The country has a confidence problem, and Congress bears much of the responsibility for it.
That conclusion, drawn by Republican pollster Bill McInturff, carries ill omens as lawmakers seem all but certain to let more than $1 trillion in automatic spending cuts go into effect at the end of the month and with fights over keeping the government funded and raising the debt ceiling looming.
“It is clear we have entered a new phase where the dysfunction and paralysis in Washington is having a significant and deleterious impact on how consumers feel about the overall state of the economy and their personal financial situations,” writes McInturff in an analysis entitled “The Washington Economy.”
As evidence of his assertion, McInturff cites the Michigan Consumer Sentiment Index in the months leading up to the “fiscal cliff” fight last winter. From October to December, consumer confidence dipped from 82.6 to 72.9. (The Michigan Index is based on a 100-point scale.) McInturff notes that the index typically moves only a point or two a month, and that such large-scale moves within such a short time typically require a “signal event” like Hurricane Katrina (a 19.6-point drop in two months), Iraq invading Kuwait (15.4-point drop) or the Lehman Brothers collapse (15-point drop).
The “fiscal cliff” debate (a 9.7 point drop) and the 2011 debt ceiling showdown (15.8) fit neatly into that category of signal events, a remarkable reflection of how what happens — or, more accurately, doesn’t happen — in Washington reverberates around the country. (One remarkable factoid: The drop in consumer confidence during the “fiscal cliff” debate was larger than the one that followed the Sept. 11, 2001, terrorist attacks.)
The Michigan Index is not alone in showing the drastic impact on confidence that the seemingly endless fiscal fights in Washington are causing. In the summer of 2011 — at the heart of the debt ceiling debate — Gallup’s Economic Confidence Index showed a score of -54. (The lowest possible number is -100, the highest is 100.) At the end of 2012, confidence dipped again in the Gallup measurement — down to -22.
Now, it’s not all doom and gloom. Of late, the Michigan Index has been showing increased public confidence, hitting a three-month high of 76.3 this month. And, the Gallup number reached as high as -8 earlier this month —a five-year high— before dipping back down to -13 last week.
But, a look at the longer trend suggests that the country is in the grips of a broader crisis of confidence that Washington is making worse. Looking all the way back to 2008 when Gallup began testing economic confidence, the organization has never — repeat, never — turned out a positive confidence score in its daily tracking polling. And, as McInturff notes, the country is now in the midst of a historically long run of low confidence. It has been 59 months since the Michigan Index dropped below 65 and it has never been back above 85. That’s the longest recovery period of any time since World War II; in 1974, amid the Watergate scandal, the Michigan Index dropped below 65, but 30 months later it was over 85 again.
Then consider that the sequester seems all but certain to kick in on March 1, the potential for a government shutdown on March 31, and the debt ceiling debate returning later this summer and it seems clear that the current bump in confidence is likely to be short-lived. Put another way: We may well be in the eye of an economic confidence hurricane.
What’s clear from all the data is that a federal government that lurches from financial crisis to financial crisis as its normal course of business is doing a great disservice to a country badly looking to finds its footing again.
“It is important leaders in both parties begin to recognize how the tenor, tone and the outcome of the policy debates in Washington are actually retarding economic confidence in a way that makes building a sustained recovery more difficult,” concludes McInturff.
The warnings, from the debt ceiling fight through the “fiscal cliff” crisis, are clear. But, political Washington has shown a remarkable inability to heed them in the past few years. If that doesn’t change in the next three months, the impact on the nation’s economy could be drastic.
By: Chris Cillizza, The Washington Post, The Fix, February 17, 2013
“It’s Really Not That Complicated”: Republicans Are At The Intersection Of Recklessness And Stupidity
Sen. John Cornyn (R-Texas) has an op-ed in the Houston Chronicle today, explaining why he believes it’s responsible to hold the debt ceiling hostage until President Obama “puts forward a plan” that makes Republicans happy. The piece is filled with errors of fact and judgment, but there was one truly bizarre claim that stood out for me.
“The coming deadlines will be the next flashpoints in our ongoing fight to bring fiscal sanity to Washington,” the Texas Republican wrote. “It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country.”
Just at a surface level, this is ridiculous — to prevent possible trouble in the future, Cornyn intends to cause deliberate trouble now? But even putting that aside, I’m not sure if the senator understands the nature of the controversy. Failing to raise the debt limit — that is, choosing not to pay the bills for money that’s already been spent — doesn’t just “partially shut down the government,” it pushes the nation into default and trashes the full faith and credit of the United States.
Does Cornyn, a member of the Finance and Budget committees, not understand this? Just as importantly, is Senate Minority Leader Mitch McConnell (R-Ky.) equally confused?
“By demanding the power to raise the debt limit whenever he wants by as much as he wants, [President Obama] showed what he’s really after is assuming unprecedented power to spend taxpayer dollars without any limit,” McConnell argued on the Senate floor.
At the risk of being impolite, McConnell’s comments are plainly dumb. As a policy matter, it’s just gibberish, and the fact that the Senate Minority Leader doesn’t seem to know what the debt ceiling even is, after already having threatened default in 2011 and planning an identical scheme in 2013, raises serious questions about how policymakers can expect to resolve a problem they don’t seem to understand at a basic level.
For the record, Congress, by constitutional mandate, has the power of the purse. Unless you’re Ronald Reagan illegally selling weapons to Iran to finance a secret and illegal war in Nicaragua, the executive branch can’t spend money that hasn’t already been authorized by the legislative branch.
If the president had the authority to raise the debt ceiling on his or her own, it would not give the White House the authority to “spend taxpayer dollars without any limit,” since any administration would still be dependent on Congress for expenditures. The debt limit has nothing to do with this — spending authority would be unchanged no matter which branch had the power over raising the limit, and whether the ceiling existed or not.
It’s really not that complicated. Congress approves federal spending, the executive branch follows through accordingly. When the legislative branch spends more than it takes in, the executive branch has to borrow the difference.
In the 1930s, Congress came up with the debt ceiling, mandating the White House to get permission to borrow the money that Congress has already spent. If McConnell, Cornyn, and their hostage-taking friends refuse to raise the ceiling, the administration can’t pay the nation’s bills. It’s that simple.
Either GOP lawmakers like McConnell and Cornyn haven’t yet grasped these basic details, or they’re cynically hoping the public is easily misled by bogus rhetoric. Either way, there’s little hope of a sensible public debate if Senate Republican leaders repeat nonsense about a looming national crisis.
By: Steve Benen, The Maddow Blog, January 4, 2013
GOP Rep. Steve King of Iowa is one of the leading spokespeople for the Tea Party wing of the House GOP. With the national press continually asking King whether he’ll be making an endorsement in the Iowa caucuses, he has been built up into something of an important GOP figure.
So it’s good to see that King is candidly admitting that the House Tea Party wing has been employing the threat of a government shutdown as nothing more than a deliberate hostage strategy designed to wring maximum concessions from Democrats.
King made the concession in an interview with Laura Ingraham. Dems are highlighting the interview because King bashes House Speaker John Boehner for his weak leadership, but the bolded portion below is the real news here:
KING: We have not lead in a clear way. American people don’t know what House Republicans believe in, and they surely don’t know what we’re willing to fight for. And I am as disappointed as the public is…
It’s clear to me that Speaker Boehner made a decision, either before, but I am convinced it was at least shortly after the election last November, a year ago last November, that we would not be in a position where we would be blamed for shutting down the government … that’s the only place where you bring the leverage to this Congress, to take on Harry Reid and Barack Obama, is you have to be willing to face a shutdown and you have to have the debate among the American people.
INGRAHAM: You think that would have helped the Republican Party and you guys would be in a better position today if the government had been shut down?
KING: The shutdown isn’t the point so much as, I don’t want the shutdown either. But if you are afraid of the shutdown you can’t have the confrontation and you lose every negotiation along the way.
And there you have it! During each impasse — the first government shutdown fight; the debt ceiling debacle; the payroll tax cut showdown — we keep being told that Tea Partyers really are crazy enough to allow the worst to happen. During the government shutdown fight, we were even told that Tea Partyers viewed that outcome as a positive. Their willingness to take us over a cliff is why Dems simply must make the concessions they’re demanding.
But now a top Tea Party leader has given away the game, admitting that not even Tea Partyers want a shutdown. Creating the impression that they’re willing to let it happen is only about winning maximum concessions in negotiations. Let’s hope Dems keep this in mind the next dozen times this happens.
By: Greg Sargent, The Washington Post Plum Line, January 3, 2011
When the House GOP’s enormous freshman class arrived on Capitol Hill in January, it wasn’t uncommon to hear them sound off on the mistakes their predecessors made in 1995. Despite having shut down the government — twice! — House Republicans under Newt Gingrich had caved too easily, didn’t push hard enough, didn’t embody the true spirit of conservatism.
But the new House leadership wasn’t so sanguine. Many had lived through the Gingrich revolution and its aftermath. Others had been around long enough to hear tales of it. And so they mapped out a strategy specifically designed to avoid what they believe were the party’s ’90s-era mistakes.
In other words, the two factions — the newly energized backbenchers and the veteran leadership — were pulling each other in opposite directions. The tug of war left the House GOP’s strategic center of gravity stuck in an unstable position. The party was committed to fighting as hard as possible, but stopping short of its most conservative members’ slash and burn instincts.
The 2011 version of the House GOP, in not always easy coordination with Senate Republicans, would approve must-pass bills, but only after dragging negotiations down to the wire and extracting as many concessions as possible from Senate Dems and the White House each time. We saw that strategy play out over and over again this year, with mixed results for both parties and largely poor results for the country at large.
Here’s a quick lookback at a year of living dangerously — and the series of recurring crises that it produced.
APRIL: Government Shutdown
This fight set the tone for the remainder of the year. At the tail end of the last Congress, Republicans blocked a bipartisan effort to fund the government through the end of the fiscal year in September 2011. They’d made big gains and wanted an early bite at the apple in the new Congress. With government funding set to expire, House Republicans sought to make good on their pledge to cut $100 billion from domestic federal programs right away. In addition, they sought to attack the Obama administration’s power to govern from the executive branch with scores of legislative riders meant to limit access to women’s health centers, weaken environmental regulations and so on. The administration and Senate Dems sought to limit the damage — but it wasn’t easy. In negotiations that lasted until minutes before the government shutdown, Republicans locked in billions of dollars in budget cuts, and even a few riders, including one that reinstated a ban preventing the District of Columbia from spending local tax dollars on abortion services.
AUGUST: Debt Limit
This is where House Republicans overplayed their hand — but also made, from a conservative point of view, the most substantive gains. Republicans held the country’s borrowing authority hostage. They implicitly threatened to let the country default on its debt obligations unless Democrats agreed to massive cuts to federal programs over the course of a decade. For a time, the White House genuinely saw this as an opening to strike a fiscal “grand bargain” with House Speaker John Boehner. But in an early indication of the limited room Boehner’s conference would give him to deal, those negotiations fell apart over the GOP’s reluctance to increase taxes on the wealthy. So Democrats reverted again to a “contain the damage” strategy. The damage was pretty severe: $1 trillion in cuts to defense and domestic discretionary spending over the next year, enforced through statutory budget caps; a downgrade to the country’s AAA rating by Standard & Poor’s; and, because the Super Committee the debt deal created would ultimately fail, the prospect of another $1.2 trillion in across the board cuts to national security programs, Medicare providers, and other parts of the budget, which are set to kick in on January 1, 2013, unless Congress finds savings elsewhere.
The good news for now is that the budget cuts are somewhat backloaded and won’t become too severe until later in 2012 and 2013. In the meantime, the country’s fiscal fate — whether we’re on a bumpy path toward unwinding the New Deal or toward shoring it up — now hinges on the outcome of the 2012 elections. If a Republican beats President Obama, the GOP will continue to put the squeeze on government revenue and pursue a course of swapping out the automatic defense and Medicare provider cuts with cuts to other key support programs.
SEPTEMBER: Disaster Relief
The debt limit fight was a political disaster, and an embarrassment for Dems who found themselves outmaneuvered throughout. But it also marked the point at which they adopted a new, more confrontational strategy with the GOP. That manifested itself in a small skirmish over funding the government in the new fiscal year that began in October. Republicans attempted to use the expiration of government funds at the end of the fiscal year as leverage to force Democrats to offset the cost of federal disaster relief with cuts to a successful hybrid vehicle incentive program. Indeed, House Republicans they tried to jam Senate Dems and skip town. In the end, Democrats refused to budge, FEMA managed to squeak by with the disaster relief funds it had, and a shutdown was again averted.
NOVEMBER: Super Committee
The debt limit fight led to the creation of the Super Committee, and a whole new fight over reducing federal deficits. But this fight was completely different. With the threat of a debt default off the table, Democrats drew a line: no cuts to entitlement benefits until Republicans agreed to break the stranglehold anti-tax conservatives have on their party. That break never really happened, and so the 12-member panel failed. As a result, major across the board cuts to defense, Medicare providers and other programs are set to kick in on January 1, 2013, unless Congress comes up with something better. That’s why the coming year and the presidential election are so high-stakes. They’re all about the nation’s priorities.
DECEMBER: Payroll Tax Cut
The GOP strategy of pushing negotiations to the brink of crisis finally caught up with them in the fight over extending the payroll tax cut, giving Democrats their most decisive victory of the year. Not only did Dems manage to turn the Republicans’ reluctance to renew the 2011 payroll tax cut into a huge political liability, they reset the consensus entirely. And in the process they left the House GOP conference — and the relationship between House and Senate Republicans — in shambles. In the end, Congress renewed the payroll tax cut for two months, and both parties have committed to extending it through the end of 2012. But Republicans will have to do so on Democrats’ terms. If they learned nothing from the last month, and try to pick another fight over payfors and unrelated riders, they risk a much more severe political embarrassment in the middle of primary season and, many observers have speculated, losing control of the House in 2013.
By: Brian Beutler, Talking Points Memo, December 28, 2011
If you keep trying something and it doesn’t work and you are a rational person, you change course. President Obama is a rational person. His rip-roaring budget speechwas a rational response to the failures of the past eight months. Republicans accused him of “class warfare” because he said the rich should pay more in taxes. When Republicans start saying “class warfare,” it almost always means that a Democrat is doing something right.
Obama’s aides insist that the president had little choice until now but to try to conciliate with the Republicans because they held in their hands the power to cause enormous damage. Obama made the budget deal early this year, they say, because he thought it would be bad for the economy to start off the new Congress with a government shutdown. And he had to make a debt-ceiling deal because the country couldn’t afford default. Now, they say, he has the freedom to bargain hard, and that’s what he doing.
There is something to this, although it doesn’t take into account other moments when the president engaged in a strategy of making preemptive concessions, giving away stuff before he even negotiated. (I’d argue that this tendency goes all the way back to the stimulus package.) But for now, it’s simply a relief for many — especially for the people who support the president — to see him coming out tough and casting himself as someone with a set of principles. And it was a political imperative, too. His image as a strong leader was faltering, and he was starting to lose support within his own party. He can’t win in 2012 (or govern very effectively before the election) if he looks weak and if his own party is tepid about him. On Monday, he began to solve both problems.
And as Ezra Klein and Greg Sargent point out, Obama may get more done by starting from a position of strength — by stating flatly and clearly what he’s seeking — instead of beginning with concessions and then having to concede even more. In the recent past, he allowed Republicans to control the terms of the debate. This time, he’s trying to set them. That’s usually a better way to get something closer to what you actually want. The Republican cries about “class warfare” reflect their awareness that if Obama can get them into an argument over why they don’t want to raise taxes on the wealthy, the GOP starts out behind.
Obama will get grief in some quarters over two decisions for which I think he deserves credit. The first was his giving up, for now at least, on the idea of raising the age at which Americans are eligible for Medicare to 67 from 65. The original rationale was that Americans in the age category who could not get private coverage would pick it up through the Affordable Care Act and its subsidies.
Put aside that (1.) it’s very hard for anyone to get affordable health insurance coverage once they pass 55 or 60, and (2.) we shouldn’t be doing anything that risks increasing the number of uninsured. The fact is, we don’t even know yet if the Affordable Care Act will survive long enough to take effect in 2014. We don’t know what the courts will do. And we don’t know if the president will be reelected. A Republican president with a Republican Congress will certainly try to repeal the law.
If the new health system takes effect, and if it can be strengthened with time, it may well make sense to move the younger and more affluent among the elderly to the new plan. (And who knows? Someday we may have a comprehensive national insurance plan.) In the meantime, let’s keep people in that category covered by keeping them in Medicare. There will be plenty of time to revisit the issue of health-care costs. It’s an issue we’ll be revisiting for years, maybe decades, anyway.
Obama is also getting hit for using the end of the wars in Afghanistan and Iraq to count up $1.1 trillion in savings. You can argue about how the math works, but I like the fact that this makes clear that there are big costs to continuing our interventions. It challenges those who say we should draw down our troops more slowly to come up with ways of paying for the wars. We should have passed a temporary war tax long ago. Obama is once again making clear that the days of putting wars on a credit card are over.
By: E. J. Dionne, Opinion Writer, The Washington Post, September 20, 2011