Tea Party Puts The Screws To House Republicans Over Debt Ceiling
Tea party activists have taken some lumps lately, but they’re not going down without a fight.
With TV ads, petitions and grassroots lobbying, tea party organizers are gearing up to send an absolutist message to Capitol Hill: Don’t raise the debt ceiling under any circumstances. Tea party activists have already clashed publicly with some of the 87 GOP freshmen they helped elect last year, and they’re warning that Republicans who don’t keep their fiscal promises will pay a political price.
“We will remove as many incumbents as we can that do not do the job they were hired to do,” Darla Dawald, national director of the tea party group Patriot Action Network, said in an e-mail. “We are watching every member of Congress, their votes, position and language.”
A newly formed conservative political action committee has released an ad opposing a debt ceiling increase and disputing the $100 billion in cuts that House Speaker John Boehner, R-Ohio, touted in the recent budget agreement. The ad cites the Congressional Budget Office finding that cuts totaled less than $400 million. But its real target is President Obama and his “massive deficit spending.”
The ad was released by the new Campaign to Defeat Barack Obama PAC, a spinoff of the Our Country Deserves Better PAC, the party of the Tea party Express. The latter is about to launch its own national TV ad campaign opposing a debt ceiling increase, said Amy Kremer, who chairs Tea party Express. The PAC raised and spent $7.7 million in the 2010 cycle, according to the Center for Responsive Politics.
Another conservative activist group, Grassfire Nation, is gathering signatures from its 1.8 million members on a petition opposing “any increase in the legal federal debt limit,” to be delivered by hand in the coming weeks to lawmakers on Capitol Hill. A Grassfire Nation poll found that close to 80 percent of its members opposed raising the debt ceiling, even if conditions such as spending cuts or caps were attached.
“It’s no secret that the tea party movement’s unhappy,” said Kremer. “You’re seeing people on a local level really upset with their congressmen and women.” Reps. Michael Grimm, R-N.Y., Tom Price, R-Ga., and David Schweikert, R-Ariz., are among the House Republicans who have fielded flak from conservative bloggers, demonstrators, or town hall hecklers upset that Congress isn’t acting faster to bring down the deficit.
“There’s a frustration that we can’t move faster,” said Americans for Tax Reform president Grover Norquist, referring to the tea party movement. “But also an understanding that their job is to say: Let’s do more, let’s do more, let’s do more.”
The debt ceiling vote will be a key test of both the tea party and of the GOP on the threshold of the 2012 election. Technically, the federal government will run out of money in mid-May, but Treasury Secretary Timothy Geithner has signaled that accounting adjustments may give Congress until early August to actually vote.
It’s an open question how successful the tea party will be, both in the debt ceiling fight and on the campaign trail next year. Of the GOP freshmen, who’ve played a pivotal role in the unfolding budget drama, one bloc would raise the debt ceiling on the condition of substantive budget reforms or spending cuts, sources say. Another bloc opposes a debt ceiling increase flat out. And about a third are undecided.
Tea party activists are up against expert and administration warnings that failing to raise the debt limit could send the economy and the stock market into a tailspin. The tea party’s star, moreover, may be fading.
A Capitol Hill protest in March to demand more budget cuts proved underwhelming. The movement’s national leaders, most notably former Alaska Gov. Sarah Palin and Rep. Michele Bachmann, R-Minn., have drifted to the fringes of the GOP White House nominating contest. A couple of tea party PACs unveiled to much fanfare last year–Ensuring Liberty and Liberty First–have fizzled. And GOP leaders have signaled that certain tea party goals–repealing the health care law, partially privatizing Medicare–may or may not be on the table in ongoing debt limit negotiations.
It “absolutely is not true” that the movement is losing steam, countered Kremer. “You’re not seeing the great big rallies that you did before, because people are engaged on a local level doing things.”
Virginia tea party activist Jamie Radtke, who’s launched a Senate campaign for the seat now held by Democratic Sen. Jim Webb, concurred that the movement is shifting from a national to a local focus: “There is a strong desire in the tea party movement to keep the tea party local.”
Radtke predicted that activists will take the fight over the debt limit to the mat. “The GOP is on probation, because under President Bush they spent a lot of money, and added $3 trillion to the national debt,” she said, adding: “You will see that the tea party will have no problem whatsoever challenging the very freshmen they put in.”
Such warnings still make some on Capitol Hill very nervous. But as Republicans struggle between idealism and pragmatism, the GOP–and the tea party–might soon face a moment of truth.
By: Elizabeth Newlin Carney, Contributing Editor, National Journal Daily, May 9, 2011
Big Government Bailout Worked
Don’t expect to see a lot of newspapers and Web sites with this headline: “Big Government Bailout Worked.” But it would be entirely accurate.
The actual headlines make the point. “Demand for fuel-efficient cars helps GM to $3.2 billion profit,”declared The Post. “GM Reports Earnings Tripled in First Quarter, as Revenue Jumped 15%,” reported the New York Times.
Far too little attention has been paid to the success of the government’s rescue of the Detroit-based auto companies, and almost no attention has been paid to how completely and utterly wrong bailout opponents were when they insisted it was doomed to failure.
“Having the federal government involved in every aspect of the private sector is very dangerous,” Rep. Dan Burton (R-Ind.) told Fox News in December 2008. “In the long term it could cause us to become a quasi-socialist country.” I don’t see any evidence that we have become a “quasi-socialist country,” just big profits.
Rep. Lamar Smith (R-Tex.) called the bailout “the leading edge of the Obama administration’s war on capitalism,” while other members of Congress derided the president’s auto industry task force. “Of course we know that nobody on the task force has any experience in the auto business, and we heard at the hearing many of them don’t even own cars,” declared Rep. Louie Gohmert (R-Tex.) after a hearing on the bailout in May 2009. “And they’re dictating the auto industry for our future? What’s wrong with this picture?”
What’s wrong, sorry to say, is that you won’t see a news conference where the bailout’s foes candidly acknowledge how mistaken they were.
The lack of accountability is stunning but not surprising. It reflects a deep bias in the way our political debate is carried out. The unexamined assumption of so much political reporting is that attacks on government’s capacity to do anything right make intuitive sense because “everybody knows” that government is basically inefficient and incompetent, especially when compared with the private sector.
Government failure gets a lot of coverage. That’s useful because government should be held accountable for its mistakes. What’s not okay is that we hear very little when government acts competently and even creatively. For if mistakes teach lessons, successes teach lessons, too.
In the case of the car industry, allowing the market to operate without any intervention by government would have wiped out a large part of the business that is based in Midwestern states. This irreversible decision would have damaged the economy, many communities and tens of thousands of families.
And contrary to critics’ predictions, government officials were quite capable of working with the market to restructure the industry. Government didn’t overturn capitalism. It tempered the market at a moment when its “natural” forces were pushing toward catastrophe. Government had the resources to buy the industry time.
What’s heartening is that average voters understand that broad assaults on government provide better guidance for the production of sound bites than for the creation of sensible public policy. That’s why House Republicans are backpedaling like crazy on their plans to privatize Medicare — even as they pretend not to.
Conservatives really believed that voters mistrusted government so much that they’d welcome a chance to scrap Big Government Medicare and have the opportunity to purchase policies in the wondrous health insurance marketplace. Don’t people assume that anything is better than government?
But there were deep potholes on the road to a market utopia. Put aside that the Republican budget wouldn’t provide enough money in the long term for the elderly to afford decent private coverage. The truth is that most consumers don’t have great confidence in the private insurance companies, with which they have rather a lot of experience.
When it comes to guaranteeing their access to health care in old age, most citizens trust government more than they trust the marketplace. This doesn’t mean they think Medicare is without flaws. What they do know is that Medicare does not cut people off in mid-illness and that its coverage is affordable because government subsidizes it.
It’s axiomatic that government isn’t perfect and that we’re better off having a large private sector. It ought to be axiomatic that the private market isn’t perfect, either, and that we need government to step in when the market fails. The success of the auto bailout and the failure of the Republicans’ anti-Medicare campaign both teach the same lesson: The era of anti-government extremism is ending.
By: E. J. Dionne, Opinion Writer, The Washington Post, May 8, 2011
What Do You Mean We, White Man? Deficit Edition
Whenever I read pieces like David Brooks’s column this morning — pieces that attribute our budget deficits to the public’s irresponsibility and lack of realism — I find myself wondering how so much recent history went down the memory hole.
To be fair, polling on budget questions does suggest a popular demand that we repeal the laws of arithmetic — that we not raise taxes, not cut spending on any popular program, and balance the budget.
But if we look at actual policy changes, it’s hard to see that too much democracy was the problem.
Remember, we had a budget surplus in 2000. Where did it go? The two biggest policy changes responsible for the swing into deficit were the big tax cuts of 2001 and 2003, and the war of choice in Iraq.
And neither of these policy changes was in any sense a response to public demand. Americans weren’t clamoring for a tax cut in 2000; Bush pushed his tax cuts to please his donors and his base. And the decision to invade Iraq not only wasn’t a response to public demand, Bush and co. had to spend months selling the idea to the public.
In fact, the only budget-busting measure undertaken in recent memory that was driven by popular demand as opposed to the agenda of a small number of powerful people was Medicare Part D. And even there, the plan was needlessly expensive, not because that’s the way the public wanted it — it could easily have been simply an addition to traditional Medicare — but to please the drug lobby and the anti-government ideologues.
Now, a lot of historical rewriting has taken place — I’ve even seen pundits solemnly describe the Iraq war fever as an illustration of the madness of crowds, somehow erasing the fact that it was Bush and Rumsfeld, not the masses, who wanted the thing.
But the reality is that if you want to see irresponsibility and self-indulgence at the expense of the nation’s future, you don’t want to visit Main Street; you want to hang out in the vicinity of Pennsylvania Avenue.
By: Paul Krugman, The New York Times, Opinion Pages, May 6, 2011
The Ryan Plan For Medicaid: Not Good For Low-Income Americans Or State Budgets
With Washington looking for ways to rein in costly entitlement programs and state governments struggling to balance budgets, conservatives have revived an old nostrum: turning Medicaid into a block grant program.
The desire for fiscal relief is understandable. Medicaid insures low-income people and in these tough economic times, enrollment and costs — for the federal government and state governments — have swelled.
Representative Paul Ryan, and the House Republicans, are now proposing to ease Washington’s strain by capping federal contributions. Like his proposal for Medicare, that would only shift the burden — this time onto both state governments and beneficiaries.
Still, some governors may be tempted. His plan promises them greater flexibility to manage their programs — and achieve greater efficiency and save money. That may sound good, but the truth is, no foreseeable efficiencies will compensate for the big loss of federal contribution.
Mr. Ryan also wants to repeal the health care reform law and its requirement that states expand their Medicaid rolls starting in 2014. Once again Washington would pay the vast bulk of the added cost, so states would be turning down a very good deal to save a lesser amount of money.
Here’s how Medicaid currently works: Washington sets minimum requirements for who can enroll and what services must be covered, and pays half of the bill in the richest states and three-quarters of the bill in the poorest state. If people are poor enough to qualify and a medical service recommended by their doctors is covered, the state and federal governments will pick up the tab, with minimal co-payments by the beneficiaries. That is a big plus for enrollees’ health, and a healthy population is good for everyone. But the costs are undeniably high.
Enter the House Republicans’ budget proposal. Instead of a commitment to insure as many people as meet the criteria, it would substitute a set amount per state. Starting in 2013, the grant would probably equal what the state would have received anyway through federal matching funds, although that is not spelled out. After that, the block grant would rise each year only at the national rate of inflation, with adjustments for population growth.
There are several problems with that, starting with that inflation-pegged rate of growth, which could not possibly keep pace with the rising cost of medical care. The Congressional Budget Office estimates that federal payments would be 35 percent lower in 2022 than currently projected and 49 percent lower in 2030.
To make up the difference, states would probably have to cut payments to doctors, hospitals or nursing homes; curtail eligibility; reduce benefits; or increase their own payments for Medicaid. The problems do not end there. If a bad economy led to a sharp jump in unemployment, a state’s grant would remain the same. Nor would the block grant grow fast enough to accommodate expensive advances in medicine, rising demand for long-term care, or unexpected health care needs in the wake of epidemics or natural disasters. This would put an ever-tightening squeeze on states, forcing them to drop enrollees, cut services or pump up their own contributions.
This is not the way to go. The real problem is not Medicaid. Contrary to most perceptions, it is a relatively efficient program — with low administrative costs, a high reliance on managed care and much lower payments to providers than other public and private insurance.
The real problem is soaring medical costs. The Ryan plan does little to address that. The health care law, which Republicans have vowed to repeal, seeks to reform the entire system to deliver quality care at lower cost.
To encourage that process, President Obama recently proposed a simplified matching rate for Medicaid, which would reward states for efficiencies and automatically increase federal payments if a recession drives up enrollments and state costs. The president’s approach is better for low-income Americans and for state budgets as well.
By: The New York Times, Editorial, April 30, 2011
Yes, Paul Ryan Does Cut Taxes For The Rich
A number of conservatives have asserted that, contrary to what I’ve written, the House Republican budget written by Paul Ryan does not cut taxes for high earners. (See John McCormack, Ramesh Ponnuru, Charles Krauthammer, and McCormack again quoting Ryan.) Here’s the argument. Ryan keeps overall tax levels the same as they are right now by making the tax cuts permanent. He would then reduce the corporate tax rate and the top income tax rate by ten percentage points, from 35% to 25%. But he would make up for that additional revenue loss by closing “loopholes and deductions,” many of which benefit the rich. Therefore, his plan doesn’t really cut taxes on the rich.
There are four problems with this claim, each of them fatal.
First, the argument simply reflects a legitimate difference in baselines. Under current law, the Bush tax cuts are in full effect, but expire at the end of 2012. Keep Bush-era tax levels in place is not a tax cut compared with the tax code now, but it is a tax cut compared with the tax code in 2013. Which is the true baseline? I think both sides have a point, and Congressional scorekeepers have taken to using both baselines.
When President Obama accuses Ryan of cutting taxes for the rich, he’s using the post-2012 baseline. I consider that the best point of reference because the most important force in our political system is inertia. Given our multiple veto points, it takes great effort to enact a policy change that the parties disagree upon. Ryan proposes to make that change. Therefore, I think it’s fair to describe him as “cutting taxes,” even if revenues did remain at present levels (which I dispute, but more on that later.) I do think there’s merit in both baselines. The argument that Obama is lying about Ryan — that calling him a tax-cutter is, in Krauthammer’s characteristically understated phrasing, “scurrilous” — rests upon the assumption that the current-policy baseline is not only more preferable but the only remotely honest point of reference. That seems like a huge stretch.
Second, even if we accept Ryan’s preferred baseline, his description of his plan is hard to accept at face value. Tax reform is a trade where you take away deductions (that’s hard) and use the money to reduce rates (that’s easy.) The rate reductions are specified. The reduced deductions aren’t. Another way to put this is that Ryan has proposed a specific tax cut that would benefit the affluent, accompanied by utterly vague promises to find offsets. At the very least, the rate-lowering portion ought to carry more weight than the deduction-closing portion.
Third, even if we accept both Ryan’s baseline and assume he will match every dollar in lost revenue from the rate cuts with another dollar in reduced deductions, he will almost certainly wind up cutting taxes for the rich relative even to the post-Bush tax code. Ryan implies that his plan would leave the rich paying the same effective tax rates as they do now because he’s “getting rid of loopholes and deductions, which by the way are enjoyed by the top [tax] rate filers, the people in the top two brackets.” But he hasn’t put out any details. In 1995, House Republicans loudly promised to promote shared sacrifice by rooting out corporate welfare in the tax code. The actual savings they produced turned out to consist of proposals that hurt the poor (by cutting the Earned Income Tax Credit), benefited business (by letting them swipe funds from employee pensions, keeping the money as profit and thus increasing corporate tax revenue), or other reverse-Robin Hood measures.
Now, Ryan was not around then. But we can get a measure of his intentions from the more specific tax plan laid out in his “Roadmap” from 2010. That plan constituted a massive tax cut for the rich, combined with a tax hike on the middle class.
The Tax Policy Center examined various proposals to reduce tax deductions while using the revenue to lower rates across the board. All the plans decreased the tax burden for the top-earning 1%. The problem is that tax deductions are just not worth as much to very rich people as low tax rates.
It’s true that the Bowles-Simpson deficit reduction plan includes proposals that would lower rates to around 25% while increasing the effective tax rate paid by the very rich. To do that, you have to do things like raise the estate tax rate and completely eliminate the preferential treatment of capital gains. But Ryan’s budget promises instead — and this is the only specific policy commitment in its tax section, other than lowering rates — to expand the preferential treatment of income from wealth:
Raising taxes on capital is another idea that purports to affect the wealthy but actually hurts all participants in the economy. Mainstream economics, not to mention common sense, teaches that raising taxes on any activity generally results in less of it. Economics and common sense also teach that the size of a nation’s capital stock – the pool of saved money available for investment and job creation – has an effect on employment, productivity, and wages. Tax reform should promote savings and investment because more savings and more investment mean a larger stock of capital available for job creation. That means more jobs, more productivity, and higher wages for all American workers.
Fourth — almost there! — even if you reject everything I’ve written to this point, Ryan’s plan includes the repeal of all the taxes in the Affordable Care Act, including the taxes on the affluent. Here’s the Path to Prosperity’s description of health care taxes he proposes to undo:
The new law imposes a 0.9 percent surtax on wages and a 3.8 percent surtax on interest, dividends, and capital gains. Both taxes only apply to filers in the top two income brackets, but as discussed elsewhere in this section, those filers include small businesses employing millions of Americans, and the new taxes on capital will reduce the pool of capital available for investment and job creation.
There. Per Paul Ryan, these are upper-bracket taxes he proposes to lower. He could keep those taxes in effect, and cover a few of the uninsured people he throws off their coverage, or make the progressively-more-inadequate health care vouchers he uses to replace Medicare slightly less inadequate. But he chooses not to do that, because he believes it’s more important to tax capital at lower rates. It’s fine for him to believe that. But he and his defenders have to stop insisting that he doesn’t propose tax cuts for the rich. He indisputably does so.
By: Jonathan Chait, The New Republic, April 20, 2011
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