“The Real Deficit Argument”: Only Politics Of A Very Degraded Kind Can Keep Us From Moving Forward
Should our politicians dedicate themselves to solving the problems we face now? Or should they spend their time constructing largely theoretical deficit solutions for years far in the future to satisfy certain ideological and aesthetic urges?
This is one of the two central choices the country faces at the beginning of President Obama’s second term. The other is related: Will the establishment, including business leaders and middle-of-the-road journalistic opinion, stand by silently as one side in the coming argument risks cratering the economy in an effort to reverse the verdict of the 2012 election? Yes, I am talking about using the debt ceiling as a political tool, something that was never done until the disaster of 2011.
My first questions are, admittedly, loaded. They refer to a difference of opinion we need to face squarely.
It is entirely true that in the wake of two budget agreements, in 2011 and the just-passed deal on the “fiscal cliff,” we have not reduced the deficit enough. The issue is: How much is enough?
Contrary to all the scare talk you keep hearing, Robert Greenstein, president of the Center on Budget and Policy Priorities, notes that we could put the deficit on a sustainable path for the next 10 years with one more deficit-reduction package equal to about $1.2 trillion, plus the resulting interest savings.
By sustainable, I mean keeping the debt from growing as a share of gross domestic product and holding it at around 73 percent of GDP for the next decade. This is a more than reasonable number by international standards. To put it in perspective: According to the International Monetary Fund, in 2011 Canada’s debt was at 85 percent of GDP, Germany’s was at 81.5 percent — and Greece’s was at 163.3 percent.
Holding the debt ratio in the low 70s is well within our sights. It could be achieved through a combination of $600 billion in cuts and $600 billion in additional revenue through tax reform — or through modest taxes on carbon or on financial transactions. (Okay, for now, I am dreaming on the last two, but they are still good ideas.) The cuts could be made without wrecking Medicare, Medicaid or Social Security, and without eviscerating government’s capacity to invest in the future.
We could then shelve our deficit obsession for a while and confront the problems that should be center-stage over the next few years: restoring shared economic growth, spurring the creation of good jobs, dealing with gun violence, reforming immigration laws, improving our education system, and taking steps on climate change.
But there is the other side of this debate, pushed not only by conservatives but also by a deficit-reduction industry that sees the only test of seriousness as a willingness to slash Medicare, Medicaid and Social Security for those who will retire 10, 20 or 30 years from now. They want to be able to admire nice predictions on a computer screen that show the debt dropping to 60 percent of GDP.
There is no objection in principle to discussing the modest changes that could improve the long-term stability of Social Security. But when it comes to health-care cost projections, there is so much we don’t know that it is truly foolish to make decisions now for, say, 2040.
Health-care cost inflation has been dropping. We can’t be sure how sustainable this trend is, but economists who study the matter think the cost curve may be bending downward for the longer run. The Affordable Care Act contains measures that could further restrain health expenditures.
Is it either sensible or humane to decide in 2013 on the basis of such limited knowledge to toss future seniors and low-income Medicaid recipients under the bus? Health-care costs are something we must keep working on. We can buy time for this difficult undertaking by getting the deficit down to a sustainable level.
And that brings us to the debt ceiling. The central weakness of a largely helpful fiscal cliff deal is that it did not save us from a debt-ceiling fight. It would be colossally stupid — there is no other word — to derail an economic recovery that is slowly but steadily taking hold with another battle over a silly provision in our law. Will all the respectable people who know this sit on the sidelines and let it happen, or will they speak out now?
We are finally on a promising path. Only politics of a very degraded kind can keep us from moving forward.
By: E. J. Dionne Jr., Opinion Writer, The Washington Post, January 6, 2013
“This Is On Congress”: The Debt Ceiling Isn’t President Obama’s Problem, It’ The GOP’s Problem
Obama and Dems have vowed not to negotiate with the GOP over the debt ceiling. This morning, I asked what “not negotiating” would look like in the real world, and whether it’s even possible. But another question may be even more relevant: Do Republicans really have the leverage in the debt ceiling fight they think they have?
Some Republicans are now coming out and acknowledging that the GOP may not be in a strong position in the debt ceiling battle, after all. Here’s Newt Gingrich, on Morning Joe today, telling Republicans that a debt ceiling fight is a “loser” for them:
“They’ve got to find, in the House, a totally new strategy. Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser. Because in the end, you know it’s gonna happen. The whole national financial system is going to come in to Washington and on television, and say: ‘Oh my God, this will be a gigantic heart attack, the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave.”
And here’s the Wall Street Journal editorial page, warning against it in similar terms:
Mr. Obama will say Republicans are risking national default and recession, most of Wall Street will echo him, and the Treasury will maneuver to apply maximum political pressure — for example, by claiming it can’t pay Social Security benefits. We’ll support efforts to cut spending and reform entitlements, but the political result will be far worse if Republicans start this fight only to cave in the end. You can’t take a hostage you aren’t prepared to shoot.
This gets right to the heart of the matter, which is this: Are Republicans really prepared to let the country go into default and take the blame for crashing the economy? Sure, maybe some Tea Party Republicans are, but if GOP leaders aren’t, and the next compromise can be passed through the House with mostly Democratic votes, then all of a sudden the GOP position doesn’t look so strong, after all.
And so maybe the question of what “not negotiating” on the debt ceiling looks like has a simpler answer than you might think: The White House just treats this as Congress’ problem. You can see that framing already in this comment from the White House today (emphasis mine): ”It is quite clear that the economy will be better if Congress does its job and does what it routinely has done historically which is raise the debt limit without problem.”
It’s true that in one way, the White House will inevitably be negotiating on the debt ceiling, in the sense that it will be engaged in talks over the sequester, tax reform, and spending cuts that Republicans will insist must be resolved before they agree to raise it. But as Ezra Klein notes, this doesn’t necessarily mean the White House has to be held hostage over the debt ceiling, and it’s really quite possible that in the end, Republicans will opt to agree to a somewhat balanced deal rather than risk taking the blame for cratering the economy.
After all, John Boehner is already on record saying that not raising the debt ceiling will cause financial disaster. The pressure on Republicans not to let this happen will be intense. For the GOP, blowing up the economy will mean nothing short of political Armageddon. Can you name a single prominent Republican in any position of influence who is willing to say the GOP should allow the country to default, rather than accept a deal that doesn’t gut entitlements?
I understand the pessimism on the left that the White House will ultimately give away too much. But things seem to be shifting: Now even prominent Republicans are giving away the game, admitting that the GOP doesn’t have the leverage here that it claims to have.
This is on Congress. If Republicans are willing to force a choice between destroying the economy and gutting popular social programs, let them wallow in that winning message. If they’re willing to tank the economy to get what they want — after taking a shellacking in the election and proving so dysfunctional that they could not pass tax cuts for everyone but the ultra-wealthy without substantial Democratic help — then it’s on them. Just leave it there.
BY: Greg Sargent, The Plum Line, The Washington Post, January 4, 2012
“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
“Something To Talk About”: The Deep, Real Spending Cuts Already Passed
The prospect of cutting Medicare benefits in a “fiscal cliff” deal has prompted an outcry from concerned liberals. But whether or not legislators actually end up raising the Medicare age or paring back Social Security payments, domestic benefits and services—ranging from veterans’ health care and low-income housing to Head Start programs—are going to get squeezed over the next 10 years.
Last year’s debt-ceiling agreement included $1.5 trillion in cuts to discretionary programs through 10-year spending caps that are already in effect. According to a new analysis by the Center on Budget and Policy Priorities, the domestic programs subject to the spending caps will face a $615 billion shortfall if they keep their benefits and services at 2012 levels. If such, they’ll be forced to scale back unless Congress decides otherwise—and right now, the Republicans want even less money spent on these domestic programs, not more.
The Center on Budget and Policy Priorities’s Richard Kogan breaks down the impact of the new spending caps:
We estimate that, with the funds available under the caps, the federal government will fall about $350 billion short over the next ten years of delivering the same level of benefits and services for NDD programs as it did in 2012. This is because: (1) the costs of a number of key programs, especially VA medical care, are projected to grow substantially, and (2) Congress relied on certain temporary savings measures to meet the 2012 caps that it cannot repeat in the future. Furthermore, it would take an additional $265 billion over the next ten years to account for general population growth, which affects NDD programs ranging from Head Start to home-delivered meals for the elderly. In total, it would require $615 billion above what the caps allow to maintain the same level of benefits and servicesper person as in 2012.
It’s a good reminder of the trade-offs that we have already made in the name of deficit reduction, which have received little attention amid the hand-wringing over the fiscal cliff. And, as Kogan points out, these domestic programs still remain vulnerable to further cutting. House Speaker Boehner (R-Ohio) has already proposed $300 billion in further cuts to discretionary programs, though he hasn’t specified how they’d be carried out. And unlike the defense programs that face big cuts, these domestic programs don’t have deep-pocketed industry lobbyists to help shield them.
By: Suzy Khimm, The Washington Post Wonkblog, December 9, 2012
“Unicorn’s And Other Fables”: Grover Norquist’s Latest Plot To Drown Government…Monthly Debt Ceiling Fights
There’s two ways to look at Grover Norquist. He’s either the most powerful unelected man in the world or an amazing self-promoter who is about to be proven obsolete. Norquist obviously feels he’s the former. For nearly two decades, he’s held Republicans to a pledge to never raise taxes. Now he wants them to force the president to cede to their wishes on a monthly basis.
The President of Americans for Tax Reform is urging Republicans to use the debt ceiling to exact spending cuts or continue the Bush tax cuts for incomes over $250,000.
“The debt ceiling that Obama’s plans bump into every month or so for the next four years provides plenty of ‘leverage’ for the GOP to trade for spending cuts — as done in 2011 — or continuing the lower rates,” Norquist wrote Wednesday in The Hill.
Nearly 6 out of 10 Americans want to end the Bush tax breaks for the rich. But enough Republicans in the House and Senate have signed Norquist’s American Taxpayer Pledge that he’s certain that the negotiations on the so-called “fiscal cliff” can end without taxes going up.
After an electoral college landslide, many — including the White House — believe that the president has the leverage in negotiations. But the debt ceiling, which we will hit in February, does give Republicans a chance to make demands on the president.
When President Obama asked Speaker Boehner to raise the debt limit, Boehner reportedly said, “There is a price for everything.”
In 2011, Republicans, for the first time ever, used the debt limit to force cuts — something they never asked for in the dozens of times they raised the limit for the last three Republican presidents.
Though senators Lindsey Graham, Saxby Chambliss and other Republicans have said they would break their pledge with Norquist, the lobbyist seems unfazed. He told Slate’s Dave Weigel that he has no concerns that his pledge is about to crumble.
“I’ve talked to Lindsey Graham on the phone after some of his pronouncements, and he’s said, ‘Oh, I would need 10-1 [ratio of cuts to tax hikes], and it would have to include permanent, unalterable entitlement reform.’ I said, ‘Lindsey, if that’s what it’s going to take to get you to raise taxes, I’m not going to worry about you,” Norquist said. “You are not in danger of being offered a silver unicorn, because unicorns don’t exist.”
The Washington Post’s Greg Sargent keeps insisting that the GOP is just trying to present an appearance of compromise. Some Republicans are making news with their alleged willingness to buck Norquist — but votes speak louder than words.
Unlike many Republicans, Norquist would be pleased if the so-called sequester goes into effect. He’s a Republican who believes the Department of Defense isn’t sacred when it comes to spending cuts.
The question is, how many Republicans would be willing to risk the cuts to Defense along with responsiblty for a middle-class tax increase by holding out for a deal that honors Norquist’s pledge?
And if the president won’t agree, will they doom the United States’ credit and cause unprecedented “uncertainty,” which Republicans claim to hate, by holding the debt limit hostage on a monthly basis?
Even if Republicans were to go down that path, the president would have to adopt a strategy advocated by former president Bill Clinton often called “the 14th Amendment option.”
The amendment includes the sentence, “The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion shall not be questioned.”
In 2011, Clinton said that “without hesitation” he would invoke the 14th Amendment “and force the courts to stop me.”
President Obama nixed that plan, saying his lawyers didn’t see the validity in it. But if Republicans decided to use the debt ceiling to keep him on an “allowance,” it wouldn’t be hard to imagine him deciding that it was worth going to court.
Norquist has never been shy about his disdain for government. He’s often joked,” I just want to shrink it down to the size where we can drown it in the bathtub.” But he’s never faced a predicament like expiring tax cuts and a president with the political capital to fight to keep some of them expired.
Soon we’ll find out how much power he actually has.
BY: Jason Sattler, The National Memo. November 28, 2012
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