“Spending Cuts”: GOP Demands An End To Their Own Idea
Remember the “triggers” in the debt-ceiling agreement? Let’s take a moment to refresh the political world’s memory.
Congressional Republicans, in a move without precedent in American history, were holding the economy and the full faith and credit of the United States hostage. Democrats, fearful that the GOP wasn’t bluffing and that the nation would pay a severe price, was willing to cut a bad deal: $900 billion in debt reduction, on top of another $1.2 trillion agreement to be worked out by a so-called super-committee.
But Dems weren’t completely willing to roll over — they wanted to create an incentive for Republicans to work in good faith on the $1.2 trillion in savings. Democrats proposed the threat of automatic tax increases to push GOP officials to be responsible, but Republicans refused and offered an alternative: if the committee failed, the GOP would accept $600 billion in defense cuts and Dems would accept $600 billion in non-defense domestic cuts.
Remember, the point was to create an incentive that the parties would be desperate to avoid. Pentagon cuts were Republicans’ contribution to the process. These cuts were their idea.
And wouldn’t you know it, Republicans don’t like their idea anymore.
Failure by Congress’ debt-cutting supercommittee to recommend $1.2 trillion in savings by Wednesday is supposed to automatically trigger spending cuts in the same amount to accomplish that job.
But the same legislators who concocted that budgetary booby trap just four months ago could end up spending the 2012 election year and beyond battling over defusing it.
Sens. John McCain, R-Ariz., and Lindsey Graham, R-S.C., say they are writing legislation to prevent what they say would be devastating cuts to the military. House Republicans are exploring a similar move.
This isn’t exactly surprising, but it is kind of amusing. Republicans, in effect, said in August, “If we fail, we’ll accept these cuts we don’t want.” The same Republicans, in effect, are now saying, “It turns out, we don’t like our idea anymore.”
In the bigger picture, Republicans were never working in good faith. Even putting aside the inherently disgusting debt-ceiling crisis they created over the summer, GOP officials were willing to offer the defense-cut trigger precisely because they knew they’d try to kill it after the super-committee inevitably failed.
Republicans started this fight demanding debt reduction, then offered massive spending cuts to a part of the government they care about. They’re now demanding less debt reduction and more government spending — and if Democrats balk, these same Republicans will spend an election year accusing them of being anti-military.
I often wonder what our discourse would be like if the general public knew what GOP officials were up to in Washington.
By: Steve Benen, Contributing Writer, The Washington Monthly, November 21, 2011
Mitt Romney And The Challenge Of Making Ridiculous Numbers Add Up
Mitt Romney has an interesting budget challenge. He wants to eliminate a large deficit entirely, but he also wants to increase defense spending and cut taxes on the wealthy by trillions of dollars. It’s the sort of plan that would make balancing the budget sort of tricky, in much the same way putting out a fire with lighter fluid would be difficult.
But don’t worry, the former Massachusetts governor’s platform now includes a spending-cut plan. In the latest in a voluminous series of op-eds, which previewed a speech he delivered this afternoon, Romney explained:
The federal government should stop doing things we don’t need or can’t afford. For example:
* Repeal ObamaCare, which would save $95 billion in 2016.
* Eliminate subsidies for the unprofitable Amtrak, saving $1.6 billion a year.
* Enact deep reductions in the subsidies for the National Endowment for the Arts, the National Endowment for the Humanities, the Corporation for Public Broadcasting and the Legal Services Corporation.
* Eliminate Title X family planning programs benefiting abortion groups like Planned Parenthood.
* End foreign aid to countries that oppose America’s interests.
That’s not the totality of the plan — Romney also has some thoughts on entitlements that we’ll get to later — but in terms of discretionary spending, this is the gist of his spending-cut agenda.
There are a few key takeaways to keep in mind. The first is that repealing the entirely of the Affordable Care Act would make the deficit much worse, not better. Romney has this precisely backwards, and the fact that he doesn’t understand this is disconcerting.
Second, if Romney thinks he can take a $1.3 trillion deficit, increase spending on the Pentagon, cut taxes on the wealthy, and pay balance the budget by going after foreign aid and the Corporation for Public Broadcasting, he’s an even bigger fool than I’d feared.
And third, Planned Parenthood? Seriously? Mitt Romney thinks he can bring the budget closer to balance by increasing military spending, while blocking working-class and low-income women from accessing contraception, family planning services, pap smears, cancer screenings, and tests for sexually-transmitted diseases?
That’s just sad.
For nearly a half-century, Republican support for Planned Parenthood was the norm. Barry Goldwater and George H.W. Bush championed the health organization, and it wasn’t deemed the least bit controversial.
And yet, now we have Mitt Romney — ostensibly one of the sane GOP presidential candidates — vowing to eliminate funding for this preventive health care for women altogether.
Romney was far less offensive when he was a moderate attending Planned Parenthood fundraisers. This latest incarnation appears to have a real problem with women’s rights and interests.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, November 4, 2011
“Crash Lies”: Washington Post Discards All Journalistic Standards In Attack On Social Security
News outlets generally like to claim a separation between their editorial pages and their news pages. The Washington Post has long ignored this distinction in pursuing its agenda for cutting Social Security, however it took a big step further in tearing down this barrier with a lead front page story that would have been excluded from most opinion pages because of all the inaccuracies it contained.
The basic premise of the story, as expressed in the headline (“the debt fallout: how Social Security went ‘cash negative’ earlier than expected”) and the first paragraph (“Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went ‘cash negative.'”) is that Social Security faces some sort of crisis because it is paying out more in benefits than it collects in taxes. [The “runaway national debt” is also a Washington Post invention. The deficits have soared in recent years because of the economic downturn following the collapse of the housing bubble. No responsible newspaper would discuss this as problem of the budget as opposed to a problem with a horribly underemployed economy.]
This “treacherous milestone” is entirely the Post’s invention, it has absolutely nothing to do with the law that governs Social Security benefit payments. Under the law, as long as there is money in the trust fund, then Social Security is able to pay full benefits. There is literally no other possible interpretation of the law.
As the article notes, the trust fund currently holds $2.6 trillion in government bonds, so it is nowhere close to being unable to pay benefits. The whole point of building up the trust fund was to help cover costs at a future date when taxes would not be sufficient to cover full benefits. Rather than posing any sort of crisis, this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.
The article makes great efforts to confuse readers about the status of the trust fund. It tells readers:
“The $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”
This is the same situation the government faces when Wall Street investment banker Peter Peterson or any other holder of government bonds decides to cash in their bonds when they become due. In such cases it “must raise taxes, cut spending or borrow more heavily from outside investors.” The Post’s reporters and editors should understand this fact.
The article then goes on to incorrectly accuse Senate Majority Leader Harry Reid of misrepresenting the finances of Social Security:
“In an MSNBC interview, he [Senator Reid] added: ‘Social Security does not add a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has and, for the next 30 years, it won’t do that.’
“Such statements have not been true since at least 2009, when the cost of monthly checks regularly began to exceed payroll tax collections. A spokesman said Reid stands by his comments and his view that Social Security is entirely self-financed.”
Of course Senator Reid is exactly right. The system is self-financed under the law. In 2009 it began drawing on the interest on the government bonds it held. That is exactly what the law dictates, when Social Security needs more money than it collects in taxes, it is supposed to draw on the bonds that were purchased with Social Security taxes in the past. This means it is self-financing.
Again, this is like Peter Peterson selling his government bonds to finance one of his political ventures. Just like Social Security, he is drawing on his own money. The Post may have missed it, but there was a big debate last summer over raising the government’s $14.3 trillion debt ceiling. This $14.3 trillion figure included the $2.6 trillion borrowed from Social Security. If Social Security sells some of these bonds and this money is used to pay benefits, it does not raise the debt subject to the ceiling by a penny. This is very simple and very clear.
The article then turns to Morgan Stanley director Erskine Bowles who describes a plan he put forward along with former Senator Alan Simpson, his co-chair on a deficit commission appointed by President Obama [the article wrongly describes this plan as being the commission’s plan. That is not true, the commission did not approve any plan.]
“It would have hit upper-income workers while raising benefits for the most needy, those with average lifetime earnings of less than $11,000 a year. ‘By making these relatively small changes, you make it solvent and you make it be there for people who depend on it,’” Bowles said. ‘I thought that’s what we as Democrats were supposed to be for.'”
Actually the plan put forward by Bowles and Simpson would have implied large cuts for most low-income workers who would not have met the work requirements needed for the higher benefit. The cut would have taken the form of a 0.3 percentage point reduction in the annual cost of living adjustment. This cut would be cumulative, after 15 years of retirement a beneficiary would be seeing a benefit that is roughly 4.5 percent lower as a result of the Bowles-Simpson plan. The plan also phased in an increase in the age for receiving full benefits to 69, which is also a benefit cut for lower income retirees.
For lower income retirees Social Security is the overwhelming majority of their income. This means that the benefit cut advocated by Bowles and Simpson would imply the loss of a much larger share of their income than the end of the Bush tax cuts would for the wealthy. However, the Post has never described the ending of these tax cuts as a “modest” or “small” tax increase.
It is also worth noting that “upper-income workers” who would face benefit cuts under the Bowles-Simpson plan are people with average earnings of more than $40,000 a year. This is not ordinarily viewed as the cutoff for upper income. In reference to the ending of the Bush tax cuts, the Post once ran a front page story questioning whether people earning $500,000 a year were wealthy. Clearly they apply a different standard to Social Security beneficiaries.
To push its line of fat and happy seniors the Post misrepresented research by Gene Steuerle on returns from Social Security taxes. At one point it told readers:
“That return is diminishing, in part because people today have paid more into the system than previous generations. But a two-earner, middle-income couple retiring this year can expect to get $913,000 in Social Security and Medicare benefits over their lifetimes, in return for $717,000 in payroll taxes.”
The trick in this picture is that the return refers to Social Security and Medicare, not just Social Security which is the topic of the article. The Steuerle paper actually has the Social Security returns shown separately in the exact same chart. Steuerle calculated that the two-earner couple referred to in the article would pay a bit less than $600,000 in taxes into the system and collect around $560,000 in benefits.
[This couple will get more back in Medicare benefits than they paid in taxes, but this is primarily because our health care costs twice as much per person as in any other wealthy country. This is a good argument for reforming the U.S. health care system but has nothing to do with the topic of the article.]
This article also repeatedly refers to the debate over cutting benefits as being an “ideological battle.” There is no evidence presented in this piece that there is any ideological issue at stake. On the one hand are hundreds of millions of workers who want to see the benefits that they paid for. On the other hand are many wealthy people, exemplified by people like Peter Peterson and Erskine Bowles who would rather use Social Security money to keep their own taxes low or to serve other purposes.
This is a battle over who gets the money. The references to ideology just confuse the situation.
By: Dean Baker, Center For Economic and Policy Research, October 29, 2011
Republicans And Taxes: Let’s Get Real About The GOP
It would be marvelous to believe that the congressional supercommittee is going to reach a bipartisan deal. Well, actually, I’m not so sure it would be marvelous, substantively. We’ll get to that. But politically, it would be nice to see Washington function for a change. Hard experience suggests to us, however, that when all the smoke clears, there will be no deal. What will happen then? The Republicans will then go in for even emptier posturing than they’re engaging in now, this time with regard to defense cuts. You think things can’t get worse? Just wait.
For a while, when the committee’s six Democrats and six Republicans were able to talk to each other in vague generalities, Washington was able to pretend that things were looking pretty hopeful. There was no precise reason for this hope. Some senators told me that their colleagues on the committee weren’t even telling them anything. But Washington elites cling to hope of bipartisan common sense winning out the way M. Night Shyamalan fans swear that he’s going to regain form in the next movie, for real this time.
But eventually and inevitably, the negotiators had to start talking numbers. And as soon as they got to specifics, two things happened. First, they realized how far apart they were. Second, the leaks started, at which point the rest of us realized how far apart they were.
Let’s compare the plans. The Democratic proposal, released by senator and committee member Max Baucus the other day, looks to cut $3 trillion from the budget. The Republican plan, leaked in parts to The Wall Street Journal and Politico after Baucus moved, cuts just $2 trillion. If it seems odd to you that Democrats are proposing more deficit reduction than Republicans, you aren’t alone. The reason is that the Republicans—surprise, surprise—are doing it all by cuts with no tax revenue, while the Democrats include $1 trillion to $1.3 trillion in new revenue.
Now, Republicans will repeat in these coming weeks that their plan does include “revenue.” And in a way, it does. It’s just not tax revenue. Or wait—it is tax revenue! But from a tax decrease! Yes: The GOP plan says the government will raise $200 billion by cutting corporate and individual taxes. You know, the way the Bush tax cuts increased revenue, which is to say, not in the real world, but in the minds of Mitch McConnell and other delusionals who think the Bush tax cuts raised revenue. So when they go around saying “our plan raises revenues,” remember their track record.
If the time comes for Pentagon cuts, will the Democrats be willing to hold the line and risk the silly accusation of being “soft on defense”? I think we know the answer.
It bears noting, once again, that the Democrats have said with the Baucus plan that they’re ready to deal if Republicans will. Their plan includes $500 billion in entitlement program cuts. They’re prepared to attach increases in Social Security benefits to the so-called chained consumer price index, which would decrease benefits, especially for those in their 80s. That’s not some token nothing. That’s a real concession, so much so that liberals are going to be up in arms about it as time marches on. That chained CPI bit probably wouldn’t make it through Nancy’s Pelosi’s caucus, but other entitlement cuts will. So the Democrats are at least showing up to play some ball.
But the Republicans are staying in the dugout. They aren’t even bothering to take the bus to the stadium. A trillion in taxes, one dollar in taxes, it doesn’t matter; Republicans will not permit a tax increase of any kind. I’m bored of writing this sentence, so you, poor reader, must be even more bored of reading it, but it has to be said, because so many others are out there peddling the falsehood that both sides are equally to blame for the impasse: No—the impasse exists because of Republicans and taxes. Period. If the GOP moved on taxes, the Democrats would give ground on entitlements, as they have now signaled yet again. And the Democrats should not and cannot accept a deal in which there are no tax increases, because they have two-thirds of the country with them and because it’s the right thing.
Put it all together and the odds of an agreement seem long indeed. Could this rump effort of 100 bipartisan House members and 40 bipartisan senators move the boulder? It’s like asking if a Boy Scout could light a fire with two sticks in the rain. Maybe. The conditions have to be just right, and no one really knows what those conditions are.
Assuming no deal, here’s what I’m told is likely to happen after everyone has acknowledged the collapse. The Republicans will, as John McCain and others have suggested, turn up the heat on the question of defense cuts. They will introduce legislation to exempt the Pentagon from cuts. Now remember—these cuts to the Pentagon, 15 percent, were agreed to by both parties in the August debt-ceiling deal. But Republicans, being the clever dialecticians that they are, will decide that the course of history has changed, and that deal will mean no more to them than one of those secret treaties Lenin routinely abrogated back in the day.
So they’ll advance a bill saying: cuts to domestic social programs, sure; cuts to Pentagon, nyet. It will pass the House. It will go to the Senate, and all the Republicans will be for it, and they’ll need 13 Democrats. So then the questions will be: will the Democrats be willing to hold the line and risk the silly accusation of being “soft on defense”? And will the White House also hold the line—bucking, of course, its own defense secretary, who agrees with the Republican position? I think we know the answer.
So the Republicans will have killed another deal with their indefensible and immoral position on taxes, and then, having stuffed that carcass in the trunk, they will retroactively work to kill the deal they agreed to last summer, and spend December demagoguing about how Democrats are going to leave America defenseless and throw hundreds of thousands of poor aeronautical engineers into the streets.
Your tax dollars at work.
By: Michael Tomasky, The Daily Beast, October 29, 2011
Olympia “Snowe” Keeps Falling
Sens. Olympia Snowe (R-Maine) and Jeff Sessions (R-Ala.) published a joint op-ed in the Wall Street Journal the other day, calling for new measures to make the legislative process more difficult. No, seriously, that’s what they said.
For two years in a row, the Democratic-led Senate has failed to adopt a budget as required by law. Meanwhile, our gross national debt has climbed to almost $15 trillion — as large as our entire economy. Our bill puts in place a 60-vote threshold before any appropriation bill can be moved through Congress — unless both houses have adopted a binding budget resolution.
We can certainly have a conversation about the breakdown in the budget-writing process, but let’s think about what Snowe and Sessions are proposing here: they want to make it harder for Congress to approve appropriations bills, regardless of the consequences.
Jamison Foser explained, “Republicans, including Sessions and Snowe, have filibustered even the most uncontroversial of measures — and that knee-jerk opposition to just about anything the Senate majority wants to do is a significant part of the reason why the Senate hasn’t adopted a budget. Now Sessions and Snowe cynically use that failure to justify structural changes that would make it harder for the Senate to pass any appropriations bills.”
Snowe and Sessions went on to call for additional “reforms” that would make it far more difficult for Congress to approve “emergency” spending without mandatory supermajorities, too, because they’re horrified by efforts to “spend money we don’t have,” which might “bankrupt the country.”
Of course, Snowe and Sessions see no need for mandatory supermajorities when it comes to tax cuts, alleged “bankruptcy” fears notwithstanding.
But in the larger picture, have you noticed just how far Olympia Snowe has fallen lately? Last week she demanded the administration act with “urgency” to address the jobs crisis, only to filibuster a popular jobs bill just one day later. A week earlier, Snowe prioritized tax cuts for millionaires over job creation. Just a couple of weeks earlier, Snowe tried to argue that government spending is “clearly … the problem” when it comes to the nation’s finances, which is a popular line among conservatives, despite being wrong.
It’s tempting to think the fear of a primary challenge is pushing Snowe to the far-right, but the truth is, the senator’s GOP opponents next year are barely even trying. She may fear a replay of the Castle-O’Donnell fight that played out in Delaware, but all indications are that Snowe really doesn’t have anything to worry about.
And yet, she’s become a shell of her former self, leading to this op-ed — written with a right-wing Alabama senator, no less — demanding that the dysfunctional Senate adopt new ideas that make it more difficult to pass necessary legislation.
There is some prime real estate in the political landscape for genuine GOP moderates who could have a significant impact. Instead, Congress has Olympia Snowe, who now bears no resemblance to the centrist she used to be.
If I had to guess, I’d say most mainstream voters in Maine have no idea of the extent to which Snowe has moved to the right, which is a shame. I wonder how those who supported her in the past would even recognize her anymore.
By: Steve Benen, Washington Monthly Political Animal, October 25, 2011
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