Debt Ceiling: What Killed The Deal And What Might Make One Happen This Week
There are a lot of good articles running through what happened between Thursday night, when a deal seemed likely, and Friday evening, when the talks fell apart. New reports suggest that Boehner is trying to prepare a deal by tomorrow evening, to prevent the markets from dropping Monday. So here’s the short version of what just happened, and where we’re likely to be going:
On Tuesday, the Gang of Six proposed a deal that would raise tax revenues by $2 trillion — which showed there was support among Senate Republicans for a deal that raised taxes by about $2 trillion. On Thursday, congressional Democrats rebelled over reports that the deal Boehner and Obama were negotiating had only $800 billion in new revenue, and it wasn’t even clear how those would be achieved. That night, Obama called Boehner looking for about $400 billion more in revenue to have something he could sell to Democrats. That would have brought the deal from $800 billion in revenue to $1.2 trillion in revenue. He didn’t get a call back until the next day at 5:30 p.m. — by which point the call was unnecessary. Boehner had already told the media that he was leaving the talks.
Republicans are emphasizing that the White House went from asking for $800 billion in revenue to $1.2 trillion. The word you’re hearing from them is “reneged,” but the White House emphasizes that negotiations were ongoing, and both sides were asking for more as they tried to figure out what they could both agree on and pass through Congress. Boehner, for instance, wanted further cuts to Medicaid, a trigger that would repeal the individual mandate and the Independent Payment Advisory Board if the entitlement cuts didn’t come through, and a tighter cap on discretionary spending. “They make it seem like the president made some ultimatum on $1.2 trillion in revenue,” says a senior administration official. “He didn’t. He said, ‘If you can’t do this, let’s figure out what we can do.’ ”
The “what we can do” would probably have been to ratchet back the entitlement cuts. Or maybe another solution would have been found. It’s hard to say because Boehner didn’t come back with a counteroffer. He simply left the negotiations.
But let’s zoom out on where the negotiations left off. Spending cuts would have totaled about $3 trillion, with a bit less than a trillion dollars of that coming from entitlements and other forms of mandatory spending. Revenue increases — none of which would have come from raising marginal tax rates — would have been between $800 billion and $1.2 trillion. The package would have extended the unemployment insurance and payroll tax cut provisions passed in the 2010 tax deal. All in all, that’s about a trillion dollars less in revenues than the Simpson-Bowles/Gang of Six deals advocated, and about $2.6 trillion less in revenue than simply letting the Bush tax cuts expire in 2012.
There’s a question as to whether this was the very best deal Republicans could get or simply close to it. But it’s hard to believe that it was so bad that it ended the talks. What seems likelier is that Boehner spent some time between Thursday and Friday talking to his members and found that his party simply didn’t support a deal with the White House. For one thing, a deal would include some amount of revenue, and that was a hard sell under any circumstances. For another, letting the president look like a dealmaker would potentially dim the GOP’s chances of retaking the White House in 2012. As my colleague George Will put it Thursday, a deal “would enable President Obama to run away from his record and run as a debt-reducing centrist.”
And so Boehner walked. Fundamentally, this looks like the same calculation that ended the last round of talks over a 4 trillion deal. What’s different this time is Boehner’s plan B: The Speaker of the House appears to believe that a deal struck between congressional leadership would perhaps be easier to sell to his members. Since it’s hard to see Nancy Pelosi and Harry Reid making deeper concessions than Obama did, it’s hard to see why that would be true, save that the deal might not look like such a victory for the White House.
Perhaps taking the benefit for Obama off the table will be enough. I’m doubtful. It’s more likely that what we’re really doing now is wasting time until the markets plummet and Boehner’s members decide that a deal is better than no deal. And there’s a very good chance that the first major show of market concern could come tomorrow night, when the Asian markets open. Boehner is hoping to present a plan by then, but a plan is very different from a deal. A plan is something politicians can come up with. A deal, we’re increasingly finding, is something that we need the markets to force.
By: Ezra Klein, Columnist, The Washington Post, July 23, 2011
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Grover Norquist’s Pledge Is A Colossal Failure
In 1986, Grover Norquist and his organization, Americans for Tax Reform, created the “Taxpayer Protection Pledge,” which he describes as “a simple, written commitment by a candidate or elected official that he or she will oppose, and vote against, tax increases.” It has recently come under repeated fire: it became a tool for ethanol subsidy apologists, for example, and most recently, it emerged as a needless obstacle in negotiations over raising the debt ceiling.
Responding to his critics, Norquist has taken to the op-ed page of the New York Timesthis morning to defend his legacy:
Contrary to the hopes of some that I am somehow softening the pledge, it is stronger and more important than ever: it has made it easier for members of Congress to credibly commit to voters that they will refuse to increase taxes and instead focus on reducing the cost of government.
In fact, it is more important than ever to be rid of The Pledge, because it has been a colossal failure. Does anyone think that fiscal conservatives should be happier with the state of our nation’s finances now than they were when the pledge began 25 years ago? Does anyone still harbor the illusion that “starve the beast” is an effective method of shrinking the federal government?
Here is why The Pledge has failed. Time and again, it has contributed to the GOP tendency to make taxes their top priority, deficits be damned. As Kevin Williamson puts it at National Review, “Republicans led by naïve supply-siders are preparing, for the third time in my life, to sell their souls on spending cuts in exchange for tax-rate reductions that are small, ineffective, and sure to be temporary. Ronald Reagan got his tax cuts, but he went to his grave waiting for those spending cuts. George W. Bush got his tax cuts, and ended his presidency with spending soaring and his entitlement-reform program in the garbage. And now certain Republicans are starting to slobber over the Gang of Six plan.”
What Norquist doesn’t understand or won’t admit is that deficit spending is worse than a tax increase, because you’ve got to pay for it eventually anyway, with interest. Meanwhile, you’ve created in the public mind the illusion that the level of government services they’re consuming is cheaper and less burdensome than is in fact the case. If you hold the line on taxes but not the deficit, you’re making big government more palatable.
Back in 1986, if taxes had been raised every time federal spending had increased, and voters knew that taxes would go up again every time new federal programs or spending was passed, the backlash against big government that we’re seeing now would’ve started a lot sooner, and been much more broad-based. Had that been the policy, it’s doubtful that George W. Bush would’ve passed Medicare Part D. Instead, the Baby Boomers have borrowed a bunch of money that my generation and my children’s generation is going to have to pay back. But their taxes didn’t go up. Thanks for that, Mr. Norquist. I’m not sure what to call it, but fiscal conservatism isn’t it.
As the conservative movement laments our fiscal straits, and the dire situation the nation finds itself in, perhaps it is too much to ask that they assign Norquist a little bit of the blame. But surely they can at least recognize that the solution he’s been pushing since the Reagan Administration hasn’t worked.
By: Conor Friedersdorf, Associate Editor, The Atlantic, July 22, 2011
Halting The “Disease Of Republican Compromise”: Intra-GOP Wars Block Path To Debt Ceiling Accord
What if they yield, even a little?
Call it GOP Primary Fear. A major hurdle to breaking the federal debt-ceiling impasse is the worry by House Republicans that they will invite primary election challenges from the right if they give ground to Democrats on the issue of higher tax revenues.
There’s even a verb for it: being “primaried.”
The challenger would not be a Democrat. It would be a fellow Republican, in a spring or summer primary that most voters would ignore. That could leave the field mainly to ideological die-hards, often with tea party ties and little appetite for compromise.
It’s the atmosphere that many House freshmen rode to victory last year, and that cost two GOP senators their party’s nomination.
“They talk about it all the time,” said Mike McKenna, a Republican lobbyist who closely follows the House and politics. If the House cuts a deficit-reduction deal with President Barack Obama, he said, “you’re probably going to see a lot of leadership guys get primaried,” along with rank-and-file Republicans. “It could be an all-time high.”
Such worries are a key reason the GOP-controlled House has refused so far to accept Obama’s debt-and-deficit overture, even though it includes budget concessions that many people never expected from a Democrat. Friday evening, after House Speaker John Boehner abruptly broke off the talks, an exasperated Obama declared: “One of the questions the Republican Party is going to have to ask itself is, `Can they say yes to anything?'”
Boehner blamed Obama for insisting on higher revenues. The package they were closing in on would have cut spending by $3 trillion over 10 years, and slowly started to trim Social Security and Medicare benefits. But to get it through the Democratic-controlled Senate, the deal also needed to include some increase in revenues from taxes aimed mainly at the wealthy, and generating up to $1 trillion over a decade.
That’s the needle Boehner can’t figure out how to thread. He’s been unable to persuade enough fellow Republicans to give just enough on higher revenues, or “tax hikes” — there will be a fierce fight, too, over definitions — to keep Senate Democrats from filibustering the bill to death.
Boehner must also reassure colleagues that they could survive primary challenges.
Obama confronted the issue Friday, at a forum in Maryland. Many House districts, he said, are drawn to be “so solidly Republican or so solidly Democrat that a lot of Republicans in the House of Representatives, they’re not worried about losing to a Democrat. They’re worried about somebody on the right running against them because they compromised. So even if their instinct is to compromise, their instinct of self-preservation is stronger … that leads them to dig in.”
Nearly all congressional Republicans have pledged not to raise taxes, although lawmakers quibble about what that means. Many tea partyers say it bars any action that would lead directly to a net increase in tax revenues. The Senate is almost certain to reject that definition.
Tea party activist Lee Bellinger recently urged colleagues to put lawmakers on notice “before the disease of Republican compromise infects Washington once again.” As early as mid-April, Tea Party Patriots co-founder Mark Meckler told The Hill newspaper he was “getting emails by the hour from people talking about primary challenges” to Republicans who seek budget deals with Democrats.
Rutgers University political scientist Ross Baker said Republican primaries are dominated by “the most ideological voters.” They “track votes and are unforgiving,” he said.
GOP pollster and consultant Wes Anderson said, “If we pass some deal that includes some form of tax increases_ even if we try really hard to couch it in `tax reform, closing loopholes,’ etc. — there are going to be a number of our folks, especially freshmen, who will face primaries. It’s just going to happen.”
Anderson said Boehner’s top staffer is counting votes every day, asking “what kind of deal can we get without losing too many?”
For Boehner, the math doesn’t require reaching the minimum 218 votes needed to pass a bill in the House (or 217, given two seats currently vacant).
If Obama eventually endorses a compromise, it probably will draw scores of House Democrats’ votes. That would allow Boehner to lose 100 or so of his 240 Republicans, and still pass the measure.
But if Boehner wants to remain speaker, he can hardly afford a bigger defection than that. He needs to find the political sweet spot, a compromise that can win the votes of 140 or so House Republicans and most of the Senate’s Democrats.
McKenna estimates that about 40 pro-Boehner House Republicans are politically safe enough to vote for a compromise with no worries. Beyond that, he said, “80, 90, 100 are probably going to vote `yes’ on whatever comes out. And they will be exposed.”
By: Charles Babington (With Contribution by Jim Kuhnhenn), The Associated Press, Yahoo News, July 22, 2011
GOP Wheeling And Dealing May Come Back To Bite Them
Wednesday was the anniversary of the day in 1944 when Democrats nominated Franklin Roosevelt for a fourth term. If he could see the wheeling and dealing in D.C. during the current budget deficit debate, FDR wouldn’t be surprised. Republicans are still trying to kill Social Security, and the GOP is still cozy with bankers, billionaires, and big business.
Tea Party House Republicans, under the leadership of Eric Cantor, are doing everything they can to protect their BFFs on Wall Street from paying their fair share of taxes. If majority Leader (and presumptive peaker) Cantor and the rest of the Tea Party types were really concerned about the budget deficit, they would support President Obama’s effort to save money by ending billions of dollars in wasteful subsidies to big oil and for corporate jets. Tax breaks for corporate jets with full bars don’t stimulate the economy, but they do stimulate corporate jet setters.
Republicans did score one victory this week which may come back and bite them on the butt. President Obama passed over consumer advocate Elizabeth Warren for the job of director of the new federal Consumer Financial Protection Bureau after Senate Republicans said they would filibuster her appointment. Warren’s crime was her fight to protect consumers from the big financial firms that rip off working families. Today is the first anniversary of the Wall Street Reform and Consumer Protection Act which Congress passed to curb predatory behavior by Wall Street.
Warren will return to her home in Massachusetts, and she may run against Republican U.S. Senator and Cosmo centerfold, Scott Brown. If the GOP has any hope of taking control of the Senate next year, Brown must win. But polls show that Brown is vulnerable, and Brown has the chops to show blue collar Democrats that Wall Street is the enemy of the working families who have lost their jobs and then their homes in the wake of the great recession, a downturn caused by big business and the bad boy bankers and billionaires that Warren has fought to regulate.
And one last date for all you American history buffs, Tuesday was the anniversary of the day in 1848 when a pioneering women’s rights convention met in Seneca Falls New York. The convention paved the way for way for women like Elizabeth Warren and Michele Bachmann to run for office. By the way, Representative Bachman, the convention was in Seneca Falls, N.Y., not Seneca Falls, N.H., if anyone asks.
By: Brad Bannon, U. S. News and World Report, July 22, 2011
GOP Leaders Must Free Themselves From The Tea Party’s Grip
Media reports are touting the Senate’s Gang of Six and its new budget outline. But the news that explains why the nation is caught in this debt-ceiling fiasco is the gang warfare inside the Republican Party. We are witnessing the disintegration of Tea Party Republicanism.
The Tea Party’s followers have endangered the nation’s credit rating and the GOP by pushing both House Speaker John Boehner and Majority Leader Eric Cantor away from their own best instincts.
Cantor worked amicably with the negotiating group organized by Vice President Joe Biden and won praise for his focus even from liberal staffers who have no use for his politics.
Yet when the Biden group seemed close to a deal, it was shot down by the Tea Party’s champions. Boehner left Cantor exposed as the frontman in the Biden talks and did little to rescue him.
Then it was Boehner’s turn on the firing line. He came near a bigger budget deal with President Obama, but the same right-wing rejectionists blew this up, too. Cantor evened the score by serving as a spokesman for Republicans opposed to any tax increase of any kind.
Think about the underlying dynamic here. The evidence suggests that both Boehner and Cantor understand the peril of the game their Republican colleagues are playing. They know we are closer than we think to having the credit rating of the United States downgraded. This may happen before Aug. 2, the date everyone is using as the deadline for action.
Unfortunately, neither of the two House leaders seems in a position to tell the obstreperous right that it is flatly and dangerously wrong when it claims that default is of little consequence. Rarely has a congressional leadership seemed so powerless.
Compare the impasse Boehner and Cantor are in with the aggressive maneuvering of Senate Republican Leader Mitch McConnell. He knows how damaging default would be and is working with Senate Majority Leader Harry Reid to concoct a way out.
McConnell can do this because he doesn’t confront the Tea Party problem that so bedevils Boehner and Cantor. Many of the Tea Party’s Senate candidates — Sharron Angle in Nevada, Christine O’Donnell in Delaware and Joe Miller in Alaska — lost in 2010. Boehner and Cantor, by contrast, owe their majority in part to Tea Party supporters. McConnell has a certain freedom to govern that his House leadership colleagues do not.
And this is why Republicans are going to have to shake themselves loose from the Tea Party. Quite simply, the Tea Party’s legions are not interested in governing, at least as governing is normally understood in a democracy with separated powers. They believe that because the Republicans won one house of Congress in one election, they have a mandate to do whatever the right wing wants. A Democratic president and Senate are dismissed as irrelevant nuisances, although they were elected, too.
The Tea Party lives in an intellectual bubble where the answers to every problem lie in books by F.A. Hayek, Glenn Beck or Ayn Rand. Rand’s anti-government writings, regarded by her followers as modern-day scripture — Rand, an atheist, would have bridled at that comparison — are particularly instructive.
When the hero of Rand’s breakthrough novel, “The Fountainhead,” doesn’t get what he wants, he blows up a building. Rand’s followers see that as gallant. So perhaps it shouldn’t surprise us that blowing up our government doesn’t seem to be a big deal to some of the new radical individualists in our House of Representatives.
Our country is on the edge. Our capital looks like a lunatic asylum to many of our own citizens and much of the world. We need to act now to restore certainty by extending the debt ceiling through the end of this Congress.
Boehner and Cantor don’t have time to stretch things out to appease their unappeasable members, and they should settle their issues with each other later. Nor do we have time to work through the ideas from the Gang of Six. The Gang has come forward too late with too little detail. Their suggestions should be debated seriously, not rushed through.
Republicans need to decide whether they want to be responsible conservatives or whether they will let the Tea Party destroy the House That Lincoln Built in a glorious explosion. Such pyrotechnics may look great to some people on the pages of a novel or in a movie, but they’re rather unpleasant when experienced in real life.
By: E. J. Dionne, Opinion Writer, The Washington Post, July 20, 2011
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