Why Boehner Must Shut Down The Government
How should Republican leaders deal with the dilemma of being caught between a base that will view any budget deal with President Obama as a sellout and independent voters who are likely to turn on them if they shut down the government? Jonathan Bernstein thinks they should bite the bullet and cut the best deal they can, figuring they’ll get hit by the base no matter what:
what Boehner has to do is to convince Republican Members of the House that the hit they’re going to take from the right for compromising is inevitable. They’ll be seen as sellouts if they cut a deal before a shutdown. They’ll be seen as sellouts if they cut a deal after a six week shutdown. True believers will always be convinced that complete and total victory was just a week away if only the cowardly politicians had been willing to hang in there. They can’t win that game.
Not a bad argument. The counter is that it’s one thing to cut a deal with Obama, and another to be perceived as cutting that deal without really fighting. If Boehner shuts down the government and then cuts a deal, at least he’s demonstrated some willingness to go to the mat and fight, right? Bernstein is right that he’ll have angry Tea Partiers regardless, but I do think he needs to show that he’s fought the good fight. A deal with Obama is bad no matter what, but a deal without a shutdown looks like surrendering the fort without firing a shot.
The other quibble I have with Bernstein’s analysis is that I don’t think he’s really thinking about this the way Boehner is, or even should, be thinking about this. What is the downside to a shutdown? Republicans get less popular, have a lower chance to win the presidency in 2012, and maybe a higher chance of losing the House as well. What is the downside to cutting a deal? GOP backbenchers revolt against Boehner and depose him as Speaker of the House.
If I’m Boehner, I’m more worried about the guns pointed at my back then the guns pointed at my face. A shutdown increases the small chance that he goes from Speaker to Minority Leader in 2013, but a deal increases the chance that he goes from Speaker to (R-OH) in 2011. The right-wingers do not trust Boehner, and he has very little slack. He also lived through a series of purges and attempted purges in the late 1990s, always taking the form of purists complaining that the leadership had gone soft.
Boehner’s top priority is probably staving off internal revolt. That means shutting down the government.
By: Jonathan Chait, The New Republic, March 30, 2011
What A Government Shutdown Could Cost Us
I don’t want to start a market panic here. I’ve no desire to be known for “The Klein Crash of 2011.” But it’s safe to say that much of Washington finds the low, low yields on Treasurys — which represent the market’s serene confidence that the U.S. can handle its debts — a little baffling. Senior government officials have told me they think Treasurys are probably a bit overpriced, which is a bit like the executives of GE privately wondering why investors are so sure they won’t go bankrupt. The investors might be right, but it’s not comforting to hear.
The market isn’t totally wrong, of course. The federal government probably won’t default on its debt. But it’s actually pretty hard to explain how we get the spending line and the revenues line to match each other. And we have a really dysfunctional political system. We’ll figure it out somehow. We always do. But our low borrowing costs are an advantage we want to preserve for as long as possible. That means keeping the market from realizing that partisan polarization mixed with our weird legislative system makes insane outcomes easily imaginable.
This is why a shutdown would be so dangerous. A last-minute deal tells the market that America is a country that dithers and procrastinates and anguishes but eventually makes the necessary decisions to avert terrible consequences. We can be trusted to follow through, even if only at the last minute. A shutdown tells the market that our political system has become so dysfunctional that we actually can’t be trusted.
Asger Lau Andersen, David Dreyer Lassen and Lasse Holbøll Westh Nielsen — remember them? — have looked into how the market treats late budgets in the states — and late budgets in the states, it should be noted, are considerably less public and psychologically disruptive than a shutdown of the federal government during a weak economy. The answer is: not kindly (pdf). “We estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points,” they conclude. To put that in context, economists estimated that if the Federal Reserve pumped $400 billion into the economy, it’d lower yield spreads by about 20 basis points, or two-tenths of a percent. And it actually gets worse than that: “Markets also punish late budgets much more harshly if they occur during times of fiscal stress.”
I think it’d be fair to characterize this as a time of fiscal stress, don’t you?
There are some reasons for optimism here. Markets seem to punish fiscal mismanagement more lightly if the state has access to lots of money, which usually means reserves. The federal government has access to lots of money — though through borrowing, not reserves — so it’s possible we’d get off lightly, too. If you look back to Treasury yields in 1995, you don’t see an obvious change, but (a) perhaps yields would have been lower without the shutdown and (b) the economy is a lot weaker today than it was in 1995. At any rate, do we really want to test this? And if so, how many times? The tea party types are already promising to oppose an increase in the debt ceiling in the absence of massive entitlement cuts. Sen. Marco Rubio says he’ll oppose lifting the debt ceiling unless it’s accompanied by “a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid.” That’s quite a list of demands in order to avoid economic catastrophe.
The irony of all this comes clear if you consider why we’re afraid of deficits in the first place. If the market comes to believe our debt is too large for our political system to pay back, they’ll become more skittish about buying government debt, and that’ll send interest rates higher and the economy lower. But if we have a series of shutdowns while we argue over how much to cut and how fast, our paralysis will convince the market we can’t get our act together in time to pay off our debts and they’ll send interest rates skyrocketing anyway. We’ll have caused exactly what we sought to prevent, and done it now, when the economy is weak, rather than later, when the economy is stronger. As I said at the beginning of this piece, I’d sure hate to be known for causing an economic crash. How about you, Congress?
By: Ezra Klein, The Washington Post, March 30, 2011
The High Price Of Rigidity: The GOP Wants A Government Shutdown
House Republicans have already won so much in this year’s federal budget standoff that they could easily declare victory and put an end to the maddening and dysfunctional cycle. Previous Congresses would have noticed that millions of people are still struggling in an economic downturn and tried to help, but Republicans have succeeded in shutting off that conversation.
They have won the philosophical war, compelling Democrats to agree to tens of billions in spending cuts. Yet that does not seem to be enough for the Republicans who now control the federal steering wheel.
With a hard deadline looming, talks to prevent a government shutdown have been stymied for a week because Tea Party members of the House have demanded everything: not just some of their cuts but almost all of them, and not just a reduction in spending but a reduction only in the programs they don’t like. Many are insisting Democrats also agree to nonbudgetary riders, like ending the financing of Planned Parenthood or health care reform.
They simply will not accede to anything that looks like a compromise with President Obama. Caught in this position, Speaker John Boehner knows the public is likely to blame Republicans for the pain of a shutdown, once it sees that the Democrats offered difficult compromises that his caucus rejected. That is the price he pays for riding to power on the backs of people who don’t understand that government cannot be built out of ideological rigidity.
If Mr. Boehner cannot persuade his members that the public does not want a government shutdown and will blame them, then much of the government will close its doors on April 8, when the current stopgap funding measure runs out. So far, the Republicans have wrung $10 billion in cuts from earlier deadlines, but their bill to butcher the current year’s budget with $61 billion in radical cuts was voted down in the Senate.
Democrats have put together a package of $20 billion in cuts, on top of the $10 billion already agreed to. They have not released the details, but officials say they could include some current spending and some mandatory programs, like agriculture subsidies. This package is likely to be far more painful than the last one and will almost certainly pull back the reins much further than is prudent when the economic recovery is still sputtering. But in the split-the-difference culture of Washington, it will get them halfway toward the Republican goal line, further than imaginable just a few weeks ago.
Does that mean the House will end the week-by-week bloodletting that is already hampering many federal agencies? So far the signs do not look promising. Republicans have told Democratic negotiators that the cuts can only come from their original, rejected bill. Many are still clinging to the ideological riders that will certainly draw a presidential veto. One way or the other, Tea Party lawmakers are about to learn a lesson in how government operates; the only question is whether the public must suffer for their education.
By: Editorial, The New York Times, March 29, 2011
Want To Cut The Deficit? Restore Fair Taxes On Corporations And The Wealthy
If the deficit hawks in Congress are serious about righting our economic ship and reducing deficits in the federal budget and many state capitols, it would we worth listening to the voices rising from the streets suggesting a very different solution than more cuts in safety net programs, education, pensions, and worker’s rights.Greed at the upper echelons of our society is bankrupting our governments at every level. “Suggesting corporations and the wealthiest Americans pay their fair share,” writes Deborah Burger, “usually earns one the reproof of advocating class warfare. But class warfare when practiced by the elites is apparently perfectly acceptable. The average CEO who was paid $27 for every dollar earned by an employer 25 years ago – during which wages have mostly fallen or stagnated – now gets a ratio of about $275 to $1.”
This is not a budget fight, it’s a fight for the future of an America in which everyone should be able to retire in dignity, not worry about whether they can go to the doctor when they get sick, or whether there will still be schools for their kids.
How will we pay for it? By increasing the revenues from those who can most afford it, not by punishing those who have the least. By requiring corporations and the wealthiest individuals to pay their fair share, and stop blaming working people for an economic crisis created by Wall Street and exploited by their politician acolytes.
We’ve all heard the arguments. Pass more corporate tax breaks because that’s what makes the economy grow. Except it doesn’t.
Corporate profits per employee are at record levels. At $1.6 trillion, third quarter 2009 corporate profits were the highest ever recorded. Yet official unemployment still hovers near 9 percent, and the real jobless number is probably double that. Whatever big corporations are doing with their record profits, they are not hiring more workers.
Or the argument that our 35 percent corporate tax rate is one of the highest in the world. Except few if any major corporations pay anywhere near that amount. Half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years from 1998 to 2005, according to a recent Government Accounting Office study.
How do they accomplish this? Pages of corporate tax loopholes that render the supposed tax rate meaningless, loopholes not available to the average working family.
Who are some of those tax scofflaws? Bank of America and Citigroup, two of the financial institutions that, unlike workers did actually create the financial meltdown, paid no taxes in 2009. Boeing, just awarded a new $35 billion contract by the federal government to build airplanes, also paid no taxes between 2008 and 2010 despite recording $10 billion in profits those year, reports Citizens for Tax Justice.
Where’s the shared sacrifice from these corporate giants? Not from General Electric which, as the New York Times reported March 24, made $14.2 billion in profits in 2010, but paid no U.S. taxes, and was rewarded with the appointment of their top executive to head President Obama’s Council on Jobs and Competitiveness. Apparently paying no taxes is a model for how to be competitive.
Then there’s the wealthiest Americans who won a two year extension on tax breaks in December and also profited from the near elimination of estate taxes, at a time when the richest 5 percent of Americans control 23 percent of total income, compared to just 12 percent for the 40 percent at the bottom.
According to Merrill Lynch Global Wealth Management and Capgemini Consulting, there were about 3 million high net worth individuals and ultra high net wealth individuals in the US in 2009, those with investable assets, excluding primary residences and consumables, of from $1 million to $30 million.
Calculations by the Institute for Health and Socio-Economic Policy, research arm of National Nurses United, shows that a one-time wealth surcharge of 14% on those assets would more than pay for the $1.6 trillion budget deficit projection for 2011. Or, it would support about 33.8 million households at the national real median income level for 2008, pay for a year’s worth of AIDS medication for about 142 million patients, or create 34 million jobs at $50,000 per year.
In other words, we could more than balance our federal and state budgets without cutting Social Security or slashing pensions for public servants or depriving students of access to a decent education or far too many Americans of access to healthcare.
Turn off the Fox News echo chamber and you can hear the sounds of those calling for economic justice and a more fair tax system every day in the streets of Madison, Columbus, Indianapolis, and other cities across America. They have opened a door that will not be closed, and their voices are getting louder.
By: Deborah Burger, Originally published March 25, 2011, CommonDreams.org
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 