The Minnesota Shutdown – A Glimpse Into The Nation’s Future And The GOP’s True Intentions
A telephone help line service for the elderly will not be ringing today in Minnesota.
Blind residents reliant on state funding for reading services will remain in the dark for as long as the government’s lights are turned off. Poor families who receive subsidies for childcare are on their own. The St. Louis Park Emergency Program’s food shelf will have bare pickings for those who depend on the program for sustenance. The Community
Action Center of Northfield will likely be forced to close down its homeless shelter without the state funding upon which it relies to house the homeless.
And yes, 23,000 state workers will be trying to figure out how to care for their families without a paycheck for the duration along with an estimated 5,000 to 10,000 construction workers who will be laid off as the state shuts down dozens of road and highway projects.
These are but a few of the consequences of the shutdown of Minnesota’s government.
At issue is how to close a $5 billion deficit in the state left by the previous Minnesota governor, Tim Pawlenty.
Minnesota Governor Mark Dayton, a Democrat, had tried to bargain his way toward an agreement by offering up massive cuts in state services. In return, he asked the Republicans to agree to a tax increase for the wealthier citizens of the state to make up the remainder of the funding required to close most of the gap in the budget.
But the Republicans held firm on taxes – even when Dayton made his final offer that would have placed an additional 3% tax on only those Minnesotans earning over $1 million a year, a burden that would have been placed on just .03% of all Minnesotans.
It’s not so much that the state’s GOP leaders had a violent, allergic reaction to those earning seven figures a year having to pay a few percentage points more in taxes. What appears to have ended negotiations were the
Republican demands that Governor Dayton agree to their social agenda issues, including Voter ID legislation and abortion restrictions, as the price for the Republicans allowing the very wealthy to pay a little more.
When the Governor refused to swallow the notion that the conservative social agenda should be used as a tool to resolve budgetary issues, the talks broke down and the lights at the statehouse were turned off.
So, you might wonder, how did the Minnesota GOP suggest that the gap in the finances be met even as they seemed to realize that there was little left for the Governor to offer on the cutting side of the ledger?
You won’t believe it.
The Republicans actually proposed creating more debt to close the gap.
The GOP proposed delaying another $700 million in payments owed to schools, which would add to the more than $1 billion the state already owes K-12 schools.
Republicans also offered to issue “tobacco bonds” of an unspecified amount to cover any remaining budget gap. Sources said Dayton considered the offer, but he criticized it as unwise borrowing late Thursday. Via The Star Tribune
I guess a Republican has to do what a Republican has to do when it comes to protecting the wealthiest in the state from paying a higher tax rate- even if it means creating more debt despite a GOP platform that, allegedly, abhors debt.
If you find the lessons of Minnesota disturbing, get used to it.
What you are seeing is simply the national debate playing out on a smaller stage. I suppose this is what Republicans mean when they suggest using the states as laboratories for what will and won’t work on the national level.
You can bet that every political player on the national stage will be watching to see how the Minnesota public reacts to their situation along with which party gets the lion’s share of the blame for bringing this blight upon their land.
If Governor Dayton caves and simply accepts the GOP budget, we can expect that our Congressional Republicans would take great heart in such an occurrence and be emboldened to stick with the plan.
If the GOP legislators begin to fear that their jobs may be in jeopardy as punishment for shutting down the state in order to protect a little more than 7,000 Minnesotans earning at least a million bucks a year, that too will be noticed.
Watch the polls in Minnesota over the next week or two. They may tell you everything you need to know about what is likely to happen as we move towards resolving the debt ceiling debate.
By: Rick Ungar, The Policy Page, Forbes, Junly 1, 2011
John Adams On The First Independence Day
On the morning of July 3, 1776, John Adams, delegate to the Second Continental Congress from the Massachusetts Bay Colony, wrote his wife Abigail:
Yesterday the greatest question was decided, which ever was debated in America, and a greater, perhaps, never was or will be decided among Men. A resolution was passed without one dissenting colony ‘that these United Colonies are, and of right ought to be, free and independent states, and as such they have, and of right ought to have, full power to make war, conclude peace, establish commerce, and to do all the other acts and things which other states may rightfully do.’ You will see in a few days a declaration setting forth the causes which have impelled us to this mighty revolution and the reasons which will justify it in the sight of God and man. A plan of confederation will be taken up in a few days.
When I look back to the year of 1761 and recollect the argument concerning writs of assistance in the superior court, which I have hitherto considered as the commencement of the controversy between Great Britain and America, and run through the whole period from that time to this, and recollect the series of political events, the chain of causes and effects, I am surprised at the suddenness as well as greatness of this revolution. Britain has been fill’d with Folly and America with Wisdom, at least this is my Judgment.
Time must determine. It is the will of Heaven that the two countries should be sundered forever. It may be the will of Heaven that America shall suffer calamities still more wasting and distressing yet more dreadful. If this is to be the case, it will have this good effect, at least: it will inspire us with many virtues, which we have not, and correct many errors, follies, and vices, which threaten to disturb, dishonor, and destroy us. The furnace of affliction produces refinement, in states as well as individuals. And the new governments we are assuming, in every part, will require a purification from our vices and an augmentation of our virtues or they will be no blessings.
The people will have unbounded power. And the people are extremely addicted to corruption and venality, as well as the great. I am not without apprehensions from this quarter, but I must submit all my hopes and fears to an overruling Providence, in which, unfashionable as the faith may be, I firmly believe.
In the evening, he sent a second letter, in which he wrote:
The second day of July, 1776, will be memorable epocha in the history of America. I am apt to believe that it will be celebrated by succeeding generations, as the great Anniversary Festival. It ought to be commemorated, as the day of deliverance by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp, shews, games, sports, guns, bells, bonfires and illuminations, from one end of the continent to the other, from this time forward forever.
You will think me transported with enthusiasm; but I am not. I am well aware of the toil, and blood, and treasure, that it will cost us to maintain this declaration, and support and defend these states. Yet, through all the gloom, I can see the rays of light and glory; I can see that the end is more than worth all the means, and that posterity will triumph, although you and I may rue, which I hope we shall not.
Happy Birthday America.
By: Peter Roff, U. S. News and World Report, July 3, 2011
Mitch McConnell’s Insincere Invitation
One can only dream of a Republican Party led by grown-ups. Instead, we have this.
Senate Republican Leader Mitch McConnell (R-Ky.) challenged President Obama on Thursday to meet with Senate Republicans to hear firsthand about the political reality of passing tax increases through Congress.
A day after Obama challenged Republicans to give up special tax breaks for corporate jets and major oil companies, McConnell issued a challenge of his own on the Senate floor.
“I’d like to invite the president to come to the Capitol today to meet with Senate Republicans. Any time this afternoon if he’s available, to come on up to the Capitol,” McConnell said. “That way he can hear directly from Senate Republicans … why what he’s proposing will not pass.”
McConnell says once Obama learns from GOP lawmakers that ending special tax breaks for oil companies and wealthy families has no chance of passing the Senate, “we can start talking about — maybe, finally — start talking about what’s actually possible.”
Let me summarize the message McConnell announced this morning: “If the president has some free time in a few hours, he should stop by and listen to us tell him we want to lower the deficit, but only in ways we see fit.”
Soon after, White House Press Secretary Jay Carney told reporters the president need not hear Republicans “restate their maximalist position,” adding, “We know that position. That’s not a conversation worth having.”
Of course not. Everyone knows what everyone thinks and everyone’s position at this point. Obama doesn’t need to listen to Republicans demand 100% of what they want, anymore than McConnell needs to listen to Democrats tell him he can’t get 100% of what he wants.
This entire process made a right turn at farcical quite a while ago. Mitch McConnell isn’t just threatening to crash the economy, he’s also threatening to make mockery of the institution he claims to serve and turn the American political process into a reality-show circus.
Not to be outdone, NRSC Chairman John Cornyn (R-Texas) said President Obama has “diminished” his office by urging lawmakers to do their duty. If anyone explain what on earth Cornyn was blabbering about, I’m all ears.
And then there’s Sen. John Thune (S.D.), the chairman of the Senate Republican Policy Committee, who told Fox News this morning that the president goes golfing too much.
These aren’t random House backbenchers — McConnell, Cornyn, and Thune are three of the top four highest-ranking Republican members of the Senate. And they all appear to be rambling incoherently.
I was about to type that there are no adults left in the Republicans’ room, but that’s not entirely true. There are still a couple left, but they’re stuck in primary fights, so they have to go along with the madness to save their careers.
It’s a pathetic display.
By: Steve Benen, Contributing Writer, Political Animal, The Washington Monthly, June 30, 2011
Debt Ceiling Hostage Taking: Section 4 Of The 14th Amendment Was Designed To Stop John Boehner
Kevin Drum is skeptical that the Obama administration would really be within its rights to ignore the debt ceiling:
Maybe I’m missing something here, but it strikes me that this doesn’t come close to implying that the debt ceiling is unconstitutional. What it really suggests is merely that the public debt is the only untouchable part of the federal budget.
Jack Balkin delves into the legislative history and shows why the 14th Amendment has a provision guaranteeing the debt in the first place. The sponsor of the provision, Benjamin Wade, wrote at the time:
[The proposed amendment] puts the debt incurred in the civil war on our part under the guardianship of the Constitution of the United States, so that a Congress cannot repudiate it. I believe that to do this wil give great confidence to capitalists and will be of incalculable pecuniary benefit to the United States, for I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.
Balkin explains:
If Wade’s speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debts from partisan struggle. Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they disliked politically. More generally, as Wade explained, “every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
Like most inquiries into original understanding, this one does not resolve many of the most interesting questions. What it does suggest is an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.
In other words, it’s in the 14th Amendment to guard against exactly what Congressional Republicans are doing right now.
Balkin does not suggest, nor do I, that the legal merits are open and shut. It’s certainly risky to take a flyer in the middle of a debt crisis. But if we do reach h-hour, we’re probably better off if the Treasury simply announces it’s going to continue to pay the bills and dares Republicans to take them to court than repudiating the debt, right?
Matt Steinglass argues that the Supreme Court would likely side with the Treasury:
If there’s one thing we’ve learned in the past 11 years, it is that the Supreme Court’s decisions on critical issues are very strongly influenced by political pressure. In a situation where the entire weight of world bond markets was bearing down on Anthony Kennedy’s head, would he really vote to crash the economy and destroy the credit rating of the United States? Would any individual do that? I don’t think even Eric Cantor would, if he were solely and publicly responsible for the decision. The ability of the GOP to push the government to the brink of default, and possibly ultimately over it, depends on the diffusion of responsibility: Republicans can only do it because they can hold Democrats to blame. It’s also driven by political vulnerability: Republicans have gotten themselves into a spiraling tea-party-driven political dynamic where they seem, on issue after issue, to be incapable of voting for any proposals that a Democrat might be able to accept, for fear of the consequences from their base. Anthony Kennedy does not have to fear a primary challenge, and if the United States’ ability to pay its debts comes down to his single vote, he’ll have no excuse. Maybe I have no idea how these things work. But I can’t see a Republican Supreme Court going toe to toe with the entire massed forces of Wall Street and not blinking.
A point that I think is worth drawing out here is that it’s not even clear the GOP leadership wants the power to take the credit of the Treasury hostage, or — more likely — if it’s simply been forced into this position by a financially uneducated base. Republicans in Congress might be relieved to have a deux ex machina absolve them of the need to walk a fine line between the demands of the base and the demands of their business constituency.
By: Jonathan Chait, The New Republic, July 1, 2011
Why The Debt Ceiling Debate Matters Now
If Congress doesn’t act soon, interest rates could spike–maybe for a long time. Then you’ll care.
The White House and Republican congressional leaders insist the debt ceiling will be raised well before the United States has to default, which would cause massive economic disruption. But a resolution seems less than assured. In the last few days, Republican presidential candidates Michele Bachmann and Tim Pawlentyhave joined a growing conservative chorus loudly denouncing a deal, and antagonism among the various parties appears to be growing, not diminishing.
Still, nobody in Washington or on Wall Street seems very alarmed. The Treasury says it can hold out until Aug. 2. But a look at the current politics and the recent history of debt-ceiling showdowns suggests that alarm might soon become warranted.
There are two reasons why. The first has to do with how difficult it will be to settle on something that can get through Congress in time to stave off any damage. This struggle has been largely misportrayed and crudely simplified as a tug-of-war between Republicans set on spending cuts and Democrats who want tax increases to accompany them. It’s actually a three-way struggle, because Republicans themselves don’t agree on their ransom demands to permit a larger debt.
House Republicans want to cut $2 trillion without raising any taxes or closing any loopholes. They’re focused strictly on spending. But Mitch McConnell, the Republican Senate leader, wants any deal to include Medicare reform. He’s focused on politics. McConnell worries that the House Republican budget passed in April, which takes the deeply unpopular step of privatizing Medicare, presents a mortal threat to Republican candidates in next fall’s elections. A debt-limit deal on Medicare that drew the support of President Obama and Democrats would inoculate the GOP against this danger.
The trouble is, House Republicans don’t share McConnell’s concern, so an agreement among Republicans seems nearly as remote as one between Republicans and Democrats.
That gets to the second reason for alarm: the United States need not default on its debt in order to incur costly and potentially lasting damage. A February report by the Government Accountability Officeexamining the recent history of “debt-ceiling events” — none nearly so serious as the current one — showed that government borrowing costs began to rise well in advance of default. Call it a taxpayer premium for congressional squabbling: the disruption of Treasury auctions and the threatened loss of liquidity among Treasury notes and bills caused billions in additional borrowing costs in the form of higher interest rates.
One reason why the debt showdown isn’t causing more alarm is that interest rates have been falling. But that’s due mostly to declining economic forecasts in the United States and fear of a Greek default — currently more powerful influences, but also ones that would mask worries about a US default.
At some point, perhaps as soon as in a few weeks, the fight in Congress could eclipse those factors and drive interest rates higher. That’s been the historical pattern, and it is already causing worry about what might trigger such a rise. “The nervousness on our end is that the markets will misperceive what’s going on,” an aide to a conservative House Republican told me. “If something fails on the House floor, people might react as if all life is about to end — just like they did when the TARP vote failed.”
That could cost taxpayers dearly, even if a default is ultimately avoided. One reason why US borrowing costs are so low is the universal belief that the government will always make good on its debts in a timely manner. But if that faith is shaken — and a good scare could do the trick — investors might decide that government debt is a riskier investment than they had imagined and demand a better return.
That will hurt. The Office of Management and Budget determined that a mere 1 percent rise in interest rates would cost taxpayers $973 billion over the next decade [pdf, pg. 23]. So a fight purportedly about cutting the deficit could actually cause it to grow much larger. That’s worth worrying about now — especially as Republicans threaten a default and claim there’s no cause for alarm.
By: Joshua Green, Senior Editor, The Atlantic, June 30, 2011
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