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
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
Americans Finally Realize GOP Handling Debt Debate Poorly
And the loser is… the GOP!
Or so says the latest CBS poll showing 71 percent of Americans don’t like the GOP’s handling of the debt crisis. And why would they? Americans have shown in polls, time and time again, that they want both sides, Democrat and Republican, to work together to get business done in Washington. To get the business of raising the debt ceiling done, that takes compromise; a word I fear Republicans don’t like or perhaps aren’t that familiar with. A great man once told me the best negotiations are when both parties leave the room winning and losing. The president has shown his ability to compromise; he put cuts to Medicare and Social Security on the table. Heck, he’s even willing to talk about cuts rather than just raising the debt ceiling on his own!
To read the polls is not only confusing, but it shows how confused we the people are. Some polls show Americans want to cut spending, but they don’t want to raise taxes. Other polls show a majority of Americans want the Bush tax credits to end for the wealthy. And after Rep. Paul Ryan put forth his machete to Medicare, he was booed at town hall meetings, and a Democrat won a congressional seat in a district which had been a Republican stronghold for decades.
This current proposal by Republicans is not a GOP plan, it’s a Tea Party debt plan, appealing to the overwhelming minority of their base, obviously pandering to the “Teapublicans” for their cash for the upcoming election.
It sickens me when I hear the GOP talk about leaving something for our children and future generations when their proposals cut more education and Medicare and Social Security, making those programs a memory for our children. And without them, our children will be financially strapped, taking care of sick and elderly parents and grandparents.
These poll numbers show the GOP cannot even convince their own party of what they’re doing, which is obviously playing politics and puffing their chests out like chicken hawks, trying desperately not to blink first in this game. And for all their talk about the Democrats’ scare tactics, the poll shows the majority feel the president raises valid concerns if the debt ceiling is not lifted.
My favorite president, and a man who I think is the most intelligent of all of them (maybe not in choices he made in his personal life), is Bill Clinton. President Clinton says he would raise the debt ceiling using powers granted under the 14th Amendment—“validity of the public debt shall not be questioned…”
Maybe it’s time President Obama took a page from the Clinton handbook and took his advice. After all, he was a constitutional lawyer. If President Obama stops the economy from going into a double dip recession by raising the debt ceiling, he’ll not only be re-elected, he’ll show America that the GOP are the losers, and prevent the American people from being so—which is what would happen if he signed that GOP plan into law.
By: Leslie Marshall, U. S. News and World Report, July 20, 2011
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