“Calling The Great Turtle’s Bluff”: President Obama Should Raise The Debt Ceiling Himself
The budget deal that just averted the supposed fiscal cliff was only a warm up. The next fiscal cliff is the $110 billion in automatic budget cuts (sequesters) that last week’s budget deal deferred only until March. But, as long as we are using topographic metaphors, this is less a cliff than a bluff.
On the Sunday talk shows, Republican leaders were full of bravado and swagger. Representative Matt Salmon of Arizona, on CBS “Face the Nation” said it was about time “for another government shutdown.”
Senate Minority Leader Mitch McConnell, speaking with ABC’s George Stephanopoulos, ruled out any further tax increases, declaring that “the tax issue is finished, over, completed.” He insisted, “Now it’s time to pivot and turn to the real issue, which is our spending addiction.”
But is spending really the problem? For most the postwar era, federal tax revenues hovered around 19 percent of GDP, and spending a bit more than that. But for the four years since the financial collapse, federal revenues have been under 16 percent of GDP, thanks to the Bush tax cuts and the weak economy. It’s true that spending is up—it peaked at 25.2 percent of GDP in FY 2009, mainly because of the stimulus. But if it were not for the stimulus, unemployment would be even higher and growth even lower.
The point is that none of these fiscal issues caused the financial collapse, nor are they retarding the recovery. Were Congress to reduce the budget deficit, it would weaken, not strengthen the recovery. That is the real danger of the so-called fiscal cliff.
Spending relative to GDP was as high as 23.5 percent in the Reagan years, a shade above its projected level for this year. So there is no “addiction to spending.” If a free society wants to tax itself more to pay for decent retirement and health benefits, that is a political choice. Even with the slight tax increase of last week’s budget deal, limited to the top one percent, we still have the lowest tax rates of any wealthy country.
Seemingly, the Republicans hold a much stronger hand in the next round of budget talks: If Congress does nothing, the automatic cuts of the sequester take hold.
But Republicans have been blustering on taxes and spending for years. They were never going to raise taxes (Sorry, Grover), but when Obama decided to hang tough they turned around and voted to hike taxes on the richest one percent.
Obama needs to call McConnell’s bluff. On the issue of the debt ceiling, he can invoke his authority under the Fourteenth Amendment, which provides that the U.S. government’s debts must be honored. He’d get wide backing.
On the sequester, Obama can keep Social Security and Medicare cuts off the table. There is more than one way to balance accounts going forward. One way is to raise the ceiling on incomes subject to payroll taxes. That would be a lot more popular than cutting benefits.
And does McConnell really want the sequester to bite, with its $60 billion in Pentagon cuts? In the great budget showdowns of the mid-1990s with Newt Gingrich, Bill Clinton got the GOP to blink first.
If Clinton could achieve that with the Great Newt, Obama can do no less with the Great Turtle.
By: Robert Kuttner, The American Prospect, January 7, 2013
“A Convenient Myth”: Republicans’ Fiscal Restraint Is Mostly In Their Heads
Thanks to an ultraconservative congressional faction, many Americans now view the Republican Party as extremist, petty and irresponsible. You need look no further than the ridiculous, drawn-out drama over the so-called fiscal cliff to see the GOP’s inability to negotiate reality.
But while its brand is badly damaged, the Republican Party has managed to keep alive its mystique as the party of fiscal restraint. Shortly before the election, a Washington Post/ABC News poll showed that, by a margin of 51 percent to 43 percent, Americans believed Mitt Romney would do a better job on the deficit than President Obama. That’s in keeping with years’ worth of public opinion that gives Republicans credit for fiscal conservatism.
But it’s flat-out wrong. That’s just a convenient myth that Republicans have sold the taxpayers — a clever bit of marketing that covers a multitude of sins. There is nothing in the GOP’s record over the last two decades showing it to be a party that is sincere about balancing the budget, ferreting out waste or reining in excessive government spending. Indeed, it’s a big lie.
Just look back at the presidency of George W. Bush — eight years of red ink that Republicans would like you to forget. First, Bush pushed through the tax cuts that ruined the balanced budgets Bill Clinton had enacted. Then, he proceeded to prosecute two wars and enact a huge new entitlement: the Medicare prescription drug plan. In response to concerns about spending from then-Treasury Secretary Paul O’Neill, Dick Cheney reportedly said, “You know, Paul, Reagan proved deficits don’t matter.”
Here’s what Republicans and their base believe in: cutting spending for programs that benefit the poor, the darker-skinned, the sciences. They want to stop the flow of government funds to the arts. They want to fire bureaucrats who prevent businesses from harming their customers with poisons and bad products.
But the GOP doesn’t really want to end big government, nor does it really care about balancing the budget. If it did, wouldn’t its members be ready to tackle the Pentagon? As we wind down a decade of war, isn’t this an excellent time to cut back on hyper-expensive weaponry? Can’t we stop feeding the military-industrial complex?
Instead, House Republicans have done everything they can think of to protect current rates of military spending. Mitt Romney, for his part, campaigned on a promise to build more warships. Please remember that the Pentagon accounts for about 30 percent of federal spending.
Then there are those pesky retirement programs — Social Security and Medicare. House Republicans supported Paul Ryan’s plan to change Medicare to a voucher program, but they did so knowing that it would never see the light of day. If they were so proud of it, why didn’t Ryan campaign on it when he was Romney’s running mate?
Instead, the Romney-Ryan team denounced Obama for making cuts to Medicare. The party that claims the mantle of fiscal responsibility shamelessly pandered to its aging base by blaming Obama for trying to rein in one of the costliest government programs.
Democrats have their own soul-searching ahead on Social Security and Medicare, which cannot be sustained without tax increases, benefit cuts or a combination of the two. (Let me rush to say here that Social Security is a much easier fix. Just hike the payroll tax for people earning more than $114,000 a year.) Medicare costs, especially, are growing at an alarming rate as baby boomers retire.
Still, Tea Partiers — the core of support for arch-conservatives in Congress — aren’t keen on cutting Medicare, polls show. Many of them seem to believe that cutting spending means only cutting that which goes to other people, not to them. Indeed, political science research shows a sharp racial edge underlying those sentiments, with racially resentful whites likely to favor cuts to programs, such as Head Start, which they associate with the “undeserving” poor.
After winning the gavel as House Speaker again last week, John Boehner said the “American dream is in peril” because of debt and pledged to reduce it. As another budget brawl nears — a debt-ceiling fight will be upon us in a couple of months — you’ll hear Republicans frequently claim the mantle of fiscal responsibility.
There is no reason to believe them.
By: Cynthia Tucker, The National Memo, January 5, 2013
“Please Proceed”: The Top Two Words Of 2012 That Describe Republicans Walk Down The Road To Oblivion
So many end of the year lists are cluttered with five, seven or even ten things. Not this one. What we have here is two words, delivered in a single phrase, that didn’t just define the fall election, but reflect the broad political situation going into 2013. Those words?
Please proceed.
These two words, delivered by President Obama at the second presidential debate, have already drawn praise from Markos as his favorite moment of the election season, but they apply far beyond Mitt Romney’s debate stumble.
In saying these words, President Obama invited the Republican nominee to carry on indulging in the right-wing, echo chamber fantasy. Romney’s confidence that the president could not have used the term terrorists in association with the Benghazi attacks was gestated in a conservative movement that’s become so divorced from reality, that it felt free to invent its own narrative of events, and so convinced of its fantasies that it felt sure they would be accepted by everyone else.
It can be argued that those words were not all that important in securing the election. By that point, whatever temporary boost Romney (remember him?) had gained in the first debate had already faded in all but the most Republican friendly—and ultimately inaccurate—polls. However, that moment was important as the point where one thing became crystal clear to a majority of Americans: Republicans have gone crazy. Granted, that’s been true for awhile, and absolutely definitively true since the elections in 2008, but Romney’s high-profile walk through conservative conspiracyland was the nail in the coffin for the GOP as a reasonable, mainstream alternative.
Those words continue to fit. They could be used at any point in the last month as the Republicans proved themselves ever further divorced from the national will. Please proceed in your rigid ideology that places minor adjustments in the top tax rate over the economy and jobs. Please proceed in hyperbolic attacks on modest changes in the health care system. Please proceed in blind obedience to the NRA even as they turn every school in America into Thunderdome Elementary. Please proceed to publicly, loudly demonstrate that you’re being driven by demons of orthodoxy … with no real idea who defines what’s orthodox.
Really, GOP, please proceed.
It’s far too early to write an obituary for the Republican Party. They’ve stumbled from their deathbed in the past, flooding midterm voting booths with tea party zombies that still stink up the House and far too many state legislatures across the country. But in 2012, they showed a remarkable ability, not to recover from mistakes, but to proceed down the road that leads to oblivion.
By: Mark Sumner, Daily Kos, December 31, 2012
“Deeply Irresponsible”: It’s Clear Now Why The “Boehner Rule” Is Such A Terrible Idea
The GOP’s insistence on using the debt ceiling as “leverage” is deeply irresponsible.
But politics and philosophy aside, let’s quickly examine the practicality of the GOP’s stance in these negotiations.
In 2011, when the GOP made its debt ceiling stand, there emerged a concept now known as “The Boehner Rule” which basically says that any debt ceiling hike has to be matched dollar for dollar with cuts. So a $1 trillion hike to the debt ceiling must see $1 trillion in cuts, and so forth.
Already, everybody hates the fruits of the 2011 fight, because now we have the “sequester” which caps spending on defense and other domestic programs — which is something that everybody wants to undo.
But even though everyone hates what came out of the 2011 fight, the GOP is at it again.
Senator Bob Corker said this weekend that a good trade will be a debt ceiling hike for cuts to Medicare.
From Burgess Everett at POLITICO:
Tennessee Sens. Bob Corker and Lamar Alexander pitched a plan on Friday to cut federal spending by $1 trillion — much of it from Medicare — in exchange for increasing the nation’s borrowing limit by that amount. The plan would raise the Medicare eligibly age to 67 and require wealthier Medicare users to pay higher premiums. Treasury Secretary Tim Geithner has estimated extraordinary measures can push the necessity of Congress addressing the debt ceiling until perhaps February.
“Here we are on Dec. 29 without a serious proposal before us to deal with the biggest issue, which is entitlements,” Corker said. “There’s been a lot of discussions about figuring out a way to deal with the … revenue side and at least getting that portion out of the way. Since we know it’s going to happen either before the 31st or after.”
(As an aside, remember that less than two months ago, the GOP was still bashing Obama for Medicare cuts, so… yeah.)
Tonight Corker is talking about tying a debt ceiling hike to Social Security cuts.
So okay, let’s imagine Obama caves on this (something he’s already pledged not to do). So we hike the debt ceiling and cut medicare. Then in a year or so, we hike the debt ceiling again by another $1 trillion and cut Social Security. These programs can’t be cut forever. If we raise the Medicare eligibility age to 67 now, we’re not going to come back and raise it to 68 or 69 the next time the debt ceiling fight comes up.
There just aren’t that many times you can keep squeezing another $1 trillion in spending cuts. The “Boehner Rule” might give you a couple of whacks, but as an actual policy it will quickly fail.
So practically, risking the U.S. full faith and credit every time this comes up, to being able to agree on new spending cuts is unrealistic. And as a matter or principal it’s awful.
By: Joe Weisenthal, Business Insider, December 30, 2012
“Leaping Lizards And Other Reptiles”: Senate Showdown Set For Today On Fiscal Cliff
Fiscal talks took a step backwards earlier today when Republicans insisted on including chained CPI in the agreement. A Senate Democratic aide told me this afternoon, “We believed it was mutually understood that chained CPI was off the table for a smaller-scale agreement, and see Republicans’ continued insistence on including it as a major setback.”
Democrats held firm, and soon after, GOP members backed off — at least on this one provision.
Negotiations over a last-ditch agreement to head off large tax increases and sweeping spending cuts in the new year appeared to resume on Sunday afternoon after Republican senators withdrew a demand that any deal must include a new way of calculating inflation that would lower payments to beneficiary programs like Social Security and slow their growth.
Senate Republicans emerged from a closed-door meeting to say they agreed with Democrats that the request — which had temporarily brought talks to a standstill — was not appropriate for a quick deal to avert the tax increases and spending cuts starting Jan. 1.
To hold the line against raising taxes on high-income households while fighting for cuts to Social Security was “not a winning hand,” said Senator John McCain, Republican of Arizona.
Imagine that. Republicans were, in effect, arguing, “We’ll raise middle class taxes unless Democrats accept Social Security cuts.” It would seem “not a winning hand” is an understatement.
But while the GOP’s shift in posture helped keep the talks from collapsing entirely, the remaining areas of disagreement — estate taxes, the sequester, extending jobless benefits, a debt-ceiling extension — have not been, and may ultimately not be, resolved.
With this in mind, the stage has been set for an interesting Senate showdown tomorrow.
On the one hand, there are the ongoing efforts to reach a compromise. Senate Majority Leader Harry Reid (D-Nev.) had nothing more to offer Senate Minority Leader Mitch McConnell (R-Ky.), so the Republican has now begun negotiating with Vice President Biden.
If they can work something out — what such an agreement might look like is hard to imagine at this point — the bill would be brought to the Senate sometime after 11 a.m. tomorrow. And if it were to pass, the House would have a half-day, or perhaps a little less, to consider the agreement, bring to the floor, and vote on it.
On the other hand, if no Senate deal emerges, Reid will take President Obama’s advice, bring the White House’s original offer — lower rates on income up to $250,000 and extended unemployment benefits — and dare Senate Republicans to filibuster it.
And what about the House? Leaders in the lower chamber aren’t saying much at this point, in large part because they have no idea what the Senate will do, but the House is already prepared to waive its three-day rule — the measure intended to give members time to read a bill before voting on it — and House Speaker John Boehner has already committed to both sides that he will bring to the floor any bill that passes the Senate.
We’ll know a bit more by morning.
By: Steve Benen, The Maddow Blog, December 30, 2012
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