“Your Job Isn’t Safe Until Extremist’s Lose Theirs”: Tea Party Extremism Cost Millions Of Jobs And Risks Millions More
If Americans learn anything from this month’s shutdown-and-debt-ceiling debacle, they ought to realize that political extremism brings real costs—denominated in dollars and jobs as well as national cohesion and prestige—and that those costs are not small. So long as the Tea Party faction continues to wield its malign influence over the Republican leadership in Congress, the threat of further, even worse damage will not subside.
Everyone should heed the clear warning issued by Senator Ted Cruz (R-TX), his cohort on Capitol Hill, and the leaders of outfits such as the Tea Party Express and FreedomWorks, all enraged and determined to lash out again as soon as possible. “This was going to be a multi-stage, extended battle,” said Cruz, “but we’ve also seen a model that I think is the model going forward to defeat Obamacare, to bring back jobs, economic growth…”
Only a dwindling fraction of voters is still mesmerized by such demagogic nonsense, but their anger intimidates enough Republicans to ensure that Cruz and company can seek to sabotage the economy again—and they will. So it is vital for everyone to understand what these vandals have inflicted on us already.
We will probably not know the full cost of the shutdown and the near-default for several months, if ever, but fresh estimates are now arriving daily. According to Standard & Poor’s, the financial ratings agency, the shutdown alone reduced economic activity in the United States by at least $24 billion and cut growth in the current quarter by as much as 0.6 percent. That means a loss of thousands of jobs and billions in household income, just when the economy would traditionally surge upward for the holiday season.
But that is just the beginning of a much grimmer inventory of suffering, which can be traced back more than two years to the first episode of Tea Party debt-ceiling bluster. For that assessment, we can look to none other than the Peter G. Peterson Foundation—named for its creator, a former Republican Commerce Secretary and fanatical fiscal hawk—whose latest contribution to public discourse is a thorough study, with charts, of “the cost of crisis-driven fiscal policy.” Peterson’s full study is worth reading, but its essential points are simple enough.
The repeated manufacturing of partisan fiscal crises has created sufficient uncertainty to reduce growth since 2009 by as much as 0.3 percentage points annually—eliminating as many as 900,000 potential jobs.
Now add on the wrong-headed cuts in federal discretionary spending caused by budget sequestration—the awful “solution” to the 2011 debt crisis. That reduced annual growth by 0.7 points since 2010 and raised unemployment by almost a full percentage point, or 1.2 million lost jobs.
Finally, the report examines two possible economic scenarios that could follow a Treasury default: a “brief” recessionary interlude that would see unemployment jump to 8.5 percent, costing 2.5 million jobs, and a longer, deeper, more volatile recession in which joblessness would rise to 8.9 percent and more than three million jobs would be lost.
Just as disturbing as all this sad waste of human potential is the incredible pettiness of the goals pursued by the Republican leadership. Their ultimate, most pathetic demand was to deny health insurance to their own aides.
So when Ted Cruz and the Tea Party tell you their holy crusade against health care will “bring back jobs,” assume the opposite (and act accordingly). There is no bipartisan compromise on offer here— only more of the same ruinous obstruction, and worse.
Your job won’t be secure until they lose theirs.
By: Joe Conason, The National Memo, October 18, 2013
“Unnecessary And Replaceable”: It’s Time To Take The Debt Ceiling Gun Off The Stage
There’s long been an expression that’s common in theater: if there’s a gun on the stage, it has to go off. It’s a loose translation of something called “Chekov’s Gun,” and I’ve long believed it’s a helpful metaphor for the debt-ceiling law.
The debt ceiling is a gun that’s been on the stage for nearly a century, and from time to time, we’ve seen lawmakers pick it up, play with it, wave it around, and even make threats with it, though thankfully it’s never gone off. But if we want to make sure no one ever pulls the trigger, there’s really only one logical course: it’s time this gun leaves the stage once and for all.
Now that Congress has approved a “clean” debt-ceiling extension, Democrats hope they’ve re-established a governing norm: extortion schemes using the full faith and credit of the United States will no longer be tolerated. When President Obama said last night, “One of the things that I said throughout this process is we’ve got to get out of the habit of governing by crisis,” I took this as a subtle reminder to GOP lawmakers: this particular gambit is over.
Whether Republicans intend to hold the debt ceiling hostage again remains an open question. Last night, Rep. Tom Massie (R-Ky.) conceded, “I’m going to commit candor here: I think we’ll have less leverage on the next CR & the next debt limit.” Around the same time, however, a Senate Republican leadership aide told a Washington Examiner reporter that the party has “no intention of allowing the next debt limit hike to be ‘clean.’”
Let’s consider that sentence, pause for a moment, and collectively bang our heads against our desks.
Policymakers can end the extortion, the economic uncertainty, and the threat of economic calamity by taking this gun off the stage – or at least unloading it. Josh Green recently talked up one of the more sensible solutions.
Back in 1979, the Democratic House Speaker, Tip O’Neill, handed the unhappy job of lining up votes for a debt-ceiling raise to Representative Richard Gephardt, then a young Democratic congressman from Missouri. Gephardt hated this, and, realizing he’d probably get stuck with it again, consulted the parliamentarian about whether the two votes could be combined. The parliamentarian said they could. Thereafter, whenever the House passed a budget resolution, the debt ceiling was “deemed” raised.
The “Gephardt Rule,” as it became known, lasted until 1995, when the new House Speaker, Newt Gingrich, fresh from the Republican triumph of the 1994 midterms, recognized the same thing that Tea Party Republicans recognize today: The threat of default could be used to extort Democratic concessions. Gingrich abolished the Gephardt Rule, and within the year the government had shut down.
Long story short, under the Gephardt Rule, Congress maintains its power of the purse and approves federal spending. If expenditures are greater than receipts, as they nearly always are, it’s simply automatic that the Treasury will have the borrowing authority to pay the nation’s bills. Gingrich ended the practice, but there’s no reason contemporary policymakers can’t bring it back.
If Congress doesn’t like the Gephardt Rule, there are other alternative solutions. Senate Minority Leader Mitch McConnell (R-Ky.), for example, floated a related idea in 2011 in which the debt ceiling would remain in place, but the legislative burden would shift – the White House would have the authority to extend Treasury’s borrowing, and instead of going to Congress for permission, Congress would only have the power to proactively block Treasury. In other words, instead of needing a “yes” from Congress, lawmakers would only have the ability to say “no.”
There’s also the possibility of a constitutional challenge – there’s a credible argument to be made that the debt-ceiling statute itself violates several provisions of the Constitution, including the 14th Amendment, so it should be struck down in the courts. If not, University of Chicago Law School professor Eric Posner recommends a constitutional amendment to prevent disaster in the future.
There are options. The point, though, is simple: the status quo shouldn’t be left in place.
It doesn’t even have to be seen as a partisan issue – Dean Clancy, who works on policy for the far-right FreedomWorks group, recently endorsed scrapping the debt ceiling, too. Everyone from Tim Geithner to Warren Buffett to Alan Greenspan has reached the same conclusion.
Most modern, industrialized countries don’t have a statutory debt limit for exactly this reason – it’s simply too dangerous. It’s time for the United States to catch up and eliminate this weapon before someone – which is to say, us – gets hurt.
By: Steve Benen, The Maddow Blog, October 17, 2013
“John Boehner’s Last Stand”: His Hostage Taking Tactics Remain As Dangerous As Ever
The nature of Speaker John Boehner’s final battle with the White House on the budget crisis is now clear: It doesn’t matter what House Republicans win in exchange for raising the debt ceiling and re-opening government, as long as they win something.
Gone is the big talk about “defunding Obamacare.” Gone are the demands for delaying the health law, or delaying the individual mandate, or delaying the medical device tax. The final stand, according to the latest reports, is simply this: remove the health insurance subsidies for members of Congress, some executive branch officials, and some of their staffs. (Those staff members are furious about the potential cut to their incomes, and many have threatened to quit.)
If that seems a paltry prize to win for causing this destructive, embarrassing crisis, that’s because it is. But this fight really has nothing to do with the subsidies. It’s all about not walking away empty handed, about Mr. Boehner persuading his Republican members that they forced President Obama to give something up in exchange for not wreaking havoc on the economy.
And that’s precisely why the president can’t agree to it, even though the impact (for all but Congressional staffers) would be minimal.
For the sake of the rest of his presidency, and the presidents to come, he has to make it clear that no chamber of Congress can back the White House into a corner by threatening the full faith and credit of the United States. Even a small concession, like ending the Congressional subsidies, would betray that principle.
Of course that position is irreconcilable with the hard-right faction of the House that sees the debt ceiling as the only leverage that can turn them into a real political force. But the unprecedented use of that leverage has to be stopped here, even at a terrible cost, because the long-term cost would be so much worse.
Once Senate Republicans and Democrats began cobbling together their own plan, Mr. Boehner could have ended the crisis by standing back and letting momentum for the Senate plan build. Instead, he chose to sabotage it, because he and the Tea Party faction clearly want to use the power of hostage-taking again.
One of the provisions in the House’s latest plan is a demand that the Treasury not use any special measures to prevent default the next time the debt hits the ceiling — a provision, in other words, that would make default an even more likely possibility the next time than it will be on Thursday, when the Treasury runs out of borrowing authority. (The actual default will probably occur later this month.)
Mr. Boehner may hope that the diminished nature of his final demand about Congressional subsidies will embarrass Democrats into approving it, but his tactics are as dangerous as ever.
By: David Firestone, Editor’s Blog, The New York Times, October 15, 2013
“Government Is Not Just About Sugar”: The GOP Helps Americans Appreciate The Importance Of Government
There’s a lot of terrible news for Republicans inside the new NBC News/Wall Street Journal poll, but one of the worst bulletins is this: Americans are becoming more appreciative of government.
The poll shows that 52 percent of respondents said that government should do more to solve problems and help meet the needs of people. That figure is up four points since June, and is at the highest level since July of 2008, when it stood at 53 percent.
The economic crisis was building during the summer of 2008, and people were growing increasingly weary of President George W. Bush’s laissez-faire attitude. Barack Obama’s more optimistic vision of government’s possibilities became infectious and helped propel him to victory, but after he took office, the popularity of government, as measured by that question, quickly fell and has been below 50 percent for most of his presidency.
Now it is back up, and Republicans have only themselves to thank. There’s nothing better than shutting down government to remind people of how much they need it. The television footage of shuttered offices and national parks, as well as people who are suffering because of lost wages and federal assistance, has had a significant effect.
So did the 2008-2009 recession and its aftermath. More people came into the government’s orbit, seeking assistance or benefiting from stimulus money, including much of the automobile industry. The poll showed that nearly a third of respondents said their family was personally affected by the current shutdown, compared to only 18 percent during the shutdowns of 1995 and 1996. The budget crisis has even made health care reform substantially more popular than it was just a few weeks ago.
This is one of the great existential fears of the right, of course, and is one of the few things uniting the various ideological wings of the Republican Party. Mitt Romney complained about the 47 percent of Americans who were “dependent on government,” and Senator Ted Cruz recently accused Mr. Obama of trying to get Americans “addicted to the sugar” of his health care law.
But this week, Americans know that government isn’t just about sugar. It’s a necessary part of their lives, and Americans expect it to be there when the private sector lets them down, as it did during the recession and as it has done on health care for so many years. Now as the Republicans’ abysmal new approval ratings show, voters are also gaining a clearer picture of precisely who in Washington is letting them down.
By: David Firestone, Editors Blog, The New York Times, October 11, 2013
“Dealing With Default”: Let’s Hope We Don’t Find Out What Will Happen If We Hit The Debt Ceiling
So Republicans may have decided to raise the debt ceiling without conditions attached — the details still aren’t clear. Maybe that’s the end of that particular extortion tactic, but maybe not, because, at best, we’re only looking at a very short-term extension. The threat of hitting the ceiling remains, especially if the politics of the shutdown continue to go against the G.O.P.
So what are the choices if we do hit the ceiling? As you might guess, they’re all bad, so the question is which bad choice would do the least harm.
Now, the administration insists that there are no choices, that if we hit the debt limit the U.S. government will go into general default. Many people, even those sympathetic to the administration, suspect that this is simply what officials have to say at this point, that they can’t give Republicans any excuse to downplay the seriousness of what they’re doing. But suppose that it’s true. What would a general default look like?
A report last year from the Treasury Department suggested that hitting the debt ceiling would lead to a “delayed payment regime”: bills, including bills for interest due on federal debt, would be paid in the order received, as cash became available. Since the bills coming in each day would exceed cash receipts, this would mean falling further and further behind. And this could create an immediate financial crisis, because U.S. debt — heretofore considered the ultimate safe asset — would be reclassified as an asset in default, possibly forcing financial institutions to sell off their U.S. bonds and seek other forms of collateral.
That’s a scary prospect. So many people — especially, but not only, Republican-leaning economists — have suggested that the Treasury Department could instead “prioritize”: It could pay off bonds in full, so that the whole burden of the cash shortage fell on other things. And by “other things,” we largely mean Social Security, Medicare, and Medicaid, which account for the majority of federal spending other than defense and interest.
Some advocates of prioritization seem to believe that everything will be O.K. as long as we keep making our interest payments. Let me give four reasons they’re wrong.
First, the U.S. government would still be going into default, failing to meet its legal obligations to pay. You may say that things like Social Security checks aren’t the same as interest due on bonds because Congress can’t repudiate debt, but it can, if it chooses, pass a law reducing benefits. But Congress hasn’t passed such a law, and until or unless it does, Social Security benefits have the same inviolable legal status as payments to investors.
Second, prioritizing interest payments would reinforce the terrible precedent we set after the 2008 crisis, when Wall Street was bailed out but distressed workers and homeowners got little or nothing. We would, once again, be signaling that the financial industry gets special treatment because it can threaten to shut down the economy if it doesn’t.
Third, the spending cuts would create great hardship if they go on for any length of time. Think Medicare recipients turned away from hospitals because the government isn’t paying claims.
Finally, while prioritizing might avoid an immediate financial crisis, it would still have devastating economic effects. We’d be looking at an immediate spending cut roughly comparable to the plunge in housing investment after the bubble burst, a plunge that was the most important cause of the Great Recession of 2007-9. That by itself would surely be enough to push us into recession.
And it wouldn’t end there. As the U.S. economy went into recession, tax receipts would fall sharply, and the government, unable to borrow, would be forced into a second round of spending cuts, worsening the economic downturn, reducing receipts even more, and so on. So even if we avoid a Lehman Brothers-style financial meltdown, we could still be looking at a slump worse than the Great Recession.
So are there any other choices? Many legal experts think there is another option: One way or another, the president could simply choose to defy Congress and ignore the debt ceiling.
Wouldn’t this be breaking the law? Maybe, maybe not — opinions differ. But not making good on federal obligations is also breaking the law. And if House Republicans are pushing the president into a situation where he must break the law no matter what he does, why not choose the version that hurts America least?
There would, of course, be an uproar, and probably many legal challenges — although if I were a Republican, I’d worry about, in effect, filing suit to stop the government from paying seniors’ hospital bills. Still, as I said, there are no good choices here.
So what will happen if and when we hit the debt ceiling? Let’s hope we don’t find out.
By: Paul Krugman, Op-Ed Columnist, the New York Times, October 10, 2013
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