“Republican Reformers”: Absolutist’s Advocating For No Tax Hikes Of Any Kind For The Rich
It’s been a good week for the intellectual cause of reforming the Republican Party. Ramesh Ponnuru has a sharp op-ed in the New York Times today arguing that Ronald Reagan’s economic program was well tailored to the conditions of 1980, but does not meet the needs of the present day. (Ponnuru could have noted that Reagan himself altered his own program in response to the massive structural deficits it created — the conservative liturgy defines the Reagan gospel as the pure 1981 version.) Bush administration veterans Michael Gerson and Peter Wehner have a longer piece in Commentary arguing along similar lines.
These are smart arguments and I devoutly hope for their success. Yet they contain the same flaws that seem to recur in all the efforts to reform the GOP from within: an unwillingness to identify or confront the forces within the party that prevent these reforms from succeeding.
Yesterday, for instance, Paul Ryan appeared on This Week to argue once again for why Republicans would not accept any new revenue as part of a deficit reduction plan:
But taking tax loophole, what we’ve always advocated is necessary for tax reform, means you’re going to close loopholes to fuel more spending not to reform the tax code. …
So if you take tax loopholes to fuel more spending, which is what they’re proposing, then you are preventing tax reform, which we think is necessary, to end crony capitalism and to grow the economy.
This is pure Republican orthodoxy. What’s remarkable about the ability of anti-tax zealots like Ryan to sustain their position is that it places them in direct opposition to conservative goals on both defense and spending. After all, Obama is offering to cut spending on retirement programs and to cancel out cuts to defense — two things large chunks of the GOP would like — in return for more revenue. He’s not even demanding higher rates. He’s merely asking to reduce tax deductions.
Ryan insists he won’t take the deal, because if he uses the revenue from reducing tax deductions to close the deficit, it won’t be available to reduce tax rates. Every other fiscal priority must give way for the overriding goal of reducing marginal tax rates.
But where are the Republicans speaking in opposition to Ryan and his allies? I haven’t seen a single one. Instead, they ignore the existing configurations altogether. Wehner had a blog post yesterday railing against “the refusal by Democrats to reform entitlement programs in general.” But Obama has been offering to reduce spending on Social Security and Medicare for two years now, in return for Republican agreement to spread the burden of the fiscal adjustment. They won’t take the deal.
Now, maybe Obama’s deal isn’t exactly what Ponnuru, Gerson, and Wehner would like. But if Republicans want to reform their party’s identity and make it into something other than absolutist advocacy of low taxes for the rich, they need to come up with some negotiating position on fiscal issues other than “no tax hikes for the rich of any kind no matter what we get in return.”
By: Jonathan Chait, New York Magazine, February 18, 2013
“A Game Of Chicken”: Republicans Want To Burn The Coop
Well, here we go again. Another season, another manufactured, self-inflicted, completely preventable crisis of government. This time it’s the sequester.
We may as well put these things in the Farmers’ Almanac.
Now we’re engaged in a finger-wagging blame game of who proposed it, who supported it and who is opposed to preventing it.
Let’s lay out some of the facts of this disaster.
The sequester’s origin is quite muddy.
President Obama, responding to Mitt Romney in an October presidential debate, said: “First of all, the sequester is not something that I’ve proposed. It is something that Congress has proposed. It will not happen.”
John Boehner, on the other hand, now says that the sequester is Obama’s baby. In a speech on the House floor this month, Boehner said:
“The president first proposed this ‘sequester’ in 2011 and insisted it be part of the debt-limit agreement.”
In an opinion piece published Wednesday in The Wall Street Journal, Boehner wrote, “Having first proposed and demanded the sequester, it would make sense that the president lead the effort to replace it.”
PolitiFact rated Obama’s claim that the sequester was proposed by Congress as “mostly false” saying:
“It was Obama’s negotiating team that came up with the idea for defense cuts in 2011, though they were intended to prod Congress to come up with a better deal for reining in the deficit, not as an effort to make those cuts reality. Meanwhile, members of both parties in Congress voted for the legislation that set up the possibility of sequestration. Obama’s position is that Congress should now act to avoid those across-the-board cuts. Obama can’t rightly say the sequester isn’t his, but he did need cooperation from Congress to get to this point.”
PolitiFact bases its assessment largely on assertions in the new book “The Price of Politics,” by the renowned Washington Post reporter Bob Woodward.
The Web site does, however, point out that there are dissenting views, including that of Christopher Preble at the libertarian Cato Institute. PolitiFact quotes Preble as saying, “I do not believe it accurate to refer to the cuts that will occur in both defense and nondefense discretionary spending under sequestration as ‘Obama’s cuts.’ ”
And John Avlon, a senior columnist for The Daily Beast, wrote Wednesday that he “happened to come across an old e-mail that throws cold water on House Republicans’ attempts to call this ‘Obama’s Sequester.”
According to Avlon:
“It’s a PowerPoint presentation that Boehner’s office developed with the Republican Policy Committee and sent out to the Capitol Hill GOP on July 31, 2011. Intended to explain the outline of the proposed debt deal, the presentation is titled, ‘Two Step Approach to Hold President Obama Accountable.’ It’s essentially an internal sales document from the old dealmaker Boehner to his unruly and often unreasonable Tea Party cohort. But it’s clear as day in the presentation that ‘sequestration’ was considered a cudgel to guarantee a reduction in federal spending — the conservatives’ necessary condition for not having America default on its obligations.
The presentation lays out the deal in clear terms, describing the spending backstop as “automatic across-the-board cuts (‘sequestration’). Same mechanism used in 1997 Balanced Budget Agreement.”
So, there’s that.
But I’m not sure where all this you- are-the-father origination blame game gets us.
The bill got bipartisan support in the House and at the time Boehner bragged:
“When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.”
And President Obama signed it.
None of this changes the fact that the sequester is still bearing down on us, and it still holds horrible consequences that we didn’t think we’d be facing.
Now we are stuck in a vicious fight about what, if anything, can be done to prevent it and protect an economy that is just beginning to emerge from the muck.
According to the Bipartisan Policy Center, “Our estimate of approximately one million lost jobs due to sequester remains our base case if a full sequester occurs as scheduled on March 1.”
So once again the American people are caught in the middle of a game of chicken between Democrats, who rightly warn that the sky could fall, and Republicans, who want to burn the coop.
Thus far, the president and the Democrats are outmaneuvering the Republicans in the messaging war, but that will be of cold comfort if the Republican hotheads prevail.
Erskine Bowles, the former White House chief of staff for Bill Clinton, and the Bowles half of the Simpson-Bowles Commission, said of impending cuts: “They are dumb and they are stupid, stupid, stupid. They are inane.”
And yet dumb, stupid and inane have become the three pillars of government now that strong-willed, dimwitted hard-liners who see compromise as a dirty word have infiltrated the halls of Congress.
By: Charles M. Blow, Op-Ed Columnist, The New York Times, February 20, 2013
“Ill Omen”: The Country Has A Confidence Problem And It’s Congress’s Fault
The country has a confidence problem, and Congress bears much of the responsibility for it.
That conclusion, drawn by Republican pollster Bill McInturff, carries ill omens as lawmakers seem all but certain to let more than $1 trillion in automatic spending cuts go into effect at the end of the month and with fights over keeping the government funded and raising the debt ceiling looming.
“It is clear we have entered a new phase where the dysfunction and paralysis in Washington is having a significant and deleterious impact on how consumers feel about the overall state of the economy and their personal financial situations,” writes McInturff in an analysis entitled “The Washington Economy.”
As evidence of his assertion, McInturff cites the Michigan Consumer Sentiment Index in the months leading up to the “fiscal cliff” fight last winter. From October to December, consumer confidence dipped from 82.6 to 72.9. (The Michigan Index is based on a 100-point scale.) McInturff notes that the index typically moves only a point or two a month, and that such large-scale moves within such a short time typically require a “signal event” like Hurricane Katrina (a 19.6-point drop in two months), Iraq invading Kuwait (15.4-point drop) or the Lehman Brothers collapse (15-point drop).
The “fiscal cliff” debate (a 9.7 point drop) and the 2011 debt ceiling showdown (15.8) fit neatly into that category of signal events, a remarkable reflection of how what happens — or, more accurately, doesn’t happen — in Washington reverberates around the country. (One remarkable factoid: The drop in consumer confidence during the “fiscal cliff” debate was larger than the one that followed the Sept. 11, 2001, terrorist attacks.)
The Michigan Index is not alone in showing the drastic impact on confidence that the seemingly endless fiscal fights in Washington are causing. In the summer of 2011 — at the heart of the debt ceiling debate — Gallup’s Economic Confidence Index showed a score of -54. (The lowest possible number is -100, the highest is 100.) At the end of 2012, confidence dipped again in the Gallup measurement — down to -22.
Now, it’s not all doom and gloom. Of late, the Michigan Index has been showing increased public confidence, hitting a three-month high of 76.3 this month. And, the Gallup number reached as high as -8 earlier this month —a five-year high— before dipping back down to -13 last week.
But, a look at the longer trend suggests that the country is in the grips of a broader crisis of confidence that Washington is making worse. Looking all the way back to 2008 when Gallup began testing economic confidence, the organization has never — repeat, never — turned out a positive confidence score in its daily tracking polling. And, as McInturff notes, the country is now in the midst of a historically long run of low confidence. It has been 59 months since the Michigan Index dropped below 65 and it has never been back above 85. That’s the longest recovery period of any time since World War II; in 1974, amid the Watergate scandal, the Michigan Index dropped below 65, but 30 months later it was over 85 again.
Then consider that the sequester seems all but certain to kick in on March 1, the potential for a government shutdown on March 31, and the debt ceiling debate returning later this summer and it seems clear that the current bump in confidence is likely to be short-lived. Put another way: We may well be in the eye of an economic confidence hurricane.
What’s clear from all the data is that a federal government that lurches from financial crisis to financial crisis as its normal course of business is doing a great disservice to a country badly looking to finds its footing again.
“It is important leaders in both parties begin to recognize how the tenor, tone and the outcome of the policy debates in Washington are actually retarding economic confidence in a way that makes building a sustained recovery more difficult,” concludes McInturff.
The warnings, from the debt ceiling fight through the “fiscal cliff” crisis, are clear. But, political Washington has shown a remarkable inability to heed them in the past few years. If that doesn’t change in the next three months, the impact on the nation’s economy could be drastic.
By: Chris Cillizza, The Washington Post, The Fix, February 17, 2013
“Joe Scarborough Is A Total Hack”: But Don’t Take My Word For It
In his latest salvo in his back-and-forth with Paul Krugman over the significance of the national debt, Joe Scarborough, writing in POLITICO today, displayed such a foul misunderstanding about economics, Krugman must have choked on his oatmeal laughing as he read it.
In “Paul Krugman is wrong – but don’t take my word for it,” the MSNBC host made the following point:
Investors may be growing skittish about U.S. government debt levels and the disordered state of U.S. fiscal policymaking.
From the beginning of 2002, when U.S. government debt was at its most recent minimum as a share of GDP, to the end of 2012, the dollar lost 25 percent of its value, in price-adjusted terms, against a basket of the currencies of major trading partners. This may have been because investors fear that the only way out of the current debt problems will be future inflation.
It also may have been because space aliens raided the Treasury in the dead of night because Nicholas Cage and Chuck Norris were off duty, having been contracted by the Navy to fight a flotilla of krakens in the Caribbean the week before. Scarborough may as well have argued that, because it would have displayed a better understanding of how foreign exchange markets actually work. The value of the dollar is determined by foreign countries’ demand for it and our supply of foreign exchange. And while foreign investors in 2002 may have begun to fear widening debt that was eventually caused by a recession in 2008 — despite the fact that the housing bubble was far from inflated in 2002 and that these investors eventually failed to foresee the crash itself — it’s more likely that the value of the dollar fell because our current account deficit essentially doubled between 2002 and 2006 (but don’t take my word for it).
Scarborough continued to make arguments that could be debunked by a remedial high school economics teacher shortly after:
More troubling for the future is that private domestic investment—the fuel for future economic growth—shows a strong negative correlation with government debt levels over several business cycles dating back to the late 1950s. Continuing high debt does not bode well in this regard.
While it’s true that government borrowing can “crowd out” private investment by bidding up interest rates, it isn’t currently happening — interest rates remain low. Furthermore, investors seem to have more confidence in U.S. Treasuries than they do in the market (but don’t take my word for it, “investors continue to buy U.S. government debt as a refuge against a renewal of turmoil in global financial markets and concern the U.S. recovery may falter”). The real reason that private investment and government debt appear to have an inverse relationship, both now and during any recession, is that economic contraction causes both tax revenue and private investment to fall.
So whose word should we take?
If you believe that I am wrong and Paul Krugman is right…then take it up with the RAND Corporation whose senior economist wrote everything you have read here other than this concluding paragraph. The debt crisis is real and waiting another decade to fix it is not an option. Anyone who suggests it is operates well outside the mainstream of where serious economists reside.
If the recent financial crash has taught us anything, it’s that “the mainstream of where serious economists reside” is less credible than a bootleg DVD salesman convention. But what’s even more troubling about Scarborough’s column — and POLITICO’s decision to publish it — is that he doesn’t even say whose words we should take or what those words actually are. Scarborough names neither the “senior economist” nor the study or studies that he is citing. Nor does the RAND Corporation even have a single “senior economist” — a search for “senior economist” on RAND’s website indicates that the think tank has at least a dozen “senior economists” on staff. So we can’t even debunk the man inspiring Scarborough to spew such noxious filth. At least we can debunk him.
By: Samuel Knight, Washington Monthly Political Animal, February 16, 2013
“Marco Rubio Is Thirsty”: Forget About The Dry Mouth, The Real Problem Was What He Said
It’s not his fault, really. Maybe it was understandable nervousness—after all, here he was just a few days after being anointed “The Republican Savior” in a Time magazine cover, following the president, but without an applauding crowd to feed off. Or maybe it was that the room was hot and dry. Whatever the cause, after trying to wipe the sweat from his brow and face for 12 long minutes and repeatedly moving his tongue around his mouth to get some moisture going, Marco Rubio decided he just had no choice but to bend down and grab that tantalizing little bottle of water that lay just out of reach.
So don’t blame him for that, even though he’ll no doubt get plenty of mockery for it today. You can blame him, however, for the insipid speech he delivered, a combination of calumny and cliché that demonstrated just why Republicans are having such problems appealing to voters. Let’s start with this:
Presidents in both parties – from John F. Kennedy to Ronald Reagan – have known that our free enterprise economy is the source of our middle class prosperity.
But President Obama? He believes it’s the cause of our problems. That the economic downturn happened because our government didn’t tax enough, spend enough, and control enough. And, therefore, as you heard tonight, his solution to virtually every problem we face is for Washington to tax more, borrow more and spend more.
OK, so that’s not what the President said in his speech, and hearing from a Republican that Barack Obama hates free enterprise ceased to surprise a long time ago. And though Obama has certainly placed part of the blame for the economic downturn on insufficient government oversight of capital markets, the idea that he ever once blamed it on insufficient spending and taxation is obviously, plainly, absurdly false, a lie by any definition of the term. But that doesn’t surprise, either. What is remarkable is that just a few paragraphs after falsely attacking the president’s motives, Rubio says this: “There are valid reasons to be concerned about the president’s plan to grow our government. But any time anyone opposes the president’s agenda, he and his allies usually respond by falsely attacking their motives.”
Come to think of it, that mixture of dishonesty and self-pity may be just what Republican primary voters are looking for in 2016. And one thing they may also be looking for is the assurance that not only are we God’s favorite country, but life everywhere else is an unending nightmare of opportunities denied and dreams dashed. If so, Rubio is ready to oblige:
This dream – of a better life for their children – it’s the hope of parents everywhere. Politicians here and throughout the world have long promised that more government can make those dreams come true.
But we Americans have always known better. From our earliest days, we embraced economic liberty instead. And because we did, America remains one of the few places on earth where dreams like these even have a chance.
Really? America is one of the few places on earth where people can dream of a better life for their children? Oh, please. The truth is that economic mobility in America is lower than in many similar countries (the result of a decades-long trend, and not Barack Obama’s fault, for what it’s worth). The “only in America” canard is a longtime pet peeve of mine, so I have to ask: why is it necessary to extol our country’s virtues by claiming that those virtues are ours alone? Why is it so hard to say that we value hard work and opportunity, and so do many other societies?
Maybe Marco Rubio is the Republican savior. Lots of politicians have given one crappy speech and then gone on to great things, most notably Bill Clinton, whose speech nominating Michael Dukakis at the 1988 Democratic convention was panned for being both dull and ponderously long. Before you know it, this one will be little more than the source of the occasional chuckle, and Rubio will rise or fall based on what he does in a hundred other settings. But it just goes to show that with a few rare exceptions (like this one), delivering the opposition’s response to the State of the Union is likely to do your career more harm than good. If Rubio thought he’d be the one to buck that history, he didn’t get much more for his trouble than a dry mouth.
By: Paul Waldman, Contributing Editor, The American Prospect, February 13, 2013
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