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“More About Marketing Than Math”: The Tea Party’s Big Idea To Shrink Government Is A Vacuous Nothingburger

Insurgent political movements are usually built around a big idea, like abolition or workers’ rights. The Tea Party certainly has a big idea: Shrink the government.

Wanting to shrink the government is a perfectly reasonable impulse given the state of Washington’s finances. The federal debt has more than doubled as a share of GDP since 2007, and future spending projects are off the charts. The latest academic evidence suggests an increase in government size is associated with slower annual GDP growth.

It’s easy to see why this shrink-the-government idea is powerful, and how it fueled the Tea Party’s rapid ascent into a rocket-powered force on the right.

However, a big idea alone is not sufficiently enough, in and of itself, to guarantee success. And therein lies the Tea Party’s big problem.

The Tea Party’s blueprint for turning their raison d’être into reality is flawed. Called the “Penny Plan,” it’s a favorite of the Tea Party Patriots, media supporters such as Sean Hannity of Fox News, and fellow travelers in Congress, including possible 2016 presidential candidate Rand Paul and — perhaps most importantly — Mike Enzi, the new Republican chairman of the Senate Budget Committee.

First devised by Georgia businessman Bruce Cook, the Penny Plan would cut government spending by 1 percent a year until the federal budget is balanced. After that, federal spending would be capped at 18 percent of GDP, to match the long-term revenue trend. Here’s how Enzi touts the plan on his website:

Though only a 1 percent cut, the savings add up quickly to balance the budget. And if it’s done right, where we’re eliminating duplication and sensibly prioritizing, discomfort will be manageable. … Living with 1 percent less is a small price to pay in order to help bring this country back from the brink of catastrophic fiscal failure. [Enzi]

It sounds so simple! Well, it really isn’t.

For starters, the “penny” part of the plan is a gimmick, more about marketing than math. The Enzi version would cut 1 percent a year from total government spending, other than debt interest payments, for three years. Maybe that doesn’t sound like much. But once you factor in inflation, that works out to a 10 percent cut in real terms after three years.

Now maybe that still doesn’t sound like much. But getting such a reduction is tough enough that there are no details in the Penny Plan about what exactly would be cut. To balance the budget in 2018, according to CBO, it would require $540 billion in reduced spending. It can’t all come from reducing non-defense discretionary spending such as foreign aid or scientific research. That part of the budget, just 17 percent, or around $600 billion, is already at its lowest levels since the 1960s as a share of GDP.

That leads to a bigger problem with the Penny Plan: Is it realistic to cap long-term government spending at 18 percent of GDP — well less than the post-WWII average of 21 percent — when an aging population means increased spending on entitlements such as Medicare and Social Security? Remember, most of the spending increase from health-related entitlements and Social Security — 75 percent over the next quarter century — comes from simple demographics, more people getting benefits over a longer period of time. That works out to about 3 percentage points of GDP in additional spending baked into the budgetary cake. Overall, CBO projects total spending at 26 percent of GDP by 2039.

Just keeping long-term spending at its historic average will be a huge challenge, much less sharply reducing it. If you also want to spend a bit more on important public investments such as infrastructure and basic research while keeping military spending constant — well, good luck. Even the GOP Senate’s new balanced budget amendment — which doesn’t calculate debt interest payments as spending — would have a tough time hitting its 18 percent target.

That the Penny Plan offers zero specifics on how to make the numbers work undercuts its seriousness. It would obviously require sweeping entitlement reform — and more. But Enzi, for one, argues that “we should focus on identifying and eliminating all of the wasteful spending that occurs in Washington before we look to other important programs and services.” That’s an evasion, though hardly a surprising one from a party that depends on older voters.

In fact, some on the right are trying to fudge that political reality by distinguishing between “earned” entitlements — Social Security and Medicare — that go to GOP-leaning voters and “unearned” entitlements — such as Medicaid and ObamaCare subsidies — that go to Democratic-leaning voters.

So yes, the Tea Party has a big idea. But it has no idea how to make it happen.

 

By: James Pethokoukis, The Week, February 19, 2015

February 22, 2015 Posted by | Federal Budget, GDP, Tea Party | , , , , , , , | Leave a comment

“Giving Your Opponents A Choice”: Underscoring The Fact That Sequester Impasse Caused Primarily By House Republicans

There’s a lot of confusion (and in certain Republican and Democratic quarters, consternation) over the president’s dinner with Republican senators last night, touted by all involved as focused on reviving prospects for a “grand bargain” on the budget. But the more fundamental purpose, which couldn’t have been clearer had the participants put up a big marquee sign outside the Jefferson Hotel advertising the theme, was to exclude House Republicans from such convivial discussions as the irresponsible wreckers they undoubtedly are.

So for the president, the strategic value of such gestures is pretty clear, whether or not they materially improve the prospects of an acceptable budget deal. E.J. Dionne lays it out:

From Obama’s point of view, engaging with Senate Republicans now to reach a broad settlement makes both practical sense, because there is a plausible chance for a deal, and political sense, because he will demonstrate how far he has been willing to go in offering cuts that Republicans say they support. In the process, he would underscore that the current impasse has been caused primarily by the refusal of House Republicans to accept new revenues.

While it’s the GOP that has been using serial, self-created crises to gain political leverage, many in the party are no less worn out by them than the Democrats. “Even we are tired of lurching from one cliff to another,” Sen. John McCain (R-Ariz.)told the Wall Street Journal on Wednesday. “I think that’s lending some pressure towards trying to come up with some kind of a grand bargain.”

Such gambits drive some Democrats crazy, partly because they don’t see their utility and partly because they fear Obama will triangulate them and make a deal involving “entitlement reforms” they oppose. But if Obama is simply giving Senate Republicans and the public at large a chance to think about what life would be like if one of our two major parties had not been conquered by ideologues, the price he’s paying may be no higher than the dinner tab.

 

By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, March 7, 2013

March 9, 2013 Posted by | Sequester | , , , , , | Leave a comment

“We Are Not A Deadbeat Nation”: Do Your Duty Congress, Or We’ll All Suffer The Consequences

By the time the president was making his case for the fourth time, the responses started getting a little repetitious, but Obama’s line didn’t change: we’ve already made enormous progress on debt reduction, he’s willing to do more, but a hostage strategy based on the debt ceiling isn’t acceptable.

In fact, the president spent a fair amount of time trying to explain to the public what some reporters occasionally overlook:

“The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to.

“These are bills that have already been racked up, and we need to pay them. So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up. […]

“So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd…. And Republicans in Congress have two choices here: They can act responsibly and pay America’s bills or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”

It doesn’t sound like he’s ready to cave. On the contrary, it sounds like the president is issuing a not-so-subtle challenge to congressional Republicans: do your duty or we’ll all suffer the consequences.

The president went on to say:

“[T]he issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this. Congress authorizes us to pay our bills.

“Now if the House and the Senate want to give me the authority so that they don’t have to take these tough votes, if they want to put the responsibility on me to raise the debt ceiling, I’m happy to take it. Mitch McConnell, the Republican leader in the Senate, had a proposal like that last year, and I’m happy to accept it.

“But if they want to keep this responsibility, then they need to go ahead and get it done. And you know, there are no magic tricks here. There are no loopholes. There are no, you know, easy outs. This is a matter of Congress authorizes spending. They order me to spend. They tell me: You need to fund our Defense Department at such-and-such a level. You need to send Social Security checks. You need to make sure that you are paying to care for our veterans.

“They lay all this out for me, and — because they have the spending power. And so I am required by law to go ahead and pay these bills.

“Separately, they also have to authorize a raising of the debt ceiling in order to make sure that those bills are paid. And so what Congress can’t do is tell me to spend X and then say, but we’re not going to give you the authority to go ahead and pay the bills.”

Obama added that he’s ready to negotiate on debt reduction, and he’s even open to entitlement changes, but he doesn’t intend to reward Congress for doing what it must do anyway.

What’s more, of particular interest was the president highlighting Republicans’ philosophical goals, which have less to do with debt reduction, and more to do with undermining public institutions.

“[I]t seems as if what’s motivating and propelling at this point some of the House Republicans is more than simply deficit reduction. They have a particular vision about what government should and should not do. So they are suspicious about government’s commitments, for example, to make sure that seniors have decent health care as they get older. They have suspicions about Social Security. They have suspicions about whether government should make sure that kids in poverty are getting enough to eat or whether we should be spending money on medical research. So they’ve got a particular view of what government should do and should be.

“And that view was rejected by the American people when it was debated during the presidential campaign. I think every poll that’s out there indicates that the American people actually think our commitment to Medicare or to education is really important, and that’s something that we should look at as a last resort in terms of reducing the deficit, and it makes a lot more sense for us to close, for example, corporate loopholes before we go to putting a bigger burden on students or seniors.”

I’m glad Obama reminded the political world of this basic truth; I get the sense folks sometimes forget what the driving motivations are behind many of our ongoing partisan fights.

 

By: Steve Benen, The Maddow Blog, January 14, 2013

January 15, 2013 Posted by | Congress, Debt Ceiling | , , , , , , , | 1 Comment

“His Centrisim Is Style And Tone”: There’s Absolutely No Reason For The GOP (Or Anyone) To Listen To Jon Huntsman

Former Utah governor, U.S. ambassador to China and failed presidential candidate Jon Huntsman has been making the media rounds recently, sitting down with the Huffington Post and CNN, sharing his big ideas about How to Save the Republican Party From Itself.*

Before we get into those ideas, and their merit, something should be made very clear: It doesn’t matter what Jon Huntsman thinks, at all. Conservatives should feel no obligation to listen to him, because he has no constituency in the Republican Party — no allies, supporters or acolytes. Liberals shouldn’t listen to him because for all his “the GOP must remake itself in my image” talk, he always conveniently forgets to mention that he’s precisely as conservative — on all the same issues — as Mitt Romney is. (Or as Mitt Romney became, as the case may be.) His “centrism” is entirely a matter of style and tone.

For the current budget showdown, he proposes … “entitlement reform,” along with a rhetorical openness to the possibility of maybe allowing the top marginal tax rate to rise, which is what makes him a big pinko now, apparently:

“You will have to have some compromise built in, and perhaps even on the marginal rates going up for a certain income category. My going-in position would be: Let’s work on phasing out all the deductions and loopholes. There is a trillion dollars there. Let’s see where that leaves us and move forward before you start willy-nilly raising taxes.”

Is this appreciably to the left of Mitt Romney’s position?

Jon Huntsman supported the Ryan Plan. During the campaign, Huntsman proposed what was probably the single most regressive, pro-rich tax plan of any Republican candidate. He called for the elimination of the Earned Income Tax Credit — which benefits poor people — along with the abolition of all taxes on capital gains and dividends, which would amount to a massive redistribution of wealth from poor and working people to rich people. This is the guy we’re looking to for serious soul-searching about how the Republicans can make themselves appeal to Americans outside the conservative bubble?

Huntsman’s actual prescription for the party is to make it more palatable to … Northeastern Elites. He wants to drop the “crazy talk” in order to focus more on the hardcore economic conservatism. Sure, he’s not going to be a Norquistian fanatic on the top marginal tax rate, but his plan is still austerity for most. The thing is, that sort of conservatism doesn’t appeal to anyone without money. Race-baiting, immigrant-hating, and war-mongering nationalism are what make the GOP’s economic agenda marketable to the masses. The best-case scenario for a Huntsman-led Republican Party is that they pick off some Dem-supporting “socially liberal” rich people in Maryland and Manhattan and maybe Silicon Valley. Enough to harm Democratic fundraising, but not to win national elections.

Since the end of the Reagan era we’ve essentially had two parties that pursue an economic agenda designed to benefit the rich people, as the poor survive on subsistence benefits and the middle class find themselves joining the poor. The rich people each party represents are generally in different (though often overlapping) industries and sectors — entertainment and finance for Democrats, energy and finance for Republicans — but they are the wealthiest all the same. The differentiating factor was that one party also supported welfare state policies that benefited the very poor and the other party also supported “social issues” that appealed to the religious white middle class. A party that did the opposite of Huntsman’s prescription — one that combined real economic populism with conservative religious appeals, as many pre-civil rights Democrats and populists once did — would almost certainly be much more popular than the current Republican Party. (The enduring popularity of Mike Huckabee, who used to frequently adopt the rhetoric of an economic populist, is evidence enough.) There’s a huge “soak the rich and burn the banks down” constituency out there, and the Democrats — who are terrified of soaking the rich — currently win it largely by default.

Unfortunately for the GOP (but probably fortunately for us secular social liberals), as Josh Barro pointed out last week, the money guys are going to push the “more secular but still pro-rich” brand makeover. And the money people have been in charge for so long that they’ve remade most of the Moral Majority people in their image.

Jon Huntsman, though, is not the man to save the party. Nor is his brother in rebranding hucksterism Bobby Jindal, unless he stops talking like a Rhodes scholar and starts acting more like the Kingfish.

*It bears mentioning that at no point does the Huffington Post’s Sam Stein disclose that his interviewee is the father of a fairly prominent Huffington Post employee.

 

By: Alex Pareene, Salon, December 3, 2012

December 5, 2012 Posted by | Politics | , , , , , , , , | Leave a comment

“It’s Just A Matter Of Math”: President Obama Rejects John Boehner’s “Out Of Balance” Fiscal Cliff Proposal

Sitting down for his first interview since the election, President Barack Obama remained optimistic about reaching a deal on the fiscal cliff, but not before rejecting House Speaker John Boehner’s “out of balance” proposal.

Obama reiterated the need for a balanced approach, dispelling the notion that he was driven by politics—“It’s not me being stubborn, not me be partisan; it’s just a matter of math,” Obama told Bloomberg News’ Julianna Goldman. The full interview can be viewed here.

The president said he was “prepared to make some tough decisions on this issue,” and allowed that he would not get “100 percent” of his demands, but stated that he would not “agree to a plan in which we have some revenue that is vague and potentially comes out of the pockets of middle-class families in exchange for some very specific and tough entitlement cuts that would affect seniors or other folks who are vulnerable.”

Speaker Boehner’s proposal yesterday called for slashing $600 billion in federal health care programs—driven partly by increasing the Medicare eligibility age from 65 to 67—$200 billion in savings by modifying how the government calculates inflation estimates for increasing Medicare and Social Security benefits, and extending the Bush tax cuts for the wealthy.

Obama restated the need for increasing top tax rates, while maintaining current rates for those making less than $250,000. “We’re going to have to see the rates on the top 2 percent go up, and we’re not going to be able to get a deal without it,” he said. The Republican plan proposed generating new revenue by closing special-interest loopholes and deductions while lowering rates. But Obama soon rejected that approach. “If you do not raise enough revenue by closing loopholes and deductions, it’s going to be the middle-class families that make up the difference,” the president said. “And that would be bad for business.”

 

By: Axel Tonconogy, The National Memo, December 4, 2012

December 5, 2012 Posted by | Politics | , , , , , , , , | Leave a comment

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