“A Deal For All”: A New Focus For Congress Called “Fixing The Economy”
The Perils of Pauline melodrama over the “fiscal cliff” will drag on as Washington heads toward another “debt ceiling” faceoff that will climax over the next eight weeks or so.
This farce captivates the media, but no one should be fooled. This is largely a debate about how much damage will be done to the economic recovery and who will bear the pain. There is bipartisan consensus that the tax hikes and spending cuts that Congress and the White House piled up to build the so-called fiscal cliff are too painful and will drive the economy into a recession. So the folderol is about what mix of taxes and spending cuts they can agree on that won’t be as harsh.
Largely missing is any discussion of how to fix the economy, to make it work for working people once more. Just sustaining the faltering recovery won’t get it done. We’re still struggling with mass unemployment, declining wages and worsening inequality. Corporate profits now capture an all-time record percentage of the economy; workers’ wages have hit an all-time low. A little constriction, or a lot, won’t do anything to change that reality.
So how about a New Year’s resolution for Washington’s political class: Vow to focus on what can be done to fix the economy, rather than on how much to lacerate it. That would require dealing with causes, not effects. And those surely would include:
Inequality: Clearly — as even the International Monetary Fund has recognized — extreme inequality saps the effective demand needed for a robust economy.
We need to rebuild a middle class if we want to again have a vibrant, growing economy. That requires a lot more than repealing the Bush tax breaks for the top 2 percent. We should be lifting the minimum wage, empowering workers to bargain for a fair share of the productivity and profits they help to generate, and limiting CEO pay packages that give them multimillion-dollar incentives to ship jobs abroad or plunder their own companies. Congress and the White House might also imitate the Federal Reserve and keep pressing the stimulus pedal until we move much closer to full employment.
Catastrophic climate change: Gross domestic product registers growth when people go to work picking up the pieces after a climate disaster, but Americans suffer rather than benefit. It’s long past time for the United States to get serious about global warming, make the investments needed to capture a lead in the green industrial revolution that is sweeping the world, end the subsidies to Big Oil and King Coal, and help the movement to clean energy.
Fixing health care: The wrongheaded agonizing over whether to cut scholarships for poor students or lay off food inspectors ignores the gorilla in the accounting books. Our long-term budget deficits are a consequence of our broken health-care system. If we spent per capita what other industrial nations spend on health care (with, incidentally, better health results), we would be projecting surpluses. This isn’t about stripping 65-year-olds of Medicare; it’s about taking on the drug and insurance companies and hospital complexes that drive up our costs. Affordable health care is a right, not a privilege.
Rebuilding America. While Washington hyperventilates about cutting spending, the excesses of this conservative era have starved society of essential building blocks. A high-wage economy needs a modern, efficient, world-class infrastructure to be competitive. Families depend on effective governance for clean air and water, safe sewage, enforcement of occupational safety standards, world-class schools and more. Our debate has deteriorated to the point that a Democratic president brags that domestic discretionary spending — which covers basic public services from the Coast Guard to child nutrition — will be cut to a share of the economy not seen since Eisenhower. That is, in a word, goofy.
Why not at least begin an informed discussion of the services we need and the ways we can afford them?
The Congressional Progressive Caucus has started that discussion with its “Deal For All” — a smart mix of fair-share taxes and cuts designed to ensure that those who never benefited from “shared prosperity” don’t get whacked unjustly by the prevailing mantra of “shared sacrifice.”
Americans, sensibly enough, will grow more disgusted with Washington whatever resolution is reached on the fiscal cliff over these next weeks. Politicians will continue to fight about how much damage to do, not how to build what comes next. What the country needs is legislators who will focus on building rather than dismantling.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, December 31, 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
“A Pig By Any Name Is Still A Pig”: Why Congress Cannot Operate Without The Bribing Power Of Earmarks
It seemed like a great victory at the time.
After years of federal taxpayer dollars being misappropriated to pay for pet projects in the districts of congressmen and senators looking to curry political favor with the voters back home, a moratorium was passed in 2011 ending the Congressional pork parade known as “earmarking”.
It appeared to make sense. Federal taxpayers had grown sick and tired of paying the bill for something like the construction and renovation of a botanical garden project in Brooklyn, New York when such a project, obviously, had nothing to do with core federal objectives, serving only to improve the re-election prospects of the Congresswoman who brought the money home to Brooklyn—along with the few Americans who spend their Saturday’s enjoying a picnic in the greatly improved botanical gardens at your expense and mine.
While the concept of earmarking—at the outset—had merit in that it compensated for the inability of the executive branch, who proposes the federal budget, to fully understand what might be rightfully required to achieve federal objectives in a state far away from the nation’s capital, earmarking quickly devolved into a system of vote-buying where a Member of Congress, reluctant to cast a vote for a particular piece of legislation, could be ‘persuaded’ to do so if enough pork was piled onto that Member’s plate in the effort to satisfy an important constituency at home.
Let’s face it—at a point, almost any elected official’s objection to a bill or judicial appointment will crumble when offered enough goodies to ensure endless re-election to office because the elected official is bringing home the bacon to the voters who hold his or her fate in their collective hands.
So, when the Senate and the House of Representatives agreed to end the earmarking process a few years ago, it certainly appeared to be a positive step in the direction of gaining a little control over wasteful government spending and a move towards bringing a bit of honestly to the process of government.
But what actually happened?
For starters, if you believe we have done away with the concept of earmarking money for special projects back home—thing again. The earmark moratorium has brought forward an even more insidious process called “lettermarking” where Congressional slush funds are created as tools for funding pet projects without even the limited accountability and public information that came with earmarking. While earmarks required publication of a pork project—along with the amount of taxpayer money being spent and identification of the elected official proposing the earmark—lettermarking allows for such expenditures without any identification of the project, sum and sponsoring legislator whatsoever.
Additionally, we now find that when an elected official is unsuccessful in convincing an agency of the executive branch to contribute money to a pet project, that official often turns to blackmailing the agency involved by threatening to cast a vote to deny some Administration objective. This is precisely what occurred when Senator Lindsey Graham (R-S.C.) threatened to block Obama administration appointments unless money was provided for a harbor dredging project in his home state.
But something even more insidious has followed the ban on earmarking—
Without the persuasive powers of the political ‘carrot’, congressional leaders and the President no longer have the ‘stick’ required to move Congress to get anything of significance accomplished.
The moratorium on earmarks went into existence in February 2011. Since that time we have seen some of the greatest legislative fails in the history of the nation, highlighted by the debt ceiling fiasco of 2011, the inability to pass a jobs bill, an ever-increasing vacancy rate in the federal judiciary as one nominee after another is shelved and, of course, the current fiscal cliff clunker that might be the most embarrassing and damaging display of congressional incompetence of all.
One cannot help but wonder if our current inability to legislate our way out of a paper bag might be different were party leaders and the President to, once again, be free to avail themselves of the one thing that could always win the hearts and minds of elected officials who care, first and foremost, for their own jobs—a healthy and legal bribe.
If the fiscal cliff fiasco has taught us anything, it is that our elected officials no longer even pretend to place the needs of the nation ahead of their own—to quote Mel Brooks—phony baloney jobs. Does anyone imagine that it is a coincidence that Speaker John Boehner has disappeared into the background in the final days of the fiscal cliff debate so as to avoid another misstep that might cost him the Speakership? Does anyone doubt that Boehner’s inability to deliver his own caucus’ support for his ill-conceived “Plan B” is the direct result of special interest groups—such as Club For Growth—whose political contributions are the life-blood that flows into the treasure chests of the more extreme elements of Boehner’s GOP caucus and remain the only carrot of any value when it comes to winning the affections of Congressional Members ?
Indeed, the only politician involved in this game of political chicken who appears to have a reason to actually put the public before politics would be the President—not because he is above playing the game, but because he no longer has to run for political office.
Accordingly, as we head into the new Congress and the expiration of the earmark moratorium, should we not be questioning whether the ban on earmarks has delivered the results that were intended? If Congress has already found a way around the ban—and is doing so by using a process that is even less transparent than what we previously had in place—maybe we would be better off simply accepting that our government only works when legalized, congressional bribery is allowed to more easily enter into the equation.
Cynical? Absolutely.
But how is it any more cynical than a political system that welcomes the bribery offered up by special interests in the guise of huge and often unlimited campaign contributions that benefit incumbents in exchange for their vote—particularly if the cost of earmarks to the taxpayer is far less than the cost to taxpayers when our legislators refuse to act, despite knowing that their inaction will cost our economy, and therefore our taxpayers, even more money?
According to Taxpayers for Common Sense, the cost of earmarks to taxpayers in 2010 totaled $15.9 billion dollars—a drop in the bucket when compared to the economic losses resulting from the failure of Congress to act rationally during the 2011 debt ceiling drama or what we stand to suffer if government cannot find a little courage as we hang over the edge of the fiscal cliff.
Accordingly, while returning to earmarks may mean a return to wasteful spending of taxpayer money on projects that bring no benefit to the nation as a whole, it could also mean saving even more money than is wasted by avoiding the financial setbacks that come with endless debt ceiling debacles and fiscal cliff fumbles.
Until we decide to completely remove the systematic rigging of elections to favor incumbents—which is precisely what earmarks seek to do as does the unlimited money that flows to incumbents from the myriad of special interests who call the shots in Washington—we may as well give in and allow the system to, at the least, function.
Conversely, if you are offended and troubled by earmarks—and you should be—you should be equally offended and troubled by the special interest groups that have taken their place. When incumbents cannot gain an advantage over challengers by bringing home the pork, they will go for the next best thing—enough campaign cash to allow them to outspend their challengers at election time.
To get rid of one without getting rid of the other makes no sense. At least earmarks produce legislation that might protect and create jobs for taxpayers while unlimited campaign money produces only jobs for elected officials themselves.
By: Rick Ungar, Op-Ed Contributor, Forbes, December 29, 2012
The One And Only Cause Of “Fiscal Cliff” Economic Crisis: Republicans Fear Of Tea Party Primaries
Often, economic crises are caused by real physical problems – like draught, war, demography, or technological innovation that robs one economy of a competitive advantage over another.
Other times, economic crises result when asset bubbles burst, or financial markets collapse. That was the case of the Great Depression – and more recently the Great Recession.
The economic crisis of the moment – the “fiscal cliff” – does not result from any of these factors. In fact it is not a real “economic crisis” at all, except that it could inflict serious economic hardship on many Americans and could drive the economy back into recession.
The “fiscal cliff” is a politically manufactured crisis. It was original concocted by the Republican Senate Leader, Mitch McConnell as a way to get past the last crisis manufactured by the Republicans – the 2011 standoff over increasing the Federal Debt Ceiling.
Theoretically, “the cliff” – composed of increased taxes and huge, indiscriminant cuts in Federal programs – would be so frightening to policy makers that no one would ever consider allowing the nation to jump.
Now, America is on the brink of diving off the cliff for one and only one reason: many House Republicans are terrified of primary challenges from the Tea Party right.
That’s right, if your tax bill goes up $2,200 a year, or you’re one of the millions who would stop receiving unemployment benefits, the cause of your economic pain is not some a natural disaster, or a major structural flaw in the economy. The cause is Republican fear of being beaten in a primary by people like Sarah Palin, Sharon Angel or Richard Mourdock – funded by far Right Wing oligarchs like Sheldon Adelson and the Koch Brothers. It’s that simple.
Most normal Americans will have very little patience with Republicans as they begin to realize that GOP Members of Congress are willing to risk throwing the country back into a recession because they are worried about being beaten in low turn out primaries by people who do a better job than they do appealing to the extreme right fringe of the American electorate – and to the far Right plutocrats that are all too willing to stoke right wing passion and anger.
Nate Silver, of the New York Time’s 538.com, argues in a recent column that one of the reasons for this phenomenon is the increasing polarization of the American electorate. That polarization translates in to fewer truly “swing” Congressional seats and an increasing number where Members are more concerned with primary challenges than they are with losing in a general election. He concludes that at this moment the number of solidly Republican seats is larger the number of solidly Democratic seats.
This, he argues is partially a result of redistricting by Republican legislatures that packed Democrats into a limited number of districts in many states. But he also contends it results from increasing polarization of the electorate in general. And it is due to the fact that solidly Democratic urban areas have very high concentrations of Democrats, where Republican performing areas tend to have relatively lower concentrations of Republicans. These reasons help explain why, even though Democrats got more votes in House races this cycle than Republicans, Republicans still have more seats in the House.
Increased political polarization in the United States is not a result of some accident or act of God. In 2006, political scientists Nolan McCarty, Kevin T. Poole and Howard Rosenthal published a study of political polarization called Polarized America: The Dance of Ideology and Unequal Riches. Their study found that there is a direct relationship between economic inequality and polarization in American politics.
They measured political polarization in congressional votes over the last century, and found a direct correlation with the percentage of income received by the top 1% of the electorate. It is no accident that the years following the second World War, a period of low political polarization, was also a period that economist Paul Krugman refers to as the “great compression” — with robust economic growth for most Americans and reducing levels of economic inequality. In other words, it turns out that if you want less political polarization, the best medicine is reducing income inequality.
Of course, one of the other major factors feeding the GOP fear of primaries is that, because of the Citizens United decision, far right plutocrats can now inject virtually unlimited amounts of money into primary races. Unlimited independent expenditures have so far been much more successful in unseating incumbent Republican Members of Congress than it has been winning General Elections.
In the end, of course the relatively more diluted presence of Republicans in Republican districts – and the country’s changing demographics — may allow Democrats to win many currently Republican seats. What’s more, Republican near term concern about primary challenges – and the stridency it breeds — may alienate increasing numbers of moderate Republican leading independents. We’ve already seen this effect in the Presidential and Senate races and it would not be surprising that by 2014 many of the primary obsessed Republican incumbents are hoisted on their own petard in the General Election. Just ask Tea Party Members of Congress who were defeated in 2012, like Alan West and Joe Walsh. But in the near term, at least, there is also no question that many occupants of Republican seats appear far more concerned with primary challenges than they are with general elections.
If House Speaker Boehner is to be successful passing any form of compromise to avoid the “fiscal cliff” – either before the end of the year or after – he will need to convince Republican Members of the House that he is doing them a favor by bringing a bill the floor that can pass even with many Republicans voting no. That, of course requires that the deal is good enough to allow many Democrats to vote yes.
Boehner will get political cover for that kind of maneuver if a bill passes out of the Senate with bi-partisan support. But even then, he will certainly weigh whether he risks his otherwise certain re-election as Speaker on January 3rd if he acts before the country goes over the cliff at midnight, December 31.
Of course the many Republicans that will never support any form of tax compromise don’t justify their position by explaining they are more concerned with primaries than they are of general elections. In fact they generally fall back on one of three myths that are themselves utter nonsense.
Myth #1 – You shouldn’t tax the wealthy because they are “job creators”. The plain fact is that no one invests money in any business if they do not think there are customers with money in their pockets to buy the products or services they produce.
Customers with money in their pockets are “job creators” – and the root of our current economic problems can be traced directly to the fact that everyday consumers are receiving a smaller and smaller percentage of the national economic pie and as a result have less ability to to buy the increasing number of products and services our economy can create. In fact, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government started keeping records in 1947. And corporate profits have climbed to their highest levels since the 1960’s.
Over the last two decades, per capita Gross Domestic Product has gone up; productivity per hour of work has gone up; but the median income of ordinary Americans has remained stagnant. That is only possible because all of the growth in our economy has been siphoned off by the top 2% of the population.
And it has meant that everyday people haven’t had the money in their pockets to buy the increased numbers of goods and services that are the consequence of that increased productivity. Stagnation and slow economic growth has been the result.
Henry Ford had this right. For the economy to grow over time, workers need to be paid enough to buy the products they produce.
If you want the economy to grow, the fruits of economic growth must be spread equally throughout the economy – if not consumers won’t have the money to buy and, as a consequence, investors won’t invest.
Higher taxes on the wealthy – including higher estate taxes on fortunes left to the sons and daughters of multi-millionaires – are not “bad” for the economy – just the opposite. They help address the economic inequality that is the core problem in our economy.
Myth #2 – Our biggest problem is the federal deficit. This is just flat wrong. It is the economic equivalent of the medieval view that you should “bleed” patients when they are sick.
We have learned from centuries of economic history, that when an economy is recovering from a recession, the right medicine for sluggish economic demand is more fiscal stimulus – and in the short run that does not mean lower deficits.
More economic stimulus, of the type that the President proposed in the American Jobs Act over a year ago, puts money in people’s pockets who can then spend it on more products and stimulate more investment. Austerity and reducing national debt will yield the same outcome we have recently seen in Europe – another recession. And that is exactly what the deficit hawks are likely to get if America slides of the fiscal cliff and stays there.
Right Wing deficit hawks are fond of warning that if we don’t cut the deficit, the country could turn into Greece – or some other European country that can’t pay it’s bills. They ignore the fact that right now U.S. Treasury Bonds are considered the safest investments in the world, and interest rates are at a record low. They also ignore the fact that, unlike the Europeans, the American Federal Reserve can monetize the federal debt and assure that U.S. bond holders are always paid — unless, of course, the Republicans refuse to pay the debts that we owe, which would be like committing economic Hara-Kiri.
In fact, the quickest way for America to become like Europe is a precipitous reduction of the federal spending. Ask the Brits how that worked out.
Finally, of course, let’s remember that the way to reduce the deficit is not an inscrutable mystery. When Democrat Bill Clinton was President he did it, just a few short years ago. The recipe for success involved two factors: increasing revenue, especially from the wealthy, and growing the economy.
Today we would have to add, the need to control the spiraling increase in health care costs. While ObamaCare will make big steps in that direction, much more will be needed. Shifting costs to seniors and other consumers by cutting Medicare or Medicaid benefits is not controlling health care costs – it is simply shifting them from government to individuals. And what is needed is not more de-regulation of for-profit health care companies. In fact we ultimately need to follow the model of the Canadians – and most of the other industrial nations in the world – and provide a universal Medicare coverage to all Americans. Our system of private health insurance is simply too expensive. Americans, after all, pay 40% more than any other country per capita for health care and have outcomes that rank only 37th in the world.
Myth #3 – Government is always bad and- as Grover Norquist argues – must be shrunk so it can be drowned in a bathtub.
Let’s ignore for a moment the fact that while Republicans talk about small government, they inevitably expand it when they control the White House – mostly in the form of larger military budgets.
Government, as Congressman Barney Frank says, is the name we give to the things we choose to do together–and that includes many of the most important things we do in our economy. From fire and police protection to providing free public education and health care for all, to building public infrastructure, to creating the Internet – government does a better, more efficient, more equitable job in many economic arenas than the private sector.
To hear the Republicans talk you wouldn’t know it, but right now taxes are at their lowest levels since 1958.
Right now in America we need more government – more education, more roads and bridges, more mass transportation, more cancer research, more health care, more nutrition programs, more drug education and treatment – not less. More government shouldn’t mean more regulation of our freedom – it should mean that when we co-operate together we have the ability to achieve more than if everyone is left to sink or swim. Government action is necessary to provide the foundation from which each person can individually excel.
The question of the type of society we want in America was squarely on the ballot in the election last November, and voters overwhelming voted for a society where we have each other’s back – where we’re all in this together, not all in this alone.
Progressives need to make all of these arguments to win the battle for the future. But let’s remember that the unwillingness of most Republicans to compromise to avoid the “fiscal cliff” – or anything else – has less to do with their commitment to their ultra right principles than to the protection of their own political hides.
That being the case, there are only two ways to convince Republicans to compromise. One is to demonstrate that their obsession with primary challenges from the right will ultimately lead them to defeat in General Elections. The second is to defeat them so badly in the next General Election that they no longer have the power to impose the will of an extremist minority on the people of the United States.
By: Robert Creamer, The Huffington Post, December 29, 2012
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