Boehner The Extortionist: “Give Us Trillions In Cuts In Medicare and Medicaid Or We Blow Up The Economy”
Stripped of its politician’s gloss, this is the message that House Speaker John Boehner delivered to Wall Street Monday in discussing the price Republicans demand for raising the debt ceiling.
Boehner portrays himself as a reluctant extortionist: “It’s true that allowing America to default would be irresponsible.” But he told the barons of Wall Street he has no choice. The Tea Party made him do it: “Washington’s arrogance has triggered a political rebellion in our country. And it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”
Notice the Speaker’s phrasing. He curses deficits and debt but he isn’t focused on them. He is focused on “our spending addiction.” “Everything is on the table,” he says, “with the exception of tax hikes.”
And even that is a half-truth, since Boehner and his party have also no appetite for real cuts in the defense budget. Boehner isn’t pushing to get out of Iraq and Afghanistan and roll back the costly U.S. global police role. In the budget that Boehner pushed through the House, Republicans voted to give the Pentagon back most of the relatively nominal defense cuts that Defense Secretary Robert Gates had projected over the next years. And many harshly censored the president for suggesting that another $400 billion in cuts might be chipped out of the more than $8 trillion the Pentagon will spend over the next 12 years.
So if tax hikes aren’t allowed—even though the wealthiest Americans are now paying a lower effective tax rate than their chauffeurs—and defense cuts are off the table, how does Boehner propose to get “trillions” in spending cuts? Medicare and Medicaid get the ax. Or as Boehner puts it in politician speak, “Everything on the table” includes “honest conversations about how best to preserve Medicare.”
The budget math is inescapable. The federal government, as Paul Krugman puts it, is basically an insurance system for our retirement years that also has an army. About half of the government’s spending is in retirement programs—Social Security, Medicare, much of Medicaid and other insurance programs. Defense is half of the rest. All of the rest of government —public health, environmental protection, the IRS, the FBI and Justice Department, education, Pell grants, roads, health research, R&D—consumes the last fourth. When Republicans take taxes and defense off the table, and call for trillions in spending cuts and you have no choice but to go after Medicare, Medicaid and/or Social Security.
Which of course is what they are doing. The House budget cuts nearly $800 billion out of Medicaid over the next five years—and ends Medicare as we know it.
There is a bitter irony to this. The current deficits stem largely from three sources—the Bush tax cuts, the two wars that were fought on the tab, and the Great Recession that cratered tax revenues and lifted spending on everything from unemployment to food stamps to the recovery spending. Boehner argues that “adding nearly a trillion to our national debt—money borrowed mostly from foreign investors—caused a further erosion of economic confidence in America.” But he ignores the trillions added to the debt by the Bush tax cuts, the wars and the Great Recession, focusing only on the Obama recovery spending, which made the smallest contribution of all of these to the deficits. And, he rules out reversing the top-end tax cuts or cutting the military spending to address the deficits that they helped to create. (And if we actually adopt his policies, he’s likely to extend the Great Recession as well).
Boehner argues that adopting his position would show that Washington is “starting to get the message” from the American people. But Boehner isn’t hearing what most Americans are saying. Americans are concerned about deficits, and they are certain that government wastes significant portions of their money. They also oppose the billions squandered on subsidies and tax breaks for Big Oil, Big Pharma, Agribusiness and the like—tax breaks that Republicans defend, arguing that repealing them constitutes a tax increase.
In fact, the vast majority of Americans don’t agree with Boehner’s priorities. The Campaign for America’s Future, which I help direct, has started an American Majority campaign to remind the media of this fact. Three quarters oppose cutting Medicare to help balance the budget. Two thirds oppose raising the retirement age. Three fourths oppose cutting state funding for Medicaid. Over 60 percent favor raising taxes on those making over $250,000 to help reduce the deficit. A growing majority think defense cuts ought to be on the table.
Boehner wants to extort his cuts now—at a time when the economy is struggling, and the country is suffering from mass unemployment. With interest rates near record lows, the construction industry idle and our infrastructure in deadly state of disrepair, the country would be well advised to use this occasion to invest in rebuilding the country, and put workers back to work.
Instead, Boehner offered Wall Streeters a shower of conservative shibboleths, stuck randomly like pieces of lint on a serge suit. “The massive borrowing and spending by the Treasury Department crowded out private investment by American businesses of all sizes,” he argued to what must have been a bemused audience well aware that with interest rates low, and business sitting on trillions in capital waiting for demand to pick up, the only “crowding out” comes from ideology displacing reality in Boehner’s head..
Boehner argues that business people crave stability. Even the mere threat of tax hikes causes them to retreat from investments they might otherwise make. Regulatory changes are similarly disruptive:
“For job creators, the ‘promise’ of a large new initiative coming out of Washington is more like a threat. It freezes them. Instead of investing in new employees or new equipment, they make the logical decision to stand pat.” Sadly, Boehner didn’t explain why the threat to blow up the economy if he can’t get trillions in unidentified spending cuts doesn’t constitute the “promise” of a large new initiative coming out of Washington.”
What happens now? Boehner’s position is untenable. He is holding a hostage—the economy—that he dare not shoot. He is demanding trillions in cuts from programs that he dare not name. He is looking for a back room negotiation in which he can get the president to give him cover in enacting cuts that are unpopular to the American people and likely to be ruinous to the economy. If the president falls for it, Republicans make progress in dismantling the Medicare program that they have always opposed, and the president takes the rap for the bad economy.
What’s to be done? Jonathan Chait gets it right. The president—and the country—would benefit from an open discussion, not a backroom negotiation. The president needs to call Boehner out. What are the trillions in cuts that he wants as the price for letting the economy go free? If he lays them out, as in passage of the House budget plan that ends Medicare as we know it, the President can show Americans why they are unacceptable, and use the bully pulpit to take the case to the country. If Boehner isn’t prepared to lay out his cuts, call his bluff. Surely he can’t long threaten to cripple the economy if he doesn’t get cuts that he isn’t prepared to define.
One thing Boehner says rings true. Americans are sick of the arrogance in Washington. But it is hard to imagine a more arrogant politician than one threatening to blow up the economy if he doesn’t get his way.
By: Robert Borosage, CommonDreams.org, May 10, 2011
GOP: Playing “Dangerous Games” With The Debt Limit
The debt limit is supposed to make Congress think twice before passing tax cuts or spending increases that add to the national debt. Instead, lawmakers routinely support policies without paying for them — like the Bush-era tax cuts and two wars — and then posture and protest when their decisions require raising the debt limit.
So it will be once Congress returns from its spring recess. The debt limit — $14.3 trillion — will be hit as early as mid-May. If it is not raised in time, the government will have to use increasingly unorthodox tactics to meet its obligations, which would disrupt the financial markets and the economic recovery.
Default is theoretically possible, though public outrage over the mess would likely compel Congress to raise the debt limit before then. The best approach, the most sensible and mature, would be to pass a clean and timely increase.
However, nothing sensible or mature is on the horizon. Republicans have vowed to extract more heedless spending cuts in exchange for their votes to raise the debt limit. To that end, they seem likely to demand changes to the budget process, like a balanced budget amendment to the Constitution, or spending caps.
Such reforms have a glib appeal — who can oppose something as prudent-sounding as balanced budgets? In fact, they are a dodge, because they cut spending broadly without lawmakers having to defend specific cuts. They are also often wired to block tax increases, without which deficit reduction efforts are not only unfair, but also will not succeed.
Take, for example, the balanced budget amendment to the Constitution that Senate Republicans recently endorsed. By rigidly requiring a balanced budget each year, it would deepen recessions by forcing tax increases or spending cuts in a weak economy.
Worse, the amendment would hold annual spending to 18 percent of the previous year’s gross domestic product, a formula that works out to about 16.7 percent in the proposal’s early years, according to the Center on Budget and Policy Priorities. That is a level last seen in 1956 — a time before Medicare, before the interstate highways, when many baby boomers were not yet born, never mind aging into retirement.
Sharply lower spending would, in turn, allow for big tax cuts. Those tax cuts would be virtually irreversible, since the amendment calls for a two-thirds vote of both houses to raise taxes.
Another bad idea is the spending cap proposed by two senators, Bob Corker, Republican of Tennessee, and Claire McCaskill, Democrat of Missouri. It would cap spending at around 21 percent of G.D.P., compared with about 24 percent now — which would require deep cuts like those in the House Republican budget plan. With its emphasis on spending cuts, the cap also seems intended to reduce the deficit without tax increases.
In the successful deficit reduction efforts of 1990 and 1993, budget process reforms were helpful. The key, however, was to first enact credible deficit-reduction packages — with spending cuts and tax increases — and then impose rules, like pay-as-you-go, to prevent backsliding. Process reforms alone avoid the hard work. Still, they can exert powerful political pull.
The White House and Congressional Democrats must not allow themselves to be taken hostage again.
By: The New York Times, Editorial, April 22, 2011
Polls And The Public: What To Do When The Public Is Wrong
There’s been a fair amount of consistency in national polls in recent months. Americans like higher taxes for the wealthy, dislike radical changes to Medicare, and don’t want the debt ceiling to be raised.
Despite Obama administration warnings that failing to do so would devastate the economy, a clear majority of Americans say they oppose raising the debt limit, a new CBS News/New York Times poll shows.
Just 27 percent of Americans support raising the debt limit, while 63 percent oppose raising it.
Eighty-three percent of Republicans oppose raising the limit, along with 64 percent of independents and 48 percent of Democrats. Support for raising the debt limit is just 36 percent among Democrats, and only 14 percent among Republicans.
Seven in ten who oppose raising the debt limit stand by that position even if it means that interest rates will go up.
These results were published yesterday, but they’re practically the same as related polling data in other surveys dating back quite a while.
Here’s the uncomfortable truth: policymakers simply must ignore them. The public has no meaningful understanding of what the debt ceiling is, what happens if interest rates go up, or the global economic consequences of a potential default. It’s quite likely Americans perceive the question as a poll on whether or not they want a higher debt.
This is one of those classic dynamics in which responsible policymakers realize that they know more about the subject matter than the public at large, so they have to do the right thing, even if the uninformed find it distasteful — knowing that the disaster that would follow would be far more unpopular.
Put it this way: what if the poll had asked, “Would you rather raise the debt ceiling or risk a global economic catastrophe and massive cuts to Social Security and Medicare?” The results, I suspect, might have turned out differently.
Or maybe not. Either way, it doesn’t matter. The public is wrong, and Americans need sensible leaders to do the right thing, even if they’re confused about what that is.
Now, I can hear some of you talking to your monitor. “Oh yeah, smart guy?” you’re saying. “The polls also show Americans hate the Republican budget plan. If the public’s confusion on the debt limit should be ignored, maybe the public’s attitudes on eliminating Medicare and gutting Medicaid should be disregarded, too.”
Nice try, but no. Here’s the thing: folks know what Medicare and Medicaid are. They have family members who benefit from these programs, or they benefit from the programs themselves. It’s not an abstraction — these are pillars of modern American life, and institutions millions of come to rely on as part of a safety net.
The point is, polls only have value if the electorate understands what they’re being asked. The debt ceiling is a phrase the public has barely heard, and doesn’t understand at all. That doesn’t apply to Medicare in the slightest.
By: Steve Benen, Washington Monthly, Political Animal, April 22, 2011
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