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
“Shuffling The Deck Chairs On The Titanic”: Are Right Wing Republicans Plotting A Coup Against John Boehner?
Right-wing Republicans are reportedly organizing a coup against House Speaker John Boehner — and if they get their way, Paul Ryan could end up holding the speaker’s gavel.
Speaker Boehner — who is currently the least popular leader in Congress — has long struggled to control the right-wing flank of his party, but his disastrous failure to pass his “Plan B” budget deal crystallized the problem in a highly public way.
In response, some on the right are mobilizing to replace Boehner with a House speaker who drops Boehner’s pretense of being willing to negotiate with the White House, and who sticks more purely to extreme conservative dogma.
According to Matthew Boyle of the far-right website Breitbart News, conservative House Republicans have already laid the groundwork to do just that. Boyle reports that several members and staffers are quietly circulating a multi-step plan to oust Boehner as speaker on January 3rd. The first step of the plan would be to change House rules to elect the speaker by secret ballot instead of by a public roll-call vote; this would protect the congressmen who vote against Boehner from retribution.
The plotters are confident that such a measure would succeed, because Boehner himself has passionately argued in favor of secret ballots in the past. While opposing the Employee Free Choice Act — ironically, a favorite target of the right wing that now has Boehner in its sights — the speaker wrote a 2009 op-ed stressing that secret ballots protect against “coercion” and “intimidation.” In a document laying out the plan to oust Boehner (which can be viewed on Breitbart.com), the anonymous staffers behind the planned coup note that Boehner would be in the “impossible position of opposing secret ballot or being confronted on the Floor with his own, indicting op-ed.”
If the move to vote via secret balloting is successful, then House Republicans would be able to anonymously vote until a Republican gains the 218 votes necessary for election as speaker. According to Boyle, House Republicans are confident that Boehner would not survive a secret ballot — but that another, still-anonymous congressman, “will unite the party and take the speakership.”
Could that congressman be Wisconsin Rep. Paul Ryan? Right-wing pundit Laura Ingraham said on Wednesday that “a well-placed conservative voice on the Hill” told her that there were “rumblings” that Ryan could replace Boehner. Although the former vice-presidential nominee is a member of Boehner’s “fiscal cliff” negotiating team (and supported Boehner’s ill-fated “Plan B”), he has the support of prominent right-wing voices such as Red State’s Erick Erickson, and his Tea Party bona fides have been well established over the past four years. If any congressional Republican could unite Boehner’s supporters and the Tea Party-backed base of the party, it would probably be Ryan.
That said, were Ryan to be elected as sSpeaker, there’s no reason to believe that he’d prove any more successful in the role than Boehner has. House Republicans — most of whom come from extremely safe districts where their only electoral concern would be a conservative primary challenge — seem wholly unconcerned with the political realities facing their party, and the fiscal realities facing the country. It doesn’t matter if Boehner, or Ryan, or even an outsider like Jon Huntsman becomes speaker (as American Enterprise Institute scholar Norman Ornstein recently suggested in a Hall of Fame example of how inside-the-Beltway consensus loses touch with reality).
Until the Republican Party listens to the American people and compromises on its extremely right-wing (and extremely unpopular) positions, changing its leadership will amount to little more than shuffling the deck chairs on the Titanic.
By: Henry Decker, The National Memo, December 27, 2012
“A Resettling Of The Hostages”: What The Tea Folk Want In The Fiscal Talks
To properly assess the lay of the land for the continuing fiscal negotiations in Washington, it’s kind of important to understand what those conservative Tea types fighting John Boehner actually want. You get the general impression they just want less compromise than Boehner. But the reality is quite different. Here’s an appropriate reminder from Breitbart’s Joel Pollak:
The present Tea Party dilemma did not begin in November 2012 but in January 2011, when the new Republican leadership in the House of Representatives excluded Tea Party members from the highest leadership positions. The Tea Party, used to opposing but not to governing, acquiesced in a faulty arrangement that allowed the Republican establishment to lead the legislative agenda, and to blame the Tea Party when it failed.
That is exactly what happened in the summer of 2011, when Speaker of the House John Boehner quashed efforts by Rep. Jim Jordan to rally support around the Tea Party’s preferred “Cut, Cap and Balance” proposal in the debt ceiling debate. Boehner then signed onto an ill-fated deal that led to the present “fiscal cliff” impasse–while the Tea Party, slandered by the mainstream media as “terrorists,” bore the burden of blame.
Sounds semi-reasonable until you focus on what the “Cut, Cap and Balance” proposal involves. Here’s a description from June of 2011:
1. Cut – We must make discretionary and mandatory spending reductions that would cut the deficit in half next year.
2. Cap – We need statutory, enforceable caps to align federal spending with average revenues at 18% of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached.
3. Balance – We must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and a Spending Limitation Amendment (SLA) that aligns spending with average revenues as described above.
The “Cut, Cap and Balance” Pledge that was signed by 12 senators and endorsed by every one of the viable GOP presidential candidates (including Mitt Romney) made all three elements a condition precedent to support for any debt limit increase.
Since constitutional amendments require passage in both Houses of Congress by a two-thirds vote, and the version being promoted by conservatives involves a radical and permanent reduction in federal spending, it ain’t happening unless and until vast changes in the composition of Congress occur–maybe on the order of four or five straight 2010-style GOP landslides. So we’re not talking about some temporary “hostage-taking” involving the debt limit, but the kind where the hostage is resettled in another country under armed guard for years.
It is rather important that the media and Democrats understand where the Tea Folk are coming from. They aren’t just trying to push the country towards their policy priorities. The whole idea, and the rationale for all the revolutionary trappings, rhetoric and other folderol, is permanent repeal of much of the domestic policy legacy of the twentieth century–back towards what they imagine the Founders (and for many of them, Almighty God) intended. For the most part, they have little to fear from voters back home. There is no price to be paid for craziness and intransigence, though in most cases there is decidedly a big risk in exhibiting reasonableness.
So that’s who we are dealing with, and best we can tell, there are enough of them in the House to keep Boehner from showing much reasonableness as well.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, December 27, 2012
“A Very Naughty Boy”: John Boehner Gets More Than 2,000 Lumps Of Coal For Christmas
House Speaker John Boehner will be greeted by more than 2,000 pieces of coal when he returns to Washington after what was unlikely to have been a relaxing vacation in Ohio amid the standoff over the fiscal cliff.
The coal is being delivered by The Action—a campaign to end the Bush-era tax cuts for the wealthiest 2 percent—which says Boehner has been extra “naughty” this year.
Last week, Boehner proposed legislation called “Plan B” that would have ended the Bush-era tax cuts on those with income of up to $1 million, but some House Republicans refused to support it. Democrats and Republicans disagree over whether the nation’s wealthiest taxpayers should see higher rates, but both parties agree they want to avoid tax increases for the middle class.
On NaughtyBoehner.com, The Action entreats supporters to call Boehner’s office because he “is desperate to protect the richest Americans at the expense of the rest of us.” For each call made, the campaign promises to hand deliver one lump of coal to Boehner’s office. As of this writing, the campaign counts 2333 pieces of coal as ready for delivery.
President Barack Obama will be back in Washington Thursday to try to negotiate once more with Congress to avoid the fiscal cliff before tax increases and spending cuts kick in at the end of the year.
By: Elizabeth Flock, Washington Whispers, U. S. News and World Report, December 26, 2012
“Rejecting Their Own Ideas”: Republicans Are Creating Needless Difficulties For Themselves And The Country
We know that the House of Representatives has been unable to reach a sensible deal to avoid unnecessary fiscal trouble at the first of the year because of right-wing Republicans’ aversion to tax increases.
But there is another issue on which conservatives are creating needless difficulties for themselves and the country: It’s harder and harder for politicians on the right to think straight about health care.
Conservatives once genuinely interested in finding market-based ways for the government to expand health insurance coverage have, since the rise of Obamacare, made choices that are dysfunctional, even from their own perspective.
Start with the decision of the vast majority of Republican governors to refuse to set up the state insurance exchanges required under the law. The mechanisms would allow more than 20 million Americans to buy coverage. They were originally a conservative idea for large, trustworthy marketplaces where individuals and families could buy plans of their choice.
Many liberals preferred a national exchange, in which the federal government could institute strong rules to protect consumers and offer broader options. This was the path the House took, but the final Senate-passed law went with state-level exchanges in deference to Republican sensibilities.
To ensure that governors could not just prevent their residents from having access to the new marketplaces, the bill required the federal government to run them if states defaulted. So, irony of ironies, in declining to set up state exchanges, conservative governors are undermining states’ rights and giving liberals something far closer to the national system they hoped for. As Robert Laszewski, an industry critic of Obamacare, told The Post’s N.C. Aizenman, conservative governors are engaging in “cut-off-your-nose-to-spite-your-face” behavior.
This is one of many forms of conservative health-care unreason. The “fiscal cliff” debate has been distorted because the problems confronting federal finances are consistently misdescribed. We do not have “an entitlement problem.” We have a giant health-care cost problem.
Our major non-military fiscal challenges lie in Medicare and Medicaid. In principle, conservatives should seek to find ways of holding down health-care inflation in both the private and public sectors. In practice, they see most efforts to take on this issue system-wide as examples of big government run wild. They seem to have a vague idea that markets can yet solve a problem that markets have not been very good at solving.
The result is that conservatives would either let government get bigger, or they’d save money by throwing ever more risk onto individuals by undercutting core government guarantees.
Their most outrageous move was the big lie that the original health-care bill included “death panels.” This would have been laughable if it had not been so pernicious. The provision in question would simply have paid for consultations by terminally ill patients — if they wanted them — with their physicians on their best options for their care. Few things are more important to the future of health care than thinking straight about the costs and benefits (to patients and not just the system) of end-of-life treatments. For those of us who oppose physician-assisted suicide, it’s urgent to promote, rather than block, serious, moral and compassionate discussions of the difficult issues raised by high-tech medicine.
Or take the health-care law’s creation of the Independent Payment Advisory Board, known as IPAB. It’s a 15-member body charged with finding ways of cutting the costs of treatment under Medicare. Congress would have the final say, but through a fast-track process. Yet the ink was barely dry on Obama’s signature of the Affordable Care Act (ACA) when a group of Republican senators introduced what they called the Health Care Bureaucrats Elimination Act, to get rid of IPAB. Thus did an innovative effort to save money meet with a slap in the face. Conservatives barely acknowledge other cost-saving experiments in the ACA.
Is it any wonder that our fiscal politics are so dysfunctional? Yes, we liberals are very reluctant to cut access to various government health-insurance programs. With so many Americans still uninsured, we are wary of depriving more people of coverage. But we fully accept the need to contain government health spending.
Yet given the conservatives’ habit of walking away even from their own ideas (the exchanges, for example) and of rejecting progressive efforts to save money, is it any wonder that liberals suspect them of greater interest in dismantling programs than in making them more efficient? We won’t find genuine common ground on deficits until we resolve this dilemma.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, December 26, 2012
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