“Catastrophically Dangerous”: What Happens If The GOP Shoots The Hostage?
Sen. Saxby Chambliss (R) of Georgia raised an interesting point this morning about the Republican debt-ceiling hostage crisis.
To translate this a bit, Chambliss is embracing the hostage strategy with both arms. From 1939 to 2010, the debt ceiling was raised without preconditions by both parties 89 times, but in 2013, Chambliss and his cohorts are demanding a ransom: painful-but-unspecified cuts to Social Security and Medicare.
And if the president refuses to meet the Republicans’ demands, and GOP policymakers follow through on their threats, Chambliss thinks it’s Obama who’ll “suffer the consequences.”
Except, whether he understands the issue or not, Chambliss is mistaken. If Republicans refuse to allow the nation to pay for the money it’s already spent, and in the process push the nation into default by trashing the full faith and credit of the United States, it’s not the president who’ll “suffer the consequences”; it’s the rest of us.
Obama will be fine. Chances are, Saxby Chambliss will get by, too. But if Republicans refuse to do their duty, conditions for the national and global economy will get “very bad, very fast,” including “financial-market chaos.”
“Think about what we’re talking about here,” Steve Bell, director of economic policy at the BPC, told Ezra Klein yesterday. “We’re talking about the reserve currency of the world. We’re talking about the deepest and most liquid markets in the world. And we’re sitting here wondering if we’ll cover our obligations?”
The consequences would be brutal and long-lasting. America’s reputation, global standing, and stability would very likely never — ever — be the same.
So, Sen. Chambliss should probably take five minutes to understand that the fire he’s playing with is catastrophically dangerous. Because at this point, the Republican senator isn’t just threatening to hurt America on purpose, he’s under the misguided impression that Obama’s the one who’ll suffer.
By: Steve Benen, The Maddow Blog, January 7, 2013
“The Real Deficit Argument”: Only Politics Of A Very Degraded Kind Can Keep Us From Moving Forward
Should our politicians dedicate themselves to solving the problems we face now? Or should they spend their time constructing largely theoretical deficit solutions for years far in the future to satisfy certain ideological and aesthetic urges?
This is one of the two central choices the country faces at the beginning of President Obama’s second term. The other is related: Will the establishment, including business leaders and middle-of-the-road journalistic opinion, stand by silently as one side in the coming argument risks cratering the economy in an effort to reverse the verdict of the 2012 election? Yes, I am talking about using the debt ceiling as a political tool, something that was never done until the disaster of 2011.
My first questions are, admittedly, loaded. They refer to a difference of opinion we need to face squarely.
It is entirely true that in the wake of two budget agreements, in 2011 and the just-passed deal on the “fiscal cliff,” we have not reduced the deficit enough. The issue is: How much is enough?
Contrary to all the scare talk you keep hearing, Robert Greenstein, president of the Center on Budget and Policy Priorities, notes that we could put the deficit on a sustainable path for the next 10 years with one more deficit-reduction package equal to about $1.2 trillion, plus the resulting interest savings.
By sustainable, I mean keeping the debt from growing as a share of gross domestic product and holding it at around 73 percent of GDP for the next decade. This is a more than reasonable number by international standards. To put it in perspective: According to the International Monetary Fund, in 2011 Canada’s debt was at 85 percent of GDP, Germany’s was at 81.5 percent — and Greece’s was at 163.3 percent.
Holding the debt ratio in the low 70s is well within our sights. It could be achieved through a combination of $600 billion in cuts and $600 billion in additional revenue through tax reform — or through modest taxes on carbon or on financial transactions. (Okay, for now, I am dreaming on the last two, but they are still good ideas.) The cuts could be made without wrecking Medicare, Medicaid or Social Security, and without eviscerating government’s capacity to invest in the future.
We could then shelve our deficit obsession for a while and confront the problems that should be center-stage over the next few years: restoring shared economic growth, spurring the creation of good jobs, dealing with gun violence, reforming immigration laws, improving our education system, and taking steps on climate change.
But there is the other side of this debate, pushed not only by conservatives but also by a deficit-reduction industry that sees the only test of seriousness as a willingness to slash Medicare, Medicaid and Social Security for those who will retire 10, 20 or 30 years from now. They want to be able to admire nice predictions on a computer screen that show the debt dropping to 60 percent of GDP.
There is no objection in principle to discussing the modest changes that could improve the long-term stability of Social Security. But when it comes to health-care cost projections, there is so much we don’t know that it is truly foolish to make decisions now for, say, 2040.
Health-care cost inflation has been dropping. We can’t be sure how sustainable this trend is, but economists who study the matter think the cost curve may be bending downward for the longer run. The Affordable Care Act contains measures that could further restrain health expenditures.
Is it either sensible or humane to decide in 2013 on the basis of such limited knowledge to toss future seniors and low-income Medicaid recipients under the bus? Health-care costs are something we must keep working on. We can buy time for this difficult undertaking by getting the deficit down to a sustainable level.
And that brings us to the debt ceiling. The central weakness of a largely helpful fiscal cliff deal is that it did not save us from a debt-ceiling fight. It would be colossally stupid — there is no other word — to derail an economic recovery that is slowly but steadily taking hold with another battle over a silly provision in our law. Will all the respectable people who know this sit on the sidelines and let it happen, or will they speak out now?
We are finally on a promising path. Only politics of a very degraded kind can keep us from moving forward.
By: E. J. Dionne Jr., Opinion Writer, The Washington Post, January 6, 2013
“Fools On The Hill”: “Nothing” Is Why Some Members Of Congress Went To Washington
We used to have a ship of state, and now we have a ship of fools.
To call what happened on Capitol Hill over the past few days Kabuki is to insult Kabuki. What actually happened was more like ancient farce when actors used to come out and hit each other over the head with socks full of cowpies.
Contrary to what you have heard, we did not face up to a financial or economic or budgetary crisis. All Congress and the White House did was slog through another political crisis.
And the way they did it was comical: a 2 a.m. vote in the Senate followed by an 11 p.m. vote in the House. This is drive-by government.
That the White House was going to win was never in doubt. Barack Obama won reelection in November by nearly 5 million votes. According to CBS News, his approval rating is at 57 percent.
The members of Congress, on the other hand, are close to being put in stocks and pelted with vegetables. According to CBS, congressional job approval is at 11 percent. Any lower than that and Congress might as well move to Canada and try there.
One of the reasons our politicians are held in such low regard is that what they do is so divorced from reality.
What was the No. 1 issue of the last election? What did both sides promise the American people? As I recall, it was jobs, jobs and more jobs. But what did the recent fiscal cliff law do about creating more jobs? Nothing.
Some politicians like nothing. Nothing is why they went to Washington. They want to shrink government, in the famous words of Grover Norquist, “down to the size where we can drown it in the bathtub.”
Why? Because as Mitt Romney said in the campaign, 47 percent of voters “believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.”
(If you haven’t heard much from Romney since the election, it’s probably because he has been down in the Cayman Islands visiting his money.)
In this view, the government spends far too much on “entitlements” like Medicare. Medicare costs are strangling America, we hear, and according to the Congressional Budget Office, spending for Medicare in 2012 was a very hefty $555 billion.
But Medicare recipients are not exactly rolling in dough. In 2006, the last study my ace research team (Wikipedia) could find, the “average household income of Medicare enrollees was $22,600 compared with a U.S. median income of $48,201.”
Yet these people are viewed as greed-heads sucking up precious dollars that could be better spent on … defense contractors!
The defense budget for 2012 was more than $600 billion, which is nearly twice as much as the rest of the planet combined. We outspend China, the next biggest military power in the world, by about 6-to-1.
Maybe this wild spending would not be so bad if it bought us quick and easy victories over ill-armed opponents. But it doesn’t. We have poured more than a trillion dollars into the war in Afghanistan over the past 11 years — to say nothing of more than 2,000 precious U.S. lives lost — and we are still fighting there.
Some say this is good for the U.S. economy because it means we have to buy more and more bullets and bombs and drones, but personally I’d rather buy more liver transplants for the 47 percent.
Yet nobody in Washington is talking about serious cuts to the defense budget. On the contrary, they are talking about ways to avoid making serious cuts to the defense budget.
In the meantime, the government borrows more and more money, which means it keeps bumping up against the debt ceiling. The debt ceiling was invented as a way to keep Congress from spending too much, but it doesn’t work.
So we keep raising the debt ceiling. We raised it 18 times under Ronald Reagan, four times under Bill Clinton, seven times under George W. Bush and three times, as of August 2011, under Barack Obama.
As Obama points out, the debt ceiling does not allow Congress to spend more money. It merely allows the government to pay the bills Congress has already racked up.
In just a few weeks, we will face another crisis over the debt ceiling. It shouldn’t be a crisis, but politics will make it a crisis.
It’s a broken system. It’s why Americans hate politics.
Late on Jan. 1, President Obama briefly addressed the nation from a nearly empty White House briefing room. “I think, hopefully, in the new year we’ll focus on seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship, not scare the heck out of folks quite as much,” he said.
A little bit less drama? Drama is what government is about these days. Drama is the only thing our elected leaders seem good at.
So you bring the socks. I’ll bring the cowpies.
By: Roger Simon, Politico, January 3, 2013
“Setting The Stage”: What The Health Law Will Bring In 2013
Most of the really big changes made by the 2010 health law don’t start for another year. That includes things like a ban on restricting pre-existing conditions, and required insurance coverage for most Americans. But Jan. 1, 2013, will nevertheless mark some major changes.
One of those changes that will affect everyone with private health insurance actually took effect last September. But most people won’t see it until they renew or apply for new health insurance. It’s called a summary of benefits and coverage. The idea is to help people actually understand what’s in their insurance policies.
“One of the big complaints of people in polls or focus groups is that they just … don’t understand either the coverage or the price,” said Jay Angoff, a former official at the U.S. Department of Health and Human Services who worked on implementing the health law.
But with the new document, he says, “there’s a standard format that allows people to compare benefits to make apples-to-apples comparisons, not just on price, but on benefits.”
Health plans will also have to provide consumers a glossary of insurance terms if they ask for it.
“It’s still harder than some people would want,” Angoff says. “It’s still a complicated area. But I think HHS has really done a very good job in making it as simple and as meaningful as possible.”
Later in 2013 will also bring a key launch date for the law, says Angoff: “Oct. 1, 2013, is when open enrollment begins.”
That’s when people can start signing up for their 2014 coverage through the new health exchanges, or marketplaces, that the states and federal government are creating. Angoff, who used to head the office that’s in charge of building those exchanges, says he’s confident that things will happen on time.
“HHS has met all statutory deadlines on this until this point, and I have confidence that HHS will continue to meet those deadlines,” he said.
But the majority of what happens on Jan. 1 is to pay for the changes in 2014. In other words, tax increases and cuts in tax deductions. For example, starting next year, people will only be able to put $2,500 pre-tax into Flexible Spending Accounts that they use to pay for items insurance doesn’t cover.
“For example if they buy eyeglasses, if they pay copays on drug benefits or to their physician, they can submit those claims and be reimbursed from the pretax dollars,” said Marilyn Moon of the American Institutes for Research.
Moon says that while the change may hurt some people with very high out-of-pocket spending not covered by insurance, lawmakers decided this was a fair way to raise some of the money needed to pay for the rest of the law.
“This is a benefit that largely accrues to higher-income individuals who can afford to set aside a certain amount of money every year, to pay towards their health care spending,” she said.
There’s another tax change coming next year for the wealthy. Individuals earning more than $200,000 a year and couples earning more than $250,000 will see a nearly 1 percentage point increase in their Medicare payroll tax. They’ll also have to pay a 3.8 percent Medicare tax on their non-wage income. Moon says that represents a big change.
“The payroll tax usually applies only to wages, and now this law will extend it to investment income as well,” she said.
Those who take deductions for medical expenses on their income taxes will also see a change starting in 2013. Right now, expenses in excess of 7.5 percent of adjusted gross income are deductible. That’s going up to 10 percent for all except the elderly.
It will affect some people who spend a lot on medical care, says Moon. But the new law should also reduce the number of people with those very large bills, “because if everyone has health insurance, many fewer people should have to pay large amounts out-of-pocket on health care. Ten percent will not affect very many people, one would hope, when they get better insurance coverage.”
Finally, there’s a key change made by the health law for 2013 that will affect only the poor. Starting Jan. 1, state Medicaid programs will be required to reimburse doctors who provide primary care at Medicare rates, which are substantially higher. The idea is to get more doctors into the Medicaid program, which will itself expand in 2014.
The Medicaid increase, however, is only for two years.
By:Julie Rovner, NPR, January 1, 2013
“Deeply Irresponsible”: It’s Clear Now Why The “Boehner Rule” Is Such A Terrible Idea
The GOP’s insistence on using the debt ceiling as “leverage” is deeply irresponsible.
But politics and philosophy aside, let’s quickly examine the practicality of the GOP’s stance in these negotiations.
In 2011, when the GOP made its debt ceiling stand, there emerged a concept now known as “The Boehner Rule” which basically says that any debt ceiling hike has to be matched dollar for dollar with cuts. So a $1 trillion hike to the debt ceiling must see $1 trillion in cuts, and so forth.
Already, everybody hates the fruits of the 2011 fight, because now we have the “sequester” which caps spending on defense and other domestic programs — which is something that everybody wants to undo.
But even though everyone hates what came out of the 2011 fight, the GOP is at it again.
Senator Bob Corker said this weekend that a good trade will be a debt ceiling hike for cuts to Medicare.
From Burgess Everett at POLITICO:
Tennessee Sens. Bob Corker and Lamar Alexander pitched a plan on Friday to cut federal spending by $1 trillion — much of it from Medicare — in exchange for increasing the nation’s borrowing limit by that amount. The plan would raise the Medicare eligibly age to 67 and require wealthier Medicare users to pay higher premiums. Treasury Secretary Tim Geithner has estimated extraordinary measures can push the necessity of Congress addressing the debt ceiling until perhaps February.
“Here we are on Dec. 29 without a serious proposal before us to deal with the biggest issue, which is entitlements,” Corker said. “There’s been a lot of discussions about figuring out a way to deal with the … revenue side and at least getting that portion out of the way. Since we know it’s going to happen either before the 31st or after.”
(As an aside, remember that less than two months ago, the GOP was still bashing Obama for Medicare cuts, so… yeah.)
Tonight Corker is talking about tying a debt ceiling hike to Social Security cuts.
So okay, let’s imagine Obama caves on this (something he’s already pledged not to do). So we hike the debt ceiling and cut medicare. Then in a year or so, we hike the debt ceiling again by another $1 trillion and cut Social Security. These programs can’t be cut forever. If we raise the Medicare eligibility age to 67 now, we’re not going to come back and raise it to 68 or 69 the next time the debt ceiling fight comes up.
There just aren’t that many times you can keep squeezing another $1 trillion in spending cuts. The “Boehner Rule” might give you a couple of whacks, but as an actual policy it will quickly fail.
So practically, risking the U.S. full faith and credit every time this comes up, to being able to agree on new spending cuts is unrealistic. And as a matter or principal it’s awful.
By: Joe Weisenthal, Business Insider, December 30, 2012
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