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Debt Ceiling: What Killed The Deal And What Might Make One Happen This Week

There are a lot of good articles running through what happened between Thursday night, when a deal seemed likely, and Friday evening, when the talks fell apart. New reports suggest that Boehner is trying to prepare a deal by tomorrow evening, to prevent the markets from dropping Monday. So here’s the short version of what just happened, and where we’re likely to be going:

On Tuesday, the Gang of Six proposed a deal that would raise tax revenues by $2 trillion — which showed there was support among Senate Republicans for a deal that raised taxes by about $2 trillion. On Thursday, congressional Democrats rebelled over reports that the deal Boehner and Obama were negotiating had only $800 billion in new revenue, and it wasn’t even clear how those would be achieved. That night, Obama called Boehner looking for about $400 billion more in revenue to have something he could sell to Democrats. That would have brought the deal from $800 billion in revenue to $1.2 trillion in revenue. He didn’t get a call back until the next day at 5:30 p.m. — by which point the call was unnecessary. Boehner had already told the media that he was leaving the talks.

Republicans are emphasizing that the White House went from asking for $800 billion in revenue to $1.2 trillion. The word you’re hearing from them is “reneged,” but the White House emphasizes that negotiations were ongoing, and both sides were asking for more as they tried to figure out what they could both agree on and pass through Congress. Boehner, for instance, wanted further cuts to Medicaid, a trigger that would repeal the individual mandate and the Independent Payment Advisory Board if the entitlement cuts didn’t come through, and a tighter cap on discretionary spending. “They make it seem like the president made some ultimatum on $1.2 trillion in revenue,” says a senior administration official. “He didn’t. He said, ‘If you can’t do this, let’s figure out what we can do.’ ”

The “what we can do” would probably have been to ratchet back the entitlement cuts. Or maybe another solution would have been found. It’s hard to say because Boehner didn’t come back with a counteroffer. He simply left the negotiations.

But let’s zoom out on where the negotiations left off. Spending cuts would have totaled about $3 trillion, with a bit less than a trillion dollars of that coming from entitlements and other forms of mandatory spending. Revenue increases — none of which would have come from raising marginal tax rates — would have been between $800 billion and $1.2 trillion. The package would have extended the unemployment insurance and payroll tax cut provisions passed in the 2010 tax deal. All in all, that’s about a trillion dollars less in revenues than the Simpson-Bowles/Gang of Six deals advocated, and about $2.6 trillion less in revenue than simply letting the Bush tax cuts expire in 2012.

There’s a question as to whether this was the very best deal Republicans could get or simply close to it. But it’s hard to believe that it was so bad that it ended the talks. What seems likelier is that Boehner spent some time between Thursday and Friday talking to his members and found that his party simply didn’t support a deal with the White House. For one thing, a deal would include some amount of revenue, and that was a hard sell under any circumstances. For another, letting the president look like a dealmaker would potentially dim the GOP’s chances of retaking the White House in 2012. As my colleague George Will put it Thursday, a deal “would enable President Obama to run away from his record and run as a debt-reducing centrist.”

And so Boehner walked. Fundamentally, this looks like the same calculation that ended the last round of talks over a 4 trillion deal. What’s different this time is Boehner’s plan B: The Speaker of the House appears to believe that a deal struck between congressional leadership would perhaps be easier to sell to his members. Since it’s hard to see Nancy Pelosi and Harry Reid making deeper concessions than Obama did, it’s hard to see why that would be true, save that the deal might not look like such a victory for the White House.

Perhaps taking the benefit for Obama off the table will be enough. I’m doubtful. It’s more likely that what we’re really doing now is wasting time until the markets plummet and Boehner’s members decide that a deal is better than no deal. And there’s a very good chance that the first major show of market concern could come tomorrow night, when the Asian markets open. Boehner is hoping to present a plan by then, but a plan is very different from a deal. A plan is something politicians can come up with. A deal, we’re increasingly finding, is something that we need the markets to force.

By: Ezra Klein, Columnist, The Washington Post, July 23, 2011

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July 24, 2011 Posted by | Congress, Conservatives, Consumers, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, Elections, Federal Budget, GOP, Government, Government Shut Down, Ideologues, Ideology, Individual Mandate, Lawmakers, Media, Medicaid, Politics, President Obama, Press, Public, Pundits, Republicans, Right Wing, Tax Increases, Taxes, Voters | , , , , , , , , , , , , , , , , , | Leave a comment

The Incredible Crazies: Finding Someone The House GOP Will Listen To

Negotiating with House Republicans isn’t just difficult because they refuse to compromise; it’s also because they don’t even appreciate the point of the exercise. Told, for example, that failure on the debt ceiling would lead to a disaster, the House GOP simply doesn’t believe the evidence.

It’s challenging enough trying to craft an agreement when the parties have the same goal. But what happens when the crew of the Titanic says, “The captain’s wrong; icebergs are no big deal”?

The trick is finding someone the crazies find credible. (thanks to T.K.)

Republican leaders in the House have begun to prepare their troops for politically painful votes to raise the nation’s debt limit, offering warnings and concessions to move the hard-line majority toward a compromise that would avert a federal default. […]

At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling. […]

The warnings appeared to have softened the views of at least some House members who, until now, were inclined to dismiss statements by administration officials, business leaders and outside economists that the economic impact would be dire if the federal government were suddenly unable to pay its bills. [emphasis added]

Right-wing freshman Rep. Steve Womack (R-Ark.) said he found the presentation, particularly the parts about skyrocketing interest rates, “sobering.”

Oh, now it’s “sobering”? We’re 17 days before the drop-dead crisis deadline, and now it’s dawning on some House Republicans that they’re not only playing with matches, but may actually torch the entire economy?

At this point, of course, I’ll take progress wherever I can find it. If some of the House GOP’s madness is “softening,” maybe they’ll be slightly more inclined to be responsible.

But I can’t help but find it interesting the limited pool of individuals Republicans are willing to listen to. The Treasury tells the House GOP caucus members they have to raise the debt ceiling, and Republicans don’t care. The Federal Reserve tells them, and they still don’t care. House Speaker John Boehner tells them, and that doesn’t work, either. Business leaders, governors, and economists tell them, and Republicans ignore all of them.

But Paul Ryan warns of a meltdown and all of a sudden, the House GOP is willing to pay attention.

I guess we should be thankful the radical House Budget Committee chairman is only wrong 90% of the time, and not 100%.

 

By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, July 16, 2011

July 17, 2011 Posted by | Budget, Businesses, Class Warfare, Congress, Conservatives, Consumer Credit, Corporations, Debt Ceiling, Deficits, Economic Recovery, Economy, GOP, Government, Government Shut Down, Ideologues, Ideology, Lawmakers, Middle Class, Politics, Republicans, Right Wing, Taxes, Wealthy | , , , , , , , , , , , | Leave a comment

Why The Tea Party Should Stop Fearing Compromise

Among tea party voters, there is a belief that the right is always getting sold out  by the political establishment. In their telling, Reagan-era conservatives agreed to an amnesty for illegal immigrants on the condition that the law  would be enforced going forward, then deeply regretted having done so.  George H.W. Bush broke his “no new taxes” pledge. The  Contract with America failed to deliver on many of its promises. George  W. Bush joined forces with Ted Kennedy on No Child Left Behind, changed  positions on campaign finance reform, and closed out his presidency by  bailing out undeserving Wall Street firms. In all this, he was abetted  by GOP legislators.

These tea party voters  are sometimes justified in feeling betrayed. Other times, they misinterpret what happened. Right or wrong, however, they’re powerfully averse to compromise. Mere mention of the word aggrieves them. They  don’t think of it as a means of bringing about a mutually beneficial  change in the status quo, where one of their priorities is addressed in return for giving up something on an issue they care less about. When  they hear the word compromise, the knee-jerk reaction is to oppose it.  In their experience, going along with compromise is tantamount to  getting screwed. The insistence that pols “stand on principle” is a  defense mechanism.

This attitude helps explain why tea partiers  are so frequently attracted to relatively inexperienced politicians like Sarah Palin, Marco Rubio, and Michele Bachmann. More experienced pols  have been forced to compromise as the price of achieving something, just as a President Palin, Rubio or Bachmann would be forced to compromise  in order to pass the parts of their agenda most important to them. Having  gotten so little of substance done in their careers, however, they haven’t yet had to give up anything significant, so they can maintain the fiction that they never would. As Daniel Larison puts it, “Bachmann’s lack of  achievements is in some ways a blessing for her, because it is proof  that she has never compromised. In today’s GOP, that is very valuable,  and she doesn’t have many competitors in the race who can say the same.”

The tea party movement should know better. The Founding Fathers engaged in an endless series of compromises. Abraham Lincoln  compromised. Franklin D. Roosevelt compromised. So did Ronald Reagan. Every consequential leader in the history of the United  States has had to compromise.

It defies common sense to think the next  Republican president will be different. So why are tea party voters asking  themselves, “Which of these presidential candidates is least  likely to compromise?” They ought to be pondering different questions, such as: “What  style of negotiation and compromise does this candidate employ? How much have they  gotten in the past for what they gave up?”

“Do the issues they’ve treated as most important align with my priorities?”

Viewed in  that light, Mitch Daniels’ talk of a truce on social issues in order to  focus on the budget deficit should’ve appealed to a large faction of tea partiers. He laid out his  priorities. They aligned perfectly with tea party rhetoric: it is a movement focused on economic issues and individual liberty far more than social conservatism if you trust what its typical adherents themselves assert. But even tea partiers who  shared Daniels’ priorities didn’t like that he talked of compromise.

They got self-righteous about it.

Tea partiers would be better off accepting that every politician cares about some things  more than others, that there is no such thing as successfully governing America as an uncompromising social, economic and national security conservative, and that pretending otherwise results in choosing candidates who are  marginally less likely to choose the best compromises.

Another way to put this is that if tea party voters were  less naive about the centrality of compromise to politics — and more  willing to believe that a principled person can compromise — they’d  feel  less victimized by an unchangeable fact of democracy. They’d also be  more frequently empowered to bring about  policy outcomes that better align with what they care about most.

 

By: Conor Friedersdorf, Associate Editor, The Atlantic, July 15, 2011

July 16, 2011 Posted by | Budget, Congress, Conservatives, Debt Ceiling, Deficits, Democracy, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Iowa Caucuses, Liberty, Politics, Republicans, Right Wing, Taxes, Teaparty, Voters | , , , , , , | Leave a comment

A False Equivalency: Don’t Blame ‘Both Sides’ For Debt Impasse

Washington has many lazy habits, and one of the worst is a reflexive tendency to see equivalence where none exists. Hence the nonsense, being peddled by politicians and commentators who should know better, that “both sides” are equally at fault in the deadlocked talks over the debt ceiling.

This is patently false. The truth is that Democrats have made clear they are open to a compromise deal on budget cuts and revenue increases. Republicans have made clear they are not.

Put another way, Democrats reacted to the “grand bargain” proposed by President Obama and House Speaker John Boehner by squawking, complaining and highlighting elements they didn’t like. This is known throughout the world as the way to begin a process of negotiation.

Republicans, by contrast, answered with a definitive “no” and then covered their ears. Given the looming Aug. 2 deadline for default if the debt ceiling is not raised, the proper term for this approach is blackmail.

Yet the “both sides are to blame” narrative somehow gained currency after Boehner announced Saturday that House Republicans would not support any increase in revenue, period. A false equivalence was drawn between the absolute Republican rejection of “revenue-positive” tax reform and the less-than-absolute Democratic opposition to “benefit cuts” in Medicare and Social Security.

The bogus story line is that the radical right-wing base of the GOP and the radical left-wing base of the Democratic Party are equally to blame for sinking the deal.

Leave aside, for the moment, the fact that in the Obama-Boehner proposal, there would be roughly three dollars’ worth of budget cuts for every dollar of new revenue. Don’t pause to ask whether it makes sense to slash government spending when the economy is still sputtering out of the worst recession in decades. Instead, focus narrowly on the politics of the deal.

It is true that House Minority Leader Nancy Pelosi howled like a blindsided politician when she learned that entitlement programs were on the table. But her objections — and those of Democrats in general — are philosophical and tactical, not absolute.

Progressives understand that Medicare and Social Security are not sustainable on their current trajectories; in the long term, both must have their revenue and costs brought into balance. Pelosi’s position is that each program should be addressed with an eye toward sustainability — not as a part of a last-minute deal for a hike in the debt ceiling that covers us for two or three years.

It’s also true that Democrats believe they can win back a passel of House seats next year by highlighting the GOP plan to convert Medicare into a voucher program. They don’t want Republicans to be able to point and say, “See, the Democrats want to cut Medicare, too.”

There’s nothing in these Democratic objections, however, that couldn’t be creatively finessed. You can claim you haven’t actually “cut” a benefit, for example, if what you’ve done is restrained the rate at which its cost will grow. You can offset spending with new revenue, and you can do so in a way that gives low-income taxpayers a break. Democrats left the door open and these options could have been explored.

The story on the Republican side is entirely different. There are ways to finesse a “no new taxes” pledge, too. Instead of raising tax rates, you close loopholes in the name of reform; you add an enhancement here, a “user fee” there, and you can manage to get the revenue you need and still claim you haven’t voted to raise taxes.

But Republicans are taking the position that not a cent of new revenue can be raised, no matter the euphemism. Some Democrats, yes, are being scratchy and cantankerous. But Republicans are refusing to negotiate at all. That’s not the same thing.

I understand why President Obama, in his news conference Monday, chided “each side” for taking a “maximalist position.” For political and practical reasons, it’s advantageous for him to be seen as an honest broker.

Meanwhile, though, the clock ticks toward Aug. 2 and the possibility of a catastrophic default becomes more real. And no one should be confused about what the president confronts: On one side, grousing and grumbling. On the other, a brick wall.

By: Eugene Robinson, Opinion Writer, The Washington Post, July 11, 2011

July 12, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, GOP, Government, Government Shut Down, Ideology, Immigrants, Journalists, Lawmakers, Media, Middle Class, Politics, President Obama, Press, Pundits, Republicans, Right Wing, Tax Loopholes, Taxes, Wealthy | , , , , , , , , , , , , , , , , | Leave a comment

John Boehner: It’s His Shutdown And He’ll Cry If He Wants To

 I guess this was inevitable.

John Boehner was driven to tears again today. This time it happened at a closed-door meeting of House Republicans.

According to sources inside the meeting, it happened while Boehner was speaking to the group about the latest on his negotiations with Democrats over government funding. Boehner talked about his meeting yesterday with President Obama and then, in a rousing conclusion, he thanked the House Republicans for standing by him and supporting him through these tense negotiations.

The Republican conference responded with a standing ovation for their speaker.

As you could imagine, that prompted the Speaker to cry.

Sure, but is there any chance the crying could become tears of joy after striking a deal? Time is obviously running out in a hurry — we’re now counting down by the number of hours, not the number of days — but there’s been some movement this afternoon.

Roll Call reported that the party’s leaders are at least talking again, and “there were indications that progress was being made.” Senate Majority Whip Dick Durbin (D-Ill.) told reporters, “I feel better about it today than I did yesterday at the same time.”

This was not a unanimous view. Politico reported that “leaders from both parties are more pessimistic about cutting a deal before the government runs out of money.”

There was reportedly some progress on the spending-cut target. Boehner moved the goalposts this week, demanding $40 billion in cuts after agreeing privately to $33 billion, but top aides today apparently met to explore another compromise between the two numbers. The bigger hurdle, apparently, is the GOP demand for policy “riders,” which right-wing House Republicans continue to treat as having equal importance to the cuts themselves.

How party leaders can work around this is a mystery to me.

The odds notwithstanding, if a compromise is reached, what about the rule GOP leaders imposed on themselves, mandating that a bill is available for three days before a vote? In this case, Republicans are prepared to waive the rule, if there’s a deal to even vote on.

In the meantime, the Koch-financed Americans for Prosperity held a rally this afternoon across the street from the Capitol, with several dozen right-wing activists on hand to listen to speeches from Rep. Michele Bachmann (R-Minn.), Republican Study Committee Chairman Jim Jordan (R-Ohio), Reps. Mike Pence (R-Ind.), and others. The Republican voters chanted, “Shut it down!” during the rally, and every other sign at the rally urged the GOP to shut down the government.

I think we can say with confidence which side of the aisle is “rooting for a government shutdown.”

By: Steve Benen, Political Animal, Washington Monthly, April 6, 2011

April 6, 2011 Posted by | Congress, Conservatives, Democrats, Federal Budget, GOP, Government Shut Down, Ideologues, Koch Brothers, Politics, Republicans, Right Wing | , , , , , , , , , , , , | 1 Comment

   

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