“Uniquely American And Uniquely Stupid”: The Makings Of The Next Debt Ceiling Debacle
I hate to interrupt fulminations about President Obama’s three incredible shrinking scandals with something as prosaic as concern about the GOP’s threatening to sabotage the economy, but a couple of bits of real news emerged yesterday regarding the debt ceiling (yes that, again).
It’s actually a perfect juxtaposition: On the same day that an interview with Standard & Poor’s top U.S. credit rating analyst warned of tinkering with the debt ceiling, House Republicans huddled up to brainstorm about what their price should be for not deliberately tanking the economy.
On the one hand you’ve got an interview National Journal did with Nikola Swann, “Standard & Poor’s top analyst for the U.S. credit rating.” You will recall that Standard & Poor’s downgraded its rating of U.S. debt in 2011 after the last debt ceiling showdown. And you will recall that that showdown was engineered by the GOP as a political hostage-taking situation: Virtually everyone (or virtually everyone who is responsible) acknowledges that raising the debt ceiling is necessary to avoid the U.S. government defaulting on its obligations, which would be financially cataclysmic, but the Republicans threatened to force that exact scenario if they didn’t get spending cuts.
Now the debt-ceiling-fight countdown clock is ticking once again (the Treasury started its “extraordinary measures” to avoid default at noon today), with the moment of crisis expected to hit some time between August and year’s end. Does the prognosis look any better? “We have not seen any strong evidence that the political system as a whole is more effective, more stable, or more predictable than we thought it was in 2011,” Swann told National Journal’s Stacy Kaper. “There does seem to be, especially in recent years, an overall trend in the U.S. to effectively make major policy decisions at the last moment in a crisis setting. We don’t see that as credit-positive.”
That’s delightful understatement. He goes on to say that in order to avoid another credit downgrade, the U.S. should extend the debt ceiling for five years and bring the debt-to-GDP ratio under control with a plan that is actually credible. House Republicans passed a bill (which stands zero chance of becoming law) which would allow the Treasury to prioritize government payments (which would still leave the government in a position of not paying its bills … it would just be not paying for goods and services while making sure that its debt holders are taken care of). “This does not sound like a very comfortable scenario,” he says in another bit of understatement.
The final point in the interview is the most instructive:
S&P rates over 120 sovereign governments, including all of the wealthy developed ones. Of those, there are very few that have anything similar to the U.S. debt ceiling. Of those countries that do have some kind of legislated limit on the amount of debt, that limit is set as part of the budget-setting process. It almost never is divided the way it is in the U.S. We don’t think it is helpful to credit quality.
The very idea of a debt ceiling that doesn’t rise with authorized spending is, in other words, both uniquely American and uniquely stupid. Why? Because it lends itself to the kind of irresponsible hostage taking the Republicans are gearing up to engage in yet again.
And it’s a political terrorism scheme that is increasingly disengaged from reality (to which its connection was tenuous at best anyway). To wit: The last time around the GOP objection to the debt ceiling was grounded in rising deficits; this didn’t make their threats less irresponsible but at least established a plausible-sounding connection between their threat and their demand. But the budget deficit is, as my bloleague Pat Garofalo wrote earlier this week, the incredible shrinking issue. As a percentage of the economy, it is now roughly half of what it was when President Obama took office.
But Republicans know they’ve got a hostage so they’re bound and determined to extract a ransom. Hence the brainstorming session they held yesterday where 39 different members of the House GOP conference arose to offer their idea of what policy they should demand in return for not intentionally tanking the global economy. The ideas, according to various reports, ranged from approval of the Keystone XL pipeline to doing something about partial-birth abortion.
My personal favorite item comes from Jonathan Strong’s account at National Review Online:
The Ryan budget passed by the House assumes repeal of Obamacare. So if House Republicans were to press for enactment of the Ryan budget in exchange for raising the debt ceiling, that would entail repealing Obamacare – which is why there are pangs of doubt within the GOP leadership about whether that strategy is realistic.
So GOP leadership thinks demanding that the president sign onto the radical Ryan budget is unrealistic because it would necessarily involve repealing Obamacare? As if the Ryan budget’s dramatic cuts to discretionary spending and gutting of Medicare and Medicaid would be evenly remotely acceptable were Obamacare not involved? The whole scenario yesterday has the air of fantasy – like my wife and I arguing over what we’ll do when we win the Powerball tomorrow night (she looks oddly askance at my plan to commute via jet pack).
By: Robert Schlesinger, U. S. News and World Report, May 17, 2013
“The Real IRS Problem”: The Post Citizens United Explosion Of Undisclosed Political Campaign Spending
Americans of all political stripes should be outraged at the recent revelation that the Tea Party was unfairly targeted by the IRS before last year’s election. The IRS should never base its decisions on political preferences or ideological code words, regardless of what bureaucratic challenges it may face. But the lesson that the right is drawing from the IRS’s misdeeds — the lesson that threatens to dominate the public conversation about the news — is wrong.
We’re seeing a knee-jerk reaction, particularly from the Tea Party and their allies in Congress, that is threatening to turn the IRS’s mistakes into an indictment of “big government” writ large. Some are already trying to tie the scandal to the Right’s favorite target, Obamacare, and to the Benghazi conspiracy theory.
The danger of this frame is that it will discourage the IRS from fully investigating all nonprofit groups spending money to influence elections. And it will distract from the core problem behind the IRS’s mess: the post-Citizens United explosion of undisclosed electoral spending.
Before the Supreme Court’s decision in Citizens United, only a limited number of nonprofit 501c(4) groups could spend money to influence elections — those who did not take contributions from corporations or unions. But Citizens United lifted restrictions on corporate spending in elections, setting the stage for individuals and companies to funnel unlimited money through all corporations, including c(4)s and super PACs in an effort to help elect the candidates of their choice. Spending by c(4)s has exploded since Citizens United, since the decision allowed any c(4) nonprofit corporation that didn’t spend the majority of its money on electoral work to run ads and campaign for and against candidates. And c(4)s, as long as they follow this rule, don’t have to disclose their donors under the laws currently in place.
The IRS, then, was forced to play a new and critical role in policing this onslaught of electoral spending. IRS officials clearly made poor choices in how to confront this sudden sea change and those mistakes should be investigated and properly addressed. But strong oversight of this new wave of spending remains critically important and clearlywithin the IRS’s purview.
If we let understandable concerns about bad decisions by the IRS lead to weakening of campaign finance oversight, our democracy will be the worse off for it. Instead, we should insist that the government strengthen its oversight of electoral spending — equally across the political spectrum. We should pass strong disclosure laws that cover all political spenders, including c(4)s. And we should redouble our efforts to overturn Citizens United by constitutional amendment and reel back the flood of corporate money that led the IRS to be in this business in the first place.
By: Michael B. Keegan, The Blog, The Huffington Post, May 15, 2013
“Panic Is Just What Republicans Want”: Democrats Shouldn’t Take GOP’s Bait On Obamacare Implementation
The notion that Obamacare’s implementation could become a major liability for Democrats in 2014 is gaining widespread currency, and today it’s the subject of a big New York Times piece reporting on confident predictions by Republicans that implementation problems will give them a powerful weapon against Dem candidates. Obama is set to do a series of events designed to educate the public on the challenges of implementing the law, beginning with one on Friday where he’ll promote the law’s benefits for women.
It strikes me that GOP Obamacare implementation triumphalism is a tad premature.
Here is how the Times characterizes the sentiment in Dem circles about the coming war over implementation:
Democrats are worried about 2014 — a president’s party typically loses seats in midterm years — and some have gone public with concerns about the pace of carrying out the law. Senator Harry Reid of Nevada, the majority leader, told an interviewer last week that he agreed with a recent comment by Senator Max Baucus of Montana, a Democratic architect of the law, who said “a train wreck” could occur this fall if preparations fell short.
The White House has allayed some worries, with briefings for Democrats about their public education plans, including PowerPoint presentations that show areas with target populations down to the block level.
“There’s clearly some concern” among Democrats “that their constituents don’t yet have all facts on how it will work, and that Republicans are filling that vacuum with partisan talking points,” said Representative Steve Israel of New York, head of the House Democrats’ campaign committee. “And the administration must use every tool they have to get around the obstructions and make it work.”
Quotes like these are widely held up as evidence that Republicans are right that Obamacare implementation is shaping up as a major problem for Dems. But this amounts to a fundamental misreading of what it is these Dems are actually saying. Democrats are simply doing exactly what they should be doing — that is, calling for care and caution in the implementation of Obamacare, and calling for a serious effort to educate the public about the challenges and potential pitfalls it entails. This is not tantamount to running away from the law wholesale; nor is it a concession that implementation will amount to a major political albatross.
As Jonathan Cohn has detailed at length, it’s very possible there will be real problems with the health law’s implementation. If that happens, Republicans will relentlessly try to tie Dem candidates to those difficulties, in hopes for a rerun of 2010. But in 2010, public reactions to the new health law were largely suffused with deep anxiety about the severe economic crisis and uncertainty about the new president’s ability to cope with it. Republicans and allied groups made the assault on Obamacare central in 2012, in the presidential race and in many Senate contests, with absolutely nothing to show for it.
Will implementation make things different in 2014? By all means, the problems could be very real, particularly with Republicans intent on subverting implementation wherever possible. Dems should remain vigilant and prepare for turbulence. But they needn’t fret this too much. For one thing, as Josh Barro has noted, implementation is likely to be most keenly felt among those who currently lack insurance, who will naturally see getting insurance as a preferable outcome to nothing at all, even if it proves logistically difficult.
Dem candidates can strike a balance here: They can call for careful implementation and criticize it when it goes awry, while standing squarely behind the law’s overall goal of expanding coverage to the millions of Americans who lack it. What’s more, they can continue to remind the public that Republicans are offering no alternative of their own and simply want to return the country to a pre-reform free-for-all that nobody, particularly the large ranks of the uninsured, wants. This position is the correct one to take, substantively and politically, and it shouldn’t be that hard to get the balance right. After all, whatever the unpopularity of Obamacare, offering nothing in the way of reform isn’t exactly a winning message, either. Major reforms are not easy, and Dems can say so, while pointing to the endless GOP drive to repeal the law to reinforce the notion that Republicans have no interest in actually addressing the country’s most pressing problems.
Dems should refrain from displays of political panic, since panicking is exactly what Republicans want them to do. “A lot of this is psychological warfare,” is how Dem strategist Doug Thornell recently put it. “I would tell Dems not to take the bait.” So would I.
By: Greg Sargent, The Plum Line, The Washington Post, May 7, 2013
“Eight Months Until The End Of Job Lock”: A Reminder About One Of The Best Things Obamacare Does
For years, even before Barack Obama was elected, one of the many complaints liberals (mostly) had about the current employer-based health insurance system was “job lock”—if you have insurance at your job, particularly if you or someone in your family has health issues, then you’re going to be hesitant to leave that job. You won’t start your own business, or join somebody else’s struggling startup (unless they provide insurance), and this constrains people’s opportunities and dampens the country’s entrepreneurial spirit.
That this occurs is intuitively obvious—you probably know someone who has experienced it, or have experienced it yourself. And today there’s an article in that pro-Democrat hippie rag The Wall Street Journal entitled “Will Health-Care Law Beget Entrepreneurs?” Amid the worrying about the implementation of Obamacare in January, and the quite reasonable concern that the news could be filled with stories of confusion, missteps, and dirtbags like that Papa John’s guy cutting employees’ hours rather than give them insurance, to avoid the horror of increasing the cost of a pizza by a dime,11This is important: when you hear a story about an employer who cut his employees’ hours so he wouldn’t have to abide by the law, what you’re reading about is a jerk who doesn’t want to offer his employees insurance, not some inevitable consequence of the law. That’s a choice he makes. And don’t forget too that the employer mandate only applies to companies with 50 or more employers, and 96 percent of them already offer health insurance, even without a mandate. it’s a reminder that there will probably be lots of stories like this one in the news too, stories about people whose lives have been changed for the better by the fact that Americans will have something they’ve never had before: health security.
So what kind of effect could the elimination of job lock have on the economy? That’s tough to say. The study referred to in the WSJ article finds that people are much more likely to start a business if they get their health insurance from their spouse’s job than if they get it from their own job; in the former case you’d still have insurance if you started a business, while in the latter case you’d lose it. In addition, and this is particularly interesting, even though you might think of 65-year-olds as looking forward to days of golf and eating dinner at 4 p.m., a large number of people seem to start businesses pretty much the minute they become eligible for Medicare. While it’s hard to get insurance in the current private market if you’re 44, it’s basically impossible if you’re 64.
So it seems that the fact that after January, job lock will be history means that more businesses will be started. How many more? Well, we don’t know yet, and it could depend in part on how affordable the insurance you can get through the exchanges is compared to what people are getting from their employers. And it will be hard to measure precisely how much more economic activity is generated by businesses that wouldn’t have otherwise been started. Obviously, some will succeed and more will fail.
Nevertheless, beyond additions to GDP, there’s something psychological that shouldn’t be discounted, touchy-feely though it might be. The end of job lock means the end of a certain kind of fear that all of us under the age of 65 live with to one degree or another. It’s the fear that leaving a job, voluntarily or otherwise, could become an utter financial calamity if we or one of our loved ones has a health problem. Even if you wish reform hadn’t been grafted on to the existing employer-based system (I’ll raise my hand on that one), ending that fear is huge; it’s one of the best things Obamacare does. Even if it’s difficult to communicate on a bumper sticker.
By: Paul Waldman, Contributing Editor, The American Prospect, May 9, 2013
“Managing Expectations”: How Conservatives Are Helping Obamacare
Yuval Levin, among other conservatives, has made an offer to liberals: Let’s delay the implementation of Obamacare for a year and make everybody better off:
Congressional Democrats surely want to avoid being blamed for a meltdown of American health care during a congressional election year, the people implementing this law at every level could certainly use the time, and Republicans believe that more time would not make Obamacare more popular but would allow them to further develop and articulate their alternatives (and allow another election to intervene earlier in the rollout process, making a replacement more plausible).
Liberals, wisely, are saying no. What’s funny about this conversation is that conservatives have been accidentally managing expectations for implementation: By harping constantly on what a disaster the rollout is going to be, they will make what actually happens look good by comparison.
Jonathan Cohn has a good piece in the New Republic arguing that implementation won’t be as bad as people are saying. This is his really important observation:
Notice that the worries about implementation chaos apply strictly to people who would otherwise be uninsured or at the mercy of the existing individual insurance market, in which plans are inconsistently priced, full of coverage holes, and of unpredictable reliability — and in which financial assistance for buying private coverage is not available at all. Even if it takes these people a while to get insurance, and even if finding that coverage is a maddening experience, they’re going to end up with something they don’t have now: Coverage that meets more of their needs and is available to them, with substantial financial assistance. Don’t forget: Today, people with pre-existing medical conditions frequently cannot get any coverage on the individual market.
This is something that has been lost in the discussion of Obamacare implementation difficulties:
Implementation won’t much affect the 78 percent of Americans currently covered through Medicaid, Medicare, or employer group health plans. It will make some people who currently buy individual coverage worse off. But only 5 percent of Americans get insurance through the individual market, which is already hugely dysfunctional. Three times as many Americans are currently uninsured, and they can only stand to gain from Obamacare implementation, even if it does not go smoothly.
For those 5 percent who buy individual coverage now, the new law will be a mixed bag. Some people will probably have frustrating bureaucratic experiences with the new exchanges that they didn’t have buying directly from insurers. And some people (particularly young and healthy people) will see their premiums go up. But others will see their premiums go down, either because they currently pay a lot because of age or health status, or because income-based premium subsidies will more than offset any premium increase.
There will also be people who lose group health coverage, when premium subsidies make it attractive for their employers to send them to shop in the exchanges. (Others will gain group coverage if employers decide it is better to offer it than to pay a penalty for uninsured workers.) But neither this effect nor any problems faced by people with existing individual insurance is likely to create a clamor for repeal that is any more effective than the din of the last three years.
That is because the most obvious way to fix the problem of those who have trouble in the health exchanges will be to fix the exchanges, not repeal them. Let’s say your employer dropped group coverage and you’re having trouble with the exchange. Will you want the whole law repealed in the hope that will lead your employer to reverse course and offer a group plan again? Or will you want the exchange fixed so you are guaranteed access to coverage?
Cohn looks back to Medicare Part D and the Children’s Health Insurance Program and argues that those programs got through their rocky implementations in large part because benefits obtained with bureaucratic difficulty are better than no benefits at all. He’s right, and this is why conservatives are “magnanimously” offering to delay implementation of Obamacare. They realize that once people have guaranteed access to health coverage, they won’t want to give it up, even if there are implementation problems.
The political landscape is already dire for those who still hope to repeal Obamacare, and they’re actually making their position worse by talking constantly about what a nightmare implementation is going to be. This fall, as the exchanges come on line, tens of millions of people are going to find they can get health coverage they never could before. They are likely to be quite happy about that, especially if they’ve been hearing for months in advance that it will be a mess.
By: Josh Barro, Bloomberg, April 29, 2013
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