“Unicorn’s And Other Fables”: Grover Norquist’s Latest Plot To Drown Government…Monthly Debt Ceiling Fights
There’s two ways to look at Grover Norquist. He’s either the most powerful unelected man in the world or an amazing self-promoter who is about to be proven obsolete. Norquist obviously feels he’s the former. For nearly two decades, he’s held Republicans to a pledge to never raise taxes. Now he wants them to force the president to cede to their wishes on a monthly basis.
The President of Americans for Tax Reform is urging Republicans to use the debt ceiling to exact spending cuts or continue the Bush tax cuts for incomes over $250,000.
“The debt ceiling that Obama’s plans bump into every month or so for the next four years provides plenty of ‘leverage’ for the GOP to trade for spending cuts — as done in 2011 — or continuing the lower rates,” Norquist wrote Wednesday in The Hill.
Nearly 6 out of 10 Americans want to end the Bush tax breaks for the rich. But enough Republicans in the House and Senate have signed Norquist’s American Taxpayer Pledge that he’s certain that the negotiations on the so-called “fiscal cliff” can end without taxes going up.
After an electoral college landslide, many — including the White House — believe that the president has the leverage in negotiations. But the debt ceiling, which we will hit in February, does give Republicans a chance to make demands on the president.
When President Obama asked Speaker Boehner to raise the debt limit, Boehner reportedly said, “There is a price for everything.”
In 2011, Republicans, for the first time ever, used the debt limit to force cuts — something they never asked for in the dozens of times they raised the limit for the last three Republican presidents.
Though senators Lindsey Graham, Saxby Chambliss and other Republicans have said they would break their pledge with Norquist, the lobbyist seems unfazed. He told Slate’s Dave Weigel that he has no concerns that his pledge is about to crumble.
“I’ve talked to Lindsey Graham on the phone after some of his pronouncements, and he’s said, ‘Oh, I would need 10-1 [ratio of cuts to tax hikes], and it would have to include permanent, unalterable entitlement reform.’ I said, ‘Lindsey, if that’s what it’s going to take to get you to raise taxes, I’m not going to worry about you,” Norquist said. “You are not in danger of being offered a silver unicorn, because unicorns don’t exist.”
The Washington Post’s Greg Sargent keeps insisting that the GOP is just trying to present an appearance of compromise. Some Republicans are making news with their alleged willingness to buck Norquist — but votes speak louder than words.
Unlike many Republicans, Norquist would be pleased if the so-called sequester goes into effect. He’s a Republican who believes the Department of Defense isn’t sacred when it comes to spending cuts.
The question is, how many Republicans would be willing to risk the cuts to Defense along with responsiblty for a middle-class tax increase by holding out for a deal that honors Norquist’s pledge?
And if the president won’t agree, will they doom the United States’ credit and cause unprecedented “uncertainty,” which Republicans claim to hate, by holding the debt limit hostage on a monthly basis?
Even if Republicans were to go down that path, the president would have to adopt a strategy advocated by former president Bill Clinton often called “the 14th Amendment option.”
The amendment includes the sentence, “The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion shall not be questioned.”
In 2011, Clinton said that “without hesitation” he would invoke the 14th Amendment “and force the courts to stop me.”
President Obama nixed that plan, saying his lawyers didn’t see the validity in it. But if Republicans decided to use the debt ceiling to keep him on an “allowance,” it wouldn’t be hard to imagine him deciding that it was worth going to court.
Norquist has never been shy about his disdain for government. He’s often joked,” I just want to shrink it down to the size where we can drown it in the bathtub.” But he’s never faced a predicament like expiring tax cuts and a president with the political capital to fight to keep some of them expired.
Soon we’ll find out how much power he actually has.
BY: Jason Sattler, The National Memo. November 28, 2012
“Old Habits Die Hard”: Cutting Taxes Doesn’t Cut It For Republicans
If the GOP pushes the economy over the fiscal cliff, the party will go over too. The longer Republicans push for tax breaks for bankers and billionaires, the more trouble they’ll get themselves into. Republicans have enough problems morphing into the Tea Party, now the GOP is becoming a wholly owned subsidiary of the Fortune 500.
The Election Day national exit survey demonstrates the fact that the GOP doesn’t have a good message for Americans who worry about the economy. The voters have spoken and the poll tells us what they have to say about the economy and taxes. Republicans will not like what they hear.
Voters heard the questions that Mitt Romney asked about the president’s handling of the economy, but the GOP nominee didn’t follow up with the answers. It should have been a plus for the challenger that almost half (45 percent) of the voters felt the economy was “not so good.” However, a majority (55 percent to 42 percent) of these distressed voters actually went for Barack Obama over Mitt Romney. Another illustration of the GOP’s failure to address middle class economic concerns was that nine of 10 voters (90 percent) who gave the economy a positive rating voted to re-elect the president but only six out of every 10 (60 percent) voters who gave the economy a negative rating voted for his challenger.
Cutting taxes doesn’t cut it for Republicans. There were more voters who worried about unemployment (38 percent) and rising prices (37 percent) than there were who were concerned about cutting taxes (14 percent). The good news for the GOP was that voters who worried about taxes voted overwhelmingly for Romney. The bad news was that there were too few of these voters to make much of a difference in the outcome. Along the same lines, almost half (47 percent) of the voters wanted to raise taxes on the wealthy and another small group (13 percent) favored raising everybody’s taxes. That’s six out of 10 voters who are open to raising taxes to stabilize the economy. Only a third (35 percent) of the voters wanted to hold the line on taxes.
The failure of Romney and the GOP to come up with anything but cutting taxes leaves Republicans in the lurch. Nature abhors a vacuum and the party’s neglect of jobs and inflation gives voters the chance to fill that vacuum with their feelings about the last Republican president. This isn’t good news for Republicans because a large majority (53 percent to 38 percent) of the electorate blames George W. Bush not Barack Obama for the condition of today’s economy.
Voters want to fight a class war and the president’s populist approach to the economy is just what they wanted. Trickle-down economics was a disaster for Romney and will continue to tarnish the Republican brand if the party doesn’t craft a more comprehensive economic message. More than half (53 percent) of the voters feel that the American economic system favors the rich and only a third (34 percent) think the system is fair to all Americans. A majority (55 percent to 39 percent) of voters also believe that Romney’s policies would have favored the rich over the middle class. A fifth (21 percent) of the voters wanted a president who cares about people and those voters supported the incumbent overwhelmingly (81 percent to 18 percent).
The party’s fixation on taxes means the GOP is riding a one trick pony into the ground. The debate on taxes only focuses attention on the GOP’s inability to come up with anything new. Old habits die hard so President Obama doesn’t have to worry that Republicans will come up with something that works better.
By: Brad Bannon, U. S. News and World Report, November 26, 2012
“Fighting Fiscal Phantoms”:The GOP Hydra-Headed Deficit Scold Movement Has Lost Some Of Its Clout
These are difficult times for the deficit scolds who have dominated policy discussion for almost three years. One could almost feel sorry for them, if it weren’t for their role in diverting attention from the ongoing problem of inadequate recovery, and thereby helping to perpetuate catastrophically high unemployment.
What has changed? For one thing, the crisis they predicted keeps not happening. Far from fleeing U.S. debt, investors have continued to pile in, driving interest rates to historical lows. Beyond that, suddenly the clear and present danger to the American economy isn’t that we’ll fail to reduce the deficit enough; it is, instead, that we’ll reduce the deficit too much. For that’s what the “fiscal cliff” — better described as the austerity bomb — is all about: the tax hikes and spending cuts scheduled to kick in at the end of this year are precisely not what we want to see happen in a still-depressed economy.
Given these realities, the deficit-scold movement has lost some of its clout. That movement, by the way, is a hydra-headed beast, comprising many organizations that turn out, on inspection, to be financed and run by more or less the same people; dig down into many of these groups’ back stories and you will, in particular, find Peter Peterson, the private-equity billionaire, playing a key role.
But the deficit scolds aren’t giving up. Now yet another organization, Fix the Debt, is campaigning for cuts to Social Security and Medicare, even while making lower tax rates a “core principle.” That last part makes no sense in terms of the group’s ostensible mission, but makes perfect sense if you look at the array of big corporations, from Goldman Sachs to the UnitedHealth Group, that are involved in the effort and would benefit from tax cuts. Hey, sacrifice is for the little people.
So should we take this latest push seriously? No — and not just because these people, aside from exhibiting a lot of hypocrisy, have been wrong about everything so far. The truth is that at a fundamental level the crisis story they’re trying to sell doesn’t make sense.
You’ve heard the story many times: Supposedly, any day now investors will lose faith in America’s ability to come to grips with its budget failures. When they do, there will be a run on Treasury bonds, interest rates will spike, and the U.S. economy will plunge back into recession.
This sounds plausible to many people, because it’s roughly speaking what happened to Greece. But we’re not Greece, and it’s almost impossible to see how this could actually happen to a country in our situation.
For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. After all, it can print the stuff. So there’s almost no risk that America will default on its debt — I’d say no risk at all if it weren’t for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.
But if the U.S. government prints money to pay its bills, won’t that lead to inflation? No, not if the economy is still depressed.
Now, it’s true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now: expected inflation would discourage corporations and families from sitting on cash, while a weaker dollar would make our exports more competitive.
Still, haven’t crises like the one envisioned by deficit scolds happened in the past? Actually, no. As far as I can tell, every example supposedly illustrating the dangers of debt involves either a country that, like Greece today, lacked its own currency, or a country that, like Asian economies in the 1990s, had large debts in foreign currencies. Countries with large debts in their own currency, like France after World War I, have sometimes experienced big loss-of-confidence drops in the value of their currency — but nothing like the debt-induced recession we’re being told to fear.
So let’s step back for a minute, and consider what’s going on here. For years, deficit scolds have held Washington in thrall with warnings of an imminent debt crisis, even though investors, who continue to buy U.S. bonds, clearly believe that such a crisis won’t happen; economic analysis says that such a crisis can’t happen; and the historical record shows no examples bearing any resemblance to our current situation in which such a crisis actually did happen.
If you ask me, it’s time for Washington to stop worrying about this phantom menace — and to stop listening to the people who have been peddling this scare story in an attempt to get their way.
By: Paul Krugman, Op-Ed Columnist, The New York Times, November 26, 2012
“What Do Republicans Want?”: President Obama Couldn’t Have Been Any Clearer, And He Won
As we head into negotiations on the Austerity Trap (better known by the inaccurate moniker “fiscal cliff,” which I refuse to use), there’s a clear narrative emerging. This narrative has it that Democrats want to see taxes increase on rich people, which Republicans aren’t happy about, while Republicans want to see entitlement “reform,” which Democrats aren’t happy about. So once everybody gives a little, and Republicans accept some tax increases for the rich while Democrats accept some “reform” of Social Security and Medicare, then we can have a happy ending.
The problem with this is that while the Democrats’ position is quite clear—the Bush tax cuts should expire for income over $250,000—the Republicans’ position is extremely vague, on both the tax side and the entitlement side. Let’s take taxes first. A bunch of Republicans are being praised for their willingness to violate Grover Norquist’s pledge to Never Raise Taxes In Any Way Ever Never Ever. Yet they’re remaining steadfast that tax rates must stay the same, while allowing that maybe we can trim some deductions for the wealthy. As Steve Benen points out, some are acting like these Republicans are being generous for essentially taking the position that they support Mitt Romney’s tax plan. Perhaps they’re assuming that the wealthy will be able to cleverly evade any limitation on deductions, so it won’t make a difference to their primary constituency. But in any case, we haven’t heard them take a specific position. Are they proposing a hard cap on all deductions? Eliminating certain deductions while keeping others? We don’t yet know.
Then we get to the price Republicans are going to want to exact for any agreement to stop the Austerity Trap, and this is where they’re vague. They want “reform” of entitlements. What is “reform,” you ask? Well, nobody ever says. The reason is that Republicans know perfectly well that the things they would like to do to Social Security and Medicare are unpopular. We can dispense with Social Security quickly: The program is basically fine, and you could eliminate future shortfalls in benefits with some minor tweaking of the financing, like raising the income cut-off for Social Security taxes, which is currently at $110,100. But the real budgetary challenge is Medicare.
You may remember that when Paul Ryan joined the Republican ticket, a lot of attention was paid to his Medicare plan, which would essentially turn Medicare from an insurance program into a voucher program, in which seniors would try to find affordable insurance coverage from private insurance companies. You may also remember that he and Romney quickly stopped talking about it and turned to accusing Barack Obama of cutting Medicare by $716 billion, heartless enemy of the welfare state that he is. This should remind us of two things: First, the “reform” that Republicans want in Medicare is to privatize it and end its guarantee of health coverage; and second, that only one party has reformed Medicare. That reform, also known as Obamacare, not only found hundreds of billions of dollars in savings but also moved toward changing the payment structure (away from fee-for-service and toward rewarding providers for making and keeping patients healthy) and included a lot of pilot programs that could reduce costs in the future.
This debate is just getting started, so perhaps it’s not so terrible that Republicans have been so unclear about what specifically they want. But they shouldn’t be allowed to get away with it for long. Let’s also not forget that we had something of a referendum on all these questions earlier this month. Barack Obama couldn’t have been clearer that he wanted to raise taxes on the wealthy and didn’t want to voucherize Medicare. And he won.
By: Paul Waldman, Contributing Editor, The American Prospect, November 25, 2012
“The GOP’s Holiday Gift Guide”: Pain For The Poor, Ponies For The Rich
Republicans are using the fiscal cliff to extract payback for all the “gifts” President Obama has given to Americans.
Before Americans have even finished digesting their Thanksgiving turkey, the holiday shopping season will have officially begun. But according to Mitt Romney, Christmas came early for those who voted for Barack Obama. The failed Republican presidential nominee and latter-day Scrooge told donors last week that President Obama had won re-election by “giving targeted groups a big gift.” And what generous stocking-stuffers they were! For the young and the poor, health coverage under the Affordable Care Act. For Hispanics, an executive order halting deportation of the children of undocumented immigrants. For women, free contraception for use in all their filthy lady activities. If Malia and Sasha don’t find a pair of baby unicorns under the White House Christmas tree this year, they have a right to feel jealous.
Romney’s comments met with disapproval from fellow Republicans who hope to have a future in elective office, but the truth is that they reflect an understanding of the American public and its relationship with government that is widely shared among conservatives. Paul Waldman argues that it fits right in with their “makers vs. takers” ideology, the notion that the country is divided between “the brave individualists needing nothing from anyone, and the blood-sucking parasites who rely on government.” But Republicans don’t just want to reset policy to some sort of neutral state where everyone gives and receives his or her fair share (slow down there, Karl Marx). Instead, they seem to view the fiscal cliff as an opportunity to impose austerity measures that would redistribute the gifts to their Nice List and punish those who have been spoiled by Obama’s Socialist Santa.
The fiscal cliff is in fact better described as an “austerity bomb,” a term coined by Talking Points Memo’s Brian Beutler and echoed by Paul Krugman. Despite what the cliff terminology might suggest, the problem isn’t that the federal deficit is about to explode, but that conservatives who have spent years demanding swift and substantial deficit reduction are about to get exactly what they wanted. If this mix of scheduled tax increases and spending cuts is allowed to take effect, it will carve $560 billion out of the budget next year—so why are deficit scolds suddenly terrified of the consequences? Krugman argues that they’re implicitly conceding that “Keynesians were right all along, that slashing spending and raising taxes on ordinary workers is destructive in a depressed economy, and that we should actually be doing the opposite.”
But are Republicans really worried about the plight of the working man? You wouldn’t know it based on the alternatives they’ve proposed, which involve swapping one set of austerity measures for a slightly different set of austerity measures. Their real concern is what the fiscal cliff will mean for their friends and supporters, not what it will mean for the broader economy. Sure, the poor will take the hit first, as is their lot in life, but taxes will go up on rich people, too! That’s money coming straight out of the 2014 campaign coffers. And what about those poor defense contractors who will suffer from cuts to the Pentagon’s budget? They have mouths to feed, too.
The terms that Republicans have set for the fiscal cliff negotiations provide clear evidence of this favoritism. Chastened by President Obama’s re-election, they keep claiming they’re open to compromise, but they steadfastly refuse to raise tax rates on the rich. Instead, they insist any new revenue must come from “closing loopholes,” a hoary Beltway cliché that means nothing in particular, and they’ll only concede that much if Democrats agree to “reform entitlements,” which is even less specific but more ominous. Oh, and they also want “changes” to the Affordable Care Act to be on the table. In fact, if Barack Obama would just go ahead and resign from office, it would be a real show of good faith and bipartisan spirit.
Proposing to cut Social Security benefits or raise the retirement age as part of a fiscal cliff deal is a non sequitur at best. With all due respect to financial masterminds like Lloyd Blankfein, it’s hard to believe that anyone could be told that Congress is about to pull the rug out from under the fragile recovery and honestly conclude that the solution is to make old people work longer. It’s the equivalent of the president being told that we’re on the verge of nuclear war and replying, “I’ll have the soup.” As Jeff Madrick has explained at length, Social Security is not in crisis, and there are plenty of easy fixes available for its future financial shortfall. (Medicare is a thornier problem, but one that probably shouldn’t be dealt with on a timer.) Senator Mark Begich, for instance, has proposed to cover the gap and pay for more generous benefits by eliminating the payroll tax cap. But don’t expect that plan to be taken very seriously by the Very Serious People, because it asks the rich to sacrifice more instead of inflicting some character-building pain on everyone else.
Aside from being unnecessary, such cuts would have a disproportionate impact on the poor. The right’s claim that Social Security wasn’t designed to handle increased life expectancies is based on a serious misunderstanding of history and human biology, but it is true that life expectancy has risen dramatically—for the rich. Workers on the lower rungs of the economic ladder haven’t been so lucky, so a higher retirement age is just a massive benefit cut for them. Of course, any such changes would only be phased in for younger workers, who (purely coincidentally) don’t vote Republican, not current retirees who do. That will teach those spoiled little punks. Er, I mean, preserve the promise of Social Security for future generations.
The same logic, if you can call it that, applies to demanding changes to the Affordable Care Act. The current law will save $109 billion over the next 10 years, so in theory, the deficit hawks should love it, right? Well, there are two problems with that theory. The first is that those cost savings are based on CBO projections, which, like Nate Silver’s electoral analysis, fall into that category of “liberal math” that Republicans find inherently suspect. The other is that the ACA achieves those savings while helping poor people — that’s what makes it a gift, according to Romney. But deficit reduction isn’t supposed to make life easier; it’s supposed to be tough love that forces people to fend for themselves in a harsh and unforgiving world. Like exercise, the pain means it’s working. Or maybe you just tore a tendon. You should probably check with your doctor, assuming you can afford health insurance.
This barely concealed impulse to punish the undeserving is the source of Republicans’ internal conflict over the fiscal cliff and the biggest hurdle they must overcome in their efforts to become viable contenders for the White House again. They may not see it as punishment; to them, it’s just a teaspoon of unpleasant medicine that will eventually make the country much healthier. But things like government-funded health care, education, and retirement security only look like gifts from the perspective of the man who has everything. What Republicans see as unaffordable luxuries, the rest of us see as essential to a basic standard of living. Until they realize that, we might be able to reach a compromise on the fiscal cliff, but we’ll never really find common ground.
By: Tim Price, The National Memo, November 23, 2012
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