Free Markets, Free People

debt ceiling


Blaming the victim

So, I got this email from the TEA Party Express people. It starts:

We are saddened to see today that the political establishment in Washington DC continues to do the only thing they seem to know – kick the proverbial can down the road. Instead of repealing, defunding or at least delaying the atrocious Obamacare, the political elites are content to let the "train wreck" happen at the expense of the American people.

Now, look, I’m really sympathetic to the goals of the TEA Party. If it was up to me, the executive departments of the Federal Government would consist of State, Defense, Treasury, Justice, and Interior. We’d have a balanced budget amendment. There would be no federal-level entitlements. Basically, the federal government’s primary responsibility would be sound money and talking to or killing foreigners as required.

But this is just a bit tendentious. It’s not “political elites” that gave us Obamacare, or who are preventing it from being overturned. It’s Democrats. The problem isn’t that Republicans have some secret admiration for Obamacare that prevents them from getting rid of it. The problem is that Republicans control 1/2 of 1/3 of the government. They have no political way to force the repeal of the ACA. They don’t control the senate—or even have a majority in it—and they don’t control the White House. Since we don’t have government by magical pixie dust, but by actual votes in actual legislative bodies and approval by the president, what possible path to ACA repeal was on the table?

The Tea Party and conservatives got short end of the stick on today’s announced budget "compromise."   Enough Republicans in the Senate and the House are ready to give the Democrats everything they wanted and rendered the principled stand led by Ted Cruz, Mike Lee, and others a futile effort.

No. It was a futile effort before it began. The principled stands of some Republicans were irrelevant, because they had no power whatsoever to translate their stands into concrete action. Nor, apparently, were the Democrats in the Senate or White House particularly worried enough about negative public opinion to yield. SO, where was this going to go? Partially shutting down the government forever? Stopping Social Security and Medicare payments? I mean, what, precisely, was the end game that got to Obamacre repeal with the current senate and president? Hey, while we’re on the subject, what was the plan that the Republicans had—or that Ted Cruz had—prior to shutting down the government? I mean, other than, you know, hope.

To put it plain and simple: we don’t have enough conservatives in Congress to stop the irresponsible spending in Washington.

Yes. Exactly. Which everyone else knew early in November of 2012, just as they knew the next chance to repeal the ACA, barring its spectacular failure, would be after 2014 at the earliest.

We have seen 5 years of the Obama Administration and no successful negotiations have taken place except the sequester, which was Obama’s idea because he never thought it would actually happen!

So, by what sophistry of reason did anyone assume Obama would negotiate over Obamacare?

This is simply unacceptable.  The Republicans have had 5 years to try and make some progress in remedying the financial ills that plague our nation’s future, and have made little to no progress.

I guess that makes you wish you’d had a massive GOTV effort in 2012, huh? But that didn’t happen, and millions of Republican voters stayed home. So we got a Democrat-controlled Senate, and Barack Obama went back to the White House.

The predictable result was that Obamacare was not—and with Democrats controlling the Senate and White House, will not—be repealed in the foreseeable future.

Are there some Republicans who could be described as insufficiently conservative? Yeah. Sure. So what? They aren’t the fundamental problem here. They aren’t the ones who voted for it in the first place, either.

If you want the ACA repealed there’s a simple way to do it: Win elections. Like Cory Booker just did in New Jersey, which sent another Democrat to the Senate.


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Closer to the edge

The grand compromise over the budget and debt ceiling was scuttled by the House. So, the expected Republican surrender didn’t emerge yesterday or today. And everyone was so hopeful, too. Anyway, we now move closer to at least a technical default on US Securities, and, as a result, Fitch announced today that the US rating was being put on watch for a possible downgrade.

Chicago-based Fitch, the third-largest of the major debt-rating companies behind Standard & Poor’s and Moody’s Investors Service, put U.S. Treasury bonds on Rating Watch Negative, which is sometimes but not always a first step before a downgrade. Fitch said in a statement that it still thinks the debt ceiling will be raised in time to prevent a default.

Fitch said the government would have only limited capacity to make payments on the $16.7 trillion national debt after Treasury Department’s emergency measures run out Thursday.

Speaker Boehner did come up with a plan for some sort of House bill, but he abandoned it at the end of today, apparently not having the votes to pass it.

Last-minute protests from conservatives in the House created a day of delay and confusion in Congress’s efforts to avoid a U.S. debt default, as Republican leaders failed to craft a GOP budget proposal that could muster enough votes to pass.

In an embarrassing retreat for House Speaker John Boehner (R., Ohio), House leaders had to cancel plans to bring a GOP bill to the floor for a vote Tuesday night.

At this point, under Congressional rules, I don’t see how a debt deal can be struck that can pass Congress and be signed by the president before the Treasuries emergency actions on the debt run out on the 17th.

The markets are starting to get cautious about all this. There were 3- and 6-month T-Bill auctions today. They didn’t go especially well. The rate for the 3 month jumped 10 basis points, while the 6-month yield rose 9 basis points from last week. Last month’s 4-week auction was weak, as well.

Doom approaches! Or not.

Meanwhile, the Chinese government is calling for a de-Americanized world.

“The world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites,” the commentary said. “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”

“The congressmen are behaving irresponsibly not only for other countries but also for” the United States’ “own creditors,” said Mei Xinyu at the Chinese Academy of International Trade and Economic Cooperation, which has ties to the Commerce Ministry. “They are gambling the U.S. future on their political-struggle interests.”

I don’t know what they’re complaining about. After all, we’re funding a great portion of their defense budget with the interest payments on the US bonds they own, so I don’t see why….oh. Wait. If we default, those interest payments stop. OK. I think I’m beginning to see what they’re so upset about. I imagine our messy democratic maneuverings are also a bit foreign and frustrating to a one-party dictatorship, too.

If only we had a dictatorial, one-party, state here, we could do these things so much more efficiently. Just like Tom Friedman always says.

I like the phrase, “political-struggle interests.” You gotta hand it to those Commies, boy. You just can’t beat ‘em for catchy political sloganeering. “The running dogs of the capitalist-imperialist forces” has always been a favorite of mine.


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Well, that didn’t take long

Last night, on the podcast, I predicted the Republicans would fold on Obamacare, end the shutdown, and avoid a technical default on the debt. Less that 24 hours later, it appears that the Republicans have decided to celebrate the Columbus Day holiday by folding. The word is—as of 1:30pm Pacific Time—that the government will be funded through 15 Jan 2014, and the debt ceiling to around 15 Feb 2014. All is proceeding as I have foreseen.

My position, as a strategic matter, was that the Republicans have simply been galactically stupid. The reality is that Obamacare, with the current Senate and President, will not be repealed. If the republicans, therefore, were not prepared to shut the government down for as long as the sun burns hot in space, they shouldn’t have shut it down at all.  Moreover, even if we assume, arguendo, that the Republicans were prepared to shut down the government forever, they shouldn’t have done it this month.

Alternatively, they could’ve sent up a temporary debt limit increase first, and ensured that was in place, and then shut the government down. At least that way, they could have a long-term shutdown without the specter of default hanging over it.

Then, they should have delayed shutting down the government until after the Obamacare rollout, which everyone with an ounce of sense knew was going to be a failure. Assuming they could have gotten the senate to sign on to a clean budget deal that would’ve funded the government for some period of time, that would’ve made the Obamacare rollout failure the top story last week. Instead it got overshadowed by the budget fight and the shutdown. The Republicans effectively did the Obama administration a favor. Otherwise, they could’ve waited until the failure of the Obamacare rollout was clear, then could’ve offered to delay the personal mandate for a year, to match the business mandate delay, as a gesture of good will to give the Administration some time to "get the system fixed."

Sure, the Republicans—or at least a plurality of them—were elected to repeal Obamacare. Sadly, the electorate as a whole didn’t provide them with the political power to make that happen. Those Republicans, therefore, cannot simply wave a handful of magical fairy dust and make Obamacare disappear. Absent a new resident of 1600 Pennsylvania Avenue, or the program’s collapse under its own weight, Obamacare will be the law until 2017. That’s just an undeniable fact.

The shutdown was a big game of chicken. The problem is that I firmly believe that President Obama is fully willing to have the US technically default on its debt rather than agree to let Obamacare loose. He isn’t going to veer away at the last minute. He’ll go all the way to default, then blame Republicans for it, and his water carriers in the media will be glad to repeat that message. As Michael said last night on the podcast, at the end of the day, this isn’t about the debt, or default, or Obamacare. It’s about taking the chance to destroy the Republican Party’s opposition.

And again, I go back to my oft-stated position that I want Obamacare implemented. The electorate effectively voted for it, they rejected the chance to repeal it, so they should get it. good and hard.

All the government shutdown did—a shutdown that the republicans didn’t have any plan to implement, by the way—is expose the Republicans as ineffective and, ultimately, feckless. So, this appears to be ending exactly as I knew it would, with the Republicans having accomplished nothing but cause an unnecessary uproar for a couple of weeks, and obscure the Obamacare rollout’s failure.

It doesn’t do much real-world good to temporarily stand for your principles, without any thought-out plan or strategy, knowing you will eventually cave, with the inevitable result of making it measurably more difficult to stand for your principles in the future.

In basic weapons training, one of the first things you learn is that you never pull a gun on someone unless you’re fully ready to put two rounds into the body and one to the head. In this case, the Republicans pulled the gun, brandished it wildly for dramatic effect, and now appear to be ready to calmly snap it back into the holster.

Fail.


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Some politicians think you’re stupid

How stupid?

There are among politicians, certain ones who think you’ll believe this:

“Now, this debt ceiling — I just want to remind people in case you haven’t been keeping up – raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy.  All it does is it says you got to pay the bills that you’ve already racked up, Congress.  It’s a basic function of making sure that the full faith and credit of the United States is preserved.”

Obama went on to suggest that “the average person” mistakenly thinks that raising the debt ceiling means the U.S. is racking up more debt: “It’s always a tough vote because the average person thinks raising the debt ceiling must mean that we’re running up our debt, so people don’t like to vote on it, and, typically, there’s some gamesmanship in terms of making the President’s party shoulder the burden of raising the — taking the vote.”

First – what is it called?

Oh, a debt ceiling.

Anyone – what is the purpose of raising the debt ceiling?

To allow more debt.

If the debt ceiling isn’t raised, then the government can’t do what?

Increase our debt.  Correct?

They can’t borrow (commonly known as going into debt) more money to pay those “bills” they’ve already “racked up”, can they?

So when “the average person” thinks that raising the debt ceiling means”running up more debt“, they’re absolutely dead-on right. Unless you plan on “running up more debt“, there is no reason to raise the debt ceiling, is there?

It’s called a “debt ceiling” for a reason.

~McQ


Debt ceiling: Orwell just missed it by a few decades

The more I see politics of today the more I think George Orwell simply listed by about 30 years. Imagine a politician a few decades ago trying to make this argument and then calling the other guy’s argument “absurd”.

“While I’m willing to compromise and find common ground over how to reduce our deficit, America cannot afford another debate with this Congress over how to pay the bills they’ve already racked up,” Obama said in the East Room of the White House at what aides have billed as the final news conference of his first term. “To even entertain the idea of this happening, of America not paying its bills, is irresponsible. It’s absurd.”

But the problem is, thanks to both Congress and this administration, we are not paying our bills. We’re borrowing money that we don’t have and have been spending it. I find it ironic, that the president who has run up the largest deficit in history is talking about being irresponsible.

And then, there’s this:

“They will not collect a ransom in exchange for not crashing the American economy,” Obama said. “The full faith and credit of the United States of America is not a bargaining chip.”

But that is precisely what Obama is doing, using the credit rating of America as a bargaining chip – to justify more spending on credit. No irony there. Interesting that Obama is suddenly concerned about “not crashing the American economy” when his  profligacy has put us in a position we are in today.

“The issue here is whether America pays its bills,” Obama said. “We are not a deadbeat nation.”

Yes we are. He just doesn’t know it yet, or at least won’t admit it.   And much of the cause rests with him as signified by his absurd argument.

~McQ


Taxes, Spending, and the Fate of the Republic

The direction the country is taking bothers me. Increasingly, I see little hope for a bright prosperous future. Frankly, things cannot continue going in the direction they’re heading without a disastrous result.

Mark Steyn wrote earlier this week:

Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent, and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.

This is unsupportable, by any measure, and should be seen to be so by anyone with common sense, irrespective of political party, but apparently is not. And it’s important to recognize that the reason revenues are at a historically high 24% of GDP—the historical average is around 18%—is that GDP growth for the last 4 years has been atrociously bad, and well below the 3% historical trend rate of growth.

In a rational world, we would make a decision to settle on a continuum somewhere between cutting government spending to 24% of GDP, and raising taxes to 42.2% of GDP, which would necessarily imply massive tax increases on the middle and, yes, even the lower class.

At the moment, however, it is impossible to cut spending to 24% of GDP. Not just politically impossible, though that appears to be true also, but I mean impossible impossible. The reason it is impossible is that 24% of current GDP will not cover the cost of mandatory entitlement spending and service on the national debt. More than 62% of government spending is mandatory spending on essentially social security and Medicare. Another 6% is interest on the national debt, and it’s only that low because 1) the Fed has been buying massive amounts of US treasury bonds, and 2) interest rates are historically low.

In other words, 68% of the federal budget is taken up by entitlements and debt service, alone. We could eliminate the entirety of the rest of the federal government and, at current rates of taxation, would still run a deficit.

At the current rate of spending, we can expect to add over $12 trillion dollars in debt over the next decade. To combat this, the president has requested an additional 1.6 trillion in new revenue, which he expects to gain by increasing tax rates on only the upper class. Even assuming, arguendo, that such a taxation plan would actually result in that much additional revenue—which it likely would not—we would still add an additional $10 trillion in debt.

And that, of course, assumes interest rates would not rise from their current low levels. A rise to the historical rates of interest would increase debt service costs from $250 billion per year to $650 billion per year, or approximately 15% of the budget.

Neither Congress nor the President are proposing a serious plan to balance the budget, which would require a politically impossible mix of massive budget/entitlement cuts, and/or massive tax increases on the middle and lower classes.

Absent such a plan, we will inevitably default on our debt, or hyperinflate our way out of it, both of which are merely two sides of the same coin. In either case, the dollar will lose its status as the world’s reserve currency, and the life savings of every single person in the country—except, perhaps, those embodied in some classes of hard asset—will be rendered worthless. There will be massive unemployment, and a high possibility of civil strife. Imported goods will essentially be unobtainable, and I’m not just talking about BMWs and Land Rovers, but everyday things we never even think about, like fresh fruit from Chile in the winter, or clothes from Singapore and Taiwan at any time.

The least damaging course of action would be a massive reduction in government spending. A more damaging course would be a massive increase in taxation. The most damaging course would be to do nothing but nibble at the edges of spending and taxation until we default, either formally, or de facto through hyperinflation. So far, we are set on the third course.

We are set on a path to completely destroy the currency and economic life of the Republic, and we will inevitably do so without massive tax increases, massive spending cuts, or some mixture of the two.

Meanwhile, in Washington, DC, the Fiscal Cliff negotiations—by which I mean "farce"—continue. Personally, I’m a charter member of the Let It Burn club. The Democrats have set up a narrative in which, no matter what happens, Republicans will get the blame. And yet, 18 months ago, what we’re now calling the Fiscal Cliff was unilaterally hailed as a wise, bipartisan, and far-seeing compromise that would set the country on the road to financial rectitude. And quite frankly, the president is giving every indication that he wants to go over the Fiscal Cliff, and that he can weather the political and economic fallout from it.

OK. Then let’s test that theory.

This is not a risk-free strategy. As Ace of Spades points out:

The Walk Away/Let It Burn option is growing on people. One cautionary note, though: This will provoke a serious constitutional crisis and may undo the Republic. So a soft Let it Burn could turn into a genuine collapse of the Republic.

Obama is a tyrant. If Republicans do not lift the debt ceiling, it is perfectly obvious what he will do, as he’s argued for it before: Like Putin, he will begin unilaterally asserting power he doesn’t have.

And what will be the recourse? Court, I suppose. Impeachment, sure, but Democrats will block conviction. So whether or not the President can suddenly assert sweeping power over the purse — sweeping aside the last real check on his power granted to the House of Representatives — will depend on the vote of Justice Go Along to Get Along Roberts.

President Obama has already asked for it. It’s that one exception I mentioned before: He is asking for unilateral power to raise the debt ceiling and no president should ever have that power.

Our constitution is clear that the money bills must originate in the house. Equally clear is the principle of Congressional supremacy, in that Congress may pass laws even over a presidential veto.  The debt ceiling is clearly a Congressional, not a presidential prerogative.

Congress, of course, has already amended the Constitution’s strictures in practice. For instance, the Senate takes House bills, say, for building a dam, and strips the original language, then loads it up with budgetary items. The House accepts them in conference. Additionally, we have operated without a federal budget—though one is required annually by law—since 2009. This is a…constitutional novelty.

But giving unilateral budgetary power to the president goes far beyond novelty. In my view, granting this power to any president will mark the end of the Republic, just as surely as the creation of the First Triumvirate marked the death knell of the Roman Republic.

The American people elected President Obama. It is only right that they should reap the full measure of the consequences of that decision. Ace is right. Going over the Fiscal Cliff may undo the Republic. But if that is true, then I’m entirely unconvinced that the Republic should be saved.

~
Dale Franks
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Observations: The QandO Podcast for 16 Jan 12

This week, Bruce, Michael, and Dale talk about the Marines incident, re-organizing government, and the coming economic collapse.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Obama asks for another increase in the debt ceiling

If you wonder why there is this focus on the left on taxing the ‘rich’, part of it can be found here:

President Barack Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under an August deal with lawmakers that averted a U.S. default.

The president’s notification to congressional leaders yesterday starts a 15-day countdown for lawmakers to consider and vote on a joint resolution disapproving of the increase.

An “August” deal and we’re already on the “third and final request”?  August for heaven sake.  5 months.  Does that at all demonstrate how absolutely unconcerned this administration is with out-of-control spending?  Does it help explain the class-warfare, anti-Wall Street, shift-the-blame campaign in which the President has been engaged?

We’ve already exceeded the national yearly GDP with our debt under Obama and now he’s going for more.

Well, except at DoD.  There’s he’s slashing muscle and bone on the one hand while proposing a pay-hike for other federal employees on the other.

The debt ceiling increase is to meet commitments already made by the government. The Treasury Department has been relying on accounting maneuvers, similar to the ones employed during the year’s earlier dispute, to ensure that the previous $15.194 trillion limit wasn’t breached.

Since the budget law was approved, the debt limit has been raised twice, by a total of $900 billion. In the latest request, the limit would rise to $16.394 trillion, which the Treasury Department estimates will fund the government until late 2012.

We are so ill served by our current crop of politicians that it almost defies description.  We’re past the generational theft of our grandchildren’s money and are working on that of our great-grandchildren.

This is simply inexcusable, yet like an alcoholic or drug addict it seems our politicians can’t help but do whatever is necessary to obtain their next fix of borrowed money.  Meanwhile the credit rating for the country has been downgraded and is at risk for further downgrade.  And the economic drag on the economy in general this sort of a debt load carries continues to increase.

You want a national tragedy … here it is.  You want a national nightmare … its playing out right in front of you and there doesn’t seem like anyone is able to stop it.

But most rational people understand that at some point it has to stop … it has to come to an end.  And when it does, this recession will look like child’s play, all thanks to the selfish short-sightedness of our political class.  Oh, and yes,  the gutless votes who keep rewarding this sort of behavior because it benefits them.

At the risk of sounding like some sort of extremist fanatic, the end is near.   And it isn’t going to be a pretty end either.

~McQ

Twitter: @McQandO


A few points about the debt ceiling theater

First of all it’s an incredible amount of nothing except politics

"In reaching this agreement, each political party yielded to the other party’s highest-priority political and ideological interest," and fails to resolve the country’s long-term budget problems, Sen. Joe Lieberman (I-Conn.) said Monday.

Indeed, for all the high-stakes political drama and the apparent damage the months-long debate has inflicted on the political standing of both parties and the president, the compromise — what White House officials refer to as a "lowest common denominator" deal — achieves relatively little in the short term.

But, like most compromise, that’s the basis of such "deals". Unless very skillful or in negotiations with a pressure filled time limit one has to find the lowest common denominator and find it fast. And that’s precisely what this deal was – just enough to get enough votes on both sides of the aisle.

The question is, will it actually do anything about spending in reality.   The answer is most likely “no”.  Lieberman is exactly right.   It not only achieves relatively little in the short term, it mostly relies on “savings” from money never spent, only projected to be spent.   Obviously then a billion dollars not spent today could add up to many billions down the road if in fact it had been spent.  So when you see huge numbers like 500 billion, remember that over 10 years the real cut is probably 50 billion.  Or, for most numbers seen projected over 10 years, you can reduce it by a factor of 10.

Here’s the crux of the deal –

In the government’s 2012 fiscal year, the cut would be $21 billion, or less than 1% of a nearly $3.7-trillion federal budget, according to the Congressional Budget Office.

The bulk of the projected $2.1 trillion or more of cuts does not start kicking in until after the next election when a future Congress and president could choose to rewrite the plan — a point that many conservatives have worried about.

"Enforcement is the key to whatever we do. It’s always in the out years and it never happens," said Sen. Michael D. Crapo (R-Idaho), using the budget lingo for the latter years of a long-term deal.

I know, “wow”, huh?  $21 billion.   And in the meantime, permission to spend $2.1 trillion more.   So are you still wondering why voters have no faith in politicians of either party?

And this:

The bill almost certainly defers until after next year’s election the central choice most budget experts say the country eventually must make: higher taxes or deep cuts in Medicare, the nation’s huge and fast-growing health program for the elderly.

Of course it does.   John Boehner is claiming he got 98% of what he wanted.   Well if that’s the case, he didn’t want much.   And politically he gave away the most potent argument against this president until after the election.

Yet even with this pathetic bill we have the Civility party, that would be the Dems, out and about vilifying (remember this is the new civility – it’s much like the new math) the Tea Party with the VP calling them “terrorists”  (along with Joe Nocera in the New York Times) and probably the most absurd but honest statement coming out of the mouth of Rep. Mike Doyle (D-PA):

We have negotiated with terrorists,” an angry [Congressman Mike] Doyle [D-Pa.] said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

Uh, yeah, right.   You mean they’ve made it tougher to spend money like a drunken sailor on shore leave in Hong Kong  on money borrowed from his buddies (product idea – Democrat Barbie,  “being civil is hard”).

Finally, the “super-committee”:

A bipartisan congressional committee set up by the compromise bill is supposed to grapple with the long-term choices over the next four months. White House officials insist they see that panel as a serious opportunity to try again for a major deficit reduction deal. Their hope is that members of both parties will back an agreement rather than accept automatic across-the-board cuts in defense and domestic agency budgets.

But many in Congress, whose leaders will appoint the panel’s 12 members, believe the panel more likely will deadlock.

"I think it’s very possible, maybe even probable, that with a committee you’re going to have a 6-6 vote," said Sen. Saxby Chambliss (R-Ga.).

And, of course, should it deadlock, the meat axe will fall heaviest on defense.  And meat axe is the correct metaphor because the cuts mandated by failure to act are across the board cuts, not carefully considered cuts which will eliminate unneeded or unnecessary spending but leave critical spending alone.  Nope, we’ll see a grand hollowing of the force – again.

So, all in all, not such a grand deal after all.  But, with the smoke and mirrors show and the liberal caterwauling we’ve heard, you’d think they’d actually cut some real money we don’t have out of the current budget.

Oh, that’s right, we don’t have a current budget do we?

And why again is this crowd still in Washington DC?

~McQ

Twitter: @McQandO


Debt ceiling deal – - Democrats whine and Republicans moan

Paul Krugman leads the “reaction” brigade with a lament that says cutting government spending while the economy is deeply depressed is a mistake.   I have to say, that is not “unexpected”.   Krugman has been a one-trick-pony ever since this recession/depression began.   Spend, spend, spend – spend more, spend it even if you don’t have it and keep spending until we spend ourselves out of a recession/depression.   For most that simply is counter-intuitive. 

Krugman also does another thing that is not unexpected.   He attempts to blame all of this turbulence on the Republicans while claiming the Democrats got rolled:

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.

The Republicans called “our whole system of government into question?”   No overstatement there.   Actually I saw it as more as the Republicans calling attention to the fact that this spending spree and expansion of government intrusion is anathema to “our whole system of government” as first envisioned and then founded.   I think what Krugman really means is the GOP has laid claim to the narrative that the current size and cost of government isn’t at all what the founders established and it is time to get back to that vision.

Wow … terrible, huh?

Then there’s the NY Times editorial page.  It too laments the deal.  More so it laments the fact that Republicans used the crisis to push their election promise to cut spending.   Apparently never letting a crisis go to waste only is good for one side.   You have to love the phrasing of the editorial – Democrats apparently held out for a few principles while Republicans were simply political barbarians out to loot, plunder, kill and maim (politically speaking, of course):

For weeks, ever since House Republicans said they would not raise the nation’s debt ceiling without huge spending cuts, Democrats have held out for a few basic principles. There must be new tax revenues in the mix so that the wealthy bear a share of the burden and Medicare cannot be affected.

Those principles were discarded to get a deal that cuts about $2.5 trillion from the deficit over a decade. The first $900 billion to a trillion will come directly from domestic discretionary programs (about a third of it from the Pentagon) and will include no new revenues. The next $1.5 trillion will be determined by a “supercommittee” of 12 lawmakers that could recommend revenues, but is unlikely to do so since half its members will be Republicans.

The only somewhat good thing that came out of it, says the NYT, is the ability to continue to spend on entitlements even though we can’t afford them.  And note too, the NYT is certainly not for any sort of a balanced budget.   And trying to make government smaller, less intrusive, less costly and to have  to live within its means makes the Speaker of the House and the rest of the GOPers who committed to all of that “radicals”.  Goodness, if that’s how a radical is now defined, count me in.:

Democrats won a provision drawn from automatic-cut mechanisms in previous decades that exempts low-income entitlement programs. There is no requirement that a balanced-budget amendment pass Congress. There will be no second hostage-taking on the debt ceiling in a few months, as Speaker John Boehner and his band of radicals originally demanded. Democratic negotiators decided that the automatic cut system, as bad as it is, was less of a threat to the economy than another default crisis, and many are counting on future Congresses to undo its arbitrary butchering.

Sadly, in a political environment laced with lunacy, that calculation is probably correct. Some Republicans in the House were inviting a default, hoping that an economic earthquake would shake Washington and the Obama administration beyond recognition. Democrats were right to fear the effects of a default and the impact of a new recession on all Americans.

Well of course they were since they were primarily responsible for doubling the national debt in a few years and adding trillions upon trillions of dollars to it.   It is they who ran it up against the debt ceiling in record time and now they want to claim that the GOP held the country hostage instead of letting them again have their way with spending money in the trillions of dollars that we don’t have?   Balderdash.

Meanwhile, here is how some Democrats reacted:

* Representative Emanuel Cleaver, Democrat of Missouri: “If I were a Republican, this is a night to party,” he said to MSNBC.

* Representative Raul Grijalva, Democrat of Arizona: “This deal trades people’s livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it. This deal weakens the Democratic Party as badly as it weakens the country,” he added. “We have given much and received nothing in return. The lesson today is that Republicans can hold their breath long enough to get what they want.”

* Representative Nancy Pelosi of California, the Democratic leader: “I look forward to reviewing the legislation with my caucus to see what level of support we can provide.”

* Donna Brazille, Democratic strategist, via Twitter: “Fellow citizens, good night. The debate was one sided – so no winners, no losers. Claim your JOY! No whining because we’re in this together.”

“The GOP won the debate by playing quick & loose w/the truth. Bullyingeveryone, incl media. Stonewalling. Arrogance. This was unnecessary.”

* Robert Reich, former secretary of labor under Bill Clinton, via Twitter: “The heinous deal is preferable to economic catastrophe. The outrage and shame is it has come to this choice.”

“The radical right has won a huge tactical and strategic victory. Democrats have proven they have no tactics and no strategy.”

“It is not the case that ‘both sides’ gave up ’sacred cows.’ Rs linked the debt ceiling to their demand for smaller govt. They’ve got it.”

Got that folks – the “radical right” linked the debt ceiling increase to a demand for smaller government and got it.  Isn’t that what they’d said they’d do?   Had something like that have occurred on the left, of course, it wouldn’t have been “radical” and people like Reich would be calling it brilliant politics.   Of course in this hyper-partisan atmosphere it mostly comes down to whose ox is being gored to understand which side is the radicals are on and which side has the brilliant politicians (well, at least situationaly brilliant).

Some Republican reactions:

* Representative Allen West of Florida: “At this time I believe this is a good plan for the American people.”

* Jon Huntsman, former governor of Utah and presidential candidate: “While some of my opponents ducked the debate entirely, others would have allowed the nation to slide into default and President Obama refused to offer any plan, I have been proud to stand with congressional Republicans working for these needed and historic cuts. A debt crisis like this is a time for leadership, not a time for waiting to see which way the political winds blow.”

* Representative Michele Bachmann of Minnesota, a presidential candidate: “Throughout this process the President has failed to lead and failed to provide a plan. The ‘deal’ he announced spends too much and doesn’t cut enough. This isn’t the deal the American people ‘preferred’ either, Mr. President. Someone has to say no. I will.”

* Representative Connie Mack, Republican of Florida, On MCNBC: “I don’t think the American people are looking for a deal or a compromise, they are looking for a solution to the problem. At the end of the day, I can’t vote for something that is going to ensure that we have over $17 trillion in debt.”

So, reading most of this, it would appear we can safely conclude no one is satisfied with the deal although given the spin coming from both sides, that most think the GOP got most of what it wanted.  OK.   And the Democrats are supposedly willing, at least for the most part, to sign on.

That’s “compromise” in today’s politics isn’t it?   After all, when the “health care crisis” was upon us a little while back, Democrats certainly weren’t at all concerned with compromise or, for that matter, Republicans in general.   Now they have to deal with the pesky bastards and their radical brethren and suddenly life is no longer good or simple.

Tsk, tsk (cue world’s smallest violin).

Oh, and I did love this, speaking of trying out a narrative:

The White House is straining to make the case that they’re playing a long-game. David Axelrod: “In the short term, everyone suffers politically. In the long term, I think the Republicans have done terrible damage to their brand. Because now they’re thoroughly defined by their most strident voices.”

Is that right, Mr. Axelrod?  Well this little debacle has also “thoroughly defined” the Democrats and the President, and in a most unflattering light.   Spendthrifts with no problem whatsoever in piling mountains of debt on future generations being “led” by an empty suit.   Yeah, it’s really hurt the Republican brand to actually try to stand up for the principles they were sent to DC to uphold.   They won’t be judged as Axlerod would hope they’ll be judged, but instead on how effective they were in accomplishing those principles

 

~McQ

Twitter: @McQandO