Free Markets, Free People
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.
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.
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.
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.
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.
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?
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?
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
The so-called “Budget Control Act of 2011” (assuming both the GOP and Dem caucuses in Congress agree) has the following provisions per Katie Pavlich at Townhall:
* More than $900 billion in deficit reduction over 10 years through discretionary spending caps . $350 billion of that comes from the Pentagon;
* Debt limit increased by at least $2.1 trillion — through 2013…see below for more on how that happens;
* Bipartisan super-committee is tasked with finding $1.5 trillion in deficit reduction by November 23 presumably through tax and entitlement reform. There will be 12 members of the super-committee. House Speaker John Boehner, R-Ohio, House Minority Leader Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., each get to pick three members;
* Congress must vote on recommendations made by the bipartisan Congressional deficit reduction committee by December 23;
* If Congress fails to pass the committee proposal, triggers are enacted that spur at least $1.2 trillion in cuts and those will be close to 50/50 split between domestic/defense spending. But the triggers exempt cuts to Social Security, Medicare beneficiaries and low income programs. The cuts will take effect on January 2, 2013.
So over a third comes from the Pentagon with the remaining two thirds or just less than $600 billion from other discretionary spending. You can ensure that Democratic politicians will try to frame that as granny being pushed over the cliff.
Also note what the “trigger” exempts. As noted then, over 50% or $600 billion in cuts would come from the Pentagon budget and the rest from other discretionary spending. No mandatory spending is touched. That means they can’t use the “I don’t know if [name of favorite government redistribution program here] checks will go out this month” scare tactic. But it also means no serious work will be done on the programs that are killing us – the entitlements. It also means almost a trillion dollars in cuts in defense spending if Congress doesn’t act before December 23 of this year.
Assuming both houses of Congress pass this and Obama signs it, how does it work?
* Immediately after passage of this bill, the president certifies the US government is within $100 billion of hitting the debt ceiling and is given authority to raise the debt ceiling by $400 billion.
* That also triggers a request to increase the debt ceiling by $500 billion — with a process in which Congress can vote to disapprove. The expected outcome: the president vetoes the disapproval, Congress fails to override the veto, and the President is given the authority to raise the debt ceiling by $500 billion.
* The second tranche comes in December. If the super-committee fails to produce a path to reduce the deficit by $1.5 trillion, or Congress fails to pass it, the president makes a request for the authority to raise the debt ceiling by $1.2 trillion. Congress votes to disapprove, the president vetoes it, Congress fails to over-ride the veto, he gets the authority to raise the debt ceiling by $1.2 trillion.
* OR the super-committee succeeds in finding anywhere between $1.2 trillion and $1.5 trillion in deficit reduction and Congress passes it. The president automatically is given the authority to raise the debt ceiling by an equal amount, with no disapproval process.
In the previous cite you saw the make up of the “Super Committee”. Can you really imagine them coming up with all those cuts? My guess is many will be of the Harry Reid variety, where he counted future war spending that we weren’t going to spend.
Also look at the process of raising the debt ceiling. Obama must veto any Congressional disapproval. In a political sense that’s almost as good as having a short term debt ceiling increase to feature during the re-election campaign, because that’s going to come up more than once.
Boehner issued a slide show to put out the GOP’s side of the argument for what they got. One thing not mentioned in Pavlich’s summary is the fact that the bill requires a vote in both the House and Senate on a Balanced Budget Amendment. I’ll just be the first among many to declare that DOA.
Meanwhile the spinmeisters for the President have been busy this morning. More on the politics of all this and reactions in a later post.
ABC is reporting there may have been agreement reached between Congressional Republicans and Democrats.
Here, according to Democratic and Republican sources, are the key elements:
- A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).
- They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.
- The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.
- The special committee must make recommendations by late November (before Congress’ Thanksgiving recess).
- If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This "trigger" is designed to force action on the deficit reduction committee’s recommendations by making the alternative painful to both Democrats and Republicans.
- A vote, in both the House and Senate, on a balanced budget amendment.
Of course we’ve seen deals much like this before. Committees never seem to get around to the promised business and triggers never seem to get pulled and, as anyone would tell you now, the balanced budget amendment will never pass. Meanwhile, Obama is authorized to spend another 2 plus trillion we don’t have.
Madness. Smoke, mirrors and madness.
That’s twice now that the Democratically controlled Senate has rejected the GOP House’s plan on the debt ceiling and debt.
The onus, now, is on the Senate to do something. That means Democrats and Harry Reid.
Feeling all warm and fuzzy about that right now? After all, it’s been about 900 days since Senatorial Democrats have offered up a budget – one of the primary duties of Congress. In fact they’ve instead spent all their time rejecting Republican proposals and then tried to blame Republicans for inaction and intransigence. The irony, of course, apparently escapes them.
The 59-41 vote, on a motion to table the resolution passed by the House less than two hours before, ran mostly along party lines, easily reaching the simple majority required to sink legislation in the upper chamber.
Six Republicans joined Democrats to table the Boehner resolution: Sens. Jim DeMint (S.C.), Lindsey Graham (S.C.), Orrin Hatch (Utah), Mike Lee (Utah), Rand Paul (Ky.), and David Vitter (La.).
Boehner’s office said the Senate’s refusal to take up the House plan puts the blame on Democrats if the U.S. defaults.
“For the second time, the House has passed a reasonable, common-sense plan to raise the debt limit and cut spending and, for the second time, Sen. [Harry] Reid [D-Nev.] has tabled it," spokesman Michael Steel said in a statement. "The responsibility to end this crisis is now entirely in the hands of Sen. Reid and President Obama.”
Hard to argue otherwise, wouldn’t you say?
Of course this isn’t the end game, but Senate Democrats have to pull a few Republicans into the game before they can execute it and escape blame:
Senate Democrats’ strategy is to send such a compromise vehicle back to the House on Tuesday, which would put intense pressure on House GOP leaders to accept it or risk a national default after Aug. 2.
If Reid can persuade at least seven Republicans to join the Democratic caucus in passing debt-limit legislation, it would give him the upper hand in the standoff with Boehner.
Chicken Politics … all bloody chicken politics. If 7 Republicans join Reid, they’ll have sold Boehner and the rest of the GOP down the river. If they don’t, Reid and Obama are going to try to blame Senatorial Republicans for any default.
As we watch the political theater that are these debt limit negotiations (and yes, I know the seriousness of all this, but this is political theater), it is interesting to watch the narratives being developed. On the left, the narrative they’re trying to push is the GOP is a bunch of intractable anti-tax zealots who don’t know how to say “yes”. On the right, the narrative seems to be … *sigh*, “no, we’re not.”
This is a game the GOP often plays – letting the other side frame the debate.
In fact, of the two sides, it is only the GOP that has actually put forward a plan. The president has certainly not put forward anything. He’s winging it. And Senate Democrats haven’t put up anything. They’ve simply refused to ratify the GOP plan (passed in the House – Cut, Cap and Balance (CCB)).
So who is the problem here? We have a GOP plan, we have no plan from Democrats or the White House. From them, all we have is grousing about the GOP plan and claims they won’t say yes to anything. Well, not true – they said “yes” to CCB, both in the House and the Senate. The only party that hasn’t said “yes” to it or anything is that of the Democrats.
Liberals say this is good for Obama because it shows GOP recalcitrance. Conservatives say that he has remained so committed to enormous tax increases that he tanked the very possibility of a deal. Time will tell, but it strikes me that the heated rhetoric he is using—”I didn’t get my phone call returned,” “I’ve been left at the altar,” “there’s nothing Republicans will say yes to”—does not suggest he, Obama, feels he has been handed a gift by Boehner and the GOP. He claims to have put $1.5 trillion in cuts on the table, plus $600 billion in entitlement reductions, in exchange for tax increases of the same size. He says Republicans said they would accept a dollar in higher taxes (or “revenue”) for every four dollars in cuts, which isn’t exactly saying “no’” to everything.
No, I’d say those who are saying “no” are Dems who want “increased revenues” and won’t take anything less than their version of that (and yeah, I’m not happy with the GOP talking about any sort of tax increase – but the claim here is that the revenues they’re agreeing too won’t come via tax increases per se, but tax reform.).
For their part, Republicans in the House passed their cut, cap and balance bill on Wednesday, and it included an increase in the debt ceiling, so even by his own account his criticisms of the GOP are not accurate.
Precisely. As Speaker Boehner said after the latest breakdown in negotiations:
“The House has passed its bill. We did our work. We passed our bill. The Senate hasn’t put a plan on the table. The president hasn’t put a plan on the table.”
If there’s a “no” contingent out there, it’s the bunch without a plan (except for raising taxes).