Sunday, July 31, 2011
Senate Majority Leader Harry Reid (D-Nev.) has signed off on a tentative bipartisan deal forged between President Obama and GOP leaders to raise the debt limit.
But the emerging deal may be imperiled by last-minute reluctance from House Speaker John Boehner (R-Ohio), who worries the proposal cuts too much from future Pentagon budgets.
[T]he cure for: a) the budget deficit = more taxes; b) unemployment = more taxes; c) recession = more taxes; d) environmental problems = more taxes; e) illiteracy = more taxes; f) L.A. riots = more taxes. It doesn't matter what the nature of the problem is.
This week, whether you listened to Rush, Sean, Mark, or even me filling in for Boortz, we've been telling you so. This whole farce in Washington is a way to get more tax revenue from you and despite public pronouncements from the Republicans that they were holding the line on tax revenue they were either (A) complicit behind the scenes or (B) going to get played.
We were right.
What we know about the pending deal is that the Democrats and Republicans are agreeing to a Deficit Commission. Despite the media spin -- and the spin of some Republican sycophants -- the deficit commission, which will be a super committee of the Congress, will have the power to come up with new tax revenue.
And if the Congress rejects the Commission's demands for new tax revenue, there will be a trigger that cuts both medicare funding and defense funding.
Except, the defense funding cuts will be much more massive than the medicare cuts. And the GOP, in addition to seeing defense cut, would be hacking off seniors right before an election.
In other words, Republican Leaders are asking their members to accept tax increases or massive defense cuts and senior anger right before the election. Oh, and the medicare cuts technically wouldn't come from beneficiaries, but from providers. Those same providers who'll just stop taking medicare patients.
It's not that the GOP got played so much as GOP leaders were collaborating on this. Boehner wanted a grand bargain and now he's going to get it along with tax increases.
But hey! At least we'll get a vote on a balanced budget amendment -- one without a requirement for a super majority to raise taxes.
Saturday, July 30, 2011
The "limited magnitude" of both debt plans put forward by congressional leaders would not put the nation's AAA credit rating back on solid footing, Moody's Investors Service announced Friday.
"Reductions of the magnitude now being proposed, if adopted, would likely lead Moody's to adopt a negative outlook on the AAA rating," the credit rating agency said in a new report. "The chances of a significant improvement in the long-term credit profile of the government coming from deficit reductions of the magnitude proposed in either plan are not high."
It added that "prolonged debt ceiling deliberations" have increased the odds of a downgrade, but that the firm is still confident policymakers will avoid a default.
Thursday, July 28, 2011
John Barrasso, NTU and FreedomWorks sign off on plan to reduce spending and balance the budget
BY: KEVIN DERBY | POSTED: JULY 25, 2011 3:55 AM
Connie Mack | Credit: Gage Skidmore, FlickrHide
Florida Congressman Connie Mack’s plan to reduce the size and scope of the federal government and balance the budget by 2019 continued to build momentum Friday, as both a U.S. senator and prominent conservative groups backed his One Percent Spending Reduction Act of 2011.
The proposal, which is being sponsored in the U.S. Senate by Republican Mike Enzi of Wyoming, also has the backing of tea party favorite U.S. Sen. Rand Paul, R-Ky., and three of Mack’s Sunshine State Republican colleagues in the House: Jeff Miller, Dennis Ross and Allen West. It would mandate a 1 percent reduction in federal spending from 2012 until 2017, before imposing a spending cap in 2018. That cap would mandate the total cost of the federal government not to exceed 18 percent of the total Gross Domestic Product. Enzi maintains that the proposal, which backers have labeled the Penny Plan, would cut $7.5 trillion from the federal government over the next decade.
On Friday, Enzi’s Republican colleague from Wyoming -- U.S. Sen. John Barrasso -- said he was backing the proposal.
“As more and more senators voice their support of the Penny Plan, it is becoming clear that a core of fiscally conscious conservatives are willing to do what it takes to stop the out-of-control, reckless spending in Washington,” insisted Mack on Friday. “Senator Barrasso knows that we must get serious about our debt crisis, which every day threatens to destabilize our economy even further. When it comes to Washington’s budget woes, voters have repeatedly said ‘enough is enough.’ I am proud that Senator Barrasso has joined us in this fight for a return to fiscal sanity.
“At a time when so many in our nation are hurting financially, the federal government needs to do its part to cut spending,” added Mack. “The Penny Plan is a straightforward answer to our nation’s overspending problem that asks government to eliminate only one penny from every dollar it spends -- a simple solution that all Americans can rally behind.”
The proposal also won the backing of the conservative National Taxpayers Union (NTU) and FreedomWorks, a Washington-based tea party movement organization led by former U.S. House Majority Leader Dick Armey.
“The One Percent Spending Act is a valuable component of a comprehensive ‘cut, cap and balance’ approach that addresses our immediate needs for spending restraint as well as our enduring structural weaknesses,” said Brandon Greife of NTU. “NTU is pleased to endorse this legislation and any roll call votes will be significantly weighted in our annual Rating of Congress.”
“Washington is on an unprecedented spending binge. Our national debt has skyrocketed to nearly $14.4 trillion. The Republican Study Committee has listed the One Percent Spending Reduction Act as a bold solution in their ‘cut, cap and balance’ proposal letter to House leadership,” noted Matt Kibbe of FreedomWorks. “The letter states that it would be fiscally irresponsible to raise the debt ceiling without immediate spending cuts, enforceable total-spending caps and a balanced budget amendment. Rep. Mack’s ‘Penny Plan’ should be considered as the second part of the RSC’s ‘cut, cap, and balance’ approach for the debt ceiling in order to put federal spending on the path to a balanced budget.”
“The support for the Penny Plan is continuing to grow across the country, today gaining support from the National Taxpayers Union, as we draw closer to President Obama’s Aug. 2 debt-ceiling deadline. Every time Washington spends more money, our freedom and security are in jeopardy. Voters have continually said ‘enough is enough’ when it comes to Washington’s appetite for spending, and it is time Congress listens,” said Mack. “ I am proud to have the support of FreedomWorks and the great work of their chairman, leader Dick Armey. Our deficits and debt hang around us like an albatross, and last November American voters sent a clear message to their elected officials that ‘enough is enough’ when it comes to Washington’s appetite for spending.”
Reach Kevin Derby at firstname.lastname@example.org or at (850) 727-0859.
Leader Pelosi is trying to “save world from Republican budget” Pelosi on today’s vote: “What we’re trying to do is save the world from the Republican budget….we’re trying to save life on this planet as we know it today.” [...]
National Review's Jim Geraghty notes today that House Minority Whip Steny Hoyer hasn't gotten the memo on the new tone in Washington. “I think we’re playing Russian roulette with the nation’s credit-worthiness, and unfortunately, all the chambers seem to be loaded on the House side. They want to shoot every bullet they have at the President” said Hoyer on Wednesday's "Morning Joe."
Wednesday, July 27, 2011
If House Speaker John Boehner or his senior leadership team thought they had the support of the Tea Party movement, they better think again. An internal poll of the largest group in the movement, the Tea Party Patriots, found that they are dissatisfied with the House leaders, Boehner in particular, and simply can't stand President Obama.
Co-Director Jenny Beth Martin told Whispers bluntly: "We're really not satisfied with any of them." [Check out editorial cartoons about the Tea Party.]
She said that the Tea Party Patriots on Tuesday surveyed "tens of thousands" of their members in 3,500 affiliates about the current leadership and found these stunning results:
--81.5 percent are not satisfied with the House GOP leadership.
--74.1 percent, asked if they want a new House speaker, said yes or maybe.
--71.7 percent are not satisfied with the performance of the House.
--97.6 percent are not satisfied with the performance of the Senate.
--98.8 percent are not satisfied with Obama's performance.
--Whopping majorities believe that their House representative and senators are more concerned with party politics than "what's best for America."
--62.8 percent trust neither party to fix the debt problem; 36.4 percent trust the GOP to fix it; less than one percent trust the Democrats.
Worse for those like Boehner and Obama trying to cut a debt ceiling increase, most do not want a deal unless it includes massive spending cuts, likely over the $4 trillion figure earlier under negotiation.
On Boehner, Martin and Co-Director Mark Meckler, who both earlier today met with reporters at a Christian Science Monitor breakfast, said the movement is worried that he is giving in too much to Obama. "He's not proven that he means to cut anything," said Martin. [See political cartoons about the budget and deficit.]Meckler said that while the movement wants lawmakers to "stand firm" and not raise the debt ceiling, it could be done if major cuts were included far and above what's been proposed, though he wouldn't set a bottom line. "If you want to raise the debt ceiling, prove to us you can make some cuts," he said. "Get real. They need to act like adults," he added of Congress
Tuesday, July 26, 2011
The non-partisan Congressional Research Service has issued a new report saying that if Congress refuses to raise the government's borrowing limit, the White House cannot do so unilaterally under the Constitution's 14th Amendment.
"It does not appear that the executive has the constitutional authority to borrow funds, even if they are for the express purpose of preventing a default on the debt," said CRS, which is the non-partisan advisory research arm of Congress.
Some commenters have argued that the 14th Amendment means the government cannot suspend payments and that President Obama can act to keep funding government even without congressional authorization.
Clause four of the amendment, which was passed after the end of the Civil War, reads: "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."
CRS's experts said that language doesn't convey any new powers on the president to circumvent Congress when it comes to borrowing or spending.
"There appears to be no basis in the legislative history, or arguably in the structure of the Constitution itself, that can support an executive power to borrow funds," the research service said in the report, which was released to several congressional offices this week and was reviewed by The Washington Times.
Though some Democratic lawmakers have raised it as a possibility, the White House has been dismissive of using the 14th amendment as a work-around.
Looks like the Speaker does have the votes necessary in the Republican caucus to pass his Debt Ceiling Bill!
“He kept using the term ‘balanced approach,’ which is a word tested in the polls to appeal to Independents.”
Cantor tells GOP to 'stop whining' about Boehner debt-ceiling plan
Cantor made the statement in a closed-door conference meeting, a Republican with knowledge of his remarks told The Hill.
Boehner and Cantor are trying to rally restive members of their caucus behind a plan that would authorize up to $1 trillion in new debt in exchange for $1.2 trillion in spending cuts and the promise of more in the future.
Monday, July 25, 2011
Good evening. I’m John Boehner. I serve as Speaker of the whole House — of the members of both parties that you elect. These are difficult times in the life of our nation. Millions are looking for work, have been for some time, and the spending binge going on in Washington is a big part of the reason why.
Before I served in Congress, I ran a small business in Ohio. I was amazed at how different Washington DC operated than every business in America. Where most American business make the hard choices to pay their bills and live within their means, in Washington more spending and more debt is business as usual.
I’ve got news for Washington – those days are over.
President Obama came to Congress in January and requested business as usual — yet another routine increase in the national debt limit — we in the House said ‘not so fast.’ Here was the president, asking for the largest debt increase in American history, on the heels of the largest spending binge in American history.
Here’s what we got for that spending binge: a massive health care bill that most Americans never asked for. A ‘stimulus’ bill that was more effective in producing material for late-night comedians than it was in producing jobs. And a national debt that has gotten so out of hand it has sparked a crisis without precedent in my lifetime or yours.
The United States cannot default on its debt obligations. The jobs and savings of too many Americans are at stake.
What we told the president in January was this: the American people will not accept an increase in the debt limit without significant spending cuts and reforms.
And over the last six months, we’ve done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country. . .something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track.
Last week, the House passed such a plan, and with bipartisan support. It’s called the ‘Cut, Cap, and Balance’ Act. It CUTS and CAPS government spending and paves the way for a Balanced Budget Amendment to the Constitution, which we believe is the best way to stop Washington from spending money it doesn’t have. Before we even passed the bill in the House, the President said he would veto it.
I want you to know I made a sincere effort to work with the president to identify a path forward that would implement the principles of Cut, Cap, & Balance in a manner that could secure bipartisan support and be signed into law. I gave it my all.
Unfortunately, the president would not take yes for an answer. Even when we thought we might be close on an agreement, the president’s demands changed.
The president has often said we need a ‘balanced’ approach — which in Washington means: we spend more. . .you pay more. Having run a small business, I know those tax increases will destroy jobs.
The president is adamant that we cannot make fundamental changes to our entitlement programs. As the father of two daughters, I know these programs won’t be there for them and their kids unless significant action is taken now.
The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen.
You see, there is no stalemate in Congress. The House has passed a bill to raise the debt limit with bipartisan support. And this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill – one that was developed with the support of the bipartisan leadership of the U.S. Senate.
Obviously, I expect that bill can and will pass the Senate, and be sent to the President for his signature. If the President signs it, the ‘crisis’ atmosphere he has created will simply disappear. The debt limit will be raised. Spending will be cut by more than one trillion dollars, and a serious, bipartisan committee of the Congress will begin the hard but necessary work of dealing with the tough challenges our nation faces.
The individuals doing this work will not be outsiders, but elected representatives of the people, doing the job they were elected to do as outlined in the Constitution. Those decisions should be made based on how they will affect people who are struggling to get a job, not how they affect some politician’s chances of getting reelected.
This debate isn’t about President Obama and House Republicans … it isn’t about Congress and the White House … it’s about what’s standing between the American people and the future we seek for ourselves and our families.
You know, I’ve always believed, the bigger government, the smaller the people. And right now, we have a government so big and so expensive it’s sapping the drive of our people and keeping our economy from running at full capacity.
The solution to this crisis is not complicated: if you’re spending more money than you’re taking in, you need to spend less of it,
There is no symptom of big government more menacing than our debt. Break its grip, and we begin to liberate our economy and our future.
We are up to the task, and I hope President Obama will join us in this work.
God bless you and your families, and God bless America.
The strategy of forcing political change through orchestrated crisis. The "Cloward-Piven Strategy" seeks to hasten the fall of capitalism by overloading the government bureaucracy with a flood of impossible demands, thus pushing society into crisis and economic collapse.
By crisis, we mean a publicly visible disruption in some institutional sphere. Crisis can occur spontaneously (e.g., riots) or as the intended result of tactics of demonstration and protest which either generate institutional disruption or bring unrecognized disruption to public attention.
White House stokes debt-ceiling crisis
If this is accurate the president is playing with fire. By halting a bipartisan deal he imperils the country’s finances and can rightly be accused of putting partisanship above all else. The ONLY reason to reject a short-term, two-step deal embraced by both the House and Senate is to avoid another approval-killing face-off for President Obama before the election. Next to pulling troops out of Afghanistan to fit the election calendar, this is the most irresponsible and shameful move of his presidency.
As for the House, why not pass the deal that Sen. Harry Reid agreed to, send it to the Senate and leave town? Enough already.
Sunday, July 24, 2011
July 24 (Bloomberg) -- House Speaker John Boehner plans to press ahead with a shorter-term increase in the U.S. debt limit than President Barack Obama has requested, he told lawmakers today, defying a veto threat and signaling continued stalemate in the U.S. Congress as time runs short for a deal.
Boehner told rank-and-file Republicans during a conference call this afternoon that they needed to pull together as a team to block Obama, who has asked for a $2.4 trillion borrowing boost in the $14.3 trillion debt ceiling, from obtaining the money all at once, without any guarantees of spending cuts. His remarks were described on condition of anonymity by a person familiar with the discussion.
The speaker said that no one is willing to default on the full faith and credit of the U.S., according to the person.
The comments indicated that Boehner plans to force action on his plan to provide only a temporary borrowing boost of about $1 trillion accompanied by spending cuts of at least as much, tying the remainder of the debt-ceiling increase Obama has requested to further cuts in the future. The White House says Obama would veto such a measure.
U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will slump after rallying within 1.4 percent of a three-year high, as failure to raise the federal debt limit intensified concern of a default.
The contract on the S&P 500 Index expiring in September declined 1.2 percent to 1,325.50 at 7:01 a.m. in Tokyo. The U.S. dollar fell against the euro, yen and Swiss franc.
Boehner told Republicans Obama wants the borrowing authority all upfront so lawmakers don’t have to deal with this again until after the next election, the person familiar with the comments said. To stop him, Boehner said, Republicans need a vehicle that can pass in both houses. Speaking to a group that includes a large proportion of Tea Party-backed freshmen intent on slashing spending, Boehner said the path forward might require some of them to make sacrifices to maximize their leverage.
Yesterday, Boehner told his members that he wanted to send markets a positive sign by the time Asian markets began opening this afternoon that Congress would strike a deal to break the impasse over raising the $14.3 trillion borrowing limit.
With no evidence that such compromise has been reached, President Barack Obama is meeting at the White House with Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi.
The dollar weakened to $1.4390 per euro as of 6:01 a.m. in Tokyo from $1.4360 in New York at the end of last week. The greenback fell to 78.35 yen, and touched a four-month low of 78.12 yen, from 78.54 on July 22. It fetched 81.17 Swiss centimes from 81.92 last week after reaching a record low 80.33 on July 18. The yen traded at 112.75 per euro from 112.77.
Friday, July 22, 2011
There is an overarching reason we can't move toward a balanced budget, which underscores why we face ongoing stalemates over debt ceilings and continuing resolutions: President Obama doesn't want to balance the budget.
I don't say this out of extremism or to be gratuitously controversial or even provocative. It's just that his words and actions lead to the inescapable conclusion that he is unwilling to curb his appetite for big government. In the absence of any such restraint, our alarming budget trajectory cannot be reversed. The debt ceiling may be the last clear chance before the 2012 elections to force meaningful budgetary reforms.
Obama's recalcitrance is rooted in his ideology. He has been working all his adult life toward the moment that he could transform America into a fairer place. He's not about to allow an existential threat to the nation get in the way of his obsession.
Perhaps he wishes he'd acceded to the presidency when our debt picture was less calamitous. Then he might have more leeway to work his despotic magic. Then again, probably not; without the mainly Democratic-caused housing crisis falling into his lap just in the nick of time, he might not have been elected, much less positioned to make the ludicrous demand that we spend nearly $1 trillion more to "stimulate" ourselves out of debt. Alinskyite revolutionaries feed on crises, real and perceived.
Obama fundamentally rejects the American ideals of economic liberty and equality of opportunity. He's determined to use government to redistribute and equalize incomes (and wealth, truth be told), and neither the Constitution nor catastrophic debt consequences will deter him.
He doesn't even appear worried about the debt itself, only the hassle he's getting from Republicans who are getting in the way of his spending and tax hikes. When most Americans are worried sick over our nation's finances, Obama is lecturing us about people who "keep hundreds of thousands of dollars in additional income that (they) don't need," as if the chief executive were the grand arbiter of income distribution. The Heritage Foundation reports that Obama is "creating a new 'poverty' measure that deliberately severs all connection between 'poverty' and actual deprivation." His "goal is to measure income 'inequality,' not poverty – giving the president public relations ammunition for his 'spread-the-wealth' agenda." Just so ... just so.
There's more. Obama is fond of invoking false consensuses in support of his policies, but there truly is widespread agreement that raising taxes during very tough economic times would impede recovery. Obama himself gave voice to that very axiom in 2009, saying, "The last thing you want to do is to raise taxes in the middle of a recession, because that would just suck up, take more demand out of the economy."
But now, perhaps realizing he might not get another chance to coerce the Congress into hiking taxes (as a matter of "fairness"), he's holding the debt ceiling hostage to his demands.
Worst of all is Obama's resistance to entitlement reforms. At a time when everyone acknowledges that our current entitlement programs are unsustainable, Obama refuses to offer a specific plan to reform them and adamantly opposes credible Republican plans to do so.
Also, Obama rarely speaks with any urgency about spending cuts; his emphasis is always that we can't unduly cut programs for "folks" who rely on them, flagrantly turning on its head the JFK maxim, "Ask not what your country can do for you; ask what you can do for your country."
-- Barack Hussein Obama
(1961-) 44th President of the United States
Source: 20 March 2006, prior to voting against a debt ceiling increase in the Senate
Thursday, July 21, 2011
BY MARC A. THIESSEN
Thursday, July 21, 2011; 11:23 AM
Sen. Kent Conrad is claiming that if the Congressional Budget Office scored the "Gang of Six" deficit reduction plan, "it would find net tax relief of approximately $1.5 trillion." This is deeply misleading. Far from a net tax cut, the Gang of Six plan would result in a massive tax hike of as much as $3 trillion. Democrats understand this -- which is why President Obama was so quick to embrace the plan.
When normal people judge what constitutes a tax increase, they compare what they will pay tomorrow to what they are paying today. If that number goes up, it's a tax increase. That is not how the Gang of Six did its tax calculations. The Gang of Six's assumptions are based on current law, not current policy. Big difference. Current policy assumes Americans will continue to pay what they are paying right now. Current law assumes that, over the next decade, taxes will go up by some $4.5 trillion dollars because of tax cut expirations. The Gang of Six reduces this $4.5 trillion tax increase by $1.5 trillion -- and calls it a tax cut. But the practical result is really a $3 trillion tax increase over what Americans pay today. Consider:
The Gang of Six plan eliminates the alternative minimum tax, or AMT. In scoring this, they assume, based on current law, that tens of millions of middle-class families would have paid the AMT, at a cost of some $660 billion. But in practice, middle-class families never pay the AMT -- because every year Congress passes what is called an AMT "patch" exempting them from the tax. In other words, about $660 billion of the taxes the Gang of Six claims to be cutting over the next 10 years exist only on paper.
The Gang of Six plan also assumes that a number of other tax provisions called "tax extenders" -- such as the research and development tax credit -- will expire at the end of the year. But most of these provisions are routinely extended by Congress. That is another $750 billion over 10 years that that Gang of Six inaccurately counts toward its tax cut total.
The Gang of Six also assumes that all the Bush tax cuts will expire at the end of 2012. But no serious person in Washington believes that all the Bush tax cuts will be allowed to expire. Even President Obama and congressional Democrats support extending some of these tax cuts, and Republicans oppose eliminating any of them. Unless Congress is ready to support the repeal all of the Bush tax cuts -- and thus the imposition of a massive middle-class tax increase -- that is another roughly $3 trillion over 10 years the Gang of Six inaccurately counts.
So if you judge the Gang of Six plan against current law -- which assumes millions of middle-class families would have paid the AMT for the first time next year, the R&D tax credit and other tax "extenders" will disappear, and all of the Bush tax cuts, including those for the middle class, will expire on Jan. 1, 2013 -- then yes, the Gang of Six cuts taxes by $1.5 trillion. But judged against current policy -- what Americans pay today in taxes -- the Gang of Six plan constitutes a massive tax increase.
And what about spending? Aside from freezing congressional pay for an unspecified period of time, repealing the CLASS act (a new long-term health-care benefit created under Obamacare), changes in the Consumer Price Index, and few other small provisions, there are no specific cuts in the Gang of Six plan at all. The plan instructs various congressional committees to produce unspecified cuts: The Armed Services Committee must come up with $80 billion; the HELP Committee must cut $70 billion; the Homeland Security and Government Affairs Committee, $65 billion; Agriculture, $11 billion; Commerce, $11 billion; Energy, $6 billion, and so on - and Congress must eliminate $26 billion in unspecified waste, fraud, and abuse. But the plan offers no specifics.
To see just how absurd Conrad's tax cut claim is, consider this: If the Gang of Six really cut taxes by a net $1.5 trillion, how on earth does its plan reduce the deficit by $3.7 trillion? That would require $5.2 trillion in spending cuts. But the plan outlines nowhere near those kinds of cuts. And even if it did, does anyone believe President Obama would sign into law a plan that cut spending $5.2 trillion while also cutting taxes by $1.5 trillion? Not a chance.
The Gang of Six plan constitutes a massive tax hike disguised as a tax cut. No wonder Obama likes it. The question is: Why would any Republican go along?
A letter being circulated by freshman Rep. Joe Walsh (R., Ill.) could effectively take the contingency plan being crafted by Senate leaders Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.) — it’s being referred to as “McConnell-Reid” — completely off the table in debt-ceiling negotiations.
Walsh tells National Review Online that he has received close to 90 signatures on his letter, which is addressed to House Speaker John Boehner (R., Ohio) and Majority Leader Eric Cantor (R., Va.) and urges them to publicly denounce the McConnell plan (or some version thereof) and ensure that it never comes up for a vote. He says that “people close to leadership” have told him that they are aware of the letter and the number of signatures (nearly 40 percent of the Republican caucus) and that it has “had an impact” on their decision making. In all likelihood, Boehner cannot afford another mass defection within the caucus (as with the continuing resolution to avoid a government shutdown in April).
Wednesday, July 20, 2011
By Laurence Kotlikoff Jul 19, 2011
Laurence J. Kotlikoff is an economics professor at Boston University and the author of "Jimmy Stewart Is Dead: Ending the Worlds Ongoing Financial Plague With Limited Purpose Banking."
More about Laurence J Kotlikoff
It’s time for a third way.
The Republicans and Democrats have become dangerous extremists. They want to spend nothing or spend too much, enrich the rich or strip them bare, regulate nothing or everything, rule the world or wall it off. Their only point of agreement is that the other party is destroying the country. On this, they’re both right.
The political rift offers an unusually propitious moment for a third-party presidential candidate to give the two parties a run for their money. I’m even willing to predict we’ll have one by this fall.
The Republicans and Democrats have done a terrible job of managing our country and economy, transforming the American dream into a nightmare. They’ve squandered our youth and wealth in endless wars we couldn’t win, and spent six decades running an intergenerational Ponzi scheme, racking up huge official and unofficial debts for our children to pay.
By some measures, the U.S. is now in worse fiscal shape than Greece. True, our official debt is a much smaller percentage of economic output. But our unofficial debt is much larger. The unofficial debt includes primarily the obligation to pay 78 million baby boomers roughly $40,000 a head each year of their very long retirements in Social Security, Medicare and Medicaid benefits. To get our overall fiscal gap under control, the U.S. must cut spending or raise tax revenue by $20 trillion over the next decade, far more than either the president wants or the House Republicans seek.
By taking ever larger sums from young savers and giving them to old spenders, the two parties have driven our national saving rate to zero (0.1 percent of national income) and our domestic investment rate to just 4.4 percent of national income. On net, foreigners are the only ones still investing in our country. That’s one reason our currency is progressively weakening.
The Reds and the Blues weakened financial regulation while pocketing hefty campaign contributions from bankers and financiers, sat back while Wall Street sold trillions in toxic assets, and then bailed out virtually every financial miscreant in sight. To cover the costs, they “encouraged” our “independent” central bank to print as much money as needed. The Federal Reserve has now injected more than $2 trillion into the financial system over four years, more than tripling our base money supply and laying the groundwork for hyperinflation.
Wall Street Architects
Rather than transform “trust me” banking into “show me” banking, our leaders hired the architects of Wall Street’s collapse to patch it up. Even worse, they promised, either explicitly or implicitly, to cover virtually all of Wall Street’s future gambling losses. The next collapse, which U.S. fiscal policy will shortly engender, will put the Fed on autopilot to print trillions more.
If the goal is a third-world economy, these folks are succeeding. The unemployment rate is stuck at almost 10 percent. Workers’ average real earnings per week haven’t budged in 40 years. Wage and wealth inequality is deplorable and getting worse.
For those not blessed with special talents, good breaks or connections, tough luck. Our primary and secondary education lags far behind that of other developed nations. For many of our children, quality higher education is now unaffordable. For others, it’s a path to student-loan debtors’ prison.
Employers in Charge
Our employers are neither our parents nor our friends, but the Red-Blues have put them in charge of our health care, much of our saving and investing, and our tax breaks. The result is a mess. Those without a benevolent employer have been left at the mercy of the cherry-picking health-insurance industry, which has succeeded in leaving 50 million Americans uninsured. Rather than fix health care from scratch, we’ve been saddled with yet another government system: health exchanges, with costs that will probably explode.
Social Security is in worse long-run fiscal shape now than it was in 1983, the last time politicians “fixed” it. It’s running cash-flow deficits and can no longer afford to mail us our annual benefit statements or even put them online. According to its trustees’ report, the system needs, immediately and permanently, a 27 percent tax increase or a 20 percent benefit cut.
Even if Social Security were solvent, as opposed to seriously broke, the 2,728 rules in its handbook are indecipherable. Millions of retirees are taking the wrong benefits at the wrong time because they can’t make sense of a system that redefines the word complexity.
The federal income tax offers another example of complexity run amok. Together with the other 17 major tax-transfer programs now active in the U.S., it has made a mockery of tax progressivity and left virtually the entire country in very high marginal tax brackets.
We need to fix America from the ground up, but both parties stand in the way. Come November 2012, the American public will have an alternative to the Democrats’ and Republicans’ incompetence. Mark my words.
(Laurence J. Kotlikoff, a professor of economics at Boston University, is a Bloomberg View columnist. The opinions expressed are his own.)
Tuesday, July 19, 2011
DOMA bans federal regulation of marriage and defines marriage as being between one man and one woman. The law merely restates what has always been the prevailing law that marriage is a matter for the states!
Excessive government spending is hurting all Americans! Why do Rangel and other black members of Congress always make every issue about race?
There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. The current problems, rather, are political. Under America’s elaborate separation of powers, Congress must authorise any extension of the debt ceiling, which now stands at $14.3 trillion. Back in May the government bumped up against that limit, but various accounting dodges have been used to keep funds flowing. It is now reckoned that these wheezes will be exhausted by August 2nd.
The House of Representatives, under Republican control as a result of last November’s mid-term elections, has balked at passing the necessary bill. That is perfectly reasonable: until recently the Republicans had been exercising their clear electoral mandate to hold the government of Barack Obama to account, insisting that they will not permit a higher debt ceiling until agreement is reached on wrenching cuts to public spending. Until they started to play hardball in this way, Mr Obama had been deplorably insouciant about the medium-term picture, repeatedly failing in his budgets and his state-of-the-union speeches to offer any path to a sustainable deficit. Under heavy Republican pressure, he has been forced to rethink.
Now, however, the Republicans are pushing things too far. Talks with the administration ground to a halt last month, despite an offer from the Democrats to cut at least $2 trillion and possibly much more out of the budget over the next ten years. Assuming that the recovery continues, that would be enough to get the deficit back to a prudent level. As The Economist went to press, Mr Obama seemed set to restart the talks.
The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical.
A gamble where you bet your country’s good name
This newspaper has a strong dislike of big government; we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. In Britain, for instance, the coalition government aims to tame its deficit with a 3:1 ratio of cuts to hikes. America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.
And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.
Both parties have in recent months been guilty of fiscal recklessness. Right now, though, the blame falls clearly on the Republicans. Independent voters should take note.
Monday, July 18, 2011
By Marc A. Thiessen, Monday, July 18, 12:38 PM
After backing conservative insurgents against Republican senators in the 2010 elections, Sen. Jim DeMint promised Republican Senate leader Mitch McConnell and his GOP colleagues that he would not “recruit or support primary challengers to incumbent Republicans” in 2012.
Now that McConnell has proposed a plan to effectively give President Obama carte blanche to raise the debt limit, it’s time for DeMint to declare that — if the McConnell plan goes through — the deal
The McConnell proposal is not a “contingency plan” — it is a sellout. As put forward by the Republican leader last week, it gives President Obama exactly what he asked for at the start of the negotiations: a “clean” debt limit increase. All Republicans get in exchange are clean hands. In this sense, it is politically brilliant. Congress votes to temporarily surrender its power to approve any increase in the debt ceiling to the president, who can then raise the debt ceiling by $2.5 trillion in three increments. Obama would have to list corresponding cuts in spending that all sides know will never be enacted. And Republicans can vote to disapprove each debt limit increase, knowing full well that they cannot stop it without a veto-proof majority. This allows Republicans to claim to have voted against raising the debt limit, when they really voted to allow it. Obama gets to drive up the debt, and thus drive our economy off a cliff — but with no GOP fingerprints.
This is an insult to conservative voters, who are expected to buy Republican claims that they opposed raising the debt limit when they were in fact co-conspirators in raising it with little or nothing in exchange. Even the “hybrid” plan McConnell and Reid are reportedly discussing would cut spending by about $1 trillion less than it raises the debt limit — an abandonment of the GOP goal to ensure that spending cuts are equal to or greater than any increase in debt authority the president is given.
The McConnell plan is exactly the kind of inside-Washington maneuver that gave rise to the Tea Party movement — and inspired conservative insurgents to challenge establishment Republicans in the last election. Don’t be surprised if DeMint makes clear that any Republican who votes for the McConnell plan could end up facing a well-funded conservative primary challenger backed by his Senate Conservatives Fund. There are signs that DeMint might be leaning toward making just such a declaration.
Last month, DeMint told the Hotline that while he still wasn’t planning to target any of his fellow Republican senators in 2012 that could change if Republicans vote to raise the debt ceiling with nothing in return. “If we have folks who go the wrong way on that, it’s going to be pretty hard for me to sit still,” he said. The day after McConnell unveiled his plan last week, DeMint sent out an urgent e-mail to supporters of the Senate Conservatives Fund declaring the McConnell plan “would effectively give the President the power to increase our nation’s debt at will. I want you to know that I strongly oppose this plan and will do everything I can to defeat it.” Bottom line: Republicans who vote for the McConnell plan should not expect DeMint to sit still in their primaries.
What is the alternative to the McConnell plan if Aug. 2 arrives with no agreement? House Republicans should simply pass a smaller debt-ceiling increase — and attach a larger number of spending cuts that Democrats have agreed to in the course of the debt-limit negotiations. The government does not default. Social Security recipients get their checks. And we begin implementing the spending cuts identified in the negotiations thus far. Critics of this approach point out that Obama has pledged that he will not sign such a stopgap bill. He is bluffing — and Republicans should call him on it. Treasury Secretary Tim Geithner recently warned that failure to raise the debt limit by Aug. 2 would lead to “catastrophic damage” to the American economy. Is Obama really going to allow “catastrophic damage” to the economy? Of course not. Republicans should pass a stopgap bill and then dare the Senate to reject it or the president to veto it. Neither will.
Obama thinks he can play hardball with Republicans by scaring seniors — warning that, to avoid default, the government might not send out Social Security checks to 55 million American seniors after Aug. 2, thanks to the GOP. This is a bluff as well. If House Republicans pass short-term legislation to keep those Social Security checks coming, and Obama vetoes it, who are seniors going blame? The Republicans who passed legislation to keep the money flowing or the president who vetoed that legislation?
The McConnell plan presumes that Obama has Republicans in a corner. He does not. But to prevail in this standoff, Republicans need to reclaim the offensive. Jim DeMint can help put some steel in GOP spines — by making clear the consequences of throwing in the towel.
The negative of the President applies only to the ordinary cases of legislation: He has nothing to do with the proposition, or adoption, of amendments to the Constitution.
I have lost faith in the national leaders of the Republican Party, especially Mitch McConnell, and question their willingness to get our nation's fiscal house in order. I am a fiscal conservative and believe that we should call President Obama's bluff on raising the debt ceiling.
Never before have we had such leverage to force significant spending cuts and debt reduction but our leaders do not appear willing to stand up and practice what they preach!
Republicans should refuse to raise the debt ceiling until Obama and the Democrats agree to spending cuts that equal the $2.5 Trillion sought and agree to balanced budgets for the remainder of Obama's time in office!
A majority of states have balanced budget amendments!