Tag Archives: republicans

Obama’s Debt Deal

The deal to raise the debt ceiling has been signed, sealed, and delivered – but what is being delivered? The political debate about the winners and the losers, whether or not the Republicans or the Democrats will gain or lose the most politically, will be analyzed and debated for weeks.

In many ways this reminds me of the health care reform debate in 2009. I think we saw a preview then of how President Obama made political deals in order to get a rather moderate and centrist piece of legislation through Democratic majorities in both houses of Congress. What did we think would happen when Obama was face with a divided Congress?

But what about the policy implications? Unlike the political ramifications, the policy ramifications are much more serious. The Economist breaks down the nuts and bolts of the deal:

The result is a mishmash of expedient stop gaps and promises that tilts heavily to Republican priorities while guaranteeing more wrangling and uncertainty in the months ahead. It does nothing to support the near-term economic outlook, and makes less progress on long-term fiscal consolidation than hoped.

Its key provisions are $917 billion in deficit reduction over the next decade (the precise timing is unclear), drawn mostly from domestic discretionary outlays. (Discretionary items must be approved annually by Congress. Entitlements, also called mandatory spending, proceed on autopilot unless the law changes.) In return, the debt ceiling rises immediately by $400 billion, about enough borrowing room for the Treasury to fund current spending until September. Then, it would rise another $500 billion unless both the House and Senate were to vote by super-majorities against doing so, which is highly unlikely.

Then comes the tricky part. The debt ceiling will rise by another $1.2 trillion to $1.5 trillion by December 23rd, enough to tide Treasury over until after next autumn’s presidential election, a priority for Mr Obama. However, that requires one of two things to happen. A committee of 12 legislators composed equally from both parties and both chambers is to agree on $1.5 trillion of deficit cuts. Congress could then accept or reject but not amend the proposals by December 23rd. Approval would result in the debt ceiling rising by $1.5 trillion.

If the committee fails to come up with at least $1.2 trillion in cuts or their proposal is rejected, spending would be automatically cut by enough to bring total cuts to $1.2 trillion, coming equally from defence and domestic outlays. The triggers would take effect in 2013, and result in a debt ceiling increase of $1.2 trillion. Payments to Medicare providers could be trimmed but Medicare, Social Security and Medicaid benefits would all be shielded. The thinking is that these cuts would inflict such pain on both Republican and Democratic pet priorities that they will labour mightily to come up with an alternative.

What do policy experts think? Mohamed El-Erian, CEO of global investment firm PIMCO, said that the deal does nothing to restore household and corporate confidence “so unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise.” Analysis by the Economic Policy Institute (EPI) found that the deal could lead to roughly 1.8 million fewer jobs in 2012. The EPI analysis says that “not only erodes funding for public investments and safety-net spending, but also misses an important opportunity to address the lack of jobs.” The Center for American Progress notes that the deal “does nothing to help with the biggest problem facing our nation: anemic job growth and a faltering economy. In fact, by putting a noose on public investments and tightening the squeeze on the middle class, the deal goes straight in the wrong direction.”



Video Geek: Debt Ceiling Deal All Cuts No Taxes

via Real News Network

Speaker Boehner’s Light Gavel

Throughout the debt ceiling debate one of the most forefront questions has been whether or not Speaker of the House John Boehner will be able to introduce legislation that most of the Republican caucus will vote for or legislation that a coalition of moderate Republicans and Democrats will vote for. This week the speaker has tried to move through legislation that could pass the House with just Republican support, but yesterdays vote in the House disengaged due to lack of support from his own caucus. Much of the analysis of this failure will look at the divides in the Congressional Republicans, or on were the power will shift to in the aftermath.

However, the events of the past few weeks put into sharp relief the difference in leadership and power of the last two people to hold the gavel in the US House of Representatives. Last year when Majority Leader Nancy Pelosi held the gavel she was able to hold together a divided Democratic Caucus to pass the Health Care Reform bill, and before that she was able to pass the Recovery Act. While the divides in the Democratic caucus were not as wide or as deep, they were there, and Pelosi was able to find the numbers. Speaker Boehner may have brought a bigger gavel with him, but it’s much lighter than the one Pelosi used so effectively.

Boehner’s Debt Plan Solves Nothing

Congressional Republicans filed a 57-page bill outlining Speaker of the House John Boehner’s two-step plan to raise the debt ceiling by $2.5 trillion. The first step raises the debt ceiling by $1 trillion and is contingent on 10-year savings of $1.2 trillion from annual appropriations bills, and the second step would raise the debt ceiling by $1.6 trillion after an additional $1.8 trillion in savings in cuts from social safety net programs. It is unclear if it would have the votes to pass the House, and it likely has no chance of passing in the Senate.

The plan does many things. This plan creates another default crisis next year, right in the middle of the Republican presidential primaries. It is far from a balance plan, which is what the majority of Americans want, as it raises no new revenue. It will result in deep cuts in the social safety net, and could dramatically change Social Security and Medicare. The plan would still likely mean a downgrade of the United States’ AAA credit rating, unlike the plan proposed by Senate Majority Leader Harry Reid. It’s a plan that does many things, but solve the problem.

The Center for Budget and Policy Priorities analysis of the Boehner plan characterizes it as “tantamount to a form of class warfare,” and that if enacted it could produce the “greatest increase in poverty and hardship produced by any law in modern U.S. history.”

“The first round of cuts under the Boehner plan would hit discretionary programs hard through austere discretionary caps that Congress will struggle to meet; discretionary cuts thus will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions. As Speaker Boehner’s documents make clear, virtually all of the $1.8 trillion would need to come from cuts in entitlement programs. (Cuts in entitlement spending totaling more than $1.5 trillion would produce sufficient interest savings to achieve $1.8 trillion in total savings.)

To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.”

Chart Geek: Comparative Deficit Reduction

via Matthew Yglesias

What Monks Could Teach Washington’s Politicians

Henry G. Brinton, a pastor of Fairfax Presbyterian Church in Virginia, writes in USA Today that political leaders in Washington, D.C. could learn something from Sixth-century Irish monks in how they approach the debt ceiling debt. Brinton says that political leaders can be a “diplomat and a warrior, but the two roles must be held in creative tension.”

“House Majority Leader Eric Cantor, R-Va., who has been out front for the GOP, could learn from St. Kevin, who was so disciplined that he held out his arms for hours in prayer. One day, a blackbird laid an egg in Kevin’s hand, and he remained in that position until the baby bird hatched. While there is clearly some historical hyperbole in this story, it illustrates Kevin’s strong commitment to a position, which a politician such as Cantor would have to admire. But Kevin was equally committed to the welfare of his community and served as the abbot of a monastery and the bishop of a region outside Dublin, caring for the needs of young and old, rich and poor. He balanced extreme personal discipline with service to the larger community.

House Minority Leader Nancy Pelosi, D-Calif., who is steering the Democrats in the House negotiations, should sit at the feet of St. Brigid, who founded two monastic institutions, one for men and one for women. St. Brigid was a strong leader, equally committed to contemplation and hospitality, and knew that some lessons are best learned from sitting down at a table with strangers, talking with them and being influenced by them. Pelosi should share a meal with some Tea Party Republicans, and see whether a dinner conversation can accomplish what political debate cannot.”

While interesting lessons can be gained from examining the lives of the monks, I find it a stretch to compare their religion beliefs with political ideology. More specifically, the monks balancing of their “strong positions with a commitment to hospitality and community life” is much different than a politician balancing their ideological position with a commitment to serve the country. If only because those strong positions held by the monks were about something greater than themselves, and politicians positions are often about serving their own political self interests.

However, Brinton makes an interesting comment that it’s “hard to believe that it was just a generation ago that icons such as Ronald Reagan and Tip O’Neill were able to take principled stands but also hammer out compromises.” You hear those names evoked by old school political observers, and they call to mind visions of party bosses sitting in back rooms sharing a glass of scotch and hammering out deals. While the back room deals and the good old boy politics may not be missed – the idea of the political compromise is something to be missed.

Debt Ceiling Solutions

There has been kind of a crowd sourcing of ideas for how to solve to the debt ceiling crisis, and the ideas include substantive policy ideas and purely political ideas. A few of the ideas I found particularly interesting, and I think the way forward for the Obama Administration is to use a combination of a few. Below are a few ideas that the President should use in some form or another beginning with his remarks tonight.

The New York Times editorial board argues that President Obama should threaten to raise the debt ceiling unilaterally, and not based on the 14th Amendment but on “president’s role as the ultimate guardian of the constitutional order.”

“A deadlocked Congress has become incapable of acting consistently; it commits to entitlements it will not reduce, appropriates funds it does not have, borrows money it cannot repay and then imposes a debt ceiling it will not raise. One of those things must give; in reality, that means that the conflicting laws will have to be reconciled by the only actor who combines the power to act with a willingness to shoulder responsibility — the president.”

Elizabeth Drew writes at Politico that the President should demand a clean bill raising the debt limit, and that he should “veto any bill encumbered by amendments, and emphasize that if the Congress does not comply he will take the issue to the American people.”

“It’s come time, perhaps long-since come time, for Obama to take charge, show some strength and commit an act of political jujitsu that will leave the Republicans gasping for air. In a short speech to the nation, Obama might remind his fellow citizens of the patience he has shown, of the fact that time is running out for the drafting and passage of a bill to increase the debt ceiling. He could make it clear that to lift the debt ceiling does not, as many people seem to think, sanction the spending of one more dime than the Congress has not already agreed to.”

David Callahan at the Policy Shop says the Democrats could agree to the large spending cuts that the Republicans are demanding, and then simply obstruct an extension of the Bush tax cuts.

“Democrats agree to $2.5 trillion in spending cuts now and reserve another $1 trillion in cuts for future hostage-taking episodes — for a grand total of $3.5 trillion in cuts. Ending the Bush tax cuts then brings in another $3.7 trillion in revenues over the next decade. That’s a big deficit reduction plan with a 1-1 ratio of revenue hikes to spending cuts, which is far more progressive than what the White House has been offering and more progressive than the Simpson-Bowles plan.”

Join me on Twitter to live-tweet during the President’s remarks tonight.