Wednesday, July 20, 2011

The Deadline Gambit

Vice President Joe Biden's debt ceiling talks stopped when the opposition party representatives, House Majority Leader Eric Cantor (R-VA) and Senate Minority Whip Jon Kyl (R-AZ), walked out in a dispute over the idea of raising taxes. Cantor left first. Somehow he told his colleagues what he was going to do but did not tell the Speaker of the House, if we are to believe that. Kyl couldn’t do much else but recite the GOP “job killing” mantra and participate in the display. It is much easier to strike a pose than to negotiate a deal, anyway.

Before his walkout on Thursday morning, Cantor told The Wall Street Journal, “As it stands, the Democrats continue to insist that any deal must include tax increases.” Cantor said in a statement, “Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.” The tax increase idea means the elimination of Bush era tax breaks to which the Republicans are married. It does not mean tax increases for individual US taxpayers, but that is just GOP semantics.

During the Biden debt ceiling talks, Democrats argued that Republicans should at least join them in eliminating corporate tax breaks for chief executives with private jets. Republicans also rejected consideration of eliminating even temporary tax breaks, such as those for NASCAR tracks and Puerto Rican rum. As a result, a new Washington Post-Pew Research Center poll found that more people say they would blame Republicans in Congress than President Obama if the debt-ceiling talks broke down.

Politicians deal in factoids, not facts. They live and breathe strategic ambiguities so that blocs of voters like the tea party can panic and over react. For example, “It's time to force our elected officials to stop spending cold turkey, and we can start by making sure they do not raise the debt ceiling,” announces Representative Michele Bachmann’s website. Never mind the fact it cannot be done.

Even one of her more staunch supporters William Kristol, editor of the conservative Weekly Standard, says such an idea is not only silly but irresponsible. “I've seen no plausible plan that would enable us to go "cold turkey" (to use her term) fast enough or dramatically enough that we could reduce the deficit to zero in a few months--which is what would be required if Congress were not to authorize an increase in the debt ceiling.”

Here is a quick review of some of the facts being ignored. For one thing, the government officially hit the federal debt limit on Monday, May 16. That forced the Treasury Department to make moves to avoid a default, like reducing government investments in two federal employee pension funds. For another thing, it is the Treasury Department that set an August 2 deadline to raise the country’s $14.3 trillion debt limit before the country risks defaulting on its debt obligations. For yet another thing still, although they don't admit it, every time Congress votes for a spending hike or a tax cut, lawmakers are agreeing to raise the debt ceiling whether they say so or not.

"Congress has already passed and the president has already signed legislation that increases spending or decreases revenues. Those decisions have already been made," said Susan Irving, director for Federal Budget issues at the Government Accountability Office. So arguing over the debt ceiling is like arguing over whether to pay the bills the country has already incurred. This is the United States. Its obligations will be paid. That is why they are called obligations.

The US Treasury Department says, “Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary.”

Just for the record, “Between 1980 and 1990, the debt more than tripled,” the Treasury reports. “The debt shrank briefly after the end of the Cold War, but by the end of FY2008, the gross national debt had reached $10.3 trillion, about 10 times its 1980 level.”

Remember the Ryan Budget passed by the Republican House majority? The Congressional Budget Office and House Budget Committee estimates that “the spending included in the House Republican Budget Resolution would necessitate a nearly $2 trillion increase in the debt limit by the end of FY2012. Moreover, it would require trillions of dollars in additional debt limit increases beyond that amount for the next several decades.” But these are only government estimates, not facts.

As to the Cantor walkout the morning after his boss met with the president, it would be underestimating the Speaker to believe he did not know what his Number 1 was going to do. It would be more characteristic of Boehner to believe that he said, “Eric, you can go, now.” It’s a chess move where you sacrifice a Rook to a Queen.

"In the Bush years the Republicans said that tax cuts will produce jobs. They didn't. They produced a deficit," House Minority Leader Nancy Pelosi (D-CA) said. "Leader Cantor can't handle the truth when it comes to these tax subsidies for big oil, for corporations sending jobs overseas, for giving tax breaks to the wealthiest people in our country while they're asking seniors to pay more for less, as they abolish Medicare," Pelosi said.

Congress and the Treasury seem to have a problem with the concept of a deadline. Showmanship seems to be paramount for the GOP. But it is the absence of any sense of urgency that gives the deadline gambit away. The Biden talks may be “in abeyance” after the Republicans pulled out, but Boehner's office says he's leaving town for an 11-day House recess, swaggering all the way to the golf course.

Article first published as The Deadline Gambit on Blogcritics.

Wednesday, July 13, 2011

Repealing the Great Society

Republicans propose changes in Medicare and Social Security. The claim is that federal spending is “out of control.” Members of Congress repeat that claim often, hoping that by repetition their claim will become true. GOP members publicly advocate that the federal budget must be cut to their terms or else the United States can default on its obligations. The party opposes the “Great Society” as it did the “New Deal.” It just doesn't know that.

President Lyndon Baines Johnson (LBJ) signed the Social Security Act of 1965 into law. It established Medicare. Johnson enrolled former President Harry Truman as the first Medicare beneficiary at the bill-signing ceremony and presented him with the first Medicare card. Truman’s boss, President Franklin Delano Roosevelt (FDR), signed the first Social Security Act into law in 1935. Thirty years later, that part of FDR’s New Deal had become part of LBJ’s Great Society.

Republicans have opposed Social Security for more than 65-years-old. They also oppose facts. For instance, Social Security and Medicare entitlements are already paid for through an involuntary tax called FICA, collected at a rate of 7.65% of gross [before deduction] earnings. 6.2% goes for Social Security called OASDI [Old-Age, Survivors, and Disability Insurance]. 1.45% goes for Medicare. The federal system of old age, survivors, disability and hospital insurance is paid by the FICA tax. The Social Security system then funds the first three, while hospital insurance is funded by Medicare.

Those are the facts. Here are more. For the last 20 years Congressional Republicans have tried to limit Medicare spending on doctors’ services. However, the proposed limits have always proved to be so unrealistic, like their current demands, that each time new limits have been proposed, Congress has had to intervene to increase them. Republicans inaccurately call it uncontrolled spending when they lose.

Only half of American's 65 and older had any health insurance at the time LBJ signed the bill that created Medicare. Medicaid, established by Title XIX of the Social Security Act of 1965, is administered by the states. The public health insurance program covers over 60 million people, including one in three children, eight million people with disabilities and nearly six million low-income seniors. Each state administers its own Medicaid program. In addition to Medicare, LBJ’s “Great Society” legislation included laws to uphold Civil Rights, to create Public Broadcasting and the National Endowment for the Arts and Humanities, and to establish a host other social legislation programs to improve the American way of life. It seems as if Republicans are determined to repeal the Great Society.

Thirty-five million Americans lived below the poverty level in 1965. In a nation with such abundance, LBJ argued that helping the poor was in the best interest of business by providing stability to society. Republican disdain for Johnson’s War on Poverty continues. Originally headed by the late R. Sargent Shriver, the first Director of the Peace Corps, its legislation created Medicaid in addition to environmental protection, aid to education, Head Start, and the Job Corps. Republicans appear to label any program that helps poor people as “reckless spending.”

President Johnson also handled spending differently than the way Republicans and President Obama are considering. Instead of deficit spending to finance the Vietnam War, LBJ pushed Congress to enact a surtax. The imposition of a surtax added another 10% to one's ordinary federal income tax liability. LBJ left office in 1969 with a balanced budget plus a small surplus. It took 30-years for the United States to see another balanced budget.

Bear in mind that there is no Constitutional requirement for a balanced budget. The United States federal government has pretty much always been in debt since its inception. Article I, Section 8, Clause 2 of the Constitution grants to the United States Congress the power “To borrow money on the credit of the United States.” As you may also know from recent accounts, Section 4 of the Fourteenth Amendment states, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Republicans are questioning it.

Their latest debt ceiling demands include an oldie-goldie cover renamed the Cut, Cap and Balance Pledge. It is a classic hit that comes up from time to time -- to oppose raising the borrowing limit unless it is accompanied by spending cuts and caps, and to pass a Balanced Budget Amendment to the Constitution. So far the Pledge has been signed by just 12 senators (6 of them freshmen Republicans) and 28 House members (17 of them Republican rookies). Republicans seem to like the idea of amending the Constitution despite the fact that the founders made that so difficult to accomplish it has only happened seventeen times. As I say, it’s a GOP blast from the past like the Fair Tax.

During the Carter administration, Republicans proposed the Balanced Budget Amendment as a fiscal cure-all. It didn’t cost them anything politically since they were out of power, controlling neither house of Congress nor the Presidency. They knew it would not be enacted. Between April 29, 1975 and January 29, 1980, 34 petitions for a Balanced Budget Amendment have been submitted to Congress from 30 different state legislatures. Even though deficit spending soared during the Reagan administration, a program agreed to by Congressional leaders and the administration that entailed two dollars of spending cuts for every dollar of tax increases failed miserably. Deficits mounted further. But Congress had no intention of passing the Balanced Budget Amendment.

The Gramm-Rudman-Hollings Act of 1985 acted as political cover to raise the debt limit. It called for automatic cuts in discretionary spending when certain deficit-reduction targets were not met. Aimed at cutting the budget deficit, the largest in history at the time, the House passed the bill 271-154, the Senate by 61-31, and President Ronald Reagan signed the bill on December 12, 1985. However, when it began to affect popular programs, Congress amended it to postpone its effects until later years. The Act was partially overturned in the courts and eventually repealed in its entirety.

Republicans should know that default is not an option. A failure to increase the debt limit by the deadline coupled with a breakdown of Treasury’s machines for printing checks caused a two-week default in 1979. That was enough to raise interest rates by six-tenths of a percentage point for years afterward and increased the Reagan era deficit even more. Yet, the GOP threatens default as a negotiating tactic.

As to tax revenue increases, Ronald Reagan requested the largest peacetime tax increase in American history in 1982. Bill Clinton also asked for a large tax boost for deficit reduction again in 1993. Strong economic growth followed each time, even though conservative economists predicted economic disaster.

Congressional Republicans seem to be thinking about something other than fiscal responsibility, business, or the social fabric of the country. Advocacy of its position to negotiate the budget with default puts its representatives in the position of breaching their oath of office which could subject them to recall if not impeachment. The GOP position seeks to repeal the Great Society. They are doing a good job of that, so far.

Article first published as Repealing the Great Society on Technorati.

Sunday, July 10, 2011

GOP Leaders Breach Oath of Office

The GOP rhetoric is pernicious. It advocates the financial destruction of the United States. It is ignorant and stupid because it is based solely on emotional appeal as the dominant factor of GOP/teaparty cheerleading. It reminds me of the Miller Light ads “Tastes Great/Less Filling,” except those ads were not dangerous. What the Republicans are advocating is.

House Representatives Eric Cantor and Michele Bachmann suffer delusions of grandeur brought on by having to believe their own pernicious nonsense. Cantor seems to believe that he will succeed John Boehner as Speaker of the House. Bachmann seems to believe that she will succeed Barack Obama as President of the United States. They advocate that the United States should default on its worldwide obligations. That alone should be sufficient to disqualify them from achieving higher office. In fact it should qualify them for recall if not impeachment.

The financial destruction of the nation that these Republicans seek is beyond what any terrorist could hope to achieve.

It is a very serious statement. I do not make it lightly, either. The consequence of not raising the debt ceiling is default on obligations the US has in the world market. Look at Bachmann's website. Never mind the fact that such a plan cannot be done. Even her most ardent of supporters Bill Kristol, editor of The Weekly Standard, says it’s “irresponsible.” He is being understandably kind and wrong. It’s not irresponsible, it’s negligent and dangerous.

Keep in mind that she has also claimed that the Founding Fathers “worked tirelessly” to end slavery, but facts don’t interest her. That conjecture is stupidity. Politicizing a function of government to make a headline is something the GOP/teaparty regularly does with flagrant disregard for consequences. It is not alright. It is bad for business and bad for the country. If that is a "negotiating tactic," it is a treacherous one.

What is worse is that the Republican Party leadership is enabling such treachery. Its recent Budget Resolution is an example because to go into effect requires raising the debt ceiling. By the way, the rest of the world is watching and so are world markets. They could not care less about Medicare. They care about the United States making good on its obligations. But the GOP does not care about anything except trashing the economy so they can blame it on the administration.

Treasury Secretary Timothy Geithner says that if the ceiling isn’t raised by Aug. 2, the government could begin defaulting on some of its obligations, triggering a financial crisis.

Republicans floated the idea of rewriting the 14th Amendment last year when they were waving the flag over Arizona’s immigration lies. Top Republicans Senator Lindsey Graham (SC), Senator Jon Kyl (AZ), and Senator Mitch McConnell (KY) advocated eliminating the “birthright clause” and demonstrated their antithesis to the Amendment. Senator Graham argued that the 14th Amendment no longer serves the purpose it was designed to address. Senate Minority Whip Kyl supported hearings on repealing the 14th Amendment. Senator McConnell said Congress should “reconsider the Fourteenth Amendment.”

But there isn’t anything to interpret in Section 4: “The validity of the public debt of the United States, authorized by law . . . shall not be questioned.” These Republicans took an oath to uphold and defend the Constitution whether they like it or not. To prevail in their hypocrisy imperils the country and should be sufficient grounds for their impeachment and removal from office for breaching their oath of office.

Article first published as GOP Leaders Breach Oath of Office on Technorati.