Category Archives: Boehner

Politics, Policies, and the Debt Ceiling

There’s been a lot of talk on left leaning blogs about how President Obama has moved to the right on the current debt ceiling negotiations. He has asked for more spending cuts than Republicans, along with reforms to Social Security and Medicare, which would, reduce the countries long term deficits. But what is missing in their arguments is the political reality that the White House is facing.

People who have read my past writings know I don’t always agree with the actions Obama has taken. But as both political parties like to say “elections have consequences” and we’re seeing one of them now. Not raising the debt ceiling would be catastrophic for the country. Standard and Poors lowering America’s credit rating would be the last thing America would have to worry about. The stock market would drop more than it did in 2008, and interest rates would be at an all time high. So if you thought banks weren’t lending money now, people wouldn’t be able to take any money because there would be no way they would be able to pay it back.

It’s clear that the Tea Party Republicans are the ones actually in charge of the House of Representatives, and Speaker John Boehner has no influence over them. The numbers simply aren’t there to increase the debt ceiling. But since our constitution says Congress has the power of the purse, Obama needs to find a way to get a majority. Most posts I have read blame the reason on the White House asking for tax increases which Republicans have pledged not to do, but when have Republicans ever wanted to raise taxes? This is nothing new and the left shouldn’t be acting like it is. What the major difference is, is that no matter what the Tea Party will refuse to raise the debt ceiling. They don’t believe the August 2nd deadline is real, even though Eric Cantor does, and believe tax increases will hurt the economy. They are zealots when it comes to these issues and no one is going to be able to change their mind. It forced Obama to make concessions to real Republicans, not Tea Party members but Conservatives, to get them to vote for an increase on the debt ceiling.

Raising the ceiling is a hard vote because the vast majority of people don’t want their elected officials to do it. It is much easier to say, like the Tea Party is doing, that they will not raise it and have a better shot at winning reelection. With the lack of leadership in Congress it makes it a lot easier for this minority to have a bigger voice and come up with small sound bites.

Mitch McConnell, realizing the disaster that would take place if the debt ceiling isn’t raised, was going to allow Obama to raise ceiling on his own, and then have Congress vote whether to veto this action. But this would be a loss for both sides. A vote would still have to be taken forcing all members to be on the record of increasing America’s debt. Republicans show they weren’t able to govern, and Democrats show how little influence they have even though they still control the Senate.

Where Obama screwed up is that he had bad timing. Both sides agree we need entitlement reform, but if done right it can be a progressive issue. When the think tank Third Way came out with a proposal on how to talk about reforming Social Security and Medicare one of their main points was to make it about small adjustments. “Democrats should invert the traditional messaging on entitlement reform, which has tended to emphasize the heroic, major sacrifices being proposed, and thus serves only to make it more politically painful and scary.” By emphasizing tax increases for the rich, and reminding the people currently receiving these benefits this is not about the present but the future of these benefits, it would have been a lot easier for him to make changes to the system. But now that Obama is lumping small changes in these entitlements with raising the debt ceiling, it makes it a big deal and wound up scaring a lot of people. If he really wanted to figure out a way to make sure Social Security and Medicare would be there for future generations, he should have done it earlier.

After Nancy Pelosi convinced the President not to cut much spending, at his press conference today Obama said he would like to see the $2.4 trillion in cuts that were being discussed in the Biden group as part of the debt ceiling deal. The $4 trillion he originally asked for was never mentioned, which is a win for liberals. What is considered big now is making changes to the safety net, as Obama said today “$2.4 trillion without any revenue would cut too many programs that would hurt people” and he’s right. The policies he is proposing aren’t crazy, it’s responsible, and many other Presidents, or Presidents to be, have wanted to do the same thing. It was Senator Truman and his commission who cut programs in the military that were deemed a waste on tax payer money. President Clinton also cut programs in the mid 90’s in order to reduce the deficit and emphasize the programs that worked.

If the Democrats were still in control of Congress the debt ceiling would still be a contentious vote because so much money has been spent. But the arguments would be much different. There wouldn’t be Tea Party Republicans refusing to cooperate. Instead there would be Blue Dog Democrats hoping enough moderates are in favor of the package being voted on so they could vote no. What the Democrats and Blue Dogs have in common is that they wanted to keep the majority while the Republicans want to take it.

Those politics don’t make for good policy when America’s economic structure is on the line. Obama has finally been using the bully pulpit much more recently, as he knows it will benefit him. He did so right before the fundraising quarter ended by holding a press conference, and has done it again three more press conferences in the past eleven days in order to look like the mature one in the room, and it’s worked. His campaign raised a lot of money and polls show Americans like the way he is handling this situation. But he hasn’t come out with a plan on his own that would give his opponents ammunition. What Obama is betting on is that neither side wants to see what will happen August 3rd, and I hope he’s right.

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Filed under Boehner, Congress, debt ceiling, Deficit, Economics, Eric Cantor, President Obama, Third Way

The Blind Leading The Dumb

There aren’t many instances when you get an email from the New York Times at one in the morning on a Saturday night, but when the Speaker of the House is begging for his political opponents to help him, you know something flew over the cuckoo’s nest.

We already knew Johns Boehner was a weak leader, but instead of the Tea Party Republicans using their influence behind closed doors, they are now openly defecting from the person they elected to run the House of Representatives. Eric Cantor didn’t leave Vice President’s Biden’s negotiating table because there was no progress being made. What he said is they have done enough and the final pieces need to be decided by the leaders. Translation: My party isn’t going to like this and if I want to be Speaker in 2014 I can’t have anything to do with it.  So he cuts off ties with the guy who is supposed to be his partner. What Cantor is blind to though is that he could become just as weak of a leader as Boehner is if he does ascend to the position.

Does Cantor really think that the same members of the Tea Party in Congress are going to allow him to raise the debt ceiling because he is sucking up to them now? We’re talking about an ideologically challenged minority that has no credible policy wonks on their side. Michael Tanner, Senior Fellow at the conservative CATO Institute, argued that cuts by themselves aren’t going to solve the debt problem. “That is why Republicans should not get hung up on seeking any particular amount of spending cuts. The dollar amount matters far less than getting the structural and institutional changes that will actually bring down the size, cost, and intrusiveness of government in the future.” Of course, the Affordable Care Act did change the structure of Medicare, and the non-partisan Congressional Budget Office said it would reduce the deficit.

But the Democrats have also been lacking serious leadership as well. So many debates are taking place right now that have no business being debated. From increasing taxes slows job creation, to government spending hurts the economy, none of the Democrats who have an office in the Capitol have said much to tell the American people not to believe it. President Obama holding a press conference the other week was a step in the right direction that put the Republican’s on the defensive, and he needs to do more of them.

One person who chooses her fights wisely though is Nancy Pelosi. When Obama thought about conceding more to the GOP on health care, it was the last Speaker who reminded everyone they are not going to get another chance at it. She has recently been more vocal when the President was again going to cave into Republicans on cutting benefits to the elderly, the lefts best talking point since the House passed Representative Ryan’s budget. Now that Boehner needs her help, she’s already gotten him to halve the amounts of cuts he was originally asking for.

Boehner knows his colleagues aren’t going to be supporting him on the debt ceiling, it’s going to be up the real leader in Congress to make sure America doesn’t default on its debt.

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Filed under Boehner, Congress, debt ceiling, Eric Cantor, Nancy Pelosi

The Politics of Budgets

Did you know that America doesn’t actually have a budget? It’s true. Congress does not pass one big bill where all the spending is voted on. Instead, all the appropriations are voted on separately and the Congressional Budget Office (CBO) adds them all up. There are so many convoluted ways in which Congress creates America’s spending it is no wonder how it has a debt of thirteen trillion dollars.

Every year, the Office of Management and Budget (OMB) reports to the President on spending levels, the debt, and what economists are predicting for the coming year. After this analysis is complete, the President makes his priorities known. Decisions are made on what the tax levels should be, where spending should be cut, and where spending should be increased. Then the president starts pushing these ideas at the State of the Union address.

The CBO and OMB can sometimes come up with different numbers for how much a program can cost, how much the debt will be, or how much the economy will grow, but there usually isn’t that big of a difference. The CBO is a non-partisan office, and because of that, their recommendations carry a lot of weight. During the healthcare debate, the CBO estimated that if the healthcare bill passed Congress it would reduce the deficit. The Democrats jumped on this and the Republicans had no reason or will to fight this fact. Of course, they still managed to find other things to complain about.

In Congress, the appropriations committees are filled with members who have a direct interest in seeing money going to their districts. For instance, the House committee on Science and Technology (which oversees NASA), had to deal with one of President Obama’s priorities this past year. The president wanted to cut NASA’s budget in order to reduce the deficit. But the members of that committee refused to let it happen, and it didn’t. NASA was still fully funded for years to come, and for the members whose constituents didn’t have a direct effect on the vote, they got a big IOU from those that it did. Needless to say, it is very hard to reduce the deficit this way.

One of the most effective ways the deficit was reduced occurred was when President Nixon was in office. When Nixon was living in the White House, he had the ability to cut spending that he did not think was necessary. Similar to a line-item veto but after the budget was passed. However, while he was in office Democrats controlled Congress, and eventually took this ability away from him, and claiming he wasn’t cutting funding in Republican districts.

Before Obama introduces his budget and sets his priorities at the State of the Union, Congress is going to have to vote on its debt ceiling. A lot of pundits are making a big deal out of this because the debt was a big issue in the last election. But this same vote has happened every year for as long as there has been a deficit. And every year the minority party blames the majority party for increasing the deficit. But really, the ceiling is based on the coming years interest on what the government owns. So if a member voted for an appropriation last year that the CBO said would increase the deficit, they only have themselves to blame.

But that does not make it any less important for the debt ceiling to be raised. If it is not, the Treasury will be forced to default on the loans from China and other countries around the world. If you thought the financial crisis was bad, this will be one-hundred times worse. If the United States defaults (which amounts to claiming bankruptcy) the entire world economy will go into an unprecedented tail spin. It won’t be just where people invested that will be hurt, this time it will be all the businesses that borrowed money from banks (which is all of them) from all around the world.

If John Boehner wants to give a fight about this, he will be playing a very dangerous game. I know he will be all high and mighty after Pelosi hands him the gavel, but unless he wants to be responsible for what I just described, he will raise the roof.

 

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Filed under appropriation, bills, Boehner, Budget, budget ceiling, Congress, debt, Deficit, Economics