Anyone Who Thinks Debt Deal Is A Victory For U.S. Understands Neither Economics Nor Politics
ROBERT REICH - Anyone who characterizes the deal between the President and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics.
The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block.
It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.
Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is that it has come to this choice. […]
Many months ago, when Republicans first demanded spending cuts and no tax increases as a condition for raising the debt ceiling, the President could have blown their cover — showing the American people why this demand had nothing to do with deficit reduction but everything to do with the GOP’s ideological fixation on shrinking the size of the government. […] But he did not.
And through it all the President could have explained to Americans that the biggest economic challenge we face is restoring jobs and wages and economic growth, that spending cuts in the next few years will slow the economy even further, and therefore that the Republicans’ demands threaten us all. Again, he did not.
The radical right has now won a huge tactical and strategic victory. Democrats and the White House have proven they have little by way of tactics or strategy. […]
By embracing deficit reduction as their apparent goal – claiming only that they’d seek it differently than the GOP – Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity.
The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is. And the largest threat to our democracy is the emergence of a radical right capable of getting most of the ransom it demands.
Wake up GOP: Smashing system doesn't fix it
DAVID FRUM - I’m a Republican. Always have been. I believe in free markets, low taxes, reasonable regulation and limited government. But as I look back at the weeks of rancor leading up to Sunday night’s last-minute budget deal, I see some things I don’t believe in:
- Forcing the United States to the verge of default.
- Shrugging off the needs and concerns of millions of unemployed.
- Protecting every single loophole, giveaway and boondoggle in the tax code as a matter of fundamental conservative principle.
- Massive government budget cuts in the midst of the worst recession since World War II.
I am not alone. Only about one-third of Republicans agree that cutting government spending should be the country’s top priority. Only about one-quarter of Republicans insist the budget be balanced without any tax increases.
Yet that one-third and that one-quarter have come to dominate my party. That one-third and that one-quarter forced a debt standoff that could have ended in default and a second Great Recession. That one-third and that one-quarter have effectively written the “no new taxes pledge” into national law.
There was another way. There still is. Give me a hammer and a church-house door, and I’d post these theses for modern Republicans:
1) Unemployment is a more urgent problem than debt.
[…] More than 14 million Americans are out of work, more than 6 million for longer than six months. The United States has not seen so many people out of work for so long since the 1930s.
2) The deficit is a symptom of America’s economic problems, not a cause.
When the economy slumps, government revenues decline and government spending surges. Federal revenues have collapsed since 2007, down from more than 18% of national income to a little more than 14%. To put that in perspective: That’s the equivalent of losing enough revenue to support the entire defense budget. Federal spending has jumped to pay for unemployment insurance, food stamps and Medicaid benefits.
Fix the economy first, and the deficit will improve on its own. Cut the deficit first, and the economy will get even sicker.
3) The time to cut is after the economy recovers.
Businesses are hoarding cash. Consumers are repaying debt. State and local governments are slashing jobs. (Since 2009, the number of Americans working for government has shrunk by half a million, the biggest reduction in civilian government employment since the Great Depression.) Right now, there’s only one big customer out there: the federal government. How does it help anybody if the feds suddenly stop buying things and paying people?
[…]
Let’s hope that as America steps back from the brink, Republicans remember that it’s their job to protect the system, not to smash the system in hopes of building something better from the ruins. That’s how student radicals think — not conservatives.
The GOP Gets Its Way, The Daily Beast, Michael Tomasky
Let’s cut right through it: In a phrase, President Obama appears to have cut a deal with the Republicans, on their terms, or about 98 percent of them. […] It’s a bleak day for this presidency, and really in American history, as we’ve now embarked on a path that’s very likely to lead to huge cuts in entitlement programs, the domestic budget, and more or less everything every Democrat in Washington (except, apparently, one) wakes up to fight for every day. […] McConnell knew he could get away with it, because […] he predicted, apparently accurately, that this president would roll over. And so the GOP will have won, and won big. Obama can call this victory if he likes, and insofar as default will be avoided, sure. But if he thinks this is what his voters sent him to the White House to do, he needs a serious reality check.
GOP ready to declare victory in debt fight, The Hill, Julian Pecquet
Republicans on Sunday framed an emerging debt-ceiling agreement as largely giving them what they wanted in a debt deal. “I don’t think we’ve been hurt at all,” McConnell said on CBS’s Face the Nation. “The American people wanted us to do something about out-of-control spending and the debt ceiling [deal] is going to produce what many people would believe is a complete change in the trajectory of the federal government.”
Senate Democratic Policy Committee Chairman Charles Schumer (D-N.Y.) acknowledged that conservative Republicans were able to get their way in the talks. “Democrats have shown throughout this debate a willingness to compromise,” he said on Face the Nation.
A “complete change,” sadly, yes. But a change for the worse. And as for the America people demanding it, the polls say otherwise (see below). Schumer, meanwhile, is spot-on in pointing to Democrats’ willingness to accept unreasonable Republican demands.
Debt Ceiling ‘Compromise’ A Total Capitulation to GOP, HuffPo, Mitchell Bard
It’s easy to take shots at the Tea Party-controlled Republican leadership for holding the American economy hostage to fulfill their extreme-right, not-supported-by-the-American-people obsession with cutting spending, and how their alleged concern over debt is really a smokescreen to fundamentally change American society [or as Mitch McConnell might put it, create “a complete change in the trajectory of the federal government”], returning the country back to the 1920s when corporations and the wealthy were allowed to run amok and there was no social safety net for everyone else (leading, of course, to the greatest depression of the 20th century). […]
But what has me so angry right now is the news of Harry Reid signing off on a compromise to the debt-ceiling clash that is, in essence, a complete capitulation to the Tea Party position. […]
I have one simple question: Where are the Democrats?
Isn’t the Democratic party supposed to be the institution in place to oppose the Republicans when they offer bad policy, especially when polls show that a majority of Americans don’t share the GOP obsession with spending cuts? (Not only did polls from CBS News and Gallup show that Americans favored revenue increases along with spending cuts to settle the debt ceiling impasse, but another Gallup poll on July 20 revealed that only 16 percent of Americans thought the deficit was “the most important problem facing the country today,” while 27 percent listed unemployment and 31 percent said the economy in general.)
After all, you can’t blame the Republicans for advancing their agenda. […] No, it’s on the Democrats, who, not incidentally, control two of the three institutions necessary to make a deal, to stand up to what Steve Benen called “extortion politics.” […]
It’s the job of the Democrats to make the case that while fiscal responsibility is an important long-term goal […], with the economy struggling and unemployment high, slashing spending now will only make things worse for most (that is, those not in the top one percent of wealth) Americans. […]
But what did the Democrats do? They accepted the Tea Party premise that it was vital right now to address [read: cut] spending instead of unemployment and the economy. […] They never pressed the case that by not raising the debt ceiling, Republicans would be taking the unbelievably un-American step of forcing the country to renege on its already agreed-to obligations. They didn’t make a clear case to the American people that the GOP was holding the American economy hostage to fulfill their political motives. (For example, John Boehner admitted that many in his caucus wanted to let the debt ceiling deadline pass and “create chaos” in order to force through their far-right fiscal policies [Naomi Klein’s “Shock Doctrine,” anyone?] […] .) They failed to make the case to the American people that the cuts being thrown around by Republicans would negatively impact their day-to-day lives, far more than deficits would this year. They never held firm on insisting on the wealthiest Americans, who profited most from the last decade of fiscal irresponsibility, pay their share toward the fiscal solution with rollbacks of the Bush tax cuts. […]
In short, the Democrats did more than just cave. They actually adopted the Republican position, and then engaged in a debate on how extreme that Republican position would be (offering far-right crazy in opposition to the Tea Party’s all-out, society-changing crazy).
Paul Krugman on ABC’s This Week completely agreed regarding both capitulation and the counter-productive nature of this “compromise” within the context of our already-fragile economy:
We shouldn’t even be talking about spending cuts right at all now. We have 9% unemployment. These spending cuts are going to worsen unemployment. It’s even going to hurt the long run fiscal picture, because we have a situation in which more and more people are becoming permanent long term unemployed, and if you have a situation in which you are going to permanently raise the unemployment rate, which is what this is going to do that’s actually going to reduce future revenue, so these spending cuts are ever going to hurt the long run fiscal position let alone cause lots of misery, and then on top of we’ve got these budget cuts which are entirely, basically the Republicans we’ll blow up the world economy unless you give us exactly what we want, and the president said, ok. That’s what happened. […]
We used to talk about the Japanese and their lost decade. We’re going to look to them as a role model. They did better than we’re doing. This is going to go on. I have nobody I know who thinks the unemployment rate is going to be below 8% at the end of next year. With these spending cuts, it might well be above 9% at the end of next year. There is no light at the end of this tunnel, and the revenue debate in Washington, which is all about “Gee, we’re going to make this economy worse. But are we going to make it worse on 90% of the Republicans’ terms, or 100% the Republicans’ terms? And the answer is 100%.”
Jason Easley at PoliticsUSA distills it down:
Recessionary economies don’t improve with spending cuts only. Cuts without addition revenue strangles the system even more, and makes things worse. Democrats have completely lost sight of the fact that Republicans aren’t trying to rationally or logically solve the problem. The people on the other side of the aisle are governing strictly by ideology. What matters to them isn’t the outcome, but the implementation of their belief system about the economy. The most frustrating thing about this debate is how, not just Obama, but all Democrats have been willing to discuss the debt ceiling on Republican terms. Spending cuts should have never factored in to raising the debt ceiling.
It seems at least some Democratic lawmakers agree.
Rep. Raul Grijalva (D-Ariz.), the co-chair of the Congressional Progressive Caucus, said in a statement that progressive lawmakers and working families “were thrown under the bus” by a deal that “trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals.” The result, he said, is as bad for the Democratic Party as it is for the country [calling it a “cure as bad as the disease”].
“We have given much and received nothing in return,” Grijalva said. “The lesson today is that Republicans can hold their breath long enough to get what they want.” […]
Grijalva excoriated the White House for abandoning too much ground to the GOP, notably by excluding revenue raisers from the first phase of deficit reduction. “We have made our bottom line clear for months: a final deal must strike a balance between cuts and revenue, and must not put all the burden on the working people of this country,” he said. “This deal fails those tests and many more.” […]
Rep. Bernie Sanders (I-Vt.) said it was both bad economics and immoral in a blistering statement. “The Republicans have been absolutely determined to make certain that the rich and large corporations not contribute one penny for deficit reduction, and that all of the sacrifice comes from the middle class and working families. […] I cannot support legislation like the Reid proposal which balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country. That is not only grotesquely immoral, it is bad economic policy.” [More Saunders in video]
Jared Bernstein of the Center on Budget and Policy Priorities writes at On The Economy about The Depressing Impact of a Spending-Only Trigger: “I and others have written from the beginning of this debacle, absent new revenues, we’ll end up with spending cuts carrying too much of the load. And that looks to be where we’re headed.”
But his colleague Robert Greenstein, President of CBPP, describes the Republican’s demands in even more severe terms: “The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history. This may sound hyperbolic, but it is not. Both the mathematics and the politics are clear.”
Like the current “compromise” plan, the earlier Boehner plan envisioned…
…No tax increases, with its entire $1.8 trillion in additional deficit reduction coming from budget cuts. Speaker Boehner gave documents to House Republican caucus members stating that […] the plan “includes no tax hikes.” In addition, Speaker Boehner told radio talk show host Rush Limbaugh that Republicans appointed to the special committee that will craft the $1.8 trillion in savings won’t support tax increases and, in the unlikely event that that committee proposed a plan with tax increases, House Republicans would vote it down anyway. A House GOP aide told National Review more bluntly: “We appoint members to the committee, and we’re not appointing any Republicans who will vote for tax hikes.”
To feasibly secure such savings without the aid of additional new revenue would therefore…
…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.
“Eviscerate the safety net?” That’s a frightening proposition. Most economist agree that cutting government programs to such an extent will only exacerbate our current economist woes. [See CNN Money’s “Spending Cuts to Whack Economy?”] Even the Chamber of Commerce “has warned against major spending cuts as part of a debt limit deal, asking lawmakers on Friday to be careful.”
“The recovery is clearly on a lower trajectory, and it will likely be some time before the economy rebounds to the point it will create much in terms of job growth,” Martin Regalia, the group’s chief economist, said in a statement.
Similarly, the Bowles-Simpson commission advised against spending cuts for at least a year to protect the economic rebound.
Senate Majority Whip Dick Durbin (D-Ill.) agrees the economy is too weak for major spending cuts, saying “Their fear, and the fear that I share, is that if we make spending cuts at this point, it will not help economic recovery.”
In a floor speech on Sunday, he mused that “symbolically, that agreement is moving us to the point where we are having the final internment of John Maynard Keynes. He normally died in 1946 but it appears we are going to put him to his final rest with this agreement.”
Miles Mogulescu at HuffPo echoes Durbin’s elegiac sentiments, proclaiming…
“Barack Obama and Harry Reid have unconditionally surrendered the values and policies that Democrats have stood for since 1932 to the Republicans and the Tea Party. […] July 31, 2011 will likely go down in history as the day that the liberal Democratic project—the hope that corporate power could be balanced by sensible regulation, Keynesian economics, and a measure of economic security for American citizens—died, or rather committed mass suicide.”
It’s ironic that Senate Democrats are signalling the death knell of Keynes, and others lamenting the Dem’s failure to push for higher taxes on the nation’s wealthiest individuals and corporations, at the very same moment that conservative commentator Ben Stein has acknowledged the utter failure of so-called “trickle down” Voodoo Reaganomics.
Between him and the Chamber, the only other sources of criticism more entertaining were the US Conference of Catholic Bishops which declared, “A just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons. It requires shared sacrifice by all, including raising adequate revenues, eliminating unnecessary military and other spending, and addressing the long-term costs of health insurance and retirement programs fairly. [emphasis in original],” and China’s state-run Xinhua news agency, which “slammed” Washington over its “dangerously irresponsible” political brinksmanship, calling its handling of the crisis “immoral.”
Speaking of China and of cuts to social services and government programs, the Organisation for Economic Co-operation and Development announced the most recent results of its Programme for International Student Assessment, measuring “how well a nation’s education system has been preparing its students for the global knowledge economy.” USA #1? Not quite.
Nations such as South Korea, Finland, and Singapore have traditionally topped the rankings, but, apparently, even they are no match for Shanghai, which shoved the others into lower positions in its very first year of participation in the programme. […] Twenty-six percent of Shanghai 15 year-olds could demonstrate advanced problem-solving skills, whereas the OECD average is 3 percent.
So how did Shanghai create the world’s best education system?
First, the Shanghai municipal government believes that the most effective way to raise the human capital it needs for the global knowledge economy is by focusing on raising the overall quality of its education system rather than investing in elite schools. ‘Students of privilege will do well wherever they are, and more resources directed at them won’t improve them that much,’ Schleicher explained. ‘But more attention and investment will greatly improve disadvantaged students.’
A tidy analogy for how our economic system, overall, should be structured, instead of tax policies which favor the wealthy to the clear disadvantage of the poor, whose government assistance programs will soon face dramatic cutbacks.
[Andreas Schleicher of OECD] is quite upbeat about Shanghai’s global economic prospects. Today, the United States may be the leader in creativity and innovation, but that’s because it made university education universally available 40 years ago, Schleicher argued. Now that the United States is failing to invest properly in public education, its prospects are dim. Shanghai is in the reverse position. […] Shanghai has the world’s best education system because Shanghainese, more than anyone else in China, take education seriously. […] The Shanghai municipal government will invest 22.4 billion yuan annually on its schools, whereas the Chinese national government will invest 299.2 billion yuan for all of China.
The top Democratic lawmaker on the House Education and Workforce Committee said he had received almost no input from state education departments and local school districts about the looming spending cuts. He said reductions contained in the debt ceiling legislation are “going to make life much more difficult for” for public schools. […]
Barry Toiv, the vice president of public affairs for the Association of American Universities, said continuing to take money out of education would slowly and steadily degrade the quality of the nation’s universities and affect America’s ability to produce the next generation of leaders.
“It’s like termites in the wall, gradually eating away at the underpinnings of our innovation,” he said. “If you do that over a long period of time, at some point you’re no longer leading the world. And eventually, like with termites in the wall, you’re not really going to have a house anymore.”
A follow-up to the recently-posted article about religious faith outweighing verifiable statistical evidence regarding Sex Education in Texas:
Teaching Evolution Up For Debate Again in Texas
Surprise.
I’m unable to watch Rick Perry without seeing/hearing former President Bush. It’s as if the current Governor is directly channeling the former, and it goes well beyond their folksy Texas drawl. From his frustratingly short (and short-sighted) answers to complex questions, to his quietly chuckling to himself at 0:47 before relying upon personal life experience to support/defend policy decisions…
Of course, that’s to say nothing of how poor those policy decision truly are:
Texas lawmakers cut sex ed from two six-month courses to a single unit of “abstinence only” education. But early indications showed that the program wasn’t working. In fact, teens in almost all high school grades were having more sex after undergoing the abstinence only program. By 2007, Texas had the highest teen birth rate in the nation. […]
Instead of providing fact-based information, the programs use fear and Jesus — over-emphasizing the risks of sexually transmitted diseases leading to cervical cancer, radical hysterectomy and death, together with Christian morality.
One Texas public school district’s sex ed handout is entitled “Things to Look for in a Mate:”
I. How they relate to God
A. Is Jesus their first love?
B. Trying to impress people or serve God?Another public school district uses this:
Question: “What does the Bible say about sex before marriage/premarital sex?”
Answer: Along with all other kinds of sexual immorality, sex before marriage/premarital sex is repeatedly condemned in Scripture (Acts 15:20; Romans 1:29; 1 Corinthians 5:1; 6:13,18; 7:2; 10:8; 2 Corinthians 12:21; Galatians 5:19; Ephesians 5:3; Colossians 3:5; 1 Thessalonians 4:3; Jude 7).
Yet another example of belief trumping measurable fact, reason, and Science. We all remember Dubya’s claiming on multiple occasions that God spoke to him, but Perry might be taking it to a whole other level. (Leading The Onion, as always, to be on-point.)
And I thought Michelle Bachmann was bad.
It’s forecast to be 103 degrees in DC tomorrow, with a heat index of 116. (Whew!) But hot-head Rush sees a conspiracy in everything…
They’re playing games with us on this heat wave, again. Even Drudge. Drudge getting sucked in here. Going to be 116 in Washington. No, it’s not. It’s gonna be like 100, maybe 99. A heat index, manufactured by the government to tell you what it feels like when you add the humidity in there.
Telling me what to feel like?! Nobody tells me what to feel like! I’ll feel however I want, you darn… manufacturers! Sneaky, maniacal meteorologists at NOAA… with your numbers, and humidity… and formulas. But it’s okay — Rush knows how to fix things:
If we want to cool things off, please, Al Gore, schedule a global warming conference, wherever, in Washington! Go there. You want that 103, 116 to get normal? It will, within an hour of Gore announcing that he’s going! Another ten degrees off when he shows up. Plus hail, and rain, and maybe some high winds to really cool people off! That’s all that has to happen.
Exactly! Because Gore and his shadow army of Green-shirts and climato-fascists will then reveal their super-secret Weather Control Machine! (muah-ha-ha! Wait, haven’t we seen this movie before? Like, a hundred times already?) I guess the heat must be getting to him…
Reagan Didn’t Leave the Republican Party; The Republican Party Left Him.
— President Ronald Reagan in a Radio Address, Sept. 26th, 1987
— President Ronald Reagan to Senate Majority Leader Howard Baker, Nov. 16th, 1983
— Dana Milbank, “The New Party of Reagan”
He made deals with Democrats? Compromised? Blasphemy!
Debating the Debate
First off, let us acknowledge that “the chances of a default on the United States debt are still fairly small.” Financial markets indicate “just a 0.05 percent chance, or 1-in-2,000, of a default occurring within the next year.”
Congress still has ample time to prevent one by raising the debt ceiling, and the Treasury Department may use any and all means to stave off a default for as long as possible even if Congress fails to act. […] Far more likely than an actual default are situations where we stop short of one but nevertheless have significant consequences for the American economy because of downgrades to the United States’ credit rating, severe reductions in government spending and significant anxiety in the market.
So the more pressing question becomes, “What happens to American politics if the debt ceiling isn’t raised by Aug. 2 and the economy suffers as a result?”
