Posts Tagged ‘ news ’

Rick Perry fading after the last Republican debate

Texas Governor Rick Perry got hammered on the Fox News/Google stage last night. If someone were just tuning into the Republican Presidential contest for the first time last night, it might even have looked like Perry was the moderate on the stage. Mitt Romney came after Perry for supporting in-state tuition for the children of illegal immigrants while Michele Bachmann continued her line of attack on Perry for supporting giving the HPV vaccine to young girls. These attacks put Perry on the defensive and forced him to defend positions he has taken outside of mainstream Republican orthodoxy. That’s not a good thing for the candidate who is trying to be THE conservative in this race.

The press has been nearly unanimous in labeling Perry the loser in last night’s debate.  Politico/Yahoo wonders if this is the beginning of the end for Perry, saying that Perry’s performance will convince Republicans that the Governor is “not ready for the big leagues.” Chris Cillizza also suggests that Perry is not ready for prime time, putting him in the “losers” column, while Romney sits comfortably on top of the “winners” column.

And it wasn’t just his opponents attacks that took a toll on Perry. The candidate also made some unforced errors. Perry showed that he had never given any thought to national security issues. He was asked about what he would do if Pakistan’s nuclear arsenal fell into Taliban hands. Even though this is kind of a ridiculous debate question, requiring only boilerplate filler about always being prepared and acting decisively, Perry was clearly shaken and caught off-guard. He rambled his way through a “response” that trailed over to our weapons sales to India and Taiwan and was just painful to watch.

Romney and Perry are the two front-runners in this race for the Republican Presidential nomination, so Perry’s bad performance is good for Romney, right? Actually, several commentators have a different take on the  dynamics of this contest. Even though Perry was not acquitted himself very well lately, he is the most credible conservative in the race. Romney gives clear and crisp answers to the questions while Perry often fumbles around and misses opportunities, but conservatives don’t trust Romney.

Romney has an appearance problem. He’s only ever won one election in his life, but he comes across as the quintessential politician. His biggest accomplishment in his one term in political office is the health care plan that became the model for President Obama’s healthcare plan. He has a problem connecting on a personal level with Tea Partiers and conservative voters. The straight-shooting Gov. Perry has always been able to connect with the Republican Party’s base. He speaks their language in a way that Romney can never hope to.

The conservative base of the party wants a nominee they can be excited about. They haven’t really come to see Romney as that person. Perry, though, can fill the mold. As long as the questions about Perry’s candidacy don’t become too serious, the conservatives can carry him through. He has wide latitude for mistakes just because Republicans don’t seem to want to give this to Romney.

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Republicans want to raise taxes on the poor, lower taxes on the rich

I really wish we lived  in a world where both political parties had convictions and fought for them. That way, even when you would disagree with someone, you still knew that your disagreement was simply the result of philosophical differences. You’d still be able to rest comfortably knowing that both parties wanted what was best for the country. Obviously, this is not the state of American politics today.

Republicans are the party of low taxes, right?? Well, no more. Republicans have come out opposed to a proposed payroll tax cut. This tax cut would affect almost every working American and would be one of the best ways to stimulate the economy. So what’s the problem, GOP? The problem is that President Obama supports this tax cut. So, throw all of your pre-conceived notions about the GOP out the window. The Republican Party cares nothing for the good of the country (or even for one of their party’s central tenets!) if it means they have to agree with President Obama.

Ezra Klein tackles this Republican hypocrisy, thoroughly dissecting 3 possible explanations for why the GOP is suddenly against tax cuts, here are the excerpts:

One possible answer is that (1)a large tax increase in an election year is good for them because it’s bad for President Obama and the economy. But that’s a pretty cynical explanation. Another is that (2)they care more about tax rates on the rich than they do about tax rates on the poor. But they resist that argument. The real answer, Republicans says, is that (3)they just don’t like temporary tax cuts.

But that claim does not stand up to scrutiny, as he concludes:

…In other words, Republicans have frequently fought for temporary tax cuts. When offered the choice between a larger temporary tax cut and a smaller permanent tax cut, as happened in 2001 and 2003 and 2010, they have opted for the temporary tax cut. Now that Obama has come to endorse a temporary tax cut, they have stopped supporting it — a pattern we’ve seen on many other issues, as well. But the idea that the party has had some steady, policy-based objection to temporary tax cuts just doesn’t fit the record.

So, with explanation 3 completely debunked, we  are right back at examining explanations 1 and 2. Ezra tends to lean toward explanation 1, that Republicans want to increase payroll taxes because raising taxes on the poor and middle class will hurt the economy and thus hurt Obama’s chances of winning the election in 2012. There’s a very good chance he is right, but I also think there’s something to explanation 2: that Republicans just don’t care taxes on the poor and middle class so much as they care about taxes on the rich.

The thing about the payroll tax cut is that most of the money would go to the working poor and the middle class, not the rich. Republicans don’t really care so much about taxes on the poor (see: The Bush tax cuts or this article) but love tax cuts for the rich. I think that Republicans would jump on a chance to massively lower taxes on the rich, even if it was Obama who offered them that chance. To be sure, it would be a tough choice for them, if that situation ever arose. The two most important things to Republicans are destroying President Obama and lowering taxes on the rich, country be damned.

Is the US tax system fair?

Warren Buffett, the mega-billionaire investor, recently wrote an editorial in the New York Times entitled “Stop Coddling the Super-Rich.” In it he argues  that the  rich should pay a higher amount in taxes than they currently do. He uses himself as an example, saying that he only paid 17.4% of his income in taxes last year. He also argues that “people invest to make money, and potential taxes have never scared them off.” Buffett himself invested very heavily and made lots of money in the 1990s and 1980s, when taxes were higher than they are now.

Against Buffett, we have people who divide Americans into two camps of “tax  payers” and “tax eaters,” while you can barely listen to a Republican talk about taxes without hearing them say that 50 percent of Americans pay no income taxes. That leads us to the question: is our tax system fair? Continue reading

Five reasons why S&P downgraded US debt

The United States lost its triple A (AAA) credit rating yesterday when S&P, one of the world’s three major credit ratings agencies, downgraded our debt. This is a major blow to US government bonds, which have traditionally been regarded as “as good as gold.” This downgrade comes on the heels of the major political fight in Washington over raising the debt ceiling and the subsequent spending cuts package that will eventually shave $2.1 trillion off the US debt. Obviously this downgrade is a contentious subject, so let’s look at what five prominent players and commentators are saying about why the US was downgraded

Standard & Poor’s

First off is the obvious, S&P. What’s their stated reasoning for downgrading our debt? I could write an entire article just on the information contained here, but will constrain myself to a few snippets and light commentary:

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. (emphasis mine)

S&P downgraded our debt because, as they see it, America  is no longer sure bet. Not because we do not have the ability to repay our debts, that is never questioned in the report. The underlying assumption in the report is that the US has all the capability to repay its very large debts, but that our political system is so broken that there is a significant chance that our politicians will prove unwilling to pay up. The key reason for the downgrade seems to be that things have gotten much worse since April 18th because Republicans were willing to threaten to cause a default and used the debt limit as political leverage.

Republicans

How do Republicans feel about this? Here is Foxnews.com on the Republican reaction:

With the U.S. losing its Triple-A credit rating for the first time ever, Republican lawmakers and presidential contenders are calling on President Obama to fire Treasury Secretary Timothy Geithner…

Sen. Jim DeMint, R-S.C. said the president should “demand” that Geithner resign “and immediately replace him with someone who will help Washington focus on balancing our budget and allowing the private sector to create jobs.”

“For months he opposed all efforts to reduce the debt in return for a debt ceiling increase,” DeMint said. “His opposition to serious spending and debt reforms has been reckless and now the American people will pay the price.”

This view does not match with what S&P said at all. S&P specifically blames Congress, not the Treasury or Sec. Geithner  for the downgrade. S&P was critical of using the debt ceiling as a political football, something Geithner vehemently opposed. Geithner also supported “the largest possible deal” in terms of debt reduction (referring to the President’s “grand bargain”), something not supported by Sen DeMint. That’s the Republican view, but it does not seem to sync with the reality of the situation. More than likely, its just an attempt to shift the blame for causing the downgrade.

Greg Sargent 

Sargent is one of the “left leaning” bloggers for the Washington Post.  He lays much of the blame for the downgrade on Republican Senate Minority leader Mitch McConnell:

In other words, S&P explicitly cites the use of the threat of default as leverage for policy ends as a sign that American governance is becoming dangerously unstable and unpredictable. But folks, Mitch McConnell has repeatedly said that use of default this way is a goodthing…

McConnell also said this is something that should happen again in the future (emphasis his)

In other words, Sargent faults McConnell (and the other Republicans) for causing a downgrade by threatening not to pay our debts and for then promising to do it again! The most baffling thing about the whole debt limit calamity is why anyone would want it to be repeated every year or two.

Megan McArdle 

McArdle is a right-of-center/libertarian editor at The Atlantic who had  this to say about the downgrade:

Fixing our nation’s fiscal problems is going to be wildly unpopular.  Either it will involve painful tax hikes, or it will involve unpleasant program cuts, and either way, the politicians that do it are going to get in trouble…and yes, that’s right, GOP, I mean compromise. I mean higher taxes…

What the Republicans made abundantly clear was that this is very unlikely…But though I will take a lot of hell for saying this, I’m afraid I think that the lion’s share of the blame goes to the GOP, which escalated to this completely unnecessary showdown, and then gave up any hope of a grand bargain because it would have required some revenue increases…

In that political environment, hell, I’d downgrade us.

From McArdle, we can see that the tendency to blame the GOP for this mess extends across ideological lines. Though she gives blame to the Democrats for this partisanship as well, it is clear that this downgrade was caused by a GOP that was both willing to cause a default to achieve its own ends, and unwilling to accept any compromise that would have solved our nation’s debt problems. Those kinds of actions are downright poisonous to the country. If the debt ceiling negotiations are a sign of things to come, I really fear for our country.

Ezra Klein

Ezra Klein is your consummate “reasonable liberal” on economic and policy matters, here’s his take on the downgrade:

Of course S&P is downgrading our political system. Did you see the nonsense we pulled over the past few months? The Republican Party took the country to the brink of default, and for what? A smaller and less certain deficit-reduction deal than they could have gotten if they had been willing to compromise with the Democrats. And then Senate Minority Leader Mitch McConnell said these default-driven deals wouldbe the norm around Washington from now on. Why shouldn’t S&P downgrade our debt?

Klein basically echos the views of McArdle and Sargent. He views this downgrade as a warranted response to political brinkmanship at its worst (and the promise of more to come).  He, like many others, is becoming increasingly pessimistic about the future of US  policy and governance in an increasingly partisan era where compromise is an ugly word. He notes that the problem is with the political system and not with our economic system, which remains strong in spite of Republicans’ best efforts to undermine it.