Posts Tagged ‘ republicans ’

How Obama wants to bring down our debt.

Everyone in Washington has released their own plan on how to close down our debt over the next 10-12 years. Progressives, conservatives, Paul Ryan, the Democratic caucus (due to release today) and the President. Throw all those plans out the window because none of them will likely ever become law. Big plans put out by partisan interests have very little chance of going anywhere and mostly serve as talking points and political footballs for debate. The plans that actually get passed are generally determined by the politics of the moment, deals worked out, and compromises made to placate special interests. You think it would be awesome to replace our  payroll taxes with a carbon tax? So do a lot of people, but it isn’t gonna happen. The two big events that will shape our debt debate will be the fight over the debt ceiling and the fight over the Bush tax cuts in Dec. 2012.

Most thinkers agree that the US needs to enact a plan that cuts $4 trillion in debt over the next decade or so. Let’s see how Obama is probably angling to get there, keeping in mind the two critical junctures we have coming up.

Republicans have forced a political crisis over raising the nation’s debt ceiling. Their demands are for about $2 trillion in spending cuts before they will agree to do what has  to be done anyway and raise the debt ceiling. This provides us with a political situation where debt reduction seems to be required. Obama has accepted Republicans’ terms on the condition that there also be $400 billion in revenue increases gained by getting rid of tax loopholes and tax breaks for the richest of the rich. Its obviously Obama’s intention for this plan to go through- $2 trillion in spending cuts and $400 billion in revenue increases for a total of $2.4 trillion in debt reduction this year.

So if that plan passes (which is far from certain) Obama is over halfway to his goal. The next test comes when the Bush tax cuts are up for renewal in December 2012. Note: this analysis assumes (as Obama certainly does) that Obama will be re-elected in 2012. Obama has all the power in December 2012 to say that he will not agree to renew Bush’s tax cuts for the top 2% and will veto any bill that tries to do that. That is what his base wants him to do and is likely what he will campaign on. At that point, Republicans have a choice- allow tax rates to rise on the top 2% or allow income tax rates to rise on everyone else. If they pick the first option, as is Obama’s intention, then there is another $830 billion in debt reduction, bringing Obama’s total to about $3.2 trillion in debt reduction. If the Republicans decide that everyone else’s rate should go up if they can’t get their precious tax cuts for the rich extended, then that would be $2.4 trillion in debt savings (we’ll call it 2.8 trillion including interest). $2.8 trillion would solve our debt problems by bringing Obama debt-reduction total to $5.2 trillion.

Even if only the cuts for the rich are ended, Obama can come up with an extra $800 billion in deficit savings by various methods like simplifying the tax code, enacting a public health insurance option, encouraging greater-than-expected economic growth, cutting down on tax cheats, cutting the military, etc.  He will work out a deal with Congress to save a bit more money. It will be a tough compromise and will burnish the President’s image as a compromiser and neutral arbiter. It would be small beans at that point.

Republicans seem to know that if Obama is re-elected, the scale beings to tilt in his favor, which is probably why they are pushing so hard right now for a completely one-sided debt deal. Its also no coincidence that a huge debt deal right now will hurt our economic prospects over the next few years. A weak economy makes  it harder for Obama to win re-election and if he doesn’t win re-election, the Republicans can basically dictate whatever “debt-reduction” deal they like.

2011
07/06
CATEGORY
debt limit
taxes and spending
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5 Reasons Why a Balanced Budget Amendment is a Very Bad Idea

Since the talks on the debt ceiling have hit an impasse, Republicans have turned their attention to a particularly destructive way to score some cheap political points. They have proposed solving our current debt problems by putting a “Balanced Budget Amendment” (BBA) in the Constitution which would require (according to the bill proposed on March 31) :

  • Every budget passed by Congress to have expenses less than the revenues for that year
  • Total outlays to be less than 18 percent of the country’s GDP
  • No tax increases
  • The above provisions may only be overruled by a 2/3 vote of both houses of Congress
  • The debt limit can only be raised by a vote of 3/5 of Congress
  • If the US is engaged in a military conflict, 3/5 of Congress can vote to deficit spend on funds for the war.

Though at first glance it may have some appeal, this amendment would be disastrous for the US economy and would further cripple the already weak and dysfunctional US government. Why? Here’s why: Continue reading →

2011
07/05
CATEGORY
economics
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The Debt Limit Talking Points we will be Hearing for the Next Month

The negotiations over how to raise  the debt ceiling have failed. Over the next month, both parties will try to rally their bases around the policies they prefer, while moving no closer to a deal on preventing the economic catastrophe that will occur if we do not raise the debt limit, reports Ezra Klein. After walking away from the negotiating table, Republicans are set to raise their demands from $2 trillion in spending cuts up to a balanced budget amendment in an attempt to rally their base. Democrats typically look at the very strict design of the BBA and dismiss it out of hand as a nonstarter. Meanwhile, Democrats are about to release a budget that will probably cut the debt using about 50% spending cuts and 50% tax increases. This probably means the Democratic budget won’t cut Medicare or Medicaid much, if at all (those cuts are extremely unpopular with Democrats and the general public). Republican Congressmen have balked at a deal that raises any revenue whatsoever, making a package that relies 50% on tax increases a nonstarter if negotiations were to resume.

I’ve laid out the parties’ strategy on the debt limit here, now here are the talking points both sides will be using to win the public over. Continue reading →

2011
06/30
CATEGORY
debt limit
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GOP Presidential Candidates Series: Herman Cain

I’ve decided that it would be good to do an intermittent series on the numerous candidates who want to run for President on the Republican ticket. Even though chances are very low that I would ever vote for one of them in the general election, the choice of who will run against President Obama is a very important one. I hope I can shed some light on the major players.

That being said,  I will start by looking at a candidate that I don’t think I could ever support (to give me time to make  up my mind about the rest!). Herman Cain is the former CEO of Godfather’s pizza, a radio host and a Baptist minister. He is  the only black man in the race on the Republican side and was raised from very humble origins in segregated Georgia to become a successful businessman. However, he has  never held any elected office, though he did run for the Republican nomination to be the US Senator from Georgia in 2004  (and lost badly). Lately he has been making some huge waves in conservative Republican circles by drawing considerable support from Tea Party Republicans. As Nate Silver explains, Cain’s poll numbers are  what makes him such  an anomaly:

In the post-reform primary era (1972 onward), there’s never really been a candidate that combined such limited name recognition, such underwhelming credentials — and such impressive polling.

So, not many Republicans know of Cain, but among the ones that do, he is very popular. This probably speaks to the anti-Washington fervor of many Republicans  more than anything, but it is very interesting that someone with no political background is being considered by so many for so high a position. Let’s leave it at that and dig into his policy positions, which is where the interesting stuff is.

Cain has said (and I have heard it repeated by some Republicans) that his candidacy would “take race off the table”  because  he could criticize Pres. Obama without being labeled a racist. Well, as this piece in Slate  magazine lays out, Cain’s candidacy might take some black/white racial issues off the table, but nominating him would bring other racial/ethnic issues to the fore.  You see, Cain has a problem with Muslims. Specifically, he does not trust Muslim doctors to operate on him (He though he was being operated on by a Muslim once, but phew!  it was only a Lebanese Christian). He also said he would not appoint a Muslim to be a federal judge or as a  cabinet official (the Slate article) because apparently Muslims are  not dedicated to this country or to the Constitution. This was not a temporary slip-up either. He has repeatedly said that he would illegally administer a religious test for people to take office in the United States. He said he would force Rep. Keith Ellison (who is  a Muslim) to swear his oath of office on a Bible, instead of on his Holy book. In a country where Herman Cain was once forced to the back of the bus and denied  the chance to drink from a “whites-only” water fountain, a President Cain would bring back prejudice and racism towards people from a different background than himself.

But its OK because  he’s only targeting Muslims, right? (sarcasm)

Among Cain’s other stances he has promised not to sign a bill that is longer  than 3 pages (though that’s probably just a stupid, populist pandering line and not a serious pledge). On his website, Cain states: “liberals have forced excessive environmental regulations that have stifled our domestic energy production, and instead, forced American consumers to rely far too heavily upon foreign oil.” I have never seen a serious study that says getting rid of regulations would significantly reduce our dependence on foreign oil. (if you know of one, put it in the comments) He really does  not like the EPA at all and has  said that he would appoint the CEO of Shell Oil and other energy executives to a commission that would get rid of regulations on their own companies. Is that a conflict of interest?

On healthcare, his website is mostly just a bunch of lies about the Affordable Care Act and then a couple of platitudes about tort reform and promoting HSAs, neither of which would address rising costs more than a percentage point or two. He also wants to expand the health insurance tax exemption for employers to include employees as well. The exemption is certainly a problem for the market, but the way to fix  it isn’t to expand it, the way to fix it is to get rid of the special tax  break for employer-sponsored insurance. Interestingly, in the “economy” section of his campaign platform he lambastes the federal government because

The federal government should not be in the business of picking and choosing industries they support financially. This happens in the form of subsidies, and special tax breaks in which the government “plays favorite” with one industry and in turn, hinders the competitiveness of another.

So he doesn’t support special tax breaks for specific industries… except he does support the biggest one of those special tax  breaks. He doesn’t support the government “picking and choosing industries” to support financially, unless its the health insurance industry, presumably…. how inconsistent.

Well, I cant find much to like here. I hope Cain fizzles out soon. America would probably be better for it. If you have any questions or disputes, leave a comment.

2011
06/27
CATEGORY
Republican Presidential Nomination
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Honesty and the Debt Ceiling

Frequent readers of this blog will find that my biggest pet peeve is dishonesty. I truly don’t mind people with opinions different than my own (and I love to debate with them) but I really can’t stand it when people lie or are intellectually dishonest. So, much of my blog will focus on calling out and correcting lies floating around in the public sphere. This week, I start with a particularly bad and dishonest column on the debt ceiling.

The political negotiations on raising the United States’ debt ceiling are extremely important because they will determine whether the US is plunged back into recession this year and what our government programs will look like in the years to come. Because of the importance of these negotiations, there is a lot of demagoguery and dishonesty floating around about the US debt and about the political talks which are aimed at bringing down the debt. One particularly egregious example is this column by Yuval Levin in the conservative magazine The Weekly Standard entitled “We Don’t Estimate Speeches.”

He starts by talking about a recent report by the non-partisan, score-keeping Congressional Budget Office (CBO) where it finds that if the US Congress continues on its current, likely spending trajectory, the US will rack up a large (and unsustainable) amount of debt in the coming decades. He does this to scare his audience and to let them know that the US debt is, indeed, a huge problem. However, along the way he conveniently forgets to mention that the CBO, in the same report he cites, also produced another scenario, one in which the debt is not as large a problem in the US’s future. But, the CBO’s “extended-baseline scenario” projects that the Bush tax cuts will fully expire (as they are scheduled to) while letting the Alternative Minimum Tax expand (as the law says it should), along with a couple other fixes which are anathema to Republicans, so Levin just talks about the scarier scenario. (More on this at the CBO and at Ezra Klein’s blog)

Anyway, now that his audience is sufficiently scared about the prospects of an ever-growing and strangling US debt, Levin starts talking about the debt negotiations. Along the way, he offers the obligatory praise for the Ryan budget that is now mandatory among Republicans. (I’ll address the Ryan plan at a later date but here’s a nice non-partisan evaluation of the tax cuts for the rich in the plan.) Here’s his summary of the debt negotiations:

Until last week, that fight had been focused on negotiations led by Vice President Biden. Those talks certainly revealed something about the Democrats’ priorities: In the midst of a spending-driven debt explosion and a weak economy, Democrats in Washington want to raise taxes. But the negotiations also revealed the continuing unwillingness of the president to make specific proposals about how to reduce spending, reform entitlements, and bring the debt under control. On June 23, House majority leader Eric Cantor (who had represented House Republicans at the negotiations) decided he’d had enough, and left the talks in order to force the issue to a higher level and compel the president to get specific.

Egads! Tax increases? The nerve of those Democrats! You mean that in the middle of debt-reduction talks, the Democrats are proposing a way to decrease the debt by raising revenue?? Insane! Let’s forget for a minute (Levin certainly has) that total federal tax revenue is already at the lowest levels since 1950 (table 1.2). Acknowledging that inconvenient fact would mean that we are not in the middle of a “spending-driven debt explosion,” but, in fact, in the middle of a debt explosion caused by the government taking in too little revenue (Hellooooo Bush tax cuts).

Levin is probably right though. We are in the middle of a weak economy and now is not the time to raise taxes because when the government taxes, it takes dollars out of the economy, and right now the economy needs all the extra dollars it can get. Of course, if Levin was being intellectually honest he would oppose any government spending cuts for the same reason. If the government cuts spending, it also takes dollars out of the economy, hurting economic growth at a particularly fragile economic moment. That contradiction, sadly, is central to Republican thinking at this time. In their view, the government can’t raise taxes because it will hurt the economy, but the government can cut spending all it wants, even though that too will certainly hurt the economy.

Also, its not like Democrats just proposed increasing taxes out of nowhere. They proposed taxes as a deficit-reduction measure in negotiations over how to reduce the deficit. Its not like they just enjoy raising taxes for the hell of it.

Then Levin tries to say that the President is not being “specific” enough in the debt negotiations. Huh? The debt negotiations are going on behind closed doors. Levin doesn’t know what’s been specifically proposed. None of us do. Eric Cantor, the lead Republican negotiator, was the one who withdrew from the talks. When he stopped negotiating for the Republican side he said it was because he could never support a tax increase as part of the deal, not because the President wasn’t being “specific” enough. By all accounts, the negotiators have plenty of very specific cuts hammered out, the only sticking point is whether taxes will also be raised as part of this deal. Republican obstinacy on taxes killed this round of negotiations, not a lack of “specificity” on the part of the President.

Levin’s account of the negotiations is all the more confusing because the President wasn’t even involved in the negotiations. Vice President Joe Biden was handling them for the Democratic side. The President presented a debt reduction vision in a speech earlier this year (the “Speech” referred to in the title of Levin’s column) but has wisely left the actual deal to be worked out by the VP and the Congressmen who will actually be voting on the deal. Would it make any sense at all for the President to be out making speeches and policy proposals while negotiations are still ongoing? Wouldn’t doing so just undermine and distract from the talks that were already happening? In one last hypocritical moment, Levin fails to mention that the Ryan plan that he adores also fails to specify what cuts it will make in tax expenditures. The Ryan plan has to make huge cuts in tax expenditures in order to afford lowering taxes on the rich, but Levin doesn’t take Ryan to task for being mum on what specifically he would cut.

For the sake of brevity, I’ll stop my critique there. Its a shame that you can get a job writing this kind of drivel. Disputes? Questions? The comment box awaits!

2011
06/27
CATEGORY
article critiques
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