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A tour de farce plays on!

Pat Ryan 2 Comments

Step by step, inch by inch, the passionless play proceeds: the House speaker proposes a new combination budget-cutting and debt ceiling-raising plan, then stands back when independent analysis shows it won’t generate the savings he promised, before the Congressional Budget Office gives good grades to the Senate majority leader’s plan (which saves little more than the speaker’s proposal).  Democrats are offering more than anyone would have expected, while some Republicans are revolting against their leadership for even thinking about going along with them, for not demanding more and more.  Who will be standing when the music stops next?

While I still expect that sanity will prevail and an agreement will be reached to prevent a crisis, nobody in Washington is doing anything about anything else and we look like a bunch of doofuses to the rest of the world as our nation moves closer to default.  So what, you ask—what the hell happens to you and me if they don’t raise the debt ceiling?

Q: Won’t refusing to raise the debt limit cut the deficit?

A. No.

Q: Do you mean that Congress can pass a budget that requires borrowing, and then argue later about whether to approve that borrowing?

A. That’s right.

Q. So, what happens to government spending if the debt limit is not raised? Will the United States default?

A. The United States will not have enough money to pay all of its bills… The possibilities range from “prioritizing” some payments and paying them first to paying bills in the order in which they were received.

The Bipartisan Policy Center analysis notes that if the government were to choose to pay the interest on its debt, Social Security benefits, Medicaid and Medicare payments, defense contractors and unemployment benefits, it could not have enough left to pay for the salaries of federal workers and members of the military, Pell grants for college, highway construction or tax refunds, among other things.

It doesn’t stop there: a default means some combination of government bondholders don’t get paid, government contractors and vendors don’t get paid, government employees don’t get paid, government benefits recipients don’t get paid, and people who don’t get paid have less money to spend so the economy slows down; government creditors demand higher interest rates on future loans and that leads to higher interest rates for we consumers on credit cards and mortgages; cities and states don’t get federal program payments and their own cash flow problems become worse.  Just the threat of default is starting to make the markets nervous.

Our country’s government spends way more than it takes in, and that needs to be corrected.  But as hard as it seems right now to make the choices that will lead to a stronger economy in the long term—and this isn’t going to be all fixed in your first six months in Washington, Mr. and Mrs. first-term Congressmember—it will only be harder if all the problems caused by a default are dumped on top of the ones we already face.  And even if there’s no default, the political playacting that both parties are consumed with right now may make financial markets skittish enough about the future that the credit rating of our country’s debt might be lowered anyway, leading to higher interest rates, etc., etc.

I’ve said this before: first, Congress needs to live up to its responsibility to prevent this totally preventable problem of potential default, then it and the administration can turn full focus on the screwed up federal budget mess that threatens our long-term financial health and security.  By the way, there’s a special tactical unit now on its way to the Capitol to help with that.

Places, please, for the big finish!

The Washington kabuki

Pat Ryan 3 Comments

It’s playing out just as any predictable, poorly-written melodrama might, these “negotiations” to raise the federal debt ceiling and avert a national economic emergency, particularly when the play is performed by such transparent and ham-handed actors.

As expected, yesterday the Senate refused to go along with the House bill to cut government spending and pass a balanced budget amendment to the Constitution (which even National Review’s Rich Lowry is against); it was thought this might provide the cover for enough Republicans to be able to say that they had done their best to comply with Tea Party demands but now had to vote for a debt ceiling hike to avert a crisis, but we haven’t seen that start so far.  Then, Speaker Boehner dramatically announced he was “abandoning” his negotiations with President Obama and laid all the blame on him for not giving in to the no-tax-hike meme…before he announced he would continue negotiating.  Obama says Boehner’s rejected a plan with less tax increases than what the Gang of Six proposed earlier in the week, and he’s called for more negotiations this weekend, while Senate leaders are trying to revive the scheme to let the president raise the debt ceiling without members of Congress having to cast an approving and politically-dicey vote.

Politically dicey?  Yes, for the many Republicans in the House more worried about getting a Tea Party-ish challenger in next year’s primary election than they are about the United States defaulting on its debts.  How’s that for statesmanship?

(Check out the letter Boehner sent to House Republicans on Friday, and expect to see/hear the verbiage again in campaign ads.)

So they talk this weekend, and come out of the talks to stand in front of the microphones and say predictable things.  I feel pretty confident they will come up with some way to beat the deadline and raise the debt ceiling to prevent default, even if they don’t tie it to spending cuts or increased revenue (which isn’t necessary—these are separate albeit related issues).  But I wish they would take advantage of the opportunity now to take some action on spending and revenue, because that’s going to have to be addressed and sooner would be better than later.  David Brooks thinks so, too, arguing that “Standing still is not an option.”

Doing nothing could lead to default and the end of American economic supremacy. The compromise put together by Harry Reid, the Senate majority leader, and Mitch McConnell, the Republican minority leader, that’s been floating around is a ploy to evade responsibility. Punting with some small package would spook the markets and reflect dishonor on yourself.

(snip)

You do it because you know the political climate will be worse for a deal in 2013. If you’re a Republican, you know Obama might win re-election, and even if the G.O.P. swept everything, you know your party wouldn’t have the guts to cut entitlements unilaterally (that’s why the cut, cap and balance bill didn’t mention the specific programs that would face the ax). If you’re a Democrat, you know Obama might lose, and, even if he doesn’t, the Senate will likely tilt rightward.

Mostly you do it because you want to live in a country than can govern itself.

(snip)

…this is the next step in the journey toward economic health.

“You can’t blame the wreck on the train”

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I only wish I had more time during the day to ponder all the developments in the “negotiation” in Washington, D.C. over raising the national debt ceiling, an issue that’s become wedded to an effort to cut government spending.  And that’s a fine issue…if only more Congresses had spent more time thinking about cutting, or at least holding the line.  Loren Steffy, one of the few bright spots at Houston’s Leading Information Source, observes that these are really two different issues and he makes a frightening case for the consequences we might all suffer if today’s Congress doesn’t pay the bills rung up in the past.

Since we last spoke on this matter, the Republican leader in the U.S. Senate has finally had something to say.  After letting the speaker of the House and the House majority leader carry the fight against President Obama, Sen. Mitch McConnell offered a surprise solution to the impasse: give all the responsibility for raising the debt ceiling to the president, so the country won’t face an actual default but Republicans won’t have to take a record vote for higher taxes or a higher debt ceiling.  Maybe he thinks he’s being clever, but he’s getting killed by “conservatives” who think he’s given up the sacred fight.

See, it’s really hard to trust labels.  The Tea Party people, at least those who really drank the kool-aid, they say they’re conservative.  But there are plenty of people who’ve been known as strong conservatives for quite a while (in just the past week I’ve cited David Brooks, Kathleen Parker and David Gergen, for example) who think the GOP in Congress may be going too far this time.  Today I’ll add Steve Bell, who believes there will be a deal and no default, but that Republicans are spending so much energy protecting tax cuts for the richest Americans that the voters are going to smack ’em up-side their heads in November 2012 (I paraphrase).  Gallup’s latest poll finds, not surprisingly, that Americans would prefer to fix the problem with only cuts in spending, although they weren’t asked to identify which cuts they supported, but most of the country favors a mix of spending cuts and tax hikes.  Perhaps because they’re smart enough to realize that the problem is too big to fix with just one or the other.

Now Moody’s is putting American government bonds on review for a possible downgrade, and even the Chinese—the Communist Chinese!—are urging the U.S. government to be responsible and think about protecting investors all over the world.

So I was thinking about all of that, and I remembered the words to a Terri Sharp song I heard performed by Don McLean:

When the gates are all down and the signals are flashing,

The whistle is screaming in vain,

And you stay on the tracks, ignoring the facts,

Well you can’t blame the wreck on the train

Grand Old Party, or Grumpy Old Protesters

Pat Ryan 4 Comments

President Obama hosts another Big Budget Meeting tomorrow at the White House with a deadline looming for raising the nation’s debt ceiling to keep the country from defaulting on its loan payments, and both political parties are acting as if they’re serious now.  (Now?  Yeah, now…finally, now.)  Republicans, who’ve been spurred in part if not entirely by tea party pressure, have been very tough in the negotiations, demanding that Democrats agree to trillions of dollars in spending cuts and no tax increases in return for the votes to increase the debt ceiling.  Sounds like the Republicans have won this round, doesn’t it?

Columnist David Brooks makes a very good case that the GOP has wrought amazing concessions from Democrats on the economy, spending cuts and debt reduction, and that if it takes what’s been offered it will be good for the country, set a new starting point for future negotiations on more cuts, and be a significant political victory for Republicans to campaign on in 2012.  But he also warns that if they don’t agree soon, people will have good reason to wonder if the GOP has ceased to be a political party capable of governing and turned finally into a mere protest movement that has a “no tax hike” fetish—even when the effective tax rate in this country is now the lowest it’s been since 1950!  The long-time conservative idea man is worried that no-tax-hike-ers threaten the future of his party:

The members of this movement do not accept the logic of compromise, no matter how sweet the terms…The members of this movement do not accept the legitimacy of scholars and intellectual authorities…The members of this movement have no sense of moral decency…The members of this movement have no economic theory worthy of the name.

(snip)

If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.

That makes sense to me, and I hope it makes sense to everyone, even the very fanatics that Brooks warns about.  The New Republic’s Jonathan Chait praises Brooks’ column for its emperor-has-no-clothes statement about GOP radicalism, and assigning all of the blame to “Republicans” who would stand in the way of shrinking government, who would cripple the economy and emasculate the recovery, just to make a point.  Something for all of us to keep in mind, as the clock tick-tick-ticks down to possible, and completely avoidable, national default.

I really don’t want to have to hear all this right now

Pat Ryan Leave a comment

I mean, this is June…June 2011, right?  Almost 17 months before the 2012 election?  I find that I grow fatigued already with the attention being paid to the early stages of the Republican Party’s presidential contest (I would be fatigued with the attention to the Democratic Party’s contest right now, too, if there was one).  There’s too much time before the election, and too much opportunity for things to happen—to change—for me to believe I’ve got to lock in to a candidate right now.  Yet the drone of activity continues.

It now seems clear that Rick Perry’s made up his mind to run for president.  Fine.  (I’ve been fighting off an imagined letter explaining his strategy, but I don’t know if I can fight it forever.)  One reason the Perry prospectus is positive is that the Newt Gingrich political brain trust that quit on him earlier this month was a bunch of Perry people, so they’re now available, if asked, to work on the makeover of yet another Texas governor into a national leader.  (Wasn’t the last one we sent you enough for a while?)  Gingrich says that was just a difference of opinion about how to run a campaign…wonder what his reasoning is today to explain his major fundraisers also calling it quits?

There’s been some consideration lately that perhaps Michele Bachmann is not so out of the mainstream after all; this is disturbing, too, and appears to be true to the extent that the mainstream is no longer where it once was.

But there was some not-disheartening news today in the stories on Jon Huntsman’s announcement of his candidacy for president.  He was able to make the point that he believes himself to be the best person for the job without resorting to irrational and hysterical (and untrue) accusations about President Obama.  No ominous warnings about socialism, or death panels, or usurpers and traitors, or even accusations that he doesn’t love his own dog.

“He and I have a difference of opinion on how to help a country we both love,” Mr. Huntsman said of Mr. Obama. “But the question each of us wants the voters to answer is who will be the better president, not who’s the better American.”

I don’t really want to be undergoing a presidential election right now, in the same way that I really don’t want to be undergoing a colonoscopy right now.  If I must, though, I could get used to one that sounded like that; on the other hand, I’m far too used to the sound of Americans’ religious bigotry showing its resilience, as it did again today.