Political Panic, Nast, via Wikipedia
A balanced but alarming Time Magazine editorial led off saying today,
As the U.S. hurtles toward a potential debt-limit default that would shake the fragile economy, the chasm between the two parties widened on Tuesday, as Republican opposition to tax increases calcified and Democrats bristled at the inclusion of cuts to entitlement-program beneficiaries without “shared sacrifice” from the wealthy.
Senate minority Leader McConnell proposed an alternative approach whereby the authority to raise the debt ceiling would be transferred from the House (Republicans) to the President (Democrat party). By doing that, though, he and his colleagues would also transfer the responsibility and the blame. Republican leaders would continue their shrill screams about overspending, pointing to Obama as the culprit. McConnell’s strategy is clear: Politics trumps the best interests of the nation. Shame on him. The Time editors said this about McConnell’s proposal:
Though designed to lift the burden on Republicans leery of backing a debt-limit increase, it’s unclear the idea would find any traction in the House, where Republicans have eschewed a piecemeal approach. Even if it did, Obama has said he won’t sign it. It’s a gambit to assign blame to Obama, whom Republicans believe would endure the brunt of the blowback if a congressional impasse produces a fiscal calamity.
An increasingly powerful player in this fight is House Majority Leader, Eric Cantor.
Representative Eric Cantor of Virginia, via Wikipedia
About him, Time said,
But while Cantor is asking Democrats to concede cuts to their most prized programs, Republicans aren’t putting any of their own sacred cows on the table. Cantor argues that increasing the debt ceiling would itself amount to a compromise. “For Mr. Cantor to say that it was a major concession by the Republicans to sit down at the table to discuss getting to an agreement is an extraordinary comment to be made in a democracy,” (Democrat) Hoyer argued.
But then, there is deep intransigence on the Democrat side as well:
We must protect Medicare and Social Security. We will not support cuts,” House Minority Leader Nancy Pelosi said Tuesday, flanked by 15 women in the Democratic caucus at a press conference that highlighted the disproportionate impact cuts would exert on women and minorities. Preserving programs like Medicare and Social Security is “the core of what we are all about,” said Democrat Kathy Hochul, who sprung an upset in a recent special election in a conservative Buffalo-area district by bludgeoning her Republican opponent for backing cuts to Medicare.
I continue to believe, as I have consistently maintained, that the key to the debt crisis and to the nation’s future health, the one issue that dwarfs all others, is entitlement reform. If they continue to dodge the issue the GOP is throwing the country under the bus, wasting the only (except for another Pearl Harbor or an alien invasion) motivation that can sway the public and enable entitlement reform – a threatened national default on its Treasury obligations. Also abandoned in the breech would be any opportunity to overhaul the Frankenstein tax code.
It’s clear to me that there has been only one adult in the Capital basement meeting room so far. How sad.
Whoever fights monsters should see to it
That in the process he does not become a monster.
If you gaze for long into an abyss,
the abyss gazes also into you.— Friedrich Nietzsche – “Beyond Good and Evil”
Still Skeptical After All These Years 
Jim,
There has been one very tall adult in Washington for ONE DAY. It was President Obama by laying a $4 Trillion deficit reduction “plan” as the goal. THAT is a REAL and profound number, IF we ever really do it, WITHOUT POLITICAL GIMMICKS. See my blog on “Smoke and Mirrors” for clarification of that thought.
For the first time EVER over the last three years or much more actually, someone has put a real and significant number on the table. That number alone will not ultimately FIX our economic problem of “spending too damn much money” (which INCLUDES taxing too “little”). But it is a huge step forward if we really did it, which we will NOT do even if the President stuck by his guns and demanded such savings (and taxes) to really make it happen.
See my blog for why I only give the President ONE DAY of praise for his bravery to suggest doing the next right thing as well as the laughable Republican counter proposal.
But I do agree with you, almost, for the long term fix, reforming entitlements. But we also need to reform our defenses as well by deciding against whom we can and must defend ourselves. CAN will or should dominate MUST in that discussion as well.
All in all, a pretty good blog.
Anson
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Jim – found my way here via Jennifer Lockett’s blog. Passing on this link from the Economist in case you hadn’t seen it. This is the key paragraph for me:
“This newspaper has a strong dislike of big government; we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. In Britain, for instance, the coalition government aims to tame its deficit with a 3:1 ratio of cuts to hikes. America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.”
http://www.economist.com/node/18928600
I haven’t read anything about overhauling the tax code as a solution, and any candidate who brings that up never seems to get very far in the polls. But I agree with you that it’s a system that could do with an overhaul.
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Thanks, Colin. Your input is appreciated and it supports my own views.
I am not sanguine about any reform of the tax code because it is the lifeblood of politics, the mechanism of small and large favors, but it is terribly inefficient. I worry most about the so-called black market economy, having seen estimates as high as 20% for business that escapes legal taxation. My wife’s former hairdresser would only take cash and gave no receipts. Wink, wink.
Thanks again. — Jim
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A PS to this post:
David Gergen, my esteemed moderate, clear-thinker, appears this morning to support me. Here is the link:
http://www.cnn.com/2011/OPINION/07/12/gergen.debt.obama/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29&utm_content=My+Yahoo+SBC+co-brand
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Ok, now Gergen has weighed in with a “fix” of sorts.
For one day, only, I saw BOTH Dems and Reps in “corners” with the President standing very tall indeed trying to do the next right thing, stop spending too damn much money.
He lost, again, my confidence by saying in his press conference that increased taxes would go, at least in part for “new” programs as well. But again “Smoke and Mirrors” on my own blog provides such rational for my thoughts on the politcs of current talks (or still screams).
But if we really WHACK our spending and INCREASE federal resources (ONLY for purposes of deficit reduction) then I am behind the President, lock, stock and barrel.
On the other hand his THREAT of no SS in Aug is just abomnibal, off the charts, whatever you call it. That is the absolute worst kind of politics and I assume it came right out of his mouth according to news reports.
If we cannot meet our current SS obligations on a month to month basis anymore, directly from the SS TRUST FUND, not the general ledger, HE needs to tell us why and what he is going to do about it.
Neither you nor Duane have addressed that one issue, Aug SS payments, yet. And if you try to only blame Republicans on that threat, well stand by.
Anson
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(I’m about to ask about spending cuts – I acknowledge a need, somehow, of revenue increases, but I’m just getting an idea about cuts right now. Thanks in advance.)
This is a question for anybody to answer. From the stuff I’ve read and seen, the cuts in spending are pointed to “the big three” (or two, depending on your point of view) – Social Security, Medicare & Medicaid, and Defence. While I understand these are three VERY big pieces of spending, what about things like foreign aid and “subsidy support” for things like oil company subsidies and fine arts support (I’ll explain that a bit)? While I understand they are nowhere near as large amounts of money, my thoughts are:
1. I see no reason to be shoveling money out of the country when we need it here;
2. While I support the arts, funding for them is (relatively speaking) a luxury when the country is in financial straits
3. While painfully obvious, reductions or eliminations of subsidies to various organisations basically guaranteed to make money (utilities, oil companies, coal mines, etc.) SHOULD be a quick and “feel good” option.
These are just quick examples – I know there are many options outside of the big 3 I named above. I would even support cuts to Defence, though I would need to see clear cut details so that we don’t end up cutting maintenance just to keep the latest fancy fighter or destroyer.
So, gentlemen, ideas for cuts outside “the big three” that I named?
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John,
The Capital Hill meetings as I understand the reports had, before the talks broke down, identified some 4 Trillion in cuts over the next decade. Finding a lot of things to cut is, I submit, not all that difficult, but the problem is that even collectively they are not large enough. Entitlement reform is required, with or without these other things, IMO.
Jim
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That’s kinda what I thought, Jim, but I figured I would ask anyway. I was thinking along the lines of spreading the pain out as widely as possible, along the lines of Sekan’s comment.
And like Auto 5, I have to agree with Sekan overall – time for EVERYBODY to step up and quit playing politics. If we default, just like the European countries in trouble, our credit rating will suffer and drive up our costs of borrowing. If the politicians think servicing our debt is expensive now, what do they think it’ll be like when the rating agencies drop us a couple notches down?
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True, John, but you know what? I do not think we will go over the financial cliff. It would be not only financial chaos, but political chaos. I think it would give rise to a common meme of “throw all the bastards out and start over” and I think they know that in their hearts. At least I hope so.
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The Republicans REALLY do need to “take the deal”, for the good of us all!
From what I read, Obama has been the only “adult in the room”, being his usual pragmatic self, cutting a deal right down the middle.
Both sides need to mind him if he’s being the adult.
Entitlement reform, along with a total of trillions in cuts, also closing tax loopholes and asking wealthy people/corporations to all give. Everybody will have to give something.
IF the hard right forces us into default, it would most likely be very bad for Republicans in the long run. The new Tea Party people need to come to the middle a little and take the sweetheart deal. Then, and only then, will they have something to be proud of and campaign on.
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I’m gonna have to agree with Sekan on this one.
Oh, wait. Seems like I ALWAYS agree with Sekan! 🙂
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John,
No way can your comment question be answered in a comment. You must go back at least a year in these blogs alone to get the views of various “factions”, mine included to get a grasp on the enormity of the issue of debt and deficits. I won’t bother listing a bunch of links, but the information, as to our local views is there, in spades.
But here is a short answer, incomplete as it is. Go online and scan various “things” under federal budgets. I found long ago a government web site that lists the top 18 (I think) “departments” in government that receive Congressional funding. The sum total of the authorized funding of each “department” (defense, HHS, DOE(2 of them), National Foundation of Sciences, etc) is all there and the sum total adds up to around $3.5 Trillion for say the 2011 Presidential budget submission.
I went so far (about a year or so ago) to read Article One, Section Eight of the Constituion and ELIMINATE any funding for any “department” out of the 18 or so that was NOT listed as a federal responsibility. HHS, Dept of energy and education, etc were zeroed based on that assumption.
I then “whacked” defense by almost 50% with similar cuts elsewhere. Result was the budget cound STILL not be balanced with such cuts alone. But if you did that then tax increases required would be rather small.
Bottom line is we need (in my view) BOTH revenue increases AND spending cuts to “stop spending to damn much money”, money that we do not and cannot MAKE through tax increases alone.
I believe we MUST begin to LIVE WITHIN OUR MEANS, which said another way says “stop spending too damn much money”. The ONLY way to do that and do it fast enough to make a difference and become really believable is to both raise taxes and cut spending.
To me that is what the argument is all about, fundamentally. But our representatives and we the people are unable to come together and PRIORITZE our wants and needs, financially to reach a point, quickly, like in five or ten years to really live within our financial means.
And failure to do so will drive us over a “cliff”. And I now see that cliff very clearly if SS checks are withheld for ANY reason in Aug or any other time in 2011.
Anson
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John,
I would also add that it is very clear to me that Republicans will not allow enough tax increases AND Democrats will not cut enough spending to even make a DENT, a small dent, in the overall problem. The current debate over debt limit increases is a perfect example of such stalemate.
And that stalemate is going to cause a very big disaster by BOTH political parites and ultimately we the people that put those parties into “power”.
I have been told for over a year now that writing about the “cliff” was too pessimestic or misguided. Well go read the front pages of the Washingto Post over the last few weeks and tell me there is no “cliff” looming in front of us on August 2, 2011.
AT BEST what will result, in my view, from this current argument will be some mealy mouthed attempt to kick the can down the road to a later date to “resolve”. HA, is all I can say to that tactic.
A “short term fix” now is paying SS in Aug. A mid-term fix is doing something over the next year or so to settle financial markets.The long term fix is doing something in the next five or ten years that forces us to live within our means. And there is a “cliff” of increasing “heights” looming at each of those ponts in time. The further “down the road that we kick the can” will increase the size of later “cliffs”.
Anson
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Thanks for the responses, Anson, and apologies for being brief – I’ve got several tasks around the house that need doing while the weather is tolerable today, before we go back into the furnace.
Could you do me a favour, and just post a quick reply with a link to your blog? I’m not sure where to start looking, and it would save me a ton of time – my internet’s been flaky the last few days.
Both you and Jim are WAY ahead of me on all the facets of this issue – I need to do some research so I can comment a bit more intelligently. Thanks to both of you for your patience!
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I can help with that, John. Go to Anson’s link here:
http://ansonburlingame.wordpress.com/
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BUT, John,
If you click on it with a “liberal finger” your computer will blow up in your face!!!
Anson
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Oh, fear not. While I may tend toward more liberal feelings on certain topics, I have FAR more elephants in my closet than donkeys. (Just don’t tell Blackjack I said that, or he’ll get jealous! 😉 )
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