Monday, July 25, 2011

Open Thread & News Round-Up: Debt Negotiations

Here's the latest...

Speaker of the House John Boehner (R-Isible) told House Republicans on a call yesterday that, despite the resounding hostility among Democrats and the public to their shitty "Cut, Cap, and Balance" plan, and Obama's promise to veto it, the Republican majority in the House should pass "a package that reflects the principles of Cut, Cap & Balance," and then send it to the Senate, essentially letting the Democratic majority there take the fall for default if they don't pass it.

On the same call, House Majority Leader Eric Cantor criticized Obama for not supporting their short-term proposal to lift the debt ceiling, even though last month he was criticizing the same proposal himself.

Yes, this is about INTEGRITY!

Washington PostDebt-limit compromise elusive as separate strategies take shape in House, Senate:
Over the weekend, congressional negotiators focused their attention on Boehner's proposal to raise the debt limit in two stages. Their goal was to make it more palatable to Democrats — particularly President Obama. On Sunday afternoon, they thought they were close.

But after a 6 p.m. powwow at the White House, Obama, Senate Majority Leader Harry M. Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) rejected the emerging compromise, saying it would leave the door open to another wrenching debt-limit battle in just a few months.

"Tonight, talks broke down over Republicans' continued insistence on a short-term raise of the debt ceiling, which is something that President Obama, Leader Pelosi and I have been clear we would not support," Reid said in a written statement. "Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President."
The HillDurbin to GOP: 'You break it, you own it': "The second most powerful Democrat in the Senate warned Republicans Sunday that they are toying with a fragile economy and would take the blame for any fallout from a debt default. On Sunday, Senate Majority Whip Dick Durbin (D-Ill.) said he had six words of warning for House Speaker John Boehner (R-Ohio): 'If you break it, you own it.'"

Bloomberg—U.S. Stock Futures Decline After Lawmakers Fail to Reach Debt-Ceiling Deal: "U.S. stock futures fell, indicating the Standard & Poor's 500 Index will drop after rallying within 1.4 percent of a three-year high, as President Barack Obama and Congress failed to reach an agreement on raising the federal debt limit, intensifying concern the nation will default."

If you read only one thing today, read this: Elizabeth Drew in the New York Review of BooksWhat Were They Thinking?
Someday people will look back and wonder, What were they thinking? Why, in the midst of a stalled recovery, with the economy fragile and job creation slowing to a trickle, did the nation's leaders decide that the thing to do—in order to raise the debt limit, normally a routine matter—was to spend less money, making job creation all the more difficult? Many experts on the economy believe that the President has it backward: that focusing on growth and jobs is more urgent in the near term than cutting the deficit, even if such expenditures require borrowing. But that would go against Obama's new self-portrait as a fiscally responsible centrist.

...The question arises, aside from Obama's chronically allowing the Republicans to define the agenda and even the terminology (the pejorative word "Obamacare" is now even used by news broadcasters), why did he so definitively place himself on the side of the deficit reducers at a time when growth and job creation were by far the country's most urgent needs?

It all goes back to the "shellacking" Obama took in the 2010 elections. The President's political advisers studied the numbers and concluded that the voters wanted the government to spend less. This was an arguable interpretation. Nevertheless, the political advisers believed that elections are decided by middle-of-the-road independent voters, and this group became the target for determining the policies of the next two years.

That explains a lot about the course the President has been taking this year. The political team's reading of these voters was that to them, a dollar spent by government to create a job is a dollar wasted. The only thing that carries weight with such swing voters, they decided—in another arguable proposition—is cutting spending.

...The Republicans displayed a recklessness that should have disqualified them from being taken seriously. Any deal that was reached would contain substantial cuts in the coming fiscal year—too soon, as Fed Chairman Ben Bernanke and the head of the Congressional Budget Office Doug Elmendorf have recently warned.

The antitax dogma of the Republican Party is strongly rooted in mythology. The theory that tax cuts create jobs has been discredited by the results of George Bush's tax policies. The Republicans cling to the myth that "small business" owners are the "job creators," and so they oppose proposals to eliminate the Bush rate cuts for even those earning over $250,000. But relatively few small business owners earn $250,000—in fact, fewer than 3 percent of the 20 million people who file business income on their personal tax forms (the 1040s) earn that much.

Finally, the antitax position of many conservatives would seem to be illogical, since they also hate deficits: but their real aim is to reduce or eliminate federal programs. They call efforts to redistribute wealth "socialism," but have no problem redistributing from the poor and middle class to the wealthy through taxes.
Seriously, go read the whole thing.