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Archive for July, 2011

Bad Deal on Debt

Bernie Sanders, the independent socialist senator from Vermont, voted against cloture on the Reid version of a debt ceiling dea. I say good for him! (I don’t like the filibuster, but as long as it exists we can’t leave it to only one side to use). The Reid bill was a bad deal – and the one they apparently agreed to on Sunday afternoon (July 31) is even worse. It makes cuts in important social service programs, reputedly including Medicare, and threatens to cut Social Security in the next round.

As Greg Sargent pointed out today in his Washington Post blog, “The Plum Line,” this deal is a huge victory for the Republicans in general and the Tea Party in particular. Why were they able to win so big? Because they, unlike the progressives, were willing to risk catastrophe in order to get their way. I think it’s time for progressives to respond in kind. 

For the last few days Wall Street bankers have been all over Congress telling them they have to raise the debt ceiling. Congress is going to listen to them — the Republicans in particular. So it’s Wall Street that should have to make some concessions.

Let’s not worry about taxing the rich. That will happen anyway, automatically, in just over a year when the temporary tax cuts expire. Instead, the essential point is no cuts! (Or maybe cuts only from getting out of Afghanistan and Iraq.) There is absolutely no need to include any deficit-reduction measures in a debt-ceiling vote. They are different issues, and should be handled in separate bills. This is nothing but an attempt by the minority party to impose its will on the majority, and it should be resisted.

Rep. Raul Grijalva, chair of the House Progressive Caucus, has vowed to fight the deal and called for the obvious alternative: a “clean” vote on raising the debt ceiling, with no conditions attached. Leave it to Wall Street to get the Republicans in line, rather than trying to buy the latter off with cuts on social services. That’s the way to go.

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Two Things to Remember about the Debt Ceiling Crisis

Let’s keep it simple. If enough people understand these two points, I think the crisis can be resolved.

1. It’s not a crisis of the budget or the deficit. It’s a crisis about the debt ceiling. We may or may not need tax increases or spending cuts as a matter of economic health. We do NOT need either in order to resolve the debt ceiling crisis. All we need is for Congress to vote to raise (or better, eliminate) the debt ceiling. That would let the world go on while Congress and the President turn to a real debate about the budget and the economy.

2. The Tea Party is opposed to raising the debt ceiling. That means that they will vote against ANY solution. And THAT means that Speaker Boehner needs Democratic votes in order to pass a solution through the House. I think he knows that, but if he doesn’t we are really in trouble.

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Speaker Boehner, Remember Newt Gingrich?

House Republican leader John Boehner’s debacle last night (July 28, 2011) has a basic common element with the failure of a previous Republican speaker, Newt Gingrich, in 1995. Each failed to understand the difference between the parliamentary and presidential systems of government.

In a parliamentary system, either there is only one house in the legislature, or one house has all the real power, so if a party has a majority of that house, it rules. The leader of the majority party is the leader of the government, and gets an appropriate title, such as “prime minister.” Newt Gingrich actually said in early 1995 that he was effectively the prime minister of the United States.

That is not the system we have.

In a presidential system, such as ours, different institutions possess independent power, and must come to agreement to get things done. In the US, the House, Senate, and President must all agree.

In 1995, the Gingrich shut down the government because he thought he could force President Clinton to accept his budget. He was wrong. Clinton vetoed the budget, the government shut down, the public blamed Gingrich, and he was soon out of office.

In 2011, Speaker Boehner is in a weaker position than Gingrich – both the Senate and the White House are controlled by the other party. In a presidential system, the best strategy in such a circumstance is to work for a compromise where you can achieve some, but not all of your goals. Instead, Boehner has tried to use control of the House, and a certain amount of momentum from the 2010 election, to dictate what happens. As of now, he appears to have failed.

Boehner’s specific mistake was to ask the House to pass a debt-ceiling bill that was going nowhere. The President had already announced that he would veto the bill, a majority of the Senate had said they would vote against it, and the Senate Majority Leader had promised to take up the bill and kill it the same night the House passed it.

In those circumstances, the Speaker needed the votes of the Tea Party Republicans to pass his bill; but they had little reason to vote for it. Doing so would violate their own beliefs, anger the voters who had elected them, and place them in danger of primary challenges. In return, they would get nothing – a bill that would be dead as soon as it passed. Leaders who know which system they are operating in ask for tough votes only when they really need them, and help their members avoid tough votes when they don’t need them. Boehner was attempting to do the opposite, and he failed.

It now appears that Boehner may lose the speakership. It’s a bit early to say that; but he has certainly lost this battle. Let’s hope the next Speaker remembers what kind of political system this is.

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Why Congress Should Pass an Unconditional Debt-Ceiling Increase

Like most powers of the federal government, the power to borrow money belongs to Congress, but is exercised through delegation to the executive branch. In this case, Congress has delegated this power with an important condition: that no more than a specified amount can be borrowed. This amound is known as the “debt ceiling.”

The problem, of course, is that the federal budget is at least a little bit in deficit every year, and every deficit, no matter how small or large, adds to the total of the national debt — as a result, the debt ceiling is reached from time to time, usually at fairly short intervals. Thus, it is frequently necessary to raise the ceiling to allow more borrowing – in order to make it possible to carry out the activities Congress and the Presdient have already approved. If you want the government to spend less, the way to do it is to cut the budget – not to prohibit borrowing after the budget has been approved.

Almost everyone understands this, so usually the debt ceiling is increased with little controversy. This time, though, two things make it different. First, there are a number of new members of Congress, elected with Tea Party support, who don’t believe that the ceiling should be increased at all, and so will vote against it no matter what. Second, the Republican party, which now controls 1/3 of the policy-making organs of government, wants to use the ceiling as leverage to get its way on important policy issues. The Democrats, who control two of those policy-making organs, are naturally unwilling to give in: hence the standoff.

What to do? I want to make two basic points:

1. The eventual solution has to pass Congress, but it does not have to pass with strong support from the Republican Party. Last December, during the lame-duck session, the budget compromise passed the House with a lot of Republican opposition, but with Democratic support. This is bound to be the way it happens on the debt ceiling vote. Even as I write, Speaker Boehnert is unable to pass his Republican plan with Republican votes – so ultimately he is going to have to rely on a substantial number of Democratic votes.

2. Various compromises are being mooted, but the issues are tricky. Therefore, I’d suggest a simpler compromise: both parties should drop ALL of their policy goals. There should be no spending cuts in this bill, and no tax increases either. Instead, Congress should simply raise (or, better, eliminate!) the debt ceiling, let the government go on functioning, and find another venue for debating their budget preferences. Such a bill could pass in one hour or less, if Speaker Boehner would let it come to a vote.

The consequences of failure are enormous, much greater than a simple government shutdown. The whole banking system relies for its stability on buying and selling federal notes, commonly thought of as the most secure and stable of all possible investments. If the value of those notes is suddenly in question, the resulting chaos may well bring the economy to a complete halt. It is time for Congress and the President to act – and a simple, clean debt-ceiling increase is the easiest, least controversial way to end the crisis.

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