Congress is congenitally incapable of agreeing on politically controversial issues like the debt ceiling until the last possible moment. Even then they can be counted on to seek the safest common denominator which usually means a partial agreement. That in turn kicks the hardest part of the problem into future congresses or leaves loopholes which future congresses can use to avoid making these same hard decisions.
The difficulty right now is that a perfect fiscal storm is building round our heads and it "will" come crashing down upon all of us unless both Houses, both parties and the president set aside their own petty, personal, parochial, political interests and make those hard decisions for the long term good of the country.
Of course, this flies in the face of what we have come to expect in recent years from all of our politicians, but especially from the spend, tax and borrow Democrats. Still, assuming that Aug. 2 is a real deadline which cannot be fiddled in some way (and I don’t for a moment assume that) you would expect that there would by now have been some indication of a possible solution.
Instead what we have from the Dems is a nebulous, almost incomprehensible, verbal proposal suggesting $4 trillion in vague unfocussed spending cuts over the next decade in return for some two and a half trillion dollars in additional borrowing authority right now.
Obama offered nothing in writing and, when the Republicans properly refused to accept his smoke and mirrors, our great national leader had a hissy fit and stomped out.
Obama offered nothing in writing and, when the Republicans properly refused to accept his smoke and mirrors, our great national leader had a hissy fit and stomped out.
Various Republicans have put forward a range of ideas, including inter alia: $12 trillion in cuts in ten years; $4 trillion in cuts in ten years; a series of half-billion dollar increases of the debt ceiling in return for larger spending cuts; $2.5 trillion in borrowing authority in three slices, each approved separately by Congress, with Obama deciding where to cut spending by agreed larger amounts. But none of the GOP positions have accepted the reality that, because they only control the House, any solution will have to include some form of tax increase, no matter how small, or it will be impossible to rally enough Democratic support to pass an agreement in the Senate.
If we had a rational government, something this country has lacked since Obama’s inauguration and to some degree well before that, the debt negotiators would have an agreed base from which to proceed. After all, a government is elected in part to manage a nation’s finances. This is done via a negotiated agreement called a budget, which sets forth how much is to be spent and on what.
Any decision to spend more than was budgeted is taken in light of the reasoning which produced the budget agreement in the first place, taking into account the changed circumstances which necessitate additional spending. But for the past two years, thanks to Harry Reid and his Democratic decision-dodgers in the Senate, our country has had no budget.
We have worked under a series of “continuing resolutions” which theoretically fund government programs at the same level as the last budget. As a practical matter the government fiddles those as well. But the outcome is that in a great many areas in these last two years Obama has had a virtual blank check to spend the available funding largely as he liked.
And there is no budget to serve as a framework of reference for the current debt ceiling negotiators. Compounding this repeated dereliction of senatorial duty, the Dems show no sign of passing a budget this year either.
By comparison the Republican-controlled House passed the Ryan Budget, a marvelous basis for discussion of solutions to many of the nation’s fiscal issues. Predictably the Dems in the Senate refused to discuss it seriously and voted it down.
President Obama had already proposed a budget so absurd, so lacking in realism and so revealing of his own ignorance of fiscal matters that his own Dem-controlled Senate, forced by House passage of the Ryan budget to vote on both, rejected it 97-0. Then, trying for a verbal do-over, Obama gave a speech outlining a new, revised, bright and shiny budget proposal which was so vague and meaningless that the non-partisan Congressional Budget Office declined to evaluate it.
A government which does not budget has no sound basis for governing. The Obama Administration has lacked direction and coherence almost from its first day in office. That is, unless one concludes that its purpose is to weaken and eventually destroy our current unique system of republican government, in which case his actions and policies, including his failure to budget, make perfect sense.
A government which does not budget has no sound basis for governing. The Obama Administration has lacked direction and coherence almost from its first day in office. That is, unless one concludes that its purpose is to weaken and eventually destroy our current unique system of republican government, in which case his actions and policies, including his failure to budget, make perfect sense.
But, vitriol aside, at the moment both sets of negotiators fail to make progress toward a solution of the debt ceiling problem because they are almost entirely focused on the 2012 election. Neither side is willing to make concessions which would put them at risk before their electoral base. What we are seeing is a massive game of blameshifting. But the time is past for that.
The threat we face as a nation is all too real and, if we cannot avoid it, the consequences will be terrible. The solution to our problem is easy to see, even if it is politically hard to do. It involves a small tax increase on the richest among us, severe tax reductions on corporate profits, capital gains and dividends, elimination of many tax deductions with the exception of the housing mortgage deduction, a gradually decreasing series of increases in the debt ceiling, a gradually increasing series of spending cuts and a constitutional amendment requiring a balanced budget whose effectiveness is phased in coordination with the spending cuts and debt ceiling reductions.
If I, who was never more than a minor bureaucrat, can see the solution, why can you not? Senators and Congress Members of both parties – man up! Do you really believe that your own political careers are more important than the economic and political survival of the United States?
Can you not see what will happen to all of us if the credit agencies reduce America’s bond rating? If the August sale of T-Bills without the monetization of the Fed is only possible at much higher interest rates?
If our international creditors abandon the dollar as the global reserve currency? If the dollar and the euro continue down a parallel slope of collapse? If our nation’s economy is overwhelmed by massive inflation and a consequent fall into a really Great Depression?
Do you not recognize the danger of future dictatorship if, in towering crisis, a desperate people turn to their government and offer their freedoms as the price for promised salvation?
Do you not recognize the danger of future dictatorship if, in towering crisis, a desperate people turn to their government and offer their freedoms as the price for promised salvation?
This is not just another political exercise. And there is not much time left.
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