Plain speaking: What President Obama should have said to the American people about the budget and the debt ceiling

By Distributorcap

This is the speech Obama should have given on Sunday night -- before he let the terrorists Republicans dance the hora all night. His polls would have gone up at least 20 points and his re-election would have been all but guaranteed. Americans may love hearing the words "tax cuts" (even when they're for 1% of the population), but they love their John Wayne character even more.

Ladies and gentlemen, the President of the United States:

Good evening.

As we all know, the U.S. government is scheduled to reach its limit for borrowing, or what has come to be known as the "debt ceiling" on Tuesday. The U.S. Congress, knowing full well the consequence of not increasing that limit would be economic chaos, has historically raised the ceiling under both Republican and Democratic administrations. This time, due to the intransigence of the opposition Republicans in the House, Congress has been unable to reach a compromise that would increase that limit. With a painful and catastrophic default staring us in the face, I am ordering the following steps to be taken:

Unless a clean bill raising the debt ceiling reaches my desk by Monday night, I will invoke the clause in the 14th Amendment to the Constitution that states, "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned" -- to raise the debt ceiling. As President of the United States, I cannot morally or financially let the United States default on its obligations. I cannot allow the actions of a small group of Representatives to push the entire American economy off a cliff. I cannot allow millions to suffer at the hands of a few. If you do not agree with this process or do not take well to the move I am undertaking and want to begin some sort of investigation into the legality of this procedure or even impose hearings for impeachment, let me quote our last Presiden: "Bring it on." I look forward to that fight.

After we ensure the continued flow of checks and payments, Congress and the Executive Branch will immediately begin discussion of the U.S. budget. To be blunt, these budget discussions will include spending cuts across the board, including defense, subsidies to the wildly profitable industries, and closing loopholes that exist only to enhance the re-election of specific Senators and Representatives, for example the corporate jet loophole. I cannot say what the figure will be, but every branch of government will be touched, including many of the perks enjoyed by Members of Congress.

The budget discussions will also include raising taxes on individuals and on corporations, especially those persons that make over $250,000 and corporations that have generated enormous profits yet pay minimal to nothing in taxes. Many of these individuals and corporations have profited greatly from the tax breaks and government bailouts over the past decade. It is time to review just exactly what this government largesse has truly cost a majority of the American people. The Bush tax cuts, which have cost over $400 billion and have not created any jobs, will not be renewed in their current form -- period.

These budget discussions will also include an in-depth examination of the cost to the American economy of sending jobs abroad and the creation of a public works program in conjunction with the private sector to rebuild our faltering infrastructure. The U.S. cannot compete in a world where jobs are shipped out of the country to save a few dollars and the rest of the world builds while applying band aid after band aid.

In addition, I am ordering Harry Reid and John Boehner to keep their respective constituents in session all month -- yes, I know it is August -- to hammer out the framework of a budget that I can sign, a budget that will truly demonstrate shared sacrifice across the board, a sacrifice that will not be based solely on those who cannot pay for high-priced lobbyists sent to D.C. to protect specific breaks and grants.

The past three years have not been a vacation for the American people, and therefore we, the men and women who these struggling Americans elected to shepherd in a better and stronger America, are not taking a vacation until we can agree on a true compromise to get our fiscal house in order.

Thank you.

On vacation, full of debt ceiling rage

By Michael J.W. Stickings

I'm currently on vacation and won't be blogging all that much over the next few weeks. Here and there, when the mood is right, but otherwise not. Rest, relaxation, and family are the priorities.

But, fear not, Richard and the gang will keep things rolling, and so I hope you keep checking back for new posts from my wonderful team.

Actually, though, I'm full of rage at the moment. I'm generally trying to avoid the news, and especially U.S. politics, but, well...

What has me enraged? The Deal, of course.

Yes, the new bipartisan deal to avert default by raising the debt ceiling and, to please Republicans, slash spending (of course, mostly spending that benefits the poor and downtrodden, the usual GOP targets, those no one in power seems to give a shit about).

Now, it's not yet a done deal. President Obama and the Democratic and Republican leadership have agreed to it, but not the rank and file -- and there are sure to be many on both sides who object to it.

Democrats have good reason to object. The deal is heavily Republican, a largely right-wing fix to a crisis created by Republicans. It's all about cuts, not revenue increases, and cuts that, again, will hurt those Democrats supposedly care about. Some Republicans will object as well, but only because -- let's put it kindly -- they're a bunch of petulant extremists who refuse to compromise and who are willing to let the country go into default, and face economic calamity, to get everything they want.

In fact, it has come to this largely because Republicans, from the top down (the leadership included), are bullies crazy enough to risk the country's health, so "patriotic" are they, having basically held the country hostage throughout this entire process.

Sure, I'm deeply critical of Democrats, including the president, for not fighting harder to prevent this, and for not standing up more determinedly for what they purportedly stand for, but, honestly, what were they supposed to do? Let the country go into default? Let the debt ceiling deadline pass, come what may? Sure, maybe. Maybe they could have spun that and kept the blame on the other side, and even come away with a political win, and maybe the impending crisis and public outcry would have forced Republicans back to the negotiating table with their tails somewhat between their legs, but... should they really have taken such an enormous risk?

Maybe Republicans were always going to win this, maybe it was inevitable, because all along they were willing to go further and risk more. That's the problem trying to negotiate with crazy people. They're willing to do things you're not. (Isn't that how Keyser Söze solidified his power?) In this case, Republicans were willing to sacrifice their country for their ideological demands. Democrats, being mature and rational and responsible, were not. And so they had to agree to a deal on Republican (i.e., insane) terms.

There was a brief time when Obama had the upper hand, after he had turned the tables on Republicans and back them into a corner, and with public opinion on his side, but he was only going to win this if he went all the way. And, say what you will about him, he wasn't prepared to play that game, not with so much at stake.

I suspect the deal will pass tomorrow. There will be major defections, but surely enough arms can be twisted, enough dissenters bought off, to make it happen.

And then? Crisis will have been averted, at least temporarily, but Republicans will declare victory -- for getting most of they want (loads of cuts, no new revenue).

The Democrats? They'll get nothing out of this politically.

Obama? Yes, probably. He'll be able to reinforce his credibility among independents by presenting himself as a bipartisan leader who got it done when it mattered (no matter the awful details of what got done).

But unless Democrats can gain control of the narrative and make the debate about ending the deeply unpopular Bush tax cuts for the wealthy and protecting deeply popular entitlement programs (Social Security, Medicare, etc.), this deal won't do them any political favors next year, with with Republicans set to hammer them, however dishonestly (as usual), for being tax-happy, spend-happy socialists.

At least for now, there is reason for cautious, extremely cautious optimism. The deal would allow the president to raise the debt ceiling by $2.4 trillion (with $900 billion in spending cuts):

That will be paired with the formation of a Congressional committee tasked with reducing deficits by a minimum of $1.2 trillion. That reduction can come from spending cuts, tax increases or a mixture thereof.

If the committee fails to reach $1.2 trillion, it will trigger an automatic across the board spending cut, half from domestic spending, half from defense spending, of $1.2 trillion. The domestic cuts come from Medicare providers, but Medicaid and Social Security would be exempted. The enforcement mechanism carves out programs that help the poor and veterans as well.

If the committee finds $1.5 trillion or more in savings, the enforcement mechanism would not be triggered. That's because Republicans are insisting on a dollar-for-dollar match between deficit reduction and new borrowing authority, and $900 billion plus $1.5 trillion add up to $2.4 trillion.

However, if the committee finds somewhere between $1.2 and $1.5 trillion in savings, the balance will be made up by the corresponding percentage of the enforcement mechanism's cuts, still in a one-to-one ratio.

Democrats say they're confident that the enforcement mechanism is robust enough to convince Democrats and Republicans to deal fairly on the committee -- to come up with a somewhat balanced package of entitlement reforms and tax increases. However, the White House assures them that if the committee fails to produce "tax reform" he will veto any attempt to extend the Bush tax cuts, which expire at the end of next year.

Again, the focus is on spending cuts, not revenue increases, but at least cuts to defence spending are on the table and at least it's possible that revenue increases will be part of any future deal.

Actually, scratch that. I'm still highly enraged. And there's really no good reason for optimism at all, even cautious optimism. Obama may want to use the Bush tax cuts for the wealthy in his re-election campaign, as a winning issue (assuming public opinion stays roughly where it is), but he has shown little to no willingness to stand up for progressive principles -- indeed, for principles that are simply not Republican, so much of a moderate Republican does he appear to be -- and, what's more, neither have most Democrats on Capitol Hill, it seems.

All of which is to say, if Obama and the Democrats have been willing to cave so much already, what should make us think anything will change?

Obama is full of shit

By Nicholas Wilbur

(Ed. note: For more on the politics of the debt ceiling debate, not that there's any real debate, see my post from yesterday, "Why the hell is Obama willing to give away so much just to get a debt ceiling deal done?" -- MJWS)

I don't think President Obama is a dick, but I do think he's full of shit – and I mean that in a the most adoring and respectful way possible.

The Huffington Post reports that House Speaker John Boehner gave an emphatic "NO!" to President Obama's proposal to cut Medicare and Social Security spending if Republicans agree to $100 billion in annual tax increases as part of the debt ceiling negotiations: 

Boehner is rejecting President Obama's offer to make historic cuts to the federal government and the social safety net, saying in a statement Saturday evening that he can not agree to the tax increases Democrats insisted on as part of the bargain. 

Unless Obama recently was lobotomized, this is just politics.

Putting "entitlements" on the table merely adds to the image of the president as a moderate negotiator, a sane, bipartisan national leader who's willing and ready to attack the big problems of the country by reaching across the aisle and making the unpopular decisions no president or Congress has been willing to make for decades.

He may want to appear as that guy, and he is appearing as that guy, but he's not actually trying to be guy – mainly because that guy would be an idiot.

Obama saw the incensed response from the electorate when House Republicans voted on a budget plan that essentially privatized Medicare. Members of Congress were being booed out of town-hall meetings by 90-year olds, for Christ's sake. The reaction wouldn't have been any different if Democrats had proposed it. And that is why I don't think Obama's "Grand Bargain" was made in good faith.

It was political posturing, pure and simple. Obama needed no contingency plan because he knew Boehner couldn't afford the political blowback within his party of accepting such a deal – not with the Norquistian Tea Partiers equating tax increases with treason. Republicans would have been slaughtered just as savagely by their constituents as Democrats would have been by theirs.

As Jay Newton-Small put it:

[T]the collapse of the grand bargain leaves President Obama in a more favorable political position. If both parties agree to cut $2 trillion from the budget with minor tax increases, he'll notch a bipartisan accomplishment. But he can also say he tried something more ambitious in putting cuts to Social Security and Medicare on the table without facing the political fallout of actually slashing those programs. He went big and congressional Republicans – not to mention the noticeably silent 2012 Republican presidential candidates – didn't.

Well said.

Obama isn't a dick. He’s a political genius.

(Cross-posted at Muddy Politics.)

Government shutdown 2.0: The debt ceiling

By Nicholas Wilbur 

It's getting down to the wire. The eleventh hour. Crunch time.

If Democrats and Republicans don't make a deal on the debt ceiling by August 2, the Earth will explode. The U.S. will default on its debts. Interest rates will rise. Rep. Eric Cantor will make a killing on his stock investments against the U.S. economy. And who knows, Ann Coulter might not look like a barfly in her next book-jacket photo, Jon Stewart might sign a contract with Fox News, Rep. Barney Frank might go back into the closet, and Marcus Bachmann might come out.

Golfing Buddies: Obama & Boehner
Source: Charles Dharapak/Associated Press

Nobody knows for sure how bad it would be if America defaulted, but everyone who's trained in the economic arts to have an educated opinion about such things seems pretty well convinced it wouldn't rank very far behind "vicious shark attack" on the summer fun scale. And isn't that odd? Doesn't President Obama have an apocalypse czar for this sort of thing?

The fact that nobody knows the exact consequences of a default says something about the likelihood of Congress not increasing the debt ceiling. Maybe it's just me, but this seems oddly reminiscent of the media frenzy surrounding the government shutdown threats in March and April of this year, when Republicans demanded a "historic" $100 billion in spending cuts to the 2011 budget.

Remember that? All the hype about the effects a shutdown would have on society – the unsettling mental images of senior citizens rotting in their own filth because they didn't get their Social Security checks on time to pay the nurse, little kids burning American flags in protest of Yellowstone campground closures, foreigners rioting in the streets (of their home countries?) because their VISA applications weren't processed? It was going to be chaotic. And then, suddenly, it wasn't.

It didn't happen. The Republicans who'd threatened to shut down the government if Obama and Co. didn't defund Planned Parenthood and NPR and the health-care reform law and the EPA, they eventually compromised, threw in the towel on the Tea Party's demands for radical policy riders, and settled on a budget deal that satisfied everyone, more or less.

Leaders from both parties boasted about the agreement, the shared sacrifice, "the biggest annual spending cut in history."

Facing threats of a primary election challenge from the Tea Party, House Speaker John Boehner (R-Ohio) had to confute his right-wing critics who claimed he was a spineless "Republican in Name Only" (RINO). And he did. He secured "historic" budget cuts and proved himself a socialism slayer, a fiscal hawk, and a trusted advocate of the small government ideal that is foundational to the Republican Party.

"This has been a long discussion and a long fight," he said, "but we fought to keep government spending down because it really will, in fact, help create a better environment for job creators in our country." The "fact" about a better job creating environment didn't pan out exactly as planned, but he heralded the deal as a victory for the GOP, because it was, and he promised to continue fighting for even more spending cuts in the future, which he has.

President Obama got what he needed from the deal as well. He was the lead negotiator of a compromise bill that was both fiscally and socially responsible. "Reducing spending while still investing in the future is just common sense," he said. He demonstrated his leadership skills by negotiating what amounted to a short-term stimulus bill, and he upheld his promise to govern from the middle – an appeal to both independent voters and the moderates who comprise the majority of the Democratic establishment. Once again, he looked like the adult sitting at the kids table. 

They avoided a government shutdown, and something tells me Congress won't let the country fall into default, either, if only because nothing has changed since the April budget deal.

Raising the debt ceiling isn't uncommon, not since Reagan anyway.
Source: TheAtlantic.com

The same Tea Party leaders continue to threaten RINOs with primary-election challenges. The same Democratic president continues his pursuit to convince the nation that he's not the radical left-wing socialist Fox & Friends accuse him of being. And the same anti-Washington blowback is at stake if the two parties fail to reach an agreement.

Will there be significant spending cuts? Probably, at least compared to what Republicans managed to finagle from Obama last time around. (The non-partisan Congressional Budget Office reported after the budget agreement was approved that the $78 billion in alleged spending cuts actually resulted in a net increase in government spending – to the tune of about $3.2 billion.)

Will the country crumble under the pressure of such austerity measures? Probably not, as Obama and the leaders of the Democratic Party understand much better than I do that appearing as the sane and level-headed party of political moderates means nothing in the eyes of the electorate if the spending cuts they so pragmatically negotiated end up causing a double-dip recession.

As Andrew Leonard predicted, the final product will likely involve "loophole closing, public-sector-employee squeezing, inflation-index finagling, and tax code juggling that allows Democrats to claim revenue increases while Republicans can pledge allegiance to the god of zero tax hikes."

But at the end of the day, the details of an agreement matter less than the politics of it. Boehner and the GOP need only look like hawks in the eyes of the extremists and the 67 percent of Republicans who identify as "conservatives." Obama and the Democrats need only appear as moderate and responsible peacekeepers who saved America from an economic apocalypse without giving away the farm in the process.

When each side agrees to the talking points, they will emerge from the negotiations and begin a joint press conference announcing in broad strokes the "historic" agreement to increase the debt ceiling before the August 2 deadline.

Because that's politics.

(Cross-posted at Muddy Politics.)