Thursday, August 4, 2011

Republican Resolve

By Ernesto Villanueva

So here we are, once again waging another political battle in Washington. Once more into the breach fellow voters as we prepare to fight Republicans on the debt ceiling and going to and fro on the same ideological fronts that seem to have no end in site. To what ends can we expect this conflict to continue and more importantly we must ask ourselves, “what is the measure of Republican resolve and just how far are they willing to go to garner political points?”

Like in Early 2011, President Obama is finding himself fighting the same battles yet again. As negotiations with Republicans seem to be going nowhere fast, we seem to be racing the deadline with no apparent solution. What disturbs me though, this is not a new fact, up until this month, the debt ceiling is an issue that has been resolved 72 times before so as to avoid American default on our loans and our responsibilities. Michelle Bachman has said that she will not vote no to raise the debt ceiling. Eric Cantor, the house Majority leader, recently walked out on talks with Vice President Biden and Speaker Beohner, stating that new taxes are off the table. What Leader Cantor was saying was that he will not participate in any discussions that include any new revenue. His actions may have proved to be a mistake and left the Democrats and the President in an advantageous position. 

The question now is whether the Democrats and POTUS can use this to force a clean debt bill...answer NO!!!

Today the House and the Senate passed a bill that will raise the debt ceiling and create a congressional committee to evaluate and put forth a proposal to create balanced approach to reduce the deficit. To put in plainly, the Democrats were faced with holding our position on taxes and revenues and once again the Democrats flinched and lost another fight with the Republican party who seemed willing and able to let the economy crash and revert back into a recession to get their way. Now I don't know whether to see this as my party being unable to take a stand or if we, as Democrats, are just more reasonable and not willing to let the country crash and burn simply for our ideals that seem to be gaining more and more support from the American public. Looking into the past, the President has given the Republicans all the ammunition that they need to ensure that our Democratic President will essentially not put forth any Democratic proposals. Basically we will end President Obama's first term having not tired or passed one single Democratic idea.

Lets take a look at the bill, the new agreement stipulates that the treasury will be granted immediate powers to borrow an additional 400 billion to help pay back money that we have already spent and make over 1 trillion dollars in cuts to government spending over the next ten years. I bet your thinking, “where are the revenues?” Great question, well they are not there, the bill states the “Super Committee” will have this fight over the course of the next ten months. The ramifications of this bill go just a little deeper, please let me explain. As you may know the Dow Jones Industrial dropped another -266 points today in response to this bill. This loss is coming off eight straight sessions in which the market has recoded losses adding up to over 6% drop in stocks, just shy of the record free fall of 2008 when it crashed just over 7%. Taking an even closer look at this bill and looking at the cuts that Republicans forced today we can see why the market resulted in the worst single day in months:

With this battle the Democrats wanted to include provisions to extend unemployment benefits and continue the payroll tax cuts to the middle class but alas were not included in the final version of this bill.

According to the Economic Policy Institute this is what the congress is celebrating over the deal “achieved” today.

Discretionary Cuts: -43 billion or (-0.3% of GDP) costing the American Economy -323,000 jobs

Not Extending Unemployment -128 billion (-0.8% of GDP) costing the American Economy -972,000 jobs

Not extending Payroll tax cuts -70 billion (-0.4% of GDP) costing American Economy 528,000 jobs
to middle class Americans

What all this means is that in total we are facing with this deal,

-241 billion in cuts and lost Revenue
(-1.5% loss in GDP)

-1,822,000 jobs lost for Americans

having an economy growing at approximately 1.3% annually and cutting -1.5%, this new deal ensures that that we end our growth in the negative .2%, basically taking the economy in reverse, ergo the response from Wall Street today.

This what Republicans are celebrating in Washington today and it is becoming harder and harder not to draw the conclusion that a bad economy will lead to a Republican victory in November of 2012, but are the American people astute enough to see the political game being played here. Well that remains to be seen, but one thing is clear; we need to work hard to ensure this November sees some gain in the House of Representatives.
Republican resolve is quite clear, the economy and the American people seem to take second billing to political victories and ideology. It remains perfectly obvious in the behavior displayed by Republican leaders Mitch McConnell and Eric Cantor that they will not agree to any types of revenue by walking out of several negations through the process. What is more troublesome, however, is that Speaker Beohner is being held captive by the Tea Party and clearly has no control over his own caucus showing on numerous occasions he is unable to deliver votes to pass anything through house. The 112th Congress thus far has proven to be the most inept and unproductive legislative body to date, having passed only a handful of bills none of which are promoting job growth and now we find them in a one month recess with catastrophic unemployment. With all that's going on the most painful aspect of this grand mess we call congress is that a party that only holds a majority in the house while Democrats hold the Senate and and the White House, we continue to pass their policies and only their policies and its costing the American People. Obama needs to to stop bending over backwards and finally stand up for the people that voted for him.

The issues that we face in this country is that Americans more and more play into the hands of the conservative mindset not knowing they are supporting policies that in turn make it more difficult for themselves. These are what Bill Maher calls closet socialist. Its no surprise that polls find more Americans dislike the word socialist, while they themselves partake in programs like Medicare and Social Security. Its no surprise that we have protestors in Washington hold signs reading “keep your government hands of my Medicare!” When actors like Craig T. Nelson make statements like “when I was on welfare and food stamps no one helped me,” shows the level at which we have engrained ourselves to continually vote and support leaders and policies that that do more to kill jobs and backtrack the economy and we as Americans don't even know whats happening until its too late and we blame the Democrat whose trying to fix it.

If you take away anything from this is that tax cuts do not create jobs, proven by President Bush who was losing over 700,000 jobs per month at the end of his presidency. The wealthiest Americans are not the job creators, we are, the middle class. Working Americans are the what drive the economy, we are what create demand and with out the demand there is need for supply. A business owner called in to a media program and said “we do not need more money, we are not the job creators in this country, if we strengthen the middle class and we will see our economy grow and that is where we need to place our investments.”


Anonymous said...

Nice Post Ernie. The problem is that of messaging. The debt limit has been raised many times since the founding of the country. The problem is that eventually it has to stop. The promises made in the 70's can't be paid for today under the same system and under the same rules. Even the most liberal or progressive economists admit that even with tax increases the deficit can't be tamed without reform. The question of how this country pays the bill is now at the heart of the "Debt Crisis".

The problem for Democratics is two fold. The Republican position of no-new taxes is strangely... pure. They are the party of No but it's the "No" that the rank and file like. Such a position is simple and easy to understand. Pols who violate the rule and those who keep it can be tracked by the voters.

The voice of "job-creation" and "taxing the millionaires" is more complicated. You listen to the talking heads talk about "paying their fair share" is also a simple message. However unlike the "No" stance what a "fair share" is depends greatly on the Democratic pol or activist. Does this mean the end of the Bush Tax rates scheduled to sunset which would return us to Clinton rates? Does it mean something higher? Once rates have increased can you make the same "pay their fair share" argument again? It will be argued again since future budgets (as it stands now) demand more revenue.

The second advantage is that since the "Debt" has been turned into an issue people are beginning to actually think about it. Reporters write articles about it. Talking head babble about it. People think about budgets in the same way as their own. The more the public learns about current services baselines, Social Security "Bonds", and "entitlements" the more the public doesn't like what they learn.

Pres. Obama has a choice. Play political brinkmanship don't let the Repubs define the budget (the best way is not give them a target by not offering one). The Pres. can push job creation and go from press event to event. By January he can just run for re-election and use the war chest to attack the Repub nominee. The stats and polls may change but re-elction is a toss up.


The President can push for tax simplification. The top rate for most wealthy will have to come down or the Repubs won't go along. Yet by killing tax shelters and loopholes revenue could go up. In addition if the President could reorganize entitlements in way that slows their growth he could potentially get Repubs on board (Or make them vote against it). This would certainly require benefit caps, co-pays that match private insurance, an end to the pharm benefit or radical revision, and means testing for S.S. meaning no money if you have a qualifying existing pension or revenue stream. All of this would infuriate Progressives, as I'm sure you would agree Jamie.

Yet perhaps if a Democratic leader made these changes it would cause less pain than a presidential successor might sign in 2012 or 2016.

Only Nixon could go to China. Maybe only Obama could end the deficit.

C. Dorhn

Anonymous said...

Your right, messaging is the problem with the left. Affordable healthcare act doesn't quite roll off the tongue like "Socialist" or "Death Panels," and that has been an ongoing issue. It begs to ask the question that if POTUS had come out and said medicare for all we may have had a much better healthcare bill.

Republicans, to their credit, know how to get their message accross and they do it well. Fear is a powerfull tool and when you can scare people, you can achieve uncharacteristic and self defeating behavior. As for the Democrats, they have the burden of being reasonable and logical in what they do and in this poitical environment is actually hurting them in the negatiations process.

As for the debt ceiling, the failure on the left is not making people understand that this money being borrowed to pay back money that has already been spent...much of that under the leadership of a Republican Legislature. I agree that we need to control the debt, but when we are facing the possibility of another recession and wall street losing another 5% today, now is not the time cut what little growth we have. We need to start investing in the economy and the middle class and yes begin to generate more revenue. Contrary to myth, Reagon actually raised taxes and brought in new revenue by closing tax loop holes...that is how the left needs to message the re-election campaign and get the country going in the right direction.

Ernie V.

Sorry for typing again

Anonymous said...

The fear game is being played by both sides. When the White House postulates that Social Security checks might not go out if a deal isn't reached... that's fear a great number of people.

It looks like both parties are punting until 2012... maybe the Aztecs were right.

C. Dorhn

Anonymous said...

that is a good point, the difference is that when the debt ceiling isn't raised the likely outcomes is all of the above: Ss checks not being mailed, soldiers not getting paychecks and default defaulting on loans because there is no money in the treasury are real concerns and valid reasons. Saying HC reform will make us into Socialists on the way to becoming a soviet United States are just a bit different, you must admitt that.

Ernie V.

Anonymous said...

I'm going by what Rep. Barney Frank said about S.S. The checks would have gone out, the others a cross the board cut would have been near 40%, to soldiers no less. Considering that the bill was signed after the 2nd suggests there was more flexibility than Treasury indicated. The date was established to create deadline for Congress but it played against the Administration.
Health Reform is the Repub demon and possibly the source of the unashamed "No's". However since the law phases in so slowly nobody is seeing any benefit. Not everyone has a family member who was been denied coverage for a preexisting condition. If more Americans understood or saw practical benefits to the ACA the county would be less divided over the reforms.