Liberals still losing: Links & comments 10/28/13

Liberals in Washington can’t win for losing.   While President Obama and the congressional Democrats did stand firm against the blackmail threat of a government shutdown and debt default, merely keeping the government functioning is not a great triumph.  While the Democrats control the White House and the Senate and the Republicans only control the House of Representatives, it is the Democrats who act as if they are a defeated minority.

The Glorious, Futile Progressive Policy Agenda by Molly Ball for The Atlantic.

The writer mocked the “fever dream bizzaro world” of a conference convened last Thursday by the Center for American Progress, a liberal think tank.  Among the “irrelevant pipe dreams” were a higher minimum wage, investing more money in education, infrastructure and scientific research and doing something about climate change.  She did not advance any arguments as to why these are bad ideas.  She merely took for granted that they are politically unrealistic.

Washington is still stuck in the wrong conversation by Ryan Cooper for the Washington Post.

Obama’s Top Economic Adviser Tells Democrats They’ll Have to Swallow Entitlement Cuts by Joshua Green for Boomberg Businessweek.

Sell-Out Alert: 9 Democrats Already Caving to GOP on Social Security Cuts by Steven Rosenfeld for AlterNet.

Maybe they are.  The default baseline position is the budget sequester, which locks in reductions in government spending across the board, which means less for scientific research, less for repairs of roads and bridges, less for school lunches and food stamps.  It’s hard to see how the Democrats can get out of this without giving up even more on historic liberal programs, such as Social Security and Medicare.

And they may not see this as a dilemma.  President Obama has long hinted at his willingness to cut Social Security and Medicare.  This may have been a factor in the Republican resurgence in 2010.

President Obama’s top economic adviser appears to think that the economic recovery depends on restoring business “confidence” and confidence can be restored only by cutting social safety net programs.  And a significant number of Democrats in the Senate are willing to go along with this.

So the Democratic program consists of Obamacare, reductions in other social programs and a moderate increase in taxes for rich people.  I think most voters are looking for a program that will address falling wages and long-term unemployment, even though that may seem like an “irrelevant pipe dream” to Washington insiders.

Let’s Get This Class War Started by Chris Hedges for Common Dreams.   Hat tip to Mike Connelly.

President Obama early in his term of office told a group of Wall Street bankers that he was the only one standing between them and the people with pitchforks.  I think it is time to join the people with pitchforks.

There is a deeply entrenched financial and corporate oligarchy who for the most part do contribute anything anywhere near equal to what they take, whose interests do not coincide with the public interest and who do not feel any responsibility for the common good.  It is time to break their lock on government and end their special privileges.

The shutdown ends, the battle continues

While the government is for now allowed to resume normal operations, it is operating under the sequestration of funds.   The sequester, which went into effect in March, is the result of the previous budget standoff between the President and congressional Republicans.  It consists of across-the-board budget cuts so drastic that it was thought that the two parties would compromise rather than allow them to go into effect.

This is not what liberals want.

On January 15, the continuing resolution to fund the government expires and a new round of sequesters goes into effect.  If the Senate and House agree on another “clean” continuing resolution, that will be in effect a victory for the conservative Republicans.  I won’t call it a defeat for President Obama because his own stated goal is a “grand bargain” to reduce the deficit.

Would the radical right wing of the Republican Party be satisfied with this?  Will liberals and Democrats counterattack and, if so, how?  Stay tuned.  We live in interesting times.

Crisis in government: Links & comments 10/4/13

Shutdown Standoff: One of the Worst Crises in American History by John B. Judis for the New Republic.

What’s at stake is whether a political bloc has the power to bring the American government to a halt in order to get its way.   If the Tea Party Republicans get their way, Judis warned, the U.S. government could become unable to function, leading to the rise of extremist parties of the right and left.  I don’t think he exaggerates.

Debt Ceiling Chicken and Trench Warfare by “Yves Smith” for Naked Capitalism.

The United States may be in for a longer and more destructive political siege than anyone expected.  Not only are there no plans for the two sides to meet, nothing is being done to prepare for discussions.  The problem is that this is an either-or situation not subject to compromise.  Either you recognize that a political faction has the right to crash the government, or you don’t.

Republicans Are No Longer the Party of Business by Joshua Green for BloombergBusinessWeek.

The government shutdown creates economic uncertainty and hampers the economic recovery.  That’s why the U.S. Chamber of Commerce is opposed to it.

Tea party lawmakers see the culmination of years of effort in shutdown by Zachary A. Goldfarb for the Washington Post.

Since Barry Goldwater ran for President in 1964, members of the right wing of the Republican Party have seen the size of the federal government as the main threat to American freedom.  Ronald Reagan didn’t accomplish this, Newt Gingrich didn’t, George W. Bush didn’t.  Now, at long last, the Republican small-government conservatives think they can accomplish their goal.

The real reason for the government shutdown by Dean Baker for Al Jazeera America.

Baker said the Ted Cruz Republicans see this as their last chance to stop Obamacare, because it will be popular if it ever is allowed to work.

The government shutdown could end today.  All it would cost is John Boehner’s speakership by Chris Gilizza and Sean Sullivan for the Washington Post.

Seventeen Republicans have said they’d vote for a “clean” continuing resolution, which would allow the government to resume normal functioning.  They and the Democrats would be a majority in the House of Representatives.  But if John Boehner allowed that to happen, he would lose his party’s support to be Speaker.

The Shutdown in 10 Infuriating Sentences by Kevin Drum for Mother Jones.

Kevin Drum demonstrated that the shutdown is not a result of equal stubbornness on both sides, but a faction of the Republican Party that intends to rule or ruin.

Even if the shutdown ends, the government is operating under the budget sequester, which is a victory for right-wing Republican priorities in itself.

Bush, Obama and the federal deficit

The great economist, John Maynard Keynes, said that governments should set taxes and expenditures so that they run a surplus when times were good and a deficit when times are bad, but balance over the period of the economic cycle.   This is much like the advice that Joseph gave to Pharaoh in the Bible.

The Clinton administration, with maybe some nudging from Republicans in Congress, followed that advice.   Bill Clinton was lucky in his timing.  He came into office at the start of an economic recovery and got out before the next crash.

The boom in itself helped bring the government’s budget into balance.  Tax revenues increased, and it was easier to cut spending.  Clinton made good use of that opportunity.  A commission headed by Vice President Al Gore streamlined the government so that, at the end of his administration, there was less spending (in inflation-adjusted dollars) and fewer civilian employees [1] than at the beginning.

Clinton persuaded Congress to increase taxes [2] by a few percentage points, which also helped.  Taxes still were low compared to what they were prior to the Reagan era.

I don’t think increasing taxes makes it easier to spend money.  On the contrary, the fact that it is necessary to pay for what is spent creates an incentive to avoid unnecessary spending.

President George W. Bush changed this.  He persuaded Congress to cut tax rates while launching an expensive war.  Nevertheless, the economic recovery during his administration brought the federal budget closer to being in balance, until the crash.

Notice that a fiscal year starts on October 1 of the previous year.  Thus fiscal 2001 began on Oct. 1, 2000, and fiscal 2009 began on Oct. 1, 2008.  This means the first Bush budget was in 2002 and the first Obama budget was in 2010.

In 2010, the first Obama budget, the federal budget deficit began to close.  Maybe the need to appease Republicans in Congress had something to do with this.  Maybe the decrease is not enough since, even though the deficit is being reduced, it still exists and the debt in cumulative.   I won’t argue either point.

What I will argue is that if budget balance is your main priority, the Clinton era shows how to do it.  Cut unnecessary spending, raise enough taxes to cover the rest and hope for economic growth.

The budget crisis: Links & comments 10/2/13

What If Voters Don’t Punish Extremism? by Ed Kilgore for Washington Monthly.

Barack Obama has a history of standing aside and giving his opponents enough rope to hang themselves, then jerking on the rope.  I think this is what he is doing in the government shutdown and debt default crises.

Ed Kilgore thinks this might backfire in the current crisis.  Voters are being told by that both sides are equally to blame—even though, in his opinion, the blame rests mainly with the Republicans.

Shutdown Could Last Weeks by Jonathan Strong for National Review Online.

Neither side is willing to back down.  Obama insists on a “clean” continuing resolution to allow the whole government to keep functioning.  Congressional Republicans plan to introduce “rifle shot” bills to keep specific government departments and programs functioning, but President Obama has said he will veto them (although he did sign a bill to continue paying active duty military personnel).

Strong said it is not just a conflict between the President and the House Republican caucus.  The real deadlock is between House Speaker John Boehner and Senate Majority Leader Harry Reid, who detest each other.

The Individual Mandate and the Government Shutdown by Ian Welsh.

Welsh argued that the Republican Obamacare proposal is reasonable.  It did not suspend Obamacare, but only its most unpopular provision, the individual mandate to buy health insurance whether you want it or not.

The problem with Welch’s argument is that, without the individual mandate, the complicated Obamacare system crashes.  If the people who sign up for Obamacare are only people who are poor and already sick, the system cannot pay for itself itself.

What Exactly Did Boehner Promise at Williamsburg? by Jonathan Strong for National Review Online.

The House GOP’s Legislative Strike by Jonathan Chait for New York magazine.

The Republican congressional caucus agreed in January to the Williamsburg Accords, an agreement to use the threat of a government shutdown and debt payment default to force President Obama to agree to their program.  The current crisis is not an accident.  It is part of a planned strategy.

Why Boehner doesn’t just ditch the hard right?, an interview of Robert Costa, the National Review’s Washington editor, by Ezra Klein of the Washington Post.

The Speaker of the House of Representatives has less influence on the Republican caucus than does the Tea Party or Fox News.

Who to blame for the U.S. budget crisis?  Try the Kaiser by Uwe Bott for the Toronto Globe & Mail.

Once upon a time the President had to ask Congress for approval each time the government borrowed money.  In order to pay for the cost of fighting in World War One, President Woodrow Wilson asked for, and got, approval to borrow money, up to a certain limit—the debt ceiling.

The objective of the ongoing budget crisis

To keep things in perspective

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The United States can afford higher taxes

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When President Obama told Republican leaders that taxes are lower now than they were under President Reagan, they rolled their eyes as if he were crazy.  But in fact, it is true.

Balancing the budget and ending the deficit is supposedly the nation’s highest priority.  How can you do this if taxes are at the lowest level within memory of most living people?  Even tax breaks for special interest are out-of-bounds for discussion.

I don’t like paying taxes any better than the next person.  But if we need to pay higher taxes to maintain essential government services, I’m willing to do my share.   I’d rather pay a modest increase in taxes than cut back schools, libraries, school lunches, medical care for poor people, highway maintenance, and everything else that has to be done to keep taxes abnormally low.  And I’d certainly rather increase taxes moderately on the super-rich than voucherize Medicare or privatize Social Security.

There is, of course, a better way to increase revenues.  That is to re-create the kind of full employment economy that existed in the 1950s and 1960s, and move people from being tax consumers to tax payers.

Click on Ten Charts that Prove the United States is a Low Tax Country for a summary of the facts by the Center for American Progress.   Some of the charts are below.

Why tax cuts for the rich won’t expire

A majority of the American people favor allowing Bush-era tax cuts on incomes above $250,000 to expire and tax cuts on incomes below $250,000 to continue.  This is the position taken by President Barack Obama, House Majority Leader Harry Reid and House Speaker Nancy Pelosi.

So why was a tax law vote postponed until after the November elections?  It was a mystery until I read a post by Jonathan Zasloff on The Reality-Based Community web log.  He noted that Pelosi and Reid had these options.

1)  Bring up the middle-class tax cut bill free-standing in the House.  The Republicans would offer a “Motion to Recommit” to the Ways and Means Committee with instructions to include the tax cuts for the rich.  With Blue Dog support, it would have won.  No go.

2)  Bring up the middle-class tax cut bill freestanding in the Senate.  The Republicans would offer an amendment to include the tax cuts for the rich.  It could have won:  41 Republicans plus Lieberman, Lincoln, Pryor, Landrieu, Ben Nelson, Bayh, Hagan, Dorgan, Baucus, Conrad, and then maybe Bill Nelson, Webb, or Warner.  Then where would you be?

3)  Bring up the middle-class tax cut bill free-standing in the House under a “Suspension of the Rules,” which requires a two-thirds vote and is not subject to the Motion to Recommit.  My favorite option, because theoretically, the Republicans would be in a bind.  Either they would vote no, in which case they would have voted no on a tax cut, or they would have voted yes, in which case the Dems win and they tick off their base.  BUT — they probably would have split, meaning that the Dems would not have not gotten a win AND the partisan difference would have been muddied.

In other words, there was no way to get an actual win under these circumstances.  You could only get a loss that would muddy the partisan split.