Grownup Time Again in Washington?

Barack Obama’s press conference ends up being an effort to put aside childish games and restore government to an adult level on national issues.

“Call me naïve,” he tells reporters. “But my expectation is that leaders are going to lead.”

At one point, he contrasts Congress’ dealing with the debt limit to the way his daughters do their homework a day early, not waiting until the last minute and “pulling all-nighters” to get it done on time.

Members of Congress “need to do their job. They need to go ahead and make the tough choices…

“This is not a situation where Congress is going to say we won’t buy this car or we won’t take the vacation. They took the vacation. They bought the car. And now they are saying maybe we don’t have to pay. If the United States government, for the first time, cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant and unpredictable. And that is not a good thing.”

Meanwhile, with as much apparent patience and good humor as he can muster, the President chides the GOP’s line in the sand against raising taxes for the richest Americans:

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Author: ROBERT STEIN

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9 Comments

  1. Unfortunately, it appears the Republicans never intended to negotiate anything here in good faith. Their approach has been “We get everything – you get nothing – or we walk away”. They and their supporters then accuse the Democrats of not being serious about the debt because they actually expected that both sides would make compromises.

    Meanwhile, Republicans are openly stating their intention of creating a recession if their demands are not met. Even on these forums we see individuals gloss over this fact and accuse the Dems of being at fault on this – for not magically fixing the economy in the face of complete Republican obstruction. It’s an easy game to trip up your opponent and then point out his fall.

    If Republicans had any intention of avoiding a default they would be considering the very rational idea that we need to look at both expenses and revenues. Both tax hikes and spending cuts will take money out of the economy – and both need to be done if we’re going to actually address the deficits – but that has never been their intention.

    The Dems may be spineless and business as usual corrupt politicians, but I don’t see them threatening to blow up the economy.

  2. If anyone in Washington actually wanted to balance the budget, you’d be correct of course. But let’s look at the more limited construct of the debate that is happening right now. I’m going to use the CBO assessment of the President’s budget as my baseline. You can find it here http://www.cbo.gov/ftpdocs/121.....Report.pdf

    Now, according the the CBO, the government is going to spend $5.76 trillion in 2021 as opposed to $3.63 trillion in 2011. That’s a growth rate of 4.72% per year in spending. Now over the course of the 10 years, the CBO projects we are going to spend$45.77 trillion dollars. To save $2 trillion, we’d have to spend 4.4% less per year.

    Applying this to the projected $5.76 trillion in 2021 gives you $5.51 trillion in spending or a growth rate over the 10 years of 4.26%. So is your contention that we really cannot slow spending growth from a shade over 4.7% to 4.25%? Because that’s all a spending only solution to saving $2 trillion over the next 10 years would require.

    OK, so what about getting to “primary balance”. Again, using the CBO assessment of the President’s budget as a baseline, we’d have to have spending lower by about $450 billion in 2021. That would mean that the $5.76 trillion would need to be $5.31 trillion. To do that, we’d need to get the spending growth rate down to about 3.8% per year, a rate that is faster than projected inflation by about 2%.

    Well, let’s be totally crazy now and go for true balance, zero deficit. Now we’d need to get spending back to $4.6 trillion. Even here, we could still grow spending by 2.3% per year (still faster than projected inflation) and hit the mark.

    So you see, spending only solutions are quite reasonable, certainly to get to the $2 trillion that is under discussion and to primary balance and arguably to balance the budget. Indeed, you don’t even have to cut spending. Heck, you don’t even need to freeze spending. You just need to hold to it the rate of inflation and population growth. Like that should be so hard.

    As to your last comment. Of course the Dems are threatening to blow up the economy if they don’t get what they want. They are saying no changes in Medicare and tax increases are a must. What will the do if they don’t get what they want?

    Both sides are behaving stupidly but the facts are that a spending only solution is not only possible (to get $2 trillion in savings over 10 years), it’s relatively easy.

  3. Thanks Steve, for your latest version of the supply-side sermon on the mount.

    If only we heathens would just buy into your worldview that cap gains is really something different than just income. Too bad we just don’t see why industry specific deductions are perfectly ok, or that corporations are paying their lowest taxes as a ratio of GDP in decades.

    Preach on Steve, your faithful will back you even if the rest of us know that the illusion of corporate omniscience is deluded.

  4. Any criticism of Obama and the dems (including my own) needs to be tempered with the awareness of just how much republicans have contributed to and created the very problems they are now trying to ensure won’t be addressed on Obama’s watch. Any possible progess coming from the other side of the aisle is a nonstarter for the GOP and if that takes the rest of the country down even lower, then it’s just fine with them…. as usual.

  5. Hemm I think you may be losing it.

    The first post said it was not possible to have a spending only solution and I then proceeded to demonstrate that it is actually quite easybto do. Your post seems to deal exclusively with the question of whethernit is appropriate to do so. I assume that means you choose not to take issue with the point that it is possible.

    Now as to your constant critiques. On cap gains, I think the rate should be lower than the oi rate. Having said that, I would be more than fine with the Clinton rate of 20%. It doesn’t raise much money but it is ok by me.

    I abhor industry specific tax deductions but do you? Would you really like to see the tax breaks for green energy and insulation go away? If you are for ending them all, we are in agreement for once.

    On corporate taxes we will never agree. Corporate taxes are pass rough taxes. They are paid by consumers in one way or another. If you want to raisenthem youmcan, you just needn’t realize that raising them is more or less the same as imposing a consumption tax in the long run

  6. I agree that Republicans are being irresponsible by refusing to consider any tax increases. While a spending-only solution may be possible, I don’t think it is practical* or politically viable. I’m not in favor of Obama’s tax ideas, but there are others that could be considered, such as ending some tax expenditures (which arguably should count as spending anyway).

    That said, I don’t see Obama as the “grownup” in the room, either. For one thing, he blatantly mischaracterizes the Republican position, which is not “maybe we don’t have to pay”. If we want to go with Obama’s analogy (interesting that he compares the government’s spending to a vacation and a car, by the way), then I’d say the Republican position is, “We’ve spent too much too frivolously and now the basement is flooded and we’re going to have to raise our credit limit, but before we do that let’s make sure we get our fiscal house in order so this doesn’t happen again.” That seems like a grownup position to me, the tax issue aside. To make matters worse, the position that Obama is distorting to seem irresponsible is the same one he took as a senator.

    So, to answer the question in the title of the OP: No, it’s not grownup time in Washington.

    *(Steve, do your numbers factor in population growth? You implied at the end that they do, but I’m not seeing how. Also, a lot of that increase is not for new programs but rather because the cost of things–healthcare for seniors–is increasing. So, even a reduction in the rate of increase *is* a cut in terms of services that government can afford to provide, and holding spending steady would be a significant cut, in those terms. That is why I say it is not practical.)

  7. “Hemm I think you may be losing it.” – SteveinCH

    Steve, less tunnel vision and more self-examination please.

  8. You first JS.

    On to CO. US population growth has been between .5 and 1 percent per annum so you are still below that number.

    I agree that some service reductions will happen but it’s not as if we’re telling people they can’t spend more money. I thought about the Medicare issue but I’m pretty sure that the rate ex-Medicare is still above inflation plus population growth.

    Cuts in services are going to happen. Denying they will is not productive. Arguing about who should bear them (wealthy seniors for a start) is.

  9. Steve in CH[I] wrote:

    Cuts in services are going to happen. Denying they will is not productive. Arguing about who should bear them (wealthy seniors for a start) is.

    Here, we can equate productive indeed with being grown-up.

    Unfortunately, ObamaCo and the Congre-Dems’ stance is:

    [Nancy Pelosi]

    “Simply unacceptable. … Any final proposal from the commission should do what is right for our children and grandchildren’s economic security as well as for our nation’s fiscal security, and it must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.”

    and

    [Obama, according to the Washington Post]

    President Obama has decided not to endorse his deficit commission’s recommendation to raise the retirement age, and otherwise reduce Social Security benefits, in Tuesday’s State of the Union address, cheering liberals and drawing a stark line between the White House and key Republicans in Congress.

    Over the weekend, the White House informed Democratic lawmakers and advocates for seniors that Obama will emphasize the need to reduce record deficits in the speech, but that he will not call for reducing spending on Social Security – the single largest federal program – as part of that effort.

    and

    [Harry Reid]

    “I’ve said clearly, and as many times as I can, leave Social Security alone. Social Security has not added a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has, and for the next 30 years it won’t do that. So what I’ve said, if we want to look at something to take care of the out years, let’s do it at the right time. It is not in crisis at this stage. Leave Social Security alone. We have a lot of other places we can look that is in crisis, but Social Security is not. I repeat, for the next approximately 30 years, people will draw 100% of their benefits. And if we do nothing after that, they will draw 80% of their benefits. Now I want to be sure in the out years, thirty years from now, everybody can draw 100% of benefits. That’s important. I believe in Social Security. I believe it is the most successful social program in the history of the world, but I am not going to balance the budget on the backs of seniors that paid into the fund and deserve their money.”

    Now there is some immature talk, appealing to the immature!

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