Quote of the Day: Debt Ceiling Limit Crisis Forever Opens Ugly New Conflict Door
Our political Quote of the Day comes from The Daily Beast’s John Avlon, who details the hypocrisy of Speaker of the House John Boehner against the backdrop of Boehner’s televised speech that countered President Barack Obama last night. Here are some key parts of his piece (go to the link and read it all):
This is starting to give Kabuki theater a bad name. The competing congressional debt ceiling plans presented at grimly choreographed press conferences. Bipartisan language used to fig leaf nakedly partisan bills. Last night’s dueling primetime speeches by Obama and Boehner, offered as the clock ticks closer to default with no constructive compromise in sight.
The markets still seem to be in denial about the growing prospect that America might fail to raise the debt ceiling for the first time in our history. They are assuming rationality from an ideology-first crowd in congress. But make no mistake: we are heading into unprecedented territory.
This is a political crisis manifesting itself as a fiscal crisis. Deficit reduction is no longer the real goal. Principled differences have been abandoned. Instead, there is just the struggle to survive politically without taking the nation off a cliff. It is a failure of divided government, and that’s why the two prime time speeches last night offered a preview of campaign 2012.
He gives his take on Obama’s speech, Boehner’s, and then looks at the Tea Party conservatives, what they sought and what they are now rejecting.
And here are the “nut graphs” for our Quote of the Day:
The irony is that Tea Partiers who sincerely campaigned on reducing the deficit and the debt have succeeded in largely preserving the status quo because they refused to any revenue increases attained through closing the loopholes that function as earmarks in the tax code. This misplaced sense of priorities at a pivotal negotiation period will cost the nation in the future. All-or-nothing usually leads to nothing.
As you watch this drama play out over the next seven days, don’t forget that this is an entirely forced fire-drill. The debt ceiling has been raised more or less automatically in the past—77 times since JFK, including 18 times under Ronald Reagan and 7 times under George W. Bush. Republicans were not rushing to the ramparts then — consistent with their heightened concern over deficits that comes only when Democrats are in the White House.
Not that there hasn’t been plenty of partisan hypocrisy to go around. Then-Senator Obama famously voted against raising the debt ceiling when President Bush was in office—a vote he later described as ‘a new senator making a political vote as opposed to doing what is right by the country.”
Nonetheless, this is the first time in American history that the debt ceiling vote has been held hostage by hyper-partisan politics. It won’t be the last. It will be difficult, if not impossible, to put this genie back in the bottle. Whether we default or just end up downgraded because of our inability to govern ourselves effectively, this kabuki theater has real costs—both now and in the future.
And that’s it in a nutshell: the debt ceiling will now be used as a tool in the future. And government shutdowns? Crises over them will become commonplace.
Welcome to government that will echo an old slogan used by Ted Koppel’s Nightline when it first came on during the Carter administration:
“America Held Hostage.”
19 Responses to “Quote of the Day: Debt Ceiling Limit Crisis Forever Opens Ugly New Conflict Door”
Why is it so hard to understand that the situation is different now. Panicking over a stubbed toe is different from panicking over a gun wound. A $1.5 trillion deficit (and people calling for more) with a $14 trillion debt is simply too much, too fast.
What’s worse, both parties seem to have agreed on far more than they’re disagreeing on.
I agree Prof. What I find fascinating is that the Boehner plan and the Reid plan are basically the same plan and we’re fighting over it like they are the difference between heaven and hell.
There are two stands here…raising the ceiling trumps all else or no raising the ceiling without surety on the long term future fiscal picture.
If you are in group 1 you should vote yes on both. If you are in group 2, you should vote no on both. I’m in group 1 and I think people in group 2 are principled but wrong. 99% of the people on the internet and in DC are in neither group which is unprincipled but I guess I shouldn’t be surprised by that.
Adding to the Kabuki is the media, who manufactured the story that the markets would crash yesterday without a deal. Tough to know who to believe.
I think people should vote no on both. Then do one of the below few things which are a great deal more rational and will result in more savings in a few situations which is what I desire.
1. Pass debt ceiling long term while creating debt commission that has a majority vote pass situation.
2. Pass the debt ceiling and repeal Part D for 15t in long term savings, no tax increase and both sides win in some ways
3. Pass a clean debt ceiling deal and just do what has been done for the last 100 years and hope to god no one noticed that you turned the debt limit into a political football and that in turn they do not use it against your party in the future which is likely.
Reids is crap but it may make it through a vote, Boehners looks like it cant even pass the House.
That’s fine MSF although I’d love to see the $15 T in LT savings from Part D. Remember the budget is only a 10 year window and part D is running at about $50 billion a year. So you’re only off by a factor of 30.
1. Is actually pretty much what both Boehner and Reid have proposed since $1 trillion in cuts including interest is more or less nothing in the context of $45 trillion in projected spending.
I think Reid’s is in more trouble than Boehner’s. Silence in the Senate is usually not a good thing but I desperately hope that 1 or both make it through.
Fine lets do number 1 + 2. That 50b per year will shoot off like a rocket as people retire in mass anyway. If medicare/caid have major future funding problems Part D has a much more extreme issue since drug costs rarely go down.
My guess is that the biggest threat in the Senate is filibuster but I am not sure McConnell would want to play those games this time. That would be an ugly black eye. Well to be fair 1trillion in appropriations cuts over a decade is a rather ugly black eye anyway, we need a multiple of that in cuts and that is ignoring the needed increased revenue.
Sorry still butt hurt since I want at minimum 4-5 times that AND an overhaul of the tax code closing loop holes and lowering overall rates.
I want that too (although we’d disagree about the split of cuts and revenues and who should pay the revenues) but I’m not willing to risk default over it.
Also the TP is officially saying that Boehners plan is a no go and would breach their “pledge.” That cuts off 15 gop in the Senate and many more in the House.
SteveinCH-Eh if me and you sat down at a table to work it out I think you would be stunned how easy the process was, heck I would bring the celebratory beer for afterward. Sadly this is not being done by me and you but instead the crazy people we elect and that desire to be elected.
The Magical Sky Father wrote:
Yep –
and raise FICA taxes to make Social Security and Medicare solvent, while lifting or ending the “cap” on incomes and subjecting all forms of compensation* to FICA taxes, with the start at least of benefit reform;
and combine a revision of the income tax system (for both individuals and corporations) with an end to the alternative minimum tax (no longer needed if loopholes are abolished).
That’ll do for starters.
The more painful stuff will come later — ending various programs, shifting federal functions to state and local governments, who may end some of their own functions and not necessary assume anything “transferred from” the feds. (Reform of government employee retirement will definitely be painful.)
* Not the new taxes on investment income, etc, in ObamaCare
Regarding the markets, an analysis I heard on the radio today suggested that markets are fairly stable in light of this debt ceiling crisis because no one really knows where to park their money for safety. Hence people are neither selling nor buying, hence market stability.
The subtext was “there are no safe venues”. Foreign countries, especially Europe, are equally in trouble; Asian countries depend on Western consumerism that’ll theoretically crash, gold & certain other commodities are already “bubble-icious”, real estate has crashed, etc.
T-bills, ironically, may be the best place to be because their interest rates will rise whilst their risk is essentially unchanged (this being a phoney, paper crisis anyway).
Bottom line: this is a terrible time for Congress to be mucking about on this issue. We just suffered a major economic collapse of virtually every market, Europe is in trouble, and there are other troubling signs. But they ignored all of that to have this bogus fight.
Congress is juggling kerosene in the middle of a burning building.
Silver
(That was all I wanted to say… Unfortunately I told that my comment was too short… Ergo this foolishness)
How come NO ONE here is talking about the revenue piece when discussing the deficit? I have heard no one in Congress calling for no cuts in expenditures but the republicans sure have put up an iron wall on revenue increases.
Revenue as a % of GNP is LESS than 15%. How about going back to 2001, Bush’s first year in office, and bring revenue back to the same 19.5% of GNP. That coupled with expense decreases of $250 billion/year will reduce the deficit by 1 trillion/year. Any takers?
I like MSF’s plan, PLUS a return to Clinton era tax rates. The revenue increase would immediately (not over multiple years) eliminate 1/3 of our massive budget deficit.
Sure jdl, you want 19.5 percent of GDP? Great eliminate the state and local tax deduction and the mortgage interest tax deduction and you will be well past 19.5 since revenues recover to 18.5 under current policy on their own.
Now your plan for getting to spending under Clinton (18.5 percent or so in 2000) would be what exactly?
It was asked:
[frowning]
It’s because the problem is spending (especially entitlement spending), not insufficient taxes (“revenue[s],” as the weasely people on the Left say because they’ve made “tax” such a worse word). That’s why we’ve discussed taxes (so much for your false “NO ONE”) but concentrated on the real problem — spending.
The solution lies in controlling and reducing spending.
As some of us have said numerous times [sigh], tax increases are inevitable to pay for even reformed entitlements once the Baby Boomers retire in large numbers. There are tax reforms that are sound (which I have advocated).
Sound tax reforms include eliminating all deductions, exemptions, exceptions, and other “loopholes” of all kinds in the income tax laws (for corporate and individual income taxes), and eliminating the alternative income tax, which no longer would be needed. Tax rates can then be lowered to achieve revenue neutrality (what liberals always insist on to preserve revenues at current levels before raising them), or can be left alone and the extra money raised used to pay down the debt. FICA taxes should be raised to 25 per cent to make Social Security and Medicare solvent. The income “cap” for FICA taxes can be raised or eliminated, and all forms of compensation (stock options, e.g.) subject to FICA taxes. The benefit structure can be modified (by adding another “bend point” at the current FICA cap level and increasing benefits zero to a minimal amount beyond it) now or later, when serious reform of entitlements begins sometime.
States with income taxes (ugh) should also reform their income taxes accordingly. (It’s incredible to believe, but some cities also have an income tax, so they should also reform their taxes accordingly. There are other things that the counties and cities can do with property taxes, which I’ve long described, but right now the focus is on the federal tax system.)
This sets things right for once, and prepares us for the harder times to come.
Class dismissed. [scowl]
Here’s a tax reform that I bet never gets done because it means governments no longer can “cheat” by paying lower interest rates:
Make all government debt payments, principal and interest, (100%) subject to income taxation.
This means governments cannot pay less than market rates any longer, which they’ve been doing (exploiting the tax exemptions).
In addition to getting more in income taxes, governments would now have to pay full, real (market) amounts for their future debts.
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As long as we have the two party system, get used to things like this. Each issue is going to be another pawn in the endless partisan political war where each side seeks to destroy the other, at the detriment of the rest of us.
We need to scrap the two party system.