Playing chicken with the Republicans over the Debt Ceiling

It looks as though President Obama has endorsed Senate Majority Leader Harry Reid’s debt-ceiling proposal, which, according to the White House, would cut government spending by $2.7 trillion and increase the federal borrowing limit through 2012. It would seem that Democrats, in spite of the fact that they control the White House and Senate, have decided to give the Republicans everything that they’ve asked for, completely taking even modest tax increases on the wealthy off the table. I’m pissed, of course, that the Democrats haven’t pushed harder for a deal that would see the wealthiest Americans, who are presently contributing at historically low levels, asked to share the pain of their fellow citizens, but, in all honesty, I’m not sure what choice Obama has at this point.

It seems to me that Republicans have demonstrated again and again over the course of these past several weeks, that they don’t care if our country defaults on its debts. It seems as though they’re absolutely willing to force our country into insolvency. In fact, it’s almost as though they want it to happen. Representative Steve King of Iowa was quoted today as saying that, if we should fail to work out a debt ceiling deal, they would have cause to impeach the President. He did so, it seemed to me, almost gleefully. I know it sounds absurd that any American would welcome an economic catastrophe of this kind, but I suppose it makes sense if you take Senator Mitch McConnell at his word when he said that making Obama a one-term President was his “single most important political goal”. How do you negotiate with a party that doesn’t care if they trigger a catastrophic economic meltdown? That’s not to say that I don’t think Obama could have fought harder, but I do think it’s worth noting that the Republicans are living in a libertarian fantasy world worthy of Charlie Sheen. And I’m not sure that we’ve seen the worst of it yet.

Now that Obama is offering everything that the Republicans have wanted, they’re asking for more. Word is that House Speaker John Boehner wants to cut another $.3 trillion from the federal budget. (And by “federal budget,” I mean only the parts that serve the poor, middle class and retired. The military budget will be fine, as will the corporate subsidies that our lobbyists have secured via their liberal use of free speech. And, by “free speech,” of course, I mean money.)

Here, on the subject of how far the Republicans are willing to push this, and what the repercussions might be, is an excerpt from Ezra Klein’s most recent column in the Washington Post.

…Originally, the Democratic position was that we should simply raise the debt ceiling. Republicans said “no.” There would have to be a deal that reduced the deficit by at least $2.4 trillion — which is the size of the debt ceiling increase needed to get us into 2013.

Then the Democratic position was that we should raise the debt ceiling through a deal that reduced the deficit by about $2.4 trillion, with $2 trillion of that coming from spending cuts and $400 billion coming from taxes. Republicans said “no.” There would have to be a deal that disavowed taxes.

Then the Democratic position was that we should raise the debt ceiling through a deal brokered by Barack Obama that reduced the deficit by $4 trillion, with about $3 trillion of that coming from spending cuts and about $1 trillion coming from tax increases. Republicans said “no.” There would have to be a deal that disavowed taxes, and it would have to be cut between the congressional leadership of the two parties. Obama couldn’t have this as a win…

If you take the Republicans’ goals as avoiding a deal in which they have to vote for tax increases and denying Obama a political victory, it looks like they have succeeded. That success has come with costs — they’ve done themselves political damage, are risking a crisis that could do the economy tremendous harm, and have left the Bush tax cuts unresolved, which means they might end up watching taxes rise much higher than if they’d taken Obama’s offer — but it’s still been a success.

The question is, what happens if they don’t stop pushing?

Late last week, pollster Mark Blumenthal summarized the “consistent findings” from the polling on the debt ceiling. First, he said, “Americans prefer a deal featuring a mix of tax hikes and spending cuts to a deal featuring just spending cuts.” Second, “most of the surveys find strong sentiment in favor of compromise, especially among Democrats and independents.” Finally, “the surveys all show Americans expressing significantly more confidence and trust in President Obama’s handling of the issue than of either the Republican or Democratic leadership in Congress.”

Republicans have leverage because the debt ceiling needs to be raised and it can’t be raised without their support. But they don’t have popular support behind their position or their leadership. They can push this up to the brink and win, because Democrats really, really, really don’t want a debt-ceiling crisis that could set back the economy. But if they push it over the brink, they’re likely to lose, as the public really, really doesn’t want Congress to create an economic crisis that will set back the economy, and they’re primed to blame the GOP if one does in fact come to pass…

And, based on the recent comments and actions of John Boehner, it looks as though they have every intention to keep pushing.

But, it would seem, some on the left haven’t given up hope. I just received the following letter from Senator Bernie Sanders:

The debate over raising the debt ceiling and deficit reduction is coming down to the wire and I wanted to take a moment to update you on what is going on in Washington.

Despite the fact that Democrats control the White House and the Senate, it is right-wing Republicans who are calling the shots and setting the agenda. Unless we fight back vigorously, Congress and President Obama will give the American people exactly what they don’t want.

Poll after poll shows that the American people want Congress to focus on job creation and that they want deficit reduction to be done in a way which is fair and which requires shared sacrifice. They do not want the budget to be balanced on the backs of those people who are already hurting through massive cuts in Social Security, Medicare, Medicaid, education, child care, nutrition, affordable housing, fuel assistance and environmental protection. They want millionaires and billionaires to start paying their fair share in taxes, and they want the removal of massive loopholes which enable many large corporations to avoid taxes. They also want a significant reduction in military spending.

Republican leaders talk about three or four trillion dollars in spending cuts over the next ten years, with no new taxes on the wealthy and large corporations and unless we turn the tide NOW, they will get pretty much what they want.

Please understand what they mean. While no specific proposals have been adopted as of this date, here are some of the ideas which have been discussed.

SOCIAL SECURITY: Revising the formula which determines cost of living increases (COLAs) so that in ten years, a 75-year-old will receive $560 a year less in benefits and in 20 years an 85-year-old will receive $1,000 a year less. Further, another provision which would require that Social Security always be solvent for 75 years would likely mean even larger cuts in benefits. All of this would take place despite the fact that Social Security has not contributed one penny to the deficit and has a $2.6 trillion surplus today. This new formula would also cut back on the pensions of veterans.

MEDICARE: Raising the eligibility age from 65 to 67 and/or cutting benefits by $250 billion over ten years. Now you tell me, how are 66 year old Americans with modest means going to afford health insurance with a private company – especially if they have medical problems? It’s not going to happen. They are going to suffer. Some will unnecessarily die.

MEDICAID: At a time when 50 million Americans already have no health insurance, Republicans and some Democrats are proposing to cut hundreds of billions from Medicaid which means that many men, women and children will lose the health insurance they have. According to a Harvard University study, some 45,000 Americans die each year because they don’t get to a doctor when they should. How many more will die if Medicaid is slashed? How many children will be thrown off of the Children’s Health Insurance Program?

EDUCATION: Today, childcare and college education are already unaffordable for millions of working families and Head Start has long waiting lists. If Republicans and some Democrats get their way, Pell grants and other educational programs will be deeply slashed. Affordable childcare and a college education will no longer be possible for many families in our country.

ENVIRONMENTAL PROTECTION AND INFRASTRUCTURE: Forget about the government having the ability to protect the people from corporations who want to evade regulations within the Clean Air Act and the Clean Water Act. With massive cuts in the EPA, the resources will not be there. Forget about this country having the investment capability to transform our energy system to energy efficiency and sustainable energy. Forget about creating millions of jobs rebuilding our crumbling infrastructure and improving our public transportation system.

At a time of growing hunger in America there will be massive cuts to nutrition programs. We have a crisis in homelessness, and there will be cuts to affordable housing. While we need more funds for research and development in disease prevention and other areas, fewer funds will be available. And on and on it goes.

Yes, the time is late, but we can still make a huge difference.

As, perhaps, the most progressive member of the Senate, I will continue to stand for a deficit reduction plan which is fair, which requires the wealthy and large corporations to begin paying their fair share of taxes and contribute at least 50 percent toward any plan which is adopted. I will also demand that Congress take a hard look at excessive military spending.

This nightmare can be avoided, if, as progressives, we continue to stand together for social justice and common decency. Thank you for all that you do.

Personally, I’m not sure what good it will do at this point, but I’m going to give Bernie the benefit of the doubt, and call all of my elected officials tomorrow, urging a more balanced approach, which wouldn’t just look to balance America’s budget on the backs of the middle class. If you have a moment free, I’d encourage you to look up the numbers of your representatives in DC, and give them a call as well. As much as we might like to lay this at the feet of Obama, much of the blame lies with those in the Senate and the House, who aren’t giving the President the political backup that he needs to push for more. I don’t know what’s possible by August 2, but I know for a fact that no positive movement is going to happen unless all of the Democrats in DC get onboard and demand it.

update: OK, it looks as though closing tax loopholes is still a part of the Reid plan, even if tax increases on the wealthy aren’t. It’s not much, but it’s better than nothing… Here’s Obama’s speech from this evening.

update: And heres Boehner’s response.

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  1. Glen S.
    Posted July 26, 2011 at 6:44 am | Permalink

    * Not a penny in new taxes on the super-rich or wealthy corporations?
    * Additional, as-yet unspecified cuts to government agencies and programs?
    * Not a *word* about “job creation,” despite the worst unemployment in nearly 70 years?
    * No mention of the TRILLIONS of dollars in critical infrastructure repairs that will be necessary in the coming decades to maintain aging roads, bridges, ports, dams, water systems, etc. — and how we will begin to pay for them?

    And this is the so-called “compromise” legislation?

    Once again, congratulations to President Obama (and Senate Majority Leader Reid) for the ongoing strategy of engaging in “compromise” with the corporate-funded terrorists who are holding our nation’s economy hostage.

    I’m sure you efforts will be amply rewarded by voters in 2012.

  2. EOS
    Posted July 26, 2011 at 7:16 am | Permalink

    Only $0.40 of every tax dollar is spent on paying interest on the national debt. By all means, let’s raise the debt limit so that those who profit from this incessant stream of interest payments can garner even more wealth before the ultimate financial collapse. And let’s shake up the hornets nest by agitating the masses to despise the very corporations which provide for their employment opportunities. How can we think of paying for infrastructure repairs when locked in increases to entitlement spending are steadily undermining everybody’s economic future? The Social Security, Medicaid and Medicare Ponzi schemes have just about run their courses.

    But of course, our main concern should be the 2012 elections????

  3. Edward
    Posted July 26, 2011 at 8:19 am | Permalink

    EOS, once again I’m not sure that you’re hearing what people are saying. No one has said that there isn’t a debt problem. No one is saying that we should just raise the debt limit. What we are saying, however, is that a balanced package of cuts and revenue increases is called for. And, in reality, they aren’t even “increases.” We’re just talking about allowing the “temporary Bush tax cuts” to expire.

    Please call your Senators and member of Congress today.

  4. Meta
    Posted July 26, 2011 at 8:29 am | Permalink

    There’s a gathering taking place at Dingell’s Ypsi office today at noon.

    From MoveOn:

    UPDATE: In his speech last night, President Obama called on Americans to contact Congress demanding an approach to the deficit that makes millionaires and corporations pay their share. So many did that they crashed the House’s servers.

    Today, we’re taking that pressure directly to Rep. Dingell’s office in Ypsilanti. The office is at 301 West Michigan. Join us today at noon!

    Dear MoveOn member,

    Republicans are still holding out against a balanced debt plan that would raise revenues by making sure that corporations and the wealthy pay their share. Instead, they’re threatening to force America to default in order to get big cuts to Social Security and Medicare—all without ending the tax breaks that put us in debt in the first place.

    The latest plan by House Speaker Boehner would set the stage for an even bigger disaster next year. And we’re running out of time: the House could vote on Boehner’s terrible plan as early as tomorrow.

    With things coming down to the wire, Rep. Dingell will be under incredible pressure to give in to Republican hostage-taking. That’s why MoveOn members and the entire American Dream movement have mobilized in just 48 hours to visit the local offices of every Democratic congressperson TODAY to deliver a strong message: that we expect them to protect the programs working folks rely on.

    86 House Democrats have already signed on to a letter pledging to keep benefit cuts to Social Security, Medicare, and Medicaid off the table. But Rep. Dingell isn’t one of them yet, and we need to change that.

    Can you drop by Rep. Dingell’s office today at noon to make sure he gets the message: “We’re counting on you to protect Social Security, Medicare, and Medicaid.”?

    You can print your own “We’re Counting on You” sign, and join other MoveOn members here at noon:

    301 West Michigan, Ypsilanti, MI 48197

    The more Democrats publicly stand up for Social Security, Medicare, and Medicaid, the more pressure there will be on congressional Republicans to agree to a balanced deal that includes revenues, not just cuts. Make sure Rep. Dingell knows you expect him to be a leader by signing on to protect these vital programs from cuts.

    We’re building a real movement to defend the American Dream. More than 15,000 people have signed up for these actions in just the past two days. This is the most important step: sending a direct message to Democrats in Congress that they need to go on the record as opposing cuts to Social Security, Medicare, and Medicaid.

    Thanks for all you do.
    –Daniel, Elena, Tate, Robin, and the rest of the team

    P.S. Don’t forget to double-check the address of the office listed above—our records indicate that this is the right address, but it’s a good idea to confirm before you head out.

  5. Mr. X
    Posted July 26, 2011 at 8:36 am | Permalink

    I wouldn’t be surprised, if, by the time all of this is over, the Republicans are demanding even lower taxes for the wealthy.

  6. EOS
    Posted July 26, 2011 at 8:40 am | Permalink

    Lower taxes for everybody and less government. It’s our only hope.

  7. Glen S.
    Posted July 26, 2011 at 9:27 am | Permalink

    Just to be clear — and to echo a bit what Edward said above — no one, including me, is suggesting that Washington can can continue spending more than it receives in revenue, indefinitely.

    The question at hand is: How do we, fairly, rationally, and *strategically* begin to “re-balance” the income and expenditure sides of the ledger — and when?

    By any objective measure, taxes on the very wealth and on corporations haven’t been this low in generations. Meanwhile, nearly all economists agree that major budget cuts now — in the middle of a very weak economy with record unemployment — is a recipe for economic disaster.

    Instead of continuing the (at this point, bi-partisan) strategy of ” cut, cut, cut” … I think we need some bold new proposals, starting with:

    * Beginning to wind down our multiple, unnecessary wars, and negotiating to get Europe, and countries like Japan and Korea, to share more of the burden for their own defense.

    * Letting the Bush tax cuts expire, closing corporate tax shelters and loopholes, and imposing a stiff tax surcharge on U.S.-based corporations that continue to offshore jobs, profits and new investment.

    * End subsidies for big agribusiness that cost taxpayers BILLIONS of dollars — which at the same time create powerful incentives for producers of cheap, unhealthy foods that are contributing to epidemic rates of obesity and diabetes (and adding to the rocketing costs of Medicare and Medicaid).

    * Impose an immediate $.75/gallon tax on gasoline and diesel fuel to encourage fuel greater efficiency — with half the revenue devoted to repairing existing bridges and highways; and the other half devoted to public/non-motorized transit.

    Etc. …

  8. Anonymous
    Posted July 26, 2011 at 9:39 am | Permalink

    Republican leadership in the House doesn’t have the balls to cut a deal. They can’t stand up to the new Representatives in their party that were swept in on the Tea Party wave, and tell them that, yes, they should support this, even if it includes wording that would effectively close the loophole for corporate jets. Unfortunately, no one in the Republican party has the guts to stand up and demand that they get on board, even though they feel it violates some asinine “no new tax” pledge that they signed upon taking office. Closing loopholes in the existing tax code, or, for that matter, allowing the Bush tax cuts to expire, is not the same as “raising taxes”. I’m tired of living in a country full of stupid people.

  9. EOS
    Posted July 26, 2011 at 9:48 am | Permalink

    “The fact that we are here today to debate raising America ’s debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

    Sen. Obama Mar 2006

  10. Posted July 26, 2011 at 10:18 am | Permalink

    We need to default, we’ve done it before in the past and the world didn’t end. Stop buying all of the hype from the fawning corporate media. Debt is the problem, so why on earth would raising the debt limit, and taking on even more debt be the solution?

    That’s not a Republican idea, so don’t you dare label me as GOP. It’s a sensible idea based on freshman level economics, not a political party.

  11. Friend of Anonymous
    Posted July 26, 2011 at 10:23 am | Permalink

    I sent the message below to my representatives in Congress. Please feel free to send it to yours. Find them here:

    I send this message in support of President Obama who requested that we contact our elected representatives to let them know we support a balanced plan that includes spending cuts and tax increases to address our deficit problem and allow for the debt ceiling to be raised. Please count me as one more citizen in support of a balanced plan.

    For the record, I only support this because it seems to be our last hope in negotiating with a group of Republicans who are willing to risk setting off a global economic disaster and devastate the lives of millions of people in order get massive federal spending cuts and to avoid raising taxes.

    It is a disgrace that we are at this point. Millions of Americans are unemployed and losing their homes. It’s unconscionable that we are talking spending cuts in these times. Our infrastructure is crumbling, our schools are failing at keeping our workforce competitive, and we are sending billions overseas to meet our energy needs while we fall behind in developing alternative energy solutions – yet we are able to still borrow money at low interest rates. If the United States were a business, a sensible CEO would acknowledge the massive debt the company carries, but recognize that it will never return to financial health if it does not borrow now to invest in its infrastructure, its people, and its technology to ensure that it will remain competitive. A CEO that would only cut spending would set that business up for failure.

    Furthermore, any supposed solution to our deficit crisis that is being discussed in Congress right now will accomplish NOTHING. If we step outside of this parallel reality created by right wing demagogues (and insufficiently challenged by Democrats,) we will acknowledge that we cannot fix the deficit problem without controlling explosive health care costs that accompany our aging population. Projections from the non partisan Congressional Budget Office convey that THE DEFICIT PROBLEM IS A HEALTH CARE COST PROBLEM.

    Only cuts in Medicare/Medicaid that are so drastic they will cripple the economy (can you afford to pay for the hospital bills for your parents as they approach their end of life?) will make a dent in the long term deficit. It’s a tough reality to face because health care is such a difficult political issue. But the reality is that we must get rising health care costs under control. We can’t afford to ignore reality.

    So please – count me in support of the President’s balanced approach so that we can avert this crisis. But when that is done, please focus on creating jobs TODAY and take real steps to protecting our future.

  12. EOS
    Posted July 26, 2011 at 10:32 am | Permalink

    Don’t you love it how MoveOn can mobilize large numbers to rally at their Congressman’s office in the middle of the workday? I’ll bet they’re the 50% who pay no taxes at all.

  13. Meta
    Posted July 26, 2011 at 11:05 am | Permalink

    More than a third of Americans now believe that President Obama’s policies are hurting the economy, and confidence in his ability to create jobs is sharply eroding among his base, according to a new Washington Post-ABC News poll. Americans are also unhappy with congressional Republicans: 65 percent disapprove of the GOP’s handling on jobs, compared with 52 percent for the president.

  14. EOS
    Posted July 26, 2011 at 11:18 am | Permalink

    Doh! Rep. House Speaker Boehner was negotiating tax increases with Obama when talks broke off. Most Americans are unhappy with all the Demopublicans and Republicrats, as well as the LameStream Media. It’s time Washington did what’s in the best interest of the people. No more of the same old shit, year after year, regardless of who’s currently in office.

  15. James Madison
    Posted July 26, 2011 at 11:26 am | Permalink

    It is disgraceful that right wing ideologues today get away with claiming that their extreme anti-taxation dogma is “conservative”. It conserves nothing, and represents a radical threat to the existence of civilization in America, as it undercuts government’s ability to do anything – be it fix roads, run schools, engage in a credible foreign policy. True American conservatives like Alexander Hamilton are appalled by what a selfish elite can today justify by calling it “conservative” when really their agenda entails is anything but conservative.

    Right wing extremists should not be allowed to claim the label of conservative, as if they owned it, or even understand it.

  16. EOS
    Posted July 26, 2011 at 11:39 am | Permalink

    The real Madison would never have imagined in a million years what the current level of taxation has become. There you go confusing your persona with an historical figure again.

  17. kjc
    Posted July 26, 2011 at 1:13 pm | Permalink

    those “you’re not really james madison” smackdowns have really gotta hurt at this point.

  18. EOS
    Posted July 26, 2011 at 1:26 pm | Permalink

    How many other adults do you know of who like to pretend they are historical entities? Over and over again?

  19. Dirtgrain
    Posted July 26, 2011 at 2:15 pm | Permalink

    “No more of the same old shit, year after year, regardless of who’s currently in office.”

    So, fuck the economy?

    “The real Madison would never have imagined in a million years what the current level of taxation has become.”

    I think he had the intellectual capacity to imagine it; prove me wrong.

  20. Johan Galt
    Posted July 26, 2011 at 2:26 pm | Permalink

    We’re gonna’ roll back the New Deal, BITCHES!

    And there’s not a damned thing you can do about it.

  21. Posted July 26, 2011 at 2:27 pm | Permalink

    EOS has been reduced to talking with her mouth full.

    This is the dumbest thread of exchanges I’ve seen from her in ages.

  22. someone
    Posted July 26, 2011 at 2:49 pm | Permalink

  23. K2
    Posted July 26, 2011 at 2:54 pm | Permalink

    From TruthOut.

    The timeline as I understand it: the far-right GOP caucus in the House decided to use the debt limit as a hostage to fortune in their decades-long quest to eliminate Social Security and Medicare. The current Democratic president saw this, and in a pure anti-Lakoffian flail that explains everything you need to know about the man, accepted the deranged premise put before him and went to work on the annihilation of the social safety net…but with the proviso that we find some new tax revenues by closing some loopholes…maybe…please?

    Not good enough. House Speaker Boehner walked away from the debt-limit talks, not once but twice, because he can’t control his caucus and because he had this Democratic president right where he wanted him. The president blew up – in as much as “No Drama” Obama ever blows up – and wondered what is needed for the GOP to say “Yes” to anything. Read between the lines of that presser, and you get this: “I tried to give them Social Security. I tried to give them Medicare and Medicaid. I gave those things willingly, despite cries of outrage from my ungrateful, foolish, obnoxious left flank, and asked only for a pittance in tax revenues in exchange. Shame on the GOP for not rampaging these social programs when I offered them the chance to do so.”

  24. wetdolphinmissile
    Posted July 26, 2011 at 4:31 pm | Permalink

    EOS, I have watched over 25,000 men pretend to be historic figures at Antietam Battlefield and that does not count the women, boys, girls and dogs…Historic reenactment is a fantastic learning tool. House Speaker Boehner is a boob and Madison would have agreed.

  25. GOD
    Posted July 26, 2011 at 6:54 pm | Permalink

    The Real James Madison would never have imagined the internet, so it should be shut down.

    I’m pretty sure people exist who are capable of choosing a username without believing that they magically become that person.

    How’s the weather under that bridge?

  26. EOS
    Posted July 27, 2011 at 4:46 am | Permalink

    There’s a difference between choosing a username and attributing emotional responses to current events to dead men.

  27. Posted July 27, 2011 at 6:30 am | Permalink

    A little obsessive today, aren’t we?

    Are you ok?

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