Everyone seems pretty cross at this juncture in the fight over raising the debt limit. As this is written, the House has just passed the bill that Speaker John Boehner yanked from the floor Thursday night and then revised with a balanced-budget amendment on Friday. The Senate has yet to pass Majority Leader Harry Reid’s measure that in many but not all respects is not that much different.
It looks like the Senate will approve Reid’s measure and that the two bills, framed in a way that makes compromise relatively easy, will be melded into one version that could be passed by bipartisan majorities of both houses in time to meet the supposedly hard deadline of Tuesday, August 2.
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But it’s not certain everything will work out, and in the meantime nobody’s very happy about the whole situation.
Democrats seem especially unhappy. They could have avoided the fight in the first place by raising the debt ceiling in the lame-duck session in December, when they had large majorities in both houses of Congress.
But they decided not to. Reid’s comments then suggested that he expected the issue to split the House Republicans, pitting the leadership against the 87 tea-party-sympathizing freshmen. The leaders would have to agree to a tax increase in order to get a deal, with a party schism like the one that followed George H. W. Bush’s agreement to a tax increase in 1990.
That didn’t happen. Instead, Reid abandoned his demand for a tax increase. The reason, I think, is that he hasn’t had a 50-vote majority for a tax increase in the Senate, just as Senate Democrats haven’t been able to pass a budget.
All of which left Barack Obama looking somewhat ridiculous when he called for more taxes in his televised speech Monday night. When you’re trying to show you’re leading and your followers have already gone off in another direction, you tend to look like something other than a leader.
Some Democrats, in frustration, have said House Republicans are acting “almost like a dictatorship” or are using “terrorist tactics.” But in opposing tax increases, House Republicans are just being true to the voters who gave them in November 2010 a larger majority than they have won since 1946.
Other Democrats have taken to blaming Obama. Robert Reich, labor secretary in the Clinton administration, decries an empty bully pulpit. Paul Krugman, the trade economist who writes partisan vitriol for the New York Times, talks about a centrist copout.
Such complaints seem to ignore a lesson that Democrats were happy to teach Republicans after November 2008: Elections have consequences.
Our Constitution does not allow the Republicans, who won big in 2010, to immediately repeal Obamacare and pare back spending to 2007 levels, and they’re pretty frustrated about that. Enough of them remained obdurate to prevent Boehner’s bill from passing Thursday and to push him to include a provision supposedly forcing passage of a constitutional amendment requiring a balanced budget.
All of which weakens Boehner’s bargaining position and may mean a final bill less tilted to Republican demands. But, as many Democrats note, the battle is being fought over how much spending to cut, which means that Republicans are winning. The question is just how much.
Democrats went into this fight with a precedent in mind, the budget fight between President Clinton and Speaker Newt Gingrich in 1995–96. The conventional wisdom is that Clinton won that fight and Republicans lost.
That’s not quite right: After shifting to noticeably more moderate policies, Clinton was reelected in 1996, but Republicans lost few House seats and held onto both congressional majorities.
The difference this time is that Obama has not shifted policies noticeably, but instead has seemed to position himself as a complainer on the sidelines, asking voters to call their congressman. He has presented no specific plan of his own. His chief of staff reports that he hasn’t spoken at all to Boehner lately.
Just as he left the specifics of the stimulus package and Obamacare to congressional Democrats, so he has left the framing of an alternative to Harry Reid, whose Senate Democrats haven’t passed a budget resolution in two years.
On Friday, the Gallup poll showed Obama’s job approval down to 40 percent, the lowest of his presidency. Voters are cross with everybody, but he has the most to lose.
“Leadership”? It's not leadership to agree to fake cuts in the future for debt increases now.
A real leader would have used economic history to frame this issue.
Right now, federal spending is consuming about 25 percent of the Gross Domestic Product (GDP). If federal spending had to match federal tax revenues, we’d need to cut government spending to about 15 percent of GDP, at the most (since cuts in spending would spur economic growth and would pave the way to much lower tax rates).
In 1945, the federal government was spending over 41 percent of GDP, mostly on the war effort.
Many Keynesian economists worried mightily about the effects on the economy if America cut spending too rapidly. Where would all the soldiers go? What would happen to the millions of Americans in the private sector making tanks, ships, guns and other war-related supplies?
These same Keynesian pointed to the very high unemployment rates that had lingered throughout the 30s. In fact, American unemployment was still about 12 percent before World War II.
Economists estimate that approximately 39.5m people (out of about 89m total workers) were directly working for the government or otherwise employed in the private sector to fuel American’s military industrial might. So these concerns were certainly understandable.
Nevertheless, Harry Truman and the congress cut spending from 41 percent of GDP in 1945 to under 25 percent of GDP in 1946 and then to under 14 percent of GDP in 1947.
Meanwhile, the private sector absorbed nearly everyone, with those involved directly or indirectly in Government falling from 39.5m in 1945 to 3.5m in 1947. Unemployment rose slight from 1.3 percent in 1945 to a very modest 3.9 percent by 1948.
Meanwhile America entered an economic Golden Age. Millions of soldiers came home, got married, bought a house and a car, and started having children, starting what we know refer to as the Baby Boom.
GDP rose steadily from just over $212B in 1946 to $260B in 1948 to over $500B by 1960.
So with all due respect, there is no leadership from the Republican party. Instead, we get weakness.
Harry Truman and the Keynesian theory will lead to a golden age every time. Simple all you have to do is get the rest of the industrialized world to destroy itself like in World War Two, and just leave the United States untouched. Then it is no problem to rebuild the whole world from here. I guess it takes Reagan to have 5 quarters straight of over 8% GDP and create 5 million jobs from a train wreck called the Carter administration. But leader has us on the right track now with those smoking 0.7 GDP’s and 25,000 jobs numbers.
Something tells me this was written before the no cuts before 2013 plan was agreed to by party leadership this evening.
"Democrats seem especially unhappy. They could have avoided the fight in the first place by raising the debt ceiling in the lame-duck session in December, when they had large majorities in both houses of Congress."
That was because they wanted to use it for a political show.
"Just as he left the specifics of the stimulus package and Obamacare to congressional Democrats, so he has left the framing of an alternative to Harry Reid"
It isn't often I find myself defending Obama, but honestly, presidents should leave legislation mainly to the legislators.
I agree with Sulmak that Presidents should leave legislation to legislators, but they should also refrain from criticizing those legislators who disagree with the Presidential goals. If he wants specific goals, let him lay out a plan, and let the legislators decide how much of it to incorporate in what they actually pass.
The complaints about Republicans coming from Democrats are heartening. Perhaps these Republicans are not as determined as some conservatives might wish to getting the budget made smaller (e.g. balanced). I think there has been too much focus on ten-year plans and not enough on one-year results. The Democrats, meanwhile, cannot pass a budget at all.
The lesson for me is that Democrats are feckless compared to Republicans. The Democratic President is forever saying (essentially) that he is not strong or capable enough to follow the Republican GW Bush presidency. The Senate is saying, when they complain about Republican intransigency, that they are too feckless to stop the Republican agenda, even with the help of a Democratic President.
So the moral is, find a Republican you like, even if it's a RINO, and vote him in. Republicans get things done, and Democrats cannot stop them. Now the trick is to get in the Republicans who want to do what we want done.
True that a President should leave it to the legislators to actually produce the legislation, but when his party controls one or both houses of Congress it is usually possible (and customary) for The President to lead the conversation to where he wants it to go. The bully pulpit, if used wisely, grants him that ability.
In this case the lack of leadership left the radical leftist wing of his party - which is his base, and holds the views in which he believes - swinging in the wind, while he stood on the sidelines bitterly complaining and pointing fingers.
Even his frequently used strawmen and the targets of his demagoguery have become punch-lines. In an old Frasier episode, Frazier and Niles engaged in a drinking game called "Veneer" which required them to take a drink every time the word "veneer" was mentioned on the Antiques Road Show on television.
We tried the same thing with one of his speeches, taking a drink whenever he said "millionaire", "billionaire", or "corporate jets". Needless to say, we never heard the last half of his speech.
Those who object to the deal should explain in what fantasy world they see Obama and Reid agreeing to anything better. All our options on this were bad, since we only control one-half of one branch of government.
BUT if we allow a downgrade through our petulance at the obstinate refusal of Democrats to address the real problems, we are digging ourselves a huge whole - interest payments on the debt could increase by $500 billion PER YEAR if we are downgraded just to the level of Italy (who are still making their payments).
Plus we'd be buying part of the blame for Obama's economic mess for no reason and no benefit - it wouldn't make him deal. It wouldn't make Democrats serious. Their base is screaming louder than ours right now.
So screw the country, and share the blame with Obama, just to make some purist point?
Obama is now what he has been from the beginning: vain-glorious and ego-centric. Until he goes, we can expect piece-meal politics, not affecting the elite----just everyone else.
Crater thought that all he had to do to be a great president was to imitate Truman; Baron Obombast obviously thinks that all he has to do to get re-elected is to imitate Klingon from 1995 to 1996. I'm afraid that is a trick he will never pull off.
