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So now the Congressional Budget Office has evaluated both the Boehner and Reid debt ceiling plans. Here’s how they score the purported spending cuts over the next 10 years compared to what advocates for the respective plans said that the plans would cut:
Reid still wins, by a large margin. You can see why many Republicans aren’t smitten with Boehner’s plan.
But forget those figures for a moment. Here are the two numbers I’d really like to see: forecasted GDP under each plan and projected unemployment under each plan. That’s a much sounder basis on which to evaluate these plans — and the whole austerity craze — than just … whose is bigger.
Dean Baker of The Center for Economic and Policy Research:
“The budget plan produced by the Senate’s ‘Gang of Six’ offers the promise of huge tax breaks for some of the wealthiest people in the country, while lowering Social Security benefits for retirees and the disabled.
Despite claiming that they will ‘reform’ Social Security on a ‘separate track, isolated from deficit reduction,’ the plan includes cuts to Social Security that would be felt in less than six months, as the plan calls for a new inflation formula that will reduce benefits by 0.3 percentage points a year compared with currently scheduled benefits.
The plan also calls for a process that is likely to reduce benefits further for future retirees.” […]
Concerning the fact that the Republicans can’t come up with a plan to address the deficit, Congressional Progressive Caucus co-chair Rep. Raul Grijalva (D-AZ) sent this email to President Obama:
“Dear Mr. President,
“The Progressive Caucus has introduced the only budget that creates a surplus by 2021 because we take seriously the need for a strong economy and manageable debt. Our budget eliminates the deficit in 10 years and creates jobs while protecting the programs our constituents rely on. We stand ready to work with you, as we have throughout this process, to solve the budget impasse in a way that helps rather than punishes the American people. With the House under tea party control and the Senate held hostage by Mitch McConnell, it is up to you to fly the standard of the people who elected you. We feel our budget achieves your policy goals, and we look forward to producing a successful outcome for our economy and our constituents at home.”
More people need to read this budget proposal and more journalists should be talking about it. When you comment on economic articles on-line, bring it up. This is one of those places where citizens could be leading and shift the conversation if they would only take a few minutes to act. Sadly, time is running out for this to have an impact. But I still keep brining it up and will continue doing so until the deal is done. Hope others will as well.
Check this out, from the New York Times in February (emphasis mine):
Almost unnoticed in the wars over the federal budget has been a pitched battle over money for Planned Parenthood, which provides contraception, medical services and abortions at 800 clinics around the country.
For the last several weeks, those on opposite sides of a sharp cultural divide have engaged in dueling rallies, virtual conferences, online petitions and phone banks as crucial Congressional votes drew near. At stake is more than $75 million that Planned Parenthood receives to provide family planning assistance to low-income women, money that its opponents say only frees up funds for abortions.
Now, from my previous post on what News Corp receives:
“News Corporation made over $10 billion in profits over the last four years. And their tax came to $4.8 billion, negative,” [Reuters news service columnist David Cay] Johnston says. “That is, they made $4.8 billion from tax refunds.”
One organization provides needed women’s health services, the other hacks the phones of dead kids, fallen soldiers, and victims of 9/11 — all while spreading propaganda through Fox News. In short, it provides service needed by no one.
And one gets $75 million from the feds, the other gets $4.8 billion.
I think we can all see which would be the wiser cut. It’s time to defund News Corp.
As we endlessly hear about a massive debt crisis, the current President has started one optional war that has already exceeded its estimated costs, plans to continue (if not escalate) two more, is drone-attacking a new country on a seemingly weekly basis, expands sprawling covert military actions in still other countries, builds new overseas detention facilities, all while offering only the most modest, symbolic and illusory “cuts” in military spending. The alleged need to slash the financial security of American citizens — and the notion that America faces a severe debt crisis — would be more persuasive if the country didn’t continue its posture of Endless War and feeding the insatiable, bloated National Security State (to say nothing of the equally insatible and wasteful Drug War and its evil spawn, the increasingly privatized American Prison State, which the Obama administration is expanding as aggressively as the War on Terror).
We are making an active choice to prioritize war and the criminalization of drugs over Medicare/Medicaid and Social Security.
The blindness of the DLC-era “Third Way” Democratic Party continues to be an astounding thing. For more than a decade now they have been clinging to the idea that the path to electoral success is social liberalism plus laissez-faire economics – in other words, get Wall Street and corporate America to fund your campaigns, and get minorities, pro-choice and gay marriage activists (who will always frightened into loyalty by the Tea Party/Christian loonies on the other side) to march at your rallies and vote every November. They’ve abandoned the unions-and-jobs platform that was the party’s anchor since Roosevelt, and the latest innovations all involve peeling back their own policy legacies from the 20th century. Obama’s new plan, for instance, might involve slashing Medicare and Social Security under “pressure” from the Republicans.
I simply don’t believe the Democrats would really be worse off with voters if they committed themselves to putting people back to work, policing Wall Street, throwing their weight behind a real public option in health care, making hedge fund managers pay the same tax rates as ordinary people, ending the pointless wars abroad, etc. That they won’t do these things because they’re afraid of public criticism, and “responding to pressure,” is an increasingly transparent lie. This “Please, Br’er Fox, don’t throw me into dat dere briar patch” deal isn’t going to work for much longer. Just about everybody knows now that they want to go into that briar patch.
If the Senate Democrats release a budget and it doesn’t have a chance, will it make a sound? Probably not. Or at least not much of one. Which is a shame. Because though Sen. Kent Conrad is releasing his budget way, way, way too late, there’s a lot in here worth considering.
Conrad is chairman of the Budget Committee and a longtime deficit hawk, so as you’d expect, his budget hits all the typical targets. According to the Budget Committee, it’s got $4 trillion of deficit reduction over 10 years and takes deficits from 9.3 percent of GDP in 2011 to 2.5 percent in 2015 and 1.3 percent in 2021. But you’re probably used to hearing about deficit plans that cut $4 trillion by now. What’s different is how Conrad’s proposal does it.
“When Democrats on the Senate Budget Committee approached this problem, we looked at it in historical perspective,” Conrad said in a speech on the Senate floor. “How did we get into this problem? Half of it is on the revenue side. So we chose to deal with a solution that deals on both sides of the ledger.” The Conrad budget relies on a 50:50 split between revenues and spending cuts — and, since it counts reduced interest payments as spending cuts, you can argue it does a lot more than half on the tax side. But let’s take the two sides separately.
So although the Conrad plan includes much more in taxes than the Republican plan, or Obama’s plan, it includes less than if we did nothing. But it turns out to be enough. “This year the deficit is 9.3 percent of gross domestic product. We bring it down very steadily until we get down to 1.3 percent in the 10th year — a lower deficit in dollar terms, a lower deficit as a share of GDP than the House Republican plan. Let me repeat that. The Senate Democrats on the Budget Committee — our plan reduces the deficit by the 10th year by more than the Republicans in total, and in the 10th year we have a lower deficit in dollar terms and a lower deficit as a share of GDP.”
But perhaps it doesn’t matter. This is perhaps the budget Democrats should have released initially, but now it’s been preempted by Obama’s April proposal, which was was far to the right of this one, and the deal he offered Boehner last weekend, which was far to the right of that. Conrad admitted as much in the conclusion of his remarks. “We are under no illusions,” he said. “We know this is a year in which the normal process is not being followed. We understand there are leadership negotiations at the highest level, so we understand this is not going to be dealt with in the normal course of doing business. We understand there is leadership negotiation, but we believe there are some ideas in this package that deserve consideration as those negotiations go forward.”
I am still pissed that the budget out of the House Progressive Caucus did not get more exposure and debate. Kent Conrad is not a favorite of mine, but this proposal also deserves some discussion.
The Maine twins, Republican Senators Olympia Snowe and Susan Collins, have spoken and have positioned themselves to the left of President Obama. Let’s hope they have the same clout they’ve had in past debates in this one.
….the Daily Beast’s Howard Kurtz reports, one group that Cantor is apparently fine with making pay more is American college students. Cantor, at the White House for budget negotiations, apparently proposed that students who take out student loans should immediately start paying interest, rather than getting to make payments after graduation
A Democratic source passes along a memo listing cuts to Medicare and Medicaid that House Majority Leader (R-VA) proposed at a contentious White House debt limit meeting on Monday.
Though the memo lacks key details about many of the cuts, it contains enough to show where, exactly, Republicans hope to achieve savings. Its largest single source of savings — $100 billion worth — comes from what the memo terms “Medicaid FMAP Reform,” or matching funds to state governments for providing Medicaid services.
It calls for up to $53 billion in savings from instituting new cost-sharing protocols for so-called Medigap policies — supplemental insurance sold to Medicare beneficiaries to cover the cost of services not covered, or partially covered by Medicare. Specifically, it would institute a $530 out-of-pocket premium for certain Medigap plans. It also calls for over $80 billion in additional cost-shifting for home health coverage, and for medical and prescription drug coverage.
Boehner said at one point that “it’s clear to all of us how big this spending problem is. Congress keeps voting for programs we can’t pay for. But look, entitlement cuts aren’t easy for us to vote for either. Our guys aren’t cheerleading about cutting entitlements.”
“Your guys already voted for them,” the president said, referring to the budget offered by House Budget Committee Chairman Paul Ryan, R-Wisc.
“Excuse us for trying to lead,” Boehner said.
The president today continued to make the case for a big deal, arguing that if they’re going to draw heat for the deal, they should at least do more than make a down payment on the deficit – they should get the country on sounder financial footing and begin to seriously bend the deficit cost curve.
During another exchange, Republicans were going through proposed tax increases as bad for jobs.
"C’mon, man!” Vice President Biden exclaimed, “let’s get real!"
The Vice President argued that their opposition isn’t economic, it’s ideological, that no real economist thinks they’re “job killers.”
In today’s Wonkbook, Ezra Klein writes on the debt ceiling negotiations:
We’ve reached an equilibrium where Republicans can’t accept any revenues and Democrats can’t accept a deal without any revenues. And I use the word “revenues” advisedly. There was a brief, shining moment when it seemed the deal would be changes to the tax code that did raise revenues but didn’t increase rates and so Republicans wouldn’t count as tax increases. But Cantor and others have made clear that they will oppose any net increase in revenues. So there’s no deal until something breaks the equilibrium. Right now, the most likely candidates, in order, are public fury arising out of a government shutdown or a market panic arising out of near-default.
I don’t envision public sentiment outweighing a market uproar regarding the economic collapse that would follow default.
The madness surrounding the debt ceiling spectacle is unprecedented. I’m still not sure whether Republican policymakers are cradling crystal balls while cackling over cauldrons full of fire or if they literally don’t know what they’re doing — but either way, it’s gone far beyond anything public opinion alone can remedy. Republicans are committing economic terrorism. While concentrated grassroots campaigns take time to organize, the economy has a week and a half.
What’s going to have to happen — and happen ridiculously quickly — is for the business lobby to press Republicans towards a compromise that includes revenue increases through tax reform as well as spending cuts. Business has more or less kept quiet about the debt ceiling. But remember, those revenue increases come in large part from tax reform that closes loopholes. Closing loopholes allows for an overall reduction in corporate tax rates when multinationals start paying a reasonable share.
This should be an easy sell to the overwhelming majority of domestic businesses that aren’t massive, multibillion-dollar global conglomerates.
Business, then, needs to frantically carry this message from Democrats to Republicans. While I don’t think this is precisely the type of market panic that Klein was referring to, it’s worthy of attention this week as negotiations lurch forward.
Other, more-drastic kinds of market panic — a downgrade from ratings agencies or a coordinated dump of U.S. debt by China and Russia — are the nightmarish scenarios that would cause immediate and catastrophic harm.
Image: Saturn Devouring His Son (1819-1823), Francisco Goya.
Perfect choice for the image…
The second oft-repeated narrative is that the two parties can’t reach a deficit-reduction deal because they are both prisoners of their ideological extremes. If only both sides would move to the center, Washington could get its fiscal house in order. But the parallelism is absurd. If Barack Obama really were the left’s version of John Boehner, he’d be insisting that the deficit be reduced entirely by tax increases—or at least tax increases plus defense cuts. Instead, he’s supporting dramatic cuts in nondefense spending while merely demanding that tax increases be part of the deal. Most Republican leaders, by contrast, oppose any tax increases at all.
On economic policy, the Democratic Party is a party of the center, not the left. If it were a party of the left, labor unionists would have a larger voice in its economic policy than investment bankers, which has not been the case for decades now. When it comes to economics, Barack Obama, like Bill Clinton, is to the right of midcentury Democrats like Hubert Humphrey, Scoop Jackson, and Walter Mondale, precisely because labor has lost influence and America’s campaign-finance system has pushed Democrats into Wall Street’s arms. Today’s Republicans, by contrast, are substantially to the right of Ronald Reagan, who cut taxes, but also repeatedly raised them. And were Dwight Eisenhower or Richard Nixon alive today, their economic policies would get them instantly labeled RINOs, if not socialists.
Since the Clinton years, in other words, what the media label “sensible centrism” has generally meant economic policies to the right of Reagan’s. That’s certainly the case today, with Obama struggling to include any tax increases at all in a deficit-reduction deal that slashes domestic spending. For those of us who believed that Obama’s victory would shift the American economic debate leftward, this is sobering stuff. It’s an amazing thing, when you think about it: To listen to the debates among today’s Republicans, you’d literally think the reason for the financial crisis was that the United States government taxed and regulated too much.
As Boehner’s actions last weekend showed, American politics still pits one party that adheres to the post–New Deal welfare-state consensus against another party of roughly equal strength that does not. In those circumstances, liberals will usually lose. It would be nice if the media noticed.