Tag Archives: john boehner

Video clip of Michele Bachmann in interview after October 11, 2011 Republican debate

I do like Michele Bachmann a lot and I love what she has to say in the article below too.

Slate.com vs. Tea-Party/Christians/Bachmann

Posted by Andrew J. Coulson

Slate worked itself into a lather yesterday over the insidious education policy implications of Michele Bachmann’s Iowa Straw Poll victory:

As recently as a decade ago, Republicans like George W. Bush, John McCain, and John Boehner embraced bipartisan, standards-and-accountability education reform…. Now we are seeing the GOP acquiesce to the anti-government, Christian-right view of education epitomized by Bachmann…. Against a backdrop of Tea Party calls to abolish the Department of Education and drastically cut the federal government’s role in local public schools….”

To support this narrative, Slate asked Bachmann what the federal government’s role was in education, to which she replied, “There is none; Education is a matter reserved for the states.”

Oh, whoops, sorry. Got that last quote wrong. That wasn’t Bachmann‘s answer, it was the answer of the FDR administration.

This answer rests squarely on the Tenth Amendment, which reserves to the states and the people powers not expressly enumerated and delegated to Congress by the Constitution. It was published by the federal government in 1943, under the oversight of the president, the vice president, and the speaker of the House.

Though it might come as a surprise to Slate‘s writers, our nation was not founded on state-run schooling. And, until very recently in historical terms, the idea that the federal government had a role to play in the classroom was unthinkable. It may have required some theorizing to evaluate the merits of Congress-as-schoolmarm prior to the feds getting involved in a big way in 1965, but now… now we can just look in the rear-view mirror (see chart below).

With nearly half a century of hindsight, advocating a federal withdrawal from America’s schools does not seem “anti-government.” Just anti-crazy.

Related posts:

Video clip of Michele Bachmann in interview after October 11, 2011 Republican debate

I do like Michele Bachmann a lot and I love what she has to say in the article below too. Slate.com vs. Tea-Party/Christians/Bachmann Posted by Andrew J. Coulson Slate worked itself into a lather yesterday over the insidious education policy implications of Michele Bachmann’s Iowa Straw Poll victory: As recently as a decade ago, Republicans […]

Rick Perry’s answer in Republican debate of October 11, 2011 (with video clip)

I really like Rick Perry because he was right when he called Social Security a “Ponzi Scheme” which it is. How did he do in the last debate? You be the judge by watching his response above. Rick Perry’s Moment Posted by Roger Pilon Last night POLITICO Arena asked: Who won the Reagan debate? My […]

Romney attacked in Republican debate of October 11, 2011 (with video clip)

I am not too pleased with Mitt Romney and the article below shows one good reason to oppose him. Can Mitt Romney Escape His Romneycare Albatross? by Doug Bandow Doug Bandow is a senior fellow at the Cato Institute. A former special assistant to Ronald Reagan, he is the author of Foreign Follies: America’s New […]

Barney Frank and Chris Dodd mentioned in October 11, 2011 Republican debate with video clip

Dodd and Frank are the real villians of the mortgage mess and I knew that 3 years ago after reading this article below. Who did the Democrats get to clean up this mess? You guessed it. What a joke. Who Are the Villains of the Mortgage Mess? by Daniel J. Mitchell  Daniel J. Mitchell is […]

Reagan’s 1982 tax increase mentioned during the Republican debate of October 11, 2011 with video clip

Reagan’s statement concerning 1982 tax increase is responded to by Republican Candidates in this clip below: Washington Could Learn a Lot from a Drug Addict Concerning spending cuts Reagan believed, that members of Congress “wouldn’t lie to him when he should have known better.” However, can you believe a drug addict when he tells you […]

Ron Paul on Fed during the Republican debate of October 11, 2011 with video clip

I really like Ron Paul a lot and the reasons I like him are in this article below and in the clip above. Ron Paul’s Success Posted by David Boaz The Washington Post reports that Ron Paul “is enjoying a surge in support and the most high-profile campaign of his life. ” Paul’s unwavering ideals […]

Cain’s 9-9-9 plan center stage at Republican debate of October 11, 2011 (with video clip)

Herman Cain’s 9-9-9 plan did steal the show at the Republican debate of October 11, 2011. Take a look at this article below: The Republican presidential debate in Hanover, N.H. (AP) There was one clear winner from Tuesday’s Republican presidential debate, based on the simple metrics of name recognition: businessman Herman Cain’s “9-9-9 Plan.” Virtually […]

Romney not conservative enough (clip from Republican debate of 10-11-11)

Mitt Romney is not a true conservative. Exhibit #1 Romney wants to start trade wars. Romney for Panderer-in-Chief? by Gene Healy  Gene Healy is a vice president at the Cato Institute and the author of The Cult of the Presidency: America’s Dangerous Devotion to Executive Power. Added to cato.org on October 11, 2011 This article […]

Ron Paul speaking at Values Voter Summit

Ron Paul speaking at Values Voter Summit In this speech above Ron Paul repeats his view that we should not have a Dept of Education and the article below does the same thing. Beating Back Big (Ed.) Brother? Posted by Neal McCluskey It certainly seems quixotic to try to reverse the federal invasion of American […]

Mitt Romney’s religion is becoming an issue

This issue concerning Mitt Romney’s religion is heating up. Baptist pastor taken to task Russ Jones and Chad Groening – OneNewsNow – 10/10/2011 11:05:00 am Popular radio and television commentator Glenn Beck wrapped up the Values Voter Summit in Washington, DC, Sunday in a wave of anti-Mormonism comments lodged towards GOP presidential hopeful Mitt Romney.   […]

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Mark Pryor voted for first stimulus but silent about second

The old political playbook will not work this time around.

Bragging on Obamacare and the first stimulus in Arkansas will not do much for Pryor in 2014. In this clip above Senator Pryor praises Mike, Vic and Marion. (All three of those men bailed out and Marion and Vic were replaced by Republicans and in 2012 an election will determine the replacement for Mike Ross.) Then he goes on to praise President Obama’s leadership.

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Mark Pryor voted for the first stimulus and will not say what he thinks about the second stimulus. I have written about that before and offer the links below to those earlier posts. Also I wanted to pass along this fine article by Red Arkansas Blog.

Pryor Skulking In Shadows, Reid Blocking Bill, Obama Blaming GOP

October 5, 2011

By

Imagine the hearty laughter we had yesterday afternoon when we received an email from President Barack Obama’s campaign blaming House Republicans (and exhorting you to spam your local House Republican’s Twitter feed [if you are represented by a Democrat, you end up spamming Speaker John Boehner]) for not passing his second stimulus bill (thanks Debbie for letting us use that term!) while at roughly the same time, Mr. Obama’s chief cheerleader in the Senate, Sen. Harry Reid, blocked an effort to put Stimulus 2: Electric Boogaloo to an up-or-down vote.

Of course, Mr. Reid may have a good reason for relatively delaying the relative “right away” vote on Mr. Obama’s stimulus: he can’t herd his own caucus.

“It seems it’s a lot easier to block a Republican plan than to get the Democrats to rally around President Barack Obama. Even though Senate Majority Leader Harry Reid (D-Nev.) has repeatedly promised to call a vote on the president’s plan, he has slow-walked Obama’s jobs bill amid fractures within his caucus over how to pay for it.”

It also turns out that the Senate Democratic Whip Dick Durbin may also have a bit of a limp whip (isn’t there a pill for that?):

“Senate Majority Whip Dick Durbin (D-Ill.) said, at the moment, Democrats in Congress don’t have the votes to pass President Obama’s jobs bill”

Of course, this brings us to our own Sen. Mark Pryor who, to date, has not expressed a position on Stimulus II, despite voting for Stimulus I in 2009 that hasn’t really done a whole heckuva lot.

Given the Senate Democratic leadership being forced to delay an immediate vote while they scrounge the north side of the Capitol for votes, Mr. Pryor’s position on a bill that would increase taxes on our state’s natural gas industry (isn’t it good for jobs?) becomes very important.

Because of the importance of Mr. Pryor’s stance on Stimulus II, we are forced to wonder why our senior senator is skulking in the shadows and not speaking to it.

Is he worried about angering the increasingly liberal Democratic Party of Arkansas by not publicly supporting President Obama’s plan to raise taxes on job creators? After all, he sponsored that resolution to create National JC Penny White Sale Da… err… National Jobs Day.

PARTING SHOT

Will Sen. Pryor add an unemployed person to his office staff? How about the DPA? Who should we direct resumes to?

Related posts:

Potential Headlines: Beebe beats Pryor in 2014, Hillary beats Obama in 2012

It is my view that if the economy keeps stinking that Republicans will have a field day  in November of 2012. However, the same principle holds true that challengers to Democrats will be  very successful in Democratic primaries. In Arkansas many have longed for another Clinton in the White House. Could it happen? It is my […]

Pryor voted for Stimulus earlier but now he is concerned about our deficit

Thanks to the Arkansas Times Blog and to Arkansas Media Watch for pointing out what Senator Pryor said in his recent visit to Rogers, Arkansas: Getting the economy on track will require deep cuts to the federal budget and a fairer tax system, Sen. Mark Pryor, D-Ark., said Tuesday. National defense, Social Security and Medicare […]

Dear Senator Pryor, why not pass the Balance Budget Amendment? (Part 3 Thirsty Thursday, Open letter to Senator Pryor)

Dear Senator Pryor, Why not pass the Balanced  Budget amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 2 Thirsty Thursday, Open letter to Senator Pryor)

Dear Senator Pryor, Why not pass the Balanced  Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]

Senator Mark Pryor in favor of debt deal: “We must continue making tough decisions to reduce our debt”

Mark Pryor voted for the Debt Deal on August 2, 2011.  He said, “We must continue making tough decisions to reduce our debt. ” However, I don’t think cutting 22 billion out of projected increases in a 3.6 trillion budget is “making the tough decision to reduce our debt.” Aug 01 2011 Statement by Senator Mark […]

Letter to Senator Mark Pryor concerning debt ceiling debate July 26, 2011

Dear Senator Pryor, The President asked us to contact those representing us in Washington and that is exactly what I am doing today. Let make a few points. First, in the past few months I have responded to your request to provide SPECIFIC SPENDING CUT SUGGESTIONS to your office. I have done so over 100 […]

Breaking down Senator Mark Pryor’s speech on debt ceiling (Part 3)

Mark Pryor’s support of the ultra liberal Obama is very clear in the video clip above. He voted for President Obama’s plan to nationalize healthcare and  Obama’s stimulus plan that wasted almost a trillion dollars. Now he is following President Obama down the path of raising taxes during the debt ceiling debate. The Arkansas Times Blog […]

Bill Clinton praises Obama
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Democrats punt the ball on real spending cuts and Boehner doesn’t do much better

The Arkansas Times Blog reported today:

Debt ceiling non-compromise updates

BOEHNER: Screaming Hell no you cant! Ah, the good old days.

  • BOEHNER: Screaming “Hell no you can’t!” Ah, the good old days.

Slate has a running update of the debt ceiling debate in Washington. So far it looks like Speaker of the House John Boehner will have the votes in the House to pass his plan. Sen. Harry Reidhas said the bill will be defeated when considered in the Senate. 

“As soon as the House completes its vote tonight, the Senate will move to take up that bill,” Reid said on the Senate floor. “It will be defeated. No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now.”

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Harry Reid and the Democrats have not lifted a finger to cut federal spending and  the markets know it. I am disappointed in Boehner’s recent attempt to get a bill together. It really does not cut spending much either. Chris Edwards of the Cato Institute takes us through the figures.

Boehner’s New Plan Doesn’t Cut Spending

Posted by Chris Edwards

House Speaker John Boehner has revised his budget plan in response to an unfavorable analysis by the CBO. The CBO has examined Boehner’s new plan and finds that it would cut spending by $917 billion over 10 years. Of the total, only $761 billion would be cuts to programs. The rest of the savings would be from reduced interest costs.

Actually, the revised Boehner plan doesn’t cut spending at all. The chart shows the discretionary spending caps in the new Boehner plan. Spending increases every year—from $1.043 trillion in 2012 to $1,234 trillion in 2021. (These figures exclude the costs of wars in Iraq and Afghanistan).

The “cuts” in the Boehner plan are only cuts from the CBO baseline, which is an assumed path of constantly rising spending. If Congress wanted to, it could require CBO to increase its “baseline” spending by, say, $5 trillion over the next decade. Then Boehner could claim that he was “cutting” spending by $5.9 trillion, even though his plan hadn’t changed. You can see that discretionary “cuts” against baselines don’t mean anything.

The way to make real spending cuts is to abolish programs and agencies. But it’s been eight months since a landslide election that focused on the issue of spending cuts, and the Republican leadership hasn’t proposed any major terminations. 

Senator Tom Coburn told us exactly where he wants to cut spending in this 620-page report. Senator Rand Paul has detailed $500 billion in specific cuts. Where are the spending cut plans of the other fiscal conservatives in Congress?

Members need to step up to the plate and tell us where they would cut the budget. (For help, they can look here). The reality of ongoing $1 trillion deficits is that Congress has to start abolishing programs, privatizing activities, and making other lasting reforms. Promising to reduce spending growth a bit from projected baseline increases won’t do the job.

Brantley wrong again, Harry Reid’s austerity turns out to be fiction

Max Brantley on the Arkansas Times Blog today asserted:

Politico notes that Democratic Sen. Harry Reid’s budget plan cuts spending more than Republican John Boehner’s plan. Boehner’s two-step plan is calculated on providing a highly politicized two-step plan for raising the debt ceiling.

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After a closer look at Harry Reid’s plan, it is evident that his “austerity” turns out to be fiction. I do admit that the Republican plan is not much better, but it is false to claim that the Reid plan cuts more.     “Some Austerity” by Michael D. Tanner of the Cato Institute examines Harry Reid’s plan closely: 

Michael Tanner is a senior fellow at the Cato Institute and coauthor of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on July 27, 2011

This article appeared in the National Review (Online) on July 27, 2011.

“It is clear we must enter an age of austerity,” House minority leader Nancy Pelosi mourned as she endorsed Harry Reid’s proposal for raising the debt ceiling. Austerity? Really?

The Reid plan would theoretically cut spending by $2.7 trillion over ten years. Even if that were true, it would still allow our national debt to increase by some $10 trillion over the next decade. But, of course, the $2.7 trillion figure is mostly fiction. About $1 trillion of the savings would come from the eventual end of the wars in Iraq and Afghanistan, savings that were going to occur anyway. Senator Reid might just as well have added another $1 trillion in savings by not invading Pakistan.

Another $400 billion comes not from cuts but from assuming reduced interest payments. And, of course, there are $40 billion in unspecified “program-integrity savings,” meaning the “waste, fraud, and abuse” that is the last refuge of every phony budget cutter. The plan rejects any changes to Medicare and Social Security, despite the fact that the unfunded liabilities from those two programs could run as high as $110 trillion. But those liabilities generally fall outside the ten-year budget window, so Reid — unlike our children and grandchildren — doesn’t have to worry about them.

[U]nder both the Reid and Boehner plans, actual federal spending will continue to rise.

That leaves about $1.2 trillion in discretionary and defense spending reductions over the next ten years. Let’s put that in perspective. This year the federal government will spend $3.8 trillion. Our deficit is roughly $1.6 trillion. Our national debt exceeds $14.3 trillion, not counting unfunded entitlement liabilities. We are talking about raising the debt ceiling to $16.9 trillion. This month alone the federal government will borrow $134 billion. Reid’s cuts would average roughly $120 billion per year.

This is austerity?

Of course, the House Republican plan as announced by Speaker John Boehner is only marginally more austere.

Boehner proposes a two-stage increase in the debt ceiling, with each stage accompanied by spending cuts. The first $1 trillion debt increase would be accompanied by $1.2 trillion in spending cuts over ten years, pretty much the same as Senator Reid’s plan. The big difference is that instead of Sen. Reid’s phony Iraq and Afghanistan savings, the speaker’s plan would appoint a commission — now there’s an exciting new idea — to propose $1.8 trillion in savings from entitlement programs. To be fair, Senator Reid would also appoint a commission — because that’s what Washington does — to recommend additional deficit reductions, presumably including entitlement changes. The difference is that the Boehner commission has teeth. If Congress rejects its recommendations, the president doesn’t get a second $1.6 trillion hike in the debt ceiling.

But $1.8 trillion in entitlement savings over ten years is still too small to encompass real structural reforms of the type envisioned by Rep. Paul Ryan and others. It is much more likely to simply be more tweaking around the edges, perhaps raising the eligibility age or changing the way the cost-of-living formula is calculated. True, changes such as these will have a real impact out beyond the ten-year budget window, but they fall far short of what is necessary to deal with the shortfalls to come.

Making matters worse, both Reid and Boehner are using the time-honored Washington dodge of “baseline budgeting,” meaning that the proposed cuts are not actual reductions in spending from year to year, but cuts from projected future increases. Thus, under both the Reid and Boehner plans, actual federal spending will continue to rise.

With the clock running out, we are now down to fifth- or sixth-best options. But let’s not pretend that this is austerity.

Beebe does not get it, Lowering federal spending is the real issue, not debt ceiling

Max Brantley wrote on the Arkansas Times Blog this morning:

Is there a better voice for moderation, compromise and legislative solutions than Gov. Mike Beebe? His legislative career contains few policy monuments, but a warehouse full of settlements of pitched legislative battles.

So he’s a good spokesman against the current impasse created in Congress by Republicans like 2nd District U.S. Rep. Tim Griffin intent on holding the U.S. hostage to debilitating budget cuts and absolute protection of the wealthy from even a small increase in the lowest tax burden in half a century. Good for Beebe.

“They are apparently so entrenched that they’re ready to allow this country to default, with all of the economic consequences that that brings with it,” Beebe told reporters. “They’re up to the licklog, and they’d better sit down and figure out how they solve this problem.” 

Beebe said both sides in the debate deserve criticism, but “it sounds to me like it’s the Republican majority in the House that has just drawn a line in the sand.”

Beebe claims it the Republicans who want to default, but is the Democrats who are refusing to cut the budget in a way we can lower this 1.7 trillion deficit for this year!!!!

The huge deficits are the problem. People want the debt ceiling raised, but if the huge deficits  continue then what is the use? The article below shows how our government will have their credit rating devalued UNLESS WE STOP RUNNING UP BIG DEFICTIS EVERY YEAR!!

Dueling Debt Ceiling Proposals vs. the Rating Agencies,” by Alison Acosta Fraser, July 25, 2011 at 10:16 pm:

As the day debt ceiling of reckoning fast approaches, dueling proposals are flurrying around Washington fast and furious.  The latest two are from House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).

Americans, and global financial markets, are watching Washington nervously for a real plan—one that will put the nation squarely on a path to solving our twin crises of spending and debt.  Without strong structural changes in spending, our debt will balloon out of control.

At stake are two issues.  The short-term is obvious – will there be an increase in the debt limit before August 3?  Despite the President and his team practically begging Wall Street to collapse, the markets and the rating agencies believe that there will be an increase and the federal government can safely avoid the chaos of prioritizing its bills in order to service the debt.  Though they warn of the consequences if this doesn’t happen, Standard & Poor’s, has stated that

…the risk of a payment default is small, though increasing…Standard and Poor’s still anticipates that lawmakers will raise the debt ceiling by the end of July to avoid those outcomes.”

The second and even more crucial issue is whether Congress will take necessary action beyond the next year to bring our debt under control over the medium and long-term.  This is where the rating agencies really voice their strong concern.    Again, Standard & Poor’s:

Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

Moody’s response is similar:

The outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.

What the rating agencies are saying is that Congress and the President must pass legislation that immediately begins to rein in deficits and bring our debt down to more acceptable levels, and either keeps it there or continues to drive it down further.

The Boehner proposal would cut $1.2 trillion in discretionary spending.  There is no assurance that these cuts will occur, but let’s assume they do.  Let’s even be generous and assume that they are – in the words of S&P– “enacted and maintained throughout the decade.”  This would cut debt held by the public from its projected $24.9 trillion in 2021 to $23.7 trillion, and when measured against the economy from 104% to 99.4%.  Certainly, this is an improvement, but it is hardly declining from today’s levels, nor would these cuts fundamentally restructure entitlements – the real driver of our deficits in the future.

Step two in the Boehner proposal would reduce deficits by an additional $1.8 trillion over ten years.  Even assuming these cuts all happen, and even assuming they were all spending cuts – a broad assumption given the President’s rhetoric surrounding tax hikes on the wealthy – this would bring publicly held debt down to 92% of GDP. Better, but not that much.  Even throwing in interest savings from deficit reduction would bring this down to 88%.  Again, not much improvement and far worse than today’s debt ratio.

The Reid proposal doesn’t move the ball forward enough either.  At best it falls somewhat short of Boehner’s $3 trillion by $800 billion ($1.2 trillion in discretionary and some confusing savings to be had from winding down operations in Iraq and Afghanistan of $1.0 trillion.)

Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate.  Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs.  And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.

And, as babyboomers flood into Social Security, Medicare and Medicaid swell in tandem, the kinds of changes necessary to rein in spending on these programs will be much more difficult.  Here again, the longer they duck the problem, the more likely a meltdown ahead.

The fact is, the only plan that could likely pass muster with Moody’s and Standard and Poor’s is House passed, Cut, Cap and Balance.  Why?  They tackle spending with firm caps that are enforceable, and before the end of the decade bring spending down to 19.9% of GDP and keep it there.  With the right spending changes it could fall, along with debt levels, from there.  Congress must act now to rein in spending and get our debt under control. It’s time for the dueling to end.

Raising debt ceiling does not solve problem, Without strong structural changes in spending, our debt will balloon out of control

Steve Brawner in his article, “Uncle Sam: Deadbeat dad?” Arkansas News Bureau, July 20, 2011 noted:

That’s no way to get out of debt. Debtors — the government, you, me — don’t stop increasing debt simply by declaring they will stop doing so. The hole will keep getting dug unless hard choices are made about reducing the right expenditures and raising the right taxes. Congress, the president, and, indeed, the American people have not yet made those choices. Until that happens, the government will keep borrowing.

The question is, will it do so responsibly, or as a deadbeat dad?

There is good news. At least we’re talking about the debt instead of ignoring it.

The huge deficits are the problem. People want the debt ceiling raised, but if the huge deficits  continue then what is the use? The article below shows how our government will have their credit rating devalued UNLESS WE STOP RUNNING UP BIG DEFICTIS EVERY YEAR!!

Dueling Debt Ceiling Proposals vs. the Rating Agencies,” by Alison Acosta Fraser, July 25, 2011 at 10:16 pm:

As the day debt ceiling of reckoning fast approaches, dueling proposals are flurrying around Washington fast and furious.  The latest two are from House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).

Americans, and global financial markets, are watching Washington nervously for a real plan—one that will put the nation squarely on a path to solving our twin crises of spending and debt.  Without strong structural changes in spending, our debt will balloon out of control.

At stake are two issues.  The short-term is obvious – will there be an increase in the debt limit before August 3?  Despite the President and his team practically begging Wall Street to collapse, the markets and the rating agencies believe that there will be an increase and the federal government can safely avoid the chaos of prioritizing its bills in order to service the debt.  Though they warn of the consequences if this doesn’t happen, Standard & Poor’s, has stated that

…the risk of a payment default is small, though increasing…Standard and Poor’s still anticipates that lawmakers will raise the debt ceiling by the end of July to avoid those outcomes.”

The second and even more crucial issue is whether Congress will take necessary action beyond the next year to bring our debt under control over the medium and long-term.  This is where the rating agencies really voice their strong concern.    Again, Standard & Poor’s:

Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

Moody’s response is similar:

The outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.

What the rating agencies are saying is that Congress and the President must pass legislation that immediately begins to rein in deficits and bring our debt down to more acceptable levels, and either keeps it there or continues to drive it down further.

The Boehner proposal would cut $1.2 trillion in discretionary spending.  There is no assurance that these cuts will occur, but let’s assume they do.  Let’s even be generous and assume that they are – in the words of S&P– “enacted and maintained throughout the decade.”  This would cut debt held by the public from its projected $24.9 trillion in 2021 to $23.7 trillion, and when measured against the economy from 104% to 99.4%.  Certainly, this is an improvement, but it is hardly declining from today’s levels, nor would these cuts fundamentally restructure entitlements – the real driver of our deficits in the future.

Step two in the Boehner proposal would reduce deficits by an additional $1.8 trillion over ten years.  Even assuming these cuts all happen, and even assuming they were all spending cuts – a broad assumption given the President’s rhetoric surrounding tax hikes on the wealthy – this would bring publicly held debt down to 92% of GDP. Better, but not that much.  Even throwing in interest savings from deficit reduction would bring this down to 88%.  Again, not much improvement and far worse than today’s debt ratio.

The Reid proposal doesn’t move the ball forward enough either.  At best it falls somewhat short of Boehner’s $3 trillion by $800 billion ($1.2 trillion in discretionary and some confusing savings to be had from winding down operations in Iraq and Afghanistan of $1.0 trillion.)

Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

Because spending is set to grow so significantly over the decade, the kind of onesie-twosie approach to cutting spending and increasing the debt limit is simply not adequate.  Net interest payments are projected to more than triple over the next decade. The longer Congress waits to seriously control spending, the more it will have to cut just to offset bourgeoning interest costs.  And if interest rates suddenly rise? Well, we have an even bigger problem on our hands.

And, as babyboomers flood into Social Security, Medicare and Medicaid swell in tandem, the kinds of changes necessary to rein in spending on these programs will be much more difficult.  Here again, the longer they duck the problem, the more likely a meltdown ahead.

The fact is, the only plan that could likely pass muster with Moody’s and Standard and Poor’s is House passed, Cut, Cap and Balance.  Why?  They tackle spending with firm caps that are enforceable, and before the end of the decade bring spending down to 19.9% of GDP and keep it there.  With the right spending changes it could fall, along with debt levels, from there.  Congress must act now to rein in spending and get our debt under control. It’s time for the dueling to end.

Obama’s phony cuts will not help, Cut, cap and balance would help

It appears the USA will become Greece. Even the Republicans are not willing to offer major cuts in spending. Ted Dehaven hits the nail on the head.

Washington is the only town where the circus never leaves. Elephants, donkeys, clowns and a ringmaster residing at 1600 Pennsylvania Avenue — our nation’s capital has it all. And what a show they’re putting on for the American people over raising the debt ceiling for the umpteenth time in recent years.

On one side we have a president whose surrogates warn of economic Armageddon if the debt ceiling isn’t raised, despite the fact that he himself voted against raising the limit in 2006 as the junior senator from Illinois. On the other side are congressional Republicans, tasked with negotiating spending cuts in exchange for raising the debt ceiling — the same guys who happily voted for big-spending legislation when it was their guy in the White House.

In short, the two sides have a credibility gap on debt reduction that makes the Grand Canyon look like a pothole. That begs the question: What sort of deal will they ultimately agree to?

Tad DeHaven is a budget analyst at the Cato Institute and co-editor of Downsizing Government.org.

 

More by Tad DeHaven

The president doesn’t want to have to rehash this debate before the November 2012 election. That means that the debt ceiling will have to be increased by $2 trillion in order to create enough space through the end of next year. House Speaker John Boehner has drawn his line in the sand: Republicans will only agree to increase the debt ceiling if spending is cut by at least as much. Thus, it is generally assumed that the two sides will have to negotiate a deal to cut spending by $2 trillion.

Here’s the problem: The $2 trillion in cuts would be over ten years, or about $200 billion a year. Suddenly, $200 billion in annual spending cuts in exchange for increasing the debt ceiling by $2 trillion through the end of 2012 doesn’t sound so great — especially when one considers that lawmakers have a storied history of changing their minds about promised future cuts. Therefore, it is imperative that any debt ceiling deal contains real spending cuts.

“Real spending cuts” means terminating programs or reducing entitlement benefits — for example, eliminating programs at the Department of Education and repealing the underlying program authorizations, or changing entitlement laws to reduce the benefit levels of programs such as Medicare. Future policymakers could reverse these cuts, but it wouldn’t be easy given that the government’s finances will probably remain in a precarious state.

Unfortunately, there’s little evidence to suggest that real spending cuts are on the table. Were that the case, we would probably be reading countless articles on the consequent suffering of those who would be separated from the federal teat. Instead, there is a growing indication that the cuts will merely be amorphous reductions against the Congressional Budget Office’s spending baseline, which projects spending over the next 10 years based on current law with an adjustment for inflation.

For example, negotiators could agree to freeze discretionary non-security spending for 10 years, which would “save” about $1 trillion compared to the baseline. However, making sure that future policymakers adhered to the freeze would require a strict budget enforcement mechanism. Such mechanisms haven’t held up well in the past for the simple reason that when it comes to spending, the legislative fox is guarding the budgetary henhouse.

Even if we knew for certain that a $2 trillion reduction in spending compared to the baseline would be achieved, again, we’re still looking at a relatively small sum of money. According to the CBO’s latest baseline, the federal government is projected to spend $46 trillion over the next decade. Regardless of whether the federal government proceeds to spend $44 trillion or $46 trillion, the government will remain on an unacceptable spending trajectory.

Unfortunately, the current state of the debt ceiling negotiations indicates that the stakes holding up the big tent in Washington aren’t going to be pulled anytime soon. On the bright side, perhaps this latest spectacle will cause more of the electorate to question why we’ve allowed so much of our collective well-being to be placed in the hands of so few. If so, there’s a chance we can at least get the animals back in their cages before it’s too late.