Wednesday, July 20, 2011

Closing In On A Deal?

We're getting there. The big news yesterday was the House's passage of the so-called 'Cut, Cap, and Balance' act. This has been one of the only serious proposals in recent months to reduce spending and bring our raging debt under control. Here's the gist:

Defying a veto threat, the Republican-controlled House passed legislation Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened government default.

The 234-190 vote marked the power of deeply conservative first-term Republicans, and stood in contrast to stirrings at the White House and in the Senate on a renewed effort at bipartisanship to solve the looming debt crisis.

Hot Air sums it up this way:
Republicans have now passed their second bill this session that attempts to address the exploding deficits and the debt crisis, the first being Paul Ryan’s budget plan in April. Meanwhile, Democrats in the Senate haven’t bothered to pass any budget resolution in over 800 days, and the White House still refuses to offer any specific ideas.
Now the issue is tossed over to the Democrat-led Senate.

Once again, it will be interesting to see if the Dems stick to their strategy of proposing nothing while ridiculing what the GOP passes. As the GOP does more and more real work toward correcting the problems this country faces, it's going to be tougher and tougher for Dems to face re-election next year with this kind of thing being their only selling point. It won't take more than a couple Dems to defect in the Senate to force Obama to either sign off or issue a veto...thus, the pressure on the White House would skyrocket like Obama's gas prices.

So let's look closer at the situation in the Senate. A group of Senators -- the 'Gang of Six' -- has proposed what they're calling a compromise bill that isn't quite what it purports to be:

As a rule of thumb, any idea coming from a gang is not a good one. This holds true in the real world; it is certainly true in the gangster world of the U.S. Senate. Members of the media are agog with glee over the supposed Gang of Six deal to cut the deficit by $3.7 trillion over 10 years. There is much hype over the fact that more than half the Senate attended the unveiling of the proposal, with many Republicans – including those in leadership – offering robust praise for it. Congressman Frank Wolf (R-VA) is calling for a vote on the plan, even though most of the details don’t exist. ...

...the budget plan is devoid of a roadmap to achieve the alleged $2.7 trillion in cuts and $1 trillion in revenue gains. Furthermore, the proposal relies upon the passage of some conservative reforms, which if seriously drafted, will never be supported by a majority of the Democrat Caucus, including Gang members like Dick Durbin.

While this appears to be a typical Republican fold -- compromising where none is necessary, inevitably benefiting just the Dems rather than both sides -- it's still in the early stages of development. As I understand it, the fundamental problem with this plan is that it promises tax increases now in exchange for unspecified spending cuts later (many details can be found here, if you're interested). Yeah, right. Pop quiz: name one Congress that has ever actually cut spending. I'm not even going to bother researching that question.

House economics rock star Paul Ryan summed up the Gang's plan like this:
“The proposal put forward by a group of seven senators today is a useful addition to the budget debate. I share the frustration that these senators appear to have with the U.S. Senate’s inability to pass a budget in over 800 days. While the proposal lacks detail in many respects, it includes some reforms that could help put our country on a sounder fiscal footing. Most importantly, it reflects a bipartisan recognition that lower tax rates are essential to help spur economic growth. Unfortunately, it increases revenues while failing to seriously address exploding federal spending on health care, which is the primary driver of our debt. There are also serious concerns that the proposal’s substance on spending falls far short of what is needed to achieve the savings it claims. Nevertheless, this effort serves as a sign that we can work together on a bipartisan basis to make a serious down payment now to avert the debt-fueled economic crisis before us.”

Once again, I would argue that the necessity of the GOP to play nice and be 'bipartisan' is seriously non-existent, but I suppose they have to at least say things like this.

Mark Steyn is similarly unimpressed:

If you take the Gang’s figure of half-a-trillion dollars in immediate “aggressive deficit reduction” seriously, that represents about what the U.S. government borrows every four months. What’s “aggressive” about that? And what’s immediate about it? It’s all unspecified “discretionary spending caps” and “process reforms” that will collapse like souffl├ęs ten minutes after the signing ceremony. Obviously it’s appealing to Democrats: It accepts their view that 25 percent of GDP should be the new baseline for national (“federal” no longer seems quite the word) government spending. But what’s in it for Republicans?

We are sending a consistent message to the world that the political structures of the United States do not allow for meaningful course correction. That does far more damage to the “full faith and credit” of America than failing to hike the debt ceiling.

And that is really the root of the issue. This is a typical political ploy to kick the ball down the road so someone else has to make the tough decisions later. Problem is, we don't have time for that now. America's debt problem must be addressed now, or we risk losing the world's full confidence in our ability to service that debt and get our fiscal house in order. If that happens, the international community will flee from the dollar, which will collapse entirely, and our economy will evaporate.

Raising the debt ceiling (which is what the current debate is centered on) isn't a crisis in and of itself, but rather an indicator of how serious America's leaders are about dealing with our debt. If we raise the debt ceiling while simultaneously implementing major spending cuts, the world will be reassured that we're on the right track, and serious about getting things under control. If we raise the debt limit yet again without commensurate reductions in spending -- or, even worse, alongside tax increases -- it will signal that the reckless spending binge the Dems have ridden for the past two years is going to continue, and other nations will be forced to examine whether or not they trust America to keep the house of cards standing much longer.

The action item for us, then, is to call our Senators and strongly encourage them to vote in favor of the House's Cut, Cap, and Balance plan. If we can apply enough pressure to a few key Senators who will be vulnerable in 2012 -- one of whom is Missouri's Claire McCaskill -- we might just be able to force this thing onto Obama's desk. While it is unlikely that a veto would be overridden, it would be a devastating blow to his re-election campaign if he were the single obstacle to real economic restructuring that would address this nation's fiscal crisis.

It's a lose-lose for him, which means it's a win-win for America. Pick up the phone and start sending those emails.

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