Friday, July 29, 2011

Friday Morning Debt Battle Update

Well, well, well...are conservatives in the House causing such a ruckus that they're finally getting through to the GOP leadership? Maybe so...

More details from Jennifer Rubin here:

A House aide just e-mailed me: “Buckets of crazy.” That’s as good an explanation as any as to why Speaker of the House John Boehner (R-Ohio) won’t be able to hold a vote tonight on his debt-ceiling bill. The burn-the-building-down set is weakening, but the speaker is still short on votes.

A more optimistic take came from a senior House leadership advisor, who told me that some key members had asked to sleep on it. There is sometimes a point in a negotiation (which is what this is) when it is counterproductive to push on. As the advisor explained: “The speaker was not going to force a midnight vote. We’re not going to do that on something this big.”


There are a couple of benefits to drawing this out (although I have no indication whatsover from conversations with half a dozen House Republican offices this evening that the delay is attributable to anything other than difficulty in rounding up the votes). First, Boehner will certainly have a strong argument that nothing OTHER than this bill can get through the House before August 2. And second, as time slips away, there is less and less time for the Senate to come up with an alternative that can pass both houses by August 2.

The smart money is still on the eventual passage of the Boehner bill. But it’s not going to happen without extracting every last drop of patience from the American people, not to mention the media covering one of the most agonizing votes in recent memory.

I find this update later to be veeeeery interesting:

A House aide who was present for much of the wrangling tonight said “we were a number of votes short.” Five? Twenty? “Somewhere in there,” he answered.

He said the opponents were “a mix of freshmen and others.” In particular, South Carolina representatives were “a problem.” He spoke derisively of Sen. Jim DeMint (R-S.C.), who has been working with the House delegation: “These guys now have a new leader -- this guy Jim.”

Jim DeMint, if you don't know, is one of the staunchest, most steadfast conservatives in Washington, and has shown over and over again that he will stand for his principles no matter what the opposition says or does. If he is working with a bunch of 'freshmen' -- many of whom were elected precisely because they pledged to get in there and shake up Washington while cutting back the size of government -- this is good, good news to me.

Still, much remains to be done, and that includes you. Have you called yet? If not, today may be your last chance. If you have, call again. Trust me, the more you do it, the easier it gets.

Here are a few points to consider on the subject:

(1) House Republicans are walking into an enormous trap. The Boehner plan is sufficiently similar to the Reid plan, in virtually all important respects, that its passage will lead to the following compromise:

  • The adoption of Boehner’s ten years of sham cuts,which will be ephemeral beyond fiscal year 2012. Even John McCain said tonight that Gramm-Rudman (whose “sequestration” provisions are the enforcement mechanism for Boehner) became worthless because Congress just started declaring emergencies.
  • A commission which will report out large tax increases which cannot be filibustered. The “deciders” on the commission will be six Pelosi/Reid people and one squish Republican, who will be corralled into submission by:
  • A “trigger” which will make the pressure currently being applied to Congress seem small by comparison.

(2) Unless you can guarantee that it will go to the states, a guarantee of a losing vote on the balanced budget amendment is worthless.

(3) Dick Morris is correct that if Tuesday comes and goes, with only a shut-down of unessential government agencies, the American people will see Obama’s fear-mongering for what it is.

(4) Furthermore, as 2008 taught us, the GOP can sell all of its principles and spend the better part of a trillion dollars and the stock market will still continue to fall –- particularly since Standard & Poor’s is about to downgrade the U.S. for being too timid in debt reduction.

(5) Finally, Obama is currently reeling from his poor stewardship. For Republicans to capitulate and give him a “compromise” will reset him on a glide path to reelection. The liberal media is currently “spinning” that Republicans have won, but, after they lose, their surrender will be reported for what it was.

I heard a radio interview this afternoon that explained another plan that I really like. It's called the Mack Penny plan, proposed by Rep. Connie Mack out of Florida. Here's the nutshell:

Presently the Mack Penny plan enjoys the support of over 40 co-sponsors in the U.S House; the backing of the Republican Study Committee’s 103 Members, three key U.S. Senators, and two grassroots organizations .

The Penny Plan balances the budget by:

· Cutting total federal spending by one percent each year for six consecutive years,

· Setting an overall spending cap of 18 percent of gross domestic product in 2018, and

· Reducing overall spending by $7.5 trillion over 10 years.

If Congress and the President are unable to make the necessary cuts, the bill’s fail-safe triggers automatic, across-the-board cuts to ensure the one percent reductions are achieved.

It's hard to get much more simple than that. And it plays nicely with common sense. Just think about it - how much does it hurt to cut your expenses by 1% (the name of the plan comes from the idea of cutting one penny from every dollar)? Not much. If you make $50k a year, this would mean spending $500 less, or roughly $42 a month. If you were facing bankruptcy and the repossession of your home and everything you owned, would you think about cutting back from your 1000-channel cable package to basic cable with 100 stations to save that money? Would you consider cutting the minutes on your cell phone plan to save that money? Would you consider eating out one or two less meals a month to save that money? Sure, you would. In the fact of impending financial disaster, it's an easy sacrifice to make.

Well, America is staring into the face of a monstrous financial disaster, and cutting one percent of its spending every year should be easy to do. I like Cut, Cap, and Balance, but I like the Penny plan, too. Might be worth mentioning to your Rep when you call.

Now let's look at the other side of the house. There's nothing responsible, bipartisan, or leader-like about the Democrats right now. On top of the absolute refusal to do anything to resolve this financial mess we're in (other than making it worse), the Dems are doing everything they can to ratchet up the hysteria. The top Democrat in the House, Nancy Pelosi, laid this wonderful gem yesterday:
Nancy Pelosi on today’s vote: “What we’re trying to do is save the world from the Republican budget. We’re trying to save life on this planet as we know it today.”
Really? That's what you have to contribute here? Thanks for being so, so helpful.

But it doesn't get much better from the top Dem himself. It appears that if a deal isn't struck, Obama is considering invoking the 14th Amendment to deal with it on his own. This will be a legal and political maelstrom, and Obama's decisiveness is something that has been rarely seen over the past two years, so this is obviously something they'd rather avoid. It should also be noted that this kind of dangerous unilateral action is what's so undesirable about a monarchy, and the kind of thing that should never happen in a representative republic like America. But, they're using the threat of this action as a club to beat down Republican opposition:
If there is no clear path out of this morass by tomorrow, sources say that administration officials will likely brief the public on how the Treasury Department will try to handle the bills Congress mandates that the government pay given a situation where Congress has not given them a way to do so.

Look for that briefing to come no earlier than Friday after the markets close at 4 p.m. ET, sources say.

Officials are most concerned about paying the interest on the existing debt, since failure to do so would result in default and almost certain immediate market panic, as well as questions about how Treasury would be able to roll over a pre-existing $87 billion in debt that comes due next week.

After that — a list of priorities, not all of which that can be met. Social Security checks? Medicare? Government workers? Pentagon contractors? Troops’ salaries? The FBI?

Why the fear-mongering? Do we really believe that if push came to shove Obama would release hardcore criminals from prison? Would he really cut off Medicare or Social Security checks? Not a chance. I could see him hammering the military, which would be shameful, but any one of these things is going to cause such a massive blowback from the American public that I'm not sure he'd be able to get away with pointing the finger at the Republicans. Yeah, he'll argue that they forced him into it, but the reality is that the question of which checks get paid first rests on him alone. If someone gets screwed, it happens because Obama doesn't think they're important enough to be at the top of the list.

Here are a few more things to keep in mind.

Why August 2nd? What's so special about that date that a deal has to be struck by then? The answer is: nothing. The only significance to that date is that it's when Congress usually goes home for the August recess. That's right, Obama and the Democrats have established August 2nd as some mythical drop-dead date to avert a crisis...but in reality, the date of a theoretical default is in September. The only thing they're trying to avoid by using August 2nd is having to put up with angry constituents throughout the month of August - they had enough when Obamacare was the hot topic, and they don't want to deal with that again.

We're going to be downgraded anyway. I hate to break it to you, but it's pretty much a foregone conclusion. The big debate right now over the debt limit really isn't even the key point. The key point is the spending. Moody's and Standard&Poor's are saying that even if the Boehner bill passes, it will really have no effect on the decision to downgrade us because it doesn't fundamentally change how much spending is going on. They're saying that immediate spending cuts of $4 trillion minimum are necessary for them to consider keeping America at a 'AAA' rating. Like I said yesterday, at this point Congress is just rearranging deck chairs on the Titanic.

Baseline budgeting. Even if the Boehner plan goes through, and even if these promised $1 trillion in cuts occur over the next decade (and it's a virtual certainty that they won't), the bloated U.S. government will be trillions of dollars bigger anyway. The dirty little secret is called baseline budgeting, and it's how Congress has operated things for decades. The core idea is that there is an automatic increase of 7.5% in operating costs from year to year. So, this year the budget was something like $3.7 trillion. Even if Congress doesn't increase spending at all, next year's budget will be in the neighborhood of $3.9 trillion. The year after that it will be roughly $4.3 trillion. The year after that it will be $4.6 trillion. Get the picture? It's an automatic increase. All of these 'cuts' that are being debated in the Boehner plan are not actually cuts - they're reductions in the amount of increase. So, instead of the 7.5% automatic annual increase, it might be only a 7% annual increase. Or whatever, I don't know the actual number. The point is that government will still grow.

The Penny plan I mentioned above would be an actual cut. If this year's budget is $3.7 trillion, next year's would be $3.6 trillion, and so on. This is how a tiny 1% cut each year will save us $7.5 trillion and bring the budget into complete balance in about just years.

Finally, let's remember who put us in this position. Yeah, it took both parties decades to build the foundation of our massive debt and reckless spending habits. But, starting with the Democrat-controlled Congress in 2007, spending has skyrocketed out of control, and Obama's spending binge starting in 2009 has thrown fuel on the fire. Recall the deficit picture over the past decade or so:

The big deficits that threw Dems into hissy fits back when George W. Bush was President were on the order of $200-300 billion. Now Obama and the Dems have racked up $1.6 trillion deficits for the indefinite future. In terms of the overall debt, look at the indisputable historical facts:

Date Dollar Amount
09/30/2010 13,561,623,030,891.79
09/30/2009 11,909,829,003,511.75
09/30/2008 10,024,724,896,912.49
09/30/2007 9,007,653,372,262.48
09/30/2006 8,506,973,899,215.23
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86

It took 235 years to rack up $8 trillion in debt. Since 2007 -- just four years -- Democrats have almost doubled that amount. Can you imagine what this chart will look like after another four years of Obama running the show?

America can't afford Democrat leadership any longer. America also can't afford Republican squishiness like what we're seeing from Boehner and the other compromisers. It's absolutely critical that we make a distinct course change NOW before it's too late.

That changes starts with killing every plan currently on the table. Congress needs to pass Cut, Cap, and Balance or the Penny plan, but they won't do it without immense pressure from American citizens who understand what this country faces better than our elected representatives.



"But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years." -- Thomas Jefferson, 1789

No comments:

Post a Comment