Archive for October, 2013

The Thrill is Gone

Friday, October 18th, 2013

BB King

The Tea Party came into existence after the election in 2008 because of concerns over the financial meltdown, bailout and stimulus spending, and the subsequent passage of Obamacare.

They scored a major victory in the off year 2010 elections and roared into Washington with what they felt was a mandate to bring debt and deficits down and cut spending. Their promise was that they would not permit the government to borrow more without also forcing the government to spend less.

Then a terrible thing happened. They succeeded.

In fairness they weren’t alone. The economy improved. The deals that they struck with Obama included new taxes. Obamacare and the slow recovery reduced the growth in healthcare costs. Slowing the growth in healthcare costs changed Medicare’s long term financial outlook from critical to manageable. Global economic instability kept US interest rates low, so our costs to finance our current debt are not the drain on the treasury previously predicted. The result is that the deficit has fallen faster than any time since WWII.
deficits-2018

Now, according to the CBO, the deficit has not only fallen, but is stabilizing in the totally manageable 2-3% of GDP range for at least the next decade. What that means is that as long as the economy grows at a faster rate than that, our debt as a percentage of GDP will go down. What THAT means is that we now have some breathing room to deal with the longer term issues of Social Security and Medicare without draconian spending cuts that will impact GDP growth or the radical entitlement restructuring that Republicans championed as recently as the 2012 elections.

Our dramatically improved financial condition eliminated the Tea Party’s primary issue. The sky is no longer falling and the Tea Party is adrift. What’s worse, this lack of direction is becoming painfully obvious to the American voter.

That’s the underlying reason for the suicide attack they recently launched on Obamacare. They felt their influence slipping away and responded with a desperate attempt to rally the troops for one last quixotic charge at their old nemesis.

What they discovered though, is that while many voters shared their concern about debt, far fewer were willing to sign on to shut down the government and defund Obamacare.

Without a shared vision of the future, Speaker Boehner was left trying to cobble together a majority by offering some representatives Obamacare delays, others looser drilling regulations, and still others tax reform borrowed from Paul Ryan’s budget. This was the first we even heard from Paul Ryan since his budget ideas crashed and burned in 2012. The fact that Boehner failed to find common ground within his own party when so much was on the line is testimony to the stark reality that, though the Tea Party remains angry and deeply distrustful of Obama, they don’t know what to do about it.

Voters sense that too because, without the debt boogey man, there is no logic to Tea Party passions or positions. Instead of saying, “we won’t let the government borrow more until it agrees to spend less”, we have, “we won’t let the government borrow more to pay it’s now manageable debt unless it blocks net neutrality, agrees to more drilling, and delays implementation of a debt-reducing law that we don’t like.”

Voters were willing to tolerate Tea Party tactics when it seemed that those tactics would in fact reduce spending. Now that spending has been reduced, voters want the Tea Party to demonstrate that they can come down from the barricades, grow up, behave like adults, and be trusted to run the government in a responsible manner. That was the message voters sent in 2012 and the Tea Party has ignored.

What voters have discovered is that these bad boys may have been fun to date in 2010, but they are not the sort of guy you ever marry. They needed these guys to deal with the scary prospect of out of control spending and ballooning debt. Now that this dirty job is largely done, voters are discovering that people who deny science, math, and economics are just as frightening and can do some real damage when they have power.

This is particularly true of the business community. Here’ a selection of comments from a WSJ article.

Mark Thierer, chairman and CEO of Catamaran Corp., a major pharmacy-benefit manager, said business’s relationship with the GOP “is going to need a retooling,” adding that he would continue to make modest contributions to centrists. “I am not going to give up on the Republican Party—I am going to encourage moderation,” he said.

Bruce Josten, the Chamber of Commerce’s top lobbyist, said he has pushed members of Congress to keep the government open and to understand that flirting with default is “just plain stupid.” To Republicans who tried to use the budget battle to unravel the health care law, he said: “They’ve accomplished nothing.”

John Engler, the former Republican governor of Michigan who now heads the Business Roundtable, a trade group, said the normal legislative process—where bills are debated and passed by each house of Congress, and then married together—encourages compromise. “Today we have a significant number of people who don’t want to compromise because they think they can win something that’s been unwinnable,” he said.

Hal Sirkin, a senior partner with the Boston Consulting Group, said his conversations with executives in a range of industries suggest widespread frustration with the Republican party. The budget battle “is giving them pause to reconsider everything that they believed” about conservative support for business, he said. Some executives have told him they plan to pull back their support for the party “as a message to say, this is not acceptable. You can’t trash the business community,” he added.

David French, top lobbyist at the National Retail Federation, guesses that business lobbies will back somewhere between 12 and 25 business-friendly Republicans in primaries next year. “We don’t like having a very high stakes poker game where we’re dealt out and nobody’s going to win,” he said.

Several business executives said they were counting on establishment GOP leaders, including House Speaker John Boehner of Ohio and House Budget Committee Chairman Paul Ryan of Wisconsin, to move immigration and future fiscal legislation. But those same leaders struggled to steer the House toward a fiscal compromise and struggled to pass another business priority, the farm bill, amid conservative demands to curtail food stamps.

The painful truth is that the voters’ love affair with the Tea Party is over. The tighter the Tea Party tries to hold onto this relationship, the more distant and resentful the American voter will become. It has all of the earmarks of a breakup that is only going to get uglier as the big 2014 dance approaches.

Madness

Wednesday, October 16th, 2013

‘‘Of all the damage to be done politically here, one of the greatest concerns I have is that somehow John Boehner gets compromised,’’ said Sen. Lindsey Graham, R-S.C., a former House member and a Boehner supporter.

Something interesting happened over the past couple of weeks.

First a little bit of background.

Congress failed to pass a budget this year. The result of that failure was predictable. The government ran out of budget authority to continue to operate.

At the same time, the government was also exhausting its ability to borrow money through the sale of bonds in order to pay its bills. This was also predictable based on the rate at which the government was authorized to spend money compared with the rate at which tax revenues were coming in.

While these two things are related, they reflect two VERY different dynamics. In the first case, budget authority reflects the government’s ability to incur NEW debts. In the second case, the credit limit is the government’s ability to borrow money to pay bills that have come due as a result of the exercise of the budget authority that the government already had.

In other words, raising the government credit limit DOES NOT affect the deficit.

Giving the government more budget authority potentially DOES affect the deficit.

Ted Cruz seized on these two financial events as a political opportunity to enhance his standing with conservatives and perhaps position himself for a 2016 presidential run. He did this using the Madman Theory by suggesting that Republicans in the House and Senate were willing to shut down the government AND prevent the government from paying its bills if Senate Republicans and the President didn’t agree to their demands. They then made good on their first promise and shut down the government.

What happened next was also predictable.

Tea Party Republicans rallied around Ted Cruz.

More seasoned politicians questioned whether this plan would work based on past history and the fact that there weren’t even close to enough votes in the Senate to support the plan.

As the reality of the government shutdown spread throughout the country, Ted Cruz and his supporters including Glenn Beck and Fox News tried to convince the country that it was the fault of the President and the Democrats.

Everyone suffered losses in the polls, but Republicans suffered the most with historic new lows in popularity.

“The only reason why the Democrats don’t look terrible is we look even worse,” said Sen. Roy Blunt (R-Mo.), a member of Senate GOP leadership.

As it became obvious that the President and the Democrats were willing to call the Republican’s bluff, House Republicans began distancing themselves from this plan. At last count there were more than enough with Republican support to pass a simple bill to re-open the government and raise the credit limit.

Republican Senator Kelly Ayotte called the tactic of tying Obamacare to the shutdown legislation “an ill-conceived strategy from the beginning, not a winning strategy.”

“It’s very, very serious,” Senator John McCain, Republican of Arizona, warned on Tuesday. “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.”

“We took some bread crumbs and left an entire meal on the table,” said Senator Lindsey Graham, Republican of South Carolina. “This has been a really bad two weeks for the Republican Party.”

“Let’s just say sometimes learning what can’t be accomplished is an important long term thing, and hopefully for some of the members they’ve learned it’s impossible to defund mandatory programs by shutting down the federal government,” Republican Senator Burr said.

The last steps are now playing out.

Boehner failed to craft a bill in the House because the 30 or so Tea Party Republicans were unwilling to support any compromise even though it would further weaken the political position of their party.

Democrats and Republicans will pass a bi-partisan bill in the Senate. Ted Cruz will vote against it, but he won’t filibuster it because he isn’t a Madman, just an opportunistic politician.

That bill will come up for a vote in House and will pass with a comfortable majority comprised of all the Democrats and a large number of Republicans.

This particular bill will set up another potential confrontation in six months, but it will not be a repeat of what we’ve just seen. Those who would threaten to use this strategy again will not have the support to even start.

Finally after five years of political dysfunction, Congress will start working again. That’s because more Republican members are now more afraid of the voters in their districts than they are opposition from Tea Party. Mitch McConnell will be the hero and emerge as the leader of “rational” Republicans. Compromise will become the new badge of honor with the Senate modeling that behavior. Getting things done will become the new measure of success.

It will prove, however, too little and too late. The Tea Party will run candidates in Republican primaries against those they feel betrayed them. It won’t matter whether they win or lose because voters in November are NOT going to re-elect anyone who behaved like a Madman. The Democrats will win the seats they need to take control of the House and retain control of the Senate and government will begin operating again. Unemployment will come down. The economy will grow robustly in the last two years of the Obama administration. Immigration reform will pass. Healthcare will roll out. The tax code will get re-written and address income inequality. We’ll fix Medicare and Social Security and take the first substantive steps to deal with climate change. Deficits will come down and debt as a percentage of GDP will drop to safe manageable levels. As long as the Democrats can avoid shooting themselves in the foot, they will be well positioned to retain their majorities and the White House in 2016 regardless of who Republicans choose.

On the Republican side, we’ll see if the Tea Party retains enough influence to get one of their candidates nominated in 2016. If so, it will be a Democratic landslide. If not, there is a very real possibility that the Tea Party may align with the libertarians or start their own third party. If that happens, it will virtually guarantee a Democratic win and confirm what we have known about the Tea Party from pretty much the beginning. They ARE mad.

Democracy will again begin to work in predictable ways as the Tea Party retreats back to the shadows of fringe politics. History will later attribute this moment in time as the point at which conservative radicalism was defeated by Obama’s firm resolve.

Parsing the Republican Shutdown Message

Friday, October 4th, 2013

Spoiler Alert: This article is written from a progressive point of view. I’m not going to try to defend Republican points of view. Only trying to provide some insight into why these talking points are frustrating for those with a progressive point of view. These Republican talking points are clearly designed to do two things. The first is to provide Republicans and their supporters a defensible position. The second is to irritate those who disagree with them. I realize that going through this exercise validates that Republicans are accomplishing their second goal.

I’m not going to spend any time doing a similar analysis of the Democratic view because in general I’m in agreement with it. The Democratic position will be reflected in my responses to the Republican position.

Republican talking points were provided by Cathy McMorris Rodgers of Washington, who chairs the House Republican Conference, in an NPR interview with Audie Cornish.

CORNISH: Earlier today, I spoke with Republican Congresswoman Cathy McMorris Rodgers of Washington State. She’s chair of the House Republican Conference. I asked her what she thought of Obama’s statement about a clean spending bill and if it had bipartisan support, why shouldn’t it be brought before the House for an up or down vote.

REPRESENTATIVE CATHY MCMORRIS RODGERS: Because it doesn’t solve the problem and it doesn’t address the concerns that are on people’s minds. The only thing that is keeping us in this shutdown is the refusal of the Senate Democrats, the president, to come to the negotiation table.

ME: The Republicans have tried to blame Democrats for their unwillingness to negotiation. They fail, however, to state the terms of the negotiation. The terms are stark. In return for funding the government, the Republicans are asking the Democrats to adopt large planks of the 2012 Republican platform which voters rejected in 2012. So what exactly are the Republicans willing to offer in return for Democrats giving up part of the agenda that voters endorsed in 2012? They are offering to allow the government to continue to operate.

The Democrats are not saying that they won’t negotiate. What they are saying is that they will not negotiate on the terms that the Republican put forward. Obama, Reid, and Pelosi have said that there will be NO negotiations until Republicans change the terms of the negotiation by passing the CR to fund the government. This is an important political point because if the minority party IS able to extort something from the majority party without giving up anything more than allowing the government to operate; this tactic will be used again by both Republicans and Democrats.

CORNISH: And you said it doesn’t solve the problem. What did you mean by that?

RODGERS: Because it doesn’t solve the problem that we hear from people that we represent all across this country and those are the concerns of out-of-control spending, the record deficits, the economy, the fact that this economy continues to be sluggish. It doesn’t address the concerns over healthcare. I would say that the overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.

CORNISH: But repeatedly this week, we’ve seen polls from CNN, the National Journal, Quinnipiac yesterday saying that by a margin of 72 to 22 percent, voters don’t want Congress shutting down the federal government to block implementation of the Affordable Care Act. They don’t want those two things linked.

RODGERS: The Republicans don’t want to shut down the government and what you’ve seen us doing…

CORNISH: No. I didn’t say shut down the government, but linking Affordable Care to the continuing resolution. That’s what people don’t want.

ME: Audie Cornish challenged Rodgers specifically on her claim that an “overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.” Rather than engage on this point, you’ll see that Representative Rodgers pivots away from her deception. Yet this deception is at core of Republican justifications for their actions. They claim that they are the ones representing the majority interests of the American people. While it is true that the country is deeply split on Obamacare, it is also true that a large majority of the country opposes shutting the government down as a tactic to delay or change Obamacare.

RODGERS: We need to get to the table. We need to negotiate and that is what we’ve been asking for from the House is for the Senate to come to the table, for the president to come to the table. The Republicans are working hard every day to open up the government. Yesterday, we voted on the legislation to open up our national parks, as well as fund NIH.

We need to start taking these steps and it’s a way where we can come to the table, start finding some common ground and hopefully it will build so that we can address these larger issues related to spending, as well as address the concerns that people have over this healthcare law. And the only message that we’ve gotten from the president is that he’s not willing to negotiate but that’s not a way forward.

CORNISH: Do you dispute his argument that there are the votes in the party for a clean resolution to pass?

ME: What Representative Rodgers pivots to is her other talking point that the government shutdown could be easily resolved by Democrats if they would just come to the table.

What Republicans are asking for in this request for negotiation is validation of this shutdown tactic. By using this term “come to the table”, she is suggesting that Democrats aren’t willing to negotiate because they don’t want to give anything up. That’s not true. The Democrats are saying that the very act of coming to the table while the government is being held hostage validates this tactic. What are Republicans going to be willing to give up in order to START negotiations which balances what they are asking the Democrats to give up?

The Democratic response has been, if you are sincere about wanting to negotiate, you have to be willing to bring something to the table. That “something” is a short-term CR to operate the government while both sides negotiate. In other words, you don’t get a validation of this tactic for free.

BTW, some might suggest that this shutdown tactic in the House is no different than the filibuster rule that exists in the Senate. That filibuster rule gives the minority an opportunity to force the Senate to come up with 60 Senators in favor of cutting off debate in order to pass a bill rather than the normal 51. The difference is that this shutdown tactic is being applied to a LAW, not a bill. It is attempting repeal or amend a law without coming up with the votes otherwise required to do so under normal legislative procedures.

RODGERS: What I see is that the Republicans are united in the House. We’re united in this effort to get this negotiation done between the House and the Senate and the president and we believe that needs to happen.

CORNISH: So despite those calls from Republicans this week to have that up or down vote on a spending bill, you’re saying you’re united.

ME: Audie Cornish again catches Rep. Rodgers in another misleading statement. There are plenty of reports from Republican Representatives that if a clean CR came up in House today, it would pass. If that’s true, it undermines Ms. Rodgers claim that the only ones standing in the way of ending this government shutdown are Senate Democrats and the President. It also undermines her claim that House Republicans are simply doing the will of the people. Instead Rep. Rodgers pivots away from this discussion and points to the fact that Republicans have passed a whole set of mini-CR’s to fund the parts of the government that are most popular. The point of this plan is an attempt to focus attention away from the pain that the shutdown is causing and instead support the false premise that it is all the fault of the Democrats.

RODGERS: We are united. We have voted on numerous spending bills to keep the government open and that’s going to remain our commitment. We’re going to continue to work every day to get this government open as much as we possibly can.

ME: The Democrats are certainly not blameless in this episode. They baited Republicans into this tactic in order to avoid a much more serious debt default. That said, the Democrats are also accurate when they say that this represents the actions of a minority in the Republican Party and a minority of voters in general. They are also accurate in saying that this particular tactic undermines the normal democratic process and if successful, will change the way that government works going forward.

For those who want to keep track of individual issues in this ongoing media war, Politifact has a good list.

They include:

“The American people support defunding Obamacare and oppose shutting down the government,” said U.S. Sen. Marco Rubio, R-Fla. Mostly False.

“The United States Senate — Democrats and Republicans — acted responsibly by voting to keep our government open,” said President Barack Obama. Mostly False.

“Today, the House of Representatives did what Washington pundits only a few weeks ago said was impossible: a strong bipartisan majority voted to defund Obamacare,” U.S. Rep. Ted Cruz, R-Texas. False.

The shutdown is projected to result in “$10 billion in costs to the economy per week, said U.S. Rep. Debbie Wasserman Schultz, D-Weston, and chair of the Democratic National Committee. Mostly True.

“Obamacare is an entitlement like Medicare and Social Security is, and so the entitlement carries on even under a government shutdown scenario, said U.S. Rep. Paul Ryan, R-Wis., who is also the House budget chairman. Mostly True.

So now we wait while both parties try to get their message out and rally public support. Boehner is the key. If the number of Republicans in the house willing to vote for a clean CR continues to grow, Boehner will be forced to act. Then it just becomes what sort of face saving maneuver he is going to be able to negotiate with the Democrats. One option is going to be to blame this whole thing on Ted Cruz. We’ll see how that goes.

Madman Theory

Tuesday, October 1st, 2013

This is actually the name for a foreign policy that Nixon tried to use to bring the Viet Nam war to an end.

In his case, the setup was that Nixon was obsessed about communism and also under great pressure to end the war. As a result, the threat was that he might simply lose patience and nuke North Vietnam back to the Stone Age if the North Vietnamese didn’t come to the negotiating table.

The same strategy is in play right now in the showdown over defunding Obamacare.

Republicans have admitted that this is a political strategy.

Even though they failed to gain the White House or a majority in the Senate in the last election, the fact that they did retain a majority in the House (they feel) entitles them to use whatever means are available to them to advance the agenda of the people who elected them.

That’s where the Madman enters the room. Republicans are willing to shut down the government in order to get some portion of their agenda passed by the Democratic Senate majority and signed by the Democrat in the White House.

“People have to recognize there’s never any compromise until the stakes are high,” said Representative Dana Rohrabacher, Republican of California. “In our society, that’s the nature of democratic government.”

The compromise in this case is that the Republicans agree to allow the government to continue to operate in return for significant legislative concessions by the Democrats.

AND they don’t seem to care whether or not it harms the economy.

“Economists, what have they been doing? They make all sorts of predictions,” said Representative John Fleming, Republican of Louisiana. “Many times they’re wrong, so I don’t think we should run government based on economists’ predictions.”

Nixon faced this same problem in Viet Nam. If your opponent is afraid of dying, and they believe that you are crazy, they will likely negotiate. If your opponent doesn’t care about dying, or at least is willing to call your bluff, you are forced to do something crazy or lose future bargaining power. That crazy act, in Nixon’s case, was invading Cambodia. The Republican crazy act is damaging the US economy in order to bring about legislative change that they couldn’t achieve through the ballot box.

The problem with this Republican strategy is that they are INDEED crazy, but not for the reasons that you might think.

They are crazy because they allowed the Democrats to BAIT them into picking a fight over the continuing operation of the government rather than the government default.

Government default is the BIG DEAL. It is one that Obama might have been willing to give up a year of Obamacare to prevent.

The Democrats, however, don’t care if the Republicans shut down the government. In fact, they prefer it to the other alternatives on the table.

The reason is that the country will survive a government shutdown, but the Republicans won’t.

By the time the REAL battle comes up, which is the debt ceiling, the country will have dealt with several weeks of the government being shut down, will be convinced the Republicans are indeed Madmen, and will demand an end to the lunacy. That end will be passing the CR to get the government running again AND passing a resolution to raise the debt ceiling. The voting public will NOT be willing to listen to Republicans talking about debt, or future generations, or irresponsible Democrats. They will have lost their patience with Republican tactics and it will all be over but the shouting. That’s because the voting public will vote in sufficient numbers in 2014 to make sure this doesn’t happen again.

So in essence, the Republican Madman Strategy was to put a gun to their own head and threaten to pull the trigger. Democrats jumped up and yelled, “Stop. Please don’t do that. Give the gun to me.” Once they were sure the gun was loaded, they handed it back to the Republicans and said, “I believe this is yours.” Last night the Republicans pulled the trigger.