Republicans

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Democratic Results from New Hampshire

According to this new report in Politico.com, President Obama got 49,480 votes in the Democratic primary and 282 votes in the Republican primary.  Tim Mak notes, however, that

The nearly 300 votes are not enough to award Obama any delegates to the Republican convention in Tampa, Fla.

Republicans also got votes in the Democratic primary.

The Republican Congressman [Ron Paul] from Texas led all write-ins in the Democratic primary with 2,273, followed by former Massachusetts Gov. Mitt Romney at 1,808 and and former Utah Gov. Jon Huntsman at 1,228
I think this just goes to show how strange the voting can get in New Hampshire.  The votes for Huntsman and Paul, I can understand but Dems voting for Mitt not so much.
 
Glenn Thrush later updated this and explained the Romney vote
Ron Paul got 2,273 Democratic write-ins but, as one GOP operative pointed out, those might have been anti-war or anti-Wall Street protest votes. The Romney Democrats likely switched for other reasons: The economy, the deficit, frustration with big government, etc.

A Dem official pushed back – and said the crossover tally is low to average. In 1996, for instance, Pat Buchanan received 3,347 votes in the Democratic primary, and Lamar Alexander, Steve Forbes, and Bob Dole were all over 1,250.

“If anything,” the Democrat says, “Romney should be concerned he didn’t receive more write-ins on the Democratic ballot.”

There are caveats, of course. Republicans were actively recruiting Democrats for weeks up to the primary and pushing hard to whip up a Democrats-for-Mitt storyline.

Mitt “Mittens” Willard Romney

No one is claiming the campaign will be easy for the President.

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First results from New Hampshire

As expected, Mitt Romney has won the New Hampshire primary.  The question that remains at 9 pm is what his margin will be.  Right now he has about 37% of the vote with 34% of the vote counted.  Interestingly it is Ron Paul, who will not be the Republican nominee, who is second.  Jon Huntsman is third.

Two interesting facts I ran across today.

First, Glenn Kessler the Washington Post fact checker on Mitt Romney’s job creation record gave his claim of 100,000 jobs three out of four Pinocchio’s.

By all accounts, Romney was a highly successful venture capitalist. While running Bain Capital, he helped pick some real winners, earning his investors substantial returns. High finance is a difficult subject to convey in a sound bite, so Romney evidently has chosen to focus on job creation. 

This is a mistake, because it overstates the purposes of Bain’s investments and has now led Romney into a factually challenging cul-de-sac.

Romney never could have raised money from investors if the prospectus seeking $1-million investments from the super wealthy had said it would focus on creating jobs. Instead, it said: “The objective of the fund is to achieve an annual rate of return on invested capital in excess of the returns generated by conventional investments in the public equity market and the private equity market.”

 Indeed, the prospectus never mentions “jobs,” “job,” or “employees.”

…

When Romney made a run for the governorship, the Boston Globe reported in 2002 that he had not been involved in the details of many deals toward the end of his Bain experience: “These days, Romney can say he hasn’t inked a deal in many years. Even during the end of his tenure at Bain, from 1994 to 1999, he played the role of CEO and rainmaker rather than delving into the details of buyouts.”

 Interestingly, when Romney ran for the Senate in 1994, his campaign only claimed he had created 10,000 jobs. In one ad, a narrator said: “Mitt Romney has spent his life building more than 20 businesses and helping to create more than 10,000 jobs. So when it comes to creating jobs, he’s not just talk. He’s done it.”

Now, apparently, those 10,000 jobs have increased tenfold, apparently in part because of Bain investments in which Romney had at best a tangential role.

The Pinocchio Test

 Romney certainly has a good story to tell about knowing how to manage a business, spotting opportunities and understanding high finance. But if he is to continue to make claims about job creation, the Romney campaign needs to provide a real accounting of how many jobs were gained or lost through Bain Capital investments while the firm managed these companies — and while Romney was chief executive. Any jobs counted after either of those data points simply do not pass the laugh test.

Three Pinocchios

 

 

With Gingrich and Perry ready to pounce on Romney in South Carolina, I don’t think it is over.   I think the vetting of Willard is just beginning.

The seond item comes from Nate Silver who is live blogging for the New York Times at 8:57

Turnout in G.O.P. Primary Tracking Well Below 2008 Pace

Although the polls made pretty good predictions of the election outcome tonight, forecasting turnout is harder. So far it looks like rumors of a record Republican turnout in New Hampshire were greatly exaggerated.

With 85 of 301 precincts reporting, 52,191 voters have cast a ballot in the Republican primary so far. That projects to about 185,000 votes statewide, as compared with about 240,000 votes in the Republican primary in 2008.

The drop-off in turnout looks worse for Republicans since a higher fraction of voters – about half this year, compared to 37 percent in 2008 – are independents. That means that turnout among registered Republicans could alone be off by nearly 40 percent from 2008.

More on the campaign tomorrow.

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Did Obama win Iowa?

Mitt Romney won the Republican Caucus by 8 votes over Rick Santorum.  They both got just under 25% of the vote followed closely by Ron Paul.  You can read this as 75% of the vote went to other Republicans with the two closest rivals representing extreme positions.  Two interesting comments I heard on the MSNBC coverage last night.  First, former Republican Congressman J.C. Watts noted that he thinks Mitt’s 25% is about what his support is.  Not clear if he was talking about Iowa or generally amoung Republicans.  Second, Rev. Al Sharpton who hoped that Santorum and/or Paul stayed in the race for a while so that Mitt had to keep moving right to get the nomination.

(Daniel Acker for The New York Times)

Robert Creamer writes in the Huffington Post today that the Iowa was bad news for the Republican establishment which just wants to nominate Mitt and be done with it.

To maximize their odds of reclaiming their hold on the White House, the Republican establishment believes they need two things:

• To nominate Mitt Romney;
• To effectively end the Republican nominating process as soon as possible.

Last night’s results from Iowa lower the odds they will get either.

In fact, what we saw in Iowa last night was the Republican base gagging on the presidential candidate the Republican establishment is trying desperately to cram down their throats.

The problem is that Mitt is not good at displaying human qualities.  Brian McGrory wrote in his column in today’s Boston Globe

For not foreseeing his rise from the State House to, potentially, the White House, I shouldn’t, in truth, be so hard on myself. Romney has made a habit of getting in his own way.

First, there was the small matter of that gubernatorial campaign. His very best day was the one right before he declared. On the stump, he was, in a word, terrible – hollow and plastic in speeches and mannerisms. “How are you?’’ he would repeatedly ask, never waiting for a response.

There was one October campaign swing through Boston’s North End with Rudy Giuliani when a burly laborer in a crowded Mike’s Pastry called out “Let me buy you guys a cannoli.’’ Brilliant, I thought. The cameras would capture Romney with ricotta cheese on his strong chin, a man of the people. Then Romney called back, “No thanks, got to run,’’ as he headed for the door. He said it with that nervous smile, which was still frozen on his face when Giuliani said to the guy “Let me buy you the cannoli!’’ The place erupted in cheers.

Mitt and the establishment have other problems.  Like the fact that Rick Santorum was able to peak at the right time and become the anti-Mitt.  Newt Gingrich and Ron Paul will also continue in the race.

All of which leads me to ask whether Obama actually won Iowa.  He had some 25000 people show up to watch a live message, signed up over 7000 new volunteers and has 8 field offices open in Iowa.  He had almost as many people at meaningless caucuses as Romney, Santorum and Paul each got as vote totals.  Sure maybe people aren’t as excited as in 2008 and everyone – even supporters  can name at least one thing he did they don’t like, but I’m with Rev. Al:  Let this go on for a while and let Mitt move to the right.  Then we shall see what the general election will bring.  Even better the Republicans could nominate Santorum.  Howard Fineman said in the Huffington Post late last night: 

The final Iowa results aren’t in but we already know one big winner: President Barack Obama.

The dismal, nasty campaign here was not good for the Republican Party or the country. There was precious little debate on anything other than who literally was Holier than Thou; the dollars spent on attack ads were, vote for vote, enormous. One GOP top finisher is unpopular with the base; another is too far out of the mainstream to be nominated, let alone elected; the third lost his last Senate race, in Pennsylvania, by 17 points, and is far to the right of the country on social issues.

All of which is good news for a president with a 40 percent job approval rating and a desperate need for a weak opponent next November.

The winner in Iowa.

I’ll leave Richard Viguerie with the last word.  In an interview today with the New York Times, Viguerie said

The conservative direct mail pioneer and activist Richard Viguerie predicted that the pack would continue to seek out a more ideologically pure standard-bearer this year than it did in accepting Senator John McCain as the Republican nominee in 2008.

“Romney has just seemed to have gone out of his way to try to get this nomination without giving conservatives anything, and that’s troubling to a lot of conservatives,” he said. “I don’t think they’re going to go away quietly into that long dark nominating fight — I‘d be surprised if the conservatives didn’t mount a serious effort to derail Romney.”

On to New Hampshire!

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The afternoon before Iowa

Yesterday we were out in South Hadley having our traditional family Japanese New Year brunch when talk turned to the 2012 election season and to Nate Silver’s piece in the Sunday Review section of the New York Times.  Some very interesting stuff there.

For example:  Iowa is 91% white (the entire country is 74% white).  You knew that, right?  Did you know there are so few Jewish people, they don’t register as a percentage?  But, except for race and the fact the Jews did not migrate to Iowa, the state is a fairly good mirror.  Oh, except for turnout.  Iowa wins 67 to 57.   Iowa and New Hampshire have each picked 10 of the eventual nominees.  Iowa does better with Democrats picking 6 while NH has picked 5 from each party.  They have each picked the President correctly 3 times with Iowa having the most recent pick, President Obama.  The track record is not particularly spectacular, but all the candidates  are flocking there and political junkies are watching polls eagerly.

John Nichols writes in the Nation that the Republican candidates and their PACs will have spent upwards of $200 per vote when you count only television advertising.  Kinda of nuts.

Seriously? All this for an glorified straw poll?

That’s the problem with the caucus system, which operates on an only slightly better model on the Democratic side.

Huge amounts of money are spent to influence a very small percentage of the electorate—less than 20 percent of Iowans who are likely to vote Republican in November will participate in Tuesday’s caucuses, and most of them will leave after the balloting finishes. An even smaller number of Iowans will begin the process of choosing representatives to county conventions, who in turn elect delegates to district and state conventions at which Iowa’s national delegates are actually selected.

As of lunch time today, Real Clear Politics shows  Romney edging out Paul 22.8% to 21.5%.  Romney is not even projected to get as many votes as he did in 2008- 25.2%.  Nate Silver has the race a little closer with Romney edging out Paul 21.8 to 21.  It is all in how you weight the various polls.  Throw in an estimated 41% undecided and Iowa is anyone’s game.  I think it is a measure of the field that Republican’s can’t decide who to support.  Poor Jon Huntsman.  We all agreed yesterday that is the only sensible one in the bunch so he has no chance.  Probably lucky for Obama.

Rosie Moser, an undecided voter thinking of endorsing Michelle Bachmann, listened to former U.S. Speaker of the House Newt Gingrich, in Independence, Iowa, on Monday.

(Daniel Acker for The New York Times)

Speaking of the President. he has been organizing in Iowa for more than a year and has more field offices that any of the Republicans.  It is will be interesting to see what the Democratic turn out is tomorrow night for a caucus that is already decided.  The link is to an interesting video on the Obama efforts from the New York Times

I think the polls are all done and we only need to wait for the caucus goers to speak.

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Newt the Unprepared

So.  Newt didn’t read the rules carefully enough and despite having a Republican Governor, Attorney General, Secretary of the Commonwealth, and a legislature, he will not be on the Republican primary ballot in Virginia.  It was just the other day that he left campaigning to go gather signatures in his adopted state

Virginia is probably the most difficult state on which to get on a primary ballot.  Signatures have to come from all 11 Congressional Districts, at least 400 from each.  Those who gather the signatures must be registered to vote in Virginia.  There must be at signatures from at least 10,000 registered voters.  In other words, you have to have a ground organization to succeed.  I believe that Newt actually paid people per signature and still didn’t make it. 

The Virginia Republican primary will now be between Mitt Rommey and Ron Paul.  50 delegates elected on March 6.  Gingrich was leading the polls, but who knows where his support will go now.  And what will the fallout be for the rest of states on Super Tuesday.  Maybe he can lose Virginia and still get delegates elsewhere.  Or maybe voters will see the disorganization and look elsewhere.

But on Newt would announce he will run a write in campaign before reading Virginia election law which prohibits write-ins in primaries.  The reaction of his campaign:  This is Pearl Harbor.  Wrong, Newt.   No one will die because you couldn’t read the rules and get on the Virginia ballot. 

This from the Governor of Virginia quoted in the Richmond Times-Dispatch

Virginia’s rules regarding qualifications for the ballot in statewide elections are clear, said Tucker Martin, a spokesman for Gov. Bob McDonnell.

“Prior candidates for president, governor and senator, from both parties, have needed to meet the same requirements as are in place for this election. It is unfortunate that a number of candidates did not submit enough verified signatures to qualify for the March primary, but the system has been in place for a long time and the ballot requirements well-known,” he said.

“The governor, however, is certainly disappointed that Virginia will not have a more competitive primary,” Martin said. “He would have preferred to see more candidates make the ballot.”

Gingrich, McDonnell

Credit: MARK GORMUS/TIMES-DISPATCH

 

So what are the options. Getting the Virginia Legislature to allow all the candidates on the ballot?  Not exactly fair to Romney and Paul.  Gingrich going to court?  I would say his changes aren’t good given that even the Republican Governor says the rules are clear and well known.  And they have been in place since the 1970’s. 

I think that Newt along with Perry, Bachmann, Huntsman, and Santorum are just out of luck. 

 
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Accept the tax increase and defeat the Republicans

I was eating my lunch at my desk today as I often do (I know a bad habit) and the Republicans were voting down the Senate bill in several complicated procedural moves I don’t pretend to understand.  I do know the bottom line:  Increase in payroll taxes, no unemployment extension, and funny things happen to reimbursements to doctors for Medicare.  Anyway, I posted on the New York Times comment section on the story of the Republican vote, that maybe we should accept the tax increase as a way of contributing to the Republican’s defeat in 2012.  Last time I check it had over 300 recommendations!  Maybe I’m on to something here.  But I have to give credit to my husband at FortRight who said at breakfast, “it might be worth $1000 to see the Republicans go down.”

Stand firm, Harry Reid.  Stand firm, Mitch McConnell.  You made your compromise as the House asked and just because John Boehner can’t herd his cats or maybe squirrels (Ana Marie Cox on her Guardian blog quoted a friend who called them squirrels because “[they] are panicky and prone to irrational running into traffic.”) doesn’t mean you have to save him.  Here is John with his squirrels.

Now they want the President to order the Senate back.  Stand firm, Mr. President.  Yes, not passing the bill will hurt briefly, but the Republicans will get the blame and will be forced to come back in January and be serious about a real bill, with real funding to pay for it.  As Ana Marie Cox said, “Congressional Republicans are roadkill.”

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The complicated deficit deal

I know I’ll be writing more about the imact of the “compromise” in the days to come, but for now here a summary.  The Atlantic Wire has the best written summary I’ve been able to find.

The basic plan, as explained by The New York Times‘ Carl Hulse and Helene Cooper, Politico’s David Rogers, and The Hill‘s Alexander Bolton, goes something like this:

1. Raise the debt limit by $900 billion and cut spending by the same amount over 10 years. Members of Congress can vote to show they don’t like the increase but Obama can veto their disapproval. 
2. Create a bipartisan committee with three members of each party from each chamber of Congress to find spending cuts the size of a second debt limit increase of $1.5 trillion. As a special holiday treat, the plan must be presented to colleagues by Thanksgiving and voted on by Christmas.
3. If the plan passes, Obama can raise the limit by $1.5 trillion.
4. If the cuts committee can’t come up with a plan, Obama can get only a $1.2 trillion debt limit increase, and Congress must either:
a. Pass a balanced-budget amendment to the Constitution, or
b. Allow spending cuts the size of the debt limit increase over the next 10 years, with at least half coming from cuts to defense spending. These cuts would be automatic by the end of 2012.
 
 
There is still a chance to get revenue increases through the committee’s recommendations.  That is what the Democrats have to run around the country selling:  increased revenues and more chanced to create jobs.  I heard Nancy Pelosi say at one point that the country did not want this debt crisis business, but were interested in “jobs, jobs, jobs.”  This has to be the new Democratic message:  OK, we have pretty much caved on the debt business, now create some jobs.
 
 
We Have a Debt Limit Deal: Now What?
 
So smile now, because if there aren’t more jobs soon – and the deficit deal has the potential to make a lot more of them go away – you might not be smiling in November 2012.
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Watching the circus

Watching the circus in Washington used to be a fun activity, but right now it is just depressing.  I got home from work last night expecting to watch the Republican vote on the Speaker’s plan only to learn that it had been postponed.  When I went to bed at 10 it was still pending.  At 5 this morning, I learned it didn’t happen because the Republican leadership didn’t have the votes.  All this for a bill that is DOA in the Senate.

We are all being held hostage by a handful of tea partiers and other Republicans who are convinced that their election gave them some kind of mandate to kill the country.  As they are learning in Wisconsin, people are beginning to have buyer’s remorse.  On the other hand, the tea partiers are threatening to run against the very people they elected if the new Congressmembers don’t come through.  Among those making the threats are Sarah Palin and the founder of the Texas Tea Party on Al Sharpton’s MSNBC show last night.  So I don’t think the 20 or so votes that Boehner is looking for will materialize, but then again, this whole spectacle is full of surprises so one never knows.

Everyone, including President Obama, has let this small faction define the fight.  I think Eugene Robinson is right:  The Republicans have one easily stated idea:  Reduce the deficit (and deny Obama a second term) while the Democrats and particularly Progressives don’t have an easily stated idea.

Those who would chronicle events in Washington can find no richer source of analogy and metaphor than the Three Stooges. These days, I’m thinking of the times when an exasperated Moe, having suffered the indignity of an accidental spritzing or clobbering, turns to Larry or Curly and demands, “What’s the big idea?”

The premise of the debt-ceiling fight is too far-fetched for a Stooges film, since no audience could imagine leaders of a great nation stumbling into such a mess. Moe’s trademark line is still relevant, however, even if it’s not followed by the two-fingered poke in the eyes that our elected officials richly deserve.

It is clear that unless President Obama ends up taking unilateral action to break a hopeless deadlock, Republicans will win. The House, the Senate and the White House are all working within GOP-defined parameters: New tax revenue is off the table, painful budget cuts are a given, everyone seems to accept the principle that a debt-ceiling increase — which allows the Treasury to pay bills Congress has already incurred — must be tied to reductions in future spending.

Besides not having an easily stated idea that everyone repeats, the Democrats have done all the compromising.  And it hasn’t worked out so well.  Look back at the retention of the Bush tax cuts:  Do you see any jobs?  Robinson concludes

Obama talks about “winning the future,” but that’s too nebulous. I’d suggest something pithier: jobs, jobs, jobs.

People may dislike paying taxes, but they dislike unemployment more. Progressives should talk about bringing the nation back to full employment and healthy growth — and how this requires an adequately funded government to play a major role.

The next time Moe asks about the big idea, Democrats, say “jobs.” You might avoid a slap on the noggin and a poke in the eyes.

I think it maybe time for the President to stop trying to compromise, to get together with Reid and Pelosi and make a real proposal.  To quote Paul Krugman

Some of us have long complained about the cult of “balance,” the insistence on portraying both parties as equally wrong and equally at fault on any issue, never mind the facts. I joked long ago that if one party declared that the earth was flat, the headlines would read “Views Differ on Shape of Planet.” But would that cult still rule in a situation as stark as the one we now face, in which one party is clearly engaged in blackmail and the other is dickering over the size of the ransom?

The answer, it turns out, is yes. And this is no laughing matter: The cult of balance has played an important role in bringing us to the edge of disaster. For when reporting on political disputes always implies that both sides are to blame, there is no penalty for extremism. Voters won’t punish you for outrageous behavior if all they ever hear is that both sides are at fault.

,,,

So what’s with the buzz about a centrist uprising? As I see it, it’s coming from people who recognize the dysfunctional nature of modern American politics, but refuse, for whatever reason, to acknowledge the one-sided role of Republican extremists in making our system dysfunctional. And it’s not hard to guess at their motivation. After all, pointing out the obvious truth gets you labeled as a shrill partisan, not just from the right, but from the ranks of self-proclaimed centrists.

But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

Time for the President to not only talk the talk as he did last week, but also walk the walk.  Compromise by only one side has lead to this circus that is not even very entertaining.  At the very least, round up enough votes in the Senate to pass the Reid plan so the Democrats can at least say they did something.  You can compare plans here.  And please, let there be only one vote.  I don’t think anyone can take this again in 6 months.

 

 

 

 

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The “gang of six” plan and the debt ceiling

In case you are wondering what it is, the New York Times has published a summary.  It is really a budget and deficit reduction plan and not something to raise the debt ceiling which still has to be done.  And time is running out.

A couple of interesting comments about the plan on Politico’s Arena.

First from Jeff Smith, professor at the New School and former Missouri State Senator:

The one real piece missing from this entire conversation? The piece that would make the numbers work and dramatically reduce the pain?

Comprehensive immigration reform. That’s right. There’s only one pool of 15 million people begging to be able to pay more into the system, and this country has spent the last several years fighting to make sure they can’t.

We need to get over our xenophobia, give them a path to citizenship, and let them start paying in to the system at regular rates in regular intervals. The nation’s immigrant population tilts much younger than the native-born population and is predominantly in the workforce, and would reverse the trend of a rising retiree-to-worker ratio, thereby shoring up both major entitlement programs

The immigrants would pay taxes, pay into social security, and Medicare.

Bernie Sanders (D-VT) points out

While the spending cuts for programs that working people desperately depend upon are enforced by specific spending caps, there is no such enforcement or clarity regarding the $1.1 trillion to be raised in revenue over 10 years.

What happens if that revenue target is not reached? There is no language that deals with that. Where does the revenue come from? That very important issue is kicked to the tax writing committees with no guarantee that hundreds of billions of dollars in new revenue will not come from the pockets of low- and moderate-income Americans. While nobody knows for certain what provisions might be adopted, there is reason to expect that some of the areas that the House and Senate will be looking at include the home mortgage deduction for middle-class families, taxes on health care benefits, and increased taxes on retirement programs such as 401(k)s and IRAs. In other words, while there is a reasonable degree of specificity in terms of cuts there is only vagueness in terms of revenue.

But Dean Baker from the Center for Economic and Policy Research asks the questions I’ve been wondering about:  What is wrong with the deficit at a time when we have no jobs and isn’t there a solution besides massive budget cutting?

The arithmetic is clear as day. The United States does not now, nor will it in the near future, face a serious problem meeting its debt obligations. It had a debt to GDP ratio of 116 percent after World War II. The baseline projections have it getting to 90 percent by 2021. 116 percent is much larger than 90 percent. (The difference will be more than $5 trillion in 2021.) This should be understandable even to a 6-figure Washington policy wonk or budget reporter.

Other countries had and have much higher ratios of debt to GDP and still face no problem paying their bills. In Japan, the ratio of debt to GDP is more than 220 percent, yet private investors are willing to lend the country money long-term at interest rates of less than 1.5 percent. Of course investors are also willing to put their money on the line in the U.S., lending us money long-term at interest rates close to 3.0 percent. So the people who actually have money on the line are saying as clearly as they can that the debt is not a serious problem.

Furthermore, there are many ways to deal with the debt that do not require attacking ordinary workers, who have been the victims of Wall Street greed and economic mismanagement by the deficit hawks. (People like Kent Conrad held positions of responsibility in the years of the build-up of the housing bubble, but were so utterly incompetent they either did not see it or recognize its danger.)

We could just have the Fed hold $3 trillion in government debt indefinitely. It would then refund more than $1 trillion in interest payments to the Treasury over the next decade. The inflationary impact of the additional reserves could be offset by raising bank reserve requirements. What could be more simple and costless than this mechanism? But the Gang of Six would rather cut Social Security and Medicare.

We could follow the example of England and impose a financial speculation on trades of stock, futures, options, credit default swaps and other financial instruments. This could raise more than $1. 5 trillion over the next decade. But the Gang of Six would rather cut Social Security and Medicare.

It is my understanding that we didn’t have a debt ceiling until World War I and that no many countries have one so why not do away with our?  Politico had this piece about that from Moody’s a few weeks ago.

The United States should do away with the debt ceiling altogether to bring greater certainty to investors in U.S. Treasury bonds, Moody’s suggested Monday.

With the August 2 deadline for raising the debt ceiling barely more than two weeks away, the bond-rating agency issued a report Monday noting that the U.S. is one of just a few countries that has a statutory borrowing limit and saying that the limit creates “periodic uncertainty” for investors, Reuters reported.

Rather than continuing to use the debt ceiling in an effort to keep U.S. borrowing down, the government should look toward Chile, Moody’s suggested. There, “the level of deficits is constrained by a ‘fiscal rule,’ which means the rise in debt is constrained though not technically limited.” Chile is considered to be Latin America’s most fiscally sound country.

And, the report noted, it’s not like the debt ceiling has been effective in keeping U.S. debt down: Congress has in the past raised it often and has not linked it to spending levels.

So the bottom line is that the Gang of Six plan may be a place to start talking budget and deficit reduction, but we should do something about the debt ceiling first – like abolish it.

 

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2012 Budget Talk

There are three budget proposals on the table that have been made public:  The President’s, Paul Ryan’s, and the Progressive Caucus.  So far all the talk is on Ryan’s cutting of Medicare.  It has defined the Republican politics.  Newt Gingrich found that out.  As I understand the President’s proposal it uses the 2008 budget as a baseline – a baseline we are already below. But no one is talking much about the Progressive budget.

The Progressive and Ryan budgets are good symbols of the world views currently held by many on the two sides.  The Democrats being democrats are not as monolithic and many will object to the severe defense cuts in the Progressive budget, but it seems to me that these proposals can be the end points that let everyone meet in the middle.

The National Priorities Project compares the two proposals.

  Congressional Progressive Caucus People’s Budget Rep. Ryan’s The Path to Prosperity
     
Underlying Philosophy Strengthens role of government in reducing income inequality and providing social safety net. Reduces deficit through combination of increased revenues and reductions in spending Relies on private sector to spur economic growth and employment using a trickle down approach. Reduces deficit solely through spending cuts
     
Revenues Shifts tax burden towards higher income earners and corporations Decreases taxes for wealthy and corporations
Individual Taxes Allows for the expiration of Bush era tax cuts Maintains the Bush era tax cuts
  Reverts highest individual tax brackets to 36% and 39.6% from 33% and 35% Cuts the top individual tax rate to 25% from 35%
  Enacts new tax brackets for high income earners (45%-49% for $1 million – $1 billion range Consolidates the current six tax brackets
  Taxes capital gains and dividends as ordinary income Eliminates $800 billion in tax increases imposed by the Patient Protection and Affordable Care Act
  Limits tax benefit of itemized deductions to 28%  
  Enacts progressive estate tax in which larger estates pay higher tax rates  
Corporate Taxes Imposes financial transaction tax on derivatives and speculative financial products Reduces corporate tax rate to 25% from 35%
  Repeals tax deductions and preferences for oil, natural gas and coal producers Eliminates loopholes and deductions that allow some corporations to pay no tax
  Taxes US corporate foreign income as it is earned instead of as dividend  
  Imposes tax equal to 0.15% of covered liabilities for banks with more than $50 billion in assets  
     
Investment Emphasizes public investment as engine for job creation and economic growth Believes that public investment crowds out private investment
  Rebuilds infrastructure – highways, railways, National Infrastructure Bank  
  Funds highway construction through increase in Gasoline Tax of 25 cents  
     
Health Care and Social Safety Net Maintains government role in providing vital public services and programs Limits government provision of social programs
  Maintains Medicare reimbursement rates for doctors Privatizes Medicare starting in 2022 for new beneficiaries
  Establishes public health care option in health care exchanges starting in 2014 Repeals Patient Protection and Affordable Care Act
  Negotiates drug prices with pharmaceutical companies Raises age of Medicare eligibility to 67 from 65
  Increases Social Security benefits based on higher employee contributions Converts Medicaid into block grants to the states
  Raises Social Security contribution limits, including employer contributions for high earners Converts SNAP (food stamps) into block grant to the states. Requires recipients to work or get job training
    Reduces Pell grants to 2008 levels
    Imposes time limits and work requirements for recipients of federal housing assistance (Section 8)
     
Defense Makes significant cuts in annual defense spending and ends the wars in Iraq and Afghanistan in FY2012 Largely exempts the military from spending cuts
Funding for Security Generates $2.3 trillion in savings compared to the CBO baseline over the FY2012-2021 period Provides real growth for “security” in each year through 2021, totaling $214 billion in new spending
Annual Pentagon Spending Reduces DoD baseline budget by $692.2 billion over 10 years compared to CBO, or $816.7 billion compared to the Obama Pentagon spending plan Reduces DoD waste by $178 billion. Reinvests $100 billion of this into key combat capabilities and uses $78 billion to reduce the deficit
Overseas Contingency Operations (Iraq & Afghanistan) Provides $161.4 billion for “Overseas Contingency Operations” (OCO) in FY2012 and withdraws U.S. forces from Iraq and Afghanistan. Provides no funding for OCO starting in FY2013, saving $1.6 trillion between 2013-2021 compared to the CBO baseline Continues Iraq and Afghanistan wars and provides $117.8 billion in FY2012. Anticipates over $1 trillion in savings from reduced costs of the “Global War on Terror” over the next decade by using the Pentagon’s $50 billion annual “placeholder” for OCO costs
     
Government Maintains size and role of government Reduces size and scope of government
  Provides percentage increases for discretionary programs Reduces size of government to 20% of GDP by 2015 and 15% of GDP by 2050
    Reduces non-security discretionary spending to pre-2008 levels
    Reduces public sector employment by 10% through attrition by 2014
    Institutes government pay freeze through 2015
    Increases federal employee contributions to retirement
    Privatizes Fannie Mae and Freddie Mac
    Decreases regulation of the energy industry
    Establishes a binding cap on total spending as a percentage of the economy
    Requires any increase in debt levels to be accompanied by spending reductions

I couldn’t find a chart that adds the President’s budget proposal, but here is a short summary.

Key Budget Facts

  • The Budget includes more than $1 trillion in deficit reduction – two-thirds of it from cuts — and puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will be paying for what it spends and debt will no longer be increasing as a share of the economy.
  • The President meets his pledge to cut the deficit he inherited in half by the end of his first term.
  • Five-year non-security discretionary spending freeze will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since President Eisenhower sat in the Oval Office.
  • 10-year Deficit Reduction:  $1.1 trillion, excluding war savings and not extending 2001 and 2003 tax cuts for high-income earners. Two-thirds are from spending cuts.
  • 2011 Projected Deficit: $1.645 trillion, 10.9 percent of GDP; 2012 Projected Deficit: $1.101 trillion, 7.0 percent of GDP; 2015 Projected Deficit: $607 billion, 3.2 percent of GDP; 2017 Projected Deficit: $627 billion, 3.0 percent of GDP

The budget itself is composed of proposals made by federal agencies under guidelines from the White House budget folks, but it seems to be a timid version of the Progressive Budget.

The choices are pretty clear.  And the news this week – increased unemployment and no job creation – has everyone saying it is bad news for the President.  But with the layoffs of public employees is it surprising that unemployment is rising?  Wasn’t keeping the Bush tax cuts supposed to create jobs?  Where exactly are all these jobs?  The Republicans are all about not raising taxes on anyone and cutting the size of government and government benefits.  They don’t care about the widening gap between rich and poor but seem to be perfectly happy to accept tax payer paid benefits.   Like Congressman Woodall. (R- GA) who thinks we should all be self reliant except for him.

The bottom line:  We have two visions of American and the one that wins will determine our future.