❄ PLAIN TALK [VIII]: THE GREAT EXTORTION

❄   PLAIN TALK [VIII]: THE GREAT EXTORTION
SUNDAY, AUGUST 07, 2011
❄ This post, and other ‘PLAIN TALK’ posts on this blog, describe in plain language the current Republican Party aims and methods, which I consider a perverse exercise in political design. ❄

There have been three major Republican initiatives since January 2010 to hold Congressional action hostage to Republican extremism. Each concerns steps Congress had to take to fund the government. The first arose from the need to complete budget enactment for Fiscal Year 2011 (1 October 2010 to 30 September 2011). The second sprang from an end-2010 deadline in tax law under which tax cuts would expire. Before Congress had adjourned for the 2010 elections stop-gap approval of spending had been approved, with an expiry date requiring action in January 2011. The third turned on the need to raise the ‘debt ceiling’, the total amount of debt that the US Government is permitted to have outstanding, to fund the deficit and roll over prior debt. As all Readers are well aware, the debt ceiling fiasco culminated in Congressional and Presidential approval of a ‘compromise’ on 2 August 2011.

(1) The FY2011 ‘Continuing Resolution’ Standoff

The FY2011 budget was to have been enacted by 30 September 2010. Between September 2010 and April 2011 the Congress passed, and the President signed, seven successive ‘continuing resolutions’. Each granted spending at roughly the rate of the FY2010 budget and contained an expiry date. The Republican House leadership called for cuts in the budget, as the price Democrats would have to pay to avoid ‘shutting down the government’ by failing to enact a further grant of time by the deadline. The Perils of Pauline. The standoff did not end until 15 April 2011, when President Obama signed legislation providing funds through the end of September. There had been sharp conflicts right up to the end:

After nightlong negotiations that ended before dawn on Friday yielded no agreement, Senator Reid went on the offensive. He told reporters and said on the Senate floor that Mr. Boehner, the Senate Democrats and Mr. Obama had essentially settled on $38 billion in cuts from current spending, a figure that represented a substantial concession for Democrats.

But he said that Republicans were refusing to abandon a policy provision that would withhold federal financing for family planning and other health services for poor women from Planned Parenthood and other providers.

“This is indefensible, and everyone should be outraged,” Mr. Reid said on the Senate floor. “The Republican House leadership have only a couple of hours to look in the mirror, snap out of it and realize how truly shameful they have been.”

In a terse statement of his own to reporters, Mr. Boehner said there was “only one reason we do not have an agreement yet, and that is spending.” He asked, “When will the White House and when will Senate Democrats get serious about cutting spending?” [Note 1]

(2) Tax Relief Expiry: ‘Bush tax cuts for the wealthy’ and ‘middle-class tax cuts’

In a nutshell, Obama wanted extension of unemployment benefits and the ‘middle-class tax cuts’; Republicans were not anxious to extend unemployment benefits, but wanted both tax cuts extended and a more generous position on estate tax. Obama was speaking to a broad constituency in financial distress. The Republicans portrayed failure to extend as a ‘new tax’, as in ‘No New Taxes!” The differences were deep, as CBS News captured in this despatch by Brian Montopoli:

The tax cut package angered liberals in the president’s party due to the extension of the Bush-era tax cuts for the roughly two percent of highest-earning Americans, which comes at a cost of $120 billion over two years. They were also incensed at the level at which the estate tax was set in the measure, which exempts estates under $10 million for couples and taxes subsequent income at 35 percent. 

But the bill passed overwhelmingly in the Senate and also got through the House, where angry Democrats eventually accepted what came to be seen as inevitable. Still, many complained that the bill was an expensive giveaway to the richest Americans at a time when America could not afford it. Some fiscally conservative Republicans also expressed concerns about the cost of bill, though most GOP lawmakers supported it.

Had Congress not acted to address the expiring Bush-era tax cuts, all Americans would have seen a tax increase on January 1st. (The average tax increase per family, the White House said, would have been $3,000.) Mr. Obama, who had long opposed extending the Bush tax cuts for America’s highest-earners, has argued he had no choice but to agree to GOP demands to do so in order to avoid a tax increase on the middle class. 

In his remarks Friday, however, he cast the agreement as evidence that both parties can work together.

“Now, candidly speaking, there are some elements of this legislation that I don’t like,” he said. “There are some elements that members of my party don’t like. There are some elements that Republicans here today don’t like. That’s the nature of compromise. Yielding on something each of us cares about to move forward on what all of us care about.” [Note 2]

(3) The ‘Debt Ceiling’: Holding the Economy Hostage

So what do we know? We know that threats of US default have an unsettling effect on global markets, and that American political parties playing chicken on the economic highway appears juvenile in foreign capitals. We know there is another way—agreeing to exempt debt ceiling bills from extraneous preconditions and amendments. Barack Obama seemed to understand that, for he called for a ‘clean’ debt ceiling bill—but was refused:

House Speaker John Boehner (R-Ohio), fresh off the budget talks, told donors this weekend that if Obama wants an up or down vote on the debt ceiling he’s not going to get it. 

“The president says I want you to send me a clean bill,” Boehner said. “Well guess what, Mr. President, not a chance you’re going to get a clean bill.” 

“There will not be an increase in the debt limit without something really, really big attached to it,” he continued in a clip of his remarks at a fundraiser that was played during “Face the Nation.” [Note 5]

Boehner’s big stick was that he held enough seats in the House to craft a Republican bill … and the threat to reject any Democratic bill that came from the Senate. But behind him sat, or stood, the Tea Party freshman class. As the final vote in August showed, the Tea Party was substantial but not monolithic. The vote in the House was 269-151. Of 60 Tea Party caucus members, 32 voted ‘yes’ and 28 ‘no’.

Altogether, 66 Republicans and 95 Democrats voted ‘no’. Even the deal that Boehner negotiated with Reid was not enough to satisfy all the Tea Partiers, but without their intransigence he would have had a tougher time communicating obstinacy and insistence. Norman Ornstein captured the affair succinctly: “If you hold one-half of one-third of the reins of power in Washington and are willing to use and maintain that kind of discipline even if you will bring the entire temple down around your own head, there is a pretty good chance that you are going to get your way.” [Note 6]

Why is the situation presented by debt ceiling exigencies different from party-to-party trading as substantive bills are negotiated within and between the major parties and between the House and Senate? Because the debt is not—despite Republican efforts to blame it on Democrats—the consequence of one party’s policies or initiatives, but instead the result of Congressional bills enacted into law and signed by presidents of both major parties. It’s a joint responsibility. A polemical but cute graphic was circulated as the immediate crisis reached climax, making the point that all recent presidents have grown the national debt.[Note 7]

Many commentators read the result this way: Republican tactics worked and gave them a victory, giving them budget cuts and wounding President Obama. The most extreme Republicans lamented that they had caved in by accepting only $2.4 trillion in cuts, rather than the $4 trillion they had sought. As we’ve seen, 28 in the House voted ‘no’.

The New York Times published an even more telling graphic [“Policy Changes Under Two Presidents”], showing how much more GW Bush increased the debt, and with what spending, by comparison to Barack Obama’s so far relatively modest use of borrowing.

A most pungent afterview of this episode was offered by New York Times columnist Joe Nocera, whose likening the Republicans to “terrorists” and writing of the “Tea Party Republicans” now able to “put aside their suicide vests,” led him to issue an apology a few days later. What else was it that Nocera had written, and how did he locate his apology? His views are salient as he has proven one of the best-informed students of the Great Recession and its continuing effects. “You know what they say,” Nocera began, “Never negotiate with terrorists. It only encourages them.” He continued:

These last few months, much of the country has watched in horror as the Tea Party Republicans have waged jihad on the American people. Their intransigent demands for deep spending cuts, coupled with their almost gleeful willingness to destroy one of America’s most invaluable assets, its full faith and credit, were incredibly irresponsible. But they didn’t care. Their goal, they believed, was worth blowing up the country for, if that’s what it took.

Like ideologues everywhere, they scorned compromise. When John Boehner, the House speaker, tried to cut a deal with President Obama that included some modest revenue increases, they humiliated him. …

America’s real crisis is not a debt crisis. It’s an unemployment crisis. Yet this agreement not only doesn’t address unemployment, it’s guaranteed to make it worse. (Incredibly, the Democrats even abandoned their demand for extended unemployment benefits as part of the deal.) …

Inflicting more pain on their countrymen doesn’t much bother the Tea Party Republicans, as they’ve repeatedly proved. [Note 8]

Then, called on to apologize (for pungent language? for colorful but apt figures of speech? for speaking the truth? because anger is forbidden?) Nocera lodged it this way:

Once the Republicans gained control of the House of Representatives, they began to systemically [sic] undermine the Dodd-Frank reform law, pushing back against new, and mostly sensible, regulations designed to prevent another meltdown. The worst was the way Republicans took a hatchet to Elizabeth Warren as she tried to set up the new Consumer Financial Protection Bureau. Such an agency, had it been in existence prior to 2008, might have prevented millions of Americans, many of them poor and financially unsophisticated, from being gouged by mortgage companies. Watching it all unfold made me angry.

That anger reached its apex on Tuesday, when I wrote a column comparing the Tea Party Republicans to terrorists. The words I chose were intemperate and offensive to many, and I’ve been roundly criticized. I was a hypocrite, the critics said, for using such language when on other occasions I’ve called for a more civil politics. In the cool light of day, I agree with them. I apologize.

I still think it was terribly wrong for the Republicans to use the threat of default to insist on massive spending cuts, though President Obama also deserves blame for playing his hand so poorly. Putting on my pragmatist hat again, I also think Congress could not have chosen a worse time to rein in spending. Yes, the country’s enormous debt — and the entitlement programs that are driving the federal deficit — needs to be brought under control. [Note 9]

As Reader must appreciate by now, I think some plain talk is needed to sustain and foster the Republic.

The Next Effort: A Balanced Budget Amendment to the Constitution

The dust had barely settled on the August 2011 debt ceiling when Speaker Boehner called his troops together for the next campaign: to pass a ‘balanced budget’ amendment.[Note 10]

In a meeting with his conference Monday, Speaker John A. Boehner told members that the best thing they could do during the August recess was to sell their constituents on the idea that the amendment — which essentially stipulates that government cannot spend more than it takes in — is necessary and good.

Republican leaders on the Hill have pivoted from railing against Democrats about tax increases to pressing for the amendment, which would require the acquiescence of two-thirds of each chamber of Congress, and three quarters of state legislatures.[Note 11]

The connection to political extortion is this: will the Republicans connect Congress’ passing a ‘balanced budget’ amendment to another must-pass bill, as they linked ‘no new taxes’ to the August 2011 debt ceiling increase? Will they begin pressing for a more draconian measure, but then ‘compromise’ by agreeing to text that contains one or more of the features they have proposed? Will they occupy the Congress and the White House with this issue, a distraction from real tasks?

Of course, there already exist mechanisms by which the Republic can have a ‘balanced budget’ or ‘pay-go’, legislating only as much expenditure as non-partisan referees anticipate from ongoing revenue. Revenue bills must be agreed by the House and Senate, and are subject to Presidential veto.

But ‘balanced budget’ has a homey ring to it. The problem lies in the La Brea tar pit of abused categories, in this case ‘spending’ that does not distinguish smart from dumb. Some ‘government spending’ goes for purposes that have both short-term and longer-term benefits, enhancing people’s lives and building for future economic activity. Other ‘government spending’ goes for naught, for illusions, or is just dumped in the trash. The most difficult budgetary problem for US politics is to distinguish spending for ‘national security’ that begins from a prudent understanding of risks in the world, on the one hand, from illusory or unnecessary increments to military capability that neither enhance lives nor secure the future, on the other. Examples of ‘security’ dollars to the trash are abundant: high-cost procurement, the Vietnam, Iraq and Afghanistan wars, and ten thousand ‘minor’ domestic and overseas programs that simply make no sense.[Note 12] Chanting ‘balanced budget’ threatens spending for sound purposes and fails to insist on political judgment.

The Question

How can the Congress, in future, avoid deadline-driven extortion?

Approaches


The simple answer is ‘don’t do it’. At present, the only restraints are voluntary forbearance, and its less altruistic version, being deterred (recognizing that the other guy will retaliate, sometime in future, given the chance). These are both good reasons to forego extortion. A variation may be better: that both major parties agree that any future debt ceiling bill will be kept ‘clean’, free of amendments and poisonous baggage: the House and Senate would vote on the one question whether to raise the ceiling to a stipulated amount.

It would be harder to extend a ‘clean bill’ agreement to other deadline-driven bills, which include all appropriations bills. The Government’s only source of money is Congressional approval. The President may veto a money bill, but cannot create one. The Constitution directly, explicitly requires that “No money shall be drawn from the Treasury, but in consequence of appropriations made by law;”[Note 13] The threat to ‘shut down the government’, like the threat of ‘default’, is credible only if they are reckless, or prepared to suffer opprobrium. While in politics the present usually trumps the future, career operatives know that they can’t be sure of the future, when the stakes, what they could lose, could be more compelling.

The New York Times proposes editorially [Note 14]

that the President should enlist figures ready to educate the public that the ‘debt ceiling’ should be done away with. “If Democrats continuously remind the country how dangerous this path is, Republicans may think twice about repeating it.” Failing that, Obama should invoke the 14th Amendment and declare the ‘debt ceiling’ practice invalid. “President Obama should use every power at his disposal to fend off Republicans’ irresponsible threats and invite them to meet him in court if they want to resist.” Unfortunately, it is in Court that the Republican surge has won unusual victories, from GW Bush’s election to Citizens United, but the courts have been loath to take on issues better left in the political arena. The 14th Amendment route should be studied and made ready.[Note 15]


NOTES

1 Carl Hulse, “Budget Deal to Cut $38 Billion Averts Shutdown” The New York Times, 8 April 2011.
2 Brian Montopoli, “Obama Signs Bill To Extend Bush Tax Cuts,” CBS News, 17 December 2010. http://www.cbsnews.com/8300-503544_162-503544.html?tag=hdr
3 http://www.youtube.com/watch?v=v5igKuNF1rI
4 Nate Silver, “The Fine Print on the Debt Deal,” The New York Times, 1 August 2011. His column FiveThirtyEight.
5 Politico Live, “GOP Rules Out ‘Clean’ Debt Ceiling Bill,” 10 April 2011. http://www.politico.com/blogs/politicolive/0411/GOP_rules_out_clean_debt_ceiling_bill.html
6 Quoted in Jennifer Steinhauer, “Debt Bill is Signed, Ending a Fractious Battle,“The New York Times, 2 August 2011.
7 Of course, GHW Bush served only one term, and Barack Obama is in the third year of his first term.
8 Joe Nocera, “The Tea Party’s War on America,” The New York Times, 1 August 2011. He explains: “As Mohamed El-Erian, the chief executive of the bond investment firm Pimco, told me, fiscal policy includes both a numerator and a denominator. “The numerator is debt,” he said. “But the denominator is growth.” He added, “What we have done is accelerate forward, in a self-inflicted manner, the numerator. And, in the process, we have undermined the denominator.” Economic growth could have gone a long way toward shrinking the deficit, while helping put people to work. The spending cuts will shrink growth and raise the likelihood of pushing the country back into recession.”
9 Joe Nocera, “The Tea Party, Take Two,” The New York Times, 5 August 2011.
10 Jennifer Steinhauer, “Republicans Set Sights on Balanced Budget Amendment,” The New York Times, 4 August 2011. She describes two plans: One would ban spending (not including interest on the national debt) more than revenues in a fiscal year (except by Congressional three-fifths votes in both houses). Under another proposal, tax increases would require a 2/3 vote in each house, and federal spending could exceed 18% of GDP only with the consent of 2/3 in House and Senate. Under both proposals, the debt ceiling could be raised only by vote of 3/5 in House and Senate.
11 Ibid.
12 Who should take responsibility for deciding that the State Police needed to install concrete bollards outside rural state police headquarters? What are the risks that someone would drive a car to or through the front door, laden with explosives? And if there were such a person, is there any reason to believe the building could not be thoroughly destroyed by bringing the explosive-filled panel truck just up to the bollards? Hysteria. And, in all likelihood, Federal money, scattered across the country. And who is paying to equip local police with tasers, and why?
13 Constitution of the United States, Article I, § 9.7.
14 Editorial, “End the Debt Limit,” The New York Times, 4 August 2011. See an op-ed by Michael D. Schear, “Can the Debt Ceiling Genie Be Put Back in the Bottle,” The New York Times, 3 August 2011.
15 See Adam Liptak, “The 14th Amendment, the Debt Ceiling, and a Way Out,” The New York Times, 24 July 2011. Liptak reports Bill Clinton’s “saying he would unilaterally invoke it ‘without hesitation’ to raise the debt ceiling, ‘and force the courts to stop me.’ ”

[Political Design 2011.08.07. Post A33. http://www.learnworld.com/blog/design.html (archive through April 2010) or http://design.learnworld.com]


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