Friday, July 29, 2011

Boehner angles to remain Speaker, Doom US Economy

I have to agree with Ezra when he says:

In order to have any chance of surviving as Speaker of the House, Boehner needs to produce legislation that is completely unacceptable to the White House and the Senate. Their opposition is a feature, not a bug. Consider how he sold his plan to Laura Ingraham: “President Obama hates it. Harry Reid hates it. Nancy Pelosi hates it. Why would Republicans want to be on the side of President Obama, Harry Reid, and Nancy Pelosi [is] beyond me.”

Why anyone would think that a plan loathed by the Majority Leader of the Senate and the President of the United States would be signed into law is beyond me. And since then, Boehner has moved the plan considerably to the right. But that’s because he’s not legislating. He’s just trying to survive.


And it's very disappointing. I've been arguing that Boehner should cut a deal, despite his caucus. History remembers Speakers who compromise. Tip O'Neil comes to mind. Even Newt, as much as he was the foil to Clinton, is remembered for welfare reform. Think anybody will remember Denny Hastert in 20 years?

What the new GDP numbers tell us about stimulus

What the new GDP numbers tell us about stimulus

For all the stimulus haters out there:

Then, Congress passed the stimulus bill, the fall in growth dwindled to 0.7 percent in the second quarter, and, by the third quarter of 2009, we had 1.7 percent growth. “We went from negative to positive at precisely the time that the stimulus was providing maximum benefit in terms of tax cuts and spending increases,” Zandi says. “The numbers actually reinforce the importance of the stimulus in jump-starting a recovery.” What the stimulus didn’t do, however, was raise employment to the levels that the White House had predicted — partly because the economy was in worse shape than anyone, even the official data-crunchers, knew.

Of course, the stimulus only lasted two years, winding down in the end of 2010. And what happened then? As Dean Baker, an economist at the Center on Economic and Policy Research observes, “The downward revision to the first quarter data coupled with the revision of the fourth quarter growth to 2.3 percent from 3.1 percent, suggests that the winding down of the stimulus has seriously dampened growth.” Zandi agrees: “If fiscal policy had simply stayed neutral, the numbers suggest we would have had around 2 percent growth these past two quarters, which isn’t great, but it’s a lot better than what we actually had.” Except fiscal policy wasn’t neutral—it was shrinking. The stimulus wound down, that extra government spending started disappearing, and, with it, economic growth dwindled.



The Short List - July 29, 2011

International
  • The U.S. has claimed that Iran is sending money to Al Qaeda in Pakistan through a Syrian intermediary.  The Treasury Department has documents, they believe prove this connection.  Iran denies the reports.

  • The Libyan rebel military leader, Abdul Fattah Younis, has been killed by assailants in Benghazi.  Details remain hard to come by and the situation remains fluid.  At the very least, the Libyan rebels have lost their chief military tactician and NATO has lost a favored partner.

  • There is fresh violence in Syria today as security forces have fired on protesters in the southern city of Deraa and earlier today an oil pipeline was bombed.  Over at Abu Muquwama, Andrew Exum considers how the unrest in Syria damages Hezbollah's legitimacy in Lebanon.
Domestic
  • Speaker Boehner canceled the planned debt ceiling vote last night because he didn't have they votes.  His staff is said to be making revisions to make it more palatable to the tea party caucus (which would make it less palatable for Senate Democrats) and House members have been told to stay in DC this weekend and plan to be in session.  There are reports that the South Carolina delegation is the issue, and that the SC representatives are taking their marching orders from Sen. Jim DeMint (SC).  Ezra Klein considers what's next in this fight, and posits that Boehner, having all but failed in a vote of confidence in his speakership, may move the bill slightly to the left to earn from Democrat votes.  Your editor suggested this path a couple weeks back.

  • And in more bad news the U.S. economy grew by just 1.4% in the second quarter of 2011.  First quarter growth was trimmed down to an anemic 0.4%.

Thursday, July 28, 2011

Req Reading: Tax Expenditures and Catholicism

Tax expenditures: Fiscal indulgences | The Economist

Will Wilkinson helps me out by citing the mention of tax expenditures in the debt ceiling negotiations. He helps Colin out with his shout out to Sen. Coburn's plan. In general, Mr. Wilkinson continues to be a great pundit, even as I disagree with him.

Tea Party Nation's Judson Phillips is Off Base

Judson Phillips, founder of Tea Party Nation, has an op-ed in The Washington Post this morning explaining why the tea party has been so recalcitrant about raising the debt ceiling.  He basically says this is about shrinking the size of government, because the government spends too much.  

The only citation he provides is a GAO report that he says indicates "billions of tax dollars" being spent on duplicating efforts, but scope matters here and a quick look at the report it doesn't give a easily cited number..  The Federal Government spent $3.4 trillion dollars in FY2010.  If they GAO report outlines $10 billion in overlap, that represents 0.3% of total government expenditures.  At $50 billion it's 1.5% and at $200 billion it's 5.8%.  All that calculation is to say "billions" is a squishy term, but we likely aren't talking about a lot of redundancy.

Mr. Phillips is also intent on propping up the Greek boogeyman.  In 2010, the estimated U.S. debt to GDP ratio was 58.9%, while in Greece the ratio was 144%.  The comparison is flawed when you look at even this single factor, but when you consider that Greece, as part of the Euro-zone, can't print more money and then factor in the historical failure of the Greek government to collect tax revenue, any suggestion that the United States is the next Greece is ludicrous at this stage.

Mr. Phillips also makes the claim that "[t]here is only one way you get to a debt crisis - you spend too much money."  This is quite simply false.  You can get into a debt crisis when you don't earn enough money.  For the federal government, those earnings come in the form of taxes.  We are at a historic trough when it comes to tax receipts, in large part because the economy is beaten and battered.  Now is the time we need borrowing authority more then ever.  We're on hard times, but times will improve.  Taking on debt is part of our modern financial system whether you're a government or a household, so let's drop the pretense that taking on debt is always some reckless endeavor.

Finally, Mr. Phillips clearly can't do math.  In his op-ed he declares, "the Tea Party movement understands that if we allow Congress to borrow more money or raise taxes, all we are doing is funding an endless expansion of government."  He says this after he explains that the tea party had to say no to the deal that was in the works between President Obama and Speaker Boehner.  If the tea party goal is truly to shrink the size of government, then they missed a golden opportunity.  The broad strokes of the $4 trillion deal discussed was 83% cuts to 17% revenue increases.  That is to say we would have cut $3.3 trillion worth of government spending and raised about $700 billion more in revenue over the next decade.  Seems clear to me that that deal would have shrunk the size of government, by quite a lot.  But Mr. Phillips derided this plan because it included a revenue increases, even though the revenue increases would have come from eliminating market distorting tax expenditures that libertarians have long opposed.

I think this debate has revealed the lack of ideological coherence of the tea party.  What is it they are really trying to achieve?  They passed on the opportunity to dramatically shrink the size of the government.  They passed on the opportunity to eliminate countless distortionary tax policies.  They have, thus far, passed on the opportunity to own the responsibility of their electoral victory, which is to govern.  Beyond the anger, I see vacuous opportunism from the tea party members in Congress.  As eager as the tea party is to remind Republicans they delivered them the house, I wonder if the tea party faithful will see through this charade perpetrated by Mr. Phillips and his consorts in Congress.

The Short List - July 28, 2011

International
  • Libyan rebel fights launched an offensive in the western mountains, and won then lost a government controlled town.

  • The EU is warning of the potential for more violence after a flare-up in Kosovo.

  • Amnesty International has reported that over 500,000 Ivorians have not returned home despite the ouster of former president Gbagbo.  The report details people are afraid of ethnic attacks and notes that atrocities have been committed by supporters of Gbagbo and current Ivorian president Ouattara.

  • China has blamed a failed signal(NYT) for the high-speed train crash that killed 39 people on Saturday.
Domestic

Wednesday, July 27, 2011

Boehner to House GOP: Get your a** in line

Boehner rallies GOP to his debt plan; CBO finds rival Reid proposal saves more - The Washington Post

Feel like this comes awfully late in the process. And one has to wonder how this will play with tea party freshmen.

There never was a surplus

Deficits: There never was a surplus | The Economist

Matt Steinglass explains the futility of long-term economic projections, and the quite sensible goal to bring government expenditures into balance.

The Short List - July 27, 2011

International
Domestic

Tuesday, July 26, 2011

The Short List - July 26, 2011

We're Back

International
  • The man who is allegedly responsible for last week's bombing and shooting rampage in Norway admitted responsibility, but entered a plea of not guilty.  He said he wanted to save Europe from "Muslim domination."  It is a reminder that "rhetoric is not cost free" whether espousing Muslim or Christian superiority.

  • Hamid Karzai encourages Afghans to realize NATO support is winding down, but also says any future NATO or US military involvement must be done on Afghan terms in a double game that seeks to return to the country to the darkness that engulfed it during the Taliban's rule.

  • Thousands of land mines slows the progress of Libya's rebels.

  • India and Pakistan are set to begin peace talks tomorrow.  The continued enmity between the two South Asian countries has prompted more then one nuclear showdown and distracted Pakistan from the threat within its borders for years.

  • The UN will airlift food to the famished regions in Somalia this week.
Domestic
  • Dueling speeches were broadcast over the airwaves last night in the debt ceiling/deficit debate.  Obama called for shared sacrifice, while Boehner  said Washington spending is out of control.  House GOP freshmen are apparently out of ideas after Cut, Cap, and Balance is tabled in the Senate.  It's worth noting that the federal government hasn't been in compliance with the figures in Cut, Cap and Balance since the 1950s, which is to say neither Reagan, nor either Bush would have been in compliance.  Meanwhile, market watchers are waiting for the bond market's patience to run out.  Cataclysm to follow.

  • Meanwhile, in another area of no compromise, the FAA has had to furlough employees as Congress has not passed an extension for funding.  It would be the 21st such extension, but it has been sullied by strings attached by the House that the Senate does not agree with.

Monday, July 25, 2011

The President's Address - Alternative Version

President Obama will address the nation tonight, probably on the debt ceiling negotiations, and so I thought it would be a fun exercise to right up an alternate version of that speech.  It's meant to be light-hearted, so take it as the tongue-in-cheek missive it's intended to be.

My fellow Americans.  I've taken to the bully pulpit tonight to show you who actually wears the big boy pants.  Speaker Boehner has been bullied by the economically illiterate tea party-ers in his midst, and I feel sorry for him.  We played a round of golf together.  We're buddies.  And while I don't believe he got that eagle on the 7th playing gentlemen's rules, I do believe he wanted to do the big thing with this whole debt ceiling/deficit reduction kerfuffle.

I tried to help my boy out.  I took the percentages of cuts to revenues outlined by his office several months ago and offered him a deal built on those percentages.  He couldn't take the deal though.  Eric was all "NO TAXES EVER!!!!!" and the look of resignation on Boehner's face told me nothing was going to get done.

Then Mitch had his cockamamie scheme, where I could ask for an increase in the debt ceiling, ignore the suggested spending cuts that Congress suggested and extend our credit line.  I don't fully understand it.  Where is Orzag to explain this to me?  I miss that guy.  He was such a player, but I digress.

Then the Gang of Six became the Gang of Five, and then they became the Gang of Six again.  I have asked the DC metro police to look into the gang activity going on on Capitol Hill.  They had a plan, it was a pretty good one, and people liked it until people realized it raised more revenue then my plan and then Cantor was prepared to start his own gang and he called Grover, and well, that idea fizzled.

So my fellow Americans, here we are.  The Washington Post has a doomsday debt clock on their main page.  The sky may well be falling.  Why is it falling?  Because Republicans want me to be a one term president.  Mitch told everybody that and if you look at the uniformity with which they have said "NO" to every idea I've mentioned, including the ideas I ripped off from past Republicans, what would certainly seem to be the only goal the Republican party has.

Here I was trying to make history.  I was going to expand healthcare to millions of Americans and Boehner and I could have had our Reagan/O'Neal moment.  But it wasn't to be.  So now John's got a bad idea floating around and Harry has a less bad idea in the other chamber.  I don't really like either idea, but I supposed I'll end up signing a version of the one of the two.  After all, as the guy who is the grown-up in this conversation, I can't let the economic slip into chaos.  But, I want you all to know that this is the Republicans fault.  That passed on history.  A smart young blogger I'd never heard of pushed John to take one for the team, but apparently his Twitter message was lost in the shuffle.

So I stand before you tonight, the adult dealing with the children in Congress.  And to echo some recent polling, only 18% of me approves of Congress too.  We're going to get a deal done, and it's going to suck, and we'll come back to this issue again in 6 to 12 months.  When we do, this will all happen again.  Just remember, it's the other guys' fault.

Friday, July 22, 2011

The Short List - July 22, 2011

International
Domestic

Wednesday, July 20, 2011

The Short List - July 20, 2011

Really short Short List today.  Apologies.

International
Domestic
  • The newly reformed Gang of Six has released a debt ceiling/deficit reducing plan that is gaining traction in the Senate and has garnered qualified support from Speaker Boehner and President Obama.  Representative Cantor, however,  remains intractable on revenues.  Details continue to emerge about the plan, but if fully implemented it would reduce the deficit by $3.7 trillion dollars over 10 years and would bring debt as a percentage of GDP down to 70% in the same time frame.  Ezra Klein breaks down the deal a bit more.  The Washington Post Editorial calls the proposal a "new hope" sans Luke Skywalker.  In the background of the Gang of Six proposal is a new Washington Post-ABC poll that shows there's plenty of blame to go around, but Republicans are considered more to blame.  Perhaps most notable, 79% of independents don't think Republicans are willing to make a deal.

Tuesday, July 19, 2011

The Short List - July 19, 2011

International
Domestic

Monday, July 18, 2011

The Short List - July 18, 2011

International


Domestic
  • Senate Minority Leader Mitch McConnell's deal is gaining momentum as Congress is set to spend the week engaged in kabuki theater, heading towards an increase in the debt limit.  The White House still hopes for a big deal, but as Jacob Lew asked on Meet The Press yesterday, "Do we have a partner to work with?"  Sadly, your editor does not believe they do.

  • Presidential hopefuls burned through $32 million so far, in a new campaign spending report.  Newt likes private jets, but not paying the bill.  Mitt spent 18% of his budget on administrative costs.  And President Obama spent about $5 million organizing fundraisers.  Beyond the horse race and personal proclivities these kind of disclosures reveal, it concerns this editor the volume of cash spent in politics these days.

Friday, July 15, 2011

The Short List - July 15, 2011

International

Domestic

Programming Note -- as one Editor travels for a few days, your other Editor is faced with the grim reality of the bar exam. He will likely not be posting over the next two weeks.

Thursday, July 14, 2011

Programming Note

Your editor is traveling for the next couple days so there won't be a Short List today.  Apologies.

Wednesday, July 13, 2011

The Short List - July 13, 2011

International
  • The Egyptian army is telling protesters, who have returned to Tahir Square, to disperse, but the protesters have refused.  They want an end to the military rule that has been in place since the army took control from Mubarak.

  • The hacking scandal in the UK has jumped across the pond, as British PM Cameron promises to investigate if news outlets that are part of Rupert Murdoch's News Corp hacked the phones of 9/11 victims.

  • Violence marred the funeral ceremony of Wali Karzai in Afghanistan yesterday.

  • The UN World Food Programme is prepared to work with al Shabab in Somalia to distribute food aid, as the region faces a tremendous drought.
Domestic

Tuesday, July 12, 2011

What Kind Of Day Has It Been

International
  • The brains behind the operation to kill bin Laden has been placed under cover for his own protection. At the same time, amid the growing row between Pakistan and the United States, Pakistan is making noise about removing troops from the old NWFP. And the Guardian reported today that the CIA ran a truly clever fake vaccination program to try to acquire DNA of bin Laden relatives to verify the man's presence in Abbottabad--some public health advocate have expressed concern over this rouse. 
  • Anthony Shadid in the New York Times reports on Egypt's unfinished and ongoing revolution. And, unfortunately, Tunisia has all but fallen out of the news.
  • French deputies voted overwhelmingly to fund France's involvement in NATO operations over Libya, while the French foreign minister indicated that a political solution may be in the offing.

Domestic

Falling On His Sword for Country & Legacy

As I mentioned in today’s Short List, Speaker Boehner has been neutered by Eric Cantor and his tea party cohorts, who want the government to live within its means so long as “its means” doesn’t have anything to do with the increasing revenue.  Even if that increased revenue comes through a simplified tax code and is accompanied with $3 in cuts for every $1 in revenue.  I think this presents Speaker Boehner with an opportunity, albeit one with severe short-term professional consequences.

As Ezra Klein reminded us this morning, on the whole the American people like compromise, even if a majority of Republicans do not.  From everything that’s been written, it would seem like Boehner knew he had a sweet deal with the Obama administration and was inching toward taking it until he was out-flanked by Cantor and the far-right of the Republican party.  I think Boehner ought to work with Obama to make this deal work and abandon Cantor and the tea party.  I think Boehner needs to appeal to the cadre of remaining Republican moderates in the House and work with Obama and the Dems to avert what would be an unmitigated economic disaster.

Sounds kind of crazy, I know.  But stay with me here.  I believe there is a segment of the Republican party that’s filled with people who want a government to govern, and I think that part of the party knows how good a deal they have.  They’re best personified by this column(NYT) from NYT Columnist David Brooks.  And I think this is the part of the Republican party that Speaker Boehner represents.  The trouble is this is now the minority wing of the Republican party.  Time and time again, Obama chased the Republicans rightward (a whole other problem for progressives), forcing Republicans to abandon several smart ideas they’ve had in the past decade.  They had to abandon them because Obama, the Other, embraced things like individual mandates and cap-and-trade.  But I believe there is a sizeable number of Republicans remaining who aren’t Grover Norquist zealots and genuinely believe it’s the job of people in Congress to compromise in the pursuit of governance.  I’m just hoping those same David Brooks’ Republicans are spoiling for a showdown with the tea party.

Which brings me back to Speaker Boehner and his opportunity.  Given Boehner’s sensibility, he is not long for his own party lest he abandon his remaining moderation.  If he can rally his fellow remaining moderates to get this deal done he will almost certainly lose the speakership, he will likely face a primary challenge, and he may well lose his seat, but it’s a play for his legacy.  He could force the showdown between David Brooks Republicans and tea party Republicans.  By falling on his own sword he may save the Republican party from permanent minority status.  And history tends to smile fondly on politicians who put the national interest (and indisputably it’s in the national interest to increase the debt-ceiling and cut the deficit) ahead of fleeting personal aggrandizement.

Perhaps I’m overly optimistic.  Perhaps I’m reading Speaker Boehner wrong.  But if he is going to be robbed of his influence, why should he hold ceremoniously to a title and let his fellow Republicans run the economy off a cliff?  Andrea Mitchell was on The Chris Matthew Show this week reiterating how much these negotiations and the compromise that will be reached is about leadership.  I couldn’t agree more and I think this is an opportunity for Speaker Boehner to demonstrate his leadership and his shot to write his name into the history books of great Speakers of the House.  If a deal doesn’t get done and the credit of the United States gets downgraded, well that path carries a legacy as well.

The Short List - July 12, 2011

International
Domestic

Monday, July 11, 2011

What Kind Of Day Has It Been

International

Domestic
  • Debt ceiling drama continues as President Obama today ruled out a short-term stopgap measure. But the GOP seems to be moving yet further from compromise--and its radical presidential nominees are saying crazy things. Here's an examination of the 1979 sort of default.
  • Politicians on both sides of the aisle--but a few more Republicans than DFLers--in MN are continuing to cash pay checks while the rest of the State's employees are furloughed with the State government shutdown. 
  • Palin still refuses your Editor's requests to just go away.

The Short List - July 11, 2011

International
Domestic
  • The debt ceiling negotiations are set to continue today, the the parties still seem far apart and despite what was once a shared vision for a grand bargain, Speaker Boehner backed off of a major deal because it would likely have included $800 billion in tax increases, despite over all savings of over $4 trillion.  Paul Krugman reminds us(NYT) that much of our economic woes come in now small part from the excuses men (and women) create.

  • The case for nuclear fusion research directed by the government.  Did we wait for private investment to start the Manhattan Project?

  • Also, America F**k Yeah!  The U.S. women play in the semi-final match against France on Wednesday at 11:30am ET.