Super Cat Food Commission: Ideologues seem destined to tank the CountryPosted: November 16, 2011
The starve the beast anthem seems to have stymied any chance the country has of solving both its unsustainable long term debt problems and its economic growth issues. This is what you get when no one embraces pragmatism, workable solutions, and data. I continue to think the best solution to much of this is to let the Bush Tax cuts expire and let them scramble from the fall out of the trigger.
Nothing is acceptable to Republicans who have signed their political souls away to Grover Norquist and seem hell bent on keeping the pentagon flush with funds all while supposedly balancing the budget. There is no way for this to happen simultaneously unless one is prepared to completely do away with all other functions of government which is frankly what I think they want. We’ll have taxes subsidizing already rich, powerful and profitable corporations and the military industrial complex and the rest of America will be sharecropping in one way or another.
Pat Toomey basically defended this position to Chris Wallace at Faux News on Sunday. The problem with this position–and with sticking to it like a drug addiction–is that the reality just doesn’t fit the story and it’s not what people want. How is it possible for a group of ideologues to continually hold the country’s economy hostage to failed ideals rejected not only by experts on the economy but by US citizens in poll after poll? Why was America’s most profitable period a time when taxes were high on both corporations and rich people and the US was winding down its war machine if the Republican paradigm is so correct? Believe me, this Toomey plan is a bait and switch.
WALLACE: Again, before we get to your plan. What are the stakes if you fail to make a deal. If on November 23rd, the super committee comes up empty and the automatic triggers come in, and we’ll talk about that in a moment. What do you think the impact is on the markets, on the economy and on the U.S. credit rating?
TOOMEY: I think that there will be further erosion of what little confidence remains of our federal government. This has been a dysfunction Senate that I’ve been serving in for the year that I’ve been in office. And this is an attempt to try to make some important progress. It would only be the first of what needs to be many steps because we’ve dug a deep hole for ourselves. I think it’s really important that we’d be successful.
WALLACE: All right. You offered a plan that breaks with the Republican pledge not to raise any tax revenue. Let’s drill down into the plan.
You would cut the deficit $1.2 trillion, which is the mark that is supposed to be met by the super committee with $700 billion in spending cuts and $500 billion in revenue increases. On the revenue side, you get $250 billion by limiting deductions especially for top earners. In exchange, you would lower tax rates, the top rate would go from 35 percent to 28 percent.
Question: why are you breaking with the GOP pledge not to raise taxes in the middle of a bad economy and how many Republicans will go along with you.
TOOMEY: Well, let me — first of all, let me say, if I were king, this is not the plan I’d put on the table. But if we both went into our respective corners and had no flexibility at all, then we wouldn’t get anything accomplish. Number two, the plan that I put on the table is contingent upon pro-growth tax reform.
Every group that’s looked to this, all of the bipartisan commissions, gang of six and the others, have acknowledge that if there is more revenue it has to come in the context of pro-growth tax reform, the kind of reform we’re talking about absolutely guaranteed to create millions of jobs over time and still more revenue.
And, finally, Chris, the other reason to make a tough decision like this, is in the alternative, we are 13 months away from the biggest tax increase in American history. And that’s written into law. That’s going to happen.
WALLACE: You’re talking about the Bush tax cuts expire.
TOOMEY: That’s exactly right.
And so, what we’ve suggested is, as an alternative to an economy destroying tax increase right around the corner, let’s have a reform, let’s simplify the code, let’s lower rates, let’s wipe out some of the loop holes and special interest, favors and deductions. Let’s have the economic growth that would come with that.
And as we lower the rates and contract the value of deductions, we’ll only generate a little revenue so that we can reduce the deficit.
WALLACE: Now, I don’t want to get too far on the weeds, but Democrats immediately rejected your plan because they say that the money that would be lost by lowering those tax rates, basically 20 percent below the Bush tax cuts, would cost over $3 trillion for the economy, and they say the money you’re going to will lose that will increase the deficit is more than money you’ll get from closing these tax loops. That it’s a net loser.
TOOMEY: First of all, that’s not true. You could design this in a way — and as I said, I didn’t invent this. We didn’t invent this. This is an idea that’s been suggested by the Simpson-Bowles commission, by the Rivlin-Domenici.
Now, it’s true that they want to raise taxes more. I think that as you reduce the value of these deductions, if you go too far, you try to create too much revenue, you can do economic damage. But you absolutely can do this in a way that will be pro-growth, that will generate more revenue, that would avoid this huge tax increase that’s otherwise coming and I think that’s a direction we should move in.
Republicans continue to say that 1+1=3 despite decades of evidence and proof that 1+1 still equals 2. If tremendous tax cuts and deregulation had such benefits to the economy we’d not have had over ten years of miserable growth and a humdinger of a financial crisis. Corporate profits are at record highs. This is not leading to job creation. Taxes on capital gains are extremely low. This just keeps leading to bubbles, increased speculation, and paper gains for a few based on nothing but gambling. It’s not bringing any value to the real economy where jobs, products, services, and tax revenues that keep things running are made. Money keeps pumping into financial contracts which is just paper whose value is detached from real assets until the market crashes. Increasing taxes on capital gains would close down much of the worthless investment funds that are going after arbitrage profits in all the wrong places. Tax benefits should go to real investments and long term commitment to growing industry and businesses. Taxes favor speculation right now. It’s bringing more volatility and risk to markets and not vaulted liquidity.
It’s ridiculous and it flies in the face of recent economic data to suggest that continuing to hand wealth over to the richest folks is going to do anything other than continue the very same problems that we have now. We move productive funds away from things that are attached to real sector growth and into speculative activities which blow bubbles and ruin the value of real assets like houses, food, and commodities and create such excessive volatility in equity markets that long term investors experience incredible losses and then small gains continually. No one benefits but a few gamblers which evidently includes Congress. Republicans like Boehner, Cantor and Bachus and Democratic leaders like Pelosi benefiting from betting based on insider information as much as Wall Street does.
It seems like there’s a plot to extract as much wealth and income out of the economy as possible before they tank the entire thing and retreat to tax haven islands like Grand Cayman. How could elected officials be so set on sabotaging the country? Granted, there are idiotic true believers like Michele Bachmann who create their own reality and narratives and are so removed from facts that you wonder why they’re allowed in public. There used to be nice places in the country for folks like that to ‘rest’ and spend their days listening to those voices in their head. Now it seems they’ve all turned up in the Republican Party and have hunkered down in Washington DC. Okay, this is from Beltway Bob, but bear with the quote, please. It’s an indicator that they’re willing–like domestic terrorists–to take us all hostage again.
Six days left for the supercommittee, and it’s not looking good. On CNBC last night, Rep. Jeb Hensarling, the Republican co-chair of the committee, said he and his colleagues had “gone as far as we feel we can go” on taxes, and that “any penny of increased static revenue is a step in the wrong direction.” In other words, Republicans aren’t looking to compromise further. But Hensarling went yet further than that. If the supercommittee fails, he said, Republicans are looking to undo the compromises they have already made.
The issue is “the trigger,” the policy that automatically cuts the deficit by $1.2 trillion in the event that the supercommittee fails. Half of those cuts are scheduled to come from domestic spending (excluding Social Security, Medicaid, and a few other programs that help the poor). That’s the stick for Democrats. Half of them are scheduled to come from the Pentagon. That’s the stick for Republicans. But last night, Hensarling said the defense cuts are too onerous, and so “we’ve got 13 months to find a smarter way to do it.” By “a smarter way to do it,” he means a way that eases the cuts to defense and, since Republicans aren’t going to replace those defense cuts with new taxes, increases the cuts to domestic programs.In comments to reporters Tuesday, Senate Majority Leader Harry Reid was firm on this point: the defense cuts in the trigger were the GOP’s concessions after they refused to include taxes in the trigger, and they’re not going anywhere. “If committee fails to act, sequestration is going to go forward,” he told reporters. “Democrats aren’t going to take an unfair, unrealistic load directed toward domestic discretionary spending and take it away from the military.”
Behind the scenes, the White House has taken a similar line: the trigger can’t be changed to exempt defense and fall more heavily on domestic spending. That isn’t the same as saying the trigger can’t be changed. But Democrats aren’t going to be enthusiastic about keeping the part meant to penalize them for the supercommittee’s failure while helping Republicans move the bit that was meant to be their punishment.
But we’ll see. Democrats haven’t always been known to hold the line on defense cuts. The bigger issue here, however, is that Republicans are setting a bad precedent for future deals. Republicans are talking about unwinding the trigger before the supercommittee has even finished its work. They are, in other words, reneging on the terms of the debt-ceiling deal. So why should Democrats who are hearing this expect they’ll abide by the terms of a deal that calls for revenue-increasing tax reform in six months?
This reminds me of the stupidity of dealing with kidnappers, extortionists and terrorists. You give in a little and they just keep coming back for more. Plus, they never keep their words because there’s essentially still no honor among thieves. They are still working hard for a permanent extension of those Bush tax cuts which have to be some of the worst domestic policy to come out of this country ever. Democrats could do worse than to just let the committee fail and let the tax cuts go the way of the Dodo bird. That’s basically what I’m afraid of. At least with the trigger, we start killing the Pentagon budget. Late last night I saw Obama commit us to putting 2,500 troops in Australia. We need to be pulling troops out of these countries, not expanding their presence. Unless every single one of our allies starts wanting to foot the bill for our military presence in their country, then I think we should consider pulling the plug on a lot of these overseas bases. Why do we still need any kind of major military presence in most of Europe?
Lawmakers emerged from the closed-door meeting saying Hensarling had made the case that offering some new revenue — $300 billion in at least one publicized offer — would be a good trade to secure a permanent extension of the George W. Bush-era tax rates.
Speaker John Boehner (R-Ohio) told reporters after the briefing that the GOP had made “a fair offer,” referring to a proposal from supercommittee member Sen. Pat Toomey (R-Pa.) that would call for about $300 billion in new taxes in a total deficit-reduction package of $1.2 trillion.
“Both Democrats and Republicans have all done good work, they’ve worked very hard, but there isn’t an agreement,” Boehner said. “I’m convinced that if there is an agreement that it can, in fact, pass.”
Despite the concession on taxes, Democrats have rejected the GOP offer as “not serious.”
Hensarling received a standing ovation following his presentation, which one Republican described as “clinical” and somewhat “detached.”
Amid widespread skepticism that the committee will meet its $1.2 trillion charge, some members said Hensarling had dampened expectations for a blockbuster deal.
One lawmaker who attended the conference told The Hill that Hensarling “did say that what with the statutory obligations that have been set before us, let alone the statutory goals — don’t be surprised if they’re not met.”
Anne Kornblut at WAPO says that Obama and his administration believe the subcommittee will fail. Then what?
If lawmakers on the committee fail to reach agreement by next week’s deadline, Obama may be forced to step back into the fray after taking a steadfastly hands-off approach to the debt talks over the last few weeks.
Perhaps mindful of the long odds of success, Obama has largely left the negotiations alone, after issuing his blueprint in September for more than $3 trillion in savings. “It would be hard [for Obama] to do more. He’s put a proposal down,” lobbyist Steve Elmendorf said. “People know where he stands.”
At the same time, several Democrats said, any greater involvement by Obama at this stage could have a toxic effect as Democrats and Republicans try to find middle ground. If the president were more deeply engaged, it could force Republicans into a reactionary role.
“He doesn’t want to do anything that would detract from getting the votes,” former House minority leader Dick Gephardt, a Democrat, said. Still, Gephardt said, referring to the members of the supercommittee: “If they don’t do anything, then I think the president will try to enter more forcefully.”
I’m just reminded of the last few times Obama has gotten involved with negotiations. He gives away every one’s shirt on the first round. So much of this did not have to happen. We needed a bigger original stimulus that wasn’t so focused on tax cuts. We needed to focus on the economy and not going national with RomneyCare and the old Dole/Chaffee Health care pogrom that the Clintons and Democrats fought at one time. How could you blow all your political capital forcing through a partisan plan brought from the opposite side of the aisle and wind up getting blamed for its contents? What sort of smart person does that? Then, instead of tackling the debt ceiling increase and the budget before the polls tell you you’re about to lose both houses, you spend time giving the other side an extension on an incredibly detrimental tax plan. At this point, I’d rather he stay out of the negotiations.
Anyway, I’m trying to stay on top of this issue as much as possible but it’s hard to not think that most of the folks in the beltway love their political donors a lot more than they love this country. I’ve never seen such insanity outside of a banana republic before.