In a press conference last week, Obama once again resorted to his gelatinous whine that the current economic crisis engulfing the US is really a carry-over of the mess he inherited from the Bush Administration. You’d think that after two and a half years in office, not even Obama could fob off that line with a straight face.
As I recall, the budget deficit in Bush’s second term was headed in the right direction, and in 2007 it had gotten to a figure that looks paltry next to Obama’s deficits – a measly $160 billion, down from $400 billion at the end of Bush’s first term. The budget was moving toward balance when the 2008 financial market meltdown occurred, causing what the CBO called a “record” budget shortfall of $438 billion. This year’s deficit will be almost four times that amount – about $1.5 trillion. Obama inherited $9 trillion in national debt at the end of Bush’s term and quickly raised it to over $14 trillion in two years.
USA Today’s October 7, 2008 edition reported:
The deficit is virtually certain to balloon even higher next year as the government sorts out the financial crisis and taps a $700 billion Treasury fund to buy toxic mortgage-related securities.
The next president is likely to have to scale back campaign pledges as he inherits a likely deficit for 2009 exceeding $500 billion. But neither GOP standard-bearer John McCain nor Democratic nominee Barack has given much detail regarding what promises they won't be able to keep …
The deficit numbers for 2008 represent about 3% of the size of the economy, which is the measure economists consider the most relevant. By that measure, the deficit is smaller than the deficits of the 1980s and early 1990s that led Congress and earlier administrations to cobble together politically painful deficit-reduction packages.
The TARP and Fannie and Freddie bailouts weren’t cheap, but a steady hand on the tiller could have managed their aftermath and restored the economy to its pre-meltdown deficits. Instead, Obama and his band of merry novices decided to exploit the crisis, following the advice of his Chief of Staff, Rahm Immanuel, to never let a crisis go to waste. Government spending exploded and the figure “trillion” became the new normal of its measure. The Obama Administration enacted a feckless stimulus, passed an eye-popping budget, and shoved ObamaCare through Congress without a single Republican vote, since both houses had bullet-proof Democrat majorities and could do what they wanted.
Trillion dollar deficits abounded. The debt that Obama inherited from Bush, which was 20% of the GDP – already high by historic standards – sky-rocketed to 25%.
As federal spending sped like a runaway freight train toward the nation’s debt limit, Obama did nothing. Oh sure, he appointed a bipartisan debt commission to look into the fiscal Frankenstein he had created, but then he ignored their findings and recommendations when they were delivered to him last December.
The 2010 elections should have been a wake-up call that voters didn’t like Obama’s new normal. The Republicans regained the House but failed to get a majority in the Senate, so Obama’s transformation of America into a Eurostate labored on. His 2011 budget was such a joke, however, that even his Democrat-controlled Senate voted it down 97-0.
With deficits piling on at a rate of $1.5 trillion per year and the national debt at a stratospheric $14 trillion plus and rising, somebody must have elbowed Obama in the ribs during one of his many golf outings and told him he was going to run out of money this summer, because suddenly he got fiscal religion. Besides, the 2012 election was coming up and, as he reminded his audience in a recent fund-raising speech, he had 5 ½ more years to go in the White House.
Initially, Obama sent Biden the Blowhard as his representative to negotiate spending cuts and tax increases with the leaders of both parties in the House and Senate. He sent no plan, however, forcing witless Republicans to negotiate against themselves. The talks were held in secret sessions, a mistake that allowed Democrats to feign support for deep spending cuts without giving specific public evidence – like a budget. It also allowed Obama to demagogue the Republicans for wanting to preserve “tax cuts for the wealthy,” his standard class warfare horse hockey. Republican Rep. Cantor and Sen. Kyl walked out of the meetings when they were hopelessly deadlocked while images of Obama playing golf and flying about on fundraisers filled the evening television news.
Obama had to get involved.
He did. He gave a $38,500 per plate fundraiser speech in New York after talks collapsed saying,
The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners. ... Before we ask our seniors to pay more for healthcare, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys.
Conveniently left out of this agitprop was any reference to the fact that Obama’s own stimulus package two years previously had contained a provision shortening the depreciation of corporate jets from seven to five years in order to stimulate US sales of jets.
And he kept it up. In a press conference several days later, Obama mentioned corporate jets not less than six times, excoriating Republicans for opposing this “tax loophole.” Also conveniently omitted was that Obama wanted to count loophole closings as spending cuts because the federal government was subsidizing them. In other words, if I was going to steal your wallet and decided not to, that nets outs the same as giving you the money I would have taken. A couple of rounds with that kind of logic and you ain’t right anymore!
Incidentally, plugging the corporate jet “loophole” would raise $3 billion over ten years, or as Charles Krauthammer put it, 5,000 years would pass before the loophole generated last year’s budget deficit. Or if you collected all the corporate jet taxes and oil depreciation allowances for 100 years, you wouldn't cover the amount that Obama added to the national debt last February.
With the venue for talks shifted to the White House, and with Obama leading them, the sides grew farther apart than they were with Biden on Capitol Hill. Since the rate at which Obama is spending money requires 40 cents of every dollar spent to be borrowed, there is no way in the short term to cut spending enough to avoid borrowing, which means the debt ceiling has to go up. But Republicans want debt ceiling increases to be matched dollar for dollar by spending cuts, whereas, Obama wants a “balanced approach” in which a dollar increase in the debt limit is matched by 75 cents in spending cuts and 25 cents in tax increases. Obama had to know that the tax increases would poison the well. And yet he put them in anyway, probably to make political hay because there is no economic rationale for raising taxes on job creators in the middle of a recession. There also was no way that the Republican majority in the House would approve tax increases, so predictably, the talks stalled.
After sitting through two days of talks, McConnell was ready to bolt. The schedule of spending curbs offered by Obama was a pittance. Only $2 billion would occur in 2012, with “empty promises of more to follow,” McConnell said. He strode to the well of the Senate and delivered a sharply worded speech, saying, “I have little question that as long as this president is in the Oval Office, a real solution is unattainable. In my view the president has presented us with three choices: smoke and mirrors, tax hikes, or default. Republicans choose none of the above.”
Obama countered with press conferences, knowing that they usually preempt regular TV programming. If there are a thousand ways of lambasting Republicans for protecting their millionaire and billionaire friends from “paying their fair share of taxes” Obama used them all in his press conferences. His claim that the rich aren’t paying their fair share, however, is his usual redistribution barnyard refuse. In the first place, Obama considers anyone making $200,000/year or a couple earning $250,000/year to be “rich.” In the second place the CBO has shown that the top 40% of income earners pay 99% percent the taxes and the top 1% pays more than the bottom 95% combined. While the top 40% of income earners make three times as much money as the bottom 60%, they pay 75 times as much in income taxes. The bottom half of all income earners pay no income taxes whatsoever. The US is the most progressively taxed nation among the Western democracies. But it will never be enough for Obama because his fiscal policies are driven by ideology, not economics.
The US has never failed to pay its obligations on time, and the 14th Amendment forbids default. If a debt ceiling limit standoff isn’t resolved by early August, tax receipts will pay about 60% of current obligations and the Federal Reserve will print the rest. It isn’t the best solution, but neither is continuing Obama’s reckless spending or raising taxes.
Believing that he can persuade or scare the public into taking his side, on July 11 Obama again called a press conference and said he couldn’t guarantee that Social Security checks would be paid. That was designed to get Grandma on the phone to her congressional representatives.
Republicans wet their britches and signaled they were willing to pass a small $500 billion (that’s small?) increase in the debt ceiling for a $500 billion reduction in spending or to do a dollar for dollar deal for 30 to 60 days. Obama said he would veto it. He wanted a “grand bargain” that would pull the issue out of the TV news hole until after his reelection. Trying to appear presidential, if not parental, he glowered at the press corps and snorted that he had bent over backward to accommodate Republicans and that it was time to “eat our peas.”
Republican legislators were furious. “What the hell kind of talk is that – ‘eat our peas’?” one ranted. It was Saul Alinsky Chicago-style politics, of course. Belittle, intimidate, and attack your opponent’s impure motives. As ancient wisdom teaches, politics ain't beanbag.
McConnell caved. He began crafting what he called a “backup plan” that he believed would cause Obama to suffer voter wrath for raising the debt ceiling while keeping Republican skirts clean. The onus would be on Obama to request three tranches of debt ceiling increases from Congress and concurrently propose spending cuts. Congress would vote each time on a resolution to disapprove Obama’s request but it would have to muster a two-thirds majority to override a veto and prevent the increase.
McConnell apparently hasn’t read Article I, Section 8 of the US Constitution, which expressly grants to Congress, not the Executive, “the power to borrow money on the credit of the United States”. Republican Sen. Tom Coburn called the McConnell plan a political rather than a fiscal solution whose sole purpose was to give Republicans political cover and hang the debt limit solution around Obama’s neck. House Republicans warned McConnell that his “Cut, Run, and Hide” plan wouldn’t pass the House in contrast to their “Cut, Cap, and Balance” Act which passed the House Tuesday night. It would cut spending, cap future spending at its historic level of 20%, and call for a balanced budget amendment to the Constitution – which requires a two-thirds majority approval in both houses before states vote on it in their legislatures. Obama has already announced he would veto Cut, Cap, and Balance. It’s an empty threat. He knew the House bill will never get through the Democrat-controlled Senate, which voted Friday 51-46 to kill it before rushing to get out of town.
Late Tuesday afternoon, the so-called Gang of Six, a bipartisan group of Senators not consumed with Obama’s class warfare resentment, has been meeting since the beginning of the year. They pitched their $3.7 trillion plan to reduce the deficit to an audience of 50 other Senators from both parties. It’s not written in legislative language – really little more than a list of talking points and lethally short on details. Here’s the good, bad, and ugly of their proposal.
The Good: the alternative minimum “theft” tax is repealed, corporate taxes are reduced to 29% (they’re 23% in Europe), and ObamaCare’s budget-busting CLASS Act is repealed. The Bad: net tax increases of $1 trillion, no spending caps or entitlement reform, income-based limitations on mortgage interest and charitable deductions, no deduction of second home mortgage interest, and Sen. Baucus, the author of ObamaCare, will write the bill. The Ugly: Washington math is used therefore a reduction in the rate of increased spending, like the Afghan war, is called a “spending cut,” the CPI is rejiggered to reduce cost-of-living adjustments and inflate tax brackets, and capital gains and dividends get double-taxed.
On balance, the Gang produced more bad ideas than good which Baucus will only make worse if he writes the legislative language. Keep in mind that in 1982, Congress promised Reagan it would cut spending by $3 for every dollar raised in taxes in order to reduce the deficit. Taxes went up but not one dime of spending was cut. Reagan’s 1986 Tax Reform Act reduced the top tax rate from 50% to 28%, where Reagan promised it would stay in return for the elimination of certain tax havens. That promise lasted until he was out of the White House, but the prohibition of tax havens stuck. Last year the freshman who swept out many in the 111th Congress promised to eliminate $100 billion in spending. That was then “prorated” for the fiscal year to $66 billion, and then whittled down to $38.5 billion. The CBO scoring on the final cuts: $352 million.
Congress can’t be trusted.
During the White House “negotiations” between Obama and congressional leaders, House Majority Leader Eric Cantor argued relentlessly for spending cuts and against raising taxes. When he brought up the possibility of an abbreviated extension of the debt limit last week, Obama lectured Cantor and threatened: “Don’t call my bluff. I am not afraid to veto and I will take it to the American people. ... This may bring my presidency down, but I will not yield on this.”
Tough talk from a guy who has no plan of his own and who’s hiding behind the skirts of a Democrat-controlled Senate which protects him from having to use a veto that could come back to haunt his reelection campaign next year.
And the beat goes on. Friday evening the “grand bargain” unraveled when, after agreeing to about $2.7 trillion in spending cuts over ten years in return for $800 billion in new taxes, Obama reneged and said he needed $400 billion more in taxes in order to win the Democrat votes needed to pass this scheme. Obama’s “balanced approach” – 75% in spending cuts and 25% in tax increases to match a debt ceiling increase dollar for dollar – had now gone to more like 67% and 33%. "Dealing with this White House is like dealing with a bowl of Jell-O," Boehner said. “The White House moved the goalpost,” he added.
Two telephone calls from Obama to Boehner were not returned. Then the Speaker called Obama and said the talks were off. Glory be! I didn’t think the guy had it in him. Republicans never miss an opportunity to miss an opportunity. Or maybe Boehner knew that he was going to have a lot of defections among House Republicans, and that the Democrats whose vote would be needed to pass a bill had also bailed because spending cuts were too much and taxes were too little.
So the guy who threatened Eric Cantor with a veto if an abbreviated extension was offered may get no more than that. Maybe it will keep him in town and off the campaign trail and golf course for a while.
Advice to Boehner: Get the spending cuts enacted by the Senate before passing a debt ceiling increase – even for an extension of a few months. As Reagan’s experience and history has shown, the Democrat’s batting average on upholding their end of a spending cut bargain should make you as nervous as a long-tailed cat in a room full of rocking chairs.
As I recall, the budget deficit in Bush’s second term was headed in the right direction, and in 2007 it had gotten to a figure that looks paltry next to Obama’s deficits – a measly $160 billion, down from $400 billion at the end of Bush’s first term. The budget was moving toward balance when the 2008 financial market meltdown occurred, causing what the CBO called a “record” budget shortfall of $438 billion. This year’s deficit will be almost four times that amount – about $1.5 trillion. Obama inherited $9 trillion in national debt at the end of Bush’s term and quickly raised it to over $14 trillion in two years.
USA Today’s October 7, 2008 edition reported:
The deficit is virtually certain to balloon even higher next year as the government sorts out the financial crisis and taps a $700 billion Treasury fund to buy toxic mortgage-related securities.
The next president is likely to have to scale back campaign pledges as he inherits a likely deficit for 2009 exceeding $500 billion. But neither GOP standard-bearer John McCain nor Democratic nominee Barack has given much detail regarding what promises they won't be able to keep …
The deficit numbers for 2008 represent about 3% of the size of the economy, which is the measure economists consider the most relevant. By that measure, the deficit is smaller than the deficits of the 1980s and early 1990s that led Congress and earlier administrations to cobble together politically painful deficit-reduction packages.
The TARP and Fannie and Freddie bailouts weren’t cheap, but a steady hand on the tiller could have managed their aftermath and restored the economy to its pre-meltdown deficits. Instead, Obama and his band of merry novices decided to exploit the crisis, following the advice of his Chief of Staff, Rahm Immanuel, to never let a crisis go to waste. Government spending exploded and the figure “trillion” became the new normal of its measure. The Obama Administration enacted a feckless stimulus, passed an eye-popping budget, and shoved ObamaCare through Congress without a single Republican vote, since both houses had bullet-proof Democrat majorities and could do what they wanted.
Trillion dollar deficits abounded. The debt that Obama inherited from Bush, which was 20% of the GDP – already high by historic standards – sky-rocketed to 25%.
As federal spending sped like a runaway freight train toward the nation’s debt limit, Obama did nothing. Oh sure, he appointed a bipartisan debt commission to look into the fiscal Frankenstein he had created, but then he ignored their findings and recommendations when they were delivered to him last December.
The 2010 elections should have been a wake-up call that voters didn’t like Obama’s new normal. The Republicans regained the House but failed to get a majority in the Senate, so Obama’s transformation of America into a Eurostate labored on. His 2011 budget was such a joke, however, that even his Democrat-controlled Senate voted it down 97-0.
With deficits piling on at a rate of $1.5 trillion per year and the national debt at a stratospheric $14 trillion plus and rising, somebody must have elbowed Obama in the ribs during one of his many golf outings and told him he was going to run out of money this summer, because suddenly he got fiscal religion. Besides, the 2012 election was coming up and, as he reminded his audience in a recent fund-raising speech, he had 5 ½ more years to go in the White House.
Initially, Obama sent Biden the Blowhard as his representative to negotiate spending cuts and tax increases with the leaders of both parties in the House and Senate. He sent no plan, however, forcing witless Republicans to negotiate against themselves. The talks were held in secret sessions, a mistake that allowed Democrats to feign support for deep spending cuts without giving specific public evidence – like a budget. It also allowed Obama to demagogue the Republicans for wanting to preserve “tax cuts for the wealthy,” his standard class warfare horse hockey. Republican Rep. Cantor and Sen. Kyl walked out of the meetings when they were hopelessly deadlocked while images of Obama playing golf and flying about on fundraisers filled the evening television news.
Obama had to get involved.
He did. He gave a $38,500 per plate fundraiser speech in New York after talks collapsed saying,
The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners. ... Before we ask our seniors to pay more for healthcare, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys.
Conveniently left out of this agitprop was any reference to the fact that Obama’s own stimulus package two years previously had contained a provision shortening the depreciation of corporate jets from seven to five years in order to stimulate US sales of jets.
And he kept it up. In a press conference several days later, Obama mentioned corporate jets not less than six times, excoriating Republicans for opposing this “tax loophole.” Also conveniently omitted was that Obama wanted to count loophole closings as spending cuts because the federal government was subsidizing them. In other words, if I was going to steal your wallet and decided not to, that nets outs the same as giving you the money I would have taken. A couple of rounds with that kind of logic and you ain’t right anymore!
Incidentally, plugging the corporate jet “loophole” would raise $3 billion over ten years, or as Charles Krauthammer put it, 5,000 years would pass before the loophole generated last year’s budget deficit. Or if you collected all the corporate jet taxes and oil depreciation allowances for 100 years, you wouldn't cover the amount that Obama added to the national debt last February.
With the venue for talks shifted to the White House, and with Obama leading them, the sides grew farther apart than they were with Biden on Capitol Hill. Since the rate at which Obama is spending money requires 40 cents of every dollar spent to be borrowed, there is no way in the short term to cut spending enough to avoid borrowing, which means the debt ceiling has to go up. But Republicans want debt ceiling increases to be matched dollar for dollar by spending cuts, whereas, Obama wants a “balanced approach” in which a dollar increase in the debt limit is matched by 75 cents in spending cuts and 25 cents in tax increases. Obama had to know that the tax increases would poison the well. And yet he put them in anyway, probably to make political hay because there is no economic rationale for raising taxes on job creators in the middle of a recession. There also was no way that the Republican majority in the House would approve tax increases, so predictably, the talks stalled.
After sitting through two days of talks, McConnell was ready to bolt. The schedule of spending curbs offered by Obama was a pittance. Only $2 billion would occur in 2012, with “empty promises of more to follow,” McConnell said. He strode to the well of the Senate and delivered a sharply worded speech, saying, “I have little question that as long as this president is in the Oval Office, a real solution is unattainable. In my view the president has presented us with three choices: smoke and mirrors, tax hikes, or default. Republicans choose none of the above.”
Obama countered with press conferences, knowing that they usually preempt regular TV programming. If there are a thousand ways of lambasting Republicans for protecting their millionaire and billionaire friends from “paying their fair share of taxes” Obama used them all in his press conferences. His claim that the rich aren’t paying their fair share, however, is his usual redistribution barnyard refuse. In the first place, Obama considers anyone making $200,000/year or a couple earning $250,000/year to be “rich.” In the second place the CBO has shown that the top 40% of income earners pay 99% percent the taxes and the top 1% pays more than the bottom 95% combined. While the top 40% of income earners make three times as much money as the bottom 60%, they pay 75 times as much in income taxes. The bottom half of all income earners pay no income taxes whatsoever. The US is the most progressively taxed nation among the Western democracies. But it will never be enough for Obama because his fiscal policies are driven by ideology, not economics.
The US has never failed to pay its obligations on time, and the 14th Amendment forbids default. If a debt ceiling limit standoff isn’t resolved by early August, tax receipts will pay about 60% of current obligations and the Federal Reserve will print the rest. It isn’t the best solution, but neither is continuing Obama’s reckless spending or raising taxes.
Believing that he can persuade or scare the public into taking his side, on July 11 Obama again called a press conference and said he couldn’t guarantee that Social Security checks would be paid. That was designed to get Grandma on the phone to her congressional representatives.
Republicans wet their britches and signaled they were willing to pass a small $500 billion (that’s small?) increase in the debt ceiling for a $500 billion reduction in spending or to do a dollar for dollar deal for 30 to 60 days. Obama said he would veto it. He wanted a “grand bargain” that would pull the issue out of the TV news hole until after his reelection. Trying to appear presidential, if not parental, he glowered at the press corps and snorted that he had bent over backward to accommodate Republicans and that it was time to “eat our peas.”
Republican legislators were furious. “What the hell kind of talk is that – ‘eat our peas’?” one ranted. It was Saul Alinsky Chicago-style politics, of course. Belittle, intimidate, and attack your opponent’s impure motives. As ancient wisdom teaches, politics ain't beanbag.
McConnell caved. He began crafting what he called a “backup plan” that he believed would cause Obama to suffer voter wrath for raising the debt ceiling while keeping Republican skirts clean. The onus would be on Obama to request three tranches of debt ceiling increases from Congress and concurrently propose spending cuts. Congress would vote each time on a resolution to disapprove Obama’s request but it would have to muster a two-thirds majority to override a veto and prevent the increase.
McConnell apparently hasn’t read Article I, Section 8 of the US Constitution, which expressly grants to Congress, not the Executive, “the power to borrow money on the credit of the United States”. Republican Sen. Tom Coburn called the McConnell plan a political rather than a fiscal solution whose sole purpose was to give Republicans political cover and hang the debt limit solution around Obama’s neck. House Republicans warned McConnell that his “Cut, Run, and Hide” plan wouldn’t pass the House in contrast to their “Cut, Cap, and Balance” Act which passed the House Tuesday night. It would cut spending, cap future spending at its historic level of 20%, and call for a balanced budget amendment to the Constitution – which requires a two-thirds majority approval in both houses before states vote on it in their legislatures. Obama has already announced he would veto Cut, Cap, and Balance. It’s an empty threat. He knew the House bill will never get through the Democrat-controlled Senate, which voted Friday 51-46 to kill it before rushing to get out of town.
Late Tuesday afternoon, the so-called Gang of Six, a bipartisan group of Senators not consumed with Obama’s class warfare resentment, has been meeting since the beginning of the year. They pitched their $3.7 trillion plan to reduce the deficit to an audience of 50 other Senators from both parties. It’s not written in legislative language – really little more than a list of talking points and lethally short on details. Here’s the good, bad, and ugly of their proposal.
The Good: the alternative minimum “theft” tax is repealed, corporate taxes are reduced to 29% (they’re 23% in Europe), and ObamaCare’s budget-busting CLASS Act is repealed. The Bad: net tax increases of $1 trillion, no spending caps or entitlement reform, income-based limitations on mortgage interest and charitable deductions, no deduction of second home mortgage interest, and Sen. Baucus, the author of ObamaCare, will write the bill. The Ugly: Washington math is used therefore a reduction in the rate of increased spending, like the Afghan war, is called a “spending cut,” the CPI is rejiggered to reduce cost-of-living adjustments and inflate tax brackets, and capital gains and dividends get double-taxed.
On balance, the Gang produced more bad ideas than good which Baucus will only make worse if he writes the legislative language. Keep in mind that in 1982, Congress promised Reagan it would cut spending by $3 for every dollar raised in taxes in order to reduce the deficit. Taxes went up but not one dime of spending was cut. Reagan’s 1986 Tax Reform Act reduced the top tax rate from 50% to 28%, where Reagan promised it would stay in return for the elimination of certain tax havens. That promise lasted until he was out of the White House, but the prohibition of tax havens stuck. Last year the freshman who swept out many in the 111th Congress promised to eliminate $100 billion in spending. That was then “prorated” for the fiscal year to $66 billion, and then whittled down to $38.5 billion. The CBO scoring on the final cuts: $352 million.
Congress can’t be trusted.
During the White House “negotiations” between Obama and congressional leaders, House Majority Leader Eric Cantor argued relentlessly for spending cuts and against raising taxes. When he brought up the possibility of an abbreviated extension of the debt limit last week, Obama lectured Cantor and threatened: “Don’t call my bluff. I am not afraid to veto and I will take it to the American people. ... This may bring my presidency down, but I will not yield on this.”
Tough talk from a guy who has no plan of his own and who’s hiding behind the skirts of a Democrat-controlled Senate which protects him from having to use a veto that could come back to haunt his reelection campaign next year.
And the beat goes on. Friday evening the “grand bargain” unraveled when, after agreeing to about $2.7 trillion in spending cuts over ten years in return for $800 billion in new taxes, Obama reneged and said he needed $400 billion more in taxes in order to win the Democrat votes needed to pass this scheme. Obama’s “balanced approach” – 75% in spending cuts and 25% in tax increases to match a debt ceiling increase dollar for dollar – had now gone to more like 67% and 33%. "Dealing with this White House is like dealing with a bowl of Jell-O," Boehner said. “The White House moved the goalpost,” he added.
Two telephone calls from Obama to Boehner were not returned. Then the Speaker called Obama and said the talks were off. Glory be! I didn’t think the guy had it in him. Republicans never miss an opportunity to miss an opportunity. Or maybe Boehner knew that he was going to have a lot of defections among House Republicans, and that the Democrats whose vote would be needed to pass a bill had also bailed because spending cuts were too much and taxes were too little.
So the guy who threatened Eric Cantor with a veto if an abbreviated extension was offered may get no more than that. Maybe it will keep him in town and off the campaign trail and golf course for a while.
Advice to Boehner: Get the spending cuts enacted by the Senate before passing a debt ceiling increase – even for an extension of a few months. As Reagan’s experience and history has shown, the Democrat’s batting average on upholding their end of a spending cut bargain should make you as nervous as a long-tailed cat in a room full of rocking chairs.
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