Wednesday, July 20, 2011

Dancing On The (Debt) Ceiling

I MAY owe Mitch McConnell an apology. I’m not sure yet. I’ve been looking into this whole debt ceiling thing and I’m actually starting to see the cleverness in his plan, especially compared to the alternatives. Wanna talk about the debt ceiling? You know you do. Don’t worry, I’ll make this as painless as possible.

Ok, here are some basics.

1. The debt ceiling was first put in place by statute in 1939 by the Public Debt Act, which set the maximum amount the government could borrow. This number has been raised many times and currently stands at $14.294 trillion. . . roughly 4 trillion Big Macs.

2. The government will break through this ceiling on August 2 like a clown bursting out of a cake. . . hmmm, cake.

3. Everyone has a plan for dealing with this.

● the Do Nothing Plan: Do nothing. Kind of self-explanatory. Of course, this means that 80 million people won’t be getting their checks, and our cost of borrowing will go up, and a bunch of investment stuff with explode like a Congressman in a microwave.

● the Dumb~ss Plan: S&P and Moodys want Congress to eliminate the debt ceiling, which would be like parking your armored car at a thieves convention.

● the Double Dumb~ss Plan: Bill Clinton thinks Obama should just declare himself king and say that he has the power to raise the debt ceiling. Clinton also thinks yer kinda sexy.

● The Tom Coburn Plan: Tom Coburn is ready to do some serious cutting. He proposes $9 trillion in cuts over the next 10 years. This would include a trillion from the Pentagon budget, modernizing military health care, significant reforms of Social Security and Medicare, and the elimination of “corporate welfare” through the elimination of subsidies (e.g. ethanol and targeted tax credits) and many deductions. Grover Norquist (which I swear is the name of a Muppet) says: “it is now clear Sen. Coburn’s plan all along was a trillion dollar tax hike. . . [I have you now Coburn, there's no escaping the Grovernator]!”

● The Gang of Six: This group of reprobates are proposing a $3.4 trillion plan that isn't a real plan. It goes a little something like this.
(1) Find $500 billion in cuts now, mainly by reducing the cost of living increase for Social Security. Impose spending caps until 2015, freeze congressional pay and sell unused federal property. . . like Hawaii.

(2) Within 6 months come up with a plan to find more cuts.

They also suggest guidelines like simplifying the tax code by making three brackets (8-12%, 14-22%, 23-29%), setting the corporate tax at 23-29%, and eliminating the Alternative Minimum Tax (which sucks when it hits you. . . “what do you mean my deductions don’t count?! Alternative what?! Did I step into an alternative reality? If that’s true, then where’s my beard Mr. IRS ‘you owe us’ letter?! Where's my beard?!”).

Beyond that, this is just a plan to work on things... kind of like the Underwear Gnomes on South Park.
● the Tea Party Plan: The House just passed a really cool bill (Cut, Cap and Balance Bill) that does a lot of cutting ($5.8 trillion), would require a balanced budget amendment, and doesn’t raise taxes and it’s really cool and I like it a lot and stuff. . . but it’s D.O.A. at the Senate. Move along, nothing to see here.

● the McConnell Plan: Finally, we come to the McConnell Plan.
When I first heard the McConnell Plan, it sounded downright stooopid. As filtered by the press, McConnell was proposing to give Obama the power to raise the debt ceiling. If Congress wanted to stop him, they would need to pass a law stopping him. Since he could veto it, that meant Congress needed 2/3 support to stop him. . . and that ain't gonna happen.

The purpose of this plan seemed to be to let Obama get his debt ceiling increase, while claiming the Republicans tried to stop him, without actually stopping him. I was not pleased. And seeing Nancy Pelosi clapping her hands over this like one of those monkey toys with the symbols made me even more suspicious. If Pelosi likes it, it can’t be good.

Then I heard more details of exactly what McConnell is proposing. Apparently, to raise the debt ceiling, Obama also would need to recommend $1 of spending cuts for every dollar he wants to raise the debt ceiling. Now that is a horse of a different shade of green. That would mean for Obama to get a $1 trillion extension to the national credit line, he would need to propose $1 trillion in cuts. Wow! Me likely!

Not only would this mean Obama would be the one responsible for raising the debt limit (as he could avoid it by offering cuts instead), but he would also be forced to make cuts. Cuts which his peeps will absolutely hate! What’s more, the Republicans can vote against those cuts (claiming they would have made different cuts) because Obama has more than enough Democrats to let his veto survive!

Now, there are some caveats here. First, I think the Republicans need to send a series of budget cuts to him and have him veto those first -- as a showing to the public that they tried to get cuts. Secondly, they need to be very careful in how they write this. It better not include any chance of him raising taxes or this will go over like a lead balloon with the public (although... it might be a good way to let him do some of the dirty work of tax simplification to keep the Grover Norquists off Republican backs).

At this point, we don’t know exactly what the deal entails, but this may actually be a smart plan. Hence Obama and the monkey with the clap (Pelosi) are now rooting for the gang of six proposal instead (Reid doesn’t like it).

Stay tuned.

There... that wasn’t so bad was it? If you have any complaints, please leave them below.

52 comments:

Tennessee Jed said...

good job digging out the details, Andrew. I don't know whether Mitch always demanded the matching cuts, but it does seem to help Republicans avoid the "bi-partisan tax and spend" issue. I started to look at this from the standpoint that THE important battle is Nove,ber 2012, not this one (except to the extent this one is somehow a game changer.) One thing that is key. We have always gone with the libs on a tax now reduce later scenario, and that has to stop.

Let's hope Mitch knows what he is doing. He is a wily veteran.

Joel Farnham said...

Cut one dollar for one dollar increase. Could work, except now they are talking about deep cuts in the military. A military that can barely fight one war. To be fair, our military has the latest gadgets and what all to be almost unbeatable. For now.

What the end result probably will be with McConnell's plan is one dollar increase and NO dollar decrease in spending cuts except for the mean old military.

I think we should keep on with what the Republicans have passed. Make Obama Veto it. Keep on making him veto it. If we keep this up, Obama will cave. Remember, Bammy said, "Don't try my bluff!"

T-Rav said...

So Andrew, exactly how many meds were you on when you wrote this?

I've been back and forth on the McConnell plan. I think it could be a clever way to resolve the debt issue and simultaneously corner Obama, but I worry it could also get bad PR for the same reason, being seen as the same old political games.

And incidentally, no Grover Norquist is not a Muppet. He is very real.

CrispyRice said...

Complaints? You have me wanting both Big Macs AND cake. I feel like a congressman...

Being of the conservative ilk, I'm more of the "pass cuts, refuse to raise taxes, damn the torpedos and full steam ahead!" thinking. Let the economy tank. Let things fall apart on O's watch. We'll finally have a chance to do some necessary reforms.

But I know that the Crispy Plan has a snowball's chance. *sigh* So, it's good to have some analysis from you about what may actually happen for reals. ;)

And for the record, I've contacted my Rep several times to let him know that I'm behind him staying strong and sticking to cuts.

BoilerRoomElf said...

Hey BossMan Andrew, don't go making fun of those Underwear Gnomes! They knew a good plan when they saw it!

rlaWTX said...

IF there was a requirement to IMPLEMENT spending reductions in order to raise the limit, I guess it might be OK. I just keep reading about the past promises to cut in exchange for various things (like "Reagan's" tax hike) that never, ever come to fruition.

I think that I like the Crispy Rice plan!

AndrewPrice said...

Jed, I hope so. Not that I use the word MAY because I don't trust any politician anymore until I see all the details.

I think this plan would work as if it is as presented because it would force through cuts, plus make Obama more unpopular, and would set us up nicely to finish the job in 2012.

You're right about 2012 -- that's the big goal. And my biggest concern is that we either end up doing nothing and appear to have just quit or that we surrender. Neither will sit well with the public.

AndrewPrice said...

Joel, I agree that's the best plan to pass, but I think the Democrats won't even bring it to a vote. So we do need a back up plan.

I would send bill after bill (single cuts) to the Senate -- 10-12 a day. And then go to the public and say "we're doing our part." If the Democrats agree to them, then we start declaring victory. If they don't, then we point out that the Democrats won't even vote for them... vote Republican 2012.

If we do that, then I think the McConnell plan is a good one for Obama's last year in office.

In terms of the military, there cuts that can come out there -- some big weapons programs the Pentagon doesn't even want. But you're right, it is a fine balance and Obama may be tempted to take too much out of that budget.

LawHawkRFD said...

Andrew: So far, the McConnell plan has more pluses than the other plans we've see (particularly the Gang of Six plan, which isn't even really a plan). I'm just concerned that Obama is sitting back and watching Republicans fighting each other instead of fighting him and the Democrats. Whatever plan we come up with, it must include massive cuts, no tax increases and a balanced budget within no more than four years. More importantly, Republicans have to unify behind one plan, soon, and start going on the offensive. Obama is winning the propaganda war, and that would be a complete disaster.

AndrewPrice said...

T_Rav, I do not believe there was any medication involved -- just high on life! :-)

I think the McConnell plan would work well, but I'm not certain. At this point, I need to see the details and I really think they need to be seen first having tried to get cuts after cuts after cuts (i.e. send spending cut bills to the Senate -- bunches of them) and the Democrats standing in the way.

I think that's the only way to insulate them from the charge that they just handed this power to Obama rather than make cuts.

I also think the tax hike thing needs to be off the table or they will get blamed for handing over the power to tax.

(I also think there's a constitutional problem, but that's not something we need to worry about now.)

T-Rav said...

Well, looks like there's one upside to all this so far--the Gang of Six is a bust. Reportedly, they won't be able to formulate a plan and get it onto the Senate schedule for a vote before the 2nd. So that's some good news, knowing they can't wreck everything again.

AndrewPrice said...

Crispy, I'm glad you're calling your rep! I think the Republicans need to hear that from their supporters!

My personal preference is to force the cuts. Make them, send them to Obama and make him take the blame for not agreeing. But since we don't have the Senate, we can't even force a vote on those bills. Thus, it's just political theater at this point -- though it can be good theater.

I don't think letting a default is a good idea. There are 80 million people who will hate someone and the media will tell them to blame the Republicans. The dollar will crash, our cost of borrowing will soar. The problems we have will multiply. So we need to do something.

The McConnell plan (if it's what they've outlined) would at least force Obama to come up with cuts.

Some of the other plans don't do anything except push off cuts for forever.

I think Coburn's plan is actually a good one, but has no chance either.

AndrewPrice said...

P.S. Crispy, Sorry about the Big Macs and cake -- I was hungry when I wrote this.


P.S. T-Rav, If he's not a Muppet, then he must be named after one. Who would do that to a kid?

AndrewPrice said...

BRE, the Underwear Gnome is a classic... profiiiiit. It is in fact the one used by Congress the most!

AndrewPrice said...

rlaWTX, That's my understanding of this plan -- he would be required to do a dollar of cuts for every dollar hike. If it isn't a requirement, then the plan should be abandoned immediately. Unfortunately, they haven't announced the exact plan.

At this point, there just aren't enough details to know exactly what is going on.

AndrewPrice said...

Lawhawk, I agree -- especially about the need for them to finally get unified. You can't negotiate if your team is all over the board as they are. It's frustrating that they can't get on the same page, but that's the problem of dealing with Congress.

Right now, the McConnell plan sounds like the best political result they could achieve, but we still need a lot more details. I would love to see something with actual cuts from the Republicans, but I'm just not sure they can get their act together to do it at this point.

I don't like the Gang of Six non-plan plan at all.

AndrewPrice said...

T_Rav, That's good news because their plan was very politician friendly -- proclaim victory now without changing anything and promise future changes. That's no plan, that's a whitewash. But Congress loves that sort of plan.

LawHawkRFD said...

Andrew: And we could get some breathing room by taking the debt ceiling issue off the table. Pick a number. $500 billion was the Krauthammer suggestion. Raise the debt limit by $500 billion but only in tandem with $500 billion in cuts. That would take Obama's "crisis" away from him, and give the Republicans time to put together a coherent, unified plan for the budget. Obama's people have cleverly manipulated the Republicans into a corner with the debt limit issue that most Americans don't understand anyway. With the limit increased, Obama loses his best "crisis card."

Joel Farnham said...

Andrew,

What I don't like about McConnell or Coburn plans are that they represent a break in a unified front aimed at Obama.

There is much more at stake than just another budget.

I would get behind both those plans if their cuts were front loaded, that is, the cuts happen before anything else. Tax increases or debt ceiling raised. As it is, it just seems more Washington Doublespeak from Republicans instead of Democrats this time around.

AndrewPrice said...

Lawhawk, That's an excellent idea too. That way we get some cuts and some time to come up with a good plan.

Pick some cuts that the Democrats claim they will accept from prior negotiations and pass those along with a small hike of the ceiling, just enough to buy a few months -- right into the election cycle.

AndrewPrice said...

Joel, I would definitely not accept backloaded cuts as real cuts. In fact, it drives me crazy to see these "trillion dollars over TEN years." When you look at them, they are often nothing for 5-6 years, then cuts at the end. That's bullsh~t.

And I agree, my biggest fear is that this ends up coming across as an abandonment of responsibility. The public won't accept that.

But tactically, this may be the best way to solve this issue until we can do more about it in 2013?

Joel Farnham said...

There is a way to solve this. Promise the Democrats all the tax increases they want, but time them for 2016. That is, if you give us these cuts, whatever the cuts are, we will give you 30% tax increases starting in 2016.

If they won't agree to that, then we don't have to agree to what they want.

AndrewPrice said...

Joel, Strategically, that's a great idea. BUT right now people are so upset at Washington that they would flip out when they heard the Republicans agreeing to tax cuts, even if they never happen.

StanH said...

Mitch McConnell being a little too clever by half. Call me skeptical, I have my doubts he can outsmart the deviants on the left…we’ll see. The cure to the insanity that is Washington DC, is several more election cycles, and many more firings. Beyond that it's Kabuki Theater for the masses.

AndrewPrice said...

Stan, Sadly, I think you're right that nothing will get fixed until at least 2013 and maybe later. But this might be the best plan until then. I guess we'll see though.

Joel Farnham said...

Andrew,

It will never happen. I just restructured the deals Democrats usually give out. That is the way to find out if a deal is fair. Restructure the deal. If it doesn't sound fair the other way, then the original deal isn't fair.

The original deals with Democrats is give us the tax increases now and we will give you the cuts later. How did that work out?

AndrewPrice said...

Joel, Don't get me wrong, I love your plan. I think it's brilliant! And I'm a huge fan of using Democratic tactics against them.

The only problem is that the public will freak out because the Republicans have squandered the public's good will for so long that people no longer trust them.

Maybe if they could get the talk radio guys on board first, then it might work PR wise?

Joel Farnham said...

You know, it would work if it is used as a hypothetical, showing how the earlier deals with Dems were never fair. Do it for a couple of months just as talk..... maybe.

AndrewPrice said...

Joel, I think it could work if the talk radio guys played it up as a brilliant plan. The Republicans could just remain silent on the part the Democrats won't like and then guys like Rush and Hannity could tell people "stay calm, this is a great idea." That might work.

Of course, the big catch is that we better be very sure we can stop those taxes from ever kicking in!

Joel Farnham said...

Well, with the cuts, why would we need the new taxes?

It wouldn't work, because the Democrats would work overtime to get them implemented as well as some idiots on our side would go crazy with new spending on "needed" reforms. Such is the human condition.

AndrewPrice said...

Sadly true. Our side often shoots itself in the foot. Or more correctly stated, guys like David Brooks love to shoot our side in the back.

Ed said...

Nice article Andrew! Funny, yet informative. From now on I will always see Pelosi as a monkey with the clap! LOL!

AndrewPrice said...

Thanks Ed! I've kind of always thought of her that way! ;-)

T-Rav said...

On economic stuff, I have to mention this. MSNBC's Contessa Brewer (defender of the pie-thrower at Murdoch's hearing yesterday) got in an argument on air today with a GOP congressman from Alabama about economics and so on. And with all the snideness we've come to know and love from liberals, she asked him if he even had a degree in economics. And he, um, does. Which he proceeded to inform her of. Awesome.

http://hotair.com/archives/2011/07/20/do-you-have-a-degree-in-economics/

AndrewPrice said...

T-Rav, I saw that at Drudge! And she's really one of the stupider news readers -- she shouldn't be questioning anyone about anything.

Here's your link:

LINK

Joel Farnham said...

If we are talking about smack downs, check out Allen West's email to Debbie Wasserman Schultz. I found the email at John Galt. Today, Lil' Debbie claims West is "Cracking under the Pressure." Since, Debbie is a liberal and brain dead one must give her some slack in not understanding that she has been slapped down.

T-Rav said...

Joel, I saw that last night. Further proof that LTC Allen West is awesome. Debbie, on the other hand, is a complete idiot too stupid to do anything but play the race/gender/class card. In other words, the perfect person to run the DNC.

Can I just say this? What is wrong with Florida? For every good guy like West, there's an Alan Grayson or a Debbie Wasserman-Schultz; besides which, that state is where we get 90% of our bizarre criminal cases, and there's always a natural disaster of some kind going on. Now, I don't dislike the state--it has a lot of nice places--but when one goes down there and sees one's grandfather getting checked out by a tranny in an IHOP, one tends to be a little leery of the general population.

AndrewPrice said...

T-Rav, You should write the tourism commercial for Florida....

"Come to Florida, we have some good parts, but watch out for crazy criminals, natural disasters and IHOP trannies!"

AndrewPrice said...

Joel and T-Rav, I saw that last night and I loved it! That women is so vile and everything he said was something I could have said too. It felt great reading that!

Joel Farnham said...

T-Rav,

I never been to Florida so I couldn't tell you. I have lived in California, does that count? There I saw a man who fancied himself as a green gnome complete with toenails painted green. Unfortunately, I accidentally stepped down wind from him and was socked by his smell. It was a cross between manure, fruit and musk.

T-Rav said...

Andrew and Joel, I really wish I were making that up. It happened. It was while we were visiting the Keys, which might be the absolute kookiest part of the state. I don't really think Florida would want me writing their ads. Maybe I could lie about California, since I've never been there, but that probably wouldn't work out too well either.

BevfromNYC said...

T-Rav - The problem with Florida is that most Northeasterners retire there. THAT's why there is so much craziness...

patti said...

andrew: ugh. it makes me want to show up in washington with a ginormous fire house and give the place a deep-cut cleaning. i don't trust the lot of them. i wish they'd give me reason to, but right now i feel we are swimming upstream where the bears are waitin' for dinner.

AndrewPrice said...

Joel, T-Rav and Bev, I spent 4 years in Florida as a child and it wasn't all that strange back them. I'm thinking times have changed. Of course, I don't recall visiting any IHOPs?

By the way, speaking of writing the tourism adverts, have you ever seen this: Cleveland

AndrewPrice said...

patti, A fire hose would be a great first start. A fence would work too. :-)

BevfromNYC said...

Patti and Andrew: You know, it hit 116 degrees in DC today. I attribute it to all the hot air from Congress. I will be happy to hold that firehouse with you...we can start with Pelosi.

AndrewPrice said...

Bev, She'll melt and then we'll get sued! Eh... I'm ok with that.

Are you sure it isn't all the brainpower in the White House? Someone as "smart" as Obama must give off a lot of heat.

USS Ben USN (Ret) said...

Good post, Andrew!

I hadn't heard about the cut 1 buck for every 1 buck hike part.
That sounds like something Mitch the ditch added since he blindsided the House republicans.

First of all, why is it so hard for Mitch (or any Senate republican other than DeMint) to check with the House before they rattle off a new plan that ain't actullay written yet?

Secondly, Mitch the ditch has an awesome track record...of pulling defeat from the jaws of victory.

It would be very easy to beat Mitch at a game of chicken because he veers off course miles before the other guy is even visible.
Predictable establishment bullhockey. That's what we have always gotten from Mitch the ditch.

However, if he's for real and there's no loopholes in his plan that ain't actually written yet (hmm...this is beginning to sound an awful lot liuke Obama's plan that has never actually been written), and he actually writes this as a plan B (after talking to the House), then yeah.

But Obama would never sign off on something like that.

I think the GOP should hit the airwaves 24/7 and keep saying "Obama and the democrats want a blank check from you, the taxpayers, and they wanna raise your taxes and we will not allow that to happen on our watch."

I would also say that "if we default it will be Obama's choice.
Because even if a deal ain't reached, Obama can still choose to pay our bills first, pay our military first, and spread the wealth of the leftovers last.

Every American family must pay their bills, so what makes Obama and the democrats so special? Make no mistake and let us be clear, Obama and the democrats refuse to budget your tax dollars or account for what they have spent and borrowed and they expect you to keep picking up the tab."

AndrewPrice said...

Ben, I agree with every thing you've said.

If this is how the plan will work, then it's a decent plan. But I will wait until I see the details.

I also agree that the Republicans need to flood the airways with their position... whatever that is.

And that's really the problem. I just don't understand why the Republicans can't get together and come up with a game plan before they get themselves into these messes. It's like they went into the negotiations with no plan whatsoever?

In the end, I think we're going to be stuck with no good choices because something will have to be done. A lot of people say "go ahead and default" but I assure you, that would be a disaster and we do not want to be facing outraged people who aren't getting their social security, outraged investors whose stocks have plummeted and outraged taxpayer when the cost of our debt goes up $500 billion a year.

Unfortunately, right now, there doesn't seem to be a plan.

AndrewPrice said...

Joel, If I'm reading my news correctly, the Republicans may be adopting your plan. They are talking about immediate cuts with tax hikes in the future.

This is getting pretty interesting.

Joel Farnham said...

Andrew,

Indeed it is getting interesting.

Boehner has done something that I didn't think he would do. He walked away from the table with decorum and probity. He stated,“In the end, we couldn’t connect. Not because of different personalities, but because of different visions for our country.”

I think Boehner, for all his crying, has actually listened to the Tea Partiers.

AndrewPrice said...

Joel, That was absolutely fascinating. I wonder what will come next?

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