Wednesday, July 25, 2012

GO'P Lies

No, the coming military sequester cuts and "fiscal cliff" are not Obama's fault

McConnell, Boehner, and Cantor: "How can we get you to understand what a horrible no-good deal we forced everyone to make us take last year?!"

It became obvious during the Debt Ceiling negotiations last summer that the the Republican leaders were incapable of negotiating in good faith. Time after time, a grand bargain was supposedly in reach, only to see Speaker John Boehner or House Majority Leader Eric Cantor walk out near the end of that round of the process. During these negotiations, at various times the Republicans turned down deals with a ratio as high as 8 to 1 spending cuts to tax revenue increases.

Finally a deal was reached at the last minute: $1 trillion in spending cuts over 10 years, and an establishment of a Super Committee with a deadline of December to reduce the deficit by $1.2 trillion or more over the next 10 years. The Super Committee had the flexibility to use a combination of tax revenue increases and spending cuts to reach this $1.2 trillion, and if they couldn't reach a deal automatic spending cuts would kick in starting in 2013, reducing military budget and domestic spending budget by roughly equal amounts (roughly $600B each) over the next 10 years.

But once again, the GOP showing their lack of seriousness about the deficit, offered three of deals they knew were unacceptable. The first offer was $2.2 trillion in spending cuts with no tax revenue increases, which was rejected. The second offer included $1.5 trillion in spending cuts and $300B in tax revenue increases. That part seems pretty good, but then the Republicans on the Super Committee also included a poison-pill extension of the Bush tax cuts and a lowering of the top marginal income tax rate. The Democrats predictably balked. The final offer was even worse: $640B in spending cuts and $3B in tax revenue increases, a ratio of 213 to 1 spending cuts to tax revenue increases. And it would barely meet half of the agreed-to deficit reduction figure.

Just like during the summer, no compromise could be made on a balanced deal that also contained significant tax revenue increases, so the automatic spending cut triggers were set to take place in 2013.

This underscores a point Jonathan Chait has made time and time again and he made it again yesterday:
What the defense sequester drama actually shows, for the jillionth time over the last twenty years, is that Republicans don’t actually care about reducing the budget deficit. If you care about reducing the deficit, you want to keep in place these triggers in order to force some kind of agreement. But Republicans want to disarm the defense trigger, and also of course the expiring tax cuts, which are the other trigger, leaving no pressure mechanism to force a deficit agreement. They’re happy to use the pretext of the deficit to pass something that cuts upper-bracket tax rates and social spending (especially for the poor and non-elderly), but there’s no plausible way to read their actual legislative position as anti-deficit.
This reinforces once again that the Republican party cares deeply about only one domestic policy: ensuring taxes remain low for rich people. All of these other issues, especially the whining about the budget deficit and spending that takes place whenever a Democrat occupies the Oval Office, is a ruse and merely a means to achieve the ultimate end of lowering taxes for the rich.

Anyway, in the last week or so the GOP new line of attack blames President Obama for the spending cuts that are scheduled to take place to the military in early 2013, as part of this deal. Here were Mr. Boehner's new talking points earlier in the week:
"Let's remember why we have the sequester. We have it for one reason: because the President of the United States didn't want to deal with the debt limit again before the presidential election. Because the president didn't want to be inconvenienced, he came up with the sequester," he said.
Well, actually, Mr. Boehner, you have the sequester because one party would not accept any fair amount of revenue increases as part of a balanced deal to reduce the defict. These spending cuts do seem to have some real teeth and will likely result in some job losses and possible overall macroeconomic harm. But that's more of a general argument against any significant spending cuts during a time of poor economic growth, than it is an argument against these cuts specifically. Cutting safety net programs would present a similar drag on the economy. 
Keynesians would have preferred a clean debit limit increase in the winter of 2011, followed by more spending to stimulate the economy. Or if anything a balanced deal that has a significant amount of upfront stimulus spending, coupled with future deficit reduction measures, all budgeted over a 10-year window.

So in review, the GOP held the country hostage last summer for months over the Debt Ceiling increase, making an unprecedented demand for a significant deficit reduction plan as a prerequisite for any deal to raise the debt limit. Then they negotiated a deal to raise the debt limit in exchange for an unspecified future plan to reduce the deficit. Then when no agreement could be reached on this future plan, automatic across-the-board spending cuts became the law.

Last summer we were reminded how bad things were when the leaders representing one of the two major parties no longer had the power nor the courage to negotiate budget deals without first consulting the Tea Party, Grover Norquist, and Rush Limbaugh. And things are even worse when the same party leaders now seem unwilling to follow through on deals they voted into law.

How can you run a government effectively when one of the two major parties can no longer be taken seriously when it comes to following through on agreements they passed into law? The GOP were exposed as fiscal frauds when it comes to the deficit years ago. Now they are being exposed as frauds in general. And this is just yet another example of them living up to the "worst Congress in history" label given to them recently by Ezra Klein.

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