The Debt Ceiling Debate: Washington's Moral Failure
Nick Carraway
Courtesy of Public Notice MediaIn Washington, we have not only a governmental failure, but a moral failure. For months, concerned words from people of all political stripes, foreign and domestic, have warned us of an impending economic catastrophe if the federal government is allowed to reach the debt ceiling. For three years, the American public has watched in dismay as elected officials try to manage the decline of the US economy. Both parties have failed to enact any meaningful spending or tax reforms, while the gap between the wealthiest two percent and the rest of us increases at a record rate. Last week's lack of progress shows that our politicians have failed to recognize debt ceiling compromise as an urgent moral imperative.
As August 2nd looms closer, the country faces the debt ceiling deadline, a date that has already been delayed once. Almost all lawmakers agree that there has to be a debt ceiling deal tied to deep spending cuts. And what are President Obama and Congressional leaders spending their time doing? Last week after a series of repetitive, unproductive meetings, the politicians held self-interested press appearances in which they attempted to spin their lack of progress into the best political posture for them.
This week Republicans are forging ahead with their cut, cap, and balance plan that the president has vowed to veto. Rather than compromise, players from both parties are willing to push their own agendas until the other side flinches, all while the global economic system hangs in the balance.
No longer is their intransigence simply a political failure, it is now a matter of morality. It is unacceptable for our elected officials to jeopardize the long term security of the whole American economy for their own short-term political gains.
This criticism is not merely a partisan attack. Last week's failure extends across party lines. On the Republican side, Congressman Boehner was unable to fulfill the basic requirement of his leadership role as Speaker of the House, that is to bring House Republicans closer to a bipartisan compromise. Now Boehner will have to push a rushed, ultra partisan bill through the House that he knows won't pass the Senate. What's worse, the Republicans will have to do it in exactly the same way for which they intensely denounced the last Democrat-controlled congress in the 2010 campaigns.
What is at the root of Republicans' failure to compromise with Democrats? Another campaign promise of course. At the behest of Grover Norquist and his right-wing group Americans for Tax Reform, most congressional Republicans signed a pledge not to increase taxes. This is a great idea for the Republican base in theory, but stupid in terms of practical governance.
Though Boehner and his party might agree with Norquist's ideology of limited government, they should not have signed his pledge for no new taxes. The US has such a complex tax code in sore need of reform, and any adjustment to it, like eliminating corporate loopholes, can be denounced by Norquist as a tax increase. So now fearful lawmakers are shying away from tough votes that might hurt their reelection efforts. In the middle of a critical national debate, short-sighted Republicans have backed themselves into a corner in the debt ceiling negotiations. It's irresponsible, and puts ideology before the common good.
It's no surprise that the Democratic party sees tax increases as necessary to the common good. Denouncing the rich has become one of the most tried and true campaign strategies for the DNC. President Obama seems more intent on getting his class warfare message out to the public than he is about reaching a debt ceiling compromise. Given his own personal assessment of how imperative it is to raise the debt ceiling, Obama's position on the matter is shockingly inconsistent. He claims to favor a $4 trillion deal that would include $3 trillion in spending cuts, and an additional trillion in tax revenue. This approach will not pass the House, and yet Obama still refused the Republican counter offer of $2 trillion in spending cuts because it didn't not include tax hikes.
With no serious explanation of why new taxes are a must in this deal, the president's intentions here are clearly self-serving. Otherwise, he would take the counter offer and save tax hikes for another battle. Why get hung-up on increasing revenue when there are bigger, more politically expedient ways to reduce deficit?
Inserting tax increases to the discussion is an obvious calculated attempt to turn voter sentiment against the successes of the rich, rather on than the irresponsible, rampant spending under the Obama administration. If tax revenue was a real priority, the President could have addressed the issue when Pelosi and his party controlled both houses of Congress. Instead, he used his advantage to pass another health care entitlement even larger than ones that we now have to cut.
By suggesting his concern for vulnerable populations, President Obama is being dishonest about his motivation when it comes to entitlement cuts. Instead of accepting the Republican compromise that would result in less cuts or offering his own counter-compromise, the President has used his bully pulpit to tweak his own image.
Obama's recent comments have lacked specificity and seem carefully designed to frame himself as the adult in a room of children. With a undue paternalistic smugness, Obama suggested that Congress should complete their work before it's due, simplistically likening the $14 trillion dollar debt to his daughters' math homework. He told us all it's time to “take the band-aid off” and “eat your peas.” Then, he attempted to spread hysteria by claiming he couldn't guarantee next month's Social Security checks, when it's obvious that averting a crisis is well within his control. But so far his advice to the American people was not to worry about the debt ceiling deal.
The behavior of both Congress and the President surpasses the common Washington gridlock and approaches the realm of immorality. This problem demands immediate action if the US economy hopes to avoid another severe blow. Cuts to a small percentage of people who rely on government assistance is no longer our biggest concern. We have to consider the whole economy. The financial well-being of average Americans outweighs the risk of losing a small portion of entitlement programs. Imagine the inflation that will affect everyone's purchases. Consider the impact of market disruptions on retirement savings.
It is immoral for our leaders to take things this far. Most agree that spending must be cut and that this amount of debt is unsustainable. We need to see a solid growth in private sector employment, not more government assistance. While the wealthiest of us need to pay their fair share, we shouldn't view tax increases as punitive measures to use against people who are more successful than the rest of us. We should demand accountability from existing regulatory agencies that haven't been catching and punishing the criminals who are destroying our economy. Yet instead of wondering why no major heads of banks were charged by the SEC, we want to pretend that higher taxes on the rich will send the message.
To avoid another moral failure like this summer's debt ceiling debacle, term limits must be imposed, not higher taxes. Our founding fathers started a new country because of the dangerous threat that an elite, disconnected ruling class meant for the public good. Giving our current leaders more power to tax and to irresponsibly borrow money won't help us return to the principles of 1776. Mandatory term limits are the best way of reminding politicians that solving the country's big problems are more important than extending their own political careers.
Reader Comments (8)
Well written and right on point. I agree with you on every count. I believe they can make this deal and there is no choice to raise the debt limit. The linguistic corner that both parties have painted for their candidates make the challenges and compromises almost impossible. So they have to have courage and compromise. I have read about the The Group of 6 and that gives me hope. Our system is not broken when the our representatives have courage.
Now I agree with term limits if they make caps with political spending and donations. There is no reason why a senator should be there for 30 years and has mansions and limos on the US tax payer. We should have a two term limit for senators and a 3 term limit for representatives. They will more likely vote their conscience if their job is not depending on it. It doesn't mean they will be moral, but they will have little time to be forgiven. It must come with caps in political spending or the poor and middle class candidates will never have a chance, instead of the slim one we have today.
Good lunch and with my money in my retirement and so much tied to stocks, I do not want to see a default, but I believe as strongly that we shouldn't have unending credit to run our programs. It is time to raise tariffs and make American products in this country, produce jobs with American rights and behavior, and start a new golden age of domestic concentration.
Thanks for the lunch
Ok Carraway, I like that you attempted to place complicity on both parties in this situation, and I am not about to try to canonize Obama and/or any liberals. In fact, I believe that Reid and Pelosi, in their old-fashionned liberal hard-headedness and denial of reality, are as much to blame for this travesty as the devil spawn Cantor (sorry, all this talk about morality is putting me in religious mode).
The position that the Republicans are taking, that this crisis needs to be resolved only through cuts, not revenue increases, is immoral. It takes away from the struggling and the weak- the old, the poor, the unemployed, the uneducated- without passing on any new difficulties to the affluent, those who could most afford to share some of the burden. This is immoral.
Warren Buffett, as seen in the attached link, pays a lower, considerably lower, tax rate than the admins in his office. This is immoral. http://youtu.be/Cu5B-2LoC4s
Reagonomics, trickle-down, whatever you want to call it, did not work effectively as a long term policy when it was first enacted on a wide scale in the 1980s. In truth, you can't really say that that is even a fair comparison, as the wealthy paid considerably more in taxes under their beloved Gipper, who raised taxes a few times as President because sometimes that's what Presidents need to do to help their country. To pretend that this policy in any way is about helping the poor and middle class, to actually sell the naive public on the idea that they should be grateful to be pissed on by the wealthiest 2%, is immoral.
What we have here is a civil war battle between two religions. The religion of the Republicans is unrestricted capitalism, and their loyalty is to men like Grover Norquist and Rush Limbaugh, who are not elected into anything by the people. The religion of the Democrats is, still basically, bleeding heart liberalism. The idea that everyone in our country should have the right to healthcare, that everyone should have the opportunity to have purposeful work, the idea that sometimes the rich, the narcissistic, and the truly powerful tyrants of society sometimes need to be taxed because they themselves DO NOTHING to help their fellow man (look at the rates of economic growth vs. unemployment rate if you disagree), these are the ideas of a truly moral leadership.
For our unemployed, our foreclosed upon, and our desperate, the economic crisis happened a long time ago. If Obama is going to try to help the poorest, least able Americans at the expense of the richest and most powerful, that is not amorailty- it is the opposite, and it is the kind of compassionate leadership that our country needs.
Incidentally, the US Conference of Catholic Bishops has something to say about the morality of this debate too. Seems the party of Ayn Rand might not be in touch with (or care about) issues of morality anymore.
http://www.usccb.org/issues-and-action/human-life-and-dignity/economy/upload/budget-debate-letter-to-house-2011-07-26.pdf
Neutron,
That letter was awesome. Clear and succinct and powerful. I wish this was publsihed in every parish a week ago and is published every week until we finally have a Washington devoted to creating a free and equal social and economic America and world instead of one trying protect established wealth and business interest. Thanks for the link.
Neutron,
Sorry I didn't comment sooner, but I'm more than happy to take up the debate with you, as it seems the debt ceiling compromise recently passed will only prolong this issue through at least Thanksgiving.
To your earlier comment, I agree that tax rates should be reformed. We could start by repealing Bush tax cuts since the federal government can't afford them. However, the underlying issue behind increase federal tax revenue is jobs. Until the president and congress put forth any meaningful job legislation, federal revenues will see no improvement. I think we need to flatten the tax rate for everyone, and try to get unemployment back down to 5 or 6 percent. This way more people will be working, and contributing to the government out of their paychecks, rather than being a burden on federal programs by collective unemployment checks and food stamps.
You're right to point out that Republicans must allow some revenue increase at least as a bargaining chip, it's immoral not to. But tax reform should not just be increases for the top two percent. That only worsens the current atmosphere of class warfare and intransigence on both sides. Everyone needs to feel like they have the opportunity to be productive members of society and that they have some skin in the game of government revenue. Then we as a society can have an informed debate on the role of a government that has grown disproportionately in the last twenty years.
Otherwise, we'll continue to see resentment on both sides. The wealthy and upper middle class will complain about carrying the unfair burden of entitlements, and everyone else will feel like they are powerless to change a system they don't even pay into and continue to accept the easy alternative of government assistance. Although I have a hard time recognizing the moral authority of US Catholic bishops these days, I do agree in part with their statement about budget cuts. The burden must be shared, not just laid on the backs of society's most vulnerable. My point is that if democrats continue to blindly support all entitlements without looking at the reality that we can't keep borrowing 40 cents of every dollar we spend to pay for them, then the whole economy is in for serious hurt. It is more moral to try to save the well-being of 98 percent of our citizens by making necessary, fiscally austere policies, than it is to pass a bankrupt country on to the next generation just so we can keep unsustainable, outdated entitlements in place for a few more election cycles.
As to your earlier breakdown of the two parties' religions, I have to say you are still coming from a fundamentally biased place. Yes republicans are overly partial to the interests of corporations and capitalists, but there is a growing number of them who really are trying to act fiscally responsible in a political culture of unrestricted spending. The truth is that we will never actually have free market capitalism when the government is so invasive in it's manipulation of monetary policy and tax breaks for the priveleged class. Until main line republicans admit that, there rhetoric about free markets and business friendly policies are empty words meant for their corporate lobbyists.
As for your analysis of democrats, can you honestly say that after seeing six years of Pelosi and two of Obama, they are purely motivated by their bleeding hearts and compassion for the poor? Let's be intellectually honest here, most of the power brokers in the democrat party are in Washington to preserve their own jobs, and only help the poor when someone else is paying for it. Pelosi and Obama could've passed an increase in the debt ceiling if they were so worried about avoiding a crisis and entitlement cuts but they didnt.. They could have worked towards a jobs bill but they didn't. A responsible budget? Meaningful regulation of the financial sector? Repeal of the bush cuts? None of these were passed. What did they spend their overwhelming majority on? A super partisan health care bill that doesn't include a public option and had limited supported among voters, when it was clear the country badly needed Washington to focus on jobs. Instead democrats were content to preside over terrible unemployment and even with wall st still raking in record profits. Oh yeah we got the Dodd-Frank bill which seems primarily designed to drive small banks out of business, and further consolidate the dominance of the mega banks. Real humanitarian stuff there.
Now after hearing Obama grandstand against the uncaring wealthy class, the private jets, and corporate tax breaks, I get to watch him fly the GE CEO around on airforce one and party it up at the white house with his Hollywood buddies while the rest of us watch the stockmarket erase a year's worth of gains in one week. So much for my retirement savings.
Give me a break Neutron, Obama could care less about us little guys. He's a politician looking to get re-elected by pulling on the heartstrings of a naive voting public. He's acted very partisan when he's in the white house, and makes bi-partisan, emotional appeals on the campaign trail. Talk about a disconnect.
Get out of the left-right paradigm and look at what's really going on. We have a ruling elite, republican or democrat, they're two sides of the same coin. Whatever you want to say about the tea party backed freshmen in Congress, at least they are sticking to their ideals and don't seem to be worried about falling in line with the old guard or getting re elected. Contrary to most politicians, Rand Paul, Marco Rubio, and their ilk are in Washington to do something, not to become something.
Ok Carraway, in the words of the Mandelbaum brothers on Seinfeld, "It's Go Tiime!"
Where is this 2% of suffering Americans coming from? Is this about saving the well being of 98% of our population a made up number? Let's, for the sake of argument, say that 90% of the US is adequately employed (yeah, right, but whatever). What, exactly, do the politics of austerity do to help that 10%? Nothing but to grow their numbers.
This 10% will increase due to budget cuts in the name of austerity. This additional round of layoffs (teachers, police, firemen, etc.) will only further hurt the economy by shredding consumer spending and confidence even further. This will inevitably lead to more layoffs in the private sector, as reduced consumer demand will tighten up companies' bottom lines. (I wonder where all those Borders employees are going next?)
Meanwhile, America, while tenuously holding onto most of our own credit ratings, is being roundly dismissed and mocked by other world powers, from China to Russia to undoubted snickering in parts of the MIddle East. We are fully on display as a dysfunctional government, thanks to an issue that didn't have to be an issue! Every president since Truman has raised the debt ceiling. Every one. No one has made a major issue of this until the Tea Party saw an opportunity to pursue their own agenda using tactics that probably should be punished by the U.N. Yes, Paul, Rubio, Bachman et al. have been doing something- they have been endangering- nope, change that- seriously damaging the world's perception of American power and economic reliability. This is also, predictably, going to make life harder for the middle and lower classes, that 2% you appear to be concerned with.
Finally, regarding our President. You are trying to pin inactivity on him now? Obamacare, the stimulus package, Libya, troop withdrawls, don't ask don't tell (kind of, tough to tell now), and on and on- this isn't exactly Stand Pat we're talking about here. You want Obama and the Dems to come up with a job plan? Tell the Tea Pain to stop obstructing it!
I'm no economist, didn't even take an intro course in college, but you don't have to be to understand these concepts:
1) Funding cuts (efficient government) = less jobs
2) Revenue increases (from the wealthy, who save more than they spend)= potential for more jobs
3) Less jobs = less revenue = less jobs
The Republicans know this, and they don't care. They fought against extracting aid from those who can afford to give it, and fought to take away even more from those who can't afford much of anything. Their policies are making the economy worse- and don't forget, it was their policies during the Bush/Cheney "Deficits don't matter years" that made this mess in the first place.
The goal of Republicans appears to be to ready America for a new norm where 10% of the population will always be unemployed. This class warfare that you accuse President Obama of stoking? That fire was lit years ago, and the class divide is growing drastically; all the liberals are doing is acknowledging it. The fact that there is not full-on class warfare yet is due to ignorance of what is really happening in Washington, nothing more, and it isn't going to be delayed for much longer.
Neutron,
You misread my answer in your fuming haste to get out your talking points without actually addressing any real criticisms of the people you voted for. If you'll take some time from your progressive ranting, look and see that the two percent I mentioned were those at the top, the wealthiest, and that I actually was agreeing with you that we should raise their taxes. So much for finding common ground. I can't have a debate with you if you can't even acknowledge a common starting point that we both share.
But let's try again anyway. Thanks for admitting your lack of economics knowledge, because you're way off base. Let me address your concepts one by one.
#1. Government spending does not create jobs, nor is it efficient.
I challenge you to find one person who found a full-time long term employment from the Stimulus package. In fact, more teachers were laid off this year because their districts were unable to make up the funds they got from the federal government in 09. Better had the districts stayed within their own economic means and budgeted better for payroll than having a sudden budget shortfall because there's no more room at the teat of a large and failing federal government.
Even Obama admitted that the shovel ready jobs were not quite shovel ready. In fact, Gibbs said only 75,000 jobs were created within the first 90 days of the stimulus, and the CBO estimates that at most 3.3 million jobs were created or saved by the $862 billion piece of legislation. I did the math, and that is at a cost of over $261,000 for each job created or saved, and many of them the CBO admits probably would still be around even without stimulus. Personally, I'd rather the government had put all those billions to reduce the debt, or give them back to the American taxpayers to pay off their own bills or put back into the economy. I guess we disagree there though.
#2. Most impartial observers agree that government revenue increases are necessary, but they won't do anything to help directly with job creation.
Most, if not all, of the federal government's revenue needs to go towards getting out of the budget deficit. Their inability to reduce their expected expenditures over the next ten years is what caused a credit downgrade from the S&P rating service. The S&P explicitly said they wanted a deal of $4 trillion. While I believe most of the savings need to come from reigning in spending, I will offer some common ground again. The tea party backed Republicans would've done better to accept the $4 trillion dollar deal when it was on the table early in the debt ceiling negotiations, even if it came with a few tax increases. They would've compromised on one of their principles but in the end they would've got more cuts then they did in the last minute compromise.
Regardless, most of the deficit reduction has to come from cuts. Here are some facts, please don't ignore them this time. In 2009, Obama and the Democrats passed as $3.5 trillion budget without one Republican vote that featured across the board increases for federal programs and agencies while the unemployment rate was 9%. As we know, between now and 2009, even with that huge federal budget, the unemployment rate is still above 9%. So all that federal spending did nothing to create jobs, as you claim it should have.
#3. Finally, I agree with your third principle, less Americans working means less revenue for the federal government. The more employed taxpayers we have, the more the Federal government will take in.
We just disagree on how to get them working again. I think we need to reduce the size of government entitlements, and focus on creating an atmosphere where people are motivated to find jobs and businesses can grow. That means cutting US corporate tax rates that are among the highest in all the developed world, and allowing businesses to spend that money on hiring more people. It also means eliminating tax loopholes and laws that give big corporations an advantage over small businesses which are historically the engine of job creation. For example, why did McDonald's get a waiver from the costly expenses that the Obamacare bill requires when the local burger stand down the street will have to obey the same law and probably lay off workers or jack up prices to stay in business?
I understand your anger at the outrageous spending under Bush and Cheney. I'm upset about it too. But you can't continue to ignore the role Obama, Pelosi, and Reid have played in our economic woes. Can you make a defense of them at all that's based on actual facts and numbers and not just their stated ideals or class warfare tactics? Are you admitting that we need class warfare and that the liberal elite will be your leaders?
I don't think continuation of Obama's political philosophy is possible in the face of our current fiscal crisis. Our country could not survive it. Honestly, I don't know if any of the Republican presidential candidates would do any better to balance the budget and shepherd us through the impending hurt we're all going to fear in the next ten years, with the exception of maybe Ron Paul. In order to get him or someone outside the partisanship of Washington elected, people like you and I are going to have to be smarter about the role of government and the best ways to fix it. Whether you like it or not, the nation's debt is intrinsically linked to our unemployment problem.
I just read this in today's Inquirer: "raising America's debt limit is a sign of leadership failure. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government's reckless fiscal policies."- Then Democratic Senator Barack Obama
Also, apparently in 2006 every Democratic senator voted against raising the debt ceiling.
I know it's late to the table but still interesting.