The Senate was back in session to address the bill passed by the House over the weekend. The House bill delays, rather than defunds the Affordable Care Act for a year.
The Senate tabled the motion, meaning that their last offer to the House…a clean spending bill with no exceptions…is their final offer.
So the questions you’ll hear from the punditocracy is what will the House GOP do? Because seriously, they’re between a rock and a hard place.
Shutting down the government is really unpopular. I mean, I pay taxes all year round for the government to be funded all year round. If the people holding the purse strings (Congress) can’t get that done, then what the hell good are they?
And that, basically sums up the response to the 1995/96 shutdowns, and will most likely be the same response now.
But for the House GOP, it’s a little more dire. From a CNN poll released today:
• 46% of people polled would blame the House GOP, as opposed to 36% for President Obama
• 69% of respondents said the House GOP was behaving like a “spoiled child”.
• 60% of poll participants reject the GOP’s approach and think it is more important to avoid a shutdown than to make major changes to the Affordable Care Act.
Whether you believe in polling or not, those last two numbers are pretty compelling.
So the question becomes: will the House GOP go for broke or will they bend a little and save themselves the ire of the public.
Right now it seems like they will go for broke…literally.
While common sense Americans think this whole thing is ridiculous (it is), House Speaker Boehner is between a rock and a hard place politically.
The House GOP caucus stands at 230 members, about half of which are hardliners. They will not bend. So the larger political issue (the shutdown) gets lost in smaller political the issues of the caucus (unity and retaining leadership), consequences be damned.
The House GOP has, for the majority of the past two decades, held to a standard called the “Hastert Rule”. This unwritten rule says that any measure that cannot pass without the majority of the majority should not be considered. The rationale behind this is that former Speaker Hastert believed the House Majority should not abdicate political victories, even if it was for the good of the country.
But to pass the Senate’s clean funding bill, all the Speaker would need to do is:
1. Bring the measure to the floor.
2. Get 30-40 Republicans to vote for it (several were already cracking Saturday).
Boehner fears the fallout of those two actions might be losing his speakership…something that would be bad for Democrats…which is not to say his leadership has necessarily been good for our causes…but that the result would be worse, if that’s imaginable.
There’s also the chance that the measure might fail (though unlikely), which would mean the Speaker had spent political capital for no good reason. No one in leadership of any organization wants that to happen.
So Speaker Boehner would need assurances from Democrats that the spending measure, that includes spending cuts Democrats abhor, would have their support, and then he’d still need to find a gaggle (30-40 or more to be safe) Republicans that would support the clean bill.
Boehner already has OPP (other political problems) in the form of a primary challenge at home, though its unlikely that his opponent will succeed. But this too, might be giving the speaker pause. It wasn’t that long ago that Speaker Foley was put out of office. Boehner was a wee pup in Congress when that happened. I have no doubt he remembers that…and worries…a lot about it.
The ball is, and has been in the House GOP’s court. They have made this a drama. They have exposed themselves to ire and scrutiny of the public by overreaching. They have held long and hard even in the face of advice from GOP math messiah Karl Rove.
Its their shutdown…we’re just going to have to deal with it. And the most effective time to deal with it, will be in November ’14.
Until then, stock up on canned foods, freeze some meats, and schedule some extra volunteer work. People in real need are going to need help when the House GOP leadership lets internal politics trump the good of the nation.
The current ploy is to defund or delay the implementation of the Affordable Care act in exchange for avoiding a government shutdown.
This, of course, is a non-starter with the President and the US Senate…which means that if no bill is passed through the House without a defunding or delay of the landmark healthcare law, non-essential portions of the government will shutdown until one is passed.
How long that would take is anyone’s guess.
Apparently, Republicans are more interested in playing politics than governing…a fact that should have been obvious in the 40 odd previous votes to repeal the law and the statement by House Speaker John Boehner that “Congress ought to be judged by how many laws they repeal”, which, by the way is zero. You can decide whether that is a good or bad thing.
In the wake of the 1995 and ’96 government shutdowns, the political cost for the majority party at the time was the loss of seats, though not their majority. But economic conditions were very different. Unemployment was lower, and growth was higher.
This time, we’re not in as strong a position, and the economic impact will hurt more if the government does shutdown.
The reality of a shutdown, even a short one, is the loss of a lot of growth, and tens, if not hundreds of thousands of people losing income. These are mostly regular people, doing regular jobs, that just happen to work for the Federal Government. They are, in effect, being punished for serving their country…a reality completely lost on the GOP majority. A reality they don’t seem to care about at all.
Current GOP orthodoxy holds that all workers should be thankful that the ownership class has allowed them to make any kind of income, whether in the private or public sectors. This is where that whole “makers and takers” rhetoric from the last Presidential election cycle naturally leads.
Understanding this, makes it easy to see why both damaging the economy at large, and potentially causing financial ruin for people who made the mistake of wanting to serve their country are no big deal to GOP v.2013.
The long-term impact of both this ideological position and policy decision to artificially constrain economic growth through inaction is founded in the politics of damaging a President more than representation of constituents…or anything else.
History has not been kind to people who put political self-interest over the needs of a nation.
So it seems that we’re in for at least two big fights (budget and debt ceiling) that don’t need to be fights except for the purposes of political expedience. These fights will include things that don’t need to be included (primarily the Affordable Care Act) and will be framed as a means to curb deficit spending, which is down at its lowest level since the previous administration.
A prolonged shutdown, due to both issues will cause a lot of harm to both the economy by creating unnecessary uncertainty. The uncertainty thus far has hurt markets…which are more a measure of sentiment than the overall economy, by taking some 200 points from the Dow Jones Industrial Average, in the past 5 days alone (a loss of 1.2%).
It would seem even GOP paymasters understand that a shutdown isn’t good for them in the real world.
But according to the current GOP, all that matters is an ever increasing list of pie in the sky conditions that help the mighty few and hurt the many, to make a President look like he’s not doing anything…which is actually what the House leadership is doing.
It is the definition of madness.
schadenfreude: pleasure derived by someone from another person’s misfortune.
So I know just about everyone is talking about the NRA’s crazy town response to the Newtown shootings. I think all that needs to be said about the speech delivered Friday is nicely summed up here.
Quite frankly, I’m shocked that anyone was shocked by that announcement. LaPierre has been spouting crazy for the NRA since 1991. Same song and dance, over and over again. It ain’t about gun ownership…its about gun sales. Manufacturers pay the bills at the NRA. Don’t forget it.
So aside from providing a distraction, the NRA event was irrelevant. Unfortunately for everyone, a distraction was needed, in the wake of the massive failure to herd feral cats, some called the display “a clown show”.
It’s important to remember is how we got here, where it started and who is responsible.
November, 2010 – A wave of of GOP wins in Congressional races, led by 40 candidates claiming “Tea Party” affiliations, leads to the composition of the US House of Representatives flipping from 255 Democrats to 242 Republicans.
August 2, 2011 – In the wake of a contentious battle over the debt ceiling limit, the Budget Control Act of 2011 was passed with bipartisan support. The bill raised the debt ceiling and put in place a series of deep budget cuts and tax increases if the Congress could not reach an agreement.
66 Republicans voted against the deal, which would not have passed without Democratic support.
August 5, 2011 – In the wake of the vote on the Budget Control Act, Standard & Poor’s downgraded the US Credit rating stating concerns with the current state of political affairs in the Congress.
February 2012 – Fed Chairman Ben Bernake coins the term “fiscal cliff”.
July/August 2012 – On July 25th the US Senate passed a proposal that would have avoided the tax increase portion of the fiscal cliff. The proposal was rejected by the House on August 1st.
November 2012 – Elections result in more GOP moderates losing. Democrats gain 8 seats in House. Incoming makeup of the House: 201D – 234R. Incoming makeup of the Senate: 55D – 45R
December 2012 – Negotiations between Speaker Boehner and President Obama net a compromise. Said compromise not brought before the House. Boehner’s bill pulled for lack of support. The House did pass a bill dealing with spending cuts, however that bill has little chance of passage in the Senate and faces a Presidential veto.
This list is hardly exhaustive, but mentions most of the highlights. Had Republicans not tried to make political hay over increasing the debt ceiling, we wouldn’t be where we are today.
Now I want to be very clear here: while I do get some pleasure from the outright #FAIL that was the Speaker’s effort to pass a watered down version of what he and the President were negotiating, I also understand that a failure to act by the end of the year will have some serious consequences for regular folks. Those consequences will be immediate for all of us, though many of them will have a limited impact.
If they fail to act, the payroll tax cut will disappear, the Bush era tax cuts will disappear, and some pretty stiff spending cuts that no one seems to want will be enacted.
What does this mean to you? Well based on the median household income you will see about $1000/yr less as a result of the payroll tax hike, about $1500 less as a result of the income tax hike, and a whole lot fewer services.
Interestingly, if the Obama proposal were to pass, a household making the median income would see a tax DECREASE of about $225/yr (payroll and income) rather than the increase of $2500 House Republicans seem to favor in the wake of their inaction. You can see how the fiscal cliff and the Obama proposals would impact your income here.
(Note: The tax calculator is provided by the anti-Keynsian, pro-business group The Tax Foundation. They bear responsibility for any inaccuracies.)
The financial impact of failure for household incomes is pretty dire. Considering that inflation adjusted incomes have been flat since 1967 for 80% of the population, losing $2500 for a median income represents a nearly 5% hit in real purchasing power. That’s not going to be good for an economy that is just really starting to emerge from weakness. Add to that increased instability from a potential market panic and Joe 6-pack is going to take a huge hit.
Investors know this. They make lots of money knowing this. And while we haven’t seen an increase in incomes to rival the increase in markets (1967 Dow was 825, 2012 Dow was 13190.84 as of the closing bell on Friday, a nearly 1600% increase), the panic that will ensue due to uncertainty if the fiscal cliff is not avoided will hurt average Americans more than investors, who will certainly lose wealth, but not much standing.
Investors have more ways to make money in the face of a market panic that regular folks don’t, including betting on failure. This kind of risky bet is usually only played by the wealthiest individuals and huge investment houses. It may seem counter-intuitive and to fly in the face of what we consider to be patriotic, but remember, in the church of the almighty dollar, anything goes that makes you rich.
Plenty of folks profited from the pain of the Great Depression and the more recent “Great Recession”. There will be winners if a huge market panic ensues come Jan. 2 as well.
Joe 6-pack won’t be one of them, so don’t even think about it.
I feel confident that a solution won’t be found before the end of the year. The House Republicans don’t seem to have the will to give any ground, and in their disarray they have given their Democratic counterparts some resolve to stand their ground. With 201 incoming votes, it will take just 17 Republicans to pass a Democratic measure…should it reach the floor. That seems like a possible scenario now that people are starting to point to conservative recalcitrance as the problem.
The Senate has already passed a bill, which was rejected by the Tea Party led House in August. The House could take the measure back up if they chose to. I can’t imagine that happening before the end of the year. I just don’t think the votes are there before the end of the year.
This means that a market panic is almost a certainty come Jan. 2. The next Congress convenes the next day. We’ll see what they do, but I’m putting my money on passing something like the Senate proposal and dealing with the spending side later…probably right before the next debt ceiling vote which will need to happen before February of 2013.
In the current climate, I just can’t see this leadership actually…you know…leading.
I don’t normally write about national issues, but this fiscal cliff thing is one particularly dumb set of concern trolling on the part of the national media so it seems like a prime target.Its dumb because as the Wonk Blog explains this is anything but a cliff. It’s a slope at best. A slope to recession, sure, but it’s not as if this is a Wyle E. Coyote moment. Nope, Just a leisurely stroll down Recession Lane.
To be clear, I don’t want to see a recession happen any more than anyone else, but considering the players involved, and the lack of real governance from the Tea Party caucus that rules the roost in the House, there’s no real reason to believe anything other than a pull of the trigger, or an extension of the deadline is on the immediate horizon.
Now I’m sure some of my more moderate friends are screaming compromise right about now. Compromise is a two way street. Getting rid expensive tax cuts for 2% of the American populous at a time when everyone (wrongly) seems to think deficit reduction is what we need to do is the definition of compromise. 98% of the people benefit and there’s some new revenue to satisfy the deficit chicken hawks. Seems like a good deal. If you don’t get that, your definition of compromise involves a great deal of ankle grabbing.Not my idea of a good time, but to each his own.
Of course, ankle grabbing compromise has defined the politics of the past 30+ years. As Nick Kristof candidly explains in this NY Times editorial we’ve been screwing up the future for, by his estimation, 50 years now with cheap tax rates for folks who didn’t need them, that were supposed to create jobs and growth and didn’t. That strategy hasn’t worked and its not going to work. Its time to bring back a new look at an old strategy that did work. 1950’s era tax rates here we come!
In the 1950′s top earners paid as much as 92% on everything they made over $400,000/yr. Don’t believe me? Here’s the chart from the IRS.
Of course, no one’s asking that from the top 2%. Just a return to the 39.6% marginal rate of the Clinton era. You know, the Clinton years, where we had that huge recovery and 4% unemployment? Yeah, doesn’t sound so bad does it?
Republicans are losing their minds over this because according to the funders of their campaigns, any kind of tax increase is devastating. But if the GOP wants a return to the 1950′s, which is something they’ve been saying essentially for 30 years, then why not the tax rates that went with them? Seems to me you can’t have one without the other.
Because, more than anything else, that’s what Republicans want right? A return to a simpler time that never really existed. Remember the coded language of the 1980/90′s GOP? A return to a “simpler” time when “family values” were values and the world was a picturesque reflection of “Leave it to Beaver”.
Honestly, the GOP rhetoric hasn’t changed much since. The difference now is that rather than “Family Values” the right is pushing Prosperity doctrine. If you’re not familiar with prosperity doctrine here it is in a nutshell:
“If you believe/give to the church/etc. more you will succeed”, which by implication means that because you haven’t succeeded, you therefore do not believe enough.
Sounds just like GOP rhetoric doesn’t it? They built it!
Interesting that they ignore the gospels when they quote the bible. Probably because its just too inconvenient. Here’s what Jesus had to say about people who are without want.
For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more. Luke 12:48
See, if you read the gospel literally, and I understand that’s all the rage these days, folks that are without want are REQUIRED…called by God, to do more to help people. If they actually did it, then maybe we could talk about some of the rewards they’ve received over the years. But since those guys don’t seem to be holding up their end of the bargain, only bringing mythical job creation, imaginary investment, and the like, I guess its time to return to the prosperity of the distant past to pressure them to do their part for society. We won’t get there by continuing tax cut policies of the past 40 years.
Here’s the dirty truth: tax cuts don’t drive expansion, they drive savings…and we’ve seen a mass expansion of savings for those who have something to save. The rest of us have been limping along barely keeping up with inflation.If it continues, we’ll have the first generation of folks since the Great Depression that didn’t see an appreciable increase in their standard of living or quality of life. That’s something you’re going to be hearing from me a lot over the coming months, because that’s what’s at stake.
As for the fiscal cliff, we’ll just have to see, but I’m not that worried. House Republicans have made their counter offer, weak and repackaged as it may be. Now the Kabuki Theatre can start in earnest. Chances are, they still will not vote for any tax increases, even if it only impacts the top 2% of earners.
That’s right, they’re ready to throw the other 98% of us under the bus for the 2% that pay for their campaigns…like Sheldon Anderson.
Jesus may have said For unto whomsoever much is given, of him shall be much required but you’d be hard pressed to convince the funders of the GOP that their assault on tax equity over the past 40-50 years makes them anything other than victims of the majority, all while they’ve benefitted from our collective 30+ year slumber.
So, you have a choice. You can choose to be scared as hell about this fiscal cliff and all the rhetoric that’s being bandied about, or you can look at what we’ve been doing that’s not working, what we’ve done in the past that did work, and make an intelligent choice.
One thing should be clear. After 30 years of tax cuts for people who don’t need it amidst declining incomes and lower standards of living for millions of middle class Americans, you need to ask yourself if you’re better off than you were, or your parents. If you aren’t, maybe its time to do something different.