Quote of the Day
An author is a fool who, not content with boring those he lives with, insists on boring future generations.
Charles de Montesquieu
Boehner Plan: The Best Path Forward: Thumbs UP!
First, as to the August 2 deadline, let's be clear: the President is clearly bluffing. He can engage in all the fear-mongering he wants, but do you really believe that the President would allow entitlement spending like social security payments to not go out? This would be like the Katrina disaster on steroids. How is he going to convince senior citizens--the reason they aren't getting a check on time is because a limited debt ceiling increase? Hennessey points out over the past 30 years, the debt ceiling has been raised 44 times and on only 10 of those times has the tenure lasted more than a year--something Obama and Senate Majority Leader Reid are insisting for the transparent reason of political convenience, particularly for Obama's reelection effort.
Let's be frank: Any intelligent person (not Obama, of course) could see this writing on the wall. It's not just that Obama has increased the national debt by some 40%, and each fiscal year we are seeing 40% of spending not covered by revenue. Of and by themselves, this is not necessarily bad--until we consider the nature and extent of the national debt. For example, if you don't carry a credit card balance and you have a $3000 auto repair bill, that's not bad because it's manageable. If, however, you have a $15,000 credit limit and you are near the top of your credit limit, you have a problem. Why? For one thing you are paying very high interest on that loan. The more money you loan, the higher the risk you won't pay off the loan and/or you find yourself under income constraints unable to get out of your loan burden since you may find your income burdened to simply pay off interest, not debt reduction. We are spending almost $200B a year simply paying off interest for existing debt and that's expected to double very soon (assuming Treasury debt doesn't get downgraded, which could dramatically increase interest expense). We now hold about $14.5T in debt nearly equal to the GDP (roughly two-thirds held publicly versus government trust funds). This puts the government under an unsustainable course by traditional heuristics.
Last fall's blowout election was clear for weeks; Obama should have seen the writing on the wall. He voted against debt ceiling increases under Bush for purely demagogic reasons, not over any serious issues with debt per se. For us conservatives, trillion dollar deficits as far as the eye could see are fundamentally unacceptable. What he needed to do was come up with a credible debt reduction plan to co-opt conservatives. He couldn't because he painted himself into a corner; he had promised nobody would have to pay a penny more in taxes except the top 5% earners.
He also overplayed his hand by ramming purely partisan stimulus, healthcare and financial "reform" down the throats of the GOP. The problem is the "post-partisan" President was gambling his political super-majority was sustainable. But when the economy failed to improve in a tangible sense, the President lost his independent/moderate support.
Payback is a bitch. Bipartisan moderate or moderately conservative Republicans were targeted by activists. Obama can complain all he wants about "extremist" Tea Party supporters, but he created it. And what Obama is really saying is that voters voted in "extremists". Charlie Crist in Florida would have won election as Florida Senator.
The problem is, you cannot do major reforms with a split majority Congress in a short time frame. You have to do a two-phase solution, where the first phase buys you time to deal with thornier issues; I'm not interested in subtleties. The bottom line is entitlements, 60% of the budget, things like social security, Medicaid and Medicare, have to be addressed. Obama has no choice. Reid can say Boehner's approach is dead on arrival, but Reid's bill is dead on arrival in the House.
Musical Interlude: My Favorite Groups
The Eagles, "Take It Easy"
