At this juncture, appears that Republicans will win the standoff over the debt ceiling no matter what: if economy fails and there is mass misery, spiking unemployment and renewed round of foreclosures they believe they will win the White House and Congress.
Winning, for the Republicans, means extracting an even greater toll on struggling middle class and working poor families, whose wages have been stagnant while expenses have skyrocketed, helping to create the biggest gap between rich and poor that has existed since 1928. the top 1% now have the wealth of the bottom 50% of the entire population; the top 1% earn 20% of all the income earned.
But if they can win this game of chicken with the nation’s economy, they believe they will get massive slashing in the social programs they have been crusading to overturn since FDR signed the Social Security Act and Johnson signed Medicare into law.
It seems that Obama, who briefly seemed to hold the upper hand, has once again been outflanked as the Right Wing Republicans pivot to focus from defaulting on debt obligations to the benign sounding but lethal “cut-cap-balance” plan.
In any case, dragging on the fight over raising the debt-ceiling, or accepting the McConnell “compromise” would force repeats of the hostage-taking exercise three more times before the 2012 presidential election, while rendering Congress incapable of accomplishing anything else (clean energy, energy independence, infrastructure, jobs creation).
He can invoke the 14th amendment
He can do what George W Bush did hundreds and hundreds of times: ignore the legislation that Congress passed and write his own with a signing statement.
And he should again put Jobs front and center. He should send down a blizzard of legislation for jobs creation and infrastructure improvement, announcing each one with the loudest fanfare, and what the legislation can do to bring down unemployment, and ease the dire straits in the states, and when republicans block it, he can hold them responsible.
But amid clear intransigence by Republicans who control the House in reaching a compromise on raising the debt ceiling, putting the United States on a path toward the fiscal abyss of defaulting on its debt, the White House has stated clearly that Obama would veto legislation for the so-called balance-budget amendment to the Constitution.
And during a conference call with reporters, the Administration explained why it isopposing H.R. 2560, the “Cut, Cap and Balance Act of 2011″ and would veto the bill if it came to the President’s desk.
“It’s important to understand that this plan isn’t cut-cap-balance. It’s dodge-duck-and-dismantle plan,” said White House Communications Director Dan Pfeiffer.
“We don’t have to amend the Constitution to get the fiscal house in order. We need partners, we need Congress to do that… Compromise will go a long way to solving the fiscal problem.
“Cut-cap-balance enshrines into Constitution the Ryan plan on steroids. Unless Republicans are willing to raise significant revenues – which something refuse to do – it would mean far more devastating cuts than Ryan – deeper health care cuts to children, Medicare cuts to seniors, make it inaccessible to many.
“The Ryan plan didn’t touch Social Security This plan would require significant cuts to Social Security beneficiaries.
“Cut-cap- balance makes a great sound bite but would have devastating impact on our economy,” Pfeiffer said.
The bill would force a $111 billion spending cut in first year, and spending caps in future years that would have the consequences including reductions in clean energy funding, $6000 in extra costs for seniors, and force cuts in spending for infrastructure,” Jason Furman, Deputy Director of the National Economic Council.
“Cuts of this magnitude, done this abruptly would have adverse impact on the economy,” he said.
“The legislation being considered today goes well beyond Ryan budget. It also includes the requirement that both houses pass a balanced budget amendment before the debt ceiling can be raised.. That’s the equivalent to holding debt limit hostage to an extreme agenda well outside the bounds of anything that could be passed.
“This balanced budget amendment is historically unparalleled,” Furman said. “In the past, balance budget amendments require you to balance the budget, period, and left it to Congress to figure how to do it.
“This balanced budget amendment would add in spending caps, referenced in the legislation, would require spending by $400 billion per year relative to the Ryan budget, trillions of spending cuts above what is required in Ryan budget. It is inconceivable you could do spending cuts of this magnitude.
Unlike previous balanced budget amendments, this one requires a two-thirds supermajority to raise taxes. That would make it virtually impossible to get any additional revenue which you would need to balance the budget.
Further, it limits spending to a fixed and specific, but arbitrary number – 18% of GDP.
“The bill would undercut the Federal Government’s ability to meet its core commitments to seniors, middle-class families and the most vulnerable, while reducing our ability to invest in our future. H. R. 2560 would set unrealistic spending caps that could result in significant cuts to education, research and development, and other programs critical to growing our economy and winning the future. It could also lead to severe cuts in Medicare and Social Security, which are growing to accommodate the retirement of the baby boomers, and put at risk the retirement security for tens of millions of Americans.
“H. R. 2560 sets out a false and unacceptable choice between the Federal Government defaulting on its obligations now or, alternatively, passing a Balanced Budget Amendment that, in the years ahead, will likely leave the Nation unable to meet its core commitment of ensuring dignity in retirement.
“You don’t need balanced budget amendment to cut spending or get the budget deficit under control. The Ryan budget has deficit of 1-2% of GDP – even the Ryan budget would fail the test of this extreme, radical, unprecedented balanced budget amendment that is being contemplated.
For all those reasons, the President said he would veto it. “He is looking for balance that is consistent with economic recovery.”
In contrast, Obama has proposed $4 trillion in cuts over the next 10 years, but phased in, rather than destabilizing the economy.
And while Republicans, mouthing the talking points, keep accusing Obama of being “obsessive” in demanding tax increases, Obama is not proposing any tax increases, but rather removing taxpayer subsidies to Big Oil, and tax incentives for such unnecessary luxuries as corporate jets.
Obama has proposed revamping the tax code – basically echoing Republican position for years – to flatten it out and simplify, so that it is fairer to everyone, by removing the tax loopholes which contradict the Republicans’ claim of a free market where the government plays no role in choosing winners and losers.
During the press briefing, I did not get a chance to ask my question: to what extent is the economic uncertainty, the crisis that is hanging over everyone, holding back business investment and jobs creation?
138,767 Co-Sign Sen. Sanders Appeal to Obama
Meanwhile, all the attention has focused on the Republicans – what they demand, and what needs to be done to accommodate the Republicans, even though the head of the Tea Party has said that there is no deal they would accept.
Progressives worry that President Obama will cave in to the radical right, much as he did in giving up the Public Option in Health Care Reform, and continuing the Bush tax cuts for the wealthiest 1%, even though he had vowed to let them expire.
But Senator Bernie Sanders (I-Vt), has written his own appeal to President Obama not to cave, which so far has 138,767 co-signers:
“This is a pivotal moment in the history of our country. Decisions are being made about the national budget that will impact the lives of virtually every American for decades to come. As we address the issue of deficit reduction we must not ignore the painful economic reality of today – which is that the wealthiest people in our country and the largest corporations are doing phenomenally well while the middle class is collapsing and poverty is increasing. In fact, the United States today has, by far, the most unequal distribution of wealth and income of any major country on earth.
“Everyone understands that over the long-term we have got to reduce the deficit – a deficit that was caused mainly by Wall Street greed, tax breaks for the rich, two wars, and a prescription drug program written by the drug and insurance companies. It is absolutely imperative, however, that as we go forward with deficit reduction we completely reject the Republican approach that demands savage cuts in desperately-needed programs for working families, the elderly, the sick, our children and the poor, while not asking the wealthiest among us to contribute one penny.
“Mr. President, please listen to the overwhelming majority of the American people who believe that deficit reduction must be about shared sacrifice. The wealthiest Americans and the most profitable corporations in this country must pay their fair share. At least 50 percent of any deficit reduction package must come from revenue raised by ending tax breaks for the wealthy and eliminating tax loopholes that benefit large, profitable corporations and Wall Street financial institutions. A sensible deficit reduction package must also include significant cuts to unnecessary and wasteful Pentagon spending.
“Please do not yield to outrageous Republican demands that would greatly increase suffering for the weakest and most vulnerable members of our society. Now is the time to stand with the tens of millions of Americans who are struggling to survive economically, not with the millionaires and billionaires who have never had it so good.”
Protecting the ‘Brand’
It is interesting, though that Republican Senator Mitch McConnell, who has said that his Number One Priority is making Obama a one-term president, in offering his own “compromise” puts Obama into the position of being the source of blame for raising the debt ceiling, and multiple times, before the 2012 election, because he would have it that the President would raise the debt ceiling and Congress would vote to accept or reject (Republicans will reject), and then Obama would veto and the Congress would not have a two-thirds majority to overturn the veto.
In this way, McConnell walks that fine tightrope between two masters: the Tea Party people who are salivating for the collapse of the federal government, and Wall Street and US Chamber of Commerce.
Indeed, business interests recognize what is at stake (businesses would fail because of the inability to get credit, consumer demand would evaporate because of the inability to use credit or pay higher interest rates, dollars, which are backed by the “full faith and credit of the United States” would be worthless, there would likely be a run on the banks, banks would fail and the FDIC would not have the funds to make depositors whole.
The mighty dollar would no longer be used as a world currency, taking away the United States’ financial institutions’ ability to dictate terms. And since the dollar has been the “safe haven” for the world, global markets would also panic, not to mention the large creditors, China and Saudi Arabia, who will not be so happy if they are stiffed.
But what is Mitch McConnell worried about? Is it the veterans and seniors who won’t get their checks? The former managers now jobless for two years who are hanging on to their home by their unemployment check, or the military families who won’t get their pay, students who will have to drop out of college because of cuts to Pell grants and skyrocketing interest rates on student loans (if they can get it)? Is he worried about small businesses closing because can’t get loans to meet payroll, and Main Street folding up? Is he worried about the run on the banks when credit card interest rises, so people need cash, and the banks fold and the FDIC is shut down because there is no money to pay all the obligations? (that word again, “obligations”).
Is he worried that no one will be able to buy, and therefore sell, a house or a car? Or that someone who loses their job when they are 58 years old, will have to “make do” for 9 years on savings that have evaporated?
No, what he is worried about, he told Laura Ingraham on radio, is that the Republican “brand” will be hurt, that Republicans might be blamed for a “bad” economy.
That’s really a laugh: the Republicans are to blame for the bad economy – the license to steal they gave to the banksters, the giveaways to Big Pharma and Big Oil and the Banks (remember the bankruptcy law), turning the Clinton budget surplus to a whopping deficit – $2 trillion for two wars not paid for, $2 trillion in tax cuts not paid for, billions for the Medicare Drug benefit that wasn’t paid for – that forced Congress to raise the debt ceiling 7 times for Bush without question.
Republicans (and even Obama) are fond of using the analogy of a family that has to tighten its belt when times get tough. But the debt ceiling is more like where you have not had a raise in 5 years and are earning the equivalent of what a worker made 20 years ago but are doing the job of three other people who have been let go, and you go to your extremely wealthy boss, who has just bought his third vacation home and second yacht with the bonus he got for shaving costs by firing workers, and you ask for a little extra so that you don’t have to miss lunch again this week, and he says, “No. I can’t afford it.”
The debt ceiling issue is a crisis, but it is a crisis of the Republicans’ making because of the economic Apocalypse that will happen if the Republicans refuse to raise it.
The real crisis is jobs creation – the desperation that individuals and families are experiencing in their own lives. And all of the rigmarole is a calculation by the Republicans that if unemployment and the misery index are high, they will win power in 2012.
Obama should not fall for it. He should re-take the high road, and stick to Job One: creating jobs.
Karen Rubin, Long Island Populist Examiner
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