Are Democrats on the Side of Ronald Reagan in Debt Negotiations?

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Let's play a little game. Who said the following quotes?

1. “Congress consistently brings the government to the edge of default before facing its responsibility...This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations.”

2. "This country now possesses the strongest credit in the world...The full consequences of a default – or even the serious prospect of default – by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns."

Give up? It was, amazingly, Ronald Reagan, way back in the 80s. Which begs the question, has the Democratic Party become the new party of Ronald Reagan (at least in terms of deficits)?
 

A Comparison

Let's take a quick look at a comparison between Tea Party Republicans and their supposed idol Ronald Reagan:

1. While Reagan presided over 18 increases in the federal debt ceiling during his eight years in office, Tea Party Republicans say that a vote to raise the debt ceiling is a threat to their most personal of values.
2. According to Dana Milbank who writes for the Washington Post, Reagan agreed to raise taxes 11 times while in office. Tea Party Republicans, on the other hand, refuse to support any increase in taxes and are even against the closing of tax loopholes for big oil companies and millionaires who can afford corporate jets. Many in the Tea Party seem to believe that they would rather see us default than to raise taxes one penny.
3. In "Cut, cap, and Balance", Tea Party Republicans promised and voted to cut government spending permanently to a level that was below 18% of our gross domestic product; under President Reagan, spending got up to as high as 23.5% and never fell below 21.3% of GDP
4. Influential Tea Party freshman have also been looking for drastic cuts to entitlement programs like Medicare; Reagan, on the other hand, signed a major expansion of the program. 

Plus, the theories of trickle down economics largely rely on deficit spending to be able to both cut taxes and increase spending.

And it's not as if President Reagan's views on raising the debt ceiling were a one time thing. Throughout his entire career, Reagan made sure to remind those in positions of power, who had the opportunity to play politics with the debt ceiling, that any political chicken with such an explosive issue could have absolutely terrifying effects on this nation's credit. And if the United States loses its full faith and credit, what do we have left?

In 1983, Ronald Reagan wrote the following message to Republican Senate Majority Leader Howard Baker:

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Analysis and Conclusion

Let all of the above information sink in for just a minute. It really is amazing how far right the Tea Party has taken the mainstream GOP. Candidates like Mitt Romney, who in a perfect world would run as a very moderate Republican, are being forced to apologize for their support of perfectly legitimate things, like taxing polluters and supporting a health care system in which access to quality medical care is a right and not a privilege. Truth to be told, if Ronald Reagan ran for office today, I don't think he'd stand a chance among the religious zealots and tea party supporters. Back when he was in office, Reagan was considered a far-right conservative ideologue. Nowadays, Reagan, a man so revered by the right and despised by the left, would be considered a very moderate Republican, if not even a very conservative Blue Dog Democrat. 

Were he alive today, Reagan would almost certainly agree with President Obama on the need to raise the debt ceiling and the need to include revenue raises as part of a possible deal. The American people sure understand, with a new Gallup poll out recently showing that 66% of Americans believe that any deficit deal should include a equal mix of tax increases and spending cuts.

If you really think about it, the fact that so many Americans believe tax increases should be a part of a deal and the concept that Reagan would today be an extremely moderate Republican, it makes you realize how out of touch the Tea Party and the House of Representatives must be if they really believe that they are speaking for the American people.

Debt Ceiling Could Prove to Be Major Victory for Republican Presidential Candidate

Google Images: Mitt Romney, the GOP front runner

I feel bad for Republican presidential candidates. They've been trying so hard to get attention recently, with a number of televised debates, campaign stops, and television appearances. But the GOP field just can't seem to catch a break. And Mitt Romney is taking it the hardest.

Romney's problems stem largely from the issues I've addressed with the mass media and the way in which it functions. Why report on Romney's serious economic proposals when Herman Cain is saying that he would outlaw any legislation over three pages, or Michelle Bachmann is reportedly having migraine headaches? The average viewer watches the news for short and interesting tidbits of information, not full-scale political analysis of major issues. This is why PBS, with its lack of flair and dramatics, is so unpopular among mainstream Americans. 

But Romney, who many consider to be the front runner of the GOP presidential race, may have caught a major break with the ongoing debt ceiling crisis happening in Washington. And he did not have to do a single thing.

Analysis: GOP Presidential Candidate Could Profit From Debt Talks
With the debt crisis consuming every single part of Washington, Romney and the other serious presidential contenders (I'm looking at you Rick Perry) have two major things going for them:

• Being outside of Washington, away from negotiations, and away from the possibility of having to vote to increase the debt ceiling, is a major advantage right now. While polls show that the American people are starting to understand the seriousness of the situation if we were default on our debts, they are still fairly evenly split on whether or not we should raise the debt ceiling. While everyone in Washington (I would hope) and those who consider themselves politically active know, it is an impossibility to not raise the debt ceiling. It will be raised, it is just a matter of how long it will take to hammer out some kind of compromise between the two parties. But reality does not matter in politics. Politics is solely driven by perception. President Obama is not only directly tied to an increase in the debt ceiling, but he also has to sign the bill into law and waste plenty of resources explaining why the ceiling needs to be raised to a relatively uninformed general populous. Nominees like Romney and Perry, on the other hand, have no such problem. In fact, knowing that their base is strongly opposed to any raising of the debt ceiling under any circumstances, I would be shocked if you don't soon see Romney railing against raising the debt ceiling, saying that if he was in Congress he would have opposed it. Is this the truth? Of course not. For all the flack that Romney takes, I'm the first to admit that he possesses a very high level of intellect, especially for things related to business. And as a businessman, Romney knows that if the debt ceiling is not raised, the United States could face an economic catastrophe. But that doesn't matter, because he will never have to vote on it in Congress or sign legislation that would raise it (at least through the campaign). 

Google Images: President Obama in the White House Briefing Room

• But that's not the only thing that Republican candidates have going for them. While Republicans like Romney are hitting the campaign trail hard, spending hours a day stumping and fundraising with major donors, Obama is stuck in Washington, dealing with anger from both sides, from Republicans who are vehemently against raising taxes and from Democrats who refuse to accept any entitlement cuts. Romney raised $18.4 million last quarter, far surpassing the amount that all other candidates took in combined. However, Romney still loses out to the incumbent president, who took in a record shattering $87 million dollars. But comparing the two numbers ignores the bigger issue. Romney is out campaigning every day, getting his policy positions out there, crusading against the President and his policies. While Obama's grassroots machine has begun to ratchet up, Obama himself has not had the opportunity to really hit the ground running in a number of key battleground states he needs to take to win in 2012. For all those who say that it's too early to even think about the President campaigning, consider this. According to the latest Gallup poll, the president's approval rating sits at 43%, far from the 52.9% that he took in the general election. These poll numbers are worrisome because his approval is down among his own base. If the President wants to rally his base and reassure independents by making sure that they don't just sit out on election day, he needs as early of a start as possible. With the fragile state of the economic recovery, and Republicans doing all they can to make sure that he does not pass a single piece of landmark legislation (or, for that matter, any legislation that would help the president in righting the economy), Obama has some major work to do if he wants to see electoral success again in 2012. 

Google Images: Voter anger with any all incumbents will certainly flair up after the extended and extremely frustrating weeks of debt ceiling negotiations. This is likely to help boost the Republican nominee, who will be able to paint him/herself as an outsider, much like Senator Obama in the run-up to the 2008 election. 

• Furthermore, while Obama may win the battle, he's growing more and more likely by the day to lose the war. Think about it this way: Polls show that if a potential default were to happen, Republicans in Congress would be blamed by 50% of Americans whereas the president would only be blamed by 33%. According to one commentator, the public would view Obama as bad and congressional republicans as even. Obama cannot win and republicans know it. And GOP presidential candidates should be licking their chops at the opportunity to hit Obama hard on the debt ceiling. With Speaker Boehner walking out of a potential bipartisan deal earlier today, this now leave the McConnell compromise as the last real bill on the table. McConnell's plan would essentially grant the president with 100% of the responsibility to raise the debt ceiling, allowing members of Congress to vote no and shifting all the blame for the unpopular action of raising the ceiling squarely on Obama's shoulders. The way in which the debt ceiling negotiations have been handled is likely to cause a rabid anti-incumbent sentiment for Washington politicians. Like it or not, even acting as the most mature man in the room (assuming an almost father like role over his "congressional" children), President Obama is the leader of the "typical, Washington politicians." President Obama will ultimately find it difficult to stave off a well-funded republican candidate who runs as an outsider, just as Senator Obama did in 2008.  

Conclusion

If you ask me, Republican leadership knows exactly what they're doing. By handicapping the President's ability to fund raise, forcing him to engage in seriously unpopular talks, and potentially giving him the sole approval to increase the debt ceiling (allowing Congress to vote no and putting all the responsibility on the shoulders of the President), they are doing all they can to set the president up for failure in 2012. The most telling of quotes comes from Senate  Minority Leader Mitch McConnell:

The single most important thing we want to achieve is for President Obama to be a one-term president.

Forget compromise, forget the possibility of defaulting on our debts, forget that American voters elect officials to represent them and act and vote in a responsible and grown-up manner. Washington has slowly but surely become a political  circus, a place where the minority party will do anything and everything to ensure that the incumbent does not get re-elected. Republicans have recently mastered this strategy, reaffirming the beliefs of millions of discontent Americans. If the possibility of a market meltdown and rapidly increasing interest rates (among dozens of other things) does not spur this Congress to quickly find compromise, I have absolutely no idea what will. 

Debt Ceiling Drama: Tea Party Republicans vs. Everyone Else

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Just weeks after the Republican caucus wholly rejected any form of "grand deal" to raise the debt ceiling, rumors are swirling around the Capitol that the possibility for a larger package has been put back on the table, and that progress is being made.

A Quick Update
For those who have not been paying much attention lately, here are the most recent updates:

• House Republicans debated and passed the "Cut, Cap, and Balance Act," with 9 republicans opposing and 5 Democrats supporting the bill. According to the language of the bill, the legislation would cut discretionary spending by around $380 billion in 2012 (although where the cuts come from has not yet been specified), enforce a cap on spending that would make it impossible to spend any more than 18% of GDP, and put a balanced budget amendment on the table which would force all tax increases to be passed by a 2/3 vote instead of a simple majority. Republicans have said that this bill will help to right America's fiscal house and spur job growth by creating certainty in the marketplace. Critics have pounced on the bill for not specifying what cuts would be made. They have also asserted that if the bill became law, the legislation would severely handicap the President in times of economic downturn (as he would be unable to access any type of money that would be intended for stimulus). Either way, the bill is said to be dead in the water in the Senate, as the Senate Democratic Majority would be wholly unlikely to pass such a bill seeing as a balanced budget amendment has very limited support among progressives.

• The Senate Minority Leader, Mitch McConnell, has floated a bill that would cut around $1.5 trillion in spending over 10 years while also giving the President the authority to suggest (but not implement) even more future spending cuts as one of the conditions to raising the debt ceiling. But House Republicans have thrown up major roadblocks to this idea, saying that it does not cut enough over the ten year period and that it gives the President too much discretion and too many opportunities to back out of those cuts in the future. Additionally, the President and his administration have been desperately pushing for a bigger deficit-reduction package, which has led many lawmakers to consider the McConnell deal as being too small and possibly unnecessary. Because of this, the bill is looking less and less likely to be the ultimate solution that is agreed upon by the President and Congress. 

Google Images: Mitch McConnell is working frantically to  create a plan that would cut $1.5 trillion dollars from the budget over 10 years and give the President the authorization to raise the debt ceiling. But commentators say it has very little chance of passing the House with enough Tea-Party Republican support. 

Where Does This Leave Us?

With the two most high-profile bills all but ruled out, where does this leave us? Remember a few weeks ago when Boehner drew major flack from House Majority Leader Cantor and the rest of the Republican caucus for offering them a "grand deal" that he had assisted in conceiving with the President? Well, it appears that that plan is back with a vengeance. Commentators and officials close to the White House are saying that a long-term, large-scale deficit plan is now seeming to be more and more likely of an option. 

According to a number of different sources, the President is still looking for a large-scale deficit deal that would likely save more than $4 trillion dollars over ten years, through discretionary cuts, entitlement reforms, tax increases on wealthy Americans, and the elimination of tax subsidies for big oil companies and a number of other corporations. And with Republicans taking major flack for their no-compromise policy, they may at this point be willing to oblige him. 

What would this possible deal look like? According to the Huffington Post,

It would involve steep reductions in health care spending -- both in Medicare and Medicaid. In previous debt ceiling negotiations, the administration has supported further means-testing elements of Medicare as well as raising the eligibility age of the program. Cuts to Medicare suppliers would also be part of a larger package, as would adjusting the payment structure of Social Security so that a lower level of benefits was paid out over time.

Even if these controversial cuts to medicare were approved by both Democrats and Republicans, the problem of tax revenue is still an issue that seems dishearteningly difficult to find common ground on. Said simply, Democrats want the Bush era tax cuts curtailed and rates to go back up to Clinton era levels, which, it should be noted, was a period in which the government was running surpluses (however, whether or not that had to do with tax rates is disputed). Republicans, on the other hand, do not want any form of tax increase involved in a deal.

But the most outspoken congressional Republicans, the freshman, tea-party backed conservatives, may have to swallow the medicine. While Speaker Boehner has publicly stated that Republicans are solely focused on getting cut, cap, and balance signed into law, according to unconfirmed yet widely circulated reports, Speaker Boehner spoke openly to the Republican caucus in a private meeting and said that some form of a grand deal is still on the table. It has also been reported that he has expressed interest in a large-scale deal with the potential for raises in revenue and has been working on some form of a deal directly with President Obama.

Knowing that Republicans will do all they can to avoid tax increases, the President has offered them an alternative path:

The White House has laid out an alternative suggestion during past negotiations: Lawmakers would be required to find $800 billion in additional revenues over the next decade. If they could not find an agreement, then the Bush-era tax cuts for the high-end earners will expire.

What's more, Grover Norquist, the man behind the "no-new-tax-pledge" which all congressman (with a handful of exceptions) have signed, said explicitly that not continuing the Bush tax cuts would not theoretically be considered a tax increase, and therefore would not violate the pledge that Republicans in Congress signed. According to the Washington Post,

According to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Republicans are critical of this alternative path, saying that all Democrats would have to do was simply "run out the clock" -- meaning that they would oppose any and all deals knowing that the Bush tax rates on the rich would go up no matter what. Because of this, Democratic officials say they are floating a new, slightly different idea:

In order to try and find agreement on this front, a slight reversal to the administration's original plan has been floated, according to a Democratic official. Rather than write the decoupling of the Bush tax cuts into the debt ceiling legislation, negotiators will simply leave the rates as is.

Lawmakers would still be tasked with finding $800 billion or so in revenues to supplement a deficit-reduction deal. But if that $800 billion didn't materialize, they would no longer have the fallback option of seeing the high-end rates go back to pre-Bush levels when they are set to expire at the end of 2012. Instead, they would have to relive the dramatic legislative showdown that happened in late 2010, when the president and Democrats tried, unsuccessfully, to decouple the top-rates from the middle and lower income rates.  

Google Images: Grover Norquist, The Head of Americans for Tax Reform

 Analysis: Tea Party vs. All 
As demonstrated above, there are a number of different options floating around. But the worry is that none of them are politically viable, by which I mean none of them would be able to get enough support from House Republicans. Even with President Obama compromising on trillions of cuts, including deeply unpopular cuts to medicare and medicaid, and offering an olive branch to Republicans on taxes, Tea Party backed Republicans still refuse to even entertain the idea of increasing taxes a single penny. Instead, House Republicans have taken to the airwaves and the television screens, arguing with political commentators and hosts that cut, cap, and balance has a great chance of passing the Senate. Case and point, Illinois Rep. Joe Walsh got into a heated (and extremely juvenile) argument with Chris Matthews about the plan that Tea Party Republicans have trumpeted:




Through all the bickering (which I have argued is a huge problem with the mass media), Walsh repeatedly asserts that cut, cap, and balance has a good chance of passing the Senate. This is pure posturing. Cut, cap, and balance has absolutely no chance of passing the Senate. It would need a total of 60 Senators to vote in favor and with the chamber being composed of a Democratic majority vehemently opposed to such ideologically driven legislation, it is dead on arrival. Joe Walsh (and more broadly members of the Tea Party Republican caucus) have said that they are in no way posturing, that they want to see a deal done more than anyone else. In fact, they argue that President Obama is the one lying in an attempt to turn the people against the Republican party.

If Tea Party Republicans are not posturing, if they really believe in compromise, why did they push so hard for cut, cap, and balance, legislation that is purely ideologically driven (with a requirement that all tax increases can only be put into law with a 2/3rds majority) and had absolutely no chance of ever becoming law? If they believe in compromise, with less than two weeks before the government begins the process of defaulting on its debts, shouldn't they be working with the President, working with their leadership to try to hammer out a deal in which no one is happy, but everyone is equally unhappy?

A new CNN poll came out today that showed that 64% of Americans believe that any debt ceiling deal should include a mix of both spending cuts and tax increases:

In those discussions, several budget plans have been proposed that would reduce the amount the government owes by trillions of dollars over the next ten years.  If you had to choose, would you rather see Congress and President Obama agree to a budget plan that only includes cuts in government spending, or a budget plan that includes a combination of spending cuts and tax increases on higher-income Americans and some businesses? 

Only spending cuts 34%  

Spending cuts and tax increases 64%

The Republican Party is in trouble on the debt ceiling, and they are being given a huge chance to potentially avoid political catastrophe. President Obama is giving up at least $2.4 trillion in spending cuts, and what does he want in return? For Bush era tax cuts to expire. Just to hammer the point home (I know I just provided the quote), even Grover Norquist, the biggest anti-tax crusader in Washington, is saying that allowing tax cuts to simply expire is not equal to a tax hike and therefore would not draw the ire of Norquist's powerful group, Americans for Tax Reform. But tea party candidates are still clinging on to the wildly imaginative idea that cut, cap, and balance has a chance to pass the Senate.

This should be most troubling for Republicans like John Boehner and Senate Republicans who believe that compromise is necessary to making a deal. Why? Because when the American voter thinks about who they would blame if the government defaults, their opinions are not nuanced. The vast majority do not say "Republicans in the House" or "Tea Party Republicans." No, they say simply Republicans. This is the same phenomenon that happens almost every midterm election after a new president has been elected. Take, for instance, 2008, when President Obama was swept into office with a huge margin of victory and dozens of congressman rode in on his coattails. Then, in 2010, voters got upset with President Obama because they had voted for change and not a whole lot happened. What did the voters do? They did not get upset at just President Obama, no, they blamed the entire Democratic Party, voting out a huge number of House Democrats and hammering away at the Democratic Senate Majority.

A similar situation appears to be manifesting with the debt ceiling talks. While Senate Republicans have showed openness to compromise, the powerful group of freshman tea-party backed republican congressman have maintained their fierce fight against taxes. In fact, many Senate Republicans have showed interest in the so-called "Gang of Six" proposal that was created by 3 Democrats and 3 Republicans. The plan would essentially raise $1.7 trillion of revenue over the next ten years. But the plan drew near-immediate criticism from House Republicans.

Paul Ryan, the head of the House Budget Committee, expressed his dismay with the plan that would raise revenues:

Unfortunately, it [the plan] increases revenues while failing to seriously address exploding federal spending on health care, which is the primary driver of our debt. There are also serious concerns that the proposal’s substance on spending falls far short of what is needed to achieve the savings it claims.

And Tea-party freshman have also been chiming in against the plan, frustrated with the proposed tax increases. What House Republicans fail to realize is this: The President has expressed a willingness to compromise on trillions of cuts in discretionary and entitlement spending, a willingness that most Democrats are visibly frustrated with. Cuts to Medicare are angering for any Democrat.

But if President Obama's final deal with Speaker Boehner includes cuts to medicare, I would be outright shocked if Democrats did not swallow the bitter pill and vote for the plan anyways, despite their public outcries. This is the main difference between congressional Democrats and Republicans. Putting all the rhetoric aside, Democrats in Congress have shown a willingness to take politics out of the equation and put the country first. Will Democrats take major flack for increasing the debt limit and agreeing to cuts to medicare? Absolutely. They may even lose some wealthy fundraisers. But they understand that if the debt limit is not raised, this country is in grave danger of an even more calamitous economic collapse than 2008.

Tea-party Republicans (this does not include Senate Republicans or Speaker Boehner) say they want to move the nation forward, get our fiscal house in order, and create jobs. But the legislation they're supporting (like cut, cap, and balance) and the roadblocks that they are constantly throwing at the President and at Speaker Boehner suggest the opposite.

Google Images: Tea Party Republicans are sticking to their guns on cut, cap, and balance

And the voters have had enough of it. A recent CNN poll indicated that that 51% of Americans would blame the Republican Congress if the deal is not reached, whereas only 30% would blame Obama. President Obama has positioned himself and the Democratic Party as compromisers, centrists whose main goal is to fix the economy without harming the middle class. Republicans have no response. Worse, Tea Party Republicans have unsuccessfully attempted to paint Obama as a liar and a radical and have worked as hard as possible to derail a possible compromise.

Tea Party House Representatives were elected to Washington in 2010 to cut spending and restore America's fiscal responsibility. But if they don't quickly realize the implications of their actions, and understand that a vast majority of Americans are demanding compromise, come 2012, those "newly elected representatives" will be voted out just as swiftly as they were voted in.