Weekday Rant: Handling of Debt Ceiling Has Become Incomprehensible

 

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Today really got to me. It may have been the lack of sleep, the lack of my morning coffee, or the hour commute that I make to work, but for some reason, I found myself utterly disgusted with the entire political system for the first time in recent memory. I won't bore you with a long drawn-out analysis but I just felt like I needed to rant and let a couple of things out quickly.

The more that this debt ceiling debate continues, the more frustrated that I become. With the markets selling off today (and most likely until we get some type of deal), how can politicians not possibly realize that what they are doing, the brinkmanship that they are directly committing too, is negatively affecting the constituents that they were sent to Washington to represent?

Furthermore, why does America so badly desire for "fresh faces" in Washington? There's a reason why we have career politicians in Congress. Sure, the longer you're in Congress, the more of a chance you have to be exposed to things that may be ethically questionable and the greater sense of entitlement you may feel. But there are so many positives to having experienced politicians in Washington: They get it, period. They understand that compromise is necessary, that both sides will have to suffer some if you're really serious about fixing the deficit. They try to beat back partisanship and don't play politics with issues that could have horrible consequences. 

But freshman in Congress just don't get it. Sure, they're a fresh face. Sure, they were swept into office because they were able to convince the American public that the nation was broke (even though, in the short term it really is not). Can a new voice in Washington help push things in the right direction? Sure it can. But freshman in Congress are not using their voices to start a dialogue, to compromise on the issues that were most important to them when they were campaigning. No, instead, they are using their voices to whine, complain, and spew talking points, doing all that they can to avoid compromise at all costs. This is not the way that Washington works. 

Google Images: Mo Brooks, a freshman congressman from Alabama, said that he did not understand why the United States credit might be downgraded. In fact, Brooks argued that our credit should actually be upgraded since Tea Party Republicans are refusing to raise the debt ceiling (I wish I were kidding).

Experienced congressman understand that there is a time and a place for every issue. If you want to talk about eliminating waste in government, reforming entitlements, or letting the Bush tax cuts expire, great -- I agree, and I think that's a debate that absolutely needs to be had. But why now? Why, when the economy is just starting to recover, when unemployment is still around 9%, when the debt ceiling needs to be raised to avoid a default and a credit downgrade, are members of Congress holding the economy hostage to their demands? Plain and simple, freshman in Congress are putting their own demands before their constituents and before the fate of the nation. 

I follow politics night and day. When I wake up, I immediately read Politico Playbook. When I get to work, I leave Politico and The Hill open so I can constantly check back for updates. I created a twitter for the purpose of getting up-to-the-minute breaking news. In my four years of real understanding and interest for politics, I have never once grown tired of it. I love the analysis, love the discussions, love the horse race. But for the first time, I'm starting to grow tired. I simply do not understand what is happening with our government anymore.

How can such a basic, procedural vote essentially stop the entire United States government from talking about anything else for months? How can one party hold the entire economy hostage, risking the fate of our credit and our nation for years, over one vote? It is simply incomprehensible to me. The partisan bickering, the despicable brinkmanship, has finally gotten out of hand. President Obama said that "America voted for divided government, but they did not vote for dysfunctional government." 

We are a centrist nation. Freshman Republicans say they have a mandate from the American people, that they speak for the American people, when they say that the debt ceiling should not be raised. They're not telling the truth. Every major poll shows that Americans are desperate for compromise. 

Americans are generally a centrist group of people. In most cases, voting Americans look for some form of divided government, and rightfully so. With divided government, both parties are forced to compromise, sacrificing a few points to the other party while gaining a few as well. But this is not what happened. Instead, freshman, tea-party supported members of Congress have put the fate of this country at risk in their attempts to discredit every single thing that President Obama has done in office. They came to Washington saying that they would end the partisan rancor once and for all and what did they end up doing but widening the ideological divide and standing directly in the way of any and all compromise. 

I want to leave you with a quote. Steve Israel, the chairman of the Democratic Congressional Campaign Committee said something that, to me, has never rang more true: 

"The Republican Party is trying to repeal the 20th century."

Weekday Rant: Handling of Debt Ceiling Has Become Incomprehensible

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Today really got to me. It may have been the lack of sleep, the lack of my morning coffee, or the hour commute that I make to work, but for some reason, I found myself utterly disgusted with the entire political system for the first time in recent memory. I won't bore you with a long drawn-out analysis but I just felt like I needed to rant and let a couple of things out quickly.

The more that this debt ceiling debate continues, the more frustrated that I become. With the markets selling off today (and most likely until we get some type of deal), how can politicians not possibly realize that what they are doing, the brinkmanship that they are directly committing too, is negatively affecting the constituents that they were sent to Washington to represent?

Furthermore, why does America so badly desire for "fresh faces" in Washington? There's a reason why we have career politicians in Congress. Sure, the longer you're in Congress, the more of a chance you have to be exposed to things that may be ethically questionable and the greater sense of entitlement you may feel. But there are so many positives to having experienced politicians in Washington: They get it, period. They understand that compromise is necessary, that both sides will have to suffer some if you're really serious about fixing the deficit. They try to beat back partisanship and don't play politics with issues that could have horrible consequences. 

But freshman in Congress just don't get it. Sure, they're a fresh face. Sure, they were swept into office because they were able to convince the American public that the nation was broke (even though, in the short term it really is not). Can a new voice in Washington help push things in the right direction? Sure it can. But freshman in Congress are not using their voices to start a dialogue, to compromise on the issues that were most important to them when they were campaigning. No, instead, they are using their voices to whine, complain, and spew talking points, doing all that they can to avoid compromise at all costs. This is not the way that Washington works. 

Google Images: Mo Brooks, a freshman congressman from Alabama, said that he did not understand why the United States credit might be downgraded. In fact, Brooks argued that our credit should actually be upgraded since Tea Party Republicans are refusing to raise the debt ceiling (I wish I were kidding).

Experienced congressman understand that there is a time and a place for every issue. If you want to talk about eliminating waste in government, reforming entitlements, or letting the Bush tax cuts expire, great -- I agree, and I think that's a debate that absolutely needs to be had. But why now? Why, when the economy is just starting to recover, when unemployment is still around 9%, when the debt ceiling needs to be raised to avoid a default and a credit downgrade, are members of Congress holding the economy hostage to their demands? Plain and simple, freshman in Congress are putting their own demands before their constituents and before the fate of the nation. 

I follow politics night and day. When I wake up, I immediately read Politico Playbook. When I get to work, I leave Politico and The Hill open so I can constantly check back for updates. I created a twitter for the purpose of getting up-to-the-minute breaking news. In my four years of real understanding and interest for politics, I have never once grown tired of it. I love the analysis, love the discussions, love the horse race. But for the first time, I'm starting to grow tired. I simply do not understand what is happening with our government anymore.

How can such a basic, procedural vote essentially stop the entire United States government from talking about anything else for months? How can one party hold the entire economy hostage, risking the fate of our credit and our nation for years, over one vote? It is simply incomprehensible to me. The partisan bickering, the despicable brinkmanship, has finally gotten out of hand. President Obama said that "America voted for divided government, but they did not vote for dysfunctional government." 

We are a centrist nation. Freshman Republicans say they have a mandate from the American people, that they speak for the American people, when they say that the debt ceiling should not be raised. They're not telling the truth. Every major poll shows that Americans are desperate for compromise. 

Americans are generally a centrist group of people. In most cases, voting Americans look for some form of divided government, and rightfully so. With divided government, both parties are forced to compromise, sacrificing a few points to the other party while gaining a few as well. But this is not what happened. Instead, freshman, tea-party supported members of Congress have put the fate of this country at risk in their attempts to discredit every single thing that President Obama has done in office. They came to Washington saying that they would end the partisan rancor once and for all and what did they end up doing but widening the ideological divide and standing directly in the way of any and all compromise. 

I want to leave you with a quote. Steve Israel, the chairman of the Democratic Congressional Campaign Committee said something that, to me, has never rang more true: 

"The Republican Party is trying to repeal the 20th century."

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.

A Missed Opportunity: Republicans Are Quickly Losing Their Momentum

Google Images: Eric Cantor

With their fervent anti-tax ideology, and their inability to entertain any of tax increases despite the fact that President Obama has offered huge cuts in a number of politically unpopular areas of the government, Republicans have lost a potentially monumental opportunity to permanently turn this country center-right.

David Brooks said it best,

It could be that this has been a glorious moment in Republican history. It could be that having persuaded independents that they are a prudent party, Republicans will sweep the next election. Controlling the White House and Congress, perhaps they will have the guts to cut Medicare unilaterally, reform the welfare state and herald in an era of conservative greatness.

Republicans had a huge chance here. I said it in my last post and I will say it again: There was a Democratic president who saw it fit and necessary to move his policies and this country towards the political center, floating ideas that were extremely unpopular in the Democratic Caucus in Congress. Liberal activists were (and still are somewhat) furious and stunned by Obama’s talk about potentially raising the Medicare enrollment age, cutting Social Security by changing the inflation index, and offering offering to work with congressional Republicans on broad-based tax reform. 

The Democratic Party was one step away from truly fracturing, with congressional Democrats unified in their full opposition to entitlement reform while President Obama spent long nights talking about that very topic with Speaker Boehner. Republicans were one step away from really solidifying and even strengthening their 2010 gains. Democrats would have stayed home in large numbers in 2012 and the Republican nominee would have had a huge opportunity to take the White House.

But then something happened. Republicans pulled back. Eric Cantor stormed out of debt talks. He then rebuked Speaker Boehner’s potential deal with President Obama that would have cut around $3 trillion in spending while eliminating tax loopholes and making minor cuts to Medicare. To avoid a “grand deal” was a mistake, but it’s understandable that Republicans pull back from such a large deal. 

But Republicans in the House did not just reject the plan being crafted by Speaker Boehner and President Obama. No, it then went to an even greater extreme. Today, House Republicans introduced the “Cut. Cap, and Balance Act,” which is the most ideologically driven, partisan debt ceiling legislation that we have seen yet. As the August 2^nd default date creeps eerily closer, and both parties frantically attempt to convince independents that they are the ones working for their values, Republicans have astonishingly made a hard-right turn.

And while Republicans believe that their opinions are currently in line with those of the American people (and they are for the most part true), those views are quickly shifting. While just one week ago, a huge majority of Americans disagreed with raising the debt ceiling, those numbers are now much more hazy, with at least one poll out today saying that 55% of Americans are now very concerned about what would happen if the debt ceiling was not raised. 

Furthermore, a new Gallup poll released today shows that 66% of Americans agree that some type of compromise plan is necessary for the debt ceiling, even if it is a plan that the person who was polled personally disagreed with. Just 27% of Americans polled believe that their party should hold out for the exact plan that they want, even if the debt ceiling was not raised by August 2nd. Furthermore, 57% of Republicans believe that a compromise is necessary even if they disagree with the plan and an astounding 72% of independents agree.

Republican and Democratic voters are decided on this issue. Republicans believe that we need to cut, cap, and balance without any tax hikes while Democrats believe that deficit reduction should involve a more balanced approach of spending cuts and tax increases. The fight is over the center. And the ability to relate to the independent center voters (those that are absolutely imperative for election/re-election) is quickly slipping away from Republicans in the House. 

Google Image: Tea Party Patriots Banner

As the tea party continues to radicalize a republican party that no longer has a moderate wing, republican lawmakers are increasingly left pandering and reassuring their own voters. This can be seen with cut, cap, an balance. Republicans know that this bill has no chance of becoming law but that's not what's important. What is important is that the act reassures tea party donors and super conservatives, which keeps money flowing in to republican coffers.

The problem with this approach is that Republicans are now ostracizing independent voters, allowing President Obama, who had consistently attempted (and mostly succeeded) in painting himself as compromiser-in-chief, to swoop in and snatch up independent voters with his centrist and pragmatic policies. While liberal democrats have become rather frustrated with Obama, there is no doubt that they will still vote for him in the end (however begrudgingly they may do it). What has always mattered (and especially matters now) is who can control the middle ground. And with Republicans moving farther and farther right, passing their latest cut, cap. and balance bill by more than 30 votes, they are moving themselves away from what is really important: the political center.

Google Images

While Republicans in the House celebrate their victory tonight, the American people are worried, worried that political posturing and risky lies could make it so they no longer have access to credit and are at risk of losing their job. The debt ceiling is not something to play with, it should never be used as a political tool to inspire fear or as an excuse to lie through one's teeth. 

Republicans are happy tonight; but rest assured, political commentators, historians, and politicians will look back on this past month and say that the Republican's handling of the debt ceiling situation was one of the biggest political blunders in the history of the Republican Party. 

The radicalization of the republican party continues, and with it goes a missed, golden opportunity. 

The Question No One Wants to Ask: What Would Happen if the US Government Defaults on Its Debts?

Getty Images

Remember this headline?

Dow falls 777 points, biggest one-day drop ever

With debt ceiling talks completely stalled and neither side wanting to give up political ground, the United States faces a true possibility of default for the first time ever. And the news coming out of Washington is less than stellar. In fact, its downright scary.

Stan Collender, budget expert at Qorvis, spoke to Ezra Klein in Sunday’s Washington Post. He ominously explained,

 “[There is] less than 50-50 [chance of a deal before Aug. 2]..." 

And David Cote, chairman and CEO of Honeywell, on the “Meet the Press” roundtable commented,

 “[I]t's like both parties have a grip on each other's throat and they're more focused on simultaneous asphyxiation than they are on actually resolving the problem.”  

Finally, The New Yorker’s George Packer:

“Obama and Congress are engaged in high-drama brinksmanship, like members of an ordnance-disposal unit arguing about how to defuse a huge ticking bomb.” 

Hearing these types of words form high-level officials and commentators this late into the debt ceiling discussions is extremely disheartening and worrisome for the economic fate of the nation. Remember, while the Obama Administration has said that we will begin the process of defaulting on our obligations August 2nd, it takes time for a bill to be drafted, debated, and passed in both the House and the Senate. If we are going to reach a deal before the deadline, it will have to come this week.

Google Images: On September 29, 2008, the Dow Jones Industrial fell 777 points, the largest single-day drop in history. Analysts are speculating that if a deal is not reached by August 2nd, we could see something comparable, if not worse, to the economic collapse of 2008.

The Current Situation 
Let's face some unfortunate facts:

• The President of the United States and high level treasury officials say that we have until August 2nd at the latest to increase the debt ceiling
• Republicans in Congress are refusing to accept any form of tax hike on any person or corporation (this includes eliminating loopholes for big oil, timber, and corporate jet owners)
• Democrats in Congress are refusing to vote for any debt increase if the deal includes cuts to medicare and/or social security
• To make matters worse, Republican have made a far-right turn, pushing a radically partisan "cut, cap, and balance" plan instead of compromising just two weeks away from a possible default. 
• Debt talks have stalled, with neither side ceding any ground; in fact, both sides have apparently dug in

Politicians in Washington are certainly playing with fire when it comes to the debt ceiling. But the American public is not making it any better. Still, despite all the dire warnings, a plurality of Americans believe that the debt should not be raised. As I have previously said, Republicans see a political victory out of this, attempting to come down on the side of the people since they know that strict opposition to the debt ceiling increase could score them political points now and mean campaign contribution for their 2012 war chest. But maybe, just maybe, if I can explain what would happen if we did default, I can begin to change some minds.

What Is A Default?

Default is a relatively simple concept: It occurs when a debtor (in this case the United States) has not met its legal obligations according to a debt contract. This may mean not making a scheduled payment, violating some condition of the contract, or being unable to pay back the loaned money. Default occurs if the debtor is unwilling or unable to pay their debt.

Google Images: Rioting in Greece

If the United States Defaults...

widespread panic would ensue. No country the size of the United States has ever defaulted on its debt. Think about this: The financial markets lost tremendous amounts of value when Greece was seen as a major threat to default in 2010. Greece has a GDP of $329.9 billion. The United States? Our GDP is almost 43 times bigger than that, valued at an astounding $14.12. A number of economists believed that the world economy was in danger of collapsing had Greece defaulted. Now, can you possibly imagine what would happen if the United States defaulted on its debt? 

One thing that is important to remember is that the debt is not just simply a bunch of numbers; it is real money that has been lent to us by foreign countries with the actual expectation that we return that payment plus interest. The debt is owed to foreign countries, multinational banks, and many Americans through the buying of treasury bonds (which are rated as AAA, the safest type of investment money can buy). If, for example, I overspend and am forced to default on my debts that I owe, that money that I owed does not just magically vanish into thin air. The bank is forced to take the loss. The same can be said for the United States of America. If the US was to default on its debt, the rest of the world would suddenly be left with $14 trillion of unpaid liabilities. One can only imagine the catastrophic collapse that would ensue. While we do not know exactly what would happen (since we have never actually been through and never should have to go through it), it is fairly easy to make some well-supported assumptions:

skiddish and more worried. However, if previous experience serves as a guide, we will not see any type of collapse until August 2nd if a deal had not been reached. That being said, if wall street spent months expecting a late-term deal and no deal ultimately gets done, the markets reaction will be uncharacteristically harsh and never-before-seen. Collender explains it best:

[R]emember the general idea on Wall Street right now is that there will be a deal because there’s always a deal. But Wall Street works off of expectations. So if the market realizes they got this wrong, the reaction could be larger than expected. 

The only positive to a market collapse would be that it would most likely force lawmakers to pass a debt increase as quickly as possible. The AP speculates,

The widespread selloff that might trigger could have one benefit, Briggs and others say. Panic-selling might force Washington to quickly agree to raise the debt limit. Think back to September 2008 for some historical perspective. After the House of Representatives voted down the bailout bill to create the Troubled Asset Relief Program on Sept. 29, the Dow Jones industrial average nosedived 777 points. Congress made an about face and four days later passed the TARP bill. President George W. Bush quickly signed it into law.

But even then, one day past August 2nd is one day too many. A deal is easily reachable if both sides share the sacrifice. In the end, no one will be happy with the deal that is reached. Ultimately it is about making sure that both sides feel equally bad about the bill that they end up passing.

2. Many of the world's largest banks, who have still not fully recovered from the 2008 financial meltdown, would be forced to go bankrupt to their exposure to United States debt. Subsequently, credit for necessary things like homes, cars, etc., would become almost completely unavailable. Additionally, since many large corporations rely on short-term credit to pay their employees and that credit would all but disappear, many workers would be unable to collect their paychecks. 

Moreover, the credit rating agencies like Moody's and S&P have threatened to downgrade treasury bonds from their AAA rating if a deal is not reached. This would mean that treasury bonds would no longer be considered as safe an investment as they once were and countries like China (who are the biggest buyer of US treasury bonds) would pull out its money and look for a safer investment. This could not only cause short-term economic pain, but have grave, long-term consequences for the United States and the rest of the world.

3. To go along with that point, businesses would begin laying off more workers since they have no access to credit and no way to advance their own growth. With no access to capital, companies would start shedding workers at an alarming rate. This would of course only make matters worse, resulting in at  best a deep recession and at worst another Great Depression. 

4. The dollar would also likely become almost worthless since the "full faith and credit" of the United States is the only real thing holding up the value of the dollar. When that disappears as access to credit vanishes, it is hard to imagine the dollar being able to retain any of its value.

5. The government would also be potentially unable to send out checks for medicare and social security, leaving hundreds of thousands of seniors who rely on medicare for their medications and prescriptions paying extremely high prices.

**There are a whole lot of other things that I could list off, like rising oil prices and subsequently, skyrocketing gas prices. But I think that the above four are the most significant and vital to understand. 

Google Images: Unemployment Could Skyrocket to Numbers Not Seen Since the Great Depression

Conclusion
So will the United States default on August 2nd? Most likely not. While the Treasury has said that August 2 is the drop-dead date for default, economists are saying that if lawmakers were to shut down a large percentage of government agencies and shuffle some money around, a full out default could likely be avoided for a few weeks. Regardless, the prospect of living with 20+% unemployment, no access to credit, a withering stock and mutual fund portfolio, and a global meltdown, is something that no person wants to see.

There is something that every American needs to realize: At this moment, the United States can still easily meet its debt obligations. Ignore the hype, those who say that America is broke and/or out of money are lying to you. 

If the United States goes into default, it will most certainly not be because of the economics. If the US defaults on its own debt obligations, it will be solely due to the politics behind the issue. The unintended consequences of political pandering to pick up votes in 2012 would have such grave economic repercussions that America would be left reeling for years to come.

Sunday Opinion: It's Time For Republicans in Congress to Take A Look in the Mirror

Congressional Republicans are continuing to throw roadblock after roadblock in the path of a possible debt ceiling agreement, and as the deadline gets closer, they are becoming more outspoken about it. Many House freshman have doubled down on their disbelief of the White House's August 2nd default date, with some, like Illinois Rep. Joe Walsh, strongly asserting that the treasury has more than enough money to service its debt and pay for major government programs. 

Others, like Congressman Mo Brooks of Alabama, have expressed utter surprise that credit rating agencies like Moody's have placed US treasury bonds on downgrade watch. Brooks actually wondered out loud why our credit rating may potentially be downgraded:

“There should be no default on August 2,” Brooks said. “In fact, our credit rating should be improved by not raising the debt ceiling.”

It is astonishing that these congressman, with absolutely no background in basic economic issues (let along something as complex and potentially catastrophic as raising the debt ceiling) are able to stand up on the House floor and unequivocally claim that President Obama pandering without a real solution for deficit reduction. Furthermore, Republicans are claiming that he is creating mass hysteria and uncertainty in the marketplace. 

This comment has been the go-to for congressional republicans and conservative commentators alike. It all started with healthcare, when those opposed expressed concern that the new healthcare law would create grave uncertainty in the marketplace and would lead to major job loss and confusion among business owners. Now, this talking point has been revamped for the new fight, the fight over whether or not to raise the debt ceiling.

But it's not President Obama who is creating the uncertainty. No, if Republicans want to point fingers at those who are causing turmoil in the marketplace, they needn't do anything but turn those fingers on themselves.

Republicans have spent the better part of July complaining about the President's handling of the debt ceiling discussion, claiming that he's adding to economic uncertainty, that he's out of touch, and that Americans cannot afford tax raises (despite the fact that they would only affect the top 1% of earners and major corporations like big oil). But this claim by Republicans only serves to act as a self-fulfilling prophecy.

By spending the majority of their time in Congress bickering about the President instead of actually attempting to reach a compromise, congressional republicans are actually the ones to blame for increasing uncertainty. To put it another way: By attempting to create artificial "economic uncertainty" by focusing on it nonstop as opposed to actually sitting down at the table and hammering out a deal, House republicans are only making the problem that much worse. 

Both sides have spent plenty of time bickering, but the time for partisan hackery is over. I don't know how to stress the importance of the situation we now find ourselves in. Congress is more divided than it has been in decades, a radical freshman class in the House refuses to do anything that could help the President score anything that could be construed as a victory, and the US Treasury is stressing that if we do not raise the debt ceiling by August 2nd, the country is at major risk of default.

This is a dire situation, but unfortunately House republicans would rather play politics in hopes of derailing the President's re-election campaign. 

It's time we hold our politicians accountable for what they're really doing: fanning the flames of partisanship and deliberately creating artificial, economic uncertainty. 

President Obama has stressed that deficit reduction must be a shared sacrifice. He has offered to accept trillions of dollars in spending cuts, raise the medicare enrollment age, and cut funding to Social Security. In return Obama has asked for top tier tax rates to return to Clinton-era levels and the elimination of a half-dozen loopholes that would not in any way, shape, or form affect middle class workers (like subsidies for corporate jets, big oil, and the timber industry), which would result in revenue increases of only a few hundred million dollars (compared to the $3 trillion in cuts that the President conceded to Republicans in Congress). And what have Republicans, who rode into Washington on a wave of promises to "cut spending" and "restore America's fiscal responsibility," promised to sacrifice? Nothing. Absolutely nothing. After getting the trillions of dollars in cuts that they asked for, and being offered cuts in medicare that they wanted from President Obama, they refuse to compromise at all. No taxes, no negotiations, their way or the highway. 

If Republicans want to blame someone for fear-mongering, mishandling debt ceiling negotiations, and creating uncertainty in the marketplace, it's time that they face facts and take a look in the mirror. 

The Disintegration of the Mass Media Part 1

Summary: I begin this piece on the media with a very recent example regarding the British tabloid scandal at the News of the World. However, this should only serve as an example to the much more important part of this posting, which can be found under the "Analysis" section.

For those people living under a rock (or taking a much needed break from the constant debt ceiling discussions on news and opinion channels for a while), the British tabloid "News of the World" and the company that owns it, Newscorp Inc. (owned by Rupert Murdoch, who also owns Fox News), have been sharply criticized for allegedly hacking into the phones of celebrities and even 9/11 victims. It's true. Major news sites have confirmed that staff members at "News of the World" actually attempted to pay off a NYC police officer in order to obtain the cell phone records and text conversations of those people who were killed in the September 11th attacks. Furthermore, and potentially more catastrophic than that, the "News of the World" staff hacked the phone of Milly Dowler, a British teenager who had been kidnapped and was ultimately murdered. In fact, when the girl's voicemail inbox became full with messages, News of the World (hereafter referred to as NOTW) staff actually erased messages from the phone in order to dig up more. This in turn gave the parents of Dowler false hope that their daughter was actually alive, despite the fact that she had already been killed. 

The acts of hacking perpetrated by staff and leaders at NOTW are horrendous and the people behind the hacks should be prosecuted for what they did. This is by all intents and purposes a huge story. NOTW was originally founded in 1843, it has been around for more than 170 years and had become somewhat of a staple in British culture. So when the shock news hit Britain and a number of top staff at the tabloid were arrested and questioned, it became a major story that news channels in the United States quickly picked up and reported on nonstop. This is where the story of media hypocrisy begins. 

DISCLAIMER: I do not hate everything on Fox News and my criticism of the network in this specific instance should not mean that I am immediately painted as a rabid liberal with an axe to grind. In this blog, I attempt to objectively point out hypocrisy, regardless of the source or party affiliation. 

Fox News, the channel that is owned by Rupert Murdoch (who company owns News of the World), has attempted to downplay the scandal. You can watch the video below, in which host Steve Doocey and his guest scolded the mainstream media for reporting on what they saw as such an unimportant issue:

In the interview, Doocey exclaimed,

"We've got some serious problems in this country ... and what do they do?" he said. "They talk about this."

Oh Steve, if only there was videotaped evidence of you ignoring real political stories to report on a politically charged issue. Oh wait, there is! Need we remind Mr. Doocey of the Anthony Weiner scandal? According to Mediaite.com, a website that tracks media coverage,

On June 14, Weiner was covered extensively on all three major cable news channels. CNN covered the Weiner fallout on American Morning, CNN Newsroom, The Situation Room, and Anderson Cooper 360. Fox News featured the story on Fox & Friends, America’s Newsroom, America Live with Megyn Kelly, Studio B, Your World with Neil Cavuto, Special Report with Bret Baier, and Fox Report with Shepherd Smith. But it was MSNBC that had the most Weiner coverage Tuesday, with every show covering the story to some degree except Morning Joe, Dylan Ratigan, Rachel Maddow, and Ed Schultz. 

Additionally, let me share a video with you of Mr. Doocey's Fox News program, Fox and Friends, ignoring important issues and focusing solely on the Weiner scandal when the news broke:



Brian Kilmeade, the commentator on the right, even says,

"We have so much to talk about, you have a budget to pass, you have what's going on in Libya...you have the tragic story of the 13 year old girl who was beaten in Syria, and who could believe that Congressman Weiner's pictures or not pictures could be the number one story on Capitol Hill!"

It's as if Fox and Friends recognized the great variety of substantive political issues that they had to choose from and yet still decided that they should spend hours upon hours needlessly tacking the most recent developments of Anthony Weiner.

Now, I would not be fair if I only blamed Fox News. MSNBC has been just as bad. On the Rachel Maddow show, Maddow went through a long list of all the different issues that were plaguing the world at that time. But then, instead of discussing them in detail, she ran a 10 minute segment about...you guessed it, the Weiner scandal:




Analysis: A Flawed Cable News System
Now, I give credit to Maddow for at least presenting these much more important issues (like the atrocities in Syria and Yemen), but the fact remains: the cable news world is out to draw headlines.

We witnessed this with the recent Casey Anthony trial. The day that the verdict was read, I sat at my desk at work watching CNN the entire 9-hour day. Of those nine hours, at least eight were completely dedicated to Casey Anthony. Even worse, the network had no new information. Instead, they were simply recycling the same four or five points over and over again, stalling until a verdict was decided upon and read.

Why do you think that PBS, a no-frills network with some of the best news and analysis on television, draws such abysmal ratings? Because there's no fun in it, no potential to see two self-interested, moronic commentators screaming at each other over a random political issue or over whether or not Casey Anthony should be released from prison on Wednesday or on Thursday. There's no flashy color schemes, loud and outspoken hosts, or crazy partisan hacks as guests. This is the problem with the modern day cable news system.

Our television coverage is failing us. As Americans who understand the importance of open discussion on extremely sensitive and overwhelmingly important issues like the debt ceiling debate, we need to demand that our cable news programs provide us with an informed, well-conceived, and non-partisan account of the most recent happenings. Guests should have substantive discussion, disagreement should be welcome (having two sides to every issue allows a free flow of ideas and encourages viewers to make up their minds independently), but shouting should be strongly discouraged.

The current politics in Washington, with an impenetrable partisan rift between conservatives and progressives that is only worsening as debate on a slew of important legislation continues, directly mirrors the way in which our cable news programs operate. The House floor used to be a place for lively debate, compromise, hard work, and negotiation. Similarly, television news programs used to be a place for well-respected, publicly non-partisan nightly news anchors to present the day's news in an objective and unbiased manner. Today, the House floor is a place for prepared, partisan statements that only serve to emphasize the divide between the two parties (compromise is no longer achievable). Likewise, the news media has become a place frequented by partisan hacks (as both hosts and guests), a place where uninformed opinion has all but permanently replaced unbiased news, commentators spout off party talking points on a relatively consistent basis, and the true battle in any debate between talking heads is over who can yell louder than the other.

Until the news media can find a way to pull back and present the news the way it should be, in an unbiased manner with substantive (and calm) discussion between opposing viewpoints, the ideologically-driven politics of Washington will remain the same.

It's about time that we start demanding change.