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."

Opinion: Tax Junk Food, Subsidize Vegetables

New York Times Image

After sitting on a bus for five hours tonight, reading story after story about the debt ceiling, learning absolutely no new information, both sides completely dug in, I decided that I really needed to free myself from the horrible constraints of rehashing the same old points about the debt ceiling. So, for tonight's post, I want to talk about an issue that is extremely important to me and to the fate of this country: the problem of nutrition in the United States.

As a disclaimer, this post was inspired by a recent article in the New York Times, which I will cite throughout.

Introduction
What would happen if we were able to change our eating habits? Americans have been stuck in a rut of horrible food at dirt cheap prices for at least a decade, and the situation is getting worse. And, to be honest, I cannot blame the working class families who feed their children fast food day in and day out. When you are working paycheck to paycheck and trying to support a family while working three jobs, the calorie-dense, cheap fast food meal options can be a blessing. But there is of course another side to the coin: Americans are becoming the fattest people on earth, and fast food is absolutely the reason. 

And the nutrition problem in this country is not only a personal issue, it's also an economic one. Think about it: Economists say that the number one way to reduce the deficit and right the economy long-term is to find some way to slow the quickly rising cost of health care in this country. The way to do it? One word: Prevention. If you can find a way to offset the cost of fresh fruits and vegetables for working class families who generally eat fast food at higher rates and have more health problems down the line, you could easily slow the massive amounts of money that we spend every year on health care costs. You're looking at tens, even hundreds, of billions in savings. 

Google Images: In many cases, in the current nutritional climate we are in, a burger and fries can be much cheaper and easier than a home-cooked, healthier meal option

The Current Situation
While junk foods (like chips, sodas, "fruit" drinks, etc.) have been shown to lead to diseases like diabetes and heart disease, the food industry, more specifically the highly-processed food industry, has proven incapable of marketing healthier food options. Why do they refuse to market healthier foods? Simple, because while they tout their care for health and growth, the only thing these major companies are after is profit, and while unhealthy foods continue to drive profit margins higher, they will continue to push these products onto our society. 

In my opinion, it should be the federal government's job to stop outrages like this. The government needs to fulfill its main role as a protector of the public good. Currently, the federal government actually subsidizes these unhealthy products by, among other things, lowering the price of corn to an unbelievable extreme. This allows junk food designers to add things like high fructose corn syrup for pennies, charge low prices, and still make inordinately high profits. Rather than subsidize the junk food, we should be doing the opposite: taxing the foods that are most unhealthy for us. The income that we gain from doing so could be used to create a program that encourages Americans to eat healthy and warns them of the potential problems that eating poorly can cause long-term. 

And the need for a solution is absolutely dire. Attempting to educate our youths on the value of fresh vegetables over the sugary sweet taste of cocoa pebbles is difficult enough. Moreover, nutritional education is no match for the $4 billion that the fast food industry pushed into marketing in 2009. Here are a few facts:

1. The percentage of obesity among American adults has doubles over the last 30 years
2. The percentage of obese children has tripled in that same period
3. We not consume more than 10% more animal products than we did a generation ago, and while low fat meats like chicken are not necessarily a bad thing (despite the oftentimes inhuman conditions), I think that Americans would perhaps be better off without the quadruple baconator offered at Wendy's. 

The situation will only get worse, unless we act. Soon. 

Google Images: The subsidization of corn has long been considered detrimental to the well-being of that nation

Taxes
The way to solve the nutrition problem is an easy one: Tax the junk food and subsidize the fresh food. Easier said than done. 

According to Mark Bittman, who wrote an op-ed for the NYTimes, 

The average American consumes 44.7 gallons of soft drinks annually. (Although that includes diet sodas, it does not include noncarbonated sweetened beverages, which add up to at least 17 gallons a person per year.) Sweetened drinks could be taxed at 2 cents per ounce, so a six-pack of Pepsi would cost $1.44 more than it does now. An equivalent tax on fries might be 50 cents per serving; a quarter extra for a doughnut. (We have experts who can figure out how “bad” a food should be to qualify, and what the rate should be; right now they’re busy calculating ethanol subsidies. Diet sodas would not be taxed.)

Simply put: taxes would reduce consumption of unhealthful foods and generate billions of dollars annually. That money could be used to subsidize the purchase of staple foods like seasonal greens, vegetables, whole grains, dried legumes and fruit.

This would, in essence, drive up the cost of junk food (although not exponentially if we are only discussing a cent, maybe two tops, per ounce) and keep the price of fresh fruits and vegetables extremely low, encouraging all types of people to buy more healthy foods. The tax would not only raise money for state and federal governments in a time where the economic recovery is slow at best, but it would also act as a preventative measure and save the country billions on health care costs long term. Think if you could go to the grocery store, the drug store, the supermarket, and find fresh fruit for 50 cents a pound instead of the 2 to 4 dollars we pay now. Think about the health opportunities if we could put vending machines filled with fresh fruits and vegetables in schools and charge less than a dollar, an idea that has already been implemented in both Japan and Ohio. 

For many Americans, they have a much more difficult time purchasing fresh fruit than fruit loops. And with diabetes and other diseases attributed to bad eating habits on the rise, this issue is absolutely urgent for the economy sanctity and national well-being of this nation. 

The problem with most state taxes on junk food right now is that they're a sales tax, meaning that the tax is charged at the register. As anyone who buys their own groceries knows, most people only consider the price they see in the aisles, not really caring about the tax they have to pay on the good. Therefore, the added sales tax to junk food is a mostly failed policy, as it has not demonstrated an impact in the goods that people commonly buy. This means that excise taxes are needed if we really want to impact the way consumers purchase. An excise tax would be incorporated into the shelf life of a product, which would mean that it would directly impact the way decisions that consumers would have to make. 

According to Bittman, 

Much of the research on beverage taxes comes from the Rudd Center for Food Policy and Obesity at Yale. Its projections indicate that taxes become significant at the equivalent of about a penny an ounce, a level at which three very good things should begin to happen: the consumption of sugar-sweetened beverages should decrease, as should the incidence of disease and therefore public health costs; and money could be raised for other uses.

Google Images: Obesity is on the rise, having more than tripled among children in the last thirty years. We can stop the flow of childhood and adult obesity by making junk foods more expensive and subsidizing the cost of healthy and delicious fresh fruits and vegetables. 

Potential Pitfalls
Bittman points out two major problems, one being that it would upset the extremely powerful food lobby and the other being that some would ague that the government is infringing on their right to eat what they want:

This program would, of course, upset the processed food industry. Oh well. It would also bug those who might resent paying more for soda and chips and argue that their right to eat whatever they wanted was being breached. But public health is the role of the government, and our diet is right up there with any other public responsibility you can name, from water treatment to mass transit.

Some advocates for the poor say taxes like these are unfair because low-income people pay a higher percentage of their income for food and would find it more difficult to buy soda or junk. But since poor people suffer disproportionately from the cost of high-quality, fresh foods, subsidizing those foods would be particularly beneficial to them.

Conclusion 
Acceptance of new taxes in a nation that is electing such anti-tax zealots will not go down easy. According to Bittman, 

First off, we’ll have to listen to nanny-state arguments, which can be countered by the acceptance of the anti-tobacco movement as well as a dozen other successful public health measures. Then there are the predictions of  job loss at soda distributorships, but the same predictions were made about the tobacco industry, and those were wrong. (For that matter, the same predictions were made around the nickel deposit on bottles, which most shoppers don’t even notice.) Ultimately, however, both consumers and government will be more than reimbursed in the form of cheaper healthy staples, lowered health care costs and better health. And that’s a big deal.

As you can see, all of these arguments against the taxation of junk foods can be easily rebuked through reason.

In order to hammer home the point, I want to leave you with some numbers:

1. According to a professor at Columbia University, a one-cent per ounce tax on sugar-laced beverages in the state of New York could save up to $3 billion in health care costs over ten years and could bring in $1 billion annually to the state
2. A two-cent tax per ounce in the state of Illinois could reduce obesity by 18%, save $350 million and bring in over $800 million in tax revenue every year
3. If implemented nationally, the United States could see revenues of $13 billion a year while cutting consumption up to 24%
4. A 20% increase in the price of sugary drinks could result in a 20% decrease in consumption, which could prevent up to 1.5 million Americans from becoming obese and 400,000 from being diagnosed with diabetes, which could save $30 billion

The federal government is embattled in a tedious fight over what areas to cut, whether it be education, medicare, social security. Significant issues like the nutritional well-being of our nation are being blatantly overlooked. But if the government had any idea the economic value of the issue, both the savings and the revenues that could be made from a simple change in the system, they may be less likely to neglect and more likely to listen. 

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.

The Debate Over Taxes, Part 1

The word taxes has, through the years, come to be seen with purely negative connotations. This is much to the dismay of Democratic politicians who believe in higher taxes for higher earners and much to the liking of Republican candidates who have long campaigned on the principles of low taxes for all.

Following the two-year extension of the Bush tax cuts in 2010, the debate over the tax code between elected representatives was re-ignited. Now, with debt ceiling talks stalling almost solely due to the fact that Republicans will not except any form of tax increase, understanding the tax code and the way in which taxes go to fund government projects has become more important than ever. In order to understand the current tax system, we must first lay out what taxes are and provide a brief background to the current debate.

What are Taxes?
The United States tax code is ridiculously complicated, made up of over 16,000 pages long. For those who prefer examples, the US tax code is more than seven times the length of the bible. But broken down, the idea of a tax is relatively simple. The problem comes into play when you begin to go through the actual process of determining who deserves tax breaks and what type's of credits you will give to what segments of the population. But let's start with a few definitions.

A tax is essentially a mandated contribution from you to the US government. This means that a portion of your income is taken out of your paycheck and goes to the US government, who, through Congress, creates a budget and determines just how to allocate that money. Taxes can also come in the form of an additional cost on a good or service, like Washington State's gas tax (which is an extra free of 37 cents per gallon of gas). Politicians also love to invoke what are called "sin taxes," which are extremely high taxes on goods like cigarettes. This tends to be a fairly good moneymaker for the city or state seeing as demand for cigarettes is relatively inelastic among the smoking community. Put in a much simpler fashion, because the nicotine in cigarettes causes smokers to become addicted and thus crave more cigarettes, politicians can invoke extremely high taxes on them because they know that smokers will continue to purchase the product. Some of the major forms of taxes include:

• Sales Tax: In the US, we most often see this tax as a method for states to raise revenue for themselves. Customers make purchases from a retailer and pay a tax that is a percentage of the sales price. States vary the rates they charge, and the rate also varies based on the product. For example a t-shirt has one tax, food has another, and gas has still another. Retailers oppose sales tax (especially in places like Washington, DC where the tax is as high as 10%) because they have to collect the tax directly from the customer as opposed to it being built into the price of the good. States, on the other hand, love the sales tax since they are able to collect revenue from people who do not live in the state (because whether or not you are a local or a tourist, you will pay the same percentage of tax on that carton of milk or that restaurant check. Proponents of a sales tax say that it is one of the fairest of all taxes because it is a tax on consumption, meaning that you can avoid paying tax by simply avoiding the product. People also argue that those that make more money are more likely to buy more products and therefore pay a greater amount of tax. This would seem to signal that the sales tax is, thus, progressive (meaning that those who make more end up paying more in taxes than those who don't make much) but critics often argue that although this may be true, the sales tax impact the poor much harder than it does someone who is rich. A 10% tax on food or on clothing would mean very little to a rich individual while that 10% could seem like a monumental amount for someone who is poor. 
• Capital Gains Tax: This is a tax on the profit made from the sale of an asset. It’s most commonly cited when it comes to profits made from selling stocks. If you buy a share of Stock A at $10 and then sell it for $15 you have a $5 capital gain. You must pay taxes on this gain. States will also take a chunk of the capital gains. The great thing about this tax is it only taxes people with enough excess income to actually invest. In other words, it’s a tax the poor don’t have to think about. 
• Income Tax: This is the most high yield and important tax.  Most states and the federal government rely heavily on income taxes. The income tax addresses the financial income of individuals and companies. Most systems tax income in different brackets. So a person making $25,000 a year will pay less as a percentage of their income than someone making $60,000 a year, and the same came be said for someone making $250,000. This system provides governments with a relatively stable income, simply because our earnings tend to be predictable. 

There also exist taxes like the property tax and the value-added tax, but the above three are the most important and highest grossing for local and federal governments. 

How Do Tax Brackets Work?

Think of the tax brackets as a series of increasingly steep steps. Let's use the 2011 "brackets" and tax rates as an example:

Income Tax Rate Schedules for 2011

2011 Single Return Rate Schedule			2011  Married Filing Jointly Rate Schedule
Taxable income levels	Tax rate		Taxable income levels	Tax rate
0 to $8,500	10%		0 to $17,000	10%
$8,501 to $34,500	15%		$17,001 to $69,000	15%
$34,501 to $83,600	25%		$69,001 to $139,350	25%
$83,601 to $174,400	28%		$139,351 to $212,300	28%
$174,401 to $379,150	33%		$212,301 to $379,150	33%
Over $379,150	35%		Over $379,1500	35%

For instance, let's completely oversimplify the tax code and say that I somehow, with two purely academic majors that make me all but destined to make mediocre money (political science and history), luck out and receive a salary of $500,000 for this year. The chart above  lays out it out perfectly. As a single man, I would pay 10% in taxes on the first $8,500 (so I would pay $850), 15% in taxes on the next $26,000 (I'd pay $3,900), etc. until I hit the 35% tax bracket. After $379,150, you will be taxed 35% on the rest of your income, regardless of whether you are like the hypothetical me who makes $500,000 or you make $54.4 million like Lloyd Blankfein, the CEO of Goldman Sachs, did in 2006. 

Remember that I have completely oversimplified the tax code for this example (I have not factored in all the different credits, exemptions, and other taxes like capital gains) but it gets across the way in which the tax code works at a basic level. 

A Brief Tax Timeline

While the history of the tax code could even put the most noble student to sleep, I think it is important to establish how taxes and tax rates have changed in the last few decades:

• "In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive, taxation and of withholding income at the source. During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut." [Info Please]
• Jump ahead to World War II: With such an expensive war to pay for, the top tax rate climbed to 91%. 
• On Oct. 22, 1986, President Reagan signed into law one of the most far-reaching reforms of the United States tax system since the adoption of the income tax. The top tax rate on individual income was lowered from 50% to 28%, the lowest it had been since 1916. In an attempt to remain revenue neutral, the act called for a $120 billion increase in business taxation and a corresponding decrease in individual taxation over a five-year period.
• In 1993, Bill Clinton passed a series of tax increases in an attempt to reduce the deficit. Clinton added two new tax brackets, at 36% and 39.6% for America's highest earners. Under Clinton's presidency, the government began to run surpluses (meaning that it took in more money than it was spending.

Because of this, President George W. Bush believed that if the government was taking in too much in taxes, that it should then pass a tax cut and give that money back to the people. According to Infoplease, "The Bush tax cut created a new lowest rate, 10% for the first several thousand dollars earned. It also established a slow schedule of incremental tax cuts that would eventually double the child tax credit from $500 to $1,000, adjust brackets so that middle-income couples owed the same tax as comparable singles, cut the top four tax rates (28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35%)." These tax cuts also temporarily lowered the capital gains rate from 35% to 15% (a loophole that was extended as a part of the recent budget battle between President Obama and congressional Republicans and is now being looked at for possible elimination). Obama has asked that we simply let the Bush tax cuts that lowered the top four tax rates expire, meaning that rates would, for instance, go back to 39.6% from the current 35%.

Analysis: Why the Republican Fight Over Taxes Is Not Worth Defaulting On Our Debt

The fight over taxes has become the main (and at this point only) facet of the debt debate left to talk about. Not considering cuts to entitlement programs like medicare and social security (which I admit are extremely important), trillions of dollars in spending cuts have already been agreed upon by the President and Congressional leadership. At this point, the only thing holding back a deal on the debt ceiling is whether or not the elimination of tax loopholes should be included in the debt ceiling package. As previously noted, President Obama is looking for what he calls a "grand deal" - which would save something along the lines of $4.2 trillion over the next ten years. Congressional Republicans, however, are looking for a much smaller, spending-cuts-only deal, which would save somewhere around $2.6 trillion dollars. President Obama's plan, $1.6 trillion more than House Republicans, would allow the four highest tax rates that had been cut to expire, which would essentially be synonymous to a tax increase (a small one, however). Additionally, Obama wants to cut loopholes for industries that take huge government subsidies, like big oil and timber. 

As debt negotiations continue to stall, politicians and commentators alike are becoming more and more frustrated with the state of the Republican Party and their complete and utter aversion to anything that could ever be construed as a tax increase. Democrats have given up trillions of dollars in cuts, made countless concessions, and the President has even offered to do something so controversial as to look into ways to raise the age that one can qualify from medicare from 65 to 67. These are major concessions on the part of Democrats, concessions, I might add, that liberal commentators are extremely frustrated with. And what have the Republicans given in return? Nothing. Not only have they given nothing, they've actually taken the negotiations in the wrong direction, exacerbating the problem with their mantra of the "anti-tax party" that polls show is actually out of line with the political mainstream.

I understand why Republicans do not want to pay taxes. Taxes are not something that most people enjoy paying, and if you can afford to keep taxes low during a period of economic prosperity than I am all for that. But that is not the case. In fact, that is about as far from the case as humanely possible. Despite narrowly avoiding the collapse of our entire financial infrastructure in 2008, we are now right back on the edge of falling off an economic precipice. Instead of being ecstatic that Democrats have given in to almost every Republican demand, freshman conservatives have instead decided to continue to play politics with the debt ceiling, something that is so fragile that it could completely decimate any economic recovery and result in a lost decade, if not worse.

Minimizing the deficit is about shared responsibility, mutual sacrifice. I will be the first to admit that both sides have wrongly made the debt ceiling a political issue, and both Democrats and Republicans should be reprimanded for playing chicken with such a fragile vote. 

But Democrats have at least given in to many Republican demands for lower federal spending. They're sacrificing a number of programs and regulations that they believe have greatly benefited our economy, and that is commendable. Republicans, however, have not sacrificed. Despite the dozens of concessions, Republicans continue to play politics, hypocritically refusing to share in any of the responsibility. 

Refusing to sacrifice is in no way commendable. In fact, it's downright reprehensible.