Debtly Peril

Pundits this morning are agog and aghast at what they perceive as Conservatives’ stubborn ignorance regarding the debt ceiling.  Any compromise they feel is better than having the country default on its debts.  Conservatives are the last people in the country who approve of defaulters.  They consider failing to pay the bills an extreme dishonor.  That’s been our whole point since we started the Tea Parties.

The pundits fear not only the economic consequences of not compromising with the Democrat Congress and President, and not raising taxes, the debt ceiling and allowing them the future privilege of putting us into even deeper debt in order to solve the short-tern crisis, but the political ramifications of belling the Democrats as well.  Here’s what some of the pundits had to say this morning:

John Podhoretz:  Podhoretz says that the debt-ceiling crisis is a man-made political disaster, with both parties caught up in a self-made whirlwind.  He points out, rightly, that we Conservatives thought we could strong-arm the Democrats into spending cuts, but as we only control one chamber, we only have one arm.  He says the arm isn’t that strong.

He recognizes that the Democrats are using the crisis “to repeat the dynamic of 1990, when they got GOP President George H.W. Bush to agree to tax hikes -- a move that fractured the right and led to divisions that helped doom Bush to a single term.”

Where he’s wrong is in claiming that both Conservatives and Liberals sought a fight that’s harming the whole nation.  Basically, that’s just saying that we should be like sheep and let the wolves eat us.  Republicans, particularly the moderates and RINOs are sheep.  Conservative Tea Partiers are the sheep dogs, the border collies that nip at the heels of the herd.  Sometimes the herd can intimidate a poorly trained dog, especially if the herd is the Media.  We didn’t create this mess.  We protested it, if the pundits will recall, only no one listened because they thought we were just meek, easily dismissed suburbanites carrying cute little signs.

Podhoretz suggests agreeing to the short-term fixes – raising taxes and agreeing to a limited raising of the debt ceiling.  The trouble is, the Democrats are liars and have never kept one promise they’ve made.  Give Obama and the Democrats that inch and they’ll remove the ceiling entirely.

He castigates Conservatives for rejecting Sen. Mitch McConnell's compromise proposal -- no cuts, no tax hike and three debt-limit increases through 2012.  No tax hike is a poor concession to the taxpayers when there are also no spending cuts, and three debt ceiling increases.   Just what kind of deal is that?  Then Podhoretz says that we will find ourselves facing the "Gang of Six" whose plan vastly more injurious to our convictions than McConnell's.

He notes that Obama is no great position, but neither are we.  Then he throws in the panic attack bomb:  “Some advance a position that makes no sense, arguing that we don't need to raise the debt ceiling when the certain result of not doing so now will be a worldwide financial panic.”  We never said we don’t “need” to raise the debt ceiling; we shouldn’t raise it.

“Even those who acknowledge the debt ceiling must be raised act as though they'll somehow be able to get Obama and the Democrats in the Senate to go along with serious spending cuts without tax hikes -- even though they surely know that's not going to happen either,” Podhoretz writes.  Well, no kidding. 

He considers the Gang of Six plan arrant nonsense that asserts but doesn't explain where or how it will cut spending or by how much.  But it is specific in one area, according to the budget expert Keith Hennessey: The "plan raises taxes $830 billion more than would President Obama's February budget . . . It's a huge hidden tax increase."

He concedes no one has any idea what to do.  “There's no workable conservative or Republican plan. The Gang of Six plan can't work. There's no White House plan; as press secretary Jay Carney said in a revealing moment the other day, "leadership is not proposing a plan for the sake of having it voted up or down.”

“So, unless a miracle occurs, and miracles rarely happen in politics, the final deal will please no one and anger everyone. Activist Democrats and Republicans will believe their leaders sold them out.  With ordinary voters, the damage is already done. Even if they're satisfied with the result, the spectacle of the last four weeks will only confirm the highly negative view of politicians that has resulted in see-saw national results -- Republican successes in 2002 and 2004, Democratic triumphs in 2006 and 2008, Republican tsunami in 2010.”

Charles Krauthammer favors the Half-Trillion plan, which raises the debt ceiling by that amount in return for an equal amount of spending cuts. At the current obscene rate of deficit spending - about $100 billion a month - it yields about five months respite before the debt ceiling is reached again.

The McConnell plan essentially punts the issue until after Election Day 2012. A good last resort if nothing else works.  The G6, he explains, proposed by the bipartisan Gang of Six senators, reduces 10-year debt by roughly $4 trillion. It has some advantages, even larger flaws.   

Krauthammer feels the Half-Trillion is best:  “It is clean, straightforward, yields real cuts, averts the current crisis and provides until year-end to negotiate a bigger deal. At the same time, it punctures President Obama’s thus far politically successful strategy of proposing nothing in public, nothing in writing, nothing with numbers, while leaking through a pliant press supposed offers of surpassing scope and reasonableness.”

Obama had threatened to veto any short-term debt-ceiling hike, he writes, revealing Obama's most vulnerable point. Is the catastrophe of default preferable, Krauthammer asks, to a deal that gives us, say, five months to negotiate something more significant - because it doesn't get Obama through Election Day?

Obama is already in retreat, he claims, citing WH press secretary Jay Carney’s statement  that the President would accept an extension of a few days if needed to complete an already agreed upon long-term deal.  “Meaning that he would exercise his veto if that larger deal required several months rather than several days? Call his bluff,” Krauthammer urges.  “Let the House pass the Half-Trillion. Dare him to put America into default because he deems a short-term deal insufficiently grand. After all, it dovetails perfectly with parts of the G6, for which the President has expressed support and which explicitly allocates roughly the same amount of time - six months - to work out the grander $3-$4 trillion deal.

He goes on to explain, “The G6 conveniently comes in two parts. Part One puts immediately into effect, yes, a half-trillion dollars in cuts, including a more accurate inflation measure (that over time greatly reduces Social Security costs) and repeal of the CLASS Act (the lesser-known of the two new Obamacare entitlements, a fiscally ruinous, long-term care Ponzi scheme).

“Part Two of the G6 is far more problematic, mandating six months of committee negotiations over the big ones - Medicare, Social Security, discretionary spending caps and tax reform.  Unfortunately, the Medicare and Social Security parts are exceptionally weak - no mention of any structural change, such as raising the eligibility age to match longevity. As for the spending caps, I wouldn't bet my dog's food bowl on their durability.

“On tax reform, the G6 calls for eliminating deductions, credits, exclusions and exemptions to reduce rates across the board. The new tax rates - top individual rate between 23% and 29% - would bring us back to Reagan levels (28%). This would be a good outcome, but the numbers thus far are fuzzy and some are contradictory. Moreover, those negotiations have yet to begin.

“In principle, however, if the vast majority of the revenue raised by closing loopholes goes to rate reduction, and if the vast majority of the net revenue raised comes from the increased economic activity spurred by lowering rates and eliminating inefficiency-inducing loopholes, the trade-off would be justified. We shall see.

“What to do now? The House should immediately pass the Half-Trillion plan, thereby putting something eminently reasonable on the table that the President will have to address with a serious counterproposal using actual numbers. If the counterproposal is the G6, Republicans should accept Part One with its half-trillion dollars in cuts, CPI change and repeal of the CLASS Act, i.e., the part of the G6 that is enacted immediately and that is real. Accompany this with a dollar-for-dollar hike in the debt ceiling, yielding almost exactly the time envisioned in the G6 to work out grander spending and revenue changes - and defer any action on Part Two until precisely that time.

“The Half-Trillion with or without the G6 Part One: ceiling raised, crisis deferred, cuts enacted and time granted to work out any Grand Compromise. You can't get more reasonable than that.

“Do it. And dare the President to veto it."

Krauthammer’s arguments sound reasonable and soothing – he’s someone who talks sense.  However, we are, as Podhoretz pointed out, a one-armed party at this point, dealing with an untrustyworthy, lying, devious adversary who has no reason in the world to compromise.  There are too many “if’s” in his arguments.

Bill O’Reilly lashes out at the Tea Party for being ‘hysterical’.  “From the beginning,” he said on Fox News, “I have supported the Tea Party because I believe it empowers individual Americans, which is always a good thing. Also, the Tea Party wants fiscal responsibility and a smaller federal government. Again, those are good things as well.

“But now the Tea Party has come to a crossroads. Some of its members simply do not want to raise the debt ceiling, and that could be catastrophic. Thursday, Standard and Poor's met with Republicans in the House to tell them there is a 50/50 chance America's Triple A bond rating will be cut if no debt compromise is reached.

“The goal of any legislation should be to strengthen the country. And there is a way to raise the national debt ceiling while at the same time drastically cutting federal spending and reforming the unfair tax code. If America starts to spend responsibly the national debt will come down and there will be no need to ever raise the debt ceiling again.

“So the Tea Party people should reassess the issue. I mean, when you have a senator like Tom Coburn, a very staunch conservative and fiscal hawk, when you have him willing to compromise, you have to take notice. In addition, the Tea Party should be looking out for itself.

He goes on to point out that we could become irrelevant, like the Hippies of the Sixties.  They’re not so irrelevant as he seems to think:  they’re in the White House, Congress and every federal agency.  They’re the reason we’re in this mess.

“Most Americans do not like extremism in politics. We need a sane compromise and tough economic reform in this country. I hope the Tea Party will be a part of it.”

Americans tolerated Liberal extremism in the Sixties, whether they liked it or not.  They allowed their children to be drugged and brainwashed into reciting the Progressive mantra.  What Americans don’t like is getting involved and they don’t like people who do.  They’re afraid of the Liberals and castigate Conservatives because Tea Partiers are the easier target for cowards to censure.

As for compromise, the tax hike issue might be easier to swallow if the Liberals hadn’t ruined the economy.  Fannie Mae was far more ruinous to the country, as Ann Coulter has pointed out, than the War in Iraq was.  The Democrats want to tax people who have no jobs?  Does Bill O’Reilly believe that that’s a sane policy? Is it sane to hand a Democrat Congress and a Socialist president a blank check, a credit card with no limits which they will never hand back?  Limitless power to spend; that doesn’t sound like much of a compromise to this “cymbal-clanging”, “hysterical” “activist” Tea Partier.

Finally, Speaker of the House John Boehner called Rush Limbaugh’s show yesterday to explain his position.  Here is the transcript:

Rush Limbaugh:  We're so happy to have with us the Speaker of the House, John Boehner. I'm glad that we had a chance to talk to you here, Mr. Speaker, because people are confused with all of these leaks as to what's going on.

SPEAKER BOEHNER: Well, Rush, there is no deal. No deal publicly. No deal privately. There is absolutely no deal. Our focus --

RUSH: Are you talking about a deal, though?

SPEAKER BOEHNER: Pardon me?

RUSH: Are you talking about a deal in secret?

SPEAKER BOEHNER: Our focus right now is getting the Senate to follow us in the House and pass Cut, Cap, and Balance. I believe that we've got to act to prevent a default and to prevent a downgrade of our nation's credit rating, and the best way to do that is to enact Cut, Cap, and Balance. But let me be clear: I believe that is the best course of action. I've said all the way along that we've gotta keep the lines of communication open. That's why Leader Cantor and I have talked with Mitch McConnell. We've talked to Nancy Pelosi. We've talked to the president. We talked about fallback options if in fact Cut, Cap, and Balance does go down; and I do think it's our obligation to have a fallback plan if that doesn't work.

RUSH: Well, but that's what everybody is worried about: What is the fallback plan? A congressional aide is out there today saying that the deal's been struck. He's unnamed, he's on Fox, he's saying, "It's $3 trillion of cuts with no tax revenue." National Journal says three trillion in cuts with "insignificant" tax revenues. So a lot of people out here are of the opinion that Obama is the one who ought to be caving. He's the one that doesn't have a plan. He's forcing you to compromise with yourself. He's done great damage to the economy, and people want it to stop.

SPEAKER BOEHNER: I understand. I'm concerned about the nation defaulting on its credit rating. I'm concerned about us not doing anything about our debt, which will cause our credit rating to fall -- and which then would mean everybody's interest rates go up. I think that's irresponsible. Frankly, we've looked at a half a dozen fallback plans. None of which, none of which, are all that appetizing. That's why we continue to support Cut, Cap, and Balance.

RUSH: So you're convinced that a default would make us unable...? We were to be unable to service our debt if there's a default?

SPEAKER BOEHNER: I'm concerned that we're getting into uncharted territory that could wreak great havoc on our nation, and I don't think it's necessary to get into that unknown zone and take the chance -- and I, frankly, believe that we've gotta find a way to cut our budget deficit, cut our debt, and balance our budget.

RUSH: Why is it not Obama's responsibility to do that? He's the one that's put us in this position.

SPEAKER BOEHNER: It would have been nice if the President would have put a plan to the table months ago, but the President has refused to put any plan on the table. It's obviously been driving me right up a wall.

RUSH: He wants you to take the heat for whatever happens.

SPEAKER BOEHNER: Yeah, but I think at the end of the day he knows that he's the commander-in-chief, he's the president of the United States, and HE will take the heat.

RUSH: Well, a lot of people are concerned that you are his lifeline to reelection and that that's how he sees you, and that if he can get you to act in any way that can be portrayed as a cave that he wins, and that's what people are deathly afraid of.

SPEAKER BOEHNER: Rush, I'm trying to do what I taught my kids to do; the same thing my parents taught me to do: You do the right things for the right reasons, good things will happen.

RUSH: All right, Speaker Boehner thanks much.

We owe Rush a debt of gratitude for stating our genuine – not hysterical – concerns about what’s going on and having Boehner on his show to tell us something, even if it’s not exactly what we want to hear.  At least Rush questioned him (gently), instead of bleating like a lamb.  Frustrated as we are, we do have to take into account that where politics and politicians are concerned, things are not always going to go well, and that games are being played.

Roland Straten, our candidate in N.J.’s 8th district in 2010 and an economist, spelled out plainly, regardless of what anyone proposes, what our representatives duty under the law is:

“Under current law, the government cannot spend any more money. [The deadline is Aug. 3].  It cannot raise taxes and it cannot borrow more money, unless the smaller smarter government group allows it to do so.  The smaller government group has, in the past, succumbed to the tactics that the tax-and-spend group has used against them and ‘compromised.’”

So, this is the pickle barrel in which America finds itself.  The smaller, more responsible Conservative party is at a numerical disadvantage, facing a Democrat majority and an arrogant President who hold most of the economic cards, and can and will not only reject compromises not to their liking, but break the agreements once it’s convenient for them to do so, threatening us with financial ruin and calamity if Conservatives don’t compromise and sealing our doom if we do.