A Failure to Lead
Tuesday, August 2, 2011When one looks at the specifics of the debt ceiling compromise, one is struck by just how bad the actual compromise is. One of the features is a 12 person joint committee, with each party selecting six of its own to said committee. The committee is apparently vested with the power to cut spending or pass tax cuts without a full vote of Congress, and according to Senator Harry Reid, the committee has the power to look at "everything."
That's ominous in and of itself. Can you imagine the committee being utilized to address controversial legislation like the Patriot Act, conducting its deliberations largely behind closed doors and passing wide broadsides against civil liberties with a 7-5 vote? It's as bad as a 5-4 Supreme Court vote determining your right to own a firearm or get an abortion in order to preserve your life.
Additionally, spending will increase by $7 trillion over the next decade even with the $2 trillion in announced cuts, because the spending cuts are to the baseline projections, which always assume that spending will increase over time. It just won't increase as much over time, apparently.
This is as bad of a deal as the Republicans could have come away with, when the simple truth was that they could have forced the President to invoke a 14th Amendment solution and raise the debt ceiling by fiat. Can you imagine the political points they would have scored? 2012 would have been a foregone conclusion, especially given the fact that we're in what the mainstream media is terming a double-dip recession. In truth, the recession never really went away, and it's not a recession: for the 20% of Americans who represent the real unemployment statistics in this country, this is a depression.
We're talking federal assistance for most of those individuals, and Obamacare is on the horizon. Make no mistake about it, we are going to have universal healthcare. Employer provided healthcare is done. The reason is simple: the fine employers will pay for jettisoning their healthcare plans is smaller than the cost of their employee insurance. It's a simple economic decision, and as a result, millions of American workers are going to be shuffled into the new healthcare exchanges, which will result in actual costs that far exceed the costs projected by anyone who relied upon the Administration's estimates of enrollment for those exchanges.
The net result is a spending bomb. You've got spending increases that are automatically projected for and that total over $7 trillion even without overloaded health insurance exchanges. What's more, the federal government isn't building the infrastructure necessary to accomodate the certain influx of customers who will be seeking insurance through those exchanges, and the government isn't doing anything to really control costs either. We'll still have the same fee for service model of healthcare that incentivizes overtreatment, overmedication, and overtesting, but it will be financed by government subsidized exchanges.
Combined with the fact that the government owes $2.5 trillion in IOUs to Social Security, IOUs it will have to repay as chronic high unemployment will slowly implode receipts from withholding taxes specifically alloted for Social Security, you're faced with even more spending as the government has to repay what it has pilfered from Social Security surpluses since the mid-80s. Then there's an aging population, skyrocketing prescription drug prices, and the Medicare prescription drug benefit.
On top of all of this, we spend over $700 billion annually on our military, and hundreds of billions more on intelligence, all to fight a war against terrorists who pulled of the likes of 9/11 with under half a million dollars in funding. The three countries who make up the Axis of Evil, Syria, Iran, and North Korea, spend a combined 1/60th of what we spend on national defense to fund their militaries. Everywhere that you look, we are faced with an imminent catastrophe that will come in the next decade unless something is done.
That solution has to be comprehensive, and it has to address rampant fraud and malfeasance in our financial markets, tax reform, spending cuts, entitlement reform, and it has to somehow arise out of a Congress that is obviously dysfunctional to the point of paralysis.
If ever there was a doubt that the Republican Party had lost its way, this debt deal and the failure of Republicans to deal in a meaningful way with the debt ceiling or at least parlay the opportunity into a political nightmare for Barack Obama is full evidence of the ineptitude of the GOP. The GOP has sided with banks that defrauded homeowners, investors, and stripped their own shareholders of value in the process. It's refused to consider meaningful spending cuts that actually involve a freeze on spending and a lock on projected spending that flatlines future budgets at current levels of spending in order to make significant cuts. The GOP has a problem with the federal government enforcing reasonable safety regulations that might have prevented the Deepwater Horizon disaster, while at the same time advocating full body scanners that show your genitalia to some TSA pervert who then searches your child's crotch.
This is where we're at, people, and there aren't any candidates on the horizon who can or will address these problems in a meaningful way. This country needs a revolution, but the electoral process is owned lock, stock, and barrel by the two major parties, and they aren't about to allow the American people to put principles above partisan interests. The two parties both conflate their own political well-being with the interests of the nation, even though this approach has led to 40 consecutive years of deficits and a record national debt, not to mention the current economic crisis, which is a direct result of government deregulation in the financial sector and shoddy oversight of our markets by the SEC and other federal agencies.
Until the American people get rid of every incumbent at every level, these problems will continue. We need a drastic solution for drastic times, and we aren't going to get what we need going forward with either of the two parties controlling our electoral process and making sure that only those candidates who toe the party line make it through the primaries. It's bad. There is no other way to put it without being disingenuous.
When faced with a crisis, the Republican Party delivered a compromise that adds $7 trillion to the national debt, does nothing to address depression level unemployment and a recurring collapse in the housing market, and which also consolidates power into a joint committee with the power to enact legislation on "everything," if Harry Reid is to be believed. The party of Reagan gave us government as the solution, rather than standing against government as the problem. It was a bait and switch, and the American people aren't stupid enough to believe it. Even if they were, the coming decade is likely to produce strains on the bottom line of the federal budget like never before. Given how many state and local governments rely on federal funds, the coming fiscal crisis is likely to be severe and inescapable.
All of this will occur against a backdrop of unfettered and renewed malfeasance in our financial sector, only this time there won't be enough money to bailout the problem. Those bad home loans? Even after $23.7 trillion in bailouts, loans, and guarantees, those toxic assets are still on the books. Thanks to a tweak to federally mandated accounting rules, banks no longer have to report those assets on their quarterly statements, so it looks as if they're generating profits rather than writeoffs. With another 10 million homes facing risk of foreclosure, this is a tsunami waiting to hit our credit markets anew, and there is no leadership in D.C. capable of addressing this problem in a mature manner.
America will survive and go on, but in order to do so, it will have to choose its own best interests over a two party system that is morally and patriotically bankrupt and ideologically inflated. This process is likely to be painful and extremely difficult. The partisans are not going to go quietly into the night. What is more, the human misery that is on the horizon in the form of another economic crisis is likely to be severe.
In all of this, the great irony is that Congress is acting as if it didn't pass the budget that has created this debt ceiling issue in the first place. The President doesn't want to raise the ceiling to increase spending, he has to raise the ceiling in order to pay the obligations created by a Congress that raised spending time and time again. It's absurd that people are blaming Obama for what a Congress did of its own volition, because Congress could have put a stop to this issue before it became an issue by cutting spending instead of continuing the orgy. What Congress did was kick the can down the road, only to blame the Executive Branch for the consequences of its own actions when it arrived at the can's resting point.
This entire charade, with its symbolic passage of a House plan that was D.O.A. in the Senate and the Senate Democratic caucus's 53 member signature of a petition that went to Speaker Boehner, was nothing more than a very expensive and absurdist form of theater. In the end, business as usual was going to prevail, and that's exactly what everyone in D.C. knew would happen. The American people got screwed today, as they have so many times over the past 40 years. Their best interests were not represented by their representatives; instead, the representatives pandered and postured for a month over what would turn out to be...nothing. The $2 trillion in advertised cuts aren't really cuts at all...they're just a reduction in the rate of increased spending. Current spending is going to stay the same and increase over time, and there is no plan to pay for it with taxes or any other method beyond borrowing.
2012 ought to be a time for the American people to make their final stand against a two party system that simply doesn't deliver on America's best interests with actual solutions. It's time to kick them out, now more than ever before.
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