Reich writes: "The 2012 election has shaken the GOP, as have the post-fiscal cliff polls. Yet, as I've noted before, the Republican Party may not care what a majority of Americans thinks."
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Obama's Gamble on the Debt Ceiling
15 January 13
week before his inaugural, President Obama says he won't negotiate with Republicans over raising the debt limit.
At an unexpected news conference on Monday he said he won't trade cuts in government spending in exchange for raising the borrowing limit.
"If the goal is to make sure that we are being responsible about our debt and our deficit - if that's the conversation we're having, I'm happy to have that conversation," Obama said. "What I will not do is to have that negotiation with a gun at the head of the American people."
Well and good. But what, exactly, is the President's strategy when the debt ceiling has to be raised, if the GOP hasn't relented?
He's ruled out an end-run around the GOP.
The White House said over the weekend that the President won't rely on the Fourteenth Amendment, which arguably gives him authority to raise the debt ceiling on his own.
And his Treasury Department has nixed the idea of issuing a $1 trillion platinum coin that could be deposited with the Fed, instantly creating more money to pay the nation's bills.
In a pinch, the Treasury could issue IOUs to the nation's creditors - guarantees they'll be paid eventually. But there's no indication that's Obama's game plan, either.
So it must be that he's counting on public pressure - especially from the GOP's patrons on Wall Street and big business - to force Republicans into submission.
That's probably the reason for the unexpected news conference, coming at least a month before the nation is likely to have difficulty paying its bills.
The timing may be right. President is riding a wave of post-election popularity. Gallup shows him with a 56 percent approval rating, the highest in three years.
By contrast, Republicans are in the pits. John Boehner has a 21% approval and 60% disapproval. And Mitch McConnell's approval is at 24%. Not even GOP voters seem to like Republican lawmakers in Washington, with 25% approving and 61% disapproving.
And Americans remember the summer of 2011 when the GOP held hostage the debt ceiling, bringing the nation close to a default and resulting in a credit-rating downgrade and financial turmoil that slowed the recovery. The haggling hurt the GOP more than it did Democrats or the President.
But Obama's strategy depends on there being enough sane voices left in the GOP to influence others. That's far from clear.
Just moments after the President's Tuesday news conference, McConnell called on the President to get "serious about spending," adding that "the debt limit is the perfect time for it." And Boehner said "the American people do not support raising the debt ceiling without reducing government spending at the same time."
The 2012 election has shaken the GOP, as have the post-fiscal cliff polls. Yet, as I've noted before, the Republican Party may not care what a majority of Americans thinks. The survival of most Republican members of Congress depends on primary victories, not general elections - and their likely primary competitors are more to the right than they are.
Robert B. Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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ok, when has he EVER negotiated??! He typically caves before negotiations begin! "Obama standing firm" hah, what an oxymoron!
The inequality of the American economy, especially as it pertains to income distribution just empowers the wealthy to clobber the rest of us. As citizens we all have skin in the game. And the amount any individual pays in taxes should make no difference.
Besides which, that 47% garbage is pure nonsense. It IMPLIES those who don't pay income (note that: INCOME) taxes are all deadbeats and cheats. Not so! There are all kinds of taxes, and everyone with a job pays them, EXCEPT for income taxes, when those jobs pay so little they are exempt. I am sick and tired of this old "47%" crap that keeps coming out over and over, no matter how many times those who keep shoveling it get shot down.
Give it a rest, MT! You KNOW better!
also, the 53% includes an awful lot of rich folks who pay virtually nothing (%) compared to the workers of the world (unite!)
This is a misleading statistic. When the payroll withholding (FICA) was increased by %200 in order to pay forward the Social security obligations of the boomer generation, the taxes at the low end became extremely burdensome. At that point, those earners were given some breaks on their income tax, which was very low anyway. The net effect was to increase the amount of money withheld from their checks while canceling out their "income tax" obligation.
Equitable and Logical Program Reform
The majority of working taxpayers in this nation pay Social Security and Medicare taxes on 100% of their income their entire lives to earn the modest benefits of these programs that sustain them when they are no longer able to work. The 2% vigorously resisting paying less than 7 cents per dollar above $250,000.00 pay these taxes on less than 45% of their income, while those receiving $1,000,000.00 pay on barely more than 11%, and those collecting 10,000,000.00 are taxed on only 1.1% of their income for Social Security and Medicare. To address entitlement reform, eliminating the 99%+ tax break received by the wealthiest 1%er's would essentially eliminate the unfunded liabilities in Social Security and reduce the federal deficit and national debt substantially by equitably funding Medicare. (Social Security and Medicare taxes applied to approximately 1/2 of 1% of Mitt Romney's income.)
The SignOn.org petition below might suggest the solution to many of these problems by providing the greatest detriment to the Republican obstructionists talking points: TRUTH!!!
http://signon.org/sign/equitable-and-logical?source=c.url&r_by=1279693
Add your support to the petition if you agree this is the appropriate means to frame the debate and redirect the discussion.
To President Barack Obama, House Representatives , and Senators,
Whereas there is great concern for the sustainability of Social Security and Medicare due to unfunded liabilities, and in consideration of demands for reform to strengthen those programs for future generations, and in consideration of the burden on our budget deficit and national debt due to persistent high unemployment:
Be it proposed that all exemptions of income subject to Social Security and Medicare taxation be immediately eliminated and the $110,100.00 cap on income subject to such taxes be permanently removed, thus equalizing the percentage of income upon which all income brackets are fairly paying to support these programs that benefit all the citizens of our nation.
Furthermore, be it proposed that the Social Security retirement age be returned to 65 years for 2 years in order to simultaneously reduce both the deficit and unemployment through eligibility of more than 2% of the workforce to voluntarily relinquish their jobs to be filled by the unemployed, while massively increasing the economic impact of their Social Security benefits spending from the increased funding resulting from taxing all income brackets equally.
http://signon.org/sign/equitable-and-logical?source=c.url&r_by=1279693
.
They are willing, however to hold the American worker and the American economy hostage to the sequester. The back and forth right now over the debt ceiling is both sides blowing smoke. Allowing the sequester by itself to occur will not bring the economy to a crashing halt overnight. But it will slide backwards. Sliding backwards instead of crashing off a cliff will give plenty of time for Republicans to shift votes back to themselves.
I would hope that the President by removing Plans B and C from the debt ceiling foolishness, has in mind Plans B, C and D for the sequester, We already know Plan B, which is to kick it down the road a little further hoping the economy will gain enough momentum to prevent any cuts. Plan C is likely to be give the Republicans some cuts in Social Security like the chained CPI. I have no idea what Plan D is, but hopefully is the Platinum coin, and more importantly he uses before he offers up any "entitlement" cuts.
They have the majority of the plutocrats on their side and now, thanks to a bent judiciary and Citizen's United, they can continue to finance their medievalist nonsense almost ad infinitum, as there are still enough sheeple who eat of the insane root rather than be engaged and pro-active, who will stumble along the road most smoothed by their corporate master's exploitive capitalist funds and the owner-media, by which means they'll continue to block any attempts at progressive taxation and a social safety net, no matter how primitive and backward it makes the US look in the eyes of the rest of the world.
But they can still cause so much damage globally which is the main universal problem for the rest of us.
As I note in my response to Mr Eagle money is a commodity. Just as we grow wheat, we via the Fed, print money. But in order for that money to do any good, it has to be consumed and recycled. When there are limited resources left to consume the money, then it value decreases. If we grow too much wheat, the price drops. When money has less value relative to wheat, it takes more money to buy the same quantity of wheat - inflation. That is the risk. But over-planting wheat is also a risk, as I just noted. Ideally, when money is a commodity and not a piece of metal, we just need to design our tax and economic rules to manage it as a commodity.
Unfortunately, these concepts are intuitively foreign and dangerous and the President is risk adverse. Mint the coins!
How about we turn things around? How about instead of collecting taxes to fund the government, we let the government print whatever it needs to fund it. Then, taxes are used as a deflationary brake if the economy heats up too much?
Remember that money is just another commodity. If you have too much available (think wheat) then its value decreases. If you have too little available its value increases. It is something the economists call supply and demand.
Right now we don't have enough money to pay for all the things we need to have. So, here is the solution! Lower taxes to put more money into circulation and increase the money supply. Raise taxes on the wealthy but a lot more than a measly 4%, since we need to make their money available. Deficits will ensue! Mint the coins, a Trillion at a time. As soon as everyone is employed and individual debt starts to diminish; raise taxes on the middle class until there is an uptick in unemployment and individual debt starts to increase. Start at the beginning and repeat the cycle for infinity.
After two or three cycles, the wobbles will smooth out and you neo-liberals can finally shut up. Nothing personal, but I wish you guys could at least out together a narrative that explains your theory in terms of PIZZA (in this case I used only the wheat for the crust).
Obama can spend only what Congress authorizes him to spend. And the problem with debt and deficits didn't start with Obama.
It was your beloved Ronald Reagan who put the nation on the road to financial crises with massive tax cuts for the aristocracy and tax increases for the working classes. His stupidity was followed by George Bush the Daddy and George Bush the Buffoon who followed suit with the "voodoo economics" that threaten the nation, which the nation's sane people realize.
Reagan raised spending much more than he did tax receipts. Bush the Daddy out did him and Bush the Buffoon blew both out of the water with his irresponsible handling of the economy.
That is not "blaming someone else", it is remembering history.
By the way; just a reminder that you live under a capitalist system and capitalism can only survive when capital flows constantly through the system. That flow is called spending. Without it the system dies. After thee decades of right-wing nuts waging war against the consuming class in America, it doesn't have the capital to spend.
So where do you propose we get spending to keep capitalism alive?
The last time this came up, the market dropped off a cliff. Are you aware that members of Congress can profit from insider information? Bet those T-baggers made MILLIONS.
I lost about 18% of my meager retirement savings; I have regained about 9% of that, but I'm still down about 9% -- even with the market at near highs. How many Americans had the same (or greater) losses? Just another hit to the middle-class.
Then send each congressman/wom an home to run for re-eletion on the proposed spending cuts and only on the spending cuts.If voters want those cuts to be made, they will re-elect that person. If voters don't want such spending to damage their home district they would elect someone new who would have to retract the spending-cut proposal. Let those fools who think a cut in government spending is a panacea for the problems they created put their political careers where their moths are.
So far there is no indication Obama has listened to anyone on this issue; or any other issue as well.
Or state we pay debt first and so cant pay Politicians till problem solved?
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