The $400 Billion Question, Or Hastert's Revenge

So the “large deal” debt talks have once again broken off in acrimony, with each side pointing fingers, leaving the United States perilously close to a sovereign debt default. So what happened? Republicans, led by Speaker Boehner, are accusing the President of “moving the goalposts” by insisting on an additional $400 billion in “revenues” beyond what the Speaker had agreed to, which was $800 billion. The Speaker and Republicans are saying that the President moved the revenue target after meeting with Congressional Democrats, who raised holy hell about the entitlement modifications, forcing the President to “move the goalposts” on taxes. Is that what happened? It looks to me like the Republicans might have a point on the later introduction of the $400 billion. Was it a cynical ploy on the President’s part, or were there other factors that contributed?

The President has responded by saying that the extra $400 billion was introduced, not as an ultimatum, but as part of an ongoing negotiation. In his presentation the President pointed to the fact that his revenue request was less than the number that the “gang of six” had presented in their plan. No doubt that there were other issues, such as what the penalties for Congressional non-action would be (triggers), but the main cited impediment by Republicans has been the additional $400 billion in taxes.

I have attached a clip of Lawrence O’Donnell crediting the President with snookering the Republicans by agreeing to deep spending cuts while attaching what he knew to be revenue targets that Speaker Boehner could not agree to. O’Donnell falls into the “move the goalpost” camp, crediting the President with “looking reasonable” while striving to derail any deal that contained real spending cuts. O’Donnell makes some sense, but I am not yet convinced. Certainly the Republican’s have entered negotiations with the President severely handicapped by the upfront restrictions on their position that they have publicly laid out. It is never a good idea as a negotiator to totally box yourself in and let the other side know the true parameters of what can be bargained. To do so is to give away much of your ability to bargain, and to test the willingness of the other side to move. The President has had a huge advantage over Boehner from the start, and that is the advantage O’Donnell thinks the President took advantage of. But could the President have had another reason to have requested another $400 billion in revenue?

It appears clear that Boehner, operating as the head of a caucus that has many members who want to see default, was going to have trouble producing enough Republican votes to push through an increase in the debt ceiling with $800 billion in new revenues. Without a doubt Boehner was going to have to rely on Nancy Pelosi to deliver a big bloc of Democratic votes for passage of the potential compromise. With Boehner seeing Republican support peeling away by the hour his reliance on the President and Pelosi certainly might have led the President to “move the goalposts” in order to get Boehner a bloc of Democrats in the House. You ask the President and Nancy Pelosi to deliver Democratic votes, and then you complain that they tell you what that might take? It was $400 billion, Mr. Speaker. No question that the Speaker was in a precarious position. If he helped push through a proposal that could not draw majority Republican support in the House, and passed with Democratic support making the difference he would have been under major siege politically from key Republican constituencies. So the Speaker has fallen back on the Denny Hastert formula, which says that a bill will not be moved to the floor without majority Republican support. But that caucus will not agree to anything that has compromise, with some saying that no bill raising the debt ceiling can be moved.

So to sum up the Speaker is in a tough spot, unable to move a bill through the House without major Democratic support. But he cannot agree to the deal that will draw that support, and has allowed his caucus to severely limit his room to maneuver. The President has him in a box. I do agree with O’Donnell that the President has easily bested Boehner and Cantor in this duel, with Republicans now staring out at the abyss. An abyss that they have created on their own.

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4 Responses to The $400 Billion Question, Or Hastert's Revenge

  1. Jules Gordon says:

    Your Honor,

    Where to begin??

    1. The united states will not go into Default.
    There is money in the treasury to keep paying bills including the social Security and Medicare Payments. Revenue cash flow is constant. The rating agencies may reduce our rating even if we pass a bill.

    2. President in running for the 2012 campaign. He is not governing. He does not know how to Govern.

    3. What is the Democratic Plan?
    4. What is the Presidents Plan?
    5. The President was petulant in his cry baby news conference. Boo Hoo those nasty Republicans didn’t call me back. He’s also got to learn the Office of the President and the legislature are co-equal branches. He can’t demand anything.
    6. Obama is a Democrat (or socialist can’t tell them apart) and is required to raise taxes.
    7. The Republicans do not want to raise taxes. He knew it and he sat on his hands.
    8. I lost count to the number of meetings the President has had with Boehner to no avail.
    9. The President voted NO to debt ceiling raise when he was a Senator. So why can’t Boehner??

    Your select an MSNBC commentator for a knowledgeable comment. Sheesh.

    All the while the economy remains in the doldrums with an official unemployment of 9+% which is nearer to 16% if all unemployed are taken into account.

    You are wrong in your conclusion in the blog entry above.

    Jules

    Like

  2. Bill Manzi says:

    Jules,

    1)The United States will not have sufficient cash to pay bills or roll over maturing debt. If you are borrowing 40 cents on every dollar how do you say that you can pay debt, pay Social Security benefits, Medicare and Medicaid bills, Veterans salaries and benefits, and roll over maturing debt. The numbers do not add up, and everyone not drinking very strong kool aid, including the Speaker, recognize this as the truth.

    2) All sides are angling politically, including the President, but also including Speaker Boehner, Leader Cantor, Majority Leader Reid, and Minority Leader McConnell. Not sure how you say the McConnell plan is not politically driven. Not sure how you say that one House of Congress, taking an absolutist position to play to their base, threatening to plunge the United States into default, is not looking to score political points.

    3) The Democratic Plan, or the Presidents Plan, will be reflected in what comes out of negotiations, and not before then. Why would the President publicly release details of what he will agree to before he has some movement on a framework from Republicans? So they can then take his “paper” and distribute it for political gain? Don’t think so. As far as the “Republican Plan” lets get serious. Where EXACTLY are the cuts to take place in the cut cap and balance bill? Why won’t they tell the American public where these cuts are going to come from? Plan? You call that a plan? It is a bad political joke.

    4)Sure, the President postured, but the Speaker did as well. If the Congress wants to produce a plan that can pass BOTH branches then they should have at it. But the Speaker cannot produce a plan that can get through the Senate. He can’t even produce a plan that gets Democratic House members. Speaker Boehner and the Republicans control one House, and therefore must compromise in order to get a bill. No compromise, no bill. Pretty simple, and frankly the way business has been done in Congress for 200 plus years.

    5) Without additional revenues no possibility exists of balancing the budget. Ryan’s budget showed this, and Republican budgets are not about balancing the budget, but about further tax cuts for the top brackets. Are you aware that the Paul Ryan budget would not be a qualified budget under the so called balanced budget amendment??????????Why? Cause its NOT BALANCED! Tax revenue today stands at about 15% of GDP, a historic low. Spending does need to come down, and serious and substantive reforms of entitlements need to occur, but you cannot run the federal government on taxes at 15% of GDP. And as a prior post showed the Republicans, given an opportunity to cut spending for military bands, instead spent $320 million for the music to continue. They increased Defense spending by billions. And they are preaching balanced budgets? They have not paid for any of the wars or programs they enacted when in power. They raised the debt ceiling under George W Bush a total of 7 times, including once in May of 2003 where they raised the debt limit, and then voted to cut taxes for the top brackets by $350 billion, on the same day! And you can say with a straight face that Obama is irresponsible? Of course Orrin Hatch had a good explanation for that type of fiscal insanity. “It was standard practice not to pay for things”. Yup, ole Orrin is now leading the charge not to raise the debt limit. What hypocrisy.

    6) Sure the Republicans have a position, and they ought to stick to it. But it is DIVIDED government, and in order to move vital legislation both sides must give some. Lets stop playing games with the debt ceiling, and lets start hammering these issues out through the budget process, where they belong. Fooling with the full faith and credit of the United States is rank insanity. As far as the votes of Democrats on prior debt ceiling bills lets be honest about that. The opposition has routinely voted against such bills in the past in order to embarrass whatever President from the other party is in office. The difference is that extraordinary means were not employed to prevent the debt ceiling from going up, and both parties engaged in the same hypocrisy. On that score the Democrats are as guilty as Republicans, but adults ALWAYS got the debt ceiling passed, because not to do so would be suicidal.

    As far as Lawrence O’Donnell goes I thought you might like his commentary, as his theory jibes with Republican thoughts on the matter. (The President is playing a political game with the debt ceiling). I am not wrong here. I am proud to say that I agree with the Wall Street Journal on this one. Republicans will soon be fleeing from the scene of their stupidity, as soon as the first set of Social Security checks fail to go out.

    Bill

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  3. Jules Gordon says:

    Your Honor,
    Here is some crow to go with that stuff your trying to sell.

    The debt ceiling has been missed 3 times in the last 30 years, 1985, 1995 and 2002.

    In 1995 then Treasury Secretary Bob Rubin said the bond market will be impaired for 20 years. Well the 1995 debt ceiling was missed by 5 months and when it was all through, there was a balanced budget follwed by economic growth.

    All that other stuff you spouted is campaign rhetoric and party talking points.

    We have spent ourselves into this predicament and the 2008 election saw the Republicans take over the house to reduce the spending and taxes.

    If Social Security checks do not go out then it’s because the President chooses not to for political reasons.

    We do not have an adult President.

    Jules

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  4. Bill Manzi says:

    Jules,

    Lets look at the numbers, as presented by the National Review.

    [F]ederal revenues will reach $2.17 trillion this fiscal year. Interest payments on the nation’s debt are estimated to be $205 billion this year, or about 10 percent of revenues. Taking that payment off the top, as Mr. Toomey’s plan would, leaves $1.9 trillion for Congress to spend. That’s enough to pay for Social Security ($741 billion), Medicare ($488 billion), and Medicaid ($276 billion), with $395 billion left for other programs.

    Clearly $395 billion is not going to pay for the massive government the country has come to assume without thinking about how to pay for it. Assuming entitlements are not touched, that $395 billion wouldn’t come close to paying the defense budget alone — DoD having requested a staggering $553 billion for next year … and that’s without the additional $118 billion the Pentagon says “overseas contingency operations” will cost us (long before we know what the contingencies may turn out to be).

    There is no more money. The $395 billion can’t cover the nearly $700 billion for the Pentagon, and it certainly can’t be further stretched to cover another $115 billion or so for homeland security, $82 billion for HHS, $77 billion for Education, $42 billion for HUD, $21 billion for DOJ, $22 billion for agriculture, $14 billion for Treasury, $13 billion each for the Labor and Transportation Departments, $12 billion for Interior, $10 billion for EPA, and on and on and on…

    So those numbers show that you could in fact pay the interest on the debt, and you could send out SS payments, but your ability to pay for the armed services is kaput. Are you going to cut the defense budget by $200 billion now? Are you going to eliminate the FBI, the federal court system, the health inspections for food products? What exactly are you talking about when you say that default is not on the horizon? What is it with this group of Republicans that can take a reasonable argument on excessive debt and turn it into the malarkey they are selling now? Those are the numbers. Or are you simply going to say that the National Review is printing Democratic talking points?

    Bill

    Like

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