Now, I'm gonna be honest, I hate partisan politics. People treat it like some kind of professional sport, where they pick a "team" and pull for that "team" to win, good of the country be damned. Which is why it's so frustrating to have seen the Republican Party go completely off the rails, from a reasonable small(er) government party under Eisenhower through Nixon to a catch-all anti-tax coalition. Their rhetoric has matched that stance, but it really has no basis in reality. Turn on Fox News or read a George Will or George Krauthammer column, and they moan about the "expansive welfare state", Obama's "socialist health care plan" and "suffocating taxes." What they don't mention is that the US welfare state, for better or worse, is smaller than what you find in just about any other advanced democracy; the "socialist health care plan passed by Obama looks... functionally identical to the one passed by Mitt Romney in Massachusetts, and the ones proposed by Richard Nixon in the 70's, and Congressional Republicans at the beginning of Bill Clinton's term (when the Democrats were, wrongly I think, pushing for single-payer). But a plan that was the GOP alternative as late as 1993 somehow turned into "socialist health care"...? Sorry, it's BS. The tax issue is even more absurd. Obama is raising taxes on everyone! is their mantra. Businesses aren't hiring because of crippling taxes! (and because of socialist health care). Never mind that businesses aren't hiring because, you know, more than 9% of the workforce is unemployed and people aren't buying enough of what they're making for it to be worth their while. Businesses are still profiting and sitting on piles of cash because there's plenty of demand in the developing countries for their product, and they've trimmed their operations domestically, but it's very clear that taxes aren't what's driving the lack of jobs. Especially because Obama hasn't, you know, raised taxes. In fact, taxes have only ever been cut on his watch. Think about it- name a single tax Obama has raised. He extended the Bush tax cuts (which were intended to be temporary, though I don't think that was ever the Bush people's plan), and cut more taxes with the stimulus (which was about 1/3 tax cuts). Last year, the US collected 14.9% of GDP in taxes, which is the lowest level since just after World War II (before Medicare, Medicaid and Social Security!), AND this is considering that the denominator of that equation (GDP) was depressed, meaning that even less taxes were collected than normal.
Which brings me to the latest issue-- the debt ceiling. As I've pointed out before, the US has a long-term structural budget issue, but there's no debt "crisis". The government borrows at a historically low rate. But that rate is in danger. Why? Because of the debt ceiling impasse. Now, the debt ceiling vote is a stupid idea anyway. Congress ALREADY votes on the debt ceiling by making taxing and spending decisions. Raising the debt ceiling amounts to a second vote to confirm the first vote. Though I hate the analogy of a government as a corporation (it's completely inane and there's really not much parallel), it's the equivalent of a company first having a committee meet to offer a worker a contract for a certain length of time and a certain amount of pay, then taking a separate vote to actually disburse the funds to pay the worker. If you pass one and not the other, you didn't perform. And if the US doesn't perform its obligations, it's in default. No, you can't avoid default just by paying interest on the debt, any more than a company can avoid lawsuits by paying its bondholders interest but refusing to pay its workers. Moody's, the giant credit agency, put the US on alert over this impasse, and the results of a downgrade would be horrifying. Not necessarily because the ratings agencies have been all that reliable (they kind of stunk at their jobs during the years leading up to the crisis), but because institutional investors like pension funds are only allowed to invest in AAA-rated securities. If they start dumping their holdings, the interest rates on US debt will go up and it'll be American taxpayers who will pick up the (dead weight cost) that is paying higher interest rates on that debt. But all of that is unnecessary if, in the short run, the government raises the debt ceiling while, in the long run, it tackles the real problems-- health care spending is on an unsustainable upward trajectory, and taxes are too low.
But those are issues that can be dealt with in the next few months and years, not the two weeks we have before the government defaults on its obligations. In fact, making that kind of important deal on a tight timeline is a completely ridiculous idea. Which hasn't stopped the Republicans from deciding to hold the debt ceiling hostage to extract... short-term cuts in discretionary spending. Now, anyone who's taken a look at a federal budget knows that the US government is best thought of as an insurance company with a military. Over 80% of outlays are some combination of Social Security, Medicare, Medicaid, and automatic stabilizer (unemployment insurance, welfare, etc.) transfers, plus interest on the debt and military spending. Republicans like to conjure an image of useless bureaucrats getting paid $100,000 a year to sit in offices in Washington and scratch themselves, but the reality is that federal workers are paid less than private workers with similar credentials (albeit with more job security and probably shorter hours; also, lower-end federal workers like the custodians cleaning Congress earn more than, say, custodians at corporate offices, but there just aren't many of those workers to cut, period). Which is what makes the "grand budget deal" to cut $4 trillion over a decade so silly. Yes, cuts will have to be made. To spread the pain around, social security and the military could be tweaked (though it's not absolutely necessary). But there's no pressing need to make a deal NOW, while it absolutely IS pressing to raise the debt ceiling.
So, with all the background out of the way, even looking at these debt negotiations makes it clear that the Republican Party is completly nuts. Nate Silver has a nice article in the New York Times showing what Americans think should go into a budget deal. In short, the average self-identified Republican voter thinks the deal should be 26% tax hikes, 74% spending increases; for independents, the ratio is 34-66, while for Democrats, the ratio is 46-54. The Obama deal the Republicans rejected was... 3/4 spending cuts, 1/4 tax increases. In other words, it was more tilted toward spending cuts than what the average REPUBLICAN voter wants. Not to say that voters are the end-all, be-all. Plenty still think refusing to raise the debt ceiling is somehow an acceptable, viable option, which no one with a pulse can believe. But it's very clear that the "no new taxes" pledge the GOP "mainstream" locked itself into is ridiculous and ought to be called out for the absurdity it is.
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