Deliberation or Incompetence?
As we rapidly approach yet another budget crisis, a growing question is whether the actions of the Democrats in Washington are the result of some sort of deliberation, or are they simply a matter of incompetence?
Some will probably complain that I am I am not including the Republicans in this question, but while they are certainly deserving of some criticism, they are not the major problem at the moment. The start of the new fiscal year is approaching but there is little chance that Congress will have its work done on time. So as government in Washington lurches from one crisis to the next, the economy continues to struggle, and people suffer.
The process is really pretty simple. The law requires that the House and Senate each produce a budget, and then based on the budget, the various committees write appropriation bills. The bills are then passed by both houses, and a joint committee works out any differences between them. Once the final bills are passed they go to the President. While a pretty simply process, it is one that was pretty much ignored by the Democrats when they controlled the entire Congress, and is still being ignored in the democratically controlled Senate.
The last time the Congress passed all of the required appropriation bills was, coincidentally 2006, the last time Congress was under the control of the Republicans. Under the Democrats, the law, and in fact most of Congress, was just ignored. Government was run by the leadership through continuing resolutions.
Whatever criticism there may be for the Republicans in the House, they passed a budget earlier this year. Democrats in the Senate have not, even though they are required to do so by law. Not only did they not pass one, they have not even proposed one, have no plans to do so, and it is coming up on 900 days since they have done so.
Thus while House Republicans have passed their budget and have already passed 6 of the required 12 appropriations bills, with 3 more already through the appropriations committee, their Democratic counterparts have no budget and have passed no appropriation bills. In fact, they have only gotten one out of the appropriations committee.
The new fiscal year starts in October, so why can’t the Democrats complete what should be one of their most basic functions, writing the appropriation bills that fund the government? Are they really looking for yet another shutdown showdown with Congressional Republicans?
If so, this would say that their failure to do their job is deliberate; a calculated ploy to use the threat of a government shutdown in an effort to gain a political advantage. At first blush, this would seem incredibly misguided. To avoid a shutdown both houses of Congress simply need to do their job and get all 12 appropriation bills to the President before the beginning of the fiscal year. When Republicans have done their part, but Democrats have failed to do theirs, how could the Democrats successfully expect to blame the Republicans?
Easy! Democrats can count on the major news outlets to take their side. Annoying little facts, such as the Democrats have not even passed a budget in several years will just be ignored. Annoying little details such as if the Democrats had appropriation bills the difference between their bills and the Republicans could be worked out, will likewise be ignored. Instead, if the last several such crises are any indication all the “news coverage” will focus on Republican intransigence and how they are constrained by the Tea Party from doing what is in “the best interests of the country.”
Democrats get another huge benefit from all this, which may indicate that this is deliberate: Secrecy. With no budget, there is no way to know or criticize the “Democratic plan” simply because there is no plan. With no appropriation bills, there is no way to criticize Democratic spending plans because there are no plans. Thus Democrats can attack Republican plans, while hiding behind platitudes and slogans until the time has run out and the crisis is upon us. Then they cannot say what their plan is because they are in the middle of negotiations with Republicans.
Normally negotiations proceed with both sides setting forth a starting position, and then the negotiations are over what concessions from their respective starting points each side will make. Boehner likened negotiating with White house to “dealing with Jell-O” and it is little wonder. Since Democrats do not have a plan, there is no starting point from which they can make concessions.
Finally when a deal is struck, Democrats can take credit for all the parts they like, and blame the rest on Republicans, again without ever having to develop an actual coherent plan of their own. Thus there are plenty of reasons to believe that our current government-by-crisis is a deliberate strategy on the part of Democrats.
But however effective the strategy, it is not good for the country, and given the polls, it does not even seem to be working all that well for the Democrats. By failing to actually put forth a plan, there is the real question as to whether or not Democrats actually understand the serious situation we are in. It is one thing to run around talking about the Bush tax cuts “for the rich” and complaining about corporate jets, but quite another to put forth an actual coherent plan that would address the problems that the country faces.
Forcing Republicans to compromise on their plans, such as with the debt limit, may be politically advantageous, but it is not itself a solution. So while Obama and the Democrats successfully blocked the Republican plan to Cut, Cap and Balance, the result was that the country’s credit was downgraded.
Even worse, democracy depends on openness. Proposals are put forth, debated and modified. Bills are written in committees and debated on the floor before being passed. But under the Democrats everything was kept secret. The committee process was basically ignored, and thousand page bills were given to members to vote on before they even knew what was in them. “You have to pass the bill to know what is in it,” ruled.
If this is all deliberate, then the Democrats are crassly failing to do their jobs for their own selfish interests. If that is not putting their own interests ahead of the country’s, I do not know what would be. On the other hand, this could simply be a matter of utter incompetence. Either way, we can look for another crisis towards the end of September, as a government shutdown looms, though they might decide to postpone this till after the budget committee setup after the last crisis finished their work towards the end of the year by passing yet another continuing resolution.
The Choice
One of the key differences between liberals/progressives and conservatives is highlighted by Michael Tomasky’s analysis of the upcoming Supreme Court ruling on ObamaCare and its impact on Obama’s reelection chances. Basically Tomasky argues that Liberals are in a no win situation. If the court strikes down ObamaCare, then they lose the gains they worked so hard to win. On the other hand, if the court upholds the bill, chances are it will energize conservatives even more, ensuring Obama’s defeat, which Tomasky believes “could be even worse for the progressive cause.”
Tomsaky gives a brief and I believe accurate overview of court history, with the dividing line in 1937. Prior to 1937 the court was hostile to the liberal/progressive cause. Then “FDR finally was able to start naming justices to the court who granted Congress wider leeway in regulating economic activity.”
But while Tomsaky is clear that the Supreme Court overturning ObamaCare would “be a disaster in terms of legal precedent” he provides no legal reasoning as to why. In fact his reasoning is basically that this would take the court back to “pre-1937 thinking.”
For Tomsaky, everything is judged in terms of the results, i.e., its effect on the progressive cause. Thus the quandary, if the court overturns the law the progressive cause for health care is harmed. If the court upholds the law, Obama’s reelection is threatened, and that “could be even worse for the progressive cause.”
Missing from all this is the effects on the Constitution. In terms of the Constitution, this case turns on the commerce clause and, in a more general sense, its purpose in the Constitution itself. Conservatives hold the historical view of the Constitution, i.e., that it specifics the powers of the federal government. The founders clearly wanted a limited federal government. Their first attempt, with the Articles of Confederation, proved to be too limited. These were replaced by the Constitution in 1789. This was again to be a limited federal government and the big debate over the Constitution was whether or not it went too far and gave the Federal Government too much power.
Article 1 section 8 lists the powers of the Congress and the 3rd clause, called the commerce clause, says that Congress has the power,
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
Article 1 Section 8 lists these powers because the founders believed that the Constitution was a limit on the Federal government; it had no powers except those granted to it by the Constitution. In fact the reason the Bill of Rights was not included, and was initially opposed by the man considered to be the Father of the Constitution, James Madison, is that he believed it was unnecessary. For example, the government could not infringe on free speech because the Constitution did not give it the power to do so. He argued that adding any list of rights was dangerous as it would imply that only the rights listed were protected. Thus when the Bill of Right was added, it included the 10th amendment,
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
If the Constitution does not give the federal government the power to do something, they don’t have that power, the state or the people have that power. Under this view, which prevailed until 1937, the commerce clause granted Congress the power to regulate commerce “among the several states,” but not commerce within states.
When we come to ObamaCare, the choice is pretty easy. ObamaCare requires people to purchase health insurance. Under a pre-1937 view of the Constitution this is a no-brainer. How can someone who is choosing not to engage in commerce, i.e., is not buying health care insurance, be regulated under a provision of the Constitution that regulates interstate commerce? The issue is further compounded by the fact that even if a person chooses to purchase health care insurance, they currently cannot purchase across state lines. Since there is no interstate commerce in health insurance, how can the federal government regulate it on the basis of interstate commerce?
A deeper and more troubling issue would be, if the government can mandate that you purchase health insurance, then just want can’t they do? Obama recently said that we “have to eat your peas.” Why couldn’t they mandate that we eat a certain federally approved diet? Or that we have to purchase membership in health clubs and exercise 3 times a week. If they can force a citizen to purchase health insurance, what does the whole concept of limited government mean?
So at one level, the Supreme Court’s decision will determine whether or not ObamaCare is constitutional. But on a deeper level, the Court will be ruling on whether or not the Constitution really means anything at all. If the commerce clause is any sort of limit on the Federal Govenment, then the provision requiring people to purchase health insurance must be struck down. If it is not, then the commerce clause, and all the other clauses are meaningless, and the Federal Government can regulate anything it wants.
Some might object that we would still have the Bill of Right, and things like free speech. Perhaps. But this would not be because of anything actually written in the Constitution. Our Rights would not be something guaranteed in the Constitution, but rather something we current have, subject to the current majority of the Supreme Court.
Consider Tomasky’s statement, “As we know all too well, this court appears ready to go back to pre-1937 thinking and in fact already has, in the Citizens United case.” The left is up in arms over the Citizens United case, because it allows corporations to spend money on political campaigns. But again they only see the results, not the Constitutional basis.
The case involved Citizens United, a conservative nonprofit corporation that had made a 90 minute move called, “Hillary: The Movie” which they wanted shown and wanted to advertise. Their efforts were blocked by the Federal Election Commission. But if the government can suppress this film, why couldn’t they also suppress the movie about Bin Laden’s death planned for release a month before the election in 2012? If they can ban a movie, why not a book or other forms of speech? As Justice Kennedy said in the majority opinion of Citizens United, “If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.”
Tomasky sees this ruling as a major step back towards pre-1937 thinking and a major threat to the progressive agenda. He is correct. It was a step back towards a view where the Constitution actually meant something and was a limit on what the federal government could do. So it looks like next year the Supreme Court and the country will be facing a similar choice, a choice between the Constitution and the progressive agenda. Let’s hope the Constitution wins, both in Congress, and at the ballot box.
Downgraded
The country is heading into uncharted waters. Even some of President Obama’s supporters are beginning to realize what a disaster his presidency is. Of course, the closest parallel is the Presidency of Jimmy Carter, until now the worst president in modern times. But Carter inherited a growing economy that was coming out of a mild recession and had about 5% growth his first couple of years in office. The country only really slid into recession during his last year.
But, unlike Carter, Obama inherited a recession. Worse he inherited one that he did not understand. For Obama, and most Democrats, the recession was the result of the Bush policies, the Bush tax cuts, the Bush deregulation, or all three. Whatever the cause, it was first and foremost Bush. In short they saw the problems in political terms not economic. Since they were not Bush, the solution was easy, just be Democrats, pass the large government programs that Bush and the Republicans had been blocking, and the economy would come roaring back. Thus 2009 was “Recovery Act Summer.” When that did not go too well, 2010 was declared “Recovery Summer.” Now here we are in the middle of the summer of 2011, and the talk is more about a new recession rather than recovery and our debt is so high that for the first time in history the US credit rating has been downgraded.
The problem was not Bush or even Bush policies, but rather it was the normal fallout following the collapse of an economic bubble, in this case the housing bubble. However there was a different twist this time. In response to the fallout after the collapse of the Internet bubble in 2000 (which likewise was not caused by Clinton), government implemented new laws and rules. Many have had negative effects, such as Sarbanes-Oxley but one was a huge mistake and its effects particularly nasty. The Financial Accounting Standards Board (FASB) Rule 157 – Mark to Market – almost derailed the entire economy and was behind the financial panic in Sept 2008. This is why TARP (the Toxic Asset Relief Program) did not work; it did not address the core problem. Markets continued to decline until end March of 2010, to the day that it was announced that Rule 157 would be repealed. (For a more complete discussion of this see Preserving Democracy, Chapter 10).
With the core problem fixed, that should have marked the beginning of the recovery. But Obama was pretty much oblivious to all this. Instead he pushed ahead with the second half of TARP, got a huge omnibus spending bill, took over GM and Chrysler, got a $800 billion stimulus program, a massive increase in government spending, and Obamacare, and those were just the major items.
Democrats had strenuously complained about deficits under Bush. Following the collapse of the Internet bubble and 9/11 the deficit grew to $426 billion, but by 2007 the last Republican budget before Democrats won back control of the Congress, it had dropped to $151 billion. Under the Democrats, it jumped back up to $422 billion before the current financial problems and is now nearly 10 times higher than the last Republican deficit. Even after adjusting for inflation, it is not projected to get back down even close to the Bush level highs for many years. Thus all the uncertainty in the credit markets.
But worse than the deficits has been the class warfare of Obama. Obama puts everything terms of “the rich” and everyone else. He portrays himself as standing up to the rich, attacking big business with their corporate jets, and trips to resorts. He epitomizes the saying, “Democrats like employees, they just don’t like employers.” He does not seem to realize that getting CEOs to stop flying corporate jets may be an inconvenience for the CEO, but it is devastating to the pilots who fly them, the crew who service them, the people who make them, and all the other “average working people” who jobs are tied to them in one way or another. Thus while CEOs “suffer” at having to fly first class, many more “average working people” find themselves out of a job as a result of Obama’s blustering. And this is just one small industry. When Obama goes after an industry, it is the workers in that and related industries that are the ones who really suffer.
The Obama attack on jobs are not limited to his speeches. Just as the deficit has exploded, so has government, and more importantly government regulation and its negative impact on business. The 2300 page Dodd/Frank bill will result in hundreds of new rules and required “26 pages of flow charts merely to illustrate the timeline for implementing the new rules, the last of which will be phased in after a mere 12 years.” Nancy Pelosi famously said, “You have to pass the bill, so you can know what is in it.” This is becoming very apparent as the rules for Obamacare are being written and surprises keep being found buried among its pages. Not only are the rules themselves a burden that stifles economic growth, all this flux makes it virtually impossible for businesses to plan. They will not know what they will be required to do or pay until the new rules can be written and understood.
Be it directly as with Corporate jets, the resort industry, or his oil drilling permitorium, or indirectly through massive increases in new government regulation and control, or just actions such as the NLRB attempt to block Boeing from opening a new plant in South Carolina, the Obama administration has been at best indifferent to business , and more often downright hostile. They seem oblivious to the harm they are doing to businesses across America. Yet they are puzzled as to why the economy is stalled and unemployment is so high.
Worse they have no idea what to do. To them this is primarily a political problem where their real goal is to stop Republicans. Case in point: the recent debt ceiling talks. While there was a big push to compromise on the debt ceiling, the problem was that we did not need a compromise, Washington has had plenty of those for decades. What we needed was a solution to the debt problem. Yet Obama and the Democrats never seemed to understand this, and they still don’t.
For all their faults, and they have many, the Republicans at least had two things that Obama and the Democrats did not: A budget, and a plan. Actually Republicans put forth a number of plans. For their part, even though they are required by law to pass a budget each year, it has been over 800 days since the Democrats who controlled the Senate have had one. And this is not about an inability to pass a budget, since budgets cannot be filibustered. Democrats in the Senate have not even proposed a budget, and currently have no plans to do so.
With no budget, and no plan to deal with the debt, all Obama had to offer in response to the Republican’s budget and Republican plans were speeches attacking them, calls for tax hikes, and oddly, still more attacks on Corporate Jets, as if taxing corporate jet owner would magically solve our debt problems. But calls for taxes on the rich are not a plan, particularly when compared to the magnitude of the problem.
Republicans understood that they would not get everything they wanted, and so in the end they compromised and passed the Cut, Cap and Balance plan. In response, Obama gave more speeches. After more compromises and with the clock ticking, in the end the President got what he wanted, the debt ceiling raised enough to get him past next year’s elections while Republicans settled for some very minor reductions in the rate of increase, which in Washington speak are call “major cuts.” While they had a compromise, without an actual solution, the credit agencies downgraded the country’s credit rating.
So we enter uncharted territory. We have a President who has no plans other than to run for reelection next year, and who frankly seems at best clueless as to the impact his polices are having. The effects of Carter’s policies really began to show up near the end of his Presidency. Before things got too bad, he lost his bid for reelection and within a couple of years Reagan had turned things around. But we have already been suffering for over 2 years and we still have about 15 months till the next election. Then there will couple of more months till the next President takes office and can begin to fix things. Unlike other counties, we do not have the mechanism for a vote of no-confidence, so it is going to be a very long 15 months and it is unclear how much more damage Obama will do.
Another Great Entry
This one did not win, but it is still good.
httpv://www.youtube.com/watch?v=lgkhkGEfdIc
The Deficit Ceiling Deal
As the details and ramifications of the deal become increasingly clear, few seem happy and there is bipartisan opposition and bipartisan support amidst all the claims and counterclaims.
There is no question that the deal is seriously flawed, but it may very well be the best that can be done at the present moment. This is because the problem is far deeper that than the differences among various demands by all the multitude involved. The real problem is that the process which developed the deal is not only seriously flawed, but flawed down to its very core.
This is not a plea for some theoretical perfect reality; as such a thing never has, and never will exist in this world. But while perfection cannot be reached, nor should it be ignored as a goal. The point here is that the process was so far away from any theoretical perfection, that it was doomed before it ever started.
At the core of any effort to solve a problem must be an understanding of the problem however imperfect. While there was general agreement that the debt ceiling was a problem, for many the problem was that a failure to raise it would limit government’s ability to spend. For others, reaching the debt ceiling is a symptom of a much larger problem, a government spending itself into insolvency. Thus for the former the cuts are too large, for supporters, they are a good down payment, and for opponents they are insufficient.
But right here we come across the first key issue. Bottom line: There are no cuts; at least not overall and government will continue to grow year after year, and will almost certainly grow faster than the rest of the economy. The fact is that politicians play games with numbers that would make the accounts at Enron and Bernie Madoff paragons of virtue and accuracy.
While the $2.4 Trillion in cuts may seem large, this is the projected savings over 10 years. Given that spending is done on a year by year basis, this is really at best $240 billion, which would be an almost respectable, 7% cut. But this not 7% from last year’s spending, but 7% from the projection for next year, meaning that even after the “cut” government will still be spending more.
To make matters worse, most of the cuts are in the out years, which means they are meaningless, as any agreement reached now cannot as a matter of settled constitutional law bind a future congress. When we look at the brave bold reductions in the increase that the congress will actually make this year, they are only $7 billion, roughly 0.19%. For someone earning $50,000 per year this amount of cuts would be asking them to reduce their weekly spending by $3.78.
Except that again this is a reduction in the rate of increase. From 2009 to 2010 government spending grew over 9% adjusted for inflation. Thus for the person making $50,000 the real equivalent would be asking them to accept only an increase of $85.64 instead of $89.43.
But it is worse than this, because while the “cuts” in Washington are only reductions in the built-in projected increases of the future, but the spending is now. So while the cuts projected over the next 10 years may, or more likely may not actually happen, the money will be spent starting immediately, and we will have to do this all over again sometime in 2013, conveniently after the election.
Since the reductions coming off of WWII, the federal government has never cut spending. Every year it has spent more than the year before and most of the time a lot more. From 1990 till 2007 federal spending grew from a little over $2 Trillion to $2.8 Trillion even after accounting for inflation. Democrats like to complain about all the money tax cuts have cost us. Yet over the same period revenues grew from about $1.7 Trillion to $2.7 Trillion. Thus even after accounting for inflation, spending grew by 40%, revenues by 60%.
There are many other problems with the language used. For example, there is not and never really was a danger of a default. Government revenues far exceed the amount of the debt service. In fact, despite all the fear mongering, government has enough money to service the debt, pay social security and Medicare, and the military for starters. More importantly, Social Security payments in excess of revenues would be seen as taken from the trust fund. This would bring down the debt, allowing the government to go out and borrow additional dollars without exceeding the debt ceiling. This last fact should reveal how much smoke and mirrors are involved in this debate and the illusory nature of the Social Security Trust fund.
Be these distortions, lies, demagoguery, or whatever, they hinder real debate and discussion to the point that people get fed up and simply want the issue settled regardless of how; which may in fact be the point.
For some, this is just Washington as normal. But that is the larger problem, Washington is broken. The founders sought to strike a balance between the need for government and the loss of freedom government action involves. But all too often the law and even the Constitution are simply ignored as both were here.
The Constitution puts the control of spending in the house, where they believed the people would have the most say. The president submits his budget proposal, which kicks off the process. The House and Senate then pass their own budgets, as required by law, and then through a reconciliation process the Government gets a budget. Appropriations bills are then written based on the budget with the people having their input through their elected representatives.
While this process has been weakened in recent years, it was basically tossed out with the swearing in of Obama in 2009. Rather than an orderly process of the House with 435 members, the Senate with 100 and the President, government was effectively run by 3 people: Reid, Pelosi, and Obama. They determined what legislation would be and then presented it in an all or nothing process, often with little or no chance to actually read the bill. Contrary to the law, they did not even try to pass a budget but simply ran the government on continuing resolutions. When Boehner became speaker earlier this year he did move the house back towards openness and debate when he restored the committee process and open rules.
The house passed a budget earlier this year, but this ultimately broke down. The Senate continues to ignore the law and has not even attempted to pass a budget. When asked about this, Democratic Senator Dick Durbin said it was because of a Republican filibuster, even though he knows this is impossible as budgets cannot be filibustered.
The house passed a debt ceiling bill and then even an second one, but the Senate did not put forth a bill till the very end, and the President never put forth a proposal. Thus in the end, government broke down. Rather than proposals that could be openly discussed and debated and amended, where the public could have some input, we went back to closed meetings and secret negotiations.
The broken process once again gave us a last minute deal in a take it or leave it situation. To make it worse, this secret set of negotiations did not even reach a total agreement but appoints yet another committee to do the rest of the work. So again we have to have to pass the bill to know what the law will actually say. Yet again, Washington is saying to the rest of the country: Trust us.
What really drives home the problem is that to balance the budget in six years is really not all that difficult. Government would only have to cut 1% per years for the next 6 years. Called the penny plan, it would work, but given all the squealing over reductions in the rate of increase, you can imagine what would happen if government actually tried to cut 1 cent for every dollar it spent. Instead we have tremendous debates over how much we will “promise” to cut the rate of increase in the future.
Meanwhile the debt grows, and the real debt ceiling approaches. Not the arbitrary date the Republican and Democrats have been squabbling over, but the real debt ceiling, the one that will come when those lending the government the money decide that the Government can’t control itself, and stop lending money.
