When the Newt Gingrich House of Representatives shut down the government in the 1990s, Gov. Bill Clinton won the war by partially closing down the government. One of the first departments he shut down was National Parks. Irate Americans rebelled against the GOP saboteurs who were denying their access to public parks, and the battle was quickly over. Clinton could have withheld funding from Agriculture or Transportation or Commerce, but nothing would hit home with constituents like locked gates at public parks.
Now, as Republicans contemplate another government shutdown over debt limits, President Obama might try a similar but different tactic. Instead of shutting down National Parks, if he is forced to curtail spending because of GOP intransigence over the debt limit, Obama should sequester all spending on the legislative branch of government. That would mean NO salaries for members of Congress, their staffs, their district offices back home, their heat and lights in their offices, and their many perquisites of office.
Let's see how long they will hold out when their paychecks are withheld and their offices are dark.
Showing posts with label debt limit. Show all posts
Showing posts with label debt limit. Show all posts
Wednesday, January 16, 2013
Thursday, July 14, 2011
Debt limit cannot be ignored
Some members of Congress, including presidential candidates Michelle Bachmann and Ron Paul, say defaulting on the nation's debt ain't no big thing. They're not worried about the federal debt limit, and they're not going to vote to raise it, no matter what. By some accounts, a few dozen U.S. House members are in this group.
They can't possibly be serious! Even if, as they claim, the Treasury would have enough money coming in from taxes to make payments on the federal debt and meet a few other obligations, the ramifications of even a near-default would be enormous. America would lose its prime credit rating, meaning fewer people around the world would invest in U.S. securities, and America would have to pay more for any borrowing it did well into in the future. Consumers would see their borrowing costs escalate. Housing, already in a giant hole, would sink into the abyss. Auto sales would collapse as car loan rates would jump from near-zero interest into double digits. Businesses would have to pay more for their routine borrowing for expansions or operating capital. More jobs would be eliminated to compensate for higher interest costs.
The costs of imports would soar as the dollar falls in value. Consumers would be paying more for nearly everything and would pay more interest on every penny they borrowed. Houses might be the exception. Already faltering housing prices might collapse if potential buyers are faced with mortgage interest rates of 15 percent or more. And the government would have to pay more in interest on the $14 trillion in debt it already has incurred.
The disdainers of the debt limit crisis and other Republicans who complain that higher taxes (on anybody) would hurt the economy will get a look at what soaring borrowing costs will do to an economy. A four- or five-fold increase in borrowing costs would hurt most businesses and do more damage to the economy than the relatively small tax changes the Obama administration has proposed.
Along with all these very tangible impacts of defaulting on the national debt would come another embarrassment: The United States would find itself in the dustbin of once-proud failed nations, lumped with Greece, Zimbabwe, the Weimar Republic and others. "Solid as a dollar" would be a joke.
They can't possibly be serious! Even if, as they claim, the Treasury would have enough money coming in from taxes to make payments on the federal debt and meet a few other obligations, the ramifications of even a near-default would be enormous. America would lose its prime credit rating, meaning fewer people around the world would invest in U.S. securities, and America would have to pay more for any borrowing it did well into in the future. Consumers would see their borrowing costs escalate. Housing, already in a giant hole, would sink into the abyss. Auto sales would collapse as car loan rates would jump from near-zero interest into double digits. Businesses would have to pay more for their routine borrowing for expansions or operating capital. More jobs would be eliminated to compensate for higher interest costs.
The costs of imports would soar as the dollar falls in value. Consumers would be paying more for nearly everything and would pay more interest on every penny they borrowed. Houses might be the exception. Already faltering housing prices might collapse if potential buyers are faced with mortgage interest rates of 15 percent or more. And the government would have to pay more in interest on the $14 trillion in debt it already has incurred.
The disdainers of the debt limit crisis and other Republicans who complain that higher taxes (on anybody) would hurt the economy will get a look at what soaring borrowing costs will do to an economy. A four- or five-fold increase in borrowing costs would hurt most businesses and do more damage to the economy than the relatively small tax changes the Obama administration has proposed.
Along with all these very tangible impacts of defaulting on the national debt would come another embarrassment: The United States would find itself in the dustbin of once-proud failed nations, lumped with Greece, Zimbabwe, the Weimar Republic and others. "Solid as a dollar" would be a joke.
Thursday, July 7, 2011
Seize opportunity to cut deficit
In about three weeks, the United States of America might default on its debts. Think about that! The richest country in the world, the paragon of democratic governments, could become a deadbeat.
The problem is not that America cannot come up with the money to pay its obligations. Its credit is good, even though it has made a habit of spending more than it takes in. This problem is more political than fiscal. Congress must approve an increase in the debt limit in order for the Treasury to come up with the money to pay the bills on time.
Republicans in Congress, particularly those who were elected last year on pledges to never, ever, under any circumstances raise taxes, don't want to increase the debt limit. They think America should live within its means. Good sentiments, but America cannot fight wars all around the globe, pay the promised benefits to Social Security and Medicare recipients, fight terrorism at home and abroad, respond to catastrophic natural disasters, maintain a space program, keep up interstate highways, pay the interest on debts already incurred, provide nourishment for the poor and all the rest without either raising taxes or borrowing money. If raising taxes — and many in Congress and the political action groups that do their thinking for them — say any increase in revenue, even if it comes from closing tax loopholes and ending unjust preferences in the tax code, is a tax increase. And any tax increase in any form is off the table.
New York Times columnist David Brooks (one of the most thoughtful and sensible columnists I've read) decries the no-tax ideology of the Republican right wing. If Republicans are unwilling to compromise, if they are unwilling to snatch the deal of a lifetime when it's being handed to them, they are no longer a political party; they are a medieval college of cardinals burning at the stake people who say the earth is round and revolves around the sun.
America's $14 trillion in debt is a real problem. Our $1 trillion-plus budget deficit is shameful. But the answer is not to force the government to implode into anarchy. President Obama is offering to go along with $4 trillion in spending cuts if Congress will agree to less than $1 trillion in revenue increases, mostly from tax reforms and closing loopholes. It's a heckuva deal for Republicans; it represents significant cuts in federal spending. All they have to do is agree to comparatively minor and relatively painless revenue increases.
I think the American people might go along with even harsher measures. Rep. Paul Ryan's highly touted deficit reduction plan, which has become an icon of the Republican Party (it raises no taxes), would not eliminate the budget deficit. The Bowles-Simpson deficit reduction commission did a better long-term job of reducing the deficit but still didn't put the federal government back in the black.
No politician seems prepared to boldly make the elimination of the deficit and the paying off of the federal debt a national priority. This could be done by returning to tax rates in effect before the 2002 Bush tax cuts and reducing federal spending in a deliberate and rational way. Remember that those 2001 tax rates already had been reduced from peak rates of the 1950s by Kennedy's and Reagan's income tax cuts. Who will stand before the public and pledge, "Before this decade is out, we shall pay off the federal debt"?
The problem is not that America cannot come up with the money to pay its obligations. Its credit is good, even though it has made a habit of spending more than it takes in. This problem is more political than fiscal. Congress must approve an increase in the debt limit in order for the Treasury to come up with the money to pay the bills on time.
Republicans in Congress, particularly those who were elected last year on pledges to never, ever, under any circumstances raise taxes, don't want to increase the debt limit. They think America should live within its means. Good sentiments, but America cannot fight wars all around the globe, pay the promised benefits to Social Security and Medicare recipients, fight terrorism at home and abroad, respond to catastrophic natural disasters, maintain a space program, keep up interstate highways, pay the interest on debts already incurred, provide nourishment for the poor and all the rest without either raising taxes or borrowing money. If raising taxes — and many in Congress and the political action groups that do their thinking for them — say any increase in revenue, even if it comes from closing tax loopholes and ending unjust preferences in the tax code, is a tax increase. And any tax increase in any form is off the table.
New York Times columnist David Brooks (one of the most thoughtful and sensible columnists I've read) decries the no-tax ideology of the Republican right wing. If Republicans are unwilling to compromise, if they are unwilling to snatch the deal of a lifetime when it's being handed to them, they are no longer a political party; they are a medieval college of cardinals burning at the stake people who say the earth is round and revolves around the sun.
America's $14 trillion in debt is a real problem. Our $1 trillion-plus budget deficit is shameful. But the answer is not to force the government to implode into anarchy. President Obama is offering to go along with $4 trillion in spending cuts if Congress will agree to less than $1 trillion in revenue increases, mostly from tax reforms and closing loopholes. It's a heckuva deal for Republicans; it represents significant cuts in federal spending. All they have to do is agree to comparatively minor and relatively painless revenue increases.
I think the American people might go along with even harsher measures. Rep. Paul Ryan's highly touted deficit reduction plan, which has become an icon of the Republican Party (it raises no taxes), would not eliminate the budget deficit. The Bowles-Simpson deficit reduction commission did a better long-term job of reducing the deficit but still didn't put the federal government back in the black.
No politician seems prepared to boldly make the elimination of the deficit and the paying off of the federal debt a national priority. This could be done by returning to tax rates in effect before the 2002 Bush tax cuts and reducing federal spending in a deliberate and rational way. Remember that those 2001 tax rates already had been reduced from peak rates of the 1950s by Kennedy's and Reagan's income tax cuts. Who will stand before the public and pledge, "Before this decade is out, we shall pay off the federal debt"?
Subscribe to:
Posts (Atom)
Posts
