Colleagues: Three disparate items on the budget/debt morass today. First, this from a very fiscally conservative friend, who has become suddenly optimistic about the prospects for serious deficit reduction. Leo writes:
However, I am newly hopeful of progress on the budget. Why, you ask:
1) Both parties have given real ground: R’s have accepted defense spending cuts and agreed to a tax rate hike; Dems have cut pet discretionary programs and seen us compile a roughly 5-to-1 ratio (of $4T in cuts to date, only $650M is new tax revenue) spending reduction to new revenue.
2) The Republicans in the House are serious about long-term debt reduction. They have passed budgets the last four years and two separate bills to forestall sequester. They now intend to do the straightforward thing on the CR….a yearlong CR with few frills.
3) Of late, Boehner has started to make the case for regular order: each house pass a budget, go to conference, send to president. This would get Congress into the game in the intended way and can produce a broad, properly-vetted bill with fulsome support (or livable compromises…same thing in political terms).
4) The lone holdouts are Obama (whose 2nd inaugural outlined an unrealistic “equality agenda”) and the most execrable character in the whole play – Harry Reid.
5) Despite his 2nd inaugural, BHO now knows that hope for a legacy is dead. He can have a legacy, but it lies in a big tax reform – entitlement reform down payment on long-term fiscal sanity.
So, my hope is that there are only two renegades left, and one of them seeks a legacy. I can only hope Reid can be shamed/cajoled/forced into doing his job and leading the senate to produce a budget. Then we can get down to closing loopholes (broadening the base); reducing rates (this is the sticky part, the R’s will seek budget neutrality, the D’s will want new revenues – this is the heart of any compromise), and curbing entitlements – both present spending, but more importantly the long-term obligations (e.g. moving the retirement age from 67 to 72 wouldn’t cut immediate expenditures, but it would lower by tens of billions the expected value of our long-term obligations).
So, take heart. If we can get those two C-D’s (crazy Dem) onboard, we can make some progress! Enjoy the sequester….from my perch, it’s a many-splendored thing!!
–Leo the Happy Conservative
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And this abridged column from the Washington Post:
A way out of our budget wars
By E.J. Dionne Jr., Published: March 6
There are, believe it or not, grounds for hoping that the so-called sequester, stupid as it is, might open the way to ending our nation’s budget stalemate.
Hope is in short supply right now, but the case for seeing a way out of the current mess rests on knowable facts and plausible assumptions.
It starts with the significant number of Republicans in the Senate — possibly as many 20 — who think what’s going on is foolish and counterproductive. The White House is betting that enough GOP senators are prepared to make a deal along lines that President Obama has already put forward.
Obama’s lieutenants argue that, while Republicans are aware that the president is seeking new revenue through tax reform, many did not fully grasp the extent to which he has offered significant long-term spending cuts. These include reductions in Medicare and a willingness (to the consternation of many Democrats) to alter the index that determines Social Security increases. Obama has proposed $930 billion in cuts to get $580 billion in revenues.
Senior administration officials note that Obama cannot stray too far from his existing offer, which was already a compromise, without losing the Democratic votes a deal would need. But his framework, they believe, could create a basis for negotiation with Republican senators, such as Sen. Lindsey Graham (S.C.), who dislike the deep, automatic cuts in defense spending, and others, such as Sens. Susan Collins of Maine and Bob Corker of Tennessee, who dislike government-by-showdown.
Graham was especially bullish, declaring that Obama’s outreach to Republicans — the president invited about a dozen GOP senators to dinner Wednesday night — was “the most encouraging engagement on a big issue I’ve seen since the early years of his presidency.”
If the Senate actually passed a bipartisan solution, it would still have to clear the House, requiring Speaker John Boehner (R-Ohio) to allow yet another bill through with a large number of Democratic votes. But the sequester almost certainly marked the high point of solidarity among House Republicans. Letting it take hold was an easy concession for Boehner to make to more militant conservatives; it kept them from pushing toward a government shutdown or a politically and economically dangerous confrontation over the debt ceiling.
Now comes the hard part for Boehner. Already, more moderate conservatives are pushing back against the depth of the budget cuts that Rep. Paul Ryan will have to propose in order to balance the budget in 10 years. At least some House Republicans may come to see a bipartisan Senate-passed deal as more attractive than the alternatives.
From Obama’s point of view, engaging with Senate Republicans now to reach a broad settlement makes both practical sense, because there is a plausible chance for a deal, and political sense, because he will demonstrate how far he has been willing to go in offering cuts that Republicans say they support. In the process, he would underscore that the current impasse has been caused primarily by the refusal of House Republicans to accept new revenues.
While it’s the GOP that has been using serial, self-created crises to gain political leverage, many in the party are no less worn out by them than the Democrats. “Even we are tired . . . of lurching from one cliff to another,” Sen. John McCain (R-Ariz.) told the Wall Street Journal on Wednesday. “I think that’s lending some pressure towards trying to come up with some kind of a grand bargain.”
Thus does the strongest reason for hope arise from one of the most basic human responses: exhaustion.
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And now, a graph that startled me, that UNR Professor Glen Atkinson sent, showing how much private debt has soared as compared to the public debt we have been focusing on. If accurate, this may be the REAL long term concern!