Monday, August 1, 2011

The Ideological and Politcal War Over The Debt Crisis and Its Serious Economic and Social Consequences’-livelihoods-votes-few-unappeasable-

Progressives Say Obama's Deal With Nutters "Trades Peoples’ Livelihoods for the Votes of a Few Unappeasable Right-Wing Radicals"
by John Nichols
July 31, 2011
The Nation

"Given the choice between a Republican and someone who acts like a Republican, people will vote for the real Republican all the time," said Harry Truman.

If the 33rd president was right, then Barack Obama just did himself and his party a world of hurt.

Faced with the threat that Tea Party-pressured Republicans in the House really would steer the United States toward default, and in so doing steer the U.S. economy over the cliff, Obama had to do something. But instead of bold action -- borrowing a page from Ronald Reagan to demand a straight up-or-down vote on raising the debt ceiling; borrowing a page from Franklin Roosevelt to pledge to use the authority afforded him by the Constitution to defend the full faith and credit of the United States -- the president engaged in inside-the-beltway bargaining of the most dysfunctional sort.

In cutting a deal with congressional Republicans [1] that places Democratic legacy programs -- Social Security, Medicare and Medicaid -- at risk while cutting essential programs for working families and the poor, Obama has positioned himself and his administration to the right of where mainstream Republicans such as Howard Baker, Bob Dole and George H.W. Bush used to stand in fights with the fringe elements of their party.

Now, the fringe is in charge of the GOP. And Obama is cutting deals to satisfy Republicans that Britain's banking minister describes as "right-wing nutters." [2]

Obama and Democratic congressional leaders are claiming that they have done everything in their power to avert deep cuts in Social Security, Medicare and Medicaid. And it is true that they have given the Republicans (and their paymasters) less than House Budget Committee chair Paul Ryan was demanding with a budget proposal that turned Medicare into a voucher program and began the process of privatizing Social Security.

But a compromise with total destruction can still do a lot of damage.

The president's bow to the political extremism -- and the economic irrationality [3] -- of a tiny circle of "right-wing nutters" in Congress and their dwindling Tea Party "base" will, according to reports based on briefings by White House and GOP aides, "raise the debt limit by about $2.7 trillion and reduce the deficit by the same amount in two steps. It would cut about $1 trillion in spending up front and set up a select bicameral committee to put together a future deficit-reduction package worth $1.7 trillion to $1.8 trillion. Failure of Congress to pass the future deficit-reduction package would automatically trigger cuts to defense spending and Medicare."

An aide familiar with the deal The Hill newspaper that the Medicare cut would not affect beneficiaries. "Instead," according to the report, "healthcare providers and insurance companies would see lower payments."

But that's still a squeezing of Medicare in order to meet the demands of congressional Republicans who have spent the past six months trying to put the program on the chopping block.

Congressional Progressive Caucus [4] co-chair Raul Grijalva says Obama and his negotiators have bent too far to the extremists. Like many progressives, Grijalva favored the straight up-or-down vote on debt ceiling. "Had that vote failed," he argued, "the president should have exercised his Fourteenth Amendment responsibilities and ended this manufactured crisis."

Instead, the president blinked in the face of Republican recalcitrance. And in so doing Obama agreed to what the Progressive Caucus co-chair decsribed as "a cure as bad as the disease."

"This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it," Grijalva declared Sunday afternoon. [5] "Progressives have been organizing for months to oppose any scheme that cuts Medicare, Medicaid or Social Security, and it now seems clear that even these bedrock pillars of the American success story are on the chopping block. Even if this deal were not as bad as it is, this would be enough for me to fight against its passage."

How widespread that sentiment will be within the House Democratic Caucus remains to be seen. While Senate Majority Leader Harry Reid, D-Nevada, has signed on with the president, House Minority Leader Nancy Pelosi, D-California, says she must meet with caucus members before taking a position.

Grijalva is far from the only member who is upset with the deal.

Congresswoman Donna Edwards, D-Maryland, slammed the deal. [6]

"Nada from million/billionaires; corp tax loopholes aplenty; only sacrifice from the poor/middle class? Shared sacrifice, balance? Really?" she complained, via Twitter, on Sunday.

Grijalva objected, in particular, to the lack of shared sacrifice.

"This deal does not even attempt to strike a balance between more cuts for the working people of America and a fairer contribution from millionaires and corporations. The very wealthy will continue to receive taxpayer handouts, and corporations will keep their expensive federal giveaways. Meanwhile, millions of families unfairly lose more in this deal than they have already lost. I will not be a part of it," the Arizona congressman explained. "Republicans have succeeded in imposing their vision of a country without real economic hope. Their message has no public appeal, and Democrats have had every opportunity to stand firm in the face of their irrational demands. Progressives have been rallying support for the successful government programs that have meant health and economic security to generations of our people. Today we, and everyone we have worked to speak for and fight for, were thrown under the bus. We have made our bottom line clear for months: a final deal must strike a balance between cuts and revenue, and must not put all the burden on the working people of this country. This deal fails those tests and many more."

But Grijalva's gripe was not merely a moral or economic one.

It was political, as well.

"The Democratic Party, no less than the Republican Party, is at a very serious crossroads at this moment. For decades Democrats have stood for a capable, meaningful government – a government that works for the people, not just the powerful, and that represents everyone fairly and equally. This deal weakens the Democratic Party as badly as it weakens the country," explained Grijalva. "We have given much and received nothing in return. The lesson today is that Republicans can hold their breath long enough to get what they want. While I believe the country will not reward them for this in the long run, the damage has already been done."

The question that remains is: How much damage? How much damage to vulnerable Americans? How much damage to the global reputation of the United States as a functional state? How much damage to a U.S. economy that is threatened by rising unemployment? How much damage to the image of the Democratic Party as a defender of working families?

There will still be a good deal of warngling over this deal. It could be rejected. It could be altered. But it cannot be defended as a sound or necessary response to a manufactured debt-ceiling debate and the mess that House Speaker John Boehner, R-Ohio, has made of it.

That is why the co-chair of the Congressional Progressive Caucus says: "I will not support the emerging debt deal."

"I will have no part of a deal that cuts Social Security, Medicare and Medicaid to appease the farthest reaches of the right wing of the Republican Party," argues Grijalva. "It is unconscionable to put these programs on the chopping block and ignore the voices and beliefs of the millions of Americans who trust us to lead while continuing to give handouts to the ultra wealthy and the largest corporations. There is no human decency in that."



Philip Scott Andrews/The New York Times
President Obama spoke about a debt deal on Sunday.

July 31, 2011

Leaders Reach Deal to Raise Debt Ceiling
New York Times

WASHINGTON — President Obama and Congressional leaders of both parties said late Sunday that they had agreed to a framework for a budget deal that would cut trillions of dollars in federal spending over the next decade and clear the way for an increase in the government’s borrowing limit.

With the health of the fragile economy hanging in the balance and financial markets watching closely, the leaders said they would present the compromise to their caucuses on Monday morning in hopes of averting a default before a Tuesday deadline.

President Obama spoke from the White House on Sunday night, telling reporters that “the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid a default.”

Just before Mr. Obama spoke on television, the two Senate leaders, Harry Reid and Mitch McConnell, took the floor to endorse the pact as well.

“I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff,” said Mr. Reid, the majority leader.

The agreement came after a day of wrangling over Pentagon cuts, and it still must be sold to the Senate and the House, with the House providing a particular challenge.

As conversations flowed between the White House and Capitol Hill, Mr. Reid publicly embraced the compromise that would tie deep spending cuts to a debt increase, though his plan to bring it to a vote as early as Sunday were put off, as was a tentative meeting of Senate Democrats to review it.

According to Congressional and administration officials, the delay was attributable to efforts by Speaker John A. Boehner, Republican of Ohio, to limit immediate reductions in the Pentagon budget and better protect it from future cuts in order to cement votes from defense hawks. He needs those votes to win approval of the plan in the House.

While architects of the compromise stopped short of declaring they had a final agreement, a framework had emerged calling for at least $2.5 trillion in spending cuts over 10 years, a new Congressional committee to recommend a deficit-reduction proposal by Thanksgiving, and a two-step increase in the debt ceiling.

The tense, last-minute negotiations were taking place against a backdrop of uncertainty, with a looming threat of a costly downgrade of the nation’s credit rating and with investors worried about the global economic impact of a possible default. The political stakes were unusually high as well, with leaders in both parties staking out positions that may well be central to their re-election chances in 2012.

If the compromise were to be nailed down, attention would immediately turn to selling it to the rank-and-file. The leadership was anticipating objections from Republicans that the plan did not go far enough while Democrats were wary that Medicare spending would take a hit.

Despite the remaining political and procedural hurdles, the predominant mood on Capitol Hill was one of cautious relief that the gears were turning to produce legislation that would eliminate the threat of a potential government default after Tuesday.

Referring to the tortuous negotiations, Senator Dianne Feinstein, Democrat of California, said: “Sausage making is not pretty. But the sausage we have, I think, is a very different sausage from when we started.”

She noted that the proposed caps on federal spending, combined with creation of a new evenly divided panel to cut the deficit further, could fundamentally change federal finances.

But not everyone was pleased. “It may be the best we can do,” said Senator Jeff Sessions of Alabama, the senior Republican on the Budget Committee. “But I do not think it’s enough.”

With the talks appearing to make progress, the Senate blocked a Democratic proposal for a debt limit increase on a vote 50-49, falling 10 votes short of the 60 required to limit debate. But all attention was on the negotiations.

White House aides were in a flurry of meetings as they prepared for the prospect of announcing a deal. After weeks of political theatrics and Congressional votes that appeared to go nowhere, the mood at the White House on Sunday afternoon was one of cautious optimism.

But Obama administration officials are also aware of the precarious risk the president was running if he strikes a deal that Congressional Democrats find hard to swallow. Mr. Obama’s top political aides, including Vice President Joseph R. Biden and the senior White House adviser David Plouffe, were on the phone Sunday afternoon with Democratic leaders, who gathered in the Capitol Sunday afternoon to explore the outlook for the measure.

A major question mark remained the House of Representatives, where a vote on the agreement could occur Monday and where Mr. Boehner has found it difficult to corral the most conservative wing of the rank-and-file. While the bipartisan deal would be expected to attract significant Democratic support, Mr. Boehner must still persuade many of his members to get behind it and would be pushing for at least half of the House Republicans to back it.

In an e-mail to Republican House members, Mr. Boehner noted that “discussions are underway on legislation that will cut government spending more than it increases the debt limit, and advance the cause of the balanced budget amendment, without job-killing tax hikes.”

“Those talks are moving in the right direction, but serious issues remain,” the speaker wrote.

Under the plan as described by officials briefed on its outline, the debt limit would be increased by $900 billion in the first installment, subject to a Congressional vote of disapproval that President Obama would be able to veto. To prevent a default, $400 billion would be added immediately.

A second increase of $1.2 trillion to $1.5 trillion would be available subject to a second vote of disapproval by Congress. At the same time, a new joint Congressional committee would be created to find a like amount of cuts.

If the evenly divided committee failed to agree on a plan, Congress would either have to approve a balanced budget agreement or accept an across-the-board cut in spending in line with the committee’s goal, with 50 percent of the savings coming from the Pentagon beginning in 2013. Medicare would also sustain cuts, though the reductions would be capped.

The rationale for picking such favored programs as the Pentagon for Republicans and Medicare for Democrats was to provide a strong incentive for the new committee to avoid a deadlock and deliver a deficit reduction plan that could clear Congress.

According to Democratic officials close to the talks, among the final sticking points that were worked out were efforts to exempt the Medicaid program from reductions under the automatic spending reductions and make certain that the Medicare cuts hit health care providers, not beneficiaries.

Negotiators did agree that any deal would not include language that could lead to a new formula for the annual cost-of-living adjustments for Social Security beneficiaries that could save more than $100 billion in the first 10 years. While many economists have long said the existing formula overstates inflation, many Democrats oppose any change that would reduce benefits from current law.

Dropping the proposal from the White House-Congressional talks reflected in part the influence of Representative Nancy Pelosi, the Democratic minority leader, whose negotiating hand has been strengthened since she will have to deliver a significant number of Democratic votes for House passage of any solution given the likelihood that Mr. Boehner will face significant loss of Republican votes.

Senators said they expected that the plan as it was being portrayed would attract a bipartisan vote even though both Democrats and Republicans would have reservations.

Senator Mike Johanns, Republican of Nebraska, said that from the terms of the deal described to him, “I think I will be satisfied and supportive.” After years of work, he noted, Congress has become “serious about cuts in spending.”

Robert Pear and Jackie Calmes contributed reporting.
This article has been revised to reflect the following correction:

Correction: July 31, 2011

An earlier version of this story incorrectly stated when the automatic cuts would occur if Congress does not approve a second round in a few months. They would occur at the end of the year 2012, not 2011.