Thursday, July 21, 2011

Washington is psychotic

"You'll get mesmerized /By alibis/ And limbo dance in pairs/ Please lock that door/It don't make much sense/That common sense/Don't make no sense/No more"

John Prine
"Common Sense"

It's hard to believe that people we elected to represent us and who swore to act in the best interest of the United States and its citizens could have pushed the country to the brink of default just to make a political point.

But it's true.

With about ten days to go until the Aug. 2 deadline for raising the debt ceiling, Washington has shown that it's gone from being dysfunctional to being psychotic.

Our capital and our government have been dysfunctional for a number of years due to the inability of Democrats and Republicans to work together on anything. That had negative effects on the presidencies of Bill Clinton and George W. Bush, but the cancer of partisanship has metastasized in Barack Obama's administration.

There's enough blame to go around for both sides. But in the debt ceiling debate, the Republicans are acting crazier than the Democrats.

While Obama has laid out plans that include up to $4.5 trillion in deficit reduction over the next ten years, Republicans have turned them down flat. Why? Because, in addition to a lot of spending cuts that would trim programs that help lower and middle-income families, Obama has included tax increases on corporation and one the wealthiest Americans.

So have the "Gang of Six" in the Senate, which includes Virginia's Mark Warner.

But Republicans, who have clamored loudest about the deficit (which they discovered about the time Obama was sworn in), have said that deficit and debt reduction needs to be done with budget cuts only. Some of the cuts they advocate are sweeping and would change Medicare and Social Security, as we know them.

It's an example of just how unserious about deficit reduction they are. As recently as January they fought tooth and nail to retain the Bush era tax cuts, which contribute to the deficit.
This attitude led David Brooks, a mainstream Republican columnist, to say that Republicans aren't operating more like a normal political party.

He's got a point.

Republicans are now acting more like a religious cult than a political party. They've raised a "no tax increases ever" ideology to level of Gospel. It's the Church of Ronald Reagan, except that it's run by people who have made commandments out of a few of the dumbest things Reagan ever said and ignore what he actually did while in office.

Because Reagan raised taxes when he felt he needed to. And the debt ceiling? It was raised 17 times during the Reagan administration. It was routinely raised under other presidents, Republicans and Democrats alike.

So why the hold up now? If you're cynic, you might almost think that Republicans are trying to make the economy worse before the 2012 elections.

But let's not infer bad motives, where incompetence and stupidity will suffice.

Let's assume that Republicans really are concerned about the level of the budget deficit and the national debt. In that case, they should be falling all over themselves to accept Obama's offer, which entails real long-term fiscal reform.

He's offered cuts that will be very unpopular with Democratic constituencies.

But apparently that's not as important as tax increases on the rich.
I'm not crazy about some of Obama's tax ideas. I think, frankly, it would be good for the economy to get rid of the corporate income tax, which is a hidden tax on American consumers on one hand and only encourages companies to move profits off shore on the other. You could make up that revenue by taxing dividend, interest and capital gains income (except on the sale of a principal residence) at the same rate as wages and salary and re-instituting the estate tax.

Obama is calling a revenue and cuts approach "shared sacrifice." It's actually not fully shared since the cuts to program that benefit lower income Americans are a much bigger than the taxes on upper income Americans. But at least it's an attempt to say "We are all in this together."

It's one most Americans get, according to the polls.

It's one consistent with the facts, since the current fiscal problems are caused both by spending at 25% of Gross Domestic Product, a level last reached in World War II and in federal tax revenues that are at only 14.8% of GDP, while they hovered around 18% for decades. No one is advocating continuing to spend at the level we have for the last three years when we've done TARP (which saved the country from Depression and is the last time Democrats and Republicans came together for the national good), the stimulus package (which didn't stimulate the economy as much as was hoped), the auto company bailout and fought 2 1/2 wars. But Republicans are proposing to struggle along on the same historically low percentage of revenue.

But the shared sacrifices model is not one Republicans in Congress are willing to go along with. Instead, they've pushed the country toward default. Rating agencies are taking a look at downgrading U.S. debt. One small rating agency has already done so. If America's bond rating falls, so will bond ratings for the states, including Virginia's cherished AAA rating.

That will be the least of the effects of failing to raise the debt ceiling. U.S. default will likely trigger a new financial panic worldwide, ending the economy's fragile recovery. Even by flirting with the specter of default, Congress has weakened the economy.

But that's not the reason that members of Congress should be ashamed of themselves.

They should be ashamed because they've let the country get into this position and because some of them have been saying it "wouldn't be so bad" if America defaulted?

Wouldn't be so bad?

Forget the dire financial consequences that would follow a U.S. default as surely as night follows day. We don't default for the same reason that we don't torture captives or censor people's mail or lock them up without trials. Because we're America and we're better than that.

The fact that some members of Congress don't think we're any different from some third-rate banana republic that won't pay its bills makes my blood boil.

Some of the same people who appear so unconcerned about the prospect of American default have voted to make it harder for individual Americans to file for bankruptcy. It's okay for the country but not for individuals? Does that make sense?

This is an especially bitter pill to swallow as it's served up by the party that loudly proclaims its faith in "American Exceptionalism." Isn't the fact that we are the world's lender of last resort, the one safe oasis where anybody in the world can park their money, part of what makes us exceptional? Isn't the fact that the "full faith and credit of the United States" still means something part of why we're exceptional?

I don't understand how anybody who's a patriot could joke about, much less seriously consider, allowing America to default. But then I don't understand why anybody who is a patriot would bet against America by buying into a fund that shorted U.S. Treasury notes either. House Majority Leader Eric Cantor, who has positioned himself as the chief stumbling block to an agreement, did that.

Even if common sense prevails and the debt ceiling is raised before the deadline, the struggle has done damage to the economy. And it's spotlighted the inability of the two parties to get beyond ideological struggles and do the people's business. The concept of the "loyal opposition" is long gone from our political lexicon. The inability, of either party, to accept the results of elections and move on is an ominous symptom of Washington's political psychosis.

Cross posted at All Politics Is Local.
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