A Two Year Budget: A Small Christmas Gift from Washington

United States Capitol

United States Capitol (Photo credit: Jack in DC)

While I have liberal leanings, I am more of a pragmatist than a liberal despite what my more conservative friends might think.  This blog is titled American Titanic because I think this nation is navigating through a thick field of icebergs which will likely become more dangerous  in decades to come.

However, much of the danger lies in our inability to steer the ship, some pulling left and others right.  Unable to pull together, we are propelled by our own momentum towards bleaker days straight ahead.

While it is a tepid agreement, the recent passage of a two year budget compromise worked out by Senator Patty Murray (D.) and Representative Paul Ryan (R.) is quite significant given the lack of bipartisan efforts on anything significant over the past few years.  Part of its importance is the bill was passed by a huge bipartisan majority in the Republican controlled House, where hardly anything passes except bills to repeal Obamacare over and over and over again.

Of course, a close look at the bill raises questions, reveals some fiscal smoke and mirrors, including supposed cuts to come later, and pleases no one.  But that’s the way it is with political compromises (for details see Ezra Klein at bottom of post).

Paul Ryan might benefit most from this bargain, especially when it comes to the next presidential election, as he has now shown an ability to get something through congress, while his likely fellow Republican senatorial contenders for THE BIG JOB  – Marco Rubio, Paul Cruz and Rand Paul – all voted against this deal, pleasing their base but also feeding into the naysayer image the Republican party has developed during the Obama years.   For a  Republican to win the White House in 2016 he will have to figure out a way to assuage the base while also attracting much wider support.   With the passage of this bill, Paul Ryan has shown an ability to do just that.

The value to us all is the bill reduces uncertainty in our economic climate in that we know the government will stay open for the next two years, and almost anything that shores up certainty is good news to the business community.   Even when it comes to the much maligned Obamacare, I conclude from various sources that most businesses believe they could thrive under Obamacare if they knew exactly what it is and how it will effect them.

Of course, there remains another bullet to be removed from the gun and that’s the potential stoppage in raising the debt ceiling February 7, or so.   While this raising used to be more or less a matter of course, the Republican tactic of making it a bargaining chip has been another cause of uncertainly since they took over the House in 2010.

From all the comments I’ve seen, they are demanding some kind of budgetary cut in spending in order to raise the ceiling once again, while also repeating the claim that we would be fools to default on our debts and cast doubt upon “the full faith and credit of the United States.”

Though that may seem illogical, their logic is while of course we must raise the debt ceiling, since our debt is our biggest problem long term it only makes sense to shave off a little spending in the process.  As such, they try to appear reasonable making President Obama seem unreasonable in his  unwillingness to negotiate.  If we all agree the debt ceiling must be raised per usual, there should not be any negotiating, but Republicans constantly gloss over that fact.   They believe, and I agree with them, that a majority of Americans like the idea (in the abstract) of less government spending and Republicans continue to play that card even when it doesn’t suit the rules of the game.

How that plays out could get interesting, but my guess is that some sort of deal will be made  whereby the Republicans can claim a spending reduction while the president can claim no important concessions were made.

This game has been played a few times since 2010 and the ceiling has always been raised, so perhaps this isn’t the big deal that it seems on the surface.   Maybe business people interpret it as only more political theater.   I hope so, but that assumes the key actors don’t get clumsy, fall over each other  and somehow ruin the play.   That really would ratchet up uncertainty to new levels.

But let’s not dwell too much on that until next year.

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P. S. – If you want a simple break down of the budget deal,  check out Ezra Klein’s summation in the Washington Post Wonk blog.  Also,  Treasury Secretary Jack Lew makes a plea for  settling the debt ceiling issue before February, for those who want to warm up for the next congressional episode of kabuki theater.

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Obama’s Charm Offensive: Hope Springs Eternal

I don’t know about you, but my previous post depressed me.   When it comes to figuring out a way for congress to actually come to grips with our federal fiscal problems, what comes to mind is the phrase:  You can’t get there from here.

However, I do recall the advice of someone who said:  “Look for the good in everything,”  words that come to mind during situations like this.  So, trying to buck myself up this morning, I’m looking for the positive wherever I can find it.

Paula Abdul Joins Papal Conclave

Paula Abdul Joins Papal Conclave (Photo credit: Mike Licht, NotionsCapital.com)

In terms of the president working with Congress, he has publicly reached out to members of both parties through meetings and dinners.   A common criticism of him from both sides of the aisle during his previous administration was that he made few outreach efforts to congress.

Having Rahm Emmanuel as his chief of staff didn’t help in terms of Republicans those first two years, as his attitude was:  “We have the votes, so F…. them.”   Sure, I know the Republicans didn’t exactly have their hands stretched out, either, and “no” soon became the only word they did no (ah, know).    But these days, I am holding out hope that  “no” may be maybe.

Despite skepticism continuing to abound, the two sides are talking nice, or somewhat nice for the moment.   Also, for once under Obama, both the House and the Senate are pulling together budgets, which is called “regular order”, because it used to be done regularly.  If both come up with budget proposals, at least it provides a place for negotiations to begin  (*1).   The Obama team tried to skirt this process and negotiate directly with House Speaker Boehner in 2011, but those talks broke down which led to the sequester which led to those forced meat clever budget cuts  recently because the two sides could not agree on a reasonable alternative to prevent them from going into effect.

The two new budgets outlined thus far are about as far apart as the edges of the Grand Canyon, with Representative Paul Ryan (R) including the elimination of Obamacare as part of his calculations and Senator Patty Murray (D) outlining a trillion dollars in raised revenue over the next ten years.   Both ideas are non-starters for the opposition.  Those who remain optimistic hope those are just bargaining positions which include hidden flexibility.   Pessimists see those as true positions with little wiggle room and continued stalemate.

As for me, I am hoping for some kind of miracle, but miracles happen some time don’t they?   One group that has a whole list of them is the Catholic church, whose members just happen to be celebrating the election of a new pope, which is what brought the possibility of miracles to mind.

I’m willing to suspend judgement for the time being, and instead ponder the idea of Paula Abul at a Papal Conclave.   Don’t ask me what she’s doing there.  The sight just made me smile.

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(*1)   One reason the Senate has not come up with a budget proposal like the House has been doing each year is that anything the  Democrats would want to pass would be  filibustered by the Republicans, so why bother.   Yes, there were 60 Senate Democrats for about the first 18 months of Obama’s first term, but they could barely muster enough votes in the Senate to prevent a filibuster and pass the stimulus plan in 2009 and Obamacare in 2010.    In terms of the stimulus, of the 61 votes in favor, three came from Republicans and two from independents.

A pet peeve of mine is having to listen to someone say the Democrats “controlled” both houses in Obama’s first two years.   They “controlled” the House, but only “managed” the Senate, in the way one tries to manage a stampede.