Tag Archives: Budget

This is no way to run a government…

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You often hear, “this is no way to run…,” a business, a theater, a team, a school, and, yes, a government.

In today’s political mess in Washington, DC, this saying is most certainly true – this is no way to run a government!

Because of the scandalous inability of the political parties in the nation’s capital, from the White House to Congress, we don’t have a budget, we can’t agree on the simple and, yes, completely sensible notion, that the country’s economic problems after the worst economic recession since the Great Depression in the 1930s, need to be solved and that they can only be solved through savings, new revenues, and, very importantly, new investments to create jobs in order to make a substantial dent in unemployment, which, hovering around 8 percent, is still much too high.

We need a plan. We need action from Washington. But we have neither, because the White House, the Democratic Senate and the Republican House of Representatives cannot agree on anything.  There are many separate plans and the result is deadlock when we all seem to agree that the country needs to push forward, urgently.  Instead, we are standing still, waiting…for what? Godot?  He’ll never come, we know that.

And in these times of deadlock, and waiting, something happened that was never supposed to happen: sequestration. A strange word, which in this case means automatic budget cuts. It came out of the big debt ceiling crisis last year, agreed to by the White House and Congress, and its goal was to force a real budget agreement by way of the so called Super Committee – remember that one? – because sequestration — the automatic budget cuts — were so harsh that neither side wanted them.

But here they are — 85 billion dollars’ worth of cuts only this year — in health, transportation, social services, defense – starting this week, across the board, with no priorities. Unbelievable.

It is, indeed, a sad verdict of the state of affairs in today’s Washington, DC, where the ideological battle is fiercer than ever and where the word “bipartisanship” has become a dirty word.   There is blame to go around, for everyone.  Obviously, President Obama, who entered the White House four years ago with bipartisanship as a main message, has now given up on this. His message is now one of a “balanced approach” to the country’s economic woes, meaning cuts, but also new revenues.  He won the election on that message and he has continued to take it to the American people, who, according to the polls, support him, but not by much.

Meanwhile, the Republicans, who had to agree back in January on the first tax hikes in over two decades, are saying no to any new revenues.  No more. All they want to do now is to cut, cut, cut – the only thing they agree on. But it is strongly felt and the party seems united behind this main message.  So, even though the automatic budget cuts include serious cuts for Pentagon, which is ordinarily anathema to the Republicans, they have decided to accept them, all in the name of spending cuts and savings.

Their goal is to balance the budget by 2023 – without any new taxes.  That’s not economically realistic, and, on top of that, it’s politically risky, because it will mean cuts in extremely popular programs like Medicare and Social Security. Will the Republicans be able take the political heat that such proposals will bring? That’s highly unclear.

Now, the good thing here is that this will never happen, because the Senate, controlled by the Democrats, will never agree to it, and, even if they did, Obama would veto it. But where will this lead us? To one crisis deadline after another as the frustration in the nation grows and as the economy continues to limp along, when it could do so much better.

As I said, this is no way to run a government…

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Ryan’s budget will haunt the Republican ticket

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They look happy, Mitt Romney and Paul Ryan, but it’s hard for me to see how Romney’s choice of Ryan as his running mate will strengthen the Republican ticket, increase its chances for victory, and bring joy for the party in November.

Yes, the choice will energize the far right in the party — the born-again Christians and the Tea party, who will now feel more motivated to actually turn out and vote. That’s not bad, of course, but beyond that? Not much.

Ryan is not broadly known and has no strong geographic base. It is unlikely that he will succeed in helping Romney carry his home state of Wisconsin in the fall. And his view of America, based on his budget proposal that he persuaded his fellow Republicans in the House of Representatives to support, is too radical and too controversial for the broader electorate. But the former Governor of Massachusetts, seen by many as a moderate voice in the Republican party, is now closely associated with that budget, and he will not be spared in the coming months.

Here is what the The New Yorker’s economic commentator James Surowiecki wrote about Ryan’s budget last spring:

But the simple truth is that his plan is not an evenhanded attempt to solve America’s long-term budget problems. It’s a profoundly radical document, its proposals skewed by ideological biases. Raising taxes, of course, is out of bounds. The same goes for using federal power to hold down Medicare costs, which will be the key driver of future budget deficits. Instead, House Republicans would cut spending on almost everything else the government does.

This budget will be a big negative for Romney/Ryan during the rest of the election campaign. The Obama team will see to that and their attacks will be relentless. Here is what Jim Messina, Obama’s campaign manager said today, and this is just the start:

In naming Congressman Paul Ryan, Mitt Romney has chosen a leader of the House Republicans who shares his commitment to the flawed theory that new budget-busting tax cuts for the wealthy, while placing greater burdens on the middle class and seniors, will somehow deliver a stronger economy. The architect of the radical Republican House budget, Ryan, like Romney, proposed an additional $250,000 tax cut for millionaires, and deep cuts in education from Head Start to college aid. His plan also would end Medicare as we know it by turning it into a voucher system, shifting thousands of dollars in health care costs to seniors. As a member of Congress, Ryan rubber-stamped the reckless Bush economic policies that exploded our deficit and crashed our economy. Now the Romney-Ryan ticket would take us back by repeating the same, catastrophic mistakes.

Here is what Paul Ryan said himself today, in his first speech as the Republican Vice Presidential candidate:

Minnesota is open again

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Minnesota is open again after closing down on July 1 when the Democratic governor and the Republican controlled State Legislature could not agree on next year’s budget.

Today’s agreement came after governor Mark Dayton gave up on his insistence on raising taxes for the state’s millionaires to help solve the budget deficit of five billion dollars. On the other hand, the Republicans gave up on their proposals to ban stem cell research, abortions, and the right to collective bargaining.

In other words, a compromise.

Will we see something similar here in Washington before August 2? If not, the United States might also be forced to close.

Minnesota has closed — is the U.S. next?

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That which now threatens the entire United States, has already happened in Minnesota.

The State closed its institutions on July 1, in the middle of tourist season, after the Democratic governor Mark Dayton and the State Legislature, controlled by Republicans, failed to agree on a budget.

What has happened to good old Minnesota, the most Scandinavian in all of America?

“Search America from sea to sea and you will not find a state that has offered as a close a model to the idea of a successful society as Minnesota,” wrote Neal R. Peirce and Jerry Hagstrom once in their excellent The Book of America.

Today, the situation is unfortunately another. Two of the leading and most conservative Republican presidential candidate, Michele Bachmann and Tim Pawlenty, both come from Minnesota. Republicans control both houses of its Congress. The old progressive political tradition, personified by Hubert Humphrey and Walter Mondale,  is a distant memory. Mondale and former Republican Governor Arne Carlson’s attempt to mediate in the current crisis has been in vain.

Minnesota’s future is at stake, says Governor of Dayton in a speech, reproduced on the Daily Kos. And the local newspaper Winona Daily News blames the Republicans who say no to everything, especially to all proposals about raising the taxes, even for those earning over a million dollars a year.

Sounds familiar?

Yes, the same battle goes on here in Washington, between a Democratic President and a House of Representative dominated by the Republicans, who have so far rejected all proposals on closing tax loopholes or raising taxes for the wealthy down the line. This ‘no’ has until now put an end to all of President Obama’s attempts to find a balanced compromise to today’s severe economic crisis.

On August 2, the United States may be forced to close and after daily but fruitless negotiations since last Sunday, pessimism is rising. All parties still proclaim that no one wants America to default on its debt, but the road ahead is still long and difficult, and the outcome is still highly uncertain.

Sabotage or hardball?

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The word sabotage has appeared in the American political debate recently. The accusation, from leading Democratic senators and from liberal commentators, is directed against the Republicans, and raising doubts as to if they, really, are interested in a settlement about the nation’s economy and the debt limit.

This debate has, of course, special relevance today, when President Obama meets separately with the Democratic and Republican Senate leaders in a bid to bring new life in the debt negotiations, whose deadline, August 2, is fast approaching.

The charges of sabotage have their roots in the Republican minority leader Mitch McConnell’s statement that the Republican political goal was to ensure that Obama is not reelected next year.

This is how Democratic Senators Dick Durbin and Chuck Schumer in put it last week.

Since then, the negotiations under Vice President Joe Biden’s leadership have more or less collapsed after the Republican participants walked out.

Michael Tomasky at the Daily Beast sees it this way:

It’s about time the Democrats started saying openly what has been clear for months or even years now—that as long as economic recovery would work to the political benefit of Barack Obama, the Republicans have been, are, and will be in favor of sabotaging the economy.

Today’s GOP is about ideological maximalism on all fronts. Eric Cantor’s withdrawal from the Biden talks shows it again. They cannot negotiate, because negotiating means accepting something you don’t like, which the noise machine will not permit. And worse, because the noise machine wants Obama to fail and is so powerful, Republican office-holders inevitably arrive at that point too.

And Steve Benen, on the Washington Monthly’s blog Political Animal, writes:

Indeed, it’s generally forgotten, but one of the first debates of the Obama era began immediately after the president’s inauguration, when many prominent Republican voices agreed that they “hope Obama fails.” The main difference between then and now is that these same voices are in a position to ensure the president fails by blocking measures that would benefit the country — in many cases, measures Republicans supported until Obama said he agreed with them.

His conclusion:

It is, to be sure, an uncomfortable subject, but maybe it’s time for the political world to have the awkward conversation anyway.

Or is it that Republicans are simply playing “hardball” in order to gain biggest possible advantage in the negotiations. No one knows. So far, they have said no to almost everything, including all proposals for revenue enhancements, which Democrats believe are required. It’s truly been “the party of no.”

Although it is possible that the parties in the end, perhaps not until the evening before the deadline, will agree on a deal — “in the national interest” – that is far from certain. For that you need goodwill and a spirit of compromise, which now seems to be totally lacking among the Republicans. “National interest” – you don’t hear anything about that these days.

Tough negotiations wait after Obama’s superb speech

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I thought President Obama’s budget speech yesterday was superb, one of his best speeches in my opinion, and judging from the comments throughout yesterday and in today’s papers it was exactly the kind of speech his supporters had been wishing for but, maybe, not really believing that they would hear.

The speech was not only most eloquent but also most convincing. The President put down his markers about not only where he stood in the budget debate but, more importantly, how he saw America and what it should stand for, the good society — helping and protecting the elderly, the sick, the poor, and that we all share in this responsibility. For the wealthy, that would mean higher taxes.

“At last,” writes E.J Dionne in today’s Washington Post, “after months of mixed signals about what he was willing to fight for, Obama finally laid out his purposes and his principles.”

Obama’s vision of government and society is what we call “liberalism”, wrote Steve Benen on Washington Monthly’s website yesterday, and continued:

“The ‘sellout’ of the left this wasn’t. What we saw today was an unapologetic defense of a progressive vision of government, cased in terms that were equal parts moral and pragmatic. America doesn’t hear it often enough, and Obama delivered it with passion and conviction today.”

Paul Krugman, the influential economist and New York Times columnist, who has recently been very critical of the president, was pleased. It was much better than what I expected, I can live with this, he wrote on his blog. And New Yorker’s political commentator, Hendrik Hertzberg, wrote that when Obama was finished, the Republican alternative was a “smoking ruin” … “Even Paul Krugman was satisfied. Me too,” he concluded

The Republican Congressman Paul Ryan, who had recently launched his, and soon to be, the Republican proposal, sat in the audience and seemed almost shocked afterwards, judging by his reaction:

“It was no budget proposal, it was a political speech,” he said, reflecting his party’s total opposition to Obama’s speech.

Tough negotiations now wait. Their outcome is impossible to predict, although both sides talk about the seriousness of the economic situation and their desire to make a deal. The New Yorker’s John Cassidy wrote a while back that meaningful reform can be achieved in America only at the “moment of genuine danger.”

Are we there today? Maybe. Time will tell.

 

 

 

Bigger budget battles await

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I think it was mainly fear of the American voters’ anger that prompted this weekend’s budget agreement, which kept the federal government open and which allowed 800,000 federal employees to go work as usual tomorrow.

It seemed to be a messy business right up until the end, but these kinds of things happen in democracies and this will happen again in America, where power is shared between a democratic president and a divided Congress.

But let us remember that the agreement to cut 38 billion dollars as about the current fiscal year, which is already over six months old, and that the cuts cover only one percent of the total budget. It’s really peanuts.

Still, everyone involved called the settlement a victory, except for a minority of the 87 Tea Party-members in the House, who wanted even greater cuts, and even at the risk of a federal shutdown. In a vote of protest, 28 of them said no to the deal, and were joined by 70 Democrats, who believed that Obama had gone too far in his willingness to compromise, particularly in today’s precarious economy.

President Obama and the Democrats could have avoided this conflict if they had acted before the November elections, when they had large majorities in both houses of Congress. But they never pushed for it, a failure for which they now had to pay dearly. There is no doubt that the new Republican majority in the House has led the budget debate since the election. Their original demand of 100 billion dollars in cuts became 38 billion. So they did not get everything, but they set the tone of the debate, drove the negotiations, while the White House and the Democrats remained largely passive, limiting themselves to reacting and commenting.

Nonetheless, Obama is seen as a victor — the pragmatist and mediator, who wanted to see results, wanted to make sure in the end that the government stayed open. He came to be seen as paving the way for the compromise, a compromise that the American electorate seemed to want — “they’re elected to make this kind of decisions”.

But new and bigger battles are waiting already this week – the raising the debt ceiling and next year’s budget. And now we are talking about real money, trillions of dollars. The debt ceiling at over 14 trillion must be raised otherwise a new recession could threaten, according to warnings from experts. But it is safe to say that a vote on the debt ceiling will come with new republican demands for budget cuts.

As to next year’s budget, there is a radical proposal by the chairman of the Budget Committee, Paul Ryan, who has proposed six trillion dollars in cuts over the next ten years with drastic changes and cuts in Medicare and Medicaid, while also cutting the taxes for the wealthiest and for corporations from maximum 35 to 25 percent.

The proposal has received scathing criticism, “a truly outrageous proposal”, writes EJ Dionne in the Washington Post. Still, the proposal is likely to be adopted this week by the Republicans in the House.

As to Obama, who already in February presented his budget proposal, which no one seems to have taken it seriously, he will this week present a series of specific proposals for cuts, as well as, once again, propose higher taxes for those who earn over 250,000 dollars a year.

Yes, a big battle is coming up, one which could decide next year’s presidential election.

The budget talks — a real mess

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It’s a real mess — the budget negotiations here in Washington.

On Friday, once again, we face the possibility that the entire federal government shuts down if an agreement is not reached until then. Without a budget deal, Congress is unlikely to vote for a new temporary increase of the debt ceiling to keep the government running. Everyone says they want a settlement and avoid a shutdown, but there is still no deal.

President Obama has not said much publicly on this issue for a long time, staying in the background, strangely passive. We should have learned this by now – judging from the healthcare reform and tax deal – that this is his style. Let Congress negotiate and then step in at the last minute and reach a settlement. This seems to be, again, the White House strategy. The question is whether it will successful this time and it worries many — Washington Post
columnist E.J. Dionne today urged Obama to step up and take the lead.

Suddenly today, the White House announced that the President has invited the Congressional leadership for talks tomorrow on the budget. The question is if it is now too late to avoid a shutdown.

The political parties have so far been unable to reach a deal – they cannot even agree within themselves,  particularly within the Republican majority in the House with its 87 new members, most of them Tea Party-members/sympathizers, who just want to cut and cut in the budget. First 100 billion dollars, then 61 billion, and now, maybe, a compromise bid of 33 billion dollars. It’s not easy for Republican Speaker John Boehner to reach a deal when he cannot count on keeping all his republicans together.

This brinkmanship must come to an end, wrote the WashingtonPost today.

Let us also remind ourselves that this fight is about this year’s budget. Congress has not even begun to discuss the budget for next fiscal year, starting on October 1.  Those discussions are
expected to last well into 2012, an election year, and we all know what that can mean.

Amidst all this, Paul Ryan, chairman of House budget committee, tomorrow presents his draft budget reported to include 4 trillion dollars in cuts over the next ten years. A blow against the middle class, say the Democrats.

The latest figures show a steady improvement in U.S. economy – 216,000 new jobs in March, with continued reduction in unemployment to 8.8 percent, compared with the peak of over 10 percent at the end of 2009. Failure to reach a budget deal could jeopardize this still fragile economic recovery.  That’s what makes this so urgent and important.

Yes, it’s a real mess.

No quick solution like in Canada

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Sometimes, perhaps even often, Europeans bundle America and Canada together – two big North American countries – and judge the two all the same. Undoubtedly, there are many similarities between the two, and Canada, as little brother, is both strongly tied to and deeply influenced by the United States.

But yesterday, when I watched Canadian Broadcasting via C-Span, I was reminded in a powerful way how different America and Canada are, and how European Canada is.

The Canadian Parliament was in session, and the debate was fierce, in both English and French, ending with a vote of no confidence, by 156 to 145. The Conservative government fell. The parties had been unable to agree on the budget, even if the formal vote was one of the government’s “contempt” for Parliament.

Such a vote had never happened before in Canadian history. The decision came quickly. The result was clear. Already on Saturday, Prime Minister Stephen Harper handed in his resignation and Parliament was dissolved. New elections will take place on May 2, and the voters will decide.

Watching all this, the Canadian/European parliamentary system looked pretty attractive from my perspective here in Washington with its messy political situation that never quite seems to get solved.  This country does not even have a budget for
this fiscal year, which is already six months old. And the budget for the next fiscal year, which starts on October 1 and which President Obama already has presented to Congress, has not yet been discussed at all.

In today’s troubled economic situation with its high debt and huge budget deficit, big and broad action is required. For that, political courage is needed in order to deal with the large issues, like defense, Medicare, Medicaid, social security, and, maybe, new  taxes. Until now no one, including Obama, has displayed that political courage.

Instead we get to experience small and temporary compromises on minor budget cuts, and, by now, six temporary increases of the debt ceiling – the last to keep the government running until April 8. And then?

Negotiations go on between the White House and Congress behind closed doors, but no one seems to want to show his cards, and it all drags on in a process that is draining for all, not the least on the patience of the voters, who show ever less confidence for Washington. But, with a Democratic President and a Congress where Democrats control the Senate and
Republicans control the House of Representatives, there is little hope for a quick and clear solution.

Upwards for the American economy

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There seems little doubt that the U.S. economy is on the rise after today’s employment and unemployment figures for February.

The figures suggest the creation of 192,000 new jobs last month, which is higher than predicted and the most since last spring. At the same time, unemployment fell for the third straight month, from 9.8 in November to now 8.9 percent, the lowest figure in two years. This means, however, that nearly 14 million Americans are still without work and that six million of those have been unemployed for over six months.

The new jobs are found exclusively in the private sector, while 30,000 people last month lost their jobs in the state and local public sectors. This figure reflects the nationwide budget problems with huge deficits in both federal and state governments. It is these budget problems that lie behind the ongoing intensive negotiations here in Washington on this year’s budget as well as behind the ongoing battles about state budgets and public employees’ pensions and wages and right to collective bargaining.

In Wisconsin, ground zero for this battle, the outcome is uncertain. The governor is threatening to lay off 1,500 employees in early April if no settlement is reached until then. But the state’s 14 Democratic senators persist in their “exile” thereby continuing to prevent the Republican majority in the Senate to vote, and pass, the governor’s drastic proposal, which includes the abolishment of the right to collective bargaining.

In Ohio, the Democratic members of Congress did not take the same drastic action. They stayed and voted, and lost, thereby failing to prevent a similar proposal from another Republican governor to become law. Not even the fact that six Republican members of Congress voted with the Democrats could stop Ohio’s public employees from losing not only their right to negotiate collectively but also their right to strike.

Meanwhile, the budget negotiations here in Washington about the cuts in this year’s budget, which has not yet been approved by Congress, intensified. The 61 billion dollars in cutbacks by the new Republican majority in the House of Representatives voted will not be accepted by either the Senate’s Democratic majority or President Obama. The negotiations, led by Vice President Joe Biden, are now about which major cutbacks the White House will accept. The final figure is unclear, but it is clear that the cuts will be in the billions of dollars and they will affect many laudable programs in various areas, not the least education and health.

The negotiators have until 18 March to agree. If they fail, the threat of a government shutdown will again be an issue. However, it seems that no one really wants this in view of the political implications of the shutdown under President Clinton in the mid-1990s. A final compromise seems likely.