Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
Morning Message: Ignorance Index II: The Spending Cuts Myth
OurFuture.org's Robert Borosage and Isaiah J. Poole: "Conservative Republicans hold as an article of faith that cutting government spending creates jobs, even in the midst of a recession. House Majority Leader Eric Cantor, the conservative zealot who has personally blown up the debt ceiling talks twice over the mere hint of closing tax loopholes, says, “All of our efforts are centered around jobs – starting with cutting spending and federal regulations – to grow the economy so that people can get back to work.” But this is nonsense. There’s no economic theory that would suggest that in current conditions, cutting government spending would create jobs.
McConnell Opens Debt Deal Escape Hatch
NYT says Mitch McConnnell has opened an escape hatch from the debt deal negotiations: On Tuesday, Senator Mitch McConnell, the Republican leader, proposed a convoluted fallback solution that would at least defuse the crisis his party created a few weeks ago by threatening to force the country into default on its national debts. The plan is no less cynical than the original threat, but if the House goes along, it may allow Washington, the credit markets and the American people to breathe a little easier. ...The proposal is clearly meant to shift all the blame for raising the debt ceiling onto the president, and away from Republicans. Every Republican in Congress could proudly vote against the debt increases, but the ceiling would still go up, because there are not enough Republicans to override a veto. ...All Mr. McConnell wants is the ability to yoke the debt increase to Mr. Obama, and his offer gives him two extra chances to do so. He hopes the maneuver will help his party win back the Senate and the White House, which remains a long shot. But at least he is no longer holding the economy hostage to his goals. It is now time for the House to reach a similar conclusion.
Geithner: We want a debt deal by next week. Reuters: "Treasury Secretary Timothy Geithner on Tuesday said that time is running out for a deal to raise the debt limit, and wants a broad agreement with Congress in place by the end of next week at the latest. Speaking at a finance symposium at the Treasury Department, Geithner vowed that Congress would raise the debt limit ahead of an August 2 deadline when the government will risk default, adding, 'Failure is not an option.' He said President Barack Obama will keep meeting with congressional leaders until a deal to raise the debt limit and slash future deficits is reached."
Matt Yglesias explains that the debt deal is really about the Bush tax cuts: "The current negotiating posture of the White House is to say that they favor permanent extension of the very expensive broad-based regressive tax cuts but do not favor permanent extension of the expensive rich people only super-regressive tax cuts. And the current negotiating posture of congressional Republicans is to say that they will vote against extension of the very expensive broad based regressive tax cuts unless they’re paired with permanent extension of the expensive rich people only super-regressive tax cuts. One of the things Obama has proposed in the negotiations is to settle for even less revenue than his proposal for partial extension would raise. There are a few ways to interpret this series of events. One of them is simply that...the Democratic Party has locked itself into a conceptual box around taxes, which is going to destroy progressive politics. Another is that a lot of the juice in the debt ceiling talks is less about what happens than about what people can make other people vote for. Republicans don’t just want to cut Medicare, they want Democrats to vote to cut Medicare and Democrats don’t just want more tax revenues, they want Republicans to vote for tax hikes."
Maine's two Republican Senators, Olympia Snowe and Sue Collins, will oppose any Social Security or Medicare cuts in the debt deal. Bangor Daily News: "Don’t look for members of Maine’s congressional delegation to support cuts in Social Security or Medicare as part of the debt limit legislation, but all four say a debt reduction package that includes budget cuts and new revenues is likely. 'There are solvency problems with both programs,' Sen. Olympia Snowe said in an interview on Friday, 'They have to be addressed but not as part of the debt reduction talks.' ...Sen. Susan Collins agreed."
Obama' suggests some checks may not be in the mail if there's no debt deal, CBS News: "President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks. 'I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it,' Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News. The Obama administration and many economists have warned of economic catastrophe if the United States does not raise the amount it is legally allowed to borrow by August 2. ...Mr. Obama told Pelley 'this is not just a matter of Social Security checks. These are veterans checks, these are folks on disability and their checks. There are about 70 million checks that go out.'"
Whose Debt Ceiling Is It?
Boehner says the debt deal is not his problem. TPM: "Burned by the fact that their prescription for reducing the deficit and increasing the national borrowing limit either can't pass in Congress or doesn't cut spending enough to warrant, in their minds, a significant debt ceiling hike, House Republicans returned to the Capitol Tuesday to ratchet up their demands, and shirk responsibility for avoiding default. 'Where's the President's plan?' asked House Speaker John Boehner (R-OH) at a press stakeout after a GOP caucus meeting. 'When's he going to lay his cards on the table? This debt limit increase is his problem.' This is a massive departure for Boehner and the GOP, who before the debt limit brinksmanship became central to U.S. politics, regularly acknowledged that raising the debt limit was his, and Congress', imperative."
Greg Sargent remembers when Boehner was committed to raising the debt ceiling two months ago: "As you may have noticed, John Boehner has now taken to claiming that the debt ceiling is Obama’s problem alone. It’s 'his problem,' Boehner claimed today. He also suggested that the GOP’s willingness to discuss raising the debt ceiling is in itself a major concession, and that a hike is necessary only because Obama has asked for it. ...Yet those with very long memories will recall that less than two months ago, Boehner himself conceded that a raise in the debt ceiling was the “obligation” of both parties, that it was “necessary” for policy reasons, and that failure to do so risked 'the end of our economy.' Boeher made those comments on Face the Nation, way back on May 15th. 'I understand what the President was saying about jeopardizing the full faith and credit of the United States,' Boehner said then. 'That’s why I’ve said in every public and private utterance that our obligation is to raise the debt ceiling.'"
Mitch McConnell accused Democrats of "deliberate deception" in debt deal negotiations. AP: "In a harshly worded speech on the Senate floor Tuesday, Sen. Mitch McConnell said the president presented Republicans with three choices: smoke and mirrors, tax increases, or default. McConnell says Republicans refused to play along. Despite their strong language, both McConnell and Boehner have said they believe the U.S. will not default on its obligations. The Treasury Department has said the debt ceiling must be raised by Aug. 2 in order to avoid that potentially calamitous situation. Republicans remain vehemently opposed to a deal that would include any tax increases, while the White House insists increased revenues must be a part of the final package."
Adam Serwer explains the real reason conservatives are so angry at Obama: "Republicans are furious because President Obama’s gambit — to make himself look like the “adult in the room” by offering Republicans a disastrous but sweeping debt reduction deal that would combine tax increases with cuts to the social safety net — appears to be working. It’s working in the sense that it has revealed for all to see that Republicans aren’t really interested in cutting the debt. What Republicans are really interested in doing is cutting the welfare state. That’s why they’re opposed to any increase in taxes, even though the biggest single driver of the deficit is the Bush tax cuts, which Republicans overwhelmingly supported. ...Moreover, Republicans had no issue with raising the debt ceiling without demanding spending cuts when Bush was president. It’s only now that Obama is in the White House that they’re insisting that a debt ceiling hike must be accompanied by major concessions from Dems. It’s true that as a Senator, Obama had no compunctions about voting against raising the debt limit, but this doesn’t make the GOP’s hypocrisy any less blatant."
Earl Ofari Hutchinson, writing at HuffPo, says the GOP's debt ceiling war isn't about the debt. It's about Obama: "The GOP's war over America's debt ceiling is not about America's debt, it's about President Obama. ...The proof is how the debt ceiling jumped to center stage in political debate and the public's awareness of it. The debt ceiling was an absolute non-issue during George W. Bush White House tenure. It was raised ten times in those years with barely a peep that the U.S. was in mortal danger of a fiscal crash and burn under its great weight of debt. This debt was incurred almost exclusively by Bush's two wildly costly and wasteful wars, his two behemoth tax cut giveaways to the rich, a relentless gut of regulations that made banks' and corporations' tax liability fall to historic low levels, and then capped by a taxpayer giveaway to Wall Street banks and financial houses. The debt that would be hiked to near astronomical proportions if Congress ever approved the House GOP's budget plan, drafted by Rep. Paul Ryan, which would add $6 trillion in to the national debt over a decade. Strangely, there's no debt ceiling squawk from the GOP on this horrific prospect. But the GOP didn't acquiesce in turning the debt into a non-issue solely to appease a GOP president. Congress jumped the debt ceiling 64 times since 1962 before Bush took office for Democratic and Republican presidents alike. The ceiling was raised even in election years without any public fanfare."
GOP "Leadership"
Swampland's Alex Altman says Cantor killed Obama's deal with Beohner: "Cantor’s stated resistance to a grand bargain freighted with revenue increases — and the perception that his position reflects the pulse of the GOP conference — likely influenced Boehner’s decision to scuttle his pursuit of a “big deal” with Obama. Weeks earlier, Cantor’s abandonment of Biden-led negotiations were the death knell for those talks. Speculation about palace intrigue is a Washington tradition, but the rumored frost between the top two Republicans in the House could have significant impact on whether the two parties can craft an agreement to raise the debt limit by Aug. 2. That’s particularly true if personal ambition leads the lawmakers to elevate political calculations over policy imperatives."
Dana Milbank sees ambition behind Eric Cantor's sardonic sneer: "What Cantor wants now is power — and he is prepared to risk the full faith and credit of the United States to get it. In a primacy struggle with House Speaker John Boehner, he has done a deft job of aligning himself with Tea Party House members in opposition to any meaningful deal to resolve the debt. If the U.S. government defaults, it will have much to do with Cantor. He pulled out of debt-limit talks with Vice President Biden. He shot down the outline of a compromise that Boehner attempted to negotiate. Now Cantor has essentially taken over talks with the White House, and he has tamped down any hint of conciliation. ...Cantor’s aides say he is merely reflecting his caucus. But Cantor, a veteran of a decade in the Capitol, surely knows that he is jettisoning the last chance in the next couple of years to make a serious dent in the national debt. The White House has so far offered up a tantalizing array of concessions — $4 trillion in budget cuts and overhauls of Medicare, Medicaid and Social Security – but Cantor has yet to offer anything but sneers."
Ezra Klein says liberals should be "sending Eric Cantor a fruit basket": "The deal Obama offered Boehner would've traded away the option to force much more in revenues later in order to get slightly more in revenues now. And it would have thrown in a slew of entitlement cuts and spending cuts as a sweetener. In part, this is because the Obama administration, much to the disappointment of liberals, doesn't value the option to fight over taxes in 2012. They'd prefer to finish the debt debates now and move onto other issues after the election. ...But they also know that if they get to 2012 without a deal, they're going to have to engage that fight whether they want to or not. And Republicans made that a lot more likely this week. The reality is that liberals should be sending Eric Cantor a fruit basket. It's increasingly clear that he has not only saved them from a deal they'd hate, but also stopped Obama from giving up a fight they want to have later.
It's still a Bush-League world, according to Tom Englehardt: "They were wrong about Iraq. They were wrong about Saddam Hussein’s weapons of mass destruction. They were wrong about what the U.S. military was capable of doing. The country imploded economically while they were at the helm. Geopolitically speaking, they headed the car of state for the nearest cliff. In fact, when it comes to pure wrongness, what weren’t they wrong about? Americans do seem to have turned the page on Bush and his cronies. (President Obama called it looking forward, not backward.) Still, glance over your shoulder and, if you’re being honest, you'll have to admit that one thing didn’t happen: they didn’t turn the page on us. They may have disappeared from our lives, but the post-9/11 world they had such a mad hand in creating hasn’t."
Get To Work On Jobs
WaPo's Katrina vanden Heuvel says it's time for a grand bargain on jobs: "This isn’t a time to give an extremist Republican Party the benefit of the doubt. And it isn’t a time to hope, with fingers crossed, that the frail economic recovery that has sputtered since it began will somehow, suddenly, without any government action, take off. This is a time, whatever the political challenges, to invest in a fight. Obama may want to play the role of reasonable adult, but being reasonable cannot mean acting as a hostage negotiator. It must mean being a leader of a nation that cries out for relief and reconstruction. He must push for a grand bargain on jobs, not cuts."
At New Deal 2.0, Jeff Madrick writes that the impact of the job numbers goes far beyond the jobless: "First of all, we of course know that millions are looking for jobs and have given up or have taken part-time jobs when they want full-time jobs. That adds another 7 or 8 percent to the unemployed or underemployed. We are now are getting to the point where one out of six workers or so is having employment disappointments. We also know many have been unemployed for a very long time — a record number, in fact. Second, these people have relatives and friends who increasingly realize they may also get the axe. Their families, not only themselves, suffer. Third, when you lose a job you now usually lose your health coverage — or have to pay up big time to retain it. That adds to the misery. In fact, far more people than 9.2 percent are upset by the high unemployment rate. About a quarter say in surveys it is our number one problem."
At NYT's Economix, Catherine Rampell writes that there are now nearly 5 workers for every available job: "More bad news on the job market front: the number of jobless workers per job opening stayed flat at 4.7 in May, according to a new report from the Labor Department. That is more than twice the average ratio seen during the boom years that preceded the Great Recession. As Henry Mo, vice president for economics at Credit Suisse, observed in a note to clients on Tuesday, 'Even if all job vacancies were filled overnight, almost 11 million workers would still be left unemployed.'"
Robert Reich sums up the president's jobs plan: "What did the President do in response to last week’s horrendous job report — unemployment rising to 9.2 percent in June, with only 18,000 new jobs (125,000 are needed each month just to keep up with the growth in the potential labor force)? He said the economy continues to be in a deep hole, and he urged Congress to extend the temporary reduction in the employee part of the payroll tax, approve pending free-trade agreements, and pass a measure to streamline patent procedures. To call this inadequate would be a gross understatement. Here’s what the President should have said..."
At CNN Money, Jeffrey Pfeffer writes that the U.S. has waged a war on jobs: "The U.S. seems to be shocked that its economy isn't creating many jobs, and each monthly report on the unemployment rate and the number of new jobs somehow stimulates more handwringing. I'm not an economist, labor or otherwise, but simple observation suggests one significant contributor to the nation's job crisis -- for a long time, maybe even decades, we have been waging war on jobs and those who hold them. ...Public employees are under attack in states across the U.S. Although it's often amusing to see The Daily Show's Jon Stewart asks how teachers became the villains in the tale of our economic troubles, the fact is that hundreds of thousands of public sector jobs have disappeared over the last 18 months and more are going to disappear in the next year. Those lost jobs -- and the income that disappears along with them -- contribute to the sputtering economic recovery."
