President Obama and others negotiating an end to the debt limit mess are searching for ways out of a political crisis of their own making and trying desperately to kick cans full of worms and of blame down the road to avoid losses during next year’s elections. Solving the underlying problems would have taken lots of unglamorous work rather than political pandering, so comforting during a political season which has neither a beginning nor an end. Now that it’s too late to do anything definitive, the rhetoric is full blown and occasionally rancorous while substance is lacking.
In his weekly speech on July 16th, President Obama called for shared sacrifice by big corporations and the rich. He said,
Simply put, it will take a balanced approach, shared sacrifice, and a willingness to make unpopular choices on all our parts. That means spending less on domestic programs. It means spending less on defense programs. It means reforming programs like Medicare to reduce costs and strengthen the program for future generations. And it means taking on the tax code, and cutting out certain tax breaks and deductions for the wealthiest Americans.
. . . .
The truth is, you can’t solve our deficit without cutting spending. But you also can’t solve it without asking the wealthiest Americans to pay their fair share — or without taking on loopholes that give special interests and big corporations tax breaks that middle-class Americans don’t get.
It’s pretty simple. I don’t think oil companies should keep getting special tax breaks when they’re making tens of billions in profits.
As was the case with President Obama’s address on July 15th, he failed to “name a single entitlement he is willing to cut. His sacred cows are still sacred, but yours are up for slaughter.” It may be true, as reported by CBS News, that
President Obama on Friday acknowledged for the first time that he was considering changes to the programs like raising the retirement age or applying means testing.
Additionally, an administration official tells CBS News political analyst John Dickerson that a deal based on Senate Republican Leader Mitch McConnell’s “back up plan” could include a binding commission charged with reviewing the entitlement programs.
President Obama did indeed put it “simply”; so simply that even a third grader could understand that he claims to want just good stuff and to kill the demons — even though the third grader couldn’t learn what the good stuff and demons are. Neither, most likely, does our Harvard Law School graduate and former “constitutional law professor” know.
Children too young to understand what’s happening are susceptible to demagoguery; so are too many chronological adults.
As to Social Security, President Obama spoke of raising the retirement age — to what, when, for whom and to produce what savings how and when he did not indicate. Means testing? What means that? He has yet even to touch upon the extent to which, if any, such tests may change or adapt existing means testing formulae with which the progressive Revenue Code and Treasury regulations already abound.
What “loopholes that give special interests and big corporations tax breaks that middle-class Americans don’t get”? Oil depletion allowances — obviously Harry Homeowner doesn’t get them and if he did wouldn’t have any use for them. Do the big bad corporations include Boeing Aircraft but not Government Motors? General Electric? Do the wicked special interests include domestic oil drilling, production, and refining companies but not unions, malpractice lawyers, and his other supporters? What “loopholes” are bad, which are good? Are they good or bad in terms of social fairness as perceived by President Obama or in terms of real economic impact? Demands for more good stuff and less bad may be sufficient for those who still hold him in absolute awe; they can’t be for the rest of us.
Everything has been so amorphous as to be meaningless. As Charles Krauthammer recently said on NPR,
[The President] talks a good game. “Oh, I’m prepared to do entitlements, I’m ready to do entitlements.” Not once has he ever enunciated in public — other than all these leaks which I don’t trust for half a second — one structural change in entitlements, and without that, everybody over the age of nine knows we are not going to get a handle on the debt. So let’s hear him say it in public once.
Rick Moran asks here whether the Republicans will “cave on taxes.” How does one cave on such things as unspecific as more taxes for fat cats, big corporations, and special interests? What’s to cave on? A marriage subsequently to be arranged with someone unknown?
President Obama to the contrary notwithstanding, it’s not “pretty simple” and anyone who claims that it is either does not himself understand “it” or has, at best, a very low opinion of the intelligence of his audience. There may be some specifics under discussion but if so the discussion has been behind closed doors; what little has leaked out under the transom has been no more solid than quicksand and no more reliable than Daily Kos.
These are complex matters. The Tax Code, Title 26 of the U.S. Code, enacted by the Congress, is voluminous. The Treasury regulations, Part 26 of the Code of Federal Regulations, promulgated by the Treasury Department, is far more voluminous. The Other Official Tax Guidance that interprets those is worse. Those are where the loopholes reside. Some probably made economic sense in the past but many no longer do. Changes will require massive rewrites of the entire tax code and of the Treasury regulations. That will take years of labor by our “hardworking” CongressCritters, their “expert” assistants and the geniuses at Treasury. Such things cannot be done comprehensively and soon. Doing it sensibly but even piecemeal now, in time to prevent a default in early August, is impossible. Campaigning and raising funds for the 2012 elections was easier and so that has been done instead. ObamaCare remains funded and so do most other problems created during the previous Congress because the current Congress didn’t do its job.
The backup plan that President Obama may or may not agree to seems far less specific than the McConnell “uber-clever” plan which, like it or hate it, provides a few bare specifics for “kicking the can” down the road till next year to avoid a default in August — now two weeks away. The backup plan may or may not include a “binding commission” to do something; we don’t know what. Nor do we know what “binding” may mean. If there is to be a commission, we don’t know how its members are to be chosen or by whom or what it is to review. Entitlement programs? Probably. Taxes? Probably.
Either the McConnell plan or the maybe-if-I-gotta-do-it Obama backup plan would open wide a big loophole for the negotiators to slip through to avoid making, and taking the blame for, “tough decisions” and doing the “tough work” to get a deal on spending — as they propose or reject ambiguous schemes to raise taxes by closing unspecified loopholes for those upon whose investments and entrepreneurship the economy depends.
Now that we have arrived at a crisis point and it’s impossible to deal with these matters as must eventually be done, why not focus immediately on whatever big stuff can be accomplished and leave the demagoguery about petty stuff for later? Adjusting depreciation schedules for corporate jets — apparently a biggie for President Obama — appeals to some but the beneficial impact on the national debt would be negligible. Even dealing with the big stuff immediately probably won’t happen in time.
Here are my thoughts on how to proceed:
Grant an immediate one trillion dollar debt limit extension valid only through August 1, 2012, on which date the debt limit will revert to the present one. Borrowed funds are to be used only
1. To pay interest on debt,
2. To redeem debt when due, and
3. To provide necessary funding for federal operations as authorized by previously enacted legislation but only, (a) until August 1, 2012, or (b) as hereafter authorized by the Congress.
Mere promises to maybe deal with substance won’t be kept. This suggestion does not rely on promises and will dump the problem back in the Congress where it belongs. Majorities of both houses will, as always, be needed to pass the necessary legislation appropriating funds for specific purposes and refusing to appropriate them for other specific purposes. Both will be necessary. It will give the Congress a year to get its act together and, with some luck, force the beginnings of a balanced budget; only with the consent of both houses can the budget remain unbalanced. That’s the purpose of paragraph 3. The suggestion will require action by our CongressCritters, mindful of the fast approaching November elections, the results of which seem more important to them than anything else.
There is a quote dubiously attributed to Otto von Bismark — “The lesser the people know about how sausages and laws are made, the better they sleep in the night.” Getting a good opiate-induced sleep is unappealing when the cost is a perpetually debilitating hangover as severe as that from which the economy now suffers, and not only due to the current debt limit fiasco. Until those who pay for and eat Bismark’s sausages — and President Obama’s peas — at least know what they contain and how they were made a persistent hangover is likely. “Trust me. I’m from the government” no longer works, even for some of those perpetually awed by President Obama.
Trust and simplicity can be glorious, but simplicity can come only if there is trust. Now, it is very scarce. The Simple Song is one of my favorites.
However, if forced to join in the “Simple Song” sung very differently by President Obama and the other parties to the negotiation, twist and turn as we may the chances of our coming down right are Zero. And if we put up with it, that’s what we deserve.