James Pethokoukis

Politics and policy from inside Washington

Senate GOP’s budget proposal shows Dem attacks working

May 10, 2011 20:00 UTC

The “Restoring Balance” fiscal proposal created by Sen. Pat Toomey does lots of good things. Such as the following:

– balances the budget by fiscal year 2020 and achieves a modest surplus in fiscal year 2021.

– reduces publicly-held debt $4.7 trillion below the levels projected in the president’s plan.

– reduces publicly held debt to approximately 52 percent of GDP by 2021 vs. 68 percent for Paul Ryan’s budget plan.

– reduces publicly held debt to approximately 52 percent of GDP by2021 and lowers total spending to 18.5 percent of GDP. This budget spends approximately 3 percent less than the House-passed budget and 16 percent less than the president’ s budget with no changes to Social Security.

 

It achieves these things mostly by big, fast cuts to discretionary spending (including defense) and to Medicaid. Nothing wrong with that. But even Toomey concedes that it is not a comprehensive plan:

Restoring balance entails two distinct, but related, paths: near-term (discretionary and non-Medicare and Social Security entitlement spending) and long-term (Medicare and SocialSecurity). The first step must be to reduce discretionary spending and non-Medicare and SocialSecurity spending. This category of expenditures has been the primary driver of deficits over the last decade, and continuing to spend at such high rates precludes an effort to tackle the long-term challenges they present.

While Social Security, Medicare and Medicaid require structural reforms soon, it is neither necessary nor politically feasible to take them on all at once. Focusing on just the current 10-year budget window, this budget makes no changes to Social Security. Changes to Medicare are limited to restoring the fictitious and unspecified cuts projected in the president’s budget.

But it’s hard to look at this budget and not conclude that it reflects the success Democrats have had attacking the entitlement reforms in Rep. Paul Ryan’s Path to Prosperity.  The Toomey Plan leaves Social Security and Medicare alone. As a result, it ignores that debt problem beyond a decade out. (Nor does it have lots of comparison charts that make it easy for gin up political attacks.)  I have leveled the same criticism at Obama’s various budget “plans.”  Implementing the Toomey plan would be a huge step forward. But since the American social insurance system will eventually need to go the Ryan path or become a strict, command-and-control rationing system, better to make the case with confidence sooner rather than later. I am quite sure Toomey knows this, and perhaps if the Senate were filled with his clones, this new budget would reflect that.  But for now Republicans, at least those in the Senate, are not looking any further than the 2012 elections.

COMMENT

The Democrats aren’t lifting a finger. Republicans who went home and hald town halls got beaten up by their own constituents, not by Democrats. The GOP has gone off the rails, and nothing can haul that train back up the cliff. They will be spending another ten years in the wilderness, thanks to Grover Norquist, the Kochs, and the Heritage Foundation.

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Just how beatable is Obama?

May 10, 2011 18:46 UTC

Peter Wehner of Commentary gives the tale of the tape:

We are now in the fifth month of Barack Obama’s third year in office. Unemployment is at 9.0 percent. We’re about 7 million jobs short of where things stood when Obama took office. Economic growth in the first quarter was 1.8 percent. Housing prices have fallen for 57 consecutive months. Only one in three Americans approve of the way Obama is handling the economy, the lowest point since he took office, and nearly eight in 10 American are less optimistic about the economy than they were a few months ago.

David Axelrod is anxious, and he’s right to be. His friend, the president, is caught in a political tractor beam from which few, if any, public officials escape. The only way to likely to overcome it is if the economy shows signs of a strong recovery. That has yet to happen, and one cannot help but think it may never happen, in the Obama presidency. If that ends up being the case—if a year from now the economy is more or less in the same condition as it was two years ago, last year, and what it is now—Obama will be the easiest incumbent to beat since 1980. It’s not impossible for Republicans to lose such an election, but it would be mighty hard.

I would add in how higher gas and food prices are just flat out killing incomes.  But certainly if the next 15 months looks like the past five months, things would look quite promising for the GOP.

COMMENT

Barack Obama is as unbeatable as FDR was. Barack Obama is the greatest president we’ve had since FDR. His health care bill would have been enough to enshrine him in the “greatest presidents” club but when he killed Osama Bin Laden he moved himself into a unique category. No rerpublican stands a chance against Barack Obama. Mark Montgomery NYC, NY boboberg@nyc.rr.com

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Boehner really isn’t asking for that much to raise debt ceiling

May 10, 2011 18:19 UTC

On  its face, House Speaker John Boehner’s demand for perhaps more than $2 trillion in spending cuts may look like a dangerous escalation in the political battle over raising the federal debt ceiling by a similar amount. But the reductions would be over 10 years, they’d be in line with several budget proposals, and they would represent only a modest down payment on austerity.

A group of Wall Street executives and other business leaders  listening to Boehner on Monday evening in Manhattan seemed unenthusiastic. They would almost certainly prefer to disentangle the issue of expanding the federal borrowing authority — and thus avoid even the whiff of possible default — from how best to deal with America’s long-term deficit and debt problems. After all, both parties have agreed on a budget that requires more borrowing next year. That is the White House position, too. “To hold one hostage to the other remains extremely unwise,” spokesman Jay Carney told reporters today on Air Force One as Obama flew to Texas.

But, thankfully, politics keeps pushing the two issues together. The powerful Tea Party wing of the GOP wants party leaders to get something substantial in return for enabling more Treasury borrowing. That might include some or all of congressional approval of a balanced budget requirement, a legislative cap on future federal spending, and deep budget cuts. Boehner’s speech certainly gave the impression he’s on the same page. “The cuts should be greater than the accompanying increase in debt authority the president is given,” he said.

Treasury Secretary Timothy Geithner may want as much as $2 trillion in new borrowing capacity through 2012. It’s not a small number, but matching that with cuts over 10 years is manageable. President Barack Obama’s debt commission called for $2.2 trillion over a decade, while his own recent budget proposal contemplates reductions almost as large. And if defense cuts are in the mix, as Boehner implied, it all could be done without touching Medicare and Social Security outlays.

Of course Democrats want to see increases in tax revenue as well as spending cuts. The elements of the Republicans’ three-part package, meanwhile, would force greater fiscal discipline on this and future administrations. Failure to do a deal could lead to a series of repetitive fights over temporary, even monthly, debt limit increases up until the 2012 elections. That won’t suit Wall Streeters, so they should hope Boehner’s equation can accommodate a compromise.

 

COMMENT

Just remember that this is the same Republican Party that wants to gut medicare and honestly believes that private companies will rein in healthcare costs. These are the people that brought us the Iraq war. Do we really want them back in the driver’s seat? Maybe we do. Maybe we haven’t had enough economic distress, social stagnation and loss of American lives in stupid wars to feel the great sense of satisfaction that they obviously feel for themselves. Oh yes, give it to us, GOP, give us your brilliant ideas and your wonderful future of bread lines and sixth-grade education for all!

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