I spent an hour on the phone earlier in a conference call with James Marple, senior economist with TD Bank. Here are my notes. They’re rough… I haven’t polished them up, but it gives you a pretty decent overview of what he views with regard to deficits, debt, and the current debate.
For weeks now we’ve heard about how urgent it is to get a debt ceiling deal done — a deal that should include only spending cuts according to Republicans, and should include tax increases according to Democrats. Here’s a key piece of the President’s press conference today:
OBAMA: If not now, when? We keep on talking about this stuff, and, you know, we have these high-minded pronouncements about how we’ve got to get control of the deficit and how we owe it to our children and our grandchildren. Well, let’s step up. Let’s do it.
I’m prepared to do it. I’m prepared to take on significant heat from my party to get something done. And I expect the other side should be willing to do the same thing if they mean what they say, that this is important.
And let me just then comment on this whole issue of tax increases, because there’s been a lot of information floating around there. I want to be crystal clear: Nobody has talked about increasing taxes now, nobody has talked about increases — increasing taxes next year.
What we have talked about is that starting in 2013 that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they’re making billions of dollars of profits.
What we have said is, as part of a broader package, we should have revenues.
OBAMA: And the best place to get those revenues are from folks like me who have been extraordinarily fortunate, and that millionaires and billionaires can afford to pay a little bit more, going back to the Bush tax rates.
And, what I’ve also said to the Republicans is, if you don’t like that formulation, then I’m happy to work with you on tax reform that could potentially lower everybody’s rates and broaden the base, as long as that package was sufficiently progressive so that we weren’t balancing the budget on the backs of middle-class families and working-class families, and we weren’t letting hedge fund managers or authors of best-selling books off the hook.
That is a reasonable proposition.
So when — when you hear folks saying, “Well, you know, the president shouldn’t want, you know, massive, job-killing tax increases when the economy’s this week, nobody’s looking to raise taxes right now. We’re talking about potentially 2013 and the out-years.
That, along with this, laid out the boundaries for the meeting taking place in the White House right now:
So what I’ve said to the leaders is, bring back to me some ideas that you think can get the necessary number of votes in the House and in the Senate. I’m happy to consider all options, all alternatives that they’re looking at. The things that I will not consider are a 30-day or a 60-day or a 90-day or a 180-day temporary stopgap resolution to this problem.
That parameter was preceded by acknowledgement that all leaders agree that default is not an option. All leaders. Not just Democrats. All.
Forget about all the pundit and partisan noise for a minute and pay attention to what he just said. He laid out clear boundaries for the discussion. These are the options available to Republicans right now:
That’s it, right there. For all of the sackcloth and ashes being worn by the left and right alike, those are the options. Period. And right now, the leverage is with Obama, not the Republicans. He reclaimed the hostage from the hostage-takers.
This is why, by the way, he is using Republican frames to discuss these issues. As frustrating as that might feel to many, the ones who need convincing right now are conservatives, and not fringe conservatives from the Tea Party. Despite the gnashing of teeth over the fact that he didn’t emphasize job creation or other worthy goals, the fact is that he has a House of Representatives which is, for the most part, irrational. I don’t think anyone expects them to get on board. The only way to deal with irrational voters is to go over their heads to their bosses. Their bosses aren’t the Tea Party at this point; they’re the independents who turned away from Obama to vote Republican because of the noise and heat generated by the Affordable Care Act, Dodd-Frank, and other legislation in the 111th Congress. Those independent voters want good-faith negotiation, and the President just let them know that there is none of that happening right now.
It’s easy to read online blogs and Facebook posts and Twitter streams and assume the entire world is all one ideology or the other, when in fact, most people come at things with mixed feelings. They like social security but are worried about the national debt, too. They’re worried about the economy and their jobs but can’t put their finger on exactly why the economy isn’t picking up, either. Then they look at Washington DC’s daily theater and say, well gosh…it’s gotta be their fault.
Wall Street isn’t going to countenance a default. Neither should we. So at this point, the options are to push hard for minimal adjustments to Social Security/Medicare spending while hammering the GOP for hanging onto tax cuts for the rich, or else start calling loud and clear for a clean vote to increase the debt ceiling substantially, while continuing to hammer out some kind of acceptable agreement for everything.
Today is July 11th. The date to have an agreement is July 22nd. A lot can happen between now and then, but right now I would say odds are pointing to a clean debt ceiling vote with no strings attached, because in the end, progressives are going to be the deal makers, not the tea party. It’s up to them to grab the ring and use it.
Update: PoliticusUSA has a great piece augmenting this one that you should read. Here’s a snip:
As long as Obama holds his ground, the Republicans paralyzed by their own internal warfare will be left with two choices. They can either compromise which would both anger their base and help reelect this president, or they can hold their ground and watch their political fortunes go down the drain.
Heads I win; tails you lose.
Update #2: It’s working, too: From Tea Party Nation (I can’t link you because it’s behind a registration wall)
John Boehner is either a gutless coward, an absolute idiot or both. What floors me is under the circumstances the GOP rank and file has not done something about him. The GOP has the greatest mandate in a century and not only is Boehner blowing the mandate, he may single handedly return Nancy Pelosi to the Speaker’s chair. We could ask what is he thinking but it is obvious he is not thinking.
Boehner has got to go immediately and the GOP needs to replace him now. We need someone who has courage and convictions. We need someone who will not sell us out. In short, we need anyone but John Boehner.
Despite the small nuclear explosion that left fallout all over the blogosphere, the President’s plan to freeze spending for three years is a sound one. The more I read, the more sense it makes to do it. More importantly, not doing it carries far more risk of damage to the economy than the reverse, not because it saves a ton of money, but because it sends a signal to those to whom we owe.