Ages ago, at the dawn of politics, by which I mean in late 2008, our country had just finished an election cycle of historic significance. Collectively, we knew that we needed something or other that fell under the term “change,” and that’s what we voted for. Along came the 2010 mid-term elections, and we felt confused and anxious. Somehow the meal of change we had voted for last time didn’t taste as good as we were expecting it to. We sent the plate back to the kitchen and asked the chef to prepare us a fresh plate of some other kind of change. Now, as the 112th Congress takes office, we can ask ourselves, exactly what is the chef whipping up back there?

In our hearts, I think we know that our change needs to embrace a new kind of fiscal restraint at the federal level. It’s hard to define, but deep down we know that annual trillion dollar-plus deficits, with federal debt now exceeding $14 trillion, just cannot be sustained. In fact, we voted in great numbers for those candidates who promised such things as “balancing the budget” and “reducing the federal debt.” But that was in the campaign season. As someone (Nixon, I think?) once said, one campaigns in poetry and governs in prose.

What do we know so far about the governing reality? One, we know that our elected officials chose lameduckedly not to capitalize on an opportunity to reduce future deficits — foregoing an opportunity to reduce our federal debt over the next decade by $2.7 trillion. Not that there weren’t good reasons for doing so, but the action did display the stark tradeoff between tax cuts and deficits.

Two, we know that House Republicans intend to trim $100 billion in spending from the next budget. Well, if one is a deficit hawk, I suppose you can at least say that points in the right direction. The federal government spent $6,412.7 billion in FY 2010. So the Republican idea is, apparently, to move us to the $6,312.7 billion annual spending level, an overall reduction of about 1.6%. Personally, I find it hard to discern why spending $6,412.7 trillion (and incurring a deficit of $1,555.6 trillion) is catastrophic, while spending $6,312.7 trillion (and presumably incurring a deficit of $1,455.6 trillion) — each amount being $100 billion less than FY 2010 — is good policy. Seems kind of like saying, you can eat 20 donuts a day and not gain weight… but if that 20th donut has sprinkles on top, then you’re going to rush headlong into morbid obesity.

Three, Republicans are putting a lot of stock into Rep. Paul Ryan’s fiscal “Roadmap.” I like his roadmap, at least in concept; like any smart politician (campaigning in poetry, as I said), he leaves the details fuzzy. But we also must understand how greatly the Roadmap departs from the campaign rhetoric. Taken at face value, the Roadmap envisions non-stop federal deficits for the next 41 years. Those deficits will decline annually until 2017/2018, and then will start to increase again, and will do so through 2037.

Let’s state the fiscal reality out loud, my friends. The Republican plan does not balance the budget. It does not reduce federal debt. It contemplates nearly endless deficits and non-stop additional federal borrowing. That’s not me saying it, that is what is in Rep. Ryan’s Roadmap. If anyone still thinks that deficits and debt accumulation are a function of recent Democratic policies, they are wildly information-averse. These deficits are structural to the core. They are the result of decades of entitlement spending growth and tax cutting.

If there is any remaining doubt that governing reality will fail to match the political rhetoric, let’s all watch today as the new House Republican leadership has the U. S. Constitution read on the floor of the chamber. There’s another bit of powerful campaign poetry: “Restore the government to its constitutional boundaries!!!” Really? Keep a list in the weeks to come of federal programs the Republicans deem unconstitutional and therefore targets for elimination. Then ask yourself, if those programs fail to pass constitutional muster, on what basis do these programs pass: Social Security? Medicare? Medicaid? Food inspections? NASA? National Parks? DEA approvals of prescription drugs? The EPA? Nursing home oversight? Financial market regulation? Are Republicans really going to propose elimination of all these federal programs? Or they are somehow constitutional, but “Obamacare” is not? Where is the line???

In other words, if the Republicans sincerely believe in strict constitutionalism, then go after them all. But if they only target a select few programs, then we will know that their actions are driven by political calculations, and not by true constitutional principles. Another plate of “change” served up to us that ends up being inedible.

Tune out the rhetoric. It is meant only to deceive and pacify you. Observe the actions, and assess the results.


President Obama is meeting with Republican Congressional leaders today, ostensibly to work out a game plan for the lame duck session. Or maybe it’s just crab cakes day in the White House kitchen, and who wants to miss out on that, yanno?

The two big issues on the agenda are the extension of unemployment benefits, which expire after today, and the extension of the Bush tax cuts, which expire on December 31. On the tax cut piece, the argument is limited to whether the tax cut from 39% to 36%, which applies to the highest tax bracket or about 2% of the population, should be extended. Everyone agrees on extending tax cuts for the other 98% of taxpayers.

The policy dilemma is that Republicans have pledged both to cut the deficit (which calls for letting the tax cuts expire) and to lower taxes (which, of course, calls for extending the tax cuts). President Obama should use that dilemma to his — and the economy’s — advantage today. He should present the Republicans with a public statement that says this:

“We are pleased to announce we have reached an agreement with the President to extend the tax cuts enacted earlier this decade for all Americans. While we recognize that the economy has rebounded these past two years, we also know that it is a fragile recovery. We have a responsibility to preserve and expand that recovery, so that the private sector can create more desperately needed jobs in the months to come. Extending these tax cuts for all Americans is an essential step in promoting that recovery.
“At the same time, we are troubled by the impact of extending these tax cuts on the federal deficit. Our agreement with the president today will add more than $2 trillion to our national debt over the coming years. We ask the American people to understand that what is necessary to solve today’s jobs crisis may increase federal deficits in the short run. We pledge to work with the president to find long term solutions to our fiscal crisis, solutions that bring government spending to a sustainable level without disrupting the ongoing recovery.”

If the Congressional Republicans agree to make, and adhere to, this statement, couldn’t the president go along? And wouldn’t that be good for America?

“Morning Joe” had as guests this morning both Rep. Aaron Schock (R-IL) and Rep. John Shaddeg (R-AZ). These are two of the more thoughtful, reasonable Congressional members of either party. What struck me, though, is the formulation of economic policy that they were putting forth.

Rep. Shaddeg was being asked one of the media’s favorite questions these days, namely, why it is that extending unemployment benefits has to be “paid for,” but extending the Bush-era tax cuts does not. The response — predictable from either party — was that this was all about jobs. Shaddeg made the point that unemployed people don’t spend those unemployment benefits; they hold on to the money for as long as they can. Rep. Schock’s contribution was that the unemployed don’t hire people, business owners do.

To me, this is a complete distortion of economic reality. Of course business owners do the hiring, but why do they hire? They hire for one reason and one reason only: they need the workers to meet the demand for their goods or services. Certainly not because their taxes are lower (or higher). Where does the demand for goods and services come from? From consumer spending, mostly. Create more consumers, or increase the spending of the consumers we have, and demand goes up… and then hiring goes up. It’s pretty simple really. Except somehow it confounds the Washington crowd.

I am not making the case for or against extending unemployment benefits, nor the case for or against extending tax cuts. My point is that we will never get economically sound policy out of Congress if our elected representatives continue to put forth economic nonsense as the basis for policy.

Put very simply, we have to choose between more job creation or more debt reduction, at least in the short run. Republicans have come into town promising both. That’s nonsense. Those two policy aims, each important and valuable in its own right, work at cross purposes, at least in the short run. Pick one. You want job creation? Then extend unemployment benefits and extend the tax cuts — but be honest and tell the American people that it is necessary to raise deficits in the short term to stimulate those jobs. You want debt reduction? Then cut off the unemployment benefits and let the tax cuts expire — but be honest and tell the American people that job creation will suffer in the short run.

It seems as close to certain as things get in politics that Republicans are going to wrest a majority in the House of Representatives in the upcoming election. Along the way, a lot has been made of the anti-incumbent fervor sweeping the electorate, and how that, while landing as a deluge on the Democrats, may soak Republican incumbents as well.

We have John Boehner sitting out there as the ranking Republican and Minority Leader in the House. Here is a guy who has served in Congress for 20 years through his current term, has strong ties to lobbyists, voted for hugely burgeoning budget deficits all through the 2000s, opposed the Republican’s failed illegal immigration bill in 2005, and voted for the TARP legislation.

If Republicans indeed win a majority and if business as usual prevails in Congress, he will become Speaker of the House. But my question is, should anyone expect business as usual? Will a deeply entrenched Washington insider with that voting history be acceptable to the newcomers, fueled as they are by an entirely new strain of anti-Washington sentiment? I wonder if the Republican establishment is expecting this new crop of Republican Representatives to come in and obediently fall in line with the usual seniority rules.

Maybe, just maybe, there is real change in the air. For better or for worse, perhaps, but real change.

I try to keep my exposure to media opinions to a minimum, and to find my way to original source material wherever I can. I don’t like my ideas pre-thought for me by someone else. Hence, this afternoon I found myself perusing the Republicans’ A Pledge to America. On the one hand, I get that vagueness is standard campaign strategy for any minority party. “Hope” and “Change” were pretty vague, too, and many people now find themselves bewildered that Obama doesn’t always hope for precisely the change they thought he would.

While vagueness is an understandable political necessity, outright contradiction, whether of principles or of facts, is another thing. That kept going through my mind as I read this thing.

“America is an inspiration to those who yearn to be free and have the ability and the dignity to determine their own destiny.”

I don’t know what message I am supposed to be getting from a party that says that the same week it defeated the repeal of Don’t-Ask-Don’t-Tell. Contradiction.

“Rising joblessness…” and “Our economy has declined… with the loss of millions of jobs.”

Huh? Joblessness is falling, not rising. Our economy is growing, not declining. Since the recovery began, the economy has added nearly a million private sector jobs. Sure, these things are too little too late for too many millions, but the rhetoric in the document describes 2007-09, not the present.

“By permanently stopping job-killing tax hikes, families will be able to keep more of their hard-earned money.”

This is contradicted firstly by the simple fact that the March 2009 stimulus package included the largest tax cut in history for most Americans. Almost $300 billion of the total $787 billion was tax cuts. It is contadicted secondly by the Republicans’ current unwillingness to extend the middle class tax cuts enacted under President Bush. They do have a stated reason — the Democrats’ opposition to extending the Bush tax cuts for the wealthiest 2% of Americans. But the rhetoric in the Pledge is that “families will be able to keep more of their hard-earned money.” They did not write, “High income business owners will be able to keep more of their hard-earned money so that their companies can grow and other people that didn’t get tax cuts can get jobs.” That is, their tax cutting policy is directed to high income Americans, but the rhetoric of the Pledge makes it sound as if it is directed to middle America. Contradiction.

“We will rein in the red tape factory in Washington, DC by requiring congressional approval of any new federal regulation that may add to our deficit and make it harder to create jobs.”

Okay, this one isn’t a contradiction. I just found it hilarious that the plan for cutting through regulatory red tape is going to be direct intervention by Congress. We will all be able to rest easier when, Congress, that paragon of sleek performance, is on the job.

“…we will roll back government spending to pre-stimulus, prebailout levels…”

You know, like the good old days… back in 2008. When the government had to borrow… pause… $1.5 trillion to fund its deficit. We are suppose to elect you so you can knock a paltry $100 billion off of spending and return us to days when federal debt was rising faster than it is now? Good job, guys.

[Debt at December 31, 2008: $10.700 trillion. Debt at December 31, 2007: $9.229 trillion. Increase = $1.471 trillion. Source: US Treasury: I warned you: I go to the original source material.]

“We will require that every bill contain a citation of Constitutional authority.”

Besides simply wondering what this “citation” is and who will issue it, the authors of the Pledge need to explain how Social Security, Medicare, Medicaid, farm subsidies, the Environmental Protection Agency, NASA, the entire Department of Housing, the non-defense portions of the Department of Energy, the entire Department of Education and, quite frankly, most everything we know our federal government to be today will pass this test. Why do all those long-standing, widely or even universally accepted functions of federal government pass constitutional muster, but somehow the most recent increments do not? Exactly what was the constitutional line that we crossed in January 2009? Or if Republicans in fact do intend to apply constitutional principles fairly, then they should at least give us a little heads up that 90% of the government as we know it will be eliminated. That’d be good to know before the election.

If the Democrats lose control of Congress in the November elections because Democrats have offered too little vision for how to address federal spending and long-term structural deficits, then that strikes me as a fair and reasonable outcome. The Democrats have not. Even if the election turns on competing visions of the role of government in addressing the needs of citizens — that is, if voters turn out Democrats because they somehow prefer the current healthcare system to that recently enacted, or they decide they’d rather hope for the best and take no action on global climate change — well, I disagree with those positions, but at least that would be a fair outcome of a fair debate.

If the Democrats retain control of Congress in the November elections because of their policies reversed the catastrophic recession conditions the country faced in 2007-08, then that also is fair and reasonable.

But if the Democrats lose control of Congress because voters blame them for the current lethargy in the economy, that is an unfair and unreasonable outcome. Yet that seems to be exactly where the electorate is right now. What exactly are the objectionable economic policy actions of the Democrats, anyway? That they enacted the biggest tax cut in history? That they put forth stimulus funds that created (or “saved”) an estimated 3 million jobs?

The accurate way to look at it is that a huge economic tsunami was coming at us, and Obama hastily built a levee that mitigated the damage. Was it a perfect levee? No. But we must remember that the tsunami was coming either way. If Republicans had controlled Congress in 2009, and had pursued policies akin to what they are campaigning on now, what would have been the result? No levee at all. Job losses, which had been running more than 700,000 per month at the time, would have continued longer and deeper. The economic contraction would have lasted longer and been more severe. Budget deficits, which are driven by the recession, would have been worse. We would have absorbed the full brunt of the tsunami.

So if the Democrats lose over their handling of the economy in the short run, that’s just wrong.

Seven Things It Seems We Could (Mostly) All Agree On:

1. That non-fossil fuels are better than fossil fuels, and that domestic energy is better than foreign energy. Therefore, promote domestic production of nuclear and alternative energy, and, for the time being, domestic fossil-based energy sources.

2. That the totality of retiree promises extended by the private and public sectors is a contract we cannot fulfill. Therefore, begin the long, slow deflation of the bubble by scaling back entitlements/benefits, and by extending more realistic promises to those currently working.

3. That neither the suffocating prescriptive regulatory framework of the 1970s and 1980s, nor the unfettered Wild West business environment of the 2000s has proved sustainable in the long run. Therefore, pursue enlightened progressive regulation where needed, by imposing appropriate capital and/or reserve requirements on risky corporate actions.

4. That 30 years of federal spending acceleration and tax cutting have left us with spending at record high levels, tax burdens at a 60-year low, and deficits as far as the eye can see. Therefore, calibrate spending reductions and tax increases until we are back in equilibrium.

5. That teachers’ unions really do put the interests of grown-ups over those of children, and really have gravely compromised the quality of public education. Therefore, break or circumvent them.

6. That all meaningful growth in personal income and personal wealth over the past 30 years has occurred only among the highest income Americans, meaning there has been a wholesale shift in wealth from the middle class to the wealthy. Therefore, be open to policies that restore the previous equilibrium.

7. That Congress has become incredibly beholden to special interests, chief among them the established political parties, putting at risk its ability to govern in a wise and thoughtful manner. Therefore, break down the hide-bound rules of seniority and deference that invest power in a select few.