Showing posts with label debt ceiling. Show all posts
Showing posts with label debt ceiling. Show all posts

Thursday, May 04, 2023

Heading Toward a Crash with the U.S. Debt Ceiling

The latest estimate by Treasury Secretary Janet Yellon forecasts the U.S. government hitting the debt ceiling — unable to incur any further debt to make payments — as early as June 1. Despite approving increases during the Trump administration, the House has tied this increase to a long list of spending cuts, reducing spending for most federal programs to the levels two years ago, according to NPR.

Disguised as concern for America's fiscal future, the House gambit is taken from classic Republican orthodoxy: cut spending except for defense and lower taxes, ignoring that the latter will actually increase the debt.

There's another dimension to this looming crisis, that of speaker Kevin McCarthy held hostage by the most conservative members of his caucus, forcing him to play a no compromise hand. Such is the price of his power.

Hard to say if rationality will prevail or we'll hit the ceiling and hope for the best. Nonetheless, it seemed prudent to reach out to my representative in the House, Mike Rogers:

Representative Rogers,

I urge you to approve an increase in the debt ceiling before the U.S. government defaults on any of its obligations. A default would be a first for the country, a self-inflicted error with unpredictable consequences for our credit rating and global financial markets.

As Jerome Powell said yesterday, “No one should assume that the Fed can protect the economy and financial system and our reputation from the damage that such an event might inflict.” A default could upend the Fed’s measured interest rate strategy to reduce inflation without incurring a recession.

As you well know, the debt ceiling simply reflects the approved spending of past sessions of Congress, Republicans as well as Democrats. Refusing to honor those debts is like me refusing to pay my credit card bill. The appropriate action for me is to reduce future charges to my credit card. The same holds for Congress.

The increasing federal debt is a longterm economic concern and should be addressed by Congress through its appropriations process. The list of spending cuts recently approved by the House is a starting point for negotiating the fiscal 2024 budget with the Senate.

The current strategy of tying a long list of wished for spending cuts to the debt ceiling in a political competition has way more downside than the outcome of reducing federal spending.

Saturday, November 10, 2012

A recap of the 2012 election

Before the echoes of the convention speeches, the attack ads, and the chattering television pundits fade to silence, I want to reflect on the election.

I voted to reelect President Barack Obama, overturn the Republican majorities in Congress and the New Hampshire House and Senate, and elect a Democrat to replace Governor John Lynch. While my goals weren't fully realized – the Republicans remain the majority in the U.S. House and New Hampshire Senate – I am pleased with the outcome and hope we will have a more effective government than the past two years.

This election is notable because I voted a straight party ticket for the first time in my life, although I still label myself an Independent. I have always weighed each race and voted for the candidate I felt would best fill the position. Until this election, that philosophy yielded a mix of Democrats and Republicans. Political parties have seemed a necessary evil and straight party voting has been anathema, so this election is an indication of a sea change in my view of the political landscape. So, before I forget, what drove my votes?

1. The Economy

The thesis of Mitt Romney's campaign argued that Barack Obama was responsible and accountable for the poor performance of the economic recovery, that the policies pursued by the Obama administration were ineffective – even hindered the recovery.

The steps taken by the Bush and Obama administrations at the beginning of the Great Recession, in the fall of 2008 and early 2009, decelerated the downward spiral and positioned the economy to recover. Government policies notwithstanding, I believe the slope of the recovery has been equally influenced by forces around the globe: the fiscal crisis in Greece, the malaise in Europe, the depressed housing market in the U.S., the caution of the banks as they seek to restore their balance sheets, and the bankruptcy and recovery of the auto industry.

I have no way to know whether a "pure" Republican response to the crisis would have yielded better results. However, I suspect that had GM and Chrysler not undergone a government-imposed bankruptcy and restructuring, the economies of Michigan and Ohio would be in far worse shape today. I don't believe the free market, as it was functioning in 2009, would have provided the capital, had the power to restructure the debt, nor moved as quickly to save the companies.

The growing U.S. debt is a concern and certainly must be addressed. Yet my college economics class and listening to various economists over the years leave me with enough belief in Keynesian theories to conclude that reducing debt by cutting government expenditures can stall an economic recovery. I think Britain and Greece are examples. Blaming the Obama administration for growing the debt during the past four years seems unfair. I suspect John McCain would be just as guilty, had he won the 2008 election.

Considering the state of the economy, I saw no basis to criticize President Obama's performance and vote for Mitt Romney.

2. Healthcare

Next to the economy, the Republican's second talking point was the repeal of Obamacare. Their original argument to "repeal and replace" simply changed to "repeal," with no discussion or, in my opinion, intent to replace.

The Affordable Care Act certainly has flaws, and the process that passed it exemplified the metaphor of making sausage. The very silver lining to that cloud, however, is we now have a framework for providing health care insurance to most Americans, with a balance to the historically punitive power of the insurance companies in the "free" market.

For very personal reasons, I'm not willing to start over; I have no faith that under a Romney administration we would see reasonable access for all Americans – even within my lifetime. That would be a moral failing, as the U.S. is the only developed country that doesn't provide comprehensive access to health care. Seeing the statistics on cost and medical outcomes, we can't even argue we have the best system for our society (meaning not just fortunate individuals).

President Obama overwhelmingly won my vote on this issue.

3. Social Values

I find it odd that while Republicans decry the role of government in our lives, they feel justified in defining the social values that everyone should live by.

Same-sex marriage most resonates with me, as I see it as a human rights issue, comparable to the civil rights struggles that played out on the TV screen of my youth. The Republican majority in the New Hampshire House unsuccessfully attempted to overturn same-sex marriage this year, arguing that the prior legislature had no right to make it legal. Of course, that was based on the religious belief that same-sex marriage is "wrong," that marriage should only recognize a relationship between a woman and a man. The 2012 Republican platform also states this position.

That's not my religious belief, and I don't want that imposed on the same-sex couples I know and respect and love. I don't want that sanctified loving relationship, nor the legal protections it affords, denied to any gay or lesbian couple.

Other values were debated during the campaign, including abortion, access to contraceptives, funding for Planned Parenthood. On all of them, I sided with President Obama and the Democratic candidates running for Congress and offices in New Hampshire.

4. Candidate Mitt Romney

No doubt Mitt Romney is a smart and decent man, despite portrayals of him being an unfeeling oligarch. I do respect his business experience and success, and the pragmatism that requires. That's not what concerned me.

Rather, I couldn't determine his political leanings from the course of his campaign. During the primaries, he tacked to the most conservative side of the party, calling himself a "severely conservative Republican governor" during one of the debates. Once he had the nomination, though, he tacked back toward the center, sounding like the most moderate person in the first debate with President Obama.

Who was the real Mitt Romney and how would he lead the nation? I wasn't willing to take a chance voting for him, with a hope that he would govern as a moderate. On this point, I voted against Mitt Romney.

5. Bipartisanship and Compromise

Washington has been in gridlock the past two years, since the Republicans assumed control of the House following the 2010 election. There's no better example of this than the bickering over the debt and raising the debt ceiling, the failed Congressional debt commission, and the resulting fiscal cliff that looms at the end of the year.

I am critical of President Obama for not adopting the work of the Simpson-Bowles Commission as a baseline plan to address the debt. Politically, I recognize that had he embraced their dramatic approach, he would have created a target for the Republicans, whose mantra is spending cuts with no increase in taxes.

Despite the possible missed opportunity, the President and House Speaker John Boehner almost crafted a deal, until it was scuttled by the conservative members of the House. That led to the failed Congressional debt commission and now the ticking time bomb of sequestration, which I've heard the New Hampshire Republican delegation repeatedly decry. Ironically, sequestration is linked to their own unwillingness to compromise on increasing tax revenue – which would violate their pledge to Grover Norquist.

While I'm not so naive that I would argue the behavior of the Democrats in Congress is pure, I find greater fault with the Republicans. Senate Minority Leader Mitch McConnell's admonition rings loudly in my ears:
The single most important thing we want to achieve is for President Obama to be a one-term president.
I think the Republicans in the House and Senate have worked to that end, employing the strategy articulated as just say no, and betting they would win the Presidency.

President Obama won my vote by the Republican Congress losing it. However, I struggled a bit voting against Charlie Bass. I respect his independence and willingness to vote against his party on various issues. He's a model for all of our elected representatives. Unfortunately, he's only one voice among many Republicans who don't seem to share his philosophy. So I voted for Ann McLane Kuster.

The Outlook

I'm very encouraged by the outcome of the election in New Hampshire: the House has flipped from Republican to Democratic majority and Democrat Maggie Hassan will replace John Lynch. I think we will have a more balanced agenda.

During the President's second term, we'll see the implementation of Obamacare and can begin to address the inflating cost of health care. I'm not worried about backtracking on social issues. I hope, fervently hope, that we'll see the bipartisan statesmanship to truly address the debt and long-term viability of Social Security and Medicare.

With President Obama reelected, Mitch McConnell's goal is no longer relevant, making me hopeful that Congress can break the partisan gridlock, despite the same majorities in the House and Senate. The most pressing issue is dealing with the fiscal cliff. I urge the lame-duck Congress to address this and not kick the proverbial can to the next Congress.

These next six weeks should be very interesting.

Saturday, July 23, 2011

Debt Ceiling drama continues

Despite meetings, proposals, votes, and lots of talk behind closed doors and before TV cameras during the past week, the gap seems to have widened between the President and the Republicans in the House—even between the President and his own party. Yesterday, the debt ceiling talks dramatically fell apart, apparently prompted by Speaker Boehner and punctuated by dueling press conferences.

The President said his proposal was “extraordinarily fair” and justified his position, in part, by the heat from his fellow Democrats and interest groups, protesting the proposed cuts in entitlement programs. President Obama testily asked if the Republicans would agree to anything. Speaker Boehner claimed the President “moved the goal posts” by asking for $400-billion more revenue late in the discussions, what Republicans say is a tax increase and is simply not negotiable.

The President demanded that the leaders of the House and Senate meet with him at the White House this morning. He expects them to advise how they intend to raise the debt ceiling.

Depressing.

While we definitely need to reduce our escalating debt, I don't believe it should be done solely by cutting expenditures. Reasonable increases in revenue, either by reducing or eliminating tax deductions or increasing certain taxes, should be part of the strategy. The Republican House is obstructing such a balanced resolution to adhere to their pledge of no new taxes.

Their position reminds me of the aphorism:
Don't let your principles keep you from doing the right thing.
Unfortunately, I think the principle of lower taxes has become a rigid ideology, and I'm afraid the country is going to suffer.

I expressed my concerns via a couple of Twitter posts earlier today.


Here's that last paragraph from President Lincoln's first inaugural address:
We are not enemies, but friends. We must not be enemies. Though passion may have strained it must not break our bonds of affection. The mystic chords of memory, stretching from every battlefield and patriot grave to every living heart and hearthstone all over this broad land, will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.
If I were in Washington today, I would go by the Lincoln Memorial to see if there are any tears in his eyes.

Saturday, July 16, 2011

Debt Limit

So far politics trumps statesmanship, as the Republican-controlled House doesn't appear willing to compromise with the President in finding a mutually acceptable path to raising the debt ceiling.

Despite admonitions from credit rating agencies and China, everyone's sights seem focused on the 2012 election, rather than defining the best fiscal path for the country.

My usual optimism is eroding.

Nonetheless, to do what I can to influence the situation and relieve my increasing anxiety and frustration, I put fingers to keyboard (the modern version of pen to paper) and sent the following to Eric Cantor (the pivotal figure in the House), Speaker John Boehner, New Hampshire Representative Charles Bass, and New Hampshire Senator Kelly Ayotte:
I write to urge you to seek a compromise that will 1) allow the debt ceiling to be raised before the August 2 deadline and 2) not enable further erosion in the confidence of the U.S. Government. We already have the basis for a solution in the recommendations of the Bowles-Simpson commission.

To believe the debt can be comprehensively reduced by simply cutting spending and not raising additional revenue strikes me as ludicrous and an unreasoned adherence to ideology. I also find it somewhat hypocritical that the Republicans are pushing so stridently for cuts in spending, when the debt rose from $5.8-trillion at the end of FY2001 to $10.0-trillion at the end of FY2008, under a Republican President and when the Republicans substantially controlled Congress.

Please don't play politics. Do focus on the best outcome for the American people.