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“They Need to Do Their Job.”

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Obama Bitch-Slaps G.O.P. Deficit Hardliners, Hell-Bent Extremists

“Before we ask our seniors to pay more for health care, before we cut our children’s education, before we sacrifice our commitment to the research and innovation that will help create more jobs in the economy, I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up a tax break that no other business enjoys. I don’t think that’s real radical. I think the majority of Americans agree with that.”

“I’ve said to some of the Republican leaders, you go talk to your constituents, the Republican constituents, and ask them are they willing to compromise their kids’ safety so that some corporate jet owner continues to get a tax break. And I’m pretty sure what the answer would be.”

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Wednesday’s presidential press conference [2]—the first since March—showed a combative President Obama chopping at the Republicans for a lack of fiscal seriousness and a slack work ethic. “They need to do their job” is right. And he’s doing his: defending social contract programs like Medicare and Social Security against the ideology-driven slasher nightmare of a “fiscally conservative” party that enabled a doubling of the deficit under George W. Bush (remember Dick Cheney’s “Reagan proved deficits don’t matter [3]”?). From 2001 to 2009 the current G.O.P. leaders voted 19 times [4] to increase the debt limit by $4 trillion. When Bush took office after Bill Clinton the budget was in the black and the Congressional Budget Office projected a $5.6 trillion [5]surplus [5] over 10 years. Then came the cuts.

[5]Anyway, this Barack Obama is the man [6] we campaigned for long ago, the fighter we feared had evaporated forever in a sweet dream of (illusory) bipartisanship. We just wish Barack had bared his knuckles like this last year when the “fiscal conservatives” were pushing like hell for the Bush tax cut extension [7], and had fought hard before that in the unnecessarily protracted struggle for the health care reform act [8], and before that for the helpful but insufficient Stimulus [9] (ARRA) of 2009.

(Obama must have been doing something right to prompt Time writer and MSNBC political analyst Mark Halperin to remark Thursday on Morning Joe, with some prompting from Joe Scarborough, “I think he was kind of a dick [10] yesterday.”)

Last year when Obama and congressional Democrats allowed themselves—and thus the nation—to be extorted into an extension of the Bush Tax Cuts for Millionaires, the president seemed not to grasp the terrible truth that the job-killing extremists controlling the G.O.P. are fully willing to drive the U.S. economy into severe crisis in order to inflict maximum damage on this president and his party.

The President now shows signs of understanding that the Republicans really are willing to destroy the United States’s credit and economic functionality in order to inflict pain severe enough to intensify voters’ rejection of the president and his party next November.

[11]The same so-called conservatives who cracked the whip for extension of the Bush tax cuts for millionaires and billionaires—which will add some $700 billion more to the deficit over the next 10 years—now scream that the deficit is strangling America and killing jobs. (The chart at left illustrates the Bush tax cuts’ contribution to the deficit.) They nearly forced a government shut-down in April (how disappointed they were that the crisis was averted by Democrats’ concessions) and now are forcing another crisis. Many of them actually want a shutdown, as is happening at this moment in the stalemated state of Minnesota [12]. (Minnesota-based G.O.P. candidates Pawlenty and Bachmann approve.)

If the U.S. were to crash through the debt ceiling after August 2, would John Boehner and Mitch McConnell’s publicly funded security detail be laid off?

Paul Krugman writes in today’s New York Times (“To the Limit [13]”) that a failure by Congress to raise the debt ceiling is not at all unthinkable:

Failure to raise the debt limit—which would, among other things, disrupt payments on existing debt—could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset.

But wait, it gets worse:

Failure to raise the debt limit would also force the U.S. government to make drastic, immediate spending cuts, on a scale that would dwarf the austerity currently being imposed on Greece. . . . slashing spending at a time when the economy is deeply depressed would destroy hundreds of thousands and quite possibly millions of jobs.

Krugman adds, ominously:

G.O.P. leaders don’t actually care about the level of debt. Instead, they’re using the threat of a debt crisis to impose an ideological agenda. . . . what’s really going on is extortion pure and simple. As Mike Konczal of the Roosevelt Institute puts it, the G.O.P. has, in effect, come around with baseball bats and declared, “Nice economy you have here. A real shame if something happened to it.” . . . [Republicans] believe that they have the upper hand, because the public will blame the president for the economic crisis they’re threatening to create. In fact, it’s hard to avoid the suspicion that G.O.P. leaders actually want the economy to perform badly.”

Senator Chuck Schumer (D-NY)—a careful politician who is not prone to exaggeration—made the same point this week when he said Republicans’ “slash-and-burn approach [14]” may be part of a plan “to slow down the recovery for political gain in 2012.” Schumer cited Senate Minority Leader Mitch McConnell’s surprisingly candid remark [15] to a reporter before the 2010 midterm elections—“The single most important thing we want to achieve is for President Obama to be a one-term president.” The senior New York senator asserted, “Republicans aren’t just opposing the president any more, they are opposing the economic recovery itself . . .”

Must Raise Revenues; Can’t Get There Just by Slashing

[5]After an opening statement in which he listed numerous practical steps Congress could take “right now” to improve the economy and relieve the public’s suffering by passing bills that have stalled—“items that historically have had bipartisan support and that would help put more Americans back to work”—the president got right to the point. “We can’t get to the $4 trillion in savings that we need by just cutting the 12 percent of the budget that pays for things like medical research and education funding and food inspectors and the weather service. And we can’t just do it by making seniors pay more for Medicare.” Defense Secretary Robert Gates has identified some $400 billion in Pentagon cuts, but there will have to be more. And revenues will have to be raised, in part by ending loopholes and subsidies to the rich and corporations.

I spent the last two years cutting taxes for ordinary Americans, and I want to extend those middle-class tax cuts. The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.

For the past month or more Vice President Joe Biden has been meeting with congressional leaders in deficit reduction negotiations. Democrats have reportedly agreed to trillions in spending cuts over years, but the Republicans refused [16] to consider a single penny of tax increases or phase out any tax deductions or credits for corporations or wealthy individuals. Last week House Majority Leader Eric Cantor (R-Va.) put on his drama queen dress and made a show of walking out of the talks to emphasize that the G.O.P. will not—will not!—raise revenues or end tax deductions or tax credits for their wealthy patrons, though any number of subsidies and programs for the middle class and the poor are no longer affordable.

The Center for American Progress reports [17] that two of the programs that Democrats’ proposed cutting in order to curb the deficit—a proposal rejected by the Cantor and the Republicans—were a Department of Transportation program that “provides interest-free loans for purchasing corporate jets” and a Department of Commerce program that “incentivizes people to become hedge fund managers by sending them an annual U.S. treasury check for 20 percent of the cut they take from managing investors’ portfolios.” The Republicans insisted that cuts must come instead from Medicare and Medicaid.

[18]Even Republican proposals from four months ago, such as for deficit reduction by a mix of 85% in cuts and 15% in revenue increases (see graph at right), are now rejected outright [18], “not on the table.” How are the Democrats supposed to negotiate with that?

Senior Republican Senate Veterans Denounce G.O.P. Intransigence

Former Republican Wyoming senator Alan Simpson, co-chair of President Obama’s debt-reduction panel, bluntly denounced the G.O.P.’s refusal to consider any revenue increases as “absolute bullshit [19].” And former senator Pete Domenici, a six-term senator from New Mexico who served for many years as chairman of the Senate Budget Committee, has formed a “truth squad [20]” to convince his fellow Republicans that defaulting on the national debt would indeed be catastrophic and could trigger a worldwide depression. House Speaker John Boehner has dismissed the date of Aug. 2 as when the U.S. would default on its obligations as “artificial,” seemingly shrugging off the seriousness of the predicament. The current standoff, said Domenici, “is absolutely beyond my comprehension.” In an interview [20] with Bloomberg news, Domenici expressed frustration with his fellow Republicans, particularly those in the House of Representatives, and wondered aloud what would change their minds. “Who do we get?” he asked. “Bring God down, Christ.”

A report by [Domenici’s] group, the Washington-based Bipartisan Policy Center, predicts that by mid-August the government wouldn’t be able to meet 44 percent of its obligations, leading to about 800,000 federal employee furloughs and spending cuts equal to 10 percent of the gross domestic product. Such moves could choke the economy, still struggling to recover from the worst recession since the Great Depression, and shake the confidence of U.S. creditors. . . .

The report by Domenici’s group, issued June 28, says a failure to increase the debt limit would leave the Treasury Department unable to fund a $134 billion deficit for August. The agency then would be forced to choose between cutting Social Security and Medicare checks and shuttering the vast majority of its agencies, including cutting off food stamps, money for veterans, and salaries. . . .

The alarms sounded by Domenici were buttressed by a June 29 annual report card from the International Monetary Fund that warned of a “severe shock” to the global economy if Congress fails to act on the debt limit.

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Following are highlights from the President’s remarks [21], both from his opening statement and in replies to reporters’ questions. (Click here [2] for video.)

“. . . if everybody else is willing to take on their sacred cows and do tough things in order to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say that the tax break for corporate jets is sufficiently important that we’re not willing to come to the table and get a deal done. Or, we’re so concerned about protecting oil and gas subsidies for oil companies that are making money hand over fist—that’s the reason we’re not going to come to a deal.”

“. . . the revenue we’re talking about isn’t coming out of the pockets of middle-class families that are struggling. It’s coming out of folks who are doing extraordinarily well and are enjoying the lowest tax rates since before I was born.

“If you are a wealthy CEO or a health—hedge fund manager in America right now, your taxes are lower than . . . they’ve been since the 1950s. And you can afford it. You’ll still be able to ride on your corporate jet; you’re just going to have to pay a little more.

“I just want to emphasize what I said earlier. If we do not have revenues, that means there are a bunch of kids out there who are not getting college scholarships. If we do not have those revenues, then the kinds of cuts that would be required might compromise the National Weather Service.

“I think it’s important for us to look at rebuilding our transportation infrastructure in this country. That could put people back to work right now — construction workers back to work right now. And it would get done work that America needs to get done. We used to have the best roads, the best bridges, the best airports. We don’t anymore. And that’s not good for our long-term competitiveness.

“. . . I think Congress, as well, they’ve got to be able to walk and chew gum at the same time. So we can focus on jobs at the same time as we’re focusing on debt and deficit reduction.

“. . . I want to address what I’ve been hearing from some quarters, which is, well, maybe this debt limit thing is not really that serious; we can just pay interest on the debt. This idea has been floating around in some Republican circles.

“This is the equivalent of me saying, you know what, I will choose to pay my mortgage, but I’m not going to pay my car note. . . . for the U.S. government to start picking and choosing like that is not going to inspire a lot of confidence.

“Moreover, which bills are we going to decide to pay? . . . are we really going to start paying interest to Chinese who hold treasuries and we’re not going to pay folks their Social Security checks? . . .

“These are bills that Congress ran up. The money has been spent. The obligations have been made. So this isn’t a situation—I think the American people have to understand this—this is not a situation where Congress is going to say, okay, we won’t—we won’t buy this car or we won’t take this vacation. They took the vacation. They bought the car. And now they’re saying maybe we don’t have to pay, or we don’t have to pay as fast as we said we were going to, or—that’s not how responsible families act. And we’re the greatest nation on Earth, and we can’t act that way.

“So this is urgent and it needs to get settled.

“August 2nd is a very important date. And there’s no reason why we can’t get this done now. We know what the options are out there. This is not a technical problem any longer. This is a matter of Congress going ahead and biting the bullet and making some tough decisions. Because we know what the decisions are. We’ve identified what spending cuts are possible. We’ve identified what defense cuts are possible. We’ve identified what health care cuts are possible. We’ve identified what loopholes in the tax code can be closed that would also raise revenue. We’ve identified what the options are. And the question now is are we going to step up and get this done.

“And, you know, Malia and Sasha generally finish their homework a day ahead of time. Malia is 13, Sasha is 10. . . . They don’t wait until the night before. They’re not pulling all-nighters. . . . Congress can do the same thing. If you know you’ve got to do something, just do it.

“I’ve got to say, I’m very amused when I start hearing comments about, well, the President needs to show more leadership on this. Let me tell you something. Right after we finished . . . averting a government shutdown, I called the leaders here together. I said we’ve got to . . . get this done. . . . I met with every single caucus for an hour to an hour and a half each—Republican senators, Democratic senators; Republican House, Democratic House. I’ve met with the leaders multiple times. At a certain point, they need to do their job.

“Now is the time to go ahead and make the tough choices. That’s why they’re called leaders. And I’ve already shown that I’m willing to make some decisions that are very tough and will give my base of voters further reason to give me a hard time. But it’s got to be done.

“And so there’s no point in procrastinating. There’s no point in putting it off. We’ve got to get this done. And if by the end of this week, we have not seen substantial progress, then I think members of Congress need to understand we are going to start having to cancel things and stay here until we get it done.

“They’re in one week, they’re out one week. And then they’re saying, Obama has got to step in. You need to be here. I’ve been here. I’ve been doing Afghanistan and bin Laden and the Greek crisis. You stay here. Let’s get it done.

. . . .

“You know, every day I get letters from folks all around the country who show incredible resilience, incredible determination, but they are having a very, very tough time. They’re losing their homes. Some have lost their businesses. Some have lost work and have not been able to find jobs for months, maybe a year, maybe a year and a half. And they feel some desperation. And some folks who are working just are having a tough time paying the bills because they haven’t seen their wages or incomes go up in 10 years, and the costs of everything else have gone up.

“And every day that weighs on me. . . .

“And these folks are counting on us. They desperately want to believe that their leadership is thinking about them and not playing games. And I think that if all the leadership here in Washington has the faces and the stories of those families in mind, then we will solve this debt limit issue; we will put in place steps like a payroll tax cut and infrastructure development; we’ll continue to fund education; we’ll hold true to our commitment to our seniors.

“These are solvable problems, but it does require us just getting out of the short-term and, frankly, selfish approach that sometimes politics breeds. We’ve got to think a bit long term.”

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For Further Reading & Viewing . . .

10 Inconvenient Truths About the Debt Ceiling [5]

(video) “The Truth About the Economy in 2 Minutes and 15 Seconds [22]” : Former Labor Secretary Robert Reich

The Phony Debt-Ceiling Debate [23]” : Rolling Stone interview with former White House economist Jared Bernstein

Republicans Reject Their Own Deficit-Reduction Report [18]” : Ezra Klein @ Washington Post

Republican Senators Defend Corporate Jet Tax Loophole [24]

Republicans Rejected Ending $72 Billion Corporate Accounting Gimmick in Debt Talks [16]

Vouchercare Is Not Medicare [25]” : Paul Krugman @ NYT

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