The debt ceiling deal in perspective
By Ken Falkenstein | Tuesday, August 2nd, 2011 | Catch-All, Policy, Politics
I drew a lot of fire the other day from both conservatives and leftists when I wrote that the debt ceiling deal was a huge victory for the Republicans (and America) and a resounding defeat for the Obama Democrats. I stand by that statement, but I think a more thorough analysis of the issue is warranted.
How we got here
The debt ceiling “crisis” was created intentionally by Barack Obama and his Democrat supermajorities in Congress from 2009-11. Barack Obama inherited a national debt of $9 trillion. It took 232 years, 43 presidents, and 110 congresses to accumulate that much debt. But in just two years, Obama and his fellow movement leftist Democrats added $5 trillion to the national debt through “stimulus,” ObamaCare, student loan takeover, purchase of car companies, and countless other statist policies. The Obama Democrats even went so far as to violate the law by refusing to pass a budget for three consecutive years.
But for the statist policies enacted by the Obama Democrats during those two years of their rampant leftism, we would have been nowhere near the debt limit this year.
So, it is clear that the Obama Democrats created this crisis intentionally. And Obama brazenly tried to capitalize on it, first by insisting on a “clean” increase in the debt ceiling that would allow him to continue to recklessly increase spending ad infinitum, and later by insisting that taxes be increased and that the Bush tax cuts be repealed – goals that he has had since he was a freshman senator (3 years ago).
It is easy to see why Obama thought he could get away with these utterly ridiculous and grossly irresponsible demands. After all, the Republicans in Congress had been happy to go along with reckless spending increases, creation and expansion of new government programs, and even multi-hundred-billion-dollar bank bailouts over the past decade, and they thereby contributed to the current problem. So who would expect them to stand on principle now?
The voters in the 2010 congressional elections, that’s who.
Last November, the American people elected huge numbers of Republicans to the House of Representatives. Those newly elected Members of Congress were elected on a platform that gave them a mandate from their constituents to slash spending and the size and scope of government. Put simply, the 2010 election was an utter and abject rejection of the statism of the Obama Democrats and an embrace of the quasi-libertarianism that is needed to restore the country’s economic viability.
Those freshman Republicans stood firm in this recent debate over the debt ceiling, demanding that trillions of dollars be cut and that institutional reforms be enacted to prevent a repeat of the Democrats’ gross and reckless spending binge, and they steadfastly refused to raise taxes during one of the worst economic downturns in American history
So, the dynamics of the situation were as follows: On one side were Obama and his Democrats fighting to preserve their ability to spend without limitation and seeking to exploit a crisis of their own making to impose tax increases on the American people. On the other side were the Republicans fighting for massive spending cuts, a Balanced Budget Amendment, and institutional reforms to limit spending, and emphatically refusing to increase the tax burden on the American people. And dangling above them all like the Sword of Damocles was the fact that if the debt ceiling wasn’t raised, the nation’s credit rating would be reduced, which would increase interest rates for everyone, and we would ultimately default on our obligations, which would utterly wreck the economy.
Given the reality that the debt ceiling had to be raised and that the Republicans had to deal with movement leftists in the White House and the Senate, a deal resulting in nearly $3 trillion in spending cuts, a vote on a Balanced Budget Amendment, and no tax increases was a remarkable achievement for a Republican Party that controls only one-half of one-half of the political branches of government.
Where we are now
I understand those conservatives who protest that this deal does not make real spending cuts but rather only cuts the projected rate of the growth of spending over the next decade. They’re right.
And I understand that the Balanced Budget Amendment won’t pass in this Congress.
But the fact is that spending over the next several years will be significantly less than it otherwise would have been. And although the Balanced Budget Amendment won’t pass, the vote will put the lie to the promise of as many as 25 Senate Democrats who pledged to support it by putting them on record just a few months before many of them face the electorate.
So yes, under these circumstances, I think this deal is a resounding victory for the Republicans and an utter defeat for Obama’s statist Democrats. Furthermore, this is an affirmation of the trust that the American people placed in the Republicans in last year’s election to stop Obama and his Democrats from their reckless spending binge and move the country toward a path of fiscal responsibility.
All of that said, although this was a victory for the Republicans and the American people, it was not a solution to the spending problem. It was merely the best that could be won with an unrepentant movement leftist in the White House and in control of the Senate (and the House minority too).
The problem remains: We are still slated to spend nearly $1.5 trillion per year more than we take in every year for as far as the eye can see. This course remains unsustainable and will cause a complete and utter economic collapse if not righted, and soon.
So, for those Americans who remain frustrated that this deal did not solve the problem, God bless you. I am too.
But direct your ire at those who deserve it – not at the Republicans who fought for Cut, Cap, and Balance and other proposals to truly try to address our out-of-control spending – but at the Democrats who obstructed those solutions and tried to maintain the status quo.
It is clear that the Democrats don’t care about the debt crisis. Today’s national Democrats are movement leftists who are more devoted to their leftist religion than to their country. They created this debt crisis intentionally and, if given their druthers, they would continue on the same course until the economy collapsed. They believe that if they can, in fact, destroy the economy, they can realize their core dream of replacing our capitalist system with a state-run economy. It is the Cloward-Piven strategy of creating and exploiting crises writ large.
What must happen next
So, if the recent debt deal wasn’t a solution, then how do we solve this problem?
First, Republicans and conservatives must confidently claim and trumpet our victory in winning trillions of dollars in spending reductions while thwarting the Obama Democrats’ efforts to keep taxing and spending. Success breeds success, and it is important that we begin our momentum now. Barack Obama is a master at stealing credit for the accomplishments of others (since he has none of his own), and his sycophantic “news” media are always happy to advance his narrative. We must not let them get away with it this time. The stakes are too high. We have succeeded in gaining the upper hand in this debate, and we need to continue the momentum by trumpeting and building upon our victory.
More importantly, in 2012, it is vital that our presidential nominee and our congressional candidates run on a unified platform of eliminating deficits and maintaining a balanced budget by enacting a Balanced Budget Amendment. America’s future depends on the resolve of the Republicans. Only by running on such a platform will they have a mandate to follow through and achieve these objectives when they take office in 2013.
Some establishment Republicans worry that running on such a platform would be seen as so radical that it would scare away moderate and independent voters. This fear is not irrational; there is no doubt that the Democrats will vilify the Republicans and that their establishment “news” media will act as their propaganda arm in this effort. See, for example, how in 2008, the leftist “news” media carried the Democrats’ water by vilifying John McCain, the King of the RINOs, as a dangerous right-winger.
The answer to this challenge is not to run scared from our core principles. (Ever heard of “President McCain?”) The answer is to trumpet those principles with confidence to the voters. (Think “President Reagan” and “Speaker Gingrich.”)
The Republicans must also keep fresh in the minds of the American voters the national Democrats’ betrayal of our country, as discussed above, by citing the facts and confronting the Democrats and their “news” media allies with those facts persistently.
America is at an economic precipice – and the American people know it. The American people love their kids and don’t want to saddle them with trillions of dollars of debt and a precarious economy. They will rally behind and reward those candidates who have the courage to confront the debt crisis as it is and offer real-world solutions.
The Republicans won a victory against a President and Senate majority that were aligned against the national interest. They deserve our appreciation. But they also carry the responsibility of fighting to win the 2012 election by running on core principles. And more importantly, they carry the responsibility of following through to apply those principles to actually balance our budgets and solve our debt crisis once they win that election.
Tags:
Contribute for Conservatism!
Share this post
About the author
Ken Falkenstein has been a staffer in the United States Senate and the Virginia House of Delegates. He has managed political campaigns. He was a military intelligence analyst in the U.S. Army in West Germany during the Cold War. He is currently the Vice President of the Down Syndrome Association of Hampton Roads and practices as a civil litigation attorney with the law firm of Poole Mahoney PC in Virginia Beach. His concern for his kids' future is what most informs his writing.
Comments
27 Responses to "The debt ceiling deal in perspective"
It is finally dawning on some of his faithful following that Obama could care less about them. The fog is starting to clear and they are realizing that they aren’t part of any special “community” as he promised them over and over again. They are starting to see that he is using “them” as a means to an end as he attempts to pit poor against rich; Muslim against Christian; black against white; Democrat against Republican; Independents, Republicans and Democrats against Tea Party; Federal Government against the States; laws against citizens; regulations against businesses; his power against our Constitution and on and on. Cloward-Piven is an apt model to describe this fulminating chaos to disassemble what and who we are and “transform” it into what we are not, nor ever have been. But it goes further because Executive Orders, unchallenged regulation by Agencies and multi-thousand page legislation passed with impunity in the dead of night are reshaping the framework and changing the structural integrity of our Republic. This great debt debate and others which will follow have provided and will provide perspective to all of us about the choices we have as Americans and the extent we want to be controlled, taxed and managed by our Government.
Ken –
This is utterly brave… and for as utterly brave a face it puts on the current deal, it is equally and totally wrong.
KF,
I think most were just objecting to the adjectives “huge” and “resounding”.
As for claiming victory, you have your right. It cannot be a victory when we added $2.7T to the debt without any significant reductions to the budget. We’ll go through the same exercise in 2013.
And Obama did not cause this crisis, the foundation for him to do this was laid by the Republicans just as well…George Allen included. As Obama did put it in hyperdrive, he cannot be blamed for this.
Now that the debt ceiling deal has passed, the Republicans true colors came out. …and it is not pretty. You cannot increase spending $10T cut $2.4T and then claim that you are victorious. Enjoy your partisan victory,
We are deficit-spending 11% of GDP. As soon as we stop it, GDP shrinks 11%.
Current cuts are politically impossible because current deficit spending is the only thing fending off a depression. If one understands this, and the fact that the deficit spending is unsustainable, then one understands that we are in / headed for a real depression.
If one understands that, then one understands that conventional thinking and responses will be ineffective. This is not a balance sheet recession. This is a deleveraging where massive losses are lurking, waiting to be realized.
There will be no cuts in the out years, because there will be no real growth to make them politically possible. The real economy is shrinking, not growing.
Finally, if one understands that, and the fact that economics is math, one will understand that math cannot be reasoned with, that it will not respond to emotional appeals, and that it does not care about anyone’s politics or their views on social justice. Math is math. Wealth cannot be redistributed until it is first created. Creating wealth requires production. We are not producing enough wealth so we have to borrow constantly to keep up our lifestyles. Everyone knows this and still we keep doing it. It’s like a mutual suicide pact or something, except I didn’t agree to it. You and the dems are like the Jim Jones enforcers who hunted down those who refused to drink the Koolaid and shot them or injected them with poison.
Keynes was a complete idiot whose views are rigorously followed by the political class only because he told them what they wanted to hear: that they have the right to manage the economy. I wouldn’t trust the average politician, including the current crop like Eric Cantor or George Allen, to run the cash register in a 7-11. They don’t know anything about anything. Yet, somehow there exists this belief system that they are able stewards for the economy.
It’s the stupidest thing imaginable. Isn’t it?
Finally, the super congress is already being rejected by the populace as what it is: taxation without representation.
Congratulations, boys.
Jamie,
Well said! I see a hostage situation happening…Social Security and Defense for whatever the debt commission dreams up which will most likely be closing tax loopholes (i.e. raising taxes). Pick your poison.
And as usual it will be a last minute situation.
Shaun- Please utter a few words about the specific points in my analysis that you think I got wrong.
Ken,
The glaring flaw in your analysis is that it is a political analysis. You, like most Americans, still believe that the economy is and should be subservient to politics.
If McCain had been elected along with a Republican majority, we would be exactly where we are now financially. There is no majority in Congress that is willing to fail to spend enough to make the economy seem to be “growing,” with GDP “growth” rates above 1%. The only members who are, as Mike points out, are Tea Partiers. They are a minority.
Under a republican administration, the arguments for deficit spending would be different (foreign boogeymen instead of pushing grandma off the cliff), but they would lead to the same destination: enough deficits to make GDP “grow” buy more than 1% annually.
Or do you advocate really cutting the deficit? Remember, we are deficit-spending 11% of GDP.
Prove my point: tell us, how much are YOU willing to cut the deficit right now?
The phrase “thorough analysis” and the article that followed are in total contradiction. It is as if the fiscal chaos that occurred because of Bush’s policies never happened. Well, they did happen, and to the degree that democrats and republicans acquiesced, or were rabid supporters, is not important, but what is important is how disastrous the situation was that the President inherited. The bail out and the stimulus, as imperfect as they were, kept the international financial system from collapsing, but the effects of the eight years that put us into that situation are still playing out. Ken’s piece would have you believe the policies of the Congress and the President made it worse when in fact it made our recovery much faster than if intervention had not occurred. But now stimulus is ending, and yet the economy, anticipating continued job loss as a result, has gone back into a funk, and the objective for Congress and the President needs to be job growth. The manufactured debt crisis created by the far right has damaged that effort greatly, but it will be important to get back to that objective if we are to pull out of ther slowdown.
Just how bad was this deal… check out these numbers and puke,, from money.cnn http://money.cnn.com/2011/08/03/news/economy/spending_cuts/
In April, lawmakers set discretionary spending levels at $1.050 trillion for the current fiscal year.
The law President Obama signed Tuesday sets discretionary spending levels for 2012 at $1.043 trillion and at $1.047 trillion for 2013 — or an accrued total of $10 billion below current levels.
Got that Boys… We got a whopper of a spending cut of $7Billion in discretionary spending for next year… we borrow more than that every two working days,,, and in the mean time entitlement spending will continue to skyrocket as 10,000 people per DAY turn 65…..
If you think Republicans won or scored a win or whatever you just havn’t LQQked at the number…. $7billion in cuts is absolutely freakin nothing,,, pocket change,,, and we get a super whoppin $3billion in discretionary savings in 2013, less than a day of borrowing…..
and all in all a two year saving representing two days of borrowing,,,,,
Go Ahead,,, make my day and tell me how Republicans won this one…
Beam Me Up DEAR Leader, most folks don’t have a clue and I’m Taxed Enough Already…..
I ask again: Given a movement leftist president and a movement leftist majority in the Senate, how were the Republicans supposed to get a better deal? As I said in my article, I agree with those who say that this deal is not a solution. Where I disagree is in blaming the Republicans who fought like hell for the deepest cuts possible and for institutional reforms. The blame for not getting a deal that actually solves the debt crisis belongs squarely on the Obama Democrats, and that is precisely the message that the Republicans need to take into the next election.
Jamie- I am not looking at this as a political issue. I very much look at it as a serious crisis that must be addressed. But I recognize that the current president and Senate are unwilling to address it. In fact, the president and Senate EMBRACE this crisis as a means of promoting their statist agenda. So the only way we can truly address and solve the crisis is to win the 2012 elections and then hold the Republicans’ fee to the fire to balance the budget and implement meaningful reforms.
Ken –
Well, for starters:
(1) It wasn’t a victory. The left has done a masterful job of spinning this as a loss. But look at what they won: entitlements untouched, the largest debt ceiling hike ever, tax hikes on the table, and marginal spending cuts. That’s the definition of a loss to me… and we’d better sort it out quick in our heads before we set the bar for victory so low.
(2) The Balanced Budget Amendment is a bad, BAD idea. You can’t legislate integrity… and frankly, the BBA throws budgets to the courts — and tears it away from the hands of the people’s representatives.
(3) The conservative movement has lost its evangelical flavor. The narrative so far goes as follows:
Conservatives threaten, liberals propose.
Conservatives are pessimists, liberals are optimists.
Conservatives tear down, liberals build up.
Conservatives demand for themselves, liberals demand for others.
Conservatives reject change, liberals embrace change.
Conservatives defend, liberals attack.
Conservatives are good enough, liberals demand better.
…etc.
In short, the visionaries such as Reagan and Gingrich? Where are they today? Conservatism used to be an intellectual movement. We embraced ideas, embraced solutions, embraced individualism, embraced life, embraced all the good things that made America great. Now we’re too timid to defend our values, much less reassert ourselves in a public light.
We’ve substituted principle for purity, in a nutshell. Thomas Merton said it best: “Faith is not fanaticism because it is not free.” When we substitute faith in the movement for fanaticism, we lose every damn time.
Consider this as well: 96 Democrats voted against the deal that eventually passed. Only 8 Republicans held the line against any and all debt ceiling increases. Eight out of 435 who toed the “Tea Party” line.
We’re a lot farther gone than folks think. It may very well be a war of inches for a long, long time… and frankly, with too many so-called conservatives more concerned about preserving their three cars, plywood palace, and collection of electronics and identifying that as “prosperity” while ignoring their personal debt, their public debt, and the terrible inheritance we’re passing down to future generations… we’re screwed.
Cicero was right. “O tempora! O mores!” Could not agree more…
Shaun, you make a lot of sense bro.. I am conflicted though since you seem to hammer away at Radtke who shares most of your views while rolling out the red carpet for Allen who by default your last post condemns. Help me bro.
Tactics and logistics, Turbo… tactics and logistics.
To date, Radtke’s entire campaign has been tearing down Allen. Which is stupid. Negative campaigning does two things: (1) drives up your opponent’s negatives and (2) slightly drives yours up as well.
Problem is… people have already made up their mind on Allen. You either love him or hate him. With Jamie, most folks still don’t know who she is. And if they do — according to the PPP polls, they don’t like her on a scale of 2:1.
Jamie and I see eye to eye on virtually everything. But she is being mismanaged, bled to death, and brutally taken advantage of IMO. They are literally ruining a fine candidate and a good friend to the point she may not be able to run for public office again.
So yes. I’m angry about that.
Shaun- I ask again: Given a movement leftist president and a movement leftist majority in the Senate, how were the Republicans supposed to get a better deal?
I agree that this is not a solution, merely a step in the right direction. But it occurred against the fierce opposition of a sitting president and Senate majority that fought like hell to maintain the status quo. Looks to me like everything you described in your comment applies to the Obama Democrats and not to the current congressional Republicans.
Ken — they could have passed a clean debt ceiling increase, and it would have been a better deal.
They could have worked on a larger package that would have increased the debt ceiling $2.5 trillion, cut $1 trillion in spending annually, and increased revenues by $500 billion — and it would have solved the problem.
They could have dug their heels in at Cut, Cap, and Balance and let the Democrats come to them.
That’s just three different ways it could have played out better……
Shaun I agree with your points 1 and 3. Although for point 1 it would have only been possible for Repubs if they had demanded that every single Dem had to vote for its passage. Then we would have had stories about Obama armtwisting and “favors” for recalcitrant Dems.
For point 2 I would substitute cutting in FY12 and 13 the $250 billion that GAO itself recently identified (without denial from anyone) as redundant wasteful spending.
I don’t see how a “clean” debt ceiling increase giving Obama the right to maintain the status quo and continue recklessly spending with no strings attached is better than a deal that cuts projected spending by nearly $3 trillion. And there was never any possibility that Obama and his Democrats would support cutting $2 trillion over 2 years or would be willing to pass a BBA. (In fact, why are you advocating for CC&B if you oppose a BBA?)
We got the best deal possible in the current circumstances. Now we need to capitalize on it to win next year’s elections and then enact serious spending cuts and reforms.
Did they cut $100 billion of spending (discretionary AND non-discretionary) in a $1.5 trillion problem, and they conceded on tax hikes plus a debt ceiling increase.
So for $100 billion, they got $2,500 billion PLUS revenue increases.
Fair trade, Ken?
They did not concede and tax increases. That’s factually incorrect.
The agreed to a debt ceiling increase that everyone knew had to be done because not doing so would wreck the economy for decades to come. They used that fact as leverage to get nearly $3 trillion in reductions from projected spending.
As I’ve said repeatedly, this deal did not solve the debt crisis because it simply is not possible to solve the debt crisis when the president and Senate majority refuse to cooperate with any solutions. It is specifically and exclusively the Democrats’ fault that we did not get a deal that solved the problem. The Republicans do not have the power to do it by themselves over the Obama Democrats’ obstruction. Given the fact that we have a president and Senate majority that insist on continuing to spend with reckless abandon and try to raise taxes to boot, this was as good a deal as was possible, and the Republicans deserve credit and appreciation for their good work.
Now, we need to build on that momentum to continue to steer the public discussion and to run on this issue to win and have a mandate to enact true and meaningful cuts and reforms.
“(2) The Balanced Budget Amendment is a bad, BAD idea. You can’t legislate integrity… and frankly, the BBA throws budgets to the courts — and tears it away from the hands of the people’s representatives.”
AMEN.. and double Amen to “You Can’t Legislate Integrity”
Ken,
Wouldn’t deleting the $250 billion GAO identified as wasteful spending have resulted in more than $2 trillion dollars of “cuts” in the arcane world of the CBO? Are you saying that the GOP could not have gone to the public waving the GAO report (which was not disputed by the Dems as far as I’m aware). That would have been an actual near term cut with actual long term benefits. The current deal “cuts” $10 billion (maybe) near term. The cuts in out years are purely imaginary.
If you doubt the imaginary quality of out year projections please refresh my memory on the 10 year estimates made in 2008. or 1998? what about 1928? or 1938?
Ding Dong: Reality Calling.
Bloomberg: “U.S. Stocks Erase Losses on Bets Fed to Provide More Stimulus.”
WSJ: “The U.S. economy faces a risk of falling back into recession and the Federal Reserve might need to consider a new round of securities purchases to deal with it, even though it isn’t in a strong position to address a slowdown, three former top officials at the central bank said.”
“…a new round of securities purchases…” Don’t you just love the obfuscation-by-lingo? The only tool the Fed has is a printing press. Guess what their “policy response” will be to the slowdown, and the new $2.5 Trillion sovereign demand coming to the well? Guess where the “money” will come from to fund these “asset purchases”?
Just a reminder: the the republicans in Congress just handed $2.5 Trillion taxpayer dollars to Obama for his reelection campaign.
VICTORY !(?) We’re freaking awesome, because this is the best we could expect! We’d rather actively participate in the destruction of the republic than take a stand on principle! AND THAT IS WHY THE VOTERS SHOULD TRUST US AND NOT THOSE AWFUL TEA PARTY TERRORISTS!
Ken said: “We got the best deal possible in the current circumstances.” No Ken, we have made a terrible deal. This is a strong case for Trump. He knows what makes a deal and how to win making a good deal. The morons we have on the hill lack the capacity to negotiate and leverage conservative positions for real deficit reduction in the near term so they sold us out for a long term deal that allows O to take easystreet through his re election. This process took so much time that lobbyists had a field day corrupting andchanging the minds of our congressmen.
Fact is, unreasonable deal makers are better off not making them but as usual the establishment perps love money for campaign coffers and nobody who needs to retire campaign debt likes a dead deal, not even a bad one. As a result we the people are unprotected.. our elected representatives voted against better judgement again and they will not work on dumbing down our expectations and skew our perspectives.
Aside from the reality on the hill, we will be obligated to pay an even more outrageous sum to foreign governments for an even longer period long after the harlots on the hill retire or get tea bagged out of office.
And Ken,stop mental masturbating about the 2010 election. Republicans did not win, dems lost. It is that simple. The GOP merely lost less than the dems.. comprende amigo?
Typo: “will now work on dumbing down our expectations”
The Donald talks for 18 minutes
http://video.foxnews.com/v/1093000031001/trump-obama-made-us-laughingstock
The Deficit SoapBox Drama: “Did I Shave My Legs For This?”
-
http://roanokeslant.blogspot.com/2011/08/deficit-soapbox-drama-did-i-shave-my.html
-
Leave your response
The comments section is for meaningful discussion. Readers are reminded to post comments that are germane to the article and write in a common language that steers clear of personal attacks and/or vulgarities.
Please take a moment to review our comment policy.