The ongoing debt-ceiling debate [Most commented]
When it comes to the federal debt, Republicans are more willing to seek their own goal of no tax hikes than they are a solution for the nation, The Times editorial board said Tuesday. Meanwhile, after ignoring the recommendations of his deficit reduction commission, Obama is finally ready to address the problem with a "balanced" approach. Cutting the projected deficit by $4 trillion in a decade may not be the best for a slow economy, the board said, but it might provide a sense of certainty that could encourage investment. Here's an excerpt:
Voting for such a plan would be hard for both sides. To save $4 trillion over 10 years, Congress would have to slow the growth in benefit programs that Democrats cherish. At a news conference Monday, Obama reiterated his willingness to support those cuts, but only if Congress also eliminated at least some tax breaks for corporations and the wealthy in 2013 and later years. That's a political necessity for Democrats, who are already grumbling about Obama's proposed deficit-reduction package being tilted much more heavily toward spending cuts than tax increases.
[Refusing to support an increase in revenue] rules out a deal that would make real progress on the deficit while also achieving some top GOP goals, including curbing the growth of Medicare and Medicaid and simplifying the tax code with lower rates and a broader base. By confusing rigidity with principle, Republicans are letting Obama portray them -- accurately -- as extremists defending "egregious tax loopholes." Republicans would do well to remember that this a no-pain, no-gain situation for lawmakers from both parties.
Scrooge endorses yachts for billionaires
Billionaires deserve bigger yachts -- so let's throw the handicapped out of their wheelchairs, condemn old people to work for minimum wage at Wal-Mart, then eliminate the minimum wage, and then bust the unions. I, Ebenezer Scrooge, endorse this program.
No one's taxes should be raised in a recession
Nothing wrong-way about this. You don't raise taxes in a recession, period. Not anybody's taxes. You can spout all the class-warfare populist rhetoric you want, and I hope it makes you feel better. But for the bottom line, refer to sentence #2 in this post. If you don't understand the reasons for this, you need basic coursework in macroeconomics which you can find on any university campus. And while you're at it, take Mr. Obama, Mr. Reid, and Ms. Pelosi with you as well, since they appear to need remedial coursework in this regard.
If they don't reach an agreement, get rid of them all
To not come to agreement is an unacceptable abandonment of responsibility on the part of the congress...the entire congress, with a cascade of consequences not only to our entire country, but the world economy. So, if congress refuses to do their job, draconian measures must be taken; no pay, no travel until a deal is done. If the nation defaults, the president declares Marshall law, demands new elections for every seat, and implements the full set of budget reductions and raises the debt ceiling; the plan he has proposed, which both sides hate (a good sign), meaning there is pain for everyone but the nation gets put back on track to a healthy economy.
Why did Obama wait until the 11th hour for this?
If you take away all tax deductions, you can call it a "tax revenue increase", but it's really a tax increase.
Obama is within his rights to demand something in exchange for permanent spending cuts and entitlement reform. This does beg the question, though, why didn't he push for the recommendations of his budget committee when he had the chance, rather than waiting until the 11th hour?
Something has to give here. If no deal is reached, the U.S. will default on its debt and become Greece. Printing more fiat money to pay down debt would be disastrous.
Republicans should agree to the elimination of all but a very few tax deductions, such as the personal deduction, deductions for dependents and a deduction for mortgage interest on one's residence, capped at, say, $25,000 per year.
Conversely, in exchange for this massive, de facto tax hike, Democrats should be willing to PERMANENTLY reduce the current tax rates (all of them) by at least 2%, including capital gains and the alternative minimum tax (a.k.a. Operation Soak the Rich).
You cannot tax your way out of this sort of economic crisis. You CAN grow your way out of it, and that means encouraging people with capital to invest it and take risks while reassuring them that if they succeed they will reap some reward. If not, expect little or no improvement in the nation's economy for some time.
Maybe it took him a while to realize another stimulus wouldn't happen, in response to GregMaragos
@Greg -- Excellent question re: why Obama didn't throw himself behind the deficit commission's recommendations. My guess -- and it's just a guess -- is that it took a few months for him to realize that any prospects of further stimulus were dead in the new Congress, regardless of what was happening with the economy. At that point, perhaps, he accepted the argument from deficit hawks that adopting a plan to really fix the problem would send confidence surging, promoting the growth that (as you point out) is critical.
--Jon Healey, LA Times
What Obama thought about the debt ceiling in 2006
"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."
Obama, 2006, when he voted against it.
Spending is the problem, not the tax breaks
The compound problem requires a compound solution: Washington and Sacramento take too much and spend too much. Consequently, we not only need to rein in spending, but also taxation. Bad class warfare theatre from the Democrats is the major point of contention. Every tax break, such as corporate jets, creates jobs. Removing these breaks will only add to unemployment, and the claimed revenue is so small, it is insignificant. It's time to come down hard before we end up like Greece.
*Spelling errors in the above comments were corrected.
Photo: President Obama meets with House Majority Leader Eric Cantor, House Minority Leader Nancy Pelosi, Speaker of the House John Boehner and Senate Majority Leader Harry Reid this week. Credit: Alex Wong/EPA