What a disappointment Paul Ryan has turned out to be.
The Republican congressman from Wisconsin, who leaves the speakership of the House of Representatives — and politics — early next year, was hailed as the last best hope of fiscal conservatism in the United States, but in fact his much-reviled predecessor, John Boehner, did more to shrink the deficit. Read more “Boehner Did More for Fiscal Conservatism Than Ryan”
Outgoing House speaker John Boehner may have done more to restrain government’s growth than any Republican in office today. Yet he is derided by many conservatives. Why?
Perhaps because Boehner got things done the hard way and spent less time boasting about it.
Some conservatives literally cheered on Friday when Boehner announced he was stepping down. Their heroes are doctrine Republicans like Texas senator Ted Cruz, a candidate for the party’s 2016 presidential nomination.
Cruz rubbed salt in Boehner’s wounds on Friday when he predicted that the speaker would “land in a cushy [lobbyist] job after joining with the Democrats to implement all of President Obama’s priorities.”
Cruz is the ultimate manifestation of style over substance so it useful to compare his accomplishment to Boehner’s.
Last year, the Center on Budget and Policy Priorities estimated that ten-year deficit projections had shrunk $5 trillion since 2010, the year Republicans won back their majority in the House of Representatives.
Vox‘s Dylan Matthews reports that the bulk of the savings, $3.2 trillion, came from spending cuts enacted through the post-debt ceiling crisis Budget Control Act, spending cuts negotiated in early 2011, the Bush tax cuts deal of late 2012, the Murray-Ryan spending deal of 2013 and last year’s farm bill.
In fairness, there were tax increases as well — which Republicans opposed — but Boehner still cut far more than one of his most immediate predecessors, Newt Gingrich. At least four times as much, by Matthews’ reckoning.
Yet Gingrich is a hero of the same small-government right that sees Boehner as at best a wimp. In 2012, he was a viable contender for the party’s presidential nomination. Boehner, despite winning thirteen elections in the ultimate presidential swing state of Ohio, wouldn’t stand a chance in a Republican primary.
Again, there are vast differences in style. Like Cruz, Gingrich is a master at self-promotion and willing to embrace whatever conservative position is fashionable at the moment even if it contradicts his previously-held beliefs. Cruz earlier this year reversed his position on giving President Barack Obama the authority to negotiate a free-trade deal with other Pacific nations when it turned out his supporters cared less about free trade than they did about opposing Obama. Gingrich famously changed his position on an individual mandate in health insurance. When Republicans were in the majority, he supported it; when Obama proposed it, Gingrich had changed his mind.
Boehner was less attentive to the whims of the conservative movement and, to the desperation of the least compromising members of his conference, willing to work with the other party to govern.
The right of the party rejected all those spending deals Boehner negotiated even though they helped stave off a serious funding crisis — because they didn’t give them everything they wanted.
The difference between the speaker and them, argues Megan McArdle at Bloomberg View, is that the latter believe they can ask the impossible and then Democrats will meet them halfway.
In reality, she writes, negotiations are defined by what is called the “zone of possible agreement,” or ZOPA.
Anything that either side considers worse than no deal at all is outside of the ZOPA and no amount of strategery is going to get you there.
It’s why Republicans have been unable to get a deal that cuts entitlements — even if they are in dire need of an overhaul — and why Democrats aren’t going to get Scandinavian-level tax rates.
Demand too much, McArdle warns, and the other side will simply walk away.
A recent demonstration of this theory came when Greece demanded relief from austerity this spring without canceling its financial support from the rest of the European Union. The country said it was willing to exit the euro if it didn’t get its way. Rather than convince Greece’s creditors that they needed to relax the conditions of the bailout, the threat almost convinced them that Greece was beyond salvation. In the end, the country had no choice but to accept even more austerity to prevent bankruptcy.
Boehner understood that intransigence wasn’t going to get the Republicans closer to what they wanted. By negotiating — with a strong majority behind him and perhaps helped by the occasional demonstration of power — he succeeded where the likes of Cruz failed and got deep spending cuts done.
McArdle isn’t optimistic that base Republicans will learn their limits and accept that they’re never going to get 100 percent.
Maybe they need to elect someone who will try what they’ve been longing for: a full throated, take-no-prisoners approach that doesn’t bother with compromise or concession. Like the Greeks, they’ll discover that this leaves them worse off, not better.
It would turn the middle of the country against Republicans and while that might not dramatically reduce their majority in the gerrymandered House, it would most likely cause them to lose control in the Senate — and almost certainly hand Hillary Clinton the presidency.
American treasury secretary Timothy Geithner predicted on Sunday that Republicans will eventually agree to raise taxes to stave off the “fiscal cliff”, but House leader John Boehner didn’t indicate that the two parties were close to reaching a compromise.
House Republican leader John Boehner clashed with his party’s likely presidential candidate, Mitt Romney, on Thursday, when he argued against legislative action to try to force the Chinese into devaluating their currency.
“Congress passing a law outlining stringent requirements for dealing with the Chinese and the value of the currency, I think is inappropriate,” said Boehner.
The Republican leader in the House of Representatives, John Boehner, said that he was confident that the bipartisan congressional committee charged with identifying more than a trillion dollars in spending reductions will reach a consensus before the deadline this month. “I’m going to do everything I can to ensure that the supercommittee is successful,” he told ABC’s This Week on Sunday.
The supercommittee, that was created as part of a debt agreement reached in August, has less than a month left to agree to at least $1.2 trillion in cuts to federal spending projections for the next decade. If it doesn’t, defense and domestic programs could each be subject to hundreds of billions in automatic cuts, a prospect that’s terrified military officials who must already cope with huge budget reductions.
Entitlement and tax reform remain the two most complicated and divisive issues for lawmakers grappling with the nation’s ballooning debt. Democrats are resistant to reining in public pensions and health support for seniors and the poor while Republicans oppose tax increases.
The nation’s largest entitlement programs, Medicare and Social Security, are projected to deplete their trust funds in 2024 and 2036 respectively. Republicans have proposed to privatize Medicare for future seniors while several of the party’s presidential contenders are in favor of introducing private retirement savings accounts for citizens who do not want to depend on a government pension. Both plans have been criticized by members of President Barack Obama’s party however who do want seniors to be able to count on the “bedrock” promises of these decade-old programs.
According to Speaker Boehner, “We’ve made promises to ourselves that our kids and grandkids cannot afford.” If Democrats are willing to reform entitlements, he suggested, Republicans could agree to measures that will boost revenue. But increasing tax rates is still unacceptable to him.
“We don’t want to stagnate this economy by raising taxes,” the conservative leader in the Senate, Mitch McConnell, told NBC’s Meet the Press in September. Boehner reiterated the Republican position on Sunday when he told ABC that Washington DC doesn’t have a revenue problem, “we have a spending problem.”
Boehner previously endorsed eliminating tax exemptions for oil companies although he conditioned such a change on a reduction of the nominal corporate tax rate which is among the highest in the industrialized world. “I believe that if we restructure our tax code where on the corporate side and on the personal side, the target would be a top rate of 25 percent, it would make our economy more competitive with the rest of the world, it would put Americans back to work.”
Texas governor Rick Perry, who is in the race for the Republican Party’s presidential nomination, proposed to introduce a 20 percent corporate and personal income flat tax two weeks ago. Former Utah governor Jon Huntsman, another presidential hopeful, said to favor a 25 percent corporate tax.
If the supercommittee unveils a comprehensive deficit reduction plan this month, Congress shouldn’t put fiscal consolidation on hold until after next year’s election. It has to reduce the projected ten year deficit by as much as $4 trillion to stabilize the debt and put it on a downward slope as a percent of gross domestic product. As long as there’s divided government though, with Republicans controlling the House and Democrats the Senate and presidency, it will require compromise to achieve further budget cuts and as John Boehner put it this weekend, “This is hard.”
The top Republican in the House of Representatives warned on Tuesday that it was “dangerous” for the United States to try to influence Chinese currency policy with legislation.
“While I’ve got concerns about how the Chinese have dealt with their currency, I’m not sure this is the way to fix it,” House speaker John Boehner told reporters.
On Monday, the United States Senate had voted to open debate on a bill that calls for tariffs on imports from countries which deliberately undervalue their currencies, prompting a fierce rebuke from Beijing.
As China’s economy is expected to overtake America’s as the world’s largest in terms of gross domestic product by 2016, lawmakers in the United States complain that their competitor is shielding its own market with trade policy and promoting exports with a cheap renminbi.
The Chinese depegged their currency from the dollar in 2005. The value of the yuan has since increased by some 30 percent against the dollar while the People’s Bank of China is allowing it to float in the foreign exchange market albeit within a narrow band.
But China won’t move further on currency as long as it has millions still living in poverty and millions more dependent on exports to the West.
Premier Wen Jiabao defended China’s monetary policy in Brussels last year. On the whole, China’s economic development “still lacks balance, coordination and sustainability,” he had said previously. A sudden increase in the yuan‘s value, he told the Europeans, could bring “disaster” to China. “Factories will shut down and society will be in turmoil.”
Treasury Secretary Timothy Geither has pointed out that the value of the Chinese currency alone does not shape the long-term investment decisions of American companies. Inflation is another crucial element.
Chinese inflation is much more rapid than the United States now. Chinese inflation is probably going to be more than twice, three times American inflation rates for a long time to come.
As a result, exchange rates, in real terms, are appreciating — “at roughly a pace of about 10 percent a year,” according to the secretary. “And that’s a very substantial material change,” he admitted.
For some American legislators, it’s not been enough. “For some inexplicable reason, the Republican leadership in the House is siding with the Chinese government,” said Democratic senator Charles Schumer of New York. “The Chinese only understand one thing — being tough,” he told his fellow senators despite calls for multilateral talks.
Chinese officials have accused Washington of “politicizing” the currency issue and retort that “quantitative easing” on the part of the Federal Reserve is actually a cloaked method of driving down the exchange rate of the dollar by injecting more money into the economy.
The American left has criticized Republican House speaker John Boehner’s deficit reduction plan because it would involve a form of “class warfare” in that it cuts welfare.
But they don’t seem to have noticed that welfare spending has skyrocketed under President Barack Obama.
The federal government operates dozens of means-tested assistance programs for the poor — everything from food and housing assistance to social services and job training. That is excluding Medicare and Social Security for which Americans of all incomes are eligible.
President Obama has hugely increased federal spending on these programs from $471 billion before he took office to $700 billion today — a 50-percent bump in just three years! Read more “Republican “Class Warfare””
Negotiations over raising the United States’ debt ceiling between President Barack Obama and congressional leaders collapsed this weekend when House speaker John Boehner refused to back $1.2 trillion in tax increases. He has promised to work with Democrats and Republicans in Congress to reach a deal instead — without administration officials present.
Boehner walked out on negotiations at the White House on Friday when the administration demanded $400 billion in revenue increases on top of the $800 billion which the speaker had already agreed to. The increases would have come from closing tax loopholes and ending special interest deductions — “spending in the tax code,” according to the president — without actually raising tax rates. Indeed, Republicans favor ending “tax subsidies” while lowering the nation’s corporate tax rate which is the highest in the industrialized world and hampering job creation, they say.
The president announced Friday afternoon that he had offered Republicans over a trillion in discretionary spending cuts over the next ten years, including defense, along with some $600 billion in cuts to public health and pension programs. Including $800 billion in revenue increases, the package, worth well over $2 trillion, would have allowed Congress to raise the legal debt limit by a similar amount and prevent having to vote on the issue again before the 2012 elections.
Entitlement or mandatory spending is mainly responsible for driving up federal expenditures in the future but lawmakers are not expected to reach a compromise agreement on reforming Medicaid, Medicare and Social Security this week. The president has threatened to veto a short-term extension of the debt ceiling that could give Congress time to negotiate a grand bargain.
Previous bipartisan negotiation efforts identified up to $300 billion in long-term savings by scaling down the pension benefits of federal workers and changing the way in which inflation is measured to slow the growth of general retirement payments. Medicare benefits for wealthy retirees could be reduced although Democrats fear that it could lead to an erosion of public support for the program. They previously rejected a Republican plan to private Medicare and replace it with “premium support” or vouchers.
Mere hundreds of billions in spending reductions won’t make the programs solvable however. Medicare is expected to run out of money in 2024 and Medicaid, which subsidizes health care for the poor and is paid for by the states, is increasingly crowding out investment in other areas, including education and infrastructure. The Social Security trust fund is projected to last until 2036 but once it is depleted, the annual payroll taxes that pay for the program will only be sufficient to cover 75 percent of the retirement benefits it is required to pay seniors.
To put $2 trillion in cuts over the next decade in perspective, the Congressional Budget Office estimates that federal spending will reach nearly $46 trillion over the same period.
The Treasury Department expects that it will have exhausted its legal ability to borrow by August 2 by which time Congress should have raised the $14.3 trillion debt limit in order to continue to finance the government or risk a technical default.