Boehner Did More for Fiscal Conservatism Than Ryan
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
Why the Right Never Liked Substance-Over-Style Boehner
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.
Boehner Has Had Enough, Resigns Speakership
John Boehner has had enough and who can blame him?
The Republican leader in the House of Representatives is stepping down next month after presiding over America’s lower chamber for nearly five years.
Throughout, he has had to fend off constant challenges from a purist minority in the Republican Party that seemed more determined to stop him from governing than oppose President Barack Obama’s left-wing policies.
The last few weeks were no exception. Hardline conservatives were plotting — once again — to remove him from the speakership and preparing to deny the entire federal government funding unless Congress cut subsidies for Planned Parenthood, a women’s health organization. Moderate Republicans, like Boehner, rightly feared that if the effort succeeded, the party would — once again — be blamed for shutting down the government and seen as extremist by most voters.
Politico reports that now he has announced his intention to stand down, Boehner will almost certainly force through a spending bill next week that keeps the government open.
Next in line to succeed Boehner is California congressman Kevin McCarthy, the current majority leader.
Geithner Predicts Taxes Will Go Up, Boehner “Flabbergasted”
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. “I was just flabbergasted,” the House speaker recalled on Fox News Sunday of when he first heard the administration’s offer.
President Barack Obama demanded $1.6 trillion in tax increases over a ten year period when spending would be reduced by $400 billion, including cuts to Medicare, the entitlement program that finances health care for the elderly in the United States.
The president needs Republican support in order to pass a budget deal through the House of Representatives where the opposition has the majority. Obama’s own Democrats control the upper chamber of Congress, the Senate.
“I’ve just never seen anything like it,” said Boehner on Sunday before characterizing the administration’s proposal as “nonsense.”
In last year’s budget negotiations between Democrats and Republicans, the president and Speaker Boehner had reportedly agreed to $800 billion in revenue increases over a similar ten year period. Those talks collapsed when the administration asked for an additional $400 billion in tax increases, something Boehner knew he couldn’t get through his conference which is opposed to tax hikes altogether.
Unless the two parties do a deal before the end of this year, $100 billion in spending cuts and $440 billion in tax increases will be automatically enacted. Economists believe that this “fiscal cliff” will plunge the country back into recession.
Comprehensive entitlement and tax reform is needed to achieve fiscal consolidation in the long term. Democrats have so far refused to cut social spending while Republicans, though willing to do tax reform, are against increasing tax rates.
Asked on NBC News’ Meet the Press whether there can be a deal, Geither insisted, “The only thing standing in the way of that would be a refusal by Republicans to accept that rates shouldn’t have to go up on the wealthiest Americans. I don’t really see them doing that.”
But that only applies to the Bush era income tax cuts that were extended last year but are set to expire in January. Democrats want to preserve the lowered rates only for incomes under $250,000 while Republicans favor extending all of the current tax rates. There is also the president’s payroll tax credit and several other deductions that are slated to be retired.
Moreover, Democrats made the same argument last year — that Republicans were holding middle-class tax relief “hostage” to low tax rates for the rich — and it didn’t persuade the latter to acquiesce.
“Here’s the problem,” Boehner told Fox News. “When you go and increase rates, you make it more difficult for our economy to grow.”
Besides, the speaker argued, if Republicans agreed to give the president $1.6 trillion in new tax revenue, “He’s going to spend it,” not use it to reduce the nearly $1 trillion deficit, let alone pay down the debt which stands at over $16 trillion.
Boehner also scoffed Geithner’s suggestion that Congress would cede its power over the nation’s debt ceiling to the president.
“Silliness,” he labeled the idea of the legislature giving up its debt authority. “I’ve made it clear to the president that every time we get to the debt limit, we need cuts and reforms that are greater than the increase in the debt limit. It’s the only way to leverage the political process to produce more change than what it would have left alone.”
Boehner Shows Wisdom Where Romney Doesn’t
House Republican leader John Boehner highlighted a policy rift with his party’s likely presidential candidate Mitt Romney on Thursday when he insisted that the United States should not take 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.
That puts the House speaker at odds with Romney who has vowed to declare China a “currency manipulator” if he manages to replace Barack Obama as president in November.
During a televised election debate late last year, Romney further accused China of “predatory pricing” and promised to “crack down on cheaters like” it. “They simply cannot continue stealing our jobs,” he said.
Romney proposed to levy tariffs on supposedly underpriced Chinese imports. When legislators in October considered to do exactly that, Boehner expressed reservations. “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,” he told reporters at the time.
Although China is shielding its own market with protectionist industrial policies while promoting exports through a cheap renminbi, the value of the yuan has increased by more than 30 percent against the dollar since it was depegged in 2005.
Treasury Secretary Timothy Geither has pointed out, moreover, that the value of the Chinese currency alone does not shape the long-term investment decisions of American companies. Inflation is another crucial factor.
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 Geithner. “And that’s a very substantial material change,” he admitted.
Nonetheless, bashing Chinese currency manipulation is a popular campaign theme in the United States, regardless of party affiliation.
It was Democrat Charles Schumer who lambasted Republicans last year when they took Boehner’s advice and voted down a bill that would have raised tariffs on Chinese imports. “For some inexplicable reason, the Republican leadership in the House is siding with the Chinese government,” the senator from New York lamented at the time. “The Chinese only understand one thing — being tough.”
Romney touts the same argument: China is allowed to take advantage of American workers by a weak incumbent president. Yet Barack Obama similarly criticized China’s “unfair trade practices” as recently as February when he told factory workers in Wisconsin, “I will not stand by when our competitors don’t play by the rules.”
American politicians may like to pretend that China isn’t devaluating its currency faster because of their inaction but the reality is that Chinese leaders are the ones who are afraid to take action. At a time when China’s growth is slowing down as a result of reduced Western demand and aggressive competition from other low wage countries in Southeast Asia, they can ill afford to imperil economic expansion by inadvertently raising the cost of exports. The stability of single party rule depends on it.
What the United States will accomplish with “tough” talk and tariffs is less business with China and possibly Chinese countermeasures which could spark a trade war. That is in neither country’s interest. It is unfortune that John Boehner’s reluctance to see this through appears to be the only thing that is standing in the way of either party incurring greater damage on the world’s economy. Unfortunate, because it signals an alarming degree of economic illiteracy on the part of policymakers.
Democrats Want More Borrowing, No Cuts
American president Barack Obama asked Republican leader John Boehner for a “clean” increase in the nation’s legal debt limit on Wednesday, one that is not conditioned on a plan for deficit reduction. The conservative House speaker said “no” but has also ruled out tax increases which the president believes must be part of a “balanced approach” to fiscal consolidation.
White House spokesman Jay Carney blamed Boehner and his Republican Party for jeopardizing the country’s financial credibility. “The president does not believe that the full faith and credit of the United States, its commitment to pay its bills and its obligations, should be held hostage to a political ideology,” he said after Wednesday’s meeting.
Republicans argue that they are looking for pragmatic solutions to solving the nation’s debt crisis when Democrats have rejected any proposed spending reductions and reforms.
To demonstrate Democrats’ intransigence, Republicans brought the president’s own budget proposal for fiscal year 2013 up for a vote again. As expected, it was overwhelmingly defeated in both the House and Senate.
The Democratic majority in the upper chamber hasn’t produced a proper budget throughout Barack Obama’s presidency. The conservative majority in the House of Representatives, this year and last, introduced budgets that were voted down in the Senate.
For three years, the United States have had to borrow more than $1 trillion annually to balance their budget. The national debt is approaching $16 trillion, several hundreds of billions of dollars short of the legal debt ceiling of $16.4 trillion.
The cap was most recently raised by $900 billion in July 2011 after weeks of strenuous negotiations between Democrats and Republicans. As part of their agreement, federal spending projections for the next ten years were reduced by $917 billion with $21 billion worth of cuts implemented in 2012.
A congressional committee was tasked with finding up to $1.2 trillion in additional savings over the 2013-2021 time period. Because the parties failed to reach a compromise, $1.2 trillion in cuts, split between defense and domestic spending, were automatically enacted. Republicans are now scrambling to avert those reductions in national security.
The battle lines for the upcoming debt debacle have already been drawn. Republicans don’t want to cut military spending nor raise taxes. Democrats don’t want to reform entitlement programs like Medicaid, which subsidizes health care for the poor, and Medicare, which pays medical care for seniors.
With Social Security pension payments, these mandatory spending outlays are mainly responsible for America’s ballooning deficit projections.
The Congressional Budget Office estimates that by 2021, more than half of federal spending will have to be allocated to Medicaid, Medicare and Social Security. Along with defense, interest payments on the debt and unemployment insurance, it would be nigh impossible for the federal government to continue to fund education and other domestic programs unless taxes are raised substantially.
Republicans have proposed to privatize Medicare and reduce Medicaid payments. Democrats have ruled out such reforms. As Nancy Pelosi, the left’s leader in the House of Representatives, put it, they will not “reduce the deficit or subsidize tax cuts for the rich on the backs of America’s seniors and working families.”
On Wednesday, Pelosi accused Republicans of “manufacturing” a crisis by demanding spending cuts for more borrowing.
“Cuts” aren’t really cuts though. They are reductions in projected spending increases. In real terms, public spending will grow every year — under the Republican plan, by 4 percent on average; under the president’s plan, by 5 percent. Republicans would spend roughly $40 trillion over the next ten years; Obama would spend $45 trillion. If neither plan is enacted, the CBO estimates outlays worth $47 trillion over the same period.
Boehner Confident in Supercommittee’s Success
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.”