Sunday, July 10, 2011

The Grand Deal Falls Through, How Republicans Have Changed the Subject, Why John Boehner is Good for the GOP, 2012: Romney or Bust

No Mega-Deal on the Debt
President Bill Clinton's Democratic Party was dealt a complete spanking in the 1994 mid-terms after public backlash against his proposed health care reform sparked the now famous Republican Revolution and Newt Gingrich's Contract with America. Clinton deftly adapted to the new political reality and negotiated with Gingrich to reform welfare and restrain government spending, which led to budget surpluses, a resounding re-election in 1996 and a lasting legacy for both Clinton and Gingrich.

President Barack Obama's Democratic Party was dealt a complete spanking in the 2010 mid-terms after public backlash against his adopted health care reform sparked a Republican takeover of the House and significant gains in the Senate. Some of us (myself included) hoped that this would lead to a grand deal on the deficit, built on the basis of the bi-partisan debt commissions recommendations.

It appears it is not to be, at least for now. The President and House Speaker John Boehner had been quietly attempting to negotiate a 10-year, $4 trillion deal that would have reportedly included not only tax changes but reforms to all three major entitlement programs. Such a deal would've been course-altering for the country and a major feather for both.

But, as is often the case, political reality got in the way. The House GOP wasn't going to bite on even the smallest of tax increases. Liberal Democrats in the House and Senate weren't going to go for entitlement reform. No compromise, no deal.

So, it appears we will likely get a deal half that size, that consists entirely of spending reductions. $2 trillion over 10 years really isn't as draconian as it sounds. It frankly wouldn't even get government back to the size of 5 years ago. But it's better than nothing. And based on the stated GOP principle that they will only vote to extend the debt ceiling only by the amount of spending that is reduced, $2 trillion would still be sufficient to get the country through the 2012 elections, all of which would set up a huge set of decisions for the population in 2012.

Just remember:
(1) The Bush Tax Cuts, extended by Obama, are slated to expire on January 1, 2013.
(2) Also on January 1, 2013, major tax changes take place as part of the Health Care reform act. These include a 0.9% Medicare tax increase on wages over $200K and a 3.9% tax on investment income for those making over $200K.
(3) Assuming a $2T increase, the new debt ceiling will be breached, likely in late 2013.
(4) The individual mandate tax for health care takes effect on Jan 1, 2014.

So, We, The People will likely have a lot to decide next November about the future of the country.

It's All About Spending, Baby
The 111th Congress, over the course of 2 years, passed 383 bills which became law. Granted, some of these were to name post offices and the like, but some very meaty legislation became law in 2009 and 2010, including:
* SCHIP Expansion
* The Lily Ledbetter Fair Pay Act
* The Stimulus Package
* Healthcare Reform
* Two major financial reform bills (the CARD Act and the Dodd-Frank Act)
* 9/11 First Responders Act
* Start Treaty
* Don't Ask, Don't Tell Repeal

In it's first 6 months, the 111th Congress has passed only 23 bills which have become law, or to put it another way, is only on pace to produce 24% as much legislation.

And this is just the way the GOP wants it. Their desire, coming out of the 2010 mid-terms, was to make the discussion all about reducing government spending. And they have succeeded, in spades. First, it was the Fiscal 2011 budget, in which they extracted over $80 million of spending reductions, albeit less than what they had hoped. Now, it is the debt ceiling increase, which will allow them to extract a large number of spending cuts and will consume all of the political air time until at least early August.

Then, lest we forget, Fiscal 2012 begins in October, and save for the House passing a Defense bill, virtually no work has been done on this opportunity for the GOP to extract more cuts.

When was the last time that you heard anyone talk about Immigration Reform, Environmental Policy or anything other than the budget?

John Boehner: Policy, Not Just Politics
House Speaker John Boehner is good for the GOP. Will Boehner and I disagree on a whole host of policy issues, I greatly respect the fact that he is about getting things done, not simply political grandstanding. It was Eric Cantor and whining wing of the GOP that caused the debt talks to break down (along with the liberal whining wing of the Democratic party), not Boehner. Boehner was willing to put everything on the table.

He also masterfully worked through deals with the White House to extend the Bush Tax Cuts and cut the deal that passed on the 2011 budget.

The more Republicans out there actually trying to make policy and strike deals versus simply scoring political points against the White House, the better off the nation and the GOP are.

Romney Is The Only One Who Can Win
Okay, maybe that's a little too bold a statement. If people actually knew Tim Pawlenty or Jon Huntsman, either would be a viable choice against President Obama, in what could wind up being a very close election in 2012. But that isn't going to happen. It's Romney vs. Bachmann unless someone else breaks out very quickly. And Bachmann can't win. I grant you that polling at this stage of the race is still very tenuous, but look at the average numbers this month:

Obama vs. Romney: Obama +5.5%
Obama vs. Gingrich: Obama +11.5%
Obama vs. Huntsman: Obama +14.0%
Obama vs. Pawlenty: Obama +14.2%
Obama vs. Bachmann: Obama +14.3%
Obama vs. Paul: Obama +18.0%

No polls yet on Obama vs. Thaddeus McCotter (go look it up, if you don't know what I'm talking about.)

It's actually quite amazing given how bad the economy is that President Obama still leads the field. Romney is within striking distance, no one else is even close. I expect things to tighten, particularly if we keep having jobs report like June's.

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Obama vs. Cain: Obama +19.0%

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