Our Elected Leaders Punt Yet Again On Real Deficit Reduction, Boehner Narrowly Holds On To Speaker Job, Christie Goes Ballistic

The Fiscal Cliff Deal Isn't Much of a Deal at All
I guess there are things that all sides can claim victory in the fiscal cliff "deal" that was negotiated early in the new year, which was primarily a by-product of discussions between Vice President Joe Biden and Senate Minority Leader Mitch McConnell.

For Republicans, they can feel good that for 99.2% of Americans, the tax cuts that President Bush pushed for in 2001 and 2003, that the vast majority of Democrats and even some Republicans opposed at the time, have no become a permanent reality.  They are law forever.  They can also feel good that the military cuts that were part of the sequestration deal last year are now put off, albeit for only two months.  They can also feel good that they will get another bite at the spending apple in short order with the pending fights over the second half Fiscal 2013 budget and the debt ceiling coming up directly.

For Democrats, they can feel good that they successfully raised taxes on the wealthiest 1% (actually the wealthiest 0.8%, to be precise, but you get the point), that they averted the fiscal cliff cuts for domestic programs, albeit for only two weeks, that unemployment insurance was extended for another year, that renewable energy tax credits were extended for another year and that they really didn't have to agree to any spending cuts to get the deal done.

As for me, I don't feel particularly good about any of this.

Let's introduce a reality into the equation.  The deficit last year was $1.128 trillion.  We took in $2.435 trillion in taxes, 46% from individual income taxes, 35% from Social Security and Medicare Taxes, 10% from Corporate Taxes and 9% from the miscellaneous set of other federal taxes that the government collects, such as excise taxes on gasoline, cigarettes, alcohol, permitting costs, etc. We spent $3.563 trillion, 45% on Social Security and Medicare/Medicaid, 23% of Defense and Military expenses, 10% on unemployment and other income security measures (such as subsidized school lunches), 6% on interest on the national debt and 16% on everything else.

So what did the fiscal cliff "deal" do?  It allowed the temporary payroll tax reduction on Social Security to lapse, which effectively boosts Social Security payroll tax income by 19%, since the total tax (including both employer and employee) rises from 10.4% to 12.4%.  This raises about $120B per year in additional revenue, versus the last two years.

The cliff deal also raised income taxes from 35% to 39.6% for individuals making over $400K and married couples making over $450K and raises capital gains and dividend taxes on those individuals from 15% to 20%, as well as capping deductions on those over $200K/$250K.  Collectively, this raises about $60B per year in additional revenue.

So, all else being equal (and it is obviously not because not everything else is static, but everything else is pretty well in balance), we took a $1.128 trillion deficit and solved 16% of it.  On the 2012 basis, this woud give us about $2.615 trillion in revenue, not quite enough money to fund Social Security, Medicare/Medicaid, Defense and interest on the debt, if you cancelled every single other government program (no FAA, no SEC, no EPA, no FDA, no USDA, no OSHA, no federal court system, no power at the White House, etc.)

In other words, this was a totally and grossly insufficient bill to solve the structural problem that we had.

It amazes me that Democrats now accept 99.2% of the Bush tax cuts that they once opposed, and that we have never been able to afford.  It also amazes me that they reject out of hand even the most modest GOP proposals to rain in entitlement spending, such as shifting the chained CPI for Social Security increases, which would save a ton of money over time and make the system much more stable while having only a gradual effect on today's seniors. 

It also astonishes me that the GOP continue to fight for low taxes without a serious, specific proposal on how they would cut spending.  Since today's revenues don't even cover Defense, Entitlements and Interest and they want even lower revenues than today, to be credible to me, they would need to present a budget that makes deep, deep cuts in Defense and Entitlements to even get close to balance.  They have not, as of yet and, in fact, most have strongly opposed defense cuts, while skirting the issue of entitlements.

Let's not forget also the underlying dynamics that make the future budget reality worse.  The population is getting older and health care costs are still rising (albeit the rate of health care inflation has slowed from the pace of the past decade) so entitlement costs will rise faster than revenues.  Interest rates are at 200 year historic lows, meaning that it is highly probable that interest rates and therefore interest expense will rise in the future, especially with a rising federal debt.  There are some positives - unemployment insurance costs are likely to drop as the economy improves along with some other social programs and the wind-down in Afghanistan will save some on the military budget.  But in balance, the trajectory is towards a worse budgetary situation, not a better one.

Both parties to date are taking unserious positions.  There are only four levers to manage our current situation:
(1) Raise Taxes of Some Form in Meaningful, Broad Way
You can't tax the 1% and get us into balance.  To make a meaningful impact on the deficit, you would need to raise taxes on the majority of the population in some form, either in the form of higher income tax rates, higher payroll taxes or a national sales or VAT tax.
(2) Structural Reforms to Entitlements
Higher participation ages, lower benefits, etc.  You have to "bend the curve" on entitlement spending.
(3) Meaningful Cuts to Defense
We spend 5 times the next nearest country (China) on our military.  Would we be unsafe at 3 times their spending?
(4) Default in Some Way Shape or Form
This is a nuclear option that would cause a depression.  There are two ways to do this - either simply don't pay the bills which would be an utter disaster to financial markets that would immediately spark a deep financial and economic crisis or print money to pay the bills (i.e. have the fed buy up and forgive treasury debt),  which would likely spark hyper-inflation.  Neither of those options is at all appealing, even compared to 1-3.

My other disappointment (or maybe I should be happy, since I didn't love the deal) with the cliff deal is that it doesn't really solve anything.  The federal budget still expires March 1st, so there is another, immediate fight over spending.  Sequestration cuts still hit March 1st also.  And, approximately the end of February, the federal government won't be able to pay its bills unless congress increases the debt ceiling.  In other words, get ready for more melodrama, stern rhetoric and down-to-the-wire posturing that solves nothing before another 11th or 12th hour deal that doesn't do nearly enough.

My final disappointment is in President Obama's inability to lead or paint a vision.  He wasn't even a participant in most of the talks that cut the deal.  He has painted no clear vision for how we get where we need to go with the budget and seems to have no sense of urgency about reducing the deficit.  Joe Biden showed far more leadership that the President in this case, and even Biden's leadership was just to cut a deal in the end, not to really solve the problem.

Prepare to be disappointed again in the coming year.

Boehner Holds On With 2 Votes to Spare
John Boehner will be the House Speaker for the next two years, after successfully beating back dissent from about 8% of his caucus.  While there was no Republican actively running against Boehner, a cast of 17 Republicans (excluding Boehner, who did not vote, as is tradition) either cast protest votes, voted "present" or did not vote.  Some were clear protest votes, for the likes of Alan West (who isn't in the House any more as he lost re-election) and Colin Powell (who has never been in the House), some were semi-serious votes, including 3 for Majority Leader Eric Cantor, who many of the far right view as more sympathetic to their cause than the pragmatic Boehner.  Boehner needed an outright majority in order to not force a second ballot on the issue, which required 218 votes.  The 220 he received was sufficient - barely, to keep him with the Speaker's gavel for the next two years.

All of this supports what I have long said about Boehner - he is a conservative but not a wing nut as many think.  He is hemmed in by a caucus that is well outside the mainstream.  The fact that he almost lost his Speakership simply for supporting the deal he did speaks volumes about where the right-wing in the House sits.  Heck, a significant number of House Republicans even opposed the Hurricane Sandy aid package that was finally passed on Friday (more on that in a second.)

My advice to Boehner?  You know you are never going to be the darling of the right wing, so take your re-election as an opportunity to try to go solve the problems.  The hard-liners will hate it, but they already don't support you.  So cement your legacy and get something done.

Chris Christie Lets Loose on the House GOP
The fiscal cliff deal on January 2nd was the last thing the outgoing House of Representatives did before disbanding to make way for the new House, which was sworn in yesterday.  This greatly upset lawmakers from New York and New Jersey, who had been hoping for and believed they had secured agreement for aid for the battered coastal areas impacted by Hurricane Sandy.

Why the House didn't take the issue up before disbanding is inexplicable to me.  Perhaps John Boehner couldn't swallow asking his conservative members to vote on a spending package right on the heels of a painful vote on the fiscal cliff.  But, come on, when did relief for people made homeless by a hurricane become a partisan issue?

Christie was specific, and named names in his criticism, stating:
"There is only one group to blame for the continued suffering of these innocent victims, the House majority and their speaker, John Boehner."

Boehner scrambled to pull a vote together on the bill, with an initial aid package rapidly set for a vote yesterday and the balance to be voted on January 15th.  The initial package passed the House 354-67, with all 67 "no" votes coming from Republicans.  It is shocking to me that there were 67 members of the new House majority willing to vote no on this bill.  The bill passed the Senate, which always seems much more reasonable an bi-partisan, without a single "no" vote.

The initial aid package contained only $9B, the bigger $51B package is to come in the January 15th vote.  Could that package be in serious jeopardy, given the delay and vote on the first bill?  If it is, it would be utter political suicide for the House GOP.  Nothing makes you look like a wing nut like pushing hard to keep tax cuts on capital gains for people making millions of dollars and then opposing federal funds to help people made homeless by a hurricane.

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The Big 2012 Elecotral Map - A Stable Picture of a Changed Race, Should Obama Abandon North Carolina and Florida?, Veep Candidates Clash, The Battle for Congress

Days Until the Election: 23
Projected Popular Vote Total: Romney +1.0% (down 0.2% from last week)
Projected Electoral Vote Total: Obama 294, Romney, 244 (Obama up 13 from last week)
Current Betting Odds: Obama 61%, Romney 39% (Romney up 1% since last week)

As the aftermath of the first Presidential debate settles down in the polls, we see the "new normal" for the race beginning to stabilize.  Romney actually lost a little ground this week, with his national polling falling back fractionally and Virginia flipping back to Obama.  But the basic picture is still the same - a pick 'em race nationally with a slight structurally electoral advantage to Obama.

Romney needs to add a minimum of 26 electoral votes from here to win the Presidency.  If he picks up the 3 closest states (New Hampshire, Nevada and Virginia), it leaves him just short at 267.  This means that Romney still needs one of the larger states - either Ohio, Wisconsin or Pennsylvania, or to pick up those 3 plus Iowa.

The betting odds continue to tighten a little but still show an Obama advantage, largely, I believe, because of this structural electoral advantage that we have been discussing for some time.

Should Obama Bail on North Carolina and Florida?
The Democratic National Convention was held in Charlotte and North Carolina holds a special place on the map for Barack Obama as a state he'd like to have.  Florida obviously holds special significance for Democrats as the site of the epic recounts 12 years ago.

But, as a matter of strategy, if I were advising President Obama, I would urge him to abandon his campaign in North Carolina and Florida in the waning days of the campaign.

Sure, winning one of those two states would seal the deal for a second term.  But they seem to be slipping out of reach and he doesn't need them.

Certainly, I would contest Colorado, which is basically just one media market and still seems very winnable.  Other than that, I'd focus on holding the states with leads.  As I described above, Romney, if he takes Florida and North Carolina, still needs New Hampshire, Nevada, Virginia, Colorado and 1 other state.  Firewall Ohio, Wisconsin, Iowa, Pennsylvania and you win the Presidency.  Make Romney feel heat by rallying Hispanic voters in Colorado and Nevada.  Make the fight take place on your turf and focus resources.

Likewise, if I were advising Romney, I'd be telling him to pour everything into Ohio and Wisconsin.  Those are two big states that appear "gettable".  Michigan looks like too far a reach.  I think Pennsylvania is a long shot.  Nail Ohio and Wisconsin and your paths to the Presidency are many.  Miss them both and it is an almost impossible map.

VP Candidate Debate to an Essential Draw
The VP debate is typically the least significant of the four national debates in terms of moving the polls and that certainly appears to be the case this year - in part because almost everyone is voting based on the top of the ticket and in part because, in my opinion, Joe Biden and Paul Ryan essentially fought to a draw.

Biden was very good on substance - he was quick on his feet, aggressive in countering Ryan's attacks and came across likable, as he virtually always does.  He has received some criticism for smirking and laughing during Ryan's responses, but I don't think in context that those responses will hurt him.

Ryan appeared capable, cool and collected.  He was also aggressive on the attack and showed credibility and understanding on foreign policy. 

In short, I don't expect that the VP debate will do much to change the race.

Tune in next week for the second Presidential debate, where it is essential for Obama's chances that he significantly outperform his first debate performance.  Look for Romney to be aggressive to maintain / support his positive momentum.

The State of the Congressional Races
It's been a while since I've looked at the state of the races.  It appears more likely than not that the Democrats will retain control of the Senate at this point and that Republicans will retain the House.  Here are the latest numbers:

In the Senate, there are 30 Democratic and 37 Republican seats that are not up for election.  Of the balance, here are where things stand:

Safe or Likely Independent Seats - 2
(both likely to caucus with Democrats)
Vermont, Maine

Safe or Likely Democratic Seats - 12
California, Maryland, New York, Delaware, Minnesota, Rhode Island, Hawaii, Michigan, New Jersey, Washington, West Virginia, New Mexico

Safe or Likely Republican Seats - 6
Mississippi, Tennessee, Texas, Utah, Wyoming, Nebraska

Close Races - Projected 10 Democrats, 3 Republicans
Florida - Nelson (D) +7.6%
Ohio - Brown (D) +5.6%
Missouri - McCaskill (D) +5.2%
Pennsylvania - Case (D) +5.0%
Connecticut - Murphy (D) +4.2%
Wisconsin - Baldwin (D) +3.0%
Indiana - Donnoley (D) +2.0%
Massachusetts - Warren (D) +1.8%
Arizona - Carmona (D) +1.5%
Virginia - Kaine (D) +1.0%
North Dakota - Berg (R) +0.1%
Montana - Rehberg (R) +0.5%
Nevada - Heller (R) +3.0%

Projected: 52 Democrats, 46 Republicans, 2 Independents
(effective control 54-46 Democratic)

So, Democrats have the lead, but also have more close races to defend that they are currently leading.  Republican control of the Senate is not impossible, but looks to have become increasingly unlikely as the races have played out.

On Intrade, the odds of Republicans winning at least 50 Senate seats is currently pegged at 34%, and keep in mind that 50 seats only gives them the majority if they also win the Vice-Presidency, otherwise they would need 51 to get control.

In the House,
Current generic polling has the Democrats at +1.3%.

Based on this, projecting based on the newly redistricted House (which structurally favors the GOP) would give us:
Republicans 220 Seats, Democrats 215 Seats

I don't generally do seat-by-seat analysis of the House, but other sites do, so here is there perspective:
realclearpolitics.com (splitting the toss-ups evenly): GOP 239, DEM 196
electionprojection.com: GOP 240, DEM 195

Republicans have a 90% chance of retaining the House, based on the latest Intrade odds.

Obviously, the seat-by-seat analysis yields a broader spread than the generic polling data would indicate.  This may well be the case because of the candidates in the close races.  But I'm inclined to believe the truth is somewhere in between.  Either way, the GOP appears well-poised to retain the House.

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The Good, The Bad and The Ugly of the Democratic National Convention, Do the Conventions Matter at All Anymore?

Last week, I looked at the best and worst of the Republican National Convention.  This week, I do the same for the Democrats, who, as expected, had a similarly hyper-produced package of material for consumption by us politicos and whatever undecided voters actually still watch this kind of stuff.

Here is my rundown:

The Good (and Very Good)
(1) Bill Clinton, Bill Clinton and Bill Clinton
Love him or hate him, Bubba is the master.  I have never in my lifetime seen a politician who can break down complex arguments in simple ways that are equally compelling to the political in-the-know and the casual observer.

Clinton's strident defense of Obamacare, including citing insurance rate declines, arrested health care inflation and stories of the ill protected was truly compelling and frankly made me wonder where the heck the Obama administration has been in the defense of its signature policy.

His dismantling of Romney and Ryan's economic proposals was wicked red meat and incredibly quotable, containing such memorable one-lines as "double down on trickle down" and "they say we need to have the courage to make the tough choices but don't have the courage to tell us what choices they would make."

He made the strongest possible case for Obama, stronger than anyone else at the convention.

(2) Joe Biden
We knew that Clinton would be good - he has always been a great speaker.  The whole Democratic Party might have been nervous about Biden, who is often prone to gaffes and wild overstatements of arguments that make him vulnerable to criticism.

Biden's speech was fiery, but also emotionally connecting and persuasive.  After all the fire he has brought over the past 4 years, it is easy to see after that speech why the President liked him so much in the first place - at his best, Biden comes across as genuine, decent and loyal.

"Osama Bin Laden is dead and General Motors is alive" will likely live on as a campaign mantra.

(3) Brian Switzer
The cowboy Governor of Montana is a hidden star in the Democratic party.  His dissection of Governor Romney's term in office, while less comprehensive than the speech delivered by Deval Patrick two days earlier, was more compelling in my mind because it made several simple points clearly - Romney left the state in greater debt and his claim of not raising taxes is a shell game.

The line "when you want to raise taxes and not tell anyone it's a tax increase, you call it a fee" cracked me up, as did his follow-up line about being mad at Romney about raising the cost of gun licenses.

Switzer is this decade's answer to Bill Clinton in the 1990s.

The Bad
(1) President Obama's Speech
I frankly found this to be the worst major speech of the President's career.  His attempt at lofty inspiration and appeal to our better natures felt vacant and flat to me in the face of the bitter partisanship and tough circumstances in which the country finds itself and of which the President has been a part.

He fired away at Romney and Ryan for not offering any specifics (a claim that is utterly fair) but then followed that by offering no real agenda of his own, other than some vague policy goals with long timeframes.

What exactly would the President prioritize if re-elected?  I'm not at all sure after watching that speech and that's not a good thing.

(2) The Long Line of Celebrities
Does everyone from Hollywood have to be given 15 minutes at these things?  I will admit that Eva Longoria gave a smart, poignant speech (she knows her stuff in politics), but the rest of the celebrity speeches sort of felt like an insult to the audience and left me wondering, what exactly qualifies them to be here telling me how to vote?

The Ugly
(1) The platform fight
This might or might not have life as an issue, but what the Democrats did relative to their platform change was a disgraceful subversion of Democracy.

To set context for those who didn't follow it, for whatever reason (oversight or intention), the platform initially omitted language which had been included in the 2008 platform pertaining to the State of Israel being our strongest ally in the Middle East and Jerusalem being the capital of Israel.

As the media and the GOP caught the shift and outraged ensued, the Democrats scrambled to change the platform back to the 2008 language (which also aligned with the state policy of the Obama administration.)

No problem with doing that, other than that convention rules require a vote of 2/3rds of the delegates to amend the platform after it has been adopted (which it already had.)  When the amendment was proposed on the floor, Los Angeles Mayor Anthony Villaragosa took a voice vote three separate times.  Each time, it appeared that the vote from the floor was no better than 50/50 for the platform change and clearly NOT a 2/3rds vote (plenty of video is available on YouTube.)  Nonetheless, Villaragosa decided that 2/3rds had voted for the change and it was adopted.

Shame on Villaragosa and shame on the party leaders for allowing this.  You cannot be the party of Democracy if you don't even practice it in your own party.

Overall, my impression is that the conventions were a relative wash - Romney was stronger than Obama in the nomination speeches but Biden was better than Ryan and Clinton was miles better than any speaker on the GOP side.

All of which leads to the key question:

Does Any of This Matter?
When I laid out my 7 key events to the last 100 days of the election (the selection of Romney's VP, the two conventions and the four debates), my assumption was that each of these 7 events could at least have the potential to shift polls in a meaningful way.  It is clear to me that the Paul Ryan nomination helped Romney at least some, possibly facilitating as much as a 2 point swing in the polls, which is significant in a close race.

So are the conventions having a similar effect?  It is too early to have numbers from the DNC, but we can see if there is an effect from the RNC by looking at the two tracking polls that are consistently publishing every day, the Rasmussen and the Gallup polls.

Both polls have their flaws - Scott Rasmussen is clearly a Republican-leaning, if not Republican-affiliated pollster and his polls early and in the middle of races consistently show the GOP doing better than virtually all independent polls.  Somehow, as elections draw near, his polls tend to intersect other polls, so his final numbers always look respectable.  So, I read the Rasmussen polls but always take them with a grain of salt if there are not other, independent polls that verify his findings.

Gallup certainly does not have polling bias, it is probably the most respected and storied polling firm in history.  My gripe with Gallup is that at this stage in the race, they use a registered voter sample rather than a likely voter sample.  Their argument has always been that until late, it is too difficult to effectively screen who is actually likely to voter, as each election has different turnout patterns.  There is validity to that argument, by the by-product of simply ignoring the likeliness of people to actually show up, Gallup can, at times, over-represent the Democratic vote.  This was not the case in 2008, when Democratic turnout was huge, but was most definitely the case in 2004, when Democratic turnout lagged GOP turnout.

Of the 2 polls, I prefer the Gallup poll, which is much more stable with a larger sample size and a longer tracking period (7 days versus 3 days for Rasmussen.)  I also like the fact that they make their tracking results available to the public (you have to pay to get the history on the Rasmussen poll, although they publish their daily number once per day free of charge.)  I will present the Gallup poll but tell you that the Rasmussen poll has tracked in the same general direction, but has been about 2-3 points consistently more favorable to Mitt Romney, for the reasons described above.

Here are the tracking changes in the Gallup poll through the convention season:

The RNC is an absolute flatline - no change in the polling whatsoever.  It remains to be seen whether the uptick in the poll yesterday for Obama is an outlier or the start of a trend up as a result of the DNC.

At any rate, while Romney was successful in changing his trajectory to some extent with the selection of Paul Ryan, it appears he was not successful in getting a "bounce" out of the RNC.

We now have a few weeks to argue over all this until the next major event, the first Presidential debate, on October 3rd.

The ads will start flying fast and furious in the meantime as the Romney campaign just announced a huge ad buy in 8 key swing states.  The choice of the 8 states is highly instructive as to his strategy. The ad buys are in: North Carolina, Ohio, Virginia, New Hampshire, Iowa, Colorado, Florida and Nevada.  Notably missing are Michigan and Wisconsin, two states that I thought were at least marginally in play and represent big electoral prizes.  Also missing is Pennsylvania, a state every Republican candidate in my lifetime has tried to compete for but that the Republicans haven't won since 1988.

All 8 of the states are states Obama won in 2008.  Assuming Romney wins all the McCain states (a reasonable assumption as of all those states, only Missouri and Arizona are even marginally competitive and both appear likely to go to Romney in the end) and picks up Indiana with relatively little effort (also a fairly safe assumption, given recent polling), these 8 states would put Romney at 291 Electoral Votes, 21 more than he needs to win.

It still shows the tough electoral map for Romney.  He could run the table everywhere but Florida and he would still lose.  The reason he is competing in a 4 electoral vote state in New Hampshire is that if he losses Ohio, he needs all of the other 7, including New Hampshire to win (in actuality losing Ohio and New Hampshire and winning the other 6 creates an almost unthinkable 269-269 tie that would probably wind up with the House of Representative selecting Romney, but let's not even go there right now.)  He can lose a few of the smaller states if he takes the big prizes of Ohio and Florida.  He could lose Iowa, Nevada and Colorado in that scenario and still eek out a 270-268 victory.

Expect the President to push very hard in Ohio and Florida to try to score the knockout punch.  He has also shown a lot of energy for going after North Carolina, which would considerably complicate Romney's path.

The battlegrounds are fairly clear.  Get ready for the ad carpet bombs from the campaigns and the Super PACs.

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Forget Hillary Clinton, How to Balance the Budget by Doing Nothing

It Isn't Going to Happen
It seems that not a week goes by that some journalist or political commentator finds the need to discuss the possibility of President Obama dumping Vice President Joe Biden to put Secretary of State Hillary Clinton on the ballot as his VP candidate in 2012.

The case goes something like this - Biden is flub-prone and doesn't do a lot for the ticket.  Secretary Clinton is wildly popular, as evidenced by a myriad of polls that show her respect.  Plus, you get the bonus of having the still-beloved ex-President Bill Clinton out, more actively fighting for the ticket.

All interesting, but it isn't going to happen.  It is nearly unprecedented for a sitting President to stand for re-election with a new Vice-President.  FDR did it, but it was after two full terms in office.  Gerald Ford ran with a different guy (Bob Dole) than the sitting VP (Nelson Rockefeller), but that was an unusual administration, as neither Ford nor Rockefeller had stood for election for either office (Ford had been appointed VP by President Nixon after Spiro Agnew's resignation in 1973, Rockefeller was appointed by Ford after taking the reins from Nixon after his Watergate resignation.)  McKinley ran for re-election with a new VP (one Teddy Roosevelt) but his original VP, Garrett Hobart, had died in office. 

To find a situation where a sitting President ran for a second term with a new VP candidate when his first-term VP candidate was still alive, you have to go all the way back to Ulysses S. Grant in 1872.  Simply put, it isn't done.

And with good reason.  Vice Presidents have only a marginal impact on Presidential races - after all, can you name one race that was largely decided on the basis of the VP candidate?  And don't say 2008 - Sarah Palin isn't what sunk John McCain, a sour economy did. 

What would the upside to President Obama be?  He would look disloyal and weak.  And that big benefit that Clinton would supposedly bring to the ticket?  Can you name a single swing state he would win BECAUSE of Clinton?  Does Clinton fundamentally change the key issues or the reasons President Obama has high disapproval numbers?  And does anyone really think Clinton would be as popular as she is now if she were a candidate for public office, re-subjected to the scrutiny the press reserves for politicians? 

It isn't going to happen, Pete Dupont (the former governor of Delaware and one-time Presidential aspirant, who is the latest to purvey this theory), so let's just stop talking about it.

The Solution: Do Nothing!
Think the deficit problem is incredibly complex and that the failure of the super committee just shows how intractable our deficit problem is?  Nonesense!

Let me show you how easy it is to balance the budget.  And our politicians don't even have to do a thing.

Here's the simple math.
This year's deficit is estimated to be around $1.099 trillion.

All you have to do is the following:
1. Let the Bush tax cuts expire (all of them) - $400B per year
That's right, the Bush tax cuts (really Bush-Obama cuts at this point) cost the treasury about $400B per year.  Of this, about $100B is associated with the cuts to the top bracket, the rest associated with the cuts to the Clinton bracket.  By doing nothing, and allowing the "temporary" cuts to expire at the end of this year, the treasury will collect approximately $400B more.

2. Let the Obama tax cuts expire - $110B per year
President Obama's "temporary" reduction in Social Security taxes by 2% for this year is costing the treasury $110B, as general revenues are being used to cover the gap in the social security trust fund.  Just allow the cut to expire, and that's $110B more in the coffers.

3. Don't extend unemployment benefits beyond statutory maximum - $44B per year
Under ordinary circumstances, people get unemployment benefits for 6 months.  Since the recession started, Congress has been routinely extending those benefits for 2 full years.  Stopping this practice would trim $44B in cost from the budget.

4. Allow the Iraq war to wind down - $159B per year
The Iraq war is costing us a lot of money in both direct costs to the military and costs to the contractors.  The troops are scheduled to leave.  This should be easy spend to wind down.

5. Don't "fix" the alternative minimum tax - $120B per year
The alternative minimum tax was created to keep the very wealthy from using loopholes to reduce their tax rate too far.  The AMT amount was not indexed to inflation, but Congress routinely passes "fixes" aimed to keep the AMT focused squarely on the very wealthy.  Allowing it to not index, as current law allows, would essentially take those same loopholes away from upper-middle class taxpayers.  This yields $120B per year in savings.

6. Allow the Sequester Cuts - $120B per year
Since the deficit panel failed, the automatic "sequester" cuts of $120B per year are scheduled to kick in in about 14 months, with 50% applying to defense and 50% applying to non-entitlement domestic spending.  These cuts happen automatically, unless Congress acts to change the law.

Total savings from doing nothing: $953B per year.

Okay, I didn't totally solve the deficit - there would still be a $146B shortfall.  But $146B is a mere 1.0% of GDP, a rate at which the overall debt would decline significantly (we can expect GDP growth plus inflation to be equal about 5-6%, even using conservative estimates, meaning a 4-5% reduction in the effective debt levels.)

The approach is balanced ($323B in spending cuts and $630B in tax "increases", with all the tax increases being the expiration of "temporary" cuts.)

And all the government has to do to make it happen is nothing.

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Obama Signs Health Care Bill, I'm with Gibbs on Biden, Time for the GOP to Grow Up

Obama Signs Health Care Legislation
Today was truly an historic day, as the President signed into law H.R. 3590, the Patient Protection and Affordable Care Act. In what may well be the biggest day of the Obama Presidency, the President finally got his health care bill.

Let's not oversell it - as I've said before, this is not the biggest new social program since Medicare, that honor belongs to George W. Bush's drug benefit for seniors. It certainly isn't the biggest expansion of government in our lifetimes, that honor would surely belong to the start of the Iraq war. It isn't the biggest new bureaucracy in decades, that honor belongs to the Department of Homeland Security.

But, it is, as Vice President Joe Biden so uncomfortable said, "a f***ing big deal". It's a big deal because it will dramatically increase access to health care for 32 million Americans. It is a big deal because it will end the job paralysis caused by pre-existing condition exclusions and the fear that the loss of a job causes to those with medical problems. And it's a big deal because it fulfills the moral obligation of a wealthy nation to care for its people.

It doesn't do enough, or even much, on cost control. It's provisions to require insurance are weak. There is no public option. It doesn't abandon the flawed employer-provided model. It doesn't address the anti-U.S. pricing practices of the drug industry. There is a lot that I would like it to do that it does not. But it is a big deal. A f***ing big deal.

Gibbs Plays it Right
The only comment on our gaffe-prone Vice President's latest on mic gaffe? Robert Gibbs tweets "yes, Mr. Vice President, you are right" and the White House refers all questions to that tweet. Couldn't agree more.

Grow Up, GOP
There are lots of legitimate reasons to disagree with the Democratic approach on health care. If you are a true believer in the power of markets, a small government person, a true libertarian, a fiscal conservative, what have you, then this bill will not appeal to you. The GOP had ever right to vote against a bill that runs against their principles. You made your points, emphatically. You lost because you lost the November 2008 elections and badly. You lost because the people didn't give you the power to stop this bill, whether they presently like the bill or not.

Now is the time to grow up.

The health care bill is law. It is flawed. You've been quick to point out some of the more ugly flaws...the Cornhusker Kickback, the Louisiana Purchase, etc. Now, out of spite, you are going to stand in the way of repealing those same things of which you were so intently critical? What I'm watching right now on the Senate floor is a bad joke. It is pure sour grapes from the GOP. There is very little credible argument that the reconciliation bill makes the health care law, and it is now a law, worse. Yet the GOP obstructs. To what end? So that we can keep the Senate bill that they panned? John McCain has taken to the press saying the GOP won't cooperate with the Democrats on ANYTHING this year, regardless of if they agree ideologically. How childish.

I said several months ago, concerned about runaway deficits, that if I did not see a credible deficit reduction plan out of the White House prior to November that I would strongly consider voting Republican to check government spending. The GOP is trying their best to take that option off the table for me. The people deserve better.

Speak out against the bill you opposed, absolutely. Campaign against Democrats who voted for it, that's completely a fair debate. Campaign on repealing it? Sure. But blocking the improvements that YOU sought? Openly obstructing things you agree with? And don't start with...back in 200x, Democrats wouldn't play ball with George Bush on xxxx...the two wrongs make a right argument is rotten to the core.

Get over it.

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