Blogs » Politcs Plus » Ideology trumps common sense



We just received the worse jobs report since December of 2010, but our politicians are putting this issue on the back burner, so they can come up with a plan to keep us from defaulting on our debt. The plan has to enhance their chances of getting reelected. We have an irresponsible presidential candidate saying that we could just pay the interest on the debt or like in 1985; prioritize our debt payments in order not to default. That’s like saying I'll just pay the interest on my car note, and the lender will not make a notation in my credit evaluation. The bond markets, the stock market, and our potential lenders will take notice. Do the Republican lawmakers have to see the stock market crash like it did after they voted against TARP? I don't know what’s so hard about passing legislation that ensures our creditors; we will pay our debt obligations as is written in the 14th amendment. Yes, we have a deficit and debt problem but that could be part of the budget negotiations. We currently have a demand and jobs deficit that should take priority. A six-month resolution to raise the debt limit is just delaying the inevitable. Try telling your creditors that we will agree to pay our bills for another six months but not so sure after that. The president said he would not accept that proposal; I hope he sticks to that.

The last two days I've been hearing arguments for NOT increasing the debt limit. I heard Pat Buchanan say that it is a matter of principle because the tea party and John Boehner cannot get reelected if they agree to tax increases. I guess the Democrats will have to swallow their principles on cutting Social Security, Medicare, and Medicaid, so their Republican counterparts can get reelected. He didn’t mention the middle class because that group will not see a tax increase. I have yet to hear one Republican say how" austerity only" will create any jobs or contribute to our growth. The president and the Democrats might agree to some cuts in the entitlements in exchange for reducing the corporate tax rate and tax loopholes. This concession is emboldening the tea party Republicans because they think they now have the upper hand. This game was started with the Democrats defending their goal line because of the overwhelming Republican majority in the House of Representatives. The Bowles-Simpson deficit reduction plan had $3.00 in spending cuts to every $1 in revenues, and Joe Biden's committee had 83% in spending cuts vs. 17% in revenues just before minority leader Eric Cantor walked out. The republicans passed the unpopular Ryan plan but they are now willing to modify it.

The Republican Party will not discuss an increase in taxes in any shape, form, or matter. I've heard the talking points they have been using for 30 years. They will say that you don't raise taxes on anyone during economic down times. Grover Norquist thinks a repeal of tax subsidies for oil exploration and corn ethanol is a tax increase. In 2001, hedge fund managers were allowed to pay taxes on their gains and at capital gains rate of 15% instead of ordinary income rates. I heard that if 25 of those hedge fund managers were taxed at ordinary income rates; it would bring in an additional $4 billion to our treasury but making them pay ordinary income rates is out of the question. Tax evaders cost the U.S. more than $400 billion a year, but we are decreasing the budget amount for Internal Revenue. The amount the U.S. military spends annually on air conditioning in Iraq and Afghanistan is $20.2 billion but we aren't talking about getting completely out of Iraq and Afghanistan. I think we still have a lot of creative thinkers in this country, who could come up with a way to get us on the path of fiscal responsibility without laying the entire burden on the middle class, working poor, the elderly, the handicap and the poor. I just don't see how speaker Boehner can stand at the podium and say that the Republican Party would not increase taxes on anyone in hard economic times, but in the same breath he will take an ax to cut spending for those that are already struggling.

The current negotiating tactics of the Republican Party caused conservative columnist of the New York Times David Brooks to say “if the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered a deal of the century: trillions of dollars in spending cuts in exchange for a few hundred million dollars of revenue increases." He went on to say" the party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are they distortionary."

I agree with what Dr. Jeffrey Sachs said this morning when he said that we will probably have an agreement Sunday to raise the debt ceiling, but it will be considered a sellout because the top 1% will not see their taxes raised but the cost of living raises for Social Security recipients(COLA) will likely be cut. We're living in a country where ideology trumps common sense because I can already hear the squawking when the Fed starts whispering QE3. Until people understand that we have a demand problem; they will continue to believe that CEOs are depending on news from Washington before they start hiring. They will continue to believe that if we would only lower the corporate rates the jobs would remain in America. Others believe that our tariffs are too low. We had two tax cuts in the Bush years, yet companies continued to outsource jobs because they cannot compete with low wages and absolute minimum regulations in manufacturing. We want cheap goods and we got used to livable wages with benefits, and a clean environment. How can we dictate tariffs with a country that holds a lot of our debt? You can never strike a good bargain from a position of weakness.

This morning I heard a commentator say that the tea party has done a good job of turning America against Keynesian economic policies, so we had better hope we don't make the same mistake Great Britain made when they went to “austerity only." Ezra Klein of the Washington Post talked of a proposal that is being floated in Washington where we would adopt a 4:1:1 plan. That's $4.00 in tax cuts, $1.00 in tax revenues, and $1.00 in stimulus for job growth. The ideologues will quickly attack the $1.00 in more stimulus because ideology trumps common sense.