Investing in the future isn’t wasteful spending

I always had a fairly good idea what “discretionary spending” meant, but I never gave it a lot of thought as it related to tough budget decisions. Yesterday, as one of the MSNBC hosts was explaining where cuts were most likely to be made, he was kind enough to define it — and describe some vulnerable areas. Bad news for the country.

To be precise (or as precise as possible), discretionary spending is a category in which the government can make choices. This is spending on such things as infrastructure, research, subsidies and tax credits for corporations and businesses — things that might or might not be a good way to invest taxpayer money.

There are some obvious cuts to be made — tax credits and subsidies for oil companies and agriculture, for instance. Both have outlived their usefulness and deprive the treasury of needed revenue while enriching the recipients.

Conservatives have successfully made “government investment” a dirty concept, but this attitude is making the US a second-rate country. Our transportation system, for instance, should have a vital high-speed rail network, but this isn’t even a reality for the distant future. In Europe, China, and Japan, meanwhile, such systems are present-day realities. We are being beaten to the punch in the alternative-energy arena by other countries, despite the best efforts of private industry. Our infrastructure is in disrepair and our electric grid is dangerously stressed.

Public investment in all these areas is vital to a robust US economy and job growth, yet conservatives don’t see this. It makes you wonder if they really care about America’s economic health.

The bottom line is, if discretionary spending is the only place significant cuts can be made, then there’s no real argument for counting on cuts to solve the budget crisis. That leaves, what — revenue increases.

The downside of the deal

I’m fairly sure President Obama is aware that Republicans forced him into a box by holding the world economy hostage over raising the debt ceiling. But I’d be a lot happier if he’d kicked and screamed a little more, if he’d made it abundantly clear that he was signing onto a deal that would cripple the economy in the long run only to spare the country from defaulting on its debt and plunging the world into catastrophe. When the economy tanks, Obama needs to be able to say, “I told you so,” but I’m not sure he did clearly enough. His progressive base sounded the alarm, but everyone wanted them to shut up.

Republicans keep saying we can’t raise taxes when the economy is weak, but not many economists agree with them. What economists do agree on is that you shouldn’t cut spending when the economy is weak. More jobs will be lost, which will snowball into a recession — or worse.

And when that happens, Obama will get the blame — which is what the Republicans planned all along. But who will make this case during the next election cycle? And will the public be able to connect the dots that complete the picture Mitch McConnell started when he stated that the Republicans’ first order of business was to make Obama a one-term president?

Everything the Republicans have done since President Obama was inaugurated was to diminish him — and sadly by trying to be reasonable he’s played right into their hands. By all logic, Republican policies and practices should doom them for many elections to come. But contrarily, their reward might be unparalleled success — and for Americans, hard times.

It may not be too late for Obama to make a statement. When it comes time to sign the bill, he needs to make it clear that he’s signing it to avert an immediate disaster, while at the same time warn us of the dangers of excessive cuts and spell out what they might be. He needs to be on record that agreeing to this deal was a good idea for only ONE reason.

Default = depression

There are a few different paths that lead to a depression. Today’s tea party Republicans have found a new one. In the 1920s, three Republican presidents and a solidly Republican Congress rolled back the regulations on big business that characterized the Progressive Era. The result was the stock market crash in 1929 and the Great Depression that followed. Similar Republican policies during the first decade of the 21st century brought us to the recession.

Now add the tea party Republicans to the mix — a loose confederation of right-wing ideologues and libertarians that seems determined to bring down the economy once and for all by sending the country into default. Based on what I see and hear during interviews with some of these representatives, I’m not sure tea party members possess the intellect to appreciate the gravity of the situation or the foolishness of their position. Novices all, their smirks suggest a desire to see what they can break — much like a young vandal approaching a school with a baseball bat.

As we approach the Aug. 2 deadline with no resolution in sight, the stock markets are in the red almost daily. The Dow Jones is close to slipping below 12,000, with “down” the trend for the foreseeable future. Even with a low capital gains tax, this loss of investor income is going to be yet another loss of revenue for the treasury.

I think the very inability for this country to struggle so hard to deal with the debt ceiling is going to be an economic setback for this country. Never mind a return to the recession — a default will almost certainly plunge us into another Great Depression.

Avoid depression — raise debt ceiling

You don’t have to be an investor to worry about a stock market collapse — the Great Depression of the 1930s that followed the crash of 1929 affected everyone. This is why this morning’s Huffington Post headline, “World Markets Tremble As Debt Deadline Looms,” should be a wake-up for House Republicans. They have it in their power to avoid a worldwide depression, and they need to exercise that power. They need to quit posturing and raise the debt ceiling cleanly, and worry about the other stuff later.

 

Playing politics with the debt

Republicans are putting forward the option of a short-term increase of the debt ceiling, which would renew the contentious debate early in 2012. Senator Tom Coburn (R-OK) says the president will have no choice but to sign such a bill if he wants to avoid catastrophe. Sounds like blackmail to me.

Republicans probably believe that continuing the debate in 2012 would be to their advantage in an election year — and they may be right. But it’s more likely the scheme will backfire because more and more Americans seem to be getting wise to the right-wing tactics to politicize this crucial economic issue.

President Obama seems to have a legitimate way out of this mess, as I wrote in a previous post, but NBC’s Andrea Mitchell raised a good point on this morning’s Meet the Press. She said no other industrialized nation has a debt ceiling, and she wonders why we do. Created by statute in 1917, it can just as easily be un-created. But Republicans wouldn’t go for that because it gives them frequent opportunities to distract everyone from problems typically of their making.

The president’s authority

In a recent New York Times op-ed, legal scholars Eric A. Posner and Adrian Vermeule argued that President Obama has the authority to unilaterally raise the debt ceiling before the August 2 deadline, and not because of article 4 of the 14th amendment. That authority would be based on “. . . the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed.”

That’s a solid argument because the country’s national and economic security are at stake. In the authors’ view, it’s a win-win situation for the president, because the public wants a deal, and it would showcase his leadership and the Republicans’ obstructionism.

The authors are professors of law at the University of Chicago and Harvard respectively — no slouches. Theirs is a compelling argument that I hope reaches Obama’s ears.

Blame Congress

There’s nothing in the Constitution about a debt ceiling. It was established as part of the Second Liberty Bond Act in 1917, and has been more or less raised routinely in the years since — 102 times since it was passed. Since it’s Congress’s responsibility to raise the debt ceiling, an economic collapse resulting from the failure to raise the debt ceiling will be Congress’s fault. Period.

Is the debt ceiling even constitutional?

The Constitution , in Article I, Section 8, gives Congress the power to pay the US debts, and Article 4 of the Fourteenth Amendment states that the validity of the US public debt “…shall not be questioned.” There are those who question the constitutionality of the debt ceiling, and I have to say I’m in that camp. We shouldn’t even be having this argument.

Stupidity rules, for now

Each time I hear an interview with a member of the tea party, my general impression is reinforced: there are no intellectual luminaries among them — or, in other words, they’re uniformly stupid. The latest tea partier to make a bad impression on me was Rep. Joe Walsh (R-IL), who blustered for what seemed like forever last night on Hardball.

Meanwhile, tea party Rep. Allen West (R-FL) made a fool of himself after Rep. Debbie Wasserman Schultz (D-FL), in her half of a traditional House exchange, wondered why her colleague from Florida would vote against the seniors who comprised so much of his constituency with his support for cuts in Medicare and Social Security. In an email response, West called Wasserman Schultz vile, unprofessional, and despicable. It’s actually West who is vile, unprofessional, and despicable.

This kind of bald incompetence bodes poorly for the Republican party, which was once capable of governing. This also bodes poorly for the country, since unfortunately the tea party is running the show in the House. The trick will be to survive until November, 2012, when there will hopefully be enough buyer’s remorse to chalk it up as a bad experiment.

Polls continue to show that the public understands just who’s responsible for the current morass over the debt ceiling — the GOP-led House. Even Wall St. and the US Chamber of Commerce are urging Republicans to raise the debt level, ironic considering they generally supported tea party candidates in the last election.

By all logic, the tea party is self-destructing even as we speak. We have to hope that they don’t take the country down with it.