Monday, July 18, 2011

No New Tale To Tell: Obama Says Will Veto "Cut, Cap, And Balance"

The Republicans in the House are rallying around legislation called “cut, cap and balance”, which would cut spending in fiscal 2012 by $111 billion, cap future spending at 19.9 percent of gross domestic product and allow for the debt ceiling to be increased if a balanced-budget amendment is approved by Congress and sent to the states.

Obama's reaction? He'll veto it out of hand.

“Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility,” the White House said in its statement. “Increasing the federal debt limit, which is needed to avoid a federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions. Instead of pursuing an empty political statement and unrealistic policy goals, it is necessary to move beyond politics as usual and find bipartisan common ground.”

Remembering how the Republicans were literally shut out of the room during Obama's 'stimulus' and the shoving through of ObamaCare, I find it quite interesting that this president now suddenly wants to seek bipartisan ground just because he no longer has a super majority in both Houses.

Obama's idea of 'bipartisanship' is a plan reportedly being tossed back and forth not by the president, but by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell. That plan, so far, allows President Obama to raise the $14.3 trillion debt ceiling in exchange for $1.5 trillion in spending cuts over the next ten years, and would probably have to include some of the tax increases the Democrats want in order to get through the Senate.

To give you an idea of how farcical this plan is, our annual deficit right now clocks in at around $1.5 trillion, and growing, because of the costs of debt service and interest. To translate this into everyday terms, let's remove a few zeroes. This is the equivalent of running up a credit card debt of $15,000 and deciding that you're going to go deeper in debt to pay it off...only the most you're willing to cut your own spending to make the payment is $1,500 dollars per year, $125 per month! Will you ever get out of debt? And unless it's a temporary zero APR come on, could you find a credit card company in America willing to let you make payments at less than 1% interest?

The answer of course is that President Obama and the Democrats aren't the least bit serious about cutting spending, because there's no way they're going to ask any of the special interest groups they depend on to take less in the way of bribes in exchange for votes. Instead,as Obama admitted, they want to raise taxes sky high - but after President Obama's re-election is decided, as the president himself admitted:

“So, when you hear folks saying ‘Well, the president shouldn’t want massive job killing tax increases when the economy is this weak.’ Nobody’s looking to raise taxes right now. We’re talking about potentially 2013 and the out years.

That aside, do not assume that President Obama has no plan. His idea is that unless he gets whatever he wants, he will allow the government to go into default. At that point, even though the government takes in enough money to pay for it's most pressing obligations, the president is going to go out and play golf. Rather than prioritize until a deal can be cut like President Clinton did, President Obama is going to see to it that things like Social Security checks and VA disability payments don't go out - and blame the Republicans for the resulting misery.

You see, President Obama wasn't kidding when he said that he either gets his tax hikes or Granny gets it. And his own White House Budget Directer, Jacob Lew refused to say that the White House would prioritize to make sure the Social Security checks go out.

Despicable, to play politic by frightening the elderly and the disabled? Yes. But that's the sort of person we have in the White House.

The most bizarre part of this is that raising the debt ceiling itself isn't exactly an arbitrary decision we can make alone. It depends a great deal on whether the world is willing to continue to buy America's debt.

Right now, 43 cents out of every dollar we spend is borrowed, and we're fast approaching the point of no return in terms of the amount of global capital we can count on to be committed to financing the sort of obscene debt we've run up. What happens when we hit that debt ceiling, if we haven't already?

"Cut, cap and balance” is the first serious effort Congress has made to get us out of the hole we're in. There's no doubt in my mind that it will likely die in the Senate, and even if it didn't the president would undoubtedly veto it.

But as Paul Ryan tells us, we're dealing with a certain mentality that isn't going to change as long as Barack Obama is President. Far better to put the plan out there for the American people to see, so that they understand exactly what's at stake, who has a plan to fix it and who's willin gto just kick the can down the road to play politics.

Let President Obama and the Senate Democrats own the role of obstructionists. And let's not be shy to say so.

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Anonymous said...

This might be the best the Republicans can get even if Obama doesn't veto it. But it isn't enough. We need to cut the 2012 budget by about $1.6 trillion and NOT raise the debt ceiling. This is just more evidence to convince me we are doomed to go through a collapse and a long economic depression. We are in deep shit.

louielouie said...

i agree with anon@8:12. however, i think c/c/b is just another political gimmick.
i'm dyshoric about the whole financial think/subject.
i say push for the default and when hussein points his finger, grab it, break it off, and point it back at him and his socialist ilk.
and if they want to negotiate afterwards, i'd put john bolton in as the lead negotiator.