Vivian Darkbloom July 15th, 2011 at 5:51 pm 12 Comments
I realize I have written about this before, but once again this week I have been seriously wondering how successful I would be in this city if I were less attractive.
Confusion usually reigns in Washington, D.C., negotiations just before a solution emerges.
Thus, small signs can signal big things to come.
As Federal Reserve Chairman Ben Bernanke concluded his testimony Wednesday morning before the House Financial Services Committee, Committee Chairman Spencer Bacchus made an interesting and perhaps important comment. In short, Chairman Bacchus said that members of his committee and many members of his party understood the difference between raising tax rates and closing tax loopholes.
Chairman Bacchus hardly qualifies as a RINO nor is he considered a renegade Republican. His remarks, therefore, may well hint that the many senior members of the House Republican caucus are beginning both to tire of the ideological rigidity of some of their “Tea Party” members and to believe that it is time to stop playing games with the debt limit negotiations. In recognition of the coming reality of a debt ceiling increase failure, Rep. Steve King of Iowa introduced a bill today in the House that would require payment of the sovereign debt, military pay and pensions above all other payments that might be owed by the federal government. Thus, King acknowledges that failure to raise the debt ceiling would lead to utter chaos within the government and would have catastrophic impact on United States military activities oveseas. Soon, we will see similar bills to protect Social Security, education, Medicare, and so on and so on. CYA is in full throat.
Clever legislation announced yesterday by Senate Minority Leader Mitch McConnell would essentially empower a President to raise the federal debt limit himself, subject to a two-thirds vote to the contrary by Congress. One begins to sense the uneasiness of Congressional Republican leadership and even among many GOP backbenchers as the real results of debt default becomes clearer to them. McConnell’s gambit, as one would expect from a consummate Congressional leader, does the most important thing that the GOP needs right now–to change the trend of the debate.
As we have said often before, when the face of the Republican Party on debt negotiations is Rep. Michele Bachmann, Rep. Eric Cantor, Sen. Pat Toomey or Sen. Jim DeMint, the party loses ground in the public relations battle. “Hell no, we won’t go” over time becomes a losing message. McConnell has said, “Yes, raise the debt limit, let’s dispose of all this Congressional-Presidential hostage-taking, and bring some stability to paying the nation’s bills.” McConnell’s suggestion avoids direct confrontation over spending versus taxes–it begins to change the subject.
We smell a deal in the works. It will be small, it will be disappointing to those of us who fear the fiscal future of the nation, but it will get the debt ceiling increased. The fact that it will be relative trivial will be, in the short run, of little moment. Market participants, who expect nothing useful from Congress in most fiscal matters, can breathe a sigh of relief that their financial engineering will be safe for another 6, 12, or 18 months. The debt default question evaporates until 2013. American debt as the “best house in a terrible neighborhood” will continue to be a safe haven while turmoil throughout the rest of the world continues.
Then in the midst of the most anemic economic recovery in America’s post-World War II history, Congress can revert to political manuevering and the American people can safely revert to concern over whether or not they or their neighbors will have jobs later this year.
The true dis-connect between both parties in Congress and the fundamental concerns of Americans in the work force will increase. Anger will continue to mount, demagogues will flourish, our national debt will increase, and loss of faith in America’s governance will expand. This cannot end well.
It has been 109 days since President Obama deployed U.S. forces to Libyan skies without congressional approval. Now, politicians on both sides of the aisle are publicly questioning whether the President is in violation of the War Powers Resolution of 1973, which requires congressional notification within 48 hours of the commencement of “hostilities” and congressional approval for military action lasting longer than 90 days.
But the War Powers Resolution, passed over President Nixon’s veto, has never been enforced and doubts have lingered over its constitutionality. So how serious are the legal challenges facing the President?
The White House has made the argument that its foray into Libya is not subject to the constraints of the War Powers Resolution because it is not actually engaged in “hostilities,” or at least not at the moment. Harold Koh, Legal Advisor of the Department of State, claims the United States hasn’t been involved in hostilities in three months. On April 4th, at which point U.S. involvement in Libya was a scant 3 weeks old, the U.S. “shift[ed] to a constrained and supporting role in a multinational civilian protection mission—in an action involving no U.S. ground presence or, to this point, U.S. casualties—authorized by a carefully tailored U.N. Security Council Resolution,” he told the Senate Foreign Relations Committee last Tuesday.
The position of the Obama Administration is that the standard of “hostilities” is “ambiguous,” and that a mission in support of a U.N. resolution involving no ground troops or casualties cannot meet that standard, wherever it may lie.
But this defense leaves itself open to multiple avenues of attack. According to Jack M. Balkin, Knight Professor of Constitutional Law and the First Amendment at Yale Law School, Congress could simply see the facts on the ground differently and decide that the U.S. military is, in fact, engaged in hostilities. “The weakness of the claim that the Obama administration was they offered a balancing test and said, ‘The way we balance things we think we’re OK.’ But if you’re not persuaded, or you don’t buy the way everything is balanced, you won’t agree with the ultimate conclusion,” he told FrumForum.
And there is reason to dispute the White House’s semantics. A 1980 opinion from the U.S. Department of Justice Office of Legal Counsel (OLC) held that the word “hostilities” was chosen to be a broader alternative to the phrase “armed conflict.” Certainly American intervention in Libya is armed conflict. Surprisingly, the Obama Administration has specifically affirmed this opinion, saying that the previous view of the OLC is “still in force.” But if the Administration accepts that the War Powers Resolution is intended to require congressional approval for mere “armed conflict,” and not a narrower definition of “war” or “hostilities,” how can it continue to insist that operations in Libya fall outside its jurisdiction? The White House doesn’t appear able to reconcile these opposing points. “It’s like the administration has said, ‘we accept this view and we’re just not going to follow it,” Balkin said.
The argument that the War Powers Resolution does not apply because the armed forces are only playing a “supporting role” is even more easily debunked. The language of the War Powers Resolution specifically includes occasions when the U.S. military “command[s], coordinate[s], participate[s] in the movement of, or accompan[ies] the regular or irregular military forces of any foreign country or government.” So whether the U.S. has troops on the ground isn’t really pertinent. If the military is involved in any way in armed conflict, the War Powers Resolution applies.
So, in light of the fact that the Obama Administration appears to be violating the War Powers Resolution, how does this answer the original question about the President’s legal challenges?
Presidents have been ignoring the War Powers Resolution since it was passed, and no troops have ever been withdrawn in accordance with the 90-day requirement. According to Richard Pildes, Sudler Family Professor of Constitutional Law at New York University Law School, some administrations have rejected portions of the resolution as unconstitutional, while others have found creative ways to work around it. The Clinton Administration informed Congress of bombings in Bosnia, per the War Powers Resolution requirement, but it did so four times, ostensibly restarting the 90-day countdown each time. Other administrations have reported military action to Congress “without acknowledging that those reports are required,” Pildes told FrumForum.
But it is up to Congress to decide whether the President is in violation of the War Powers Resolution and how to respond. “The statute has not been enforced in the courts and the courts have not gotten involved in disputes about the meaning of the War Powers Resolution. The issue stems from the Executive Branch issuing decisions and interpretations and Congress responding to those interpretations,” Pildes said.
That response, however, would necessarily be indirect. Congress could attempt to legislate a withdrawal of troops, but that would require a two-thirds majority overriding the probable Presidential veto. But Congress would more likely pass a joint resolution expressing their displeasure towards military action. Or, Pildes said, “they could try to punish the executive branch in a variety of ways, such as holding up appointments.”
But the one thing Congress cannot do is sue the Executive Branch over the War Powers Resolution. The courts have invoked a variety of doctrines to avoid being forced to decide the issue. So President Obama, like so many administrations before his own, is openly defying the War Powers Act. But he can rest easily knowing that Congress largely lacks the power to enforce it.
The theatrics of the past two weeks aside, click the wink and the nod seem to be already communicated as the President, remedy the Speaker of the House, sale and the Senate Majority and Minority leaders begin the next phase of the drama.
Both sides have now solidified their bases in Congress. “No new taxes” now balances “The end of Medicare as we know it.” Neither will happen to any significant degree and the press releases for back home can be written well in advance.
The question arises, then, if the negotiations ignore 70 percent of the problem, what kind of deal could pass muster with a majority in both the House and Senate?
Here’s the dirty little secret—it isn’t that hard to meet the targets set out by either side.
Let’s start with the basics.
To get a debt ceiling increase that will take Congress and the Administration beyond the November, 2012, elections, requires approximately $2.4 trillion. Speaker Boehner has declared that he wants that much in spending restraint, dollar for dollar.
Selected leaks from the now-defunct Biden meetings crowed about getting as much as $2 trillion.
Can either target be met without confronting the underlying structural changes in entitlements that would truly change the debt trajectory?
Here’s a “back of the napkin” plan to reach the Speaker’s goals and not harm entitlements.
A—accept approximately $1.1 trillion in defense savings over the 10-year period by simply counting the money that will be saved as we draw down troops from Iraq and Afghanistan.
B—freeze non-defense, domestic appropriated accounts for five years, saving $400-$500 billion.
C—make minor changes in small entitlements like agricultural subsidies, change the Cost-of-Living index used to calculate increases in various federal programs, and allow many of the openings in the federal work force the next decade to go unfilled, saving another $100-$200 billion.
D—accept a freeze on new defense spending, outside the troop drawdown savings, for enough time to get $300 billion.
E—close a couple of tax loopholes—like the ethanol subsidy, some of the “tax extenders” for special purposes, and remove the mortgage interest deduction entirely for second homes—and save another $600 billion over the decade.
F—finally, add to these savings the amount of federal interest payments that such savings would produce, another $300-$400 billion.
Lo and behold, you’ve done it. These changes from the Congressional Budget Office current policy baseline for the next decade amount to even more than $2.4 trillion. And, better yet, the savings from “cuts” in programs outweighs the new revenues from loophole closings by about three to one. That is another stated goal of whatever package emerges.
Republicans get to claim that they held on “no new taxes.”
Democrats get to shout that they kept “hands off our Medicare and Social Security.”
And both sides can do all this without having to reduce Medicare payments to doctors, or to expand the reach of the Alternative Minimum Tax (AMT), or to reform almost anything of significance. Better, if the 113th or 114th Congress confronts a serious international challenge, those folks can always increase defense spending as needed. One Congress cannot bind another—a basic law of legislation.
No one will notice, except for budget geeks and some cranky media types, that the total indebtedness of the federal government will total $23 trillion ten years from now. This means that the $2.4 trillion in savings barely achieves 10 percent of anticipated debt. Worse, such a deal allows Medicare, Medicaid and most other entitlements to continue to climb without restraint.
Why does this outcome seem probable? Because we have been down this road before.
In the Reagan years, Congress promised a package of deficit cuts that would be three-to-one spending changes compared to tax changes. When all was said and done, and we looked back a couple of years later at our handiwork, much more was said than done. The package never achieved three-to-one spending versus taxes and deficits barely budged from projections.
Yes, the package may contain serious process reform and enforcement mechanisms that promise to save more in the future. But such an outcome will hardly satisfy those who want real fiscal reform and real stabilization of the federal debt.
Kicking a can down the road really is fun. You watch kids do it all the time.
It is true that we can and often do learn something new (and sometimes useful) every day.
After living and working in Washington, DC for the great majority of my adult life, including a stint in the White House, I have heard Hail to the Chief hundreds of times. The mere sound of it — the notes, the cadence — still thrills and inspires me, regardless of who occupies the Oval Office at any given time. I have been known to tear up, John Boehner-like, when it has been played at state events.
However, just today I learned that there are actually lyrics to Hail to the Chief. And they say something about the state of politics in our country, and what has been lost or trivialized by the ideological divisions and partisan posturing of recent years:
Hail to the Chief we have chosen for the nation, Hail to the Chief! We salute him, one and all.
Hail to the Chief, as we pledge cooperation, In proud fulfillment of a great, noble call
Yours is the aim to make this grand country grander, This you will do, that’s our strong, firm belief.
Hail to the one we selected as commander, Hail to the President! Hail to the Chief!
Four short stanzas say it all, but I was struck by the first two in particular:
Hail to the Chief we have chosen for the nation, Hail to the Chief! We salute him, one and all.
Hail to the Chief, as we pledge cooperation, In proud fulfillment of a great, noble call.
“We salute him, one and all”. We respect the office—it is quite simple, but it has been forgotten by too many. And “we pledge cooperation” to serve and benefit the country. What, pray tell, am I missing here? I have been brought to this point of bewilderment, quickly turning to disgust, by the latest Republican ploy in sulking out of the debt limit talks.
Republicans in Congress seem determined to drive the country over the cliff in order to damage President Obama’s political standing with the voters. Not quite “in proud fulfillment of a great, noble call.”
Now that we know that Hail to the Chief has lyrics, I have concluded that the Republican leadership on Capitol Hill deserves its own song. I have tried to come up with something fitting, but I just cannot improve on words immortalized by Frank Sinatra and others.
So I propose that the House of Representatives institute a new procedure: Following its daily prayer and Pledge of Allegiance to the Flag, the Members from the majority are encouraged to sing the following (which, with apologies to the memories of Sammy Cahn and Jimmy Van Heusen, contains one ever so slight modification from the original version):
Call me irresponsible — call me unreliable
Throw in undependable, too
Do my foolish alibis bore you?
Well I’m not too clever — I just oppose you.
A “hymn” of sorts especially for Congress …
It’s only fair that it has its very own song, lest imbalance between the branches of government take hold and imperil the Republic.
Eric Cantor’s withdrawal from the debt talks with Joe Biden may be dominating the headlines for now but, there in the long run, it may not matter much.
More negotiations, probably between President Barack Obama and Speaker of the House John Boehner, will take place and, unless both parties have a death wish, default on the debt isn’t going to happen. (Both parties may resign themselves to a variety of face-saving short-term extensions until the 2012 elections.)
The bigger news — which is pretty meaningful — is that Democrats have apparently floated real short-term cuts in Medicare before talking ended.
If the offer is something more than a political bluff (and that’s what I suspect it is), it’s hugely important.
The cuts the Democrats may have suggested — cuts to provider reimbursements – are the right ones. Medicare, as the largest medical payer in the country by a large margin, undergirds a medical system that pays workers, regardless of education, job title, or background, more than their counterparts in any other sector the Bureau of Labor Statistics tracks.
Controlling overall costs is going to require controlling labor costs and that, in turn, is going to require medical providers to be more productive or work for less. And cutting reimbursements to providers, if done correctly, won’t necessarily result in much that patients will notice: as much as doctors may complain about it, few are going to stop taking Medicare patients.
Furthermore, provider cuts could take place right away: For all its merits, the Ryan Plan isn’t nearly as much a small government manifesto as many of its acolytes think.
Nearly all of its meaningful Medicare cuts take place well in the future and, if history is any guide, would probably be repealed before taking effect even if they somehow pass into law. (Medicare cuts almost always have.)
Cuts to Medicare provider reimbursements now will take force now ad cut the deficit now. These types of painful but necessary short-term cuts, furthermore, are exactly the ones Republicans will have to go for if they actually want to reduce the deficit without raising taxes.
Although it may seem like good politics to let Democrats propose these types of cuts first–and then as part of a deal that also includes tax increases — it does draw GOP political courage into question.
Even though there are plenty of good reasons to think that the offer is insincere, it may give the Democrats an upper hand in trying to show that Republicans are unreasonable. If Republicans are serious, they need to call Democrats’ bluff and propose even deeper cuts in Medicare and probably Social Security too.
Bitter medicine? Yup. But necessary.
One question that has always hung over Ben Bernanke’s press conferences is: “Why are you doing this?”
Bernanke’s push for increasing transparency at the Federal Reserve seemed poorly timed since it has come right as Fed skeptics are strongest in Congress, whether the skepticism comes from Ron Paul or other politicians.
During his press conference today, Bernanke suggested that if the Fed can be more transparent and gain the trust of Congress, then it might be able take on more innovative policies such as inflation targeting. This would be great if it were true — but it’s unclear that more press conferences are increasing trust in the Federal Reserve.
Currently, the Federal Reserve sets monetary policy usually by announcing what it’s interest rates are, or by announcing if it will conduct large asset purchases. If it adopted an inflation target, the Federal Reserve would announce a goal for inflation that it wants to achieve (for example, two percent) and its success in policy making would be determined by how closely all its activities meets that target.
Bernanke is a self-described “ longtime proponent of an inflation target” and was asked directly about how the Federal Reserve could adopt this policy in practice. He suggested that the policy could take time to develop since it would need to be explained to members of Congress. He also warned that the public might not understand the benefits of inflation targeting and they would fear the Federal Reserve was intentionally abandoning its mandate for employment:
“It is very important first that we communicate to the public what we are doing. Without sufficient explanation and background many people might think are abandoning our employment targets. We need to make sure it’s well understood by the public and by congress that having a target would not mean we are abandoning the other leg of the dual mandate.”
Left unsaid in Bernanke’s response was that many people might also be terrified of the Fed intentionally trying to increase inflation due to the fear of inflation among many members of the population.
As for why Congress would need to be consulted:
“We might have the legal authority to do this, but I think we need some buy in from the administration and Congress to take this step.”
Bernanke said there is “nothing imminent” on the horizon and that actions such as this press conference are part of a longer term strategy of increasing transparency.
The exchange was a revealing look at the limits of the Federal Reserve’s independence. On the one hand, Bernanke believes he has the legal authority to conduct inflation targeting if it would be better policy. On the other hand, he wants to get stakeholders behind him first –but given how skeptical many in Congress are of the Federal Reserve, that doesn’t seem likely to happen.
Given how timid the Fed can be on some policy questions, it’s remarkable that politicians such as Newt Gingrich are claiming the Fed is violating the “rule of law.”
Larry Summers this weekend argued in favor of another round of stimulus, including:
I say “aye” to number one and number two, but enter a caveat to number three.
What we’ve seen from the prior round of infrastructure spending is that the U.S. government as today organized does not find it easy to spend infrastructure money intelligently. Future generations will look back in amazement at the 2009 stimulus and wonder: what exactly did America buy with all that money? Where is the FDR Drive, where are the Grand Canyon steps, where are all of the equivalents of the amazing things built and done in the 1930s?
And what exactly would $100 billion more buy for us?
The strict Keynesian answer is: it should not matter. Demand is demand. As Keynes himself said in one of his more cynical moments, it would suffice if the government put bank notes in bottles and buried them in coal mines, anything to encourage private investors to put people to work.
Few of us are as strictly Keynesian as that. As we amass debt in hope of accelerating growth, we’d like some assurance that the debt is buying things worth having.
The chokepoint here is the breakdown in the congressional system of governance. Back in the 1930s, Americans believed more in expertise than they do today. The executive branch chose the projects and assigned priorities. After a little log-rolling, the legislature enacted them. Today, the legislature is much more empowered. Within the legislature, power is more diffused. And so the money is divided into hundreds of little pieces that may or may not make sense as a whole: fragments of a high-speed rail line through rural California or windfalls of educational money for states like South Dakota and Wyoming that do not face big funding gaps.
The phrase “infrastructure bank” is catching on. But the key point to the idea is not only to increase the amount spent, but to enhance the effectiveness of the spending by depoliticizing it. Senators Chris Dodd and Chuck Hagel introduced legislation to create such a bank back in 2007.
John Kerry and Kay Baily Hutchison have tried again this year.
Fareed Zakaria endorsed the idea in a noteworthy column last week.
I’ve even noodled the concept myself.
There are a lot ways to imagine how the thing would work, and I’d be keen to hear Larry Summers’ version. Otherwise, Zachary Karabell’s caution will prove depressingly accurate: until Americans feel more confidence that infrastructure money will be spent well, it won’t be spent at all.
That wasn’t Benjamin Netanyahu speaking. That was Congress speaking.
Mahmoud Abbas had a plan. Ignore Netanyahu. Go to the UN General Assembly. Get a vote purportedly recognizing a Palestinian state. Then use that vote to leverage international pressure on Israel.
The iffy bit of the Abbas plan was always that fourth step. There have been no shortage of anti-Israel UN General Assembly votes over the years, most famously the 1974 “Zionism is racism” vote. But those votes did not cause the US or the Europeans or other important players to change their policy to Israel. Why would one such vote more?
The point about September was always: it would be one more harassing non-event in a long history of harassing non-events – unless the US decided to treat it as something more.
So September was always a mind-game against the US. The vote would matter only if the US agreed that it mattered.
In his Thursday speech on the Middle East, President Obama decided to agree. The Abbas mind game had worked on him. By any objective , rational measure, it ought to be Abbas who feels a sense of urgency about reaching an agreement with Israel. It’s his people who suffer most from the continuation of the conflict, his people who have most to gain from a permanent peace with Israel. Yet Obama agreed to accept this concocted deadline as a real source of pressure on himself.
Congress’ reception of Netanyahu doused the Obama speech with ice-water realism.
After the September vote, the Palestinians will demand that Israel retreat from the fence to the 1967 lines – that Israel remove soldiers from outposts inside the 67 lines – that Israel allow land traffic into the West Bank and sea traffic into Gaza -and a thousand other incidences of statehood. There’s only one force on earth that can make Israel do those things if Israel doesn’t want to. And that force just cheered and cheered the man who won’t want to.
Even as Republican Congressmen applauded the passage of three energy bills they said would address skyrocketing gas prices, conservative economists told FrumForum that the legislation – even if it was signed into law – would not have much impact on gas prices within the next year.
Over the last two weeks the House has passed three pieces of legislation (known as the ‘American Energy Initiative’) that attempt to address energy policy and rising gas prices:
Freshmen members of Congress greeted the passage of these bills as job creators that would also reduce the price of gasoline. The Putting the Gulf of Mexico Back to Work Act “not only would put thousands of Americans back to work, it would increase our production of oil here at home and lower the cost of gas,” noted Rep. Paul Gosar (AZ-01) in support of the bill.
“By speeding up the drilling permitting process and increasing domestic energy production, we will… help address the concerns of rising gas prices,” said Rep. Alan Nunnelee (MS-01) after the bill’s passage.
“We need to be doing everything in our power to keep energy prices low, especially during these difficult economic times,” added Rep. Scott Desjarlais (TN-04) after the Restarting American Offshore Leasing Now Act passed.
Indeed, in their statements, first supporting the bills and then later touting its passage, many congressmen cited the rising cost of gasoline and the pressures high summer prices would have on families.
But conservative economists were not optimistic about a short run impact on gasoline prices. When asked by FrumForum whether the passage of these three bills would have any discernible impact on the price of gas in the next year, we received a resounding ‘no’ in reply.
“There’s very little that the President and Congress can do to substantially lower the price of gas over the short term, because the price of gas is largely contingent on the price of oil, which is traded on a world market. Even if we increase domestic production, we do not have the ability to seriously shift the world price, and our own oil will sell at that same price,” explained Dr. Kenneth Green, a resident scholar at the American Enterprise Institute.
“In general it is very difficult to have policies to significantly increase oil production within one year,” concurred Dr. David Kreutzer, a Research Fellow in Energy Economics at the Heritage Foundation.
This does not make the ‘American Energy Initiative’ a bad series of legislation, he argued.
“If the one-year impact on price is the only measure of policy success, there will never be a policy to significantly increase oil production. Unfortunately, this short-run focus has been a dominant factor in energy policy for the past decade and is one of the reasons we do not currently have more production from Alaskan lands and waters as well as from the Lower 48 and the outer continental shelf,” said Kreutzer.
Cato Senior Fellow Peter Van Doren had a technical analysis for the longer-term impact of the legislation. “In the long run if these actions increased total supply by 2 million barrels a day…this implies a 3.9% reduction in global crude oil prices,” said van Doren, citing estimates from academic articles. “But a price decline is going to increase demand somewhat – these are dynamic markets, remember – and once we take that into account… the price decline drops to 2.4%. So if oil would otherwise have sold for $100 per barrel, it would now sell for $97.60 per barrel.”
The American Enterprise Institute’s Kenneth Green did have at least one suggestion that would immediately decrease the price of gasoline: cut the gasoline tax. “One thing they could do would be to declare a gas tax holiday,” said Green, which would promptly reduce the cost of gas.
However, even this has caveats. “They’d have to make up the shortfall from somewhere else to maintain transportation infrastructure. They could do that by switching to something like tolling, or VMT-fees (fees based on miles-traveled), but the money would have to come from somewhere,” said Green.
Therefore, if Congress were serious about immediate relief at the pumps, it seems as if the solution lies in calling for a gasoline tax holiday.
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