Compromise -- Like Kissing Your Sister

Everyone hates this compromise unlike anything I've ever seen coming out of Washington D.C.

President Obama failed to get tax hikes on the wealthiest Americans for now, but in January 2013 the Bush-era tax cuts expire. That's a tax increase by any calculation. But Paul Ryan gave Sean Hannity assurances tonight (Monday after the House passed the bill) the measure will not allow it to happen.



There's a bicameral bipartisan committee of twelve (six from each house) being handed authority to come up with more spending cuts (half defense and half entitlements) by November of this year. If they don't, some "triggers" kick in that are designed purposefully to be painful enough for both sides to compel action. We'll see. There is a troubling habit in Washington in recent years. We don't openly debate anymore. We appoint committees. It's a trip down memory lane.

The House has held its ground since the mid-term elections in 2010. They repealed Obamacare, they passed the proposed Ryan budget, and they passed Cut, Cap and Balance and got an assurance for an up or down vote in both the House and the Senate on the Balanced Budget Amendment. Apparently the sticking point for Democrats is a mechanism for a "super majority" vote of 67% in each house to raise taxes. Look for that provision to be modified to be more acceptable.

But tonight it's all political, not meaningful. Here's the biggest problem -- the entitlement spending is on autopilot and increases (because of the absence of a restraining budget) by 8% for the next several years. The "cuts" proposed in this compromise deal merely state we will cut 3% from the projected spending we haven't spent yet, and it's not real. The net result that just got cast in stone today is that S&P will downgrade the AAA bond rating, assured by this deal. Moody's may be more patient, but not for long. Strange, that knowing what the rating agencies wanted to see, the politicians couldn't satisfy their demands.

This is a political compromise of the first order, nothing more nothing less. It's avoided a default in the short term, but the structural economic weaknesses still remain. We're on a path to borrow 100% of our GDP, and this does nothing to short circuit that trajectory. The total economy is $14.8 Trillion, and we've borrowed $14.3 to date with more coming. The debt is accumulating at $4 Billion PER DAY! Astounding to me is Obamacare and its impact, already being

We need to take the baseline for this year, then cut 1% off that per year until spending comes down to the level of tax revenue. That's real. This deal is just more Washington compromise as usual. Watch for Paul Ryan (R-WI), the House Budget guru, to take up the return to the baseline budgeting in committee. We learned nothing from the TARP lesson of September of 2008, and you can add Obamacare to that pattern. Remember, "We have to pass this bill to know what's in it?" (That was Nancy Pelosi when they passed Obamacare).

And now we repeat the same pattern. This compromise deal was struck by Senate minority leader Mitch McConnell (R-KY) and Vice-President Joe Biden (don't let anyone tell you any differently -- that's who did it). Panic at the last minute is once again what this looks and feels like. Will anyone actually get to read and study this thing before a vote? Let's hope so.

Some members of the House and Senate complained that the details of the backroom deal were in the hands of the media for a full hour before getting a conference call to their respective caucuses. That doesn't sit well with elected representatives who were sent there as the representatives of the people. What a horrible example of Constitutional government!

However, lest we sink all hope with these comments, there is a ray of sunshine. The House and Senate freshmen Republicans who were sent to change things have held their ground and have succeeded in changing the conversation. Instead of being able to buy votes with more pork barrel spending, this time the POTUS and the Senate majority leader were compelled to have a conversation with Speaker Boehner in the back room, all of them realizing the American people now had representation and they meant business. We sometimes forget that only a year ago the Obama administration got a $1.9 Trillion increase in the debt limit rubber-stamped through both houses of Congress without anyone even finding the story in the mainstream media because it was buried on page 10 under the fold. Why? See Obamacare -- you'll find it there.

So that's some progress on some level; some, but not enough.

What comes next? We haven't really had a comprehensive debate yet about the underlying economic issues. That has to come next, and it isn't going away until after the 2012 election, like President Obama would have preferred. He's actually going to have to defend his record as the biggest spender in the history of the Republic.

So what we got after all the angst over the last two months was the one thing the country can least afford -- more uncertainty. We'll lose the AAA bond rating, there's little doubt. Whether or not S&P decides to follow through on their threat of a downgrade, that fact may be the least of our financial worries. A Democrat-controlled Congress seems to believe adding a "mere" $7 trillion to our debt between now and 2020 instead of $10 trillion represents a victory for prudent budgeting. GEEZ! And even a "modest" $3-trillion trim is a theoretical number. Further, nothing can bind a 2018 Congress to follow the will of Americans expressed in 2011. That's a lot more frightening than any credit downgrade. Married with inflation that's already on the way, the impact on discretionary spending is negative for everyone.

Last night CNN interviewed Senator Mike Lee (R-UT). Notice how many times the interviewers bring up the political implications, none of which Lee is interested in discussing. Instead, he's focused totally on the underlying economic issues that have not been addressed. Blitzer tried to suggest the Republicans got nearly everything they asked for, so why can't Lee be happy about that? Well, it's simple. This request for an increase in the debt ceiling is unprecedented in U.S. history, and cannot be granted without a structural reform to the way Washington spends our money in the future. This is a debate that has just barely begun, and I don't expect a political "deal" to tamp down that economic debate.



The rest of the story is even easier, which may make all this academic -- will the deal actually pass through both houses among the rank and file members? Lee first wanted to invoke the filibuster, requiring 60 votes in the Senate for passage to break the filibuster, then backed off when the votes lined up in support of the measure. It's the American way. It's the Constitutional way. It's not the political way Lee's interested in. Orrin Hatch (R-UT) also stood by his pledge to oppose it without the BBA.

We are finally beginning to wake up from our long national nap, it seems. If there is any good news, both sides are finally compelled because of the economy to end their lavish dreams. The Tea Party uprising has killed both the neoconservative dream of an ever-expanding American empire and the liberal hopes once entertained that roughly 100 years after Theodore Roosevelt and Woodrow Wilson, roughly 75 years after the New Deal and roughly 50 years after the Great Society, we were living in another great age of progressive reform.

Given the era of fiscal scarcity we’re now entering, those neocon and progressive dreams are now likely dead for many years to come. This recovery will take years, not months, to materialize. Meanwhile, the Tea Party’s dream of a government reduced to its pre-welfare state size becomes self-fulfilling.

Stay tuned, this thing isn't a done deal yet, even when the votes are in.

Open Letter on the Debt Crisis

Mr. President, Mr. Majority Leader, and Mr. Speaker (and Mr. Chief Justice if it helps):

The noise in Washington this week has been deafening, the heat has been off the charts, the accusations and threats unrestrained, and the rhetoric explosive. And what have we gleaned from it all? So far, nothing. You all saw this coming when the new House was sworn in last January, and what have you done since then? You waited until the self-imposed deadline, and very little leadership among you has been in evidence. Senator Marco Rubio (R-FL) explains just how simple these issues really are:



There are those who claim the freshmen Republicans in the House are irresponsible with their staunch position on "Cut, Cap and Balance," but to date it is the only piece of pending legislation that has passed, until a second attempt passed narrowly late today. Since then a flurry of proposals (and that's all they are -- proposals) have not been put into actionable legislation. Moody's remains unimpressed, saying nothing they've seen so far will work to appease their pending downgrade of the U.S. Treasury's AAA bond rating. What is pathetic in a crisis of leadership that seems to characterize Democrat control of the Senate and the White House is that we haven't yet seen a plan in writing. The budget submitted by this White House earlier this year was so deficient in specifics it was voted down 97-0, and nothing has come out of the Senate since.

Senator Mike Lee (R-UT)

I am grateful for the efforts of Utah's congressional delegation who are leading the way in this fight -- specifically Senator Mike Lee (R-UT), Congressman Jason Chaffetz (D-UT) and senior Senator Orrin Hatch (R-UT). Lee is responsible for the content of the House legislation and it was sponsored courageously by Chaffetz where it passed. Cut, Cap and Balance is the responsible approach, the "balanced approach," if you prefer. Unfortunately, when it was sent to the Senate, Senator Harry Reid (D-NV), House Majority Leader, decided to kill it on a procedural vote without giving anyone in the "deliberative body" a chance to debate or amend its merits or deficiencies.

Then the House Speaker, John Boehner (R-OH), went to work with Reid, feeling betrayed by a "wiggly" Jell-o-like occupant of the White House, to craft yet another Washington COMPROMISE solution. So far, no success on that path has been reached either. We'll now watch the Senate shred this latest attempt and see if they can come up with anything over the weekend that might have a chance for passage in the House.

In the meantime President Obama remains on the sidelines where he deserves to be as a lame duck and out of the discussions because he was summarily excluded (correctly) by Boehner as an impediment.

Since January, the threat of a downgrade in the U.S. Treasury credit rating for its bonds has been on the table. The rating agencies are looking for a commitment for real cuts in spending amounting to $4 Trillion, not ironically the same amount that has been amassed under the Obama administration in a short two and one-half years. I continue to be baffled why anyone would think borrowing $4 Trillion from principally the Chinese government then blaming George W. Bush for everything, as President Obama did last week without even acknowledging his own complicity might be a factor, is a viable campaign strategy by Obama's advisers. The thought makes reason stare. Then after that he demands that wealthy Americans pay their "fair share" in taxes.

It is my considered belief that Mike Lee is the statesman in all this. I define "statesman" as one who takes a principled stand in the face of popular opinion. However, the American people are lined up behind Lee on this one. A recent CNN poll indicates as many as 74 percent favor the general idea of a BBA without even knowing the specifics. You may disagree, but his influence is having a profound impact for a junior senator from a small state like Utah. Those who doubted his effectiveness as a freshman replacing a seasoned Bob Bennett can rest assured there would have been nothing coming from Bennett by comparison. So, kudos to Mike.

I do not speak for Lee (he is fully capable), but it's important to underscore what he is attempting to accomplish without impugning his motives as some have done. He is not in favor of raising the debt limit if he were making an isolated choice. In this climate currently, however, he is willing to make the necessary compromise now if he can get the Balanced Budget Amendment to change the structure of the government's spending habit to finally come under Constitutional control. Click the link (it's not a new idea). Anything short of a Constitutional amendment allows future Congresses to adjust whatever assumptions are put in place today and to change the law at will. That's what got us into this mess in the first place. I think that position is reasoned and worthy of consideration, especially when it authorizes a mechanism to deal with "emergencies" like wars. There are twenty Democratic Senators who are on the record as favoring the BBA idea.



When 49 states require their legislatures to balance their budgets, can anyone explain to me why expecting the same thing from the federal government is such a bad idea? When did it become "reckless" for government to commit to the taxpayers they would not spend more than they take in? Will those same people explain why deficit spending and unsustainable debt and borrowing is NOT reckless? I await your response. We're at a tipping point in America. The word of the year in politics is "UNSUSTAINABLE." Everybody uses that word. So let's bind Congress in the future to a sustainable and sensible process when it comes to spending priorities. Is that reckless?

I have always maintained since first being introduced to Mike's senate candidacy early in 2010, that he would make an impact on Washington if he could remain true to his beliefs. However, I acknowledge he cannot be effective in isolation, nor that any one man can change everything. That would be a truly audacious undertaking. If I were a betting man, I would wager the August 4th deadline is mythical and has no real merit as a drop dead date for solving the problem. If Americans have a few more weeks of watching these positions revealed for what they are -- mostly lies -- we'll see a public ground swell uniting behind Mike's leadership on the BBA. Why? Because President Obama has already caved on including taxes as part of this compromise. That's a reasonable compromise, and he is to be commended for taking taxes out of the equation. However, the spending cuts proposed by Reid have been exposed for what they are -- illusory rather than real cuts to trim the baseline for this year, particularly when an "assumption" about the end of our involvement in Afghanistan is included -- and REAL, tangible cuts out of this year's budget are what the credit rating agencies are looking for. They are certainly not going to be impressed with a promise to impanel more commissions to study the matters.

Everyone knows what is required, it seems, except the Democratic and Republican establishment leadership, who are taking us down a path of more "blue ribbon commissions" to do the hard work the American people elected their representatives to do. There is a committee of 535 elected representatives already in place -- 100 in the Senate and 435 in the House. They need to step up, write their best proposals, debate them in public rather than cutting deals behind closed doors, take the votes up or down, and be accountable instead of hiding behind procedure. The American people are screaming, "NO MORE GAMES!"



I stand with Senator Lee. We must put on the spending brakes immediately against THIS YEAR's baseline, then plan for the future by passing the BBA out of both houses of Congress, realizing that most of its provisions will take a matter of months, maybe years, to be approved by 3/4 of all the state legislatures before its provisions kick in. However, just the act of passing that legislation will signal Washington's commitment to the world and to our citizens we are taking immediate and realistic steps to curb the spending addiction.

If the individual states disagree with the BBA, then let them have their voice, and let the debates be held state by state until we reach the needed number. A return to states' rights and federalism at that level would be a welcomed change from what we are witnessing on the shores of the Potomac today. Yes, withdrawal from our easy credit addiction will be long and painful, but must be undertaken. Like all addictions, the time to quit is now, not tomorrow. I guarantee you those in Washington who are not willing to find the game changing solutions will be swept out of office in 2012.

There is no doubt when the Constitution was approved it baked in all the spending restraints and separation of powers by design to prevent tyranny from ever gaining power in America as it had in England. But the abuse of Constitutional principles defining those important limitations are only effective if all agree to be bound by its provisions. Sadly, that is not the case today.

Therefore, we must determine right now as a nation what course we will take. Will we at long last try to reclaim the liberties we have ceded as free men and women to an out-of-control tyrannical federal government, or will we wait for nature to take its irrevocable course and watch the ship of state sink beneath our feet? The choice could not be more clear to me. We have given money to this government and it was not enough. The government appears to be ready to confiscate and regulate even more, and we have created that voracious appetite by monetizing our debt and printing gobs of worthless paper. We have done this to ourselves, and we have what we have because of our own greed. Only our collective political will as a people can reverse this addiction and stop it in its tracks.

We can debate the merits of the proposed BBA (there are actually many versions afloat now), if a true debate can be had in today's environment, but this much seems clear -- drastic measures are needed now. If you use a percentage of past spending limits as a measurement, maybe that's not realistic, so let's come up with something else to cap what we spend if you like, but unless the spending cuts and caps are real and permanent, and until someone else comes up with a better idea, let's support Senator Lee's efforts to at least get us to the starting line on the debate as a nation.

The political gamesmanship is pathetic to watch. Only this morning I listened to President Obama suggest Americans need to keep up the pressure on their elected representatives. "Keep Tweeting," he encouraged. Really, Mr. President? That's your solution? Tweeting? Wouldn't it be hysterical if he were reported as a Twitter spammer and they shut down @barackobama?

There are some who are far to the right of Senator Lee. They would argue there is no defensible principled position on which we could possibly stand to consider raising the debt ceiling. They would advocate a complete collapse of the federal government as the only option avialable to prove a point and win the ideological argument for "purity."

I would suggest there might be an alternative.

It's called elections. They are free and vouched safe under the Constitution. We may have to wait for sixteen more months before enough like-minded people can be added to the ranks of those who believe as I do, but I have a feeling it will be worth the wait if it means saving the Republic by peaceful means. I don't love the thought of anarchy in the streets, nor do I relish a complete economic meltdown simply to prove your "pure" ideology is better than mine. America renews itself every two years by design. When it makes an egregious mistake in judgment, America can redeem herself. The pendulum swings back and forth.

While you may argue there is no principled room left to entertain a vote to raise the debt limit, I believe there is. Even Senator Lee recognizes it is irresponsible or naive to stamp his feet and refuse to raise the debt ceiling. His rational, if adamant stance on the BBA, makes sense while compromising on a debt ceiling increase tied to the strong medicine of the BBA later on. That's better than specious commissions to study and recommend spending cuts and caps that cannot bind the collective wills of future Congresses. Lost in the clamor of the ideology sometimes is the simple fact that the current proposed increase in the debt ceiling is only to handle what we've already obligated the government to do. We just need to make a stand that we won't continue our irresponsible spending habits.



Going forward, let's find Constitutional principles to stand on relative to the federal government's proper role in our lives. Then when we reduce the size of government we'll attack the silent elephant in the room in the aftermath -- who's got a plan for putting all the downsized federal government workers back to work in the private sector?

But that's tomorrow's problem.

How Big is $15 TRILLION?

Last night a grandson was watching the President on TV with me. He heard me muttering in amazement at the way the TRILLION dollar numbers just seemed to roll off the lips, but he had no concept of what he was hearing. So he asked, "Grandpa, how much is $15 TRILLION?"

We went to the computer and this is what we found. It kind of helps to visualize it since it's so difficult to grasp it in words alone.

The fact that amazes me is we actually are having an ideological war of words about it between the parties. Doesn't everyone agree that we have to stop the runaway freight train of spending NOW? It should be a no brainer. Today the CBO scored Boehner's plan and discovered it fell short in actual results of the $1 Trillion he was seeking in cuts, so the vote on his bill is going to be delayed until they can come up with more cuts.

At least someone is doing some serious counting, but as you can see from the illustration, that's a lot of counting!

Showdown at the NOT OK CORRAL

Further evidence that things are seriously broken in the White House. Until this president is retired by the voters in November 2012, the great divide will continue. The evidence could not be more clear in these two dueling news conferences last night:





A Rasmussen poll released yesterday reflects the frustration in the country among likely voters. No matter which Republican candidate is pitted against Obama in the poll, he fails to muster support higher than 47%. The election of 2012 is shaping up as a referendum on the incumbent, and right now they are labeling him a lame duck president and he is being treated as such because of his failure in leadership. Even his liberal base is eroding because his most ardent supporters are seeing him now for what he is. Here's another story with the same conclusion.

The result that was most telling to me was the matchup with Ron Paul -- Obama 41%, Paul 37%. I could be satisfied with ANY Republican candidate right now, and apparently the rest of the country is feeling exactly the same.

And oh, by the way, don't underestimate the influence of a man you've never heard of before on the current discussion over taxes and the debt ceiling. Grover Norquist has marshaled members of Congress who have signed his pledge to NEVER raise taxes anytime, anywhere on anybody.

Bohener is not abdicating his duty and his oath of office -- he's merely excluding the president from the discussion and putting him right where he belongs -- on the sidelines -- while Congress takes the leadership role out of his hands..


WASHINGTON, DC (Jul 23)

House Speaker John Boehner (R-OH) issued the following statement regarding ongoing work on a deficit reduction package:

“As I said last night, over this weekend Congress will forge a responsible path forward. House and Senate leaders will be working to find a bipartisan solution to significantly reduce Washington spending and preserve the full faith and credit of the United States."

Political Quote of the Day

On the heels of another announcement of mass layoffs this week (23,000 combined from Cisco, Lockheed Martin and Borders, after 41,432 planned cuts in June, plus 142,000 government jobs lost so far this year), I stumbled over this quote this morning:

Howard Davidowitz

Howard Davidowitz is bipartisan in his criticism, calling the U.S. political system "dysfunctional and deranged."

Still, the restructuring expert is a longtime and vocal critic of President Obama. Today, he said:

"There has never been a situation in my lifetime where a guy increases the debt by 40%, GDP growth is on the way down, Food Stamps are up, millions more are unemployed -- and to accomplish this we spent $4 trillion."


Further evidence we are indeed living in unprecedented times.

WASHINGTON – Following a procedural vote to prevent the “Cut, Cap, and Balance Act” from coming to the Senate floor, Senator Mike Lee released the following statement:

“Today, Majority Leader Harry Reid used procedural tactic to prevent a vote on a bill that is supported by two-thirds of the country.  It is shameful, despicable, and an abuse of this chamber.  We weren’t even allowed sufficient time to debate the one bill in Congress that would address the country’s most immediate challenges.

“The Democrats have blocked a vote for now, but the fight is not over.  I will continue to make sure ‘Cut, Cap, and Balance’ receives a proper up or down vote in the Senate.”