Living In Last Year

Conservative House Speaker John Boehner has thrown down the gauntlet with a promise of another tense, partisan showdown later this year.  Mr. Boehner promised that he will insist on big spending cuts before he will agree to a new debt ceiling.  Mr. Boehner promised a vote before November’s presidential elections and he promised that he would prevent the tax cuts enacted during the Bush era from expiring by year’s end as scheduled.  Mr. Boehner’s announcement instantly brought to mind last year’s weeks long political clash over increasing the debt ceiling between the White House and congressional Republicans in the House of Representatives that roiled financial markets around the globe and led to a downgrade of the country’s credit rating and forced much of the government to shut down.

Predictably, Democrats are criticizing Mr. Boehner’s bravado.  House Minority Leader Nancy Pelosi said that the Republicans are once again choosing to protect the interests of millionaires over the rest of the country as Mr. Boehner is threatening to manufacturer a crisis that will harm American families.  Senate Democratic Policy Committee Chairman Charles Schumer of New York said that the last thing the country needs is a rerun of last summer’s debacle that nearly brought down our economy.

White House spokesperson Jay Carney responded that everyone except for the elected members of Congress, the Republican Party, agrees with the proposition that we need to take a balanced approach to our deficit and debt challenges.  The White House is looking for a combination of tax increases as well as spending cuts.

However, Mr. Boehner has promised to reject any increase in taxes saying that a sudden tax hike would hurt the economy.  Mr. Boehner says that the House of Representatives will stop the President from enacting the largest tax increase in the country’s history, a reference to the expiration of the Bush tax cuts.  But the flipside of this problem is that any sudden decrease in spending that supports domestic programs, especially the social programs that help people who are being hurt by this economy, will hurt the economy as well.  Since Republicans control the House by holding a majority of the seats it is a safe bet that an extension of the tax cuts is sure to pass there.  But Democrats hold a majority of seats in the Senate, and are sure to block any extension without some kind of compromise that the conservatives promise isn’t coming.

Last summer the White House and House Republicans spent weeks hemming and hawing negotiations over tax and spending policy.  They ultimately agreed to raise the debt ceiling in stages and to impose automatic spending cuts with the first round of cuts occurring in January at a total of about $110 billion with half from defense and half from domestic programs.  It might sound fair that half the cuts will come from cuts to the defense budget while half comes from domestic programs.  But the big difference is that the defense department isn’t struggling to put food on the table for families across the nation or trying to keep people down on their luck from falling through the cracks in our economy.

Tax increases on the wealthy does not keep them from being able to live.  Higher taxes on the wealthy don’t keep food off their table, a roof over their head, and it doesn’t keep them from obtaining healthcare or much of anything else.  The only thing a higher tax rate on the wealthy does is keep them from amassing more wealth as quickly as they would have without the rate increase.  That really doesn’t hurt the economy.

What hurts the economy is when people can’t afford the things they need to live.  When the masses can’t afford food, food producers don’t sell and that impacts the economy.  When the masses can’t afford a place to live, landlords don’t sell and that impacts the economy.  When food producers, landlords, manufacturers, and the rest don’t sell, they don’t need as many people on their payroll and that impacts the economy.  And when one sector of the economy starts to drag, the entire economy starts to sputter and fail.

Last summer our economy teetered on the edge of ruin as politicians played with our lives.  The favorability rating of our Congress reached a new low with single digits for some politicians while others hovered at the lowest range of the two digits.  People were ready to fire any politician they could to manifest their anger and disgust.  Woe to anyone who would come up for reelection.

It might be a coincidence but President Barack Obama is up for reelection this year, just before the time Mr. Boehner promises to start another fight over policy, a virtual reenactment of the same fight that angered so many last year.  It might be Mr. Boehner’s hope is for a new round of political gridlock that will rekindle voter anger and they will again look to throw all the politicians out that are up for reelection.