Q They don’t want any tax increases, as they put it. And the House Speaker says not only that he doesn’t support that, but that plan won’t — will not pass the House. So my question is will you insist, ultimately, that a deal has to include those tax increases that you just laid out? Is that an absolute red line for you? And if it is, can you explain to us how that can possibly get through the Congress?
THE PRESIDENT: Look, I think that what we’ve seen in negotiations here in Washington is a lot of people say a lot of things to satisfy their base or to get on cable news, but that hopefully, leaders at a certain point rise to the occasion and they do the right thing for the American people. And that’s what I expect to happen this time. Call me naïve, but my expectation is that leaders are going to lead.
THE PRESIDENT: …Marc Ambinder.
Q Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?
THE PRESIDENT: When you say it would seem they’ll have a significant amount of leverage over the White House, what do you mean?
Q Just in the sense that they’ll say essentially we’re not going to raise the — we’re not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you’re willing to do. I mean, what leverage would you have –
THE PRESIDENT: Look, here’s my expectation — and I’ll take John Boehner at his word — that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That’s something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.
And so my expectation is, is that we will have tough negotiations around the budget, but that ultimately we can arrive at a position that is keeping the government open, keeping Social Security checks going out, keeping veterans services being provided, but at the same time is prudent when it comes to taxpayer dollars.
No one could have predicted....
So the Democrats are proposing 17% tax increases, 83% spending cuts, and the Republicans are rejecting it. Well, this just forces us to ask: What’s the ideal conservative Republican ratio here?
Let’s take a look at March, 2011 Joint Economic Committee (JEC) Republican report, Spend Less, Owe Less, Grow the Economy. This report lays out the entire case for expansionary austerity, or how if we cut the deficit now the economy will likely grow faster, faster enough to offset the contraction. National Journal covered this report here. I think this report is bananas, but we are trying to think like a right-wing economist here. That report is based on an study by the right-wing think tank American Enterprise Institute, carried out by Biggs, Hassett, and Jensen, titled A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked (which, in turn, is largely based on a 2009 study by Alberto Alesina and Silvia Ardagna of Harvard, titled Large changes in ﬁscal policy: taxes versus spending).
When Republicans say that there is all kinds of research supporting their demands to cut the deficit for the health of the economy, they are specifically referring to their JEC report, which summarizes all the studies and lays out their arguments for What Is To Be Done. So what does it say about the ratio?
So when the GOP’s economic policy team sat down to make the strongest case they could for growth-inducing deficit reduction, they recommended a mix an 85:15 mix, not a 100:0 mix. And then, when the Obama administration agreed to an 83:17 mix, the Republican leadership walked out of the room and demanded that taxes be excluded from the deal altogether. How do you negotiate with that?
What else do you expect when you appease hostage takers...they get more and more confident and audacious...
One Democrat who was there said Rep. Henry Waxman (D-Calif.) bluntly asked Obama whether he was willing to fight for Democratic priorities amid GOP calls for trillions of dollars in spending cuts.
In asking the question, Waxman said he’d asked several Republicans about their White House meeting the day before and had been concerned by their response.
“To a person, they said the president’s going to cave,” Waxman told Obama, according to his colleague’s account.
The time to stand firm and say enough is NOW. And that means a lot more than trying to portray an upcoming concession on a corporate jet tax exemption, originally included in the stimulus, as a major victory.
Now is the time to stand up and make jobs to number one priority, as every competent economists have pointed out. The big money is getting restless.
Solutions from policymakers on the right or left, however, seem focused almost exclusively on rectifying or reducing our budget deficit as a panacea. While Democrats favor tax increases and mild adjustments to entitlements, Republicans pound the table for trillions of dollars of spending cuts and an axing of Obamacare. Both, however, somewhat mystifyingly, believe that balancing the budget will magically produce 20 million jobs over the next 10 years. President Obama’s long-term budget makes just such a claim and Republican alternatives go many steps further. Former Governor Pawlenty of Minnesota might be the Republicans’ extreme example, but his claim of 5% real growth based on tax cuts and entitlement reductions comes out of left field or perhaps the field of dreams. The United States has not had a sustained period of 5% real growth for nearly 60 years.
Additionally and immediately, however,government must take a leading role in job creation. Conservative or even liberal agendas that cede responsibility for job creation to the private sector over the next few years are simply dazed or perhaps crazed. The private sector is the source of long-term job creation but in the short term, no rational observer can believe that global or even small businesses will invest here when the labor over there is so much cheaper. That is why trillions of dollars of corporate cash rest impotently on balance sheets awaiting global – non-U.S. – investment opportunities. Our labor force is too expensive and poorly educated for today’s marketplace.
In the near term, then, we should not rely solely on job or corporate-directed payroll tax credits because corporations may not take enough of that bait, and they’re sitting pretty as it is. Government must step up to the plate, as it should have in early 2009. An infrastructure bank to fund badly needed reconstruction projects is a commonly accepted idea, despite the limitations of the original “shovel-ready” stimulus program in 2009. Disparate experts such as GE’s Jeff Immelt, Fareed Zakaria, Jeffrey Sachs and Paul Krugman believe an infrastructure bank to be an excellent use of deficit funds: a true investment in our future. While the current administration admits that the $25 billion in Recovery Act spending on infrastructure only created 150,000 jobs, it also stabilized and improved this nation’s productivity for years to come. Clean/green energy investments also come to mind, most of which require government funding and a government thrust in order to create millions of jobs. China knows this and is off and running. The U.S. needs to learn from their state-oriented model. In times of extremis, pushing on the private sector string is ineffective, especially within the context of a global marketplace that offers alternative investment locations. Government must temporarily assume a bigger, not a smaller, role in this economy, if only because other countries are dominating job creation with kick-start policies that eventually dominate global markets.
When Bill Gross talks, the world listens.
It is time to end the kabuki. It is time to stand up for policies that will create jobs and protect the poor. It is not the time to try to please people that want you to fail, want you to be a one term President, or think you are a d*ck.
THE PRESIDENT: Look, here’s my expectation — and I’ll take John Boehner at his word ... once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.
Mr. President...it is time to accept the reality. They don't want you to succeed. If you have goals that differ from theirs, it is time to take decisive action.
As Timbuk3 said earlier...the message to the GOP should be:
You have 3 options;
Raise taxes on the wealthy.
Send the POTUS a "clean" bill to raise the debt ceiling.
Be responsible for world-wide depression.
That should be the message for the next month.
It is now or never.