Crossposted from Democratic Convention Watch.
I keep watching these two and think of Carl Albert and Richard Nixon, Tip O'Neill and Ronnie Reagan, and Newt Gingrich and Bubba the Big Dog. Strong characters of differing parties who sometimes worked together, but even when at cross purposes were not crazy. The six men mentioned, for all their faults, were party partisans, and stood up for the platforms (okay, most of the time), and most of the time did what they legitimately thought was right for the country.
And now we've got Obama and Boehner. They are embroiled in their own private war, not to mention being at war with wings of their respective parties. The private war gets fought every time we hear them make speeches and call out one another. The other night Boehner said that he took the same oath the president did, it's similar but different. The salient part for both oaths involves preserving and defending the Constitution against all enemies foreign and domestic. I've been thinking a lot about that, and I think it's very sad that they've both forgotten it. For it's in that oath that Obama and Boehner could find common ground and actually solve this whole economic mess. Yes, really.
Let's start with the fact that neither Obama nor Boehner is a party partisan. Admit it. Get over it. They're concerned with themselves, and their re-elections. Neither of them is aligned with his party's platform. However, it's unlikely either wants to go down in history as the man who sent the entire world's economic system down the toilet.
Now, let's look at what the problem is: it's not that we have too much current "debt", it's that we have too much debt on the books. "Debt" is something you owe now, not 10 years down the line. Further, we have too many bills. Look at it this way in your household: you may have a car loan. You owe X number of dollars (debt) but you have a manageable monthly payment. You also have bills that come every month, like electricity, oil, phone. These are not debts, but bills. You could conceivably have future debt, like a balloon payment on a mortgage. In addition, you have an income, and potentially some savings. Thus, you can keep your monthly payments for debt and bills under control, but if something happens, there is some money to tide you over.
The Feds have debt (T-bills and other instruments) and bills (government salaries, Social Security payments, Medicare payments, the wars, etc.) and ballon debt (pension increases) and savings (the Aviation Trust Fund, and the supposed Social Security Trust Fund, to name two.) It gets income on a regular basis as people pay their taxes, pay fines and fees, and buy bonds.
The way government debt is calculated is often as a percentage of GDP. There are also different types of debt. You can see charts and historical data here. You'll notice that our debt is about to be 100% of GDP. This has happened once before, in the early 1940's. The problem is NOT the amount of debt, but the fact that GDP is too low. As we've said here at DCW many times before, if unemployment were back to 5%, and jobs were paying what they should, the problem would basically go away. In case you want the math: if the total payroll amount in America was a million dollars a week, and the government got 10% of that, it would take in $100,000. But if total payroll were two million, it would take in $200,000. The government's largest source of income (taxes) is in large part dependent on how much GDP there is. You get the idea: if the government took in more money BECAUSE there was more GDP, debt as a percentage of GDP would fall.
Remember that while "business" says it hates taxes, what it hates far more is uncertainty.
Add to this the problems both men have with their parties. Obama has alienated the Democratic base. The percentage of liberal Democrats who support his position on jobs is 31% according to a new poll. He's ticked off gays, women, unions....the list just goes on. And he doesn't care. To his credit, though, he doesn't pander to those he's already lost. Meanwhile, Boehner's party has been so co-opted by the teabag contingent that he has had to delay the House vote since he won't come close to the 218 he needs. He may be the Speaker, but he's certainly not speaking for his caucus. Still, Boehner's far worse off here than Obama: Americans, regardless of political affiliation (except the teabaggers) want shared sacrifice, spending cuts AND increased revenues, and for this thing to just get solved. Whoever actually solves it will be a hero.
So here's the fix: Obama and Boehner decide that their careers are basically over unless they do something so radical, so outrageous that it will not only play well, but actually work. They come up with a program to actually raise government revenue. They admit (privately, between themselves, likely on the links) that Krugman, Reich and Stiglitz are right. They come up with a jobs program. They bring in a bunch of business types and tell them that they're willing to do for manufacturing and infrastructure what they did for Wall Street. That if these people agree to build, rebuild, buy, and above all HIRE, the government will cut them all sorts of tax breaks on the salaries. This then allows them to come up with a blended cut and revenue plan but when CBO scores it, the debt goes down as income goes up. Since CBO scores for 10 years, things look Clinton-ish by year 5.
Think it can't pass the House? If everyone shows up, there are 191 Democratic votes (1 Democratic vacancy, 1 Democrat on extended medical leave). Boehner would need about 20 Republicans. Maybe 30, but that's it. And there are 30 Republicans in swing/moderate districts would would sign on. It has the ancillary benefit of marginalizing the teabaggers.
It may be too late at this juncture for something so huge in scale, but at this point, we either go into default next week, get downgraded next week (if there's a 30 day extension of debt ceiling raise on a clean vote), or take the Reid proposal (which is voodoo and will need rework after enactment). Thus, this could still work over the next few weeks. And face it, if those Social Security checks don't go out next week, people will be MUCH more willing to accept this sort of thing.
Just a Hail Mary Pass thought, but what do I know? I'm a blonde girl.