Be careful what you wish for – Congressional Edition

Capitol DomeA new Washington Post/ABC News poll finds that nearly two-thirds of registered voters say they plan to “look around” to vote for someone other than their current member of Congress in 2012.

This is pretty understandable given the utter dysfunction of the 112th Congress and the debt ceiling gauntlet they have chosen to run us through.  However, it’s worth noting that this sort incumbent dissatisfaction is what got us here in the 2010 election cycle.

The 2010 elections were all about throwing out the incumbents and sending Washington a message that the voters were mad as hell and wanted things to be different.  The result being an extremely large crowd of 93 Freshman Representatives in the House and 13 fresh-faced Senators.  And well… it’s different in Washington, but is it what we wanted?

The mad as hell, ideologically driven, take no prisoners and accept no compromise spirit of the voters is arguably embodied in the newly elected legislators.  But the result has been virtual political paralysis.  The people sent to “shake things up” have failed to realize that beyond being a message incarnate, they are actually supposed to run a government and act in the best interest of the people.  And the very nature of that in any democracy is about compromise and negotiation, a subtle point of complexity apparently lost on the Freshman class.

The lesson here for us voters should be that while there’s lots of good reasons to revile the incumbents, it’s vitally important to replace them with someone competent and capable, not merely someone loud and angry.

This is why we can’t have nice things

Grandma Party
Democrats are pandering to the senior crowd

The Obama administration announced it was kicking in $6.7 billion to head off cuts to Medicare Advantage—cuts put in place by Obamacare.

These were some of the cuts put in place to reduce the excessive spending on health care.  They were a key part of the package Democrats fought tooth and nail to get passed last year.  They are essential for the new health care reform bill to achieve its projected savings.  And now they are flip-flopping on them.

Why would these cuts be restored?  Well, no one is saying for sure, but given the popularity of Medicare Advantage with seniors and the impending election season, this is pretty clearly just blatant pandering to the elder voting bloc.

The Republicans ruled the 2010 elections largely on the back of seniors they scared by pointing out that Obamacare included cuts to Medicare Advantage, so maybe Democratic strategists are merely trying to avoid a repeat in 2012.  However, House Republicans are now on record as supporting the Ryan plan which not only contains those cuts, but goes on to dismantle traditional Medicare as well.  It seems seniors worried about Medicare should be far more scared of the GOP proposed budget than Obamacare, even without this restoration of benefits.

Medicare Advantage is more expensive than traditional Medicare.  While it makes sense to allow seniors to opt for private insurance over public coverage, it doesn’t make sense for us to pay extra for it.  These cuts should be among the easiest to make.  If politicians can’t stick to even this sort of spending cut back out of fear of losing votes, will they ever be able to make any really hard economic choices?

The Magic 8-Ball says… “Outlook not so good”

It’s the Revenue, Stupid

As we rapidly approach another potential government shutdown due to the Congressional budget impasse, it’s a good time to examine to root of the fiscal situation in which we find ourselves.  Republicans did well at the polls in 2010 by framing the problem as one of out of control government spending.  Democrats have basically conceded that point, and the current debate rages over exactly how many billions of dollars should be cut and from where.

Looking for ways to contain spending is always smart, whether you’re a government, a corporation, a small business, or just a household.  Left unscrutinized, expenses tend to accumulate over time, and the larger the organization, the larger the accumulation of programs and services that no longer provide a valuable service, or do so inefficiently.

Spending as a % of GDPHowever, the current debate overlooks the larger, and frankly glaring, reality that we are not in the midst of a period of out of control spending.  We are in a period of unprecedented loss of income.

The chart at the right shows spending relative to GDP. Looking at these numbers relative to GDP is the only sensible approach as it takes into account the dollars relative to the size and strength of the country’s economy.  What’s clear from the chart is that we are on the line that extends back for a century.  The two big blips are the World Wars, but otherwise, spending growth is relatively constant.  It’s also interesting to note that one of the only extended declines in spending was during the Clinton administration in the 1990s.  We’ve since squandered that, which does lend credence to the claim that spending has increased dramatically in recent years.  But it would still be difficult to characterize this as run away spending.  Especially considering we are already seeing a downturn in spending because of the expiration of most of the stimulus programs.

Still, it’s also important to recognize the slope of this spending line is ultimately unsustainable.  Eventually, this line will cross 100% and keep on going.  And realistically, we need to flatten it out long before then.  So yes, make some tough priority choices, strive for efficiency, and reduce waste because ultimately we do need to flatten this line out.

Revenue as a % of GDPOn the other side of the equation though, look at the revenue graph.  There has been a precipitous drop in revenue over the last decade.  As a percent of GDP, revenues have not been this low in 50 years.

In part, this loss of income is attributable to the economic downturn, but it is attributable in larger part to the many tax cuts passed.  So while we may argue that some of our deficits are caused by economic realities, a non-trivial chunk are caused by our choices.  We are choosing to be broke, or at least choosing to be as broke as we are.

Think of this in the framework of a typical 2-income household.  As a couple, you decide you need to get your spending under control as its year-on-year growth is not sustainable, but you just can’t bring yourselves to contain your spendthrift habits.  So you decide to have your spouse quit their job.   For a while you continue to spend at your old rate anyway because your credit cards have not maxed out.  And it is only when they do that you force yourselves to cut back.  Yet now you have to cut back to one-income levels, and you are also saddled with interest payments on all the debt your racked up.

Mission accomplished?  In what reality?  We need to get spending under control.  We have a revenue problem.

Divided House GOP ups the odds of government shutdown

Pew Poll on Spending Cuts
Republicans favor spending increases when polled on specific programs

On Wednesday, Republican House leaders introduced $32 billion in budget cuts for the remaining seven months of the 2011 fiscal year, but were then rebuked by more conservative members who deemed the cuts not deep enough.  A big chunk of the incoming freshman class, elected on the promise of slashing $100B from the budget, are taking their campaign promise literally.

This creates problems for Speaker Boehner and his team who have vowed not to repeat the mistakes of the ill-fated 1995 Gingrich Congress who played a game of “chicken” over the budget and lost.  Boehner is faced with internal forces who are demanding extremely painful non-defense discretionary spending cuts.  Meanwhile, a new Pew Poll shows that most Republican constituents are not in favor of cutting much other than global aid and unemployment benefits.  This potentially puts the House leadership in a no-win situation.

The poll shows that while the American people are conceptually in favor of less spending, lower taxes, and smaller government, when you get down to specifics, there’s not too much they are willing to give up in terms of government services and programs.  There is a popular perception that government is so rife with waste and fraud that $100B could be saved without really impacting anyone’s life.  A false perception that was perpetrated by the GOP during the 2010 election when they tossed the $100B number about without any specific plan for how to achieve it.

Unfortunately for the GOP, many of their own members were drinking their Kool-Aid.  The Tea Party Caucus and other ultra-fiscal conservatives are now standing by their $100B pledge.  And they seem convinced that this time around the people would stand with them if they dare the Senate and Obama to reject their cuts—something House leaders are not so sure about.

With a looming budget vote and a debt ceiling vote, fiscal conservatives have two upcoming opportunities to force an economic crisis if they are unsatisfied with the budget proposals.  Neither a government shutdown due to a failure to approve a budget nor the global market shockwave that a refusal to raise the debt ceiling would cause will be tolerated by voters.  Yet there is virtually no chance a draconian budget approved by the House would get through the Democratically controlled Senate, much less the White House.  Even if it did, the poll indicates a significant voter backlash.

Unless the fiscal conservatives blink, the only path to avoid a crisis may be for moderate Republicans to break ranks with the Tea Party and cooperate with Democrats to pass reasonable budget bills.  This is something neither Boehner nor the Republican party wish to happen as it would fracture the unified alliance responsible for resurrecting the party after 2006 and would alienate the conservative base.

The GOP is between the proverbial rock and a hard place.  Yet it’s hard to sympathize as this is a situation of their own making.  It’s not clear if Republicans will win or lose, but it’s increasingly likely the people will lose.

Bachmann vies for GOP leadership post

Michele Bachmann
Photo by Gage Skidmore on Flickr

Congressional Tea Party Caucus leader Michele Bachmann has announced she is running for the GOP Conference Chair now that Rep. Mike Pence has stepped down.  If successful, this would make the Minnesota representative and Tea Party front-person the fourth highest ranking Republican in the House.

Rep. Jeb Hensarling, R-Texas, has also announced his desire for the seat.  Hensarling is a close political ally of Eric Cantor, which potentially sets this contest up as the first “Tea Party vs. establishment Republicans” fight of the new Congress.  The vote is expected to happen on November 17th.

The prospect of Bachmann’s rise in power and influence within the House is particularly troubling in light of her persistent tendency to buy into conspiracy theories.   She raised fears about the census over concerns Obama would use the information to open conservative internment camps.  She’s convinced The Fed is conspiring to create a single global currency.  And she believes the healthcare bill promotes abortion and rations care.

Most recently, she appeared on CNN’s AC 360 after the election and railed against Obama’s upcoming $2 billion dollar trip to Asia, which would include the redeployment of a tenth of the U.S. Navy, as an example of the waste that needs to be eliminated from government.  Unfortunately, as Anderson Cooper points out, the notion that a Presidential trip could cost more per day than the war in Afghanistan is preposterous and untrue.

A senior GOP aide on Capitol Hill told NBC News that the chance of Bachmann securing the GOP Conference Chair is, “slim to none.” The aide continued, “She’d be hard-pressed to find the votes to win that job.”  However, given the number of Tea Party backed candidates that enabled the Republican takeover of the House, the pressure on the GOP establishment to give the Tea Party a seat at the leadership table may be significant.