weekly response

President Obama has announced that Congress should not adjourn for the holidays until they extend payroll tax cuts for working class families. Clearly, this is the right thing to do, both for the economy and as a matter of simple compassion. Whereas eliminating this tax cut would be a punch in the gut to millions of families living on the brink of homelessness and malnutrition, its impact on the national budget would barely register against the enormous costs of Social Security, Medicare and Medicaid, and defense spending.

...America voted for divided government, not dysfunctional government...

But, President Obama contends in this week's address, a dysfunctional government we have. And although the President officially disagrees with Standard & Poor's downgrade of the U.S. credit rating, he would surely agree with this one main thrust of the report:

"We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process."

Contentious and fitful. Like children. Or, perhaps more relevantly, like pillars of hubris, swollen with pride, holding the course so as not to appear weak.

As such, in the aftermath of the debt ceiling hoo-ha, Republicans remain adamantly opposed to tax hikes for the rich. This might feel good inside, but the House majority is not doing itself any favors. On the contrary, they have everything to gain by backpedaling, even just a touch. Approval of Congress is at a historic low, and numerous polls (I'll link one example) show that a majority of Americans, even a majority of Republican voters, want the newly-anointed bipartisan "supercommittee" to reach a compromise.

I'm confident that the sooner Republicans stop hollering about "no new taxes," the less silly they will appear. Wouldn't it make sense to count the deficit war as a political victory and move on? After all, they made the President look weak, triggered a credit downgrade which wreaked havoc on the stock market, and took a wonderfully uncompromising stand against taxes. Now would be an ideal time to pick some fresh, new talking points before the public begins to notice the real-world consequences of this round of GOP political bullying. After all, Standard and Poor's has noticed, and they've raised quite the stink. That's sort of like police lights in your rearview mirror. A fair time to pull over, even if you were literally in the middle of saying that you'll never get a speeding ticket.

But the party faithful prattles on. At the Republican presidential debate last night, when asked if they would reject a deal that concedes one dollar of tax increases for every ten dollars of spending cuts, all eight candidates stuck their hands up like a band of crazed teacher's pets. Not a flicker of hesitation.

I understand that in a primary campaign, it is sometimes necessary to appeal to the party base, but I honestly think these people are not helping themselves. The American public can indeed be fooled, and we don't always pay close attention to important, relevant political matters. But when it's this obvious, when politicians repeatedly flout their refusal to compromise, their ideological stasis, for such an extended period of time, few thinking voters will take them seriously. So what are they trying to accomplish?

In the aftermath of Tuesday's debt deal, liberal commentators and members of the Congressional Progressive Caucus are furious at radical Republicans for hijacking the debt debate and forcing President Obama's "surrender." But, as Daniel Markovits writes in his piece, "How the GOP lost on the debt deal," published yesterday in the Los Angeles Times, it's a wonder things didn't end up a whole lot worse for the left, considering the Tea Party's extremist negotiating tactics.

Perhaps most importantly, Republicans can no longer bolster their hand with the ultimate bargaining chip: the threat of default. When a bipartisan commission meets this fall to negotiate further budget cuts, anti-tax hawks will no longer hold the power to shove the economy into the ditch; they will settle instead for indignant sound-bytes and symbolic bluster. Though the President is disappointed that Washington wasn't able to grow up and stitch together a bigger deal, the fact remains that the nation has escaped with Medicare, Medicaid, Social Security, and education grants - the pillars of our social safety net - fully intact.

Not that it's much consolation, but it was at least a little gratifying to see President Obama call out Tea Party shenanigans this Saturday, chastising "one faction of one party" for refusing to compromise their extreme positions in the debt ceiling debate. And following this frank, pleading address, it seems that Congressional leaders have finally reached a deal sufficiently revolting to the wings of both parties. The deal includes $2.4 trillion of cuts over ten years, no tax hikes for the rich, and no cuts of Social Security, Pell grants, Medicaid or Medicare. Barring unexpected political fiasco, the broad (and, sadly, unorganized) moderate caucus of Congress will be able to pass this legislation tomorrow, presumably without the votes of extreme Tea Partiers or hard-line liberals.

Among the accomplishments of the last few weeks, the Tea Party may have finally and conclusively outed itself to the American masses as a band of bona fide wack jobs. Their unyielding stance on taxes and blithe embrace of default leave no doubt (if any remained) that this powerful caucus is not fit to govern. But we are stuck with them for the immediate future, and I heard for the first time today on NPR's "All Things Considered" a gesture towards an organized and practical response to our predicament. A "restoration of sanity," as Jon Stewart might have.

The American Dream Movement is the brainchild of Van Jones, a former White House advisor to President Obama. Unlike Mr. Stewart's Rally to Restore Sanity, which placed a premium on fun, this movement presents itself as a serious political player designed to combat Tea Party fervor. Whereas the Tea Party calls for the end of government, the American Dream Movement values some of the things that government offers, such as Social Security and education grants. Mr. Jones believes that a silent majority of Americans oppose Tea Party policies, and he hopes to inspire them to political protest and action.

We will soon know whether this movement has as much traction as Mr. Jones claims. But if the last few weeks have taught us anything, it is painfully clear that any political voice, no matter how radical and irrational, has the power to tarnish the compromises that occur every day in government. In such a scary, precarious world, all thinking citizens have sacred responsibility to yell back. By adopting some of the Tea Party's organizing tactics (if not their positions), perhaps Mr. Jones will be able to lug the center of out policy debates back towards the left, closer to where it belongs.

In this week's terse, joyless address, President Obama reminds the nation that both parties share responsibility for the last decade of unbridled government spending. In the wake of Speaker Boehner's abrupt departure from White House budget negotiations this Friday, the President makes no apparent effort to maintain his hopeful, inspired tone of the last few weeks. This address features not a glimpse of his pearly whites, not even a "have a great weekend!" As such, the summer's foul political stasis persists. The President trudges through an epic struggle of careful political maneuvering and tortured reasoning, compromise futile, for upon his every offer, Republican leaders deftly triangulate to claim a new baseline, desperate to assuage their radical constituents.

I admire President Obama's enduring commitment to civil discourse, and he certainly honors his campaign promise to bring compromise to Washington. But aside from showcasing himself as a reasonable, fair man, this approach has not yielded the necessary results. The proposals Republicans have deigned to consider all rely overwhelmingly on spending cuts, including substantial cuts to Social Security and Medicare, while protecting the corporate rich from paying fair tax rates. The President has invited these proposals by indulging the notion, now common, that both parties deserve equal blame for the current crisis. While the blame game can be dangerous and unproductive, and the President has much to gain from keeping his composure through the entire haul, I am starting to think that progress can only be made once the nation is reminded, with a bit more precision, why the budget deficit is so large.

The fact is, the majority of today's debt accumulated with President Bush at the helm. The extraordinarily costly War on Terror added nearly $800 billion to the bill before President Obama took his oath of office. In addition to increased investment in national security, the growing cost of entitlement programs during the Bush years was not funded by new revenues. Whether or not you feel that these various spending initiatives enacted by President Bush were justified, he and his supporters will proudly point out that taxes remained constant throughout his presidency. Quite obviously, this is the reason why the deficit rose much more quickly than the GDP during the last decade.

If President Obama is bold enough to point out a few of these basic, indisputable facts, his adversaries will surely accuse him of "playing the blame game." But without getting too dirty or personal, it is important for the many interested parties - including politicians, the media, and the public - to hear from the President himself some specific details about the history of our debt. By repeatedly and vaguely asserting that blame must be shared, the President isn't helping people understand what is really going on. But if folks hear him spell out why the budget deficit grew so rapidly over the last decade, even if they refuse to listen at first, they will, perhaps, be more likely to support politicians who espouse responsible, logical economic policy.

Debt math is often confusing and always fuzzy, but check out this graphic, which clearly shows the relative impact of tax cuts on the budget. Also, Nobel Prize-winning economist Paul Krugman captures the exasperated plight of the left in his latest column, published yesterday in The New York Times.

It's possible that the weeks of closed-door conversation are yielding results, but neither President Obama's video address nor Friday's press conference suggest any meaningful development in budget negotiations. Rather than dignifying the familiar, self-indulgent stalemate with further attention, I'll write down a few ideas about how our economy has arrived at this pitiful juncture. For the sake of brevity, I've focused my thoughts on the housing and debt fiasco that blew up a few years ago, as well as the role of the American education system in bringing us to this moment.

Big banks certainly deserve blame for the subprime mortgage crisis of the late 2000s. By extending credit to individuals who would probably not be able to keep up with new bills, these banks put our economy on extremely shaky footing. Their morally dubious business calculations contributed to the current recession and destroyed the financial independence of millions of Americans, leaving them with a debt spiral to last a lifetime. It is frustrating to realize that wealthy, educated bankers and politicians allowed this situation to transpire in hopes of turning a profit.

The subprime mortgage crisis could have been avoided, or at least softened somewhat, had government enforced more stringent regulations and credit rating agencies issued strict credit scores. To this end, President Obama plans to name an individual in the next few days to lead the newly-created Consumer Financial Protection Bureau. (To the chagrin of her supporters, the agency's architect, Harvard Law Professor Elizabeth Warren, will not be chosen, mainly because so many conservatives in Congress despise her relentless advocacy on behalf of duped homebuyers.) If the agency manages to maintain its integrity and purpose amidst a muck of Congressional hearings, it will, perhaps, prevent a subprime mortgage crisis of such magnitude from ever again undermining our economy.

However, for all that government, banks, and credit agencies could have, should have, and can still do to protect the economy, the crisis could have been entirely avoided by one mechanism only: if individuals had not bought homes - without paying a penny up front - that they could not afford. The simple fact is that no bank strung up its clients and no hostages were claimed in the effort to corral high-risk homebuyers. Rather, just as any cheap salesperson, they spun a flashy deal, amped up their customer's confidence, and dangled the American dream for all to snatch. The rest, as they say, is history.

Why did so many fall for this sales pitch and wind up in debt?  Do these unfortunate individuals deserve a chunk of the blame for how things are today? Hard-line conservatives will argue that personal responsibility and an "all-American" spirit of rugged independence would have prevented so many from running up their credit card bills past the point of no return. More moderate voices will point out that everyone makes mistakes, and our country will be more stable once we offer help to those who have been taught their financial lessons the hard way. Thankfully, most Americans seem to understand that the millions who foreclosed on their homes have suffered enough, financially and emotionally, to drive home at least some lessons learned from their mistake, their naive trust of the powers that be.

While individual stories certainly differ, my concern lies in the similarities that provoked so many to fall into the same trap. So much media and political attention has been directed towards the evil of banks and stupidity of individual homeowners, but I believe that this problem of financial ignorance and irresponsibility originates in the basic structure of our education system. Upon graduating high school, not to mention college, my peers and I have been taught virtually nothing about financial management. What we do know is only the product and direct consequence of what our parents have passed along, along with any elective courses we might have chosen. In a world inextricably linked to complex financial markets, credit cards and scores, loans and debt, and myriad opportunities for investment miracle and catastrophe, such profound ignorance is a tremendous handicap and impediment to our independence and success, both as individuals and as a nation.

If parents would faithfully instill in their children intelligent and practical money management strategies, it might not be so important for our education system to take on this role. But the fact is that most parents are unwilling, or unable, or simply don't make time to empower their children with these lessons of survival. We witness this unfortunate reality every day as our friends, neighbors, and community struggle with poverty and debt, waiting in vain for economic revival. The cycle of mismanagement has revolved time and again, and if President Obama and members of Congress want to avoid another financial crisis, they need to address this gaping hole in our education system thoroughly and immediately.

I don't have on hand (and you probably weren't planning to read) a detailed policy proposal to overhaul our education system. I suppose that might be my next project. But I do know that a real solution will not take the form of a required high school economics course. To mend our society, we need to teach kindergarteners how to spend their allowance, and second graders how to set up (with adult supervision) a lemonade stand, and third graders how to start a savings account. Fourth graders need to know what I have barely figured out - just how a credit card functions - and seventh graders need to understand the basics of Wall Street. All that we, adults, strut around pretending to understand, we need to teach our nation's children before they are too spaced out or stoned to give a damn.

If the President and Congress want to be serious about "getting our fiscal house in order," they need to take a hard, long look at an education system that continues to churn out graduates without a nickel of financial common sense. This long-term investment would not only yield real results, but would finally eliminate the insidious root of our financial woes. Perhaps, if our nation were educated, if we had been indoctrinated with common sense in our youth, politicians would have less to gain and fewer constituents to please by trumpeting nonsensical solutions to serious economic problems.

This week's presidential video address is not all that different from the last, reflecting stubborn intertia in the struggle to address our nation's budget challenge. Once again, President Obama presents the centerpiece of his argument for tax hikes: that the wealthiest Americans, including large corporations and oil companies, can sacrifice a few dollars in order to budget for priorities such as Medicare, scholarships and research grants. To me, this seems like a reasonable bit of logic, but somehow, the President's approach has managed to antagonize Republicans and Democrats alike. According to Treasury Secretary Timothy Geithner, Congress and the President need to figure out some sort of budget plan by August 2nd in order to avoid defaulting on the nation's debt. But as President Obama attempts to strike a compromise with Republicans, who remain unwilling to consider a single tax hike, he risks losing the support of Democrats, who are becoming increasingly suspicious of the President's motives and loyalties.

Some have written, as I mentioned in my comments under last week's post, that President Obama's rhetoric has sounded alarmingly conservative of late. In this week's address, the President announces again that we have to make sure "our government lives within its means," just as American families do. Liberals have good reason to fear the consequences of this notion; many before have fallen for the seductive populist logic that government should regularly and faithfully pay off its debt, including President Herbert Hoover during the Great Depression. The last thing we need as the fragile economy recovers is senseless, unnecessary government austerity.

Listening to the President speak during his weekly address and at last week's Twitter Town Hall event, I began to think about his comments in a context that might allow him a bit more ideological wiggle room. He frightens the left by saying the government needs to live within its means, a turn of phrase typically associated with thinly-veiled free-market libertarian nonsense. But in the context of a historic budget deficit and a weak economy, and even during less extraordinary times, a government "living within its means" will not resemble a responsible family or individual with that same approach. Never does the President suggest that we need to eliminate our budget deficit; returning to a Clinton-era fiscal state couldn't possibly happen anytime soon. But should government spend its money carefully and responsibly, investing in useful, well-run programs that hold the promise of future returns? Absolutely, and Republicans are lucky to be working with a president so willing to scour the national budget for opportunities to cut pointless spending. With any luck, they will realize their good fortune just in time to eliminate unhelpful corporate tax cuts.

Cross your toes, and maybe by next week, the President will be able to announce that things have progressed! And for an intriguing time capsule, check out this ominous piece written by David Leonhardt, published by The New York Times in 2009, detailing the nation's dangerous fiscal state and how it might erupt in the near future.

President Obama is hopeful (video), for “Democrats and Republicans agree on the need to solve the problem” and reduce the national deficit. But such vague accordance will not deliver results unless substantiated by a set of concrete goals and priorities. As in any productive negotiation, both parties need to convey clearly and frankly what they can give up, what they cannot, and what is up for discussion. By establishing common ground and shared objectives at the outset of the conversation, perhaps individual temperament and pride will figure in less prominently as the President and Congress attempt to reach a useful compromise.

Most Republican members of Congress, including House Speaker John Boehner, Majority Whip Eric Cantor, and a swath of newly elected Tea Party heroes, are staunchly unwilling to vote for new tax increases. Further exacerbating the situation, these politicians have repeatedly announced their convictions to constituents and the media. In this week’s address, the President explains – again – that by eliminating tax cuts for the wealthy, the government can continue to provide college scholarships, health care, research grants, and postal service. But as the President’s frustration mounts, his pleas fall on deaf, obstinate ears. His political adversaries have built their political identity upon a promise to reign in government spending and slash taxes whenever possible. For these individuals, this discussion is no longer simply ideological (if it ever really was). Their pride, integrity, and purpose as elected officials are at stake; they have drawn a line in the sand and moved beyond reason in their vehement dogma.

The President’s demands are sensible, but in order to reduce the deficit, he requires the cooperation of at least some Republicans. Rather than honing in on the one policy option – raising taxes – most offensive to Tea Party sensibilities, the President might have more luck if he temporarily diverts attention from this sensitive, emotional issue. Instead of beginning the discussion by announcing, “We need to cut taxes in order to protect these programs,” President Obama could try saying, “We need to keep college scholarships, right? And medical research, too. Let’s think about how we could do that. Where can we save?”

This strategy would allow Republicans and Democrats to finally establish meaningful points of agreement. It doesn’t really help if everyone in Congress agrees that we need to reduce the deficit, just as the nuances of military engagement in Afghanistan remain contentious even while everyone in Washington wears a flag pin. Until the Republicans and Democrats agree on approximately how much the deficit must be reduced, and until they pencil in a few federally funded programs that must be protected (the postal service might be a nice place to start), negotiations will remain stagnant. But if the parties can stomach this degree of cooperation, it could trigger some important prerequisites to progress: media and political attention to taxes might simmer down, Republicans can tout the negotiations as a partisan victory, and President Obama can quietly strong-arm tax hikes for the wealthy into the final budget plan. In the current state of political inertia, the President has little to gain by digging in his heels and dignifying the mulish Republican posture. Rather, he can diffuse the petty, sour attitude of the opposition by extending an olive branch and allowing the GOP to begin a conversation without abandoning their steadfast principles. Tax hikes need to be part of the deficit reduction plan, but there’s no sense in forcing Republicans in Congress to publicly acknowledge this reality just yet.

For another perspective on the current state of the Republican party, check out The Mother of All No-Brainers, written by David Brooks and published yesterday in The New York Times. Mr. Brooks is a right-leaning moderate journalist.