Tornado Alley (PROG)

[fuagf]

Republicans are acting like vandals

Andrew Sullivan
From: The Australian
July 05, 2011 12:00AM

THE polls in the US reveal remarkable public insouciance towards the possibility of the US Treasury defaulting on its debt. Most show a 2-1 margin against raising the debt ceiling - the legal limit of how much the government can borrow - which is set to be exceeded on August 2. This is not the same as a majority wanting to cut the deficit: the budget for the year has already passed, spending plans and tax cuts included. It is about stopping the federal government actually paying its creditors.

No one quite knows what would happen if the US defaulted, because it has never happened before. But everyone who knows anything about financial markets regards it as a potential catastrophe. Interest rates could sky-rocket; the US economy, already fragile, could lapse into a second recession. If the Greeks stagger towards default at the same time, we could be facing an event even more treacherous than the financial landslide that began with the collapse of Lehman Brothers in 2008. This really could be the second Great Depression.

So the political parties are clear that they need to reach a compromise, right? Surely conservatives, of all people, would not want to trash the US's debt rating, risk the savings of millions and throw the world economy into a new depression.

Well, that's where you're wrong. The controlling faction of the Republican Party appears more than eager to push the US and the world over a fiscal and economic cliff. It has all but held a gun to the head of President Barack Obama, telling him that unless he takes the raising of taxes off the table they will let the global economy collapse. Some within the faction even hope that might help them defeat Obama in next year's presidential election.

I sincerely wish I could be bipartisan on this and write a column saying that blame lies on both sides. But I can't. The debt itself is bipartisan, built up over many years, but only the Democrats are taking responsibility for paying it back. Today's Republican Party in the US is so extreme, so doctrinaire and so reckless it stands alone on this question.

Any serious attempt to cut the US debt requires big cuts in various benefits and defence spending. But it also must involve raising some revenues through tax increases or ending tax loopholes, or both. As with the Israel-Palestine question, everyone knows the shape of an actual compromise: Democrats will have to sacrifice some of their beloved social programs; Republicans will have to swallow hard and raise some taxes. A deal that solely cuts spending or solely increases taxes won't make it and won't command consent in the country. Sacrifice requires a common effort.

Tax levels in the US, meanwhile, are at historic lows. The amount of GDP taken up by government revenues is at its lowest for 50 years. Marginal tax rates for the middle class and wealthy are lower than they were during Ronald Reagan's second term.

Spending, of course, is the main problem, and the Democrats have offered trillions of dollars in substantive cuts. When, however, it came to the other side of the equation - revenues - last month Eric Cantor, the Republicans' second-in-command in the House of Representatives, simply walked out of talks with Joe Biden, the vice-president. John Boehner, the house Speaker, said baldly last week that even Reagan-style tax reform that would raise revenues while streamlining and lowering some rates was out of the question, unless taxes were lowered elsewhere to compensate. The message is that there should be no revenue increases at all. And these fanatics are perfectly prepared to stick to their word.

Yes, the debt caused by the recession is unprecedented; yes, the stimulus cost close to dollars $US800 billion; yes, the President is worried that too steep a cut in current spending could derail the recovery. Yes, Obama, too, has a responsibility to offer a platform for cuts. But his willingness to cut Medicare, the most expensive benefit, is clear. He did it in his healthcare reform, cutting Medicare significantly - only to have Republicans run mid-term election campaigns attacking him for it. And he passed several strong cost-control mechanisms within healthcare reform - which the Republicans have pledged to repeal.

Obama has also cut taxes significantly since he took office. A third of the stimulus was in the form of tax cuts. He agreed last December to extend George W. Bush's tax cuts for those earning more than $US250,000 a year. For all this, as a true fiscal meltdown looms, the Republicans refuse to budge a millimetre on future taxes.

This is particularly rich when you recall that the current debt was racked up by Bush, who, like Tony Blair and Gordon Brown, spent like mad in the boom years - on new benefits as well as wars. A recent estimate puts the combined cost of the wars in Afghanistan and Iraq at $US4.4 trillion. The defence budget of most countries has halved since the end of the Cold War; the US's has declined from 6 per cent of GDP to 4.8 per cent, with hefty Republican support. You'd think Republicans might be willing to take some responsibility for this record and give a little on revenues, wouldn't you?

The public understands the need for a balanced approach. I'd prefer $US3 of spending cuts for every $US1 of tax increases, along the lines of the coalition's program in Britain. A poll last month found 66 per cent of Americans were willing to raise taxes on those earning more than $US250,000 a year, as part of a deficit-reduction package. A recent Gallup poll found only one in five Americans thought the debt could be tackled by cuts alone. And yet that 20 per cent is holding the rest of the country hostage.

History shows that raising revenues will not kill the economy. The first president Bush's tax rises, combined with Bill Clinton's, preceded a boom. The second Bush's tax cuts were followed by mediocre growth. And taxes are now lower still.

If the Republicans want to slash spending, they can pass a budget that does so and hope for a president and Senate who will agree. While they control only one branch of government, they have to compromise. Reagan did: he raised taxes 11 times in office to grapple with a debt that was tiny by comparison. The coalition government in Britain has raised taxes reluctantly, too.

No responsible government, having agreed a budget, subsequently refuses to pay its creditors for money already lent.
This is called vandalism, not conservatism. And the terrifying aspect of these Republicans is that they are very proud of it.

The Sunday Times

http://www.theaustralian.com.au/news/world/republicans-are-acting-like-vandals/story-e6frg6ux-1226087451041

When a piece like this gets into a Murdoch paper, some people should take note.