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The Amazing Surrendering Congress

We’re now five days away from hitting the deadline to get a deal done to raise the debt ceiling, and things aren’t looking up for anybody interested in a “grand bargain”, or anything other than maintaining the status quo. What’s even more depressing is that from a couple of negotiations, there seems to be an almost bi-partisan push to surrender lawmaking authority to either the executive branch or a small group of lawmakers beholden to practically nobody.

In one case, some lawmakers are considering giving the president authority to raise the debt ceiling by himself, using a vague interpretation of the 14th amendment that states that the ability of incur debt “shall not be questioned”. The other method, which is being supported by Senate Majority Leader Harry Reid (D-Nevada) and Speaker John Boehner (R-Ohio), would allow a “Super Congress” to be formed, a 12-member body from the House and Senate that would have the exclusive power to draft legislation regarding the deficit, and the legislation couldn’t be amended by either the House or Senate. It doesn’t take much research to know that both of these proposals are disasters waiting to happen.

Starting with the “14th amendment solution”, which I mentioned in a previous “Constitution Watch” article, is a gross misinterpretation of one section of the Constitution, which disregards the part where it gives Congress the power to tax and spend. While I’m not surprised some of the President’s advisors want him to involve the 14th amendment, I am surprised that some in Congress want to handover decision making on the debt to the President so readily. As for the “Super Congress”, which is the proposed bicameral, bipartisan panel, it is just as bad. The deficit, which is getting closer to $2 trillion with no real end in sight, is one of the most important issues facing the legislature. Letting such a major issue be decided by 12 out of 535 members of Congress is unwise, especially if it’s filled with legislators committed to tax increases rather than making any meaningful cuts. Unsurprisingly, this proposal is being attacked by both the left and right as an unconstitutional power-grab that shuts out 96% of legislators to the decision making process, and reduces their role to a simple “yea or nay” vote on whatever the panel comes up with.

More at www.silverunderground.com


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A Nation Drowning in Debt

Our national debt crisis is serious, we all know that. Where many disagree is how serious the crisis really is. People like Robert Reich insist that it’s “ridiculous” to concern ourselves with the debt right now, when we can deal with it five years from now, and various Keynesian economists believe that spending will fix our current economic conditions, and tackle the deficit and debt when we’re on more stable financial footing.

Unfortunately for this side of the argument, the time to tackle debts and deficits is now, and the days are numbered. A recent Moody’s report, one of the most influential debt rating agencies in the country, stated that a downgrade on America’s debt rating “is likely” by mid-July if there isn’t a “credible agreement on deficit reduction”. This is the second such warning in two months, coming on the heals of the S&P’s threats of a downgrade amidst the debt ceiling discussions currently taking place in Washington.

Yet while the seriousness of this situation can’t be understated any longer, Congress doesn’t seem to be too concerned. President Obama set a deadline for a debt ceiling deal to be ready by the end of June, with Vice President Biden leading the talks. However, the Senate is in recess this week, the House will be in recess next week, and Biden is in Italy, making it unlikely a proposal will be ready at that time. You’d think given the severity of the situation, Congress would hold off on their vacations until a proposal could be agreed upon. It’s their job, right? But alas, it is becoming clear that if there is one thing Congressmen value more than anything, it’s frequent vacations, even in times of national importance such as this.

America’s perfect credit rating hangs by a thread, our deficit has grown to unacceptable levels, and important budget reforms have been subjected to fear-mongering and childish insults. Maybe instead of taking a week off, our representatives should commit to staying in Washington to fix this fiscal nightmare. Otherwise, break out the gyro stands and pop the Ouzo, it’s going to look an awful lot like Greece.

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When Ben Bernanke Faced the Nation

Man, the world has gotten depressing recently.

Every time I read the news or flip on a cable news channel, it’s the same dreary stories day in and day out: Oil prices are skyrocketing, the dollar is plummeting, commodities prices are soaring, and Lady Gaga still wears ridiculous clothing in her music videos. Usually one looks to our President for answers, but he’s been too busy raising money for his re-election campaign to stop and give us any answer that doesn’t involve partisan rants or false promises. So rather than listen to the same old chatter, I decided to listen to another perspective on our current economic woes, one that is rarely heard outside of Congressional hearings, and an individual that is often shrouded in a fog of confusion and frustrating mystery. Today was Federal Reserve chairman Ben Bernanke’s first news conference of his tenure as chairman, a rarity for someone of his position. I was hoping that watching this news conference would shed some light on our fiscal and monetary problems we are suffering from right now. Why is the price of oil so high? What is causing the dollar to fall to such lows? Why are commodities like beef and corn getting more expensive? I thought all of these questions would be at least partially answered by the Fed chairman today, but alas, all I got was more of the same old chatter with no answers or substance.

Up until now, the Federal Reserve’s answer to our fiscal woes has been to print more money. The way the Fed does this is by buying government bonds and securities from banks and the Treasury, or by lowering the amount of money banks are required to keep in reserve, which puts greenbacks into circulation. This strategy, termed “Quantitative Easing”, is intended to make credit easier to come by, and give businesses money to pay their employees and take out loans. A few months ago, Ben Bernanke authorized $600 billion worth of bonds to be bought, which has caused inflation. Essentially, what has happened is that since more dollars are in circulation, they are being devalued, which means goods suppliers want more money for their goods, causing inflation to occur. In addition to these policies, the revolutions throughout the Middle East have caused oil prices to jump to record highs, making transportation of goods more expensive. Since oil prices are determined in US dollars, it makes the dollar look weaker and weaker. Hoping to hear about a new direction from the Fed chairman, I tuned in, but all I got instead was Bernanke saying his policies were going to remain the same.

When asked about the rising gas prices, he admitted that there isn’t much the Fed could do to stem the rise. While I agree that he can’t magically make them go lower, and we shouldn’t expect him to take any drastic action, there are still policies that he could enact that would help consumers at the pump, like selling government bonds to take dollars out of circulation and keep the prices somewhat controlled. Since the United States has an import-driven economy, it is imperative that we have a strong currency so imports, like oil, remain affordable. Bernanke went on to say that he can’t lower the rate of inflation right now because the economy is still fragile, and doing so would cause a second recession. He conveniently forgot to mention that persistent inflation is still not good either, and if the 2% inflation rate (which he has set right now) holds for much longer, it would put American jobs at risk by making goods harder to afford. I know 2% doesn’t seem like much right now, but as time goes on, it has a bigger and bigger impact on the economy than previously.

The press members that were present today did a pretty good job at asking tough, poignant questions regarding the state of the economy, and I only hoped that Bernanke would be able to respond with more than just vague answers that the Federal Reserve is famous for. Since such public statements by a man in his position are rare, I was hoping that he was going to announce some bold new plan of his to keep the economy going, or what he thought would keep the economy going but instead made the dollar weaker and weaker. Unfortunately, the much hyped news conference was just Bernanke telling the nation that he’s continuing the same policies and that he might alter them when the economy gets better and more people become employed. He still deserves some applause for having a big enough pair of moneybags to go in front of the cameras, but I just wish I got some real answers as to why the country is on a slow, depressing decline. 

Back to the depressing drone for me, I suppose.

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Who Won the Government Shutdown Smackdown?

Just before midnight on Friday, April 8th, Congress pulled off the equivalent of a last-minute field goal in the realm of government: they got a long-term spending deal done and are able to fund the government for the rest of the fiscal year. Although there is still no real budget, the spending plan promises to cut a record $39 billion, the largest one-year cut in history. President Obama and John Boehner both claimed victory for this negotiation, and in a rarer moment, the Tea Party praised Boehner rather than criticized him. Democrats and Republicans, in usual partisan fashion, each hit the airwaves trying to claim credit and heap blame on the other side for stalling on the proposal. The tough battles lie ahead, and the battle over the FY2012 budget will be as intense if not more so than the battle to keep the government going. One thing we say about this deal though is that Boehner went toe-to-toe with Obama and Reid, and got what he was elected to the Speakership to do: cut spending.

On numbers alone, Boehner won the poker match. Considering he is dealing with the most spend-happy President and Senate Majority Leader we’ve had, it was an accomplishment to win any sort of spending reduction, especially considering the Democrats didn’t want to cut anything. Yes, $39 billion isn’t going to bring down the deficit at the rates the country needs, and it’s a far cry from the $61 billion some Tea Party leaders were calling for, but it’s more than half that number, a good result in what were some very tough negotiations. It also shows the American people, as I mentioned in my previous article “Countdown to Shutdown”, that the GOP means business when it comes to cutting spending. It also puts the budget fight in Paul Ryan’s court for the next six months, and the promise of $6.3 trillion in cuts will win over some on the fence legislators. It’s unrealistic to think the Ryan budget will get to the President unaltered, after all, Democrats control the Senate and the White House, but it gives Republicans the upper hand in negotiations because they can act with the confidence that they can get serious spending reforms passed, even ones President Obama might not be comfortable with. The downside of the negotiations is that the defunding of Planned Parenthood and NPR and the reining in of the EPA’s extra-legal powers are going to a Senate vote, which will result in certain defeat, but hey, that’s negotiating for you, although these are proposals that should be given serious consideration in the months ahead.

Round one of what might be the biggest spending battle in American history has been decided, and the result was a $39 billion cut that may be miniscule in the face of a $1.6 trillion deficit, but it was a strong first step in the quest to rein in government spending. The next round will feature a real budget that may very well determine the 2012 presidential elections, as well as who controls Congress come 2013.

Fasten your seat belts, kids, it’s going to be a wild ride.


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Countdown to Shutdown

The standoff of a century is currently taking place in Washington, DC right now (even though the century is only 11 years old). If Congress can’t come to a spending agreement by Friday, the government will shut down for the first time since 1995. This moment has been staved off the past couple of months through continuing resolutions and stopgap measures that pay to keep government operating, but they’re temporary solutions that merely kick the can down the road.  Now it appears we’re at the end of the road, and the clock has run out on Congress. We’re down to two options: get a long-term spending bill finalized, or shut down the government.

First let’s look at Option A: a long-term spending bill. With the arrival of the Tea Party in Washington, the attitude towards spending and budgets has changed dramatically, and it’s for the better. Rather than discussing how much will be spent and where it will be spent, the focus is now what to cut and by how much. It’s a welcome breath of fresh air, but it comes with the same old arguments. Both parties have proposed bills that cut spending, but in different amounts. Democrats, feeling the pressure of mounting deficits for the first time in two and a half years, proposed $33 billion in cuts, whereas Republicans, pressured by the Tea Party-backed members of Congress, are thinking more towards $40 billion at this stage of the game, according to Speaker John Boehner. While on paper these cuts seem pretty hefty, they barely make a dent in the nearly $1.3 trillion deficit. If one does the math, $33 billion in cut spending would represent, at most, a 2.6% reduction in the budget. $40 billion in cuts would be better, but still only roughly 3.1% of the budget. It’s a start, but such miniscule cuts will not do much in the long run to get our country back in fiscal order.

On the budgeting side, House Budget Committee chairman Paul Ryan just announced the GOP budget for the upcoming fiscal year. In it, he claims spending would be reduced by $6.3 trillion over ten years, while adding one million net jobs next year. The savings would come from a reorganization of Medicare and Medicaid, which would turn these programs into a system of insurance premium payments that would allow seniors on Medicare more flexibility in choosing their health care providers in the open market, as well as helping poor people pick better plans for themselves as well. The bill would also defund ObamaCare, lower the corporate the tax rate to 25% while closing major tax loopholes and government giveaways à la General Electric, and make cuts in defense spending. The budget has been widely praised by budget experts from both parties (Alice Rivlin, a Democrat budget analyst from the non-partisan Brookings Institute, was Ryan’s key partner in crafting the budget). These proposals would cut the deficit in half as well as bring unemployment down to 4% by 2015. Democrats were quick to skewer this bill as taking food out of seniors mouths (Nancy Pelosi’s claim), and leaving the poor at the “mercy” of the private health insurance industry, but it’s just their same old schtick they’ve been playing for the last four months: cut spending, but don’t cut that spending. Sadly, the Senate Democrats, who hold a majority, won’t pass the budget without changes, but it does serve notice that the GOP is keeping its pledge to cut government spending and is serious about getting rid of the deficit while creating jobs and making America a more business friendly environment for corporations. It’s an ambitious and risky budget proposal, but given the financial state our country is in, ambition is sorely needed.

If both sides can’t agree on a budget, then we are faced with Option B: a government shut-down. Regardless of what some will have you believe, the “shut down” is not a complete shut-down. Essential services like entitlement checks and unemployment insurance will still be sent out, and you will still get your mail. Also, passports and document processing will still occur, though at a slower rate. However, national parks and DC museums like the Smithsonian would close, and federal funding for state programs would end, meaning states would have a lot less to work with for a period of time. Federal employees may also be furloughed, and non-essential military personnel might be working without pay. The IRS would close as well, so tax refund checks won’t go out (hold the hallelujah). Strangely enough, this prospect intrigues me. States would now have to run without many federal funds, so governors and legislators could act more independently of federal whims. This would mean a sink-or-swim situation for supposedly conservative state officials, and seeing how they react to the situation will tell us who is committed to more state sovereignty, or is just another big government suck up.

Probably the worst aspect of a government shutdown though would be the non-stop finger-pointing we’d hear on the television during the shutdown period. Be prepared for all day tit-for-tat blame fests between Democrats and Republicans over who caused the shutdown. As it stands right now, Democrats might be on the hook for the shutdown more than the GOP. I’m not saying that to point fingers, but rather an analysis regarding facts. Spending proposals have flown out of the House this session due to an unexpectedly united House GOP, but Senate Democrats have shot them down once they reached the upper chamber. Also, Democrats have been shaky regarding cuts to entitlement programs and education funding, which are both due for serious spending reforms. Democrats, to their credit, are beginning to see the need for cuts, and are starting to talk to the Republicans on this issue, but their numbers are still too small to make any real impact, and much of the “cut” spending comes from the transfer of domestic spending to mandatory spending, which can’t be cut unless a law is changed.  However, Democratic leaders will still spin the story to make it seem like the GOP is making unreasonable spending demands and robbing Joe Smith of Somewhere, USA of his health care or government-funded job. It’s the same tired attacks that nobody subscribes to anymore, and that Democrats continue to use for the purposes of grandstanding and electioneering.

The two sides continue to talk, and budget debates are occurring as they should. This might be the moment when a long-term spending bill aiming at the staggering deficit goes to the President for his signature. We might even see a budget for the first time in nearly two years. We might finally see unemployment numbers decreasing at a much faster rate as more businesses hire without unnecessary red tape and confusing tax codes weighing them down.

Or Congress just keeps kicking the can down the road.

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Mideast March Madness

Up until now, March Madness just meant the ritual of filling out brackets for the NCAA Basketball Tournament, then watching as they slowly (or in my case swiftly), get torn to shreds within the first weekend. However, in Washington, the madness has revolved around the civil strife in Libya. For much of the last month, the turmoil that has defined the Middle East has spread to the shores of Tripoli in some of the most violent uprisings since the Bosnian conflict in 1995. Contrary to expectations, the rebels, based in the city of Benghazi, had the upper hand, capturing much of the country and appeared poised to take Tripoli. Unfortunately for them, they found out it’s difficult to keep fighting when Gaddafi turns his army loose. By March 13th, the rebels were in full retreat, and the “capital” of Benghazi was under siege. It was at this time that the UN Security Council authorized a no-fly zone by a 10-0 vote, with P-5 countries Russia and China abstaining, and soon the US was sending ships and planes and men to halt Gaddafi.

Without congressional approval.

Without an address to the nation.

Without any explanation as to why the conflict in Libya is a national security priority.

It is the reasons mentioned above why many Americans, and congressmen from both sides of the aisle, oppose the conflict in Libya. What is even more surprising is that this conflict flipped the script in terms of support for military activity. Proponents for the Libyan conflict include Democrats like Nancy Pelosi, who oppose the Iraq war, claim intervening in Libya is a humanitarian issue and Republicans like Senator Lindsey Graham of South Carolina, who maintain that it is America’s obligation to defend those who combat tyrants in their home country. Opponents of the conflict include Democrats like Representative Dennis Kucinich and Tea Party-backed Republicans like Rand Paul (and, of course, his father Ron), who are upset with Obama’s bypassing of Congress and instant support for the UN resolution. Some Democrats like Kucinich have even speculated that Obama’s actions are grounds for impeachment (no you read that right, Democrats are speculating that). Regardless of which side you fall on, this issue is one of the very few whose battle lines aren’t partisan, a rarity in the age of Obama.

The crisis in Libya has been often compared to the war in Iraq, but there are noticeable differences between the way Obama is handling Libya and the way Bush handled Iraq. In 2003, Bush took us to war in Iraq on the premise that dislodging Saddam Hussein would deprive al-Qaeda of a safe haven from which to attack America. Also, Saddam was thought to possess weapons of mass destruction capable of attacking Israel and the US. Even though nerve gas canisters were found, which can be called “weapons of mass destruction”, opponents say those were overstated, or even fabricated. Also, the war in Iraq did not gain UN approval, but it got congressional approval, and Bush addressed the nation before commencing with the war, along with nations like South Korea, the UK, Iceland, and a few other minor players. Obama took us into Libya without consulting Congress beforehand, choosing to send a letter explaining his actions after airstrikes began. Also, the conflict is currently limited to a no-fly zone, but there is every indicator that it will go beyond that and will involve ground troops, especially since Gaddafi has resumed his offensive on the ground despite the airstrikes. The premise for the Libyan conflict is that America can’t supposedly sit on the sidelines when a civil war is raging, so military action is justified in this case. So far, it isn’t the full blown invasion like we saw in Iraq, so the costs are significantly less, but given the ongoing budget battles in Washington and in the states, any amount of money spent is magnified, especially on defense.

One thing is clear however; the conflict in Libya has enabled the world to see what kind of leader Obama is in regards to military and foreign policy, especially when this seems like it will be Obama’s War, and it isn’t promising. By not consulting Congress, Obama has given the impression that UN approval is more important than approval by our elected representatives, thus giving the UN the power to dictate where US military might is deployed. At least with previous presidents like Bush, it was more important to get congressional approval, since it is the taxpayers that fund the military, not the UN. Also, despite Obama campaigning on promises of peace and a reduced presence around the world, promises that somehow earned him the 2009 Nobel Peace prize, it only takes a civil war in a country that doesn’t pose a major threat to American interests for him to contribute America’s military power. This was the kind of behavior that earned President Bush wide condemnation for being reckless, especially by then-Senators Obama and Joe Biden. In 2007, Joe Biden even went on record saying that violating the War Powers Resolution Act, which requires presidents to keep Congress informed regarding usage of the military, is grounds for impeachment, which Bush and Obama . Don’t get excited guys, President Obama won’t face Biden’s wrath anytime soon, he’ll have enough of a time trying to win back the liberals he lost over this conflict. 

Let’s not forget about the costs of this conflict as well. A no-fly zone will cost roughly $1.2 billion a month, plus the costs of the Tomahawk missiles and the expected costs of ground troops that may become necessary, despite Obama saying he won’t be using them. NATO is expected to take control of the coalition very soon, but NATO’s military forces are backed up by the US, and make up a huge component of the coalition. Obama is also going to have to find a way to raise money for this war. Hopefully he will abide by the cut-go policies of the House of Representatives, especially since he wanted to make cuts in defense spending anyway, but it seems like it will mean raising taxes yet again.

The situation in Libya is changing every day and uncertainty over what America’s role in the conflict will continue. Whether or not the no-fly zone will force Gaddafi from power, or only increase his resistance to the sanctions will be decided in the coming days, weeks, months, or even years. One thing is clear, the Obama that ran against Bush’s war policy is gone, and has been replaced with an Obama that has not only embraced such policies, but has expanded them into yet another theater of war.

So much for “Change We Could Believe In”.

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Walker, Wisconsin Ranger

We’re closing in on the month of March, and that means budgets are being prepared by state governments as well as Washington. Still on a post-election high, Republican leaders across the nation are taking it upon themselves to cut spending and get the nation on level ground. Nowhere is this struggle more encapsulated than in Wisconsin, and Governor Scott Walker is the face of the movement. In an effort to carve a chunk out of a projected $3 billion budget shortfall, Governor Walker is proposing a strong budget that will reign in the runaway public sector unions by asking them to pay more for their pensions and health care benefits, as well as restricting their collective bargaining to wages. These proposals have been met by protests launched by unions and supported by liberal action groups like Organizing for America and MoveOn.org, some almost as large as the many Tea Party protests over the last two years. These events have triggered a nationwide battle over what should and shouldn’t be cut, and every lobbyist inside and outside the Beltway is trying to protect their special project or giveaway that might face the ax. One trend that seems to be true in all cases is that Republicans are more willing to cut spending and reduce the size of government than Democrats.

The situation is Wisconsin is currently ground zero in the battle over spending cuts. Governor Walker’s proposal to limit the power and influence of public sector unions has drawn anger from nearly every left-leaning action group in America, and caused 14 Democratic senators to flee the state rather than give the budget the up-or-down vote it deserves. This mass exodus by the Senate Democrats is shameful and cowardly, and proves that they don’t want to have a serious discussion about spending, even when the state is in fiscal disarray. When the Democrats in Washington passed the health care law last year, the Republicans could have walked out at any point during the debate, but they stayed and fought because they know that walkouts are not the way to negotiate. Also, it is expected that if the GOP did walkout, you could count on the mainstream media doing everything they could to paint them as obstructionists, if they didn’t do that enough already. When the Democrats in Wisconsin walked out, though, they were lauded as heroes by many liberal media outlets. Some even called Governor Walker an obstructionist, despite the fact that it’s his bill that he wants to get passed.

What is more, many of the protests’ leaders are making this out to be far worse than it actually is. Even without many bargaining privileges, the unions will still be able to negotiate over pay, probably the most valuable chip to have at the table. Also, they unions will still be better off than their private-sector counterparts, who don’t get the same lavish pensions and benefits. The more one reads about the facts of the debate, the more clear it becomes that the public sector unions, once praised as the champion of the working man, are now becoming more and more greedy and protective of their taxpayer benefits, even when states like Wisconsin are in fiscal distress and can’t afford to keep paying them.

Governor Walker’s proposals to limit the bargaining privileges also demonstrate his commitment to keeping his promise to cut spending. The only way to cut spending is for him and his government to have a more hands-on approach when it comes to dealing with government employees. After all, it is his government that has to write the checks and hand out the pensions, so why not have more power to determine what the rules are? Although I am an advocate for smaller, limited government, I am strongly in favor of this increase in power because it amounts to less government spending and a reduction in the influence of public unions and their taxpayer-funded giveaways. If one works in the public sector, he or she is doing so not for the pay or the benefits, but because he or she wants to work in the public sector. Teachers, police, and firefighters should all be professions filled by people who desire to be these professions, not because they want to cash in on the benefits. Ever since public sector unions started clamoring for these benefits, it seems that many employees are in it for the benefits, not for the love of the job, which is a shame because America could have the best teachers and law enforcement in the world if their ranks were filled with people who desire to be teachers or law enforcement. I understand the pay structure is not very high, but working in the public sector will always have that drawback, as it should. That is what makes public service so admirable: the people who serve do it because they want to serve the people of their community, not because they want to be wealthy. Public sector unions cheapen this line of work because it then becomes a struggle over getting benefits that private sector unions wish they could have, and people sign up for public service for the benefits. If these unions’ powers were to be restricted, it will lead to more determined employees who would gladly trade the larger wages of private sector work in favor of serving the community. Also, the quality of services would be greatly improved because the workers would gladly come in every day to a job they love, and would perform better than a person who was just there for the money.

The next scenes in this budget fight are yet to be played out. Governor Walker’s budget proposal is a welcoming sign that there are politicians that were elected in November that took their campaign promises to heart, and are determined to cut spending and restore fiscal sanity to the states and to Washington. Riding Walker’s coattails, Indiana Governor Mitch Daniels and Ohio Governor John Kasich have taken up similar budget plans to address their states’ fiscal health, and are being met with the same protests from unions, though nowhere close to the ones in Wisconsin. Even though there is still a long and challenging road ahead, if more governors will follow Walker’s example, the era of big government could finally be over.


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