There are reports that an April 8th government shutdown may be inevitable due to an impasse in negotiations over spending cuts between Democrats and Republicans. On February 19th, the House passed a bill with $60 billion in spending cuts, but there has been no action in the Senate on that bill, or any alternative offered by Democrats. As a result, the government has been kept open via the passage of continuing budget resolutions (CRs), a process which is running out of steam. How we will move forward is unclear, but more than just overt partisan politics is in play: “sub-dramas” within the overall battle will ultimately determine whether or not America will point itself towards fiscal sustainability, or inevitable bankruptcy.
First, some perspective. Ten years ago, former president Bill Clinton’s last budget was submitted and approved for fiscal year 2001. That budget was $1.9 trillion dollars. The budget submitted by Barack Obama for fiscal year 2011 was $3.7 trillion, meaning in just over ten years, spending by the federal government has virtually doubled. Democrats consider $61 billion in spending cuts — $39 billion lower than the Tea Party faction of the Republican party promised to implement during the 2010 election campaign — dead on arrival. They have countered with the $10 billion dollars of cuts which have already been implemented via the two CRs approved to prevent a government shutdown so far, along with an additional $20 billion proposed by the White House, for a total of $30 billion.
Thus, the political impasse between the two parties, the one which threatens to shut down the government on April 8th if no agreement is reached, is over a $31 billion difference in cuts between the two parties. Putting it as charitably as possible, such negotiations are virtually meaningless, because they are utterly removed from reality.
Here’s reality: the projected deficit for this year is $1.6 trillion, and the federal government will be borrowing over 40 cents for every dollar it spends. Furthermore, the deficit for the month of February alone was $223 billion, which is almost four times the “unreasonable” cuts Republicans are proposing and almost eight times what Democrats have proposed for the entire year.
Need more perspective? Imagine a miracle happened, and every House and Senate member in Congress suddenly became a Rand Paul (R-KY) devotee. He’s the senator who proposed making $500 billion worth of spending cuts in one year. For that, he has been ridiculed, vilified and sent packing to the outer boroughs of political discourse. Yet, if Mr. Paul’s cuts were enacted, America would still be $1.1 trillion dollars in the red. Still more perspective? That’s $3,333 of additional debt piled onto every man woman and child in the nation.
So what’s the budget battle really all about? Enter sub-drama number one, aka the battle for the heart and soul of the Republican party. This battle was reflected in the current three-week CR designed to prevent a previous government shutdown which 54 House Republicans rejected in order to express their disgust with their party’s refusal to play fiscal hardball. This left House Speaker John Boehner in the unenviable position of needing several Democratic votes in support of the CR to prevent the shutdown. As luck would have it, he got them: 85 Democrats supported the measure.
Chuck Schumer (D-NY) and other Democrats believe that painting the Tea Party as “extremist” is the key to exploiting Republican disunity heading into both the budget battle and, by extension, the 2012 election season. In fact, Mr. Schumer was caught outlining this strategy to fellow Democrat Senators Barbara Boxer (D-CA), Benjamin Cardin (D-MD), Thomas Carper (D-Del.) and Richard Blumenthal (D-CT.) in what he thought was a private conference call on Tuesday. Unfortunately for Mr. Schumer, reporters were also listening in. This is what they heard: “I always use the word extreme, that is what the caucus instructed me to do the other week. Extreme cuts and all these riders and Boehner is in a box. But if he supports the tea party there will inevitably be a shutdown. What we are trying to do here…” at which point Schumer realized they were listening.
Damning? Only if one naively believes politicians don’t collectively strategize. Yet there is a level of cynicism here that is daunting. It would appear that Mr. Schumer’s primary concern is putting House Speaker John Boehner “in a box,” rather than coming up with a responsible budget, something House Majority Leader Eric Cantor (R-VA) was quick to point out. “We have seen what the motive is behind Mr. Schumer,” Cantor (R-VA) said. “He says every spending cut is unreasonable.”
Which brings us to sub-drama number two, and the reason there are continuing resolutions being voted on instead of an overall budget. Again, a little background first. The 111th Congress, led by Nancy Pelosi and Harry Reid, started the CR ball rolling last year when they refused to pass a federal budget before the 2010 midterm election. This was the first time that occurred since 1974, when the current rules for the budget process were enacted. The reason was obvious: heading into what already looked like a bloodbath for Democrats, Ms. Pelosi, et al, did not want another trillion dollar-plus deficit such a budget would have contained being used as a club in the 2010 election campaign.
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