The Budget Battle Boils Over

April 6, 2011 By 27 Comments

Republicans also unveiled their long-term budget plan, which aims to cut spending by $5.8 trillion over the next ten years and to reform the tax code. Under the plan that Ryan outlined on Tuesday, tax rates would top out at 25 per cent for both individuals and corporations. Ryan said that many tax loop-holes would be closed as well if the plan is adopted. Democrats pounced on the proposal, invoking the specter of class-warfare.

Representative Chris Van Hollen, the ranking Democrat on the House Budget Committee, called the GOP plan a “rigid ideological agenda that extends tax cuts to the rich and powerful at the expense of the rest of America.” Republicans counter that simplifying the tax code and cutting government spending are essential to America’s long-term economic health. Currently, federal government spending consumes about twenty three per cent of the overall United States economy. Ryan said that the GOP blueprint would reduce that to about twenty per cent by 2015 and to fifteen per cent by 2050.

It’s hard to see how Republicans and Democrats could get together on a long-term, sweeping proposal like Ryan’s when lawmakers don’t seem able to agree on a budget that covers a single year of government operations. If the two sides can’t find some common ground by Friday, the dreaded phrase “government shut down” comes into play. That would be a double edged sword for both sides.

Hard-line fiscal conservatives won’t be much bothered by a federal government shut down, but most of the rest of the electorate wouldn’t be happy. Senator Chuck Schumer (D – NY) said that if a shut down occurs, it will be the Republican Party’s fault. “A deal with $33 billion in spending cuts is right there for the taking,” Schumer said. “But the House leadership will need to stand up to the Tea Party.”

President Obama is ostensibly taking the high road on the issue — or at least positioning himself as such. “I don’t think the American people are interested in blaming somebody” for a shutdown, he said. They rather expect solutions. The president’s message is upbeat, saying that the two sides are closer than ever to reaching a compromise. Boehner was not as positive following meetings with Obama and Senate Majority Leader Harry Reid. In Boehner’s view, neither Obama or Reid have learned much from the last election.

The next few days will decide the issue, perhaps for a longer term than a week or two. Whichever side blinks first is sure to endure the wrath of their supporters. Yet, if neither side blinks at all, the situation may get even worse.

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Filed Under: Daily Mailer, FrontPage
About

Rich Trzupek is a veteran environmental consultant and senior advisor to the Heartland Institute. He is the author of the new book Regulators Gone Wild: How the EPA is Ruining American Industry (Encounter Books).

  • waterwillows

    If they don't know where to look for it, might I make a suggestion. The realm of possibility will be found in the realm of man's will power. It is always there, easy to find.
    I suspect this presidents does not intend to leave without doing his best to bring America to bankrupcy. It is the job of the GOP to stop that.

    • Dalek

      You are right. If this is not fixed soon, this country is going to be headed for serious trouble and I mean even worse than we will already have. It will take years, maybe decades, to dig our way out of this.

      They are doing just like a teenager on a credit card. They spend it fast not realizing how long it takes to pay the bill when it comes in.

      • sky

        we the people must stop the north american union and the wto patriotactionnetwork

  • Chezwick_mac

    History need not repeat itself…this doesn't have to mirror 1996. There was very little by way of alternative media back then. The liberal narrative established by the MSM essentially decided public opinion. Today, the debt problem is much, much worse than it was then. Republicans can and must articulate their message…that their efforts to reign-in spending and the long-term interests of the American people are in perfect consonance.

    • Jim_C

      The problem Republicans face is a tough one, though, because the perennial call of "cut spending, lower taxes" sounds good–until your program gets cut.

      Right or wrong, it won't be hard for democrats, sooner or later, to paint a picture of pre-New Deal America, where the rich remained in luxury and the rest of us waited on them, hand and foot.

      • Chezwick_mac

        Maybe, Jim. But the counter-narrative isn't so hard to conceptualize. It would go something like this:

        America is a country built upon FREE ENTERPRISE. This is the source of our wealth. Cripple it through oppressive taxes and regulations (and through a class-warfare narrative), and we'll watch as investors vote with their feet and send their money abroad to havens where they can get a better return, to the detriment of all. Conversely, if you nurture and cultivate it, we'll all benefit through jobs creation and revenue enhancement.

        It's not so very complicated.

        • Jim_C

          Then you come back with "This economy has not stagnated due to excessive taxation and regulation, it has been crippled because those in charge of investments found a way to institutionalize themselves in Washington, creating both regulations and deregulations in their favor, and got to treat other people's money like their own in a casino. They did very well indeed–but not mom and dad!"

          • Chezwick_mac

            No question that aspects of the economy have been dislocated due to regulatory interference from Washington. A perfect example would be the CRA, combined with underwriting by Fanni and Freddie, which dislocated the housing market, created many more buyers than there were sellers, and resulted in a price inflation bubble that could never sustain itself, thus threatening the entire financial system through toxic MBSs.

            No bank, no financial institution was lobbying for the CRA, It was a purely political/sociological initiative of the social reformers in the political class…and it wreaked havoc upon our economy. Can't blame that one on Capitalists.

            Fannie and Freddie were/are quasi-governmental entities that fed the bubble through underwriting; why WOULD financial institutions behave responsibly if they knew Uncle Sam would bail them out should they get into trouble? It's elemental.

            The problem was and remains government. While I'll readily concede there is certainly a place for government regulation in a market economy, the dislocations occur when that regulation/oversight becomes too intrusive, inspired and guided by social-engineering.

          • Jim_C

            Well, that's us arguing with each other, which is different from which message will hit home with the most voters.

            I don't see the CRA as the Jenga block that finally toppled the economy.

            And in fact one could argue that deregulation of the banking industry led to this mess. (This doesn't make your point about excessive regulation wrong).

            Probably the biggest problem is that with such regulation/oversight, there is never any will to prosecute any wrongdoing

          • Chezwick_mac

            The CRA was the legal impetus that decoupled home-loans from traditional lending criteria (sufficient and verifiable income, a substantial down-payment, etc.). By 2006, the eroded criteria had become culturized throughout the industry, "empowering" not just minorities as was originally intended, but any borrower who would have previously been considered a bad risk.

        • BlueCollarBibleBelt

          where is the wealth? It's in the hands of the richest 1% of the country.

          I'm not buying this argument anymore, this country is no longer "the land of opportunity". Those of us who work for a living and don't have trust funds or an inheritance find it very difficult to stay afloat, banks don't just give us business loans at low interest rates to be "entrepreneurs", and manufacturing jobs are gone, exported to China, India, Central America, Mexico and SE Asia.

          Free enterprise my a**.

          Unless you want our country to become a sweatshop country, this issue is much more complicated than just repeating the "America is built upon FREE ENTERPRISE" talking point. Which, if you read our history is also not true. Slavery and Indentured servitude have no place in Free Enterprise, yet, that's what our country was largely built on until the 19th Century.

          We need to reign in gov. spending but we also need to make sure that corps and banks benefiting from the bailout and the tax cuts, really keep the money flowing in our country instead of opening tax free bank accounts offshore and creating low wage jobs abroad. We need to keep out money, here.

          Obama is just as complicit in this as some GOPers, so no one is free from blame.

          • Chezwick_mac

            This is the mindset that corrupted our economy in the first place, a mindset devoid of any real understanding of how capitalism works. You want to mandate that companies "keep the money flowing in our country"…without necessarily giving them any financial incentive to do so. It will never work. Such is the nature of capitalism that money flows intuitively where it can get the best return. Setting up arbitrary roadblocks to inhibit the movement of capital only creates dislocations in the market place. Cut taxes, cut regulations, and capital will stay here of its own volition.

          • Jim_C

            Ah, but that message will never play in Peoria.

            Sure, I can move my company to Gilligan's Island where the natives will work for coconuts, and get a superb return. The problem is that I'll be living on Gilligan's Island, working with people who work for coconuts. It's hot here, there's lots of bugs, and doggone it, I'm winding up paying for the roads, electricity, and infrastructure, anyway. But at least they're mine, I console myself.

    • sodizzy

      I so agree. People cite the Roman empire lasting only 200 years as if that were proof that we must demise at same said point. However, not necessarily!!

  • Steve Chavez

    How can you cure the ills of a CAPITALIST SOCIETY with SOCIALIST IDEAS? Isn't that like going to a foot doctor for your heart problem? Why are we depending on those who were brainwashed to love the Union of Soviet SOCIALIST Republics/Iron Curtain, and their proven failed economic system, to aid in a society built over centuries based on CAPITALIST ideals which made it the number one economic power in the world?

    American Socialists/Leftist were very bitter when their Soviet Union, a country they loved more than their own, fell, and now that they are in control of Congress and the White House, they want the downfall of the United States! When the Berlin Wall fell, we cheered, they cried! When the Twins fell, we cried, they cheered as they saw Lady Liberty bend at her knees as they hoped she would fall into the ocean!

    • Jim_C

      It's always "USSR, Cuba, North Korea."

      Somehow, it's never "Denmark, Norway, Canada."

      Now why would that be? Hmmm….

    • sodizzy

      Tom Sowell is saying and I so agree that the Repubs need to MAKE THEIR CASE. We need to explain and educate people about our way of life and the way a free enterprise system works and how we prosper when individuals prosper and then gratefully give back.

  • tagalog

    The President and the Democrat Party may be holding out for a "compromise" (by which they have historically meant the right wing accepting their take on things), but in fairness there's no compromising with an imminent financial disaster. Either we stop spending or we crash.

  • Raymond

    By J.B. Williams
    April 6, 2011
    NewsWithViewsdotcom

    Obama should have never been allowed to appear on a single presidential ballot, let alone set foot in the people’s Oval Office. But since the people have not seriously objected, despite his making fast work of the utter destruction of our country, Obama has launched his bid for re-election.

    Unless he is appropriately removed from office in handcuffs beforehand, he will be re-elected in 2012 and there are at least a billion reasons why.

    Money Talks

    Obama won an illegal and unconstitutional election in 2008. We all know it and yet nobody seems interested in doing anything about it.

    For all practical purposes, he ran unopposed, which is how he won every election he ever entered. Running against John McCain was essentially running unopposed, as McCain is no more popular among constitutionally grounded free-market Americans than Obama, Biden or Clinton.

    The money tells the story…

    Obama (D) – $745 million
    McCain (R) – $368 million
    Nader (I) – $4 million
    Barr (L) – $1 million
    Baldwin (C) – $258k
    McKinney (G) – $199k

    In 2008, Obama was elected by only 22.4% of the U.S. population – approximately 44.8% of eligible voters. He raised 66.6% of the presidential campaign money, compared to 32.9% raised by McCain-Palin. Though Obama only had the support of 22.4% of Americans, he was able to defeat John McCain by a 53.7% – 46.3% popular vote margin with 67.8% of the Electoral College vote.

    Obama is ineligible for office and he is clearly in no way qualified for the job. But his 2-to-1 financial advantage over McCain won the day. Despite the fact that most of the nation believes in constitutional conservatism, name one candidate they will all get behind in 2012?

  • Minnie I Am

    Face it! We are experiencing the effects of the Second Reconstruction. As the South suffered After the Civil War, the whole country suffers now. As then, we now have an unqualified Black in power who has surrounded himself with modern day eqivalent of self serving carpetbaggers, now known as Community Activists and Lobbyist. We owe trilions, not billions, of dollars in debt for projects never built o rwhich accomplished little or nothing, and nobody can tell you where most of the money went. It took southern states over 100 years to pay off the enormous debts run up during reconstruction. It's going to take at least that long to dig out of the hole we are now in, if the country survives.

  • Mary Lynn

    For over 50 years we have been reacting to the battered citizen syndrome. We have been manipulated into cowering like frightened, abused women, accepting blame for all the ills of the world, thinking if we just tried harder, gave more and did better, others would accept and approve of us. We have bankrupcted ourselves chasing this dream, because these manipulators will never be satisfied. the more we give, the more they demand. It's time for us to wake up and tell all these freeloaders , both foreign and domestic, "If you don't work, you don't eat."

  • sedoanman

    You can't make any real headway until you make vertical cuts. Making every agency cut by X percent won't solve the underlying problem that the federal government has to micromanage society. Start by zeroing out federal funding for sandals for gay ex-nuns with a foot-fetish in Nob Noster, MO, and dog counters in Oxnard, CA.

  • BLJ

    Time to put the folly of the Great Society to rest once and for all. Give the American people line item veto power. Stop all of the idotic waste and graft of the government.

    If some citizens want to have a free lunch let them move to Europe or someplace else. It is not 1965 anymore.

    • Jim_C

      "Give the American people line item veto power."

      Ah, no. I'm sure you can tell me where the heart is located, but that doesn't mean I want you performing triple bypass surgery on it.

      • BLJ

        Sorry, I should have said American's that pay taxes. This would eliminate quite a few of the boobs who support Obama and the Dems.

  • Raymond

    Look at what Nobama wants to bring to America…………
    By the way, many of Nobama’s supporters want this too.

    A shocking story of a 8 year old girl being married to a Muslim man in a Islamic Country, Saudi Arabia. This happens in Islamic Countries because the prophet of Islam Muhammad himself married his second wife Aisha when she was only 6 years old. Muhammad then consummated the marriage with Aisha when she was only 9 years old, Muhammad himself was 54 years old. For this reason it is not illegal for Muslim men to marry child brides in many Islamic Countries & this routinely happens. Some Islamic Countries that still allow legal pedophilia today are; Saudi Arabia, Iran, Afghanistan, Yemen, Samalia & northern Nigeria where their is a large Muslim population.

    Narrated Aisha: that the prophet married her when she was six years old, and he consummated his marriage when she was nine years old, and then she remained with him for nine years. Sahih Bukhari Volume 7, Book 62, Number 64

    Narrated ‘Aisha: that the Prophet married her when she was six years old and he consummated his marriage when she was nine years old. Hisham said: I have been informed that ‘Aisha remained with the Prophet for nine years (i.e. till his death).” what you know of the Quran (by heart)’ Sahih Bukhari Volume 7, Book 62, Number 65

    Narrated Hisham’s father: Khadija died three years before the Prophet departed to Medina. He stayed there for two years or so and then he married ‘Aisha when she was a girl of six years of age, and he consumed that marriage when she was nine years old. Sahih Bukhari Volume 5, Book 58, Number 236

    Narrated ‘Ursa: The Prophet wrote the (marriage contract) with ‘Aisha while she was six years old and consummated his marriage with her while she was nine years old and she remained with him for nine years (i.e. till his death). Sahih Bukhari Volume 7, Book 62, Number 88

  • Jim_C

    Does it work? It CAN work, in the right environment. I don't think this is that environment. It's true we don't want to make things prohibitive for growth by getting tax crazy. I think, counter to the prevailing narrative, government right this minute actually needs to SPEND MORE. Spend more on our crumbling infrastructure; spend more purchasing goods and services from the private sector. This is how you create the environment for growth.

    Get jobs, and therefore consumers, back into the economy. Jobs should be priority 1. The idea that "government does not create jobs" is a hoary old myth.

    Then, if and when the economy recovers, you go back to the tax rates under Reagan and address the deficit. (Or, we could also dream of "flat" tax rates, but politically I don't see it happening).