The first entry I wrote on this blog after the introductory post was about the debt ceiling, in that post I mentioned that Republicans would hold a vote on raising the debt ceiling hostage in exchange for something but that ultimately they were bluffing and would vote to raise it even if Dems did nothing (you can read that post here). I still feel today as I did then that the Republicans are bluffing and that Democrats really don't have to address their demands and when the time comes that they have to vote in August enough of them will cross the aisle, and take the bullet for their party, to ensure the ceiling is raised. But in light of new events this week regarding bipartisan negotiations I felt it was important to revisit the issue and provide more insight into what Republicans really stand for.
Scheduled this week were four bipartisan negotiation sessions on the debt ceiling led by Vice President Joe Biden. Republican attendees of these negotiations included House Majority Leader Eric Cantor and Senate Minority Whip Jon Kyl who both decided to walk out of talks on Thursday. Why did they walk out of negotiations? Because Democrats wanted to propose increasing revenue in addition to spending cuts. That's right, because Democrats wanted to take a serious and balanced approach to the debt ceiling negotiations and evaluate all possible solutions Republican leaders felt that to be so unreasonable that they could no longer participate in negotiations. And this behavior continues to prove a point I make all the time, Republicans represent the wealthiest of Americans and don't care about the middle-class.
Just to be clear, raising the debt ceiling doesn't mean that we have to increase spending as it is the budget that controls spending. Raising the debt ceiling ensures that we are able to "pay our bills" to those that we have already borrowed from and to cover new borrowing that stems from budgets. Spending debates are better left for when Congress plans the next budget, but Republicans insisted that the debt ceiling vote should be used to address spending and the Democrats have capitulated. Democrats have been open to cuts proposed by the GOP in these negotiations including cuts to Medicare (provider-side cuts), cuts to the Pell Grant program, and other cuts that are tough for Democrats to swallow. But as soon as Dems propose cutting tax subsidies to Big Oil, eliminating tax loopholes for corporations who don't currently pay federal taxes, and shifting some tax subsidies that go to those making over $500,000 a year to the middle-class the Republicans walk out. Republicans want the middle-class, the elderly, and children to carry the economic burden. We've seen it in their budget proposal and bills that have been passed in the GOP led House. Not once has the GOP ever asked the wealthy and corporations to sacrifice anything this session. Not once. I've written about this before and I'm sure you've read articles about this but it's worth repeating here. CEOs and corporations are doing better now than they ever did before 2008 while the middle-class continues to struggle and all the GOP can come up with are cuts to programs working Americans, children and the elderly depend on, cuts to things that protect the middle-class and balking at any proposal that those who are doing very well pay a few percent more in taxes (or any taxes at all in some cases).
Their motive is to take care of those who fund their campaigns but they claim that they don't want to burden the "job creators." Supply-side economics (aka trickle-down economics) doesn't work, we've tried it and it costs us jobs and creates recessions. I was talking with my Dad the other day and he heard somebody explain the GOP's theory this way, and I think it's the most simplistic way this can be illustrated:
Let's say that I'm a CEO of a company that produces Widgets and last year we produced 150,000 Widgets but only sold 148,000 Widgets. I still have 2,000 Widgets sitting in my warehouse that I can't move. The economy isn't doing great and unemployment is up so the GOP gives my company (and me personally) a tax cut, not only do they give me a tax rate cut they also give my company a tax holiday reducing our tax rate to 5% for this year. Bitchin!!! I can hire a bunch of new employees to help us make more Widgets! But wait, I couldn't even sell the 150,000 Widgets we produced last year so if I hire more employees and can produce 250,000 Widgets I can still only sell 149,000. If I hired more people just because I got a tax cut my investors would hang me by my thumbs! I like my job so I'll just use the tax cut to by up more company stock and inflate the value of my company instead.
That's how supply-side economics works, you can give corporations all the tax breaks you want but without demand they're not going to produce any more than they can sell and in turn will not hire any more workers. To get the economy going you have to invest in jobs. Most Republicans know this, they oppose tax hikes on the wealthy and corporations because they fund their campaigns not because they think it will create any new jobs. But if they say that they can't get you to vote for them.
Republican leadership walked out of debt ceiling negotiations because they don't even want to hear anything about closing tax loopholes or raising taxes on the wealthy but before they left they made sure that Dems agreed to cuts that would harm middle-class Americans. Another reason they walked out was to shove the issue to Obama so that when they eventually do vote to close tax loopholes or raise taxes they can just blame it on the President and say that they had no choice because the debt ceiling had to be raised. Because as I've said before they will raise the debt ceiling but they're going to position themselves to their political advantage first.
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