Democrats, Republicans Team Up to Teabag Economy
I never understood why the Republicans chose an elephant for a symbol, while the Democrats chose a donkey. After watching the debt ceiling debacle, which ended with Standard & Poors downgrading the United States government's credit rating, I can see why.
Republicans are the party of immovable, obstinate buffoonery, and Democrats are colossal jackasses. I'd root for a pox upon both their houses, except (thanks to the debt downgrade) I can no longer obtain credit to BUY a pox to place on their houses; and, at some point, the Patriot Act was amended to include poxes, curses, and stink-eyes.
Ah, yes...the debt downgrade. In case you missed the news Friday, Standard & Poors downgraded the United States government debt from AAA (the best) to AA+. It was the first time in modern history that the United States had a debt rating other than AAA. Considering that this isn't the first time we've been in a financial mess, this debt rating downgrade tells us one thing: the budget is completely out of control, and no one seems to want to actually fix the damn thing.
At least, that's what the downgrade should tell us. It's how I read the downgrade. But don't take my word for it. Go read the actual report from S&P. They come right out and tell you WHY the government's credit rating got whacked.
On page three of the eight-page report, S&P says, "Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability."
Translation: Neither party is serious about fixing the budget problems. Democrats don't want any cuts to any government programs (except the military). Republicans don't want any increases to any taxes on anyone who might vote Republican. The President doesn't want to do anything beyond act as Referee In Chief between the warring congressional factions. And so, despite months of bargaining and posturing, the wonderful grand deal we got handed was...a turd sandwich wrapped in an American flag (with bacon and extra mayo, of course).
The ridiculous thing is, balancing the budget is not a difficult task. It might be politically challenging, because liberals and conservatives will have to come together to agree to give up a small chunk of policy stances they hold dear, but it can be done. I know because I've done it, here. It took me less than five minutes. There were no gimmicks or magic tricks. There is no pretend accounting. It's just simple math: you cut some spending here and there, and you raise some taxes here and there. You do all of that primarily around the upper end of the economic spectrum, to keep the pain as minimal as possible.
Yet, as simple as that solution is, it's completely unworkable in the current Congress. Republicans simply will not agree to tax increases on the wealthy, even though every reasonable analysis of the budget shows that we will, at some point, have to raise taxes on the wealthy.
Outside of Washington, raising taxes on the wealthy isn't even a controversial topic. In a CBS/NYT poll from last week, the entire political spectrum was in favor of raising taxes on the wealthy. Overall, 63 percent of Americans want taxes raised on households that earn more than $250,000 a year. That includes a majority of Democrats (80 percent) and independents (61 percent). It also includes a majority of Republicans (52 percent).
That's right: a majority of actual, voting Republicans are in favor of increasing taxes on wealthy Americans. Again, don't just take my word on it. Click the link, see the poll, and see for yourself.
Then again, this isn't JUST a Republican issue. Democrats in Congress are unwilling to consider any reasonable cuts to anything. If you go back through my plan, you'll see cuts at the edges of both Social Security and Medicare: raising eligibility ages, trimming off or ending benefits for wealthy recipients, and so forth. There is nothing in my plan that suggests grandma will have to choose between heart pills and cat food. You can balance the budget without going to the extreme, worst case scenario of either side.
Look again at the numbers. If you hold government to the size it was before George Bush stole a pair of elections and spent his way into the history books, you balance the budget. If you increase taxes back to where they were under Bill Clinton, you balance the budget. Clearly, there is some wiggle room here for an agreement where both sides give, right?
But, of course not. Republicans in Congress are beholden to their special interest groups, and Democrats in Congress are beholden to their special interest groups — and neither party gives a damn about what you think. Look at how the downgrade debacle shook out: no tax increases (even though an overwhelming majority of Americans want them) and cuts to Medicare and Social Security, with more cuts to come (even though poll after poll suggests Americans do NOT want this).
This is what the American people have to show for a month of negotiating between Congress and the President: a debt deal we do not want, a series of not-enacted policies we do want, and now, a first-ever downgrade of United States debt. Gee, thanks? The downgrade of U.S. debt should raise the interest rates in this country just high enough to put a new car out of reach for my budget. It will raise your variable mortgage rates, your credit car rates, your student loans, and make it more difficult to finance anything. That should be a nice drag on the economy just in time for the fall shopping season. Meanwhile, Congress is now on vacation...for a month.
All of this suggests one thing: it's great to be a Congressman! At what other job can you be a colossal screw-up, destroy the company you work for, ruin the credit rating of your boss, blow a hole in the budget (and blame it on the black guy)...and then go on a paid vacation for a month?
Not to be outdone, the President is also going on vacation. I mean, why not, right? The world is burning, the economy is collapsing, the Dow is doomed...why not go shore up your golf game?
Aaah, screw the Patriot Act: A Pox Upon Both Your Houses. (I guess I'm a terrorist, now).
America deserves better than this.
You can reach the author by email email@example.com or on twitter @johndthorpe.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.