Earlier this week, I helped negotiate an imperfect solution aimed at avoiding the so-called “fiscal cliff.” If I had my way taxes would not have gone up on anyone, but the unavoidable fact was this if we had sat back and done nothing taxes would have gone up dramatically on every single American, and I simply couldn’t allow that to happen.But never fear, dear conservatives, Mr. Turtle is convinced that the good guys hold all the cards for the next battle:
By acting, we’ve shielded more than 99% of taxpayers from a massive tax hike that President Obama was all-too willing to impose.
Predictably, the President is already claiming that his tax hike on the “rich” isn’t enough. I have news for him: the moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over. Now the conversation turns to cutting spending on the government programs that are the real source of the nation’s fiscal imbalance. And the upcoming debate on the debt limit is the perfect time to have that discussion.There's a few problems with McConnell's thinking, but as long as President Obama keeps his word, the biggest one is this:
We simply cannot increase the nation’s borrowing limit without committing to long overdue reforms to spending programs that are the very cause of our debt.
One last point I want to make. While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they've already racked up through the laws that they've passed. Let me repeat, we can't not pay bills that we already incurred.Only time will tell what happens, but McConnell and his crew can't have a debate about torching the United States economy unless President Obama agrees to have it with them. As long as he refuses to negotiate over their threat to sabotage the economy, they can pontificate all they want, but will in the end still face a binary choice: default or no default. Personally, I'm convinced they are bluffing, but even if they aren't, President Obama needs to stand firm: we can't negotiate with economic terrorists.
But beyond the importance of ending government-by-hostage-crisis, McConnell is deeply, fundamentally wrong about debt. First, in the short-term, our deficit and national debt are not a grave economic problem. Interests rates are just about as low as they can go. Our economic problem continues to be demand, and reducing spending will hurt demand.
Second, if our deficit and debt were the biggest problem facing our economy, then the deal McConnell just negotiated was truly an economy-wrecker because it added $4 trillion in debt over the next ten years.
Third, while we do face long-term fiscal challenges, McConnell's approach to dealing with them is counterproductive. Case in point: health care. McConnell says we need to take an axe to health care programs in order to reduce spending. He says:
While most Washington Democrats may want to deny it, the truth is, the only thing we can do to solve the nation’s fiscal problem is to tackle government spending head on — and particularly, spending on health care programs, which appear to take off like a fighter jet on every chart available that details current trends in federal spending.McConnell's solution is to repeal Obamacare, privatize Medicare, and effectively end Federal controls on Medicaid. But the reality is that his approach would actually lead to skyrocketing health care costs. Despite doomsday predictions from the right, the rate of increase of the cost of the biggest health care program, Medicare, is actually slowing down more quickly than other forms of health care spending—and that comes despite the fact that Obamacare expanded Medicare benefits.
McConnell mentioned charts—he should take a look at this one from Peter Orzag to see what I mean.