Political Irony

Here’s what I think will happen with the (poorly named) “fiscal cliff”. Or at least what the Democrats should do.

1. This assumes the Republicans refuse to compromise (or don’t even make a counter-offer to Obama’s offer).
2. We go over the fiscal cliff. Nothing happens, at least not immediately. I think the markets are already prepared for this to happen anyway. People start to find out what across-the-board spending cuts will do, and become concerned.
3. Just before the deadline — when it is clear that no compromise will be reached — the Democrats (should) introduce a tax cut for everyone earning under $250,000, to replace the Bush tax cuts that are expiring. And reversing the worst (most damaging to the economy) spending cuts.
4. The Republicans have a choice: Vote against a tax cut (because it doesn’t apply to the rich), making them look really bad. Or vote for it, accepting no tax cut for the wealthy.
5. If the Republicans vote against it, throw in some additional spending cuts. By then, people start getting really pissed off about the across-the-board spending cuts (their social security checks get smaller, people lose their jobs, the military starts making cuts).
6. The Republicans cave, having at least put on a show of being tough for the benefit of their base.

Why do I think no compromise can be achieved before the deadline? After all, didn’t major Republicans already offer to compromise by raising revenues? No, not really. Their offer to raise revenues does not include any tax increase, only “closing of tax loopholes” — and they are unwilling to specify what loopholes they would close. Besides, closing loopholes will never be enough to balance the budget. We need at least some tax increases, and I think that will just be too difficult for too many Republicans. Once we go over the cliff, then taxes will increase automatically. At that point, Obama can propose tax cuts and spending cuts from a position of strength, and Republicans can pretend they are voting for tax cuts (which before the fiscal cliff would have been tax increases).

If you disagree, please leave a comment. But don’t just disagree, tell me what you think will happen. If I get it totally wrong and someone else gets it mostly right, maybe I’ll give a prize or something. At the very least you’ll get bragging rights. And maybe a job as a political pundit (<snark> except at Fox News, where being right could be a problem </snark>).

Extra points if you present a plausible idea of how we can get rid of the debt ceiling.

© Brian McFadden

Campaign finance reform won’t be enough to eliminate rampant special interest influence and corruption, as long as we have such a huge revolving door between Congress and lobbying firms.

Go read this interview with the President of Iceland, Ólafur Ragnar Grímsson.

As you may recall, their economy cratered a few years ago, brought on by the collapse of their banks (sound familiar?). But instead of bailing out their financial institutions, they let them go broke. Then the country stood up to demands from world banks that the country assume the debts of their failed banks and enact extreme austerity measures — or else. It was close to blackmail, but the country said no. And … nothing happened. In fact, their economy is recovering faster than the rest of Europe (and faster than the US).

It is a good and instructive read. Nothing radical at all, and is mostly common sense:

As everybody knows now, we did not pump public money into the failed banks. We treated them like private companies that went bankrupt, and we let them fail. Some people say we did it because we didn’t have any other option, there is clearly something in that argument, but it does not change the fact that it turned out to be a wise move for whatever reason. Whereas in many other countries, the prevailing orthodoxy is you pump public money into banks and you make taxpayers responsible for the banks in the long run, and somehow treat the banks as if they are holier institutions in the economy than manufacturing companies, commercial companies, IT companies, or whatever. And I have never really understood the argument: why a private bank or financial fund is somehow holier for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector.

So if you add all of this together and throw in the devaluation of the currency as well, it’s clear that what some people have called the Icelandic model includes a number of measures and approaches that have not been adopted in other countries. On the contrary, it includes some methods in the process that go directly against what has been adopted in other countries. But the outcome is the Icelandic economy is recovering faster and more effectively than any other economy, including the British and the American that suffered from a big financial crisis in 2008.

So why aren’t other countries learning from what they did? Grímsson provides the answer in the interview, when he warns against countries becoming addicted to their financial sector.

In responding to the crisis, Iceland treated it “not only as an economic challenge but also as a fundamental social, political, and even a judicial challenge.” Instead of bailing out rich investors and foreign banks, using money they would have to take away from providing services for the poor, they protected social and health services. In other words, they put their country and its people ahead of the banks. Is that really so hard to do?

[Hat tip to Media Matters]

The worst part of Fox News’ incessant yammering on about the Benghazi attack is that they have been so transparently partisan and gotten their facts so terribly wrong, that it has made it virtually impossible to have a real investigation into the death of the US Ambassador to Libya, either in the US or in Libya.

Why is Fox News helping the terrorists?

© Drew Sheneman

Some CEOs are complaining that they will have to pass the cost of health insurance for their employees on to customers. One of the biggest complainers was John Schnatter, who claimed he would have to raise the price of each pizza by 11 to 14 cents. First of all, is that all? Second of all, Schnatter claims that he already provides health insurance to 100% of his employees, so why would his costs go up? Regardless, after customers started boycotting his pizza, he backed down. Besides, since Schnatter was a supporter and fundraiser for Mitt Romney, it is more likely that his complaints were just so much hot air. If he was really worried about costs, he could reduce them by lowering how much he pays himself.

© Matt Bors

Leading Republican Senator Saxby Chambliss has publicly renounced Grover Norquist’s anti-tax pledge, stating “I care more about my country than I do about a 20-year-old pledge.”

Chambliss may not be the first, but he is definitely the most prominent Republican to say he no longer feels bound by the pledge (which he signed) to not raise taxes. Some freshmen Congresspersons have also said that they no longer feel bound by the pledge, which they were almost required to sign before winning a Republican nomination.

Maybe there is hope for the GOP yet?

Or maybe not. Karen Handel, the former executive for Susan G. Komen for the Cure, who nearly destroyed that charity with her attempt to defund Planned Parenthood, is considering running for the Senate against Saxby Chambliss. Handel previously ran for governor of Georgia on a strong anti-abortion platoform, but lost. Handel has called Planned Parenthood “a bunch of schoolyard thugs.”

UPDATE: Senator Lindsey Graham (R-SC) has now said “I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.”

On the other side, Grover Norquist claims that the anti-tax pledge will hold. “For 20 years Democrats have tried over and over to trick Republicans into breaking the pledge. It hasn’t happened. This isn’t my first rodeo.”

© Ruben Bolling

On his show, Bill O’Reilly recently said “Traditional America as we knew it is gone. Ward, June, Wally and the Beave — outta here!”

I thought it was weird enough when conservatives attacked Murphy Brown, a fictional TV character. But now they seem to be basing their vision of conservative America on a classic sitcom — Leave it to Beaver.

But sure! Let’s take America back to the era of higher tax rates for the rich, back to less obscene pay for CEOs and hedge fund managers, back when politicians were spending more time bolstering the social safety net than trying to blame our nation’s problems on the poor or on immigrants (you know, the people who founded this country).

As Ruben Bolling said about his own comic:

The right has always fetishized 1950s suburbia as the idyllic landscape of “traditional” America, full of nuclear families, strong values, men in suits and Wonder bread (R.I.P.). But how would the world of Leave It to Beaver really see the 2012 election? Mitt looks an awful lot like Ward, but is Mitt’s Bain-inspired economic worldview one that Ward would approve of?

BTW, in an amazing show of overly sweet irony, the Wall Street Journal has a recipe for faux Hostess cupcakes but made with a high-brow bittersweet chocolate glaze and a white chocolate mousse filling, called Hostess Cupcake 2.0.