US Politics Analysis: Can America Overcome "Deficit Fear" to Deal with Unemployment?

Senator Patty MurrayFor the last two years, debate over the deficit has dominated political discourse in Washington, driven by a Republican majority in the House. Along the way voters’ main concern --- policies that create jobs --- has been sidelined as Democrats have concentrated on defending the entitlement programs, primarily Medicare and Social Security, that Republicans have targeted for reform.

However, that may be about to change. Senator Patty Murray, the Democratic Chair of the Budget Committee, is not as respectful of the need to build coalitions as her predecessor. Murray is a conviction politician, and she feels her middle-class constituency is being betrayed by a callous GOP caucus more interested in abstract arguments about deficit reduction than the human costs of a damaged welfare system.

Click to read more ...

US Politics Feature: Can a Senator Named Coburn Cut $9 Trillion from the US Government's Debt?

Washington has a notoriously Byzantine manner of getting things done, but if his new subcommittee is ordered to write out new legislation reforming the tax code as part of a super-committee deal, Senator Tom Coburn will wield enormous influence. After all, he has a comprehensive plan ready to go. If that is the scenario that ultimately plays out, it will be fascinating to see the response of special interests, business lobbyists, and advocacy groups --- can they maintain their hold over a Congress newly determined, and chagrined after the nation's credit downgrade, to begin finding a long-term solution to America's debt problem?

Click to read more ...

US Politics Analysis: Darkness Before An Agreement on the Federal Debt?

With the usual disclaimer that it could all change tomorrow, there is hope that the adults in Washington can get beyond the "weasel" rhetoric and accusations of childishness to hammer out a deal that moderates on both sides can swallow as a necessary evil.

Click to read more ...

US Politics Special: Fiddling While America Defaults?

With four weeks to go before the US faces a possible default on its debt, there is still little sense of how President Obama will lead the country out of the public finances mess the nation faces. It defies belief that the Administration does not have some kind of long-term strategy to ensure that America pays its bills come 2 August, but quite what that plan is nobody outside the Administration could claim to know for sure.

One disturbing possibility to begin considering is that Obama is privy to information that the crisis in America's finances is worse than thought --- his seeming reluctance to get fully involved in the debate is, in fact, a masterful attempt to avoid spooking the markets before a Band-aid can be slapped on the problem. That is pure speculation, but it says something about the ineffectiveness of the President that the only way to take some cold comfort from his performance is to imagine an even worse scenario.

Click to read more ...

US Politics and Economy Analysis: Obama Talks Corporate Jets But Fails to Lead

Obama's demeanour does little to suggest he takes the problem as seriously as the authors of the Congressional Budget Office report. He is flunking his responsibility to take the initiative in explaining to the public the magnitude of the issues at stake. When he talks corporate jets not entitlement spending reform, he only makes it harder for those voices in Congress who are struggling to lead responsibly to be heard. If the president does not appear to be taking them seriously --- to my knowledge, President Obama has not once publicly acknowledged or encouraged the efforts of Sen. Conrad to build some sort of bipartisan consensus on the deficit, why should anyone else?

Click to read more ...

US Politics: Compromising on the Federal Government's Debt

A few weeks ago it appeared that Republicans were prepared to use the need for increasing the debt limit to push through some of the controversial measures included in their 2012 Budget Resolution, notably the plan proposed by Rep. Paul Ryan (R-Wisc) to change the Medicare programme for future beneficiaries and/or a Balanced Budget Amendment that would require sharp and immediate reductions in government spending.

These options are not totally off the table, especially with the pressures being exerted within Republican ranks by new members of Congress keen to assuage their Tea Party constituencies, but the overwhelming message that emerged from participants after the Biden talks is the urgent need for compromise before the debt limit vote.

Click to read more ...

US Politics: A Beginner's Guide to the Plans to Cut Government Spending

On Monday, the Tea Party Caucus held a meeting in Washington to discuss their potential approaches to a forthcoming vote, probably in June, on raising America's debt ceiling. No definite conclusion was reached by the Caucus, but here are the headline numbers, from the President's deficit reduction commission, that illustrate how the the debt burden in in the United States is forcing the political conversation in Washington....

In 2010, Federal Government spending was nearly 24% of the nation's GDP; a level not seen since the days of WWII. To cover this spending, the government raised tax revenues of 15% of GDP. In total, the difference between spending and revenue in 2010 –-- the deficit –-- stood at 9% of the value of all the goods and services produced in the economy, or GDP.

Click to read more ...

US Politics: A Beginner's Guide to Reducing the Federal Government's Debt

This report issues a stark warning, supported by every member of the Deficit Reduction Commission, "The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for our fellow citizens." And the Preamble emphasises the Commission's belief that the American public are ready to discuss long-term fiscal solutions, as long as they feel that everyone is sharing in the pain. The report notes that; “In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose,” but stresses that. “The national interest, not special interests, must prevail."

Click to read more ...

US Politics Special: The Conservative Way Forward on Social Security

Last week's quiet in Congress was broken when the House of Representatives debated the spending levels to keep the government in operation through 30 September, the end of the current Fiscal Year.On Tuesday, Wednesday and Thursday the House did not adjourn until past midnight. Members can presumably catch up on sleep this week when Congress is in recess for President's Day.

Meanwhile, President Obama released his budget for Fiscal Year 2012, which starts on 1 October.Some sympathetic commentators, i.e., those who didn't castigate the President for cowardice or a lack of statesmanship, argued that this was a credible political strategy. Ignore the subject of this year's budget and let the Republicans raise it; with the consequence they become labelled as the party that wants to tear apart America's welfare system. That is not a badge you want to wear as you enter a 2012 election campaign that, as always, will be decided by moderate Independents.

Entitlement reform will be the political battleground for the foreseeable future. The current struggles over cutting government spending are only the initial skirmishes in a long campaign ahead. Momentum is growing for the budget summit called for two week ago by Sen. Kent Conrad (D-North Dakota), Chairman of the Senate Budget Committee, and Republicans are intimating their leadership will only attend if entitlement reform is on the agenda for discussion.

That brings up to a final look at the Conservative Roadmap put forward by Rep. Paul Ryan's (R-Wisconson), with its recommendations for Social Security and Tax Reform.

Click to read more ...

US Politics: Government Spending, Ethanol, and the Republican Dilemma

During the recent controversy within the Republican Party over a ban on "earmark" funding, Senator Jim DeMint, the leading advocate of the moratorium, was able to call upon the support of a host of Tea Party and conservative blogs.

Now the battle gets specific. As DeMint turns his attention to the specific issue of subsidies for corn, media on the Right have been much quieter. At stake in the upcoming debate over the extension of tax credits for the use of ethanol (corn alcohol) in fuel are the same principles that drove the earmark battles, but this time politicians  in corn-producing states may find themselves opposing a cut in Government spending.

Click to read more ...