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One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Tuesday, January 29, 2013

President Obama Lost His Shirt to Speaker Boehner

by Ralph Benko, Contributing Author: The House, under the leadership of Speaker John Boehner, has precipitated a postponement in the debt ceiling fight until May. This represents a strategic choice by Boehner to make the Sequester fight, not the debt ceiling fight, the next major engagement. Much of the mainstream media now is accusing Congress of “kicking the can down the road.” They are missing the strategic implications.

In retrospect, at the Battle at Fiscal Cliff, Boehner took President Obama to the cleaners. He did it suavely, without histrionics. While Obama churlishly, and in a politically amateurish manner, publicly strutted about having forced the Republicans to raise tax rates on “the wealthiest Americans” Boehner, quietly, was pocketing his winnings.

Dazzled by Obama’s Ozymandias-scale sneer most liberals failed to notice that Boehner quietly made 99% of the Bush tax cuts permanent. As Boehner himself dryly observed, in an interview with The Wall Street Journal’s editorial board member Steve Moore, “”Who would have ever guessed that we could make 99% of the Bush tax cuts permanent? When we had a Republican House and Senate and a Republican in the White House, we couldn’t get that. And so, not bad.’”

“Not bad” is a resounding understatement. Dealt a weak hand, Boehner managed to 99% outfox, on tax policy, a president who had the massive apparatus of the executive branch, the Senate majority, and a left-leaning national elite media whooping it up for a whopping tax increase. Even more impressively, Boehner pulled it off with steady nerves while under heavy pressure from the anti-spending hawks in his own caucus.

Boehner, deftly, also dramatically raised the threshold, on which Obama had campaigned, at which the modest 3.6% rate increase kicked in. Yet his biggest win may have been in making the Alternative Minimum Tax patch permanent. This changes the baseline with profoundly positive implications for future tax reform and economic growth.

Boehner thereby won a triple jackpot, a bonanza for conservatives and supply-siders … while Obama, giving up all that for a trivial symbolic victory, lost his Progressive shirt. The mainstream media, with a few exceptions such as Howard Kurtz at the Daily Beast, was too deep in the tank to report that the Emperor has no clothes.

But Obama ended up, at least, shirtless. Next … off come the pants. Here come the real spending cuts. As reported by Moore, Boehner privately told Obama “’Mr. President, we have a very serious spending problem.’ He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: ‘I’m getting tired of hearing you say that.’”

Boehner, last week, again bested Obama by pushing the debt ceiling fight back to May. This is a double whammy by Boehner. According to specialists, by structuring the law to allow new borrowing only to the extent of obligations “outstanding on May 19, 2013, exceeds the face amount of such obligations outstanding on the date of the enactment of this Act” Boehner effectively instituted a spending freeze. This, in the face of Obama’s relentless demand for even more spending, is a victory for anti-profligacy hawks.

There’s a much bigger whammy embedded. Pushing the debt ceiling fight back to May, as the New York Times put it, “re-sequenced” the fight. Re-sequencing was not an idle gesture. It was a major tactical win by the House. The Times reported that “’The president stared down the Republicans. They blinked,’ said Senator Charles E. Schumer, Democrat of New York.” Schumer speaks with macho naiveté.
The Democrats, apparently, still don’t know what Boehner has hit them with. Thanks to the Sequester anti-profligacy conservatives now negotiate from strength. What are the implications of putting the Sequester fight before the debt ceiling fight? Steve Moore:“The Republicans’ stronger card, Mr. Boehner believes, will be the automatic spending sequester trigger that trims all discretionary programs—defense and domestic. It now appears that the president made a severe political miscalculation when he came up with the sequester idea in 2011.

“As Mr. Boehner tells the story: Mr. Obama was sure Republicans would call for ending the sequester—the other ‘cliff’—because it included deep defense cuts. But Republicans never raised the issue. ‘It wasn’t until literally last week [columnist’s note: just before the deadline] that the White House brought up replacing the sequester,’ Mr. Boehner says. ‘They said, ‘We can’t have the sequester.’ They were always counting on us to bring this to the table.

“Mr. Boehner says he has significant Republican support, including GOP defense hawks, on his side for letting the sequester do its work. ‘I got that in my back pocket,’ the speaker says. He is counting on the president’s liberal base putting pressure on him when cherished domestic programs face the sequester’s sharp knife. Republican willingness to support the sequester, Mr. Boehner says, is ‘as much leverage as we’re going to get.’”
Will the support of the defense hawks hold? It appears Boehner’s not bluffing. Although Obama’s outgoing defense secretary, Leon Panetta, infamously called the sequester “catastrophic,” the secretary obviously is falling back on the old bureaucratic tactic called “squealing louder than it hurts.” The Washington Post afterward called Panetta “the former (emphasis added) deficit hawk.”

As the Center for Strategic and International Studies, and nobody’s patsy, crisply notes about the Sequester: “This cut is significant to be sure, but it does not reach that of previous postwar drawdowns.”

Catastrophic? Oh please. Panetta surely knows better. The Post reprised a younger Panetta who, at a 1992 hearing (when the deficit was less than half its current size), stated:“I think the most dangerous threat to our national security right now is debt, very heavy debt, that we confront in this country.”

“As chairman of the House Budget Committee and later as budget director in the Clinton administration, Panetta was an unforgiving enforcer of the bottom line as the United States grappled with record-size debts. As the largest government agency, the Pentagon found itself a frequent target of his whip, especially as it struggled to justify its missions in the aftermath of the Cold War.

“’I think the most dangerous threat to our national security right now is debt, very heavy debt, that we confront in this country,’ Panetta lectured then-Defense Secretary Richard B. Cheney and Gen. Colin L. Powell, the chairman of the Joint Chiefs of Staff, during a hearing in 1992.”
It now should be clear to every Tea Party Patriot that Boehner is acting with integrity, with acute political sophistication, as an authentic conservative serious about reducing the debt by reducing spending. His claim, to Moore, that “he has significant Republican support, including GOP defense hawks … for letting the sequester do its work,” promises to be a game changer.

Given the assessments by sober defense analysts — and according to other, private, reports from Capitol Hill — there is no reason to think that Boehner is bluffing about having the support he needs to take the Sequester or barter it for even better cuts. And Boehner’s abhorrence of debt appears completely authentic. Moore: “He sees debt as almost a moral failing, noting that when he grew up in a little middle-class, blue-collar neighborhood’ outside of Cincinnati, ‘nobody had debt. It was unheard of. I just don’t do debt’.”

Boehner, having shrewdly identified the conservatives’ point of maximum leverage, appears poised for an historic victory. Boehner may prove himself to be the guy big enough and smart enough finally to engineer something that eluded even the great Reagan: pushing federal spending onto a downward trajectory.

If Boehner succeeds in closing the deal as he, with a critical assist from Senate Minority Leader McConnell, seems about to do he will go down in history as having brought about “the moment when the rise of the oceans (of debt) began to slow” … and our republic “began to heal.” If so John Boehner will deserve to be more than a Republican, conservative, and tea party, hero. He will go up in popular esteem, and down in history, as the master who staunched Washington’s hemorrhaging of America’s wealth.
------------
Ralph Benko is senior advisor, economics, to American Principles in Action’s Gold Standard 2012 Initiative, and a contributor to he ARRA News Service. The article which first appeared in Forbes was submitted for reprint by the author.

Tags: President, Barack Obama, Speaker John Boehner, Ralph Benko, commentary, Forbes To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
Posted by Bill Smith at 8:52 PM - Post Link

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