CONGRESS HAS A BIG DEBT-CEILING PROBLEM, AGAIN … WELCOME SPEAKER RYAN … 5 MYTHS ABOUT THE BUDGET (must read) … VETO DAY … BINGE-GAZI (h/t Daily Show) … ROPE-A-DOPE AND HILLARY … WHO IS SIDNEY BLUMENTHAL? … THE 250 DAYS OF POINTLESS BIDEN SPECULATION … NO $$. NO SHOT. GOODBYE LINCOLN (and Jim) … and other news of the week.
Joyce Rubenstein and the Capstone Team (John Rogers, Steve Moffitt, Alan MacLeod, Diane Rogers, Erik Oksala and Ross Willkom)
CONGRESS HAS A DEBT-CEILING PROBLEM AGAIN. A BIG ONE. Politico: “The U.S. government is 12 days from reaching the debt limit without a clear plan of what to do. Boehner, McCarthy and other GOP leaders are refusing at this point to move ahead with a ‘clean’ debt ceiling bill insisted on by President Barack Obama. Senior leadership aides said they couldn’t find the 30 Republican votes needed to join with all 188 Democrats to pass that proposal – a bleak indication of the current state of play.”
WELCOME SOON-TO-BE SPEAKER PAUL RYAN. DON’T EXPECT A HONEYMOON The Fix: “Lots of deadlines. Little time.” Rep. Paul Ryan (R-Wis.) will soon be speaker of the House, officially announcing his candidacy for the job on Thursday night after securing the support he needs to be elected — including from most members of the antagonistic, conservative Freedom Caucus. And there are smiles all around, as even many members of that group express happiness that Ryan has taken the plunge. However strong this new union might be, it will be tested almost immediately. That’s because the House faces a series of fast-approaching deadlines — most notably having to extend the debt ceiling in early November and having to avert another government shutdown in early December. Previous versions of these debates have suggested the only way Democrats will agree (or need to, politically speaking) to a debt limit increase or funding the government is if those things are clean and don’t include add-ons or changes that conservatives want. Will Ryan try and gain concessions that the Freedom Caucus approves of, or will he go a more moderate route? Ryan’s election as speaker is likely to take place on Wednesday — just one day before the National Highway Trust Fund runs out of money. It will be the first of many trying moments in his first few weeks.”
AS OF TODAY CONGRESS HAS:
– 5 legislative days until the National Highway Trust Fund runs out of money on Oct. 29
– 5 legislative days until Speaker Boehner hopes to retire on Oct. 30, a day with no votes scheduled
– 9 legislative days until the government runs out of money to pay it’s debts on Nov. 3
– 21 legislative days until the federal budget expires and the government shuts down at midnight on Dec 11, a day with no scheduled votes.”
HOW RYAN CONQUERED THE FREEDOM CAUCUS Politico: “He said he would not advance contentious bills without support from a majority of the majority of the House Republican Conference – adhering to the much-talked-about Hastert rule. Discuss sweeping changes to the House rules? Change the way committee chairs are elected? There are a lot of good ideas, Ryan said, and they all merit a broader conversation with all Republicans. Ryan made it clear that groups like the Freedom Caucus would have a place at the table in Ryan’s speakership …”The conservative lawmakers applauded at the end of the meeting. Ryan seemed to feel good. … After three ballots around a long table, the group, led by Ohio Rep. Jim Jordan, did not reach the 80% of members needed to deliver Ryan the endorsement he said he needed to run. … An official statement said ‘a supermajority of the House Freedom Caucus has voted to support’ Ryan.”
SPEAKING ABOUT THE FREEDOM CAUCUS … check out Diane Rogers’ blog post “You are Free to Agree With Us.”
5 MYTHS ABOUT THE BUDGET (DEEP, DEEP DIVE, BUT WELL WORTH IT) Politico Agenda: “Washington is preparing for another partisan clash over federal spending. In fact, the Obama era has been a series of partisan clashes over federal spending—the stimulus battle in 2009, the debt-limit crisis in 2011, the “fiscal cliff” in 2012, the government shutdown in 2013. They are always noisy. They are always tense. And they are always confusing because Americans don’t really understand how their tax dollars are spent. You don’t need to be a budget wonk to get the gist of the budget wars. You don’t need to know about reconciliation or sequestration, outlays or out years, the trust fund or the doc fix. You just need to know a few basics so that you don’t think a quarter of all federal spending goes to foreign aid—which, incidentally, is exactly what the polls say most people think. As confusing as the budget can be, the broad strokes are pretty simple. You just have to get past a few common myths:
MYTH 1: The government pours your money into porky boondoggles and random programs.
The U.S. spent about $3.7 trillion in the fiscal year that just ended, about $12,000 for every American. The first thing to know about that spending is that about two-thirds of it, nearly $2.5 trillion, went to military, Social Security, Medicare and other health programs.. The old joke about how the federal government is an insurance company with an army is not really a joke. The next largest budget item was just $229 billion, the interest we paid on our national debt. Everything else the U.S. government funded—farm subsidies, food stamps, flood control, the FAA, the Fish and Wildlife Service, FBI investigations and FEMA disaster responses as well as foreign aid—took up less than 30 cents of every taxpayer dollar. Foreign aid actually took up less than one cent. Popular priorities like national parks and Head Start and the Border Patrol were basically rounding errors. It’s not like the bulk of your hard-earned cash is funding bridges to nowhere, rabbit massages, congressional junkets or Solyndra-style failures, either. The big money goes to the Pentagon and the elderly.
MYTH 2: “Spending” means the annual budget.
Another way to think about the vast gap between the spending we fight over and the spending we ignore is to see how much Congress appropriates through its annual budget process. For 2015, it was just $1.1 trillion. The rest of the spending was “mandatory,” a telling Beltway description of dollars that go out the door automatically unless Congress decides to stop them. This autopilot situation is definitely not an optimal way to run a multi-trillion-dollar spending operation, and when fiscal conservatives say they want to rein in “entitlements,” they’re talking about mandatory spending programs. WHAT’S IT INCLUDE? Mandatory spending includes some veteran benefits, unemployment benefits, food stamps, and even transportation dollars. But the vast majority of it is Social Security and Medicare, our beloved entitlement programs for senior citizens, along with Medicaid, our main health care entitlement for low-income families. … the key point is that the discretionary spending that inspires so much warfare in Washington is just a small chunk of federal spending—and more than half of it goes to the Pentagon. Just 13% of the 2015 budget was “non-defense discretionary,” a bucket including education, science, the environment, housing, energy, the National Weather Service, the National Endowment for the Arts, that porky local boondoggle named for your former congressman and just about anything else that doesn’t involve defense, health care or old-age pensions.
MYTH 3: The government is rapidly going bankrupt.
The government spent $439 billion more than it raised in taxes in 2015. That sounds bad, but that deficit was almost $1 trillion less than it was in 2009, when revenues plunged and spending spiked after the financial crisis. Back then, the deficit was a terrifying 9.8% of GDP; now it’s 2.5%, which is considered stable when the economy and the population are growing. … America has almost achieved the 2015 Simpson-Bowles target of 2.3% of GDP (Simpson-Bowles was NOT adopted), anyway. The U.S. is not Greece, and is in no imminent danger of becoming Greece…. The biggest factor driving down the deficit has been the improving economy: Individuals and businesses pay more taxes when they have jobs and profits. … Higher taxes for high earners (Obama’s victory) plus lower spending (a Republican victory) equals lower deficits. Now the only real short-term danger is that Washington dysfunction and brinksmanship could force the Treasury into default. Congress has two weeks to raise the debt ceiling so the government can pay for stuff it has already bought, but Republicans want to use the deadline as another opportunity to extract concessions. Obama has said he is done horse-trading over the full faith and credit of the United States. We’ll see. A default would be spectacularly catastrophic, but … it’s not exactly unimaginable.
MYTH 4: The government is slowly going bankrupt.
The deficit is shrinking, but since outflow still exceeds inflow, we still have to borrow to make up the difference, and our $18 trillion debt is still growing. It has shrunk slightly as a portion of the economy, to about 74% of GDP, but that’s still an awful lot of money for a nation to owe. Meanwhile, the CBO has forecast that annual deficits will start growing again soon. And the retirement of the Baby Boomers (combined with the trend toward greater longevity) will put heavy pressure on entitlement spending in the coming decades.That’s why fiscal Chicken Littles can produce alarming 75-year budget forecasts. Honestly, though, nobody has any clue what will happen to the country over the next 75 years. Abraham Lincoln didn’t budget for the Great Depression. FDR didn’t anticipate 9/11. That said, there has been one very significant piece of long-term budget news during the Obama era: The cost of health care, which was the most serious threat to fiscal sustainability, is no longer soaring. In 2009, the CBO expected Medicare spending to jump from 3 to 6 percent of GDP by 2030; it now expects much more limited growth to less than 4%t of GDP. That is a huge difference, worth trillions of dollars over time. Our fiscal position decades from now will depend on economic performance, interest rates, military entanglements and a bunch of stuff that would never occur to us today. It will depend on whether we want government to do more or less than it does now, and whether we’re willing to collect the taxes needed to pay for it. But it will also depend on the cost of health care. If Obamacare really does control costs, the well-armed insurance company we call the U.S. government will be a lot cheaper to maintain.
MYTH 5: Spending is just the stuff labeled “spending.”
That’s the budget in a nutshell. Most of the $3.7 trillion we spend gets funneled into the military-industrial and medical-industrial complexes. Most of the spending is virtually automatic. The deficit is shrinking. The debt is growing. We have a serious demographic problem. We had a serious health care problem, but it looks like it won’t be as bad as we thought. OF COURSE, IT’S NOT REALLY THAT SIMPLE For example, that $3.7 trillion spending number doesn’t include another $1.3 trillion worth of “tax expenditures,” basically spending disguised as tax breaks. Predictably, the biggest one is the tax deduction for employer-paid health insurance, which cost the Treasury $150 billion in lost revenue last year, followed by tax-deductible contributions to pensions and retirement plans. But there are also sizable tax expenditures for mortgages, children, charitable donations, tuition and earned income for the working poor that don’t fit neatly into the general spending narrative. ANOTHER TWIST: Sometimes the government loans money rather than spend it. Uncle Sam now has a $3.3 trillion credit portfolio, and the vagaries of federal accounting tend to hide its true cost. For example, the Department of Education loans students more than $100 billion a year and the Federal Housing Administration insures more than $100 billion worth of mortgages. But the government books a profit on those programs, so they don’t show up as spending. The nationalization of Fannie Mae and Freddie Mac is also artificially reducing the deficit since the government gets to keep their profits. NUANCE CAN BE OVERRATED The budgetary forest may be less compelling than some of its individual trees, and in the coming weeks there’s sure to be heated debate about Planned Parenthood, the Export-Import Bank and the Highway Trust Fund. But the big picture still holds. Our fiscal picture might be kind of a mess, but it’s not really a disaster. If we don’t do something stupid like default on our obligations, we should be just fine.
VETO DAY The Hill: President Obama on Thursday took the rare step of vetoing a major defense policy bill, upping the stakes in a faceoff with Republicans over government spending. Obama argues the bill irresponsibly skirts spending caps adopted in 2011 by putting $38 billion into a war fund not subject to the limits, a move he called a “gimmick.” He has called on Congress to increase both defense and nondefense spending. The move forces Congress to revisit the bill and send it back to the president. The military will continue to operate under last year’s defense policy if lawmakers cannot reach an agreement. MorningD: “The fiscal 2016 NDAA [is] just the fifth veto of Obama’s seven-year presidency.”
WHAT’S NEXT FOR THE NDAA? Congressional Republicans are furious with Obama for his veto of this year’s NDAA and are looking to make him pay. First, there’s the OUTSIDE GAME: a public-relations campaign, complete with scores of press releases and a flurry of cable news appearances, seeking to portray the president as indifferent to the sacrifice of service members. Then, there’s the INSIDE GAME: House Republicans have scheduled a Nov. 5 vote to override the veto and are whipping votes to try to get to the required two-thirds majority. Last time around, they were about a dozen votes short – with 10 Republicans voting against the defense policy bill. Thornberry and other GOP defense hawks are sure to lean on those Republicans, along with Democrats from defense-heavy districts who voted against the bill last time, as they scrounge for votes. AND IF THERE AREN’T THE VOTES FOR AN OVERRIDE, which we think is the more likely scenario, then the bill will probably be stuck in limbo until Democrats and Republicans hash out a budget agreement for the current fiscal year. And that isn’t expected until December, if at all. With a budget deal, the authorization measure would likely be revised to match the deal’s spending levels and then sent back to the president. But if no deal is reached, then the bill’s fate is unclear.”
WOULD RYAN THE SPEAKER BE A FRIEND TO DEFENSE HAWKS? “Rep. Paul Ryan has walked a high wire to stay on the good side of the two warring factions in his Republican Party – defense and fiscal hawks. But if he becomes the next speaker, his balancing act will be put to the test. The former Budget Committee chairman has a generally solid record on defense issues, defense analysts say. He’s done fiscal gymnastics in an attempt to be both a fiscal hawk and defense hawk, though at times he’s appeared to sympathize more with the fiscal conservatives in his party.” (MorningD)
HILLARY EMERGES LARGELY UNSCATHED FROM “BINGE-GAZI” Politico: “The former Secretary of State faced sharp questions from Republicans about her handling of the run-up and aftermath of the attacks in Benghazi, which claimed the lives of Ambassador Chris Stevens and three other Americans. GOP lawmakers repeatedly pressed her to explain why she didn’t know about Stevens’ requests for more security. LITTLE NEW INFO WashPost: “During hours of fastballs flung at Clinton by GOP lawmakers, and softballs lobbed by Democrats, very little was added to the already-extensive factual and investigative record of what happened, and why, in Benghazi before, during and after the terrorist attacks there in September 2012. Much of the questioning rehashed issues that were settled in other hearings and official inquiries about Benghazi over the past several years. Clinton repeated her categorical denials of the long-debunked charge that she told the Defense Department to ‘stand down’ attempts to launch a military rescue.”
*ROPE-A-DOPE (*a boxing tactic: popularized by Muhammed Ali, where instead of moving around the ring, the boxer fights for extended periods of time leaning back into the ropes, while the opponent expends energy throwing punches, becoming exhausted so the opponent cannot defend effectively late in the fight and is thus defeated). “Largely through ROPE-A-DOPE, a sometimes-smirking Hillary triumphs at 11-hour House Benghazi hearing, which lasted from shortly after 10 a.m. to 9:02 p.m. You want me to answer that question for the eighth time? Sure, I will – at length, and with all the acronyms. What else you got? When it finally ended, a top Dem emailed: “She will be the next president.” Another asked: “Where would we be without the GOP?” Joe Lockhart added: “They only play to their own audience.”
HEARING STATS: “Number of questions asked: 316 … Number of times Hillary Clinton was interrupted by GOP members: 144 … Gowdy mentions of her emails: 78 … Gowdy mentions of Sidney Blumenthal: 36 … Gowdy mentions of Benghazi: 18 … Minutes she was in the chair: 500 Average time between interruptions: 3 minutes and 28 seconds … Lozenges: 1.” (Correct the Record)
THAT BENGHAZI COMMITTEE, turns out, is NOT THE LONGEST RUNNING special congressional investigation ever. According to PolitiFact, other congressional probes have lasted a lot longer than 17 months, including hearings on the conduct of the Civil War (40 months) and the assassinations of J.F.K. and Martin Luther King Jr. (30 months).
SO WHO EXACTLY IS SIDNEY BLUMENTHAL? The FIx: “During 11 hours of hearings … House Republicans seemed singularly focused on one man — a man who has never held public office, a man who is not officially on the payroll of Hillary Clinton’s presidential campaign and a man who has no official capacity to influence American foreign policy. That man is Sidney Blumenthal. … in the first session alone Thursday, he was mentioned exactly as many times as the U.S. ambassador who died in the Benghazi attacks. WHY? Blumenthal’s name came up again and again because his e-mail address filled Clinton’s e-mail inbox again and again, before and after the attacks. Between 2011 and 2012, he sent Clinton at least 25 memos consisting of intelligence and strategy reports, advice, articles and even gossip. His memos filled about a third of the nearly 900 pages of e-mails related to Libya released from Clinton’s private e-mail server.”
BYE- BYE BIDEN Politico: “Vice President Joe Biden on Wednesday ended months of breathless will-he-or-won’t-he speculation about a potential presidential run, saying he’s concluded that he’s simply ‘out of time’ to mount a real and winnable campaign. The announcement, in the Rose Garden, with Biden flanked by President Barack Obama and his wife, Jill, means the vice president is foregoing what would have been a third run and likely the last chance to fulfill a lifelong quest to the highest office in the nation.” MORE FANTASY FOOTBALL THAN FOOTBALL – 5 takeaways from Biden’s not-quite campaign – Politico: “1. It was never going to happen. … 2. The GOP is bummed he’s out. … 3. He wouldn’t have been a great candidate anyway. … 4. Don’t expect a Clinton endorsement anytime soon. … 5. Elizabeth Warren is the only one left.”
PHOTO TELLS THE STORY The Fix: A lot has been written about the close relationship between Barack Obama and Joe Biden. Obama has repeatedly said that choosing Biden was the smartest decision he has made in politics. … Given that relationship, it was compelling to watch Biden, age 72, end a lifelong dream with Obama, a man 18 years his
junior and one who had achieved that dream, standing by his side. … Biden’s speech felt like the address he wanted to give to launch a campaign for president, but knew he couldn’t. The timing wasn’t right — and won’t be. Obama, of course, knew all that — and knew that, for him, the timing had been perfect. How do you comfort an old friend who has to let a dream drift away? YOU PUT A HAND ON A SHOULDER. (Photo by Mike Theiler/Pool via Bloomberg)
BYE-BYE LINCOLN Democratic presidential candidate Lincoln Chafee, always a long-shot, dropped out of the race for his party’s nomination this morning. AND ALSO Former Virginia Sen. Jim Webb announced Tuesday that he will drop his bid for the Democratic presidential nomination.”
HILLARY’S BEST WEEK YET Politico Mag: “If in January 2017, Hillary Clinton is sworn in as the 45th president of the United States, historians may well point to this month as the moment her campaign turned around. Like the first brisk snap of fall, Clinton’s terrible, horrible, no good, very bad summer has morphed overnight into the best week of her campaign: Joe Biden is out, her poll numbers are up, her crisp debate performance reassured nervous Democrats and her measured resolution before the House Benghazi committee made her interrogators … seem small by comparison. Meanwhile , with every passing week, the GOP looks less united, more angry and less able to govern. … Her reconsolidated status as the prohibitive 2016 Democratic frontrunner is the predictable result of the grim determination that has always been her hallmark-and the penchant for overreaching that has long been her enemies’ Achilles heel.”
CARSON SURGES PAST TRUMP IN IOWA POLL In a Quinnipiac poll of likely Republican caucus-goers, Carson has 28%; Trump has fallen to 20%. A September survey had Trump at 27%, Carson at 21%. Rubio is third with 13%, after attracting only 5% last month. Following Rubio is Rand with 6%, and Fiorina and Bush with 5%”
MONEY HONEYS “Billionaire Carl Icahn launches $150 million super PAC,” … to help end the crippling dysfunction in Congress,’ Icahn tweeted. … The super PAC’s first goal will be to reverse the trend of U.S. companies merging with foreign ones or relocating overseas because of high corporate taxes.”
WHAT HAPPENED TO WORKING WOMEN? (Gail Collins) “Japan now has a higher proportion of working women than we do. I’m trying to get my head around this fact. “Everyone else is continuing to rise and we’ve declined, and now we’re basically tied with Japan. … We will now stop for a moment and recall that in 1971, Congress passed a bipartisan bill that would have made quality preschool education available to every family in the United States that wanted it, with tuition based on the family’s ability to pay. Also after-school programs for older children. Forty-four years ago! Richard Nixon vetoed it, muttering something about “communal approaches to child rearing.” But women falling out of the work force is also a huge deal. It reduces family standards of living and puts a crimp in the economy. And why do you think this is happening? One of the reasons is clearly, positively, absolutely the cost of child care.
It’s incredible that we’ve built a society that relies on women in the labor force yet makes no discernible effort to deal with this problem. In this week’s Democratic debate, Bernie Sanders said he was embarrassed that the United States was the only “country on earth” that did not guarantee workers paid maternity leave. This was inaccurate, since Sanders completely overlooked the situation in Papua New Guinea. Our current government policy requires that employers give new mothers 12 weeks of unpaid leave. This was based on a bill passed early in the Clinton administration. … You may be stunned to hear that … the idea of helping working mothers stay in the labor force does not come up all that often. [And] Ben Carson has described preschool as “indoctrination.” From Richard Nixon to Ben Carson, and wow, nothing’s changed.”