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In America, when gangs of bullies torment school children, pushing them around and extorting their lunch money, parents know only one response effectively counters the abuse: confrontation. Running, whining, negotiating — none of that works.

For the past year, since Republicans took the majority in the U.S. House of Representatives, they’ve behaved like young thugs, extorting Democrats to get what they wanted. Employing the blackmail techniques of schoolyard gangs, House Republicans repeatedly threatened to hurt the American people and the American government if Democrats didn’t submit.

Then President Obama confronted them. In recent weeks, he finally internalized and implemented the advice of American parents on dealing with bullies. He stood his ground. He called the GOP bluff on the payroll tax. And they backed down. He recess appointed four officials, defying GOP attempts to thwart service to American workers and borrowers.

Apparently, it’s a new day in Washington, one in which Democrats, who control the presidency and the majority in the U.S. Senate, are fed up and not going to take GOP extortion anymore.

For a year, Republicans leveraged their demands with blackmail.  If Democrats didn’t accept draconian and economic recovery-starving budget cuts, Republicans would shut down the government. If Democrats didn’t agree to slash the budget by exactly the amount Republicans required, the GOP would destroy the country’s credit rating.

In December, House Republicans overplayed. Initially, they’d opposed President Obama’s proposed extension of the payroll tax break that puts about $1,000 a year back into the pockets of working Americans. Just before the holidays, they changed their minds and said they’d accept a one-year extension, if it were offset by cuts in the federal budget. A dispute ensured between Democrats and Republicans about what to cut. As time ran out before the scheduled holiday break, the Senate compromised and passed a two-month extension, with the remaining 10 months to be settled later. The approval was overwhelming, 89 to 10. The Senators went home.

That bi-partisan action in the Senate left House Republicans with the choice of approving a two-month extension of a tax break they claimed to support or rejecting it, which would increase payroll taxes for 160 million workers.

For days, House Republicans refused to accept the Senate measure, threatening workers with a tax increase. The House Republicans claimed they wanted a one-year extension, but what they really wanted was a one-year extension paid for by cuts they chose without Democratic input. They demanded Senators return to Washington and vote on cuts to support a one-year deal.  Or they’d increase taxes.

The Senate refused. Obama refused. They confronted the bullies.

And the bullies blinked. The House passed the two-month extension. (more…)

U.S. Sen. Dick Durbin, (D-Ill.), assistant majority leader, condemns Republican obstruction of the Middle Class Tax Cut Act of 2011. The legislation would extend and enlarge President Obama’s middle class tax cut.

Isaiah J. Poole

By Isaiah J. Poole
Executive editor of the blog site OurFuture.org

Senate Finance Committee chairman Max Baucus has introduced a bill today that is a frankly unadventurous mix of jobs initiatives and tax incentives, with a healthy dose of loophole-closings to make sure that it can be presented as revenue-neutral. (Don’t accuse Baucus of trying to run up the deficit in order to stimulate economic growth and create jobs, even though that’s precisely what a statement released today endorsed by more than 300 economists and civic leaders called for.)

But while it is not the kind of bold response to today’s job emergency that we progressives demand, it presents this challenge to the Senate’s conservatives: Are you so desperate to keep the economy on its knees, to hold it hostage to your political ambitions and ideological rigidity, and to keep the Tea Party (crack)pots boiling in hopes their overheated bitterness will propel you back into control of Congress, that you can’t even say yes to this limited bill?

Don’t hold your breath, obviously, waiting for a favorable answer. We’re talking about the same people, after all, that had House Minority Leader John Boehner retreating with his tanned tail tucked between his legs after making the utterly sensible statement that if he could not continue the Bush tax breaks for everyone, including people making more than $250,000 a year, at least he’d vote to continue tax relief for everyone making less than that amount.

The ashes had hardly cooled on the cigarette Boehner smoked after making that statement that Senate Minority Leader Mitch McConnell issued his “hell no, you can’t” edict and telling reporters that he’d lead a filibuster to make sure billionaires and millionaires paid not one dime more in earned income tax.

Such is the political environment in which Baucus drops his latest effort to move the jobs debate forward. (more…)

Robert Borosage

By Robert L. Borosage
Co-Director of the Campaign for America’s Future

Senate Republicans have perfected the art of saying no. But in blocking a debate on financial reform, they have begun to imitate Goldman Sachs traders, selling positions that they are betting against.

Blocking financial reform is, not surprisingly, financially rewarding, as Republican leaders lease themselves to Wall Street as congressional security guards. But with the public outraged at the human devastation caused by the financial crisis, and the bailout of the big banks, with the Wall Street ethics (increasingly an oxymoron) in full display in the Goldman Sachs and Washington Mutual hearings, being in the pocket of the big banks isn’t exactly a popular platform for re-election.

So instead, Republicans are expressing their inner populism. They rail at the financial reform bill (the Dodd bill) as too weak, designed to ensure more taxpayer bailouts. “We cannot allow endless taxpayer-funded bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor,” says Senator Mitch McConnell, unfortunately tracking almost word for word the infamous Frank Luntz talking points on how to kill financial reform. Republicans pose like Horatio at the bridge, defending us against future bailouts. For McConnell, and Republican Senate Campaign Chair Tom Coburn to come straight from a Wall Street fundraiser to parade as the scourges of Wall Street may lack a certain authenticity, but Goldman Sachs traders aren’t the only insiders who think the rubes will buy anything.

Now Republicans have done us a favor. They’ve published a Republican alternative on financial reform, laying out the differences. Not surprisingly, much of it tracks the Dodd Bill, since a good portion of that was forged in bipartisan negotiations. It adds language calling on the Treasury Secretary to present a plan on Freddy Mac and Fannie Mae, which he’s promised to do. It puts somewhat different limits on the Federal Reserve. But its major differences come in two major areas: how to pay the costs associated with shutting down failed big banks, and on consumer financial protection.

The Dodd bill calls for the banks to ante up a $50 billion fund. This would be used by the FDIC if it were forced to take over a failing big financial institution. Unlike the last bailout, where the banks were rescued but not reorganized and taxpayers paid the bill, in the Dodd bill, a troubled big bank would be treated basically like smaller insolvent banks. The FDIC would take it over, fire the management, and reorganize it, liquidating assets, merging with other banks. The shareholders would lose their investment; the creditors would take a hit. The bank financed fund would cover any costs along the way.

For all of Republican warnings about the FDIC’s incompetence, the Republican alternative essentially calls for the same procedure. The FDIC would be named receiver. It would liquidate the assets, or transfer them to a “bridge bank” and sell them. It would fire the management; operate the bank if necessary while dispersing its assets. Shareholders would be wiped out; creditors would take a hit. But in some cases, the FDIC will have to take “emergency action to stabilize” the bank, “issuing guarantees, purchasing assets, and advancing funds to creditors.” The FDIC would seek to recoup this money from creditors and shareholders in the ensuing liquidation.

Where would that initial money come from? Here’s where Republicans pay tribute to George Orwell. The money won’t come from a fund paid for by the banks. Republicans denounce that as leading to “taxpayer funded bailouts.” No, the money would come from, well, taxpayers, and thereby save us from taxpayer funded bailouts. War is peace. Black is White. Are Republicans a great party or what?

The second major Republican initiative is to protect the banks from consumer protection. No really. Instead of an independent agency which the House called for, or a strong agency lodged in the Fed as the Dodd bill calls for, Republicans would create a “Council for Consumer Financial Protection” to promulgate rules for consumer financial protection. It would have three regulators and three consumer advocates and is charged with insuring that all rules and regulations “consider the safety and soundness” of the banks.

That, of course, is essentially what we have now where the various regulators have the authority to protect consumers, but are focused on the safety and soundness of the banks. The result is that they sat on their hands as consumers got gouged by payday lenders, rapacious mortgage brokers, credit card companies, used car dealers and more. (Of course, they didn’t do much on the safety and soundness of banks either).

So when you watch Republicans join in lock step once more to block opening the debate on financial reform, understand what their objections are. They want taxpayers, not banks, to front the costs of resolving failed big banks. And they want greater protection for the banks from consumer protection.

Which side are they on?

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Robert Borosage and Campaign for America’s Future Co-Director Roger Hickey are co-editors of the book, The Next Agenda: Blueprint for a New Progressive Movement.

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 Follow Robert L. Borosage on Twitter: www.twitter.com/borosage

Robert Borosage

By Robert L. Borosage
Co-Director of the Campaign for America’s Future

It is time to go all in to support comprehensive health care reform. The stakes have gotten prohibitive. Republicans have essentially bet the House on it. Obama, for all intents and purposes, has wagered the White House agenda. The insurance and drug companies are pouring in dough. This month will be telling. The debate in congressional districts across the country in August will go far in determining what kind of reform we get — or whether we get any reform at all.

The opposition — well financed by the insurance and drug companies and by the rabid right — is mobilizing now to stop reform. Republicans believe that they can replay 1994 when the defeat of Clinton’s health care plan (and the fight over NAFTA) led to the stunning elections that resulted in the Gingrich congress. The insurance and drug companies have sought to dilute reform on the inside the process while helping to fund front groups trying to torpedo it on the outside.

Their tactic this August is clear. Run Astroturf campaigns and mobilize the zealots to disrupt congressional town hall meetings, spew anger and invective against the “government takeover” of health care that will “kill your grandmother.” Intimidate legislators, cow decent citizens, sow fear and confusion. Legislators learn that if they vote to disembowel reform they’ll be amply rewarded with campaign contributions. If they vote to support it, they’ll face the fury of the wingnuts and the Astroturf activists. Cynical but effective politics. (For a fact check on the big lies, go to the Campaign for America’s Future page here)

Every American has a direct stake in this debate. Every citizen faced with soaring health care bills, every one of the 14,000 who lose their health insurance each day, every one of the millions frozen in jobs for fear of losing health insurance, every family that faces bankruptcy because someone got sick, every one denied coverage or cut off of coverage because he or she fell sick, every parent losing sleep over a child entering the workforce without insurance, every senior gouged by unconscionable prescription drug prices, every worker who simply can’t afford adequate coverage for her or his family. If the insurance industry and the Republican right manage once more to frustrate reform, all of us will pay part of the price.

As Arianna Huffington suggests above, readers of HuffPost should make it a personal mission to challenge and counter the opposition’s plans. Locate the town meetings that your legislator is having. (Call your legislators’ district offices. Health Care for America provides a listing of town halls organized by pro-reform groups here) Attend with friends and family, silence and shame those trying to disrupt the meeting, demand a serious discussion about this fundamental issue. Challenge your legislators to ignore the wingnuts and support real reform, not a watered down substitute.

So what constitutes “real reform?” Amid the foul odors and sordid ingredients of the legislative process, it is easy to lose sight of what is needed to insure the result is nourishing, and not dangerous to our health.

What many of us would favor — a system of government funded insurance with many alternative plans, a sort of Medicare for all – is not on the table, to the dismay of single payer advocates. But reforms now under consideration include major changes — all of which have passed through Senate and House committees — that could make a dramatic difference in people’s lives, and begin to mend our broken system. Those elements include:

Choice . if you have insurance, like it, and can afford the increasing costs of it, you get to keep it. Every plan on the table insures that. The charge that this is a government takeover of heath care is simply a lie.

Comprehensive insurance reform. Since most American voters have some kind of insurance, these reforms will have the greatest impact. Every plan under consideration will force a change in the insurance companies’ model. They will be prohibited from refusing to cover those who are sick, and prohibited from cutting off those who get sick. Discriminatory prices against women will be banned. Children can stay on family plans until the age of 26, which is vitally important to those like myself, a father of a 23 year old daughter who works at a place that doesn’t offer health insurance. Insurance companies will be prohibited from hiking rates and co-pays in the middle of the year just because someone gets sick. They won’t be able to gouge small businesses when one of their employees suffers a serious illness.

Shared responsibility. Everyone covered; everyone contributes. Mandates on businesses – beyond small shops — to provide insurance or pay into a common pot; mandates on individuals to get insurance. This removes the hidden charge — estimated at $1,100 per person — we each pay for the 47 million who aren’t insured and are forced to use the emergency room as their doctor, often putting off treatment that results in higher costs when the untreated illness becomes critical. If you have health insurance now, you’ve got a big, personal stake in getting everyone covered.

Affordability. You can’t mandate that people get insurance without making it affordable, since cost is what keeps people from getting it. The best legislation coming out of the House would provide subsidies for low and middle income families up to 400% the poverty level (about $43,000 in individual income). The house legislation would also empower Medicare to negotiate lower prices on drugs, and allow the import of drugs from safe places abroad, saving seniors big time. This would remedy the outrageous payoff to Big Pharma in the prescription drug bill that prohibits Medicare from negotiating lower prices on drugs.

Fair financing. Not surprisingly, there’s a pitched battle over how to finance the costs of the change. This shouldn’t be complicated. In society with gilded age inequality and the wealthiest paying lower tax rates than their secretaries, the most sensible way is to add hike top end tax rates on millionaires. Rep. Charles Rangel has been pushing for high end tax rates. The least sensible way — floated constantly by the eternally wrong-headed Senator Max Baucus, chair of the Senate Finance Committee — would be to tax those who have so called “Cadillac” health care plans now. Too often people with high cost plans are people who suffer terrible illnesses. The insurance companies already gouge them for getting sick; it would be truly outrageous for the Congress to tax them for it. Luckily Obama campaigned against this in his campaign, and should be held to that promise.

Public Option. For those whose companies don’t provide insurance — disproportionately lower wage workers in small businesses — every plan offers access to an “exchanges” that provides choices in private plans and helps keep prices down. Key to this is a robust public option that can contract with providers at something like Medicare rates. That will drive down the price of private insurance, provide model coverage that they will have to compete with, and help, as the president put it, keep the companies honest. The most obscene part of this debate has been to watch so called fiscal conservatives in both parties seek to oppose or disembowel the public option. This is the corrupting influence of insurance company dollars. If they succeed in prohibiting the public option from pegging its rates to Medicare, it will be as outrageous a subsidy to private industry as the prohibition on negotiating lower drug prices. Legislators in both parties should be challenged to support a real public option.

This isn’t as complicated as some in the media try to make it. Cover everyone, curb the abuses of the insurance companies, insure affordability, and send the bill to those who’ve had the party, use a public option and the power of Medicare to drive lower prices and better practices.

Making the case

In a town meeting or on the phone to legislators’ offices, many of us get intimidated. Legislators and aides often are skilled at using detail to dazzle or distract. The right-wing claque hopes to intimidate others. But in fact, you don’t need all the facts and figures. Just tell your own story about health care, and express your opinion clearly. Say you want insurance company abuses curbed. That you expect your representative to fight for a public option strong enough to cut costs and force competition. That you want the reforms paid for fairly by higher taxes on the wealthy and a cutback on subsidies to the insurance companies. And make it clear, reform is essential; the right-wing extremists don’t speak for you or the district. Don’t let them hijack the debate.

These reforms aren’t nirvana, but they would make a difference. And committees in both the House and Senate have now passed bills that contain them. If they are passed into law,
we will have made dramatic changes in our health care system that will benefit the vast majority of Americans. A lot more work will still be necessary to fix the broken system — particularly on cost. But most Americans will enjoy more secure, more affordable, and more sensible coverage.

Needless to say, this is all contested. The House Energy Committee, held hostage by the Blue Dogs, weakened the public option, lowered the subsidies for middle income workers, and diluted the reforms. We haven’t even seen the worst of the bills, whatever comes out of Baucus’ Finance Committee. But in the House and the Senate, if liberals stand tall, we’ve got a real chance to pass the basics mentioned above.

The first question, however, is whether any reform will pass. That is what is at stake this August. Will the insurance companies, the Republicans and the wingnuts sow sufficient fear and doubt to stop any serious reform? Or will citizens demand an adult debate about a broken health care system that must be fixed?

If Republicans are betting the house on this, so is President Obama. As Senator DeMint suggested, the right thinks defeat here will be Obama’s Waterloo, that it will “break” his presidency. There is no question that failure to move health care will be treated by the press as a monumental setback, weakening the president significantly. If health care reform fails, then the other reforms on the table — energy, financial reform, education, immigration, empowering workers — will face more daunting odds. Many voters dismayed at the failure will stay home in 2010. Failure on health care may well strangle this era of reform in its infancy. That, of course, is what the zealots on the right seek.

But this country can’t afford more drift and more stasis. We can’t afford another failed presidency. We desperately need to step up to deal with the fundamental changes that can no longer be avoided. This isn’t a spectator sport. The abusive tactics of the right are designed to keep the good hearted away, to create fear in the undecided, to cow timorous legislators. We can’t allow that to happen. It is time to go all in.

Robert Borosage

By Robert Borosage
Co-Director Campaign for America’s Future

Will Obama’s transformative budget survive? As his press conference last night illustrated, it runs a serious risk of drowning in a swamp of cant.

The budget is getting strafed by politicians in both parties for its deficits and debt. (the deficit is the annual shortfall between revenue and spending; debt is essentially the accumulation of net deficits over time).

Republicans, having joined Rush Limbaugh in betting that Obama fails, have done most of the ranting. Sen. Judd Gregg, lead Republican on the Senate budget committee, fulminates that if we pass Obama’s budget, “this country will go bankrupt. People will not buy our debt. Our dollar will become devalued.”

Richard Shelby, top Republican on the banking committee, warns Cassandra-like that Obama’s budget will put the country on “the fast road to financial destruction.” Eric Cantor, the hyperbolic House Republican Whip, brings it down to his favored level, railing about wasteful spending like “money that goes to remove pig odor.”

Conservative Democrats are chiming in also. Evan Bayh has formed what must be the twentieth new democratic rump group, arguing that “families and businesses are tightening their belts to make ends meet — and Washington should too.” Kent Conrad, Democratic head of the budget committee, is pushing for deep cuts in spending on domestic programs. “Moderate” Senators are expressing growing opposition to the president’s spending plans. Even the Chinese, America’s biggest creditor, are wringing their hands about US deficits, suggesting perhaps a new international currency might be needed to replace the dollar.

Before this babel completely drowns out reason, a little common sense might be useful.

1. The newfound Republican fiscal probity is worth less than a drunkard’s morning after regret.

For the last decade, they merrily embraced the Dick Cheney dictum that “Reagan taught us that deficits don’t matter. They doubled the national debt when the economy was growing, exactly at the height of the business cycle when they should have moved budgets into balance and reduced debt burdens. Fully $1.4 trillion of the largest annual “Obama” deficit — the $1.8 billion the CBO projects for FY 2009 that ends this October — was bequeathed to him from George Bush; the remainder comes from worsening conditions and the Obama stimulus spending to put people back to work..

Now as the economy verges on a depression, Republicans are indicting Obama for raising spending and deficits. This is like a gambling addict squandering the family fortune in a Las Vegas blowout and then scolding his wife for borrowing money to keep the kids in college. Had Republican leaders any sense of decency, they would just shut up and let adults address the mess they have left.

2. The greater worry in the short-term is that the deficits may be too small, not too large.

We’ve just suffered what Warren Buffett calls an “economic Pearl Harbor.” The accelerating downturn is turning into a global collapse. Consumers are cutting back; businesses laying off workers; exports have plummeted. The Fed has already cut interest rates to near zero. The only thing lifting this economy is deficit spending at the federal level. Senators intoning the comfortable mantras of the last years like Even Bayh can’t seem to grasp that we’re in a big-time trouble. If we took his advice, and cut federal spending and deficits, it would simply contribute to a downturn that is already the worst since the 1930s.

That’s why the high-church of economic conservatism, the International Monetary Fund, is calling on countries across the world to borrow more to stimulate the economy, not less. And that’s why all the talk about deficits in the out years — six, eight, ten years from now — is simply a dangerous distraction. The Congress isn’t passing the budget for a 2019. It is passing one for next year, and it should be spending more, not less, to put people to work and get the economy going. Once the economy recovers, we can act to bring deficits down to a sustainable level.

3. We can afford to take on the debt

Before joining Judd Gregg in rending garments and mumbling darkly about the end of the world, legislators would be well advised to inhale deeply, calm themselves and look around. The Congressional Budget Office predicts budget deficits will total some $9.3 trillion over 10 years (Obama’s budget which is more optimistic about the pace of recovery projects $6.97 billion). That’s a lot of money.

But this is a very big economy at $15 trillion a year and hopefully soon growing again. Bill Gates undoubtedly carries more debt than I or you do. But the burden of that debt — the carrying charges in relation to his income or the debt in relation to his assets — is far less than mine or thine. He can afford to take on more debt.

After years of conservative misrule, the US isn’t in as good shape as Bill Gates, but it isn’t broke either, particularly in comparison to other industrial nations. The current US public debt is about 40% of our annual economic production (GDP). It’s been far higher — reaching as much as 109% of GDP coming out of World War II. Post-war growth brought the burden down to about 25% GDP until Reagan gave us over to the seductive supply-siders and doubled the debt burden to about 49% GDP. Clinton brought it down to 33% and Bush drove it back up to about 40% even though the economy was growing.

Under Obama’s plans, the national debt will rise as a percentage of the economy to about 65-67%. That’s a big change. But the reason countries carry low levels of debt is so they can borrow when trouble comes. And this is the mother of all trouble.

But what is notable about that increase is that it will leave the US carrying only about the same debt burden that Germany, France and Canada were carrying -before they began adding to it in the current economic downturn. According the analysis of the Central Intelligence Agency in 2008, Germany’s public debt was at 65%, France at 66%, and Canada at 64%. The Italians, always somewhat more fiscally dissolute, were at 106%. Sober Japan, coming out of its lost decade, carried a public debt that was182% of its country GDP. 

None of these countries are going bankrupt. The Euro isn’t turning into toilet paper. The Japanese haven’t boarded up the country. We are urging all of these countries to borrow and spend more to help counter the downturn. We can afford the Obama deficits and more if necessary to lift us out of what looks increasingly like a global depression. (And that’s why if the Chinese are looking for a new currency to supplant the dollar, they’ll have to invent it.)

4. The most dangerous deficit is our public investment deficit.

Fact is we can’t really afford to cut the public investments Obama would make in education, new energy, health care and 21st century infrastructure. For too many years, we’ve starved basic investments to pay for adventure abroad or top end tax cuts at home. Now we have a national security imperative to invest in new energy, reduce our dependence on foreign oil and begin to address catastrophic climate change. We can’t compete as a high wage economy in a global economy without providing our children with a world-class pre-K to college (or advanced training) education. We must make the changes needed to provide Americans affordable high quality health care while getting health care costs under control. And we’ve paid the costs everyday of allowing our basic infrastructure to decay — from unsafe water to gridlocked roads to falling bridges to the outmoded electric grid.

Obama’s budget and recovery plans run up deficits to put people back to work while making a down payment on investments vital to our future. His domestic spending plans are, if anything, already too austere, reducing domestic discretionary spending to a lower percentage of the economy than under Reagan or Clinton or the Bushes. He argues correctly that we have to make investments in these areas to move our economy to sustainable growth, and away from the disastrous bubble economy that has now exploded in our faces. It is notable that his Republican critics don’t dispute him on this point. They simply stand firm against any tax increases on the wealthy, while calling for cutting spending to reduce the deficits — without ever offering a budget of their own to let us know exactly what it is they think should be cut.

The lesson? Let’s make certain we spend enough to get this economy going. Once we do that, we must guard against making Roosevelt’s mistake of trying to balance budgets too quickly, driving the economy back into the pits, as he did in 1937. Ignore the hyperventilating about America’s pending bankruptcy. But let’s make certain we stop spending money on pig odor, or whatever it is goofy Eric Cantor is whining about.