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OP-ED | Obama’s Empty Win

by Christopher Healy | Oct 18, 2013 4:13pm
(28) Comments | Commenting has expired
Posted to: Congress, Health Care, Opinion

The standard narrative is the country has been saved from the “debt ceiling-default-zombie assault” abyss by an unbending President Obama and Congressional Democrats who persevered over the unhinged ultra-Conservative wing of the once respected Republican Party.  The last two weeks have been hard on all of us here in Connecticut with 17 percent of the federal government being put on paid holiday and one Head Start program being short of cash in Bridgeport.

Several members of the Connecticut Congressional delegation — the ones who are millionaires in their own right — donated that lost time to various charities while those Congressmen who live paycheck to paycheck, kept their joy to themselves.

The political class and its cheerleaders in the media agree that President Obama won the battle against House Speaker John Boehner. But there was one Republican who won big — Senate Minority Leader Mitch McConnell, R-KY, who got $2.9 billion for a (damn) dam project for simply taking a meeting with Majority Leader Harry Reid, D-NV.

Obama did win, but it is a short-term victory and an empty accomplishment. The damage his policies have done and are doing to the national economy will continue until 2015. People have been led to believe that a robust stock market and a marginal rebound in the housing industry will propel the economy in time for the 2014 midterms. Our economy might merrily limp along, but uncertainty over free money, borrowing, and the true impact of Obamacare will mean more lean times.

Obama made the argument about closing the government. Republicans couldn’t settle on the danger of short ($1 trillion) and long-term debt ($17 trillion) or how the effect of Obamacare was confusing individual applicants, scaring the business community, and further retarding economic growth.

For a few moments, Obama stumbled with his absurd closing of open-air national parks and monuments. But the President effectively shamed Republicans with his cool self-serving style that is unequaled.

Republicans tried to argue about events that have not come to harvest. Their arguments over Obamacare income verification, subsidies to well-paid Congressional staff, and software problems got yawns and puzzled stares from the general public. But, Republicans did get income verification and kept the previously negotiated cuts in federal spending — sequestration — that got little notice from the Obama-applauding media. Democrats labeled sequestration “Draconian” and predicted great mass suffering if it was allowed to be implemented. Turns out those trees are falling nicely in the forest.

For liberal Connecticut political junkies and partisans, there were the predictable smirks about the hayseed Republicans from inland America trying to undo two national elections. But across the Hudson River, there are millions of people who do understand what is happening and they demand action by their elected representatives. We should thank those Republicans for showing some spine when it has become all too easy to simply sigh and push the green button.

Connecticut supposedly “lost” $14 million in federal salaries, but all of those workers will be made whole. Even the state of Connecticut will get its $800,000 back for covering the Head Start program in Bridgeport. Democrats will continue to argue that any future sluggish growth can be blamed on those crazy, corn-fed Republicans who lost their minds to make a meaningless point.

Long term, the Democrats shouldn’t get too giddy or ahead of themselves. President Obama is only effective when he creates his own crisis to solve. Republicans don’t have to attend every fight that the President initiates. Over the next several months, many companies will see if this holiday season will provide the bounty needed to show profits.

But the implementation of Obamacare will become more real to everyday people. Higher premiums, fewer professionals, cuts in Medicare — are all predictable outcomes that will change the political dynamic very quickly.

Christopher Healy is the former chairman of the Connecticut Republican Party and is a partner at his political consulting firm, TheHealyStrategy, with his wife, Suzan Bibisi. He blogs at MakeBlueRed.

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(28) Comments

posted by: LongJohn47 | October 18, 2013  6:18pm

Chris—do you really expect us to believe that Obama created this crisis and initiated this fight?  Get a grip!  Please!

But you’re right about “millions of people… understand what is happening.”  76% of independent voters blamed the Republicans for the shutdown according to a Washington Post/ABC News poll this week http://wapo.st/1hRCHP8.

Your party—the one that says it believes in economic growth above all—cost the country $24 billion in lost GDP through this stupid temper tantrum, and as a result the Republican brand has taken a well-deserved hit.

By the way, your guy Foley’s not doing too well, either.

posted by: ASTANVET | October 18, 2013  7:41pm

Why do we continue to further the idea that there would be some kind of default if the debt ceiling was not raised?  to service the debt it costs a fraction of what we take in every day in taxation.  The law prevents anything getting paid before the debt.  If you want to make a case that the department of education should be paid before the debt interest, step up to the microphone and make your case.  I doubt that will get very far.  The problem with conservatism is that it isn’t sexy to talk about fiscal restraint, balanced budgets, not having 100Trillion in unfunded liabilities - it just doesn’t compare to the heart string pullers on the left.  Life is not fair, some are granted great genes, some great intelligence, some athletic ability, some born into wealth.  The democrats seek to have equal outcomes when we all do not start with the same equipment or circumstances.  What conservatism seeks is to allow people to make moral and just decisions and reap the benefit and reward from those decisions.  I wonder some times if the ancient romans ‘woke up’ at the end of their reign, and felt regret or remorse of the folly that lead to their decline, or if it was a partisan fight all the way down the tubes.

posted by: DrHunterSThompson | October 19, 2013  10:31am

here’s the deal: yesterday we went $17 Trillion into debt as a nation.  that’s on Congress, of the past 20 years or so.  that is what we should be talking about.  get off the Affordable Health Care Act, get off the debt ceiling.  stop the partisan BS. 

we have serious issues in this country.  if you can’t engage in a serious conversation, stay quiet.

HST

posted by: LongJohn47 | October 19, 2013  12:32pm

Astanvet—“default” means not paying your bills on time—all of them.  The “full faith and credit” of the U.S. has been damaged, so that anyone—bondholder, supplier, employee, payee of any sort—now has to legitimately wonder whether in fact the legal, expected payment will be made on time and in full. 

Never before has this been questioned.  Now it is.  And we have the Tea Party to thank.

posted by: Commuter | October 19, 2013  1:59pm

No, Mr. Healy. It wasn’t a failure to make the argument. It wasn’t an inability on the part of the American people to understand the import of the tea party’s baseless raving. And it wasn’t the “liberal media.” Nor was it Obama’s fault, nor the Democrats in the Senate. Not one bit.

The Tea Party caucus didn’t fight the good fight. They didn’t show any spine. They displayed mere ignorance, arrogance and stubbornness. They rigged the rules. They refused to put the matter to a vote on the floor. Because they knew they would lose.

In the end, Tea Party Republicans got nothing. They just plain folded.

Obamacare will not implode. The people it is designed to help will receive it, the business community will be largely unaffected. The program will be adjusted and problems fixed. Exactly what happened with Medicare 50 years ago.

And 50 years from now, Obamacare will be as accepted and relied upon as Medicare is today.

If the Tea Party Republicans do this again, it will be they who bear the burden of blame. The Democrats will simply continue to set new fundraising records.

In short, there will be no vindication.

However eager you are for economic collapse on Obama’s watch, something like 70% of Americans are already awake to the fact that the Tea Party and its apologists are not a “movement” of “patriots” at all. Quite the opposite.

Like the nativists, the know-nothings, the isolationists, and the ideologues and reactionaries throughout human history to whose heap of ashes their own will (not soon enough) be added, they are an obstacle to freedom and democracy, economic growth and prosperity, and a stronger America.

If the GOP continues to be controlled by this belligerent faction of frightened, xenophobic, retrograde, red neck trolls, the Democrats will have an easier time still of defeating the kind of Republican you used to be, as well as these kooks, on election days to come.

As someone once paraphrased, the arc of the moral universe is long, but it bends toward justice.

You are simply on the wrong side of history.

posted by: LongJohn47 | October 19, 2013  2:19pm

HST—please forgive the partisanship.  Chris Healy is the former state GOP chair and is one of the most partisan people in CT.

I agree we have a serious debt problem which has developed over the past thirty years, and that both Democrats and Republicans share the blame.

I also believe that the Tea Party antics of the past three weeks have made things measurably worse, and while we need to find some real, long-term solutions it’s difficult to do so in the current toxic climate.

That said, put your ideas out there and let’s talk.  I’m always ready for a real conversation.

posted by: LongJohn47 | October 19, 2013  2:58pm

Astanvet—let’s take a deeper look at your idea that we make interest payments on the debt before anything else.

First, I don’t know of any law that requires the federal government to prioritize interest payments above all others, but you may be right.  I’d like to see your source for this.

But regardless, let’s think about the implications.  Take, for example, that hated, useless branch of government—the Dept of Education.

This is a cabinet level department, established in 1979 and previously part of HEW, which itself was created in 1953.  ED has a budget, also approved by Congress and signed into law by every President since Dwight Eisenhower.  So for sixty years the federal government has been deeply involved in education.

Because it has a budget, ED is able to hire personnel, set up offices, and run programs.  The personnel are either direct employees of the government or contractors, and for the past sixty years they have been paid on time at whatever rate they negotiated.

Likewise, there are thousands of private businesses across the country which have also entered into agreements with ED to provide goods and services, like office space, supplies, and programmatic services.  And for them as well, the “full faith and credit” of the federal government has meant that they got paid on time and in full.

I’m sure you also understand that the money that ED pays its personnel and suppliers goes right back into the economy, creating jobs here at home in restaurants, dry cleaners, car dealerships, paying mortgages, putting kids through college.

But you don’t like ED, and you think it’s okay not to meet these contractual obligations if you don’t want to.  And given the choice, you believe we should pay Chinese bondholders first, not only sending the money out of the country but also starving countless small businesses here at home who depend on money moving through our economy.

You have “vet” in your online ID, so I’m assuming you’re very patriotic.  Is this how you want to treat your fellow citizens, stiffing them in favor of paying a foreign government?  Is it really “conservative” to break contracts and refuse to pay people to whom you owe money and who themselves have done nothing wrong?

Is this really a “moral and just decision”?

posted by: Stan Muzyk | October 19, 2013  3:41pm

Neither Congress or Pres. Obama represented the people in this crisis. We are led by a bunch of elected losers who pass the buck.  God bless America!

posted by: dano860 | October 19, 2013  10:05pm

In G.W. Bush’s 8 years he increased the ‘Debt held by the public” by $6 Trillion.
In Owebama’s term, to date, the same number has been increased by $12,2 TRILLION.
Public Debt: Securities that Treasury issues to fund the government. It includes Treasury bills, notes, bonds and savings bonds. Foriegn governments, investors and the Federal Reserve hold the bulk of the debt.(USA Today 10/15/2013)
I don’t care what anyone thinks or says, the economy isn’t going positive fast enough to even come close to justifying this ridiculous rate of spending.
Printing the amounts of money that they have to keep us afloat are leading us into a severe inflation situation.

posted by: LongJohn47 | October 20, 2013  10:22am

dano—where do you get these numbers?  Total U.S. debt at 9/30/08 was $10T, up from $5.6T eight years earlier.  (see http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm)  Now it’s $17T.

Total foreign holdings of U.S. debt is $5.6T, exactly one-third.  The rest is held domestically.  (see http://1.usa.gov/iatoPb)

Finally, interest rates are at an all-time low, lower even than during the Great Depression.  Where’s the inflation?

posted by: Commuter | October 20, 2013  10:38am

dano860 (and a lot of other people) appears to have a basic misunderstanding about the role of government spending. Spending (demand) drives economic growth. It creates the need for supply, and the hiring and capital investment necessary to provide it.

Federal government deficit spending is one way to stimulate the economy. Monetary policy (e.g. ‘easy money’ policies such as increasing money supply and low interest rates) is another.

Selling government securities is, from a monetary policy point of view, a way to dampen economic activity, because you’re exchanging long term obligations for cash, taking money out of the economy.

Also, there is a fundamental difference between spending in deficit to finance two wars and over stimulating an already overinflated economy - which is what Bush did - and spending to try to stop or prevent a deflationary spiral, brought about by the collapse of the Bush bubble, which is what Obama did.

posted by: Lawrence | October 20, 2013  7:20pm

Unfortunately, Dano, we are still paying for the Bush-Cheney wars.

Perhaps you’ll appreciate this, from the pro-Republican, pro-business Forbes magazine: smallest government spender in decades?

Barack Obama.

posted by: ASTANVET | October 20, 2013  8:08pm

Longjohn - yes, VET - 28 years of service…tours overseas - under every president since Reagan.  If I take 100% of your argument - how then do we have un-funded liabilities of 100Trillion or so?  Servicing the debt does come first, that keeps bond markets from crashing and creating hyper inflation.  My point, to simplify this, is to say that the govt is out of scale.  That the sheer size and scope of it is too large, you asked about my patriotism and my conservatism… i will answer that by saying that if we used the federalist system (as we had designed our country) we would have power and money at the lowest levels of government.  (power to the people) the towns would serve their citizens, the states would do the same - the federal government would be concentrated on the essential functions of government for the enumerated powers - that does not include DEPT of ED, DEPT of AG, DEPT of Energy - which have not educated anyone, grown one bit of food, or reduced the cost of energy…instead these departments are rife with Waste Fraud and Abuse.  They are pork rich programs that increase dependency on the federal govt and are used to purchase votes by buying senators/congressmen with big dollar projects.  That sir, is not democracy, it is not federalism nor is it republicanism.  That is corporatism and an oligarchy… not exactly our finest hour…

posted by: Stan Muzyk | October 20, 2013  8:35pm

LongJohn47: The Tea Party antics you cite were promoted by the dictatorial stance of Pres. Barack Obama.  Obama keeps playing hard ball with our national interests because he won the election by five million votes—and feels he can get away with anything he desires.  So far Obama has been successful—but our once great country keeps losing—BIG TIME.

posted by: LongJohn47 | October 21, 2013  12:22am

Stan—the Tea Party prompted the fight, not the other way around.  They lost because Obama stood up to their hostage taking and refused to negotiate—exactly what Reagan and “W” would have done (Clinton would have talked them to death, then outfoxed them when they were exhausted).

This is the first time that Obama has played “hard ball” since the passage of the Affordable Care Act, but hopefully it’s not the last.

posted by: LongJohn47 | October 21, 2013  12:25am

Commuter—good points, but I have to slightly disagree on selling government securities.  If the money comes out of individual savings or from foreign sources and goes directly into spending on current projects, the effect is to stimulate economic activity, not dampen it.

There are very few instances where government securities, with their inherently low interest rates, will drain money from more productive uses of capital.

posted by: LongJohn47 | October 21, 2013  12:44am

Astanvet—I understand and share your disgust with corporatism and oligarchy and agree that the current system is rife with corruption.

I do not agree that big government is necessarily evil or unconstitutional, though it’s certainly different from what was envisioned in 1789.  Simply put, the world has changed dramatically, and structures that worked then would be hopelessly ineffective now.

We’ve made lots of constitutional changes that have greatly empowered the federal government at the expense of the states, especially the 14th, 15th, 16th, and 17th amendments. 

We’ve also created structures that the Courts have found constitutional, like the Dept of Energy, because they are needed in our modern world (Energy controls the nuclear weapons programs, among other things).

Waste, fraud, and abuse exist in any large organization, private as well as public.  I’m not saying it’s acceptable, just that it’s inevitable, and of course we should fight it where we find it.

But we also shouldn’t let the fact that government is imperfect get in the way of recognizing that modern capitalism needs an effective counterweight, and that without it we’d all be victims of even more corporatism and oligarchy and greed.

posted by: ASTANVET | October 21, 2013  2:16pm

Long John, WFA (waste fraud and abuse) does happen in any large organization.  We should not tolerate it in our government, as they are suppose to represent us.  The TEA Party did not start that fight, but regardless of who did/didn’t the issue at hand is the forced capitulation by the Government.  You now have a tax on your head by the virtue of breathing.  That is the Affordable Care Act.  The other issue is that government is force.  They have the ability to force you to do something (buy insurance) or fine/imprison you.  If Congress is so hated, why do we continue to give them more and more power, more and more oversight into the daily functions of our lives.  You hit it on two amendments - if you want to fix this country you have to repeal the 16th and 17th amendments.  16th let the FED bypass the states to collect directly from you - meaning the states now lined up to get their dole from the fed, and didn’t worry about the people.  And the 17th because the direct election of senators negates their purpose in the construct of the government.  They no longer protect the state from the encroachment of government, rather they act as another “people’s house” - our system has been so perverted by money and power that it is damn near abolished.  I am a conservative because i believe in the founding principles of our country, in the checks and balances they created.  Not watching Adams, Lincoln, Wilson, T. Roosevelt, F. Roosevelt, Johnson, Nixon, Carter, GHWB, Clinton, GWB, and Obama re-write our history.  Are we not free?  Can we not decide what happens in our own lives?  what choices we make.  You make a great many assumptions that just because it IS a certain way that it MUST be that way… I would prefer to live in peace as a free person, and not be forced into conformity with whatever mob is running the show.  But I am a dying breed of independent thinkers.

posted by: LongJohn47 | October 21, 2013  3:15pm

Astanvet—good luck revoking those amendments.  The 17th is particularly interesting.  Progressives across the country forced state legislatures to give up their power of appointment because they were so corrupt.  If you think WFA is so bad now, go back 100 years.  There’s truly no comparison.

The government has changed over the last 200 years because it had to, though I believe that the basic principles are very much intact.  Remember, the Founding Fathers weren’t perfect either.  But more to the point, they’re dead and we’re alive, and we have every right to reshape institutions to fit our needs.

posted by: Stan Muzyk | October 21, 2013  7:54pm

LongJohn47: Pres. Obama is playing now losing hardball with ObamaCare—but essentially “he has made losers out of all of us.”  We are already paying dearly for this miscalculated mess.

posted by: Commuter | October 21, 2013  9:25pm

LongJohn47 -

There is no actual relationship between borrowing and spending. The federal government does not have to borrow to spend. It has an infinite supply of money, by fiat.

In a pure fiat currency regime, which has only existed for about fifty years or so, the real functions of sovereign debt are as a tool to manage money supply and to provide a secure store of value.

The only way the US government can default is by choice. The debt ceiling is a dangerous fiction, and the calls for austerity in general are fundamentally misguided.

The only real threat to that standing is the kind of insanity that the Tea Party Republicans have engaged in, which amounts to choosing to bankrupt and destroy this country, when we have no real prospect of ever having to face such a circumstance.

posted by: LongJohn47 | October 21, 2013  10:39pm

Commuter - I agree that the government can simply print money, but controlling the money supply lies with the Fed and not the Administration. 

The debt limit, however stupid, is real, and real money from real people (or institutions or governments) must be handed over through T-bill purchases before the cash can be recirculated through payments.

I agree that the only way we can default is by choice, but that choice involves not going to the market to borrow money that the world stands ready to give us.

posted by: Commuter | October 22, 2013  12:11am

LongJohn47 -

There is no need for securities sales (nor is there a need for taxes) to fund the federal government. It has an infinite and unrestricted amount of money already.

There is therefore no limit to the amount of debt that can be carried. So the federal government of the US has a theoretically unlimited capacity to spend.

This is just the mechanics of it.

The only reckonings are out of control inflation or a loss of confidence in the full faith and credit of the sovereign.

posted by: dano860 | October 22, 2013  7:43pm

LJ 47 your numbers are correct but I took out the “public debt” only. These numbers come from the 10/15/13 USA Today graph.
Commuter we have a very shaky economy if the government has to keep pumping money into it, sort of a socialist type existence, isn’t it?
Larry, whether or not there was a Republican, Democrat or The Wing Ding Party the war would have still happened. The debt would still be the same but the increase in public debt over the past 5 years is unprecedented in the annals of history.
We need to face reality, inflation is at our doorstep…the market will run for the hills when the Feds printing of the cheap cash stops.

posted by: ASTANVET | October 22, 2013  8:02pm

I love the theoretical answers and comments - I prefer to live in the real world, where money has value, hard work allows you to build capital… but i’m sure all the Keynesians have this well thought out.

posted by: Commuter | October 22, 2013  10:51pm

Astanvet - they aren’t theoretical, they’re very concrete. It doesn’t mean that in the real world you and I occupy money doesn’t have value, it does mean that what the Tea Party is threatening could destroy the value of the money, and with it your ability to earn an honest living working hard. As Nixon said about 40 years ago (not 50 as I said above), we’re all Keynesians now.

posted by: MGKW | October 28, 2013  7:29am

Your credibility as a political consultant is supported by your perfect record…you have lost every race that your party entered when you ran the state…btw, thank you for delivering both Chris Murphy and Dick Blumenthal as senators for CT…Linda was the perfect foil and it showed…your rant about Obama should be blamed for the shutdown is both laughable and pathetic…we all know why you guys hate him so much…it is not about competence but race…yes, I played the race card…and I am proud of it… the truth hurts.

posted by: ASTANVET | October 28, 2013  1:05pm

HAHAHAA the race card - too funny… the last ditch attempt at shutting up dissent… not with reason, not with fact, not with anything other than a slur which will put people on the defense…. it says much more about you, than it does about your opponents.