There's a fair amount of armchair psychoanalyzing here, but Bruce Bartlett has an interesting theory today about why President Obama continually thinks that pre-emptive compromise will bring Republicans to the table: it's because he never had the pleasure of negotiating with either the Soviet Union or Big Labor, a pair of opponents who could very quickly disabuse presidents of the idea that nice guys finish first:

Consequently, Obama has really been caught flat-footed by the Tea Party era Republican Party. He believed it would respond positively if he offered it half a loaf on just about every issue.

For example, some 40 percent of the 2009 stimulus legislation consisted of tax cuts even though his economic advisers knew that they would have almost no stimulative effect....Obama offered Republicans another half-loaf by putting forward a health reform plan almost identical to those that they and conservative groups such as the Heritage Foundation had proposed in the 1990s....Last December, he caved in to Republicans by supporting extension of the Bush tax cuts even though there is no evidence that they have done anything other than increase the deficit....Foreseeing that Obama lacked leverage in the debt negotiations that everyone knew were coming, I tried to give him some by explaining why the 14th amendment to the Constitution gave him the authority to disregard the debt limit if the Treasury runs out of cash, as it will next week....But on July 7, the Treasury Department publicly ruled out the idea.

....I think if Obama had the sort of experience that Cold War presidents had in dealing with the Soviet Union or that corporate executives and union leaders had in negotiating labor contracts he wouldn’t have been so naïve about the Republicans, who have never hidden the fact that their only objective is defeating him next year regardless of the cost. It’s not too late for Obama to play hardball, but I fear that it is just not in his nature.

Maybe there's something to this — though I'd note that neither Bill Clinton nor George W. Bush had any experience with communists or union leaders either. My biggest objection, though, is that I'm not sure it would have mattered. If Obama had negotiated with nerves of steel, would he have gotten better deals throughout his presidency? I don't think so. Unlike labor bosses and Soviet bosses, who could be pressured because there were things they wanted that a president could provide, Republicans — and especially tea party Republicans — want nothing that Obama can feasibly give them. If Obama had been tough as nails, they would have followed a path of total obstruction and nihilism anyway. Maybe some details here and there would have changed, but on the whole it just wouldn't have made any difference.

So I guess I'm open to this idea, but not sold on it. Tougher negotiation with centrists in his own party might have moved the needle a bit, but I doubt that Obama ever had any real leverage over Republicans. So, since banging his shoe on the lectern wouldn't have worked, he decided to give compromise a try. It didn't work, but I'm not sure he really lost anything by it.1

1And electorally, it might still be a winner. Obama believes that his reelection depends on votes from independents, and he further believes that independents react well to a conspicuous display of reasonableness. He might be right.

What Republicans Want

Rep. John Boehner (R-Ohio), the Speaker of the House, addresses the nation about the debt ceiling crisis on Monday, July 25.

It's no surprise that political partisans tend not to like each other. Generally, though—with obvious and famous exceptions aside—the level of personal hostility on Capitol Hill has usually been kept down to manageable levels.

Until now. To a degree rarely seen in the past, Republican policymaking lately seems to have been driven at least as much by pure political venom as it has by ideology or interest-group pressure. House Speaker John Boehner certainly gets this. When he was trying to whip his troops into line to vote for his debt ceiling bill on Wednesday, his pitch was simple: "President Obama hates it. Harry Reid hates it. Nancy Pelosi hates it. Why would Republicans want to be on the side of President Obama, Harry Reid, and Nancy Pelosi is beyond me." That was enough for conservative firebrand Rep. Allen West (R-Fla.). Boehner's plan wasn't perfect, he said in a Facebook post, but "the fact Pelosi, Reid and Obama hate it doggone makes it perfect enough."

And it's not just the debt ceiling. Take cap-and-trade legislation to reduce carbon emissions. As recently as 2008, plenty of Republican leaders were for it. John McCain backed cap-and-trade, and so did Tim Pawlenty. Newt Gingrich even cut a commercial with Nancy Pelosi where he declared to the world that "our country must take action to address climate change."

But then Democrats introduced an actual cap-and-trade bill, and in the blink of an eye it got tarred as "cap-and-tax" and opposition became practically a litmus test for movement conservatives. Republicans couldn't run away fast enough. Gingrich's recent attempt to disown his own words was almost poignant, while Pawlenty's groveling has been all but cringe-inducing. "I just admitted it," he said. "I don’t try to duck it, bob it, weave it, explain it away. I’m just telling you, I made a mistake."

In recent months this has metastasized into all-out war as House Republicans have bombarded a pending appropriations bill with amendments to roll back environmental rules:

Although inserting policy changes into appropriations bills is a common strategy when government is divided as it is now, no one can remember such an aggressive use of the tactic against natural resources.…The unusual breadth of the attack, explained Rep. Mike Simpson (R-Idaho), is a measure of his party’s intense frustration over cumbersome environmental rules.

“Many of us think that the overregulation from EPA is at the heart of our stalled economy,” Mr. Simpson said, referring to the Environmental Protection Agency.

Simpson's suggestion that the EPA is responsible for our parlous economic condition could hardly have been suggested seriously. It's just filler, the kind of thing that gurgles up from the recesses of a politician's mind because they have to say something when a reporter asks what's going on. Grist writer David Roberts gets closer to the truth when he points out that Republicans are even going after a Bush-era regulation that prevents the Defense Department from using fossil fuels that are dirtier than petroleum. The catch? Even the Pentagon doesn't want this rule repealed. "Repeal or exemption could hamper the department's efforts to provide better energy options to our warfighters," wrote Elizabeth King, assistant secretary of defense for legislative affairs.

No matter. Republicans want it repealed anyway. Why? Ideology is probably part of it, as is fealty to coal interests. But that's not the whole story. Repealing it just because it's something Democrats like seems to be part of it too. Welcome to the modern Republican Party.

The big news tonight is that John Boehner has shelved plans to vote on his debt ceiling proposal. Why? Because he couldn't round up enough Republicans to vote for it. A hardcore rump of tea party nihilists is now treating him the same way that he's treated President Obama for the past few months: rejecting every deal offered, regardless of how good it is or how much harm rejection will do to the country.

It would be easy to shed crocodile tears about this, but there's really nothing here to gloat about. It's just undiluted bad news if Congress refuses to raise the debt ceiling. Whether D-Day comes on August 2nd or — thanks to better-than-expected tax receipts — a few days after that, hardly matters. We're not only headed for unprecedented fiscal chaos when it comes, but we're taking a real risk of throwing the country back into recession too. Granted, that's the Armageddon scenario, and things might not turn out that badly in the end. But I'd just as soon not take the chance. Our economy is just too fragile to risk it.

But it's possible — barely — that there's some good news here. If Boehner can't get the tea partiers in the House to support his proposal, and if Harry Reid can't find 60 votes in the Senate for his, then pretty shortly they'll figure out that there's only one way to pass something: forge a compromise that can get substantial support from both Democrats and non-tea-party Republicans. Such a compromise is almost certainly available, and all it takes to get there is for Boehner to be willing to admit the obvious: the tea partiers just aren't willing to deal, period. They want to burn the house down so they can build something better from the ashes. They're insane.

So walk away from the tea partiers. Instead, strike a deal that a hundred non-insane House Republicans and 20 or 30 non-insane Senate Republicans can support. Add that to a majority of the Democratic caucus and you're done. You've saved the country.

It won't be as a good a deal as Republicans could have gotten a month ago. What's more, it would take some guts from Boehner, who might very well be jeopardizing his speakership if he does this. But it will save the country. Surely that's still worth something?

CMS is a government agency that has long offended my OCD sensibilities because it stands for Centers for Medicare & Medicaid Services and really ought to be called CMMS. But today I'll link to them anyway. They've completed a new projection for total national health expenditures through 2020, and it's shown in the chart on the right. The green line shows the old projection and the red line shows the new projection after passage of the 2009 healthcare reform act. Basically, they expect a one-year spike in spending growth in 2014, when most of the law takes effect, followed by slightly lower growth for most of the rest of the decade.

So how does that work out? For the decade as a whole, CMS projected an annual growth rate of 5.7% pre-reform compared to 5.8% post-reform. To put that into dollars, it means that in 2020 our total spending on healthcare will be about $40 billion higher than it would have been without healthcare reform. So what do we get for that money?

In 2014, the Affordable Care Act will greatly expand access to insurance coverage, mainly through Medicaid and new state health insurance exchanges which will facilitate the purchase of insurance. The result will be an estimated 22.9 million newly insured people.

....Out-of-pocket spending is projected to decline by 1.3 percent as the number of people with insurance coverage increases and many services formerly paid for out of pocket are now covered by insurance....The newly insured are expected to consume more prescriptions because of substantially lower out-of-pocket requirements for prescription drugs.

Not bad for only $40 billion! 23 million more people will be covered, out-of-pocket spending will decline, and prescription drugs will be more widely available. All for less than $2,000 per person, which is a considerable bargain.

The White House, of course, thinks that ACA will reduce costs more than CMS suggests. You can read their argument here. But even if it doesn't, CMS is projecting a mighty small price for something that's going to benefit so many.

Joe Klein admits today that he loves himself some good old-school Democrat bashing, but he's just not up for it these days:

And so, here we are. Our nation’s economy and international reputation as the world’s presiding grownup has already been badly damaged. It is a self-inflicted wound of monumental stupidity. I am usually willing to acknowledge that Democrats can be as silly, and hidebound, as Republicans — but not this time. There is zero equivalence here. The vast majority of Democrats have been more than reasonable, more than willing to accept cuts in some of their most valued programs. Given the chance, there was the likelihood that they would have surrendered their most powerful weapon in next year’s election — a Mediscare campaign — by agreeing to some necessary long-term reforms in that program. The President, remarkably, proposed raising the age of eligibility for Medicare to 67.

The Republicans have been willing to concede nothing. Their stand means higher interest rates, fewer jobs created and more destroyed, a general weakening of this country’s standing in the world. Osama bin Laden, if he were still alive, could not have come up with a more clever strategy for strangling our nation.

I don't think that most Republicans, or even most tea partiers, actively want the American economy to tank. At the same time, an awful lot of them sure don't seem to care very much. They're more focused on getting Obama out of the White House, and the truth is that a little bit of economy tanking makes that goal a little easier to achieve. And so, here we are.

Abundant evidence demonstrates that although voter ID laws don't do anything to curtail fraudulent voting, they do reduce election participation by ethnic minorities, the poor, and the young. This might seem like an unfortunate side effect to you, but to the Republican activists behind these laws it's a feature, not a bug. Why? Because ethnic minorities, the poor, and the young tend to vote for Democrats, and Republican activists find it remarkably easy to live with the prospect of fewer Democrats voting when election day rolls around. For more, see here, here, here, and here.

But guess which other demographic group tends to vote Democratic? Women. I have to say that this one hadn't occurred to me, but Megan Devlin takes a closer look at the fine print of some recent voter ID laws:

Here's where women get stuck. American women change their names in about 90 percent of marriages and divorces. So newly married and recently divorced women whose legal names do not match those of their current photo ID will face opposition when voting, especially in the seven states with the stricter voter-ID rules. They cannot provide personal information like a birthday or take an oath swearing to their identity in lieu of showing a photo ID. Instead, they will have to fill out substitute ballots and later return with valid documentation like a certified court document showing a divorce decree or marriage license.

Since only 66 percent of voting-age women have easy access to proof of citizenship and documentation with their current legal name, a significant number of women could be disenfranchised by the new laws.

By February 2012, these stricter laws will be in effect in seven states, just in time for the spring primaries.

I'm sure some enterprising political scientist will examine the evidence after next year's election to see if women really have been disproportionately affected by these new laws. But if they are, I'll bet the Republicans behind them will consider it acceptable collateral damage. Why wouldn't they, after all?

During the recession, men lost far more jobs than women. Since the recovery began, though, that's reversed: women are recovering jobs at a much slower pace than men. Partly this is related to job cuts by state and local governments, but Bryce Covert and Mike Konczal write today that it's also related to what MoJo editors Clara Jeffery and Monika Bauerlein called "The Great Speedup" in the current issue of the magazine. Here are Bryce and Mike:

Women have been brutally hit when it comes to a category called “office and administrative support occupations," i.e. those who make workplaces run smoothly....It falls on other workers to pick up the slack in offices where assistants have been let go. Americans have been working harder without seeing better pay or even new titles. Mother Jones recently reported that Americans put in an average 122 more hours than British workers and 378 more than Germans. As companies trim budgets, employers are “rationalizing” far more positions than usual. This leaves everyone else to pick up the remaining work. In a recent survey by Spherion Staffing, 53 percent of workers said they’ve taken on new roles. Just 7 percent got a raise or a bonus for doing so.

The chart below tells the story. For the most part, though, I think it just puts some numbers to something all of us knew was happening already.

Earlier this week Britain announced that economic growth in the second quarter was an anemic 0.2%, within a hair's breadth of re-entering recession territory. But what about the rest of Europe? Today Edward Hugh passes along the latest Purchasing Managers Index figures for the Eurozone, a statistic that generally suggests the economy is expanding when it's above 50 and contracting when it's below 50. It's been dropping steadily for the past quarter, and in July registered just 50.8:

Outside of France and Germany, which are still expanding, though slowly, the rest of Europe is already below 50. "Even as growth in the core economies approaches stall speed, out on the periphery a new recession seems increasingly on the cards, and most importantly in countries like Spain and Italy which have so far managed to keep their heads just above the waterline. Growth in the second quarter of the year looks likely to have been minimal in both cases, and the outlook for the third quarter suggests we are entering a bout of economic shrinkage."

Click the link for the rest. Economic growth is slowing all over the world as we fiddle around with our insane, politically motivated debt ceiling fight. A double dip recession might still not be the betting choice, but it's hardly out of the question anymore.

The other day I wrote about the zombie lie that half of Americans pay no taxes. This is something conservatives repeat routinely, somehow forgetting repeatedly to explain that what they really mean is that half of Americans pay no federal income tax but do pay plenty of other taxes. When you call them out on this wee mistake they tend to get offended — though somehow, never quite offended enough to stop saying it.

But put that aside. Even stated accurately, you might be wondering how it is that so many people end up not paying any federal income tax. Today the Tax Policy Center has the answer for you. In 2011 they estimate that 46% of Americans will pay no federal income tax. Donald Marron breaks this down:

  • 23% pay nothing because they're poor. A couple making less than $19,000, for example, doesn't owe anything after their $11,600 standard deduction and two exemptions of $3,700 each reduce their taxable income to zero. As Bob Williamson puts it, "The basic structure of the income tax simply exempts subsistence levels of income from tax."
  • 10% are elderly and pay nothing because their Social Security benefits are exempt from federal income taxes.
  • 7% pay nothing thanks to provisions in the tax code designed to benefit low-income families: the earned income tax credit, the child credit, and the childcare credit account.

And the other 6%? Their taxes are zero for a variety of reasons: above-the-line deductions and tax-exempt interest; itemized deductions; education credits; other credits; and reduced rates on capital gains and dividends. TPC's report has all the gruesome details.

But for the vast bulk of nonpayers, the explanation is simple: the federal tax code is designed not to tax the poor, the elderly, or low-income families with children, and there are more of these in America than you'd think. One way or another, it turns out, this accounts for about 40% of the country.

If the United States defaults on its debt, its credit rating will be downgraded catastrophically by every ratings agency. That's not going to happen because the United States isn't going to default, but Standard & Poor's has warned that it might downgrade U.S. debt regardless. Even if there's no default, says S&P, it might take action if Congress fails to credibly cut the long-term deficit by $4 trillion.

So how worried should we be about this? The answer comes from two places. First this from Time's Massimo Calabresi:

S&P is an outlier among the top three ratings agencies: Moody’s and Fitch say they won’t even consider a downgrade unless there’s a danger of an actual default.

And this from the mysterious Wall Street lawyer who writes Economics of Contempt:

So even if S&P follows through on its threat — and frankly, I suspect it's just a bluff — it probably won't have any immediate effect on the market for U.S. bonds. Pension funds won't have to engage in a massive sell-off, state and local bonds will be fine, and life will go on.

In other words, the threat of actual default is nil, and the threat of downgrade is pretty close to nil too. This goes a long way toward explaining why bond markets aren't panicking over the debt ceiling fight.

The real danger, of course, is different: shutting down the government for any extended period would likely have a disastrous effect on our still weak economy. Unfortunately, keeping the government operating at the cost of passing the deficit deals currently on the table would probably also be pretty disastrous. We are, for no good reason, deliberately setting our economy on fire. It's insane. Nero may have fiddled while Rome burned,1 but at least he didn't set the fire himself.2

1Though probably not, actually.

2Then again, he might have.