The Republicans are playing with fire.
They have embarrassed their leader in the House of Representatives, Speaker John Boehner, by rejecting his efforts to arrive at a reasonable compromise with President Barack Obama on the extension of the debt ceiling.
The Republican leader in the U.S. Senate, Mitch McConnell, worried that a failure to extend the debt ceiling could cause an economic catastrophe, has come up with a proposal. According to a Los Angeles Times editorial of July 14, his proposal would provide "that Congress eject itself from the debate and give President Obama the power to raise the limit on borrowing unilaterally" by a maximum of two trillion, 300 billion dollars which would bring the ceiling close to 17 trillion dollars.
The president could then raise the debt ceiling in three approximately equal increments before the 2012 presidential election, offset by expense reductions and revenue increases he proposes without requiring their implementation. If the Republican Congress votes no to any of the incremental increases, the president would then veto the congressional resolution defeating his proposed action and his veto would then prevail. This political chicanery is clearly intended to convince the public that the Republicans, who control the House of Representatives, are keeping their promises to vote no on any proposed tax increases. It won't work. Americans are smart enough to see through the subterfuge. The McConnell plan keeps evolving from day to day, so at this point, we don't know its final form.
The president's offer for some time has been to reduce the national debt by four trillion dollars over a 10-year period, funded by expense reductions and revenue increases. Republican Tea Party adherents believe a debt ceiling increase to be funded only by expense reductions is politically and morally the only arrangement they can support.
The Republican majority in the House, led by Speaker Boehner, is incapable of imposing party discipline and allowing more moderate voices to prevail over the Tea Party faction. The president should be praised by the American public for doing what is clearly in the national interest -- requiring the debt ceiling to be raised to pay the country's ongoing expenditures.
Mitch McConnell, the Republican Party, and all of its representatives in Congress who stand by and support the McConnell farce deserve a stern rebuke by the voters in the 2012 presidential election. The result will be that the Democrats will once again have a majority in both Houses, and President Obama will be reelected.
In the judgment of many, the Republican Party is leading our great country into another recession. Most Americans, myself included, believe in a capitalist economy with reasonable rules to restrain Wall Street and bank excesses that brought on the Great Recession of 2008.
The failure to enforce existing rules and to adopt stronger rules was due in part to the objections of then-Federal Reserve Chairman Alan Greenspan, former Treasury Secretary Robert Rubin, and former Chairman of the Securities and Exchange Commission, Arthur Levitt, Jr. Levitt later apologized for his actions. Greenspan admitted publicly after the Great Recession that he was wrong to support self-regulation instead of regulation by Congress. I have not seen Rubin offer either an admission of error or apology respecting his role in the debacle.
A brilliant article in the July 16 New York Times by James B. Stewart sounds an alarm. He reports that we are on the cusp of repeating the 2008 Wall Street meltdown because of a lack of S.E.C. regulation. That agency was given new authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to protect investors and regulate markets.
The Republican-controlled House of Representatives is deliberately depriving the S.E.C. of the funds needed to carry out its new responsibilities. This course of action is particularly outrageous because, as Stewart writes, "the S.E.C. isn't financed by tax revenue, but rather by fees levied on those it regulates, which include all the big securities firms."
Let me quote a portion of his analysis and his powerful conclusion:
The economy is still suffering from the worst financial crisis since the Depression, and wide-spread anger persists that financial institutions that caused it received bailouts of billions of taxpayer dollars and haven't been held accountable for any wrongdoing. Yet the House Appropriations Committee has responded by starving the agency responsible for bringing financial wrongdoers to justice -- while putting over $200 million that could otherwise have been spent on investigations and enforcement actions back into the pockets of Wall Street.
A few weeks ago, the Republican-controlled appropriations committee cut the Securities and Exchange Commission's fiscal 2012 budget request by $222.5 million, to $1.19 billion (the same as this year's), even though the S.E.C.'s responsibilities were vastly expanded under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Charged with protecting investors and policing markets, the S.E.C. is the nation's front-line defense against financial fraud.
A little-noticed provision in Dodd-Frank mandates that those fees can't exceed the S.E.C.'s budget. So cutting its requested budget by $222.5 million saves Wall Street the same amount, and means regulated firms will pay $136 million less in fiscal 2012 than they did the previous year, the S.E.C. projects.
The excesses of Wall Street and the big banks have been intolerable for years. The major securities firms and large banks have in many cases more than recovered the losses they sustained during the Great Recession. They were assisted by federal loans and other federal programs, all provided courtesy of the American people.
We the taxpayers have not for the most part been made whole. Most Americans believe that those who brought this country to its knees economically have not been held accountable. In the debacle involving trillions of dollars of lost wealth, few if any CEOs of major corporations have been criminally pursued. Yes, some corporations and individuals have paid large civil fines while not even having to admit wrongdoing, but those fines in the millions of dollars are considered the cost of doing business.
Large corporations are using their connections and power in Congress to seek to rig the rules once again to allow them to enrich themselves at the expense of the American taxpayers.
When will Congress realize that they should be the servants of the people, not the enablers of the rich and powerful who fill their campaign coffers?