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“Where Do Debt Talks Stand After Last Night’s Presidential Speech?” by Clark Judge

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The weekly column from Clark Judge:

Where Do Debt Talks Stand After Last Night’s Presidential Speech?
By Clark S. Judge: managing director, White House Writers Group; chairman, Pacific Research Institute

Last night, towards the end of his speech to the nation, President Obama recalled Thomas Jefferson’s aphorism on making legislation: “Every man cannot have his way in all things.”

The president was trying to pin the intransigence blame on House Republicans, particularly Tea Party freshmen. But he did it in a speech in which he gave not one inch of ground on his own positions.

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In effect, Mr. Obama said last night that he would not accept a plan in which there were no tax increases. Then he detailed a number of spending cuts he would not accept. Outside of cutting defense, which he supports, it wasn’t at all clear that there was any cut to any spending in any part of the federal establishment that the president would endorse.

This has been Washington’s problem for months. Having boosted the federal take on the gross national product from 20% to 25% in his first two years in office (a peacetime record), the president is now unwilling to contemplate any retrenchment. It has become clear that all the administration’s spending has not bought the nation an escape from record high levels of unemployment. Many economists believe that all this massive spending and regulation have significantly hurt the economy, not helped it.

That view was summed up by entrepreneur and executive Steve Wynn last week, when in a widely reported conference call he told investors:

“[The president] keeps making speeches about redistribution and maybe we ought to do something to businesses that don’t invest, their holding too much money. We haven’t heard that kind of talk except from pure socialists. Everybody’s afraid of the government and there’s no need soft peddling it, it’s the truth. It is the truth,… and I am a Democratic businessman…. And I’m telling you that the business community in this [country] is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.”

As if to confirm Wynn’s analysis, Goldman Sachs reported last week that, at the cost of declining earnings, over each of the last six quarters it has decreased the value that its trading desk has had at risk on any given day. Reasons cited included increasing regulation, financial shakiness in Europe and fiscal uncertainty in the U.S.

And yet, despite warnings from economists like Hoover Institution’s John Cogan and Michael Boskin, despite confirming signals from the financial and business worlds, despite the worst recovery of employment from any downturn since the end of the Second World War, the president, in effect, cried out last night “full speed ahead.” He would not turn course in the slightest.

And not turning course includes not putting specific debt reduction plans on the table. The administration talks in generalities (mainly “tax the rich”), but offers no details. This passivity is without precedent since the rise of the modern presidency and perhaps in the history of our country. The White House has no operative budge proposal on the table and hasn’t since the Senate rejected by a vote of 97-0 the budget it submitted earlier this year. That budget called for vastly increasing spending again in the coming year.

Despite the president’s line last night that the fault for the impasse lies with the House GOP, the view is growing in Washington that the president is the source of the problem. Thanks to his lack of serious legislative and executive experience, he has never learned how to conduct a high stakes negotiation. His insulting treatment of House Budget Committee chairman Paul Ryan at the start of the current talks was an example. Who in the White House thought it would be a good move to invite Ryan to the president’s first speech on the debt talks, seat him in the first row, and then use the address to insult him?

Where do we go from here? If, as reported, Senate Majority leader Harry Reid has been trying to put together an all-cuts-no-taxes deal, it is likely because some members of the Democratic caucus are demanding it. Those members would surely include Democrats such as Nebraska’s Ben Nelson who are from heavily GOP states and are up for reelection next year. Add to them red state Democratic senators who are up in 2014 and some Democrats with similar views who are retiring from the Senate this year and it is possible to see a spending-cut-no-taxes bill passing Congress, a bill that the administration had virtually no role in developing.

After Mr. Obama’s speech last night, that’s my bet right now. The president said “my way of the highway.” Congress is hearing the call of the open road.


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