Reality to White House: Freshmen Republicans Want Government Shutdown

Austan Goolsbee, chairman of the White House Council of Economic Advisers,
said the Republicans would never shutdown government.

“The reason you haven’t seen the private sector getting worked up about it — I don’t think the evidence is the markets believe there’s going to be a shutdown,” Goolsbee said Thursday at a breakfast sponsored by The Christian Science Monitor. “You saw the leaders of both parties in both houses say — all four of them — they’re going to do what it takes, that they don’t think there’s going to be a shutdown.”

If Florida's Tea Party-elected freshmen delegation had their way there will be a government shutdown.

Rep. Allen West

"There’s a very good possibility that government will shut down. I know the Democrats have their talking points lined up. They’ll blame us for everything. What will we do?"

Rep. Rich Nugent

"All I can tell you is this: If you’re looking for us to blink, it’s not going to happen."

The three shutdowns in 1995 hurt Newt Gingrich politically. Gingrich lost control of his caucus and couldn't get the votes to fund the government. George Stephanopoulos recounts in his book "All Too Human" that former Senate Majority Leader Bob Dole told the White House he gave up trying to get the House to pass a budget. Dole left Washington to campaign. It will be interesting to see if Boehner can control his caucus.

Former White House Treasury Sec. Robert Rubin told President Bill Clinton, during the shutdowns, that the United States could financially default. If these Republicans were really worried about fiscal issues they wouldn't be talking about a shutdown.

Gallup Poll on Spending Cuts

Americans love government spending cuts in theory. That is until cuts are proposed to government programs they support. The latest Gallup Poll shows Republican and Democratic voters support spending for Social Security, anti-poverty programs, and Medicare. There is agreement on spending cuts for foreign aid (which Sec. of State Hillary Clinton won't let happen) and farm subsidies.



An unsurprising finding is only 16 percent of all voters support shutting down the government if President Obama and Congress can't come to adeficit reduction and raising the debt ceiling compromise. Sec. of Treasury Robert Rubin was worried that not raising the debt ceiling could unleash havoc on international finances. Rubin borrowed money from federal pension funds to keep government running.

Newt Gingrich's government shutdown was a political gift to President Bill Clinton. Contrary to popular believe: Clinton didn't magically shoot up in the polls. The American people did view Clinton more favorably than Gingrich. Short answer: if the newly elected Tea Party Republicans shut down government they will be helping Obama get a second term.

Benjamin Kirby Responds to My Post

Benjamin Kirby answers my questions about the Clinton administration's economic team. Kirby was a low level staffer in the Clinton administration. Kirby has a great story about Mickey Kantor that may or may not be true. If true it confirms my suspicion that Kantor one of dumbest people in the administration.

Unfortunately, Kirby couldn't answer my question about Robert Rubin's and Joseph Stiglitz's working relationship. Stiglitz's is more progressive than the neoliberal Rubin. Where Rubin and Stiglitz disagreed is on the size of the deficit reduction package in 1993. Former Clinton administratin Council of Economic Advisers, Laura Tyson, reviewed both Rubin's and Stiglitz's books and weighs their differences. What is interesting is the pro-business Rubin supported vetoing welfare reform (Rubin supports government and private sector anti-poverty programs.) and Stiglitz helped create "third way" neoliberal economic policy theory. Rubin's and Stiglitz's debates were more about policy and both of them could make excellent arguments to counter each other and Kirby should have been in the room with a tape recorder.

These days Stiglitz is calling the Obama economic team incompetent or in the pocket of the banks. Rubin said that while he was at Citigroup "virtually nobody" saw the financial collapse coming. Guess which one is keeping a lower profile.



Agree or disagree with Rubin or Stiglitz they are both smarter than you will ever be. Both are better than former Bush amdinistration economic adviser Lawrence Lindsey. Only a true hack like Lindsey would argue that it wasn't the stimulus, but TARP (the bank bailout) and the FDIC that kept unemployment from rising to 15.7 percent. Lindsey advised President George W. Bush that the tax cuts would pay for themselves. One area that Rubin and Stiglitz agree on is that the surplus should have been used to pay off borrowed debt.

Gene Sperling Back At National Economic Council

Joy-Ann Reid and Benjamin Kirby should be forewarned before going into cardiac arrest. I am going to offer President Barack Obama praise.

Obama's selection of Gene Sperling as director of the National Economic Council maybe the best appointment he has made. The NEC was created by President Bill Clinton's executive order. Much like President Richard Nixon Office of Management and Budget to be an in-house think tank and deal with the intricacies of the massive federal budget. Clinton created the NEC to be an economic think tank. Economic policy heavyweights Robert Rubin and Laura Tyson. Sterling was Tyson's replacement under Clinton.

To shows what happens when a President doesn't take the NEC seriously, George W. Bush appointed Lawrence Lindsey. Former Treasury Sec. Paul O'Neill documented Lindsey's incompetence in Ron Suskind's book. "The Price of Loyalty." Lindsey actually believes in the debunked theory of supply side economics.

Obama correctly cites Sterling's previous experience and success as NEC director. Sterling is also rather progressive. There are not enough progressive voices in the Obama administration. Sterling will have credibility holding a cabinet level position.

John McCain's Empty Promises

Josh Marshall details how John McCain promises to balanced the budget and victory in Iraq in his first term. McCain doesn't provide details on how he plans to do this. McCain's rhetoric reminds me of Richard Nixon's secret plan to get America out of Vietnam. We now know that Nixon didn't have a plan. That didn't stop Tricky Dick from pandering to voters.

The federal deficit is at $443 billion and McCain wants to continue the Bush tax cuts and most likely push for new cuts. Consumers are spending and making less. All indications point to McCain continuing troop presence in Iraq and increasing military spending. The deficit can not be brought down with an economic downturn, war and tax cuts. The Bush administration tried and it didn't work.

Senator McCain has been dishonest about Barack Obama's tax plan. Obama's website states, "THE FACTS: BARACK OBAMA IS ACTUALLY PROPOSING A MIDDLE CLASS TAX CUT." Obama will roll back the Bush tax cuts on people making $250,000 or more a-year. If Obama is serious about cutting the deficit than he, like the Clinton administration's first term, will have to renege on the middle class tax cut. Obama hasn't revealed a serious deficit reduction plan. My sense is Obama is willing to do as much economic pandering as McCain. Obama's flip flop on Social Security is a perfect example.

This election will decide if Robert Rubin or Phil Gramn becomes the next Sec. of Treasury. The former is one of the best economic minds in America's history. The latter is a crackpot.

Gramn favors tax cuts. Just not to the middle class.

"“The reality is (Clinton's) so-called tax cut is basically giving money to people who largely don't pay taxes, so that it's really spending rather than a tax cut..."

Gramn's view of poor people isn't kinder.

"Has anyone ever noticed that we live in the only country in the world where all the poor people are fat?"

Gramn is also a strong proponent of the flat tax. The Church of Scientology came up with the idea. This tells you what kind of economic thinking of Gramn.

Robert Rubin is one of the major architects behind Bill Clinton's deficit reduction plan. Rubin also served as Sec. of the Treasury and on the National Economic Council. No on-the-job training would be needed for Rubin. McCain's and Obama's choices for Sec. of Treasury candidates says much about their judgement.