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Thread: Seven top executives "propose a truce" to Democrats and GOP over budget fight

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    Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Philly CEOs push Congress to cut a deal | PhillyDeals | 07/25/2011

    The executives told Republicans to stop blocking tax reform and Democrats to curb future Social Security, Medicare, and Medicaid deficits.

    "We are writing here as job creators. We collectively employ thousands of people and generate over a billion dollars in revenue.

    "Our message is simple: The threat of a reasonable increase in the effective tax rate, particularly one that combines the closure of tax loopholes and a reduction in applicable tax rates, [will] not slow economic growth and will not prevent us from creating more jobs.

    "Rather, a greater impediment to job growth is our continued failure to invest properly in the things that drive our economy, like education, our transportation and information infrastructures, and basic research.

    "We propose a truce, in which Democrats are given the leeway to do the right thing with respect to entitlement reform, in return for the cover Republicans need to do the right thing with respect to taxes."
    Actual small and medium sized business owners in Pennsylvania - the real job creators - calling for compromise in the debt deal. I hope that Congress is listening.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by satandog View Post
    Actual small and medium sized business owners in Pennsylvania - the real job creators - calling for compromise in the debt deal. I hope that Congress is listening.
    The Philadelphia CEOs are articulating exactly the general solution most economists advocate and the IMF has called for. Unfortunately, while in business compromise can readily be reached over economic/financial issues, in politics the reality is more complex. Currently, the debate has taken an almost theological air. On one hand, a significant number of Republicans have committed themselves to a pledge not to raise taxes and that pledge has a very stringent definition as to what would constitute a tax hike. On the other hand, many Democrats see the mandatory spending programs as a policy compact to the nation's older peole that should not be violated. These have become almost identity issues. As such, those who hold the above views find it difficult to accept compromises, as they fear that their accepting compromise would undermine the raison d'etre of their respective political parties as they perceive it, not to mention their own credibility.

    With strong leadership in either the Congress or the White House, I believe a compelling case could still have been made by which a "grand bargain" could have been struck. The issue would have been tied to the nation's destiny in general and its ability to provide core programs/services that the public desires, as well as national security, in particular. Failure to put the nation on a sustainable fiscal course could only jeopardize core programs and services and put the nation on a path of relative decline vis-a-vis numerous other states. It speed a shift in the balance of power against the U.S. It could lead the nation to confront a period of struggle and renewal that would be far more painful than if early action were undertaken. Hence, the leaders would have acknowledged that although the grand bargain put each side in a bad position on specific policy changes, even violating narrow policy commitments, the larger cause of putting the nation on a more secure path justified such an extraordinary agreement. To be sure, genuine political courage would have been required. The President, House Speak, House Minority Leader, Senate Majority Leader, and Senate Minority Leader would have had to have been prepared to tackle obstacles to the grand bargain, mainly neutralize and isolate those taking the course of intransigence (certain Democrats from the progressive wing and certain Republicans, mainly a chunk of the freshmen).

    Unfortunately, I don't believe the political leadership has been up to the task. One has witnessed the exertions and, to date failures, of well-intentioned but fairly weak leaders. Speaker Boehner's hands have been tied by some of his own caucus. President Obama's ability to pursue common purpose was squandered in his advocating a health reform initiative that was bitterly opposed by Republicans. Bad negotiating process that encouraged the parties to start from their maximum positions, rather than from the standpoint of offering sustainable opening positions contributed, wasting precious time. Bringing the debate before the public hurt things further. Sensitive negotiations should be conducted privately. Public airing of such talks invites posturing and rigidity, as the parties aim to demonstrate strength and avoid perceptions of weakness.

    In the end, democracy is the most effective system for coping with and adapting to ongoing and evolutionary change. However, for democracy to be effective, there most be a strong willingness among participants to reach and respect consensus (even if individual positions and desires are not fully met) and to compromise to bridge differences (meaning that all sides need to retreat from their maximum positions and accommodate one another's core needs). Unfortunately, the debt ceiling talks--even as I fully expect the debt ceiling to be raised in a timely fashion--has exposed political dysfunctionality in Washington in which the willingness to build consensus and to compromise are lacking. The near absence of such attributes has drained the nation's political system of the flexibility that makes democracy effective. There will be fallout even when the impasse is resolved. For example, creditor nations, particularly China, will have a greater incentive to diversify their portfolios due to the added risk associated with the U.S. That will mean somewhat higher interest rates in the future and reduced foreign appetite for Treasury securities. Those developments will have macroeconomic implications for the U.S.

    In part, I believe weak leadership has contributed to the outcome. If that were the only issue, it would be a less serious matter. In part, I also believe the outcome is exactly the result of the public's choice of elected officials who pursued office on uncompromising platforms and are now holding fast to those positions (basically delivering as they committed themselves). Apparently, the public is just learning that "Caveat Emptor" applies to politics, too. The selection of "theologians" so to speak may be a more structural and longer-lived problem even if it recedes for a time following resolution of the debt ceiling issue. Hence, there is little assurance that the 2012 electoral outcome would fully address the political dysfunctionality problem. In the medium-term and beyond, even as far tougher decisions will be required, that dysfunctionality could increase prospects of a debt crisis. Of course, there remains a small prospect that the U.S. could engineer a self-inflicted debt crisis in coming weeks that one analyst aptly termed "debt suicide."

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    You make a lot of good points, but I think it's far from accurate to say that both sides started negotiations from their maximum positions. That seems to be the exclusive province of republicans, these days.

    Obama's major (and constant) error is starting negotiations at the point where he would like to wind up, which inevitably leads him to concede more than he should. In contrast, the republicans major (and constant) error is to start at their maximum position and then refuse to negotiate at all.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by AdamT View Post
    You make a lot of good points, but I think it's far from accurate to say that both sides started negotiations from their maximum positions. That seems to be the exclusive province of republicans, these days.

    Obama's major (and constant) error is starting negotiations at the point where he would like to wind up, which inevitably leads him to concede more than he should. In contrast, the republicans major (and constant) error is to start at their maximum position and then refuse to negotiate at all.
    One thing you forget this isn't just a fight between Obama and the Republicans in Congress. He has to fight his own party who are just as intransigent about their usual positions. Any compromise is going to be fiercly opposed by the usual suspects on the Democrat side in Congress.

    I do like what the business leaders had to say. We need more business leaders to follow suit to pressure Congress and Obama to do the right thing.
    Last edited by jambalaya; 07-26-11 at 11:04 AM.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by AdamT View Post
    You make a lot of good points, but I think it's far from accurate to say that both sides started negotiations from their maximum positions. That seems to be the exclusive province of republicans, these days.
    From the June 29, 2011 edition of The Washington Post:

    Leading congressional Democrats immediately recoiled Tuesday from a new proposal to cut $600 billion in Medicare spending over the next decade - in part by raising the eligibility age...

    But the swift rejection of the proposal among Democrats reflects the significant obstacles that remain to any agreement to cut the deficit and raise the nation's legal borrowing limit.


    That's an example of a maximum position from the Congressional Democrats, who are one of the parties to the talks. The reality is that everything should be on the table, with negotiations focused on details.

    To be clear, I am not in any way suggesting the extreme notion that Medicare, Medicaid, or Social Security should be gutted. Such an outcome would be politically unfeasible and socially destructive. I do believe structural changes will be needed with all those programs (Social Security's is easiest given that the problem is essentially an actuarial one). Medicare/Medicaid are more difficult, as the program's difficulties are overlaid on a health system that has an excessive cost growth problem, meaning that fundamental health care reform will need to be adopted to help address Medicare/Medicaid problems. Everything can't be accomplished immediately, but a downpayment on entitlement reform is feasible. Raising the age of eligibility over a period of time and pegging it to life expectancy changes is an easy downpayment and it is one that would have minimal macroeconomic fallout.

    As noted earlier, I believe the negotiations should have commenced with each side's having been instructed to open with sustainable proposals. By that, I mean proposals that they reasonably would expect would be largely satisfactory to the other side. No such instruction was provided. Moreover, when the "grand bargain" was within reach and the parties were reportedly about $10 billion apart, I believe either Speaker Boehner or President Obama should have suggested that they split the difference and initial the terms as they stood. That would have locked in what had been agreed. Instead. talks proceeded with nothing having been locked in and they ultimately collapsed over additional suggestions that pushed the parties farther apart. I believe an important opportunity was lost and don't believe any deficit reduction that will be agreed in the near-term will amount to what would have been possible under the grand bargain.

    ...the republicans major (and constant) error is to start at their maximum position and then refuse to negotiate at all.
    The intransigence by some Republicans, namely those who oppose raising the debt ceiling under virtually any circumstances, is a huge problem. They are not alone. There are some progressive democrats who oppose any changes to the entitlement programs. Such entrenched positions highlight my point about an unwillingness to build consensus and to compromise to achieve agreement. Those holding such positions are an example of the "theologians" to whom I refer.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by donsutherland1 View Post
    From the June 29, 2011 edition of The Washington Post:

    Leading congressional Democrats immediately recoiled Tuesday from a new proposal to cut $600 billion in Medicare spending over the next decade - in part by raising the eligibility age...

    But the swift rejection of the proposal among Democrats reflects the significant obstacles that remain to any agreement to cut the deficit and raise the nation's legal borrowing limit.


    That's an example of a maximum position from the Congressional Democrats, who are one of the parties to the talks. The reality is that everything should be on the table, with negotiations focused on details.

    To be clear, I am not in any way suggesting the extreme notion that Medicare, Medicaid, or Social Security should be gutted. Such an outcome would be politically unfeasible and socially destructive. I do believe structural changes will be needed with all those programs (Social Security's is easiest given that the problem is essentially an actuarial one). Medicare/Medicaid are more difficult, as the program's difficulties are overlaid on a health system that has an excessive cost growth problem, meaning that fundamental health care reform will need to be adopted to help address Medicare/Medicaid problems. Everything can't be accomplished immediately, but a downpayment on entitlement reform is feasible. Raising the age of eligibility over a period of time and pegging it to life expectancy changes is an easy downpayment and it is one that would have minimal macroeconomic fallout.

    As noted earlier, I believe the negotiations should have commenced with each side's having been instructed to open with sustainable proposals. By that, I mean proposals that they reasonably would expect would be largely satisfactory to the other side. No such instruction was provided. Moreover, when the "grand bargain" was within reach and the parties were reportedly about $10 billion apart, I believe either Speaker Boehner or President Obama should have suggested that they split the difference and initial the terms as they stood. That would have locked in what had been agreed. Instead. talks proceeded with nothing having been locked in and they ultimately collapsed over additional suggestions that pushed the parties farther apart. I believe an important opportunity was lost and don't believe any deficit reduction that will be agreed in the near-term will amount to what would have been possible under the grand bargain.



    The intransigence by some Republicans, namely those who oppose raising the debt ceiling under virtually any circumstances, is a huge problem. They are not alone. There are some progressive democrats who oppose any changes to the entitlement programs. Such entrenched positions highlight my point about an unwillingness to build consensus and to compromise to achieve agreement. Those holding such positions are an example of the "theologians" to whom I refer.
    what do believe will happen?

    Originally Posted by johnny_rebson:

    These are the same liberals who forgot how Iraq attacked us on 9/11.


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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by liblady View Post
    what do believe will happen?
    I believe a deal will be reached to raise the debt ceiling/provide some deficit reduction. However, long-lasting damage will be done in terms of some increase in yields, particularly longer-term yields. Risk perceptions concerning U.S. political leadership will have worsened.

    From last night's speeches, it appears to me that the President (degree of flexibility in his address noted and credited) is essentially captive, caught between purists in both political parties and Speaker Boehner is captive to hardliners in his party who oppose raising the debt ceiling under virtually any circumstances. Senators McConnell and Reid have tried to circumvent that situation, but their efforts may fall short. Nonetheless, they may hold the best hope for forging a deal to avert a default, but the margin for error will probably be extremely narrow in the polarized House (many democrats and republicans will probably vote against a debt ceiling increase/deficit reduction deal).

    Ultimately, if credible deficit reduction is to be pursued, the quest for purity will need to yield to pragmatism. That approach means entitlement reform and it means some revenue increases. Voters need to understand this and vote accordingly (divided government is not always assured to ultimately work out as happened during the Reagan-O'Neill and Clinton-Gingrich eras; one has to be careful to differentiate between principled pragmatists and unyielding political revolutionaries; pragmatists will ultimately work to strengthen/reform the current system, but revolutionaries reject it).
    Last edited by donsutherland1; 07-26-11 at 12:33 PM.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    "Look, a 3% increase in top marginal tax rates isn't going to sink us."

    This is what I've been saying all along. NOBODY LISTENS TO DEUCE
    He touched her over her bra and underpants, she says, and guided her hand to touch him over his underwear
    Quote Originally Posted by Lutherf View Post
    We’ll say what? Something like “nothing happened” ... Yeah, we might say something like that.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by satandog View Post
    Actual small and medium sized business owners in Pennsylvania - the real job creators - calling for compromise in the debt deal. I hope that Congress is listening.
    I'm betting that these CEO's aren with small and medium businesses. They're probably from large businesses who hope that higher taxes and fewer deductions will kill some of the competition.

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    Re: Seven top executives "propose a truce" to Democrats and GOP over budget fight

    Quote Originally Posted by Deuce View Post
    "Look, a 3% increase in top marginal tax rates isn't going to sink us."

    This is what I've been saying all along. NOBODY LISTENS TO DEUCE
    So, a person making 30 grand a year can afford 3%, as well. Yes?

    But, something tells me that the Libbos wouldn't be all over that. I wonder why not.

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