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Tilting at Windmills

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March 7, 2011

WE'RE NOT 'BROKE,' AND BOEHNER SHOULDN'T SAY THAT WE ARE.... It's become one of House Speaker John Boehner's (R-Ohio) favorite phrases: "We're broke." The line has become a justification for everything Republicans have wanted to do for years.

Why would the House GOP want to make brutal cuts in areas like education, medical research, infrastructure, job training, and national security, all of which would cost the economy hundreds of thousands of jobs? That's easy -- "we're broke."

There's a nagging detail, though, that generally goes overlooked: Boehner has no idea what he's talking about. When the Speaker and other Republicans who are following his rhetorical lead repeat this little talking point, they're lying.

Boehner's assessment dominates a debate over the federal budget that could lead to a government shutdown. It is a widely shared view with just one flaw: It's wrong.

"The U.S. government is not broke," said Marc Chandler, global head of currency strategy for Brown Brothers Harriman & Co. in New York. "There's no evidence that the market is treating the U.S. government like it's broke."

The U.S. today is able to borrow at historically low interest rates, paying 0.68 percent on a two-year note that it had to offer at 5.1 percent before the financial crisis began in 2007. Financial products that pay off if Uncle Sam defaults aren't attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so. [...]

A person, company or nation would be defined as "broke" if it couldn't pay its bills, and that is not the case with the U.S. Despite an annual budget deficit expected to reach $1.6 trillion this year, the government continues to meet its financial obligations, and investors say there is little concern that will change.

A spokesperson for Boehner defended the lie, arguing that "broke" means spending more than one takes in for a long period of time.

Oh, good. We've been reduced to parsing the meaning of the word "broke." It's another fine day for our sterling public discourse.

This isn't to pick on Boehner exclusively. Republican lawmakers, governors, and media personalities have embraced the same phrase.

But they're all wrong. Worse, they seem to be trying to undermine confidence in American finances, on purpose, as part of a political agenda. That's not only dumb, it's dangerous, and I really wish Republicans would be a little more responsible, though that's clearly asking too much.

In any case, this isn't complicated. We have the ability to borrow plenty of money at low interest rates; we have easily the largest economy on the planet; we're facing no borrowing limits; and as Jamelle Bouie noted this morning, the United States also has the ability to "print money to cover its debts and can still rely on global investors."

And despite all of this, Republicans still say debt reduction is more important than economic growth, and are prepared to make unemployment worse, on purpose, because of their twisted priorities.

But if Boehner or his office were ever serious about defending the lie, perhaps the Speaker could explain why we're "broke" now, and not when he was adding $5 trillion to the debt during the Bush era. Is it just a coincidence that we're "broke" because we have a Democratic president who inherited a $1.3 trillion deficit from his Republican predecessor?

Steve Benen 4:10 PM Permalink | Trackbacks | Comments (40)

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Comments

Huh. We were "spending more than we take in" during most of the Bush years, but Boehner wasn't running around then crying that we were "broke" and couldn't afford things like two ongoing wars, a rigged Medicare drug program and other things. Funny, that.

Posted by: jonas on March 7, 2011 at 4:20 PM | PERMALINK

Maybe if we ask the correct question, then Boehners answer would make sense.

"Mr. Speaker, what wealth of new idea's do you and your party have to offer the American people?"

"We're broke."

There - better!

Posted by: c u n d gulag on March 7, 2011 at 4:21 PM | PERMALINK

Shouldn't the response to "We're Broke" be "Go out and get some money"?

Posted by: martin on March 7, 2011 at 4:25 PM | PERMALINK

Someone said, "Words have meanings!"

-there is a discussion of this,- involving royalty, if I recall,- in a work by Lewis Carroll. . .

Posted by: DAY on March 7, 2011 at 4:27 PM | PERMALINK

Every time Boehner employs such a misnomer, we should all yell back in a resonating way:

YOU LIE! -Kevo

Posted by: kevo on March 7, 2011 at 4:27 PM | PERMALINK

Boehner's statement took two words, and ties into beliefs the public already holds.

Lynch's rebuttal runs about 35 paragraphs long and runs counter to "common sense."

Which view is the public more likely to pick up on?


Posted by: beep52 on March 7, 2011 at 4:38 PM | PERMALINK

We're not broke -- we're broken. Our discourse has sunk to levels well below what we'll need to tackle the very real problems of the 21st century.

One has to wonder at the political payoff, though. Historically Americans are not too receptive to pessimism. (Carter's "malaise" versus Reagan's "Morning in America", anyone?) Does Speaker Boehner really want the American public's icon of the GOP to stop being the elephant and become the pockets-outturned guy from the Monopoly card "Poor Tax"?

Posted by: Bernard Gilroy on March 7, 2011 at 4:49 PM | PERMALINK

Been reading lately about our corporate citizens here in America who aren't paying their fair share of taxes.

Mr. Boehner, instead of giving yet another tax cut to businesses who aren't paying their fair share in the first place, do your job as an elected representative and begin representing your non-corporate citizens who are feeling much more pain than BofA or the Koch Bros.!

Demand these corporate dole takers pay their fair share, and then I may begin to hear the other words coming from your pie hole! -Kevo

Posted by: kevo on March 7, 2011 at 4:49 PM | PERMALINK

One of the more salient comments I overheard when Bush the Younger started out in 2001 was "He's talking down the economy!" The first item his shadowy puppet-masters wanted was an immense tax cut for themselves. Clinton had left Bush with a large surplus, and many more were projected. Bush argued that there were signs that the economy was slowing--pretty microscopic signs, given all the favorable indices at the time. He said tax cuts were needed to "stimulate" the economy (that old saw won't cut it anymore). He also said the money belonged to the rich people, and should be returned to them, except he left out the word "rich". So the GOP, given the choice between words of economic reassurance or self-fulfilling fear-mongering that feeds into a twisted ideology designed to satisfy the greed of their masters, will go with fear and greed, every time.

Posted by: Keeping Track on March 7, 2011 at 4:54 PM | PERMALINK

Unfortunately, Boner is right. The US is broke. If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?

Posted by: Alan Greedscam on March 7, 2011 at 5:02 PM | PERMALINK

The corporate tax rates aren't to blame. They are among the highest in the industrial world. What is to blame is the effective corporate tax rates after all the special write offs are taken into account. We could easily raise more money by lowering the corporate tax rates while closing gapping loopholes, but then what would congressmen have to sell if they didn't sell loopholes and subsities to giant corporations.

You want to see a change in the world, make dividends deductable at the corporate level but taxed as ordinary income to the shareholders. Really encourage corporations to let go of the profits that are quietly accumulating doing nothing.

Posted by: Ron Byers on March 7, 2011 at 5:03 PM | PERMALINK

Just remember. The last time we weren't "broke" in Boehner's terms was when Bill Clinton was President and Al Gore, Vice-President. Not only weren't we broke, but we were running a surplus. Then the Rebublicans took over and gave that surplus to rich people. And if we're broke now, that's why.

Posted by: David in NY on March 7, 2011 at 5:07 PM | PERMALINK

When the United States fails, Republicans win. They're actually TRYING to get people laid off without hiding it at all.

And the Democratic response is to meet them halfway.

Posted by: doubtful on March 7, 2011 at 5:07 PM | PERMALINK

If we ARE broke, then EVERYTHING needs to be on the table, starting with the military and intelligence budgets. We would solve 99% of our problems by cutting those budgets.

Posted by: Kanzanian on March 7, 2011 at 5:10 PM | PERMALINK

"Unfortunately, Boner is right. The US is broke. If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?"

Posted by: Alan Greedscam

Sadly that is what a lot of Americans did during the 90s.

Seriously, what most of us would try to do is use the time spent running up our credit card to increase our income. In the old days unions would go on strike for higher wages. These days we just cringe as our jobs are shipped off shore.

There are only two ways for America to grow it's income. One is to increase taxes and the other is to grow the size of it's economy. Republicans say we can't increase our taxes and we can't put policies in place that increase our economy.

Basically Boehner and the Republicans are calling on us to settle for less as long as they are in charge.

Posted by: Ron Byers on March 7, 2011 at 5:11 PM | PERMALINK

If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?

I would if I could give myself a raise.

Let me ask you a question: if you could only meet 60% of your obligations would look for a job making less money?

Posted by: doubtful on March 7, 2011 at 5:13 PM | PERMALINK

I believe what Drinker Boehner means is: That black buck stole your wallet.

Posted by: hells littlest angel on March 7, 2011 at 5:17 PM | PERMALINK

If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?

Last time I checked I don't own a mint or have the authority to levy taxes.

Posted by: AK Liberal on March 7, 2011 at 5:28 PM | PERMALINK

And almost as bad is this meme: "We have to live within our means."

We're a goddam country - our "means" are what we decide they are going to be. Y'know, like we used to do before Saint Ronnie of Reagan.

Posted by: Roddy McCorley on March 7, 2011 at 5:33 PM | PERMALINK

They ARE actively trying to undermine confidence in the US. Just as swinging a fist an inch from your nose is a serious threat, even if no punch ever connects, playing chicken with default is seriously dangerous and might well make someone fear the US is being run by crazies who would trade a couple of hundred years of financial integrity for the right to keep women pregnant against their will.

I say if the option is to reduce women to breeding stock and keep men ignorant of the alternatives (through abstinence miseducation and by banning contraception), then that government has no right to exist and the world would be better without it.

Fortunately, it's not my call. But this kind of financial brinksmanship is bad enough as it is, dangerous in its own right, just as this kind of constant talking down is dangerous.

It is, however, nothing new. Remember when Republicans launched their own foreign policy in Central America, where they went outside the US to oppose, actively oppose, the policies of the United States of America? Or went to an environmental conference eager to display their pig-ignorant fundy views to the world?

And specifically, remember Rep. Mark Kirk (R-IL) proudly boasted that he had met with Chinese leaders and told them not to believe US economic data. If that's not giving aid and comfort, isn't it at least seditious? Does anyone care?

Posted by: Tomm Undergod on March 7, 2011 at 5:40 PM | PERMALINK

"Unfortunately, Boner is right. The US is broke. If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?"

I guess most retired people are insolvent then, because their expenditures exceed their income.

Seriously, the measure of solvency (or whether an entity is "broke") is not whether income exceeds expenditures, but rather whether assets exceed liabilities. One is an income statement question; the other is a balance sheet question.

Obviously, negative income adversely affects the balance sheet. But if you have lots of assets, you can endure negative income for a long time.

Oh, and if we're broke, I guess we better stop paying out those agribusiness subsidies.

Posted by: kk on March 7, 2011 at 5:54 PM | PERMALINK

"We're broke" coming from the party of tax cuts is an implicit oxymoron. Lying is the least of Boehner's sins. Passing huge tax cuts and then talking about the deficit is much worse.

Obama is so lost in the chess game we hoped he was playing. His king is off the board and Obama still thinks he's playing. A disappointing fool, all the worse for being a decent, intelligent man.

Posted by: IndigoJoe on March 7, 2011 at 6:04 PM | PERMALINK

I know it's your job, Steve, to engage in logical discussion using relevant facts. The game, however, is a very different one. It's not about whether the US is actually broke. That's just some wording used to pursue the larger goal - bring Obama and the Democrats down. The large strokes are the same old starve the beast, now with a side of kill the economy:

First, you have Obama pass tax cuts so the rich get theirs, but tax cuts which haven't helped the economy for the last ten years. Then you really bring down the hammer on the debt, now so much bigger because of the tax cuts. A few hundred thousand lost jobs - "so be it". All the better for getting rid of Obama and doubly starving the beast. And now, for dessert, you can let the tea party darlings take all the blame for the social issues cuts you've been drooling over for years. While social security and medicare might survive a bit longer, there's always 2012 or 2016 to finish those off. Nice game if you have a clueless, weak, spineless, and rudderless opposition (not just Obama).

Posted by: IndigoJoe on March 7, 2011 at 6:15 PM | PERMALINK

Well, you seem to have gotten the memo about this week's meme, "We are not broke !"

The fact that the deficit last MONTH was larger than Bush's deficit for 2007 should suggest something but it doesn't seem to.

Posted by: Mike K on March 7, 2011 at 6:16 PM | PERMALINK

Ron,

The corporate tax rates aren't to blame. They are among the highest in the industrial world. What is to blame is the effective corporate tax rates after all the special write offs are taken into account. We could easily raise more money by lowering the corporate tax rates while closing gapping loopholes...

The ‘lowering-the-corporate-rate-and-closing-the-loopholes’ is a SCAM for Corporate America paying even less than they do now:

MORE THAN TWO-THIRDS OF CORPORATIONS PAY NO TAXES

Posted by: Joe Friday on March 7, 2011 at 6:31 PM | PERMALINK

Is that for the on the books budget ? I got the booshie meme about not paying for stuff , like illegal wars 'n stuff , so is that not counting the booschie tarp toosie ?

Posted by: FRP on March 7, 2011 at 6:37 PM | PERMALINK

IndigoJoe: "And now, for dessert, you ..."

A depressing summary of the Republican strategy to destroy the USA while claiming to save it. But I'd finish the sentence..."and now, for dessert, you..." with "go after collective bargaining and destroy unions." Because in addition to starving the beast, the Republicans need to make sure that no one is left who has the power to stand up to them.

Still, the question remains why Republican ever win elections. I don't know why Americans are so ready to believe that "we're broke," "We have to live within our means" and--(my personal favorite)--"We can't afford it." Why do people fall for these lies?

Posted by: PTate in MN on March 7, 2011 at 6:43 PM | PERMALINK

If we are 'broke' it's because the First Estate and the Second Estate are effectively exempt from paying taxes.

Posted by: Seould on March 7, 2011 at 6:44 PM | PERMALINK

Forget printing money. Rescinding tax cuts on the wealthy would go a long way toward reducing the deficit.

The only ones broke in this country are those in the middle and working class, and Boehner and his pals plan is only to make that worse.

Posted by: karen marie on March 7, 2011 at 6:52 PM | PERMALINK

what irks me is that you know as soon as we start showing a surplus (ie, no deficit) as Clinton was able to do in the 1990s, Cons will be there with an ax to cut taxes on the wealthy again, causing more deficits, and complaining we're 'broke.'

Posted by: JWK on March 7, 2011 at 7:09 PM | PERMALINK

"Is it just a coincidence that we're "broke" because we have a Democratic president who inherited a $1.3 trillion deficit from his Republican predecessor?"

It was different under Bush. 9/11 changed everything.

Posted by: robuzo on March 7, 2011 at 7:11 PM | PERMALINK
Unfortunately, Boner is right. The US is broke. If you could only meet 60% of your obligations through your salary and you had to put the other 40% on your credit card, would you consider yourself solvent?

Yes. If you can secure financing to pay your immediate obligations, you are solvent. Solvency is the ability to pay debts as they fall due, not the ability to do so without incurring additional debt. And it is certainly not the absence of the choice to incur additional debt rather than liquidating assets to meet current obligations.

Frequently organizations which are in good long-term financial health but seeking to fuel expansion use debt financing to meet current expansion needs; their ability to do so (e.g., the cost of such financing) is driven by how financiers see the health of the organization and the strength of its investment plans (and by the alternative investments available to financiers.) A low cost of debt, as the U.S. government sees now, means that, relative to other organizations seeking capital, the organization seeking debt financing is considered strong by the market. At this time, evidently, the U.S. Government is in an objectively strong market position to finance expansion via debt.

A sovereign government seeking to expand the national economy (which is, after all, the "market" to which government "sells" its services) its essentially in the same position as a business organization seeking to expand its operations (in one of the ways that government action is countercyclical, this becomes an important government priority at exactly the same times that private businesses are contracting rather than expanding.)

Posted by: cmdicely on March 7, 2011 at 7:37 PM | PERMALINK

robuzo, Bush actually inherited a recession from Clinton due to the dot-com bubble bursting. I do not defend the deficit spending of Bush or the GOP Congress which lost its way under Delay and Hastert. The Republicans would not have lost Congress in 2006 if they had stuck to their principles.

Posted by: Mike K on March 7, 2011 at 7:38 PM | PERMALINK

@ Mike K
Nice revisionist history there. Bush inherited a surplus, and created a fake fiscal emergency by cutting taxes on the wealthy just as Walker is doing in Wisconsin.

Posted by: JWK on March 7, 2011 at 7:45 PM | PERMALINK

"In any case, this isn't complicated. We have the ability to borrow plenty of money at low interest rates; we have easily the largest economy on the planet; we're facing no borrowing limits; and as Jamelle Bouie noted this morning, the United States also has the ability to 'print money to cover its debts and can still rely on global investors.'"

We also have a very small number of people who are sitting on a HUGE MOUNTAIN OF CASH.

Idiots like Mike K. want us to believe that they secured these vast sums through their street smarts and ingenuity, but most of them were born into it and learned how to use there monetary influence to rig the government to do their bidding.

Restore the tax brackets during REAGAN'S PRESIDENCY and we would have plenty of revenue to rebuild our infrastructure and educational system for another recovery.

Posted by: bdop4 on March 7, 2011 at 7:56 PM | PERMALINK

If you scream "we're broke" loudly and often it sure makes good cover for going on a slashing rampage through the budget.

Posted by: LRM on March 7, 2011 at 8:39 PM | PERMALINK

What arouses my curiosity is how Boner can pull that folksy "we're broke" stuff when he was quite happy running up the tab while Bush was President (as Steve mentioned) AND when the great shining icon of Republicanism said, "deficits don't matter".

Posted by: Mark on March 7, 2011 at 8:53 PM | PERMALINK

they seem to be trying to undermine confidence in American finances, on purpose, as part of a political agenda. That's not only dumb, it's dangerous" and unconstitutional.

Am I saying its unconstitutional to say something ? Yes. What about the first amendment ? Well you can say anything to the same extent that you can't sell "intoxicating liquors".

The first amendment was partially repealed by the 14th amendment which reads, in party, "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

That happens to be one part of the constitution which I would rather weren't there (like the 2nd amendment, the 10th amendment and any clauses* including the word "Senate" or the phrases "grand jury" or "twenty dollars"**). But it's there.

* At first I typed "sentences" but I found I had almost proposed deleting the entire fifth amendment, forgetting how much the founders liked commas; they liked them no more than they liked semi-colons. How the hell did people write like that ?

** One of the reaons we have our current Constitution is that the founders had just managed the greatest inflation in world history to date (10,000 in total). So why did they use the word "dollar" in the constitution ?

Posted by: Robert Waldmann on March 7, 2011 at 9:28 PM | PERMALINK

Has Boehner even noticed the skyrocketing oil and gasoline prices, and the contractionary load they are putting on US consumers?

Posted by: bob h on March 8, 2011 at 6:53 AM | PERMALINK

mike k: The Republicans would not have lost Congress in 2006 if they had stuck to their principles.

but you left out two other important things to consider.

one..competence..

and the second..

the more than a dozen convictions and guilty pleas in the abramoff scandal

good times..

Posted by: mr. irony on March 8, 2011 at 7:59 AM | PERMALINK




 

 

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