12:17 PM
Julio Barreto
House Majority Leader Eric Cantor’s (R-VA) decision to abruptly pull out of the talks in objection to potential tax increases does more to absolve him of any responsibility for an agreement he and his conservative allies oppose than it does to bring both parties closer together. Cantor can read the writing on the wall. House and Senate Republicans have expressed a willingness to explore the elimination of corporate tax loopholes and cuts to defense spending in order to reach a compromise with the president and Democrats.
Cantor fancies himself as a leader of the House conservative movement. As the point person for the House in these talks, he cannot be perceived as compromising on the no tax increase pledge. By agreeing, or even the perception he has agreed to, anything which looks like a tax increase could damage his credibility among conservatives. Cantor certainly has aspirations to become Speaker of the House one day and would prefer to have the current Speaker, John Boehner (R-OH), take the fall.
While there are many Republicans who would be happy to allow the federal government to default, they cannot afford to be seen as the cause for the failure to reach an agreement. Republicans are more concerned about scoring political points than reaching a reasonable compromise. Such a position is selfish and irresponsible. A reasonable deficit reduction plan cannot be achieved by simply reducing domestic programs and making adjustments to Medicare and Social Security. A balanced approach is required.
Senate Minority Leader Mitch McConnell (R-KY) must also be careful. He can ill afford to lose any Republican votes in the Senate. Reasonable minds will eventually prevail. It is hard to believe anyone will actually allow the government to default on its obligations.
Those seeking to preserve domestic spending should be encouraged by the inclusion of defense cuts in the mix. Cuts to the defense budget may limit the depth of reductions to domestic programs and could pave the way for an agreement. However, it doesn’t lessen the impact cuts will have on domestic programs. It does, however, illustrate how serious both sides of the aisle are in finding ways to reduce the federal deficit.
States Seek Ways to Respond to Stagnant Economy and Reduce Federal Aid
The United State Chamber of Commerce released its second study looking at ways in which states are seeking to create policies and practices which help businesses, stimulates job growth and increase state revenue.
Enterprising States 2011 Recovery and Renewal for the 21st Century, looks at ways in which states are responding to the new economic environment. While the specific actions vary from state-to-state, the report finds that states are redesigning themselves, reducing spending, and revising their tax codes and policies. The report also pointed out that have fared best have fostered a “business-friendly” environment. These states also invested in new infrastructure and in education and training.
Mayors Release Report on U.S. Metro Economies
The United States Conference of Mayors and the Council for the New American City released a report during their recently completed conference in Baltimore, MD which highlighted the bleak economic forecast within the nation’s urban settings. The report, U.S. Metro Economies Report: 2011, was completed by Global Insight. The key findings to mayor's report covers a range of issues. The mayors are hoping the reduction in military operations in Afghanistan will translate into increased spending for local economies.
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