Obama Unlimited

Beneath a stagnant-looking surface, the current of fiscal negotiation in Washington, D.C., is moving in the expected direction - and maybe more swiftly than anyone expected.

The unexpected retirement of Sen. Jim DeMint, a conservative firebrand from South Carolina, is the strongest signal yet that Republican hardliners know they can't hold back the tide of higher taxes sweeping across Capitol Hill. DeMint's departure to head the Heritage Foundation, a conservative think tank, is an acknowledgment that the tactical battle has been lost for the time being. He seems to think that, in the long run, he can accomplish more to limit the scope and cost of government, and the share of national wealth it absorbs, from outside the legislative process than from within it.

Taxes on upper-income Americans are going to go up. In fact, they have gone up already in many states over the last several years. During the presidential campaign, Mitt Romney acknowledged that federal taxes would follow suit. House Speaker John Boehner put $800 billion in "revenue enhancements" on the table as part of the Republicans' initial offer to President Obama in the current negotiations.

The question of whether taxes on the wealthy go up via higher tax rates, as Obama insists, or via new limits on deductions, as Republicans prefer, is not trivial - but it isn't earthshakingly important, either, as Republicans are beginning to realize. Limiting deductions would do less damage to the economy because, all else being equal, higher rates create greater distortions - such as an incentive to give more money to charity rather than pay higher taxes to the government. This is why charities are already lobbying behind the scenes to prevent limits on the tax benefits on which their fundraising feeds.

But charitable contributions are voluntary, unlike taxes. Regardless of the mechanics of any tax increase, if the government takes more of your income and you want to spend the same amount on yourself, you can still cut back your philanthropy to make your personal ledger balance. Or you can cut back the amount you invest in expanding your business with new equipment or employees. In the short term, you maintain your personal resources, although it comes at a long-term cost to your own finances as well as to the nation's.

When taxes go up for high earners, they ought to go up for the middle class as well - to underline the point that federal spending isn't free, and to prevent today's voters from dumping their costs on tomorrow's taxpayers. Neither party, however, wants to see taxes rise on the 98 percent of households for whom Obama wants to maintain current rates. Those taxes would rise if current law is allowed to expire at the end of this year, but since neither party wants to see that happen, it won't happen. Even if politicians miss the year-end deadline, they will make a continuation of lower rates retroactive to the beginning of 2013.

The real federal fiscal problem is one of spending, not taxes, and this is where the real conflict between the parties lies. Republicans want to spend less than Democrats do. They want to make more changes in entitlement programs than Democrats want. Again, the differences are not trivial, but in the scheme of things, they are not massive. Republicans mostly want to maintain a federal government that spends an enormous amount of money on defense, health care, Social Security and many other things. Democrats unanimously want a government that spends even more on those same things, except that some Democrats would spend less on defense.

Politicians know how to bridge those differences, and when the politicians engage fully, they will do exactly that.

One obstacle is that Obama has never been much of a politician. If you like him, you may see him as a leader, a visionary or a transcendent figure, a sort of Gandhi who can nail a jump shot. If you don't like him, you may see a bully, a narcissist or the worst sort of lawyer, one who is fully prepared to trample the law (recall his recess appointments when the Senate was not in recess, or his treatment of Chrysler debt holders) for his own purposes. Either way, he is not someone with a history of forging legislative compromise.

He has less reason than ever to compromise now that he no longer needs to run for re-election. This explains why the president's own initial offer calls tax increases twice as large as Republicans are proposing, as well as for $50 billion in new so-called "stimulus" spending (you scarcely heard him utter the word "stimulus" during the recent campaign, given the dismal results of his first-term spending binge), and why he has made no serious move on entitlement reform. It is also why he demands a unilateral congressional disarmament on the federal debt limit, which is where Republicans have their greatest remaining leverage. Rather than require approval of ever-higher federal borrowing, Obama would treat every dollar borrowed as pre-authorized unless Congress mustered a supermajority to stop it. The result, like it or not, would be Obama unlimited.

There was a time when Obama himself didn't like it. As a senator in 2006, he voted against a debt ceiling increase, but that vote came when Republican George W. Bush was in the White House.

It might make more sense for House Republicans to refrain from negotiating with the White House at all. After all, any legislation that reaches Obama's desk has to clear the Senate as well as the House. Senate Democrats generally agree with the president's positions, but most of them, unlike Obama, still need to face voters in the future. Of course the president matters, but I don't know why House Republicans don't give Senate Democrats the chore of bringing the president's positions into line with political reality. The House could just pass its own plan and hash out its differences with the Senate in a conference committee.

A deal will be reached sooner or later. Nothing may seem to be happening on the surface, but deep beneath the still waters, things are moving right along.

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A Sense of Scottish Identity Does Not Require Independence

There are many reasons why people support Scottish independence. Some think that it would be economically advantageous, others think it would be politically advantageous and would make the sort of society they long for more likely to occur. But I get the impression that most nationalists see all these things as fringe benefits, even as ways and means to try to persuade other Scots to vote for independence. If I could convince a nationalist that Scotland would be just about the same economically as an independent state as it is now, or if I could show that politically things would be much the same, would I thereby convince him that he should vote against independence? I doubt it. A nationalist sees independence as a good in itself. Why is this? The answer, I think, lies in how such a person sees himself. Most typically Scottish nationalists, define themselves as exclusively Scottish. This sense of Scottishness, which they feel, they consider to be constrained by Scotland not being an independent state. Nationalists tend to see Scottish patriotism and Scottish nationalism as one and the same thing. Thus, at times they might even resort to questioning the patriotism of those who oppose independence. They might even consider that such opponents are betraying Scotland, that they are somehow traitors.

Some time ago I had an interesting experience while on holiday, which gave me a new insight into identity and issues of nationalism and made me compare and contrast my experience here with my experience there. I spent two weeks in the Bavarian Alps in a small town called Berchtesgaden. It's a wonderful spot, perhaps known chiefly for the fact that it was the site of Hitler's Eagle's Nest and thus a monument to the darkest side of nationalism. But perhaps because of this historical situation, it was possible here to see people expressing their identity in a way that I found quite touching.

One day I came across a village celebrating its anniversary. Four or five hundred years ago, that village been founded. Nearly every man was dressed in traditional Bavarian lederhosen. Each had a hat with a feather. Nearly every woman wore a dirndl, the traditional dress for that region. These people were clearly comfortable with their Bavarian identity. They spoke the Bavarian dialect, indeed even I learned a few Bavarian phrases. Were these people patriots? Were they nationalists? There were Bavarian flags everywhere, blue and white. But there were lots of German flags, too. No one had a problem speaking High German rather than dialect, no one had a problem with the idea that being a Bavarian meant that they could also be a German. The lesson about nationalism had been learned and perhaps less than one percent of these Bavarians wanted independence from Germany.

What I learned on my trip also was that nationalism did not have much point in this region. The nearest major city was Salzburg in Austria, but on the short trip there, it was scarcely possible even to notice a border. I didn't even see a sign. The whole trip from Germany to Austria was as near to being a trip within one country as makes no difference. Everything was completely integrated. The same money, the same tickets, the same everything. Only an accident of history meant that Bavaria and Austria were separate countries, but it didn't seem to bother anyone living there. They scarcely seemed to notice. Really, by all normal standards they might as well have been in the same country. They have no reason to unite, because they are already united. But by the same token Bavaria has no reason to divide itself from the rest of Germany. These people seem to have moved on from these questions. I imagine they would find our debate in Scotland all rather baffling. Bavarians can express their separate identity, without denying that they are a part of whole. They fought a war with the most of the rest of Germany as recently as 1866, yet no one goes on about sending the Germans homeward to think again.

In Britain we have just the same experience as I found traveling between Germany and Austria, a land without borders. The Germans have learned their lesson about nationalism and they want nothing to do with borders. When countries are as integrated as Germany and Austria, questions about unification or separation become meaningless. This is the direction which Europe is moving towards. At times it must be said that the journey Europe is making is a struggle. National difference and especially the lack of a common language is hindering them on the path to European integration. But it's possible to admire the attempt, even while retaining concerns about the fundamental nature of the European Union. The goal of creating a free, democratic Europe without nationalism, may turn out to be impossible, but it is a fine ideal nonetheless.

We in the UK already have what Europe so desperately wants. We have unity, we can travel from one part of the UK to another and barely notice the difference. We can work and live where we please and only an accent distinguishes those who live here. But we have not yet learned that we can express our identity without demanding separation. We have not yet learned the lesson about nationalism, that was given to the Germans and the Austrians. For this reason we squabble over matters of no consequence, ungrateful, willing perhaps to squander the unity of centuries for a mess of nationalism.

http://effiedeans.blogspot.co.uk/

The Scottish independence referendum will be in 2014. I'm campaigning for Scotland to remain in the United Kingdom, by means of a regular blog exploring all of the issues involved.
Please come and join the debate by clicking on the above link.

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