Tea Party Budget Battle. GOP Refuses to Negotiate on Budget.

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Today, we appear to be in the middle of a big budget battle between the Democrats and Republicans. But I don‘t think that‘s the case at all.

I‘m going to explain this fun graphic to you in a second. I like that. It looks like an egg, but it‘s actually a rock.

I don‘t think we have a fight on our hands at all. I think we have one side who will not budge at all, and we have another side that wants nothing but to give concessions.

So, let me start explaining this graphic that you‘re looking at.

Initially, the Democrats gave $40 billion away to the Republicans. President Obama‘s budget proposal for 2011 got cut by $40 billion. That included giving away, you know, the heating oil for the poor, giving away community organizing, et cetera, et cetera, and then two weeks continuing resolution in March 2nd got passed, giving away another $4 billion. As you show there.

And then, another $6 billion was cut—I like the sound effect—as part of another three-week continuing resolution that got passed on March 18th. So far, the GOP has not moved at all, and you see that jump, that last one? Well, that‘s today. The Democrats have offered $20 billion more in cuts. And what have the Republicans done in return? Nothing.

They have not moved an inch. So why are these guys continuing to do this? It doesn‘t make any sense.

The Democrats are stretching like an accordion and the Republicans—because of that Tea Party rock you saw at the end of that graphic—are like an immovable rock.

So, you might be wondering why? Why do they have these incredibly different negotiating strategies, let‘s say, right?

Well, look, Democrats look at the national polls and the White House looks at the national polls. One of these polls they see is this one. It‘s by “Bloomberg,” OK? And it says that 20 percent say that holding out for deep cuts and risking a shutdown is a very bad—or is in favor of it, I should say. Seventy-seven percent say that compromise is the way to go.

So, Obama looks at that and goes, I‘m going to run in a national election, that‘s a national poll. And so, that‘s the right way to go, right? So why aren‘t the Republicans reacting that way? Because they should look at that same poll and have the same reaction, right? Why are they in the position of defending the 20 percent?

Well, it‘s because they‘re not going to run in local races. These are I‘m sorry, in national races. These are House Republicans that are going to run in their local races. In a lot of the districts, they‘re in incredibly safe Republican districts.

So, they‘re not going to lose to the Democrats, they think. They think the only way they lose is to—in a primary to a Tea Party candidate. So, in which case, they don‘t move, because the Tea Party tells them not to move. So, obviously, then, the Tea Party becomes incredibly important.

So what does the Tea Party believe?

Now, this is an interesting question, because a new poll shows their incredible extremism. When you ask non-Tea Party conservatives and that‘s conservatives: is Barack Obama destroying the country? Only 6 percent agree. When you ask Tea Party conservatives, 71 percent believe Barack Obama is destroying the country.

Now, look, there‘s something visceral there that doesn‘t make sense. Destroying the country? Well, what, Bill Clinton didn‘t destroy the country, Al Gore didn‘t destroy the country, none of these other Democrats. But somehow, Barack Obama, he‘s something that is dangerous. He‘s not like them. He‘s another. There‘s something driving them and they will not budge.

It reminds me when Dick Cheney, when offered a great offer by Iran said, you know what? We don‘t negotiate with evil, so we will even turn that down. Now, that‘s absurd.

What—and you begin to wonder—is that how they view Obama? Is that why they won‘t move? Because they think any compromise to Obama is a compromise they cannot live with. So, if you‘re a Democrat, what lesson do you learn from this?

Well, look, you can‘t negotiate this. They‘re never going to move.

If they don‘t move, why should you keep moving? It doesn‘t make sense.

We showed you the graphic. Forty billion, 6 billion, now 20 billion and they still won‘t move an inch. Are you crazy?

All these concessions—all it does is it encourages them. And now, the Democrats are having an internal battle on whether they should blame the GOP publicly.

Are you ready for this? Of course! Of course, they should. You‘ve got to show that to the American people. If you don‘t show it to them, how do they know? You‘ve got to make your own case.

All right. Now, someone who isn‘t afraid of making that case is Congresswoman Marcy Kaptur of Ohio. She‘s joining us now.

Congresswoman, look, as you see that, is there any sense in still sitting at the negotiation table with these guys when they won‘t move an inch and they say, they just keep saying, no, no, no we‘re not going to budge at all?

REP. MARCY KAPTUR (D), OHIO: Well, there‘s a real problem on the Republican side of the aisle. They have a lot of frogs, and they can‘t keep a majority of them in the barrel. They can‘t keep the majority of them in the barrel. And it‘s sad.

Some of the new members that have come here within 100 days have been bending over backwards for the top 1 percent of the wealthiest people in this country, Cenk, where they are literally trying to balance the budgets on the backs of the middle class and the working class, and they‘re not holding accountable. They‘re raising money from the very same groups that caused the deep recession we‘re in—from Wall Street, which only pays 15 percent of taxes compared to 35 percent like other businesses.

UYGUR: Right.

KAPTUR: And they‘re fighting eternally. They‘re not making G.E. pay its fair share of taxes. Well, G.E. is not paying any at all. Or ExxonMobil that just raised our gas prices to $3.50. They‘re not going there.

They‘re trying to fight among themselves about how much more they‘re going to take out of the hides of the American people, the people who are actually paying their fair share of taxes.

UYGUR: Well, Congresswoman, apparently, Senate Majority Leader Harry Reid agrees with you. I want to come back and ask you what you want to do about this.

But, let‘s watch first.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The Republicans refuse to negotiate on a final number. That‘s because the biggest gap in this negotiation isn‘t between Republicans and Democrats. It‘s between Republicans and Republicans.

The infighting between the Tea Party and the rest of the Republican Party, including the Republican leadership in Congress, is keeping our negotiating partner from the negotiating table. And it‘s pretty hard to negotiate without someone on the other side of the table to talk to.

(END VIDEO CLIP)

UYGUR: Now, that‘s all exactly true, what you said is true. So, the question is, what are you going to do about it? You got another side who won‘t budge. Are you going to keep giving in?

KAPTUR: Well, I hope that we don‘t keep giving in because you can‘t get where we need to go on 14 percent of the budget. In other words, what they‘re trying to do is an impossibility.

The governor of Michigan, a state in deep economic recession, just said he‘s going to cut six weeks of unemployment benefits. Rather than dealing with: how do we create jobs? Because that‘s the real answer. If we create jobs and keep the focus on jobs, we can gain the revenue to balance the budget.

They‘ll do anything to avoid that subject. And they‘re running into trouble internally because they can‘t get to where we need to be in order to balance the budget, and they‘re threatening a government shutdown now, because the current budget resolution only runs through April 8th. So, they‘re between a rock and a hard place.

And I would agree with the leader in the Senate that there‘s nobody on the other side of is the table, because they are in total disarray on their side of the aisle.

UYGUR: All right. Congresswoman Marcy Kaptur, thank you for joining us. We appreciate it. Interesting to see how it turns out.

KAPTUR: Thank you.

UYGUR: All right. Now, let me bring in a totally different voice. Philip Dennis is the founder of the Dallas Tea Party. I‘m sure he has a different perspective on this.

First thing I want to ask you is: what do you want? I mean, do you want the Republicans to just stay at that $61 billion number and not budge an inch?

PHILLIP DENNIS, TEXAS TEA PARTY ORGANIZER: What we want is or government to spend less money than it takes in in revenues, just like we must do to live our lives. That‘s exactly what we want. And that is—if that‘s extremism, if that is out-of-touch—well, then all of America is out of touch because that‘s the way we live our lives.

UYGUR: I hear you, and I‘d love to have that conversation, we might in a second. But what I‘m asking is a specific question. You got these budget negotiations. Democrats have given, given, given, $40 billion, $4 billion, $6 billion, $20 billion. The Republicans haven‘t moved an inch.

So, do you want they to move at all, or do you not want them to move and say no, even though this is supposed to be a negotiation, we will not give in anything?

DENNIS: We have a $1.65 trillion deficit this year alone. Last year, we had a $1.5 trillion deficit, which means that we are printing or borrowing over $5 billion a day to keep this government running and you‘re bragging because the Democrats want to cut four days of borrowing? I‘d say to the Republicans, you need to do a lot more.

UYGUR: You‘ve got to answer the question. I hear you. But I‘m asking you, you wouldn‘t budge. You‘re saying, no, you wouldn‘t budge.

DENNIS: I don‘t know if you hear me or not. Well, the Republicans promised in the campaign season to cut $100 billion in spending, which to most Tea Party people out here, we think that‘s just basically ridiculous when we got a $1.6 trillion deficit.

UYGUR: So, you won‘t budge?

DENNIS: So, now, they have backed off to $61 billion.

UYGUR: So, you wouldn‘t budge an inch?

DENNIS: Absolutely not.

UYGUR: So, how are they supposed to negotiate?

(CROSSTALK)

UYGUR: Look, Phillip, you know, you guys claim that you‘re in the business and stuff like that and you understand it. You know, I run a small business, my dad‘s run a small business for a long time. I know you get in negotiations, right? And in negotiations usually, you have to come to some sort of agreement. If one side says I‘m not going to budge at all, well, you‘re not going to have an agreement, isn‘t that right?

DENNIS: Well, let me ask you this. In your father‘s business, if he made $12,000 a month, did he spend $13,100 –

(CROSSTALK)

UYGUR: But, Phillip, I‘m trying to get you to answer a question. So, the question is: if you‘re in a negotiation, if you‘re in business, and you say I won‘t give into anything at all, do you think you‘re going to have a deal or you‘re likely not to have a deal?

DENNIS: Hey, listen, let the Democrats do what they vote and let the Republicans vote the way they did. I don‘t know what anybody missed in November with the elections there. We send a bunch of Democrats home. And this time, we‘re going to send a bunch of Republicans home if they don‘t do what we send them up there to do, which was to repeal Obamacare and to reduce the spending dramatically, not this $51 billion, $61 billion.

Like I said, we‘ve got $1.65 trillion deficit. It is not sustainable.

UYGUR: So, even if they got 100 percent of what they wanted, you still wouldn‘t be satisfied because you‘re saying $61 billion?

DENNIS: No, absolutely not. We got $1.65 trillion deficit. I mean, how much more money do you people want to spend and borrow?

UYGUR: OK. So, Boehner was a disappointment no matter what then, right, because he‘s only asking for only $61 billion?

DENNIS: Absolutely. So far, absolutely. That‘s been a tremendous disappointment.

UYGUR: So, you would shut the government down then?

DENNIS: Well, absolutely. Shut it down.

UYGUR: Shut it down, right?

DENNIS: Shut it down, until they—

UYGUR: All right. You‘re very, very clear about that.

DENNIS: Until the Republicans and Democrats that go to Washington, D.C. can learn to spend $1 less than the government takes in in revenue. We don‘t have a revenue problem in Washington. We got a spending problem. And it‘s unsustainable. How many secretaries of the Treasury have to come out and say, this debt is not sustainable until somebody in Washington, D.C. listens?

UYGUR: Let me address that for one quick second here. You know, you‘ve been making that point throughout. Now, you know that non-defense discretionary spending is only $610 billion and the deficit overall is $1.6 trillion.

If you cut it to zero, you got everything you want. They cut all the programs, EPA, gone, Department of Education, gone. Everything is gone, right? Zero. You still would have about $1 trillion. So, how do you balance this thing without going into defense or raising taxes?

DENNIS: I think most people on the Tea Party side would like to see across the board cuts and everything is on the table for cuts. Look, we have to—we have to totally revise the way Washington does business, because it‘s gotten fat and it has gotten large and it has gotten away from what the Constitution advocates. And that‘s—

UYGUR: So, you would cut defense?

DENNIS: Absolutely.

UYGUR: All right. Good. Good, we have agreement on that.

DENNIS: Yes.

(CROSSTALK)

UYGUR: Look, and, you know, right now, we‘re in historically low taxes as a percentage of GDP, et cetera. But you‘re still saying not low enough, you still want to cut taxes and give us a bigger cutting thing that we got to get passed. So, you really, really have to cut the heck out of defense.

DENNIS: Now, wait a minute, I haven‘t said anything about taxes. You said that. We‘re not averse to paying taxes. We‘re averse to paying our fair share. But—

UYGUR: So, you don‘t mind raising taxes if it‘s necessary.

DENNIS: Well, we will—absolutely, if it‘s necessary.

UYGUR: OK. Great.

DENNIS: Our government has gotten so much larger since Bush and Obama and their administrations and Americans that pay the bills, that create the wealth out there, that are seeing their children‘s futures mortgage so these people can spend money line drunken sailors. The only difference is drunken sailors spend their own money.

We are tired of it. We send the Republicans to change that. And if they‘re not going to make the big boy decisions we sent them up there to make, we‘re going to get bigger boys in 2012. If the Democrats want to spend—stand by this, oh, the Republican and Tea Party are extremists for wanting to cut spending—then, let them stand by their votes and we send them a whole bunch of them home last time. And we‘ll do more time this time.

UYGUR: All right. Look, Phillip, obviously, I don‘t agree with a lot of what you‘re saying, but those last two points I respect, because it‘s honest, because you can‘t do it from non-defense discretionary spending. So, if you‘re willing to go after defense and you‘re willing to say, hey, we should look at the revenue side, that‘s at least an honest conversation.

DENNIS: Hey, we spent $600 million in Libya over the last week, and no one knows what we‘re doing over there. Not even the president.

UYGUR: Right. That‘s different conversation. We‘ll do that in another night.

Phillip Dennis, thank you for joining us tonight. We appreciate it.

DENNIS: Anytime. Thank you.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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