POLITICS AT HOME: DEBT CEILING DEAL; JOB PROBLEM

Supposedly this weekend is the crucial period for a make or break deal on the debt ceiling issue. That is, given the deadline of August 2 for avoiding a default, President Obama and congressional leaders of both parties have to come up with some kind of deal for raising the debt ceiling above $14.3 trillion, a package that would include huge spending cuts and revenue increases. If such a deal can be put together Congress will need the time between now and August 2 to write and pass the various pieces of legislation needed to complete the deal.

A grand bargain is a kind of gleam in the eye of persons like myself who just want an end to all of the political posturing and get the issue settled so we can move on to other things. But the weekend could produce, if it produces anything, a not-so-grand bargain that will will put off the big and politically tough decisions to another day. In either case there are certain factors to be taken into account in trying to understand any settlement--large, medium, or small.

Democratic liberals are wary of Obama's seeming willingness to give ground on social security and medicare as potential sources of savings. On the other side, the fiscal hawks are suspicious about Speaker Boehner and Senate Minority Leader McConnell giving ground on the party's no tax increases stand. Depending on which newspaper article you read or which talking head you watch on television, you get varying stories on what the two sides have been cooking up or will cook up on almost any part of the spending cuts/revenue increases issue. If this is supposedly THE weekend for a grand bargain, a mini bargain, or no bargain, perhaps the Monday morning news will enlighten us all. But one thing you can count on without waiting is that almost any agreed upon package, whenever it comes, will defy understanding of we mere mortals.

On both spending cuts and revenue increases there will likely be cuts and increases that occur now and others that won't happen for perhaps two or three years, or more. On revenue increases the fundamental GOP position is that any revenue increases, whether closing loopholes or ending subsidies through the tax code, must be offset by revenue decreases so the final result is revenue neutral; that is, no net change in revenues up or down. To get around this a deal of any dimension may include provisions for more revenues immediately but to be offset the increases sometime down the road, say 1-3 years, by some revenue decreases. Thus the Republicans can stick to their pledge. Likewise in spending cuts. Keep in mind also that all talks of spending cuts is in terms of $X trillions over a 10-12 year period, thus allowing a lot of staging when these will occur. If there is one overriding goal sought by both sides, it is do nothing that outrages too many of the left or right political bases before the 2012 election.

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Speaking of the 2012 election, the GOP is delighted with the last jobs report which showed little increase in new jobs and an increase in the unemployment rate from 9.1 to 9.2 percent. While using the report to attack the President's economic/job creation policies, the GOP continues to push for policies almost certain to keep the job situation bad.

The latest report showed an overall increase of 18,000 new jobs in June but less attention was given to the fact that 39,000 jobs were lost in the government sector last month with a total of 238,000 government jobs lost in the last eight months. It is GOP spending cut policy at the national and state levels that contribute significantly to these job losses which they blame on Obama policies. Further, there is every reason to believe that the GOP will continue to cut government jobs as part of a deliberate but deniable effort to maintain a dismal job picture for 2012.