Could a Shutdown Threat “Break the Fever” and Provide an Opening to Stimulus and Recovery?

There’s an old saying: Never let a crisis go to waste. And just as the Chinese ideogram for “crisis” combines the symbols for “chaos” and “opportunity,” we now find ourselves in a crisis that nevertheless might provide an opportunity to break the current gridlock in Washington and fund some Democratic priorities that promise to move the country forward.

And ironically enough, the opportunity may come from anti-abortion Congressmen who are threatening to shut down the government unless Planned Parenthood is defunded.

Republican leadership, including House Speaker John Boehner and Senate Majority Leader Mitch McConnell are desperately trying to tamp down a rebellion among social conservatives by offering up various symbolic votes intended to placate them while allowing the government to remain open beyond Sept. 30, when current funding runs out.

However, Boehner’s caucus is especially restive and fractious, and this impasse might force him to make a deal with House Minority Leader Nancy Pelosi for Democratic votes – which will assuredly come at a price.

Soon after he was re-elected, President Obama predicted – somewhat optimistically, as we now see in retrospect – an imminent “fever break,” with Republicans rejecting obstructionism and brinksmanship in favor of good-faith bipartisan governance.

However, buoyed by their victory in the 2014 elections, outraged by misleading, selectively-edited videos by an anti-abortion pressure group, and emboldened by the bluster of Republican presidential frontrunner Donald Trump and the proliferation of untold millions in secret, unregulated campaign contributions from anonymous conservative special interests, it seems likely that Republican leaders are headed toward a crash course with their intransigent and rebellious base.

President Obama, liberals and Democrats have called for massive investments in education, research and vital infrastructure projects that would put millions of Americans to work. These projects would focus on long-neglected needs; the American Society of Civil Engineers estimates that there are $3 trillion worth of infrastructure projects in the U.S. that are long overdue. 

However, since the Republicans have taken over the House in 2010, the chances for a direct appropriations bill to fund these projects seem unlikely, even though interest rates are at historic lows.

Numerous proposals over the years have outlined various alternative means of financing infrastructure projects without direct government spending: tax reform, tapping into union pension funds, streamlining rules governing public-private partnerships, etc.

However, to work at the national level these strategies require the assent of Congress, which in recent years has been mired in politically and emotionally-charged ideological battles.

And with the Federal Reserve recently agreeing to keep interest rates at historic lows, for now, there is a small window of opportunity to access credit cheaply.

But maybe Democrats can leverage the intransigence of far-right Republicans to achieve a crucial victory despite their minority status in Congress.

At his recent appearance before the prestigious Business Roundtable, President Obama reiterated his support for tax reform that reduces nominal rates – and noted the agreement of Boehner and McConnell – but linked it with the need to free up revenues by closing loopholes and funding investments in education and training, research, and infrastructure. He also noted that Senator Charles Schumer, among others, is currently working on a bill to do just that.

And Democrats might have some unlikely allies: Donald Trump recently proposed eliminating the carried interest tax loophole, as did fellow candidate Jeb Bush. Eliminating that loophole is likely to find favor in populist circles, which Republicans are now trying to co-opt, and could lead to a productive discussion on tax policies which promote widespread prosperity and those that protect the interests of a privileged few.

Also, the liberal think tank Center for American Progress recently called for reforms that would permit union pension funds – a huge source of potential funding – to be tapped for infrastructure projects in a way that would fittingly utilize organized labor’s capital to create jobs, help rebuild our infrastructure and economy, empower worker interests, and enhance the long-term value of public-sector assets which are the source of our prosperity.

Another aspect of tax reform that may become more relevant due to current circumstances involves foreign capital and foreign holdings of American multinationals. The past year has seen economic growth in China slowing – and with it, foreign investment in the world’s second-largest economy – and the past few months have seen increased volatility and capital outflows from Chinese equity markets.

Amid this chaos, there are trillions of dollars hovering overseas and looking for a welcoming and profitable place to land, and proposals such as a one-time tax break for investments in the U.S. – already the prime destination of foreign investment – might provide the all-clear signal.

There is a tremendous amount of capital around the world seeking investment opportunities, and some states do allow public-private financing of infrastructure. Here in South Florida, public-private partnerships are behind two massive infrastructure projects: The expansions of the Port of Miami and Port Everglades in Fort Lauderdale.

The Miami project features a huge tunnel and rail lines to facilitate port traffic without impacting downtown traffic, and the Port Everglades project includes rail spurs to link the port with nearby warehouses and other support facilities to reduce congestion and roadway wear-and-tear from trucks. 

Businesses have responded to these two projects with plans to construct warehouses, distribution centers and other projects to service the expected increase in freight.

Both expansion projects are well underway, and when completed these two seaports will be well-equipped to accommodate the super-sized container ships that will be able to navigate the Panama Canal when its own expansion is completed.

Another Democratic priority is affordable education. And on this front there also is bipartisan precedent: The successful implementation of programs offering free pre-kindergarten and community college, which President Obama is championing as nationwide models.

Offering two years of free community college would provide access to education for millions of financially needy youth and adults seeking to retrain for a new career, and universal pre-K has been proven to enhance developmental and intellectual progress in children and pave the way to greater success later in life.

Under President Obama’s leadership the U.S. has recovered from the global economic downturn much better than all other developed nations. The U.S. economy is improving, and at the fastest rate of any developed economy on earth.

Due to the policies initiated under this administration, and the accommodative monetary policies of the Federal Reserve, we have avoided the types of economic contraction that we see in Europe – which had pursued the same self-defeating austerity measures that Republicans here began advocating in 2009.

Europe is struggling to emerge from recession, while we are experiencing steady growth.

Could it be better? Absolutely, but not without the types of stimulative measures outlined in President Obama’s American Jobs Act, which Congress has refused to take up.

But could there be a wedge issue to split the Republicans and break the fever?

While abortion might seem like an unlikely hill for conservatives to die on, they have become increasingly impatient with what they see as a series of humiliating losses and mere lip service from the Republican leaders whom they have supported.

Promises to limit President Obama to a single term, pass a balanced budget act, extend all Bush-era tax cuts, repeal Obamacare, kill the Iran nuclear deal and the executive order on immigration, and shut down the government to defund Obamacare – all are increasingly seen by the Republican base as abject failures and cynical exercises in Republican duplicity. 

In fact, the only “victories” the Republicans can claim since taking over the House in 2010 is the sequester, which imposed mindless across-the-board spending cuts that hampered the nation’s economic recovery, and the sunsetting of the Export-Import Bank in a misleading and cynical strike against crony capitalism; EX-IM actually supports jobs for American exporters and runs at a profit.

And both are bloodless, empty “victories” that provide no nourishment for culture warriors hungry for red meat.

Which makes a government shutdown over Planned Parenthood a battle worth having for some social conservatives – the most enthusiastic members of the Republican base – and the most daunting test of Republican leadership.

With that in mind, both President Obama and Democratic leadership have said they would support a short-term budget deal if it provides cooler heads with some time to craft an acceptable longer-term agreement.

That fact that Republicans now control both chambers of Congress means they must deal with the President and the Democrats in good faith in order to prove they can govern, particularly with the election season upon us. And with Boehner’s speakership once again threatened by a Tea Party rebellion, he may soon be forced to choose between his position of power and privilege and what’s best for the country.

Could the base’s obsession with abortion and their eagerness to challenge their leadership finally break the gridlock and force moderate and conservative (but not single-mindedly ideologically driven) Republicans to ally with Democrats, head off a disastrous government shutdown, and provide the political space for truly bipartisan governance that results in economic stimulus and recovery?

And with the budget clock ticking toward Sept. 30, will midnight bring chaos – or opportunity?



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