Tax increases and spending cuts

The "fiscal cliff" is a term used describe a bundle of momentous U.S. federal tax increases and spending cuts that are due to take effect at the end of 2012 and early 2013. The fiscal cliff is in many ways the culmination of a series of increasingly contentious fiscal showdowns between the Democratic and Republican parties over the last few years. The most noteworthy, the debt-ceiling fight of August 2011 threatened the country's ability to meet its financial obligations and resulted in an unprecedented downgrade in the U.S. credit rating by Standard and Poor's. The avoid the “fiscal cliff” of automatic tax increases and spending cuts at the years end, the republicans and democrats tried to work together. The republicans want to cut three big entitlements programs such as social security, Medicare and Medicaid.

Cutting these entitlements challenges Democratic belief almost as much as higher taxes challenges Republican. President Obama has admitted all along that spending has to shrink. During the campaign, he expected that a bargain would include $2.50 of spending cuts for every dollar of tax increases. But so far he has made few concessions on entitlements. The two deficit deals he struck with Republicans in 2011 fell almost entirely on flexible spending: items that Congress must authorize each year, such as education, transport, research, foreign aid and defense. But such spending is already approaching its lowest share of GDP since the 1950s. Big automatic cuts to domestic and defense discretionary spending will drive it even lower if the parties do not agree to override the cuts by January.

On entitlements, President Obama has proposed trimming federal and military retirement benefits and agriculture subsidies. Last year, President Obama and Mr. Boehner, speaker of the house, negotiated on this issue. At the negotiation President Obama offered two substantial concessions. He offered to raise the age at which Americans become eligible for Medicare from 65 to 67. He also offered to index social security benefits to less generous version of the consumer price index. These changes will take almost a decade to bring in the projected $225 billion because such changes can only be implemented gradually.

The re-elected President Obama is almost certain to reject both vouchers and block grants proposed by Mitt Romney and his running mate, Paul Ryan, just as he will tolerate no big changes to his health-care plan. But there may be other common ground, in particular on means-testing. President Obama has already proposed a modest increase in Medicare premiums for the affluent, and numerous bipartisan proposals would make Social Security less generous for richer beneficiaries. In all President Obama is trying reduce Americas’ long term deficit in order to avoid the upcoming fiscal cliff. 

The Balance of Power

The framers of the constitution originally envisioned that the congress, the president and the judiciary would have discrete powers and that one branch would be able to hold the other in check. The main function of Separation of Powers is to do just that, separate powers. The responsibilities of the Government are divided into the three branches in order to prevent one branch from having absolute power and in turn abusing that power. The basic idea of Separation of Powers is that each branch has its own areas of authority and its own roles. The idea of checks and balances, like separation of powers, lies in its title. Each branch has the power to check and balance the actions of the other two branches. This system was also put in place to insure that not one branch received too much power. Over the years, and especially since the 1930s, the president often has held the upper hand. In times of crisis, congress willingly has handed over its authority to the chief executive, for example, FDR during the great depression.

The balance of power between the congress and the executive has fluctuated tremendously over time. Although congress was most powerful in the early years of U.S. history, since the New Deal, the president has played an important role in proposing legislation and spending. For example, the president is named by the Constitution as commander-in-chief of the armed forces, giving him an incredibly powerful position in times of war. The Framers worried that the president's wartime role was too powerful, in fact, and thus gave Congress a powerful set of checks and balances on the president's war powers. Only Congress, not the president, has the power to declare war. Perhaps even more important, only Congress has the power to pay for wartime expenses. That means that if the president tries to launch an ill-advised military escapade, Congress can effectively pull the plug, forcing the president to bring his troops home by refusing to fund their continued deployment. Another example is that the president can veto acts of Congress. Thus if the executive tries to pass laws that the president believes are unconstitutional or even just bad policy, the president can veto it and prevent the bill from becoming law. The veto is perhaps the president's most powerful means of checking and balancing Congress. The framers also gave congress the power to re check the president’s veto power. The congress can override the president’s veto if it can get two-thirds vote from both its houses.  

Congress and the judiciary also have an ongoing power struggle. Although the judiciary can declare acts of congress unconstitutional, Congress also exercises control over the judiciary in a variety of ways. It has the constitutional authority to establish the size of the Supreme Court, its appellate jurisdiction, and the structure of the federal court system. 

President Obama’s election strategy

President Obama won all the battle ground states, which secured him a second term in office. He won the Electoral College by 3332 votes to Mitt Romney’s 206- almost as convincing a victory as in 2008. But he won the popular vote by a much diminished 2.4 percentage point, whole Republicans easily retained control of the House of Representatives. So after all that campaigning, we are back to where we started; A republican majority in the House, a democratic majority in the senate. As in 2000 and 2004, America seems split right down the middle.

On the eve of the election, things looked pretty good for Romney, as Obama was polling below 50%, and had a lead of less than a point. There was much speculation that the result would be very close in the battle ground states such as Ohio to leave the outcome in doubt for many hours after the polls closed. In the end, however, the result was clear within a few hours. President Obama lost only two sates that he had won during the 2008 election: Indiana and North Carolina. Like 2008, President Obama’s advantage largely came from young women, minorities, the educated and the young. It was minorities who boosted President Obama the most. He triumphed among both Asians and Hispanic. Black voters voted for him by almost the same margin as they did last time. And minorities constituted a bigger share of the electorate: 28% compared to 26% in 2008.

I believe it was President Obama’s campaign strategies that won him the election. Over the course of his presidency, he has introduced policies designed to appeal to each of his voter groups. He courted the young by battling with Republicans in Congress to increase the number of government-backed student loans. For women, he advertised the first bill he signed into law, the Lilly Ledbetter Act, which makes it easier for them to sue for wage discrimination. He also appeased them by the clause in his health reforms requiring insurers to provide contraception to policy-holders at no extra cost. To get Latina votes, he granted a pardon from deportation to certain illegal immigrants who had arrived as children. To repair his losses among the white working class, he highlighted his support for the government-backed bail-out of the car industry. To get the gay votes, he put an end to the long-standing policy of expelling openly gay soldiers from the armed force and expressed personal support for gay marriage.

The House of Representatives vs. the Senate

The U.S. Government constitutes three branches namely the legislative branch, the judicial branch and the executive branch. The framers’ original conception of Congress’s authority was much narrower than it is today. Those in attendance at the Constitutional convention were concerned with creating a legislative body that would be able to make laws and raise and spend revenues. Over time, these roles has have changed. Today, members of Congress must combine and balance the roles of lawmaker, budgeter and policy maker with being a representative of their district, their state, their party, and sometime this race, ethnicity, or gender. According to the Article section 8, the powers of congress include the power to lay and collect taxes and duties, borrow money, regulate commerce, establish rules for naturalization, coin money, establish post office, and etc.  The U.S. Congress and almost all the state legislatures are bicameral, meaning that there are two houses through which legislative initiatives must pass. At the federal level, these houses are the U.S. House of Representatives and the U.S. Senate. This system was set up for two reasons: It was a compromise between those who thought that democratic representation should be based on population (the House) and those who thought that the states should be represented equally (the Senate). 

There are several differences between the House of Representatives and senate. The U.S. Vice President is the head of the Senate. He is supposed to vote in the senate in case of a tie. On the contrary, the leader of House of Representatives is called the Speaker of the House. He/She is elected by the representatives. The Senate is made up of 100 voting members, two from each state. They are in office for six year. The senate also approves treaties and tries impeached officials. On the other hand, The House of Representatives is made up of 435 representatives the number of which is determined by that state’s population. The greater the population in a state, the more representatives that state will have in the House. The House initiates all revenue bills and initiates impeachment procedures and passes articles of impeachment. Another difference is that senators are elected to 6-year terms, while representatives are elected to serve 2-year terms. Every two years, the nation holds an election for members of Congress. At that time, all members of the House of Representatives and one-third of the Senate are up for re-election.

In the House, there are several parties. Whoever holds the majority, has the biggest say in the decision making process. This means that if the House proposes a rule or bill, it only necessitates a majority of the votes to pass the said bill. The house tends to emphasize tax and revenue policies and the power is distributed less evenly there. They are more centralized and more formal. The Senate is somewhat similar but entirely different. They are less centralized, less formal and more personal. The power is distributed more evenly and they tend to emphasize foreign policies.

Over time, both the house and the senate have changed. The power centralized in the speaker’s inner circle of advisers. Turnover is relatively high in the house, although those seeking reelection almost always win. In the senate, their workload has increased over time and they have become more formal. Also it has become more and more difficult to pass legislation through the senate.

The Fiscal Cliff

A day after Barack Obama won the election, the stock market fell 2%, its biggest fall in a year. Are higher taxes on dividends and capital gains and tougher treatment of banks and fossil fuels only to be blamed for this fall? Or is it fact that the election failed to resolve the biggest question hanging over the economy: how to deal with the deficit. “Fiscal cliff” is the popular shorthand term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. The $7 trillion fiscal cliff is the largest, most immediate domestic problem confronting President Obama and lawmakers in the next two months.

President Obama needs to come up with a solution, fast. Within two months some $700 billion of tax increases and spending cut will kick in. Because it would be so abrupt and arbitrary, the cliff also could throw the United States back into a recession next year, when more than $500 billion will be taken out of the economy. But moving the cliff will still leave the underlying problem intact

The Obama administration and the Congress plan to address these problems in two steps: a small deal and a grand bargain. The smaller deal will be struck by the end of year which would extend most of George W. Bushes’ tax cuts temporarily. The deal will also delay the automatic cuts to defense and other spending, and raise the legal ceiling on issuing new debt. The second step would be a “grand bargain” next year on long-term tax and entitlement reform.

The prospect of such a deal depends heavily on whether the two sides are in any better mood to compromise than they were last year. Both sides want a short-term deal linked to a longer-term one that raises revenue by reforming the tax code and slowing the growth in entitlement spending. During previous failed efforts to reach a grand bargain, both sides agreed, however briefly, to important concessions: Mr. Boehner to raise $800 billion in revenue through tax reform, Mr. Obama to a higher Medicare retirement age and less generous inflation protection for Social Security benefits. They also agreed on some $2 trillion of miscellaneous cuts to defense, Medicaid and other programs.

Another problem is how to ensure in advance that rewriting the tax code and entitlements, which could easily take a year, produces the promised deficit reduction. Despite their high-minded rhetoric, neither Democrats nor Republicans relish the political blow back that comes with cutting entitlements and tax breaks. Either way, there would be no easy way out. 

Expansion of Presidency under FDR

Franklin Delano Roosevelt is generally regarded as one of the top U.S. Presidents. President Franklin Delano Roosevelt began a new era in American history by ending the Great Depression that the country had fallen into in 1929. When President Franklin Delano Roosevelt assumed the Presidency on March 4, 1933, he gained leadership of a deeply isolationist country struggling to survive a depression and yearning for change. When Roosevelt died twelve years and one month later, he had lifted the United States to world power status, provided recovery from economic depression, incorporated rhetoric as a means to reach the masses, and expanded the powers of the Presidency. In short, FDR had created the Modern Presidency. Through his New Deal Programs, his ability to increase the United States’ worldwide influence, his Fireside Chats, and his expansion of Presidential powers, Roosevelt became the first Modern President and established the precedent all future presidents were to follow. His social reforms gave people a new perspective on government. Government was not only expected to protect the people from foreign invaders, but to protect against poverty and unemployment.

The differences between great and mediocre presidents centers on their ability to grasp the importance of leadership style. Truly great president, such as FDR, understood that the White House was a seat of power from which decisions could flow to shape the national destiny. They recognized that their day to day activities and how they went about them should be designed to bolster support for their policies and to secure congressional and popular backing that could translate their intuitive judgment into meaningful action. Going public and mobilizing public opinion was another great trait of a great president, a concept FDR understood very well. FDR became the first president to communicate personally with Americans across the nation at the same time. He utilized the radio to deliver his series of Fireside Chats in which he addressed citizens as “my friends.” His calm and encouraging rhetoric inspired Americans to renew their faith in banking and to trust Roosevelt’s administration.

When President Franklin D. Roosevelt sent his first legislative package to congress he broke the traditional model of law making. The framers envisioned the congress to be making the laws, but that soon changed as soon as FDR came into power. In the beginning of his first term, Congress passed an unprecedented amount of legislation during the “Hundred Days.” The Hundred Days were crucial in providing direct relief from depression, but a more appropriate model of the president as chief legislator comes from FDR’s creation of the New Deal political coalition. With this, FDR shifted the presidency into a law and policy maker role. Since FDR, modern presidents have played a major role in setting the legislative agenda.

Franklin Roosevelt redefined the American presidency. By leading America from an isolationist to a world power, strengthening the central government through the establishment of the New Deal Coalition, using encouraging rhetoric to establish a connection with Americans, and expanding the president’s administrative capabilities, Franklin Roosevelt set standards of leadership and conduct all current and future presidents would be wise to emulate.

The Development of Presidential Power

The presidential authority was something that had to be established over time because presidential authority meant very little at the beginning of our nation. During Washington’s presidency, the entire federal budget was only about $40 million or approximately $10 for every citizen in America. Our country has come a long way since then. Now the federal budget is $3.55 trillion, or $11500 for every man, woman and child. The executive branch has become more powerful over time. In actuality, the drafters of the Constitution did not expect the executive branch to wield the amount of power it wields today. In fact, James Madison, the Constitution's principal architect, worried that the "balance of powers" tilted toward the House of Representatives. Madison believed that its control over taxes and spending and its ability to make laws that narrowed the powers of the executive and the judiciary made the legislative branch the real center of national power.

But from the start, presidents worked to protect and expand their turf—and they generally succeeded. George Washington set several precedents for future presidents. He took every opportunity to establish the primacy of the national government. In 1794, Washington used the militia of four states to put down the whiskey rebellion. He began the practice of regular meetings with his adviser, thus establishing the cabinet system. He also asserted the role of the chief executive in the conduct of foreign affairs. When Congress requested documents pertaining to the controversial Jay Treaty, he refused to turn them over, introducing the doctrine of executive privilege and making a point about the autonomy of the executive branch. Washington made it clear that the Senate’s function was limited to approval of treaties and did not include negotiation with foreign powers. Over the course of the nineteenth century, other presidents added new weapons to the office's arsenal of powers. Andrew Jackson was the first to make extensive use of the veto and Abraham Lincoln read broadly into his wartime powers as commander-in-chief. Lincoln suspended the writ of habeas corpus, expanded the size of the US army, ordered a blockade of southern ports and closed the U.S. mail to treasonable correspondence. Lincoln argued that the inherent powers of his office allowed him to circumvent the constitution in time of war. But it was with Teddy Roosevelt and the arrival of a new, more complex century, did the office's power grow at an even faster pace.

Part of this growth in the presidency might be classified as natural—the inevitable result of the historical process. As the nation's economy grew, the government needed to assume a larger regulatory role. As the world shrank, enabling the United States to increase its international presence, the federal government needed to expand its diplomatic presence. And many of the new demands placed on government could not be easily met by Congress. Congress often is unable to respond to fast-changing events- especially in foreign affairs. In a crisis, the president is the only individual that can act quickly and decisively on behalf of the entire nation. For example, FDR took office in 1933 in the midst of a major crisis, the great depression. To jump start the American economy, FDR asked the congress for “broad executive power.” He set up the New Deal, which profoundly and permanently changed the institution of the presidency as new federal agencies were created to implement it. FDR established the modern presidency of today, including a burgeoning federal bureaucracy, an active and usually leading role in both domestic and foreign policy and legislation, and a nationalized executive office that used technology to bring the president closer to the public.