LeRoy Goldman
The Shadow Knows

Published: Sunday, January 20, 2013 at 4:30 a.m.

          Obama's going on the offensive

Last Sunday's column began, "Now that the president has been re-elected, the only thing left for him that counts is his legacy." Although he won't give voice to it, there is no doubt that President Barack Obama knows this first term has not achieved all that much. And he knows that as long as radical Republicans control the House of Representatives, his maneuvering room is severely limited.

In other words, he's trapped. And, if you assume House Republicans will never sit down at the bargaining table with him, then either he must concede that he has no real chance to leave office in 2017 with a legacy that will put him in the pantheon of great U.S. presidents, or he must find a way for Democrats to recapture the House in 2014.

And his first move on the chessboard to set up the House GOP for their demise two years hence is his oft-repeated statement that he will not negotiate with Congress over the need to raise the debt ceiling. Just a few days ago, in the final news conference of his first term, President Obama stated that he would not negotiate the debt ceiling while the House Republicans hold a gun to the head of the American people.

He's made these kinds of statements in the past about the debt ceiling and about income taxes, but he has backed down in the face of Republican intransigence. However, this time he means it, and he's hoping the GOP will be naïve enough to assume he's bluffing again. If they foolishly make that assumption, he's going to obliterate them.

He wants them to assume he's bluffing because that will embolden them and cause them to push the nation into default and/or shut down the government. When that happens, Social Security payments, veterans' benefits and military pay will be delayed. It ain't gonna be pretty. Obama is betting that when the tea party Republicans take those draconian steps, they will find that the nation turns on them with a vengeance, thus setting the stage for their demise on Election Day in 2014.

We need only look at the symbolism the president will use in order to appreciate what's coming as we approach his private inauguration today, the public inaugural at the Capitol on Monday and his State of the Union address on Feb. 12. Monday is Martin Luther King Jr. Day, and Feb. 12 is the anniversary of the birth of President Abraham Lincoln. Moreover, the backdrops for all the symbolism soon to be unveiled are the 150th anniversaries of Lincoln's Emancipation Proclamation and the Battle of Gettysburg, which was the turning point in the Civil War.

At his swearing-in Monday, Obama will use two Bibles. The first is the Lincoln Bible that the former president used at his inauguration in 1861, and the second will be Martin Luther King Jr.'s traveling Bible.

And there's more. It is likely that Steven Spielberg's powerful and evocative film "Lincoln" will sweep the Academy Awards on Feb. 24. Don't be surprised if Spielberg and presidential historian Doris Kearns Goodwin, the author of "Team of Rivals" upon which the movie was based, are seated in the House Gallery next to a beaming first lady Michelle Obama during the State of the Union address.

Lastly, when the confrontation between the president and the House radicals reaches the boiling point in February, the nation will be in the midst of Black History Month with celebratory events in the media, public schools, universities and churches — well, most churches.

The cumulative effect of the use all of these symbols from late January through March, as the battle lines are drawn between President Obama and the House radicals, is going to be devastating for the GOP. By the time it's over, Obama will have morphed himself into a black Abraham Lincoln and turned the ideas and ideals of the founder of the Republican Party into the sharp end of the spear that will pierce the heart of the GOP insurgents.

It's going to be very bloody, as was Gettysburg. It's going to be akin to the decisive battle on the third day at Gettysburg when 12,500 Confederate soldiers, led by Maj. Gen. George Pickett, charged the center of the Union line on Cemetery Ridge. The carnage on both sides was ghastly, but Confederate Gen. Robert E. Lee's Army of Northern Virginia was decisively defeated. Lee had no choice but to begin his tortured retreat that culminated at Appomattox.

Now don't get me wrong — I'm no fan of President Obama. I have long believed he was not adequately prepared for the job and that his tenure thus far has been feckless and timorous. But the House Republican radicals have proven themselves to be something far more sinister and far more malevolent than any of us suspected. It's what caused Colin Powell to say on "Meet The Press" last Sunday, "There's also a dark — a dark vein of intolerance in some parts of the party."

It's always the case that doctrinally driven zealots of all stripe inevitably push their luck to the self-destructive breaking point. In a forced choice between benign and malignant, I'll take benign every time.

The Shadow's deciding which GOP House patsy to defeat in 2014. Hopefully, it won't need to be the one in the 11th District of North Carolina! Goldman, as always, can be reached at: Email Me

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LeRoy Goldman: The Shadow Knows

Obama's legacy forming amid debt fights

Now that the president has been re-elected, the only thing left for him that counts is his legacy. So far, that legacy is thin gruel. And unless the president has got a new way of doing business up his sleeve, there is no good reason to expect that he will leave office in 2017 as anything more than a pedestrian president.

Remember the centerpiece of his 2012 campaign — a tax increase for "millionaires and billionaires"? Well he's got it now, and it's worth $60 billion a year, enough to run the federal government for a week. Wow! Instead of a campaign that laid out Obama's road map for dealing with the real problems the nation faces, we got a vapid, yet successful, exercise in the politics of class warfare.

But now Obama must govern successfully or leave office with his tail between his legs. He's got to find a way to get the "grand bargain" enacted that will rein in the out-of-control entitlement programs, including Medicare, Medicaid and Social Security. Doing that is the key to curbing the death spiral of debt that chokes the economy and prevents job growth.

He must find a way to reform and simplify the income tax code for individuals and corporations. He needs to achieve comprehensive immigration reform. The Newtown massacre may enable him to ban assault weapons and high-capacity magazines. And he needs to end the war in Afghanistan and wring the waste out of the Pentagon. None of that can be achieved by continuing business as usual in Washington.

Standing in the president's way is the tea party-dominated House that aims to thwart him at every turn. Obama's nemesis is the work of his own creation. He created them by the way he and the congressional Democrats governed in 2009-10. Remember the stimulus and Obamacare? Their passage is what brought the tea party to power in 2010. Since then, they have become the self-destructive face of a dying Republican Party.

On New Year's Day, the president signed the bill that settled the dispute over raising taxes on the wealthy, but it kicked the much more vital and incendiary issues of raising the debt ceiling and the "sequester" down the road until March. Most House Republicans, led by the tea party insurgents, voted against the legislation. They are bitter in their defeat, and they believe that the forthcoming battle over raising the debt ceiling gives them their best opportunity for vengeance, just as it did when the debt ceiling was last raised in 2011.

In the battle, soon be joined, the tea party will be willing to close the government, to roil the world's stock markets, and to send America over the fiscal cliff. They will stop at nothing to bring Obama to his knees. Moreover, they believe they have the president cornered. And more importantly, they believe that the president will be so wounded by this fight that he will not have the political capital or the political will left to accomplish his far-reaching domestic and foreign policy agenda.

But at the White House on Jan. 2, the president said, "I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up."

What did he mean? He didn't say, but here are two possibilities.

Section 4 of the 14th amendment to the Constitution states in part, "The validity of the public debt of the United States shall not be questioned." It is possible that the president is planning to invoke this provision of the Constitution and instruct the Treasury Department to continue to issue bonds beyond the debt ceiling, thereby rendering the ceiling and the necessity for Congress to raise it unnecessary.

Were the president to take such a bold step, it would turn the tables on the Republicans. They will go nuts. Then they will attempt to take the matter to court. The outcome in court is not clear. Legal analyst Jeffrey Rosen believes that Section 4 gives the president unilateral authority to raise or ignore the debt ceiling. Legal scholar Garrett Epps and fiscal expert Bruce Bartlett have argued that the debt ceiling itself may be unconstitutional.

On the other hand, the dean of the University of California Irvine School of Law, Erwin Chemerinsky, has argued that even a "dire financial emergency" would not permit the president to raise the debt ceiling.

The second option is this. U.S. law does not place a limit on the denomination of minted coins. Thus the president could direct the minting of a $5 trillion coin, for example, to be used to buy back the nation's debt. Obama could call that option "Heads I win, tails you lose."

Either of these moves would isolate and emasculate the House GOP. And in 2014, if the Democrats pick up just 17 House seats, they recapture the House. And that opens wide the legacy floodgates.

From 1992-2004, Barack Obama was a lecturer at the University of Chicago Law School. He lectured on constitutional law. We are about to find out whether he knew what he was talking about.

The Shadow's planning to succeed Secretary Geithner at Treasury, but Goldman can be reached at:   Email Me

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Despite a last-minute compromise, US remains nation of cliff dwellers

Something significant and quite extraordinary happened in Washington last Tuesday — the federal government worked! For a few brief hours, the president and the Congress declared an armistice in the nonstop war of attrition that has crippled Washington for the past 15 years and instead successfully grappled with legislative matters of great consequence for the nation.

The Congress has passed and the president has signed into law a bill that temporarily averts what otherwise would have produced fiscal and economic Armageddon.

It’s important to be clear on what’s been accomplished and what’s left undone. For the first time since 1990, the Congress has voted on a bipartisan basis to raise taxes. The legislation was passed by the Senate 89-8. Any senator could have brought the entire process to a halt with a filibuster. None did!

Speaker Boehner allowed the House to vote on the Senate- passed measure, and the House adopted it by a vote of 257-167. The deal came within a whisker of being torpedoed by the tea party Republicans. In the final House vote, only 85 of the 241 Republicans supported the bill. One can hope that this vote will mark the beginning of the end for the tea party wingnuts.

Here are the main provisions of the legislation: The Bush-era tax cuts of 2001 and 2003, which technically expired at midnight on New Year’s Eve, are reinstated and made permanent for most Americans. However, individuals with incomes above $400,000 and couples with incomes above $450,000 will face higher taxes. For them, the effective tax rate will rise from 35 percent to 39.6 percent. This will produce an additional $60 billion dollars annually — enough to run the government for about a week! In addition, those high-income individuals will see their capital gains tax rate increase from 15 percent to 20 percent.

The legislation also extends unemployment benefits another year for the long-term unemployed, it prevents a 27 percent cut in physician fees for doctors who treat Medicare patients, it removes the threat of a gigantic spike in milk and dairy prices that could have occurred because of the deadlock on the farm bill, and it includes numerous tax breaks for businesses and for renewable energy.

The new law also resolves two long-standing tax problems, the Alternative Minimum Tax and the Federal Estate Tax. The AMT was initially enacted in 1969 because there were 155 highincome households in America who paid no income tax. The AMT was designed to correct that inequity, but Congress never adjusted the AMT for inflation. Over the decades, it has affected more and more people, including the middle class. The new legislation permanently removes that threat to the middle class.

The legislation also ends uncertainty with respect to federal estate taxes. They will now be levied only on individuals whose estates are in excess of $5 million and couples whose estates exceed $10 million. In addition, those amounts will be annually adjusted for inflation.

Finally, the legislation delays for two months the “sequester” that would otherwise have begun to make what some believe are draconian reductions in both domestic and defense spending.

But for all that this legislation accomplishes, including the bipartisan manner in which it was enacted, the hard fact of the matter is that it barely qualifies as foreplay in terms of what is coming in the next couple of months.

In fact, although a precipitous fall off the fiscal cliff has been temporarily averted, America remains a nation of cliff dwellers. Nothing has yet been resolved on the much larger and much more contentious issues of debt, deficit and spending. And those issues can no longer be avoided.

Although most Americans don’t yet realize it, on New Year’s Eve the nation breached the national debt ceiling. The Secretary of the Treasury will use his authority to keep the United States from defaulting on our obligation to service our debt by moving money from one account to another for a couple of months. But by March, the debt ceiling limit will have to be raised or default will occur. If default occurs, the credit worthiness of the United States will be downgraded. That will produce national and international economic chaos. America would then resemble Greece, or worse, a banana republic.

In addition and at the same time, the two-month extension of the dreaded sequester will expire. What all of this means is that the time will be upon the president, the Congress and all of us to face the music, or to really send the nation over the fiscal cliff.

The only way out of this much more fundamental problem is to constrain the portions of the federal budget that are leading us to economic and fiscal catastrophe — the entitlements — Medicare, Medicaid and Social Security.

Fixing the runaway entitlements and rewriting and simplifying the income tax code for individuals and corporations is what we must do to save our economy and our way of life. It can only be accomplished successfully on a bipartisan basis.

The odds against success are long, and time is short. President Obama has yet to show the courage or the competence to lead such an effort. After all, it was Joe Biden, not Barack Obama, who brokered the compromise last week. The House Republican Caucus, dominated by uncompromising tea party zealots, is nothing but a destructive band of simpletons.

We’re gonna need a miracle!

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