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eddhead
July 22nd, 2011, 06:11 PM
http://www.washingtonpost.com/business/economy/senate-rejects-conservative-budget-proposal-as-obama-boehner-reach-for-grand-bargain/2011/07/22/gIQAzskYTI_story.html?hpid=z1

Obama-Boehner talks collapse, House Republicans say


By Paul Kane, Lori Montgomery and William Branigin, Updated: Friday, July 22, 6:00 PM


Debt-reduction negotiations between President Obama and House Speaker John A. Boehner collapsed Friday, derailing an effort to reach a landmark agreement to cut spending, overhaul the tax code and avert a government default, according to senior House Republican aides.


House leaders are now working with Senate leaders to craft an alternative plan to raise the federal debt limit, but so far they have not reached agreement on a way to meet an Aug. 2 deadline and avert a potentially major fiscal crisis.


Boehner (R-Ohio), who had been negotiating a $3 trillion deficit-reduction deal with Obama, planned to notify his Republican Conference of the development in a letter Friday night.


Word of the collapse of the talks came hours after Obama publicly reiterated his insistence that any broad deficit-reduction plan must include new tax revenue in addition to large spending cuts. Earlier Friday, the Senate rejected a bill from the Republican-controlled House that would have required a balanced-budget amendment and massive cuts, but no tax hikes.


The Senate also set aside immediate plans to consider a bipartisan measure to raise the federal debt limit and avert a government default, leaving it to the House to approve such a plan first. The moves were made in the hope that the House can pass the so-called “grand bargain” to reduce the deficit and raise the debt ceiling next week.


Speaking at a town hall meeting at the University of Maryland in College Park, Obama told a largely supportive audience, “We can’t just close our deficit with spending cuts alone.” That would mean senior citizens would have to “pay a lot more for Medicare,” students would have trouble getting education loans, job training programs would be trimmed and there were be “devastating cuts” in medical and clean-energy research, he said.


“If we only did it with cuts, if we did not get any revenue to help close this gap . . . then a lot of ordinary people would be hurt, and the country as a whole would be hurt,” Obama said. “And that doesn’t make any sense. It’s not fair. And that’s why I’ve said, if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well.”


Obama spoke a day after his talks with Boehner on a far-reaching deficit-reduction plan ran into a revolt from Democrats furious that the accord appeared to include no immediate provision to raise taxes.


With 11 days left until the Treasury begins to run short of cash, Obama and Boehner were still pursuing the most ambitious plan to restrain the national debt in at least 20 years. Talks focused on sharp cuts in agency spending and politically painful changes to cherished health and retirement programs aimed at saving roughly $3 trillion over the next decade.


But in his remarks Friday, Obama appeared to stick to his insistence that any large deficit-reduction deal include increased tax revenue. He provided no details of his talks with Boehner and made no mention of Democratic lawmakers’ objections to what they were told was a plan to postpone rewriting the tax code.


“This idea of balance, this idea of shared sacrifice, of a deficit plan that includes tough spending cuts but also includes tax reform that raises more revenue, this isn’t just my position,” he said. “This isn’t just a Democratic position. This isn’t some wild-eyed socialist position.” Rather, it argued, it is a position taken in the past by presidents from both parties who have signed major deficit-reduction deals.


“So we can pass a balanced plan like this,” Obama said. “The only people we have left to convince are some folks in the House of Representatives. We’re going to keep working on that.”


Obama also spoke forcefully about the need to raise the $14.3 trillion debt ceiling in the coming days.


“The one thing we cannot do is decide that we are not going to pay the bills that previous Congresses have already racked up,” he said. “The United States of America doesn’t run out without paying the tab. We pay our bills. We meet our obligations. We have never defaulted on our debt. We’re not going to do it now.”


After a 51-46 vote in the Senate against the House act to mandate balanced budgets, Majority Leader Harry M. Reid (D-Nev.) told his colleagues that the “Senate will wait anxiously” as the president and speaker continue their bargaining .


Boehner has told Reid and his own House colleagues that, if that deal comes together, the House must pass it by Wednesday to leave enough time to approve the comprehensive measure in the Senate, where parliamentary hurdles could drag out the process perilously close to the Aug. 2 deadline.


The Obama-Boehner plan is far more sweeping than the backup plan that Reid and Senate Minority Leader Mitch McConnell (R-Ky.) had been drafting, and its potential sweep has frayed nerves among both liberals and conservatives.


Lawmakers on both sides of the aisle say they are anxious to see the final framework and its impact on tax rates and cuts to popular entitlement programs. Reid, who was briefed by Obama Thursday night, along with other Democratic leaders, did not publicly endorse the emerging plan Friday morning.


“A lot of what’s going on, we don’t know,” he said in a speech on the Senate floor. “I wish them well.”


The deal that Obama and Boehner are trying to forge does not include specific tax increases as part of legislation to lift the debt limit, Democratic lawmakers said. Instead, savings would be generated through an overhaul of the tax code that would lower personal and corporate income tax rates while eliminating or reducing an array of popular tax breaks, such as the deduction for home mortgage interest. The tax rewrite would be postponed until next year.


Democrats reacted with outrage as word of that framework filtered to Capitol Hill Thursday, saying the emerging agreement appeared to violate their pledge not to cut Social Security and Medicare benefits as well as Obama’s promise not to make deep cuts in programs for the poor without extracting some tax concessions from the rich.


When “we heard these reports of these mega-trillion-dollar cuts with no revenues, it was like Mount Vesuvius. . . . Many of us were volcanic,” said Sen. Barbara A. Mikulski (D-Md.).


White House budget director Jacob J. Lew denied that a deal without taxes was in the works. “We’ve been clear revenues have to be part of any agreement,” he told reporters.


After a lunchtime meeting between Lew and Senate Democrats, Reid made no attempt to hide his anger, telling reporters that his caucus would oppose the “potential agreement” because it appeared to include no clear guarantee of increased revenue.


“The president always talked about balance, that there had to be some fairness in this, that this can’t be all cuts. There has to be a balance. There has to be some revenue and cuts. My caucus agrees with that,” Reid said. “I hope that the president sticks with that. I’m confident that he will.”


Congressional and administration officials said the White House informed Democratic leaders about the talks after Obama met privately with Boehner and House Majority Leader Eric Cantor (R-Va.) late Wednesday. Congressional aides, speaking on the condition of anonymity to detail private discussions, said the White House acknowledged that the emerging agreement is “to the right of the Gang of Six” — a bipartisan Senate debt-reduction framework unveiled this week — and far removed from what Democrats have said would be acceptable.


The White House is seeking a trigger that would allow the Bush-era tax cuts to expire for the nation’s wealthiest households. Boehner has proposed repealing provisions of Obama’s health care law, including the requirement that all individuals purchase health insurance after 2014.


Obama summoned top Democratic leaders in both the House and the Senate back to the White House later Thursday for further discussions.


While Senate Democrats fumed, other Democratic officials familiar with the administration’s approach to the talks said the goal is still to reduce the debt in a balanced way that tackles both the tax code and rising entitlement spending. While the two sides are nowhere near an agreement, the officials said, they are focused on a two-part package. The first measure would raise the debt limit through 2013 and specify cuts to domestic agencies, including the Pentagon, over the next decade.


If both sides agree, that measure could also include some tax and entitlement changes, such as ending breaks for corporate jets, raising the Medicare eligibility age or changing the measure of inflation used to adjust Social Security benefits. However, the largest tax and entitlement changes are likely to be left until next year, the officials said, when policymakers will have more time to weigh the effects on taxpayers, program beneficiaries and the economy.


The officials said the toughest part of the negotiations has been finding common ground on the magnitude of those changes and the shape of a mechanism that would automatically cut spending or raise taxes if Congress fails to follow through. In any case, the officials said, no taxes would go up and no entitlement changes would take effect until at least 2013.


Before leaving for the White House on Thursday, Reid cut short debate on the GOP bill that would impose federal spending caps and send a constitutional amendment requiring balanced budgets to the states for ratification. Reid had considered extending debate into the weekend, but instead he angrily declared it was “perhaps some of the worst legislation in the history of the country” and set the final vote for Friday.


If the Obama-Boehner deal comes together, House Republicans would move the legislation first in their chamber, perhaps later next week, according to a senior Senate GOP aide. This move would short-circuit a previous effort by Reid and Senate Minority Leader Mitch McConnell (R-Ky.), who have been crafting a backup plan that would allow Obama to increase the federal debt limit himself unless a two-thirds majority in Congress objected.


Policymakers are racing to forge agreement on a plan to stabilize the soaring national debt before Aug. 2, when the Treasury will be unable to pay the nation’s bills without additional borrowing authority. Lawmakers in both parties are reluctant to raise the $14.3 trillion debt limit without a clear plan for restraining future borrowing. But they are running out of time to strike such a deal, draft legislation, submit it to congressional budget analysts and win the votes needed to push it through Congress.


Despite the loudly ticking clock, Obama and Boehner are trying to revive the “grand bargain” that eluded them earlier this month. Then it was Republicans, including Cantor and other conservatives, who raised objections, saying they were unwilling to trade tax increases of as much as $1 trillion over the next decade for deep spending cuts and significant changes to Social Security and Medicare.


Since then, with polls showing increasing public annoyance with GOP intransigence, Cantor has signaled that his views on a grand bargain are in flux. So Boehner restarted talks with the White House. The White House, in turn, according to congressional sources, dropped its demand for a big upfront concession from Republicans: an agreement to immediately extend tax cuts enacted under President George W. Bush for middle-class households, leaving cuts benefiting the wealthiest households to expire on schedule next year.


Democrats said this element of the deal would have given them leverage against Republicans to force a rewrite of the tax code that raises revenue. Republican leaders are insistent on extending tax cuts for the highest earners, including many entrepreneurs and business owners. If that part of the bargain were taken off the table, the aides said, Democrats see no guarantee that Republicans would actually agree to an overhaul of the tax code that raises revenue.


Democratic Senate leaders warned the Republican-controlled House, meanwhile, that time is running out for a comprehensive deal that would include raising the federal debt limit. They urged the House to remain in session and to ignore “extreme right-wing ideologues” who reject compromise.


Reid said Friday that because of “changed circumstances,” as well as the constitutional requirement for revenue bills to originate in the House, he was dropping his call for the Senate to remain in session this weekend.






Staff writer Felicia Sonmez contributed to this report.

mariab
July 23rd, 2011, 08:16 PM
Congressional leaders work to avert default
Boehner, McConnell say they'll work over the weekend on plan to raise borrowing limit and cut spending.

msnbc.com staff and news service reports msnbc.com staff and news service reports
updated 29 minutes ago 2011-07-23T23:17:27

http://msnbcmedia3.msn.com/j/MSNBC/Components/Photo/_new/110723-obama-hmed-9a.grid-6x2.jpg
Jewel Samad / AFP - Getty Images President Obama chats with House Speaker John Boehner before a meeting in the Cabinet Room at the White House on Saturday, as the two tried to revive talks over the government's debt limit.


Congressional leaders were working over the weekend to design new legislation to head off a government default.
House Speaker John Boehner told House Republicans in a conference call after meeting with President Barack Obama Saturday that he hoped to be able to announce a "viable framework for progress" by 4 p.m. EDT on Sunday, before Asian financial markets open, two participants told the Associated Press.
The goal is to produce at least a framework agreement to raise the nation's debt limit by Monday, congressional officials said. Even that would allow scarcely enough time for the House and Senate to clear legislation in time for Obama's signature by the Aug. 2 deadline, a week from Tuesday.
Inconclusive meeting Saturday
Obama conferred at the White House for about an hour Saturday with congressional leaders in an attempt to revive negotiations over raising the debt ceiling, but no news of progress emerged from that meeting.The Obama-Boehner negotiations had ended abruptly Friday when the House speaker decided there was no prospect of success.
Financial markets could react nervously to the potential that no accord might be reached by the time the government reaches the debt limit on Aug. 2 and is unable to borrow more money to finance its debt.
While warning of the gravity of the situation, Obama said Friday night, "I remain confident that we will get an extension of the debt limit and we will not default."
In his press conference Friday night, frustration was evident in Obama’s voice as he said, “I’ve been left at the altar now a couple of times” in what he described as "very intense negotiations" with Boehner.
“I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything? Can they say yes to anything?”
Referring to congressional leaders, he said, “We have run out of time and they are going to have to explain to me how it is that we are going to avoid default.”
Obama's only bottom line
Obama said his only requirement for an agreement was legislation that provides the Treasury enough borrowing authority to tide the government over through the 2012 election. Boehner said he had little interest in a short-term extension either.
Obama said Friday night that he'd offered Boehner was “over a trillion dollars in cuts to discretionary spending, both domestic and defense. We then offered an additional $650 billion in cuts to entitlement programs — Medicare, Medicaid, Social Security.”
He did not specify a time period for the cuts, but presumably he meant over the usual ten-year budget forecasting period. Cuts of $650 billion in Medicare, Medicaid, and Social Security outlays would amount to roughly a three percent reduction in the ten-year cumulative spending of those programs.
He said he also asked for new tax revenues, but less than the $1 trillion that the bipartisan “Gang of Six” senators were seeking in their proposal released Tuesday.
If his proposal was unbalanced, Obama said, “It was unbalanced in the direction of not enough revenue.”
Boehner gives his side of the story
But in his version of events, Boehner Friday night blamed Obama for insisting that $400 billion more in new taxes must be raised as part of any agreement.
"It's the president who walked away from his agreement and demanded more money at the last minute," Boehner said. "And the only way to get that extra revenue was to raise taxes."
He said, “We had an agreement on a revenue number — a revenue number that we thought we could reach based on a flatter tax code with lower rates and a broader base that would produce more economic growth, more employees and more taxpayers, and a tax system that was more efficient” in collecting taxes.
Boehner said, “A deal was never reached, and was never really close.” He said he’d decided “to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward.”
Where some agreement was reached
Still, aides on both sides said agreement had been reached on two highly controversial changes.
One would raise the age of eligibility of Medicare gradually from 65 to 67 for future beneficiaries, while the other would slow the increase in cost-of-living raises in Social Security checks.
Additionally, aides said the two sides were not able to bridge their differences over the triggers designed to force Congress to enact both tax reform and cuts to Medicare and other benefit programs by early next year. Both sides also were apart on the size of cuts for Medicaid, the health care program for poor and disabled Americans.
Publicly held debt is now at its highest level than at any time in American history other than the period after World War II when the costs of the war were being paid off.
In a report last month, the Congressional Budget Office said publicly held debt “is expected to equal roughly 70 percent of the economy’s annual output, or gross domestic product (GDP), at the end of this fiscal year, up from 40 percent at the end of 2008.”
It said "that sharp deterioration in the fiscal situation" was caused by "an imbalance between spending and revenues that predated the 2007–2009 recession and turmoil in financial markets," a drop in tax revenues caused by workers losing their jobs or suffering pay cuts, and an increase in spending on Medicaid and other benefit programs caused by the recession, as well as by the costs of policies, such the $830 billion stimulus , enacted in response to the recession.

http://www.msnbc.msn.com/id/43864749/ns/politics-capitol_hill/?GT1=43001

mariab
July 23rd, 2011, 08:24 PM
Some consequences of not raising the debt ceiling:

Six consequences of not raising the debt ceilingNational Journal (http://www.nationaljournal.com/) May 27, 2011

Treasury Secretary Timothy Geithner announced on May 16 that the federal government had reached its borrowing limit. With the $14,294,000,000,000 cap on debt imposed by Congress firmly in place, the Treasury began a series of "extraordinary" measures designed to stave off a potential government default until August 2.
If Congress fails to raise the debt limit by August 2, the Treasury has only two options: It can default on its debt - meaning, stop paying its creditors around the world - or continue to pay creditors but halt any other federal spending above what the government collects in taxes. In effect, that would mean an overnight spending cut of about 40 percent.
Here are six consequences if the Treasury is forced to choose one of those options:
Cut $125 Billion Per Month - Right now, the federal government must borrow an additional $125 billion each month to finance all of its commitments. If the Treasury chooses to continue to pay creditors but stop all other federal spending, the government will have to begin reducing its spending by $125 billion every 30 days--mmediately. These cuts could affect everything from NASA and the FBI to congressional salaries and White House operating expenses.
Treasury Bonds Collapse - If the government defaults on its debt, economists say that prices for Treasury bonds (http://nationaljournal.com/magazine/main-street-bigger-problems-than-the-debt-ceiling-20110526) would collapse and interest rates would probably soar to record highs. The centrist Democratic think tank Third Way estimates that the bond rate increases alone would eliminate nearly 650,000 jobs in the United States.
Cut Medicare and Social Security (http://topics.govexec.com/Social+Security/) - To reduce spending by $125 billion (http://nationaljournal.com/article/424373) a month, the government would have to make deep cuts to the two giant entitlement programs for the elderly, Medicare and Social Security.
Stock Market Plunge - Wall Street generally agrees with Geithner that it would be a disaster if the U.S. defaulted on its debt. In addition to damaging the nation's creditworthiness in global markets, most experts agree it would torpedo the stock market (http://nationaljournal.com/magazine/wall-street-raising-debt-ceiling-is-a-done-deal-right--20110526?page=1) and very possibly trigger a double-dip recession.
Government Furloughs or Mass Layoffs - The federal government would most likely turn to furloughs or mass layoffs to immediately cut spending, possibly including the salaries earned by the approximately 2,000 people who work at the Bureau of Public Debt, the department that borrows the money to keep the federal government running. This could drain even more money from local economies and the states' tax bases.
Sky-High Mortgage and Interest Rates - If the government defaults, interest rates on mortgages would shoot up and homebuyers and small businesses would have trouble getting loans even if they could afford the higher interest.
http://www.govexec.com/dailyfed/0511/052711-debt-ceiling.htm


More reasons to worry:

Even More Evidence of the Negative Consequences of not Raising the Debt Limit

Steven L. Taylor (http://www.poliblogger.com/) · Monday, July 18, 2011 ·

Politico posts a report (http://www.politico.com/static/PPM192_debt_ceiling_report.html) from MF Global (http://www.mfglobal.com/) that notes a failure to raise the debt ceiling would impact not just the federal government’s bond ratings, but local governments as well.
From the report:

In addition to placing the U.S. (http://wirednewyork.com/forum/#) Government’s debt under review, Moody’s also placed on review approximately 7,000 Aaa-rated muni issuances with direct links to the U.S. debt.
Over the next two weeks, Moody’s will likely place on review for downgrade thousands of additional Aaa-rated muni issuances with indirect links to federal debt and liquidity.
We believe that Moody’s has correctly identified threats to hospitals, some local governments and all state governments, as they rely on government revenue streams – particularly, Medicaid funds; but we think the problem may be even larger.
We think Moody’s understates the threat to issuers that rely on federal education (http://wirednewyork.com/forum/#) funds to sustain their normal
operations.
We believe that there could be a domino effect. If the prospect of a federal government shutdown continues to loom large, ratings agencies will be compelled to look more carefully at local schooldistricts (http://wirednewyork.com/forum/#) and municipalities that have issued securities for purposes of undertaking capital protects in support of primary and secondary education.
But, don’t listen to experts on the bond market, because what do they know?

http://www.outsidethebeltway.com/even-more-evidence-of-the-negative-consequences-of-not-raising-the-debt-limit/

mariab
July 23rd, 2011, 08:27 PM
Some people don't believe the hype:

Bachmann: Geithner is wrong about consequences of not raising debt limit (http://www.therightscoop.com/bachmann-geithner-is-wrong-about-consequences-of-not-raising-debt-limit/)

Posted by The Right Scoop (http://www.therightscoop.com/author/therightscoop/) on Jul 11, 2011 in Politics (http://www.therightscoop.com/category/politics/) | 91 Comments (http://www.therightscoop.com/bachmann-geithner-is-wrong-about-consequences-of-not-raising-debt-limit/#disqus_thread)

Bachmann tries to tell BilO that we have enough money coming in to pay off what we owe our creditors along with the big entitlements, and even tells him it’s provable by just looking at the books. But BillO in his stubbornness refuses to entertain such an idea and continues to believe what Geithner has said about catastrophic consequences of not raising the debt ceiling on August 2nd. It’s as if he has bought into the left’s narrative and believes Bachmann isn’t smart enough to convince him or something – at least that’s the vibe I got. All I wanted to hear him say was that he would check into it but as I said he wouldn’t even entertain the idea.
Despite the host I thought it was a very good interview for her. She said what needed to be said, confidently, that Geithner is wrong and refused to take BillO’s bait of calling Geithner a liar. I’m not sure why he took it there but he did. The normal first reaction would be that he’s just wrong.
I actually think he is lying, especially in light of what I know as well as what Goldman Sachs recently said, courtesy of Jim Pethokoukis (http://blogs.reuters.com/james-pethokoukis/2011/07/11/goldman-sachs-debt-default-is-extremely-unlikely/):
There are essentially two plausible outcomes. One is that the two sides agree on a deal in coming weeks, with headline cuts of $2+ trillion over a 10-year horizon, probably mostly composed of discretionary spending caps that gradually squeeze projected outlays in a highly back-end loaded fashion. The other outcome – whose probability has unfortunately risen in recent weeks – is that there is no deal by August 2. Even in this case, we continue to believe a default is extremely unlikely, as the Treasury would likely prioritize interest payments, Social Security and Medicare payments, and “essential” defense payments over other types of spending, and should have enough revenues to cover the essentials. But make no mistake: the negative consequences of failing to make other payments would be very severe. In the month of August, projected outflows exceed projected inflows by about $150bn (not annualized), or about 12% of GDP. Even if we allow for a further decline in cash holdings in the Treasury’s account with the Fed, this means that a failure to reach a deal would imply a huge, immediate fiscal retrenchment. The economic consequences of such a retrenchment would likely force a deal within a few days.

Maybe BillO should expand his list of reliable sources. Pethokoukis is a good one.
In any even I say kudos to Michele Bachmann on a good interview with an ignorant and gullible host:


http://www.therightscoop.com/bachmann-geithner-is-wrong-about-consequences-of-not-raising-debt-limit/

lofter1
July 24th, 2011, 10:43 AM
'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body

The Huffington Post (http://www.huffingtonpost.com/2011/07/23/super-congress-debt-ceiling_n_907887.html)
July 23, 2011

WASHINGTON -- Debt ceiling negotiators think they've hit on a solution to address the debt ceiling impasse and the public's unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.

This "Super Congress," composed of members of both chambers and both parties, isn't mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers -- six from each chamber and six from each party.

Legislation approved by the Super Congress -- which some on Capitol Hill are calling the "super committee" -- would then be fast-tracked through both chambers, where it couldn't be amended by simple, regular lawmakers, who'd have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.

House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal, multiple news reports (http://www.nytimes.com/2011/07/24/us/politics/24debt.html?_r=1&ref=carlhulse) and people familiar with his plan say. A picture of Boehner's proposal began to come into focus Saturday evening: The debt ceiling would be raised for a short-term period and coupled with an equal dollar figure of cuts, somewhere in the vicinity of a trillion dollars over ten years. A second increase in the debt ceiling would be tied to the creation of a Super Congress that would be required to find a minimum amount of spending cuts. Because the elevated panel would need at least one Democratic vote, its plan would presumably include at least some revenue, though if it's anything like the deals on the table today, it would likely be heavily slanted toward spending cuts. Or, as Obama said (http://www.huffingtonpost.com/2011/07/22/obama-debt-ceiling-talks-boehner_n_907502.html#185_reid-no-shortterm-deal) of the deal he was offering Republicans before Boehner walked out, "If it was unbalanced, it was unbalanced in the direction of not enough revenue." ...

FULL ARTICLE (http://www.huffingtonpost.com/2011/07/23/super-congress-debt-ceiling_n_907887.html)

BBMW
July 24th, 2011, 02:27 PM
I don't know how they get a default out of this. Tax revenues are about $2.2 trillion a year and the bond interest is about $450 billion. Keep paying the interest, and cut the rest out of other disbursements until they make a deal. The default think is unwarranted fearmongering by the administration to avoid having to make real substantive cuts in the budget.

eddhead
July 24th, 2011, 04:10 PM
yeah, it is all the administrations fault for not wanting to make substantive cuts in the budget. Really, you've got to be kidding me. Let's put this another way... this is all the fault of the tea party terrorists for not wanting to substantially increases tax revenues by repealing a Bush tax cut that contributed to our being in this position in the first case.

and btw,just who determines what other disbursements get cut?

eddhead
July 24th, 2011, 04:29 PM
^^ BTW, the administration has offered up $3TN in expenditure cuts including cuts in entitlements, defense, and discretionary categories.

BBMW
July 26th, 2011, 12:48 AM
That's not the point. They're talking about this as a default. I take that as them saying there isn't enough money to float the bond interest payments. That's appears to be patently false.

Also, the Bush tax cuts were only to the general treasury revenues. All the major entitlements have their own revenue streams, except they're all running deficits. May the need to be cut to fit their dedicated revenues. Really nothing is going to happen unless the Republicans put the Dems feet to the fire on entitlements, and that's exactly what their doing.


yeah, it is all the administrations fault for not wanting to make substantive cuts in the budget. Really, you've got to be kidding me. Let's put this another way... this is all the fault of the tea party terrorists for not wanting to substantially increases tax revenues by repealing a Bush tax cut that contributed to our being in this position in the first case.

and btw,just who determines what other disbursements get cut?

scumonkey
July 26th, 2011, 01:40 AM
hmmmm sounds like it's time to buy stock in Kool aide - a lot of "folks" seem to be drinking it ;)

lofter1
July 26th, 2011, 02:44 AM
Oh God ... Sure, just pay off the interest of the debt and everything will be hunky dory.

Say that over and over and over while the credit rating of the US gets bumped down a notch or two.

lofter1
July 26th, 2011, 02:47 AM
Enjoy the kool aid but then please get real about where we're at ...

Sources: Congressional Budget Office; Center on Budget and Policy Priorities

13667

scumonkey
July 26th, 2011, 01:39 PM
I'm not drinking any...I completely understand where we are at- not in a good place by any means.
I'm buying stock in it cause I can't believe how many people are drinking it believing everything is hunky dory!:eek:

lofter1
July 26th, 2011, 01:44 PM
Smart man. How much will that Kool Aid stock have to go up to counteract the rising interest rates and costs of living?

scumonkey
July 26th, 2011, 02:00 PM
I don't know but at the rate we're going, it'll be the only stock not crashing.

BBMW
July 26th, 2011, 03:33 PM
That's what seems upside down. Keep ladeling on vast amounts of new debt, no problem. Cap it, and they sky is falling.

I don't get how this is a "default" event, if they can plainly keep paying the interest on the outstanding debt or even roll it over. If you want to argue the point of taking out new debt to fund gov't operations, that's a different subject.


Oh God ... Sure, just pay off the interest of the debt and everything will be hunky dory.

Say that over and over and over while the credit rating of the US gets bumped down a notch or two.

eddhead
July 26th, 2011, 08:04 PM
Also, the Bush tax cuts were only to the general treasury revenues. All the major entitlements have their own revenue streams, except they're all running deficits. May the need to be cut to fit their dedicated revenues. Really nothing is going to happen unless the Republicans put the Dems feet to the fire on entitlements, and that's exactly what their doing.

But that did not prevent us from deploying accounting treatments that enabled partially offsetting deficits in the budget with surpluses in the trust fund. It is either all one big pot of stuff or it is not.

scumonkey
July 26th, 2011, 10:57 PM
http://d.agkn.com/pixel!t=650!?ct=US&st=NY&ac=212&zp=10021&bw=3&dma=3&city=13275&che=6555056&uuid=0&camid=5657365&plaid=66810974&creid=42986072&adgid=243360825



SNAPSHOT-Developments in U.S. debt talks
WASHINGTON, July 26 | Tue Jul 26, 2011 10:27pm EDT

(Reuters) - Here is the situation on Tuesday as lawmakers try to close in on a deal (http://www.reuters.com/finance/deals) for Congress to raise the U.S. government's $14.3 trillion borrowing limit by an Aug. 2 deadline and avoid a debt default:
* Competing plans to raise the debt ceiling from the Democratic-controlled Senate and Republican-controlled House of Representatives have a lot of similarities, White House senior adviser David Plouffe says.
* The House postpones an expected Wednesday vote on the plan by Speaker John Boehner, the top Republican in Congress, until at least Thursday after non-partisan budget experts say it would not deliver the spending cuts it claimed.
* President Barack Obama's chief of staff, Bill Daley, says: "There are lots of plans out there but I'm confident that the default that some people fear will not occur."
* Prioritizing U.S. debt payments to avoid a default would be "deeply disruptive" to the economy (http://www.reuters.com/finance/economy), Standard & Poor's global head of sovereign ratings says.
* The White House says it is continuing to talk behind the scenes with members of Congress to break the impasse.
* A Reuters poll shows 30 of 53 economists surveyed think at least one of the major credit agencies will strip the United States of its top-notch credit rating. Most also say wrangling over debt has already damaged the economy.
* A Reuters/Ipsos poll finds 56 percent of Americans want a combination of government spending cuts and tax increases in a deal to bring down the U.S. budget deficit and permit a vote to raise the debt ceiling -- the approach favored by Obama and his fellow Democrats.
* Obama will not use a clause in the U.S. Constitution to bypass Congress and raise the debt limit on his own, the White House says.
* Republican Representative Jim Jordan (http://www.reuters.com/places/jordan), who is aligned with the fiscally conservative Tea Party movement, opposes the Boehner plan. Steny Hoyer, the Democrats' top vote counter in the House, says "a few" Democrats may vote for it.
* The U.S. dollar falls broadly and gold hovers near a record high above $1,619 an ounce as investors seek safety. The debt gridlock also hits U.S. stocks (http://www.reuters.com/finance/stocks).
* International Monetary Fund chief Christine Lagarde urges the United States to quickly resolve the stalemate, warning that failure to reach agreement would have serious consequences for the world economy.
* United Parcel Service Inc (UPS.N (http://www.reuters.com/finance/stocks/overview?symbol=UPS.N)), the world's largest package delivery company, gives a cautious economic outlook and cites stalled U.S. debt talks, sending its shares lower.
* Americans answer Obama's request to make their voices heard on the debt crisis, crashing websites with e-mails and flooding the telephone lines of lawmakers in Washington with thousands of calls. (Compiled by John O'Callaghan)

http://www.reuters.com/article/2011/07/27/usa-debt-idUSN1E76N04120110727

Ninjahedge
July 27th, 2011, 08:53 AM
The one thing that annoys me the most are catch phrases and euphemisms.

The portions of the speech made by Obama that I have heard were all strait forward, this is what we need to do.

Then I start hearing from BOTH sides phrases like "American People" (all 2% of them), and another that fails me now which all seem to side-step the actual import of what is going on and tries to make it sound friendly and simple to the american people.

Here's the bottom line. MAJOR cuts need to be made, primarily in the Military budget. MAJOR changes need to be made in regards to regulations on Health Care Providers and ESPECIALLY insurance agencies and pharmaceutical companies (any time that Medicare is raised, the cost of care mysteriously goes up to match, I cry SHENANIGANS!!!!).

IN ADDITION, the tax breaks that Bush and Co. gave their supporters need to be allowed to expire. We need money from those than can afford it now to REDUCE the debt. The combination of losing our manufacturing and labor overseas AND a huge debt whose INTEREST ALONE is almost $500B/year is just inexcusable.

Both "sides" need to dig into their false promises and make concessions to get us back to a point where we can argue about where our SURPLUS DOLLARS will be going, not about how we are going to handle our debt.

:mad:

eddhead
July 27th, 2011, 09:23 AM
http://www.nytimes.com/2011/07/27/us/politics/27date.html?hp=&pagewanted=print


By BINYAMIN APPELBAUM
WASHINGTON — It turns out the federal government is sitting on some extra cash.


Thanks to an inflow of tax payments and maneuvering by the Treasury Department, the government can probably continue to pay all of its bills for several days after Aug. 2, providing potentially critical breathing room for Congress to raise the debt ceiling, according to estimates by several Wall Street banks and a Washington research organization.


The consensus is that the government will not run short of money until Aug. 10, when it would be unable to cut millions of Social Security checks without borrowing more money.


President Obama has described Aug. 2 as a “hard deadline” for Congress to increase the maximum amount that the government is allowed to borrow.


“We have to do it by next Tuesday, Aug. 2, or else we won’t be able to pay all of our bills,” Mr. Obama told the nation in his speech on Monday night.


Jay Carney, the White House spokesman, restated that position on Tuesday.


“That’s not a guess. That’s not a political opinion,” Mr. Carney said. “It is the judgment of career analysts at the Treasury Department. We give up our borrowing authority without action by Congress. And the result of that risks default for the United States for the first time in our history.”


That description, however, conflates two distinct events.


The government will exhaust its ability to borrow more money on Aug. 2, which is equivalent to maxing out a credit card. But there still will be cash in the federal wallet.


Some Republicans have expressed skepticism about the Aug. 2 deadline, describing it as an artificial line drawn by the Obama administration for political reasons. Analysts emphasize, however, that the deadline is real; it’s just the date that is inexact.


“Should policy makers wait till Aug. 10 to come to an agreement? If they can agree sooner, absolutely not. There are no definites in this case,” analysts for Barclays Capital wrote in a note to clients entitled “Is August 2 really ‘August 2’?”


Analysts also said that all of the estimates, including those from Treasury, were necessarily inexact, because they relied on variables like incoming tax payments. That means each passing day without a deal increases the risk that money will run out.


“This is more like predicting the weather than predicting the sunrise,” said Jay Powell of the Bipartisan Policy Center, a nonprofit in Washington that has analyzed the issue.


There are other risks in waiting. The Treasury must continue to repay debts as they come due, then borrow the same amounts anew. Officials are concerned that it will become harder to find investors for United States government securities, and that remaining buyers will demand higher interest rates.


The Treasury plans to auction about $87 billion in short-term securities next Monday and Tuesday. The following week it plans to hold a much larger auction of long-term debt.


All told, the government plans to borrow almost $500 billion in August. If interest rates climb by even a tenth of a percentage point, the annual cost would rise by $500 million.

BBMW
July 27th, 2011, 10:45 AM
This is quite true. It's also why SS is a sinking ship. They never segregated SS trust fund money, and used it to somewhat plaster over the true deficit. Now there really is no trust fund money, so SS is back to the original "pay as you go" model they knew would collapse when the baby boom hit retirement age.

But SS was always meant to be funded out of it's payroll tax. So either that should be raised to pay the current level of benefits, or benefits should be cut to the level that fits it's cash flow stream.


But that did not prevent us from deploying accounting treatments that enabled partially offsetting deficits in the budget with surpluses in the trust fund. It is either all one big pot of stuff or it is not.

BBMW
July 27th, 2011, 11:00 AM
Sorry but you're wrong about several things.

First entitlements are ballooning to the point where they're going to basically squeeze out the rest of the budget. The growth in these needs to be capped.

As far as the military, sorry, but we need it. We can end the missadventures in 'stan and Iraq, but the military at this point has been hollowed out in terms of being able to deal with a major conflict. At some point we are going bump heads with China, and we need to be prepared for this (they're pumping up their military and are preparing for it).

Health care has become a gigantic financial black hole directly because it's become something that individuals use, but someone else pays for, so no one has any incentive to control their own costs. What's needed it to move everyone to some sort of cost controlled voucher bases system. While people wouldn't have to pay all they're own health care costs, they'd have to pay a fair amount, and this would put the brakes on the out of control spending.

And you in for a nasty suprise if you think you can use corporations and the rich as a piggy bank to pay for everything. They don't need the US any more, we're not where the action is. Our corporate taxes are already higher than most of the major industrial countries, and our growth is minimal. If we squeeze them, they'll cut and run.


The one thing that annoys me the most are catch phrases and euphemisms.

The portions of the speech made by Obama that I have heard were all strait forward, this is what we need to do.

Then I start hearing from BOTH sides phrases like "American People" (all 2% of them), and another that fails me now which all seem to side-step the actual import of what is going on and tries to make it sound friendly and simple to the american people.

Here's the bottom line. MAJOR cuts need to be made, primarily in the Military budget. MAJOR changes need to be made in regards to regulations on Health Care Providers and ESPECIALLY insurance agencies and pharmaceutical companies (any time that Medicare is raised, the cost of care mysteriously goes up to match, I cry SHENANIGANS!!!!).

IN ADDITION, the tax breaks that Bush and Co. gave their supporters need to be allowed to expire. We need money from those than can afford it now to REDUCE the debt. The combination of losing our manufacturing and labor overseas AND a huge debt whose INTEREST ALONE is almost $500B/year is just inexcusable.

Both "sides" need to dig into their false promises and make concessions to get us back to a point where we can argue about where our SURPLUS DOLLARS will be going, not about how we are going to handle our debt.

:mad:

stache
July 27th, 2011, 11:30 AM
^ Yawn.

lofter1
July 27th, 2011, 11:55 AM
Top 6 Ways a U.S. Credit Rating Downgrade Could Cost Americans

CBS Money Watch (http://moneywatch.bnet.com/economic-news/blog/daily-money/top-6-ways-a-us-credit-rating-downgrade-could-cost-americans/3185/)
July 27 2010

... At this point, the scramble is to get any deal done to increase the debt ceiling before August 2nd. Neither the Boehner nor Reid debt ceiling plans (http://moneywatch.bnet.com/economic-news/blog/daily-money/with-2-sides-far-apart-on-debt-ceiling-debate-wall-street-shrugs-for-now/3171/) that were proposed on Monday — and that have no chance of passing both houses without serious compromises — seek more than $3 trillion in deficit reduction over a 10-year period.And that’s $1 trillion less than the $4 trillion in deficit cuts Standard & Poor’s says is needed (http://online.wsj.com/article/SB10001424052702304203304576446750260199940.html) to give the U.S. a solid chance of avoiding losing its AAA-rating. Both S&P and Moody’s have issued warnings that the United States could face an unprecedented downgrade in its pristine credit rating if substantive progress isn’t made on deficit reduction ...
Some possibilities:

1. U.S. borrowing costs rise $100 billion. With a lower credit rating, the theory is that investors will insist on being paid a higher yield to buy our Treasury debt. (Though Nobel Laureate Paul Krugman (http://krugman.blogs.nytimes.com/2011/07/24/moodys-blues-poor-standards-and-the-debt/) offers Japan’s experience after it was downgraded as a counter-argument to the conventional wisdom.) A new report from JP Morgan Chase (http://www.bloomberg.com/news/2011-07-26/u-s-downgrade-may-raise-interest-cost-by-100-billion-jpmorgan-says.html) says a 60 to 70 basis point rise in lending rates could end up costing the U.S. an extra $100 billion in interest payments on Treasury debt. (http://moneywatch.bnet.com/economic-news/blog/daily-money/politicians-playing-costly-game-of-chicken-with-the-debt-ceiling/3067/) Standard & Poor’s came to the same $100 billion conclusion (http://moneywatch.bnet.com/economic-news/blog/daily-money/politicians-playing-costly-game-of-chicken-with-the-debt-ceiling/3067/) nearly a month ago. For all the rhetoric about no new taxes, a downgrade that causes our borrowing costs to rise is effectively a tax hike. Same goes for states and municipalities; if there is a general rise in interest rates triggered by a downgrade, that impacts the borrowing costs for cities and states. Depending on the health of municipal coffers where you live, that could end up meaning higher taxes, or reduced services.

2. Variable rates tied to government benchmarks will rise. Any variable rate borrowing you do — from an unpaid credit card balance, to private college loans — would likely rise along with any move that pushes the prime rate higher.

3. Mortgage rates could rise as well. Same theory applies here. As rates rise, so, too, do mortgage rates. Just what the housing market doesn’t need right about now.

4. Mortgage-backed bonds would likely face a downgrade. If the mother ship takes a downgrade hit, so will its close relatives, bonds issued by Fannie Mae and Freddie Mac. That could lead to price declines for mutual funds that own these issues.

5. Money market mutual funds could come under pressure.

6. Foreign imports and vacations could cost more.

Ninjahedge
July 27th, 2011, 12:47 PM
BBMW, you are stretching my own statements beyond what I have stated.

Big business is not a cash cow, but how many buildings have you designed for Merryl Lynch? Until you see the difference in client attitude for something as simple as an OFFICE, and how banal and uncaring they were to MAJOR renovations and design changes just to suit their own plans, until you can compare that to the "average" client, you really do not know where this money that seemed to have magically "disappeared" has really gone.

Big business should go back to its original tax levels BEFORE THEY WERE GIVEN A TAX BREAK. So many repubs keep crying that this is a tax hike, when it is really just restoring old levels after a TEMPORARY break. This is RBS.

Health care has become a black hole because it is not regulated. Or, rather, INSURANCE has not been regulated. What business do you know whose only responsibility is financial management, is able to glean 25% of the money it handles? What kind of racketeering is it when a company says "I know your cost is X, but we are only going to pay you Y, and our client does not have to make up the difference"? (Copay).

And what about prescription meds? Don't get me started on all these precious gemstones that have not gone generic. For me, they can charge whatever they want for the 50 different anti depressants and erectile dysfunction meds, but when it comes to antibiotics or other critical meds (especially for the elderly) charging as much as Medicare will bear is unscrupulous.

As for the military, more BS. We are in SO many different countries with SO much active or on immediate standby that it costs too much to keep the Juggernaut alive. We need to pare down to what is needed to handle our own interest and some of our neighbors, not half the world. Your attitude is the very thing that got us INTO this.

"Oh the RED THREAT is upon us, we needz military might!!!!"

How about decommissioning 2/3 of our redundant nuke program for a start?

We need to have a defense force even in modern times, but having something that is no longer financially feasable is a way to fall like Russia, under the weight of our own armor and the debt it carries with it.

So whatever, get your herrings out and start dancing.

nick-taylor
July 27th, 2011, 01:40 PM
I suspect that there will be a downgrade, even if a deal is reached in time.

lofter1
July 27th, 2011, 02:52 PM
As for the military, more BS. We are in SO many different countries with SO much active or on immediate standby that it costs too much to keep the Juggernaut alive. We need to pare down to what is needed to handle our own interest and some of our neighbors, not half the world. Your attitude is the very thing that got us INTO this.


One way to contain military spending would be to look into and CUT the huge amount$$$$ that are now spent to contract out all sorts of work done on US bases overseas by local & shipped-in low paid workers, work formerly performed by US service members but now paid for by tax dollars spent via 3rd party contractors (thank you Mr. Rumsfeld & Mr. Cheney).

What is done in the name of the USA via that outsourcing scheme is repugnant -- plus it enriches any number of mercenary minded folks ...

The Invisible Army

For foreign workers on U.S. bases in Iraq and Afghanistan, war can be hell.

THE NEW YORKER (http://www.newyorker.com/reporting/2011/06/06/110606fa_fact_stillman)
June 6, 2011

... unwitting recruits for the Pentagon’s invisible army: more than seventy thousand cooks, cleaners, construction workers, fast-food clerks, electricians, and beauticians from the world’s poorest countries who service U.S. military logistics contracts in Iraq and Afghanistan. Filipinos launder soldiers’ uniforms, Kenyans truck frozen steaks and inflatable tents, Bosnians repair electrical grids, and Indians provide iced mocha lattes. The Army and Air Force Exchange Service (aafes) is behind most of the commercial “tastes of home” that can be found on major U.S. bases, which include jewelry stores, souvenir shops filled with carved camels and Taliban chess sets, beauty salons where soldiers can receive massages and pedicures, and fast-food courts featuring Taco Bell, Subway, Pizza Hut, and Cinnabon. (aafes’s motto: “We go where you go.”)

The expansion of private-security contractors in Iraq and Afghanistan is well known. But armed security personnel account for only about sixteen per cent of the over-all contracting force. The vast majority—more than sixty per cent of the total in Iraq—aren’t hired guns but hired hands. These workers, primarily from South Asia and Africa, often live in barbed-wire compounds on U.S. bases, eat at meagre chow halls, and host dance parties featuring Nepalese romance ballads and Ugandan church songs. A large number are employed by fly-by-night subcontractors who are financed by the American taxpayer but who often operate outside the law ...

eddhead
July 27th, 2011, 03:40 PM
Sorry but you're wrong about several things.

First entitlements are ballooning to the point where they're going to basically squeeze out the rest of the budget. The growth in these needs to be capped. Fine. Than give me back the money I paid in. With interest. Compounded.


As far as the military, sorry, but we need it. We can end the missadventures in 'stan and Iraq, but the military at this point has been hollowed out in terms of being able to deal with a major conflict. At some point we are going bump heads with China, and we need to be prepared for this (they're pumping up their military and are preparing for it).

In nominal terms, the US spends more on defense than the next 25 countries combined (and about 4.7% of GDP) and approx. 40% of the global budget. Oh, and in nominal terms, we spend 5X + as much as China (2.2% of GDP or 1/2 as much as ours) and we already have a lead on them. We cannot afford it.


Health care has become a gigantic financial black hole directly because it's become something that individuals use, but someone else pays for, so no one has any incentive to control their own costs. What's needed it to move everyone to some sort of cost controlled voucher bases system. While people wouldn't have to pay all they're own health care costs, they'd have to pay a fair amount, and this would put the brakes on the out of control spending. No money for healthcare, but tons of waste on defense. Right. Meanwhile, we'll just let the elderly and poor drop dead in the streets of illness because there are too many of them anyway.


Our corporate taxes are already higher than most of the major industrial countries, and our growth is minimal. If we squeeze them, they'll cut and run. Not when you factor in the loopholes. Don't believe me? Ask GE. Billions of dollars in income and no taxes. Yeah, their assessed tax rate is higher than what it would be in most of the major industrial countries.

mariab
July 27th, 2011, 05:26 PM
I'm starting to worry. One of my relatives has money tied up in a Variable Immunity, which has already taken a big hit these last few years. They were always careful & relatively recently started to trust investment options other than CDs again. Now this.

STR
July 27th, 2011, 06:00 PM
Say that over and over and over while the credit rating of the US gets bumped down a notch or two.

The US has probably already earned a Aa rating. It simply isn't the safest investment out there, at least as long as elected officials honestly think a default (an actual default) is not a problem. However, treasuries are the only relatively safe market where the likes of China can keep a trillion dollars without upending the market. T-bills get a bulk discount, so as long as interest payments are still made, I don't see major long-term consequences of this fight. It gets dropped a notch to Aa, yields go up 10 basis points, eventually the Aaa rating is restored once a deal is reached and Congress sticks to it and the yield drops back down in turn.

If the US actually defaults, we could see the market seize up, recession will return and people will start fleeing the treasury market. Long term damage.

Actually, recession will hit even if the US can keep paying interest. The US Govt. is ~12% of GDP, and since half of that is borrowed money, we could see an overnight drop of ~6% GDP, worse than the last recession.

eddhead
July 27th, 2011, 06:29 PM
http://www.nytimes.com/2011/07/28/business/bank-examiner-testifies-on-credit-downgrade.html?hp=&pagewanted=print

By EDWARD WYATT
WASHINGTON – A top official from one of the country’s largest credit rating agencies told a House panel on Wednesday that the United States is unlikely to default on its debt obligations, but he warned that its credit rating could be lowered if it doesn’t come up with an adequate plan to address its soaring budget deficit.


The president of Standard & Poor’s Corp. also said that deficit-reduction plans currently being considered in Congress could be sufficient to allow the United States to keep its triple-A credit rating.


But the executive, Deven Sharma, disavowed recent news reports that quoted an S.&P. analyst as saying that Congress would need to achieve at least $4 trillion in deficit cuts over 10 years to maintain the country’s triple-A rating.


Mr. Sharma told a House subcommittee that the $4 trillion figure was “within the threshold” of what the agency thinks is necessary. But he declined to draw a bright line, saying only that “some of the plans” being considered on Capitol Hill could reduce the U.S. debt burden to a level that was “in the range of the threshold of a triple-A rating.”


The remarks came at a hearing by the oversight and investigations subcommittee of the House Financial Services Committee. The hearing was scheduled to examine the performance of the major credit ratings agencies following reforms that were instituted as part of the Dodd-Frank Act, but questions quickly turned to the issue of whether or not the United States would be able to meet its obligations if Congress does not raise the federal debt ceiling.


A senior national bank examiner also told the panel that they were “right to worry” about the possible unknown effects of a downgrade of the United States’ credit rating on financial institutions and the markets.


David Wilson, senior deputy comptroller and chief national bank examiner in the Office of the Comptroller of the Currency, said a downgrade of the AAA rating of the United States would mean that borrowers would have to increase the amount of margin they offered as collateral for loans.


A downgrade of the country’s credit rating would probably also be followed by lower ratings on state and local government debt, he said.


Any resulting difficulties would be “manageable in the short term” because even a downgrade to AA from the current AAA rating would still mean that Treasuries are “very high quality securities,” Mr. Wilson said. But the long-term effects of a ratings downgrade, he added, were unknown.


Asked by Brad Miller, a Democrat from North Carolina, if he were “right to worry that this could be real bad if our debt were downgraded,” Mr. Wilson replied, “You know, it’s hard to measure, but I think you’re right to worry. I mean, it could happen. It could be a big thing.”


Representatives from the Federal Reserve, the Securities and Exchange Commission and the comptroller’s office all said they believed that the credit rating agencies were doing a better job of accurately assessing risks in their credit ratings now than they were before the financial crisis.


However, said Mark Van Der Weide, senior associate director in the division of banking supervision and regulation at the Federal Reserve Board, “no matter how good they are doing,” it is important that “we not over-rely on them.”


This article has been revised to reflect the following correction:


Correction: July 27, 2011




An earlier version of this article incorrectly said that officials from two credit rating agencies said the United States was unlikely to default.

eddhead
July 27th, 2011, 07:31 PM
What a moron. The fact she got something like 40% of the De senatorial vote is depressing.


http://www.mediaite.com/tv/christine-odonnell-returns-to-fox-news-advises-gop-to-abstain-from-short-term-fixes/
by Colby Hall | 10:12 am, July 27th, 2011

The Tea Party’s role in the current discussion over how the federal government should best resolve the debt crisis has become a debate unto itself. Some pundits have made clear that the Tea Party is to blame for the possibly impeding default (if they even exist at all.) So who does the conservative opiniotainment program Fox and Friends turn to for clarity on this topic? None other than Tea Party poster candidate Christine O’Donnell (remember her?) who gave a full-throated defense of the Tea Party movement, crediting them for keeping dialogue going.


“They’re making sure that we don’t just get away with short-term fixes so that…Obama can get re-elected in 2012,” O’Donnell told host Gretchen Carlson. The Delaware GOP Senatorial candidate’s position predictably declared that the current debate over debt was due to Republicans elected because of their loyal to the Tea Party movement are standing firm on the position of fiscal responsibility. However, there are just as many (if not more) who see this obstinate position and lack of compromise as something more worthy of blame than praise.


After O’Donnell failed in her attempt to become the junior senator from Delaware, many theorized that she would end up as a host of a Fox News show, though Fox News consistently denied such a claim. Since then, she has kept a low profile and has avoided television appearances, though its not clear whether that was her strategy, or if she had simply never been invited to speak on cable news. Either way, one wonders if we will start to see more of O’Donnell, just in time for the coming political season, one in which the Tea Party is sure to play another significant role.

lofter1
July 27th, 2011, 07:55 PM
O'Donnell should be one to understand that raising the credit limit might come in handy. She probably wishes her personal "Deficit Ceiling" was higher than she was allowed back in the day (http://www.delawareonline.com/article/20101231/NEWS02/12310354/Delaware-politics-Christine-O-Donnell-questions-accusers-credibility):

"During the campaign, she was asking other employees to put campaign expenses on their personal credit cards and pay for stuff out of their own pockets," Keegan said.

scumonkey
July 27th, 2011, 11:48 PM
Carney Says Boehner Debt Proposal Isn’t ‘Fair Compromise’
July 27, 2011, 3:43 PM EDT
full article:
http://www.businessweek.com/news/2011-07-27/carney-says-boehner-debt-proposal-isn-t-fair-compromise-.html

excerpt
...The Congressional Budget Office said both measures fall short of their savings goals, prompting leaders to rework their proposals.
The CBO said Reid’s plan would cut $2.2 trillion over 10 years, shy of its $2.7 trillion target. CBO said Boehner’s plan would save $850 billion rather than its advertised $3 trillion.

eddhead
July 28th, 2011, 10:03 AM
In the event we do not reach agreement,the folks who are going to get hurt here are those with bond and equity holdings in 401K's. Institutional investors, and high-net worth individuals have options ... Cash, International Funds, Precious Metals, etc... that are not readily available to folks holding retirement funds in their 401Ks.

So what else is new?

eddhead
July 28th, 2011, 10:36 AM
http://www.washingtonpost.com/blogs/plum-line/post/mccain-erupts-conservatives-are-lying-to-america/2011/03/03/gIQAUm2HdI_blog.html

Sorry, I could not capture the video, but I think you get the idea. The GOP seems to be splitting up over this issue.

McCain erupts: Conservatives are lying to AmericaBy Greg Sargent (http://wirednewyork.com/greg-sargent/2011/02/24/ABvj85M_page.html)
So the debt limit debate has come to this: John McCain, who you may recall was the GOP’s 2008 standard bearer, is now openly accusing conservatives of actively misleading America with their completely unrealistic demands, which he labeled “deceiving” and “bizarro.”
In a seminal moment in this debate, here’s some video of McCain on the Senate floor today, unleashing an angry tirade at conservatives who are still holding out for a balanced budget amendment as part of any compromise on the debt ceiling. McCain accused them of “deceiving” America into believing such a thing can pass the Senate:

There are Republicans in both the House and Senate who are still pushing for another vote on the balanced budget amendment, even though “cut cap and balance,” which contains such an amendment, has already failed in the Senate. Tea Party GOP senators such as Jim DeMint and Rand Paul are calling on colleagues to reject John Boehner’s proposal for a two-tiered debt-ceiling increase and are instead demanding (http://thehill.com/homenews/senate/173831-mccain-rips-lawmakers-demanding-balanced-budget-amendment) another vote on “cut cap and balance.” Meanwhile, House conservatives such as Mike Pence are also urging another vote (http://thehill.com/homenews/house/173759-pence-lobbies-leaders-for-a-clean-balanced-budget-amendment) on a modified version of a balanced budget amendment.

To such conservatives, McCain offered a simple answer: You’re in fantasy-land, and you’re doing your constituents a disservice by perpetuating the falsehood that such a thing can ever happen.

“What is really amazing about this is that some members are believing that we can pass a balanced-budget amendment to the Constitution in this body with its present representation — and that is foolish,” McCain said angrily. “That is worse than foolish. That is deceiving many of our constituents.” McCain went on to rip the idea as “bizarro.”

Tellingly, McCain cited today’s Wall Street Journal editoral (http://online.wsj.com/article/SB10001424053111903591104576470061986837494.html?m od=WSJ_Opinion_LEADTop) excoriating conservative opponents of the Boehner plan as out of touch with reality for thinking they can do better. McCain’s angry tirade on the Senate floor today perfectly captures the rising frustration, anger and panic of more responsible Republicans and GOP establishment figures as they come to terms with the true depths of the delusion that is now afflicting some on the right — and the danger it is now posing to our economy and country.

By Greg Sargent (http://wirednewyork.com/greg-sargent/2011/02/24/ABvj85M_page.html) | 03:13 PM ET, 07/27/2011

lofter1
July 28th, 2011, 12:10 PM
bizarro :D




McCain offered a simple answer: You’re in fantasy-land, and you’re doing your constituents a disservice by perpetuating the falsehood that such a thing can ever happen.

“What is really amazing about this is that some members are believing that we can pass a balanced-budget amendment to the Constitution in this body with its present representation — and that is foolish,” McCain said angrily. “That is worse than foolish. That is deceiving many of our constituents.” McCain went on to rip the idea as “bizarro.”

eddhead
July 28th, 2011, 01:11 PM
I know. Talk about the pot calling the kettle black. Still, I was glad to see McCain stepping up this time.

mariab
July 28th, 2011, 01:46 PM
In the event we do not reach agreement,the folks who are going to get hurt here are those with bond and equity holdings in 401K's. Institutional investors, and high-net worth individuals have options ... Cash, International Funds, Precious Metals, etc... that are not readily available to folks holding retirement funds in their 401Ks.

So what else is new?


And Annuities. That's what I meant yesterday when I typed Immunity (maybe I was thinking about vitamins).

They were all told don't put your eggs in one basket. They said don't rely on SS because it won't be there, & even if it is, it won't be enough. They were asked why on earth they would think of keeping their money in CDs with those abysmal interest rates, when their money can grow so much faster somewhere else. Most of them, believe it or not, were still gun-shy from the crash of '87, so damn right they'll keep it in CDs. So when they finally started trusting the money guys again, they took a chance & in 2008 things went south.

Now some of them have lost tens of thousands, but if they remove their money & close the accounts, they can't get the lost money back. If they leave it in there & stick it out for 10 years, they can get the lost money back, not counting any withdrawals. 10 years. When my relative went to open the account, their money guy showed them the statement from another client who opened an account in 2006 with 100 thousand dollars. By 2007 the other client had made 107 thousand on top of that. That's when they made the decision to take their money out of the CDs & open the annuity, in 2007.

All they wanted was to live off the earnings (the interest when they had the cds). Now they're even penny pinching to do that, & they never lived extravigantly in the first place. They always had their financial priorities straight & never lived beyond their means. They're angry, scared, & all they can do is look at what the market did at the end of the day & either exhale or sweat, even though they swore they'd never be one of those people. Now they trust no one from either side, & that goes for everyone in between. Neither do I.

Every time we get a lousy report from somewhere, or the Greeks are worried, or China is pouting over something, or someone on wall st sneezes, the dow sinks. Every little thing. My mother once said decades ago that she read that women's hemlines, whether they were shorter or longer that year, affected the market. Maybe the older folks would remember this. Every little thing can wipe out someone's savings or retirement. The very things we were told we must do for ourselves so's not to rely on everyone else. Now what.

eddhead
July 28th, 2011, 04:26 PM
Here is some more good news....


http://www.politico.com/politico44/FIRM ON A VETO: President Obama will veto House Speaker John Boehner’s deficit bill if it reaches his desk, White House communications director Dan Pfeiffer says.

Pfeiffer said on MSNBC that chief of staff Bill Daley and a statement of administration policy have already stated that Obama “would veto” Boehner’s bill, which is scheduled to be voted on in the House today. But critics have said the administration’s statement stops short of a veto threat because it says only that Obama’s “senior advisors would recommend that he veto this bill.”

Pfeiffer said Thursday afternoon that the veto threat doesn’t even matter “because it’s not going to get to the president’s desk.”

Ninjahedge
July 28th, 2011, 10:19 PM
I know. Talk about the pot calling the kettle black. Still, I was glad to see McCain stepping up this time.

This is the McCain I liked in 2000 (the one that talked often on the Daily Show).

Conservative? Yes, but not a BS monger... yet.

scumonkey
July 28th, 2011, 11:07 PM
until he went on fox and showed his second face...
first he says one thing:

http://www.youtube.com/watch?v=d7GfPEtyQsE&feature=related
and then claims another...

http://www.youtube.com/watch?v=cNJChj7kDJ4

Ninjahedge
July 29th, 2011, 08:29 AM
Will watch at home w/sound... but that is disappointing.....

Not moreso than his 180 in the 2008 elections, but still.....

eddhead
July 29th, 2011, 09:40 AM
agreed. I think we are begining to see a major split in the GOP .... hard right teapartiestsvs. more pragmatic old school conservatives. It is the first time I can remember seeing the GOP so fragmented.

Ninjahedge
July 29th, 2011, 10:17 AM
The threat of financial meltdown is one of the only ways you will split a conservative caucus.

They may be able to keep together as a unit defining certain spending plans and/or social dictates, but not when it comes down to cold hard cash. Bickering over specifics when we run the risk of higher interest rates (another fallacy, perceived risk inflating corporate profit is all it is) and the possible shutdown of needed services (another fallacy as things will not grind to a halt, but sure enough it will mean huge headaches for all that are being serviced by them).

Sad, but maybe something good will come of this. If the conservative party fractures, maybe we will get a bit more of a balance rather than a tug of war between two extremes that have forgotten all the people in the pit between them.

eddhead
August 1st, 2011, 09:16 AM
No new tax hikes, despite the fact that 58% of Americans are in favor of eliminatng the Bush cuts.  What a bunch of bullshit.

http://www.nytimes.com/2011/08/01/us/politics/01assess.html?pagewanted=2&hp

eddhead
August 1st, 2011, 09:54 AM
I am so pissed....

By PAUL KRUGMAN (http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/paulkrugman/index.html?inline=nyt-per)A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record.

Indeed, slashing spending while the economy is depressed won’t even help the budget situation much, and might well make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.

And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.

Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the G.O.P. has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?

In fact, Republicans will surely be emboldened by the way Mr. Obama keeps folding in the face of their threats. He surrendered last December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it’s just me, but I see a pattern here.
Did the president have any alternative this time around? Yes.

First of all, he could and should have demanded an increase (http://krugman.blogs.nytimes.com/2011/07/31/tax-cut-memories/?scp=1&sq=krugman%20conscience%20tax%20cut%20memories&st=cse) in the debt ceiling back in December. When asked why he didn’t, he replied that he was sure that Republicans would act responsibly. Great call.

And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.
At the very least, Mr. Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.

But wouldn’t taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.

Make no mistake about it, what we’re witnessing here is a catastrophe on multiple levels.

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Mr. Obama has thrown all that away. And the damage isn’t over: there will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.
In the long run, however, Democrats won’t be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t.

eddhead
August 2nd, 2011, 08:59 AM
We may as well have Barry Goldwater in the Oval office.

http://fivethirtyeight.blogs.nytimes.com/2011/08/01/what-the-white-house-left-on-the-table/?pagemode=print

August 1, 2011, 9:44 pm

What the White House Left on the Table

By NATE SILVER (http://wirednewyork.com/author/nate-silver/)

I wrote at length (http://fivethirtyeight.blogs.nytimes.com/2011/08/01/the-fine-print-on-the-debt-deal/) earlier Monday about why I think the proper characterization of the deal that President Obama struck with Republicans is “pretty bad” rather than “terrible.” (That’s from a Democratic point of view. For Republicans, I’d say the deal should be thought of as “quite good” rather than “awesome.”)
It seems as if the results of the House’s vote on Monday (http://clerk.house.gov/evs/2011/roll690.xml) tend to back up that assertion. In the end, exactly half of the Democratic caucus members voted for the debt ceiling bill, which makes it hard to classify the deal as “terrible” from their point of view.

But almost three-quarters of Republicans voted in the affirmative. And even the Tea Party came around in the end. By 32-to-28, members of the Tea Party Caucus (http://tpmdc.talkingpointsmemo.com/2010/07/bachmann-forming-house-tea-party-caucus.php) voted for the bill, despite earlier claims — which now look like a bluff — that they wouldn’t vote to raise the debt ceiling under any circumstances.
These results seem to suggest that Mr. Obama left something on the table. That is, Mr. Obama could have shifted the deal tangibly toward the left and still gotten a bill through without too much of a problem. For instance, even if all members of the Tea Party Caucus had voted against the bill, it would still have passed 237-to-193, and that’s with 95 Democrats voting against it.

Specifically, it seems likely that Mr. Obama could have gotten an extension of the payroll tax cut included in the bill, or unemployment benefits, either of which would have had a stimulative effect. Some Republicans would have complained that the new deal expanded rather than contracted the deficit in 2012, and Mr. Obama would have lost some of their votes. But this stimulus spending wouldn’t have overtly violated their highest-priority goals (no new taxes, and a dollar in spending cuts for every dollar in borrowing authority). And Mr. Obama, evidently, had a few Republican votes he could afford to lose.

With that payroll tax cut, the deal becomes a much easier sell to Democrats — and perhaps also to swing voters, particularly given that nobody spent much time during this debate talking about jobs. Plus, it would have improved growth in 2012 and, depending on how literally you take the economic models, improved Mr. Obama’s re-election chances.

No, we can’t know this for sure. Voting during roll calls can be tactical, and the results may have been skewed by the heartwarming and unexpected return of Representative Gabrielle Giffords to the House chamber. But this is at least a little bit more tangible than simply asserting (http://blogs.middlebury.edu/presidentialpower/2011/07/31/did-obama-cave/) that Mr. Obama did as well as he could under the circumstances.

It wouldn’t have been a great deal for Democrats — still no tax increases, still lots of spending cuts, still buying into Republicans’ premise that the debt ceiling is an appropriate vehicle for fiscal reform. But it would have been a fair one, and better than what Mr. Obama got.

stache
August 2nd, 2011, 10:53 AM
Obama = Tea Party's bitch.

scumonkey
August 2nd, 2011, 12:34 PM
sadly i have to agree.

Ninjahedge
August 2nd, 2011, 01:37 PM
I don't agree.

What I know is that the president really does not have that much power to do much. This was in the hands of the House and Senate. What could Obama do besides mediate with the possible threat of Veto?

What we are seeing here is the power of our own government to scuttle itself and our willingness as a people to let it do so (so long as we are given a few scapegoats to throw rotten consumables at at election time).

eddhead
August 2nd, 2011, 01:59 PM
The president is not a good negotiator. Read the Krugman article. He could have cut a better deal back in Dec (read the brief interview here should have demanded an increase (http://krugman.blogs.nytimes.com/2011/07/31/tax-cut-memories/?scp=1&sq=krugman conscience tax cut memories&st=cse) ) but he opted to wait thinking the GOP would act reasonably when it hit the fan. They did not and it is not the first time he got fooled.

He continues to enter these negotions by adoting a middle position as an opening stance, than moving to the right. He did the same thing with healthcare and we ended up with Bob Dole's plan. And than declared victory.

And yes, the threat of veto is a strong weapon that has enabled past presidents to pursue their agendas despite dealing with less than friendly congress.

Going into this debate he had public opinion on his side. So where was his voice? Why was he so silent? Do you think that under the same circumstances, with strong public opinion on his side, Clinton would have taken such a meek public posture? A stronger public posture would have put a hell of a lot more pressure on the more moderate wing of the GOP. It is almost like he is afraid of plaacing them in a untenable position or offending them. He made it too easy.

At some point you have to stand up to your core principles.

BBMW
August 2nd, 2011, 02:12 PM
In a game of chicken, the one who is willing to get closer to a collision usually wins.

eddhead
August 2nd, 2011, 02:18 PM
That is true, but there is more to it than just that. Politics is about influence and the president is in a unique postion to influence public policy through the bully pulpit, but this president would rather work behind the scenes. He is trying to be reasonable with people who are not reasonable.

Do you think LBJ, or Nixon, or Reagan, or Clinton would have been bowled over like this?

eddhead
August 2nd, 2011, 02:23 PM
BTW, the market loves the news of the agreement. The Dow is down 140 today.

stache
August 2nd, 2011, 02:59 PM
Clinton was worse, if that's possible.

eddhead
August 2nd, 2011, 03:09 PM
I understand the ill will directed toward Clinton, but he would not have signed off on this deal. In fact, he would not have had to because he would have done a better job of influencing the debate in days and weeks leading up to the vote. Especially with public opinion on his side.

Ninjahedge
August 3rd, 2011, 09:16 AM
Obama is not as good a vacuum cleaner salesman as Clinton.

THAT man knew what sucked well.

stache
August 3rd, 2011, 09:53 AM
Yes but he didn't get that pesky stain out of Monica's dress.

eddhead
August 3rd, 2011, 02:19 PM
forever to his detriment.

Ninjahedge
August 3rd, 2011, 04:11 PM
He capitulates too much. He does not seem to be taking a hard line with anything, and seems reasonable in his requests. Problem is, in our dysfunctional government, going with what makes sense never works. you have to try and diametrically oppose whatever the other side is putting out so that the "middle" is somewhere you want to be.

Regardless of how ridiculously overstated and misplaced the two ends are.

In THEORY, that should work. Unfortunately even THAT fails us in that we end up getting pieces from both sides unreasonable and ill-fitted position without any compromise that would do us better.

"I vow that rich people should be taxed at 3X what they are now!!!"
"I vow that NO TAXES, whether they are old or new, shall be placed, reinstated or otherwise raised, and that we cut a lot of money from plenty of programs that wold actually hurt the economy indirectly"

'compromise' = no tax on the rich, tax breaks for the middle class are not "extended", many programs are cut (except SS and the Military).

No repeal of the top tax break. No reduction in spending and withdrawal of forces from some of our overseas positions, no VOLUNTARY SYMBOLIC SURRENDER OF HOUSE/SENATE SALARIES, nothing.

Just a bunch of half extremes rather than middle ground in everything.

eddhead
August 3rd, 2011, 04:16 PM
He is also a bad tactician. He could have had a better deal in Dec when the Bush tax cuts were set to expire but he gave in without getting enough back. This round, the GOP held the cards and nailed him to the wall.

BBMW
August 4th, 2011, 11:43 AM
He has to be willing to accept missing the deadline and turning up the pressure. He couldn't bring himself to do that. The Republicans could. (Well, at least some. Not Boehner. But the rest dragged him along.) That's why they won.

From what I've read in the mandated cuts if they don't make a follow on deal, are big cuts to Obamacare. Will he let those go, if the Republicans make big demands to get a deal done? I'm guessing not. So they'll get their way with that one also.


He capitulates too much. He does not seem to be taking a hard line with anything, and seems reasonable in his requests. Problem is, in our dysfunctional government, going with what makes sense never works. you have to try and diametrically oppose whatever the other side is putting out so that the "middle" is somewhere you want to be.

Regardless of how ridiculously overstated and misplaced the two ends are.

In THEORY, that should work. Unfortunately even THAT fails us in that we end up getting pieces from both sides unreasonable and ill-fitted position without any compromise that would do us better.

"I vow that rich people should be taxed at 3X what they are now!!!"
"I vow that NO TAXES, whether they are old or new, shall be placed, reinstated or otherwise raised, and that we cut a lot of money from plenty of programs that wold actually hurt the economy indirectly"

'compromise' = no tax on the rich, tax breaks for the middle class are not "extended", many programs are cut (except SS and the Military).

No repeal of the top tax break. No reduction in spending and withdrawal of forces from some of our overseas positions, no VOLUNTARY SYMBOLIC SURRENDER OF HOUSE/SENATE SALARIES, nothing.

Just a bunch of half extremes rather than middle ground in everything.

eddhead
August 4th, 2011, 01:11 PM
The OMB has projected a net deficit decrease as a result of "Obamacare" (I call it Dolecare). That being the case, it would be tough to take this off the table for budgetary considerations.

I also think this is where Obama draws a line in the sand.

EDIT: Btw, my understanding is that the "automatic cuts" are not to Obamacare (Dolecare) but to defense and other "popular" programs.

eddhead
August 4th, 2011, 01:22 PM
This seems kind of weak, but OK.....

-----------------------------------------------------------------------------------------------------------------------------------------

http://thecaucus.blogs.nytimes.com/2011/08/04/will-debt-deal-force-higher-taxes-on-the-rich/?pagemode=print


August 4, 2011, 11:53 am Will the Debt Deal Force Higher Taxes on the Rich?By MATT BAI (http://wirednewyork.com/author/matt-bai/)
During the 2008 campaign, President Obama (http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per) and his rivals for the nomination used to talk a lot about how they were going to rid the world of both Osama bin Laden (http://topics.nytimes.com/top/reference/timestopics/people/b/osama_bin_laden/index.html?inline=nyt-per) and the Bush administration’s tax cuts for the wealthy. Turns out that, of the two, Bin Laden was a whole lot easier to kill.



Political Times (http://thecaucus.blogs.nytimes.com/category/political-times/)

Matt Bai’s analysis and commentary.



This is a big reason that White House advisers are now saying that the deal they struck with Republicans over the debt ceiling (http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html?inline=nyt-classifier) is better than it appears. Built into the architecture of this arcane compromise, Democrats say, is a “secret trigger” — that is, a stealthy way to finally roll back the tax cuts for the affluent (those earning more than $250,000 annually) that are now scheduled to cost, by some estimates, about $1 trillion over the next 10 years.

The thinking behind this secret trigger idea goes like this: First, lawmakers on the so-called supercommittee — think of them kind of like the Hall of Justice heroes, only flabbier and somewhat less diverse — will almost certainly come up short in their effort to agree on how to find roughly $1.5 trillion in additional savings by the end of this year.

If that happens, then Congress, under the terms of this week’s deal, will face another crisis just after the 2012 election. At that point, members will be forced to either make a new deal on spending reductions or face automatic cuts in the military budget and other popular programs.
That’s precisely when the Bush tax cuts (http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier) will expire, unless Congress acts to renew them. The administration is betting that the economy will be in somewhat better shape by then, making higher taxes on the wealthy more palatable than they were when the two parties had this debate at the end of 2010.

What’s more, the White House assumes that Republicans in Congress won’t possibly be able to argue for another round of draconian spending cuts while at the same time advancing a bill to preserve tax cuts for the affluent. And even if they did, and managed to get it through a Democratic-controlled Senate, the president could veto the bill.

Hence the perfect moment for Democrats to slay what has become the party’s proverbial great white whale. And it might all work out this way — except that there are a few significant reasons to think that it won’t.

For one thing, it should be clear by now that Republicans will happily and without reservation argue both for painful spending cuts and tax breaks for the wealthy, all at the same time. It’s just what they do.

Conservatives have continually argued that tax cuts spur growth and thus create more revenue. It may sound fanciful to most Democrats, but thus far it’s proven to be a pretty tenable position politically, and there’s really no pressing reason for Republicans to abandon it.

Second, even if Republicans are able get legislation through the Democratic-controlled Senate after the election, it’s not at all certain that Mr. Obama would veto a bill to extend the tax cuts, no matter what his aides say now. Should Mr. Obama lose in 2012, he’s not really the kind of guy you would expect to go out in a blaze of glory, waving around a veto pen after the voters have turned him out.

And if Mr. Obama wins re-election, it’s hard to imagine him opening his second term by rushing to raise taxes on the middle class, which is what Republicans would almost certainly force him to do, by including those tax cuts in any legislation he’d be inclined to veto. They might also make the tax cuts part of any new agreement to raise the debt ceiling — which, unfortunately, should be necessary again around the end of 2012.
The point here is this: Democrats should probably stop waiting for this ideal window in which they can raise taxes without anyone really putting up a fight. The whale is never going to just swim up alongside the boat and roll up on its back.

Cutting taxes, as a rule, is easy and relatively risk free. Raising them is hard and takes some combination of courage and salesmanship. This is what George W. Bush (http://topics.nytimes.com/top/reference/timestopics/people/b/george_w_bush/index.html?inline=nyt-per) and his party understood when they agreed to tax cuts that would eventually “sunset,” as if the sun ever actually sets on tax cuts in Washington.

If Democrats are serious about reversing the policy of the Bush years, then they will probably have to be willing to make a case for eliminating all the tax cuts, not just those for the wealthiest Americans. And they may have to come up with some kind of more comprehensive plan for modernizing the entire tax code, in order to persuade voters that even if some taxes go up, they might still come out ahead.

There’s no trigger, secret or otherwise, that can spare Democrats a titanic clash over taxes. In politics, you can’t get the whale unless you’re ready to face the waves.

eddhead
August 4th, 2011, 07:05 PM
Maybe the American public is finally starting to get it. Note the comment on tax increases


The Republicans compromised too little, a majority of those polled said. All told, 72 percent disapproved of the way Republicans in Congress handled the negotiations, while 66 percent disapproved of the way Democrats in Congress handled negotiations. The public was more evenly divided about how President Obama handled the debt ceiling negotiations: 47 percent disapproved and 46 percent approved.

The public’s opinion of the Tea Party movement has soured in the wake of the debt ceiling debate. The Tea Party is now viewed unfavorably by 40 percent of the public and favorably by just 20 percent, according to the poll.


Though Republicans prevented tax increases from being included in the debt ceiling deal, half of those polled said the agreement should have included increased tax revenue as well, while 44 percent said it should have relied on cuts alone.

http://www.nytimes.com/2011/08/05/us/politics/05poll.html?_r=1&hp=&pagewanted=print


August 4, 2011
Disapproval of Congress at Historic Level, Poll Finds
By MICHAEL COOPER and MEGAN THEE-BRENAN
The debate over raising the debt ceiling, which brought the nation to the brink of default, has sent disapproval of Congress to its highest level on record and left most Americans saying that creating jobs should now take priority over cutting spending, according to the latest New York Times/CBS News poll.


A record 82 percent of Americans now disapprove of the way Congress is handling its job — the most since The Times first began asking the question in 1977, and even more than after another political stalemate led to a shutdown of the federal government in 1995. More than four out of five people surveyed said that the recent debt ceiling debate was more about gaining political advantage than about doing what is best for the country. Nearly three-quarters said that the debate had harmed the image of the United States in the world.


Republicans in Congress shoulder more of the blame for the difficulties in reaching a debt ceiling agreement than President Obama and the Democrats, the poll found.


The Republicans compromised too little, a majority of those polled said. All told, 72 percent disapproved of the way Republicans in Congress handled the negotiations, while 66 percent disapproved of the way Democrats in Congress handled negotiations. The public was more evenly divided about how President Obama handled the debt ceiling negotiations: 47 percent disapproved and 46 percent approved.


The public’s opinion of the Tea Party movement has soured in the wake of the debt ceiling debate. The Tea Party is now viewed unfavorably by 40 percent of the public and favorably by just 20 percent, according to the poll. In mid-April only 29 percent of those polled viewed the movement unfavorably, while 26 percent viewed it favorably. And 43 percent of Americans now think the Tea Party has too much influence on the Republican Party, up from 27 percent in mid-April.


“I’m real disappointed in Congress,” Ron Raggio, 54, a florist from Vicksburg, Miss., said in a follow-up interview. “They can’t sit down and agree about what’s best for America. It’s all politics.”


There were signs that the repeated Republican calls for more spending cuts were resonating with the public: 44 percent of those polled said the cuts in the debt ceiling agreement did not go far enough, 29 percent said they were about right, and only 15 percent said they went too far. More than a quarter of the Democrats polled said that the cuts in the agreement did not go far enough.


But by a ratio of more than two to one, Americans feel that creating jobs should be a higher priority for the nation right now than cutting spending.


Though Republicans prevented tax increases from being included in the debt ceiling deal, half of those polled said the agreement should have included increased tax revenue as well, while 44 percent said it should have relied on cuts alone. That issue is likely to be revisited soon: Congress is preparing to appoint a special committee to recommend ways this fall to reduce the deficit. Sixty-three percent of those polled said that they support raising taxes on households that earn more than $250,000 a year, as President Obama has sought to do — including majorities of Democrats (80 percent), independents (61 percent) and Republicans (52 percent).


There were signs that President Obama was emerging from the crisis less bruised than the Republicans in Congress.


The president’s overall job approval rating remained relatively stable, with 48 percent approving of the way he handles his job as president and 47 percent disapproving — down from the bump up in the polls he received in the spring after the killing of Osama bin Laden, but in line with how he has been viewed for nearly a year. By contrast, Speaker John A. Boehner, an Ohio Republican, saw his disapproval rating shoot up 16 points since April: 57 percent of those polled now disapprove of the way he is handling his job, while only 30 percent approve.


Americans said that they trusted President Obama to make the right decisions about the economy more than the Republicans in Congress by 47 percent to 33 percent. They were evenly divided on the question of whether he showed “strong qualities of leadership” during the negotiations, with 49 percent saying he did and 48 percent saying he did not. And they were still more likely to blame President George W. Bush for the bulk of the nation’s deficit: 44 percent said that the deficit was mostly caused by the Bush administration, 15 percent said it was mostly caused by the Obama administration and 15 per cent blamed Congress.


The growing fears about the economy — amid a sinking stock market, signs that the economy is stalling and warnings that the nation risks sliding back into recession — were reflected in the nationwide telephone poll, which was conducted Tuesday and Wednesday with 960 adults and has a margin of sampling error of plus or minus three percentage points. The number of Americans who rated the economy “very bad” was the highest it has been in a year. But there was uncertainty about whether the debt ceiling deal would help or hurt the economy: nearly half said it would have no effect, while 24 percent said it would make the economy worse and 22 percent said it would improve it.


Most of those polled said that the spending cuts included in the debt ceiling deal — many of which are spread out over a decade — either did not go far enough or were about right. But with the nation’s unemployment rate remaining at a stubbornly high 9.2 percent, 62 percent of those polled said that creating jobs should be a higher priority now than cutting spending.


“Cutting spending is important, but getting people back to work is more important,” said Diane Sherrell, 56-year-old Republican from Erwin, N.C. “If people are working, they are more productive. There is less crime, there is less depression, there is less divorce. There are less hospital and medical bills. If you put people back to work you are cutting spending.”


Stanley Oland, a 62-year-old Republican from Kalispell, Mont., said that the government needs new jobs to generate the economic activity and the revenue it requires. “That revenue supports the basic foundation for the economy, creates more jobs and stimulates the economy,” he said. “Unless you have working people you don’t have revenue from taxes. If you cut spending, jobs will be eliminated and you won’t get any revenue. Every dollar spent creates jobs.”


Marjorie Connelly, Allison Kopicki and Marina Stefan contributed reporting.

lofter1
August 4th, 2011, 11:22 PM
I got this email recently. If enough folks followed up it might get things in order ...



Hi everyone - I usually don't pass on chain messages, but this one is just too important not to. Please review and if you agree, please pass it on.





The 28th Amendment proposal

The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971 ... before computers, before e-mail, before cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land ... all because of public pressure.

I'm asking each addressee to forward this email to a minimum of twenty people on your address list; in turn ask each of those to do likewise.

In three days, most people in The United States of America will have the message. This is one idea that really should be passed around.

Congressional Reform Act of 2011

1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when they are out of office.

2. Congress (past, present and future) participates in Social Security.
All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with Congressmen. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.

THIS IS HOW YOU FIX CONGRESS!!!!!

If you agree with the above, pass it on. If not, just delete.

You are one of my 20+. Please keep it going.

Ninjahedge
August 5th, 2011, 10:23 AM
Good postulations, but it may be difficult to get the intended LEGAL meaning of this without some loophole magically finding its way into it.

This SHOULD be what the Tea Party stood for. Treating congress just like everyone else. Not all this selective BS about restricting government power, only when that power does not directly benefit their sponsors or their own private interests.

START CHUCKING SOME DAMN TEA ALREADY!

As for the Repubs, they have to start looking like individual REPRESENTATIVES again rather than some sort of Cabal. And the Dems? They NEED to work together more and stop coddling their pet projects.


One additional thing I would like to add to Loft's junk-mail is simple. Any congressman that is earning more than a certain amount, or has more than a certain net worth, should NOT be paid at all.

Why the hell do they need it? They should follow Bloomie's example in this and take a nominal salary of $1/year if they are found to have more money than is justifiable as a government employee.

BBMW
August 5th, 2011, 11:35 AM
Oh, yeah, that'll get right through Congress.

lofter1
August 5th, 2011, 12:58 PM
Any congressman that is earning more than a certain amount, or has more than a certain net worth, should NOT be paid at all.


Yes! Means testing for the means testers.

mariab
August 5th, 2011, 04:42 PM
I get that particular chain-mail about 2x/year & I pass it on, but it probably doesn't get to the right people. Think they'll ever put it up for public vote?:cool:

Ninjahedge
August 5th, 2011, 04:46 PM
Well, everybody probably goes "YEAH!!!" and then nobody writes their congressperson.....

eddhead
August 5th, 2011, 06:35 PM
I think it might be different this time. People are really pissed.

mariab
August 5th, 2011, 09:20 PM
Well, everybody probably goes "YEAH!!!" and then nobody writes their congressperson.....

It would help if we received a reply that consisted of more than the standard "Thank You for writing. We read all of our emails & cannot promise replies to all due to volume. However, yada yada yada..."



I just received an email today, which I've tried to copy/paste with no success. IT is a list of raises for White House staff from 2010-2011. The highest was an 83% raise (for Special Assistant to the President for Economic Policy), the lowest 17% ( for Assistant to the President and Deputy National Security Advisor). The average for all 21 people was 43.6%. The source for this info seems to be the Drudge Report.

Even better:

S&P downgrades U.S. credit rating to AA+, from AAA; Announcement comes after volatile day in stocks

ASSOCIATED PRESS
Originally Published:Friday, August 5th 2011, 2:37 PM
Updated: Friday, August 5th 2011, 5:31 PM


http://assets.nydailynews.com/img/2011/08/06/alg_nyse1.jpg Jin Lee/AP
Many investors fear that Europe's spreading debt crisis might reach U.S. banks and threaten the fragile economy.
WASHINGTON — Credit rating agency Standard & Poor's says it has downgraded the United States (http://www.nydailynews.com/topics/United+States)' credit rating for the first time in the history of the ratings.

The credit rating agency says that it is cutting the country's top AAA rating by one notch to AA-plus. The credit agency said late Friday that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.
A source familiar with the discussions said that the Obama administration (http://www.nydailynews.com/topics/Barack+Obama) believes S&P's analysis contained "deep and fundamental flaws."

http://www.nydailynews.com/money/2011/08/05/2011-08-05_friday_stock_market_results_seesawing_dow_jones _industrial_average_rollercoaster.html

mariab
August 5th, 2011, 09:36 PM
^According to factcheck.org, the report on White House raises was misleading, in that
The salary increases for 19 of the 21 employees listed resulted from promotions. Average pay for White House staff actually declined

Full article:

http://factcheck.org/2011/08/top-20-white-house-raises/

Merry
August 6th, 2011, 04:53 AM
S&P: US needs more tax revenue

by Michael Shatz

Standard and Poor’s (S&P) downgraded the United State’s AAA credit rating today. In a statement released by S&P, the credit rating agency basically said the debt ceiling bill passed by the House and Senate was not sufficient to instill the confidence needed to maintain the top rating.

For months, Democrats in the House and Senate have been prepared to sign a clean bill to raise the debt ceiling. And for months, Republicans refused to sign any bill. Many of the House Republicans even refused to sign the bill introduced by House Speaker John Boehner (R-Oh).

In their official statement, reported by USA Today (http://www.usatoday.com/money/economy/2011-08-05-s-and-p-downgrades-credit_n.htm), S&P cites, among other factors, Republicans’ stance against increasing revenues under any circumstances:


“We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”


Entitlements and public spending, especially Pell Grants and subsidized student loans, SNAP (food stamps), Medicaid and housing funds are tools to enable citizens to become self-sufficient and thus successful. The idea is that those who are assisted by the tax payers via the government will eventually be able to pay that good will forward with their own taxes.

Under such a plan, we grow as a nation, generation to generation. Unfortunately, the declining economy and job market make upward mobility a pipe dream for millions of hard working, responsible Americans. These programs need to be reformed from the bottom up. Medicare and social security, too. But even with effective, cost cutting reform, tax revenues are needed to create jobs, whether they be private or public, and the money needs to be invested rather than spent.

The jobs created should be ones that will lead to future prosperity. NASA was one program that created entire industries (think satellites and such) and we just privatized it, for better or for worse. Mass transit infrastructure in the United States is crumbling and antiquated. There are nations with far less power than America that have vastly superior, modernized mass transit systems.
Such investments pay-off in the long run, and in the short. Mass transit is a huge revenue generator for local municipalities. If a city can move people faster and more efficiently they can employ more people at higher wages with better benefits. This is just one example of how the government can create jobs.

The Republican plan of refusing to raise taxes, ever, is like a household deciding that, even though they can’t pay the bills and they are buried in debt, they will not be attempting, under any circumstances, to increase their income. Not by one dime. Ever.

So we don’t really need S&P to tell us that we need to raise taxes. But we need to raise taxes in a way that does not slaughter the mid-to-upper middle class. Currently, households making $250,000 are in the same bracket as multi-billionaires.

This allows the multi-billionaires, about 400 families in America, to keep the middle class voting against tax increases. We can’t raise the Koch Brother’s taxes unless we raise taxes on the guy who just opened his third dry cleaning location. That guy is probably stretched to the limit and is employing people.

We have taken money from school districts. Teachers and other public employees have been laid-off in droves, and in a down job market. These were Republican demands, and in most cases, Republican governors. The Republicans have essentially taken money from the average American school children. Yet they refuse to vote for a 2% tax increase on the nation’s wealthiest.

They refuse to vote to end subsidies for billion dollar oil companies. They refuse to even allow a temporary tax break to expire. The Republicans, 90% of them, at least in the House, have signed Grover Norquist’s pledge, swearing they will never vote for a tax increase.

They should all be voted out. And not just the Republicans. Our credit raring has been dropped due to a lack of effective governance. You can point the finger at whichever party (I sure just did) but in the end, they all failed us. They have failed us for a long, long time. Since before I was born.

The entire lot should be replaced, perhaps save for a few. This is within our power. The Republicans can replace their Republicans, who obviously sacrificed our credit rating to save their tax cuts and to make Obama look bad. The Democrats can replace their Democrats who were too weak to stop this.

http://progressivetoo.com/2011/08/06/sp-us-needs-more-tax-revenue/?utm_medium=twitter&utm_source=twitterfeed

Ninjahedge
August 8th, 2011, 09:52 AM
IOW, our government will argue for ever last point on the plan whether it helps or not, and that is not something investors want to hear.

Give us your money so we can yell and scream over it /= AAA

eddhead
August 8th, 2011, 10:06 AM
It is 10:00 and the Dow is down 195. Fasten your seatbelts.

BBMW
August 8th, 2011, 11:44 AM
No matter how much they raise taxes, entitlements costs, as currently called for will expand to aborb the new revenues, and still outstrip them. Until entitlements are capped, or there is a sudden unespected die off of baby boomers, we're going to have budget problems.

lofter1
August 8th, 2011, 12:33 PM
Given the current political situation, your second option is probably the more likely to occur.

BBMW
August 8th, 2011, 01:26 PM
I dunno? There's a wall out there somewhere, and I think we're getting close to hitting it.

eddhead
August 8th, 2011, 02:21 PM
Interesting perspective from Robert Reich...

http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html
(http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html)

(http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html)

eddhead
August 8th, 2011, 02:34 PM
http://economix.blogs.nytimes.com/2011/08/08/moodys-why-the-u-s-is-still-aaa/?pagemode=print

Moody’s: Why the U.S. Is Still AAABy FLOYD NORRIS (http://wirednewyork.com/author/floyd-norris/)Virtually unnoticed last week was that Moody’s kept a Triple A rating on the United States.




On Monday, the credit rating agency released its “Weekly Credit Outlook” publication (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_135001)
discussing the decision. Whether by coincidence or not, the stock market turned up just after 11 a.m., just as the wires carried headlines from that. (Why it is news that Moody’s has not changed its mind in the past week is for someone else to explain.)

The United States, Moody’s says, has “unmatched access to financing, meaning that the U.S. government can support higher debt levels than other governments.”

Somebody tell Washington. Greece has a debt crisis. The United States had a debt limit crisis. It can, if it wishes, do something to try to avert a new plunge into global recession, which has become a real fear.

Here’s an excerpt:

Characteristics that support the Aaa rating and that formed the basis of our decision to confirm the rating include the following:

1. The unparalleled diversity and size of the U.S. economy and its long record of relatively solid economic growth, based on both demographics and productivity. Even if the short-term economic outlook exhibits some weakness, we believe that the long term remains favorable in relation to many other advanced economies. This provides a solid base for government finance.

2. The global role of the dollar, which underpins continued demand for U.S. dollar assets, including U.S. Treasury obligations. This feature, unique to the U.S., provides unmatched access to financing, meaning that the U.S. government can support higher debt levels than other governments. Thus, while comparisons of government debt ratios form an important part of our rating analysis, the status of the dollar and the U.S. government debt market need to be taken into account when making such comparisons. Over time, the dollar’s role may be eroded, but we see no immediate threat.

3. Relative to other large Aaa-rated governments, the U.S. debt position is somewhat high, but not out of line with the positions of these countries. While the projected trend of U.S. government debt is less favorable without further deficit reduction measures, we believe that eventually such measures will be adopted. The less favorable debt ratio trend now in place is reflected in the negative outlook assigned to the rating.

4. A step in the right direction toward deficit reduction was taken on 2 August with the passage of the Budget Control Act, even if by itself it will not produce all of the deficit reduction measures necessary to reverse the debt trajectory. Although the political process has been considerably more contentious than usual in the past few months, it finally did produce an agreement. We expect further fiscal measures over time, albeit with vigorous debate over the particulars.

Ninjahedge
August 8th, 2011, 02:49 PM
Logic and actual worth have long not been the true factor in a markets behavior for years.

Perception and blind speculation combined with instant direct access has turned it into an open lottery that is more influenced by someone forecasting DOOM on Twitter than an actual financial prospectus.

mariab
August 8th, 2011, 04:54 PM
Down over 5% today.

Slow economy is a worse problem than any downgrade
Growth would help reduce debt burden, but double-dip recession may be in cards

By John W. Schoen (http://www.msnbc.msn.com/id/10913752) Senior producer[/h]msnbc.com
updated 1 hour 53 minutes ago 2011-08-08T18:48:04

The real risk to holders of U.S. debt is not the government's heavy reliance on borrowing or the deep political divisions in Washington. It's the weakening U.S. economy.
Until very recently, most forecasters were expecting the pace of economic growth to pick up in the second half of the year. But despite a surprisingly strong showing from the job market in July, a string of disappointing data has prompted many economists to slash their growth targets.
“Whatever (economic) growth you thought you were going to get as of a month ago, it is quite reasonable to expect less as of today,” Credit Suisse chief econmist Neil Soss said in a weekend conference call with repoters and investors.
The central issue behind the Standard and Poor's decision late Friday to downgrade the government's AAA credit rating was the level of government debt, relative to the size of the U.S. economy.
A rapidly growing economy would help, by effectively shrinking the relative size of the debt without painful spending cuts. The effect is the same as when you get a raise, and it makes your credit card debt suddenly more manageable.
But instead of growing rapidly, the nation's economy is inching ahead so slowly that it has raised concerns about a second recession — the so-called "double-dip" after the recession of 2007-09.
That's one reason S&P has said there is a one in three chance of an additional downgrade over the next six months to two years. Restoring the Treasury's AAA borrowing status, which will not be easy, also would mean getting economic growth back on track.

Read the rest:

http://www.msnbc.msn.com/id/44061369/ns/business-eye_on_the_economy/

eddhead
August 8th, 2011, 05:42 PM
Interesting perspective from Robert Reich...

http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html
(http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html)

(http://live.washingtonpost.com/Was-downgrade-of-the-US-unnecessary-robert-reich.html)



I meant to do this before posting but got distracted. To summarize Reich beleives:


1. S&P was wrong to downgrade US debt
2. THe S&P has no role in grading Govt securities
3. Given S&P's recent history (failure to properly grade MBS) , he is not quite sure why anyone would listen to them anyway
4. The US' main problem is one of demand which will only be exacerbated by spending cuts
5. S&P's revenue model / pricing structure is irrational. Rather than receiving revenues from the entities they pay (excpet the US Govt BTW) they should collect them from the entities that need the information. The current model encourages conflicts of interest.

eddhead
August 9th, 2011, 10:51 AM
Some very interesting factoids about yesterday's sell-off. Most pundits blame the sell-off on the downgrade of US Sovereign Debt. Yet as equities fell, investors sought after the very same instrument (T-bills) as that which was downgraded. In other words, T-bills actuall appreciated in price after they were downgraded.

You can't make this up.

As for this article, Paulson believes the sell-off had more to do with Greece, Spain, and Italy than it did with the US.

p.s For those of you who are not familar with him, Andrew Ross Sorkin (author of "To Big To Fail) is awesome.

--------------------------------------------------------------------------------------------------------------------------------


Disaster Movie Gets a Sequel, With Subtitles

By ANDREW ROSS SORKIN (http://wirednewyork.com/author/andrew-ross-sorkin/)

It is beginning to feel a lot like 2008 all over again. But it’s not the same.
As markets tumble — the Dow Jones industrial average fell 5.6 percent on Monday — it is instructive to hear from someone who knows a thing or two about a financial crisis: Henry M. Paulson Jr. (http://topics.nytimes.com/top/reference/timestopics/people/p/henry_m_jr_paulson/index.html?inline=nyt-per), the former Treasury (http://topics.nytimes.com/top/reference/timestopics/organizations/t/treasury_department/index.html?inline=nyt-org) secretary.

And he turns out to be more sanguine about the United States, after the Standard & Poor’s (http://topics.nytimes.com/top/news/business/companies/standard_and_poors/index.html?inline=nyt-org) downgrade, than some other voices being heard amid the tumult.

“While the players in Washington certainly haven’t performed at AAA level, I would certainly take U.S. Treasuries over other AAA sovereigns any day,” Mr. Paulson told me.

Yes, there has been much hue and cry over S.&P.’s cut in the credit rating of the United States. But the credit rating downgrade almost seems like a bad joke considering what happened in the bond market: Treasuries rallied as yields fell on Monday to their lowest levels since 2009. In other words, investors felt Treasuries were a safer — yes, safer — bet after S.&P. downgraded them than they were before. (What does that say about S.& P.’s credibility in the bond market?)

The downgrade may point up the enormous challenges facing the country — persistent unemployment and the possibility of slower economic growth is a hard truth that may ultimately force the cost of borrowing to rise for the nation over the long term.

But the downgrade is almost a sideshow compared with the real reason that stocks started falling Monday morning, before panic set in and the momentum of the market took over: the intractable problems in the European Union (http://topics.nytimes.com/top/reference/timestopics/organizations/e/european_union/index.html?inline=nyt-org), which look a lot more like the United States banking crisis circa 2008 than what’s happening on this side of the Atlantic now.

Pretend for a moment that countries like Greece, Spain and Italy are our banks in 2008. They are close to insolvent. (And the actual banks in Germany, Britain and France that are supposed to be strong are horribly undercapitalized and are holding too much debt from countries like Greece, Spain and Italy — all countries that truly may not be able to pay it back in full.)

As Mr. Paulson told me, “The most pressing and significant problems in the global economy are unsustainable structural issues with regard to the E.U. — fiscal deficits and the structure of the E.U. itself.”

This story might not grab as much attention, but it is this plight that is manifesting itself in the market.

The problem is that without any one individual in charge in Europe, there is virtually no possibility for someone to emerge the way that Mr. Paulson did during the panic of 2008 with a lifeline like the Troubled Asset Relief Program, a plan he practically had to ram down the throat of Congress. (And there’s no money for such a program unless a coalition is formed.)

Say what you want about TARP — it was clearly unpopular — but in retrospect, it is hard to argue that it did not keep the economy from going off a cliff. A handful of people with conflicting interests could never come up with such a program. “The E.U. is an odd construct — multiple political systems with disparate economies and fiscal policies but a single currency and monetary system,” he said.

Now, just as was the case in the fall of 2008 before Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org) collapsed, the panicked rumor mill in Europe is in full swing. On Monday, traders were passing along rumors that a French bank and an Italian bank were on the verge of collapse. (There’s no evidence that the rumors are true, but the concern is that such chatter can become a self-fulfilling prophesy.)

In Greece, regulators announced a two-month ban on short-selling to prevent investors from betting against stocks. Sounds just like 2008, right?

And when and if there is another bank in Europe — or worse, an entire country — on the precipice, it is unlikely there will be the political will to bail it out. Yes, just like Lehman Brothers.

In the United States, the speculation game jumped the pond. This time it centered on Bank of America (http://dealbook.on.nytimes.com/public/overview?symbol=BAC&inline=nyt-org), after a report that David Tepper, the founder of the hedge fund Appaloosa Management, had dumped (http://dealbook.nytimes.com/2011/08/08/financial-stocks-tumble/) his entire 17-million-share stake in the bank. (In truth, he has sold about 40 percent of his stake.)

Still, Mr. Paulson said he was less worried about the troubles in the financial sector of Wall Street than in Europe. “In the U.S., our capital markets and banks are stable and much better capitalized and better regulated than they were,” he said.

But he did suggest that the problems in Europe could be a lesson for us if we didn’t get our house in order, echoing a thought that S.&P. made when it downgraded our long-term debt.

“Many of the Western democracies — including the U.S. — have a problem that voters want benefits they don’t want to pay for,” Mr. Paulson said.

Nonetheless, Mr. Paulson said he actually took some solace in the debate over the debt ceiling (http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html?inline=nyt-classifier), despite its ugliness.
“The good news over the last six months or so — beginning with Bowles-Simpson — is that there is now a much better understanding of what is by far our biggest structural economic problem,” he said referring to the Bowles-Simpson bipartisan fiscal commission that looked at ways to cut the deficit.

“Bowles-Simpson was particularly helpful by highlighting the fact that we are such a wealthy country that if we act soon we can deal with this problem with shared sacrifice but without any segment of our society having to sacrifice too much.”

Mr. Paulson, a longtime Republican, even appeared to break with party ranks by going so far as to opine that slashing spending wasn’t the only answer. “The most discouraging fact is that, as important as expense-cutting is — and it is essential that we cut — we can’t just cut our way out of this problem.”

His comment implied that a tax overhaul — and the possibility of raising revenue, a prospect that most Republicans have castigated — may need to be on the negotiating table as part of any solution.

Unfortunately, while Mr. Paulson may be bullish on the long-term prospects for the United States and the nation’s ability to pay back its debts, he is less convinced that a solution will come anytime soon.

“We need fundamental, structural reform and that is impossible without bipartisan compromise and cooperation,” he said, “which doesn’t appear to be forthcoming before an election which changes the players.”

BBMW
August 9th, 2011, 12:34 PM
“Many of the Western democracies — including the U.S. — have a problem that voters want benefits they don’t want to pay for,” Mr. Paulson said.

Our second biggest problem.

eddhead
August 9th, 2011, 06:31 PM
Right. We should be paying for them. We need to increase revenues and roll-back the Bush tax cuts.

stache
August 9th, 2011, 06:58 PM
^ + 1

BBMW
August 9th, 2011, 11:16 PM
And at what point are the productive tell the nonproductive, who they are carrying economically, to screw off. Or maybe they have.

212
August 10th, 2011, 12:45 AM
^ BBMW, you mean we should raise the inheritance tax? ;)

lofter1
August 10th, 2011, 12:59 AM
And at what point are the productive tell the nonproductive, who they are carrying economically, to screw off. Or maybe they have.

London's Calling! Who's telling who to screw off?

Ninjahedge
August 10th, 2011, 09:01 AM
We are polarizing again.

BBMW, while I agree that it is not fair for the Have's to pay for the "WTF do I have to work for?"s, but we are not talking about that.

the Politicians do. They sited the $250K/yr tax as some sort of penalty to all of the american people when it represents a relatively TINY portion of the general population.

the main problem we have in our policy is simple. We only look one or two steps in front of us. We argue about Medicare, Medicaid, Unemployment, Social Security, but we do not look at the primary costs to people in all those categories.

The primary would be HEALTH CARE.

Now, although many would argue that it is not up to us to provide this to everyone, otherwise we will have queues, "limits" and the like, but when you look at the facts, it is not the abuse of a health care system that is problem, but more the unrestricted profiteering of pharmaceutical companies and insurance companies.

Why is US Healthcare allowed to increase rates on a company when their rate of outgo exceeded 75 cents on the dollar? Why is 25% of my insurance money going strait to paying the guys simply managing the MONEY, not providing the care?

Why are pharms allowed to patent things that may save lives, like AIDS treatments or the like (there is a better singular example of this, but I will have to root around for it). I know it costs money to research things, but all you have to do is look at the bottom line and ask "how can they be making this much PROFIT, even after subtracting R+D costs???"

Then there is Big Oil, who whines and complains about their costs and losses (Gulf of Mexico/LA), but yet they are raking in record profits year after year.

Or our bailouts of FINANCIAL FIRMS, which do not more than MOVE MONEY AROUND. Somehow we are allowed to bail them out when they screw up, but asking them for interest on their loans? THE NERVE!

And what about the federal interest rate? Why is it that the Government can only lend to businesses and the like. Why cant the AMERICAN PEOPLE get a 0% loan directly?

There are so many inconsistencies in our system that require more than a single leap or rote finger pointing.

Bottom line is this. The schism is getting too big, as it is always want to do. Money earns money, and the more you have the more you can stand to compound your earnings.

We need buffers in this system that still encourage growth while supplying fiscal liquidity. IOW, taxes that will discourage this striation between classes, this lumping of wealth amongst the few, but at the same time does NOT hinder growth.

Until we find some way to do this effectively, we will just get Republicans pointing at the minority of Welfare abusers as reason not to provide, and the Democrats pointing their fingers at Exxon Mobil while turning a blind eye on throwing a computer lab at an inner city school that needs counselors.

Ninjahedge
August 10th, 2011, 09:01 AM
London's Calling! Who's telling who to screw off?

Has phony Beatle Mania bitten the dust??? :confused:

eddhead
August 10th, 2011, 09:41 AM
And at what point are the productive tell the nonproductive, who they are carrying economically, to screw off. Or maybe they have.

Are you really going to suggest to me that the most productive people in our society are the CEO class, that they're 400 X more productive than the employees them manage, and that their comp is appropriately set by market factors, and not cronism. Give me a break.

The Speaker of the House has been quoted as saying he got 98% of what he wanted from the Debt Celiling negotiations. Well, congratulations John, you own this mess including the downgrade.

eddhead
August 10th, 2011, 10:20 AM
Excellent points raised by NH (no, not about phony Beatle Mania biting the dust)

BBMW
August 10th, 2011, 11:29 AM
No, I'm not talking about the CEO class. I'm talking about people who are working, paying taxes, paying their bills, and not being a drain on society (and okay maybe that includes the CEOs also, but their a tiny subset), who are sick of funding those feeding at the government trough.

You can see a microcosm of this in the population loss in NY State. People are sick of the taxes and are leaving.


Are you really going to suggest to me that the most productive people in our society are the CEO class, that they're 400 X more productive than the employees them manage, and that their comp is appropriately set by market factors, and not cronism. Give me a break.

The Speaker of the House has been quoted as saying he got 98% of what he wanted from the Debt Celiling negotiations. Well, congratulations John, you own this mess including the downgrade.

lofter1
August 10th, 2011, 12:00 PM
Those feeding off the government trough would include those getting subsidies for any number of things, from grazing rights to low water costs to mining rights sold at 1 cent on the dollar, yes?? (not to mention any other number of ways big holders have learned to game the system via expensive lawyers, accountants & lobbyists)?

Ninjahedge
August 10th, 2011, 12:16 PM
IOW BBMW, most of the things that people SEE being "given away" are not the biggest items.

In a nation where we still SUBSIDIZE TOBACCO FARMERS as if they were growing something we all need to survive, it should be no small wonder that there are many dollars being given to those that not only do not deserve it, but who we rarely hear of in political debates.

BBMW
August 10th, 2011, 01:20 PM
I agree about agro subsidies (and really, most subsidies.) But the biggest give aways (at least at the federal level, are the biggest budget items) Medicare, Medicaid, Social Security, and the various programs that full onder the welfare budget.


IOW BBMW, most of the things that people SEE being "given away" are not the biggest items.

In a nation where we still SUBSIDIZE TOBACCO FARMERS as if they were growing something we all need to survive, it should be no small wonder that there are many dollars being given to those that not only do not deserve it, but who we rarely hear of in political debates.

mariab
August 10th, 2011, 01:43 PM
Medicare & SS are paid into all of our working lives, we should have access to it. Not unlike a car insurance policy: If you get full coverage & 6 mos later get into an accident, your ins company isn't going to write you a check for only what you paid into it. They'll pay whatever you're covered for. Even if it's into the hundreds of thousands. Granted, they'll either hike up the premium next term, or even drop you, but you're still covered. Same with health ins. When you have an accident or medical problem, you know you're covered because you are paying toward it & you agreed to the terms.


Not only that, Medicare pays 80%, you still pay 20%, which could be pretty steep if you have a major medical episode, or even a terminal condition. Not to mention prescription costs, which, if you're on a Medicare-approved plan, gets deducted from your monthly SS payment as well.

eddhead
August 10th, 2011, 01:49 PM
No, I'm not talking about the CEO class. I'm talking about people who are working, paying taxes, paying their bills, and not being a drain on society (and okay maybe that includes the CEOs also, but their a tiny subset), who are sick of funding those feeding at the government trough.

You can see a microcosm of this in the population loss in NY State. People are sick of the taxes and are leaving.

The CEO class is the problem. The top 1% of income earners actually have a lower tax base than the 9% immediately below them.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html


Right now I cannot find the source data, but I have read that the top 1% of all income earners earn in excess of 23% of all income which is more than the bottom 50% of all income earners (try saying that without twisting your tongue)>

eddhead
August 10th, 2011, 01:51 PM
Medicare & SS are paid into all of our working lives, we should have access to it. Not unlike a car insurance policy: If you get full coverage & 6 mos later get into an accident, your ins company isn't going to write you a check for only what you paid into it. They'll pay whatever you're covered for. Even if it's into the hundreds of thousands. Granted, they'll either hike up the premium next term, or even drop you, but you're still covered. Same with health ins. When you have an accident or medical problem, you know you're covered because you are paying toward it & you agreed to the terms.


Not only that, Medicare pays 80%, you still pay 20%, which could be pretty steep if you have a major medical episode, or even a terminal condition. Not to mention prescription costs, which, if you're on a Medicare-approved plan, gets deducted from your monthly SS payment as well.

I agree with you. But I am sadly coming to the realization that we will likely see means testing for Social Security. And I would not be surprised if an agreement for means testing happens under Obama.

BBMW
August 10th, 2011, 02:00 PM
If they're going to cut SS, they're going to cut Medicare even more. SS is only now becoming a fiscal problem. Medicare has been fore years, and is getting, and will continue to get, exponentially worse.

Ninjahedge
August 10th, 2011, 02:45 PM
I agree about agro subsidies (and really, most subsidies.) But the biggest give aways (at least at the federal level, are the biggest budget items) Medicare, Medicaid, Social Security, and the various programs that full onder the welfare budget.

Here's the thing.

If you do not regulate how much a pharm can charge for a medication that will keep granny alive, how can you control how much SS$ is spent on that?

The allowable amount for prescription meds went up recently, and lo and behold, so did the cost of several common medications used by seniors. 2 steps. You see high SS, a fund that was pretty much fine UNTIL WE STARTED BORROWING AGAINST IT (same as with pension funds, thank you Christine Whitman (NJ)), but you do not see that most of that money is going right into the hands of Proctor and Gamble, Johnson and Johnson and others.

Our problem is just that. We point the finger at Pension Funds and fail to realize that the only reason they are in trouble is because some politicians decided to raid that fund and never paid it back. (degrees of separation)

eddhead
August 10th, 2011, 03:39 PM
http://thecaucus.blogs.nytimes.com/2011/08/10/is-the-house-g-o-p-warming-to-tax-increases/?pagemode=print

August 10, 2011, 1:33 pm Is the House G.O.P. Warming to Tax Increases?By JENNIFER STEINHAUER (http://wirednewyork.com/author/jennifer-steinhauer/)

VIRGINIA BEACH, Va. -– While last month’s Congressional tangle over the debt ceiling (http://topics.nytimes.com/topics/reference/timestopics/subjects/n/national_debt_us/index.html?inline=nyt-classifier) suggested permanent partisan gridlock, signs are emerging that some House Republicans are opening the door to potential revenue increases, as Congressional leaders continued to name their members of a bipartisan committee charged with finding ways to tame the deficit.

In a town-hall-style meeting in Virginia on Tuesday night with four Republican House members – Scott Rigell, who represents the Virginia district where the meeting was held; Larry Bucshon of Indiana; Phil Gingrey of Georgia; and Phil Roe of Tennessee — audience members asked what, if any, revenues the representatives would accept as part of a final deal to cut deficits by at least $1.2 trillion over the next decade and pave the way for a second increase in the debt ceiling up to $1.5 trillion.

Of the four, three gave specific examples that they could possibly acquiesce to. Mr. Rigell – who had invited the other three House members to the meeting because it focused on health care and they are medical doctors – said he thought that at least a few forms of tax subsidies provided to oil companies should be on the table. Government should not subsidize one industry over another, Mr. Rigell said.

Mr. Gingrey said he found the question “difficult” and suggested that he had been struggling with the answer himself. Raising the rates on those earning $250,000 a year – a category of beneficiaries under the Bush tax cuts (http://topics.nytimes.com/top/reference/timestopics/subjects/t/taxation/bush_tax_cuts/index.html?inline=nyt-classifier) that some Democrats have suggested be taxed more – was a no-go for him, but for those earning over $700,000, he said, “I’m not really sure.”

In response to request for elaboration, Mr. Gingrey said Wednesday in an e-mail: “I have a proven decade-long record of voting against tax increases, and believe that tax hikes on anyone in the middle of an economic recession is the last thing our country needs. Instead, as included in the Fiscal Year 2012 budget passed by the House, we should pursue comprehensive tax reform that will close loopholes and revise the tax code to be simpler and less burdensome to promote economic growth, incentivize investment and encourage job creators.”

Mr. Roe said that he would support closing certain legal loopholes that corporations take advantage of. “G.E. ought to pay some taxes,” he said, referring to General Electric, which has taken advantage of various loopholes in the tax system.
(http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=all)
The members made their remarks as leaders in both chambers put together their 12-member committee charged with coming up with recommendations to tame the deficit.

On Tuesday, Speaker John A. Boehner (http://topics.nytimes.com/top/reference/timestopics/people/b/john_a_boehner/index.html?inline=nyt-per) appointed three Republican House members to the committee: Dave Camp (http://topics.nytimes.com/top/reference/timestopics/people/c/david_l_camp/index.html?inline=nyt-per) of Michigan, who is chairman of the House Ways and Means Committee; Fred Upton of Michigan; and Jeb Hensarling of Texas, who is the Republican conference chairman.
Senator Mitch McConnell (http://topics.nytimes.com/top/reference/timestopics/people/m/mitch_mcconnell/index.html?inline=nyt-per), the minority leader, chose three senators: Pat Toomey (http://topics.nytimes.com/top/reference/timestopics/people/t/pat_toomey/index.html?inline=nyt-per) of Pennsylvania; Rob Portman (http://topics.nytimes.com/top/reference/timestopics/people/p/rob_portman/index.html?inline=nyt-per) of Ohio; and Jon Kyl (http://topics.nytimes.com/top/reference/timestopics/people/k/jon_kyl/index.html?inline=nyt-per), the minority whip, who is retiring at the end of his term.

On Tuesday, the Senate majority leader, Harry Reid (http://topics.nytimes.com/top/reference/timestopics/people/r/harry_reid/index.html?inline=nyt-per), named three Democratic senators: Patty Murray (http://topics.nytimes.com/top/reference/timestopics/people/m/patty_murray/index.html?inline=nyt-per) of Washington, John Kerry (http://topics.nytimes.com/top/reference/timestopics/people/k/john_kerry/index.html?inline=nyt-per) of Massachusetts and Max Baucus (http://topics.nytimes.com/top/reference/timestopics/people/b/max_baucus/index.html?inline=nyt-per) of Montana. Representative Nancy Pelosi (http://topics.nytimes.com/top/reference/timestopics/people/p/nancy_pelosi/index.html?inline=nyt-per), Democrat of California, the minority leader, has yet to name her three selections.

All six of the Republicans named have signed a pledge, written by Grover Norquist (http://topics.nytimes.com/top/reference/timestopics/people/n/grover_g_norquist/index.html?inline=nyt-per), not to raise taxes. But there are various ways of raising revenues, like closing the corporate loopholes or making adjustments to existing tax rates. All six are also supporters of a Balanced Budget Amendment, which will be voted on in Congress this fall.

Among the Democratic picks, the most surprising may be Mr. Kerry, who tends to focus on foreign policy rather than fiscal issues; however, absent the passage of the budget amendment or the adoption of the committee’s recommendations by Congress, large cuts to both discretionary spending and defense would automatically be triggered. Mr. Kerry, who is a military veteran, may be perceived as sensitive to those defense cuts.

Further, Mr. Toomey, along with numerous other Senate Republicans, has voted in the past to end ethanol subsidies, as he emphasized on a call with reporters Wednesday.

eddhead
August 10th, 2011, 03:41 PM
Here's the thing.

You see high SS, a fund that was pretty much fine UNTIL WE STARTED BORROWING AGAINST IT (same as with pension funds, thank you Christine Whitman (NJ)), but you do not see that most of that money is going right into the hands of Proctor and Gamble, Johnson and Johnson and others.

Our problem is just that. We point the finger at Pension Funds and fail to realize that the only reason they are in trouble is because some politicians decided to raid that fund and never paid it back. (degrees of separation)

Spot on.

eddhead
August 10th, 2011, 03:44 PM
I agree about agro subsidies (and really, most subsidies.) But the biggest give aways (at least at the federal level, are the biggest budget items) Medicare, Medicaid, Social Security, and the various programs that full onder the welfare budget.

Give aways? I have been paying into those funds for 35 years now. Hardly a give away. Now agro, oil and other industry subsidies, those are give aways./

Ninjahedge
August 10th, 2011, 04:08 PM
A farm subsidy was originally instituted to help provide FOOD for our nation. To help preserve farmland during times of economic trouble (which could, ironically, mean surpluses in certain stock like corn, wheat, or cheese).

But then the rules get bent, and things like Tobacco are included.

Other rules get bent and you have companies copy-writing genetic strains and pretty much monopolizing things like the soy bean market in the US.

You have so many of these rules that were meant to help which are now becoming burdens that are only so because of their abuse by those that now promote them. I am sure you will not get the senators from Virginia to eliminate Tobacco farming from the subsidies even though they know that that was not what they were meant for.

eddhead
August 10th, 2011, 04:23 PM
I hate to say it, but there is a lot of truth to was she has written. For all of his good intentions, Obama has been a disappointment.

Note Dowd writes this:


He doesn’t like the bully pulpit, just the professor’s lectern

I have mentioned this in the past. It REALLY hits the mark, and is one reason he was not able to drive a more favorable outcome to the debt ceiling debate


http://www.nytimes.com/2011/08/10/opinion/withholder-in-chief.html?hp=&pagewanted=print (http://www.nytimes.com/2011/08/10/opinion/withholder-in-chief.html?hp=&pagewanted=print)

August 9, 2011

Withholder in ChiefBy MAUREEN DOWD (http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/maureendowd/index.html?inline=nyt-per)DES MOINES
Even the Butter Cow at the Iowa State Fair is not enough to sweeten the mood.

Three years ago, Barack Obama’s unlikely presidential dream was given wings by rapturous Iowans — young, old and in-between — who saw in the fresh-faced, silky-voiced black senator a chance to leap past the bellicose, rancorous Bush years into a modern, competitive future where we once more had luster in the world.

“We are choosing hope over fear,” Senator Obama told a delirious crowd of 3,000 here the night he won the Iowa caucuses.
But fear has garroted hope, as America reels from the latest humiliating blows on the economy and in Afghanistan. The politician who came across as a redeemer in 2008 is now in need of redemption himself.

Faced with a country keening for reassurance and reinvention, Obama seems at a loss. Regarding his political skills, he turns out to be the odd case of a pragmatist who can’t learn from his mistakes and adapt.

Many of his Democratic supporters here, who once waited hours in line just to catch a glimpse of The One, are disillusioned.
“We just wish he’d be more of a fighter,” said one influential Democrat with a grimace. Another agreed: “You can’t blame him for everything. I just wish he would come across more forceful at times, but that is not the dude’s style. Detached hurts you when things are sour. You need some of Clinton’s ‘I feel your pain’ compassion.”

The president has been so spectacularly unable to fill the leadership void in Washington that the high-spirited Michele Bachmann feels free to purloin Obama’s old mantra.

“The power behind our campaign is hope and a future,” she chirped to a sparse crowd Monday in Atlantic, Iowa. “That’s all I believe in.” That and making America safe for old-fashioned light bulbs and not those weird curly ones.

Obama’s response on Monday to Friday’s Standard & Poor’s downgrade and to the 22 Navy Seal commandos and 8 other soldiers killed by a Taliban rocket-propelled grenade in Afghanistan was once more too little, too late. It was just like his belated, ineffectual response on the BP oil spill and his reaction to the would-be Christmas Day bomber; it took him three days on vacation in Hawaii to speak about the terrorist incident when the country was scared about national security, and then he spent the next week callously shuttling from the podium to the golf course.
Bachmann has been riding around Iowa in her bus, with Elvis music and her name emblazoned 25 times on the outside, mocking Obama for going to Camp David last weekend and burrowing in, while the country was roiling.

His inability to grab a microphone and spontaneously assuage Americans’ fears is strange. If the American servicemen had died on a Monday, he wouldn’t have waited until Wednesday to talk about it. He doesn’t like the bully pulpit, just the professor’s lectern.

After failing to interrupt his Camp David weekend to buck up the country on one of its worst days in history, he tacked on his condolences for the soldiers’ families to his economic pep talk, in what had to be the most inept oratorical segue of his presidency.

He long ago should have gone out into the country to talk to Americans in person and come up with a concrete plan that people could print out from the White House Web site and study. Hasn’t he learned how dangerous it is to delegate to Congress? His withholding and reactive nature has made him seem strangely irrelevant in Washington, trapped by his own temperament. He doesn’t lead, and he doesn’t understand why we don’t feel led.

Speaking from the State Dining Room of the White House, he advised America it was still “a triple-A country” like some cerebral soccer coach urging the kids to win one for the London Interbank Offered Rate.

With traders hearing nothing new, just boilerplate about “common sense and compromise” on deficit reduction, the Dow Jones industrial average, which had already fallen 410 points, fell 20 more points while the president was talking around 2 o’clock. By the 4 p.m. close, the Dow was 634 points lower.

Obama has spent a lifetime creating his persona — superior, wise, above all parties and interests, all-seeing, calm, unflappable.
But as Drew Westen, a liberal psychology professor at Emory University wrote in The Times on Sunday, puzzling about what has happened to his former hero’s passion, the president never identifies the villains who cause our epic problems.

It’s unclear, Westen wrote, whether that reflects his aversion to conflict or a fear of offending donors, or both.

Obama’s assumption that you can rise above ascribing villainous motives has caused him to waste huge chunks of his first term seeking bipartisanship from Republicans who were playing him for a dupe. And it has led to Americans regarding the nation’s capital as a place of all villains and no heroes

BBMW
August 10th, 2011, 04:42 PM
The rules didn't get bent, they got changed. Tobacco interests were powerful, and could do that.

As far as the genetic patents, when the patent laws were written, no one even conceived of the concept of genetic engineering. They just tried to apply old laws to new situations. In point of fact the patent laws probably need a tune up. But no one is bending anything, just trying to fit a square peg in a a rectangular hole.

The rule of unintended consequences applies. When they wrote the SS Act, no one thought the population would stop growing, so they created a legally enforced Ponzi scheme. And we all know what happens to Ponzi schemes when pool of suckers, er, investers stops growing.


A farm subsidy was originally instituted to help provide FOOD for our nation. To help preserve farmland during times of economic trouble (which could, ironically, mean surpluses in certain stock like corn, wheat, or cheese).

But then the rules get bent, and things like Tobacco are included.

Other rules get bent and you have companies copy-writing genetic strains and pretty much monopolizing things like the soy bean market in the US.

You have so many of these rules that were meant to help which are now becoming burdens that are only so because of their abuse by those that now promote them. I am sure you will not get the senators from Virginia to eliminate Tobacco farming from the subsidies even though they know that that was not what they were meant for.

BBMW
August 10th, 2011, 04:47 PM
Obama will go down in history the same way David Dinkins has in NYC history. As someone who was supposed to be a turning point in history, but became an ineffectual also ran. Hopefully we'll get someone who can follow up Obama's term who can clean up the mess in the country the same way Giulianni did in NY (if not actually Rudy, who seem to prefer the life of a high paid consultant now.)



I hate to say it, but there is a lot of truth to was she has written. For all of his good intentions, Obama has been a disappointment.

Note Dowd writes this:



I have mentioned this in the past. It REALLY hits the mark, and is one reason he was not able to drive a more favorable outcome to the debt ceiling debate

(http://www.nytimes.com/2011/08/10/opinion/withholder-in-chief.html?hp=&pagewanted=print)

stache
August 10th, 2011, 06:06 PM
I don't know anyone that thought Dinkins was going to make great changes in NYC. My impression always was he was mainly a place holder.

eddhead
August 10th, 2011, 06:54 PM
You beat me to it. I agree.

mariab
August 10th, 2011, 09:20 PM
As far as SS, they've already started cutting (into) it. There hasn't been a cost of living increase for what, 2 years now? That's hurting a lot of people who really need it to simply survive.

The video accessed by the link on the bottom explains how millions are feeling right now.


Video: MSNBC’s Dylan Ratigan has a meltdown over the meltdown

By Dylan Stableford (http://wirednewyork.com/blogs/author/dylan-stableford/) | The Cutline (http://wirednewyork.com/blogs/cutline/) – 21 hrs ago

MSNBC's Dylan Ratigan is mad as hell about the U.S. financial crisis--and he's not gonna take it anymore!
While convening a roundtable discussion on the market meltdown on his eponymous MSNBC show on Tuesday, Ratigan exploded.
"We've got a real problem!" an exasperated Ratigan shouted. "This is a mathematical fact! Tens of trillions of dollars are being extracted from the United States of America. Democrats aren't doing it, Republicans aren't doing it. An entire integrated system, financial system, trading system, taxing system, that was created by both parties over a period of two decades is at work on our entire country right now. And we're sitting here arguing about whether we should do the $4 trillion plan that kicks the can down the road for the president for 2017, or burn the place to the ground, both of which are reckless, irresponsible, and stupid."
"I'm sorry to lose my temper," he continued. "But, I tell you what, I've been coming on TV for three years doing this, and the fact of the matter is that there's a refusal on both the Democratic and the Republican side of the aisle to acknowledge the mathematical problem, which is that the United States of America is being extracted."
Later, on the show's website, Ratigan called it his "epic 'Network' moment."
The clip of the entire rant is worth watching, which you can (and should) do after the jump:



http://news.yahoo.com/blogs/cutline/video-msnbc-dylan-ratigan-meltdown-over-meltdown-031046281.html (http://news.yahoo.com/blogs/cutline/video-msnbc-dylan-ratigan-meltdown-over-meltdown-031046281.html)

Ninjahedge
August 11th, 2011, 08:48 AM
I will after work.

I agree. Those that have, and I do not mean just people who have more than others, but the TRUE "have"s (top 1%) have been working to influence policy so that their investments are not only protected, but more profitable.

You can understand why this would be something that almost anyone would do, but the problem here is, when you have that much ballast to move around, it is easier for you to get what you want. And the more you get, the more weight you have to shift.

This is not as simple as a DeBeers diamond monopoly or an attempt to corner the silver market, but more akin to the business practices of Walmart, who has been diabolically clever enough to see that it is not the salaries of employees that cost the company, but long term benefits. They have also seen that by seeming to give much at the start, they dry up their suppliers other channels of sale and are able to tighten things up later when they are the ONLY ones buying from that supplier.

Good business, bad socioeconomic effect.


The thing I do not get is this. Instead of getting all the problems on the table and trying to work them out, it is like each side is just trying to eliminate something from the others. Everything should be on the table with some way to rectify it, not bargaining like it was a hostage situation.

lofter1
August 11th, 2011, 09:21 AM
Rattigan's point (I happened to catch it as it aired and it's good TV) is that everything being done (or not done) by Congress et al is obscuring the fact that the corporatocracy is looting the national coffers and we're all f*cked, that it's designed that way to serve the money masters who apparently think they're rich enough so that they and theirs will survive whatever calamity they create.

stache
August 11th, 2011, 09:50 AM
That's about the size of it. Between gated communities and the possibility of living anywhere on the planet, they've pretty much got it sewn up.

212
August 11th, 2011, 09:54 AM
Obama’s assumption that you can rise above ascribing villainous motives has caused him to waste huge chunks of his first term seeking bipartisanship from Republicans who were playing him for a dupe.

That's a foolish statement by Dowd. The Republicans control the House and can filibuster in the Senate. Democrats need Republican votes to get anything done. Anything. Any spending, taxes, appointments, anything. So compromise is inevitable. You can't just tell the Republicans to piss off.

The Tea Party wants to destroy the safety net for the poor and middle class, and Republicans in Congress barely listen to anybody else. But Obama has deflected any major cuts to safety net programs for the next two years. The major cuts in the debt deal are backloaded, to 2013 and beyond. They could be reversed by a future Congress.

So, want different results? Elect a different Congress.


And it has led to Americans regarding the nation’s capital as a place of all villains and no heroes.

Obama is holding his ground politically in a terrible economy.

Meanwhile, Republicans are making themselves look insane to most voters:
http://tpmdc.talkingpointsmemo.com/2011/08/cnn-poll-grand-old-party-downgrade.php

eddhead
August 11th, 2011, 10:24 AM
Foolishness. The Republicans control the House and can filibuster in the Senate. Democrats need Republican votes to get anything done. Anything. Any spending, taxes, appointments, anything. So compromise is inevitable. You can't just tell the Republicans to piss off.

Want different results? Elect a different Congress.

So at the end of the day the GOP caucus of a mixed Congress (GOP controlled house, Dem controlled senate) holds more political sway than the President of the United States? The two political parties presented diametrically opposed views for dealing with the Debt limit. The President led one constituency, the Speaker the other. Neither could have passed their agenda without the capitulation of the other. Obama blinked and the GOP got what they wanted.

And it is more than that. For someone who was elected with such strong communication credentials, he has done a terrible job of articulating and selling his vision to the public and garnering public support for his positions. Say what you will about Clinton, he understood the power of the bully pulpit and was much better at influence management than Obama is . I do not see those skils in Obama and as much as I hate to say, have come to the conclusion that he lacks leadership creds.

eddhead
August 11th, 2011, 11:28 AM
That said, I do agree with what I perceive to be am implied conclusion in your message. The American public also bears some responsibility here for consistently voting for a Congress that stands diametrically opposite to what is in their best interests. Never ceases to amaze me.

BBMW
August 11th, 2011, 12:34 PM
^
Maybe your perception of their best interests is at odds with their perception of their best interests.

212
August 11th, 2011, 12:34 PM
Edd, we agree on most things. But I think the left expects way too much of Obama. They want him to be MLK and LBJ* rolled up into one presidential superhero.


Say what you will about Clinton, he understood the power of the bully pulpit. I do not see that in Obama. I really question is leadership creds.

Leadership differences between Bill Clinton and Barack Obama:

• Clinton never won a majority of the popular vote. Obama won 53% in 2008, and could win a majority again in 2012.

• Clinton and a Democratic Congress lost health care reform. Obama and a Democratic Congress won health care reform.

• Clinton signed the "Defense of Marriage Act". Obama ended "Don't Ask Don't Tell."

And a similarity: They both lost the Congress in their first off-year election.

Really, the main difference between Clinton and Obama is that Obama inherited a vastly worse recession. If you had a race to climb out of a hole in an hour, and Clinton climbed 500 ft out of a 500-ft hole, and Obama climbed 1,000 feet out of a 2,000-ft hole, who was the better climber?

* LBJ had a filibuster-proof majority of Democrats in the Senate; Obama started with 58 + Lieberman and Nelson.

212
August 11th, 2011, 12:43 PM
^
Maybe your perception of their best interests is at odds with their perception of their best interests.

BBMW, we'll see in 2012. For now, here's the American public's perception:

Democrats: 47% favorable, 47% unfavorable
Republicans: 33% favorable, 59% unfavorable

That unfavorable rating for the GOP is "an all-time high dating back to 1992 when the question was first asked."

http://politicalticker.blogs.cnn.com/2011/08/09/cnn-poll-time-to-clean-house-in-congress/

212
August 11th, 2011, 01:10 PM
The two political parties presented diametrically opposed views for dealing with the Debt limit. The President led one constituency, the Speaker the other. Neither could have passed their agenda without the capitulation of the other. Obama blinked and the GOP got what they wanted.

Both sides wanted to cut spending. The Democrats wanted to bring our troops home from Iraq and Afghanistan, and end some corporate subsidies. The Republicans wanted to end Medicare as we know it.

What we got was a deal that has major cuts to both the defense budget and domestic programs. But the vast majority of the cuts are delayed until 2013 or beyond. Some of the cuts you dislike could even be reversed by the next Congress. Will it happen? Depends on who the voters choose in 2012 and 2014.

eddhead
August 11th, 2011, 01:52 PM
Edd, we agree on most things. But I think the left expects way too much of Obama. They want him to be MLK and LBJ* rolled up into one presidential superhero.



Leadership differences between Bill Clinton and Barack Obama:

• Clinton never won a majority of the popular vote. Obama won 53% in 2008, and could win a majority again in 2012.

• Clinton and a Democratic Congress lost health care reform. Obama and a Democratic Congress won health care reform.

• Clinton signed the "Defense of Marriage Act". Obama ended "Don't Ask Don't Tell."

And a similarity: They both lost the Congress in their first off-year election.

Really, the main difference between Clinton and Obama is that Obama inherited a vastly worse recession. If you had a race to climb out of a hole in an hour, and Clinton climbed 500 ft out of a 500-ft hole, and Obama climbed 1,000 feet out of a 2,000-ft hole, who was the better climber?

* LBJ had a filibuster-proof majority of Democrats in the Senate; Obama started with 58 + Lieberman and Nelson.

I agree that we agree on most matters but feel compelled to remind you that that the version of Healthcare legislation passed was akin to what Dole proposed, and in no way resembles the legislation Clinton advocated.

And although Clinton lost control of Congress during the off-year cycle, he was still able to enact much of his political agenda relying heavily on his ability to shape public discourse.

The "Defense of Marriage Act" and "Welfare Reform" were inexcusable. I would say the same thing about "Don't Ask Don't Tell" except as ridiculous as this sounds that actually represented a small victory for gays in the military at the time. Remember gays were expressly prohibited from serving prior to the enactment of that policy, and could be discharged without cause. In other words the Military was allowed to "Ask" prior to that point. I think Clinton always felt badly about it though.

I do not want to be in the position of defending Clinton's tenure in the White House. I merely suggesting that he was able to promote most of his agenda ans sway public opinion through the use of the bully pulpit. And as much as I hate to admit it, so was Reagan, I do not see it in Obama

212
August 11th, 2011, 02:01 PM
And although Clinton lost control of Congress during the off-year cycle, he was still able to enact much of his political agenda relying heavily on his ability to shape public discourse.

What parts of his political agenda was Clinton able to enact after the GOP took Congress in 1994?

212
August 11th, 2011, 02:09 PM
the version of Healthcare legislation passed was akin to what Dole proposed, and in no way resembles the legislation Clinton advocated.

I agree that the GOP moved the goalposts on health care, repeatedly. But that's an argument against the GOP, not Obama.

Near-universal health insurance by 2014 is, in Biden's words, a big f'in deal. The GOP opposed it en masse. Obama got it done.

eddhead
August 11th, 2011, 02:26 PM
The GOP did move the goal posts the plan that was enacted was there plan They settled on their own plan.

On the other hand Obama never seriously pursed the public option much less single payor. Had he gone into the debate with a stronger 'left' position, he may have negotiated to a more moderate solution than what we have (or will have) today. And remember, the dems controlled both the house and senate at the time. True, they did not have had a super majority in the senate but they should have been able to woo over Snow or one or two others from the GOP.

As for Obama getting 53% of the vote, I agree with you and that is what I find so puzzling. Given how communicative and articulate he was during the election cycle, and how well he influenced the discourse, I am stunned by how poorly he does so today.

Again, I do not want to be in a position of defending Clinton who I have mixed feelings about, but here is a list of accomplishments to start with.

http://clinton3.nara.gov/WH/Accomplishments/summary.html

212
August 11th, 2011, 02:53 PM
^ OK true, Clinton won children's health grants, Hope scholarships and Medicare mammograms in '97-'99. But most of his big legislative accomplishments were in '93-'94, when the Democrats held Congress. Otherwise his accomplishments reflected a healthy economy. We bounced back from a much shallower recession than the one Obama inherited.


Given how communicative and articulate he was during the election cycle, and how well he influenced the discourse, I am stunned by how poorly he [Obama] does so today.

Edd, you don't think Obama rose to the occasion with the Gabrielle Giffords speech, or when Bin Laden was killed?

eddhead
August 11th, 2011, 03:07 PM
Agree on Clinton, except you could argue that his accomplishments created rather than reflected a healthy economy. After all the US was in a budget deficit position when he took office, and moved to a surplus position afterwards. Still the current state of the US economy is not Obama's fault and I am not blaming him for that.

As for Obama rising to the occasion, yes I think he did well with GIffords and Bin Laden. I also think that Clinton won the battle of public perception when Gingrich tried to shut down the Govt, an event that had a greater impact on public policy than either of Obama's two speeches. That is the kind of stuff I am looking for from Obama; not one time hits, but rather protracted campaigns.

Ninjahedge
August 11th, 2011, 03:48 PM
We put too much weight behind the President. He has no real power in this, his is but an advisory role and one as a "circuit breaker" for narrow margin victories (veto).

Recently line item vetos and addendums have been abused (George Jr), but aside from that, the major role he has is just one of spokesperson, not "Decider".

I am a bit disappointed in his progress, but I am not disillusioned by it. I did not believe he would be able to enact change as many hoped. I do hope that he will be able to influence enough members of congress to start taking the issues a bit more realistically instead of all these outlandish extrapolations and cockeyed "compromises" we have been forced to endure, but that is something we still have time to see.

I blame congress first in this, laying it all on the shoulders of the President (past or present, good or bad) is not 100% fair in a situation like this.

212
August 11th, 2011, 04:50 PM
Agree on Clinton, except you could argue that his accomplishments created rather than reflected a healthy economy. After all the US was in a budget deficit position when he took office, and moved to a surplus position afterwards. Still the current state of the US economy is not Obama's fault and I am not blaming him for that.

Coming out of the 1992 recession, Clinton raised taxes to fix the deficit. Obama couldn't do that. For Obama, stopping the massive bleeding of the economic crisis had to be the priority.

And the 2007-2009 recession is of a different kind and magnitude than 1992. The 1992 recession was a cyclical downturn, and unemployment had already topped out at 7.8% by the time Clinton won the election. 2007-2009 was a giant housing bust and a financial crisis. As we all know, unemployment skyrocketed to 10% in early 2009. There's been some anemic job growth since then. But a massive overhang of consumer debt (especially mortgages) means our recovery is painfully slow and very, very fragile.


I also think that Clinton won the battle of public perception when Gingrich tried to shut down the Govt, an event that had a greater impact on public policy than either of Obama's two speeches. That is the kind of stuff I am looking for from Obama; not one time hits, but rather protracted campaigns.

Fair enough. In some ways Gingrich lost the shutdowns (two of 'em!) more than Clinton won. Today's Republicans seem determined to repeat history.

eddhead
August 11th, 2011, 05:40 PM
We put too much weight behind the President. He has no real power in this, his is but an advisory role and one as a "circuit breaker" for narrow margin victories (veto).

Recently line item veto's and addendums have been abused (George Jr), but aside from that, the major role he has is just one of spokesperson, not "Decider".

I am a bit disappointed in his progress, but I am not disillusioned by it. I did not believe he would be able to enact change as many hoped. I do hope that he will be able to influence enough members of congress to start taking the issues a bit more realistically instead of all these outlandish extrapolations and cockeyed "compromises" we have been forced to endure, but that is something we still have time to see.

I blame congress first in this, laying it all on the shoulders of the President (past or present, good or bad) is not 100% fair in a situation like this.

Per the 14th amendment, the President could have unilaterally raised the debt ceiling via an Executive order. I am not saying he should have, but the fact that he could have speaks to the power of the office.

Remember too, the President could have gotten a more favorable budget deal had he pushed the democratically controlled lame duct congress harder in December.

EDIT: That should read lame duck of course. I was probably thinking of all the hot air that fills the Senate and House Chambers

eddhead
August 12th, 2011, 05:57 PM
Seems the GOP position is at odds with even fiscally conservative economists and past policy makers. And once again, Obama needs to find a way to demonstrate how effective some of his programs have been. Again, it comes down to communication.


http://www.nytimes.com/2011/08/13/business/economy/voices-faulting-gop-economic-policies-growing-louder.html?_r=1&hp=&pagewanted=print
August 12, 2011
G.O.P. on Defensive as Analysts Question Party’s Fiscal Policy
By JACKIE CALMES
WASHINGTON — The boasts of Congressional Republicans about their cost-cutting victories are ringing hollow to some well-known economists, financial analysts and corporate leaders, including some Republicans, who are expressing increasing alarm over Washington’s new austerity.


Their critiques have grown sharper since last week, when President Obama signed his deficit reduction deal with Republicans and, a few days later, when Standard & Poor’s subsequently downgraded the credit rating of the United States.


But even before that, macroeconomists and private sector forecasters were warning that the direction in which the new House Republican majority had pushed the White House and Congress this year — for immediate spending cuts, no further stimulus measures and no tax increases, ever — was the wrong one for addressing the nation’s two main ills, a weak economy now and projections of unsustainably high federal debt in coming years.


Instead, these critics say, Washington should be focusing on stimulating the economy in the near term to induce people to spend money and create jobs, while simultaneously settling on a long-term plan for spending reductions and tax increases to take effect only after the economy recovers.


These critics include onetime standard-bearers of Republican economic philosophy like Martin Feldstein, an adviser to President Ronald Reagan, and Henry M. Paulson Jr., Treasury secretary to President George W. Bush, underscoring the deepening divide between party establishment figures and the Tea Party-inspired Republicans in Congress and running for the White House.


“I think the U.S. has every chance of having a good year next year, but the politicians are doing their damnedest to prevent it from happening — the Republicans are — and the Democrats to my eternal bafflement have not stood their ground,” Ian C. Shepherdson, chief United States economist for High Frequency Economics, a research firm, said in an interview.


As for the longer term, Ethan Harris, co-head of global economics research at Bank of America, wrote this week that “Given the scale of the debt problem, a credible plan requires both revenue enhancement measures and entitlement reform. Washington’s recent debt deal did not include either.”


That is a common assessment, which may explain why Representative Eric Cantor, the House majority leader, was defensive about Republicans’ antitax absolutism in a memo to his colleagues on Monday.


”Over the next several months, there will be tremendous pressure on Congress to prove that S.& P.’s analysis of the inability of the political parties to bridge our differences is wrong. In short, there will be pressure to compromise on tax increases,” Mr. Cantor wrote.


But, he added, “We were not elected to raise taxes or take more money out of the pockets of hardworking families and business people.”


Republican presidential candidates share that fervor: in their Iowa debate Thursday night, all eight participants raised their hands when asked who would reject a long-term debt reduction package that had $10 in spending cuts for every $1 in revenue increases.


Although many forecasters criticize S.& P. for downgrading the United States, they share the company’s disappointment that the budget deal fell short of the “grand bargain” Mr. Obama tried to negotiate with House Speaker John A. Boehner to provide stimulus and cut annual deficits up to $4 trillion over 10 years.


Along with the annual caps on discretionary spending for domestic and military programs that ended up in the final deal, Mr. Obama and Mr. Boehner were also exploring stimulus measures for the short run and, for the long term, revenue increases and future savings from Social Security and from the Medicare and Medicaid entitlement programs, whose growing costs are stoking projections of mounting debt.


But Mr. Boehner quit the talks over taxes. And until Republicans budge on revenue, Democrats refuse to consider entitlement cuts.


Of course, Republicans can point to support among some conservative economists. John B. Taylor, a professor at Stanford and an adviser to Republicans presidents and presidential candidates, said in an interview that temporary stimulus measures were counterproductive, and for long-term debt reduction, “I would try very hard to make it work without revenues.”


But Mr. Feldstein, who was chairman of President Reagan’s Council of Economic Advisers, was among the first in 2008 to call for stimulus spending and recently has advocated raising revenue. He would do so by limiting “tax expenditures,” the costly tax breaks for corporations and individuals that include the mortgage-interest deduction — an idea recommended in December by a majority of Mr. Obama’s fiscal commission and lately by the president.


“I think Republicans should recognize that is a way of raising revenue without hurting incentives by higher marginal tax rates,” Mr. Feldstein said.


S.& P. based its downgrade and its negative outlook for America’s credit rating partly on the assumption that Bush-era tax cuts for high incomes would be extended past their 2012 expiration, “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” S.& P. said it could change its outlook to stable if the tax cuts ended.


Yet Republicans insist that taxes will not be on the table for the bipartisan Congressional committee created by the deficit deal. The panel must propose additional savings by Nov. 23 to fulfill the deal’s promise of up to $2.4 trillion in savings over 10 years.


Assuming Democrats then refuse to consider entitlement savings, only discretionary spending would be left — less than 40 percent of the budget, encompassing education, research, military, infrastructure and more. Last winter House Republicans forced Mr. Obama to agree to cut such spending by $183 billion over a decade. The deficit deal’s caps would cut nearly $1 trillion more.


The prospect of further reductions worries forecasters. Jerry Webman, chief economist of OppenheimerFunds, wrote in an analysis that while the cuts were not huge this year or next, “they are nonetheless contrary to what would be expected in a fragile economic environment.”


In separate interviews, Joel Prakken, chairman of Macroeconomic Advisers, a forecasting firm, and Laurence H. Meyer, its co-founder and a former Federal Reserve governor, called the reductions “job-killing spending cuts” — playing on Republicans’ mantra against “job-killing tax increases.”


Mr. Prakken said tighter spending would “slow economic growth unless it was offset with lower interest rates through the Fed.” But with interest rates already near zero, the best the Fed could do this week was signal that rates would remain ultralow well into 2013.


The low borrowing costs, analysts say, are all the more reason for Congress to bolster the economy now.


“At the very least,” said Mark Zandi, chief economist of Moody’s Analytics, Congress should renew for another year two measures that expire after 2011 — payroll tax relief for employees and extended unemployment compensation — as Mr. Obama has proposed. If either expired, Mr. Zandi said, that could shave roughly a half-percentage point from economic growth next year.


Republicans are resistant. And Democrats are too cowed to counter much, given polls that show many Americans believe Mr. Obama’s 2009-10 stimulus package did not work, despite studies to the contrary.


A Democratic Congressional adviser, granted anonymity to discuss party deliberations, said: “We’re at a loss to figure out a way to articulate the argument in a way that doesn’t get us pegged as tax-and-spenders.”


In a column in The Washington Post on Friday, Bill Gross, who runs the giant bond-trading firm Pimco, lashed out at Republicans and “co-opted Democrats” for setting aside widely accepted economic theory.


“An anti-Keynesian, budget-balancing immediacy imparts a constrictive noose around whatever demand remains alive and kicking,” he wrote. “Washington hassles over debt ceilings instead of job creation in the mistaken belief that a balanced budget will produce a balanced economy. It will not.”






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BBMW
August 13th, 2011, 12:26 PM
The problem with stimulus come down to the question, when does it end. We've basically been artificially stimulating the economy now, in one form, another, or several simultaneoiusly for 30 years. What we've basically been doing is masking the weaknesses in our economy with debt. How long can we keep doing this until the whole house of cards collapses?

eddhead
August 13th, 2011, 01:46 PM
until the jobs come back..This economy is sufffering from a revenue and demand problem. significant cuts to spending will exacerbate lack of demand and crowd out growth.

BBMW
August 13th, 2011, 01:58 PM
The problem is much bigger than that, and just trying to keep the economy artifically pumped up for a little while longer is only going to make the long term problems worse. We've basically priced ourselves out of the world labor market, and stimulus just makes us more expensive.

lofter1
August 13th, 2011, 02:12 PM
So, BBMW: Now that the US is a failed state, what country will you be moving to?

212
August 13th, 2011, 11:08 PM
until the jobs come back..This economy is sufffering from a revenue and demand problem. significant cuts to spending will exacerbate lack of demand and crowd out growth.

Very true.


just trying to keep the economy artifically pumped up for a little while longer is only going to make the long term problems worse.

BBMW, right now, demand for Treasury bonds is so high that investors will lend to the U.S. at just a 1% annual interest rate (http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield) for a 5-year bond.

So yes, you're right that USUALLY debt is a bad thing. And yes, government debt is a mortgage that must be repaid. But I ask you as a real estate fan: Isn't a mortgage at 1% a pretty good deal?

And with the country at 9% unemployment, couldn't we put that money to some good use? To save a lot of jobs?

BBMW
August 13th, 2011, 11:47 PM
o, BBMW: Now that the US is a failed state, what country will you be moving to?

Failed? No. Due for a solid cyclical downturn, yes.

BBMW
August 14th, 2011, 12:01 AM
So what's the plan to transition out of debt stimulus to anything close to a balanced budget? Is there one, especially with entitlement costs exploding?

Also, funding operating expense with long term debt is a sure sign of an insolvent organization.



BBMW, right now, demand for Treasury bonds is so high that investors will lend to the U.S. at just a 1% annual interest rate (http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield) for a 5-year bond.

So yes, you're right that USUALLY debt is a bad thing. And yes, government debt is a mortgage that must be repaid. But I ask you as a real estate fan: Isn't a mortgage at 1% a pretty good deal?

And with the country at 9% unemployment, couldn't we put that money to some good use? To save a lot of jobs?

212
August 14th, 2011, 12:31 AM
funding operating expense with long term debt is a sure sign of an insolvent organization.

No, it's just what we need to get through a recession.

If we're smart, we'll start running surpluses again in the next expansion. Like we did in the 1990s. Instead of going deeper into debt, as we did in the mid-2000s.


So what's the plan to transition out of debt stimulus to anything close to a balanced budget? Is there one, especially with entitlement costs exploding?

• Costs of the recession account for most of our current deficits. If we can raise employment, it will raise the government's tax revenues, and will reduce welfare expenditures. Win-win-win.

• We can rein in Medicare/Medicaid costs with payments for results rather than procedures. (Health costs are by far our fastest-growing entitlements. Over-prescribing is one of the biggest contributors to costs.)

• Social Security costs are growing slower, but the system needs more cash to keep up with our aging population. We could raise the cap on the Social Security payroll tax. Right now people stop paying after about $100K in income. Maybe we don't want to raise taxes on the $100-250K earners. But making the tax kick in again above, say, $250K could keep Social Security solvent for decades more, and possibly forever.

Just a few possibilities. What do you think?

eddhead
August 14th, 2011, 11:32 AM
Sounds like an economic plan Obama can run on.

212
August 14th, 2011, 06:45 PM
^ Thanks. For political use, it needs a catchy catchphrase. "Invest in America"? Something like that, with fewer syllables.

Clinton as president was really good at catchphrases. Like "mend it don't end it". Since then, Republicans are way better.

eddhead
August 15th, 2011, 11:26 AM
Great contribution from Buffet who you know has Obama's ear.
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?hp

August 14, 2011

Stop Coddling the Super-Rich

By WARREN E. BUFFETT
Omaha

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

Daquan13
September 15th, 2011, 07:44 PM
Obama admin. ignored warnings about Solyndrahttp://por-img.cimcontent.net/api/assets/bin-201109/a69a-Solar-Manufacturer-Investigation-.jpg FBI agent carry dozens of boxes of evidence from Solyndra headquarters in Fremont, Calif.,...

By MATTHEW DALY, AP

Thu Sep 15, 7:01 PM EDT

The Obama administration ignored repeated warnings about a clean-energy loan program that has become an embarrassment for the White House amid the collapse of a California solar energy company that received more than $500 million in federal loans.
At least three reports by federal watchdogs over the past two years warned that the Energy Department had not fully developed the controls needed to manage the multibillion-dollar loan program that provided more than $528 million to Solyndra Inc., a now-bankrupt solar panel manufacturer.

The Silicon Valley company was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently touted Solyndra as a model for its clean energy program. President Barack Obama visited the company's Fremont, Calif., headquarters last year.

Even as Obama praised the company's plans to hire more than 1,000 workers, warning signs were being sent from within the government and from outside analysts who questioned Solyndra's viability as a "going concern."

Emails obtained by The Associated Press show that a White House official dismissed reports about Solyndra's gloomy future. An email from Greg Nelson, a White House official who had been involved in the planning of Obama's May 2010 trip to Solyndra's headquarters, to a Solyndra executive downplayed a July 2010 news story in a trade publication that criticized the company's financial health.
"Seems B.S.," Nelson wrote.

A 2009 report by the Energy Department's inspector general warned that the DOE lacked the necessary quality control for the loan guarantee program, which was created in 2005 to support clean-energy projects that could not obtain conventional bank loans due to high risks.
In July 2010, the Government Accountability Office said the Energy Department had bypassed required steps for funding awards to five of 10 applicants that received conditional loan guarantees.

The report did not publicly identify the companies that were not properly vetted, but congressional investigators say one of them was Solyndra. The company was the first to receive a loan guarantee after the program was expanded under the 2009 stimulus law.

In March, DOE Inspector General Gregory Friedman again faulted the loan program for poor record keeping. A report by Friedman said the program "could not always readily demonstrate, through systematically organized records ... how it resolved or mitigated relevant risks prior to granting loan guarantees." According to the report, the department kept limited or no electronic data on 15 of 18 loan guarantees examined.
Documentation for the remaining three projects was more robust, the report said, "but did not include all of the information necessary ... to evaluate the applicant's credit worthiness and/or the risks associated with the projects."

Damien LaVera, a spokesman for the Energy Department, said all reviews were completed before any taxpayer money was obligated.
Even so, warnings about the company persisted. A report last year by auditor PricewaterhouseCoopers said Solyndra had suffered recurring losses from operations and negative cash flows, raising "substantial doubt about its ability to continue as a going concern."

But last May, a Solyndra email informed the White House that "things are going well" at the company and that it had "good market momentum, the factory is ramping up and our plan puts at cash positive later this year. Hopefully, we'll have a great story to tell toward the end of the year."
Nelson, the White House official, replied: "Fantastic to hear that business is doing well — keep up the good work! We're cheering for you."
White House spokesman Jay Carney said the White House did not influence the Solyndra loan, which he said was made on "a merit-based process" by DOE.

"There's no evidence that the White House was involved in the loan," Carney said Thursday. Emails that show White House officials pressuring the administration's budget office about the loan were about scheduling, he said.

"The White House was involved in trying to find out when a decision would be made, so ... staff here could make a decision about the vice president's having an event" at Solyndra headquarters in September 2009, Carney said.
The FBI recently raided Solyndra's headquarters, shortly after Solyndra filed for bankruptcy and laid off 1,100 workers.
A U.S. official, who spoke on condition of anonymity because the case under seal, said the search was related to a fraud investigation into whether Solyndra filed inaccurate documents with the government.

Meanwhile, the Treasury Department's inspector general said Thursday it has opened an investigation into the Solyndra loan.
Spokesman Richard Delmar said the inspector general is reviewing the role and actions of the Federal Financing Bank, a government corporation supervised by the Treasury Department. The bank provided the low-interest loan to Solyndra. The loan is one at least 15 loans totaling more than $6 billion made by the financing bank as part of the stimulus program.

The FBI has executed search warrants at Solyndra's headquarters and talked to top executives. The Energy Department's inspector general and the House Energy and Commerce Committee also are investigating Solyndra and the DOE's loan guarantee program, which has provided billions in loan guarantees to renewable energy companies.

The loan guarantees essentially make it easier for the companies to get financing, because the government guarantees repayment in the event of default. In Solyndra's case, the loan came from the government itself, but private banks often provide the financing.

The Obama administration is moving to finalize as many as 15 loan guarantees for renewable-energy companies before the stimulus program ends on Sept. 30. Republicans question whether that could lead to more loans to companies that fail like Solyndra.
LaVera said the department won't take any shortcuts during the approval process.
"We will only close the deals that are ready to close on Sept. 30," he said.
___
Associated Press writers Jack Gillum, Jim Kuhnhenn and Larry Margasak contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

lofter1
November 19th, 2011, 11:56 AM
Energy Secretary Chu Shines After Solyndra Hearing

TPM IDEA LAB (http://idealab.talkingpointsmemo.com/2011/11/energy-secretary-chu-shines-after-solyndra-hearing.php?ref=fpnewsfeed_beta)
TALKING POINTS MEMO
By CARL FRANZEN
NOVEMBER 18, 2011

In a spectacular case of instant karma, House Republicans’ plan to roast Energy Secretary Steven Chu in Thursday’s investigative hearing into Solyndra appears to have backfired. Chu seems reinvigorated in his effort to make the U.S. into global clean energy leader, calling for increased U.S. investment in alternatives on a tour of General Electric solar plant in Colorado on Friday, while Republicans seem at odds with their own message.

“There are some in Washington who think we can’t, or shouldn’t, compete when it comes to producing solar panels, wind turbines and other clean energy technologies,” Chu said at GE’s PrimeStar plant in Arvada, CO, the Hill (http://thehill.com/blogs/e2-wire/e2-wire/194539-chu-doubles-down-on-clean-energy-message) reported. “They’re ready to wave the white flag and declare defeat. I disagree.”

The plant, which GE purchased along with the company PrimeStar in April, developed the highest-efficiency thin film solar panel (http://www.primestarsolar.com/solar-energy-news/_pdf/2011-04-07 News Release-Merger & Solar Milestone.pdf) ever publicly announced. GE plans to build a new PrimeStar factory (http://www.nytimes.com/2011/04/07/business/energy-environment/07electric.html) in Aurora, Colorado, which would be the nation’s largest. Before it was purchased by GE, PrimeStar received $3 million from the Energy Department, the Seattle Post Intelligencer (http://www.seattlepi.com/news/article/At-GE-plant-Chu-says-US-needs-to-stay-in-solar-2276764.php) reported.

Meanwhile, House Republicans who participated in the Solyndra hearing have been tripping over one another.

Shortly after the hearing concluded on Thursday, Rep. Cliff Stearns (R-FL) Chairman of the Subcommittee on Oversight and Investigations, who presided over the hearings and has spearheaded the Solyndra investigation, called for Secretary Chu to be fired.

“I just think he has failed the test,” Stearns said, the Associated Press (http://www.boston.com/business/articles/2011/11/18/chu_solyndra_loan_based_on_merits_not_politics/) reported, “The fact that he’s unaware of so many things makes me think that he’s not the best person for the position.”

Yet earlier, during the hearing itself, another top Republican probing the Solyndra loan guarantee said that Chu shouldn’t resign but was being “set up” by the Obama Administration to be the “fall guy.”

“I said every time I don’t think you should resign,” Rep. Joe Barton (R-TX), told Chu, the Houston Chronicle (http://blog.chron.com/txpotomac/2011/11/joe-barton-suggests-energy-secretary-chu-could-become-fall-guy-in-solyndra-debacle/) reported.

“I also happen to believe that it’s possible you’re being set up to be the fall guy,” Barton said later, according to Politico (http://www.politico.com/news/stories/1111/68643.html).

Also, before the hearing, Rep. John Sullivan (R-OK), countered his own party’s attempt to link the Solyndra loan guarantee approval to the fact that the company received major funding (http://www.washingtonpost.com/politics/investment-in-failed-solar-firm-solyndra-raises-questions-about-nonprofits-purpose/2011/09/27/gIQAVByZ2K_story.html) from the Kaiser Family Foundation, a charity nonprofit founded by Oklahoma billionaire George Kaiser, who was also an Obama 2010 campaign bundler.

“I don’t see any illegality by [Kasier] or any impropriety,” Sullivan told the Tulsa World (http://www.tulsaworld.com/news/article.aspx?subjectid=335&articleid=20111117_16_A1_CUTLIN724654). “He was just doing what a businessman does.”

Still, analysis from former Energy Department officials and others in the press indicates that not only will Chu keep his job, but that Republicans have come out of the hearing looking worse for the wear.

“I don’t think there was any kind of ‘smoking-gun’ type question-and-answer that came out of the session,” Salo Zelermyer, a former Energy Department senior counsel during the Bush Administration, Reuters (http://www.reuters.com/article/2011/11/18/us-solyndra-chu-idUSTRE7AH2L020111118) reported Friday.

“House Republicans may have squandered their golden opportunity when they decided to make Chu, Washington’s most lovable nerd, the fall guy for the scandal,” wrote Grace Wyler at the Business Insider (http://www.businessinsider.com/steven-chu-solyndra-congress-republicans-department-energy-scandal-2011-11), “No one person is to blame for the Solyndra debacle — the entire DOE loan program is seriously flawed. And taking cheap shots at shy nuclear physicists isn’t going to fix it.”