From Ezra Klein’s Wonkblog today:
Banks are dumping T-bills. “With Washington’s fiscal standoff still unresolved, large financial firms have been unloading investments once considered pristine, suggesting a wild week ahead for markets. Banks are dumping short-term government debt, usually one of the most plain-vanilla investments available, amid fears that Congress and the White House won’t reach an agreement by Thursday to raise the debt ceiling…Senior Treasury officials convened by phone Sunday afternoon to discuss the evolving market conditions, an agency official said…The Securities and Exchange Commission is monitoring bank capital levels and the amount of short-term Treasurys held by financial firms, among other things.” Damian Paletta and Dan Strumpf in The Wall Street Journal.
World should ‘de-Americanise’, says China following default fears. “In China, Xinhua, the official government news agency, said that as American politicians continued to flounder over a deal to break the impasse, “it is perhaps a good time for the befuddled world to start considering building a de-Americanised world”…Xinhua attacked America’s pre-eminent position in the world, adding that “such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated”.” Philip Sherwell and Malcolm Moore in The Telegraph (UK).
The US would be the first major Western sovereign default since 1933 Germany. “Reneging on its debt obligations would make the U.S. the first major Western government to default since Nazi Germany 80 years ago. Germany unilaterally ceased payments on long-term borrowings on May 6, 1933, three months after Adolf Hitler was installed as Chancellor. The default helped cement Hitler’s power base following years of political instability as the Weimar Republic struggled with its crushing debts. “These are generally catastrophic economic events,” said Professor Eugene N. White, an economics historian at Rutgers University in New Brunswick, New Jersey. “There is no happy ending.”” John Glover in Bloomberg.
Just had an email from Brian, Canadian citizen – he admires the US in many ways, but has always been puzzled by our odd attitudes on medical care. Now he is also worried:
we’ll be in FL by Nov. 17th. for another VT season…people in this country and our contacts in the UK are flabbergasted by the way your govt. is doing such damage to itself and its economy…big investors here such as our multi-billion dollar pension plans are starting to shy away from the US markets due to the volatility screwing up all their actuarial tables…how can such a small group of racist tea partiers take over so dramatically?
And so it goes . . .
Because that worked so well. Who needs a balance of powers anyway? Checks and balances? Bleh. We have a US Senator is ‘whipping’ votes in the House of Representatives. A significant cohort of the Congress is ideologically committed to the destruction of a strong Federal government. The House Speakership – designed to wield enormous power – now powerless. Who really needs him any more? Put the world economy at risk during a fragile recovery? So what if that usually leads to World Wars. That’s the world’s problem. – and damn Europeans and Mooslims.
Shut it down. Take it down! USA! USA! USA!
I asked my old friend Wikipedia for a few random factoids about the debt and that debt ceiling thingee:
- US government indebtedness has been the norm in the financial history of the nation. The carriage of debt in Western Europe and North America by governments has been normal for the past 200 years, so the US situation is not unique.
- The US has been in debt every year except for 1835.
- Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791).
- Every President since Herbert Hoover has added to the national debt expressed in absolute dollars. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush, and three times under Barack Obama.
Posted in broken government, Civics, Congress critters, economy, Politics
Tagged Article of Confederation, congress, debt ceiling, federal government, government, Politics, US natinal debt
Ezra Klein yesterday (formatting added by Moe):
The House GOP’s debt limit bill — obtained by the National Review — isn’t a serious governing document. It’s not even a plausible opening bid. It’s a cry for help. In return for a one-year suspension of the debt ceiling, House Republicans are demanding:
- a year-long delay of Obamacare,
- Rep. Paul Ryan’s tax reform plan,
- the Keystone XL pipeline,
- more offshore oil drilling,
- more drilling on federally protected lands,
- rewriting of ash coal regulations,
- a suspension of the Environmental Protection Agency’s efforts to regulate carbon emissions,
- more power over the regulatory process in general,
- reform of the federal employee retirement program,
- an overhaul of the Dodd-Frank financial regulations,
- more power over the Consumer Financial Protection Bureau’s budget,
- repeal of the Social Services Block Grant, more means-testing in Medicare,
- repeal of the Public Health trust fund,
- and more.
It’s tempting to think that this is Boehner teaching his conference a lesson. They told him what they wanted, and he’s going to let them have it — good and hard. House Republicans are walking into the debt-ceiling negotiations with an opening bid that makes them look ridiculous. This looks like an Onion parody of what the House’s debt-ceiling demands might be. It’s a wonder it’s not written in comic sans.
Dear House GOP:
You may have noticed that America doesn’t like you anymore. And America now expects the worst from you.
I have an idea how you can change that – pass the debt ceiling increase quickly, without a lot of drama. You’ll leave the punditocracy speechless.
Ehhh, they’ll never do it.
UPDATE 1/19: Yikes, they did do it! Yesterday. For three months. And I’m guessing when it comes back in 90 days, they’ll pass it if the spotlight can be turned elsewhere.
In the Wall Street Journal‘s editoriall this morning, we find much admiration for the debt deal (natch), much damning of damn liberals (it’s their job after all), and much admiration for the Tea Party success (political porn).
But there was also this little tidbit:
The same supposedly conservative Republicans and their talk radio minders may denounce this deal as a sellout, but we’ll be charitable and assume they’ve climbed so far out on the political ledge they don’t know how to climb back without admitting they were wrong.
We elected them, but how do we unelect them in a gerrymandered
nation world owned by a multinational meglithic oligarchy? (h/t friend Shep)
CLARIFICATION: My words above (unlike the cartoon itself) are actually not directed at the newly elected Tea Partiers, who may be the least ‘owned’ members of Congress. My words are directed at the majority of our Congress Critters, all too many of whom daily do the bidding of their Galtian overlords. (hint: that’s not us)
Boehner: “it’s the only way to stop Washington from spending your money”.
Translation: “it’s the only way to stop ourselves from spending your money”
Suppose the day actually comes when the US Treasury must begin making daily decisions about what bills to pay today. Should the members of the Congress and Senate, whose job it was to act in the best interests of the country and failed at that job expect paychecks?
Nah. Penalize them. No paychecks till they’ve put things right.
A few terrific debt/deficit editorials /op ed’s from the New York Times yesterday, one of which features this chart. This story from Teresa Tritch is “How the Deficit Got So Big”. Folks who voted for Obama and have been feeling some pain lately, might find some comfort here. Good, short read and she concludes:
A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.
Then there’s this by Eric Posner and Adrian Vernuele suggesting a Presidential action to resolve the debt ceiling argument unilaterally based on, not the 14th Amendment, but on:
. . . the necessities of state, and on the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed.
When Abraham Lincoln suspended habeas corpus during the Civil War, he said that it was necessary to violate one law, lest all the laws but one fall into ruin. So too here: the president may need to violate the debt ceiling to prevent a catastrophe — whether a default on the debt or an enormous reduction in federal spending, which would throw the country back into recession.
A deadlocked Congress has become incapable of acting consistently; it commits to entitlements it will not reduce, appropriates funds it does not have, borrows money it cannot repay and then imposes a debt ceiling it will not raise. One of those things must give; in reality, that means that the conflicting laws will have to be reconciled by the only actor who combines the power to act with a willingness to shoulder responsibility — the president.
Posted in broken government, Civics, Congress critters, Current Events, economy, Obama, Politics
Tagged debt ceiling, Deficit, Eric Posner, Obama, presidential power, Teresa Tritch, US constitutional history
I’m losing faith in the ‘Obama plays a long game’ theory. (h/t mac who brought this up today )
Gotta admit though, the Pentagon is about to deep-six DADT and that didn’t happen by executive order. Obama suffered the slings and arrows that descended on him when he didn’t just do it on January 21, 2009. He allowed the process to work until the support was broader. I suppose that’s that is playing a long game.
Anyway, Tom Tomorrow nails it – this is how Democrats see things today – click to enlarge.
Posted in broken government, Congress critters, Current Events, economy, Meet the 112th!, Obama, Politics, taxes, Tea Party
Tagged broken government, debt ceiling, Dont Ask Dont Tell, Obama, partisanship, Politics
They've tried to kill SS for 50 years.
I’m listening to Obama’s press conference right now and getting a bit frustrated. If I could whisper in his ear, I’d tell him:
Don’t say “I think this is what the American people want”. Say “This is what the American people want.”
Don’t use the future tense, as “I”m willing to move in their direction”, be firm and say “We’ve already moved in their direction”
Dont’ say ‘entitlements’: We didn’t use to call SS and Medicare ‘entitlements’, because they were shared programs and everyone paid in; then 20 years ago the GOP carefully – and very successfully – injected that word into the mainstream. And your Democrats? What did they do? Why they just went along and today you’re up there reading from their script, calling the social contract with the American people ‘entitlements’.
OMG! Fair and balanced? Do you know that’s FOX News logo?
And really, Mr. President, you keep referring to ‘raising taxes’. How about “its time to remove outdated corporate entitlements but not starting until 2013. And for the very richest Americans, we’re asking them to pay Clinton-era marginal rates. That is all. Those rates are already historically low.” But he keeps using the words ‘raising taxes’. Even when you say you’re not doing it, phrase it differently!
Language matters, Mr. President. Language matters.
Posted in broken government, corporate power, economy, Government, Obama, Politics, taxes
Tagged debt ceiling, entitlements, House Republicans, Obama, Politics
RR with Tip O'Neill
Repeatedly documented, but rarely cited in the current kerfuffle over raising the debt ceiling are two things:
- 1. Ronald Reagan “repeatedly signed deficit-reduction legislation in the 1980’s that melded annual tax increases with spending cuts just as President Barack Obama is now asking Congress to consider.” from POLITICO via Steve Benen, here, and
- Congress raised the debt ceiling under George Bush seven times – every time he asked.
. . . it’s also worth noting that the conservative Republicans of the 1980s were absolutely certain that Reagan’s policy would destroy the economy, and as part of the right’s unyielding track record of failure, they were wrong.
The larger point, though, is that when the 40th president sat down with lawmakers to work on debt reduction, he accepted as a given that the agreement would include a combination of spending cuts and tax increases. The debate would be over the ratio. Indeed, it’s one of the reasons Reagan ended up raising taxes in seven out of the eight years he was in office. (Remember, “no peacetime president has raised taxes so much on so many people” as Reagan.)
Republicans in Congress balked in 1983. Reagan wrote to then-Senate Majority Leader Howard H. Baker Jr. (R-Tenn) about their intransigence. From the letter:
The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar.
Now Baker was a Senator I admired for his moderation, and many Republicans in the Congress then may have been right about the dangers of the debt. But that is not the point. Then, as now, they were ignoring the causes and resisting action on the consequences.
More from Benen:
Mike Huckabee recently said, “Ronald Reagan would have a very difficult, if not impossible, time being nominated in this atmosphere of the Republican Party.” Sen. Lindsey Graham (R-S.C.) had a nearly identical take last year, arguing Reagan “would have a hard time getting elected as a Republican today.”
It’s also worth noting that the GOP never shut down the government when Republican presidents Reagan or Bush or Bush were in office. They did it only when the Democrat Clinton was in office. And now they threaten to do it to this Democratic president.
For the good of the country of course.
Posted in Congress critters, economy, Government, History, Politics, taxes
Tagged Barack Obama, congress, debt ceiling, Howard Baker, partisanship, Ronald Reagan, Steve Benen
As rhetoric heats up about the debt ceiling (not to mention the indignity of being ordered to come to work on a weekend), a new talking point has emerged. This is very interesting – expect sputtering rage when the radio talkers retake the air on Tuesday morning. From the linked post at Crooks & Liars:
It’s an untested concept, but rooted in some really strong history. I cannot recommend this post enough for the backstory and history around the adoption of Section Four of the Fourteenth Amendment:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
When I first heard about this I was completely confused as to how language about the public debt became part of a constitutional amendment, which is why you really must read the post on Balkanization. Here’s a snippet:
What do we learn from this history? If Wade’s speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debts from partisan struggle. Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they did disliked politically. More generally, as Wade explained, “every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.”
more from Jon Chait:
This means that the very existence of the debt limit is unconstitutional because it calls into question the validity of the debt. So would any other provision of law. That is a key reason why Congress created a permanent appropriation for interest payments at the same time that the Fourteenth Amendment was debated. Previously, Congress had to pass annual appropriations for interest.
Paul Krugman also had a word on the same subject yesterday.
UPDATE: I urge you to read the comment below by John Nail re a 1935 ruling by the Supreme Court on this very matter.
Posted in Civics, Current Events, economy, Government, History, Politics
Tagged debt, debt ceiling, Fourteenth Amendment to the United States Constitution, Republicans, United States Constitution, United States public debt
Dear Senate Democrats:
The Republicans in the Senate in the voice of leader and turtle out of his shell Mitch McConnell have announced they will stop any vote on raising the debt ceiling unless they get their way with Medicare.
A very astute observer Josh Marshall listens to McConnell’s words and hears as self-serving a Senatorial statement as has been heard this session.
Republicans have boxed themselves into a political corner with their plan to end Medicare. It’s a big problem for them politically, and there’s no easy way out . . . [so] McConnell just announced he will not support raising the debt ceiling unless big Medicare cuts are part of the deal. Translation: Unless Democrats get us off the hook by agreeing to deep Medicare cuts (meaning Democrats can no longer attack Republicans for wanting to eliminate Medicare), then we’re going to force the federal government into default on its debt. . . . It’s as stark as that. And the decision for Democrats is equally stark: Do you negotiate with hostage-takers?
No you don’t Mr. Reid. No you don’t and don’t you dare. If Republicans actually would allow us to go into default and suffer all the world wide consequences of such an action, let them pay the price and forfeit all pretense of being part of this ‘governing’ thing.
Let them slink away with their Tea Party buddies to a State with a population smaller than Hartford and let them sit together late at night and plot how to take down those damn Americans. And all their damn American ideas. And all their damn beliefs that people matter.
The debt ceiling is important. More important though, is standing up to threats, threats as cavalier as McConnell’s.
So don’t you dare Mr. Reid.
Posted in Congress critters, economy, Government, Politics, Tea Party
Tagged debt ceiling, Harry Reid, Josh Marshall, Medicare, Mitch McConnell, Politics, Talking Points Memo
As Congress faces the vote to raise the debt ceiling – something we do every year – the blogosphere is full of posts on the subject. Posts by blogfriends Kay and BeneathTheTinFoilHat led me to Perspectives where there is lots of bloggy goodness on the subject. This chart caught my attention.
My god, he really does look like a turtle!
Senate Republican leader Mitch McConnell was just on The News Hour where Jim Lehrer always asks informed and serious questions which McConnell answered like he was on Morning Joe. He was as squirrely as can be and wouldn’t even “reveal” whether he was one of those Congressional leaders who were shown the bin Laden death photos. Only elvis knows why.
What caught my attention though was this phrasing: “President Obama’s request to raise the debt ceiling.” He said it half a dozen times.
Sounds like Frank Lutz is back on the job.