Newest Boehner Scheme Could Backfire Badly And Immediately
House Speaker John Boehner (R-OH) reportedly told House GOP in a conference call this afternoon that he's working on a new $3 trillion-$4 trillion spending cut plan and that he plans to make some type of announcement before Asian markets open this week to reassure them that it will be enacted and that there will be no default.
Boehner is taking a huge risk by doing this.
If a spending cut of that size was adoptable it would have already been adopted and the markets will immediately see through Boehner's remarks to what he's really saying -- that he has made no progress at all with his tea party wing and still has to placate them.
Boehner's announcement is far more likely to be taken as a further indication that the debt limit stalemate is real and intractable than as a sign that it will all work out.
Is it possible a number of
Is it possible a number of Dems in both houses may be a bit anxious to get something done on terms more favorable to the R's than Reid and Obama would like?
R's will believe Boehner's version of Thu/Fri events and D's will believe Obama, but maybe this is an indication that Boehner truly thought he was close to a "doable" deal.
I still believe there is plenty of time for a back up plan, but I agree that the Sunday Asian Market self imposed deadline is very risky.
I agree
Markets will start tanking this week.
Personally, I'll be blaming the Republicans.
They've tied raising the debt ceiling to deficit reductions.
I find it ironic that Republicans railed on the Minnesota governor to "pass the lights on bill!",
yet they can't find it in themselves to do the same at the federal level.
At what point will the
At what point will the Speaker and House Republicans stop playing political games with the full faith and credit of the United States? I understand that politics is a contact sport but this has gone too far.
Doesn't make sense?
Haven't there already been at least two separate "$3-4 trillion in spending cuts" plans before this one? What has changed? Why no mention of the revenue side of the plan? Does that mean Obama conceded to all Republican cuts with no revenue increases, and if so, what is the chance of Senate Democrats going along with that?
At this point, it seems to me that the best path forward for all, given the constraints, is a 6 month "clean" debt ceiling increase.
The GOP is No Longer a Serious Political Party
Rather, they're seemingly prepared to drive the economy right off a cliff just to spite the President. Worldwide depression? Who cares, as long as we can blame Obama for it!
I hope President Obama really does pull the 14th Amendment dodge. SOMEBODY has to be responsible, and it ain't the GOP.
This is ridiculous! More agricultural imagery needed
Because of the Tea Party, Boehner is playing Russian Roulette, except with at least 3 barrels loaded, with the American economy. $3-$4 million in spending cuts? And taxes not on the table? Seriously folks.
I do think this is a good time for more Gigantor-sized agricultural imagery... first it was corn... this time perhaps bananas? or a large pile of nuts, w/ or w/o squirrels...
This is clealy not the party of Dwight Eisenhower or Gerald Ford.
It does strike me that if Boehner is having to work this hard to keep his job, and is this afraid of the "Tea Party" it does make one wonder if Mitt Romney stands a chance through the first 10 primaries or so, despite what the overall national polls say.
What part of "Drown America in a bathtub" do you not understand?
Grover and bin Laden, sitting in a tree...
Sadly the impact of this debt
Sadly the impact of this debt negotiation period is already cast. The effect it will have will be to contribute strongly to an already deteriorating economy and making it harder for any unified efforts to help those affected by the growing economic hardships. The likely outcome is not default but a forced austerity campaign where the Treasury and Fed further plunder the soc sec funds, pensions and use any other accounting tricks (er I mean "tools") they can employ to stave off real default. What isn't really being mentioned is who owns the bulk of the Treasuries...wait for it... 33% of outstanding treasures are held by the Social Security Trust, US Pension Plans (Statee, corp and muni) and other US tax payer funds. Thats right, if the Treasury defaults once again the American Tax Payer takes the biggest hit. We can get off this merry go round when the pain gets great enough.
silliness everywhere, including the comments
Neither party has the votes to make a real compromise. Obama doesn't have the votes to cut medicare and social security for the entitlement generations (ie, the "greatest" and the "me" generations), and Boehner doesn't have the votes to raise taxes by hiking marginal rates, axing tax "expenditures", or otherwise.
It's really the voters fault. Until the voters grow up and elect a majority of politicians that can agree on a high tax/spend system, or a low tax/spend system, we'll stay on the current course of deficit spending. People can wring their hands and cry all they want, but government benefits aren't free. The craziest people on the scene are the economists that argued for bailouts and funded with deficits, and are shocked that the people don't want to pay up, and consider the deficits illegitimate and as much "odious" debt as debt racked up by dictator of a banana republic. Second craziest on the scene are the entitlement generations that wrote themselves IOUs promising themselves rich SSI and medicare benefits, and expecting younger generations to pay up.
Entitlements
You are misrepresenting the facts on Social Security and Medicare. SS currently has a $2.6 Trillion dollar surplus created by increased regressive payroll taxes paid by working Americans over the last 28 years. These excess taxes were paid and then saved as U.S. Treasuries, the safest investment in the world until the Tea Party decided to use them for political blackmail (with an assist from Obama). But instead of saving adequate amounts in the general fund George Bush decided to spend this temporary surplus on tax cuts for the wealthy. This was therefore a $2.6 Trillion dollar loan from working Americans retirement accounts to the wealthiest Americans and now the rich don't want to pay it back. Since the baby boomer refinanced much of their own SS ( and paid previous generations) it is incorrect to say that they 'expect younger workers to pay the' it is more accurate to say that they expect the rich to pay them back.
As for Medicare, it is more cost effective and has lower administrative costs than private insurance. If the goal is too give all Americans health care for the lowest amount then the smartest policy is Medicare for all. All other OECD countries provide universal health care for $3500 per person less than we do. That means we are overpaying by about $1 Trillion per year. The Tea Party solution is just to shift the overpriced costs from government to individuals, many of which will pay by going without health care.
You sir, are misrepresenting
You sir, are misrepresenting the facts. It is fraud for anyone but the US government to write itself IOU's and call them an asset. If a company does this, its executives go to jail for fraud. However, some people act as if when the US government collects employment taxes, and uses the proceeds to buy US government debt from itself, that this two step process creates an asset.
Unfortunately, there is no trust fund. If the government wants cash to pay medicare or social security outlays in excess of current receipts in employment taxes, then the government needs to get cash by taxing or borrowing. There is no other way.
The Ike and bommer generations promised themselves benefits based on the idea that US prosperity immediately after WWII when Europe and Japan were in rubble and China and the USSR were behind the iron curtain would last. Unfortunately, it didn't, so the benefits they promised themselves aren't viable.
A promise
These are real treasury bonds bought with taxes paid on the hard work of ordinary working Americans and backed by the full faith and credit of the U.S. Government just like the bonds bought by rich Americans and the Chinese. It is true that the U.S. Government can choose not to repay these bonds but it would represent a theft of $2.6 Trillion from the middle class to the wealthy.
A default! Please, childe.
A default! Please, childe. Courts have concluded individuals have no right to social security or medicare benefits, so if Congress cuts them, the excess "interest" and "principal" payments to the "trust fund" are returned to the Treasury. It is just like the Fed: all profits go back to the Treasury.
The real theft my friend was boomers and Ikes, it is this. They spent their employment taxes, and for every dollar they spend they wrote themselves an IOU labelled a treasury bond. You can only spend a dollar once my friend. The boomers and Ikes spent their money, and now claim to be shocked they didn't save any money. Time to grow up and get real.
Different people
What you are missing is that the people that were taxed to pay for the future costs of SS are not the same people that got the tax cuts that plundered the trust fund. Payroll taxes are extremely regressive being paid on every dollar earned up to about $106,000. The rich pay a tiny share of their income in payroll taxes the poor and middle class pay about 15% of their income, including the employer portion which comes out of their paycheck. In 2000 Al Gore was arguing for setting aside money while Bush was saying we should spend it on tax cuts for the wealthy and Alan Greenspan was warning us against paying off the national debt too soon. Bush won and plunged the country deep into debt with tax cuts for the wealthy, trillions spent on unfunded wars, Medicare expansions, and military spending.
Now that the trust fund bonds come due the country has to make tough choices about how to pay the bills. Republicans like to say we have to default on working Americans retirement savings but the truth is we have choices. We have the lowest tax rate since 1950 and the highest inequality since the 1920's. We also have almost doubled the military budgets since 2001 and we waste $1 trillion a year on our failed health care system. We have the money to pay for s
SS and the moral imperative to do so. If we choose not to it is because politicians put the wishes of the plutocracy above the needs of the rest of us.
The T-bonds in the SS "trust
The T-bonds in the SS "trust fund" already count towards the national debt ceiling. Redeeming them will not result in one dollar of additional debt - even though the Treasury will simply issue new "publicly-held" debt for every "trust-fund" bond handed to the Treasury. Obama's little fearmongering about the debt ceiling having an impact on SS checks is pure crass politics. Intended to either electioneer -- or worse, divert attention from a possible reality that the US govt is already insolvent/bankrupt and is now kiting checks to pay interest.
The crime of the "trust fund" was its original mandatory legislated limitation -- that it had to be 100% government debt. As the poster above says -- that was pure fraud and every single legislator/analyst knew it - and every single critter/Prez since then has known it. Govt debt cannot - by definition - be an asset of government. Govt debt is a liability of govt. Pols have gotten away with lying about it ever since and the American people are too damn stupid to hold anyone accountable.
Had DC ever intended for this to be a true "trust fund", then the government would have bought ASSETS with incoming payroll taxes. But they instead chose to create an artificial demand for govt debt - thus driving interest rates artificially low - thus allowing them to justify far more govt spending than would have occurred otherwise - which also thus allowed far more leverage to be layered on top of that govt debt. This is not a partisan issue. EVERY SINGLE politician/analyst/commentariat/apparatchik in DC - for the last 25 years - has been complicit in this fraud and has directly benefited from it and has repeatedly lied to the American people about it.
Of course
Of course it is all a big scam to steal the hard earned money from working people and give it to the rich. The whole government has been nothing more than a scam for the last 30 years. But, that doesn't mean we should let them get away with it. The final part of the scam is to convince people the money is gone so it can't be paid back. True to form, the Tea Party is acting as the billionaire's stooges to promote that myth. In reality, there is no reason why we shouldn't raise taxes on the rich and cut military spending to pay for Social Security.
Then you have to conclude
Then you have to conclude that A) Reagan was the great tax increaser, he just shifted taxes to the poor from the rich
B) any one who trots out the "half of Americans don't pay taxes" line is a LIAR. What you are saying is that there is no real difference between FICA taxes and any other taxes. If so, how can anyone talk of Social Security or Medicare going bankrupt. Do we ever hear talk of the Pentagon going bankrupt, or the State Department, or the Justice Department? Social Security would be no different than any of those.
C) If the SS trust fund is not read debt, whe still have a heck of a lot of room under the debt ceiling.
Funny thing. Lending and
Funny thing. Lending and saving are older than money, the notion of a "bond" and a "trust" have been central to lending since before there was money, but in this modern age, some smart-@ss in a bow-tie decided to argue once upon a time that Social Security is somehow outside that long tradition, and bunches of people who apparently don't know any better have repeating the bow-tie-guys fiction ever since.
Legal Fraud
You don't understand the legal rules, so you are confused. Courts have long held that beneficiaries of social security and medicare have no legal rights to benefits. Beneficiaries of a real trust actually do have rights, and can sue the trustee if they are violated.
If the boomers and Ikes lied to themselves in thinking they were saving their employment taxes, when they were spending it on God knows what, and elected politicians that repeated the lie, that is unfortunate. However, it doesn't change the facts. They didn't save money. And they can no more bind subsequent generations to pay them benefits than a current congress can bind future congresses to cut spending or raise taxes.
No Short Term Solution
We need a clean bill that getsus past the 2012 election. If the votes for cuts are not there now, they will not be there closer to the election. However, Boehner would have to rely on Dems for the votes to pass a "clean" bill. What are the odds of that happening with Cantor measuring the drapes?
More stalemate ahead.
kick the can, inches at a time
A clear lift through 2012! That won't happen. There's a bunch of republicans in the House that will be fired if they agree to that, so "No sale." The only thing are are the votes to do are periodic minimal ceiling raises under the cover of stock market or bond market crisis, which provide enough cover for the House republicans to avoid getting fired for raising the debt ceiling without budget cuts. Obama doesn't like this because it keeps the issue in front of voters, but sooner or later, Obama will have to accept the eternal truth that politics is the art of the possible.
Investors won't like it either
A stock market crisis once or twice a year? Great. Just great.
Full faith and credit of Boehner
He has a few minutes left in his self-imposed "before the Asian stock market opens" deadline.
The Chinese masters will not be happy.
Misleading Americans
Yesterday Michele Bachmann told a crowd that, "“Our debt is so big, all the money we send to Washington pays for interest."
Link:
http://www.muscatinejournal.com/news/local/article_604e659e-b65a-11e0-af...
Can one of the experts here tell me if this is true? Should I send this one to politifact -- is it another "pants on fire" statement? I'm thinking it is.
Nope totally false, a
Nope totally false, a significant chunk does, but all, not even close. Then again when has Ms. Bachman ever told the truth? Based on the May Treasury Statement, for the last four months of the fiscal year, Interest is expected to be $155.08 billion, or 30.2% of the on budget revenues, and 12.3% of expected spending.
Long Term Plan
The Chinese have a 500 year plan and the US will not see its initial stages.
Default on SS after the foreign held bonds.
As seen above the courts decide whether to pay defaulted debt, so that there is no right to biond interest or principle short of liquidation.
Default on SS after the foreigners and locals' bonds go through liquidation.
There is $400B a year for debts from the war budgets.
Cut the military budget
Nothing more to explain here. Neither side has proposed meaningful cuts in our outrageously huge military budget and neither side has proposed ending our wars of choice.
The Eisenhower warnings about the power of the Military Industrial Complex have come true.