Larry Elliott, economics editor of the guardian and one of my regular fave reads:

Whether there will now be an outbreak of bipartisan harmony in the face of looming economic disaster remains to be seen. On past form, it is possible that the warring factions will simply dig themselves deeper into their entrenched positions. Democrats will look at the growth figures and point to the depressed state of consumer spending, flat over the quarter, and the negative contribution made by government spending. They will argue that it would be foolish to tighten fiscal policy now, and that Obama's real mistake was not to have been braver with his stimulus packages.

Republicans will say that there is no point in continuing with a policy that has so palpably failed. In response to the recession, the Federal Reserve has cut interest rates to zero, pursued a policy of benign neglect towards the dollar and had two big bouts of quantitative easing. The US Treasury has raised spending and cut taxes, causing the budget deficit to balloon and national debt to rise towards 100% of GDP. The return on the cocktail of stimulus measures has been miserable, mainly because consumers are debt saturated and wallowing in negative equity.

If I was to draw anything from this, it's that the economic mess is harder to resolve when a significant part of congress feel that a complex situation merits a simple solution. Jerz, you may enjoy the political power the teaparty has given you, but in terms of long term policy (and the state we're all in now requires a long term solution, which we still haven't been given), they cramp your style. It is a hindrance, rather than a help, at a time when delays and bickering have larger then usual effects in terms of economic costs.

I get the sense that Jerz is ambivalent about the tea party.

This is not a strategy difference, its all about ideology and political plans for 2012.

The facist wing of the Rep party - if not most of the Rep party have been trying to get us back to and bury us in the 1890's or worse, for a long time now. They want to destroy SS and Medicare and privatize everything, have Zero regulations, no recourse in the courts -- and are generally pro wealthy, pro military, pro corporate welfare, pro KGB-tactics, and anti-people/working man.

When Main street finally wakes up and realizes its not about abortion, or terrorism - and grabs a pitchfork - maybe they will at least stop voting against their own class interests. (if they vote at all) (if the votes are even properly counted)

Unfortunately the Dems since Clinton present only slight differentiation. With viable 3rd parties boxed out after 200 years of an established system...I'm looking for an island to move to where people aren't a**holes and the water hasn't be contaminated yet.

$700 billion of lost stock value over the past 6 days. Yay!!!

Phan In Phlorida wrote:$700 billion of lost stock value over the past 6 days. Yay!!!

Buying opportunity

In all candor, I think there needs to be a compromise, with some combination of tax increases and spending cuts. My question is, once an agreement is put in place, what really prevents Congress from going back to its old ways? They need to address the 10's of trillions in unfunded liabilities, and they've been punting it for 20 years. It would be nice to see some kind of bill that puts in a balanced budget amendment (and perhaps a requirement to "force" a % spending reduction over a number of years), in exchange for a meaty tax increase. The problem is, there's nothing to prevent the reductions from being eliminated if a one party comes to power. Perhaps the supermajority suggestion addresses this.

Raising the debt ceiling isn't about new spending or future spending, it's about allowing for the payment of obligations already authorized by Congress that the prez is obligated by law to pay.

We legally can't default, according to the SCOTUS back in the 1930s when FDR wanted to default on WW I war bonds...

“By virtue of the power to borrow money ‘on the credit of the United States,’ Congress is authorized to pledge that credit as assurance of payment as stipulated — as the highest assurance the Government can give — its plighted faith. To say that Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor.

When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments.

The right to make binding obligations is a power of sovereignty.

The sovereignty of the United States resides in the people, and Congress cannot invoke the sovereignty of the people to override their will as declared in the Constitution.

The power given Congress to borrow money on the credit of the United States is unqualified and vital to the Government, and the binding quality of the promise of the United States is of the essence of the credit pledged."

The 14th Amendment has yet to be addressed by the SCOTUS, but may present some questions of Constitutionality with regards to situational details. So if it gets that far, Obama is seriously boned. If he goes 14th Amendment, cries for impeachment from the House for usurping the powers of Congress. If default, cries for impeachment for violating the constitution. It's possible Obama doesn't get out of this debt ceiling mess without a resulting vote of impeachment in the House.

cshort wrote:

Phan In Phlorida wrote:$700 billion of lost stock value over the past 6 days. Yay!!!

Buying opportunity

In all candor, I think there needs to be a compromise, with some combination of tax increases and spending cuts. My question is, once an agreement is put in place, what really prevents Congress from going back to its old ways? They need to address the 10's of trillions in unfunded liabilities, and they've been punting it for 20 years. It would be nice to see some kind of bill that puts in a balanced budget amendment (and perhaps a requirement to "force" a % spending reduction over a number of years), in exchange for a meaty tax increase. The problem is, there's nothing to prevent the reductions from being eliminated if a one party comes to power. Perhaps the supermajority suggestion addresses this.

They've been punting it for more than 20 years. Remember what Reagan did when the SS inflation formula called for no increase one year? He asked Congress to increase the payments anyway and they did.

You're right, there is no way for this Congress to bind what future Congresses do, so that plans to reduce spending by $3 trillion over 10 years, when the plan calls for saving less than $20 billion in the first two years -- all that this Congress and President have control over, is meaningless. This is a lot of sturm and drang that will do nothing but increase interest rates in future.

You can't adopt a plan that you're going to privatize Medicare for everyone under 55, but hold all those over 55 harmless. No savings for 10 years, plus few savings for the next 10 years. And how is this going to play with someone who's 44 or 54. I'm sure they'll be thrilled to pay taxes to give great benefits to the over 55s, which they'll never get to enjoy themselves. If you feel that the economy is strong enough to sustain a deficit reduction of X and Y this year and next, then you make the reductions now. If you decide that the economy can't sustain meaningful deficit reduction today, then you stop pretending that it can and destroying the faith and credit of the US over a political charade.

I love this talk of having to protect our children and grandchildren from horrible future debt burdens --- by asking them to keep paying taxes to support our unreduced bennies, while being told they won't get those bennies. So, what we're saying is we want our kids and grandkids to support us, but we're using their smiling little faces as an excuse for not paying for all these bennies that we want to continue receiving.

So, let's assume we think the economy getting a little fiscal drag is less important than starting to reduce the deficit. Then the thing to do is to act to reduce spending and raise revenue in the here and now, not some hypothetical future, when today's seniors won't need to give anything up. If Medicare is not sustainable, start reducing what is covered today, for everyone now and in the future. Raise premiums for those who can afford it -- starting today. Trim SS benefits slightly, for those who can afford it, along with slowly increasing the retirement age by another year and raising taxabl income level. But do it today. Get out of Iraq and Afghanistan and reduce military spending today. End farm subsidies today. Eliminate the Dept of Ed today. Get over the paranoia and reduce the cumbersome bureaucratic mess that is Homeland Security today. Pare the overlapping Congressional committees and subcommittees, reduce staffs, eliminate front and backdoor earmarks, live by PAYGO.

There are real things that Congress and the President can do today, rather than fighting over what instructions to give to future Congresses and Presidents. The future Congress and President are far likelier to continue cuts made now than to acquiesce to imposing the pain themselves at the direction of a prior Congress.

Super majorities don't work. See California. For that matter, see the Senate of the last Congress. You can create a system that requires consensus to move forward, and that is bound to work just as well as it does in Iraq and Lebanon.

When all the chatter about raising the debt ceiling is behind us, we're left where we began. Both houses of Congress must approve any spending. If it's too much spending, then don't approve it. I'm not going to award courage points to a Congress that boldly declares that in 2020 Congress and the President, whoever those folks may be, must reduce spending by $1 billion below current projections. The then Congress will at least agree on giving the one-finger salute to that action of their predecessors.

House defeats Reid bill as expected. In order to get a bill on Obama's desk on time, Reid apparently has to get something done by 1 tomorrow morning. Which isn't going to happen.

Obama has to invoke the 14th amendment, shaky legal ground be damned. What other alternative does he have besides letting the country default and the economy collapse?

kopphanatic wrote:House defeats Reid bill as expected. In order to get a bill on Obama's desk on time, Reid apparently has to get something done by 1 tomorrow morning. Which isn't going to happen.

Obama has to invoke the 14th amendment, shaky legal ground be damned. What other alternative does he have besides letting the country default and the economy collapse?

The economy won't collapse. In the short term, interest payments will still be made (avoiding default), however other bills won't be paid (which ironically doesn't include our elected officials' paychecks). The ratings agencies will lower our rating, which in all likelihood will happen anyway, because of the debt we've taken on (this is coming from Bill Gross of Pimco). Even if it runs a few days past August 2, things will get straightened out, something will get passed, and the checks will be cut.

"If the Democrats don't stand up for what they believe in, how can Obama sell them out?" - Bill Maher

Hey. Guess what. $500 billion in treasury debt rolls over in August.

cshort wrote:In the short term, interest payments will still be made (avoiding default), however other bills won't be paid (which ironically doesn't include our elected officials' paychecks).

The SCOTUS ruled the gvmt picking and choosing what debts to pay as unconstitutional.

cshort wrote:The ratings agencies will lower our rating,

Fitch says from AAA (the bestest) to B+ (highly speculative)... the same credit rating as Cambodia, Ghana, Uganda, Zambia. S&P says they'd only drop it to A (medium grade). Both give no guarantee they'd raise it afterwards, and if they do it would be after at least 90 days.

We're not going to default anyway. The SCOTUS ruled that unconstitutional. They're just going to back Obama into a corner and force him to invoke the 14th Amendment.

So, barring a deal, its 14th amendment or default.

In default, he's fucked, the Republicans are more fucked, and the people are fucked the most.

Phan In Phlorida wrote:

cshort wrote:In the short term, interest payments will still be made (avoiding default), however other bills won't be paid (which ironically doesn't include our elected officials' paychecks).

The SCOTUS ruled the gvmt picking and choosing what debts to pay as unconstitutional.

cshort wrote:The ratings agencies will lower our rating,

Fitch says from AAA (the bestest) to B+ (highly speculative)... the same credit rating as Cambodia, Ghana, Uganda, Zambia. S&P says they'd only drop it to A (medium grade). Both give no guarantee they'd raise it afterwards, and if they do it would be after at least 90 days.

We're not going to default anyway. The SCOTUS ruled that unconstitutional. They're just going to back Obama into a corner and force him to invoke the 14th Amendment.

From just about every article I've read (from a variety of sources, conservative and liberal), the law isn't clear on whether Geithner can prioritise, and even if it isn't explicit, Congress can provide for that (even the Tea Partiers would do that).

NPR article on debt payment

Regarding the Fitch rating, that was in the event the US didn't make a debt payment in August. So in the scenario where Geithner can make a payment (which according to experts he can), the B+ rating is unlikely.
Fitch article

The US won't go into default, the world's economies are not going to collapse. Relax.

Putting all this default/debt stuff aside for a moment, why is it that the GOP continues to pass laws that erode our air and water quality? As annoyed as I am about the default thing, I can at least recognize that some of it is a difference of opinion. But how can anyone think that lower air and water standards is a good thing? These people have kids and families. Why don't they care that their loved ones will be breathing dirty air and drinking potentially unsafe water. And for that matter, the attacks on other regulatory mechanisms that help keep food and drugs safe, are just as bad.

It reminds me of that Police song about the nuclear war never happening because the russians love their children too. I know republicans love their kids just as much as dems, so why the hell don't they care if their kids are able to breath and eat and drink safely? I mean, that's the real world consequences of their legislation. Nobody can seriously argue that lowering standards doesn't cause worse air and water quality, and nobody can seriously argue that these things lead to negative health effects for everyone, not just the poor (though the consequences are worse for them).

cshort wrote:

Phan In Phlorida wrote:

cshort wrote:In the short term, interest payments will still be made (avoiding default), however other bills won't be paid (which ironically doesn't include our elected officials' paychecks).

The SCOTUS ruled the gvmt picking and choosing what debts to pay as unconstitutional.

cshort wrote:The ratings agencies will lower our rating,

Fitch says from AAA (the bestest) to B+ (highly speculative)... the same credit rating as Cambodia, Ghana, Uganda, Zambia. S&P says they'd only drop it to A (medium grade). Both give no guarantee they'd raise it afterwards, and if they do it would be after at least 90 days.

We're not going to default anyway. The SCOTUS ruled that unconstitutional. They're just going to back Obama into a corner and force him to invoke the 14th Amendment.

From just about every article I've read (from a variety of sources, conservative and liberal), the law isn't clear on whether Geithner can prioritise, and even if it isn't explicit, Congress can provide for that (even the Tea Partiers would do that).

NPR article on debt payment

Clinton v New York. The SCOTUS ruled that the executive branch is not allowed to pick and choose among provisions of enacted budget legislation and obligations even if congress has granted the power to do so. So the treasury, being a department of the executive branch, does not have the constitutional right to decide which obligations previously authorized by congress it will or will not pay. Not even congress can, nor can it give the executive branch authorization to do so. The executive branch's (prez, treasury) hands are tied since all this debt ceiling stuff is about allowing for the payment of obligations already authorized by congress, rolling over debt to make these payments.

cshort wrote:The US won't go into default

I think I said that

Syrian 'security forces' killed 70 in a town in Syria, just basically trying to terrorize the populace into backing down.

They're no Libya, I guess.

budget passed

yay guys

Someone tell me how much of a pussy Obama is