03/12/2013 archive

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

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Robert Kuttner: The Grand Bargain We Don’t Need

President Obama has been meeting with small groups of Republican senators and representatives in an effort to reduce the damage of the so-called sequester — the $85 billion in automatic budget cuts that took effect March 1. But these meetings, if successful, are likely to lead to greater economic and political damage, in the form of a “grand bargain” to cut Social Security and Medicare in exchange for some reductions in tax preferences.

This is a bad idea for several reasons.

First, in these deals, it’s usually Democrats who get taken to the cleaners. Republican leaders insist that their rank and file members will never vote for progressive tax increases, so the tax part of the bargain tends to focus on closing minor loopholes while Republicans demand major spending cuts in return.

Secondly, the sequester is a grave problem not just because the cuts are automatic, but because they are a down payment on a decade of budget cuts that both President Obama and the Republicans have embraced. If we trade the $85 billion of automatic cuts in the sequester for $85 billion of some other cuts, the impact on the economy is just as depressive.

Josh Barrow: Don’t Cut Social Security, Expand It

With everyone in Washington experiencing sea-bass-induced euphoria, we’re talking again about a “grand bargain” to replace the sequestration and shrink the federal budget deficit. And that means we’re talking about using the chained consumer-price index, a lower and more accurate inflation measure, to modestly raise taxes and cut Social Security benefits over time.

Back in December, I wrote that applying chained CPI to Social Security is the wrong solution to our budget problems: It’s just a way of dressing up a cut to retirement benefits at a time when retirement insecurity is rising. Despite its problems, Social Security is the best-functioning component of the U.S.’s retirement-saving system. Instead of cutting, the federal government should be expanding its role in retirement saving.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 12 is the 71st day of the year (72nd in leap years) in the Gregorian calendar. There are 294 days remaining until the end of the year.

On this day in 1947, in a dramatic speech to a joint session of Congress, President Harry S. Truman asks for U.S. assistance for Greece and Turkey to forestall communist domination of the two nations. Historians have often cited Truman’s address, which came to be known as the Truman Doctrine, as the official declaration of the Cold War.

In February 1947, the British government informed the United States that it could no longer furnish the economic and military assistance it had been providing to Greece and Turkey since the end of World War II. The Truman administration believed that both nations were threatened by communism and it jumped at the chance to take a tough stance against the Soviet Union. In Greece, leftist forces had been battling the Greek royal government since the end of World War II. In Turkey, the Soviets were demanding some manner of control over the Dardanelles, territory from which Turkey was able to dominate the strategic waterway from the Black Sea to the Mediterranean.

Truman stated the Doctrine would be “the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” Truman reasoned, because these “totalitarian regimes” coerced “free peoples,” they represented a threat to international peace and the national security of the United States. Truman made the plea amid the crisis of the Greek Civil War (1946-1949). He argued that if Greece and Turkey did not receive the aid that they urgently needed, they would inevitably fall to communism with grave consequences throughout the region.

The policy won the support of Republicans who controlled Congress and involved sending $400 million in American money, but no military forces, to the region. The effect was to end the Communist threat, and in 1952 both countries joined NATO, a military alliance that guaranteed their protection.

The Doctrine was informally extended to become the basis of American Cold War policy throughout Europe and around the world. It shifted American foreign policy toward the Soviet Union from détente (friendship) to, as George F. Kennan phrased it, a policy of containment of Soviet expansion. Historians often use its announcement to mark the starting date of the Cold War.

Long-term policy and metaphor

The Truman Doctrine underpinned American Cold War policy in Europe and around the world. The doctrine endured because it addressed a broader cultural insecurity regarding modern life in a globalized world. It dealt with Washington’s concern over communism’s domino effect, it enabled a media-sensitive presentation of the doctrine that won bipartisan support, and it mobilized American economic power to modernize and stabilize unstable regions without direct military intervention. It brought nation-building activities and modernization programs to the forefront of foreign policy.

The Truman Doctrine became a metaphor for emergency aid to keep a nation from communist influence. Truman used disease imagery not only to communicate a sense of impending disaster in the spread of communism but also to create a “rhetorical vision” of containing it by extending a protective shield around non-communist countries throughout the world. It echoed the “http://en.wikipedia.org/wiki/Quarantine_Speech quarantine the aggressor]” policy Franklin Delano Roosevelt sought to impose to contain German and Japanese expansion in 1937. The medical metaphor extended beyond the immediate aims of the Truman Doctrine in that the imagery combined with fire and flood imagery evocative of disaster provided the United States with an easy transition to direct military confrontation in later years with communist forces in Korea and Vietnam. By presenting ideological differences in life or death terms, Truman was able to garner support for this communism-containing policy.

Within one week Republicans are going to grab the national spotlight on two huge issues that should be the realm of the party who stands up for the little guy.  That party used to be the Democratic party.  How can they let this happen?

On Friday, at the CPAC convention, Federal Reserve Bank of Dallas President Richard Fisher is going to call for breaking up the big banks in the wake of a failed Dodd-Frank bill.

This is mind blowing. First a Republican, Rand Paul, filibusters to get answers about the targeted killing program and now at CPAC, a speech calling for breaking up the TBTF banks.  Where are the Democrats??  The last thing we heard from the party was that the executives can’t be held criminally liable, via Eric Holder and Lanny Breuer.

End “Too Big to Fail” Once and for All

In advance of his speech on Friday to the Conservative Political Action Conference, Federal Reserve Bank of Dallas President Richard Fisher writes with Harvey Rosenblum about the failure of the Dodd-Frank financial reform law to adequately address financial institutions that are “too big to fail.”

[…]

“Third, we recommend that the largest financial holding companies be restructured so that every one of their corporate entities is subject to a speedy bankruptcy process, and in the case of banking entities themselves, that they be of a size that is ‘too small to save.'”

[Emphasis added]

Once again Sen. Elizabeth Warren demonstrated why the voters of Massachusetts sent her to the Senate when in a Senate Banking Committee hearing about money laundering, she questioned why British bank HSBC is still doing business in the U.S., with no criminal charges filed against it, despite confessing to what one regulator called “egregious” money laundering violations

Her comments came just a day after the attorney general of the United States confessed that some banks are so big and important that they are essentially above the law. His Justice Department’s failure to bring any criminal charges against HSBC or its employees is Exhibit A of that problem.

(..) Warren grilled officials from the Treasury Department, Federal Reserve and Office of the Comptroller of the Currency about why HSBC, which recently paid $1.9 billion to settle money laundering charges, wasn’t criminally prosecuted and shut down in the U.S. Nor were any individuals from HSBC charged with any crimes, despite the bank confessing to laundering billions of dollars for Mexican drug cartels and rogue regimes like Iran and Libya over several years.

Defenders of the Justice Department say that a criminal conviction could have been a death penalty for the bank, causing widespread damage to the economy. Warren wanted to know why the death penalty wasn’t warranted in this case.

“They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it,”

“How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”

“You sit in Treasury and you try to enforce these laws, and I’ve read all of your testimony and you tell me how vigorously you want to enforce these laws, but you have no opinion on when it is that a bank should be shut down for money laundering?”

“If you’re caught with an ounce of cocaine, the chances are good you’re gonna go to jail. If it happens repeatedly, you may go to jail for the rest of your life,” Warren said. “But evidently if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your bed at night — every single individual associated with this. And I think that’s fundamentally wrong.”

As staunch an opponent of the death penalty as I am, I would have voted for it and watched the “execution” of HSBC with glee.