Tag: Federal Budget

Nobel Prize winning Economist and New York Times columnist Paul Krugman has nailed Barack Obama’s economic polices and his penchant for feeding the right wing economic fallacies, as “the false government-family equivalence, the myth of expansionary austerity, and the confidence fairy” and, as Dr. Krugman points out, Obama did it in two sentences:

Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.

Dr. Krugman has already debunked both the myths of government-family equivalence and expansionary austerity. Yet the President still thinks that by caving to the right wing Hoover economic policies the economy will get better. This appears to be a signal that he is about to cave to Republicans once again on spending cuts and no new revenue sources that has led will further slow the economy and may spiral the US into a second recession or worse.  

The White House is now saying that Congress must pass a bill by July 22 in order for the government not to default on its debt.

The Obama administration believes congressional leaders must agree to a deficit-reduction deal by July 22 in order to raise the government’s borrowing limit in time to avoid a default in early August, according to Democratic officials with knowledge of the negotiations.

The government needs a week or two to write and pass the necessary legislation and take the steps necessary to avoid missing a payment. “We’re down to the wire,” one official said.

Brain Beutler of Talking Points Memo reports Sen. Charles Schhumer (D-NY), in an telephone interview with reporters, said that while the Constitutional option is worth exploring, he thinks “it needs a little more exploration and study. It’s probably not right to pursue at this point and you wouldn’t want to go ahead and issue the debt and then have the courts reverse it.”

Legal scholars and other Democratic Senators have been taking a very close look at the 14th Amendment clause that forbids Congress from defaulting on US debt.

Republican economist Bruce Bartlett, who believes that the Republicans are playing with “the financial equivalent of nuclear weapons”, argues that Section 4 renders the debt ceiling unconstitutional, and obligates the President to consider the debt ceiling null and void.

If the Congress fails to raise the debt ceiling and the government stops paying its obligations, the first people who should not get paid is Congress.

The 14th Amendment of the United States Constitution:

Section 4:

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.

Republican economist Bruce Bartlett, who believes that the Republicans are playing with “the financial equivalent of nuclear weapons”, argues that Section 4 renders the debt ceiling unconstitutional, and obligates the President to consider the debt ceiling null and void.

. . . .I believe that the president would be justified in taking extreme actions to protect against a debt default. In the event that congressional irresponsibility makes default impossible to avoid, I think he should order the secretary of the Treasury to simply disregard the debt limit and sell whatever securities are necessary to raise cash to pay the nation’s debts. They are protected by the full faith and credit of the United States and preventing default is no less justified than using American military power to protect against an armed invasion without a congressional declaration of war.

Furthermore, it’s worth remembering that the debt limit is statutory law, which is trumped by the Constitution and there is a little known provision that relates to this issue. Section 4 of the 14th Amendment says, “The validity of the public debt of the United States…shall not be questioned.” This could easily justify the sort of extraordinary presidential action to avoid default that I am suggesting.

snip

Constitutional history is replete with examples where presidents justified extraordinary actions by extraordinary circumstances. During the George W. Bush administration many Republicans defended the most expansive possible reading of the president’s powers, especially concerning national security. Since default on the debt would clearly have dire consequences for our relations with China, Japan and other large holders of Treasury securities, it’s hard to see how defenders of Bush’s policies would now say the president must stand by and do nothing when a debt default poses an imminent national security threat.

Mr. Bartlett is not alone, Garret Epps, journalist and professor of law at Baltimore University, agrees and proposes the President should give a speech declaring, ‘The Constitution Forbids Default’.

Democratic members of the Senate, too, have begun exploring the possibility of declaring the debt ceiling unconstitutional:

“This is an issue that’s been raised in some private debate between senators as to whether in fact we can default, or whether that provision of the Constitution can be held up as preventing default,” Sen. Chris Coons (D-Del.), an attorney, told The Huffington Post Tuesday. “I don’t think, as of a couple weeks ago, when this was first raised, it was seen as a pressing option. But I’ll tell you that it’s going to get a pretty strong second look as a way of saying, ‘Is there some way to save us from ourselves?'”

By declaring the debt ceiling unconstitutional, the White House could continue to meet its financial obligations, leaving Tea Party-backed Republicans in the difficult position of arguing against the plain wording of the Constitution. Bipartisan negotiators are debating the size of the cuts, now in the trillions, that will come along with raising the debt ceiling.

Sen. Patty Murray (D-Wash.), head of the Democratic Senatorial Campaign Committee, said that the constitutional solution puts the question in its proper context — that the debate is over paying past debts, not over future spending.

“The way everybody talks about this is that we need to raise the debt ceiling. What we’re really saying is, ‘We have to pay our bills,'” Murray said. The 14th Amendment approach is “fascinating,” she added.

Let the games continue.

Up dates below the fold.

Up Date below the fold

Call a Wahmbulance for House Majority Leader Eric Cantor as he quits the debt ceiling talks with Vice President Joe Biden:

House Majority Leader Eric Cantor, Republican of Virginia, said Thursday that he was quitting  the debt ceiling negotiations being led by Vice President Joseph R. Biden Jr. because of an impasse over the role of taxes in any final deal.

“I believe that we have identified trillions in spending cuts, and to date, we have established a blueprint that could institute the fiscal reforms needed to start getting our fiscal house in order,” Mr. Cantor said in a prepared statement.

“That said, each side came into these talks with certain orders, and as it stands the Democrats continue to insist that any deal must include tax increases. There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.”

David Kurtz at Talking Point Memo says this may not be such a big deal:

The read we’re getting is that this could be merely an indication that the emissaries to the talks have gotten as far as they can get and that the remaining heavy lifting is going to have be done by the principals: President Obama and Speaker Boehner.

Meanwhile, Speaker John Boehner doesn’t sound to pleased that he will now have to defend the Republican stand that tax increases are off the table:

“I understand his frustration, I understand why he did what he did, but I think those talks could continue if they’re willing to take the tax hikes off the table,” he said.

One possible interpretation of Cantor’s pullout was that he needed Boehner’s authority to negotiate revenue increases necessary to complete a far-reaching deal with Democrats, but Boehner made repeatedly clear on Thursday that he had not budged at all on the issue.

“Tax hikes are off the table,” he said. “First of all, raising taxes is going to destroy jobs….second, a tax hike cannot pass the US House of Representatives — it’s not just a bad idea, it doesn’t have the votes and it can’t happen. And third, the American people don’t want us to raise taxes. They know we have a spending problem.”

(emphasis mine)

Boehner may be correct on point two but he is so wrong on one and three that is totally laughable and flat out lies that the press refuses to counter. Americans know we have a revenue problem because of the Bush/Obama tax cuts and loop hole in the tax code. Americans overwhelmingly support tax increases on millionaires. I don’t think Boehner is stupid, I think he is a tool of his corporate masters.

My only question now is where the hell is the Democratic leadership to counter this? Why aren’t the Democrats out in front of the cameras pointing out how wrong the Republicans are? The Democrats need to listen to the people, too and take Social Security, Medicare and Medicaid off the table as well.  

While CEO’s are rolling in more money than any average workers could imagine in a lifetime, raising their taxes and closing the tax loop holes that allow then to pay even less or, in some instances, nothing at all. According to a USA Today analysis, CEO’s pay went up 27% in 2010 while workers’ pay rose only 2%.

Paychecks as Big as Tajikistan

By Gretchen Morgenson

WHEN does big become excessive? If the question involves executive pay, the answer is “often.”

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Answers to that question come fast and furious in a recent, immensely detailed report in The Analyst’s Accounting Observer, a publication of R. G. Associates, an independent research firm in Baltimore. Jack Ciesielski, the firm’s president, and his colleague Melissa Herboldsheimer have examined proxy statements and financial filings for the companies in the Standard & Poor’s 500-stock index. In a report titled “S.& P. 500 Executive Pay: Bigger Than …Whatever You Think It Is,” they compare senior executives’ pay with other corporate costs and measures.

It’s an enlightening, if enraging, exercise. And it provides the perspective that shareholders desperately need, particularly now that they are being asked to vote on corporate pay practices.

Let’s begin with the view from 30,000 feet. Total executive pay increased by 13.9 percent in 2010 among the 483 companies where data was available for the analysis. The total pay for those companies’ 2,591 named executives, before taxes, was $14.3 billion.

That’s some pile of pay, right? But Mr. Ciesielski puts it into perspective by noting that the total is almost equal to the gross domestic product of Tajikistan, which has a population of more than 7 million.

Warming to his subject, Mr. Ciesielski also determined that 158 companies paid more in cash compensation to their top guys and gals last year than they paid in audit fees to their accounting firms. Thirty-two companies paid their top executives more in 2010 than they paid in cash income taxes.

The report also blows a hole in the argument that stock grants to executives align the interests of managers with those of shareholders. The report calculated that at 179 companies in the study, the average value of stockholders’ stakes fell between 2008 and 2010 while the top executives at those companies received raises. The report really gets meaty when it compares executive pay with items like research and development costs, and earnings per share.

Using Disney CEO, Robert Iger and workers at Disney World in Florida as an example, Time looks at the ever widening income gap:

Disney’s Robert Iger got a 45% bigger bonus in 2010

The corporate PR teams are defending these bonuses by saying that the executives deserve the pay because stock prices and earnings are up. A Walt Disney spokesperson says that shareholder return at the company was up nearly 24%, substantially more than the Standard & Poors 500. But haven’t we already learned, through bubble after bubble, that stock prices are a poor indication of anything. They are irrational, give us false positives, and crash.

But here’s what is the real problem. Yes, if higher profits and a higher stock price warrant better pay for CEOs, why doesn’t the same ring true for the average employee. Workers at Disney’s Florida amusement park Walt Disney World fought for months last year and early this year for higher wages. What they finally ended up getting, in a new contract settled earlier this month, was an annual raise of 3% to 4% over the next three years. The workers will get a bonus, too, of $650, a mere 20,769 times less than Iger’s bonus. As long as it remains that only a small segment of our population will be rewarded for better performance, while the rest of us do more and more work for the same pay, the wealth gap in America is certain to get worse.

It is very evident that the White House, Congress and many state governors and legislatures have not learned that tax cuts for the wealthy will not improve the economy or create jobs. They have done nothing to reverse the trend of the widening income gap. They have dug themselves and us into a hole so deep that they cannot hear rational ideas for even stopping the spiral into a economic morass.

Finally, Democrats leaders are telling the White House to take Medicare off the table negotiating the debt ceiling. Hello? The majority of Americans support Medicare.

Actually there should be nothing on the table, raising the debt ceiling isn’t something that should or need to be negotiated, just DO IT. This is not a game. This is the economy of the United States and the world which relies on the US dollar as the basis for trade. Are the Democrats, at last, seeing the Republican folly of using Medicare as a pawn in their game for their corporate masters?

In Debt Ceiling Negotiations, Democrats Insist Paul Ryan’s Medicare Reform Plan to be ‘Off the Table’

In a letter to Vice President Biden today, five Democratic senators are calling for the Paul Ryan Medicare reform plan to “remain off the table,” as the budget and deficit negotiations over raising the debt ceiling go forward.

“We encourage you to remain unwavering in opposition to this scheme. For the good of the nation’s seniors, it must remain off the table,” the Democratic Senators write, ” we will never allow any effort to dismantle the program and force benefit cuts upon seniors under the guise of deficit reduction.”

The letter has been signed by Senators Bill Nelson (D-FL), Ben Cardin (D-MD), Sherrod Brown (D-OH), Claire McCaskill (D-MO) and Jon Tester (D-MT).

Even the Wall St. puppet, Sen Charles Schumer (D-NY) has said that Medicare cuts are a not a negotiating point:

The GOP has mostly stood behind the Medicare proposal, crafted by Rep. Paul Ryan (R-Wis.). But it’s been Democrats who have highlighted the proposal at every opportunity, and they’ve repeatedly called on debt negotiators to say publicly that Medicare cuts are off the table entirely.

If Congress is going to look to the program for savings, Schumer said, the money should come from cuts to the pharmaceutical industry rather than benefit cuts. He cited two policies Democrats have consistently supported: price controls on prescription drugs and extended rebates for people who are eligible for both Medicare and Medicaid.

A deal will be “impossible” if Ryan’s Medicare proposal is included, Schumer said.

The negotiations are aimed at finding a workable solution that both parties can support – which clearly would not describe the Ryan plan.

After the big Republican pow wow with the president at the White House, the so-called liberally biased media turned their mikes over to the Republicans so they could spout more lies about Paul Ryan’s budget, Medicare and the economy. One of the bigger lies about Medicare was a recycled one about Medicare from that little pouty demagog, Paul Ryan:

Millions of dollars of negative ads are being run to try and scare seniors and trying to confuse seniors. You know, the irony of this Bill, is with all this Mediscare that the Democrats are running, it’s Obamacare itself that ends Medicare as we know it. Obamacare takes half a trillion dollars from Medicare – not to make it more solvent but to spend on this other government program, Obamacare. And then it creates this 15 panel board of unelected, unaccountable, bureaucrats starting next year to price control and ration Medicare for current seniors.

Just how many times to we have to debunk this lie?

From Think Progress:  

The ACA reduced annual increases in payments to hospitals, skilled nursing facilities, home health agencies, and other institutions to spur productivity and cut overpayments to private insurers that are not delivering value for Medicare dollars. It used that money to expand coverage to 32 million Americans – many of whom were receiving uncompensated care at these institutions – to extend the life of the Medicare program and invest in new demonstration projects that aim to encourage providers to deliver quality care more efficiently. Seniors’ guaranteed benefits are in no way affected.

The “15 panel board,” as Ryan calls it, is actually the Independent Payment Advisory Board (IPAB). It will include individuals from across the health care field, all of whom will have to be confirmed by the Senate. Significantly, their proposal to reduce spending cannot “include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums…increase Medicare beneficiary cost- sharing (including deductibles, coinsurance, and co- payments), or otherwise restrict benefits or modify eligibility criteria” (Section 3403 (page 409) of the Affordable Care Act stipulates.)

The Democrats need to tell the White House and the democratic leadership to take Medicare off the budget deficit negotiating table now. As Greg Sargent observes recent polling shows Americans are strongly opposed to cutting Medicare. If the Democrats agree to cuts it will doom there electoral advantage in 2012.

If Democrats in deficit negotiations agree to a compromise that cuts Medicare benefits to seniors, they risk squandering the advantage they’ve built up over Republicans on the issue since 2010 and risk losing their more general edge as defenders of the middle class, a top Dem pollster who just completed an extensive health care poll tells me.

Jeff Liszt, of the respected Dem firm Anzalone Liszt, has just completed a poll for two liberal-leaning groups finding that the Paul Ryan Medicare plan is deeply unpopular with voters, and particularly with seniors and independents, when the plan is described to them. The poll also found that Obama and Dems have increased their advantage over Republicans on Medicare, on health care in general, and on who can be trusted to defend the middle class.

After spouting off before the cameras, the house went back into session, and using a twisted rules maneuver attached the rejected Ryan budget onto the Homeland Security Appropriations bill in a ‘deem and pass’ move. From Nancy Pelosi:

   Despite Americans soundly rejecting the Republican budget to end Medicare-with a new CNN poll out today finding 58% oppose and opposition from senior citizens even higher at 74%-House Republicans doubled down on ending Medicare by passing a Rule on the Homeland Security Appropriations bill (pdf) which “deems” that the Republican budget is passed:

       Provides that H. Con. Res. 34, including the related 302(a) allocations printed in the Rules Committee report accompanying the resolution, shall have force and effect until a conference report on the concurrent resolution on the budget for fiscal year 2012 is adopted.

   House Democrats unanimously opposed the Rule today and the Republican budget ending Medicare which increases costs by $6,000 a year for seniors, cuts benefits immediately, and puts insurance companies in charge.

Since 1962 the debt ceiling has been raised 74 times. Under George W. Bush, it was raised ten times without amendment. The current fiscal problems were caused by the Bush tax cuts, the Afghanistan and Iraq Wars and the economic downturn that both Republicans and Democrats refuse to realistically address by investing in this country, raising revenue, yes taxes, and closing the tax loop holes for corporations. The deficit will not be reduced by ending Medicare and decimating Medicaid and forcing seniors to pay 68% of the costs. That Medicare is even on the table without the tax increases for the top 1% should be a non-starter for negotiations on limiting the debt or raising the debt ceiling. The only reason that I can see this is even a discussion is that the President and the Democrats are beholding to the health care industry and pharmaceutical companies that would benefit in the trillions of dollars if Medicare and Medicaid are ended.

Every Democrat in the House who voted “nay” on the clean bill to raise the debt ceiling should be primaried with a real Democrat who will vote for the best interests of the middle class and the poor and not negotiate away their safety nets to make the rich wealthier.

Because we aren’t going to let you get out from under it….

Thus spoke Anthony Weiner on on May 24th, laying out the Republican plan to replace Medicare with an inadequate voucher program:

Today, House Republicans brought another bill (HR 1216) to the House floor that does not address jobs and wastes time in a futile attempt to repeal part of the Affordable Care Act. House Democrats are staging a “mini-filibuster” by “striking the last word” allowing them five minutes of time to discuss their strong opposition to the Republican-passed budget which ends Medicare as we know it and forces seniors to pay over $6,000 more a year.

   Weiner: I move to strike the last word Mr. Chairman. Mr. Chairman, you may recall I was standing here approximately two hours ago waiting to speak with several other members on the efforts of my Republican friends to eliminate Medicare as we know it and for reasons that are known only to the Chair, I was denied the ability to do that. Well, I’m back. And just to review the bidding, here’s where it was before that order was made. We had the Chairman of the Republican Congressional Campaign Committee, a good man, a guy I like, stand down in the well and say, ‘Oh, no’ (and this by the way is someone who is elected by the Republican members to represent them in races all around the country) saying that the Ryan plan wasn’t a plan it was and I’m quoting here, “a construct to develop a plan” and he said the proposal is not a voucher program and then he said it was a one size fits all, that Medicare was draining our economy is what he said.

  Well, ladies and gentlemen, that might be the rationale for our Republican friends wanting to eliminate Medicare, but none of those things are true. It is not a ‘construct to develop a plan’ it is the proposal of the Republican party of the United States of America to eliminate Medicare as a guaranteed entitlement. If you don’t believe me, go get the book that they wrote, go get the budget that they wrote, go get the bill that they wrote.

h/t to Crooks & Liars for the transcript.

The Ryan Budget plan has failed in the Senate with 5 Republicans opposing it, the Republicans are still embracing the proposal to eliminate Medicare. They are in denial about the loss of NY-26, long a Republican stronghold. to Democrat Kathy Hochul. The sadder part is the White House has also missed the message

Joe Biden group to tackle Medicare and Medicaid: aide

Vice President Joe Biden and top lawmakers will examine government-run health plans on Tuesday as they try to work out a deal to raise the United States’ borrowing authority, a congressional aide said.

h/t Marcy Wheeler

It would appear that the White House is willing to sell out future seniors to give political cover for raising the debt ceiling.

Sen. Tom Coburn (R-OK), he of the Sen. Ensign “put your pants on” club, has departed in a huff from the latest government attempt to come to a budget agreement on the backs of those who can least afford it. Coburn walked out when Dick Durbin refused to accept Coburn’s demand for $130 billion in Medicare benefit cuts for current beneficiaries on top of the $400 billion in savings already on the table. That half a billion is on top of the cuts already passed in the Obamacare bill. If enacted, these cuts would dismantle Medicare.

From Greg Sargent at the Washington Post:

The “Gang of Six” talks on deficit reduction broke down after Senators Dick Durbin and Tom Coburn got locked in a heated yelling match over Coburn’s demand for extremely deep cuts in Medicare that Durbin thought would “destroy” the popular program, a Senate aide familiar with the talks tells me.

The episode could prove at least somewhat reassuring to liberals who have worried that Durbin is open to a “grand bargain” that would include serious cuts in the popular program, which would undercut Dem efforts to draw a sharp contrast with Republicans on the issue. Durbin has insisted he’s at the “Gang of Six” table mainly to protect liberal priorities.

The episode also is a reminder of how much Republicans will insist on in Dem concessions as conditions for any deal.

Coburn apparently has been bringing up new issues at every meeting, or demanding to reconsider old ones and asking for sharper cuts to Social Security than had been previously agreed to even as the group appeared to be reaching a consensus. On Monday he threw the gauntlet down, like the loyal corporate puppet that he is, and when he couldn’t get his way, took his ball and went home to C Street. I give Durban some small iota of credit for not caving but considering the recommendations that will come from this right wing/blue dog packed “gang”, that is damning praise.