Tag: Debt Ceiling

There seems to be a lot of celebrating without actually understanding much of what has happened as of late. One reason is that it looks like House Republicans will agree to raise the debt ceiling but only for 3 months until the budget gimmick of all Congressmen supposedly either passing a budget or denying their own pay as if that will ever happen. There will be infighting on whether there should be heavy or light deficit terrorism terrorizing the unemployed as usual, but now we can expect these dysfunctional austerity celebrating battles to go on and on.  And as I pointed out when I predicted all of this 3 years ago, when this is the debate in Washington DC we have already lost.

We’ve Already Lost So Cancel Any Perceivable Celebration

This budget gimmick fight is already on top of what the last debt ceiling fight created with the negotiations coming up over the self induced sequester on the basis that 4 trillion bipartisan austerity is awesome. That is the problem for all debates and all fake “progressive” political rhetoric in DC we heard at the Inauguration even though it was a great speech.

The plans to kick this austerity shit can down the road continually every few months is not a victory; it’s also not even a clean debt ceiling raise because it’s not even going to be for a fiscal year. It also means the White House was really posturing as I said they were when they claimed they wouldn’t negotiate on the debt ceiling; this shows that all this so called new-found post reelection “strength for progress” is a myth. That also means that all the hyp being bandied about, about the low-balled 60 billion to merely 9 billion Sandy relief bill passing weeks late and 51 billion dollars short breaking the Hastert rule did not have the significance of the spin behind it at all. It’s simple: John Boehner was looking out for his own ass as speaker(shocking!). That’s it.

The idiotic bipartisan sequester created by the last grand self induced standoff over the last debt ceiling fight will come to a head on March 1. I don’t expect a lot of defense cuts despite the posturing and fully expect more cuts to SS and Medicare to be floated and bargained with within multiple negotiations that show nothing but contempt for the public. Yves Smith goes into the real reasons why a Republican grand standoff on the debt ceiling looks like it won’t happen despite the coming miniature ones every few months that will happen where plenty of deal making and deficit terrorism will take place.

All Good Democrats Applaud Republicans Rearranging Battle Lines in Austerity Phony War

It’s not quite that simple.

First, if you widen the frame, the budget jockeying is largely kabuki: which team is going to score more points that appeal (or more accurately, can hopefully be spun to appeal) to their base? The reality is that both parties are fully committed to imposing austerity. The only question is whether we get Dem Lite or Republican Hi Test. But rest assured, neither version will be good for ordinary Americans.

Second, the Republicans have not dropped the deficit ceiling cudgel, but they seem to recognize that it is a mutual assured destruction weapon, and therefore not as useful as they once thought. They seem to still be coming to grips with the negotiating implications. As the New York Times reports, the Republicans are willing to extend the deficit ceiling for three months, but that increase was conditioned on having the Democrats approve a budget (during the Obama administration, no budget has been approved; the government has carried on because Congress has passed spending resolutions). Notice that while Obama has said that he would not discuss deficit cuts under a debt ceiling sword of Damocles. But if he accepts this deal (which includes a gimmick, of having Congresscritters go unpaid if they can’t agree on a budget on the normal timetable), he will still be doing that. So why is this a victory of sorts?

The more important part of the New York Times story on the Republican climbdown is that Dave Camp, the House Ways and Means Committee chairman, disabused his fellow party members of the idea that the government could limp through hitting the debt ceiling by using tax proceeds to pay only debt obligations, Social Security, the military, and other critical needs. So the Republicans can’t refuse to raise the debt ceiling and not do serious damage, pronto. And everyone would blame them for their intransigence. So unless they want to play Major Kong, they will probably continue to play ball with the Democrats on debt ceiling increases while trying to save face about it.

This past week calls by Republicans to not raise debt ceiling got little push back from the talking heads this Sunday as Senate Minority Leader Mitch McConnell made the morning rounds insinuating that it might not be so bad. Lets get something straight that the MSM village is allowing to happen here. The Republicans are conflating passing a budget bill (future spending) with making the payment on those expenditures (past spending). Those two things are NOT the same. The debt ceiling addresses the later and the consequences of even threatening to not pay US debts would have the same, if not greater, negative results as it did in 2011 when the feral children of the House held it hostage. The result of that debacle was the current sequestration bill and “fiscal cliff” crisis.

The inflation that everyone from the Federal Reserve to Wall St. wants to the one thing that would put the US in the same boat as Greece, facing increasingly higher interest rate payments. In other words the debt ceiling and the budget resolution are NOT the same and should not be treated the same.  The sequester and the budget resolution are negotiable; the debt ceiling is not.

This idea of holding the debt ceiling is in fact so dangerous to the world economy that politicians, economist and pundits are calling for President Barack Obama to act by using possibly the only legal means he may have, mint a Trillion Dollar Platinum Coin. Even New York Times columnist and economist, Paul Krugman has change his mind calling for the president to be ready to mint that coin:

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious. [..]

It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable – if you’ve been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous – far more ridiculous than the notion of the coin.

So if the 14th amendment solution – simply declaring that the debt ceiling is unconstitutional – isn’t workable, go with the coin.

If you think that this possibility isn’t serious, consider the fact that the feral children of the House now do introducing legislation to prevent the president from minting the coin

And now a US Congressman has come out against the coin idea and is proposing a law to ban it (via Matthew O’Brien). Ironically, this action actually legitimizes the coin option. [..]

In the past, hiking the debt ceiling was pretty painless, but some in the GOP are staunchly opposed to doing it, raising the specter that the US will default on its obligations.

It’s because of this that some people are getting more excited about the “Platinum Option,” which refers to a technical loophole in the law that allows the Treasury to create platinum coins in any denomination, theoretically up to a trillion and beyond. [..]

We’ve posted his full press release below, but the key thing here is that the idea is now legitimized, as a GOP Congressman implicitly acknowledges that the coin idea is currently legal.

Note that in his press release, the Congressman uses the flawed analogy of comparing the US government to a small business. Unlike governments, small businesses can’t print money. And small businesses can’t “deficit spend,” the way governments can.

The opponents of this idea are also wrong. Josh Borrow, who writes at Bloomberg‘s The Ticker, enumerates why their arguments are all wrong and concludes:

Minting the platinum coin would be less economically damaging than any of the above options, which is why Obama should announce he will pursue it if the debt ceiling is not raised. Hopefully, inflation hawks will be so alarmed by the president’s intention to use his direct monetary authority that they will choose to cut a deal and we’ll never actually get to the minting stage.

But if Republicans call Obama’s bluff, he should be ready to mint that coin – – and to save the economy by doing so.

The next “plateau” in the on going “Mythical Cliff” debate is the unconstitutional debt ceiling which the Republicans are now threatening to take hostage to demand draconian cuts to social security and other programs while sparing defense. With the settlement over the Obama tax cuts out of the way, the $1 trillion dollars in sequestration cuts are scheduled to take effect in two month at the same time authorized spending will “hit the roof,” setting up the showdown between the feral Tea Party dominated Republican held House, the roadblocked filibustered Senate and the ever capitulating White House. Still very much in danger are Social Security and Medicare which President Barack Obama has refused to take off the table and keeps offering up as sacrifice as part of an agreement. To get what they want the Republicans are willing to let the government default on its debt

Sen. Pat Toomey (R-Pa.) said on MSNBC’s “Morning Joe” this week, “we Republicans need to be willing to tolerate a temporary, partial government shutdown” in order to achieve spending cuts and entitlement reforms.

On Friday morning, meanwhile, House Speaker John Boehner (R-Ohio) told members that he was prepared to use the debt ceiling fight as leverage to get spending cuts. According to a source in the room, Boehner showed fellow lawmakers the results of a survey by the Winston Group, a GOP polling firm, which showed that 72 percent of Americans “agree any increase in the nation’s debt limit must be accompanied by spending cuts and reforms of a greater amount.”

“The debate is already under way,” the speaker said.

Elsewhere on Friday morning, Sen. John Cornyn (R-Texas), the second-ranking Senate Republican, penned an op-ed making a similar argument.

   Republicans are more determined than ever to implement the spending cuts and structural entitlement reforms that are needed to secure the long-term fiscal integrity of our country.

   The coming deadlines will be the next flashpoints in our ongoing fight to bring fiscal sanity to Washington. It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain. President Obama needs to take note of this reality and put forward a plan to avoid it immediately.

Calling this a “government shutdown,” even a partial shut down, is just plain spin that will result in an even deeper recession than the last one from which we have yet to fully recover. In a letter from Matthew E. Zames, a managing director at JPMorgan Chase and the chairman of the Treasury Borrowing Advisory Committee lists what will happen if the debt ceiling is not raised:

First, foreign investors, who hold nearly half of outstanding Treasury debt, could reduce their purchases of Treasuries on a permanent basis, and potentially even sell some of their existing holdings. [.]]

Second, a default by the U.S. Treasury, or even an extended delay in raising the debt ceiling, could lead to a downgrade of the U.S. sovereign credit rating. [..]

Third, the financial crisis you warned of in your April 4th Letter to Congress could trigger a run on money market funds, as was the case in September 2008 after the Lehman failure. [..]

Fourth, a Treasury default could severely disrupt the $4 trillion Treasury financing market, which could sharply raise borrowing rates for some market participants and possibly lead to another acute deleveraging event. [..]

Fifth, the rise in borrowing costs and contraction of credit that would occur as a result of this deleveraging event would have damaging consequences for the still-fragile recovery of our economy. [..]

Finally, (..) because the long-term risks from a default are so large, a prolonged delay in raising the debt ceiling may negatively impact markets well before a default actually occurs.

Obviously, the Republicans did not learn from the last hostage threat that resulted in a market down turn and the downgrade of the US credit rating. That debacle resulted in an extension of the Bush tax cuts and, now the permanent Obama tax cuts. Without tax increases as leverage the President and the Democrats have very little wiggle room.

That brings us to the elephant in the room that most of the MSMS, some so called progressive blogs and pundits, including Nobel Prize winning economist Paul Krugman, have laughed off as “not serious,” the “Trillion Dollar Platinum Coin Solution” (TPC). Guess what, they aren’t laughing at this any more. We may not be able to print money but we can mint coins of any denomination. From Paul Krugman:

The peculiar exception is that clause allowing the Treasury to mint platinum coins in any denomination it chooses. Of course this was intended as a way to issue commemorative coins and stuff, not as a fiscal measure; but at least as I understand it, the letter of the law would allow Treasury to stamp out a platinum coin, say it’s worth a trillion dollars, and deposit it at the Fed – thereby avoiding the need to issue debt. [..]

In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick – but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.

But there is a solution to preventing a real fiscal crisis and Josh Barrow at Bloomberg has an ingenious solution to both the debt ceiling and the TPC and why we need to “go off the platinum cliff”:

This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government’s bills, in lieu of issuing debt.

What the law should say is that the executive branch may borrow to pay whatever obligations the federal government has, but may not print. Unfortunately, when we hit the debt ceiling, the situation will be backwards: The administration will not be allowed to borrow, but it can print in unlimited quantities.

This points toward an interesting solution.

If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow. But, to avoid causing long-term inflation expectations to skyrocket, he should pledge that he will have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so.

And then he should offer to sign a bill revoking his authority to issue platinum coins — so long as that bill also abolishes the debt ceiling. The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations.

Here that Barack? Dare them to destroy the face and credit of this country, then flip that coin on the table along with the bill. Wanna bet they’ll bite?

Meanwhile, we need to encourage our weak kneed president to do what Atrios said

The sequel to the the Bush/Obama tax debacle  is the unconstitutional debt ceiling. According to the 14th Amendment, the US has to pay its bills, even if the government has to borrow the money through bond sales. So the debt ceiling is another manufactured “cliff” that was created to curb spending which it didn’t, obviously, or we wounded be having another media side show staring the White House and the Congressional leadership. So get comfy and grab you favorite munchies as we watch the 99% get raked over the coals.

President Obama:

Obama Debt Ceiling Statement: Limit Increase Not Up For Debate After Fiscal Cliff Showdown

from Reuters

“While I will negotiate over many things, I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up,” Obama said in remarks in the White House.

McConnell: Spending fight coming whether Obama ‘wants it or not’

by Alicia M. Cohn, The Hill

Senate Minority Leader Mitch McConnell (R-KY):

President Obama will get a fight over government spending with a hike to the debt limit “whether he wants it or not,” Senate Minority Leader Mitch McConnell (R-Ky.) wrote Thursday.

In an op-ed for Yahoo, McConnell wrote that Republicans would focus on reducing spending in the next Congress, and in conjunction with the debate over raising the $16.4 trillion debt ceiling. Congress will likely need to take action on the debt limit within the next two months.

“The president may not want to have a fight about government spending over the next few months, but it’s the fight he is going to have, because it’s a debate the country needs,” McConnell warned.

Speaker of the House John Boehner (R-OH)

Boehner tells GOP he’s through negotiating one-on-one with Obama

by Russel Berman, The Hill

Speaker John Boehner (R-Ohio) is signaling that at least one thing will change about his leadership during the 113th Congress: he’s telling Republicans he is done with private, one-on-one negotiations with President Obama.

and just to prove that the 113th Congress will bear little difference to the 112th

At noon today, I introduced the first bill of the 113th Congress to repeal Obamacare in its entirety.

— Michele Bachmann (@MicheleBachmann) January 3, 2013

Let the games begin: Thunderdome

Once we realize there is no fiscal cliff and the whole premise is a myth, you think about why it was created. It was created so we can mop up after the 1% which owns all three branches of government including the President. Obama didn’t add a raise in the debt ceiling to the Obama Bush tax cut deal he made in 2010 which created this political mess we are in right now.

Yet the poor and middle class are supposed to “stop whining and complaining” and just mop it up as if it’s one of the menial 60% of low wage jobs created that were part of this “recovery” where 93% of the income it went to the top 1%? I don’t think that’s fair. He needs to ask his Wall St buddies in his Treasury Department to share sacrifice. We have sacrificed enough in the name of the fantasy evil deficits from the land of Mordor causing fantasy default. Think about this when Nancy Pelosi was lying to you about this sellout ultimately helping the middle class last night.

From blatant robbery to money laundering, here are the biggest scandals of 2012 banking history.

#9. Middle-Class Wealth declines by 35 percent

On July 18, 2012, the U.S. Bureau of the Census made it official: The middle-class is getting poorer. The median family — that family exactly at the mid-point of the wealth ladder  — saw its net worth collapse. (Net worth is all assets minus all liabilities.) In 2005, the median family’s wealth was valued at $102,844 (in inflation adjusted dollars.)  By 2010, the latest Census figures showed a drop of 35 percent to $66,740.

And we’re supposed to celebrate this?  

Up Date 14:26 EDT: The House of Representatives has adjourned until Monday December 31

New Year’s Eve is four days away but you may want to start drinking now. True to form Congress is right on track to do nothing about anything, except maybe to try to repeal the Affordable Care Act. The House is still in recess, under what Senate Majority Leader Harry Reid (D-NV) called the “dictatorship” of House Speaker John Boehner (R-OH), with some major issues still in need of resolution. There is the mythical Cliff with its draconian spending cuts to everything except Medicare, Medicaid, and Social Security; the expiration of the Bush/Obama tax cuts and the end of unemployment benefits for two million long term unemployed. There is the farm bill that has lingered undebated in the House which will most likely result in steep spikes in the cost of dairy products and to throw another log on the fire, Treasury Secretary notified congress yesterday that the debt limit will be reached on December 31.

This past Sunday on MSNBC’s Up with Chris Hayes, host Chris Hayes discussed how the president and congress almost came up with a deal to avert a non-crisis and how Speaker Boehner’s “Plan B” failed. Chris’ guests were former Governor James Florio (D-NJ); Heidi Moore, Finance and Economics Editor for The Guardian newspaper; Dean Baker, Co-Director of the Center for Economic and Policy Research; and Dylan Glenn, Senior Vice President of Guggenheim Advisors and former Special Assistant to Pres. George W. Bush. Keep in mind that Social Security has nothing to do with the deficit. It is on the table because President Obama put it there.

Warning: Dylan Glenn and the lack of push back from Hayes and the others on Social Security may have you throwing things at your monitor, so secure any damaging objects before watching.

Yes, we know what is driving the latest performance behind this fiscal sham.

It’s basically good cop, bad cop; or bad cop, worse cop theatre to get you to sign off on this grand betrayal as UKMC economist William K. Black aptly calls it.

Once again the Republicans in Congress are threatening to refuse to raise the debt ceiling in order to get concessions from the Obama administration. Those concessions would involve severe cuts and changes to the social safety net that our most vulnerable citizens rely on to stay out of poverty but would not solve the so-called problem of the US debt obligations and deficit spending. We’ve been down this road before and it resulted in the extension of the Bush tax cuts and an increase in the deficit.

This could all be rendered irrelevant quite easily and very legally by the minting of one or more platinum coins in denominations determined by the Treasury Secretary. Here’s the law, 31 USC § 5112 – Denominations, specifications, and design of coins:

§ 5112. Denominations, specifications, and design of coins

(a) The Secretary of the Treasury may mint and issue only the following coins: [..]

(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Those coins would be deposited with the Federal Reserve and used to make good on the obligated debt of the United States.  This is a legitimate option  for President Barack Obama and the argument has been made that it may be his duty to order the minting of Trillion Dollar Platinum Coins  to protect the US from failing to pay its obligations. Here is the explanation of what a trillion dollar coin does from blogger letsgetitdone at Correntewire:

If the Mint coins money in denominations appropriate for commonplace retail transactions than the coins involved can be exchanged among parties as needed. But what happens if the Mint coins platinum money with face values in the trillions of dollars? Then that money can’t be used for exchange as a practical matter, because there are no buyers who will accept the trillion dollar coins in exchange. So, if the Treasury wants to use such coins to fill the public purse with money it can later spend on debt repayment or Congressional deficit appropriations, it must transform high face value coins into divisible money; i.e. reserves in its Fed spending account. [..]

In the case of $One Trillion proof platinum coin, the profits are its face value minus a few thousand dollars. So that amount would be “swept” into the Treasury General Account (TGA), which is the account used by Treasury to perform Government spending.

A very good way to look at high value platinum coins is that they are legal instruments for the Treasury to use the unlimited “out of thin air” reserve creation authority of the Fed to fill the public spending purse, the TGA, for public purposes. In effect, platinum coin seigniorage involves the Treasury commandeering the power of the Fed to create reserves and place them in the TGA, perhaps, depending on what the Treasury chooses to do, in the many Trillions of dollars.

The coin’s value is not limited to one trillion dollars, according to the law, the Treasury Secretary sets the value. Letsgetitdone makes the argument for a $60 trillion coin that would be a political game changer:

{..} because it institutionalizes the idea that there is a distinction between appropriations, the Congressional mandate to spend particular amounts on particular goods and services, and the capability to spend the mandated accounts by having the funds (electronic credits) in the public purse (the TGA). In a fiat currency system, the capability always exists if the legislature provides for it under the Constitution, as it has under current platinum coin seigniorage legislation.

But the value of the $60 T coin, and the profits derived from it, is that it is a concrete reminder of the Government’s continuing ability to buy whatever it needs to meet public purposes, and its continuing ability to harness the authority of the Central Bank to create reserves to support the needs of fiscal policy. It demonstrates very clearly that the Government cannot run out of money, and that the claim that it can is not a valid reason for rejecting spending that is in accordance with public purpose.

So, please keep in mind the distinction between the capability to spend more than government collects in taxes, and the appropriations that mandate such spending. The capability is what’s in the public purse, and it is unlimited as long as the Government doesn’t constrain itself from creating credits in its own accounts. With coin seigniorage its capability could be and should be publicly demonstrated by minting the $60 T coin, and getting the profits from depositing it at the Fed transferred to the Treasury General Account (TGA).

On the other hand, Congressional appropriations, not the size or contents of the purse, but whether the purse strings are open or not, determines what will be spent, and what will simply sit in the purse for use at a later time. So there is a very important distinction between the purse and the purse strings. The President can legally use coin seigniorage to fill the purse, but only Congress can open the purse strings through its appropriations.

Is there anything congress could do to stop the president from issuing a coin like that? No, there isn’t. Could they impeach him? Well they could try, but I doubt they would get 67 votes in the Democratic held Senate. Nor would impeachment of a president who rescued the economy be very popular with the public.

Last year during the last budget hostage situation, Jack Balkin, Knight Professor of Constitutional Law at Yale Law School, wrote this:

Like Congress, the president is bound by Section 4 of the 14th Amendment, which states that “(t)he validity of the public debt of the United States, authorized by law . . . shall not be questioned.” Section 4 was passed after the Civil War because the framers worried that former Southern rebels returning to Congress would hold the federal debt hostage to extract political concessions on Reconstruction. Section 5 gives Congress the power to enforce the 14th Amendment’s provisions. This does not mean, however, that these provisions do not apply to the president; otherwise, he could violate the 14th Amendment at will.

Section 4 requires the president not to put the validity of the public debt into question. If the debt ceiling is not raised in time, there will not be enough incoming revenues to pay for all of the government’s bills as they come due. Therefore he has a constitutional obligation to prioritize incoming revenues to pay the public debt: interest on government bonds and any other “vested” obligations. [..]

An angry Congress may respond by impeaching the president. However, if the president’s actions end the government shutdown, stabilize the markets and prevent an economic catastrophe, this reduces the chances that he will be impeached by the House. (After all, he saved the country.) Perhaps more important, the chances that he will be convicted by a two-thirds vote of the Senate, which has a Democratic majority, are virtually zero.

Since Pres. Obama is no longer faced with reelection and the Republicans in the House are again threatening to default on its obligations without deep cuts to the social safety net and protect the 1% from tax hikes, there is no reason for the President not to mint that coin.

These are the articles by letgetitdone that were referenced and are all well worth reading:

Coin Seigniorage: A Legal Alternative and Maybe the President’s Duty

Beyond Debt/Deficit Politics: The $60 Trillion Plan for Ending Federal Borrowing and Paying Off the National Debt

Origin and Early History of Platinum Coin Seigniorage In the Blogosphere

What Does The Trillion Dollar Coin Do?

The Trillion Dollar Coin Is A Conservative Meme

History was made in the Senate when Senate Minority Leader Mitch McConnell (R-SC) filibustered his own bill and got PWD by Senate Majority Leader Harry Reid (D-NV). Really. Not kidding.

Senate Minority Leader Mitch McConnell (R-KY) wanted to prove on Thursday that Democrats don’t have the votes to weaken Congress’ authority on the debt limit. Instead they called his bluff, and he ended up filibustering his own bill.

The legislation, modeled on a proposal McConnell offered last year as a “last-choice option” to avert a U.S. debt default, would permit the president to unilaterally lift the debt ceiling unless Congress mustered a two-thirds majority to stop him.

McConnell brought up the legislation Thursday morning. Senate Majority Leader Harry Reid (D-NV) initially objected, seemingly proving the Republican leader’s point that it cannot pass the Senate. But then Reid ran it by his members and, in the afternoon, agreed to hold that same vote. This time it was McConnell who objected.

“The Republican leader objects to his own idea,” Reid declared on the floor. “So I guess we have a filibuster of his own bill.”

Here is Senate Majority Whip Dick Durbin (D-IL) full response along with Sen. Debbie Stabenow (D-MI) and Sen. Chuck Schumer (D-NY).

The signs of desperation are starting to show. Here’s hoping that the Democrats hold and strengthen their line on the fiscal bluff. Sen. Reid has my respect for that move.  

Yes, the grand bargain is coming up before the deadline by December 31st, 2012.

Social Security, Medicare, and Medicaid will be on the chopping block like it was last time. This is not a conspiracy theory, and it comes from solid sources involved in all of the deliberations if you read the source material provided. Sure, some can pretend it is CT. They can even cry it out loud from the rooftops while closing their eyes and plugging their ears, but the reality based community is all talking about this because this is confirmed reality, and the prospects are real like they were last time.

It’s really up to those that would deny this confirmed reality to prove the actual sources in the Senate are all liars in the WaPo peice. Either that or they have heads their heads in the sand for all of 2011 and this is just too much of a downer to acknowledge but it’s time to grow up. These are facts. Denying the factual historical record in 2011 disqualifies anyone writing about these matters at all. Yes, when the entirely self induced entirely avoidable fake fiscal cliff was made real through the stop go that was passed to raise the debt ceiling in Aug 5, 2011 it set this whole pathetic fiscal cliff debacle coming up.

Rick Pearlstein: Author of Nixonland details the Grand Bargain coming up as well.

America didn’t vote for a “grand bargain”

I heard Dick Durbin, the Illinois senator who is close to Obama, on the radio the next morning boasting that he was one of the Democrats on the Simpson-Bowles Commission to vote for its recommendations – recommendations that included, in addition to changes in the tax code meant to increase revenue (while also cutting tax rates), diminishing eligibility and benefits for Medicare and Social Security. Though the commission failed to reach consensus, making its proposals moot, it was aiming at just the sort of “grand bargain” that Obama has consistently and quietly spoken about as his sort of beau ideal for what a successful presidency would look like. Durbin went on to say he hoped a grand bargain might be wrapped up in the next calendar year, before congressmen and senators became preoccupied with reelection.