Tag: fiscal cliff

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And here we are again! It started in 2010. The Bush tax cuts were about to expire. There was leverage to negotiate a debt ceiling raise or to just let them expire. How do I know there was leverage? I know Republicans like tax cuts for the rich, and there was a deal for the purpose of extending them with Republican votes. It passed with those Republican votes, which led to this whole thing because there was no debt ceiling raise included.

Maybe others are unaware of this? I don’t know. It doesn’t matter though; the uninformed shouldn’t dictate fantasy as reality in a reality based community. This is the actual reality and why we are worried about a global financial calamity with regard to a possible political default on the public debt, which is a choice and otherwise impossible for a sovereign currency issuer.

Obama on the Debt Limit – December 2010

Q Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?

THE PRESIDENT: When you say it would seem they’ll have a significant amount of leverage over the White House, what do you mean?

Q Just in the sense that they’ll say essentially we’re not going to raise the – we’re not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you’re willing to do. I mean, what leverage would you have –

THE PRESIDENT: Look, here’s my expectation – and I’ll take John Boehner at his word – that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That’s something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.

You know, we on the left knew what this would lead to. You don’t trust John Boehner with the full faith in credit of the United States unless one is completely clueless or an economic nihilist. The resulting signs we are starting to see of a financial panic in response to the prospects of a default on top of the ongoing depression, the jobs crisis, the continuing climate and ecological crisis all converging into one huge Epochal crisis, point to a special kind of disdain for the public that all our elected leaders have for us.  I mean, we have enough problems without adding to them through a self induced global financial then economic crisis caused by the President’s pursuit of a deficit terrorist grand bargain whether through incompetence or outright corruption.  

With $85 billion across-the-board spending cuts, known as “the sequestration,” set to take effect this Friday, a new investigation reveals how billionaire investors, such as Peter Peterson, have helped reshape the national debate on the economy, the debt and social spending. Between 2007 and 2011, Peterson personally contributed nearly $500 million to his Peter G. Peterson Foundation to push Congress to cut Social Security, Medicare and Medicaid – while providing tax breaks for corporations and the wealthy. Peterson’s main platform has been the Campaign to Fix the Debt. While the campaign is portrayed as a citizen-led effort, critics say the campaign is a front for business groups. The campaign has direct ties to GE, JPMorgan Chase, Morgan Stanley and Goldman Sachs. Peterson is the former chair and CEO of Lehman Brothers and co-founder of the private equity firm, The Blackstone Group. For more, we speak to John Nichols of The Nation and Lisa Graves of the Center for Media and Democracy.

Sequestration Is Austerity, but Not Enough for Simpson and Bowles

by John Nichols, The Nation

Sequestration?

Cue the return of Alan Simpson and Erskine Bowles, frontmen for American austerity. [..]

The former Republican senator and defeated Democratic senate candidate who praises Paul Ryan’s budget don’t particularly like the death-by-slow-cuts of sequestration. They prefer a full frontal assault on the most vulnerable Americans and a redistribution of the wealth upward.

As President Obama has noted, Washington has already reduced the deficit by $2.5 trillion.

But the co-chairs of the failed National Commission on Fiscal Responsibility and Reform now want another $2.4 trillion.

To wit, in a “rehashed” plan to “Fix the Debt,” Simpson and Bowles are busy promoting schemes to “modernize…entitlement programs to account for” an aging population. That’s code for schemes to delay the point at which the hardest working Americans can get access to Social Security and Medicare.

Simpson and Bowles are arguing specifically for the adoption of “chained CPI.” That’s the assault on Social Security cost-of-living increases that Congressman Keith Ellison, D-Minnesota, correctly identifies as “a benefit cut.”

Remember who appointed these two charlatans to head the “National Commission on Fiscal Responsibility and Reform” when Congress refused to create it, Pres. Obama. Remember who embraced their recommendations when the committee failed to come to an agreement, Pres. Obama.

Remember who was privately financing the commission, Peter G. Peterson.

Sperling: Obama Wanted Sequester to Force Democrats to Accept Entitlement Cuts

by Jon Walker, FDL Action

The way Obama has handled basically every manufactured crisis from the debt ceiling, to the Bush tax cuts expiration, to the sequester has been about trying to force both Democrats and Republicans to embrace his version of a “grand bargain.” While it is clear this has been the driving force behind Obama’s decisions, if you pay close attention to his actions is is rare than an administration official will directly admit this. This is actually what I think it most interesting about the recently leaked email exchange between Bob Woodward and Gene Sperling up on Politico. Sperling wrote:

   But I do truly believe you should rethink your comment about saying saying that Potus asking for revenues is moving the goal post. I know you may not believe this, but as a friend, I think you will regret staking out that claim. The idea that the sequester was to force both sides to go back to try at a big or grand bargain with a mix of entitlements and revenues (even if there were serious disagreements on composition) was part of the DNA of the thing from the start. It was an accepted part of the understanding – from the start. Really. It was assumed by the Rs on the Supercommittee that came right after: it was assumed in the November-December 2012 negotiations. There may have been big disagreements over rates and ratios – but that it was supposed to be replaced by entitlements and revenues of some form is not controversial. (Indeed, the discretionary savings amount from the Boehner-Obama negotiations were locked in in BCA: the sequester was just designed to force all back to table on entitlements and revenues.)

Pres. Obama has close ties to Mr. Peterson, both want cuts to Social Security and Medicare. That the president is calling for tax increases is a cover so he can get away with unpopular cuts. If he can get a bipartisan agreement that cuts entitlements and raises taxes then everyone, and no one, is to blame. What John Walker said, “That is why even now Obama isn’t calling for the sequester to be simply repealed or delayed. Obama still wants to use this manufactured crisis to force congressional Democrats to betray their base by adopting Social Security cuts and get Republicans to accept revenue increases.”

This is a fine mess you’ve got us into, Barack.

What Atrios said: Republicans Don’t Care About Cutting Social Security

The big flaw in the premise of the grand bargain is that Obama is asking them to give away their precious by increasing taxes on the rich in exchange for something they don’t care much about. Cutting taxes for rich people is their whole purpose. Cutting Social Security? Well, if they can use Social Security cuts to cut taxes for rich people, sure. But cutting Social Security in order to increase taxes on rich people? Really not interested.

401Ks are a disaster

We need an across the board increase in Social Security retirement benefits of 20% or more. We need it to happen right now, even if that means raising taxes on high incomes or removing the salary cap in Social Security taxes.

Over the past few decades, employees fortunate enough to have employer-based retirement benefits have been shifted from defined benefit plans to defined contribution plans. We are now seeing the results of that grand experiment, and they are frightening. Recent and near-retirees, the first major cohort of the 401(k) era, do not have nearly enough in retirement savings to even come close to maintaining their current lifestyles.

Frankly, that’s an optimistic way of putting it. Let me be alarmist for a moment, because the fact is the numbers are truly alarming. We should be worried that large numbers of people nearing retirement will be unable to keep their homes or continue to pay

Economics and law professor at the University of Missouri, Kansas City, William K. Black joined Paul Jay, senior editor at The Real News Network to discuss President Barack Obama’s State of the Union address and his economic proposals.

President Barack Obama told Democratic delegates and congressional members meeting at the annual House Democratic retreat at Lansdowne Resort in Virginia that the he wants a “big budget deal”

President Barack Obama said he wants to reach a “big deal” on the budget that will cut the nation’s deficit without slashing spending on education and research that is needed to ensure future growth.

Obama said negotiations with congressional Republicans over avoiding the $1.2 trillion in automatic, across-the-board spending reductions set to begin March 1 shouldn’t push aside the effort for a broader plan to cut government debt.

While the president stood firm against “government by crisis” and the need for more revenue in any future deficit reduction deal, and much like the Republicans, who keep saying that they will close loop holes in the tax code but not which ones, there have been few details in how that deal would be accomplished. Nobel Prize winning economist points out that any reduction in government spending at this time would “destroys jobs and causes the economy to shrink”

This really isn’t a debatable proposition at this point. The contractionary effects of fiscal austerity have been demonstrated by study after study and overwhelmingly confirmed by recent experience – for example, by the severe and continuing slump in Ireland, which was for a while touted as a shining example of responsible policy, or by the way the Cameron government’s turn to austerity derailed recovery in Britain. [..]

But aren’t we facing a fiscal crisis? No, not at all. The federal government can borrow more cheaply than at almost any point in history, and medium-term forecasts, like the 10-year projections released Tuesday by the Congressional Budget Office, are distinctly not alarming. Yes, there’s a long-term fiscal problem, but it’s not urgent that we resolve that long-term problem right now. The alleged fiscal crisis exists only in the minds of Beltway insiders.

(my emphasis)

Prof. Krugman discussed with MSNBC’s The Last Word host, Lawrence O’Donnell the consequences of such a deal at this time would mean and what the government should be doing to restart the economy.

Unbeknownst to most of the legislators and public, tucked very neatly in section 632 (pdf) of the “fiscal cliff” bill, was provision that gave the world’s largest biotechnology firm, Amgen, a drug maker that sells a variety of medications, a half billion dollar gift that allows the company to evade Medicare cost-cutting controls by delaying price restraints on a class of drugs used by kidney dialysis patients for two years. Meanwhile in December, Amgen had been fined  $762 million in civil and criminal penalties for illegal marketing of one of its other drugs. This pricing break would wipe out two thirds of those fines.

This undercover handout of taxpayer’s dollars during a so-called “fiscal crisis” was reported in depth by The New York Times investigative reporters, Eric Lipton and Kevin Sack, who also revealed the “architects” of this giveaway, Republican Minority Leader Mitch McConnell, Democratic Senator Max Baucus, chair of the Senate Finance Committee, and that committee’s ranking Republican, Orrin Hatch.

Amgen has deep financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators Max Baucus, Democrat of Montana, and Orrin G. Hatch, Republican of Utah, who hold heavy sway over Medicare payment policy as the leaders of the Finance Committee.

It also has worked hard to build close ties with the Obama administration, with its lobbyists showing up more than a dozen times since 2009 on logs of visits to the White House, although a company official said Saturday that it had not appealed to the administration during the debate over the fiscal legislation.

The measure flies in the face of attempts to curb the enormous expense of dialysis for the Medicare program by reversing incentives to over-prescribe medication. But that didn’t deter the “three amigos” from sneaking in the provision to their generous benefactor:

Amgen’s employees and political action committee have distributed nearly $5 million in contributions to political candidates and committees since 2007, including $67,750 to Mr. Baucus, the Finance Committee chairman, and $59,000 to Mr. Hatch, the committee’s ranking Republican. They gave an additional $73,000 to Mr. McConnell, some of it at a fund-raising event for him that it helped sponsor in December while the debate over the fiscal legislation was under way. More than $141,000 has also gone from Amgen employees to President Obama’s campaigns.

What distinguishes the company’s efforts in Washington is the diversity and intensity of its public policy campaigns. Amgen and its foundation have directed hundreds of thousands of dollars in charitable contributions to influential groups like the Congressional Black Caucus and to lesser-known groups like the Utah Families Foundation, which was founded by Mr. Hatch and brings the senator positive coverage in his state’s news media.

Amgen has sent large donations to Glacier PAC, sponsored by Mr. Baucus in Montana, and OrrinPAC, a political action committee controlled by Mr. Hatch in Utah.

Not surprisingly when the news of this giveaway hit the paper, it enraged a bipartisan group of legislators to repeal this section.

U.S. Rep. Peter Welch (D-Vt.) filed legislation this week to eliminate the exemption for a class of drugs, including Amgen’s Sensipar, that are used by kidney dialysis patients. [..]

“Amgen managed to get a $500-million paragraph in the fiscal-cliff bill and virtually no one in Congress was aware of it,” Welch said. “It’s a taxpayer ripoff and comes at a really bad time when we’re trying to control healthcare costs. Amgen should not be allowed to turn Medicare into a profit center.” [..]

Other co-sponsors of the bill seeking repeal include House Republican Richard Hanna of New York and two House Democrats, Jim Cooper of Tennessee and Bruce Braley of Iowa.

Rep. Welch sat down with Bill Moyers on Moyers & Company to discuss Amgen’s “sweetheart deal”

“When there is this back room dealing that comes at enormous expense to taxpayers and enormous benefit to a private, well-connected, for-profit company, we’ve got to call it out,” Welch tells Bill. “Those members of Congress who are concerned about the institution, about our lack of credibility, about the necessity of us doing things that are in the public good as opposed to private gain, we’ve got to call it out.”

The New Deal, Social Security, The Great Society, Medicare, Medicaid – concern for the welfare of “the little guy.” These are the marquee items which have defined the modern Democratic Party to its constituency.  These sorts of programs have been the sweet nectar in the plant which has allowed liberals and lefties to excuse the Democrats flings with the Military Industrial Complex, foreign dictators and bankster thugs along with the usual graft, corruption and peccadilloes.

The Democrats have, in modern times, always looked after society’s island of misfit citizens and the oppressed, cast off from the society and economy.  This is what allowed lots of principled people to pull the levers for folks that were committing war crimes and conducting illegal wars of aggression for resources and business interests. It is what allowed principled anti-war legislators to coalesce in a party which did some pretty awful things. The Democrats were going to watch out for the interests of the little guy whether he was a hero in one of their wars or not.  

An article entitled, “Defining the modern Democrat,” lays out the basis of the identity of the Democratic Pary:

The modern Democratic Party was born, just over a century ago, when another young orator from the Midwest-William Jennings Bryan-rocked the national convention in Chicago in 1896.  Because of its stirring climax, Bryan’s address is widely known as the “Cross of Gold” speech and, in most histories, is accompanied by an arcane explanation about the gold standard and 19th-century monetary policy.

Unfortunately, the focus on gold obscures Bryan’s real import. His candidacy redefined the Democratic Party as the voice of the common man. It ultimately led to Woodrow Wilson’s election and the formation of Franklin Roosevelt’s New Deal coalition, which dominated American politics for most of the 20th century. …

Bryan and his Democrats promoted a wide, rich menu of reforms – a graduated income tax, the Federal Reserve, women’s suffrage, direct election of U.S. senators – that became law in the Progressive Era.

The Great Commoner, as Bryan was known, was “the first leader of a major party to argue for permanently expanding the power of the federal government to serve the welfare of ordinary Americans.

The ambitions of William Jennings Bryan were carried out by other great Democrats and enacted with the enthusiastic support of Americans.  They are the bedrock of our social contract and a legacy of the 20th century that most Americans would like to keep vital and secure.

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

Last night the House of Representatives voted to make permanent the Bush/Obama tax cuts on all but the top 1% of tax payers and increasing taxes on on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut. With the bill set to be signed by Pres. Barack Obama, Congress and the White House move to the next manufactured crisis that this bill set up, the draconian sequester cuts to defense and non-defense spending and the debt ceiling, also a manufactured “crisis.” The bill did hold off those draconian cuts for two months, just in time for spending to hit the debt ceiling.

Pres. Obama made it clear in his address after the passage of the “Fiscal Cliff” bill, that he would not allow the debt ceiling to be used as a bargaining chip in negotiations over spending.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. We can’t not pay bills that we’ve already incurred.”

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

This bill was not the best deal as this article on the behind the scenes Senate dealings by Ryan Grym at Huffington Post tells it:

The White House sent Reid a list of suggested concessions as his staff debated what to send back to McConnell. Reid looked over the concessions the administration wanted to offer, crumpled up the paper and tossed it into his fireplace. The gesture was first reported by Politico and confirmed to HuffPost by sources with knowledge of it, who noted that Reid frequently keeps his fire going and is fond of feeding a variety of proposals to it.

Reid’s staff then called McConnell’s office with a simple message: Our last offer stands. There will be no further concessions. McConnell took to the Senate floor, complaining that he had no “dance partner” in Reid, and called Vice President Joe Biden, a man he assumed would be more willing to give. McConnell was right.

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

President Barack Obama has vowed not to negotiate over the debt ceiling, but Democrats in the Senate are worried that they’ve now lost their leverage. “Everyone knew taxes would be raised on high earners,” said the Democratic source. “So with that out of the way, what do we bargain with?”

All they had to do was let the tax cuts end and pass new tax bill that included extension of unemployment benefits, ended unconstitutional the debt ceiling nonsense and added some stimulus to really create jobs, since we all know that tax cuts don’t. But no, Pres. Obama had to have this done and kept backing away from his so-called “line in the sand.”

If anyone believes at this point that Obama stand up to the threats of a government shut down by Republicans refusing to raise the debt ceiling without serious concessions on Medicare and Social Security, consider these three reasons to doubt from Jon Walker at FDL Action

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargain chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When WP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay.

Meanwhile the “irrational exuberance” of Wall St’s feral children over the tax deal abounds with the markets closing on a high. Let’s see what happens in two months when we sit on the edge of another cliff.

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?  

21:28 EST: There will be 30 minutes of debate before the vote

22:41 EST: Vote on “Fiscal Cliff” bill starts now. 217 needed to pass.

23:02 EST: Bill passes 267- 167.

23:05 EST: Pres. Obama to address the nation from the East Room Briefing Room at 23:15 EST.