Tuesday, August 2, 2011

Interesting Times

Here we are at the brink of an historical default. Earlier I wrote about what exactly was on the table, what Congress and President Obama were attempting to force on the American people in the name of bipartisan cooperation, and compromise:

Sunday afternoon I took a break from my normal greased poll dancing exercises, and checked the news online to see what our members in Congress were doing about settling the matter of the nation's debt ceiling, if anything. To my delight I found headlines such as this:

Debt Ceiling Deal Reached To Avert Default

"President Barack Obama and Republican congressional leaders reached historic agreement Sunday night on a compromise to permit vital U.S. borrowing by the Treasury in exchange for more than $2 trillion in long-term spending cuts."

I said to myself as no one else was there, "Wow! Finally! Self, after weeks now of this story being forefront in the news, it's over at last (frankly I was getting sick of hearing about how dysfunctional our federal government had become)! Now all of my neighbors who receive social security checks, and all of my veteran friends who get pensions, won't have to worry anymore about getting paid. Thank goodness."
Then I continued reading and found out that neither the House of Representatives, or the Senate had voted on the deal yet.
"Oh crap," I said to Herkimer, my in invisible cat.
"Shit!" Herkimer agreed.
Herkimer and I both knew all to well the difficulty in getting anything passed right now in Congress, especially concerning the debt limit, and especially in the House since the infiltration of the Tea Baggers. The last few weeks were a testament to this fact.
"Okay, okay, let's take a look at this," I said.
What is this bill Congressional leaders and the President are trying to pass? Let's examine, shall we?
The following is from the White House... that place where the President lives.
Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.

Well that certainly explains everything in a clear and straightforward manner.
First, it stipulates a reduction in the deficit of nearly 1 trillion dollars over ten years, from the day-to-day operating budgets of Cabinet agencies. And as we learned yesterday, that really means a reduction in the Public Debt (PD) of 1 trillion. At the same time the limit on government borrowing will be raised (the infamous debt ceiling) by 2.1 trillion, in three stages, allowing the federal government to function throughout 2012, and into 2013, which Obama had made clear was a stipulation that he required for the deal to go through. So, according to the proposed deal, the Treasury can increase the PD up to 16. 56 trillion, while Congress reduces spending 1 trillion over a decade.
Next, this creates another commission (bipartisan!) to study the problem of implementing additional spending cuts of 1.5 trillion from the so called "entitlements," and tax reform (increasing revenue by closing tax loopholes for the rich? What will the Tea Baggers think about that?).
Commissions. Huumm. This is what Obama said in 2008 while running for office: "Senator McCain's first answer to this economic crisis was - get ready for it - a commission. That's Washington-speak for 'we'll get back to you later.'"
He said this too: "Folks, we don't need a commission to spend a few years and a lot of taxpayer money to tell us what's going on in our economy," he continued. "We don't need a commission to tell us gas prices are high or that you can't pay your bills. We don't need a commission to tell us you're losing your jobs. We don't need a commission to study this crisis, we need a President who will solve it - and that's the kind of President I intend to be."
This will be the fourth commission that the Obama administration has convened, the best known being the Debt and Deficit Commission, which made recommendations, but failed to endorse itself.
Anyway, this 12 member commission (6 Republicans and 6 Democrats) would not be any ordinary commission, oh no. This is a Super Commission, that would be endowed with super powers, that Congress would not be allowed to take away. This super commission would be responsible for finding another trillion and a half of additional spending cuts, again, over ten years.
If for some reason the super commission could not come up with a consensus on what to cut, then a so-called "trigger," would be tripped, setting off automatic cuts across the federal budget; the Pentagon, domestic agencies and farm subsidies would be affected, as would payments to doctors and other Medicare providers. However, individual benefits under Social Security, Medicaid, Medicare and programs for veterans and federal retirees would be exempt.
This commission spares Congress from doing it's job, which is appropriating money for the different programs and agencies of the government. Additionally, the legislation requires both the House and Senate to vote on a balanced-budget amendment to the Constitution, which if passed would further abdicate Congress from fulfilling it's constitutional duties, but has no chance in hell of passing with two thirds of the House and Senate, then 38 of our 50 states approving it.
Oh yes, The Economic Policy Institute crunched the numbers and found that the deal will cost 1.8 million jobs in 2012, mostly because the first round of the deal included no extension of long-term jobless benefits (528,000 jobs lost) and no extension of the current payroll tax cut for employees (972,000 jobs lost).
A lot of people don't like this legislation. Right and Left. I don't. There are no immediate increases in revenues, in other words the rich don't have to pay a dime... again. Lost jobs. All there seems to be are cuts, cuts to programs that the country needs quite badly. This at a time when the whole fiscal debate is wrong headed to begin with. This is not a time to be cutting spending, not coming out of a great recession, not with this sluggish economy. The only reason we're talking about the need for debt reduction rather than increased stimulus spending is because the Democrats have been out maneuvered PR wise, by the Republicans.
I have a lot of good company who seem to share my opinion.
Nobel prize winning economist Paul Krugman has taken a break from his burgeoning film career ("Get Him to the Greek") and ways in on the debate: "For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status."
Come on Krugman! Don't hold back, tell us what you really think.
Watch Paul spank George Will and Grover Norquist on "This Week," with Christine Amanpour (Hey, Christine... Paul won the Nobel prize, not the Pulitzer!)
One of my other favorite people, former Secretary of Labor under President Bill Clinton, Robert Reich wrote: "The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been, in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block.
It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right.
Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is it has come to this choice."
Keith Olbermann had something to say about this as well, in yesterdays Special Comment:

A little after three o'clock my time, six o'clock in Washington D.C., the House of Representatives passed this debt ceiling bill 269-161, with 3 Democrats abstaining. 95 Democrats voted for it to pass, including Rep. Gabrielle Giffords, who returned to the floor of the House for the first time, and in public for the first time, since she was shot last January. She insisted on being flown from rehab for the vote.
"I'm proud of some of the accomplishments contained with it and that's why I'm voting for it," she said.

Minority Leader Pelosi had a different opinion. "It's hard to believe we are putting our best foot forward with the legislation that comes before us today."
She voted for it as well.
The big vote over, the Republican controlled House gave itself a vacation, until after Labor Day, September 6th to be exact. They leave with much left to do, like reauthorize funding for the Federal Aviation Administration, you know, that little agency in charge of looking out for all of the airplanes flying around. At the present time the government is losing 200 million dollars a week in taxes. But why would the Republicans be concerned with that paltry sum, and the thousands forced out of work due to their inaction.
But I digress. The passage of this debt ceiling bill is unfortunate. Not that a government default seems to have been avoided (the legislation will be voted on in the Senate in about nine hours, noon Washington time. It is expected to pass), but this whole thing could have been avoided last December when Obama extended the Bush tax cuts for two years in order to get one year of extended unemployment benefits. During a press conference, a reporter asked him point blank, should he at this time divorce the public debt from a needed debt ceiling vote in the future as they are not inextricably linked. The President didn't seem to understand the question and had the reporter repeat it, then answered, and I paraphrase, no one would ever hold the country's economy hostage for political or ideological reasons.
I'm sure President Obama feels differently now.
The title of this post is "Interesting Times," which is a segment of the well known phrase, "May you live in interesting times." The phrase is often attributed to the Chinese, as an old Chinese proverb. Some even suggest that the philosopher Confucius said it himself.
It's origin is unclear. It very well may have been invented by the English, or even Americans.
One thing is clear however. The phase is not a pleasant bid to thwart a life of boredom, but rather a curse... a curse assigning the one it is told to a life of harsh circumstances.
I think we are indeed living in interesting times.

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