Yawn! Best Guesses As To The Newest Budget Bill

The Budget Bill Will be negotiated between the President and Republicans. The Democrat Senate Leadership, will sit on the sidelines…

Rumour Has It…..

1) The Debt Limit will be decided and locked down until after the elections in 2012….

2) Republicans will get their vote on a balanced budget amendment….

3) A Bi-partisan commission will be formed to carve up what and what not will be eradicated from Federal spending, probably forever.

4) Close to $1 Trillion in cuts.

5) An order that if Congress fails to agree on longer-term reductions, more painful across-the-board reductions would take effect automatically…..

6) Medicare and Social Security, will feel some heat. They will not be removed from the possibility of cutbacks… They will be put on the table.

7) If Congress cannot how to balance a budget then taxes go up to pay for the budget….

The devil is in the details; we won’t know those until scholars pour over the language, long after it’s passage.
But, putting the threat out there that if Congress cannot get it’s act together, then draconian cuts automatically begin, as well as all tax breaks and tax cuts automatically end, should, should tend to force a compromise just to insure that these things don’t happen.

Here’s the genius.

We are not talking about cuts… only unless Congress can’t agree…

We are not talking about new taxes… only unless Congress can’t agree…

Agreement is in our future.

7)

Oh! To Know What Must Go On In A Republican’s Bed

Remember back when you occasionally went on a blind date?

Remember especially, right here, how Republicans dissed the Tea Party right up until they trounced them and then, inexplicably fully embraced them as the change of the future?

It’s like the republicans went out on a date with Lindsey Lohan, got a piece of her, and married her the next day….

They are waking up now.

Tommy Reminds Us All………..

You have to see this. If you missed it, here is the final tour de force… (almost said France).

“This is about whether one faction can force the government to stop operating unless that faction gets its way. The essence of majority rule is that all citizens and parties accept the legitimacy of the government, even when those with opposing views hold power. The House Republicans do not acknowledge limits to their power in a divided government, and are holding up the machinery of government unless they get their way.”

Republicans are like a screaming child in a restaurant. Someone needs to take them out.

Silence on the Edge of Night…….

A very good blog in Delaware that usually covers politics from the center (well perhaps to the right of center), is strangely silent on the debt crises now undergoing national, even international scrutiny.

Their last statement was a guest post by Urquahart, on charging ahead with default.

The comments at the bottom of that article aren’t too kind to the Republican party…

Sometimes you can more find truth in what is NOT BEING SAID, than you can in what IS being said.

Apparently there is no one defending the Republican position on the debt ceiling crises. Especially among Republicans.

It is 4 days since the Republicans walked out of talks with Obama and the stock market dropped 2%.. Already $2.4 Trillion Dollars have disappeared globally, stemming from reports that the Republican Tea Party will disrupt the forging of a compromise, forcing the US to default.

While I’ve put up 13 posts regarding the deficit calamity, hmmm, I wonder what the other side has been saying. let’s see what the Republican leaning blog Delaware Politics has had to say……

A Heat Advisory For Friday…

Kevin Wade Fields Fair Tax Questions on the Angel Clark Show

Do You Approve of GOD’s Job Performance?

Atheists Attempt to Bully NY 9/11 Memorial Committee

Kevin Wade vs. Tom Carper?

Another Democrat Scandal

90 days

An Appeal To Our Guest

Ways and Means Server Overloaded

These are all good writings and I certainly do not wish to knock anyone at this site, but I find it remarkably strange that there is zero, nothing, nada, zappo, zed, of anything that has kept the rest of America up at night…..

Don’t you think it odd that not one word, not one post, not one mention of the debt ceiling crises ever since it has become apparent that maybe the Tea Party led by Eric Cantor is really off their rockers, and is definitely attempting to destroy the United States by forcing us into default?

It stinks a lot of like someone one asking their spouse, “…. have you been out seeing someone else?”

Silence………………………………………….

Late Night Pondering….

The bill that gets passed will have a poisoned pill. I haven’t seen it, but the whole debt crises thing, smacks of Phil Gramm holding the Omnibus Bill hostage in his committee as the government ran out of money then borrowed from the Pentagon, whose budget had already been passed, then get rushed through at absolutely the last minute, with no one reading it, and all voting for it….. only to find out later that unbeknownst to anyone who voted, derivatives were removed from regulation..

Derivatives caused the collapse of Lehman Brothers and Merrill Lynch and set off the panic that created the Bush Depression of 2008…..

Deregulating derivative in hindsight was a stupid idea. No one was watching over the worlds credit swaps.

We paid, and will again… something nefarious is lurking in the Republican Bill that hits the floor Friday… It will pass the house, and must be found before that bill gets to the Senate.

Simplest Math…. Even a 5th Grader Can Do It

American debt after Bill Clinton. 6 trillion.
The projections by the Congressional Budget Office were that we were going to run a 6 trillion surplus. If we’d left alone, we would have paid off all our old debt.

Instead, we added 3 trillion in tax cuts.

We lost 3 trillion due to the slow economy, and added 6 trillion in spending due to two wars, and the deficit funded prescription plan.

If Gore had won…

6 Trillion
- 6 Trillion
_____________
0 deficit.

But he conceded too early.
Instead we got….

6 Trillion
-1 Trillion of Clinton’s Package the first year
_______________________________
5 Trillion
+3 Trillion Bush Tax cuts
_________________________
8 Trillion
+6 Trillion in Bush unfunded spending.
___________
14 Trillion in todays deficit.

Where’s the Democrats finger in all this?
It’s not there…………

You Just Don’t Get It…..

Everyone is discussing the idiocy or moth-erfuc-kings-tupi-dity of Republicans because THEY CAN’T EVEN AGREE ON A REPUBLICAN PLAN, ONE THAT SAVES US FROM A CATASTROPHIC COLLAPSE OF THE ECONOMY.

If Republicans can’t agree among themselves, isn’t that where the real problem lies?

But these are not stupid people. Some actually graduated high school.

The group that is jamming up the works, and has since we began negotiations, is the Eric Cantor Group in Congress.

They originally stated that the rise in deficit, must be matched by cuts.

When that happened, they said there must be cuts in entitlements,…

When that happened, they said the budget must be balanced….

When that happened, they said the budget must have a balance budget amendment that must get passed by 2/3 of the states in order for them to raise the debt ceiling…

That is impossible… Most states do not have legislatures in the summer, and getting that on a ballot, without a legislature in session, is near impossible.

And so they upped the ante… They said there should be a shift of $4 trillion to take care of the long term debt problem.

When that appeared to be happening, they … stormed out of the meeting, did not return phone calls, and said it was impossible to negotiate with someone who wouldn’t agree to their demands….

Since it was impossible to negotiate with someone, they decided they must pass the solution themselves in the House, and force the Senate and President to concur ……

When that appeared to be happening, they…. stormed out and voted it down, saying even it… wasn’t Draconian enough……

Some people may shake their head at this bunch and mutter under their breath… “gee, what a bunch of losers…”

They aren’t. They’re getting exactly what they want… the collapse of the economy… The last collapse wasn’t big enough… they only got one house of congress… The next one must be gigantic, flattening out all economic activity, in order for them to win both houses in 2012 and the Presidency…..

If the economy doesn’t collapse, and doesn’t collapse totally, they haven’t a prayer of being re-elected.. especially the way America feels about them now….

Never once, was there any idea among Cantor’s group, that the US debt ceiling would be raised to avoid catastrophe.

This crises is all by their design………

Giant Lesson For Obama

Compromise sounds good, especially to a great mind of a practical bent… It, however, plays out poorly politically.

If Obama thinks he can rise above the din of bloody infighting, well, those things don’t happen in Congress…

Consider the 1990 compromise, where George HW Bush went back on his “no new taxes” pledge. Working with both Democrats, and moderate Republicans Bob Dole, and Bob Michel (remember him?) Bush forged ahead with a $500 billion deficit reduction plan, that went no where because of the pig in the Senate, named Newt Gingrich.

It was a good plan, an economic stimulus package in the making, but it failed. Lesson learned. The only way to remove ones opposition is to annihilate it….

Events Out Of Control

This is a catalog for my own benefit. You are welcome to peruse it .. But so much was happening I couldn’t get a grasp of it, so I put it here…..

Dollar collapses to record low against Swiss Franc……

Tuesday’s Congressional Budget Office analysis said the GOP measure would cut the deficit by about $850 billion over 10 years, not the $1.2 trillion originally promised. Even more embarrassing was a CBO finding that the measure, which would provide a $900 billion increase in the nation’s borrowing cap, would generate just a $1 billion deficit cut over the coming year.

California planned to borrow about $5 billion from private investors as a hedge against a possible federal government default.

Believe it or not, for those of you who lived through the nineties, Brazil’s default risk, is now lower than that of the US… Republicans have sunk us into the Third World…. Is Brazil that good, or we, thanks to Eric Cantor, really that bad of a risk?

For the first time ever…. It costs more to insure U.S. Treasuries for one year than for five years as investors anticipate that a failure to raise the debt ceiling will prompt rating companies to declare the nation in default.

Federal officials reported Friday that the economy added only 18,000 jobs in June — far below the number predicted by most economists. Unemployment inched up another tenth of a point to 9.2%. As everyone takes a wait and see stance over debt ceiling negotiations..

On the Laura Ingraham radio show Wednesday, House Speaker John Boehner acknowledged that “a lot” of Republican House members “believe that if we get past August the second and we have enough chaos, we could force the Senate and the White House to accept a balanced budget amendment.”

The Dow Jones Industrial Average settled down by 198 points, or 1.6%, at 12,303. The S&P 500 dropped by 27 points, or 2%, at 1305, and the Nasdaq sank 75 points, or 2.6%, at 2765.

Over 5 Trillion Dollars of wealth, has disappeared because of Eric Cantor and his renegade Republicans.

Why I Read The Foreign Press Instead of The Crap Found In American Ones

I’m printing this article in full: tell me, where in America can you find journalism this “fair and balanced”?

Another crisis in the horizon?

A | A | A |
Winarno Zain, Jakarta | Tue, 07/19/2011 7:00 AM A | A | A |

It seems the world economy has faced endless threats preventing it from sailing smoothly into a strong recovery this year.

First there was the Greek debt crisis that jolted several major banks, and then a political uprising in the Middle East that pushed up oil prices, and then a tsunami in Japan that disrupted manufacturing activities in many countries.

The world economy has not fully dusted off the adverse impacts of these three events. Yet another headwind is looming large on the horizon. This time it is the possible default of the US government of its debt on Aug. 2, if the US Congress fails to approve an increase to its debt ceiling as requested by President Barack Obama. By that date, the US government debt would have reached its maximum allocated limit of US$14.3 trillion.

The current negotiation between representatives of Democratic and Republican parties on the US budget deficit has run into a deadlock, and so the possibility is real that there won’t be any substantial agreements reached, since the dateline is nearing. Major rating agencies such as Standard and Poor, and Moody’s have warned they are ready to downgrade the US government debt rating from top grade AAA.

This would be the first time in 90 years that the US government debt has been downgraded.

It is not hard to imagine what will happen if by Aug. 2 the US government has exhausted its credit ceiling and can not get additional debt to pay for its spending needs.

The US government would have to curb its spending, and because some of these relate to payments to government employees, pensioners and other social benefits, this would strike a severe blow to the consumer spending that is so essential to the US economic recovery.

With debt default and credit rating downgrades, it would be difficult for the US government to get loans. Faced with increasing risk, investors would ask for higher returns for US government bonds. This would push interest rate higher, further depressing the economic recovery.

The US dollar would plunge, triggering a surge in commodity prices and another round of inflation around the world. A deadly combination of inflation and economic stagnation could spin the world economy into a tailspin as happened in the early 1970’s.

How would this worst case scenario affect the Indonesian economy? As capital flows out of the US, investors have tended to seek safe havens elsewhere. Commodities, especially gold and oil, would be their first targets. Emerging markets could be the next destination of this capital flight, depending on the assessment of investors on the strength of its economy and their vulnerability and exposure to the US economic fallout.

But financial crises always result in a loss of confidence and produce negative sentiments in the financial markets. They put financial markets into disarray, and as investors panic, capital starts flowing out of emerging economies.

During the global financial crisis in 2008-2009, capital moved out from emerging economies back to the advanced economies. At that time, the US government bonds and commodities like gold were considered safe havens.

If the US government defaults on its debt payment this time, the question is will the situation change? Will the US government bonds still be considered a safe haven for investors? If not, then where else will they put their money? Or maybe they would prefer to keep their money in the same place and not move it anywhere. If so, the Indonesian economy could get some benefit and may not have to face another shock.

In the longer term, however, the situation may change. No country is immune to the negative ripples of a US economic crisis. As US imports plunge from weakening domestic demand, exports from emerging countries will also suffer. The extent to which these negative impacts affect each country will depend on their trading and banking exposure to the US economy.

What is disturbing about this debt talk is the use of this debate as a political game. This is especially apparent in the Republican stance.

Economist, market analyst and CEOs of financial institutions and even the IMF itself have warned that if Congress fails to raise the ceiling of the US government debt, the world economy would slip into deep recession.

The Republicans did not fully accept Obama’s proposal to raise the debt ceiling. They only agree on a smaller number, but even it was given with some conditions. The Republicans asked Obama not to raise taxes, especially for the wealthy, and Obama should cut social spending, a sacred cow for the Democrats.

By using tit for tat tactics in the negotiation and by seemingly ignoring the impending consequences and dangers, the Republicans were trying to push Obama into an intricate political dilemma.

If the US economy slip into another crisis, economic contraction would be inevitable. Corporate bankruptcies would spread, and jobless rate would surge.

A presidential election is still slightly more than one year away, and Obama’s reelection prospects are solid. But his popularity rating is highly dependent on the unemployment rate. That is why the Republicans think the only way for them to erode Obama’s popularity now is by pushing the US economy into crisis.

As the stakes are high, the two political parties should temporarily set aside their ideologies and adopt a pragmatic stance for the interests of saving the world economy from another catastrophe.

President Obama demonstrated his willingness to compromise his political ideology during the global financial crisis of 2008-2009. Being a Democrat, Obama’s political inclination is generally anti-big business.

Obama realized that it was reckless lending by some big banks on Wall Street that triggered the financial crisis. But he also realized that saving these banks from bankruptcy was key to saving the world economy from further disaster.

His decision to pour $800 billion of taxpayer’s money to bail out these banks was hard to swallow by his fellow party members, but it worked. Now it is expected that the Republicans will be willing to do likewise.

The writer is an economist.