After “Fiscal Cliff” Fix, Dems Draw Hard Line in Sand on Debt Limit

“I feel very confident, it was reiterated multiple times tonight, that the President is not going to negotiate about the full faith and credit of the country,” said Sen. Debbie Stabenow (D-MI). “If they choose to create a situation where our country cannot pay its bills, that’s their decision.”

“What they did in summer of 2011 was the most irresponsible thing that’s happened in my years in politics, where they were willing to freeze investment in the country for weeks and weeks and weeks, inject such uncertainty in the economy and hurt job creation,” said Sen. Sherrod Brown (D-OH). “I know they talk about doing it again, but we’re simply not going to negotiate with those kinds of tactics, because it’s clearly damaging.”

via Dems Steel Themselves For Debt Limit Staredown After Fiscal Cliff Agreement | TPMDC.

This will be curious to see if they can stick to their guns.  The Debt Ceiling Debacle of last summer *was* a huge embarrassment, and negotiating with hostage takers should *never* be the MO of a respectable government.

As regards the deal with the fiscal cliff, my summary is below.

So….regarding the “Fiscal Cliff” resolution….pretty much exactly as I said it would happen.

The sick thing about this, though, and it highlights how skewed the media conversation is vs. the real world…pretty much every single one of my friends will see their paychecks shrink and their taxes go up as a part of this deal. Why’s that, you ask? I though it was about raising taxes on the wealthy?!

Well…that’s part of it. The other part was a 2% payroll tax cut that was part of the much-dismissed-and-even-less-understood Stimulus deal passed to fight the recession. While the Tea Party nutjobs were complaining about socialists and communists, the President fought for, passed, and extended a payroll tax cut for the last three years.

This tax cut was never likely to be extended, and this is facepalm part….BECAUSE REPUBLICANS DIDN’T CONSIDER IT A REAL TAX CUT.

They never wanted to see it extended, Gover didn’t count it, it wasn’t even on their radar.

This is the big disconnect. Multiple media sources are talking about how “tax rates stay the same on the middle class”…and this is true…but payroll taxes are going back to 6.3% from 4.3% on the first $106,000 earned.

So most of my friends (and myself) are going to see 2% smaller paychecks in a couple weeks.

And just to be very, very, very clear. The Republicans spent 0 (zero, none, zilch) time trying to extend the payroll tax cuts. All of their energy was focused on extending the tax cuts for high earners (who don’t even have to pay payroll taxes on their unearned income). I’m guessing, as a consistent watcher of this charade, that when people see their paychecks shrink, and they hear about “tax rates going up”, there are going to be more than a few talking heads (mostly on Fox), that try to convince a lot of these working folks that it was *them* Obama wanted to raise taxes on, and it is *them* Obama considers the wealthy.

So when you start to hear the lamentations in a couple of weeks, and the misplaced blame, try to keep it in context.

Good luck with that.

Note: my prediction from last week.

And.. the fallout of the “debt debacle” a couple summer’s ago.

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My Objection to the Debt Ceiling Deal in words John Boehner can understand

Oompa, Loompa, doom-pa-dee-do
I have a perfect puzzle for you
Oompa, Loompa, doom-pa-dee-dee
If you are wise, you’ll listen to me

Tax cut are fine when they’re once in a while
People invest and brighten their smiles
But it’s insulting, repulsive and wrong
Cutting and cutting all year long

I don’t like the look of it

Oompa, Loompa, doom-pa-dee-da
If you’re not greedy, you will go far
You will live in happiness too
Like the Oompa Loompa doom-pa-dee-do

Stock Market Crush

Well, it wasn’t a crash like I predicted, but it does look pretty much like a crush.   This is a chart of the Dow Jones Industrial Average from July 21st-27th.

Market Reaction to Ongoing Deb Ceiling Walkouts/Tantrums

Something to note about the graph…note the huge drops due to “overnight” trading (those are the big gaps where the DJIA opens well lower than where it closed).  That’s when the rest of the world takes over for the global economy, and then we open up the floor for trading and recalculate the price of things.    What we’ve seen over the last five days is a steady erosion in investor confidence.  This is directly due to a manufactured political debt crisis that went critical last Friday.

This will continue, if not accelerate, until we get a deal done.   There is real and palpable damage being done RIGHT NOW to our economy thanks to this idiocy.    One side understands that, and is willing to compromise to get things right.  The other side is split.  Some of them get it, others are hoping, literally, that we crash and burn, somehow thinking this will be better in the long haul.  This is kinda like thinking that blowing out a knee in college is, somehow,  absolutely awesome for the prospects of someone who wants to be a professional athlete.

There was, before this whole episode, a large and growing contingent of countries that think using the Dollar as a reserve currency is looking more and more like something that shouldn’t be done any more.    It’s hard to explain to people who can’t understand how defaulting on our loans would be bad, that losing this *very* privileged and unique position would cause further harm to the economic prospects of everyone in this country.

We get a fairly large dividend by underwriting the global economy.   We are going to lose that dividend, and soon, as more and more evidence is added to the pile that says we are simply not functional enough as a political entity to deserve that pedestal.

If you want a nice and stark piece of data to use to mark the end of the American economic dominance, that’s the one.     And we are now rushing towards it…and half the crew doesn’t even believe it exists.

S&P Tells Tea Party GOP What “Not Raising the Debt Ceiling” Means in Practical Terms

Here’s the news story.  It’s absurd that it has gone to this point.

NEW YORK (CNNMoney) — More than 40 House Republicans on Thursday met with a top official from Standard & Poor’s and representatives of other Wall Street groups to hear what could trigger a downgrade of the U.S. credit rating.

“It was a lively discussion,” said the meeting’s organizer, Rep. Nan Hayworth of New York, who characterized the information the lawmakers were given as “nonpartisan,” “dispassionate” and “objective.

Rep. Mike Pompeo of Kansas stressed that “one of the … messages they had for us today that was unmistakable — that if we kick the can down the road, it’s a bad outcome for U.S. Treasuries.”

The other message: Raise the debt ceiling.

[full story]

The sad thing?  Even after being told that they are completely conceptually wrong about what the “debt ceiling” is, or how not raising it would work, they still double down on the stupid.

The Bipartisan Policy Center has estimated that the Treasury wouldn’t be able to pay nearly half of the bills coming due in August and would temporarily cut government spending by 44% immediately, with adverse effects on the economy.

But some Republicans have suggested the Treasury would be able to harvest cash from various investments to make up for the shortfall in revenue.

Two members who attended Thursday’s meeting on Capitol Hill seemed to suggest as much again, although they said things could get very serious by Aug. 15, when Treasury must make a large interest payment to investors and rollover a sizeable amount of debt.

“Starting August 2, I’m sure some decisions will have to be made. But it won’t be catastrophic. But clearly each day will be important after that. And I think August 15 is going to be, potentially, a very serious point in time,” Rep. Charles Boustany of Louisiana told CNN.

That part I bolded up there?  Complete and utter idiocy.  What Republicans are now suggesting we do is the exact same thing the Treasury Department has been doing since we hit the limit back in May.

I’m not sure exactly how the meeting went, but I did find this…which is probably a pretty close approximation.

Code_Archeologist [TotalFark] Quote 2011-07-22 12:45:09 PM
A summary of the meetingS&P: Not raising the debt ceiling would be a bad
GOP: …for Obama
S&P: No… for everyone. Because it would raise interest rates
GOP: Which is a good thing
S&P: No… that is a bad thing because that would make it more expensive to pay back the debts that are already outstanding
GOP: And that’s a good thing, because then we could cut more government programs
S&P: No… its a bad thing, because of compounded interest. If the debt ceiling does not go up and you cut spending to make up the difference you will eventually run out of things to cut
GOP: And then we win!
S&P: No… then the United States implodes because it will be unable to service its creditors.
GOP: Then we will cut those government services to
S&P: facepalm… no, the nation would experience run away inflation like a third country and you will have to raise taxes in order to rescue the economy.
GOP: Oh! This is just another tax and spend Democrat party conspiracy, we are done talking to you now.
S&P: What?! Are you kidding? We are being serious here, you are going to destroy the country.
GOP: sings LA LA LA! LA LA LA! We can’t hear you

What Happens When I Get Really Angry

This is probably just a coincidence, but I realized my frustration with the current debt ceiling debate, which had been building for months and finally bubbled over the past week or so, has had some severe consequences.  Sorry about that.

The National Oceanic and Atmospheric Administration, has put together this animation of the phenomenon with their quickly dwindling funds.   There will come a time where we remember, as Americans, when our government was capable of doing such things (and back when we had, I shit you not, “space shuttles”.  This was all back before the Tea Party bankrupted the country…my…those were the days) routinely.

Here’s the gist of what’s going on in response to my annoyance. (and check out the animation, it’s integral to my argument presented below). 

 

Heat Wave Sweeps Across the U.S.
A shroud of high pressure has taken a foot-hold over the U.S. from the Plains to the Northeast, and with it has brought temperatures well into the 90’s and 100’s for half of the country. This animation shows the predicted daily high temperatures from NOAA’s high resolution North American Model (NAM) from July 13-21, 2011.

As evidence that it’s me causing this, well, I offer to you the same amount of evidence as is currently required for a “solid, fact-based argument” in an Idiocracy like mine…coincidence.

I am angry.  I live in Dallas, TX.  It looks like, if you watch the animation….the heat is centered on, and perhaps even emanating from, Dallas.

‘Course, could be all the bullshit around here…which the proximate cause of my anger….and the heat ain’t helpin’ neither…

I dunno…it’s hot…not stopping…cool animation.  Figured I’d link it both figuratively and literally to my personal interpretation of reality, that’s what blogs are for, after all.

Stay frosty, my friends.

And pass the damn debt ceiling.   I’ll cool it off if you do.  Promise.

UPDATE: Videoe evidence…

* and on a 100 point scale no less.

Clearing up some Misconceptions re: Debt Ceiling

Did a bit of a rant about this yesterday.  The video is below.

Two main points in around 7 minutes (with around 12 jokes) is too-long-didn’t-watch for ya…

a). The U.S. already reached the debt limit back on May 16th.  Aug 2nd is when we run out of trick to make it look like we didn’t.

b). The “debt limit” is not the same as “the debt”.  Nor or either of them like your family budget, unless there are laws out there prohibiting your family from having as much debt as you do income (our country currently does not, but it does have an artificial limit (not tied to inflation) on how much we can borrow.)

We also have assets worth several times our country’s annual income, which is about $14.12 trillion/yr (2009).    Note: that is the country’s income en total.  The government pulled in about $2.1T/yr, and spent about $3.1T/yr in 2009.

This was Obama’s first year.  In 2008, government revenue was $2.6T and spending was $2.9T.   Did you notice that $500,000,000,000 ($.5T) dropoff in government revenue from 2008 to 2009?  That’s what we call a recession.  Except it hits government revenue waaaaay harder than the economy as a whole.   The Economy as a whole was in a recession, and dropped by $250,000,000,000 ($.25T) from 2008 to 2009.

This is why it was called “The Great Recession”.  Over 250 Billion dollars…gone.   And it kept going into 2010.   We won’t have the final 2010 numbers for a bit yet, but before we started to see growth near the end of last year, but it was really rough.     The thing about losing GPD growth, and why losing $.25T in GPD led to losing $.5T (double) in tax revenue, is that we only tax profits.   If a business loses money, it pays no taxes.  If you lose your job, you pay no income taxes (yes, 9.2%…at least…of that oft-and-wrong-cited 47%-who-pay-no-taxes are the unemployed).

So we get a massive drop off in revenue, and huge deficits.  They come pretty naturally with a recession…ESPECIALLY, if you were already running huge deficits to pay for a couple wars, expanded medical coverage (Med Part D), and tax cuts.   Which brings us to this legislative fiction known as the debt limit.

It has to be raised.   We’ve known for some time it has to be raised.   This has been known, definitively, since December when the President gave in to the hostage takers the first time.

We can deal with the debt much, much easier after the recovery.   Recall..cutting government spending = cutting government jobs = higher unemployment.  If we try to balance this whole thing without *any* new debt, and just cut off a major sector of our economy, and only pay the interest on our debt, we are well and truly fucked.   Which is what led to this rant below.

I think we have less than a week for a deal.   And a sane deal, at that.

Republicans Ecstatic Over Bad Jobs Report, Vow to Crush Economy/Obama, Lead Country to Freedom!

So this has officially reached sickening proportions.   Many didn’t think the Republicans were stupid/evil enough to push it this far, and then go for the throat of the country when it was exposed, but those folks haven’t actually been following what the Republicans have been doing or saying for the last little while.

To rewind a bit, the current Republican leadership voted 19 times to raise the debt limit under Bush.  They did so with no protest, no riders, no taxes (hence the constant need to raise the limit), multiple expensive wars, expanding “entitlements” (Med Part D), and with what could damn near be called enthusiam.   Over the 8 years of the Bush presidency, and all his tax cuts, we ended up with Zero (0, that’s none, nada, zilch) net jobs created.

That’s the big rewind.  The little rewind has Eric Cantor (R-Douchebag) walking out of the debt ceiling discussions after Democrats mentioned changing the tax depreciation limit for Rush Limbaugh’s jet from 5 years to 7 years (amoung many other loopholes that mostly benefit people who, from the amount of drugs and Haitian prostidudes they consume, seem to be doing just fine).  That was simply too much for Eric to stomach, so he had to walk out of the talks. (this was two weeks ago).

Now, after that spectacular failure of leadership,they want to double down and totally fuck the country.   What is the problem now?   Any compromise *at all*.

DES MOINES — The decision by House Speaker John A. Boehner to scale back budget talks with President Obama unfolded as Republican presidential candidates were campaigning against any outcome that smacks of compromise, underscoring divisions in the party over whether to raise the federal debt limit.

The action by Mr. Boehner, which was announced Saturday night, illustrated just how difficult negotiations had become in this political climate to reach agreement on a sweeping plan to lower the deficit without an infusion of new tax revenues.

Representative Michele Bachmann of Minnesota seized on the issue and used the first television commercial of her campaign to highlight her opposition to raising the debt ceiling. She drew enthusiastic applause on Saturday as she amplified her position.

“It’s time for tough love,” Mrs. Bachmann told supporters at a rally. “Don’t let them scare you by telling you that the country’s going to fall apart.”

So now the frontrunner in the Republican joke parade has crossed over completely into insano-parody.   One needs to realize the context of Mrs. Bachmann’s comments…her entire campaign is about scaring people about how the country is going to fall apart under Obama.

One of the quickest ways to do this, as pretty much everyone who has a rational understanding of world economics agrees, is for the U.S. to default on our debt.   Despite Mrs. Bachmann’s idiotic statements to the contrary (and her idiotic economic statements are legion), not raising the debt ceiling when government revenues are at historic lows (as perecentage of GDP),  and we are still trying to recover from a recession, is about the worst thing one can do for the economy.

This is putting somebody who is starving on a diet, and then burning down their pantry.    It can only lead one direction, as we’ll note when we get to the jobs numbers next.

I mentioned that jobs reports.  The Republicans loved it.   It’s what emboldened them to push for an absolute destruction of the economy…because they now feel they can safely blame it on Obama. (yea, they campaigned on “jobs, jobs, jobs”…no they haven’t yet put forth an actual jobs bill (they claimed trying to repeal “Obamacare” was their “jobs” bill)…yes, it only shows what an evil/partisan/liberal I am to point this out…yes that quote from Boehner about “Where are the jobs?” should have resulted in him being struck down by lightning in a  just universe with an engaged God).

Here’s the jobs numbers….

WASHINGTON — Facing a dismal jobs report, President Barack Obama called on Congress Friday to end uncertainty over their debt standoff and pass a litany of administration-backed proposals, including a payroll tax cut extension and three free trade agreements.

Obama spoke from the Rose Garden shortly after the release of fresh figures that showed employers added just 18,000 jobs in June, the fewest in nine months, and the unemployment rate rose to 9.2 percent. The president said the numbers were yet another sign that a full economic recovery is still elusive.

[full story]

I want to talk about those numbers real quick, and the notion of “small government” the Republicans keep pushing.   That rising unemployment number?  It’s a reflection of a “smaller government”, literally.  Here’s what underlies those 18,000 new jobs…

The actual: private payrolls up 57,000; government payrolls down 39,000.

“It’s as if the economy hit a brick wall in May,” said [Nigel Gault of IHS Global Insight]. In the three previous months, payroll jobs had increased an average of 215,000; the May-June average was 22,000. Keep in mind that, with an expanding labor force, the economy needs 100,000 to 125,000 new jobs a month to prevent unemployment from rising. Reducing it requires even more job-creation.

It isn’t clear what happened. Standard explanations for the economy’s sluggish first half of 2011 cite three causes: bad weather (flooding in the Midwest); Japan’s earthquake, which depressed auto production by disrupting supply chains; and high oil prices, which sapped consumer buying power

[full story]

Yup, that’s right, it’s more teachers and government workers being laid off.  Same exact thing as I mentioned in June.

So…what…pray tell, was that brick wall the economy hit in May?    Oh yea….(and yes…I mentioned this when it happened)

NEW YORK (CNNMoney) — It’s official: The U.S. government hit the debt ceiling on May 16.

Treasury Secretary Tim Geithner told Congress he would have to suspend investments in federal retirement funds until Aug. 2 in order to create room for the government to continue borrowing in the debt markets.

[full story]

Yes, that’s right.  The Media (fuck them to hell) has been operating under this pseudo-lie for the last two months.  Every time they ever mentioned the debt ceiling, they should have mentioned how we hit it a couple months ago, and have been using tricks since then to pay the bills.  They should mention how China thinks we’ve already defaulted.  Instead they keep talking as if A) the “debt ceiling” is the same as the debt, or that not raising it somehow alleviates our debt and B) AS IF WE HAVEN’T ALREADY CROSSED IT.

That “brick wall” our economy hit in May?  IT WAS THE DEBT CEILING!!!

Let’s think about this for a second…hmmm…Republicans refusing to raise the debt ceiling (err,”brick wall”)…economy slows….Republicans add more bricks to the wall, saying how it’s all Obama’s fault…idiotic Media doesn’t explain two simple facts that expose this bullshit….the economy slows….Republican governors fire a bunch of people…unemployment goes up….economy slows….Republicans add more bricks to wall…the economy slows….unemployment goes up….and then the most important thing to Republicans happens…

Obama loses.

So to the Republicans it’s very much worth it to destroy the full faith and credit of U.S. debt, push unemployment up, and slow the economy, all because it’s good for them politically.   It’s about priorities, people, and every single one of you, by now, should know exactly what those Republican priorities are.   The Senate Majority leader laid it out, early on.

“Over the past week, some have said it was indelicate of me to suggest that our top political priority over the next two years should be to deny President Obama a second term in office,” the Senate Republican leader will tell the conservative Heritage Foundation, according to excerpts of his speech provided to POLITICO.

“But the fact is, if our primary legislative goals are to repeal and replace the health spending bill, to end the bailouts, cut spending and shrink the size and scope of government, the only way to do all these things is to put someone in the White House who won’t veto any of these things,” the Kentucky Republican will say. “We can hope the president will start listening to the electorate after Tuesday’s election. But we can’t plan on it.”

Read more: http://www.politico.com/news/stories/1110/44688.html#ixzz1RjHfCQ8D

So that’s the only way they can end Medicare and Medicaid, and raise the retirement age and *extend those tax cuts for the rich*….get Obama out of office.  The only way they can do that…is for the U.S. to default on its debt (*or flirt with the idea long enough to screw up the global economy…which they’ve already done*)…and have the economy tank.

Once that happens our corporate media will simply pass along the messages, the unlimited spending by the Koch Broth, et. al. during the campaign will turn everyone off with the ugliness, and we very well might end up with country of Michelle Bachmann’s dreams, where the only thing the Government does is tell you who you can’t marry, sleep with, drink with, abort, or die for.     Government “services” and taxes, will be a thing of the past.

We will finally have achieved the Tea Party paradise…no taxes, no government, only Freedom.

Just like Somalia.

UPDATE:  One final note on this, and it’s a phrase that has been chapping my hide.  Here’s the quote…

Before the meeting, GOP leaders took a hard line against tax hikes as part of any debt ceiling deal.

“Everything is on the table except raising taxes on the American people,” Boehner said. “We are not going to raise taxes on the very people that we expect to reinvest in our economy and to help create jobs.”

That statement there, the part I bolded,  IS A LIE.  Everything, literally, is NOT on the table, if raising taxes is not on the table.  You have, in fact, said the only thing that’s on the table is the “other guy’s” food.   This is an absurd position, that’s is LITERALLY A LIE.

To further annoy my logic sensors, the jobs that the people he’s talking about create (Rush, for example) WOULD ACTUALLY EXIST if they were created for the reasons he is implying they do (that is…the wealthy have extra money and, naturally, spend it to hire people regardless of demand…yes, I know it doesn’t make sense, but that’s how he’s implying it works.    It’s “supply side” economics.   To understand why this doesn’t work, and why spreading the wealth a bit works much better under certain circumstances, watch this short video.  Short version…you run a store…do you need more employees to service one guy making $1B/yr buying one hamburger a year, or 10,000 people making $100K/yr buying 10,000 hamburgers.).

U.S. to begin smashing piggy banks to pay creditors

Treasury Details Steps to Avoid Default – WSJ.com http://online.wsj.com/article/SB10001424052748703703304576299484177501192.html?mod=googlenews_wsj

Here’s what we are doing literally (not figuratively like in the title)

In the first emergency step, Treasury on Friday will stop issuing state and local government series securities, commonly known as SLGS. That could make it harder for states and cities to issue debt, because they will have to seek issuers in the private market. If the debt limit hasn’t been raised by May 16, the government will begin delaying payments into two government pension funds and redeeming Treasury securities in those funds.

It also will suspend its daily investment of Treasury securities into another government employees’ retirement plan. In addition, Treasury officials are prepared to suspend their daily reinvestment of Treasury securities held as investments in the Exchange Stabilization Fund, a fund held by the government to guard against exchange-rate fluctuations.

UPDATE: This was a draft from a bit back, here’s the latest news…

As the Treasury department has been warning — and as House Republican leaders have promised — the United States hit its debt limit Monday morning. The government can no longer meet its obligations by borrowing more money. And since incoming revenues aren’t sufficient to pay for the services Congress has ordered and for interest payments on existing debt, the Treasury department is taking a series of ever-more extraordinary measures to pay all of its bills.

[full story]

This was as threatened by the Derp Brigade (also known as the Tea Party).  They believe that by simply not paying for our obligations, we won’t have them any more.    These folks have convinced themselves that the lowest tax rate in their lifetime is the highest tax rate in the history of the Universe, and the only way to make that point is not to pay down the debt DRIVEN UP BY THAT SAME RATE. 

Here’s the graph, putting the tax cuts in proportion to everything else that is blamed…

The Bush Economic Legacy

It’s so ridiculous at this point, but I’ve got about six or seven posts to make about this.  We had a balanced budget 12 years ago.  We paid down some debt.  We then cut taxes and were told that would help pay it down more.  The debt got larger.  We cut taxes more.  We went to war.  The debt got larger.  We cut taxes more.   Now the debt is huge…and what’s the Republican plan?  Don’t pay the debt we do owe, and cut taxes more.

All the while one of their mouth is saying “all options are on the table” to deal with the debt, and the other side screaming, “EXCEPT FOR TAXES!!!”.     When you have have one-half of government refusing to consider the concept of “taxes” being used to pay for “government debt”, you know how crazy we’ve become.

And hopefully now everyone can see how bass-ackwward tea-rarded certain groups of political activists have been shown to be.

UPDATE:  This story is about this same group of idjits.   To understand the level of hypocrisy here…this is group elected by the elderly after complaining about how Obama was going to cut Medicare, then voted to essentially end Medicare, then got rightly lambasted by their constituents and realized they’d spent the first 25% of their term making sure it would be their only one….and finally have the temerity to write the President and ask for a more civil discussion and that he not mention how they voted to end Medicare.  BTW, that should be the current Tea Party Bestseller…”The Tea Party : How They Ran Against Government Death Panels and Won…Then Proceeded to Vote to End Medicare.”