Thursday Reads: Fiscal Cliff Crashes into Debt Ceiling, Villagers Blame Old People….And Other News

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Good Morning!!

The storm has moved into New England, but it’s mostly rain up here–very hard, windy, noisy rain. I’m very grateful it isn’t snow, but I feel for all the people down south of me who are getting hit harder. Take care, everyone!!

Yesterday Tim Geithner announced that the U.S. will hit the debt ceiling on December 31. He sent a letter (pdf) (also posted on the Treasury Department website)to Harry Reid with cc’s to other Congresscritters informing them that the Treasury can fiddle around and keep things going for at the most two months before the U.S. defaults on its debts for the first time in history.

Meanwhile, no negotiations on the “fiscal cliff” took place yesterday. John Boehner appears to have abdicated all responsibility and has announced that it’s up the the Senate to act; but Senators are in no hurry to rush back to Washington DC and clean up the House Republicans’ mess.

U.S. House of Representatives Speaker John Boehner on Wednesday urged the Senate to pass its version of legislation to avert the “fiscal cliff,” in a sign that congressional efforts to avoid a budget crisis are coming back to life days ahead of the year-end deadline.

In a statement issued by Boehner and his top lieutenants, the Republican leadership team said “the Senate must act first” to revive efforts to avert the $600 billion in automatic tax hikes and spending cuts due to be triggered on Jan. 1.

They promised that the House would weigh whatever legislation the Senate produced.

What are we paying these incompetent idiots for anyway? But of course no one is talking about cutting Congresspeople’s salaries–the pressure is all on Social Security recipients. Yesterday, Ruth Markus wrote a column in support of cutting benefits because seniors and disabled people (including disabled veterans) are getting too much money (the average SS check is $1,200 per month). She thinks everyone should gratefully embrace the Chained CPI.

Here’s how the CPI works. When taxes are being calculated, brackets, standard deductions, personal exemptions and the like are ratcheted up with inflation, protecting taxpayers from being forced to pay higher taxes for what is essentially the same amount of income they had previously.

Benefits — everything from Social Security to veterans’ benefits to federal pensions — are similarly adjusted upward to protect beneficiaries’ buying power from being relentlessly eroded.

Such indexing makes eminent sense. The difficulty — and the money-saving opportunity — arises because, in the view of most economists, the current method of calculating changes in the CPI overstates the inflation rate.

It fails to account for what economists call upper-level substitution bias, and what my mother would call plain common sense: If the price rises for a certain commodity in the basket of goods used to measure inflation, consumers will choose a cheaper alternative. In my house, when the price of beef soars, we substitute chicken.

The CPI doesn’t and, as a result, taxpayers are undercharged and beneficiaries are overpaid — a lot. The overestimate is small — less than 0.3 percentage points annually but, much like compound interest, it adds up over time.

What Marcus doesn’t seem to understand is that when your income is that low, beef and chicken are are both too expensive and you substitute peanut butter and dried beans. Except that peanut butter prices have skyrocketed–what’s the next step down, cat food?

Two economists responded to Markus. Dean Baker at the CEPR: Ruth Marcus Is Outraged by Overly Generous Social Security Checks.

Well, who can blame her? After all, we have tens of millions of seniors living high on Social Security checks averaging a bit over $1,200 a month at a time when folks like the CEOs in the Campaign to Fix the Debt are supposed to subsist on paychecks that typically come to $10 million to $20 million a year.

Anyhow, her main trick for cutting benefits is to adopt the chained consumer price index as the basis for the annual cost of living adjustment. This would have the effect of reducing benefits by 0.3 percentage points for each year of retirement. This means a beneficiary would see a 3 percent cut in benefits after 10 years, a 6 percent cut after 20 years and a 9 percent cut after 30 years. This is real money. Since Social Security is more than half the income for almost 70 percent of retirees and more than 90 percent of the income for 40 percent of retirees, the hit to the affected population would be considerably larger than the hit to the top 2 percent from ending the Bush era tax cuts.

But Marcus insists this cut must be done first and foremost in the name of accuracy, since the chained CPI is supposed to provide a better measure of the cost of living. She notes but quickly dismisses the evidence from the Bureau of Labor Statistics (BLS) consumer price index for the elderly (CPI-E), which shows that the rate of inflation seen by the elderly is somewhat higher than the overall rate of inflation.

Read Baker’s upteenth explanation of why the Chained CPI doesn’t accurately reflect spending for seniors at the link. He argues for continuing development of a CPI that takes into account that seniors spend greater proportions of their income on health care and basic necessities that can’t necessarily be replaced with cheaper substitutes.

Next, Jared Bernstein says he’s “convinced the Chained CPI is coming” and it is a benefit cut. He agrees with Baker that an elderly CPI would be a good thing, but says that Markus’ argument we should cut benefits now and deal with the injustices later makes no sense.

…as Dean notes, it would make a lot of sense to invest in a chained-weighted CPI that accounts for the notably different buying patterns of the elderly. Ruth Marcus critiques this point today but for reasons that don’t make sense to me. For example, she criticizes an elderly price index that would more heavily weight health care spending because “the burden of higher health costs falls unevenly among the elderly. Average costs are skewed upward by a minority who face very high out-of-pocket expenses…”

But a) all the commonly used price indexes use average costs and are thus “skewed” up and down when the underlying distribution is uneven, and b) there’s little question that the ‘old’ elderly—the ones most hurt by the switch to the chain-weighted measure—face high out-of-pocket medical costs.

Marcus goes on to endorse, as do we at CBPP, [immediately switching to the Chained CPI but protecting "vulnerable people from the impact"] and this is clearly the administration’s view as well—in fact, they’ve built in offsetting benefits to the poor, old elderly into their plan. That’s very important and salutary and one reason why I nervously support the switch.

But I’m more concerned than Ruth appears to be with the possibility that the current politics get us the chained CPI without the necessary protections.

It certainly looks like President Obama will go down in history as the Democrat who cut the New Deal off at the knees unless he suddenly realizes his legacy matters to him. Remember way back when Social Security was “off the table” because it doesn’t contribute to the deficit? Oh wait–that was only two weeks ago.

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Poor Sad Sack Romneys At Loose Ends

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Did you see the hilarious piece by Philip Rucker in the Washington Post this morning on how poor Mitt and Ann Romney are having trouble adjusting to life out of the spotlight?

Gone are the minute-by-minute schedules and the swarm of Secret Service agents. There’s no aide to make his peanut-butter-and-honey sandwiches. Romney hangs around the house, sometimes alone, pecking away at his iPad and e-mailing his CEO buddies who have been swooping in and out of La Jolla to visit. He wrote to one who’s having a liver transplant soon: “I’ll change your bedpan, take you back and forth to treatment.” [....]

Four weeks after losing a presidential election he was convinced he would win, Romney’s rapid retreat into seclusion has been marked by repressed emotions, second-guessing and, perhaps for the first time in the overachiever’s adult life, sustained boredom, according to interviews with more than a dozen of Romney’s closest friends and advisers.

Romney’s next door neighbor is renovating his house, but the Romney’s planned renovations to their La Jolla home, including the famous car elevator haven’t even begun. The former presidential candidate is now renting an office in Boston at his son Tagg’s firm, Solomere Capital. Ann Romney is reportedly more devastated than her husband.

By all accounts, the past month has been most difficult on Romney’s wife, Ann, who friends said believed up until the end that ascending to the White House was their destiny. They said she has been crying in private and trying to get back to riding her horses.

Ann apparently bought into the White Horse Prophecy, and believed–along with her husband’s pollsters–that God would keep the black people away from the polls because Mitt had been chosen by god.

But Mitt’s friends say he’s not bitter, and he isn’t going to let himself go, despite his hangdog appearance in the photo above. He’s been riding his bike around his La Jolla neighborhood, and he’s not going to balloon up and grow a beard like Al Gore did after he was cheated out of the presidency.

One longtime counselor contrasted Romney with former vice president Al Gore, whose weight gain and beard became a symbol of grievance over his 2000 loss. “You won’t see heavyset, haggard Mitt,” he said. Friends say a snapshot-gone-viral showing a disheveled Romney pumping gas is just how he looks without a suit on his frame or gel in his hair.

The article says Romney might write a book about the campaign, and he’s even thinking about starting some kind of charity along the lines of the Clinton Global Initiative. But wouldn’t that require some kind of ability to empathize with people who need help?

But here’s the funniest part. On Thanksgiving, son Josh came for a visit with his four kids–they all had to sleep in one bedroom–and no one wanted to cook dinner, so they ordered out from Boston Market.

It’s all so very very sad.


Is Tagg Romney Wielding New Power in Mitt’s Campaign?

Mitt, Tagg, and Ann Romney

Politico is out with a new “insider” piece on the Romney campaign by the usual suspects, Mike Allen and Jim Vandehei. They report that there has been a “family rebellion,” led by Ann Romney and articulated within the campaign by the Romneys’ eldest son Tagg.

According to Allen and Vandehei, Ann and Tagg have been fuming for months about how campaign aides–especially previous Politico-identified scapegoat Stuart Stevens–have forced Romney to avoid specifics about what he would do as president and instead focus on attacking President Obama’s economic policies.

Chief strategist Stuart Stevens — whom the family held responsible for allowing Romney’s personal side to be obscured by an anti-Obama economic message — has seen his once wide-ranging portfolio “fenced in” to mainly the debates, and the television advertising that is his primary expertise, according to campaign officials. Tagg Romney, channeling his mother’s wishes, is taking a much more active role in how the campaign is run.

The family rebellion, long building despite Mitt Romney’s initial reluctance to change, reached a climax in September, amid mounting evidence that the status quo was doomed to failure. The course correction came after internal polls showed him losing nearly every swing state and a loud chorus of second-guessing among prominent conservatives.

Allen and Vandehei claim that:

When the history of this campaign is written, the family intervention will be among the most important turning points in the Romney saga. Until the weeks before the first presidential debate, the candidate sided with Stevens over his family’s skepticism, accepting the strategist’s view that the best way to win was to point out President Barack Obama’s flaws and articulate generic promises to do better.

The campaign is hopeful that the new supposedly moderate Mitt can now reveal his “true self” with the support of the right wing Republican base which is now so thrilled over Romney’s debate performance that they’ll give him some leeway to be more like the Romney he was as Governor of Massachusetts.

Behind the scenes, the high command has changed with the candidate. Senior adviser Ed Gillespie, for instance, has rising responsibility for the campaign’s broad message. Campaign manager Matt Rhoades is commanding the stagecraft, the insiders said. And Sen. Rob Portman (R-Ohio), originally brought in as Romney’s debate sparring partner, has become a close and trusted adviser.

But the biggest change in the ecology, according to the insiders, is the more assertive role of Tagg Romney, who has been “making sure that his father’s environment is such that he’s relaxed when he goes up to do things, and making sure that he’s not over-programmed, and is protected from the cacophony of advice,” a family friend said.

There’s just one problem with this new Politico narrative: Tagg Romney told the New York Daily News today that the Politico story is nonsense.

A recent POLITICO story quoted an unnamed family friend as saying Tagg Romney would be working behind the scenes at being “more assertive in making the organization work better, cleaning up some of the organizational dysfunction.”

But Tagg Romney said that’s simply not the case.

In fact, he said he hasn’t been to a strategy meeting in more than a year, and the last time his father specifically solicited his advice on a campaign issue was in considering his selection of a running mate.

“It sounds like a great story, but it’s not based in reality at all,” he said of the suggestion that he’d be the one to broker peace between warring factions inside Romneyland.

“I’ve never approached anyone about wanting to play that role. No one has approached me,” he said.

“This is not spin, the team really gets along well. There’s no internal squabbling or fighting for territory or turf.”

Tagg says, although he has been involved in fund raising and made campaign stops in support of his dad’s presidential bid, he’s just too busy with his own private equity firm and his six kids to get involved in the nut’s and bolts of the Romney organization in Boston.

I don’t know which of these stories is more accurate, but here are a few blog reactions to the Politico story.

Taylor Marsh bought the Allen-Vandehei version completely–she says it’s “the story of the fall campaign season.” I don’t read her daily, but based on this post, Marsh appears to have reverted to her old anti-Obama ways and seems to be almost rooting for a Romney win.

The man who was elected governor of Massachusetts was always going to be Mitt Romney’s strong suit in the general election. It’s why Eric Eric Fehrnstrom’s Etch-a-Sketch gaffe was so alarming. Wiping the slate clean from the hard right primary contortions that allowed Romney to win the nomination had to be the move they’d make at some point. Not finding it sooner will be the reason Romney loses if he doesn’t prevail.

….

Mitt Romney’s challenge was not only to seduce the Republican base and get the nomination, but to be able to shed the wingnuttery in the general and present himself as Governor Mitt when it mattered, the man closer to his core. A core founded in fundamentalist patriarchy moored in deep religiosity, which is different from wingnuttery.

Ann Romney saw him through the first task, but she and Tagg Romney saw that the second shift wasn’t happening and with it the man they believe can fix this country was losing his chance at history. So, they stepped in and the result is what we saw at the debate.

Love Romney or hate him, what the debate revealed was a man comfortable in his own skin for the first time in over a year. Was that the Romney rebellion manifest setting Mitt free? To Team Obama’s chagrin, just maybe, though it’s too soon to tell.

Apparently Marsh doesn’t know much about Romney’s record in Massachusetts. And she thinks Romney has a core!

Ed Kilgore is more skeptical.

Somewhat counter-intuitively, the Politico Pair argues that “the family” combined forces with restive conservatives wanting a “clear choice” message to topple the steady-as-you-go approach of Stevens. Here’s how they square that circle:

[O]ne big reason for hope inside the Romney campaign is that conservatives were so down on the campaign before the debate — and so rapturous during it — that they will give him a lot of maneuvering room to talk in more moderate ways.

As I’ve tried to demonstrate here and here, however, the Moderate Mitt Meme is mighty thin and based on an infrastructure of lies and evasions. Under sustained attack from the Obama campaign, how long is Romney going to be able to get mileage out of such brave defiance of the Right as admitting there might be some place in the world for regulation of business; how long can he get away with pretending his “health care plan” prevents discrimination against people with pre-existing conditions; how long can he brazen his way through the mendacious math of his tax plan, or avoid the many extremist positions that Obama did not bring up during the first debate? Remember, BTW, that the first time Romney (or Ryan) must engage seriously with criticism of his actual agenda, all that conservative tolerance for “moderation” will vanish.

That makes more sense to me, but I think TBogg’s take is my favorite so far: Gang Ann Style

Smug future-dowager queen Ann Romney is very sick and tired of You People not loving that man of hers like she loves that man of hers, so she and her gang of lying-ass sons, led by eldest crazy-eyed blank-shooter Tarkus, held down Romney campaign chief strategist (I know… I was surprised they had a “strategy” too) Stuart Stevens and cut off his hair influence.

….

This had to be done because Mitt Romney, who has been sold to us as a decisive and brilliant businessman who SAVED THE OLYMPICS and made BILLIONS of dollars which he then stashed in off-shore tax havens, is actually just one of those goofy hapless bumbling dads (Homer) from the sitcoms who must be continually reined in by his adoring yet amusingly exasperated wife (Marge). Except, in this case, the role of the sensible mom with a heart of gold is played by Angela Landsbury from the Manchurian Candidate (without the oily style but with 70% more bitchface) and Mitt is dopey drunken empty-headed James Gregory.

Feel free to either discuss the Romney rebellion or use this as an open thread.


Afternoon Open Thread: Romney’s Fetus Disposal Bonanza and Other Horrors

This is going to be a quickie, because I have to go out pretty soon. I just posted a lot of this in a comment on the morning thread, but I was thinking I should do it as a post in case anyone wants to investigate further on some of the Romney news that has broken over the past few days.

Vanity Fair has a new article on Romney’s finances that is a must read: Where the Money Lives.

It’s all about Romney’s secrecy about his fortune and his many offshore holdings. He may actually have much more money than we know, because most of it is hidden in tax havens around the world. I repeat: this is a must read!

Then there’s Romney’s engineering of Bain Capital’s $75 million investment in Stericycle, a corporation that disposes of medical waste, including aborted fetuses. Bain and Romney “cleaned up” on that one. David Corn had an investigative piece on it at Mother Jones yesterday, but Sam Stein actually reported on it in January. It went nowhere then, but now it could catch on. When will the corporate media start reporting on it?

Well, here’s something at MSNBC on why we shouldn’t believe Romney’s claims that he wasn’t involved with Bain when the deal happened. David Corn addresses this at Mother Jones also.

Romney has never really left Bain. He still gets most of his income from Bain investments. Are we supposed to believe he has no say in their activities? Give me a break! Jezebel has a post on Romney’s lies about his investment in fetus disposal.

Until I read that Vanity Fair piece and started googling, I didn’t realize that Tagg Romney’s investment firm, Solamere, was originally a subsidiary of Alan Stanford’s Stanford Capital. Stanford is now in jail for the huge ponzi scheme he ran there.

Mitt and Tagg both claim they haven’t been investigated for their involvement with Stanford’s ponzi scheme, but in fact they are still being investigated.

Finally, another of Mitt’s cronies got into trouble today. Robert Diamond was forced to resign from Barclays today and then called off a planned fundraiser for Romney in London. More on this from Bloomberg.

It’s a big day for embarrassing Romney news. The Obama campaign and the DNC need to get on this stuff stat!


Open Thread: The Romneys’ Nightmarish Family Vacation

The Romney family–all 30 of them including the 5 sons, their wives and 18 grandchildren–are on vacation this week at the Romneys’ $8 million estate on Lake Winnipesaukee in Wolfeboro, New Hampshire, and the Washington Post published a fascinating article about the family’s vacation traditions.

Romney’s 13-acre estate features a six-bedroom house, a horse stable with guest apartments above it, a $630,000 boat house, tennis and volleyball courts and a shoreline stretching 768 feet, more than double the length of a football field, according to public property records.

Attendance at the annual event is “mandatory.” Everyone has to show up, no excuses allowed.

One summer when Romney’s eldest son, Tagg, now 42, was working for the Los Angeles Dodgers, he told his father he wouldn’t make it to Wolfeboro. Baseball, after all, is a summer sport, and he didn’t think he could take a week off in the middle of the season.

“My dad said, ‘No, you will make it,’ ” Tagg recalled in an interview. So he showed up, noting, “I had to beg forgiveness from my bosses at the Dodgers.”

Also required is participation in the annual “Romney Family Olympics.”

The Romney Olympics have long included a mini-triathlon of biking, swimming and running that pits Mitt and his five sons and their wives against one another. But after Mitt once nearly finished last, behind a daughter-in-law who had given birth to her second child a couple of months earlier, the ultra-competitive and self-described unathletic patriarch expanded the games to give himself a better shot.

Now they also compete to see who can hang onto a pole the longest, who can throw a football the farthest and who can hammer the most nails into a board in two minutes…

The days are filled with highly-structured games and competitions. There is a water skiing, a “home-run derby,” and games of tennis and basketball. During the week, the grandchildren have to stage a “talent show” on an outdoor stage that Mitt built. Mitt also created a “chore wheel” to divide up the household chores. At the end of the week everyone poses for a group photo to be used for the family Christmas card. The grandchildren dress in matching outfits according to gender, as in the photo above from last year.

And the nights? The adults have a rollicking good time holding meetings, each of which is “focused on a frank and full discussion of a different son’s career moves and parenting worries.”

Can you believe that? Do you suppose attendance at this “vacation” is a condition of the trust funds Romney set up for his sons? Can you imagine the anxiety any normal person would have as the weeks and days ticked down until vacation week? I’d be a nervous wreck!

Once when I was a kid, my entire extended family spent a week in the governor’s mansion on the Indiana Dunes (my great-uncle was Lt. Governor of the state at the time). One day some of the adults tried to get my cousin and me to compete to see who could do the most chores in the shortest amount of time. When I realized what was happening, I opted out. It was pretty traumatic being manipulated and controlled like that–I was so angry and humiliated!

Imagine a whole week of that kind of bullsh$t, and you’ve got the Romney’s summer vacation. Is it just me, or is there is something seriously wrong with this family?


Tagg Romney Followed Mitt’s Advice: “Borrow Money…from Your Parents; Start a Business.”

Who names their kid "Taggart?"

The New York Times has an interesting story about Solamere Capital, a private equity firm founded by Mitt Romney’s son Tagg (short for Taggart) shortly after his dad’s last campaign for POTUS ended in 2008.

About a month after Mitt Romney ended his bid for the Republican presidential nomination in February 2008, his eldest son, Tagg, and Spencer Zwick, the campaign’s top fund-raiser, met with a beef company executive who had been a major campaign donor over dinner at the posh Torrey Pines resort in San Diego….

Neither had experience in private equity. But what the close friends did have was the Romney name and a Rolodex of deep-pocketed potential investors who had backed Mr. Romney’s presidential run — more than enough to start them down that familiar path from politics to profit.

I’m sure you recall Mitt Romney’s advice to community college students at a recent campaign appearance in Ohio.

WESTERVILLE, Ohio — Republican presidential candidate Mitt Romney offered a group of college students this advice on Friday: If you want to start a business, borrow money from your parents.

Romney, a wealthy former investment banker who has struggled to soften his image as a member of America’s super elite, was discussing ways of achieving the American dream at Otterbein University. He said, “We’ve always encouraged young people: Take a shot, go for it. Take a risk. Get the education. Borrow money if you have to from your parents. Start a business.”

Well, Mitt knows whereof he speaks! He kicked in $10 million to help Tagg and some friends start up Solamere. On top of that, he gave his eldest son access to his superrich campaign donors. What a guy.

The small firm, including Tagg Romney, 42, Mr. Zwick, 32, and a third partner they brought in, Eric Scheuermann, 47, the only one with a private equity background, is in line to collect at least $16.8 million in fees over the first six years of the fund, according to a filing with the Securities and Exchange Commission. The firm has earned a 20 percent return since 2010, despite having invested only about half of its money so far.

And guess what? Solamere’s employee roster is practically a who’s who of Romney campaign personnel:

While Solamere has not operated exactly as a subsidiary of the Romney campaign, it has seemed that way at times. The firm shared its first address with the Romney campaign headquarters in Boston. Later, the company was located in the same building as Mr. Romney’s leadership PAC, Free and Strong America, before moving to trendy Newbury Street in Boston.

Please go read the whole article. If Mitt Romney is elected POTUS this time, will he be the leader of the American people or will the U.S. government simply become a wholly owned subsidiary of Romney family enterprises?