Today’s Deadline Passes With No Progress: Now What?Posted: July 24, 2011 | |
Late last night I wrote a post summarizing what happened yesterday in seemingly endless debt ceiling kabuki dance that is being staged for our benefit by people who are supposed to be serving us but instead answer to Wall Street, Big Oil, Big Pharma, and the rest of the filthy rich.
Last night John Boehner told House Republicans that they needed to show some progress today in order to calm the Asian markets. After weeks of assuming the politicians in Washington would work something out in order to keep the US from defaulting on its debts, the banksters were suddenly realizing there is a good chance the feckless “leaders” will just go ahead and let it happen.
Apparently both Democrats and Republicans see this debt ceiling debacle as a golden opportunity to strip Americans of what is left of their social safety net. The only disagreement seems to be that Democrats want to include a pretense of raising some revenue along with all the cuts to social programs and Republicans want no new revenue sources, apparently because they see an opportunity to bring Grover Norquist’s dream to fruition:
Norquist favors dramatically reducing the size of the government. He has been noted for his widely quoted quip: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”
He has also stated, “Cutting the government in half in one generation is both an ambitious and reasonable goal. If we work hard we will accomplish this and more by 2025. Then the conservative movement can set a new goal. I have a recommendation: To cut government in half again by 2050”. The Americans for Tax Reform mission statement is “The government’s power to control one’s life derives from its power to tax. We believe that power should be minimized.”
So what was accomplished in today’s kabuki performance? Did the Republicans meet Boehner’s goal of sending a calming signal to Asian markets before their Monday opening. No, of course not.
From The New York Times: Deadline Passes as Debt Ceiling Talks Languish
House Speaker John A. Boehner and the Senate majority leader, Harry Reid, were preparing separate backup plans to raise the nation’s debt ceiling on Sunday, after the leaders were unable to end an increasingly grim standoff over the federal budget.
The dueling plans emerged as lawmakers appeared to miss a self-imposed deadline of 4 p.m. Eastern time to cut a deal before markets open in Asia. And at about 6 p.m., President Obama began meeting with Mr. Reid and the House Democratic leader, Nancy Pelosi, in the Oval Office to discuss the Reid proposal.
Not surprisingly, nothing new seems to have emerged from the talks at the White House. But here’s Harry Reid’s supposed “plan.”
Mr. Reid, the Senate’s top Democrat, was trying Sunday to cobble together a plan to raise the government’s debt limit by $2.4 trillion through the 2012 election, with spending cuts of about $2.5 trillion. He would seek to avoid cuts to entitlement programs, but it was unclear how those savings would be achieved.
Notably, the plan does not currently contain any new or increased taxes, an approach that many in his caucus would probably balk at.
For his part, John Boehner is still blabbing on about the Republicans ridiculous “cut, cap, and balance” plan.
Speaker John Boehner (R-Ohio) told his colleagues in a Sunday afternoon conference call that a debt deal with Obama is not the way forward. He said on the call that a plan that “reflects the principles” of the conservative “Cut, Cap and Balance” proposal that the Senate rejected will serve as the model for any legislation coming out of the House. The speaker, though, did acknowledge that the plan itself is a non-starter.
“So the question becomes – if it’s not the Cut, Cap and Balance Act itself – what can we pass that will protect our country from what the president is trying to orchestrate,” Boehner said, according to a source familiar with the call.
Boehner and Majority Leader Eric Cantor (R-Va.), according to several sources on the call, implored his colleagues to “stick together” to enact a budget deal that they can support. Boehner said an agreement “will require some of you to make sacrifices.” He told his colleagues that they shouldn’t worry about winning the battles, but rather the war, according to a source on the call.
I found this piece at Huffpo helpful, although I’ve never heard of the author, Mohamed el-Erian. CEO and co-CIO, Pacific Investment Management Company. Perhaps Daknikat has? Here’s what he had to say after the supposed deadline passed without any progress.
Friday’s stunning and very public quarrel between the president and the Speaker of the House of Representatives was the catalyst for a weekend of frantic negotiations on how to increase America’s debt ceiling, maintain the country’s sacred AAA rating, and avoid a near-term default. Meanwhile, administration officials and members of Congress took to the airwaves on Sunday trying, but largely failing, to strike the balance between statesmanship and another round of the Washington blame game.
It was hoped that all this would serve as a prelude to a political compromise announced just before the opening of Asian markets. This did not materialize. But while another self-imposed deadline has been missed, it is likely that the nation’s leadership will stumble into a short-term compromise over the next few days — one that raises the debt ceiling and avoids a debt default but, importantly, leaves the AAA rating extremely vulnerable and does little to lift the damaging clouds hanging over the US economy.
It will come down to the wire; and when the stopgap compromise is reached, many in Washington will declare victory and, in the process, claim credit for averting a national disaster. Yet the resolution will likely be temporary, and the damage will be real and long-lasting — both of which render an already worrisome situation even more difficult going forward. Indeed, by illustrating so vividly to the whole world what is ailing America, the weekend’s political theatrics should make us all worry even more about the world’s largest economy.
It’s an interesting article. Obviously our “leaders” have already done immense damage to our struggling economy, not just with their wrongheaded policies, but also with their childish game-playing.
Boehner’s plan right now seems to be to insist on a short-term temporary increase in the debt limit of about $1 trillion
accompanied by spending cuts of at least as much, tying the remainder of the debt-ceiling increase Obama has requested to further cuts in the future. The White House says Obama would veto such a measure.
The markets responded quickly:
U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will slump after rallying within 1.4 percent of a three-year high, as failure to raise the federal debt limit intensified concern of a default.
The contract on the S&P 500 Index expiring in September declined 1.2 percent to 1,325.50 at 7:01 a.m. in Tokyo. The U.S. dollar fell against the euro, yen and Swiss franc.
The dollar weakened to $1.4390 per euro as of 6:01 a.m. in Tokyo from $1.4360 in New York at the end of last week. The greenback fell to 78.35 yen, and touched a four-month low of 78.12 yen, from 78.54 on July 22. It fetched 81.17 Swiss centimes from 81.92 last week after reaching a record low 80.33 on July 18. The yen traded at 112.75 per euro from 112.77.
I don’t pretend to understand all that gibberish, but I know it isn’t good.
The Wall Street Journal says the markets are “bracing for volatility as debt ceiling debate drags on.”
What really scares me is what is going on behind all the “partisan” kabuki. Let’s face it, Democrats are no more our friends than Republicans at this point. We simply can’t trust any of them. I wrote a few days ago about the Catfood Commission II clause that is included in the so-called McConnell plan–the fallback plan that Harry Reid is on board with. Apparently Boehner has also latched onto this idea, and the sequel to the Catfood Commission will also be included in whatever legislation the Republicans come up with.
Ryan Grim has a piece in Huffpo today about Catfood Commission II, which he characterizes as a “Super Congress.”
Debt ceiling negotiators think they’ve hit on a solution to address the debt ceiling impasse and the public’s unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.
This “Super Congress,” composed of members of both chambers and both parties, isn’t mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers — six from each chamber and six from each party.
Legislation approved by the Super Congress — which some on Capitol Hill are calling the “super committee” — would then be fast-tracked through both chambers, where it couldn’t be amended by simple, regular lawmakers, who’d have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.
So basically, no matter what legislation Congress ends up passing to raise the debt ceiling, this “Super Congress” will be included. We certainly can’t expect any disagreement on this from Obama who, as Grim describes it “has shown himself to be a fan of the commission approach to cutting social programs and entitlements.”
We are so utterly f&cked.