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John Boehner Thinks We’re “Broke” But He’s Willing To Splurge

When the Obama administration announced that it no longer considers the Defense of Marriage Act constitutional, and would stop defending the law against court challenges, officials told Congress it could step in and defend DOMA if it wants to. Soon after, Speaker John Boehner (R-Ohio) said the House would gladly to just that.

Yesterday, Boehner’s office announced it has hired former Bush Solicitor General Paul Clement to defend the discriminatory law, which seems like a wise choice. Clement is an accomplished attorney with extensive experience who’ll no doubt do a capable job.

But Clement is also a very well paid D.C. attorney, and House Minority Leader Nancy Pelosi (D-Calif.) would like to know what Boehner expects this little culture-war endeavor to cost. For that matter, Pelosi found it curious that the Speaker hired an attorney to represent the House, but hasn’t shared the contract with other congressional leaders.

Today, the picture started coming together.

House Republicans plan to pay former Solicitor General Paul Clement and his legal team from King & Spaulding as much as $500,000 of taxpayer money to uphold the Defense of Marriage Act (DOMA) on behalf of House of Representatives, according to a document obtained by the Huffington Post.

“The General Counsel agrees to pay the Contractor for all contractual services rendered a sum not to exceed $500,000.00,” the Contract for Legal Services obtained by The Huffington Post says. The cap could be raised “by written agreement between the parties with the approval” of the House, the document states.

The hourly rate that King & Spaulding will be receiving is $520 per hour — which could actually be considered a deal. Some reports say that the firm’s top attorneys receive as much as $900 per hour.

Pelosi spokesperson Drew Hammill told Amanda Terkel, “The hypocrisy of this legal boondoggle is mind-blowing. Speaker Boehner is spending half a million dollars of taxpayer money to defend discrimination. If Republicans were really interested in cutting spending, this should be at the top of the list.”

That seems more than fair. After all, Boehner has been running around for months, falsely claiming, “We’re broke.” It’s how he justifies proposed cuts in critical areas like education, medical research, infrastructure, job training, and homeland security, even if it makes the jobs crisis much worse.

But if we’re actually broke, shouldn’t House Republicans want to save $500,000 of our money, and not give it to one high-priced lawyer to defend an anti-gay law?

By: Steve Benen, Washington Monthly, Political Animal, April 19, 2011

April 19, 2011 Posted by | Bigotry, Budget, Class Warfare, Congress, Conservatives, Constitution, Deficits, Democracy, Democrats, DOJ, Education, Equal Rights, GOP, Government, Ideology, Jobs, Justice Department, Politics, President Obama, Republicans, Right Wing | , , , , , , , , , , , , | Leave a comment

Tea Party: The Welfare State Is Out Of Control But Leave “My” Medicare Alone

About a month ago, Politico ran a much-discussed piece, insisting that the Republican Party and its base have become “fanatically anti-spending.” Tea Partiers, the article added, are obsessed with “cut, cut, cut,” and “taking a cleaver to government spending.”

I’ve pushed back against this, but a new Marist poll out today makes this much easier. The poll asked respondents:

“Do you support or oppose doing each of the following to deal with the federal budget deficit: cut Medicare and Medicaid?”

Among all registered voters, 80% opposed these cuts. Among self-identified Tea Party supporters, 70% opposed these cuts. Among self-identified Republicans, 73% opposed these cuts.

We’re talking about taxpayer-financed, socialized medicine, which Tea Partiers should oppose reflexively if they’re desperate to “cut, cut, cut.”

Except, they’re not.

When pressed on the radical nature of their agenda, congressional Republicans consistently claim the “American people” are on their side, even suggesting they have a popular mandate to pursue drastic policy measures that voters didn’t know about last year. But the data is hard to ignore — not only does the American mainstream oppose GOP cuts to Medicare and Medicaid, but even the Republicans’ own base isn’t on board.

I often think of this piece from Matt Taibbi, who attended a Tea Party rally last summer.

After Palin wraps up, I race to the parking lot in search of departing Medicare-motor-scooter conservatives. I come upon an elderly couple, Janice and David Wheelock, who are fairly itching to share their views.

“I’m anti-spending and anti-government,” crows David, as scooter-bound Janice looks on. “The welfare state is out of control.”

“OK,” I say. “And what do you do for a living?”

“Me?” he says proudly. “Oh, I’m a property appraiser. Have been my whole life.”

I frown. “Are either of you on Medicare?”

Silence: Then Janice, a nice enough woman, it seems, slowly raises her hand, offering a faint smile, as if to say, You got me!

“Let me get this straight,” I say to David. “You’ve been picking up a check from the government for decades, as a tax assessor, and your wife is on Medicare. How can you complain about the welfare state?”

“Well,” he says, “there’s a lot of people on welfare who don’t deserve it. Too many people are living off the government.”

“But,” I protest, “you live off the government. And have been your whole life!”

“Yeah,” he says, “but I don’t make very much.”

 The point is that congressional Republicans are desperate to make devastating cuts, and think they’re on safe political ground. GOP officials might be surprised to learn just how many Americans rely on government spending, and want to keep the benefits that apply to them.

By: Steve Benen, Washington Monthly, Political Animal, April 19, 2011

April 19, 2011 Posted by | Budget, Class Warfare, Conservatives, Deficits, Economy, Elections, GOP, Government, Ideologues, Ideology, Medicaid, Medicare, Middle Class, Politics, Public, Republicans, Right Wing, Seniors, Tea Party, Voters, Wealthy | , , , , , , , | Leave a comment

Letting The Banks Off The Hook: Top Bank Regulator Is Back To Its Old Tricks

Judging by last week’s performance, it sure looks as though the country’s top bank regulator is back to its old tricks.

Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.

Back during the subprime bubble, for instance, it was so eager to please its “clients” — yes, that’s how O.C.C. executives used to describe the banks — that it steamrolled anyone who tried to stop lending abuses. States and cities around the country would pass laws requiring consumer-friendly measures such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.

It relied on the doctrine of pre-emption, which holds, in essence, that federal rules pre-empt state laws. More than 20 times, states and municipalities passed laws aimed at making subprime loans less predatory; every time, the O.C.C. ruled that national banks were exempt. Which, of course, rendered the new laws moot.

You’d think the financial crisis would have knocked some sense into the agency, exposing the awful consequences of its regulatory negligence. But you would be wrong. Like the banks themselves, the O.C.C. seems to have forgotten that the financial crisis ever took place.

It has consistently defended the Too Big to Fail banks. It opposes lowering hidden interchange fees for debit cards, even though such a move is mandated by law, because the banks don’t want to take the financial hit. Its foot-dragging in implementing the new Dodd-Frank laws stands in sharp contrast to, say, the Commodity Futures Trading Commission, which is working diligently to create a regulatory framework for derivatives, despite Republican opposition. Like the banks, it views the new Consumer Financial Protection Bureau as the enemy.

And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure crisis — a crisis they created with their sloppy, callous and often illegal practices — with no serious consequences. There is really no other way to explain the “settlement” it announced last week with 14 of the biggest mortgage servicers (which includes all the big banks).

The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?)

If you’re thinking: that’s what they should have done in the first place, you’re right. If you’re wondering what the consequences will be if the banks don’t abide by the terms, the answer is: there aren’t any. And although the O.C.C. says that it might add a financial penalty, I’ll believe it when I see it. While John Walsh, the acting comptroller, called the terms “tough,” they’re anything but.

No, the real reason the O.C.C. raced to come up with its weak settlement proposal is that last month, a document surfaced that contained a rather different set of terms with the banks. These were settlement ideas being batted around by the states’ attorneys general, who have been investigating the foreclosure crisis since late October. The document suggested that the attorneys general were not only trying to fix the foreclosure process but also wanted to penalize the banks for their illegal actions.

Their ideas included all the terms (and then some) included in the O.C.C. proposal, though with more specificity. Unlike the O.C.C., the attorneys general had devised a way to actually enforce their settlement, by deputizing the new consumer bureau, which opens in July. And they wanted to impose a stiff fine — possibly $20 billion — which would be used to modify mortgages. In other words, the attorneys general were trying to help homeowners rather than banks.

By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O.C.C., there’s a good chance that Republican attorneys general will walk away. The banks will be able to say that they’ve already settled with the federal government, so why should they have to settle a second time? If they wind up being sued by the states, the federal settlement will help them in court.

“It’s a vintage O.C.C. move,” said Prentiss Cox, a law professor at the University of Minnesota who was formerly an assistant attorney general. “It is clearly an attempt to undercut the A.G.’s”

Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.

By: Joe Nocera, Op-Ed Columnist, The New York Times, April 18, 2011

 

April 19, 2011 Posted by | Banks, Congress, Consumer Credit, Consumer Financial Protection Bureau, Consumers, Foreclosures, Politics, Regulations, States | , , , , , , , , , , , , , | Leave a comment

Standard And Poor’s Attempt To Influence The Political Debate

In what appears to be an attempt to influence the political debate in Washington over federal government deficits, Standards & Poor’s rating firm downgraded U.S. debt to negative from stable. Yes, the raters who blessed virtually every toxic waste subprime security they saw with AAA ratings now see problems with sovereign government debt.

The best thing to do is to ignore the raters — as markets usually do when sovereign debt gets downgraded — but this time stock indexes fell, probably because of the uncertain prospects concerning government budgeting. After all, we barely avoided a government shutdown earlier this month, and with S&P. joining the fray who knows whether the government will continue to pay its bills?

Mind you, this has nothing to do with economics, government solvency or involuntary default. A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.
Similarly Chairman Alan Greenspan said that Social Security can never go broke because government can meet all its obligations by “creating money.”

Instead, sovereign government spending is constrained by budgeting procedure and by Congressionally imposed debt limits. In other words, by self-imposed constraints rather than by market constraints.

Government needs to be concerned about pressures on inflation and the exchange rate should its spending become excessive. And it should avoid “crowding out” private initiative by moving too many resources to our public sector. However, with high unemployment and idle plant and equipment, no one can reasonably argue that these dangers are imminent.

Strangely enough, the ratings agencies recognized long ago that sovereign currency-issuing governments do not really face solvency constraints. A decade ago Moody’s downgraded Japan to Aaa3, generating a sharp reaction from the government. The raters back-tracked and said they were not rating ability to pay, but rather the prospects for inflation and currency depreciation. After 10 more years of running deficits, Japan’s debt-to-gross-domestic-product ratio is 200 percent, it borrows at nearly zero interest rates, it makes every payment that comes due, its yen remains strong and deflation reigns.

While I certainly hope we do not repeat Japan’s economic experience of the past two decades, I think the impact of downgrades by raters of U.S. sovereign debt will have a similar impact here: zip.

By: L. Randall Wray, The New York Times, April 18, 2011

April 19, 2011 Posted by | Bankruptcy, Banks, Congress, Debt Ceiling, Debt Crisis, Deficits, Economic Recovery, Economy, Federal Budget, Financial Institutions, Financial Reform, Government, Government Shut Down, Ideology, Politics, Social Security, Standard and Poor's | , , , , , , , , , , , | Leave a comment

Standard And Poor’s Is The Broker Who Lost All Your Money: There Is No Real Risk Of Default

What does Standard & Poor’s action lowering the U.S. outlook to “negative” mean? What are the likely ramifications of the U.S. deficit and debt? I do not want to conflate two completely different issues, so let’s take each in turn.

First, I have stopped paying any attention to anything that S&P says or does. Its performance over the past decade has revealed it to be incompetent and corrupt – it sold its AAA ratings to the highest bidder. It is the broker who lost all your money, the girlfriend who cheated on you, the partner who stole from you. Since the portfolios we run never rely on its judgment or analysis, we simply do not care what it says about credit ratings.

But big bond managers like Bill Gross of Pimco do matter – he invests hundreds of billions of dollars. We pay close attention when smart managers like him announce they are out of the Treasury market, which he did last month.

Many people misunderstand the U.S. deficit. First, it is stimulative to both the economy and the markets. Look at what happened under Reagan and Obama and most of Bush II – the economy recovered from recession and the markets rose along with the deficit.

Second, Social Security is fine. Sure, the retirement age will go higher, there will be means testing, and the income cutoff for contributions ($106,000) will likely double. But it will remain solvent. Medicare is much trickier, as the United States pays two times what most countries pay for health care but gets lesser care.

The current debate about deficits looks like more politics. Look at the voting records of those posturing about the debt. The “deficit peacocks” voted for new entitlements (the prescription drug benefit — Medicare Part D), went along with a trillion-dollar war of choice in Iraq, and supported (for the first time in U.S. history) a major tax cut during wartime. I find it hard to take their deficit noise as a bona fide fiscal concern.

After Standard & Poor’s missed the greatest collapse in history – indeed, they helped create it by rating junk mortgage backed securities Triple AAA – they are now over-compensating. As I mentioned on The Big Picture, there is an old Wall Street joke about analysts: “You don’t need them in a Bull Market, and you don’t want them in a Bear Market.” That especially seems apt with regard to S&P.

The deficit has been with us for a long time. Since investors are continuing to lend money to Uncle Sam at exceedingly low rates, there does not appear to be any real fear of a default. That is what matters most to bond buyers — and it’s why I never care what S&P thinks on this.

By: Barry Ritholtz, The New York Times, April 18, 2011

April 19, 2011 Posted by | Congress, Consumers, Debt Ceiling, Debt Crisis, Economic Recovery, Economy, Federal Budget, Financial Institutions, Financial Reform, Government, Government Shut Down, Lawmakers, Medicare, Politics, Social Security, Standard and Poor's, Wall Street | , , , , , , , , , , | Leave a comment

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