No More Republican Hostage Strategies: On Debt Ceiling, Just A “Clean Bill”
On Fox News this morning, House Majority Leader Eric Cantor (R-Va.) said he’s prepared to play a dangerous game with the federal debt limit — he’ll help block an extension without “guaranteed steps” on unspecified cuts to public investments.
It is, in other words, another hostage strategy. Last week, the message was, “Give us what we want or we’ll shut down the government.” Going forward, the new message is, “Give us what we want or we’ll wreak havoc on the global economy and trash the full faith and credit of the United States government.
The details of the ransom note apparently haven’t been written yet, but we’re getting clues.
The down-to-the-wire partisan struggle over cuts to this year’s federal budget has intensified concern in Washington, on Wall Street and among economists about the more consequential clash coming over increasing the government’s borrowing limit.
Congressional Republicans are vowing that before they will agree to raise the current $14.25 trillion federal debt ceiling — a step that will become necessary in as little as five weeks — President Obama and Senate Democrats will have to agree to far deeper spending cuts for next year and beyond than those contained in the six-month budget deal agreed to late Friday night that cut $38 billion and averted a government shutdown.
Republicans have also signaled that they will again demand fundamental changes in policy on health care, the environment, abortion rights and more, as the price of their support for raising the debt ceiling.
The stakes of the Republicans’ hostage strategy are significantly higher than the budget fight, at least insofar as the consequences would be more severe. Had the GOP shut down the government, it would have been awful for the economy; if the GOP blocks an extension of the debt ceiling, the results could prove catastrophic. As the NYT noted, “The repercussions in that event would be as much economic as political, rippling from the bond market into the lives of ordinary citizens through higher interest rates and financial uncertainty of the sort that the economy is only now overcoming.” The likelihood of “provoking another credit crisis like that in 2008” is very real.
It’s exactly why Federal Reserve Chairman Ben Bernanke recently warned congressional Republicans not to “play around with” this, adding that lawmakers shouldn’t view the debt ceiling as a “bargaining chip.”
Republicans freely admit they’re doing it anyway. Indeed, they’ve been rather shameless about it.
http://www.washingtonmonthly.com/archives/individual/2011_03/028426.php
It seems to me President Obama’s message should be pretty straightforward: “To prevent a crisis, I expect a clean bill.”
This isn’t complicated. Democrats and Republicans have, routinely, raised the debt limit many times. Neither party has ever held it hostage, or made sweeping demands. Economists, government officials, and even financial industry leaders have all told Republicans to reject the political games and do what’s right.
What’s more, as we discussed yesterday, even Republicans know how this has to turn out. House Speaker John Boehner (R-Ohio) recently said failing to raise the debt limit “would be a financial disaster, not only for us, but for the worldwide economy.” Sen. Lindsey Graham (R-S.C.) said failure to raise the debt limit would lead to “financial collapse and calamity throughout the world.”
Democrats and Republicans can have a larger debate about entitlements and debt reduction in the fight over the next fiscal year budget. But there’s not enough time for that to occur before we hit the debt ceiling.
Just pass a clean bill, prevent a calamity, and get ready for the larger budget fight.
Despite Scandalous Abuses, Banks Are Off the Hook Again
Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among other things, they habitually filed false court documents. There were investigations. We’ve been waiting for federal and state regulators to crack down.
Prepare for a disappointment. As early as this week, federal bank regulators and the nation’s big banks are expected to close a deal that is supposed to address and correct the scandalous abuses. If these agreements are anything like the draft agreement recently published by the American Banker — and we believe they will be — they will be a wrist slap, at best. At worst, they are an attempt to preclude other efforts to hold banks accountable. They are unlikely to ease the foreclosure crisis.
All homeowners will suffer as a result. Some 6.7 million homes have already been lost in the housing bust, and another 3.3 million will be lost through 2012. The plunge in home equity — $5.6 trillion so far — hits everyone because foreclosures are a drag on all house prices.
The deals grew out of last year’s investigation into robo-signing — when banks were found to have filed false documents in foreclosure cases. The report of the investigation has not been released, but we know that robo-signing was not an isolated problem. Many other abuses are well documented: late fees that are so high that borrowers can’t catch up on late payments; conflicts of interest that lead banks to favor foreclosures over loan modifications.
The draft does not call for tough new rules to end those abuses. Or for ramped-up loan modifications. Or for penalties for past violations. Instead, it requires banks to improve the management of their foreclosure processes, including such reforms as “measures to ensure that staff are trained specifically” for their jobs. The banks will also have to adhere to a few new common-sense rules like halting foreclosures while borrowers seek loan modifications and establishing a phone number at which a person will take questions from delinquent borrowers. Some regulators have reportedly said that fines may be imposed later.
But the gist of the terms is that from now on, banks — without admitting or denying wrongdoing — must abide by existing laws and current contracts. To clear up past violations, they are required to hire independent consultants to check a sample of recent foreclosures for evidence of improper evictions and impermissible fees.
The consultants will be chosen and paid by the banks, which will decide how the reviews are conducted. Regulators will only approve the banks’ self-imposed practices. It is hard to imagine rigorous reviews, but if the consultants turn up problems, the banks are required to reimburse affected borrowers and investors as “appropriate.” It is apparently up to the banks to decide what is appropriate.
It gets worse. Consumer advocates have warned that banks may try to assert that these legal agreements pre-empt actions by the states to correct and punish foreclosure abuses. Banks may also try to argue that any additional rules by the new Consumer Financial Protection Bureau to help borrowers would be excessive regulation.
The least federal regulators could do is to stress that the agreements are not intended to pre-empt the states or undermine the consumer bureau. If they don’t, you can add foreclosure abuses to other bank outrages, like bailout-financed bonuses and taxpayer-subsidized profits.
By: The New Yor Times, Editorial, April 9, 2011
Our Narrow And Wrong Headed Economic Debate
There’s a janitor who lives in a studio apartment just outside of Stevens Point, Wis. He cleans the math and science buildings at a state university, a job he’s been doing for about 18 months, after a year of unemployment. He’s 43 and last year made $24,622. He doesn’t have kids, so he doesn’t qualify for a child-care tax credit. He doesn’t own a home or a hybrid car — those credits don’t apply to him, either. He hasn’t been enrolled in school since the 10th grade, so he definitely doesn’t qualify for any education credits or deductions. He just learned that Gov. Scott Walker’s new budget has slashed his benefits and that next year he’ll be bringing in about 16 percent less per month. And when he sits down to do his taxes next week, he’ll find that he paid the federal government around $1,400 in 2010.
“People can think what they think,” said Jeff Immelt, GE’s chief executive, in response to a growing anger to this story, first reported last week by the New York Times. What else is there to think, one wonders, but that with the muscle and money of lobbyists and lawyers, with the access and influence built over generations, GE has done not just the audacious but the outrageous. And it is not alone.
Exxon Mobil, for example, made $19 billion in profits in 2009 but paid no federal income taxes. In fact, it received a $156 million rebate from the IRS. Bank of America received a $1.9 billion tax refund from the IRS last year, even though it made $4.4 billion in profits and was handed a nearly $1 trillion bailout by taxpayers. The list, inconceivably, goes on.
And yet the conversation in Washington hasn’t turned to aggressively closing the loopholes that GE’s lobbyists created for its accountants to exploit. It hasn’t turned toward ending the ridiculous tax breaks on corporate dividends and capital gains that allow hedge fund managers and the very wealthy to pay the government a lower percentage than their middle-class employees. Instead, Congress is debating whether $33 billion in cuts to the social safety net is enough to make the Tea Party happy.
While Republicans in the House have stopped talking nearly altogether about jobs (and have embraced a budget that could cost the economy 700,000 of them, according to Moody’s chief economist Mark Zandi), the head of the President’s Council on Jobs and Competitiveness, someone charged with finding a way to sustained job growth, is none other than Jeff Immelt himself, tax evader in chief. This is a systemic problem that neither belongs to nor can be solved by a single man. But for Immelt to keep his post with the administration now would be bad politics, bad policy and bad messaging. Yet as I write this, it doesn’t look as if he will be asked to step down.
Still, I am hopeful.
I am hopeful because an incredible spirit and energy has been unleashed. It was first shown during the Wisconsin labor battle, and it is being sustained and nurtured, and broadened to communities across the country. People are showing that they will not abide a system that finances corporate greed on the backs of the poor and middle class.
On Monday, the nation commemorated the assassination of Martin Luther King Jr., who was killed in Memphis, where he had gone to fight for the rights of sanitation workers. Thousands gathered across America for a national day of action supporting public employees, other working people and trade unions in a common quest for jobs, justice and decency for all citizens. They participated in teach-ins, protests, demonstrations and vigils, all with a simple and deeply American message: It is time for the richest, most privileged among us to pay their fair share.
They spoke of the widening gulf in American politics, between the powerful and the powerless, between those who most need the government’s assistance and those most likely, instead, to receive it. They are not alone. For all the disappointment that progressives feel about this Congress, there are members who have been leaders and allies on Capitol Hill.
Consider Sen. Bernie Sanders (I-Vt.). Always the people’s champion, Sanders has called for closing corporate tax loopholes, which, if done, would raise more than $400 billion over a 10-year period. He’s also introduced legislation imposing a 5.4 percent surtax on millionaires that would yield up to $50 billion more a year — more than enough to protect Pell Grants and Head Start and other programs facing the chopping block.
He is joined by Rep. Jan Schakowsky (D-Ill.), who has introduced legislation to create a separate tax bracket for millionaires and billionaires — an option that garners the support of 81 percent of the American people, according to an NBC/Wall Street Journal poll.
The common sense, humane response at this moment is to fight to reset the terms of a suffocatingly narrow and wrongheaded debate. This is the heritage of the progressive movement and, indeed, our obligation. The best principles of our country have been trampled by corporate immorality and right-wing extremism. But they can be restored. Martin Luther King Jr. knew as much when he fought for the sanitation workers of Tennessee 43 years ago. Now, we must know it too.
By: Katrina Vanden Heuvel, Opinion Writer, The Washington Post, April 5, 2011
Junior High Theatrics And Our Cowardly Congress
• Democrats excoriated Republicans for threatening to shut down the government, but this mess is a consequence of the Democrats’ own failure to ensure a full year’s funding last year when they controlled both houses of Congress.
That’s when the budget should have been passed, before the fiscal year began on Oct. 1. But the Democrats were terror-stricken at the thought of approving spending bills that Republicans would criticize. So in gross dereliction of duty, the Democrats punted.
• Republicans say they’re trying to curb government spending and rescue the economy — but they threatened to shut down the government, even though that would have been both expensive and damaging to our economy.
The shutdowns in late 1995 and early 1996 cost the federal government more than $1.4 billion, the Office of Management and Budget reported at the time. Much of that sum was for salaries repaid afterward for work that employees never did because they were on furlough. There were also lost fees at national parks and museums: tigers must be fed at the zoo, even if nobody is paying to see them.
It’s particularly reckless and callous to threaten a shutdown when the economy is already anemic. Among the federal workers and contractors potentially losing paychecks, some would miss payments on their homes, their credit cards or their children’s college tuition.
• Republicans are posturing against abortion in a way that would increase the number of abortions.
Conservatives have sought to bar federal funds from going directly to Planned Parenthood and the United Nations Population Fund. The money would not go for abortions, for federal law already blocks that, and the Population Fund doesn’t provide abortions. What the money would pay for is family planning.
In the United States, publicly financed family planning prevented 1.94 million unwanted pregnancies in 2006, according to the Guttmacher Institute, which studies reproductive health. The result of those averted pregnancies was 810,000 fewer abortions, the institute said.
Publicly financed contraception pays for itself, by reducing money spent through Medicaid on childbirth and child care. Guttmacher found that every $1 invested in family planning saved taxpayers $3.74.
As for international family planning, the Guttmacher Institute calculates that a 15 percent decline in spending there would mean 1.9 million more unwanted pregnancies, 800,000 more abortions and 5,000 more maternal deaths.
So when some lawmakers preen their anti-abortion feathers but take steps that would result in more abortions and more women dying in childbirth, that’s not governance, that’s hypocrisy.
• The House Republican budget initiative, prepared by Representative Paul Ryan, would slash spending and end Medicare and Medicaid as we know them — and it justifies all this as essential to confront soaring levels of government debt. Mr. Ryan is courageous to tackle entitlements so boldly, and he has a point: we do have a serious long-term debt problem, and Democrats haven’t had the guts to deal with it seriously.
Unfortunately, the new Republican initiative would worsen government debt problems, according to the Congressional Budget Office. The C.B.O. (whose numbers Republicans regularly use to attack Democrats) estimates that with current trends, debt will reach 67 percent of gross domestic product in 2022. But it finds that under the Republican plan, because of increased tax cuts, debt would reach 70 percent of G.D.P.
In other words, the Republican position is that America faces such a desperate debt crisis that we must throw millions under the bus — yet the result is more debt than if we do nothing.
What does all this mean? That we’re governed by self-absorbed, reckless children. Further evidence comes from a new study showing that American senators devote 27 percent of their press releases to “partisan taunts” rather than substance. “Partisan taunting seems to play a central role in the behavior of many senators,” declared the study, by Justin Grimmer of Stanford and Gary King of Harvard.
A bewildered Chinese friend asked me how the world’s leading democracy could be so mismanaged that it could shut down. I couldn’t explain. This budget war reflects inanity, incompetence and cowardice that are sadly inexplicable.
By: Nicholas Kristof, Op-Ed Columnist, The New York Times, April 9, 2011
Wisconsin Supreme Court Election: Every Vote Must Be Counted
Many voters went to sleep in Wisconsin and thought they woke up in Florida on Friday after a “Republican activist” county clerk announced that she discovered an extra 14,315 votes in a hotly contested Supreme Court race. Not surprisingly, the votes went to the conservative candidate giving incumbent justice David Prosser a 7,500 lead over challenger Joanne Kloppenburg. Oddly, 7500 was the exact number of votes Prosser needed to avoid a statewide recount.
The Supreme Court race has garnered national attention as a proxy vote on Governor Scott Walker’s radical proposal to end collective bargaining in the state and cut a billion dollars from public schools.
Long Time Republican Apparatchik
The county clerk in question is long-time Republican apparatchik Kathy Nickolaus. Nickolaus got her start in GOP politics in 1995 when the Republican Speaker of the Assembly was – that’s right – David Prosser. She worked for Prosser’s Republican Assembly Caucus, one of four GOP and Democratic legislative groups that were shut down following a criminal investigation for illegal campaign activity on state time.
Nickolaus first came to public attention in 2001 when she was granted immunity from criminal prosecution in exchange for testimony against her bosses at the Assembly Caucus. The case resulted in unprecedented convictions of Democratic and Republican legislators on felony counts of misconduct in office and arranging for illegal campaign contributions. Both Democratic and Republican leaders were sentenced to jail time.
In the caucus, Nickolaus was the person who ran the numbers, creating databases for illegal donations, partisan mailings and the like. When she escaped criminal prosecution, she hightailed it to Waukesha where she ran for county clerk in the conservative county in 2002.
She later botched a 2006 vote and stirred controversy by placing the entire voting system on her own personal computer. Prompting the County Corporation Counsel to charge: “If she wants to keep everything secret, she probably can.”
On Thursday of this week, she called a press conference to announce the new vote totals that put Prosser over the top and blamed “human error.” She claimed that the canvass was a “open and transparent” process, yet she found the error at noon on Wednesday and sat on the information for 29 hours, not even telling top election officials at the Government Accountability Board. According to election observers, the issue of 14,315 additional votes from Brookfield was never discussed at the canvass. But, this information somehow made its way to right wing bloggers before her press conference.
Reaction Swift
Wisconsin Citizen Action has demanded that federal prosecutors step in, confiscate her computer and start an investigation. “In the current political climate in Wisconsin, only an investigation by a U.S. Attorney can be seen by all citizens of the state as independent and above politics,” said Robert Kraig.
The Kloppenburg campaign has demanded “a full explanation of how and why these 14,315 votes from an entire city were missed.” As part of the search for that explanation, the campaign plans to file open records requests for relevant documents.
Meanwhile, both Kloppenburg and Prosser have lawyered-up. Kloppenburg is being represented by Marc Elias, the attorney who handled Al Franken’s U.S. Senate recount fight in Minnesota. Prosser is being represented by Ben Ginsberg, who served as national counsel to former President George W. Bush’s campaigns in 2000 and 2004 and was central to the 2000 Florida recount.
Lessons from Bush v. Gore Florida Recount
The Florida 2000 recount is on the mind of many Wisconsin voters. The big lesson from the nightmarish “hanging-chads” recount “is that you need a total statewide recount. If you only recount select counties the perception is you are only selecting counties that favor you,” says Jay Heck, the head of Wisconsin Common Cause.
Heck issued a statement on Friday:
The incredible and almost unbelievable events of the last two days with regard to the reporting of votes in the City of Brookfield in Waukesha County in Tuesday’s election for the State Supreme Court warrant a full investigation by the Wisconsin Government Accountability Board, the U.S. Attorney for the Eastern District of Wisconsin, the Wisconsin Department of Justice and the District Attorney of Waukesha County. Furthermore, the Government Accountability should authorize and supervise a statewide recount of all ballots cast in Tuesday’s elections and such a recount should be funded by the State of Wisconsin.
Why so many parties? Because this is the same constellation of offices that investigated the 2002 caucus scandal, giving voters more confidence that the manner was being handled appropriately and in a bipartisan fashion.
If Wisconsin is not to irreparably harm its reputation as a functional and relatively noncorrupt state, many Cheeseheads believe that a statewide recount is a necessity.
By: Mary Bottari, Center for Media and Democracy, April 9, 2011
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About a thousand miles to the east, in Fairfield, Conn., General Electric, one of the world’s largest multinational corporations, posted a $14.2 billion profit for 2010. When its accountants were finished working their magic, the company didn’t owe a single dollar in federal taxes.