Eric Cantor’s Glaring Conflict Of Interest
When Eric Cantor shut down debt ceiling negotiations last week, it did more than just rekindle fears that the U.S. government might soon default on its debt obligations — it also brought him closer to reaping a small financial windfall from his investment in a mutual fund whose performance is directly affected by debt ceiling brinkmanship.
Last year the Wall Street Journal reported that Cantor, the No. 2 Republican in the House, had between $1,000 and $15,000 invested in ProShares Trust Ultrashort 20+ Year Treasury EFT. The fund aggressively “shorts” long-term U.S. Treasury bonds, meaning that it performs well when U.S. debt is undesirable. (A short is when the trader hopes to profit from the decline in the value of an asset.)
According to his latest financial disclosure statement, which covers the year 2010 and has been publicly available since this spring, Cantor still has up to $15,000 in the same fund. Contacted by Salon this week, Cantor’s office gave no indication that the Virginia Republican, who has played a leading role in the debt ceiling negotiations, has divested himself of these holdings since his last filing. Unless an agreement can be reached, the U.S. could begin defaulting on its debt payments on Aug. 2. If that happens and Cantor is still invested in the fund, the value of his holdings would skyrocket.
“If the debt ceiling isn’t raised, investors would start fleeing U.S. Treasuries,” said Matt Koppenheffer, who writes for the investment website the Motley Fool. “Yields would rise, prices would fall, and the Proshares ETF should do very well. It would spike.”
The fund hasn’t significantly spiked yet because many investors believe Congress will eventually raise the debt ceiling. However, since Cantor abruptly called off debt ceiling negotiations last Thursday, the fund is up 3.3 percent. Even if an agreement is ultimately reached before Aug. 2, the fund could continue to benefit between now and then from the uncertainty. (One tactic some speculators are using is to “trade the debt ceiling debate” — that is, to place short-term bets on prices as they fluctuate with the news out of Washington.)
Salon’s Andrew Leonard calls the debt ceiling negotiations “Washington’s titanic game of chicken,” and the longer the game goes on, the more skittish the bond markets will become.
“Cantor’s involvement in the fund and negotiations is not ideal,” Koppenheffer said. “I don’t think someone negotiating the debt ceiling should be invested in this kind of an ultra-short. We can only guess how much he understands what’s in his portfolio, but you’d think a politician would know better. It looks pretty bad.”
Cantor spokesman Brad Dayspring noted that U.S. Treasury bonds make up a large portion of the congressman’s pension, and said investment in ProShares ETF serves to balance that investment and to diversify his portfolio. Disclosure forms indicate that Cantor has considerable personal assets, including real estate in Virginia worth up to $1 million, and a number of six- and seven-figure loans to private entities and limited liability companies. So his investment in ProShares ETF represents only a small portion of his overall portfolio — but that share could grow a little larger just over a month from now.
By: Jonathan Easley, Editorial Fellow, Salo, June 27, 2011
Democrats Must Be Adults As GOP Redefines ‘Tax Increase’
OK, this isn’t exactly asking what the meaning of “is,” “is,” but it is close.
What is a tax increase? Is it letting a previous, temporary tax cut expire and go back to the earlier tax? Is it the “closing of a loophole” to remove a favorable tax break put in place for a specific industry? Is it the imposition of a fee or the increase in a fee? Is it really anything that results in an increase in revenue?
We can go on and on here, but what we are really talking about is not an esoteric debate. If you listen to Republicans right now, particularly Rep. Eric Cantor, who picked up his marbles and went home from White House negotiations, you would think that everything is a “tax increase.”
The sad aspect of the current debate is that what many Republicans are espousing is that added revenue should be “off the table.” This is clearly a nonstarter for truly solving our problems.
It also is inflexible and holds to the absurd notion that taxes can never go up; they can only go down. That sort of reminds me of: Housing prices can only go up; they don’t go down! Hmmm…
Democrats, to be honest, have to be the responsible party when it comes to providing balance to the cuts/revenue equation. They need not fear the boogeyman crying “tax raiser!”
Americans, by large majorities, understand that the richest 2 percent of their fellow citizens have seen rapid and large increases in their wealth of late, and asking them to pay their fair share is a no brainer. Americans understand that providing huge tax breaks to oil companies already making huge profits makes no sense. Americans understand that rewarding companies for parking their profits overseas or exporting jobs is untenable, and such behavior should not entitle them to special tax “incentives.”
In short, most Americans know that adequate revenue is part of the critical balance that will create and keep jobs as well as attack our debt problem. It is not about eviscerating government and tearing apart our social fabric. Republicans as conservative as Ronald Reagan have known the meaning of a tax increase and have not hesitated to use it.
By: Peter Fenn, U. S. News and World Report, June 27, 2011
Debt Ceiling Charade: Why Are Republicans Voting Against America’s Interests?
There isn’t much credibility left in Congress, perhaps none at all. In fact, the ceaseless C-SPAN sitcom we call government has offered plot lines from titillating tweets to illegitimate children, foreign lovers to shady cover-ups. But even their writers sometimes run out of ideas. Last week, when they thought you weren’t watching, they stooped to acting out their actual jobs: faking a vote on the debt ceiling.
A group of Republicans and Democrats alongside them turned sacred duty into dramedy. Pretending they would favor something they actually don’t endorse, they voted against their own beliefs and our national interests.
Of course, they first sold their banker buddies the good seats. Along with popcorn and reassurance that they weren’t actually planning a default on our debt, they were just pretending to do so in order to exact concessions.
These “leaders” admit that not raising the debt limit is untenable. Defaulting on our loans, we’re told, has the potential to wreck our economy. In fact, we’re supposed to be very concerned about this economy. It’s not “healthy”; it’s in “free-fall”; it’s “crumbling into ruin”.
But this belies the true damage these members of Congress seem intent to bring upon us. The economy is nothing besides the people that work, buy, save and invest within it. The collateral damage here isn’t to some numerical abstraction; it’s a serious and even fatal blow to Americans. We talk so much about the economy suffering; it’s easy to forget it’s actual people who stand to be hurt badly, over and again.
Even Republicans know raising the debt ceiling is not really negotiable. This issue is at core about whether or not we do what we say, whether or not America can be trusted. And raising the debt ceiling without precondition is about whether we make good on our promises not just to our creditors, but to each other. For all Republicans talk about not being able to afford things, it seems to apply only to food, health care, housing and electricity for their constituents. We’re flush when it comes to not collecting taxes from corporations, giving more to millionaires, subsidizing polluters and bombing other countries.
Without raising the debt ceiling free of conditions, we cannot honor our commitments to our grandparents who need to see their doctors and purchase their meds, to our children who need trained teachers and classrooms with heat and to our neighbors who need help when jobs are scarce and earnings don’t cover what life costs. Further gutting social spending will hurt those least equipped to sustain further injury. The jobless, the homeless, the young and the old will be the ones maimed.
With all this at stake, those of us without Goldman-sized bonuses to cover the cost of a heads-up beforehand are left watching in horror from the nose bleed section. This is a scripted show mocking not only we the people but the very exercise of elected office.
If voting among the masses is democracy in action – the votes of those we’ve voted for should be even more important. This is the logic behind representative democracy as our beloved Constitution has enabled it. This is the belief that has served us as a nation and as a people.
We all like to have occasional fun at the office. Some facebook checking, coffee drinking, office gossiping stress relief help the hours tick by. Republican House Members and some Democrats have turned workplace tricks into a dangerous practical joke on us, and we’re not laughing. This is the scariest kind of reality television. No more theatrics about our security and prosperity. Our elected leaders need to stop playing at their jobs and step up to do them.
By: Anat Shenker, AlterNet, June 12, 2011
Walking Away From The Truth: GOP Playing With Matches On The Debt
Just ignore Tuesday’s vote against raising the debt ceiling, House Republican leaders whispered to Wall Street. We didn’t really vote against it, members suggested; we just sent another of our endless symbolic messages, pretending to take the nation’s credit to the brink of collapse in order to extract the maximum concessions from President Obama.
Once he caves, members said, the debt limit will be raised and the credit scare will end. And the business world apparently got the message. It’s just a “joke,” said a leader of the United States Chamber of Commerce, and Wall Street is in on it. Not everyone found it funny.
No matter how they tried to spin it, 318 House members actually voted against paying the country’s bills and keeping the promise made to federal bondholders. That’s an incredibly dangerous message to send in a softening global economy. Among the jokesters were 236 Republicans playing the politics of extortion, and 82 feckless Democrats who fret that Republicans could transform a courageous vote into a foul-smelling advertisement.
The games that now pass for governing in an increasingly embarrassing 112th Congress are menacing the nation’s future. It was bad enough when Republicans threatened to shut down the government to achieve their extreme and extremely misguided spending cuts, but that threat would have caused temporary damage. The debt limit is something else altogether. If the global credit markets decide that the debt of the United States will regularly be held hostage to ideological demands, it could cause significant harm to investment in long-term bonds and other obligations. That, in turn, could damage domestic credit markets and easily spark another recession.
To prevent this from happening, 114 Democrats in April asked for a “clean” vote without conditions. But Republicans were not about to set their hostage free. Knowing that the clean vote would not pass — and imposing a two-thirds majority requirement to ensure its failure — House Republicans gave the Democrats what they requested. They then voted it down, sending their reckless message to the world.
But there was no excuse for so many Democrats to go along with that message, including the leadership. Steny Hoyer, the minority whip, urged his members to vote no so they would not “subject themselves to a political 30-second ad attack” with all Republicans voting no. Apparently Mr. Hoyer did not trust voters to understand what a dangerous and dishonest game the Republicans are playing.
The exercise has prompted the White House to convene talks to discuss the Republicans’ scattershot demands, which have ranged from trillions in spending cuts to the outright dismantling of vital safety-net programs like Medicare and Medicaid. Democrats have hoped to get an increase in revenues out of any deal, but House Republican leaders emerged from a White House meeting on Wednesday spouting the usual discredited claims that higher taxes on the rich would impede job growth.
What Republicans seem unwilling to acknowledge is that the debt-limit debate is not about future spending. It is about paying for a deficit already incurred because of two wars and tax cuts approved by both Republicans and Democrats at the behest of a Republican president. Tuesday’s vote was a chance to do the right thing and educate the public on why it was necessary. Instead, too many lawmakers walked away from the truth.
House GOP Scoffs At The Fact That Taxes Are Lower Under Obama Than Under Reagan
President Obama met with House Republicans today at the White House to discuss ways to move forward on negotiations regarding the nation’s debt ceiling and the budget. During the discussion, talk evidently turned to taxes, and when Obama noted that taxes today are lower than they were under President Reagan, the GOP, according to The Hill, “engaged in a lot of ‘eye-rolling’“:
Republicans attending a White House meeting on Wednesday didn’t take kindly to President Obama telling them tax rates were higher during the Reagan administration. GOP members engaged in a lot of “eye-rolling,” according to a member who was on hand to hear Obama, who invited House Republicans to the White House for discussions on the debt ceiling. […]
“[The President] made a comment like the tax rate is the lightest, even more than (under former President) Reagan,” Rep. Lee Terry (R-Neb.) told The Hill following the meeting. House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) joked that during the meeting, “We learned we had the lowest tax rates in history … lower than Reagan!”
That House Republicans find this preposterous is symptomatic of the hold Reagan mythology has over them. After all, for seven of Regan’s eight years in office, the top tax rate was higher than the current 35 percent. In six of those years, it was 50 percent or more. And every year that Regan was in office, the bottom tax bracket was higher than the current ten percent.
For a family of four, the “average income tax rate under Reagan in 1983 was 11.06 percent. Under Clinton in 1992, it was 9.18 percent. And under Obama in 2010, it was 4.68 percent.” During Reagan’s time, income tax revenue ranged from 7.8 to 9.4 percent of GDP. Last year, it was 6.2 percent and is not projected to climb back to 9 percent until 2016. In fact, in 2009, Americans paid their lowest taxes in 60 years.
Republicans are very fond of saying that the U.S. has “a spending problem, not a revenue problem.” But the truth is that revenue has plunged due to the recession and to continued misguided tax cuts, and revenue needs to be raised to eventually bring the budget into balance. And Reagan knew that taxes were an important part of the budget equation. After all, he “raised taxes in seven of his eight years in office,” including four times in just two years.
By: Pat Garofalo, Think Progress, June 1, 2011
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