Grave Consequences: Wall Street Tells John Boehner To Back Off The Debt Ceiling
Republicans are growing increasingly concerned about the impact a bruising fight over raising the nation’s $14.29 trillion debt ceiling could have on U.S. financial markets.
House Speaker John Boehner (R-Ohio) has had conversations with top Wall Street executives, asking how close Congress could push to the debt limit deadline without sending interests rates soaring and causing stock prices to go lower, people familiar with the matter said. Boehner spokesman Michael Steel said Tuesday night that he was not aware of any such conversations.
Treasury Secretary Timothy Geithner has warned Congress that without new borrowing authority, the federal government could hit the statutory debt limit by May 16.
Treasury could then implement emergency measures to continuing making interest payments on existing debt until around July 8. After that, the U.S. risks going into default, an unthinkable idea to many economists and market participants who say such an event could drive scores of large banks into failure, send interest rates skyrocketing as foreign investors abandon U.S. securities and crush the already slow-going economic recovery.
Republicans and even some fiscally conservative Democrats want to use the debt limit fight as leverage to wring more significant spending cuts out of the White House. Politicians of all stripes are worried about how independents will react to a vote — or multiple stop-gap votes — to raise the debt ceiling. Many executives on Wall Street believe Washington is playing an enormously dangerous game with what is typically a non-controversial vote.
Sen. Chuck Schumer (D-N.Y.), who leads the Senate Democrats’ messaging efforts, expressed anger that Boehner was searching for leeway on the debt limit.
“The speaker seems to be testing out how far he can venture onto a frozen lake before the ice breaks. He should listen to business leaders who are telling him to watch his step. Messing around with the debt ceiling just to satisfy the tea party will lead to higher interest rates and an economic cataclysm.”
The Wall Street executives say even pushing close to the deadline — or talking about it — could have grave consequences in the marketplace.
“They don’t seem to understand that you can’t put everything back in the box. Once that fear of default is in the markets, it doesn’t just go away. We’ll be paying the price for years in higher rates,” said one executive.
Another said that “anyone interested in ‘testing’ the debt ceiling should understand the U.S. debt traded wider [with a higher yield] than Greek debt roughly five years ago. Then go ask CBO what happens to our deficits/public debt to GDP, if the 10-year [Treasury bond] goes from 3.5 percent to 5.5 percent to 7.5 percent.” The executive said such an increase would result in a downgrade of U.S. debt by ratings agencies and an end to the dollar as the standard global reserve currency.
By: Ben White, Politico, April 13, 2011
Few Heard At Wisconsin Budget “Hearing” In Milwaukee, But School Choice Advocate Denounces Walker’s Subsidy For Rich
At Monday’s public hearing in Milwaukee on Governor Walker’s budget, Wisconsin Republicans once again resorted to anti-participatory tactics to avoid criticism of their far-right agenda. Despite these efforts, strong criticisms were squeezed-in by longtime Milwaukee school choice advocate Howard Fuller, calling GOP efforts to lift income limits on school vouchers an “outrageous” program “that subsidizes rich people.”
Republicans Regulate Milwaukee Hearing
Milwaukee’s hearing at State Fair Park was the third of four statewide sessions on Walker’s proposed budget by the Republican-controlled Joint Finance Committee, and controversy arose well before the hearing began. According to the Milwaukee Journal-Sentinel, two of Milwaukee’s congresswomen, Rep. Tamara Grigsby and Sen. Lena Taylor, were concerned that many working people would be excluded because the hearing was scheduled to end at 6pm. The two arranged to hold informal sessions until 9pm to allow people to voice their opinion, then notified Joint Finance co-chairs Rep. Robin Vos (R-Burlington) and Sen. Alberta Darling (R- River Falls) about their plans.
Sen. Darling reportedly approved the Grigsby-Taylor informal hearing and Rep. Vos “said he would think about it.” However, Taylor soon received notice from State Fair Park that Vos had reserved the facility until midnight, meaning the Dems’ hearing could not take place, and Milwaukee’s working population could not have their voices heard.
According to Taylor, “This isn’t open government. This is not democracy. This is shameful.”
Beer City Blockage the Latest in a Series
Vos and Darling were unabashed about their intention to suppress opposition, with Darling telling the Journal-Sentinel “we had to take precautions so that what happened at the Capitol wouldn’t happen at State Fair Park.”
“The hearings are going to be done when we say they’re done,” Vos said.
This is only the latest in a series of Wisconsin GOP efforts to limit scrutiny and stifle dissent. On February 11, Governor Walker sought to limit deliberation on his budget repair bill by introducing it on a Friday and ordering a vote on a Tuesday (Senate Democrats thwarted these plans by leaving the state). The Walker Administration violated the constitutionally-guaranteed right of public access to the state capitol in late February, and a judge ordered it re-opened; the administration violated that order in March and a hearing on that violation is pending. On March 11, Republicans forced the union-busting budget repair bill through the Senate with minimal notice, breaking state Open Meetings laws and possibly violating the constitution’s public access guarantees.
Hearing Limits Input from Milwaukee’s Particularly-Affected Populations of Color
This latest step towards suppression is especially egregious considering Milwaukee is not only the state’s largest city, but has the most people of color, a population that will be particularly affected by Walker’s budget and budget repair bill. The plans eliminate funding for a new program to track and remedy racial profiling (the first step towards confronting Wisconsin’s atrocious record of racial disparities in incarceration); will limit eligibility for medical assistance; kicks legal immigrants off food assistance; and eliminates funding for a program that provided civil legal services to low income residents. Walker is also expected to cut $300 million from Milwaukee Public Schools (MPS), severely limiting education quality for the district teaching the greatest number of students (and students of color) in the state.
With Republican legislators keeping the Milwaukee hearing short, only speakers who signed up before 12:30pm had their voices heard. Hundreds of people were denied the ability to speak, and as the hearing ended at 6:30pm, there were shouts of “let us speak” and the now-familiar “shame” directed at those lawmakers.
Howard Fuller Heard on Education
While many Milwaukee residents were not heard on Monday, at least one prominent voice spoke strongly against Walker’s plans for Milwaukee schools.
In addition to cutting $300 million from Milwaukee’s public schools (and eliminating teacher’s unions), Walker’s budget reinforces existing inequalities by expanding the “school choice” program, which allows students to opt-out of public schools and use a taxpayer-funded voucher for private school tuition. The voucher program has been criticized not only because it directs money away from public schools, but because private schools can pick-and-choose their students, often selecting those who come from an advantaged background and leaving the rest to suffer in under-funded public schools.
Milwaukee became the country’s first publicly-funded school voucher program in 1990, and it grew under the tenure of MPS Superintendent Howard Fuller. He currently directs an institute at Marquette University that authorizes schools trying to get into Milwaukee’s choice program. Howard has collaborated with Republican lawmakers in the past, many of whom support so-called “school choice” out of belief in free market principles of competition and privatization. While many on the left fear defunding public education, some urban advocates like Fuller have supported vouchers to give promising low-income students a better chance at long-term success by providing education options that would not otherwise be available.
But Fuller, who is now regarded as the nation’s most influential African-American spokesman for “school choice,” strongly criticized Walker’s plans to remove income eligibility caps for the private school voucher program. “Please don’t make it true that you were using the poor just to eventually make this available to the rich,” Fuller said. “If [lifting income eligibility] is done, I will become an opponent of this.”
“I never got into this to give someone like me $6,500 to send their kid to Marquette High School (tuition $15,000 per year). . . This is where I get off the train, I’m not going to go anywhere in America and fight for a program that subsidizes rich people.”
By: Brenda Fischer, Center for Media and Democracy, April 12, 2011
What’s In The Compromise Spending Bill?
After a marathon four-day bill drafting session, the House Appropriations Committee early Tuesday morning unveiled compromise legislation to fund the federal government for the remainder of the fiscal year and cut $38.5 billion from current spending levels.
House Republican leaders struck a deal with Senate Democrats and the White House late Friday after pushing to cut $61 billion from current spending levels. GOP leaders hope to put the bill on the floor Wednesday, with Senate action expected Thursday. The current stopgap funding measure expires Friday.
Overall, labor, health, and education programs received a $5.5 billion cut from last fiscal year’s level, including the cancellation of 55 programs for savings of more than $1 billion. The final legislation prevents 218,000 low-income children from being removed from Head Start and rejects education grant funding that would have cost approximately 10,000 jobs and reduced educational services to 1 million students, according to Senate Appropriations Committee summary.
Here’s where the spending cuts (and, in the case of Defense, the increases) come from:
- TRANSPORTATION AND HOUSING. These programs would receive the largest cut under the compromise, $12.3 billion from fiscal 2010 levels, including a total of $2.9 billion in cuts for high-speed rail, $991 million in cuts to transit programs, and a $3.2 billion rescission of highway funding, including $630 million worth of old earmarks. The Department of Housing and Urban Development’s community development fund would get a $942 million cut.
- SCIENCE. The continuing resolution also blocks funding for the establishment of a Climate Service at the National Oceanic and Atmospheric Administration; for the approval of new fisheries catch-share programs in certain fisheries; and for NASA and the Office of Science and Technology Policy to engage in bilateral activities with China.
- AGRICULTURE. Agriculture programs would see $3 billion in cuts from fiscal 2010, including a $10 million cut to food and safety inspection, but the plan allows “for uninterrupted meat, poultry, and egg products inspection activities of the” Agriculture Department, the committee said. The USDA’s Special Supplemental Feeding Program for Women, Infants, and Children, also known as WIC, received $6.75 billion, which is a $504 million cut from the fiscal 2010 level.
- ENERGY. Energy and water programs were reduced by a relatively modest $1.7 billion. The bill funds the Army Corps of Engineers at the president’s request level of $4.9 billion and supports existing applications for renewable energy loan guarantees at the Department of Energy.
- WASHINGTON, D.C. The compromise restores a long-standing provision against the use of federal and local funds for abortions in the District of Columbia, and includes the reauthorization of the D.C. Opportunity Scholarships, along with a $2.3 million funding increase, to stop the termination of the program and allow new students to participate.
- HOMELAND SECURITY. A $784 million net reduction over last year, including a $786 million cut to Federal Emergency Management Agency first-responder grants and elimination of $264 million in funding that was previously targeted to earmarks.
- DEFENSE. Funded at $513 billion in the CR, about $5 billion above last year. The bill also includes an additional $157.8 billion for overseas contingency operations (emergency funding).
By: Humberto Sanchez, National Journal, April 12, 2011
What Paul Ryan’s Constituents Think And Why It Matters
Rep. Paul Ryan’s (R) Wisconsin district isn’t competitive. Over the last decade, his most competitive race was the one he won by “only” 26 points. Last year, the margin was 38 points.
But when the Associated Press checked in with some of the far-right congressman’s constituents, they were aware of their representative’s plan to eliminate Medicare, and they weren’t exactly on board with the plan.
Brian Krutsch has been long one of many automatic votes here for Rep. Paul Ryan…. But this week, admiration has been tinged with apprehension as one of Ryan’s signature ideas — ending Medicare’s status as a full, guaranteed benefit for senior citizens — suddenly took a step toward reality.
“I think that’s one of the things they should probably leave alone — you know — unless it’s absolutely necessary,” Krutsch said as he took a break from reviewing job openings at the Rock County Job Center. “Old people need help with medical bills. There’s too many people under-insured right now — especially people like myself right now who don’t have insurance.”
Howard Gage, a 74-year-old Medicare recipient who owns a three-person video-production company, said he has voted for Ryan in all seven races, still supports the congressman and likes him as a person. But, he added, it’s hard to accept that fixing the budget should mean that his family wouldn’t receive the same Medicare benefits that he relies on.
“It bothers me that my kids or grandchildren might be affected by whatever has to be done” to curb spending, he said.
At face value, it’s interesting that those who elected Ryan aren’t at all sold on Ryan’s vision. If they’re not on board, it stands to reason more vulnerable Republican lawmakers from more competitive districts have reason to be concerned, and may very well balk at embracing such a radical move that won’t pass anyway.
But there’s more to it than that. As Greg Sargent explained, “These folks are worried about doing away with Medicare as we know it, but they are grappling with whether or not this will be necessary to put the nation on firmer fiscal footing.”
Right. Reading the piece, it seems these folks want to do the right thing. They’re uncomfortable with an extreme overhaul of Medicare, but they’re willing to listen to what’s “absolutely necessary.”
But the point is, the privatization of Medicare isn’t “necessary” at all. It won’t even lower health care costs. Paul Ryan’s plan is ostensibly about debt reduction, but even that’s a charade — he’s going after entitlements and other domestic priorities while slashing tax rates for the rich.
Or as Greg added, these voters “are proceeding from the premise that Ryan’s Medicare proposal is about fixing our fiscal situation in a way that would spread the pain around evenly — and not aware that it would shift the burden for fixing our fiscal situation downward, in keeping with conservative tax-cutting ideology.”
Guess what message Democrats should be pushing right now? Or put another way, what do you suppose those folks in Southeastern Wisconsin would say if they knew going after Medicare wouldn’t be at all necessary if Ryan weren’t so desperate to give millionaires another massive tax break?
By: Steve Benen, Washington Monthly-Political Animal, April 11, 2011
Budget Compromise Shows Conservative Big Government Hypocrisy
They hate big government, those conservative Republicans—especially a big federal government, trying to meddle in Americans’ lives on everything from healthcare to light bulbs.
Except, of course, when it comes to the District of Columbia, which the GOP-controlled House seems to view as its own little political petri dish. As part of its pending agreement to cut $38 billion from the federal budget, negotiators decided to cave in to the GOP’s demand to bar the District from using its own money to subsidize abortions for poor women.
A lot of people don’t like abortion, think it should be illegal, and don’t think government should pay for it. That’s a simple equation: if you don’t like abortion, don’t have one. If you think it should be illegal, take it up with the courts, or push for a constitutional amendment banning it. Barring government money from being spent on a legal women’s health service—however controversial—is not defensible. We all have to pay for activities we don’t want, through our taxes or health insurance premiums. Some taxpayers would prefer that their contributions to the federal treasury not be used to pay for wars; some who pay health insurance premiums don’t want the pool of money to be used to pay for someone’s Viagra. But group funds don’t allow for individual micro-management.
The attack on the District of Columbia adds even more insult to the unforgivable injury Washingtonians already endure as the nation’s only legally disenfranchised voters. It’s bad enough that U.S. citizens in Washington—people who pay local and federal taxes, volunteer, serve in wars and on jury duty—don’t have a full voting representative in the House and have no U.S. senators. It’s the height of arrogance for members of the U.S. Congress from other parts of the country to presume to tell the District how to spend tax dollars it collected from its own citizens. Aside from the abortion restrictions, the pending budget agreement also reinstates and expands a private school voucher program for the District.
D.C. Mayor Vincent C. Gray, who was arrested at the Capitol this week in protest over the meddling, sounded just like a genuine political conservative as he described his objections: “I’m tired of being a pawn in a political game. All we want is to be able to spend our own money.”
How unfortunate that congressional Republicans, who demanded the control over the District—and Democrats, who caved into their bullying—can’t see their way to apply true conservative principles when it comes to the city where they work. Other jurisdictions have imposed a “commuter tax” on people who live in one state and work in another. Members of Congress pay taxes in their home districts and states, but not here. If they want a say in how District funds are used, maybe it’s time they started to pay up.
By: Susan Milligan, U.S. News and World Report, April 12, 2011
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