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Debt Ceiling Warning: Inaction Would Double Interest Rates, Crash Market

Public efforts by both House Speaker John Boehner and President Obama to convince skeptical new Republican House members to add $2 trillion to the nation’s burdensome $14 trillion debt ceiling are being reinforced by dire warnings from business leaders that failing to OK the increase will lead to inflation, an immediate doubling of interest rates and a killer Wall Street crash.

“If they don’t increase the debt, there will be a huge impact on the economy,” a Wall Street executive told Whispers on background. “Interest rates would spike. S&P and Moody’s would downgrade U.S. debt, raising the price of borrowing, there would be a market sell-off, it would be a disaster.”

While Boehner, who yesterday called for a deal that would OK the debt ceiling increase in return for trillions of dollars in spending cuts, Wall Street lobbyists and banking and business leaders are meeting with several of the new Tea Party-backed House members who pledged to stop raising the ceiling to explain the impact of standing pat.

“A lot of freshmen are new to the issue,” said one of those meeting with the new members, some of whom signed pledges not to raise the debt ceiling no matter what.

Among the specifics the sources say they are telling the new members:

— Inflation could jump, though they aren’t giving any percentage growth.

— Interest rates could double if U.S. debt is downgraded. House loans, for example, that are now below 5 percent, could surge to 9-10 percent, killing any chance of fixing the housing slump or cutting the unemployment rate, now at 9 percent.

— The stock market could suffer a 10 percent drop, far more significant than the 778 point thrashing Wall Street took when the House rejected the government’s $700 billion bank bailout plan in September 2008.

“That market sell-off will look small compared to what we’ll see,” said a Wall Street executive.

So far, the campaign to turn the naysayers around is starting to work, say those involved. Helping is the expectations that the debt ceiling won’t actually be breached until August.

While there have been warnings that the vote must come sooner due to expectations that the cap will be breached this month, officials explained that Treasury can make several moves to postpone that until about August 2.

By: Paul Bedard, U. S. News and World Report, May 10, 2011

May 10, 2011 Posted by | Banks, Businesses, Congress, Conservatives, Debt Ceiling, Deficits, Economic Recovery, Economy, Financial Institutions, GOP, Government, Government Shut Down, Jobs, Lawmakers, Lobbyists, Politics, President Obama, Republicans, Right Wing, Tea Party, Unemployment, Wall Street | , , , , , , , , , | Leave a comment

Tea Party Puts The Screws To House Republicans Over Debt Ceiling

Tea party activists have taken some lumps lately, but they’re not going down without a fight.

With TV ads, petitions and grassroots lobbying, tea party organizers are gearing up to send an absolutist message to Capitol Hill: Don’t raise the debt ceiling under any circumstances. Tea party activists have already clashed publicly with some of the 87 GOP freshmen they helped elect last year, and they’re warning that Republicans who don’t keep their fiscal promises will pay a political price.

“We will remove as many incumbents as we can that do not do the job they were hired to do,” Darla Dawald, national director of the tea party group Patriot Action Network, said in an e-mail. “We are watching every member of Congress, their votes, position and language.”

A newly formed conservative political action committee has released an ad opposing a debt ceiling increase and disputing the $100 billion in cuts that House Speaker John Boehner, R-Ohio, touted in the recent budget agreement. The ad cites the Congressional Budget Office finding that cuts totaled less than $400 million. But its real target is President Obama and his “massive deficit spending.”

The ad was released by the new Campaign to Defeat Barack Obama PAC, a spinoff of the Our Country Deserves Better PAC, the party of the Tea party Express. The latter is about to launch its own national TV ad campaign opposing a debt ceiling increase, said Amy Kremer, who chairs Tea party Express. The PAC raised and spent $7.7 million in the 2010 cycle, according to the Center for Responsive Politics.

Another conservative activist group, Grassfire Nation, is gathering signatures from its 1.8 million members on a petition opposing “any increase in the legal federal debt limit,” to be delivered by hand in the coming weeks to lawmakers on Capitol Hill. A Grassfire Nation poll found that close to 80 percent of its members opposed raising the debt ceiling, even if conditions such as spending cuts or caps were attached.

“It’s no secret that the tea party movement’s unhappy,” said Kremer. “You’re seeing people on a local level really upset with their congressmen and women.” Reps. Michael Grimm, R-N.Y., Tom Price, R-Ga., and David Schweikert, R-Ariz., are among the House Republicans who have fielded flak from conservative bloggers, demonstrators, or town hall hecklers upset that Congress isn’t acting faster to bring down the deficit.

“There’s a frustration that we can’t move faster,” said Americans for Tax Reform president Grover Norquist, referring to the tea party movement. “But also an understanding that their job is to say: Let’s do more, let’s do more, let’s do more.”

The debt ceiling vote will be a key test of both the tea party and of the GOP on the threshold of the 2012 election. Technically, the federal government will run out of money in mid-May, but Treasury Secretary Timothy Geithner has signaled that accounting adjustments may give Congress until early August to actually vote.

It’s an open question how successful the tea party will be, both in the debt ceiling fight and on the campaign trail next year. Of the GOP freshmen, who’ve played a pivotal role in the unfolding budget drama, one bloc would raise the debt ceiling on the condition of substantive budget reforms or spending cuts, sources say. Another bloc opposes a debt ceiling increase flat out. And about a third are undecided.

Tea party activists are up against expert and administration warnings that failing to raise the debt limit could send the economy and the stock market into a tailspin. The tea party’s star, moreover, may be fading.

A Capitol Hill protest in March to demand more budget cuts proved underwhelming. The movement’s national leaders, most notably former Alaska Gov. Sarah Palin and Rep. Michele Bachmann, R-Minn., have drifted to the fringes of the GOP White House nominating contest. A couple of tea party PACs unveiled to much fanfare last year–Ensuring Liberty and Liberty First–have fizzled. And GOP leaders have signaled that certain tea party goals–repealing the health care law, partially privatizing Medicare–may or may not be on the table in ongoing debt limit negotiations.

It “absolutely is not true” that the movement is losing steam, countered Kremer. “You’re not seeing the great big rallies that you did before, because people are engaged on a local level doing things.”

Virginia tea party activist Jamie Radtke, who’s launched a Senate campaign for the seat now held by Democratic Sen. Jim Webb, concurred that the movement is shifting from a national to a local focus: “There is a strong desire in the tea party movement to keep the tea party local.”

Radtke predicted that activists will take the fight over the debt limit to the mat. “The GOP is on probation, because under President Bush they spent a lot of money, and added $3 trillion to the national debt,” she said, adding: “You will see that the tea party will have no problem whatsoever challenging the very freshmen they put in.”

Such warnings still make some on Capitol Hill very nervous. But as Republicans struggle between idealism and pragmatism, the GOP–and the tea party–might soon face a moment of truth.

By: Elizabeth Newlin Carney, Contributing Editor, National Journal Daily, May 9, 2011

May 10, 2011 Posted by | Budget, Congress, Conservatives, Debt Ceiling, Deficits, Democracy, Economic Recovery, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Lobbyists, Politics, Republicans, Right Wing, States, Tea Party, Voters | , , , , , , , , | Leave a comment

Recall Elections Enhance Democracy: Wisconsinites Are Holding Their Elected Officials Accountable

It’s true that the recall election was never intended to replace our representative form of government, and it’s most certainly not a tool to be used lightly. However, when elected officials subvert the will of those they represent, enacting a radical agenda that seeks to concentrate power in the hands of the very few and jeopardizing the livelihoods of the people they are supposed to protect, the exercise of the constitutionally guaranteed right to force a recall election is a just and proper tool to hold those elected officials accountable for their actions.

And, although the use of the recall election is an appropriate expression of voter outrage, the fact remains that the actual undertaking of a recall election is an incredibly daunting task that requires collecting a great amount of signatures in a relatively short period of time. Here in Wisconsin, the number of valid signatures required to trigger a recall election is equal to 25 percent of the number of persons who voted in the last election for the office of governor within the electoral district of the officer sought to be recalled. Even more of a challenge, these signatures, numbering in the thousands, or possibly even hundreds of thousands, must be collected in a mere 60 days.

These requirements are incredibly stringent, and in being so, protect the integrity of the electoral process by ensuring that the recall election is not used to undermine representative democracy. Prior to the historic recall filings of the past few weeks, Wisconsin has only had four recalls of state officials, dating back to 1926, when, at the very heart of the Progressive movement, the Wisconsin Constitution was amended to provide for the recall of elected officials. Two of those four were successful.

The unprecedented efforts of thousands of engaged citizens only serve to illustrate the significance of the events of recent weeks, where the tremendous momentum against Republican legislators who enabled Gov. Scott Walker’s extreme power grab continues unabated, and where Wisconsinites continue to express their outrage over record cuts to education, healthcare, and support for our seniors and the most vulnerable, while granting tax cuts for the very rich.

It’s clear that the tide is turning in Wisconsin. The people have sent an unmistakable signal to an intransigent governor and his rubber-stamp legislature that their divisive methods and preference for placing narrow and partisan corporate interests over the people they represent have been rejected, and there is no choice now but to know that the voices of thousands of working Wisconsin families will be heard.

The actions of the Republican legislators facing recall are extreme, dangerous, and way out of step with Wisconsin values. Through the power of their ballots in recall elections, Wisconsinites have the opportunity to hold their elected officials accountable and effect immediate change so they are no longer subject to the will of politicians more concerned with promoting the agenda of their party bosses than with keeping their promises to represent the will of their constituents.

Recall elections send a direct message to elected officials—that they will be held responsible for the promises they make to the people they represent, and if they fail to keep those promises, they risk drawing the ire of the electorate.

Recall is undoubtedly a powerful tool, but it does not weaken democracy. If anything, it enhances it.

By: Mike Tate, U. S. News and World Report, May 10, 2011

May 10, 2011 Posted by | Collective Bargaining, Conservatives, Constitution, Corporations, Democracy, GOP, Gov Scott Walker, Government, Lawmakers, Liberty, Politics, Public Employees, Republicans, Right Wing, State Legislatures, States, Union Busting, Unions, Wisconsin, Wisconsin Republicans | , , , , , , , , , , , | Leave a comment

Is Donald Trump A Demagogue?: He Might Aspire To Be One—But He Doesn’t Have The Chops

Unless you live under a rock, you know Donald Trump is thinking about running for president. His sensational public endeavors—pushing the White House to release President Obama’s long-form birth certificate and, most recently, questioning the authenticity of the president’s academic record—have met with astonishment, outrage, and dismay. A recent Bloomberg BusinessWeek cover featured a photo of Trump in mid-rant with the one-word headline, “Seriously?” Journalists, commentators, and even Jerry Seinfeld (who recently canceled an appearance at a Trump fundraiser) have taken to calling Trump a demagogue.

In recent decades, this powerful term, traditionally a scalpel for taking apart dangerous leaders, has become blunt and ineffectual through overuse. I’ve been thinking and writing about demagogues for a decade. I’ve been watching with a mix of bemusement and concern as Trump strains to elevate himself into an actual political figure, rather than the ego tornado he’s been for decades. But one of the lessons of history is that, while it’s easy to underestimate demagogues, it’s also easy to overestimate them. For the time being, I’ve concluded that Trump is not a demagogue. He lacks both the common connection and the lawlessness of classic demagogues, whether Venezuela’s Hugo Chavez today or, in the past, figures ranging from Benito Mussolini to George Wallace to Joseph McCarthy. Instead, call him a quasi-demagogue: a political figure with the desire, but not the chops, to manipulate the masses.

Demagogues are part of the natural life cycle of democracy. So much so that the Founding Fathers designed our various checks and balances and circuit-breakers in part from their mortal terror that a predatory mass leader—a demagogue—would convert popular adulation into American tyranny. James Madison, for instance, explained that “provisions against the measures of an interested majority,”such as an independent judiciary, were required to control “the followers of different Demagogues.” This doesn’t mean, however, that demagogues haven’t popped up throughout the country’s history.

During my years studying and watching demagogues, the one lesson that has stuck with me is this: Many politicians could become demagogues if they wanted to. They could choose the gross emotional appeal, the naked ambition, and the cunning blend of vulgarity and artistry that is the true demagogue’s métier. They don’t because most of them are governed by an ethic of shame. Where others blush and quail, the demagogue happily blusters ahead—crossing boundaries, coloring outside lines, toppling walls.

Demagogues often look most ridiculous to the people they’re most uninterested in impressing. When the colorful, autocratic Louisiana Governor Huey Long was sworn into the U.S. Senate in 1931, it was precisely his clownishness that gave him such political amplitude. He prompted a firestorm of controversy when he met a German naval commander paying an official call in a pair of green silk pajamas and a bathrobe. One scholar writes, “[T]he lesson he learned from the incident was less the importance of diplomatic niceties than the value of buffoonery in winning national publicity.” With these techniques, Long soon attracted more attention from the press than his 99 Senatorial colleagues combined. He would have challenged FDR for president in 1936, had he not been assassinated by the son of a political opponent in 1935.

You might think that Trump’s own clownishness puts him in the class of a Huey Long. But let’s take a closer look. As I argued in my book Demagogue: The Fight to Save Democracy from Its Worst Enemies, a true demagogue meets four tests. First, he presents himself as a man of the people, rather than the elites. Second, he strikes a very strong, even overpowering emotional connection with the people. Third, he uses this connection for his own political benefit. Fourth, he threatens or breaks established rules of governance. This fourth test is the most important, distinguishing a demagogue like Huey Long (who routinely used the National Guard to intimidate or brutalize political opponents, for instance) from populists like William Jennings Bryan (who, as rambunctious as he may have been, tended to play by the rules).

For Trump, let’s take the four tests in turn. With his Theater of the Absurd hairdo and his massively knotted silk ties, his Manhattan address and his glitzy brand, Trump is hardly a man of the people. True, he’s employing incautious bluster as a proxy for common appeal. “Authenticity” has become the coin of today’s reality-television realm, and there is a mass appeal to his straight-talkin’ persona—this is why his recent use of the “f bomb” plays to his curious political strengths, even while appalling elites. But for Trump to swap his fancy persona for that of a commoner would require him to blow up the brand he’s spent decades building, a task for which he is probably not constitutionally capable.

Second, Trump does not have the broad emotional appeal to the masses that marks the classic demagogue. Over the last decades, Trump has enjoyed billions of dollars of both paid and earned media exposure. He couldn’t be better-known by the American people. Yet he is consistently polling under 20 percent right now among Republicans and right-leaning independents (a recent CNN poll has him at only 14 percent), giving him a base of well under one in ten among the general voting population. The emotional surge for Trump among the very hard-core Tea Party right should certainly be noted. But it’s more likely this brushfire halts at a particular firebreak: the general American public’s hostility and suspicion to the Tea Partiers.

On the third test, it’s very unclear whether Trump is interested in actual political power, or just in increasing his personal brand and wealth. Even now, we can’t tell whether he will run—and keep running, after the glitz of the initial launch wears off—for president. Even if he gets into the race, will he slog through the hard work of an 18-month campaign, including getting on the ballot in all 50 states, participating in debates, developing policy positions? And, if he drops out, will he really have an interest in putting his shoulder to a real political end? Time will tell, but the initial signs are that this is mostly about Trumpery rather than government.

The most important test is the fourth—that demagogues, unlike populists, bend or break the rules. Trump clearly has no inhibition about lying for political benefit. But real demagogues go much further. Look at Joseph McCarthy, who used his selected issue of anti-communism to demolish people’s personal and professional lives. It’s hard to imagine that Trump really wants to encourage threatening behavior. But, if he ever started to ask his followers to test boundaries of lawfulness, to “challenge authority,” our hackles should quickly rise.

None of this means Trump isn’t worth taking seriously. To the contrary: Where Trump is succeeding in his demagogic appeals, he’s also illuminating shadowy corners of the American public. And we have to take a hard look at how this is happening. Demagogues, like nightshade, have always flourished in dark places of extreme economic or social distress. The 1920s were the last great era of American demagoguery, when Huey Long and the Detroit “radio priest” Father Coughlin rallied millions of terrified Americans against elites. It’s been no surprise that the 2010s, a time of similar distress, have fostered divisive figures from Sarah Palin to Glenn Beck to Trump.

The lesson here is that today’s restless, upset public needs reassurance—and vigorous economic policy that addresses their concerns. But we also need the media to exercise some discretion. In today’s fragmented, 24-7 echo chamber, where 500,000 nightly viewers qualify you as a pundit and one persistent blogger can take over a news cycle, the media has more responsibility for steering the ship of state toward calmer waters. Trump—as quasi-demagogue—is a creation largely of the media. The real conspiracy isn’t Trump’s mania du jour; it’s hundreds of news editors, assignment editors, reporters, and bloggers whom he’s playing like fiddles.

More broadly, though, history shows that the only real antidote to demagogues is an alert, vigilant civic culture. The ancient Athenians, exhausted by a series of vicious demagogues, passed a law exiling anyone who “proposed a measure contrary to democratic principles.” We probably don’t need to go so far, though some watching Trump today doubtless wouldn’t mind moving him to Canada. America, after all, is the land of the civic mores the visiting Frenchman Alexis de Tocqueville chronicled and admired. And we almost always eventually turn on demagogues. The stars of Father Coughlin, Joseph McCarthy, George Wallace, and David Duke all rose for a time, but, when they fell, they crashed hard.

We can never be complacent about our constitutionalism, and the Trump phenomenon bears careful watching, lest the little fires he’s clearly capable of starting spread into a larger conflagration. But, in general, Americans have shown they’ve got what it takes to nip even quasi-demagogues in the bud. Take note of Palin and Beck’s recent fates: Under heavy fire from the public for their own excesses (a persecution complex in Palin’s case, and anti-Semitic conspiracy theories in Beck’s), they both are retreating to the sidelines.

We’re early in Trump’s political career, so I offer these judgments cautiously, but my suspicion is that Trump, too, will burn out, like a hot fuse on a cold rocket. This may already have started. When President Obama took the stage last week in his stunner of a press conference to take on Trump’s birther attacks, he declared, “We’re not going to be able to solve our problems if we get distracted by sideshows and carnival barkers.” A hilarious tweet I received shortly after said that carnival barkers were protesting that the comparison with Trump was giving them a bad name. And, of course, the president easily made Trump look both inane and irrelevant when the coverage of Osama bin Laden’s death interrupted “The Celebrity Apprentice.”

There’s also a final thing Trump himself should remember, before he goes farther down what is likely a dead-end road to demagoguery: History remembers Joseph Welch’s famous question to McCarthy—“Have you no sense of decency, sir? At long last, have you left no sense of decency?”—as well as it remembers McCarthy himself. Trump has shown he doesn’t take criticism well, sending an angry retort to Vanity Fair and appearing openly thin-skinned after jokes were made at his expense at the White House Correspondents Dinner. He will likely realize soon, if he hasn’t already, that his brand, not to mention his ego, will not sustain the sort of historical thrashing that will inevitably follow any furthering of his demagogic aspirations. Indeed, in the end, The Donald’s self-love might just be his own best friend.

By: Michael Signer, The New Republic, May 7, 2011

May 7, 2011 Posted by | Bigotry, Birthers, Constitution, Democracy, Donald Trump, Economy, Elections, Ideologues, Ideology, Journalists, Politics, Populism, President Obama, Press, Public, Pundits, Republicans, Right Wing, States, Tea Party, Voters | , , , , , , , , , , | Leave a comment

Gov. Walker Signs Bill Blocking Milwaukee’s Paid Sick Leave Law

In 2008, Milwaukee, Wisconsin became the third city in America to guarantee workers paid sick leave, joining Washington D.C. and San Fransisco. These cities are stepping up to fill a void left by the federal government, which is content to leave America as one of the only countriesin the developed world that does not guarantee workers paid time off if they are sick.

The sick leave law was approved by referendum — with nearly 70 percent of voters in favor — and was upheld a few weeks ago by the state’s court of appeals. However, Republicans in the Wisconsin state legislature passed a bill preempting the city’s law and ensuring that no jurisdiction within the state of Wisconsin is allowed to decide it wants to mandate paid sick days. Gov. Scott Walker (R-WI) — who gained notoriety for proposing a law stripping public sector workers of their collective bargaining rights and sparking mass protests — signed the anti-sick leave bill into law today:

Gov. Scott Walker has signed a bill that prohibits local governments from passing ordinances guaranteeing workers’ paid sick and family leave…Walker, a Republican, says in a statement the bill removes another barrier to creating jobs.

But Walker’s concern about job-loss is overblown. The Drum Major Institute conducted a study examining San Francisco’s paid sick leave law and found “no evidence that businesses in San Francisco have been negatively impacted by the enactment of paid sick leave.” In fact, the U.S. economy as a whole loses $180 billion in productivity annually due to sick employees attending work and infecting other workers.

Despite Walker’s misguided action, as the National Association of Working Women noted, plenty of other cities are forging ahead with paid sick leave legislation:

In Philadelphia, a paid sick days bill was passed out of a City Council committee a few weeks ago, and in Connecticut, the state legislature is moving forward on a bill with bipartisan support. Paid sick days legislation in New York City has 35 City Council sponsors, legislation is about to be introduced in Seattle, and more than a dozen states have coalitions advocating actively for paid sick days and paid family leave policies.  San Francisco and Washington, DC have already implemented paid sick days laws.

In the end, repealing Milwaukee’s paid sick leave law is simply one more way in which Walker is undertaking his assault on Wisconsin’s workers.

By: Pat Garofalo, The Wonk Room, Think Progress, May 5, 2011

May 6, 2011 Posted by | Collective Bargaining, Conservatives, Democracy, Economy, GOP, Gov Scott Walker, Governors, Ideology, Jobs, Lawmakers, Middle Class, Politics, Republicans, Right Wing, State Legislatures, States, Unions, Wisconsin, Wisconsin Republicans, Women, Womens Rights | , , , , , , , , , , , , | Leave a comment