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“A Lesson Never Learned”: A Hostage Takeover By Any Other Name Is Still A Hostage Takeover

It was, to my mind, the worst thing an American major party has done, at least in domestic politics, since the Civil War. Last summer, congressional Republicans held the full faith and credit of the United States hostage, threatening to impose a catastrophe on all of us, on purpose, to achieve a specific (and unnecessary) policy goal.

It was a move without parallel. The entirety of a party threatened to deliberately hurt the country unless their rivals paid a hefty ransom — in this case, debt reduction. It didn’t matter that Republicans were largely responsible for the debt in the first place, and it didn’t matter that Republicans routinely raised the debt ceiling dozens of times over the last several decades.

This wasn’t just another partisan dispute; it was a scandal for the ages. This one radical scheme helped lead to the first-ever downgrade of U.S. debt; it riled financial markets and generated widespread uncertainty about the stability of the American system; and it severely undermined American credibility on the global stage. Indeed, in many parts of the world, observers didn’t just lose respect for us, they were actually laughing at us.

It’s the kind of thing that should have scarred the Republican Party for a generation. Not only did that never happen, the Republican hostage takers are already vowing to create this identical crisis all over again, on purpose.

House Speaker John Boehner (R-Ohio) will threaten Tuesday that Congress will not raise the debt limit next year without spending cuts greater than the size of the debt ceiling increase.

According to excerpts of the remarks Boehner will deliver to the Peter G. Peterson Foundation fiscal summit on Tuesday afternoon, the Ohio lawmaker will “insist on my simple principle of cuts and reforms greater than the debt limit increase.” […]

He will also tell the audience: “We shouldn’t dread the debt limit. We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction.”

It’s not hyperbolic to characterize this as madness. Boehner is, in no uncertain terms, announcing that he and his party will deliberately hurt the country — and he’s calling his hostage-taking strategy an “action-forcing event.”

At a certain level, it’s true that holding a gun to someone’s head forces “action,” but it’s also true that such aggression tears at the fabric of the body politic.

I should emphasize that Boehner’s comments don’t come as a surprise. After the crisis was resolved last summer, the Center on Budget and Policy Priorities President Robert Greenstein explained, “Those who have engaged in hostage-taking — threatening the economy and the full faith and credit of the U.S. Treasury to get their way — will conclude that their strategy worked. They will feel emboldened to pursue it again every time that we have to raise the debt limit in the future.”

And that’s exactly what has happened. Senate Minority Leader Mitch McConnell (R-Ky.) told Fox News that the GOP-created crisis “set the template for the future.” He vowed, “We’ll be doing it all over” in 2013.

In case anyone’s forgotten, over the last 72 years — before 2011 — Congress raised the debt ceiling 89 times. Lawmakers from both parties, working with presidents from both parties, treated this as routine housekeeping. Preconditions have never been applied to this process, and neither party has ever used the law to hold the nation’s full faith and credit hostage. Clean debt-ceiling votes weren’t always popular, but they’ve been a standard American norm for generations.

Last year, radicalized Republicans changed the game, and they apparently have no intention of going back. This wasn’t a one-time hostage strategy, threatening the nation’s wellbeing in a fit of partisan rage; this was the creation of a new norm, to be repeated forever more. Why? Because the dangerous scheme worked — when radicalism is rewarded, the result is more radicalism.

Update: Incidentally, it’s also worth realizing that Boehner is demanding another debt-ceiling deal less than a year after breaking the terms of the agreement he reached last summer. President Obama is well positioned to ask a simple question: “If you won’t keep your word and honor your own agreements, why should I negotiate with you?”

 

By: Steve Beneb, The Maddow Blog, May 15, 2012

May 17, 2012 Posted by | Debt Ceiling | , , , , , , , | Leave a comment

“Recalcitrant And Incorrigible”: John Boehner Threatens To Take The Debt Limit Hostage Again

Last August, the nation narrowly avoided hittingits debt limit thanks to a last minute deal cut by Congress. House Republicans had threatened to push the country into a default unless Democrats agreed to spending cuts that were larger than the amount of the debt limit increase.

The episode is widely regarded as an embarrassment for good governance and a blow for the economy. Standard & Poor’s, even with the deal, downgraded America’s credit rating, citing the GOP’s complete intransigence regarding revenue increases. But it seems Speaker of the House John Boehner (R-OH) is ready to write the sequel, as he will reportedly demand today that the next increase in the debt limit follow the same GOP criteria:

In a speech Tuesday, House Speaker John A. Boehner (R-Ohio) plans to address the issue of national debt, which will once again be nearing its legal limit in January, just as the tax hikes and spending cuts are due to hit.

According to advance remarks provided to The Post, Boehner will insist that any increase in the debt limit be accompanied by spending “cuts and reforms greater than the debt limit increase” — the same demand that pushed the Treasury to the brink of default during last summer’s debt-limit standoff.

According to the Economic Policy Institute, the cuts demanded by the GOP in exchange for raising the debt limit will cost the economy 1.8 million jobs this year. Treasury Secretary Tim Geithner already pushed back on Boehner’s remarks, saying, “this commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment that you can never call into question or violate.”

 

By: Pat Garofalo, Think Progress, May 15, 2012

May 16, 2012 Posted by | Debt Ceiling | , , , , , , , , | Leave a comment

Obama And The Art Of Rational Choices

If you keep trying something and it doesn’t work and you are a rational person, you change course. President Obama is a rational person. His rip-roaring budget speechwas a rational response to the failures of the past eight months. Republicans accused him of “class warfare” because he said the rich should pay more in taxes. When Republicans start saying “class warfare,” it almost always means that a Democrat is doing something right.

Obama’s aides insist that the president had little choice until now but to try to conciliate with the Republicans because they held in their hands the power to cause enormous damage. Obama made the budget deal early this year, they say, because he thought it would be bad for the economy to start off the new Congress with a government shutdown. And he had to make a debt-ceiling deal because the country couldn’t afford default. Now, they say, he has the freedom to bargain hard, and that’s what he doing.

There is something to this, although it doesn’t take into account other moments when the president engaged in a strategy of making preemptive concessions, giving away stuff before he even negotiated. (I’d argue that this tendency goes all the way back to the stimulus package.) But for now, it’s simply a relief for many — especially for the people who support the president — to see him coming out tough and casting himself as someone with a set of principles. And it was a political imperative, too. His image as a strong leader was faltering, and he was starting to lose support within his own party. He can’t win in 2012 (or govern very effectively before the election) if he looks weak and if his own party is tepid about him. On Monday, he began to solve both problems.

And as Ezra Klein and Greg Sargent point out, Obama may get more done by starting from a position of strength — by stating flatly and clearly what he’s seeking — instead of beginning with concessions and then having to concede even more. In the recent past, he allowed Republicans to control the terms of the debate. This time, he’s trying to set them. That’s usually a better way to get something closer to what you actually want. The Republican cries about “class warfare” reflect their awareness that if Obama can get them into an argument over why they don’t want to raise taxes on the wealthy, the GOP starts out behind.

Obama will get grief in some quarters over two decisions for which I think he deserves credit. The first was his giving up, for now at least, on the idea of raising the age at which Americans are eligible for Medicare to 67 from 65. The original rationale was that Americans in the age category who could not get private coverage would pick it up through the Affordable Care Act and its subsidies.

Put aside that (1.) it’s very hard for anyone to get affordable health insurance coverage once they pass 55 or 60, and (2.) we shouldn’t be doing anything that risks increasing the number of uninsured. The fact is, we don’t even know yet if the Affordable Care Act will survive long enough to take effect in 2014. We don’t know what the courts will do. And we don’t know if the president will be reelected. A Republican president with a Republican Congress will certainly try to repeal the law.

If the new health system takes effect, and if it can be strengthened with time, it may well make sense to move the younger and more affluent among the elderly to the new plan. (And who knows? Someday we may have a comprehensive national insurance plan.) In the meantime, let’s keep people in that category covered by keeping them in Medicare. There will be plenty of time to revisit the issue of health-care costs. It’s an issue we’ll be revisiting for years, maybe decades, anyway.

Obama is also getting hit for using the end of the wars in Afghanistan and Iraq to count up $1.1 trillion in savings. You can argue about how the math works, but I like the fact that this makes clear that there are big costs to continuing our interventions. It challenges those who say we should draw down our troops more slowly to come up with ways of paying for the wars. We should have passed a temporary war tax long ago. Obama is once again making clear that the days of putting wars on a credit card are over.

By: E. J. Dionne, Opinion Writer, The Washington Post, September 20, 2011

September 21, 2011 Posted by | Affordable Care Act, Congress, Conservatives, Deficits, Democrats, Economy, Elections, GOP, Government, Government Shut Down, Ideologues, Ideology, Income Gap, Medicare, Middle Class, Politics, President Obama, Republicans, Right Wing, Taxes, Teaparty, Voters, War, Wealthy | , , , , | Leave a comment

Republican House Bills: A Glimpse Into The Tea Party’s Vision For America

If the House ran America, what would America look like?

It would no longer have a far-reaching health-care law. The House voted to repeal that legislation in January.

It would no longer have federal limits on greenhouse gases. The House voted to ax them in April.

And it would not have three government programs for homeowners who are in trouble on their mortgages. The House voted to end them all.

These and many other changes are included in an ambitious slate of more than 80 bills that have passed since Republicans took control of the chamber this year.

Most of these measures will die in the Democrat-controlled Senate. Still, they are a revealing kind of vision statement — the first evidence of how a tea-party-influenced GOP would like to reshape the country.

That vision is aimed at dismantling some Democratic priorities. The GOP’s philosophy holds that paring back an expensive and heavy-handed government bureaucracy would help restore the country’s financial footing and give private businesses the freedom to grow and create jobs.

After seven months, it is still only half a vision.

On major issues such as health care, climate change and bad mortgages, the House has affirmed that fixes are needed — if it can ever manage to repeal the old ones.

It hasn’t said exactly what those changes should be.

“The Republican Party is sort of united in terms of what they’re against. But there’s not a great deal of consensus right now in terms of what they’re for,” said Michael D. Tanner, a senior fellow at the libertarian Cato Institute and an expert on health-care reform and recent GOP history.

This month, a divided Congress finally staggered into its summer recess. Its business has been split between the terrifyingly urgent — including standoffs that threatened a government shutdown and a national debt default — and the purely theoretical.

The theoretical part has come because neither the House nor the Senate is likely to approve big ideas dreamed up by the other. The Democrat-held Senate has reacted to this by withdrawing into legislative hibernation.

House Republicans have instead been passing bills that tell a story — about the country they want but can’t quite get.

“The new House Republican majority was voted into office to change the way Washington does business and make the government accountable to the American people once again. Our agenda has reflected these goals,” said Laena Fallon, a spokeswoman for House Majority Leader Eric Cantor (Va.).

But even within the Republican ranks, there is a desire for more details about the party’s vision for replacing Democratic policies.

Rep. Trey Gowdy (S.C.) said the GOP must put forward its own solutions on issues such as health care, job creation and mortgage assistance. He said he is not convinced that there is a need to take on climate change in the same way.

“Being the party of ‘no’ . . . is an appropriate response” in some cases, Gowdy said. “It’s not appropriate when you’ve been extensively critical of someone else’s ideas” and have none to replace them, he said.

“For substance reasons, and for credibility reasons, we also need to have a comprehensive . . . alternative that goes beyond saying, ‘Your plan is bad,’ ” Gowdy said.

The best-known part of the House’s vision has to do with spending. The chamber passed a budget that calls for a Medicare overhaul that would force new recipients to buy private insurance after 2022. It also passed, with five Democratic backers, a bill that demanded a balanced budget amendment: essentially, a spending limit written into the Constitution.

But the House’s measures have gone far beyond the budget.

It has passed legislation to forbid new energy-efficiency standards for light bulbs and to punish shining a laser pointer at an airplane in flight. It voted to take away federal funding for National Public Radio and for public financing of presidential campaigns.

The House also took a stand against President Obama on the military campaign in Libya, rejecting a motion to approve U.S. involvement. And it voted to rein in Environmental Protection Agency efforts against “mountaintop-removal coal mines” by requiring the EPA to defer to decisions by state regulators.

On three major issues, the House seemed to acknowledge that simply repealing a Democratic idea might not be enough — and that it did not have its own solutions.

On Jan. 19, for instance, 242 Republicans and three Democrats voted to repeal the landmark health-care law.

In place of the legislation, Republicans had said they would craft their own solutions for problems involving high costs and the denial of coverage for preexisting conditions. Their slogan, outlined in last fall’s Pledge to America, was “Repeal and Replace.”

No replacement has occurred.

A bill that would limit liability in malpractice lawsuits has passed in committee. Other ideas are being developed, aides said.

On climate change, the EPA is requiring larger power plants and industrial facilities to reduce greenhouse gas emissions to obtain new permits.

But many in Congress worried that the effort would drive up energy prices and kill jobs. So in April, 236 House Republicans and 19 Democrats voted to make the EPA stop in its tracks.

In place of regulations, they approved only a vaguely worded “sense of the Congress” about climate change.

“There is established scientific concern over warming of the climate system,” the bill says. It adds that Congress should attack the problem “by developing policies that do not adversely affect the American economy, energy supplies, and employment.”

But how? When? The measure doesn’t say.

And it doesn’t need to, said Tim Phillips, president of the conservative group Americans for Prosperity. He said his group thinks that simply repealing this legislation — and the health-care law — is enough for now.

“The big-government assault [has been] so damaging to the economy and the government. They’re doing the right thing by just trying to stop and reverse,” Phillips said.

Environmental groups have said that the House’s bill would leave the nation powerless to fight an escalating global problem.

“They clearly aren’t going to pass any legislation themselves that would address that pollution,” said Dan Lashof of the Natural Resources Defense Council.

The House also has voted to eliminate three federal programs meant to aid homeowners in danger of foreclosure. Two help modify loans to create lower payments. The third gives no-interest loans to borrowers who are in trouble. All have been criticized for moving too slowly and helping too few.

In March, the House decided to do away with them. The Congressional Budget Office said that doing so could save taxpayers $2.4 billion.

“None of the programs . . . have been successful,” Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio), wrote in a statement.

By: David Fahrenthold, The Washington Post, August 17, 2011

August 18, 2011 Posted by | Affordable Care Act, Budget, Climate Change, Congress, Conservatives, Constitution, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, Elections, Energy, Environment, Foreclosures, Global Warming, GOP, Government, Greenhouse Gases, Health Reform, Ideologues, Ideology, Jobs, Lawmakers, Medicare, Politics, Regulations, Republicans, Right Wing, Taxes, Teaparty, Unemployed, Voters | , , , , , , , , , , , , , | Leave a comment

Standard And Poor’s Goes Tea Party

Big headlines for a Friday night: “U.S. Loses Top Credit Rating!” Yes, as most now know, Standard & Poor’s went ahead with its warnings of the past weeks and downgraded the sovereign debt of the United States government from its pristine triple-A to a still stellar but one notch less so AA+. And after a miserable week in global equity markets that was almost as ugly as it gets, a week that began with the conclusion of a universally reviled debt-ceiling deal, the late-night downgrade was the fitting end.

The symbolism is undeniable. This is the first downgrade in history, as commentators rushed to remind us. But of course, that history goes back only to the late 1930s, when the ratings agencies began to hold sway. And S&P is the only one of the major three—Fitch, Moody’s, and S&P—to downgrade. So this was big bad news, a bad coda to a bad week, but only as news and not as a trenchant analysis of the creditworthiness of the United States or its ability to meet its debt obligations going forward.

Let’s be clear: Congress and the White House did not cover themselves with glory during the debt debate throughout July. The United States has a stalled economy and a large amount of debt. But on so many levels, this downgrade is absurd.

First there is the question of math. When S&P informed the White House of its intention to downgrade on Friday afternoon, the Treasury Department took issue with S&P’s math and claimed that their assessment of the trends of the U.S. debt burden and its ratio to GDP was off by trillions of dollars. No matter. After a brief review, the wizards at S&P went ahead and removed an A.

A news ticker reads “Standard & Poor’s downgrades US credit rating from AAA to AA+” in Times Square on August 5, 2011 in New York City., Andrew Burton / Getty Images

Second, what’s with the fetish for a so-called proper ratio of debt-to-GDP. Academic economists have done no favors here. Carmen Reinhart and Kenneth Rogoff have become the go-to economists for their work showing how countries that reach a 90% ratio slide into recession and see slowing growth well before. The U.S. current level according to S&P is 74% and will rise to 85% by 2021. The explanation of the downgrade closely tracks this academic logic.

I have no criticism of an academic theory about how nations function economically. But when debatable theories become the underpinnings of decisions by unelected individuals who run organizations with significant sway (sway ceded to them by governments throughout the 20th century), then we have a problem. We have a problem when that argument gives short shrift to the debt-servicing burden. The current interest rate that the U.S. government pays to service its massive debts is hovering around 2.5%, which makes interest payments as a percentage of GDP as low as they have been since the mid-1970s.

Servicing the debt does not enter into the analysis, yet that and current interest rates make all the difference. Dismissing that counterargument, warning that rates will of course rise (yet even if they double, that will still leave the U.S. more than able to meet its obligations), and drawing on theories about the “right” level of debt puts S&P in a strange bedfellow alliance with the Tea Party.

The people who run the ratings agencies are welcome to their analysis, as is the Tea Party. But if Rogoff and Reinhart or the Tea Party announced that they were downgrading U.S. sovereign debt, they would be laughed for their audacity. Yet when it is one of the anointed ratings agencies, there is this sudden need to genuflect.

This is largely because covenant after covenant in both SEC rulings and institutional money management (pensions especially) dictate that many types of capital can only be invested in credit-worthy instruments as determined by Moody’s, S&P and Fitch. The downgrade doesn’t remotely begin to threaten the “investment grade” status of U.S. debt, and there is little reason to suspect that borrowing costs will go up as a result. Still, the reason we are in this situation of having to genuflect to S&P is because an entire structure of credit and investments, and the issuance and purchase of bonds above all, has been built on the shaky and questionable foundation of the ratings agencies.

The worst part of the downgrade is this: S&P spent considerable time in the body of their explanation about debt and GDP and growth. But they didn’t lead with that. That wasn’t the kicker. No, this was: “the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.” The company assailed the Washington culture of “brinkmanship” so in display during the debt ceiling fiasco, and used that as the primary reason to take us down a notch.

Excuse me, but since when is a pristine political process a key ingredient to good credit? Are we supposed to have civil politics in order to maintain the rating? Are we supposed to have some mythic Scandinavian concord? Washington has usually been a mess, and arguably more now than ever. Nonetheless, the great distortion of the debt-ceiling imbroglio was that failure to do a deal would have led to a default. It would have led to a partial and then increasing complete shut down of the government, which would have soon enough forced a resolution. At no point would there have been insufficient tax revenue to meet the $20 billion of so in monthly interest payments on the debt, unless the crisis had gone on for months and months, which barring collective national psychosis simply could not have happened.

So S&P doesn’t feel comfortable that the American political process is conducive to dealing with long-term debt issues and so issued a downgrade. Yet S&P is a ratings agency, not a political arbiter. Olympic judges rule on athletic aptitude, not the politics of the athletes (usually). There is not a scintilla of evidence that the political process has yet impeded the ability of the United States to meet its debt obligations, even with the debt ceiling brinkmanship. The political process may indeed be contributing to the morass of the American economy, but the larger causes are the challenges of emerging economic centers and changing patterns of global commerce. Those are long-term issues that have little bearing on current ability to manage debts.

Finally, as a symbol that the United States is sliding off the rails, the downgrade is potent. It’s hard to argue with the reality that America is in a challenging moment that looks and feels a lot like decline. Whether that proves false and a new dawn awaits, we’ll find out soon enough. But the actions of S&P are part of problem and not just an independent verification that one exists.

These agencies have been elevated to heights that should not ascend; they have been chronically wrong and late in the past; and their rationale for a downgrade sounds more like a prim distaste for a dysfunctional political process that a reasoned assessment of the ability of the United States to discharge its obligations. No defense can be offered of our current political system or near-term economic prospects. But S&P—already on overreach as “neutral” judge of American creditworthiness—has no special standing to rule on the political system, and using that as a cudgel to prove their own power is a destructive act.

 

By: Zachary Karabell, The Daily Beast, August 6, 2011

August 7, 2011 Posted by | Congress, Conservatives, Consumers, Debt Ceiling, Debt Crisis, Deficits, Democracy, Economy, Federal Budget, GOP, Politics, Republicans, Right Wing, Teaparty | , , , , , , , , , , , , , , | Leave a comment