“We Are Not A Deadbeat Nation”: Do Your Duty Congress, Or We’ll All Suffer The Consequences
By the time the president was making his case for the fourth time, the responses started getting a little repetitious, but Obama’s line didn’t change: we’ve already made enormous progress on debt reduction, he’s willing to do more, but a hostage strategy based on the debt ceiling isn’t acceptable.
In fact, the president spent a fair amount of time trying to explain to the public what some reporters occasionally overlook:
“The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to.
“These are bills that have already been racked up, and we need to pay them. So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up. […]
“So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd…. And Republicans in Congress have two choices here: They can act responsibly and pay America’s bills or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”
It doesn’t sound like he’s ready to cave. On the contrary, it sounds like the president is issuing a not-so-subtle challenge to congressional Republicans: do your duty or we’ll all suffer the consequences.
The president went on to say:
“[T]he issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this. Congress authorizes us to pay our bills.
“Now if the House and the Senate want to give me the authority so that they don’t have to take these tough votes, if they want to put the responsibility on me to raise the debt ceiling, I’m happy to take it. Mitch McConnell, the Republican leader in the Senate, had a proposal like that last year, and I’m happy to accept it.
“But if they want to keep this responsibility, then they need to go ahead and get it done. And you know, there are no magic tricks here. There are no loopholes. There are no, you know, easy outs. This is a matter of Congress authorizes spending. They order me to spend. They tell me: You need to fund our Defense Department at such-and-such a level. You need to send Social Security checks. You need to make sure that you are paying to care for our veterans.
“They lay all this out for me, and — because they have the spending power. And so I am required by law to go ahead and pay these bills.
“Separately, they also have to authorize a raising of the debt ceiling in order to make sure that those bills are paid. And so what Congress can’t do is tell me to spend X and then say, but we’re not going to give you the authority to go ahead and pay the bills.”
Obama added that he’s ready to negotiate on debt reduction, and he’s even open to entitlement changes, but he doesn’t intend to reward Congress for doing what it must do anyway.
What’s more, of particular interest was the president highlighting Republicans’ philosophical goals, which have less to do with debt reduction, and more to do with undermining public institutions.
“[I]t seems as if what’s motivating and propelling at this point some of the House Republicans is more than simply deficit reduction. They have a particular vision about what government should and should not do. So they are suspicious about government’s commitments, for example, to make sure that seniors have decent health care as they get older. They have suspicions about Social Security. They have suspicions about whether government should make sure that kids in poverty are getting enough to eat or whether we should be spending money on medical research. So they’ve got a particular view of what government should do and should be.
“And that view was rejected by the American people when it was debated during the presidential campaign. I think every poll that’s out there indicates that the American people actually think our commitment to Medicare or to education is really important, and that’s something that we should look at as a last resort in terms of reducing the deficit, and it makes a lot more sense for us to close, for example, corporate loopholes before we go to putting a bigger burden on students or seniors.”
I’m glad Obama reminded the political world of this basic truth; I get the sense folks sometimes forget what the driving motivations are behind many of our ongoing partisan fights.
By: Steve Benen, The Maddow Blog, January 14, 2013
“The Crazies Just Get Crazier”: Bring Me Your Angry, Your Paranoid, Your Masses Huddled In Their Bunkers…
Independence is the new media thing. Andrew Sullivan is doing it. Trey Parker and Matt Stone are doing it. And Glenn Beck, who did it already when he got booted from Fox News and created his own internet TV … um … thing in response, is taking it even farther. Inspired by “Galt’s Gulch,” the place in Atlas Shrugged where the Randian übermenschen retreated, Beck is unveiling plans for an entire city he will build, a city to embody all that is right and good and libertarian about America, a true refuge where those who have proven their mettle by watching hundreds of hours of his programs can come and live just as the Founders intended. It’ll be called, naturally, Independence, U.S.A. Behold: http://www.video.theblaze.com/media/video.jsp?content_id=25550259
You’ll notice how right at the beginning Beck says, “You will have to literally wipe us off the face of the earth and wipe us off the map before you can erase the truth that is America.” Presumably in the regular America, the sinister forces can just come for us one by one, and before you know it America is gone, but it’ll be a lot harder if the True America is all concentrated in one city. Seems a little backward to me, but OK.
Of course this will never happen, but you can’t fault him for a lack of ambition. It isn’t enough to pay to be a member of Glenn’s web site and listen to his radio show and buy his books. He wants you to come live in a city he designed! And what’s the end point of this? Perhaps an “Eternal Glenn” program, where after your loved one dies, you mail to Beck a small vial containing some of old grandad’s blood (harvested while he was alive, of course), and in a brief but solemn ceremony, Glenn will join the blood with that of other Beck fans in a beautiful cauldron (mini-replicas available for only $39.95), merging their essences into a powerful liquid spirit, each drop a concentrated reduction of Paranoid Cranky Old White Man, bursting with America-ness and used for anointing in secret ceremonies deep within the underground temple at Independence, U.S.A. Don’t be surprised.
By: Paul Waldman, Contributing Editor, The American Prospect, January 14, 2013
“Fundamentally Stupid And Dangerous”: The GOP Debt Ceiling Strategy Is “Hostage Taking”
Paul Krugman on Sunday accused the Republican leadership of holding the country hostage.
The Nobel-Prize winning economist and New York Times columnist argued that congressional Republicans are “threatening to blow up the world economy” if they don’t get their way in the debt-ceiling debate. After a difficult fiscal cliff battle, President Barack Obama said he would not negotiate over the debt ceiling, but Republicans have said they won’t authorize an increase in the country’s spending limit without major spending cuts.
“We should not allow this to become thought of as a legitimate or normal budget strategy,” Krugman said on ABC’s “This Week.” “This is hostage taking.”
Krugman has made similar statements in the past, particularly when defending the idea of minting a trillion-dollar platinum coin to avoid the debt ceiling crisis — a loophole the White House ruled out Saturday. In a blog post earlier this month, Krugman argued that Obama should be ready to mint the coin because it offered a “silly, but benign” solution to the crisis. The alternative: Putting the nation’s ability to meet its financial obligations at risk, an option that Krugman described as “both vile and disastrous.”
“The debt ceiling is a fundamentally stupid but dangerous thing,” Krugman said on “This Week.” “It’s incredibly scary, this is much scarier than the fiscal cliff,” he added later.
If Congress does nothing to raise the debt ceiling, the U.S. could lose its ability to meet its financial obligations by as early as February 15, according to a recent report from the Bipartisan Policy Center. Republican leaders and the White House came to an agreement earlier this month to address the so-called fiscal cliff, a combination of tax increases and spending cuts that economists warned could have plunged the country into recession.
By: Jillian Berman, The Huffington Post, January 13, 2013
“Public Goals, Private Interests”: In Debt Campaign, Business Executives And Former Legislators Defending Their Narrower Interests
When Jim McCrery, a former Louisiana congressman, urged lawmakers last month to pursue entitlement cuts and tax reform, he was introduced on television as a leader of Fix the Debt, a group of business executives and onetime legislators who have become Washington’s most visible and best-financed advocates for reining in the federal deficit.
Mr. McCrery did not mention his day job: a lobbyist with Capitol Counsel L.L.C. His clients have included the Alliance for Savings and Investment, a group of large companies pushing to maintain low tax rates on dividend income, and the Win America Campaign, a coalition of multinational corporations that lobbied for a one-time “repatriation holiday” allowing them to move offshore profits back home without paying taxes.
In Washington’s running battles over taxes and spending, Mr. McCrery and his colleagues at Fix the Debt have lent a public-spirited, elder-statesman sheen to the cause of deficit reduction. Leading up to the fiscal negotiations, they set up grass-roots chapters around the country, met with President Obama and his aides, and hosted private breakfasts for lawmakers on Capitol Hill. In recent days, Fix the Debt has redoubled its efforts, starting a new national advertising campaign and calling on Mr. Obama and Congress to revise the tax code and reduce long-term spending on entitlement programs.
But in the weeks ahead, many of the campaign’s members will be juggling their private interests with their public goals: they are also lobbyists, board members or executives for corporations that have worked aggressively to shape the contours of federal spending and taxes, including many of the tax breaks that would be at the heart of any broad overhaul. While Fix the Debt criticized the recent fiscal deal between Mr. Obama and lawmakers, saying it did not do enough to cut spending or close tax loopholes, companies and industries linked to the organization emerged with significant victories on taxes and other policies.
“Some of these folks who are trying to be part of the solution have also been part of the problem,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a liberal-leaning advocacy group, and a former economic adviser to Vice President Joseph R. Biden Jr. “They’ve often fought hard against the kind of balance that we need on the revenue side. Many of the people we’re talking about are associated with policies that would make it a lot harder to fix the debt.”
Sam Nunn, a former Democratic senator from Georgia who is a member of Fix the Debt’s steering committee, received more than $300,000 in compensation in 2011 as a board member of General Electric. The company is among the most aggressive in the country at minimizing its tax obligations. Mr. McCrery, the Louisiana Republican, is also among G.E.’s lobbyists, according to the most recent federal disclosures, monitoring federal budget negotiations for the company.
Other board members and steering committee members have deep ties to the financial industry, including private equity, whose executives have aggressively fought efforts to alter a tax provision, known as the carried interest exception, that significantly reduces their personal income taxes.
Erskine B. Bowles, a co-founder of Fix the Debt, was paid $345,000 in stock and cash in 2011 as a board member at Morgan Stanley, while Judd Gregg, a former Republican senator from New Hampshire and a co-chairman of Fix the Debt, is a paid adviser to Goldman Sachs. Both companies have engaged in lobbying on international tax rules.
Mr. Gregg also sits on the boards of Honeywell and IntercontinentalExchange, a company that has warned investors that a tax on financial transactions would lower trading volume and curtail its profits. The two companies paid Mr. Gregg almost $750,000 in cash and stock in 2011.
In all, close to half of the members of Fix the Debt’s board and steering committee have ties to companies that have engaged in lobbying on taxes and spending, often to preserve tax breaks and other special treatment.
Fix the Debt does not endorse specific tax proposals. Instead, it advocates broad principles for debt reduction, including “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.” A spokesman, Jon Romano, said that the executives involved with the campaign were committed to tax reform, even if it closed loopholes that benefited their companies.
“All the people involved in this campaign have said from the beginning that everything has to be on the table,” Mr. Romano said. “Our C.E.O.’s, our state chapters, our small-business leaders — they are all willing to give something up for the sake of the country.”
Those involved with the campaign say they have tried to separate their advocacy for Fix the Debt and their private work for clients. Vic Fazio, a former Democratic congressman from California who is on the campaign’s steering committee, is a lobbyist at Akin Gump, a firm whose clients include KKR, a leading private equity shop, and the Private Equity Growth Capital Council, an industry trade group.
Mr. Fazio said that he and other people involved with the campaign had tried to set aside their parochial interests and had assumed that any grand bargain between Mr. Obama and Congress would include some elements they did not like.
“The people who have signed up to work with Fix the Debt are people with lots of tax preferences that are important to their business model,” Mr. Fazio said. “But they go along with it because they think there is an overriding benefit to their companies and to the country.”
But so far, at least, the companies and industries most closely linked to Fix the Debt have been aggressive in defending their narrower legislative interests.
The fiscal deal preserved the carried interest loophole, eliminated most of a large prospective increase in dividends taxes and preserved a tax break, known as the active financing exception, that allows G.E. and other multinational companies to avoid paying United States taxes on overseas profits.
The deal also forestalled large automatic cuts in military spending, a boon to contractors like Honeywell. The company’s chief executive, David M. Cote, is a co-founder of Fix the Debt; the group’s “core principles,” which call for retrenchment in entitlement programs like Social Security, make no mention of military spending, which constitutes about a fifth of the federal budget.
“It’s easier to get face time in Washington as a deficit hawk than as a corporate hack,” said Kevin Connor, the director of the Public Accountability Initiative, a watchdog group. “They are spending millions, but they are protecting billions in defense contracts and tax giveaways that would otherwise be on the chopping block.”
Yet after an election in which many industries, including Wall Street, bet heavily against Mr. Obama, Fix the Debt has also had more credibility among Democrats than some traditional business groups like the United States Chamber of Commerce. The chamber, by far the largest business advocacy group in Washington, staunchly opposed proposals to raise taxes before the fiscal deal.
At a news conference in New York on Tuesday, Mr. Bowles suggested that Fix the Debt was just getting started.
“I’m not a quitter,” he said at the event, which was sponsored by Nasdaq, the country’s second-largest stock exchange. “We’re going to stay until we get the job done.”
By: Nicholas Confessore, Nelson Schwartz, Contributor; The New York Times, January 9, 2013
“She Will Be Heard”: Elizabeth Warren Knows Where A Lot Of The Bodies Are Buried, Puts AIG On Notice
When new members arrive in the US Senate, they are supposed to take a seat on a back bench and listen quietly for a couple of years. That is not in Elizabeth Warren’s nature. She had been a US Senator from Massachusetts for only about a week when she broke with etiquette. Warren was outraged that AIG investors were urging the insurance giant’s directors to join them in a lawsuit against the federal government, claiming damages from the federal bailout of their company during the financial crisis.
The freshman senator sent out a tartly worded statement to her many fans and followers. “AIG should thank American taxpayers for their help—not bite the hand that fed them,” Warren wrote. The message swept the blogosphere like wild fire. The AIG directors folded the next day. It is perhaps mistaken to assume her voice alone stopped this corporate ingratitude in its tracks, but that may well be the message absorbed in Washington politics. Try not to provoke this new senator, especially on the stuff she knows a lot about. She might bite back.
Indeed, Senator Warren has renewed the accusation about the AIG bailout she had made a year ago during her Senate campaign. While the Federal Reserve pumped a fortune ($182 billion) into saving AIG from failure and thereby protected Wall Street megabanks from huge losses, the Treasury Department was arranging its own “sleuth bailout,” as Warren charged. Treasury granted an exception to the standard tax rules that delivered billions more to AIG in the form of a special tax break.
The company was effectively relieved from paying any taxes despite the fact that it has returned to profitability and repaid the Federal Reserve loans. The senator called on her supporters to join a campaign to end AIG’s special tax break. “Enough is enough…,” she wrote. “These special tax giveaways give AIG a competitive advantage over its competitors—all the while inflating AIG’s profit numbers and compensation for executives.”
What separates Elizabeth Warren from your typical newcomer to Congress—in addition to the rare gutsiness—is her deep knowledge of banking and finance. For many years, while she taught at the Harvard law school, Warren was a lonely crusader, exposing predatory bankers and the cruel terms by which millions of families were driven into bankruptcy.
Her reputation led to appointment as the chair of the Congressional Oversight Panel that investigated the AIG bailout in great depth. The COP final report is itself an extraordinary document of government—clear and concise, an unflinching analysis that describes exactly how the Federal Reserve and the Treasury failed to serve the public interest in their incestuous bailout of Wall Street titans.
“The AIG rescue demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the collapse of America’s largest financial institutions,” Warren’s report concluded.
She will be heard. The new senator will serve on the Senate banking committee and she already knows where a lot of the bodies are buried. I suspect some of those disgruntled AIG investors are wishing they had kept their whining to themselves.
By: William Greider, The Nation, January 10, 2013
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