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THE NATIONAL REVIEW:
The deal includes a lot of spending cuts, but it’s important to understand how backloaded these cuts are. The headline figure is $2.5 trillion in cuts over ten years, but (assuming no radical change from the Boehner plan) less than 1 percent of those cuts will come in FY 2012. The near-term fiscal changes are so small that they will matter very little for the economy. The long term changes will be subject to revision by future Congresses and will hopefully come when the economy is healthier—and the parts that do go into effect will probably not be that different from whatever fiscal adjustment we were going to have to enact sooner or later.
There are two parts of the spending cuts in this package that really do matter. One is the cuts that will apply in Fiscal Year 2012. There probably won’t be very big; assuming the plan follows the last Boehner proposal, there will be $22 billion in spending cuts compared to the baseline for 2012, or about 0.15 percent of GDP. (That’s out of the $1 trillion in cuts that will be agreed upfront.)
A “Super Committee” will be charged with finding a further $1.5 trillion in deficit reduction, and we can expect that the cuts it recommends will again be backloaded. (Indeed, if the Super Committee deadlocks, we will go to an automatic “trigger” process which involves no cuts at all until FY 2013). Discretionary spending cuts that come out of the Super Committee process will again be subject to the whims of future Congresses. Any changes to mandatory spending that come out of the Super Committee are more likely to be sticky—that’s the second part of the cuts that matters—but I’ll believe we’re getting meaningful entitlement reform when I see it.
So, liberals who are upset that this deal is destimulative, or who expect it to tank the economy, are off base. Suzy Khimm cites a study finding that a 1 percent of GDP fiscal consolidation implies a 0.5 percent reduction in GDP after two years—or a reduction in the growth rate of 0.25 percent each year. That points to a hit to annual GDP growth of roughly 0.04 percentage points from the FY 12 changes in this plan—an effect that will be impossible to pick up amidst the noise.
The consolidations get larger in later years. But an eventual fiscal consolidation is inevitable—we can’t run deficits over 5 percent of GDP forever. If the economy remains terrible in 2014, it is likely the cuts will be delayed.
Finally, I would note that the president called for a “balanced” approach to fiscal adjustment, and this is one. We now have $2.5 trillion in automatic, scheduled spending cuts* over the next 10 years. That comes on top of $2.8 trillion in automatic tax increases that are already scheduled through the year 2022, due to the expiration of the Bush tax cuts at the end of 2012. Indeed, Republicans have a good case that the automatic deficit reduction plan is not balanced but a bit tax-heavy.
I brought this up on Twitter today, and I got a lot of harrumphing from Democrats. There’s no way President Obama will ever let the Bush tax cuts expire, they say—he’ll get rolled again, just like he did in 2010.
To that, I have two responses. First, it’s not our fault you nominated this guy. Second, I’m not sure what good a balanced trigger as part of this compromise—one that included automatic tax increases, not just spending cuts—would have done, under this view. President Obama already has an automatic tax trigger that liberals believe he is afraid to use. What good would giving him a second trigger do?
I, personally, believe that Obama will play hardball on the Bush tax cuts in late 2012, assuming he gets reelected. Both the politics and the policy will be very different than when he agreed to a full extension in 2010. Having already been re-elected, he’ll be free to break his promise not to raise taxes on people making less than $250,000 (or, perhaps I should say, break it again, since he’s already raised cigarette taxes).
On the policy merits, if the economy is on sound footing in 18 months, a large fiscal consolidation will be called for. If we’re still in the mire, Obama can agree to another short-term extension. Once the economy is healthy and interest rates are rising, I expect that Obama will put his foot down, Republicans will refuse to do a middle-class-only extension, and most of the Bush tax cuts will expire.
Of course, if Obama is defeated in 2012, all bets are off. But then, if Republicans take full control in Washington in January 2013, they will be able to set the fiscal agenda anyway—the fact that this deal passed won’t do much more to weaken Democrats’ hands.
So, aside from raising the debt ceiling—which is very important—I think most everybody is overstating how much this deal matters. It is possible that we will get some good entitlement reforms out of the Super Committee, which will be a nice bonus on top of the debt ceiling increase. If not, for all the Sturm und Drang, this deal will have been a lot like a clean hike in the ceiling, which is fine with me.
*The mandate of the Super Committee will be to find $1.5 trillion in deficit reduction, not necessarily just spending cuts. I disagree with claims that the Super Committee is institutionally blocked from recommending tax increases. However, as a political matter, I believe that if the Super Committee recommends tax increases, the House of Representatives will most likely reject its recommendations.
- Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
- Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
- Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
- Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
- Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.
Mechanics of the Debt Deal
- Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
- President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
- Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
- Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.
1. REMOVING UNCERTAINTY TO SUPPORT THE AMERICAN ECONOMY
- Deal Removes Cloud of Uncertainty Until 2013, Eliminating Key Headwind on the Economy: Independent analysts, economists, and ratings agencies have all made clear that a short-term debt limit increase would create unacceptable economic uncertainty by risking default again within only a matter of months and as S&P stated, increase the chance of a downgrade. By ensuring a debt limit increase of at least $2.1 trillion, this deal removes the specter of default, providing important certainty to our economy at a fragile moment.
- Mechanism to Ensure Further Deficit Reduction is Designed to Phase-In Beginning in 2013 to Avoid Harming the Recovery: The deal includes a mechanism to ensure additional deficit reduction, consistent with the economic recovery. The enforcement mechanism would not be made effective until 2013, avoiding any immediate contraction that could harm the recovery. And savings from the down payment will be enacted over 10 years, consistent with supporting the economic recovery.
2. A DOWNPAYMENT ON DEFICIT REDUCTION BY LOCKING IN HISTORIC SPENDING DISCIPLINE – BALANCED BETWEEN DOMESTIC AND PENTAGON SPENDING
- More than $900 Billion in Savings over 10 Years By Capping Discretionary Spending: The deal includes caps on discretionary spending that will produce more than $900 billion in savings over the next 10 years compared to the CBO March baseline, even as it protects core investments from deep and economically damaging cuts.
- Includes Savings of $350 Billion from the Base Defense Budget – the First Defense Cut Since the 1990s: The deal puts us on track to cut $350 billion from the defense budget over 10 years. These reductions will be implemented based on the outcome of a review of our missions, roles, and capabilities that will reflect the President’s commitment to protecting our national security.
- Reduces Domestic Discretionary Spending to the Lowest Level Since Eisenhower: These discretionary caps will put us on track to reduce non-defense discretionary spending to its lowest level since Dwight Eisenhower was President.
- Includes Funding to Protect the President’s Historic Investment in Pell Grants: Since taking office, the President has increased the maximum Pell award by $819 to a maximum award $5,550, helping over 9 million students pay for college tuition bills. The deal provides specific protection in the discretionary budget to ensure that the there will be sufficient funding for the President’s historic investment in Pell Grants without undermining other critical investments.
3. ESTABLISHING A BIPARTISAN PROCESS TO ACHIEVE $1.5 TRILLION IN ADDITIONAL BALANCED DEFICIT REDUCTION BY THE END OF 2011
- The Deal Locks in a Process to Enact $1.5 Trillion in Additional Deficit Reduction Through a Bipartisan, Bicameral Congressional Committee: The deal creates a bipartisan, bicameral Congressional Committee that is charged with enacting $1.5 trillion in additional deficit reduction by the end of the year. This Committee will work without the looming specter of default, ensuring time to carefully consider essential reforms without the disruption and brinksmanship of the past few months.
- This Committee is Empowered Beyond Previous Bipartisan Attempts at Deficit Reduction: Any recommendation of the Committee would be given fast-track privilege in the House and Senate, assuring it of an up or down vote and preventing some from using procedural gimmicks to block action.
- To Meet This Target, the Committee Will Consider Responsible Entitlement and Tax Reform. This means putting all the priorities of both parties on the table – including both entitlement reform and revenue-raising tax reform.
4. A STRONG ENFORCEMENT MECHANISM TO MAKE ALL SIDES COME TOGETHER
- The Deal Includes An Automatic Sequester to Ensure That At Least $1.2 Trillion in Deficit Reduction Is Achieved By 2013 Beyond the Discretionary Caps: The deal includes an automatic sequester on certain spending programs to ensure that—between the Committee and the trigger—we at least put in place an additional $1.2 trillion in deficit reduction by 2013.
- Consistent With Past Practice, Sequester Would Be Divided Equally Between Defense and Non-Defense Programs and Exempt Social Security, Medicaid, and Low-Income Programs: Consistent with the bipartisan precedents established in the 1980s and 1990s, the sequester would be divided equally between defense and non-defense program, and it would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.
- Sequester Would Provide a Strong Incentive for Both Sides to Come to the Table: If the fiscal committee took no action, the deal would automatically add nearly $500 billion in defense cuts on top of cuts already made, and, at the same time, it would cut critical programs like infrastructure or education. That outcome would be unacceptable to many Republicans and Democrats alike – creating pressure for a bipartisan agreement without requiring the threat of a default with unthinkable consequences for our economy.
5. A BALANCED DEAL CONSISTENT WITH THE PRESIDENT’S COMMITMENT TO SHARED SACRIFICE
- The Deal Sets the Stage for Balanced Deficit Reduction, Consistent with the President’s Values: The deal is designed to achieve balanced deficit reduction, consistent with the values the President articulated in his April Fiscal Framework. The discretionary savings are spread between both domestic and defense spending. And the President will demand that the Committee pursue a balanced deficit reduction package, where any entitlement reforms are coupled with revenue-raising tax reform that asks for the most fortunate Americans to sacrifice.
- The Enforcement Mechanism Complements the Forcing Event Already In Law – the Expiration of the Bush Tax Cuts – To Create Pressure for a Balanced Deal: The Bush tax cuts expire as of 1/1/2013, the same date that the spending sequester would go into effect. These two events together will force balanced deficit reduction. Absent a balanced deal, it would enable the President to use his veto pen to ensure nearly $1 trillion in additional deficit reduction by not extending the high-income tax cuts.
- In Securing this Bipartisan Deal, the President Rejected Proposals that Would Have Placed the Sole Burden of Deficit Reduction on Low-Income or Middle-Class Families: The President stood firmly against proposals that would have placed the sole burden of deficit reduction on lower-income and middle-class families. This includes not only proposals in the House Republican Budget that would have undermined the core commitments of Medicare to our seniors and forced tens of millions of low-income Americans to go without health insurance, but also enforcement mechanisms that would have forced automatic cuts to low-income programs. The enforcement mechanism in the deal exempts Social Security, Medicaid, Medicare benefits, unemployment insurance, programs for low-income families, and civilian and military retirement.
Hate it a lot or hate it a little: Congressional leaders and the White House reach a debt ceiling deal (ignore the badly written headline)
The Reid Report:
Liberals are apoplectic that the deal doesn’t include revenues. Hawks are pissed that the deal includes triggers for massive defense cuts. It’s bad blood all around, with a source telling TRR negotiations inside the White House got ugly when President Obama threatened to kill the Bush tax cuts with a veto if necessary, to which an unnamed Republican in the room responded, “how do you know you’ll be president by then?” Apparently, the look he got from the president wasn’t pretty.
In the end, the deal appears to be something like the Reid plan, with a Mitch McConnell amendment negotiated with Vice President Biden. The deal won’t raise taxes right now, and it cuts around $1 trillion dollars in spending reductions over ten years. The deal is already boosting the futures markets in Asia, and it will likely boost the stock market in the U.S. as well. In the biggest win for President Obama, it does end this issue for the duration of the election season — a key goal — and the commission that will seek an additional $2.7 trillion in deficit savings can revisit the tax issue.
And as Ezra Klein points out, (and as I was tweeting earlier today) Democrats now hold the same whip hand over taxes that GOPers held over the debt ceiling: if they simply refuse to act, the Bush tax cuts will die in December 2012, regardless of the results of the election. That’s the scenario my source tells me the White House and Sen. Reid are planning on, and that would mean nearly $4 trillion in deficit savings. And since the trigger mechanism wouldn’t kick in until 2013, when the Bush tax cuts will theoretically be history, the deficit reduction will have been achieved, averting the need for additional cuts anyway.
The Beltway will see this as a win for the president, and a big loss for liberals, and the latter will agree with the second part. The White House has already begun pushing back on that, putting out a fact sheet designed to change perceptions of the deal from “capitulation” to worthy compromise. (Full text of the president’s statement at the end of the post). But according to TRR sources, the deal stripped out John Boehner’s more egregious requests, like Pell Grant cuts, and holds both Social Security and Medicare beneficiaries harmless (there may be future cuts on the provider side, but that’s not spelled out in this bill.) That seems to be the consensus even among wavering House Democrats.
And if the White House can make the case for ending the Bush tax cuts over the course of the next year and a half — a reisky proposition in an election year, but something they may be preparing to take the plunge, and the hits from Republicans, and do — they can win in the longer term what they lost in the short term.
Of course, now the question is whether John Boehner can steer the deal through the House. It’s certain to pass the Senate, now that Mitch McConnell has seized the stage and added his bits to it. That means he won’t filibuster, leading to what could be a big margin of victory in the Senate — which would put additional pressure on the House.
From the fact sheet released by the White House tonight:
BIPARTISAN DEBT DEAL: A WIN FOR THE ECONOMY AND BUDGET DISCIPLINE
The debt deal announced today is a victory for bipartisan compromise, for the economy and for the American people. The agreement:
Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.
Mechanics of the Debt Deal
Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.
Apparently, the $1 trillion in “cuts” are really $900 billion in discretionary spending caps, plus $350 billion in defense cuts, which the White House points out is the first cut in the defense budget since the 1990s. And again, the bill stripped out Boehner’s attempt to cut Pell Grants.
As for the “supercommission” — this from the White House fact sheet:
· The Deal Locks in a Process to Enact $1.5 Trillion in Additional Deficit Reduction Through a Bipartisan, Bicameral Congressional Committee: The deal creates a bipartisan, bicameral Congressional Committee that is charged with enacting $1.5 trillion in additional deficit reduction by the end of the year. This Committee will work without the looming specter of default, ensuring time to carefully consider essential reforms withoutthe disruption and brinksmanship of the past few months.
· This Committee is Empowered Beyond Previous Bipartisan Attempts at Deficit Reduction: Any recommendation of the Committee would be given fast-track privilege in the House and Senate, assuring it of an up or down vote and preventing some from using procedural gimmicks to block action.
· To Meet This Target, the Committee Will Consider Responsible Entitlement and Tax Reform.This means putting all the priorities of both parties on the table – including both entitlement reform and revenue-raising tax reform.
So that means the decision on revenues has been pushed down the road. Now here, we have two possibilities: the White House and Republicans will agree to overall tax reform that makes the Bush tax cuts irrelevant, or they let the Bush tax cuts sunset, and force Republicans to stand aside and watch them die.
More on the committee process, and entitlements:
· The Deal Includes An Automatic Sequester to Ensure That At Least $1.2 Trillion in Deficit Reduction Is Achieved By 2013 Beyond the Discretionary Caps: The deal includes an automatic sequester on certain spending programs to ensure that—between the Committee and the trigger—we at leastput in place an additional $1.2 trillion in deficit reduction by 2013.
· Consistent With Past Practice, Sequester Would Be Divided Equally Between Defense and Non-Defense Programs and Exempt Social Security, Medicaid, and Low-Income Programs: Consistent with the bipartisan precedents established in the 1980s and 1990s, the sequester would be divided equally between defense and non-defense program, and it would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.
· Sequester Would Provide a Strong Incentive for Both Sides to Come to the Table: If the fiscal committee took no action, the deal would automatically add nearly $500 billion in defense cuts on top of cuts already made, and, at the same time, it would cut critical programs like infrastructure or education. That outcome would be unacceptable to many Republicans and Democrats alike – creating pressure for a bipartisan agreement without requiring the threat of a default with unthinkable consequences for our economy.
Looked at in total, the deal doesn’t look that bad. It caps rather than slashes spending, spread out over 10 years, and it includes real defense cuts; and it doesn’t take revenues off the table. Liberals may still hate it, but the answer to that, again, is to elect a better Congress in 2012.
Here’s the president’s statement tonight:
THE PRESIDENT: Good evening. There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default — a default that would have had a devastating effect on our economy.
The first part of this agreement will cut about $1 trillion in spending over the next 10 years — cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President — but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.
Now, I’ve said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
That’s why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.
Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required — on entitlement reform and tax reform — right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.
Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Now, this process has been messy; it’s taken far too long. I’ve been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.
Most of all, I want to thank the American people. It’s been your voices — your letters, your emails, your tweets, your phone calls — that have compelled Washington to act in the final days. And the American people’s voice is a very, very powerful thing.
We’re not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it’s currently growing.
That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.
Thank you very much, everybody.
Many of you are rushing too quickly to judgment on the deal that appears to be coming together between GOP congressional leadership and the White House. President Obama actually got us a very strong deal (especially under the circumstances) and it will serve the country, and his re-election campaign well, even if he has to take some political flack in the short term.
The vast majority of Kossaks believe that the President “caved”. It appears that people feel the main cave is that there isn’t revenue raises in the bill. But keep in mind the one thing the tea party wanted–a default. For them, this was not a hostage negotiation, they wanted to kill the hostage. In this they failed–totally. And in fact if you read between the lines, I think you’ll see that this deal is far more advantageous to us in the longer game for other reasons. […]
To begin with, let’s go over exactly what is in the deal.
1. $2.4 trillion in cuts up front; mainly from reduced spending on the wars and decreased interest on the debt, the so-called “accounting gimmicks” the GOP hates so much.
2. A 12 member bi-partisan fiscal commission to determine another $1.5 trillion (approximately) of cuts.
3. Self executing extension of the debt ceiling through the end of 2012.
4. Triggers; automatic cuts, 50% to defense, 50% to other domestic programs including to medicare providers as a fraction of that pie, but Social Security is exempted totally.
5. House GOP gets another crack at a balanced budget amendment. (Good luck).
You can see full details about the deal, from a Republican perspective, from the Speaker’s slides, which are available here:
Now, what do Obama, and you, gain from this:
First and foremost, you gain a long-term debt ceiling extension. For fiscal stability, our credit rating, and economic growth in the future, this had to happen, and it had to be in a bi-partisan way. I know many of you cowboys on Daily Kos wanted POTUS to go the constitutional route; I did too. But it’s a bad idea because it would merely be trading a constitutional crisis from an economic crisis and, most critically, would not restore investors confidence in U.S. credit. This is a far better outcome.
Second, Obama was able to define the terms of the debate going forward. While he may not have been able to convince a majority of Republicans in congress that taxes have to be raised, he won in the court of public opinion. Americans get that we need to raise taxes, particularly on the wealthy and big business, in a way they never have before, and a majority favor it (including even a few Republicans). Imagine you are Obama’s eventual opponent in the Presidential. You have to take a position on the commission’s findings and the nation’s choices going forward. You probably have to continue advocating for tax cuts and budget cuts. Meanwhile, Obama and the Democrats still have their social program talking points, because Obama did not meaningfully concede on those programs. The majority of Americans have made clear that they prefer the latter approach. It’s a good position for a Democratic candidate to be in.
Third, the GOP has been shown up for what it is, an extremist party out of step with the majority of Americans. We all benefit from the comparison.
Fourth, this plan does contain revenue enhancements, just by another name. Here’s why:
(a) the commission will realistically have to consider them, if it is going to have any credibility and reach a result that can pass both houses of Congress;
(b) the sequestration is itself a revenue enhancement. As a former military member, I can tell you from personal experience that the military industrial complex, from the bombers made by Boeing and Lockheed Martin to the Burger Kings on and around the bases is huge. It is as much an “entitlement” program for those associated with the military as Social Security and Medicare are to everyone else. If these cuts occur, a major GOP constituency will be in a world of hurt, but the funds will be freed up for other programs. Same with the Medicare cuts. Notice that they are cuts to providers, not beneficiaries. I know many people think this is not a meaningful difference, but it is, because Medicare is the providers’ bread and butter, and there is a limit to the degree to which they can pass those savings along. Again, it’s revenue that is mostly fattening up an industry, and cutting it means it can be used elsewhere more efficiently and;
(c) the expiration of the Bush tax cuts are themselves revenue enhancements, Obama gets the final vote on whether this occurs. It’s not in the deal.
If you go to Redstate, you will see that they do not like this deal any more than you do, and for all of the reasons outlined above. They feel as though they have lost, and they are right. They wanted to instigate a default, and they did not do that. They wanted to cut Social Security, and they did not do that, they wanted another opportunity to fight this battle, and they did not get that. What they did get is that major GOP constituencies (defense and corporate health providers) have been put in jeopardy of major cuts, and from our perspective this is a good thing. What they also got is a damocles hanging over their head in the form of the soon to expire Bush tax cuts, which Obama can blackmail them with just as they did all of us with the debt ceiling.
Senator Reid has signed off on the latest incarnation of the debt-ceiling agreement pending caucus approval, the Wall Street Journal reports. Here’s the outline of the debt ceiling deal as of now, according to officials on both sides, and courtesy of the Journal‘s live-blog:
* $900 billion in the first stage of deficit reduction.
* $1.5 trillion in second stage of deficit reduction to be defined by a bipartisan special committee of lawmakers appointed by leaders of the House and Senate.
* If the special committee fails to deliver a deficit-cutting package, it would trigger $1.2 trillion in cuts, [half-defense, half-non-defense] from Medicare, exempting low-income programs Social Security and Medicaid.
* The debt ceiling increase would be done in three phases: $400 billion initially; another $500 billion later thise year would be subject to a vote of disapproval; a third increase of $1.5 to get the rest through 2012 and would also be subject to vote of disapproval.
* There is also a provision to have Congress vote on balanced budget amendment.
* The special committee would not necessarily tackle tax reform. But Mr. Obama is threatening to veto any extension of the Bush-era tax cuts for those making $250,000 a year or more unless Congress acts on an overhaul of the tax code.
Another, more detailed outline of the emerging deal is at Talking Points Memo. So how does everyone feel about this? Pretty badly, it seems. Speaking with reporters Sunday, Sen. Carl Levin criticized President Obama, TPM reports. He said the bill avoids default in a way that assures deep spending cuts over the coming decades — but provides no guarantees of higher tax revenues. Perhaps that will give Democrats a political advantage, but, Levin said, “in the meantime there’s a hell of a lot of damage done to average people in this country. I don’t know of too many people, I hope, that are willing to have a political advantage at the price, at the expense, of people we represent.”
And let’s not forget the bill still faces House approval. The Journal reports that House Speaker John Boehner appears to be “balking” at the deal. According to TPM, “Republicans were unhappy with the notion that the enforcement mechanism would contain a one-to-one match of domestic and defense spending cuts — they want spending cuts to be lowered.”
But this struck many as surprising because if anyone thinks their representatives have given away the house, it’s the Democrats. New York Times editor Andrew Rosenthal seemed to echo the sentiments of many when he tweeted, “There is nothing for GOP to complain about. Seems like total victory.” Charles Krauthammer likewise indicated, “The winner here is the Tea Party.”
As far as House Democrats are concerned, according to Reuters, Pelosi said they will meet on Monday to determine how to proceed in the debt deal. She said,”We all may not to support it, or none of us may be able to support it.” Rep. Raúl M. Grijalva released a starkly-worded statement on the emerging deal, where he said, in short, that he despised it:
Republicans have succeeded in imposing their vision of a country without real economic hope. Their message has no public appeal, and Democrats have had every opportunity to stand firm in the face of their irrational demands. Progressives have been rallying support for the successful government programs that have meant health and economic security to generations of our people. Today we, and everyone we have worked to speak for and fight for, were thrown under the bus.
And those are just politicians. Glenn Greenwald posted on Salon the “Democratic politics in a nutshell,” which is, in his words:
[I]t makes no difference to us how much we stomp on liberals’ beliefs or how much they squawk, because we’ll just wave around enough pictures of Michele Bachmann and scare them into unconditional submission. That’s the Democratic Party’s core calculation: from “hope” in 2008 to a rank fear-mongering campaign in 2012.
Blogger and journalism school professor Jeff Jarvis tweeted the hashtag “#HillaryForPresident” and retweeted from John Forsyth, “House Democrats agree to give their Republican counterparts a massage 3x a week #otherpartsofthedebtdeal.” TPM took the Hilary Clinton comparison one step further, and asked readers if they wished she was president in light of the latest deal. One responder said, “if [Clinton] mounted a primary challenge at this point I would caucus for her.”
So the final deal has been announced, pending approval by the House, and one of the key new pieces of the compromise is that the Congressional committee tasked with coming up with a second round of spending cuts in exchange for the later debt ceiling hike would be forced to act by the new “trigger.” In the event that the committee deadlocks, that trigger would force an even division of non-defense and defense cuts, and since the latter is anathema to Republicans, they would not have any incentive to deliberately sabotage the committee in order to force the deep entitlements cuts they want.
The White House’s argument is that even if the deal is far short of what liberals hoped for, Republicans have effectively surrendered the amount of leverage they were expected to have over entitlements cuts. Now that the committee — which is half Republicans and Dems — will all but certainly advance a package of cuts in exchange for the later debt ceiling hike, the argument is that Dems can live to fight it out another day on entitlements.
The White House is also arguing that the deal sets the stage for a relitigation of the tax cut fight, and it’s now distributing talking points to outside allies that are heavily devoted to making that case on entitlement and taxes, an argument that seems designed to quiet angst and criticism among liberals:
* Expedited Process for Balanced Deficit Reduction: Puts in place a longer term process for additional $1.5 trillion in deficit reduction through a committee structure that will put everything on the table, including tax and entitlement reform. To prevent either side from using procedural tricks to prevent Congress from acting, the committee’s recommendations will receive fast track authority, which means they can’t be amended or filibustered.
* Sets the Stage for a Balanced Package Including Revenues: The American people and a growing number of Republicans agree that any deficit reduction package must be balanced and included revenue.
* Even Speaker Boehner was open to a deal with $800 billion in revenues, and nearly 20 GOP senators were supportive of the Gang of 6 framework, which had more than $2 trillion in revenue.
* If the Committee does not succeed in meaningful balanced deficit reduction with revenue-raising tax reform on the most well-off by the end of 2012, the President can use his veto pen to raise nearly $1 trillion from the most well-off by vetoing any extension of the Bush high income tax cuts.
Dean Baker, Center for Economic and Policy Research:
Policy debates in Washington are moving ever further from reality as a small elite is moving to strip benefits that the vast majority need and support. The battle over raising the debt ceiling is playing a central role in this effort.
The United States is currently running extraordinarily large budget deficits. The size of the annual deficit peaked at 10 percent of GDP in 2009, but it is still running at close to 9.0 percent of GDP in 2011. The reason for the large deficits is almost entirely the downturn caused by the collapse of the housing bubble. This can be easily seen by looking at the projections for these years from the beginning of 2008, before government agencies recognized the housing bubble and understood the impact that its collapse would have on the economy.
At the beginning of 2008 the Congressional Budget Office (CBO), the country’s most respected official forecasting agency, projected that the budget deficit in 2009 would be just 1.4 percent of GDP. The reason that the deficit exploded from 1.4 percent of GDP to 10.0 percent had nothing to do with wild new spending programs or excessive tax cuts. This enormous increase in the size of the deficit was entirely the result of the fallout from the housing bubble.
Remarkably, both Republicans in Congress and President Obama have sought to conceal this simple reality. The Republicans like to tell a story of out-of-control government spending. This is supposed to be a long-standing problem (in spite of the fact that Republicans have mostly controlled the government for the last two decades) that requires a major overhaul of the budget and the budgetary process. They are now pushing, as they have in the past, for a constitutional amendment requiring a balanced budget.
It might be expected that President Obama would be anxious to correct the misconception about the budget, but this would not fit his agenda either. President Obama is relying on substantial campaign contributions from the business community to finance his re-election campaign. Many business people are anxious to see the major government social programs (Social Security, Medicare, and Medicaid) rolled back. They see the crisis created around the raising of the debt ceiling as a unique opportunity to accomplish this goal.
In order to advance their agenda, President Obama also has an interest in promoting the idea of the deficit as being a chronic problem. Plus, it gives him an opportunity to blame the deficit on the fiscal choices of his predecessor, President Bush. Therefore, in his address to the country on July 25, he told the public that as a result of President Bush’s tax cuts, his wars, and his Medicare prescription drug benefit, the deficit was on a track to be more than $1 trillion in 2009.
This is more than five times as large as the actual figure projected by CBO. However, President Obama’s distortion preserved the idea of the deficit as a chronic problem, while also getting in an attack on the Republicans. It also allows him to avoid talking about the housing bubble. This is a topic that he seems anxious to avoid, since many large contributors to his re-election and to the Democratic Party profited enormously from the bubble.
The claim that the deficit is a chronic problem and not primarily the result of a severe cyclical downturn also opens the door for cuts to the country’s major social welfare programs. These cuts are hugely unpopular. All three major programs enjoy overwhelming support among people in all demographic groups, including conservative Republicans. There is no way that an ambitious politician would ever suggest major cuts to these programs apart from a crisis.
In this respect, the crisis over the debt ceiling is the answer to the prayers of many people in the business community. They desperately want to roll back the size of the country’s welfare state, but they know that there is almost no political support for this position. The crisis over the debt ceiling gives them an opportunity to impose cutbacks in the welfare state by getting the leadership of both political parties to sign on to the deal, leaving the opponents of cuts with no plausible political options.
To advance this agenda they will do everything in their power to advance the perception of crisis. This includes having the bond-rating agencies threaten to downgrade U.S. debt if there is not an agreement on major cuts to the welfare state.
In principle, the bond-rating agencies are only supposed to assess the likelihood that debt will be repaid. However, they showed an extraordinary willingness to allow profit to affect their ratings when they gave investment grade ratings to hundreds of billions of dollars of mortgage-backed securities during the housing bubble. Given their track record, there is every reason in the world to assume that the bond-rating agencies would use downgrades or the threat of downgrades for political purposes.
This means that the battle over the debt ceiling is an elaborate charade that is threatening the country’s most important social welfare programs. There is no real issue of the country’s creditworthiness of its ability to finance its debt and deficits any time in the foreseeable future. Rather, this is about the business community in general, and the finance sector in particular, taking advantage of a crisis that they themselves created to scale back the country’s social welfare system. They may well succeed.
Joe Klein, TIME:
[…] The Cut the Crap Act isn’t actually my invention. It is the White House’s best case scenario for the next five days. This has been an exhausting process–one that might have resulted in an exhilarating triumph, if the Republican party were not led by nihilists like Rush Limbaugh and Grover Norquist. But one senses that the President is feeling the exhaustion and frustration. He is preparing himself for the worst of all possible scenarios: the uncertainty caused by the Republican anarchy has already damaged the economy, businesses are waiting to see what the interest rates will be and therefore delaying plans to expand. That uncertainty, added to the higher oil prices caused by Arab Spring, the European Debt crisis and the Japanese earthquake could well bring us a double-dip recession.
But the President also seems absolutely intent on forcing this issue because the Republicans have used the debt ceiling weapon to upend the traditional balance of power in Washington. It is the ultimate nuclear option, creating a bigger bang than abuse of the filibuster in the Senate. If this Republican ploy succeeds, this nuclear option can be deployed again on other issues–surgical nuclear strikes directed at the funding of individual government programs and agencies. (Indeed, if she were less scrupulous, Pelosi could have used a debt ceiling vote to force President Bush to defund the war in Iraq.)
And so, here we are. Our nation’s economy and international reputation as the world’s presiding grownup has already been badly damaged. It is a self-inflicted wound of monumental stupidity. I am usually willing to acknowledge that Democrats can be as silly, and hidebound, as Republicans–but not this time. There is zero equivalence here. The vast majority of Democrats have been more than reasonable, more than willing to accept cuts in some of their most valued programs. Given the chance, there was the likelihood that they would have surrendered their most powerful weapon in next year’s election–a Mediscare campaign–by agreeing to some necessary long-term reforms in that program. The President, remarkably, proposed raising the age of eligibility for Medicare to 67.
The Republicans have been willing to concede nothing. Their stand means higher interest rates, fewer jobs created and more destroyed, a general weakening of this country’s standing in the world. Osama bin Laden, if he were still alive, could not have come up with a more clever strategy for strangling our nation.
I think its a good time to remind ourselves what Michelle Obama said about her husband and our President.
Here’s the thing about my husband: even in the toughest moments, when it seems like all is lost, Barack Obama never loses sight of the end goal. He never lets himself get distracted by the chatter and the noise, even if it comes from some of his best supporters. He just keeps moving forward.
And in those moments when we’re all sweating it, when we’re worried that the bill won’t pass or the negotiation will fall through, Barack always reminds me that we’re playing a long game here. He reminds me that change is slow — it doesn’t happen overnight.
If we keep showing up, if we keep fighting the good fight and doing what we know is right, then eventually we will get there.
We always have.
As we hear rumors about what might be in the debt ceiling bill, I begin to wonder about that long game.
I’ve had one guess in the back of my mind for a couple of days. Its not like I have the greatest track record in these predictions. But its still interesting to throw this kind of thing out there. And then this morning I saw something that made it seem even more likely.
What I saw was an short note in Politico titled WH fine with no new revenue until 2013. It refers to something Gene Sperling, Director of the National Economic Council, said.
A bleary-eyed Sperling, who has been at the center of talks between the White House and congressional Republicans, said that Obama wouldn’t seek new revenues over the next 18 months anyway and will still push for a payroll tax cut.
You have to ask the question about why President Obama would take new revenues off the table as part of this deal when that has been the bottom line of his whole appeal about a “balanced approach.”
The key to answering that question is the timing referred to in both the Politico headline (2013) and Sperling’s reference to 18 months. That’s when the Bush tax cuts expire. And if the President is willing to let them ALL expire, the Republicans won’t have any hostages to take to prevent that because all that needs to happen is for Congress to do nothing to extend them. And whala…we get our balanced approach that deals with the biggest contributor to our current deficit.
I might very well be wrong about this one. But I suspect its what’s going on – or something like that. Who are you going to believe on this one? The poutragers who are convinced the President is caving? Or Michelle and what we’ve seen happen over and over again?
It’s difficult to see how it could have ended otherwise. Virtually no Democrats are willing to go past Aug. 2 without raising the debt ceiling. Plenty of Republicans are prepared to blow through the deadline. That’s not a dynamic that lends itself to a deal. That’s a dynamic that lends itself to a ransom.
But Democrats will have their turn. On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is…nothing.
UPDATE 2: Joy Reid twitters:
Harry Reid doesn’t have to negotiate with Mitch McConnell to get revenues. He doesn’t have to worry about Boehner’s impotence in the House.
Harry Reid can simple refuse to bring the tax cuts up for a vote before they expire next December 31st, and POTUS can threaten to veto them.
Even if Dems were to be wiped out next Nov, or Obama lost, the lame duck Congress would be in place til January 2013.
And I have good sourcing that Obama and Reid will hold the line, win or lose. So don’t sweat this bill. Its long term “cuts”, short term win
[…] Behind the deal is a creative way out of the impasse that’s held up the negotiations: how do you get “balanced approach” if Republicans refused to consider revenues? The solution that both sides seem to have settled on is to substitute defense cuts where taxes would otherwise have gone.
In the initial $900 billion in cuts, almost half will come from “security spending” (which includes defense, homeland security, veteran’s benefits, the State Department, etc). Defense is the big money there, and, according to the White House’s fact sheet, it will take a full $350 billion in cuts on its own. But the real hit comes in stage two: if the second round of deficit reduction isn’t signed into law, the “trigger” that will make automatic spending cuts absolutely savages defense spending.
Let’s stop there and talk about the trigger, as it’s arguably the most important part of the deal. In his remarks on Friday, President Obama said he would support a trigger if it was done in “a smart and balanced way.” The implication was that it had to include tax increases as well as spending cuts, as a trigger with just spending cuts wouldn’t force Republicans to negotiate in good faith. The trigger in this deal does not include tax increases.
What it includes instead are massive cuts to the defense budget. If Congress doesn’t pass a second round of deficit reduction, the trigger cuts $1.2 trillion over 10 years. Fully half of that comes from defense spending. And note that I didn’t say “security spending.” The Pentagon takes the full hit if the trigger goes off.
The other half of the trigger comes from domestic spending. But Social Security, Medicaid and a few other programs for the poor are exempted. So the trigger is effectively treating defense spending like it comprises more than half of all federal spending. If it goes off, the cuts to that sector will be tremendous — particularly given that they will come on top of the initial round of cuts. Whether you think the trigger will work depends on whether you think the GOP would permit that level of cuts to defense.
If the trigger “works,” of course, it’s never used. Instead, the bipartisan committee produces $1.5 trillion (or more) in deficit reduction, Congress passes their plan and the president signs it. But why should we believe that will happen? If Republicans and Democrats couldn’t agree on major deficit reduction this year, why is it going to be any easier in an election year?
The answer is supposed to be the trigger. Those cuts are meant to be so brutal that neither party will risk refusing a deal. But a deal means taxes, or at least is supposed to mean taxes. And Speaker John Boehner is already promising that taxes are off the table.
In a presentation to his members, Boehner says (pdf) that the rules governing the committee “effectively [make] it impossible for Joint Committee to increase taxes.” Specifically, he’s arguing that using the Congressional Budget Office’s “current-law baseline” makes tax increases impossible, as that baseline assumes the expiration of the Bush tax cuts, and so, if you touched taxes at all, you’d have to raise taxes by more than $3.6 trillion or the CBO would say you were cutting taxes and increasing the deficit.
Confused? That seems to be the point. Boehner is misleading his members to make them think taxes are impossible under this deal. But make no mistake: The Joint Committee could raise taxes in any number of ways. It could close loopholes and cap tax expenditures. It could impose a value-added tax, or even a tax on carbon. The Congressional Budget Office would score all of this as reducing the deficit under a current-law baseline. The only thing that wouldn’t reduce the deficit is going after part of the Bush tax cuts. That means they’re likely to go untouched in this deal.
That’s actually good news for…people who want to raise taxes. The Bush tax cuts will still be set to expire in 2012, which means that if Democrats get some revenue as part of this deal, they’ll be able to get more revenue if Congress gridlocks over the Bush tax cuts in 2012.
But that’s really a technicality. Boehner is promising that he’ll oppose any deal that includes revenue, and unless he decides to break his promise next year, that means the House is unlikely to pass any deal that includes revenue. So that leaves us with three options: 1) there’s no deal and the trigger goes off, 2) the Democrats agree to $1.5 trillion in further spending cuts alongside zero dollars in tax increases, or 3) Republicans agree to revenues.
The upside of this deal is that “the debt ceiling will cave in and Congress will create a global financial crisis for no reason” is not one of the potential outcomes. So that’s something.
The downside is that we actually haven’t come that far: we’re still pretending that a deal a few months from now will somehow be easier than a deal today, we’re moving to austerity budgeting — note that neither unemployment insurance nor the payroll tax cut are extended — while the economy remains weak, and we’re putting off the decisions about what to cut and how to handle taxes.
And that gets to the truth of this deal, and perhaps of Washington in this age: it’s all about lowest-common denominator lawmaking. There are no taxes. No entitlement cuts. No stimulus. No infrastructure. Less in actual, specific deficit reduction than there was in the Simpson-Bowles, Ryan, or Obama plans, and even than there was in the Biden/Cantor or Obama/Boehner talks. The two sides didn’t concede more in order to get more. They conceded almost nothing in order to get a trigger and a process, not to mention avoid a financial catastrophe.
There’s reason to be skeptical that a trigger and a process will do much to change these basic dynamics. We’ve now attempted to get a deficit-reducing grand bargain by yoking it to both a near-shutdown and a near-default, not to mention a series of negotiations, commissions, and senatorial gangs. None of it has been enough. And that’s because bipartisan commissions and terrible consequences have not been enough to convince Republicans to agree to revenues, and revenues are fundamental to large deficit-reduction compromise.
Perhaps this deal signals the end of the need to actually reach an agreement, however. If the Joint Committee fails, the trigger begins cutting spending. If negotiations over taxes fail, the Bush tax cuts expire and revenues rise by $3.6 trillion. Neither scenario is anyone’s first choice on policy grounds. But you can get to both scenarios without Republicans explicitly conceding to higher taxes or Democrats explicitly conceding to entitlement cuts in the absence of higher taxes. Politically, that’s the lowest-common denominator, and that might mean it’s also the only deal the two parties can actually make. But that’s because it’s the only deal that doesn’t require, well, making a deal.
Again, quickly running down the deficit-reduction framework as it stands:
–$1 trillion in cuts in discretionary spending over 10 years
What does that mean? It refers to the non-entitlements in the budget: defense and non-defense programs where dollar amounts are appropriated every year. On the non-defense side, it’s transportation, education and training, child care, housing assistance, health research, energy.
From a jobs perspective, a lot of infrastructure and investment in stuff like clean energy comes out of this part of the budget.
–A bipartisan committee (6 R’s, 6 D’s) must identify another $1.5 trillion in cuts; entitlements and tax increases can be on the table, though Speaker Boehner claims his R’s will not countenance any new revenues, and I’m prone to believe him. Assuming the committee agrees on the cuts, it reports out by Thanksgiving and their proposal gets a fast-track procedure—up or down vote by the end of the year.
–But if the committee fails to report out or Congress won’t enact their cuts, a spending-cut-only trigger kicks in, with cuts split 50/50 between domestic and defense spending. This sequester, as it’s called, would exempt “Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side” according the White House.
Those are welcome exemptions, but man, I don’t see how you get $1.2 trillion (that’s the savings required if this part triggers) after you’ve already taken $1 trillion out of discretionary and still maintain those exemptions. I predict they’ll be a lot of pressure to violate this part of the deal.
Now, here’s a wrinkle a commenter asked about. Again, from the White House fact sheet: “If the Committee does not succeed in meaningful balanced deficit reduction with revenue-raising tax reform on the most well-off by the end of 2012, the President can use his veto pen to raise nearly $1 trillion from the most well-off by vetoing any extension of the Bush high income tax cuts.”
Here, the White House is saying they have a fail-safe to get revenues in the deal. If the committee gets to the trigger stage without revenues, they’ll go after the high-end Bush cuts.
OK, but those cuts were presumably going to sunset anyway, so on one hand, no new revenue there relative to what we expected. And what if the committee does come up with cuts (unlikely, but just sayin’)…then does the administration punt on the high end sunset?
So it’s no replacement for a balanced sequester, one that required both cuts and new revenues. On the other hand, given the tenor of the times, expected or not, it would be an accomplishment to finally see the sun set on those tax cuts.
The President spoke on the pending deal tonight, ending with this:
“[The deal allows us to] turn to important business of doing everything we can to create jobs, boost wages, and get this economy growing faster. That’s what American people sent us to do and that’s what we should focus on in months ahead.”
I agree. It’s about time.
But he also bragged that “these discretionary caps will put us on track to reduce non-defense discretionary spending to its lowest level [as a share of GDP] since Dwight Eisenhower was President.”
Why is that a good thing? Why are 1950s levels (relative to GDP) of investment, infrastructure, and research in medicine and innovation so damn optimal?
And with all this incessant emphasis on deficit reduction, it’s going to be extremely tough to convince people that we actually might need to spend some money right now, in the short run, to help get this economy out of neutral.
There’s a lot of cognitive dissonance out there…stay tuned.
Many Democrats and liberal activists are already expressing anger that President Obama has apparently agreed to a deal to raise the debt limit with no guarantee that taxes would be raised.
But a White House official points out that the president has not given up on a fight over tax revenues.
For starters, the official said, the Bush tax cuts, set to expire at the end of 2012, will serve as a sort of “trigger” to guarantee a major revenue increase. After all, even if Obama loses his 2012 reelection campaign, he would still be president until Jan. 20, 2013, and could veto any legislation seeking to extend those cuts.
At this time, it is not clear whether those promises from the White House will be enough to soothe feelings on the left – but the Bush tax cuts, and Obama’s willingness to extend them late last year, have been a major flashpoint for liberals. And the idea that Obama ultimately might not extend them would give the president a powerful line to fire up his depressed base.
Beyond that, Obama can use the strategy as leverage later this year as the new “super committee” created by the emerging deal debates whether to recommend any tax-code changes to drive up revenue.
White House officials caution that details of the debt limit deal are still being worked out.
Meanwhile, David Plouffe, a senior adviser to President Obama, said Sunday morning that it would be “inconceivable if we don’t reach a deal.”
“Our focus now is on solving this,” he said on ABC’s “This Week.” “There is no off-ramp here. The only option is for Congress to raise the debt ceiling, and deficit reduction.”
Asked if the deal represents a defeat for Democrats since it does not include tax increases, Plouffe said: “This isn’t about playing on the Republican playing field…The president has been clear he is willing to do some tough things.”
The nation’s political leaders agreed on Sunday to spend and invest less money in the American economy, a step that economists said risks the reversal of a faltering recovery, in the hope of improving the nation’s long-term prosperity.
The emerging outlines of a deal to cut spending by at least $2.4 trillion over 10 years, with a multibillion-dollar down payment later this year, would complete an about-face in the federal government’s role from outsize spending in the immediate aftermath of the recession to outsize cuts in the future.
Last week brought the disconcerting news that the economy grew no faster than the population during the first six months of the year, in part because of spending cuts by state and local governments. Now the federal government is cutting, too.
“Unemployment will be higher than it would have been otherwise,” Mohamed El-Erian, chief executive of the bond investment firm Pimco, said Sunday on ABC. “Growth will be lower than it would be otherwise. And inequality will be worse than it would be otherwise.”
He added, “We have a very weak economy, so withdrawing more spending at this stage will make it even weaker.”
The agreement would end months of single-minded debate about the federal debt that has diverted Washington’s attention from broader economic questions, and indeed threatened the health of financial markets as investors watched and wondered whether the United States might really decide, quite voluntarily, to leave some bills unpaid.
If both chambers of Congress give their approval by Tuesday night, the government will have averted the danger of a self-inflicted financial crisis, but only at the expense of public confidence in its ability to address the nation’s broader economic malaise.
The looming challenges include a renewal of the standoff over the federal budget at the end of September, and the scheduled expiration at the end of 2012 of the broad tax cuts passed during the administration of President George W. Bush.
President Obama said Sunday night that the deal “begins to lift the cloud of debt and the cloud of uncertainty that hangs over the economy.” He added that political leaders now “should be devoting all of our time” to the nation’s broader economic challenges.
But economists say the deal could complicate that task. There is broad agreement that the United States needs to pay down its debts, but most economists say the government should have waited a year or more for the economy to strengthen.
“We sure missed a big window of opportunity to reduce our debt in those strong years when asset prices were booming,” said Carmen Reinhart, senior fellow at the Peterson Institute for International Economics and co-author of “This Time Is Different,” a history of debt crises. “Instead we’re stuck trying to do it now, when the economy is so weak.”
The economy grew at an annual rate of only 0.8 percent during the first half of the year. Millions of homes remain empty. Twenty-five million Americans could not find full-time jobs last month. And even without the debt ceiling deal, federal spending is in rapid decline. Little remains of the federal stimulus money. Payroll tax cuts are set to expire at the end of the year.
The combination of the budget-cutting government’s plans and the grim economic news is likely to increase pressure on the Federal Reserve, which will hold a scheduled meeting on Aug. 9, to reconsider its declaration earlier this summer that it has done enough to aid the economic recovery.
After four years of extraordinary efforts to promote growth, including a continuing campaign to hold down interest rates for at least a few more months, officials at the central bank say they are reluctant to do more. But the Fed’s chairman, Ben S. Bernanke, said if the economy deteriorates and there is a growing risk of deflation or a broad decline in prices, policy makers could act.
The Fed’s options include pledging to maintain low interest rates for a specified period of time or increasing its holding of government debt in a bid to further reduce rates.
“It’s difficult to find a textbook to tell you what should you do now,” said Torsten Slok, chief international economist at Deutsche Bank.
The Republican authors of the debt ceiling deal say that cutting the size of government will increase economic growth down the road because federal borrowing soaks up money otherwise available to private businesses and federal spending distributes that money inefficiently.
Some conservative economists argue that even the immediate impact of a deal could be positive. Classic economic theory holds that people respond to the growth of government by spending less of their own money, because they assume that taxes will increase. A reduction in the federal debt therefore should encourage people to spend more of their money.
GMAC, one of the nation’s largest mortgage servicers, faced a quandary last summer. It wanted to foreclose on a New York City homeowner but lacked the crucial paperwork needed to seize the property.
GMAC has a standard solution to such problems, which arise frequently in the post-bubble economy. Its employees secure permission to create and sign documents in the name of companies that made the original loans. But this case was trickier because the lender, a notorious subprime company named Ameriquest, had gone out of business in 2007.
“The problem is we do not have signing authority—are there any other options?” Jeffrey Stephan, the head of GMAC’s “Document Execution” team, wrote to another employee and the law firm pursuing the foreclosure action. No solutions were offered.
Three months later, GMAC had an answer. It filed a document with New York City authorities that said the delinquent Ameriquest loan had been assigned to it “effective of” August 2005. The document was dated July 7, 2010, three years after Ameriquest had ceased to exist and was signed by Stephan, who was identified as a “Limited Signing Officer” for Ameriquest Mortgage Company. Soon after, GMAC filed for foreclosure.
An examination by ProPublica suggests this transaction was not unique. A review of court records in New York identified hundreds of similar assignment documents filed in the name of Ameriquest after 2008 by GMAC and other mortgage servicers. […]
GMAC, whose parent company renamed itself last year as Ally Financial, was at the center of what became known as the robo-signing scandal. The uproar began last fall after revelations that mortgage servicing employees had produced flawed documents to speed foreclosures. GMAC and other banks have acknowledged filing false affidavits in which bank officials claimed “personal knowledge” of the facts underlying thousands of mortgages. But GMAC and other servicers say they’ve since tightened their procedures. They insist that their records were largely accurate and the affidavits amounted to errors of form, not substance.
The issues surrounding the Ameriquest loan and others like it appear to be more serious.
“This assignment of mortgage has all of the markings of GMAC finding that it lacked a needed mortgage assignment in order to foreclose and just making it up,” said Thomas Cox, a Maine foreclosure defense attorney.
In New York, it’s a felony to file a public record with “intent to deceive.”
“It’s fraud,” said Linda Tirelli, a consumer bankruptcy attorney. “I want to know who’s going to do a perp walk for recording this.”
No criminal charges have been filed in the robo-signing cases.
Asked by ProPublica about the document, GMAC acknowledged Stephan did not have authority to sign on behalf of Ameriquest. The bank said it is still planning to push ahead with foreclosure on the homeowner, who remains in the property.
Company spokeswoman Gina Proia said an internal review last fall into “suspected documentation execution issues” had flagged the loan as problematic and that GMAC is “determining what needs to be done in order to receive the necessary authorization.”
“We will determine and complete the necessary steps to remediate and proceed with foreclosure,” Proia said.
GMAC also declined a request from ProPublica to interview Stephan.
There is at least some positive news from Washington: a major agreement to bring American consumers cleaner cars — dramatically cutting greenhouse gas pollution, raising fuel economy standards and increasing Detroit’s ability to compete in world markets.
President Obama made the announcement on Friday, surrounded by automobile executives (who seemed, for once, genuinely enthusiastic) and by gleaming models of some of the fuel-efficient vehicles the industry is beginning to turn out. The government will issue a more detailed proposal in October. If the agreement holds, as it should, American vehicle fleets will average 54.5 miles per gallon by 2025, double today’s average of about 27 m.p.g.
Though that falls short of the 62 m.p.g. that some environmental groups had lobbied for, it is still a big jump. It will result in cuts in fuel consumption of between 40 percent and 50 percent from today’s levels and roughly equivalent cuts in greenhouse gas emissions. Cars and light trucks like sport-utility vehicles account for just over one-fifth of this country’s carbon-dioxide emissions.
The new standards build on a historic 2009 agreement that for the first time established a unified set of rules governing both fuel economy and carbon-dioxide pollution. A second agreement in 2010 established new efficiency standards for heavy-duty trucks and buses. These agreements represent Mr. Obama’s biggest success in addressing climate change. The standards will also reduce oil imports and save money for consumers. Cumulative oil savings, the administration says, will amount to at least 2.2 million barrels a day by 2025, about one-fifth of today’s imports. Even though fuel-efficient cars may cost more initially, lower fuel use is expected to save consumers up to $3,000 over the life of their vehicles.
In the years since the original fuel economy standards were approved in 1975, it would be hard to find more bitter enemies than the automobile companies and the advocates for cleaner cars and better mileage. This time, industry found it hard to say no to a government that had rescued it from bankruptcy.
Beyond that, the big American automakers have discovered that they are perfectly capable of building more efficient cars to compete with foreign models — and that consumers burdened with $4-a-gallon gas are eager to buy them. As we said, rare good news, all around.
The Department of Justice is preparing to sue Wells Fargo for allegedly targeting African Americans during the subprime mortgage crisis and steering them into expensive subprime loans.
The city of Baltimore filed a similar suit against Wells Fargo in early 2008 alleging the bank “engaged in a pattern of predatory lending practices in Baltimore’s poorest neighborhoods, leading to foreclosure rates nearly double the citywide average.” Wells Fargo stands accused of targeting black borrowers for loans the bank knew borrowers would default on, a practice dubbed “reverse redlining.” The imminent defaults were of no concern to Wells Fargo, who later sold the loans off to investors. The city of Memphis also filed suit against Wells Fargo for discriminatory and illegal lending practices.
These multiple lawsuits paint a collective picture of lending institutions taking advantage of consumers with limited access to credit and legal resources. Banks have also recently taken heat for misleading investors, forging loan documents, “robo-signing”, and countless other illegal, unethical tactics.
The Fed announced last week that 10,000 or more borrowers were illegally pushed into costly subprime loans and had their documents falsified by mortgage servicers.
WSJ on Debt Crisis: Reject Reality: I used to write editorials for the Wall Street Journal myself, 20 years ago now. So I’m well aware of the challenge faced by those assigned to compose these documents. The strict demands of the paper’s ideology do not always lie smoothly over the rocky outcroppings of reality. It can take considerable skill to match the two together….
If you were to write a story about government debt, you’d probably be inclined to write about… decisions about expenditure and decisions about revenue…. And that’s why, my friend, you would wash out as a WSJ editorialist. They wrote this editorial without any reference to revenues whatsoever. Boom! Gone! Don’t deny reality. Defy reality….
One of the many traps and impediments facing a Journal editorialist writing about debt is that up until 2009, the US debt burden rose most under the two presidents the Journal most ardently supported: Ronald Reagan and George W. Bush. The debt burden declined most under the presidents the Journal most despises – Dwight Eisenhower, Bill Clinton and Jimmy Carter. How to deal with this troubling problem? It must have taken some searching, but the Journal managed to find a chart vaguely relating to debt that went up under Clinton and stayed flat under Bush…. What’s so great about this chart is that it excludes two of the biggest federal spending programs: Medicare Part B and Medicaid, both of whose costs rose faster in the Bush 2000s than in the Clinton 1990s. Isn’t that ingenious? Would you ever have thought of doing that? Again – that’s why you would wash out. This is not a job for just anyone.
But maybe my favorite bit of the editorial is the solemn warning at the end that unless the US corrects its course, it may follow in the wake of Greece. The Greek crisis, as almost every economist published on the Journal oped page would acknowledge, is the product of the collision of heavy Greek borrowing against the hard constraint of the Euro currency. And guess which US newspaper was the most passionate advocate of the Euro currency? Guess which paper wants the US to be tied to some basket of commodities all the better to inflict Greek-like crises on Americans?
No, no, I wont answer. Like the Journal’s editorialist, I’ll follow the motto: the less said, the better.
Why oh why can’t we have a better press corps?
The Air Force, in response to an exclusive report published by Truthout earlier this week, has withdrawn materials used in a training session that relied upon passages from the New and Old Testament and aquote from an ex-Nazi SS officer to teach missile officers about the morals and ethics of launching nuclear weapons.
The Nuclear Ethics and Nuclear Warfare training “has been taken out of the curriculum and is being reviewed,” said David Smith, chief of public affairs of Air Education and Training Command at Randolph Air Force Base in Texas. “The commander reviewed it and decided we needed to have a good hard look at it and make sure it reflected views of modern society.”
Smith said the ethics training has been in place for “20-plus years” and the decision to remove it was made on Wednesday after Truthout’s report was published. He added that it will now be “given thorough scrutiny” and “folks will be appointed to look at what we have and determine its utility and if they think its useful to continue having an ethics course they will develop a new course.”
The course was led by Air Force chaplains and took place during a missile officer’s first week in training at Vandenberg Air Force Base in California. Officers who train to be missileers were required to attend the ethics course, which included a PowerPoint presentation on St. Augustine’s “Christian Just War Theory” as well as numerous examples of characters from the New and Old Testament the training materials asserted engaged in warfighting in a “righteous way.”
St. Augustine’s “Qualifications for Just War,” according to the way the Air Force characterized it in slides used in the ethics training, are: “to avenge or to avert evil; to protect the innocent and restore moral social order (just cause)” and “to restore moral order; not expand power, not for pride or revenge (just intent).”
One of the PowerPoint slides also contained a passage from the Book of Revelation that claims Jesus Christ, as the “mighty warrior,” believed some wars to be just.
At the conclusion of the ethics training session, missile officers were asked to sign a legal document stating they will not hesitate to launch the nuclear-armed Intercontinental Ballistic Missiles (ICBM) “if lawfully ordered to do so by the President of the United States or his lawful successor.”
The documents’ blatant use of religious imagery and its numerous references to the New and Old Testament would appear to constitute a violation of the First Amendment establishing a wall of separation between church and state.
The 43-page PowerPoint was included with more than 500 pages of other documents pertaining to a missile officer’s first week in training that was released by the Air Force under the Freedom of Information Act (FOIA) and provided to Truthout by the Military Religious Freedom Foundation (MRFF), a civil rights organization.
Another PowerPoint slide quoted Wernher Von Braun, a former member of the Nazi Party and SS officer who is regarded as the father of the US space program. Von Braun was not cited in the PowerPoint as a scientific expert, rather, he was specifically being referenced as a moral authority, which is remarkable considering that the Nazi scientist used Jews imprisoned in concentration camps, captured French anti-Nazi partisans, civilians, and others to help build the V-2, a weapon responsible for the death of thousands of British civilians.
MRFF President Mikey Weinstein said more than 30 missile officers contacted his organization over the past week to complain about the Christian imagery and biblical passages in the ethics training. He said the decision by the Air Force to pull the ethics course material is a “great victory for the constitution.” [Full disclosure: Weinstein is a member of Truthout’s Board of Advisers.]
“We are not going to commend the Air Force for doing something they should have done a quarter-century ago,” Weinstein said. “It’s an outrage and a deliberate attempt to torture and distort our constitution when the US Air Force mandatorily teaches its nuclear missile launch officers that fundamentalist Christian theology is inextricably intertwined with the ‘correct’ decision to launch nukes.”
Clive Crook, The Atlantic:
Paul Krugman and EJ Dionne agree that too much centrism is what ails the United States. What the country needs is fewer moderates and more people ready to stand firm on principle come what may. (Actually Dionne draws a distinction that eludes me between moderation and centrism–they are not just different but opposed–but let that pass.)
Lacking a Nobel prize, I find this theory odd. If only centrists would come over to the left and deplore Republicans more vigorously, all would be well? Right now, I would be willing to help out–but would this do much to reduce the House Republican majority? If centrist commentators only joined Krugman’s anti-Republican crusade, the country would see its mistake and put things right at the next election? It’s flattering, but surely we feeble soggy centrists have nothing to offer that would improve on the quality of the arguments already put forward by writers such as Krugman, Dionne, and many others. Surely they are refuting conservatism as effectively as anybody can.
House Republicans are dictating US fiscal policy not because centrists have given them a pass, but because voters have given them a majority. This is something that progressives tend not to mention, despite propounding the theory that “elections have consequences” for two years after 2008, and using that theory to justify, for instance, passing a health-care reform that the country was not sure it wanted. In Krugman’s view, of course, 2010 only confirms that more than half the country is evil or stupid. But in that case, what would centrists achieve by taking up arms with progressives? It won’t help. If Krugman is right, the idiots out there just don’t get it. We centrists might as well carry on saying what we think.
Yes, but what do we think? Our views are so pliable! Krugman and Dionne both see a “cult of balance” (Krugman’s term), a witless or unprincipled system of triangulation. It’s all about splitting the difference, so the further to the right the Republicans go, the further to the right we rootless centrists get pulled. Either we don’t see it (stupid) or we do and don’t care (evil). Honestly, some of us are as bad as the voters.
I expect there are some such pliable centrists. None springs instantly to mind. Commentators such as David Brooks, for instance, have attacked the GOP’s extremism in the fiscal debate. So have I, by the way. And I think I have supported the Bowles-Simpson approach to long-term debt control throughout–dare I say, even before Bowles-Simpson. The center I support hasn’t moved, so far as I know. The response of many Democrats, led by Krugman, to Bowles-Simpson was that it should be uncompromisingly opposed on the theory that if you give them an inch they will take a yard. Raise the retirement age slightly over a period of decades, and before you know it we will be feeding seniors cat-food. Progressives need to position themselves further to the left in order to cancel out the rightward shift of the Republicans. Principled liberalism in action!
Yes, Republican intransigence and irresponsibility have brought the country to the brink of default. There, I said it (again). But let me give Democrats a word of advice. Stop calling the spending cuts you have finally agreed to “concessions”. Medium-term spending restraint is the right policy. You should be proposing it willingly, on its merits, not having it beaten out of you. And here’s a bonus: that way, when it happens, as it will because the country wants it, it will not look so much like defeat.
You are absolutely right that higher taxes are needed as well. The Republicans are dead wrong about this. (I did it again.) But the idea that higher taxes are good in themselves–a victory you need in order to justify yielding ground on spending–is the dumbest kind of politics. Repeat after me: spending cuts are bad, but necessary; higher taxes are bad, but necessary. Otherwise, the idiots out there are never going to buy it.
OUR nation isn’t facing just a debt crisis; it’s facing a democracy crisis. For weeks, the federal government has been hurtling toward two unsavory options: a crippling default brought on by Congressional gridlock, or — as key Democrats have advocated — a unilateral increase in the debt ceiling by an unchecked president. Even if the last-minute deal announced on Sunday night holds together, it’s become clear that the balance at the heart of the Constitution is under threat.
The debate has threatened to play out as a destructive but all too familiar two-step, revealing how dysfunctional the relationship between Congress and the president has become.
The two-step begins with a Congress that is hamstrung and incapable of effective action. The president then decides he has little alternative but to strike out on his own, regardless of what the Constitution says.
Congress, unable or unwilling to defend its role, resorts instead to carping at “his” program, “his” war or “his” economy — while denying any responsibility for the mess it helped create. The president, on the defensive, digs in further.
Take recent events in Libya. The president didn’t try very hard to get Congress to agree to the intervention, some say, because he didn’t think he had the votes. Congress, for its part, has been unwilling or unable to defend its constitutional and statutory power to authorize a war.
In a single day, the House voted down a resolution that would have approved the war and then, just hours later, voted down a bill that would have denied the president the power to spend any new money on the war. Not surprisingly, the war continues without a single Congressional vote to support it, and Congress’s power to authorize military action has taken a hit from which it may never recover.
The problem is not limited to war. For decades, presidents have been making more frequent use of executive orders, signing statements and agency regulations, as well as sole executive agreements with other nations (instead of treaties or Congressionally authorized international agreements).
Earlier this year, the Environmental Protection Agency began regulating greenhouse-gas emissions at some energy plants and factories after efforts to address the problem through legislation stalled. Members of Congress were angry about the end run, but, predictably, they failed to do anything about it.
The ultimate consequence in each case is the same: Congress is saved from its inability to govern by being cut out of the process. Senators and representatives avoid taking responsibility for the most important decisions, and thus can’t easily be held accountable for poor choices.
Meanwhile, the president gets a poisoned chalice: increasing unilateral power, but reduced ability to share responsibility — or blame. Whether President Obama or members of Congress would bear the greater pain if the economy imploded because of a default is unclear. Either way, 535 legislators would have essentially gone AWOL.
It doesn’t have to be this way. It is time to pursue reforms that allow Congress to act effectively. While it’s easy to assume that more checks are always desirable — that the harder it is to make policy decisions, the better they will be — the debt crisis shows this isn’t true.
Failing to raise the debt ceiling stops money already approved by Congress from being spent. If lawmakers see the debt ceiling as real, they will exercise less judgment in the ordinary budget process, on the reckless belief that fiscal restraint can somehow be imposed down the road.
Legislative obstacles like the debt ceiling are a source of mischief, not precaution. They aren’t found in the Constitution; they were put in place by previous Congresses seeking to tie the hands of their successors. Far from encouraging more responsible governance, they often have the opposite effect.
Unnecessary supermajority requirements are another culprit — the Senate filibuster chief among them. It has been transformed over the last generation from an extraordinary step taken by disgruntled minorities into a hard-and-fast “rule of 60” that makes compromise extraordinarily difficult. And when Congress fails to meet this extra-constitutional threshold, it is no surprise that the president tries to work around it.
Fast-track procedures that limit amendments and require an up-or-down vote may appear to limit Congress’s power, but could actually strengthen it by discouraging the executive from going it alone. If prior debt-ceiling legislation had included a fast-track provision, with an automatic increase that would go into effect in the case of inaction, much of the acrimony and brinkmanship of the past few months could have been avoided.
After the debt crisis ends, the democracy crisis must be tackled. Nobody wins when our constitutional system falters: not the president, who gains unilateral power but loses a governing partner; not Congress, which gets to blame the president but risks irrelevance; and certainly not the American people, who have to bear the resulting dysfunction.
Billionaire brothers David and Charles Koch have been dominant financiers for conservative front groups and nonprofits for nearly three decades. Their money has flowed to organizations dedicated to lobbying for corporate and upper income tax cuts, as well as to groups responsible for mobilizing Tea Party rallies against President Obama. But the Koch family’s association with fringe right-wing groups began a generation earlier with Fred Koch, the patriarch of the clan.
Fred not only founded the company now known as Koch Industries, he also was a founding member of the John Birch Society. As a founding board member, Fred helped engineer a hysterical wave of attacks on labor, intellectuals, public education, liberal clergy members, and other pillars of society he viewed as a threat. Birchers decried everyone from former President Eisenhower to water utility administrators as pawns in a global communist conspiracy. In the last two years, as the Koch name has become synonymous with right-wing plutocracy in the United States, the Koch family has played down its relation to the Birchers.
However, the New American, the official mouthpiece of the John Birch Society, published a piece this morning celebrating Fred and the Koch family’s pivotal role in developing the group:
Koch warned that American institutions were honeycombed with communist subversives, from labor unions and tax-free foundations to universities and churches. Art and newsprint, radio and television — all these media had been transmuted into vehicles of communist propaganda. […] Fred Koch was no fly-by-night pamphleteer. He spent a generous portion of his later years using his wealth and influence to fight the communism he abhorred. He was an early member of the The John Birch Society’s National Council, an advisory group to JBS founder Robert Welch. Koch supported a variety of freedom-related causes, all the while continuing to build the company today known as Koch Industries.
The Bircher ode to Koch glosses over Fred’s record of bigotry. In a booklet he authored, Fred railed against civil rights leaders, and claimed the movement against racial segregation was a communist plot to use African Americans to destabilize the country. The Koch-funded Birchers held numerous rallies during the ’60s claiming integration would lead to a “mongrelization” of the races.
Although the present-day Koch brothers try to eschew explicit racism, their top Tea Party front group, Americans for Prosperity, is currently pursuing similar racial segregation goals. In North Carolina, the Americans for Prosperity chapter led a campaign to end a highly successful public school integration system.
In September 2009, the President announced that – for the first time in history – the White House would routinely release visitor records. Today, the White House releases visitor records that were generated in April 2011. Today’s release also includes several visitor records generated prior to September 16, 2009 that were requested by members of the public in June 2011 pursuant to the White House voluntary disclosure policy. This release brings the grand total of records that this White House has released to over 1.5 million records. You can view them all in our Disclosures section.
Boeing Co and the agency that accused it of putting a non-union factory in South Carolina to punish unionized workers in Washington battled in court on Thursday over the company’s request to block public access to its trade secrets during hearings.
Boeing has asked the administrative law judge in the case to issue an order keeping confidential some information on the planemaker’s labor costs for its 787 Dreamliner program that competitors might desire.
But the National Labor Relations Board (NLRB), which brought the complaint, and the International Association of Machinists (IAM) union say the request is too broad and that it unfairly conceals details that are crucial to the case.
The company wants to guard information on its costs from its top rival Airbus, a unit of EADS, as well as from competitors in China and Brazil, said Boeing attorney Eugene Scalia, who is the son of U.S. Supreme Court Justice Antonin Scalia.
Judge Clifford Anderson did not say when he would give his decision. He said he would issue a “protocol” for dealing with sensitive information but that it was unlikely to be a blanket order sealing documents.
Boeing disputes the NLRB claim that it put the $750 million 787 assembly plant in South Carolina as retaliation against the IAM for past strikes. The new plant represents the addition of jobs to the company, not the relocation of work, Boeing says.
The Dreamliner, a lightweight, carbon-composite airplane, is three years behind schedule because of snags in its complex global supply chain. But the company also blames a 58-day IAM strike in 2008 for part of the delay.
Unionized school employees in Detroit were dealt another blow today as Emergency Manager RoyRobertswiped away their union contract and cut the wages by 10% across the board. This comes after Detroit Public School (DPS) employees accepted a major wage concession just a year and a half ago.
Wielding power under a new state law to modify union contracts, Detroit Public Schools emergency manager Roy Roberts this morning imposed a 10 percent wage cut on all employees and moved the district to a more costly benefits plan.
The move, announced by Roberts this morning at a meeting with leaders of eight unions representing nearly 10,000 employees, will save DPS $81 million dollars this year alone at a time when the district is struggling with a $327 million budget deficit.
Roberts first announced the wage concession when the district released its annual budget last month. Union leaders balked at the time, saying they would fight the move and had already given millions in concessions to Roberts’ predecessor, Robert Bobb.
As the Detroit Free Press reports, this affects a large number of Michiganders and sets a new precedent:
The decision marks the first time that the Public Act 4 of 2011 – the new emergency manager law – has been used to modify collective bargaining agreements.
Some of the details:
- Suspend payments for any sick days remaining unused at the time of an employee’s retirement
- Suspend implementation and payment of any annual increments
- Suspend payments for oversized classes to teachers in kindergarten through Grade 12
- Suspend payment of any longevity bonus
- Suspend payment for any preparation periods lost by the teachers
- Suspend payments of any certification bonuses
- Suspend any premium payments for special education personnel and suspend payments of any assault pay
In addition to the 10% wage cut and 20% benefits contribution, the other union employees contracts will be changed to:
- Suspend payments by the district for any sick days remaining unused at the time of an employee’s retirement
- Suspend payment of any longevity bonus and suspend implementation and payment of any annual increments
The bitter irony in this is that DPS employees should be probably be getting paid more considering their work environment. It takes courage and dedication to be a teacher in Detroit. Their working conditions, from crumbling infrastructure to gang and other violence, make their job considerably different from their counterparts in most other school districts across the state. The DPS has long been run by corrupt and/or incompetent administrators and school board members and has been described by some as a “personal ATM” for people who embezzled money or otherwise profited personally. Now the teachers are being asked to pay the price.
I don’t know what the solution is for Detroit schools. An $81 million deficit is profound. Roberts describes the DPS as having “dual crises” — academic and financial. With this move, in my opinion, he is attempting to solve one of the crises by making the other one worse.
The We Are Wisconsin headquarters in La Crosse, Wisconsin, was totally destroyed in a fire that started at 9:30 a.m. today and is still burning. There were staff in the building when the fire started, but all were evacuated and are safe. At this time, there is no indication of the cause of the fire.
An article in the La Crosse Tribune has photos showing the extent of the fire that spread to adjoining buildings.
State Representative Jennifer Shilling, who is running against Republican Senator Dan Kapanke in one of the state’s recall elections, is going to need assistance following this fire. The recall election is less than two weeks away and this is going to seriously impact her get-out-the-vote effort.
If there is any additional news on the cause, I will update.
Update: Help We Are Wisconsin rebuild at Act Blue.
Update As requested, here is the Act Blue link to donate to Jennifer: Act Blue – Jennifer Shilling
Updates from this morning’s La Crosse Tribune:
The La Crosse headquarters for We Are Wisconsin, a left-leaning political action committee, was a total loss, said group spokesman Kelly Steele.
Staffers were in the office when the fire broke out and escaped safely, he said. It’s too early for Steele to say how the group will function without a local headquarters with just 10 days left before the recall election between Democratic challenger Rep. Jennifer Shilling and Republican Sen. Dan Kapanke.
Around the corner, Shilling’s campaign staff was forced to evacuate their Fifth Avenue headquarters, which shares part of a wall with the destroyed building and which lost power Saturday. Shilling released a written statement praising firefighters and emergency workers for securing the area and allowing the staff to get out safely.
It will likely take days before investigators can determine a cause. Baker said vagrants have recently been spotted sleeping in the area, but fire inspector Helfrich said he has not ruled anything out.
While the rear building showed the greatest damage initially, that doesn’t mean the fire began there, he said. That may have been a result of the way that structure burned and collapsed.
The investigation will require interviewing all tenants, owners and firefighters as well as sifting through piles of rubble
Someone firebombed a Planned Parenthood clinic in McKinney, Texas, late Tuesday night. Because it was so late, no one was hurt. The clinic doesn’t provide abortions, but there had been protesters there earlier that day anyway. You might’ve read about the news on Twitter or on a liberal blog. Probably not in a newspaper or on a cable new channel. Definitely not at any right-wing blogs. Which is a bit odd, actually, considering how much attention terrorist attacks generally get in this country.
Oh, sorry, how much attention possible Islamic terrorist attacks get.
Planned Parenthood, in case you haven’t been paying attention, has been the focus of a flood of political attacks — both rhetorical and legislative — since approximately the minute the Republicans who were elected in 2010 took office across the nation. James O’Keefe shopped around one of his trademark shamelessly misleading video “stings.” Glenn Beck devoted an hour to falsely accusing Planned Parenthood of various heinous crimes. The major right-wing pundits have stepped up the hysterical anti-reproductive rights rhetoric as multiple states attempted to defund the organization. The right has even moved on to attacking contraception, as if it doesn’t even want people to believe that its goal isn’t to control women’s bodies.
The National Review’s the Corner has run multiple posts on some pro-life “study” accusing Planned Parenthood of “systemic, organization-wide fraud and abuse” and even human trafficking “at this federally funded billion-dollar abortion business.” One of them said, “Where is the Media,” and bemoaned the fact that the mainstream press was supposedly “ignoring” the report, which got a major press conference with multiple members of Congress and coverage in Politico and the Hill.
But, weirdly, this Planned Parenthood news has not been mentioned at the National Review.
It’s easy to imagine that if the target of the attack had been associated with the right — Marcus Bachmann’s clinic, maybe? — this would be a major national story, even if no one was hurt and the attacker’s identity was still unknown.
It’s even easier to imagine that if anyone had any reason to suspect that a Muslim did this, that it’d be not just a major national story but also the subject of congressional inquiries and maybe eventually an air war. (Even failed Islamic terrorists are treated as if they succeeded by politicians, these days.)
We obviously don’t know yet, but this attack seems more likely to be the work of a politically motivated person with conservative beliefs than a random act of vandalism. In other words, domestic terrorism. Someone threw a Molotov cocktail at a women’s health clinic. It’s insane that only a couple of Internet feminists actually seem to care.
AND IN OTHER NEWS…
Organizing for America:
Posted by Howard D., Obama for America-FL volunteer, Palm Beach County on July 30, 2011
My first encounter with the political arena came in 1968 when I voted for Richard Nixon by absentee ballot from Vietnam. I continued to vote Republican for the next 24 years.
I have to confess that my bank account did well during the Reagan years. I was not a fan of George H.W. Bush, but I had convinced myself that they and Pat Robertson couldn’t hurt things too badly.
At the end of Bush 41’s administration, I started listening to what the Democratic Party had to say, and it resonated with me. Governor Clinton said that, if elected, he would raise my taxes and work on social justice issues. I had been prosperous and felt it was time to pay a little more in taxes, both to help the country move forward on important social issues and to reduce the deficit. I voted for Governor Clinton in the 1992 election. I was proud of his accomplishments on social justice and economic issues and voted for his reelection.
By the end of President Clinton’s second term, I was a committed Democrat. Although I didn’t volunteer on the Gore/Lieberman team, I was sorely disappointed when Governor Bush was elected president. His policies and practices were so harmful to the country that I volunteered on the Kerry/Edwards team. When their campaign failed, it stung and I vowed to work even harder in the next election.
It was in the televised coverage of the 2004 Democratic Convention that I first saw Barack Obama, then a State Senator in Illinois. My wife and I both saw greatness and remarked on it frequently to friends and family.
When I saw an opportunity to volunteer for then-Senator Obama’s election in 2008, I buckled down and went to work. It was a thrilling moment when the Obama/Biden ticket was declared to have taken Florida, and then the election. I’m pleased to say that my greatest expectations have been far exceeded, and sincerely believe that President Obama will prove to be one of the greatest presidents in our nation’s history.
It is for all these reasons that my wife and I support the election of Obama/Biden in 2012.
Howard is a dedicated volunteer who’s making a difference. Stand by his side! Help out your neighborhood team by attending an event near you: http://OFA.BO/FLEvents
QUOTE OF THE DAY:
“We refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds.” — Dr. Martin Luther King, Jr.