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DougMacG
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« Reply #400 on: July 13, 2011, 09:26:40 AM »

"grumble , , , grumble , , , grumble , , , I suppose that makes sense , , , grumble , , ,"

Yeah, it's frustrating (and this deal isn't done).  We can't force a solution against an unwilling President and Senate now because of fickle and lacking support of the public - with moderates/independents wavering from about 60/40 Dem to maybe 60/40 against the Obama-agenda, but not fully on board with any principles yet to be articulated about how this country should be driven forward out of the ditch.  If people were demanding a trillion in cuts now or a new flat tax code now or a re-write of the entire regulatory scheme including energy now, then it would be at least possible to try to ram it through the other body and the other branch.  There isn't even a full plan on the table.  Paul Ryan was trying to start a conversation, not end it.  No leaders stepped forward to expand it,  run with it or sell it.  Just caution.  (Where is Romney's plan?! He's the front runner. And Bachmann is unrealistic.  Boehner is Boehner, I don't dislike him as much as some do but he isn't the answer or the messenger.) When Dems hear the uproar now they just think tea party meaning only extremists and activists.  They have their own extremists and activists to appease.

Similar disarray at this point in Jimmy Carter's 3rd year, though there were no elected Republicans.  Reagan was one of many candidates with many messages.  No one knew what to think of Kemp-Roth or anything else, just barely starting to admit that the current direction was wrong.  We couldn't solve it without a clear message and a messenger stepping forward.  And we never did tackle spending or big government in those years, just defense and growth.
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G M
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« Reply #401 on: July 13, 2011, 10:27:14 AM »

"Where is Romney's plan?! He's the front runner"

Finger in the air, waiting to see what everyone else comes out with and the way public opinion falls.
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JDN
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« Reply #402 on: July 13, 2011, 11:31:21 AM »


Finger in the air, waiting to see what everyone else comes out with and the way public opinion falls.

Sounds familiar.  Isn't that the same reason why Clinton and Obama have been criticized? 
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DougMacG
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« Reply #403 on: July 13, 2011, 12:02:46 PM »

"Sounds familiar.  Isn't that the same reason why Clinton and Obama have been criticized?"

Yes! Obama needed political advice to take out bin Laden! How will it poll if we shoot him in the head versus the saga of capturing and holding...

Yet centrists despise ideologues with a backbone, at least on the right.  So we get deals that perpetuate the status quo, stagnation with trillions more debt, spending increases on programs that exacerbate the same problems, and all real reform on all topics tabled for another day - that never comes.  The centrists win again.
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G M
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« Reply #404 on: July 13, 2011, 12:13:29 PM »

"Sounds familiar.  Isn't that the same reason why Clinton and Obama have been criticized?"

Yes! Obama needed political advice to take out bin Laden! How will it poll if we shoot him in the head versus the saga of capturing and holding...

Yet centrists despise ideologues with a backbone, at least on the right.  So we get deals that perpetuate the status quo, stagnation with trillions more debt, spending increases on programs that exacerbate the same problems, and all real reform on all topics tabled for another day - that never comes.  The centrists win again.

Yup, we've compromised for decades until the future of this country is compromised.
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Crafty_Dog
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« Reply #405 on: July 13, 2011, 12:32:01 PM »

In precisely that vein , , ,

Posted by Erick Erickson (Profile)
Wednesday, July 13th at 5:00AM EDT
47 Comments
Everyone is using the hostage metaphor these days regarding the debt ceiling. Barack Obama started it back in December when he called the GOP hostage takers before the GOP gave him everything he wanted.

Well, I hope the GOP noticed Barack Obama yesterday upped the ante and declared his willingness to shoot his hostages, i.e. senior citizens. Yes, if the GOP dares to hold the line on spending cuts, Barack Obama will balk, the debt limit will not be raised, and Obama will refuse to pay senior citizens.

Jim Pethokoukis notes a Goldman Sachs report showing there will be plenty of money flowing into the treasury in August for the government to pay its debt obligations, pay social security obligations, pay military obligations, and avoid default. But Obama won’t let facts stand in the way of starving senior citizens to score political points against the GOP.

Of course, it is not just Obama willing to score political points. Mitch McConnell wants to give Barack Obama the right to automatically raise the debt ceiling. The only caveat is McConnell wants everyone to know it’ll be Obama who does it, not the GOP. Just how bad is McConnell’s plan? After David Hauptmann, a staffer in McConnell’s office, sent out an email linking to a National Review Online column that said Grover Norquist “supported” Mitch McConnell’s capitulation, Americans for Tax Reform rapidly sent out a press release saying Norquist did not support the plan, just “the goals.” They also asked NRO to clarify.

Undeterred, McConnell enlisted the support of the Wall Street Journal’s editorial page, which came out swinging not just in favor of McConnell’s plan, but also pretty directly against me. I can console myself that they also supported McConnell’s push for TARP.The Journal’s editorial opines

The hotter precincts of the blogosphere were calling this a sellout yesterday, though they might want to think before they shout. The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return.

As I first out of the gate and drew the most ire from McConnell supporters, I think it is safe to conclude they are unhappy with me. Nonetheless, let’s move beyond the rather snotty “we are the adults and the rest of you are unwashed ignorant masses” tone of the editorial and get right to what they actually say.

They might not like my use of the word “sellout,” but McConnell’s plan is exactly what Barack Obama wants. He’ll get to raise the debt ceiling with no obligations to do anything else, except conduct a dog and pony show.

I have written repeated — not that the crack editorialists care — that the debt ceiling is going to go up. I have also written that, however admirable the opposition to any increase is, it is not realistic.

I have then gone on to say that the GOP must hold the line on their cut, cap, and balance plan.

The Wall Street Journal’s editorial goes on to note this:

The tea party/talk-radio expectations for what Republicans can accomplish over the debt-limit showdown have always been unrealistic. As former Senator Phil Gramm once told us, never take a hostage you’re not prepared to shoot. Republicans aren’t prepared to stop a debt-limit increase because the political costs are unbearable. Republicans might have played this game better, but the truth is that Mr. Obama has more cards to play

The President today signaled his willingness to shoot the hostage. The GOP should do the same — show an absolute unwillingness to raise the debt ceiling without their balanced budget amendment passing out of Congress to the states.

Again and again, Congress folds to the doomsday scenarios. The Wall Street Journal again and again claims the sky will fall and the markets will crash. The suits come down from New York and paint the disaster scenario. The GOP falls in line. TARP is passed. What else will be passed?

This time, the GOP should embrace the apocalyptic future, call B.S. on the fear mongering, and shoot their debt ceiling hostage. if they engage in politics as usual as the Wall Street Journal and Mitch McConnell would have them, we’ll be back in this mess again next year.

Politics as usual usually gets us here. If we want to move back to fiscal sanity, we need to try a different approach.
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Crafty_Dog
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« Reply #406 on: July 13, 2011, 12:54:16 PM »

Surely Rep candidates should be making these points with the same gusto , , ,


Editorial Exegesis

"Republicans seemed warily confident that they might get a [debt-ceiling] deal over
the weekend on cutting future spending without raising taxes -- a deal that would
likely lead to smaller future deficits, the possibility of badly needed tax reforms
and the resumption of economic and jobs growth. No such luck. Not only did Obama not
really put any specific major cuts on the table, he reportedly surprised negotiators
by asking them to agree to a 'balanced approach' to deficit-cutting by including a
job-killing $1.7 trillion in potential new tax hikes. ... As a new Heritage
Foundation study shows, the government's tax take under Obama's current budget plans
will 'increase rapidly' from its long-term average of about 18% of GDP to a ruinous
26% of GDP in coming decades. That's why he seemed desperate, saying we need to
'tear the Band-Aid' off and 'eat our peas' to get a deal done by Aug. 2, the phony
deadline established by Democrats for fiscal Armageddon. ... During the press
conference Monday in which he made his case for 'revenue increases' -- that is, tax
hikes -- in deficit talks, Obama suggested why: He wants to spend even more in the
future. He's not shy about airing his many ideas for this, among them what he calls
'investments' in Head Start and student loan programs, more government funding of
medical research, and even an 'infrastructure bank.' Such programs aren't possible,
Obama said, 'if we haven't gotten our fiscal house in order.' This almost defies
belief. This is how we got into the problem in the first place. Too much government,
too much spending, too many regulations, too many taxes. Is Obama really that out of
touch with Americans? It seems so." --Investor's Business Daily
(http://www.investors.com/NewsAndAnalysis/Article/577932/201107111858/Compromise-Not-On-Taxes.htm
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Crafty_Dog
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« Reply #407 on: July 13, 2011, 04:21:38 PM »

http://www.daybydaycartoon.com/2011/07/13/
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G M
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« Reply #408 on: July 13, 2011, 04:29:02 PM »


 grin shocked  cry

It would be funny if we were not watching this country go off a cliff.
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G M
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« Reply #409 on: July 13, 2011, 05:10:52 PM »

http://mercatus.org/publication/how-much-federal-spending-borrowed-every-dollar

How long could you survive if 43 cents of every dollar you spent was borrowed?
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Crafty_Dog
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« Reply #410 on: July 13, 2011, 05:32:48 PM »

Ummm , , , that's a tough one.  Do I get to print the money with which I pay off the debts incurred?
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G M
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« Reply #411 on: July 13, 2011, 05:52:55 PM »

Ummm , , , that's a tough one.  Do I get to print the money with which I pay off the debts incurred?

If you could, it would allow you to get away with it for a bit longer, but the endgame plays out the same, I think.
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DougMacG
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« Reply #412 on: July 13, 2011, 07:48:25 PM »

"How long could you survive if 43 cents of every dollar you spent was borrowed?"
"Do I get to print the money with which I pay off the debts incurred?"
---------------------
There is a guy on the radio (Rush L) who says there is only one Democrat who runs his business the way Democrats run the government (Ponzi scheme).  Maybe we can ask him how long you can survive (Bernie Madoff).  BTW, where are they now (in federal prison until 2139, assuming early release for good behavior).
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Crafty_Dog
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« Reply #413 on: July 15, 2011, 10:00:16 AM »

http://frontpagemag.com/2011/07/15/debt-ceiling-demagoguery-or-extortion-2/print/
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ccp
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« Reply #414 on: July 15, 2011, 10:05:41 AM »

Who was fired from MSNBC for calling Brock for what he is, a "dick"?
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Crafty_Dog
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« Reply #415 on: July 15, 2011, 11:16:13 AM »

That would be for the Media thread please smiley
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G M
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« Reply #416 on: July 15, 2011, 11:23:26 AM »

http://online.wsj.com/article/SB10001424052702304203304576446332084493902.html?mod=WSJ_Opinion_LEADTop

The Obama Downgrade
The real reason the U.S. could lose its AAA rating..

So the credit-rating agencies that helped to create the financial crisis that led to a deep recession are now warning that the U.S. could lose the AAA rating it has had since 1917. As painfully ironic as this is, there's no benefit in shooting the messengers. The real culprit is the U.S. political class, especially the President who has presided over this historic collapse of fiscal credibility.

Moody's and the boys are citing the risk of a default on August 2 as the proximate reason for their warning. But Americans should understand that the debt ceiling is merely the trigger. The gun is the spending boom of the last three years and the prospect that Washington lacks the political will to reduce it in the years to come.

On spending, it is important to recall how extraordinary the blowout of the last three years has been. We've seen nothing like it since World War II. Nothing close. The nearby chart tracks federal outlays as a share of GDP since 1960. The early peaks coincide with the rise of the Great Society, the recession of 1974-75, and then a high of 23.5% with the recession of 1982 and the Reagan defense buildup.

From there, spending declines, most rapidly during the 1990s as defense outlays fell to 3% of GDP in 2000 from its Reagan peak of 6.2% in 1986. The early George W. Bush years saw spending bounce up to a plateau of roughly 20% of GDP, but no more than 20.7% as recently as 2008.

Then came the Obama blowout, in league with Nancy Pelosi's Congress. With the recession as a rationale, Democrats consciously blew up the national balance sheet, lifting federal outlays to 25% in 2009, the highest level since 1945. (Even in 1946, with millions still in the military, spending was only 24.8% of GDP. In 1947 it fell to 14.8%.) Though the recession ended in June 2009, spending in 2010 stayed high at nearly 24%, and this year it is heading back toward 25%.

This is the main reason that federal debt held by the public as a share of GDP has climbed from 40.3% in 2008, to 53.5% in 2009, 62.2% in 2010 and an estimated 72% this year, and is expected to keep rising in the future. These are heights not seen since the Korean War, and many analysts think U.S. debt will soon hit 90% or 100% of GDP.

...
Congress is responsible for the way so much of this spending was wasted, resulting in little job creation and the slowest economic recovery since the 1930s. But in the U.S. political system, Presidents are supposed to be the fiscal adults. When they abdicate, the teenagers invite over their special interest friends and blow the inheritance.

The President is now claiming to have found fiscal virtue, but notice how hard he has fought House Republicans as they've sought to abate the spending boom. First he used the threat of a government shutdown to whittle the fiscal 2011 spending cuts down to very little. Then he invited Paul Ryan to sit in the front row for a speech while he called his House budget un-American.

Now Mr. Obama is using the debt-ceiling debate as a battering ram not to control spending but to command a tax increase. We're told the White House list of immediate budget savings, the ones that matter most because they are enforceable by the current Congress, are negligible. His offer for immediate domestic nondefense discretionary cuts: $2 billion.
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DougMacG
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« Reply #417 on: July 15, 2011, 12:08:49 PM »

The compromise, if there is one, needs to be 3 dimensional, debt limit, spending cuts and movement on pro-growth.  Republicans are talking about only the first 2 and Dems want pretend spending cuts combined with a worsening of growth policies.

a) Limiting and raising the debt limit is a lever to exchange for real improvements on the underlying budget problems: spending and growth.

b) Spending is out of control and future cuts don't count.  Cuts need to be immediate with some structural changes in entitlements and in process.  It's not realistic to get the full fix in an emergency session with divided government, but real movement has to be in the right direction - or why compromise?  One report is that Dem cuts offered equal $1 billion immediate - that is less than 1/1000th of the immediate problem and 1/14,000th of the debt problem.  We would go from borrowing 43% of what we spend to borrowing 43% of what we spend and from owing 14.3 trillion to owing 16, 17, 18 trillion in short order.  Why give an inch for that?

c) Pro-growth policies: there has to be some movement toward alleviating the burden of our anti-growth laws or the deficit and debt burden crises will NEVER ease.  Tax rate increases move us in the opposite direction.  If not tax cuts, if not a total re-write of the tax code, if not repeal of bad regulations, then perhaps a moratorium on one thousand of the most counter-productive regulations.  Real movement on energy alone that would increase production and lower the costs would stimulate nearly all businesses and households.  There will never be a balanced budget again in this country without new growth.

The House vote needs to address all 3 areas in a reasonable and realistic fashion to put the pressure back on the senate and president.
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Crafty_Dog
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« Reply #418 on: July 15, 2011, 12:40:48 PM »

http://www.theblaze.com/stories/judge-napolitanos-open-letter-to-john-boehner-a-common-sense-guide-to-what-needs-to-be-done/
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Crafty_Dog
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« Reply #419 on: July 15, 2011, 01:24:27 PM »

"[T]he present Constitution is the standard to which we are to cling. Under its banners, bona fide must we combat our political foes -- rejecting all changes but through the channel itself provides for amendments." --Alexander Hamilton


Government & Politics
The Debt Ceiling and the Constitution
"C'mon, man!" Joe Biden exclaimed Monday, "Let's get real!" On Wednesday, Barack Obama was so upset that he took his ball and went home, shoving his chair away from the table and saying tersely, "I'll see you tomorrow." The topic, of course, is the debt ceiling, which Obama and his pals at the Treasury Department insist must be raised by Aug. 2 to prevent default on U.S. debt. But this isn't your father's debt ceiling; it's $14.3 trillion currently, and Democrats want $2 trillion more. It's no wonder that tensions are running high. This is where ideological rubber hits the road and either builds America or tears it down.

The sticking points aren't new. Democrats want to raise taxes by as much as $2 trillion in addition to making cuts to various budget items, not least of which is defense. Republicans want cuts with no tax increases. Obama is so insistent on tax increases that, according to a GOP aide in the discussions, he declared, "This may bring my presidency down, but I will not yield on this." He didn't yield as he demagogued Social Security, either. "I cannot guarantee that [Social Security] checks go out on August 3rd if we haven't resolved this issue," he shamelessly warned. Who's throwing grandma off the cliff now?

After that snit, he audaciously criticized Republicans' "my way or the highway" approach.

As for the cuts under discussion, they aren't genuine cuts like those average Americans are making -- buying less milk and fewer eggs, for example. Called base-line budgeting, Washington's cuts are merely reductions in projected growth, as in, "We're still going to buy more milk and eggs than we did last year, but not quite as much as we would have under better political circumstances."

To put it in perspective, spending over the next decade is projected to reach about $46 trillion, including $13 trillion in new debt. The haggling is over $2-4 trillion in cuts to that projected increase. Spreading $2 trillion over 10 years "saves" just $200 billion a year, or less than the interest payment on the debt, and even by reducing projected growth by that much, we still end up with an increase in spending. That, in a nutshell, is Washington-speak.

As for the status of compromise, it has succeeded only in Minnesota, where the Democrat governor and Republican legislature just agreed to end a government shutdown. At the federal level, Republicans have all but given up on a comprehensive reform package. As many as 60 House Republicans might vote against any increase to the debt ceiling, and Democrats control the Senate and the White House, making a deal without their support impossible. What to do?

McConnell's Plan

Senate Minority Leader Mitch McConnell (R-KY) concluded this week, "[A]fter years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable. I was one of those who had hoped we could do something big for the country. But in my view the president has presented us with three choices: smoke and mirrors, tax hikes or default." McConnell is absolutely correct. However, his solution is questionable.

He outlined a complicated legislative maneuver in which Congress would permit the president to raise the debt ceiling unilaterally in three increments totaling $2.5 trillion, provided that he offer equivalent spending cuts each time. Each increase would be subject to a resolution of disapproval from Congress. The president would almost certainly veto that, but he would also then "own" the debt increase, and Congress -- particularly Republicans -- could be absolved, in theory, of responsibility for raising the debt ceiling. The plan has caused a split on both sides of the aisle. Senate Majority Leader Harry Reid (D-NV) and Sen. John McCain (R-AZ) both praised the deal, and Reid is working to make it reality. Sen. Jim DeMint (R-SC), not so much. Many House Republicans indicate it's a non-starter.

The Wall Street Journal asks, "The debt ceiling is going to be increased one way or another, and the only question has been what if anything Republicans could get in return. If Mr. Obama insists on a tax increase, and Republicans won't vote for one, then what's the alternative to Mr. McConnell's maneuver?"

"Ugly and unpleasant as it is," writes Daniel Foster of National Review, "not all retreats are capitulations. McConnell clearly thinks of this as a tactical retreat in the service of his overarching strategic objective: to make President Obama a one-term president."

On the other hand, there are constitutional concerns with McConnell's plan. The Constitution (Article I, Section Cool puts budget responsibility directly in the hands of Congress, not the president. Technically, the deal would leave Congress with the authority to dictate the amount of the increases and to "disapprove" if they choose, but there's a real sense that one of the three co-equal branches of government is abdicating its constitutional duty for political gain.

Rory Cooper of the Heritage Foundation writes, "Depending on exactly how the legislative language is drafted, it well might violate the Bicameralism and Presentment Clauses for the making of law, the separation of powers regarding Congress's control over the budget and spending, [and] the legislative Recommendations Clause, and it might also be struck down as an attempt to grant the President the equivalent of a line-item veto. It is also unclear whether the unconstitutional portion would be struck down by the courts and severed from the rest of the statute (which would eliminate Congress's ability to veto the cuts) or if the entire scheme would be struck down. But, at a minimum, the proposal is highly dubious as a matter of constitutional law."

Call us crazy, but we think the Constitution trumps political concerns. Regardless of the worthy strategic objective of limiting Obama to one term in office, or of limiting blame in the polls, the ends don't justify the means. The debt was run up by politicians who have ignored their sacred oaths to support and defend the Constitution. Congress and the president must take their oaths seriously, and solidify the full faith and credit of the United States by cutting excessive and unconstitutional spending. The goal should be to lower the debt ceiling, not bicker about how high to raise it. Following the Constitution -- not skirting it -- is the proper path to arrive there.

(Comment here.)

Essential Liberty
"Republicans have been neatly set up to take the fall if a deal is not reached by Aug. 2. Obama is already waving the red flag, warning ominously that Social Security, disabled veterans' benefits, 'critical' medical research, food inspection -- without which agriculture shuts down -- are in jeopardy. The Republicans are being totally outmaneuvered. The House speaker appears disoriented. It's time to act. Time to call Obama's bluff. A long-term deal or nothing? The Republican House should immediately pass a short-term debt-ceiling hike of $500 billion containing $500 billion in budget cuts. That would give us about five months to work on something larger. ... Will the Democratic Senate or the Democratic president refuse this offer and allow the country to default -- with all the cataclysmic consequences that the Democrats have been warning about for months -- because Obama insists on a deal that is 10 months and seven days longer? That's indefensible and transparently self-serving. Dare the president to make that case. Dare him to veto -- or the Democratic Senate to block -- a short-term debt-limit increase." --columnist Charles Krauthammer

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ccp
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« Reply #420 on: July 15, 2011, 02:15:14 PM »

"The Republican House should immediately pass a short-term debt-ceiling hike of $500 billion containing $500 billion in budget cuts."

Even Krauthammer smells Democratic blood in the air!  Time to lock the armbar and break their arm!

Mark Levin was right all along.  Time to go for the kill.  It is now or never and they are on the run.

As Bachman said the other night to a grinning OReilly she has a titanium spine. Time for all Repubs to get titanium rods implanted in their/our spines.
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Crafty_Dog
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« Reply #421 on: July 15, 2011, 02:26:00 PM »


Reich was in Clinton's cabinet. 

================

By ROBERT REICH
After a bruising midterm election, the president moves to the political center. He distances himself from his Democratic base. He calls for cuts in Social Security and signs historic legislation ending a major entitlement program. He agrees to balance the budget with major cuts in domestic discretionary spending. He has a showdown with Republicans who threaten to bring government to its knees if their budget demands aren't met. He wins the showdown, successfully painting them as radicals. He goes on to win re-election.

Barack Obama in 2012? Maybe. But the president who actually did it was Bill Clinton. (The program he ended was Title IV of the Social Security Act, Aid to Families with Dependent Children.)

It's no accident that President Obama appears to be following the Clinton script. After all, it worked. Despite a 1994 midterm election that delivered Congress to the GOP and was widely seen as a repudiation of his presidency, President Clinton went on to win re-election. And many of Mr. Obama's top aides—including Chief of Staff Bill Daley, National Economic Council head Gene Sperling and Pentagon chief Leon Panetta—are Clinton veterans who know the 1995-96 story line by heart.

Republicans have obligingly been playing their parts this time. In the fall of 1995, Speaker Newt Gingrich was the firebrand, making budget demands that the public interpreted as causing two government shutdowns—while President Clinton appeared to be the great compromiser. This time it's House Majority Leader Eric Cantor and his Republican allies who appear unwilling to bend and risk defaulting on the nation's bills—while President Obama offers to cut Social Security and reduce $3 of spending for every dollar of tax increase.

And with Moody's threatening to downgrade the nation's debt if the debt limit isn't raised soon, Republicans appear all the more radical.

So will Barack Obama pull a Bill Clinton? His real problem is one Mr. Clinton didn't have to contend with: a continuing terrible economy. The recession in 1991-92 was relatively mild, and by the spring of 1995, the economy was averaging 200,000 new jobs per month. By early 1996, it was roaring—with 434,000 new jobs added in February alone.

View Full Image

Martin Kozlowski
 .I remember suggesting to Mr. Clinton's then-political adviser, Dick Morris, that the president come up with some new policy ideas for the election. Mr. Morris wasn't interested. The election will be about the economy—nothing more, nothing less, he said. He knew voters didn't care much about policy. They cared about jobs.

President Obama isn't as fortunate. The economy remains hampered by the Great Recession, brought on not by overshooting by the Federal Reserve but by the bursting of a giant housing bubble. As such, the downturn has proven resistant to reversal by low interest rates. The Fed has kept interest rates near zero for more than two years, opened the spigots of its discount window, and undertaken two rounds of quantitative easing—all with little to show for it.

Some in the White House and on Wall Street assume the anemic recovery will turn stronger in the second half of the year, emerging full strength in 2012. They blame the anemia on disruptions in Japanese supply chains, bad weather, high oil prices, European debt crises, and whatever else they can come up with. These factors have contributed, but they're not the big story.

When the Great Recession wiped out $7.8 trillion of home values, it crushed the nest eggs and eliminated the collateral of America's middle class. As a result, consumer spending has been decimated. Households have been forced to reduce their debt to 115% of disposable personal income from 130% in 2007, and there's more to come. Household debt averaged 75% of personal income between 1975 and 2000.

We're in a vicious cycle in which job and wage losses further reduce Americans' willingness to spend, which further slows the economy. Job growth has effectively stopped. The fraction of the population now working (58.2%) is near a 25-year low—lower than it was when recession officially ended in June 2009.

Wage growth has stopped as well. Average real hourly earnings for all employees declined by 1.1% between June 2009, when the recovery began, and May 2011. For the first time since World War II, there has been a decline in aggregate wages and salaries over seven quarters of post-recession recovery.

This is not Bill Clinton's economy. So many jobs have been lost since Mr. Obama was elected that, even if job growth were to match the extraordinary pace of the late 1990s—averaging 300,000 to 350,000 per month—the unemployment rate wouldn't fall below 6% until 2016. That pace of job growth is unlikely, to say the least. If Republicans manage to cut federal spending significantly between now and Election Day, while state outlays continue to shrink, the certain result is continued high unemployment and anemic growth.

So Mr. Obama's challenge in 2012 has nothing to do with Mr. Clinton's in 1996. Most Americans care far more about jobs and wages than they do about budget deficits and debt ceilings. Even if Mr. Obama is seen to win the contest over raising the debt limit and succeeds in painting Republicans as radicals, he risks losing the upcoming election unless he directly addresses the horrendous employment problem.

How can he do this while continuing to appear more reasonable than Republicans on the deficit? By coming up with a bold jobs plan that would increase outlays over the next year or two but would credibly begin a long-term plan to shrink the budget. To the extent the jobs plan spurs growth, the long-term ratio of debt to GDP will improve.

Elements of the plan might include putting more money into peoples' pockets by exempting the first $20,000 of income from payroll taxes for the next year, recreating a Works Progress Administration and Civilian Conservation Corps to employ the long-term jobless, creating an infrastructure bank to finance improvements to roads and bridges, enacting partial unemployment benefits for those who have been laid off from part-time jobs, and giving employers tax credits for net new hires.

The fight over the debt ceiling will be over very soon. Most Washington hands know it will be raised. Political tacticians know President Obama will likely appear to win the battle, and his apparent move to the center will make Republicans look like radicals. But the Clinton script will take the president only so far. If he wants a second term, he'll have to come out swinging on jobs.

Mr. Reich, a former U.S. secretary of labor, is professor of public policy at the University of California, Berkeley and author of "Aftershock: The Next Economy and America's Future" (Alfred A. Knopf, 2010).

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« Reply #422 on: July 16, 2011, 08:49:33 AM »

http://www.foxnews.com/opinion/2011/07/15/seven-myths-about-looming-debt-ceiling-disaster/
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« Reply #423 on: July 16, 2011, 11:51:36 PM »

MARK STEYN

JULY 16, 2011 7:00 A.M.

The Great Charade

The spenders are negotiating among themselves how much debt they’re going to burden you with.   

There is something surreal and unnerving about the so-called “debt ceiling” negotiations staggering on in Washington. In the real world, negotiations on an increase in one’s debt limit are conducted between the borrower and the lender. Only in Washington is a debt increase negotiated between two groups of borrowers.

Actually, it’s more accurate to call them two groups of spenders. On the one side are Obama and the Democrats, who in a negotiation supposedly intended to reduce American indebtedness are (surprise!) proposing massive increasing in spending (an extra $33 billion for Pell Grants, for example). The Democrat position is: You guys always complain that we spend spend spend like there’s (what’s the phrase again?) no tomorrow, so be grateful that we’re now proposing to spend spend spend spend like there’s no this evening.

On the other side are the Republicans, who are the closest anybody gets to representing, albeit somewhat tentatively and less than fullthroatedly, the actual borrowers — that’s to say, you and your children and grandchildren. But in essence the spenders are negotiating among themselves how much debt they’re going to burden you with. It’s like you and your missus announcing you’ve set your new credit limit at $1.3 million, and then telling the bank to send demands for repayment to Mr. and Mrs. Smith’s kindergartner next door.

Nothing good is going to come from these ludicrously protracted negotiations over laughably meaningless accounting sleights-of-hand scheduled to kick in circa 2020. All the charade does is confirm to prudent analysts around the world that the depraved ruling class of the United States cannot self-correct, and, indeed, has no desire to.

When the 44th president took office, he made a decision that it was time for the already unsustainable levels of government spending finally to break the bounds of reality and frolic and gambol in the magical fairy kingdom of Spendaholica: This year, the federal government borrows 43 cents of every dollar it spends, a ratio that is unprecedented. Barack Obama would like this to be, as they say, “the new normal” — at least until that 43 cents creeps up a nickel or so, and the United States government is spending twice as much as it takes in, year in, year out, now and forever. If the Republicans refuse to go along with that, well, then the negotiations will collapse and, as he told Scott Pelley on CBS the other night, Gran’ma gets it. That monthly Social Security check? Fuhgeddabouddit. “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue,” declared the president. “Because there may simply not be the money in the coffers to do it.”

But hang on. I thought the Social Security checks came out of the famous “Social Security trust fund,” whose “trustees” assure us there’s currently $2.6 trillion in there. Which should be enough for the August 3rd check run, shouldn’t it? Golly, to listen to the president, you’d almost get the impression that, by the time you saw the padlock off the old Social Security lockbox, there’s nothing in there but a yellowing IOU and a couple of moths. Indeed, to listen to Obama, one might easily conclude that the whole rotten, stinking edifice of federal government is an accounting trick. And that can’t possibly be so, can it?

For the Most Gifted Orator in Human History, the president these days speaks largely in clichés, most of which he doesn’t seem to be quite on top of. “Eric, don’t call my bluff,” he sternly reprimanded the GOP’s Eric Cantor. Usually, if you’re bluffing, the trick is not to announce it upfront. But, in fact, in his threat to have Granny eating dog food by Labor Day, Obama was calling his own bluff. The giant bluff against the future that is government spending.

How many of “the wealthy” do you require to cover a one-and-a-half trillion-dollar shortfall every single year? When you need this big a fix, there aren’t enough people to stick it to. “We are not broke,” insists Van Jones, Obama’s former “green jobs” czar and bespoke Communist. “We were robbed, we were robbed. And somebody has our money!”

The somebody who has our money is the government. They waste it on self-aggrandizing ideologue nitwits like Van Jones and his “green jobs” racket. How’s the “green jobs” scene in your town? Going gangbusters, is it? Every day these guys burn through so much that they can never bridge the gap. By that, I don’t mean that an American government that raises $2 trillion but spends $4 trillion has outspent America, but that it’s outspent the planet. In my soon to be imminently forthcoming book, I discuss a study published last year by John Kitchen of the U.S. Treasury and Menzie Chinn of the University of Wisconsin. Its very title is a testament to where we’re headed:

“Financing U.S. Debt: Is There Enough Money In The World — And At What Cost?”

 

The authors’ answer is yes, technically, there is enough money in the world — in the sense that, on current projections, by 2020 all it will take to finance the government of the United States is for the rest of the planet to be willing to sink 19 percent of its GDP into U.S. Treasury debt. Which Kitchen and Chinn say is technically doable. Yeah. In the same sense that me dating Scarlett Johansson is technically doable.

Unfortunately, neither Scarlett nor the rest of the planet is willing to do it. It’s not 2020 and we’re not yet asking the rest of the planet for a fifth of its GDP. But already the world is imposing its own debt ceiling. Most of the debt issued by the Treasury so far this year has been borrowed from the Federal Reserve. That adds another absurd wrinkle to the D.C. charade: Washington is negotiating with itself over how much money to lend itself.

Meanwhile, the World’s Greatest Orator bemoans the “intransigence” of Republicans. Okay, what’s your plan? Give us one actual program you’re willing to cut, right now. Oh, don’t worry, says Barack Obluffer. To demonstrate how serious he is, he’s offered to put on the table for fiscal year 2012 spending cuts of (stand well back now) $2 billion. That would be a lot in, say, Iceland or even Australia. Once upon a time it would have been a lot even in Washington. But today $2 billion is what the Brokest Nation in History borrows every ten hours. In other words, in less time than he spends sitting across the table negotiating his $2 billion cut, he’s already borrowed it all back. A negotiation with Obama is literally not worth the time.

In order to fund Obamacare and the other opiates of Big Government dependency, the feds need to take 25 percent of GDP, now and forever: The “new normal.” It can’t be done. Look around you. The new normal’s already here: flatline jobs market, negative equity, the dead-parrot economy. What comes next will be profoundly abnormal. His name was Obamandias, King of Kings. Look upon his works, ye mighty, and despair. Round the decay of that colossal wreck, boundless and bare, the lone and level sands stretch far away.

Do they still teach Shelley in high school? Or just the “diversity manual” about “social justice” the Omaha Public Schools paid for with $130,000 of “stimulus” funding?

— Mark Steyn, a National Review columnist, is author of America Alone. © 2011 Mark Steyn.
 
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« Reply #424 on: July 17, 2011, 12:18:31 AM »

http://www.nationalpost.com/news/Destroying+itself+from+within/5111564/story.html

Rex Murphy, National Post · Jul. 16, 2011 | Last Updated: Jul. 16, 2011 3:03 AM ET



If America falls, it will not be from external enemies. It will be by her own hand. That is the inescapable conclusion one carries away from a reading of Reckless Endangerment, an account of the ferocious financial crisis that exploded in 2008 and through which, to this very day, the United States is still struggling to find safe and solid ground. It surely isn't over yet. Witness the current tussle between the White House and the Republicans on whether or not to "raise the debt ceiling," which is already over the incomprehensible level of $14-trillion.

First, a note about Reckless Endangerment's authors. They are, respectively, Gretchen Morgenson, a Pulitzer Prizewinning New York Times business reporter, and Joshua Rosner, a financial analyst -solidly competent and authoritative both. Reckless Endangerment does not come, in other words, out of the wild territory of hyper-partisanship or the backwaters of conspiracism.

Any person with a regard for the United States, or with some surviving faith in the virtues of representative democracy, will finish this book severely angry. It's a good game to play, should you start to read it, to keep count of the number of times you lay the book down in exasperated wonder that the American system could have been so twisted, so abused and so turned against itself.

What brought on the sub-prime crisis, as the meltdown of 2008 has become known? What brought about the worst crash since 1929, impoverished millions, tipped the government of the world's most powerful country into near window-ledge panic, pushed its Treasury into unprecedented outlays to forestall absolute collapse and left most of America with an almost broken faith in the integrity of its financial institutions and those who preside over them?

The most obvious villain is the one we all know. Wall Street is everything its wildest detractors want to label it.

It is a dog of greed and self-interest. The investment houses, the brokers, the great wizards of the street: Once the great sub-prime market began to swell, and once the great tranches of excessive earnings and those wonderful bonuses began to fill, they abandoned all scrutiny, flouted their own best practices and pushed the ever more risky market with all the adrenalin that hypergreed can supply.

But equally deserving of blame are the two federal institutions somewhat infantilely known (from a phoneticization of their acronyms) as Fannie Mae and Freddie Mac -whose ostensible purpose is to expand home ownership by providing a buyer for mortgage-backed securities. Originally, these entities were designed in 1938, in the aftermath -irony alert -of the Great Depression. By the early 1990s, they had mutated into weird, almost autonomous, speculative, rules-defying and ruthlessly aggressive money-making machines for the benefit of the handful of executives who ran them.

This space does not have length enough to tell how Fannie Mae and Freddie Mac were so thoroughly hijacked. The accounts given in Reckless Endangerment of executives James Johnson and Franklin Raines, just to pick two examples, are astonishing. These two were/ are monsters of rapaciousness and arrogance. They so brazenly used the truly vast resources of their mortgage retailing to launch public relations campaigns, hire relatives of the politicians who oversaw them, fund lobbyists by the dozens, and orchestrate fake campaigns of "public support" every time two or three brave regulators began the Sisyphean task of calling them to account.

Reckless Endangerment tells us which elected officials did their bidding. If there is ever a Mount Rushmore for hypocrites, the face of Democratic Congressman Barney Frank -Fannie Mae's friend in every sordid scrape (until nothing could be hidden anymore) -should be the first to go up. It was the complaisance and complicity of elected politicians like him that enabled Fannie Mae and Freddie Mac to achieve the power they did, to violate so utterly their own charters, to defy and slander their regulators (they set rumours afloat that one honest overseer was having "mental problems") as long as the mortgage giants tossed funds into their political kitties, gave them ribbon cutting ceremonies for "minority housing," and greased their re-election efforts.

The real story of Reckless Endangerment is more a story of democracy corrupted than it is a story of financial fraud. It is a story of America's great wounding of herself. And even now, with this book, the full account is not nearly as known as it should be; and as the authors so sadly point out, nearly every one of the principals who brought such misery and shame upon their countrymen are free, prosperous, in many cases highly honoured and "serving" still at the highest levels of political and financial power.

One weeps and despairs.
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« Reply #425 on: July 17, 2011, 04:12:48 PM »

Obama wil plunge us into a second dip just like FDR in his second term plunged the country into a sceond depression:

http://www.dickmorris.com/blog/dick-morris-tv-lunch-alert-fdr-obama-compared/
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« Reply #426 on: July 17, 2011, 05:32:53 PM »

Yes. 

Concerning Baraq and Fannie & Freddie, in a mere 18 months in the US Senate he become the #2 all time recipient of donations  shocked and the Franklin Raines mentioned in the piece (who, IIRC acclerated Fannie earnings so he could get an even huger bonus) was selected by Baraq to , , , something important, but I forget what.
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« Reply #427 on: July 18, 2011, 10:25:35 AM »

Posted here because of its connection to govt programs and spending:

What Is Poverty in America?

As Congress struggles to find a way to cut spending as part of raising the $14 trillion debt ceiling, they should take a close look at the more than $1 trillion spent every year on welfare. You'll be surprised to learn that many of the 30 million Americans defined as "poor" and in need of government assistance aren't quite what you'd expect—rather than homeless and on the streets, the average poor American household has luxuries like air conditioning, cable TV, and X-box video game consoles.

In their new report, What Is Poverty?, The Heritage Foundation's Robert Rector and Rachel Sheffield analyze what it really means to be poor in America. The reality they found is much different than the picture painted in movies and on TV:

According to the government’s own survey data, in 2005, the average household defined as poor by the government lived in a house or apartment equipped with air conditioning and cable TV. The family had a car (a third of the poor have two or more cars). For entertainment, the household had two color televisions, a DVD player, and a VCR.

If there were children in the home (especially boys), the family had a game system, such as an Xbox or PlayStation. In the kitchen, the household had a microwave, refrigerator, and an oven and stove. Other household conveniences included a washer and dryer, ceiling fans, a cordless phone, and a coffee maker.

The home of the average poor family was in good repair and not overcrowded. In fact, the typical poor American had more living space than the average European. (Note: That’s average European, not poor European.) The average poor family was able to obtain medical care when needed. When asked, most poor families stated they had had sufficient funds during the past year to meet all essential needs.

By its own report, the family was not hungry. The average intake of protein, vitamins, and minerals by poor children is indistinguishable from children in the upper middle class and, in most cases, is well above recommended norms. Poor boys today at ages 18 and 19 are actually taller and heavier than middle-class boys of similar age in the late 1950s and are a full one inch taller and 10 pounds heavier than American soldiers who fought in World War II. The major dietary problem facing poor Americans is eating too much, not too little; the majority of poor adults, like most Americans, are overweight.

That's a far cry from the images the news media conjure up on TV. But it's the reality of those who are defined as poor in America.

To be sure, the average poor family does not represent every poor family, and there are some who are better off and some who are worse off. Though most of the poor are well-housed, at any given point during the recession in 2009, about one in 70 poor persons was homeless, and one in five experienced temporary food shortages. Those individuals have serious concerns. But the fact remains that U.S. government statistics on poverty misrepresent the reality.

That misrepresentation has international implications. Rector and Sheffield explain that U.S. government poverty statistics portray a misleading negative image around the world. Al Jazeera, Iran's Teheran Times, Chinese and Russian media have latched on to U.S. poverty statistics to depict the United States as a failed, nightmarish society. And nothing could be further from the truth.

President Obama plans to make this situation worse by creating a new "poverty" measure that deliberately severs all connection between "poverty" and actual deprivation. Rector and Sheffield say that the goal is to measure income "inequality," not poverty—giving the President public relations ammunition for his "spread-the-wealth" agenda.

Rector and Sheffield write that when it comes to making policy, the broader reality of what poverty in America means should be taken into consideration: "Sound public policy cannot be based on faulty information or misunderstanding . . . In the long term, grossly exaggerating the extent and severity of material deprivation in the U.S. will benefit neither the poor, the economy, nor society as a whole."
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« Reply #428 on: July 18, 2011, 10:49:19 AM »

Second post of the morning:

The Foundation
"The battle, sir, is not to the strong alone; it is to the vigilant, the active, the brave." --Patrick Henry

Government

Bullet train to bankruptcy"The country is on a high-speed bullet train to bankruptcy (the only kind of bullets liberals approve of), and the Democrats' motto is: Spend! Spend! Spend! Democrats are at an advantage in the 'should the U.S. go bankrupt or not?' debate because, based on their economic policies so far, they obviously favor bankruptcy. This allows them to sit back and demand that Republicans propose all the spending cuts and then turn around and scream that Republicans have declared war on the poor and disadvantaged. It's a nice trick, especially considering Republicans control only the House. Meanwhile, the Democrats control all other branches of our government: the Senate, the White House, and The New York Times op/ed page. What's their plan? Their plan is to keep spending, while blaming tax breaks for corporate jets for the entire $14.3 trillion deficit. The Democrats will never suggest any cuts to a budget that has put the country another $4 trillion in debt only since Obama became president. So Republicans keep proposing cuts and Democrats keep riling up the increasingly large number of people who get checks from the government. Nothing ever gets cut, but more people hate Republicans for having proposed any cuts at all. ... If Republicans cut government spending, recipients of government checks come after them with pitchforks. If the Republicans refuse to raise the debt ceiling to force spending cuts, the economy collapses. In general, the trend seems to be in the direction of higher spending and endless debt." --columnist Ann Coulter

Essential Liberty
"The depressing debate over the debt ceiling underscores just how recklessly the ruling class has squandered America's sacred heritage -- a heritage I had the privilege of revisiting up close this past week on a family vacation. The contrast between the sublime historical locations we experienced during the day and the alarming news we ingested each night about the dire state of our nation's financial condition couldn't have been starker. Upon witnessing the majesty of our historical sites, it's difficult not to be outraged at the irresponsible stewardship of our do-gooder ruling class. These elites are on the final leg of their long journey to uproot our founding principles and remake the nation in their quest for moral self-realization through public acts of philanthropy with other people's money and liberty. In the name of compassion, they have systematically undermined our founding ideals of life, liberty, the pursuit of happiness and equal opportunity under the law. ... I am more convinced than ever that words alone are insufficient to express the richness of America's heritage and the debt we owe our Founding Fathers and all others who sacrificed so much so that we could be free. As we measure the forces determined to structurally change this nation, divest us of our liberties and, in the process, inevitably bankrupt us, let us always be mindful of the sacrifice of these great men, who bequeathed to us our liberties, and honor them and our posterity by redoubling our commitment to fight to the end to preserve them." --columnist David Limbaugh

Opinion in Brief
"[P]resident Obama's statements that he may have to stop Social Security checks, veterans' checks and disability checks shows just how bankrupt our country is. If we literally don't have the cash to pay those checks out of our current stockpiles, how is borrowing more money going to cure the problem? ... By tacitly admitting that government benefit schemes are month-to-month, [Obama's] admitting that the underlying structure of these systems is not self-sustaining. That's a major shift for a man who, in August 2010, proclaimed, 'Social Security is not in crisis.' ... President Obama has now embraced a binary choice: either he can screw current taxpayers or he can screw past taxpayers. Those who depend on their Social Security check to pay the rent are now being asked to suffer a double burden: The burden of paying their original Social Security tax as well as the burden of forgoing their expected return. The alternative is asking those who currently pay taxes to suffer a double burden: paying a higher tax rate and then forgoing their check somewhere down the road." --columnist Ben Shapiro


Political Futures
"Rarely ... has any administration been so disconnected from Reality as is the one now lecturing us. Who strong-armed through Congress a health insurance measure on the supposition that somehow we, the taxpayers, will cough up the hundreds and hundreds and hundreds of billions necessary to pay for it forever? As everyone and his dog knows, the Affordable Care Act was the Obama administration's bright idea. Ironically, the president plans next year, while seeking re-election, to pat himself enthusiastically on the back for winning passage of the very measure that makes control of federal spending so devilishly hard. Having told us to eat our peas, he plans next to remind us how good they tasted." --columnist William Murchison

Re: The Left
"In the midst of testy debt-limit negotiations, Obama told House Majority Leader Eric Cantor, 'Don't call my bluff.' The first rule in bluffing is to keep it a secret that you're bluffing. So, technically speaking, that's like a con man saying, 'Don't give any weight to the fact that I'm lying.' ... His remark about not calling his bluff notwithstanding, Obama has at least demonstrated the political professionalism to read his lines. His refusal to sign a short-term debt-ceiling extension is, according to him, an act of moral leadership, high-minded pragmatism and flat-out bravery. 'I've reached my limit. This may bring my presidency down, but I will not yield on this,' Obama reportedly said about his determination to have a long-term deal. He says he wants the deal because America can't continue to kick the can down the road, even though that's what he did during his entire presidency until the GOP got in the way. My suspicion is that if he read his stage direction instead of his lines, it would sound very different. Something like: 'I want to be positioned as if I'm taking the high road, but I'm really just trying to kick this can past the 2012 election. I want to keep asking for things Republicans won't agree to so I can paint them as irresponsible. So, whatever you do, don't call my bluff.'" --columnist Jonah Goldberg

For the Record
"Let me start by saying American should pay its debts. If the debts are really, really large -- that's too bad. We owe the money and we have to pay it. We're the richest, most blessed nation in the history of the world and we have to pay what we owe. Period. ... On Wednesday a company known as a ratings agency, Standard & Poor's, weighed in on this debt limit business by putting the whole U.S. of A. on what it calls a 'credit watch.' If we slip into the Wayback Machine we will see that S&P along with its partner in crime, Moody's Investor Services, were two of the major players in pretending that all those securitized mortgage instruments that were being bought and sold up until the whole world went broke had 'AAA' ratings even though they turned out to have the accumulated value of a bucket of beach sand. Standard & Poor's either lied about the value of all those mortgages, or it didn't understand how to value them, or it did understand that they were worthless but it (and Moody's) collected fees from the geniuses who almost made our ATM cards as useful as baseball cards in our bicycle spokes. ... If I were in a position to do so, I would haul the heads of Moody's and S&P in front of Congress, make them swear to tell the truth, and ask them if they had any conversations with Treasury Secretary Timothy Geithner or any of his people prior to issuing this warning. My strong suspicion is that the White House, looking for leverage, told Geithner to call his buds at Moody's and S&P and get them to issue a warning hoping it would weaken the resolve of Congressional Republicans." --political analyst Rich Galen

Insight
"The only freedom deserving the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it. Each is the proper guardian of his own health, whether bodily, or mental and spiritual. Mankind are greater gainers by suffering each other to live as seems good to themselves, than by compelling each to live as seems good to the rest." --British philosopher and economist John Stuart Mill (1806-1873)

The Gipper
"I have wondered at times about what the Ten Commandment's would have looked like if Moses had run them through the U.S. Congress." --Ronald Reagan

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Crafty_Dog
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« Reply #429 on: July 18, 2011, 03:10:39 PM »

Third post of the day:

No matter where we stand on the War on Drugs, I think we can all agree with this one.

MAN! A BIG 10-4 FOR THIS ONE!
We need this in all the states.
 
Florida is the first state that will require drug testing when applying for welfare (effective July 1st)! Some people are crying this is unconstitutional. How is this unconstitutional yet it's okay that every working person had to pass a drug test in order to support those on welfare?
Re-post if you… agree. Let's get Welfare back to the one's who NEED it, not those who W A NT it...
http://www.politifact.com/florida/promises/scott-o-meter/promise/600/require-drug-screening-for-welfare-recipients/ 
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« Reply #430 on: July 18, 2011, 07:10:46 PM »

This makes a lot of sense to me:

==========================
Republicans this week plan to force votes in the House and Senate on a balanced budget amendment to the U.S. Constitution. The last time Congress voted on a BBA was in 1997. It failed. The first unsuccessful BBA was proposed in 1936. All efforts between now and then to vote a balanced budget amendment into the Constitution have failed. This one will as well, as there are sufficient Democratic votes in the Senate to block it.

What, then, is the point?

The point is that many Republicans—and we suspect silently more than a few Democrats—are frustrated and sickened at the spectacle of the nation's debt bursting past $14 trillion, with the prospect that the debt soon may reach 100% of GDP. They are upset as well that the Obama Presidency has pushed federal spending upward, from its historic postwar level around 20% of GDP to near 25% this year. Proponents of the BBA argue that only a spending limitation embedded in the Constitution can stop the U.S. fisc from going over the cliff.

These pages bear enough scars from the spending wars—against both political parties—to have won Milton Friedman spending-limitation citations many times over. But we have been writing since at least the 1995 vote on a balanced budget amendment that we do not believe this mechanism can achieve its desired result. Its effects may even prove perverse. We see no reason to change that view now.

The newest versions of the BBA include a strong provision requiring a two-thirds supermajority vote to increase taxes. That said, we doubt the historic 1981 Reagan tax cuts within the Kemp-Roth bill, once subjected to Congress's revenue-neutrality accountants, could have survived the balanced budget mandate. Even with deficits, the U.S. grew strongly for seven years, adding to GDP as much as the entire West German economy.

View Full Image

Getty Images/Stock Illustration Source
 .Nor is it clear that the amendment could avoid unintended consequences. In the current fight over spending and the debt, the GOP Congressional leadership has worked well to protect the defense budget from a President who constantly cites the need to cut it. But under a mandated need to balance spending, the inevitable horse-trading would likely default to cutting defense while ducking fights on domestic programs.

The Senate and House versions both contain waivers in times of military conflict, but these are fraught with problems. The supermajority requirement for taxes is waived if a "declaration of war" is in effect, or if a majority votes to support spending for a conflict "which causes an imminent and serious military threat" as described in a joint resolution of Congress. Sounds complicated. Would Ronald Reagan's spending that did so much to end the Cold War have survived these hurdles?

Tea party Republicans, to their credit, want to pass a BBA that would include the supermajority tax limitation. But it has no chance of passing, and absent that rule, political pressure could turn the amendment into a driver for the entitlement state as successive Democratic governments raised taxes, most likely with a European-style value-added tax to balance spending commitments.

The new Members who are intent on fiscal responsibility should visit with Congressional historians to discover a root cause of this modern spending catastrophe—the 1974 Congressional Budget and Impoundment Control Act, the most laughable title ever placed on a federal law.

Passed amid Richard Nixon's struggles over spending with Congress, the law eviscerated the President's ability to impound Congressional spending. The law itself was an act of rage against Nixon's impoundments. "Control" over spending tipped into the hands of Congress, as is clear from the upward path of federal spending post-1974. This was the start of the infamous "baseline" budgeting rules, which automatically ratchet up spending from one year to the next.

Rather than trying to scale the impossibly high cliff of a Constitutional amendment, younger Members should revisit that bad law and fix it. Tom DeLay never wanted to fix it, but Paul Ryan does. The goal of an achievable reform act would be to put spending on a downward slope. That would include getting rid of baseline budgeting, restoring the Presidential impoundment power (if liberal Congresses hated it, it must have been good), and requiring the two-thirds majority for tax increases.

The BBA's supporters are right that the U.S. is riding a runaway entitlement train. That train, however, is the product of politics, and politics is the way it will have to be stopped. The main political impact of the BBA, however, will be to give "moderate" Senate Democrats up for re-election next year a chance to enhance their prospects by voting "for" spending control they don't believe in.

We certainly support the House GOP's plan today to vote to cut spending by $111 billion in fiscal 2012, and to cap spending in future years at a gradually smaller share of the economy. They should make this plan their main political argument, and leave the Constitution out of it.

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« Reply #431 on: July 18, 2011, 11:11:49 PM »

The BBA (IMO) is a misnomer like Dems usually do.  I oppose a simple balanced budget amendment, but this one has a hook in it, an 18% cap on spending.  I favor the cap and I favor the supermajority required to raise taxes.  So I favor it the way it is, but if it were amending to just a BBAthat becomes mostly a prescription for unlimited spending and automatic tax increases to match.
----
SC Gov. Nikki Haley in this video - Must see, IMO. There are some tough Republican Governors out there.  Haley with TX Gov Rick Perry has coauthored support of the BBA from the states or which 3/4 would be required if it ever got 2/3 vote House and Senate.  http://www.realclearpolitics.com/video/2011/07/18/sc_gov_nikki_haley_pushes_for_balanced_budget_amendment.html

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DougMacG
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« Reply #432 on: July 19, 2011, 01:11:16 PM »

Sorry to be a broken record, but the House plan leaves out one crucial leg of the stool.  Growth doesn't need to be in this package but the spokespeople need to relentlessly remind people that the problem is not solved and will never be solved until there is a earthquake scale move toward pro-growth policies.  We aren't moving backwards to balance the budget at last year's revenue numbers.  We need a SURGE of investment, employment and revenues.  Please the bill, but people on notice that nothing in cut, cap and balance alone addresses that.  We can do the rest now or after the next election, whenever the national will and the votes are there.
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DougMacG
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« Reply #433 on: July 21, 2011, 06:40:28 PM »

Crafty has often pointed out the problems and deceptions caused by 'baseline budgeting'.  In St. Paul they have admitted that the baseline is far greater than simply adding in population growth and inflation adjustment.  In fact the $5 billion 'shortfall' was merely the invention of highly paid big government biased forecasters who should be prosecuted.  There were no actual cuts or spending hikes required, but the anger and fireworks and shutdown over nothing went on until today.  In the spirit of let no crisis go to waste, Gov. Mark Dayton wanted to raise the highest marginal rate by a factor of 62.5% - over nothing.  Oblivious to the fact that we border a state with no income tax that runs ads here constantly enticing businesses to re-locate, where the Governor's own trust fund is located.

20 days without government, I noticed the bathrooms had to be closed at the wayside rests (do those janitors get back pay for work that didn't happen?) and traffic was a little lighter with the state's largest employer idle.

http://online.wsj.com/article/SB10001424052702303661904576454130534664732.html?mod=WSJ_Opinion_LEFTThirdBucket

The St. Paul Solution
Republicans in Congress might learn a political lesson from the budget agreement in Minnesota.

By STEPHEN MOORE

The longest government shutdown in any state in at least a decade appears to have ended, as Democratic Gov. Mark Dayton of Minnesota has agreed to key budget demands by the Republican-controlled legislature. Republicans in Congress might learn a political lesson from what happened.

On Thursday Mr. Dayton took new taxes off the table and in the end agreed to a spending ceiling very close to the original GOP target. Republicans made concessions, too, but there can be no mistake that in this two-week long St. Paul stare down it was Mr. Dayton who blinked.

From the start, the newly elected governor wanted giant tax increases. Under his proposal, the top income tax rate would have risen to almost 11% (initially, he proposed 13%) from the current top rate of just below 8%. Republicans didn't cave to the class warfare, even as the press carped at how unreasonable they were being. But Minnesota voters seemed to understand that the state would only make its economic troubles worse by increasing costs to employers.

Republicans also set spending at $34 billion for two years, compared to the $37 billion that the Democrats sought. But after two weeks that saw everything from the parks to most government agencies to pubs shut down (no business permits), Mr. Dayton agreed to GOP demands with "serious reservations."

Republicans did agree to new revenues through bonding tobacco settlement money and shifting education payments -- an accounting trick to create the fiction of savings... Republicans remained committed to the principles that won them legislative majorities in November for the first time in more than two decades. Let's hope lawmakers in Washington were watching.
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DougMacG
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« Reply #434 on: July 24, 2011, 12:06:36 PM »

First a followup on the MN shutdown over draconian cuts and refusal to expand the punishment of wealth, (same issues as at the national level):  The Republican offer that the Dem Governor finally agreed to, breaking the deadlock, includes a 10% actual increase in spending.   As you follow all these arguments at all levels, remember that words no longer have real meanings.
----------

"A $2 trillion cut is only about a four percent reduction in spending that is set to increase almost sixty percent."

Budget Myths:
http://www.powerlineblog.com/archives/2011/07/budget-myths.php

Ranking Budget Committee Republican Jeff Sessions has been our most consistent and reliable voice on this issue. [Thursday] he gave a speech on the Senate floor that exposed some of the myths that are circulating in the budget debate:

    First, I would like to address the myth that the president has a $4 trillion deficit-reduction plan. The only plan the White House has ever put on paper is his February budget, which doubles our national debt.

    The president has never put a single spending cut plan on paper and he has no proposal to slash the deficit. If he does, it’s a closely guarded secret. And if such a secret plan does exist it should be made public this very afternoon. I’d like to see it. I’m sure millions of Americans feel the same.

    We also have no debt plan from Senate Democrats. In fact, they haven’t even passed a budget in 813 days.

    As of now, there is only one debt limit plan on paper. Only one plan available for public scrutiny and review. That’s the plan we are debating today: cut, cap, and balance. It cuts spending immediately, it caps it so it doesn’t go up, and it requires the passage of a balanced budget amendment to ensure Washington ends the deficit spending once and for all. The American people do not trust Washington to pass some grand budget deal with tax hikes that never go away and spending cuts that never materialize. …

    Another myth I’d like to address is the idea that our current budget crisis is the result of two wars and a tax cut. Let’s consider that claim. The total cost of the wars in Afghanistan and Iraq, over the entire last decade, is $1.3 trillion. Again, that’s over the last decade. This year alone the deficit is expected to be $1.4 trillion dollars. War costs represent only 4 percent of total outlays over the last ten years. The total amount of money spent since the president took office is $8.5 trillion dollars. By the end of his first three years in office we will have added $5 trillion to our gross federal debt. We are borrowing almost half of what we’re spending every single day. In the last two years, non-defense discretionary spending has soared 24 percent. The stimulus package alone—enacted into law in a single day in 2009—cost more than the entire war in Iraq. Annual spending when President Bush took office was less than $2 trillion. Today, it’s almost $4 trillion. It will be almost $6 trillion by the end of the decade.

    There is only one honest answer to the question over why our debt is rising so fast: out-of-control domestic spending.

    Another myth that’s circulating which I’d like to address concerns the budget summary from the Gang of Six. The authors of the summary claim that their approach would reduce the deficit by $3.7 trillion. But my staff on the Budget Committee can only find $1.2 trillion in reduced spending, along with a tax increase of $1 trillion. Where does the other $1.5 trillion in deficit reduction come from? Chairman Conrad, one of the members of the Gang of Six, even says the outline has a $1.5 trillion tax cut. But this is compared against a baseline that assumes a $3.5 trillion tax increase. It’s just an accounting gimmick. The real cost of the tax changes could be an increase as large as $2 trillion.

    This is why we need more than a handout—we need legislative text.

    The last myth that I’d like to address is perhaps the most important of all. This is the myth that we only need about $2 trillion in spending cuts over the next ten years.

    Democrats have said—although no plan has ever been made public—that they could get behind a budget deal that reduces the deficit $4 trillion over the next ten years, half of it comprised of spending cuts. I’m skeptical that even this minimal level of spending cuts would occur. But even if it did, it’s not even close to what is needed to ultimately balance our budget. We are projected to spend $46 trillion over the next ten years. A $2 trillion cut is only about a four percent reduction in spending that is set to increase almost sixty percent.
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G M
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« Reply #435 on: July 25, 2011, 11:57:58 AM »

http://www.slate.com/id/2299845/

You know we are in deep kimchee when Slate is talking about debt rather than the usual leftist talking points.
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DougMacG
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« Reply #436 on: July 25, 2011, 01:21:44 PM »

It is cognitive dissonance to talk about debt ceiling increases in time periods instead of dollar increments as if the rate of deficit spending was fixed beyond our control.  Would a credit card company or business bank loan bump you up by thousands from being maxed out and call it a 6 month increase? No. You would argue and they would need to believe you that the amount they are willing to do will be enough for you to get your act together, get through this temporary period of revenue shortfall, that you will make necessary changes on spending, and soon be breaking even and starting to paying back - or you wouldn't get the loan.

Republicans should bump up the debt ceiling only by the amount the US government should need this remaining cycle, not by the amount they say they need.  Let's say it's a trillion, then make it last a year and half instead of a year.  The government would have existing revenues of 2.5 trillion/yr plus another trillion in new borrowing to operate.  Make do.  The legislation should call for corresponding economic growth policies and public spending curtailments required to make it work.

A larger economy with increasing assets and income can support greater debt; that is not the case now as wealth is decreasing.  Congress has raised the debt ceiling 89 times since 1939, 18 times for Reagan and 19 times for Bush it is argued.  What's the big deal this time? (Because he is black? No. Because we 43% unfunded and not even pretending to end the ponzi-scheme.) With Reagan the congress was Democrat and the domestic spending was the Dem agenda.  Of course they passed increases.  With Bush, it started with reasons/excuses: there was the recession he inherited and the economic crisis in the aftermath of the 9/11.  But then compassionate non-conservative spending escalated.  It should have been stopped and it wasn't.  That congress was punished and that President lost his credibility and power.  Still Bush's ending deficit was 1/10th of Obama's typical one, roughly 160 billion to 1.6 trillion.  

When this house, senate and administration runs through another trillion without changing course, they deserve to face this argument again - before an angry electorate.  If the cuts are promised and do not materialize, if growth is promised and does not materialize, then the hard issues for the next election will be front and center.

44% growth in revenues over a relatively short period is very possible, we did it between 2003 and 2007.  Next time we need to do it without the spending increases.  That will take a change of political will and a change of government.
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DougMacG
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« Reply #437 on: July 25, 2011, 03:12:16 PM »

http://online.wsj.com/article/SB10001424053111903554904576457880527361612.html?mod=WSJ_Opinion_LEFTTopOpinion

How Spending Cuts—Not Higher Taxes—Saved Canada
Liberals up there listened to voters, and their economy is now growing faster than ours.

By FRED BARNES

When Jean Chretien became prime minister in 1993, Canada faced a fiscal and economic breakdown. The government's share of the economy had climbed to 53% in 1992, from 28% in 1960. Deficits had tripled as a percentage of gross domestic product over the prior two decades. Government debt was nearly 70% of GDP and growing rapidly. Interest payments on the debt took up 35 cents of every tax dollar.

Mr. Chretien and his finance minister, Paul Martin, took decisive action. "Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree," Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada's national railway and air-traffic-control system were privatized.

The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada's debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that's a quarter of ours, and a stronger dollar.

What's most remarkable about the Canadian turnaround: It was led by liberals. Mr. Chretien and Mr. Martin were leaders of the Liberal Party. Yet they responded to the clear wishes of Canadians and, to the surprise of the political class, shifted to the right. Or to the center, the two leaders would say.

Today the United States is in a situation almost identical to Canada's in the 1990s. Government spending is surging, a huge deficit and national debt are setting peacetime records, interest payments are soaring, the economy is stagnant, and unemployment is stuck at around 9%. Yet one thing is missing: Liberals in America refuse to lead.

Led by President Obama, liberals have held back, leaving conservatives to lead and then stymieing conservative proposals because they rely on spending cuts. Liberals have sought to protect domestic programs, including entitlements, from even small cuts.

It's increased spending that is largely responsible for deficits exceeding $1 trillion for three consecutive years and thus for the rise in the national debt's percentage of GDP from 40% in 2008 to 62% in 2011 and toward an estimated 72% next year. The public, in the 2010 election and in poll after poll, is insisting on spending cuts.

But the president has declined to present a specific plan of his own. The 2012 budget he sent to Congress in February is inoperative. His tack now is to comment on the debt-reduction plans of others. Just this week, the White House said Mr. Obama would veto the "cut, cap and balance" proposal approved by the House and attached to the $2.4 trillion hike in the debt limit the president has asked for.

Earlier, the president attacked the Republican budget passed by the House. And in five days of negotiations with congressional leaders last week, he backed away from some of the spending reductions that had been agreed to in talks led by Vice President Biden. Mr. Obama had already taken major spending programs, like his health-care program, the $53 billion rapid rail project, and funding for "green jobs," off the table.

As the Aug. 2 deadline for a debt-limit increase nears, Mr. Obama has combined a very public role with an absence of upfront leadership. He's had three press conferences in the past month without offering clear guidance. But since he has no plan, he's less of a target for criticism, and he has tried to limit his accountability.

At his session with reporters last week he minimized the severity of the debt problem. "Here's the good news," he said. "It turns out we don't have to do anything radical to solve this problem. Contrary to what some folks say, we're not Greece. We're not Portugal."

The fiscal trouble was caused over the past decade, Mr. Obama explained, by the Bush tax cuts, "a prescription drug program for seniors that was not paid for," the wars in Iraq and Afghanistan, and "a bad recession that required a Recovery Act and stimulus spending and helping states . . . and there's interest on top of that." In other words, it wasn't Mr. Obama's fault.

What the president left out were the biggest drivers of spending and debt—entitlements. The Congressional Budget Office (CBO) projects Medicare, Medicaid and other health-care spending to jump to 9.5% of GDP over the next two decades from 5.6% in 2011. The CBO says Medicare will run out of money in 2020.

Like Mr. Obama, House Minority Leader Nancy Pelosi downplays the fiscal difficulty and recommends against offering a plan. "Once you put another proposal on the table, you're conceding that there must be some big problem," she said in April.

Senate Majority Leader Harry Reid is also a minimizer. He said this spring that changes in Social Security shouldn't be considered until the program fails. "Two decades from now, I'm willing to take a look at it," Mr. Reid said.

As America struggles over spending and debt, Canadians watch with wonderment. A new book, "The Canadian Century: Moving Out of America's Shadow," points to a role reversal—a strong Canada and a weak America.

In the foreword, former Canadian Ambassador to the U.S. Allan Gottleib writes: "If we want to see what would have become of Canada had we not lived through the difficult changes, we need look no further than Washington, D.C., where unreformed entitlements and undisciplined borrowing are hobbling America's power to be a world leader."
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DougMacG
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« Reply #438 on: July 26, 2011, 05:37:45 PM »

I asked for clarity from the Republicans, really from all sides, about a year ago.  Here it is, finally, from the most unlikely of sources - the Speaker of the House John Boehner.  Probably could have unleashed this speech a couple of weeks earlier if not for the golf summit.

http://www.realclearpolitics.com/video/2011/07/25/boehner_balanced_approach_means_spend_more_you_pay_more.html

The president has often said we need a 'balanced' approach -- which in Washington means: we spend more. . .you pay more. Having run a small business, I know those tax increases will destroy jobs.

The House and Senate can pass this bipartisan bill and send it to the President for his signature.  And if the President signs it, and crisis atmosphere that he created will simply disappear.
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ccp
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« Reply #439 on: July 27, 2011, 11:13:17 AM »

"My friend just did a major $500K+ renovation.  Among minor issues was an expansion of his garage.  It seems it is now 24' feet from the street.  The inspector this week told him to tear it down; the code says 24'.  My friend is not very happy."

The codes here in NJ obnoxious.  I can't even put in an electical line from one side of my basement to the other without having to clear it with code "enforcement".

This is a great example of government gone too far.  I say get government the hell off my property.  There is no end to the government expanding its power its reach, its taxation, in a self fulfilling cycle.  I say enough.

You say what?

They are looking out for us?

I am tired of being a victim of the Democrat/lawyer/union trifecta taxes.
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JDN
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« Reply #440 on: July 27, 2011, 11:18:27 AM »

I agree government building codes often go too far.  However, I think safety codes, i.e. electrical, structural, etc. have some merit.
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ccp
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« Reply #441 on: July 27, 2011, 11:28:36 AM »

"However, I think safety codes, i.e. electrical, structural, etc. have some merit"

I knew you would.  That is why I asked if you say the giov. is looking out for us?

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JDN
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« Reply #442 on: July 27, 2011, 11:40:24 AM »

Yes, I do think to some small degree think government's job is to "look out for us". 

For example, it is my understanding that Doug is a Landlord.  While I don't think the city should meddle in color choice (my hometown is considering
an ordinance that requires approval of all colors) I do think his tenants are entitled to electrical work that is safe, i.e. not prone to cause a fire.  Further, I  think they are entitled to clean running water and a toilet that works.  Also structural changes need to be examined so that they do not cause a collapse of the building.

Basic health, safety and sanitation laws/rules are important. 

But I concede many if not the majority of codes seem rather intrusive. 
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ccp
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« Reply #443 on: July 27, 2011, 12:23:19 PM »

"I do think his tenants are entitled to electrical work that is safe, i.e. not prone to cause a fire"

OK his tenants can get an outside opinion at their expense.

Rather than have *everyone* else pay up and go through a bureacracy.

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Cranewings
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« Reply #444 on: July 27, 2011, 06:02:53 PM »

"I do think his tenants are entitled to electrical work that is safe, i.e. not prone to cause a fire"

OK his tenants can get an outside opinion at their expense.

Rather than have *everyone* else pay up and go through a bureacracy.



People shouldn't be expected to have to do that. You shouldn't have to watch your back where you live. You know that the majority of land lords would turn their places into wrecks so that their tenants wouldn't have a better place to go.
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Crafty_Dog
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« Reply #445 on: July 28, 2011, 07:58:29 AM »

Scott Grannis <> wrote:

Here's my latest blog post, which I thought I would share with everyone. Everything
is so misleading, and both parties are to blame. I try to put things into
common-sense terms here. Solving our budget problem shouldn't have to be a big deal.
For example, by just allowing spending to grow 2% a year, we could easily balance
the budget in 7 years without raising anybody's tax rate.
Nobody is proposing actual spending cuts

When the history of the Great Debt Limit Debate is written, one of the key villains
will be the definition of "cut." (He is discussing baseline budgeting here)  For everyone who lives outside the halls of
Congress, "cut" means to reduce. But inside Congress, "cut" means to spend less than
your baseline projection of future spending. Since spending always tends to rise by
at least the growth of nominal GDP, which has averaged about 5.5% for the past 30
years, the baseline that everyone compares their budget proposals to tends to
project increased spending of about 5-6% per year.

Over the past 12 months the federal government has spent $3.56 trillion. A typical
baseline would project spending to increase about 5.5% a year, reaching some $6
trillion a year by 2021 (budget scoring generally focuses on what happens over the
next 10 years). That would equate to total expenditures of $48.4 trillion over the
next decade. So when one party proposes to "cut" spending by, say, $4 trillion, what
they really mean is that they propose to spend $44.4 trillion over the next 10 years
instead of $48.4 trillion. The $4 trillion "cut" they are proposing actually works
out to a 4% annual increase in spending, instead of a 5.5% annual increase in
spending.

So even the most radical of "cuts" that are being proposed today would still allow
government spending to increase by 4% a year. How hard or draconian is that?

I suspect the great majority of Americans would be stunned to realize that if we
allowed government spending to increase by only 2% a year, then we could probably
balance the budget in about 7 years, without any need to increase tax rates or
actually cut anybody's spending. No real cuts and no real tax hikes are needed to
balance the budget within a reasonable time frame. Why is there so much sound and
fury surrounding this debate?

(My calculations assume that tax revenues as a percent of GDP rise naturally to
about 18% of GDP over the next 7 years, which is close to the long-term average and
the same level that was achieved a few years after the Bush tax cuts. Tax revenue as
a % of GDP always rises during the expansion phase of a business cycle, and we know
that the current level of tax rates can generate 18% of GDP if the economy is
healthy.)

=====


So, if we slow the growth of total federal government spending to about the
current rate of CPI inflation and tax revenues revert to the mean, we’ll be
OK.  However, in order to accomplish that target, won’t we have to reduce
non-Medicare/Medicaid expenditures significantly in order to offset the
normal rate of growth in those expenses?
« Last Edit: July 28, 2011, 08:04:56 AM by Crafty_Dog » Logged
Crafty_Dog
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« Reply #446 on: July 29, 2011, 07:49:16 AM »

There are some important points in here with which I disagree (e.g. on foreign affairs) but RP brings up some very interesting reminders of previous defaults by the US govt.


Friday, July 22, 2011

> From Ron Paul on  Bloomberg:

Debate over the debt ceiling has reached a fever pitch in  recent weeks,
with each side trying to outdo the other in a game of political  chicken. If
you believe some of the things that are being written, the world  will come
to an end if the U.S. defaults on even the tiniest portion of its  debt.

In strict terms, the default being discussed will occur if the  U.S. fails
to meet its debt obligations, through failure to pay either interest  or
principal due a bondholder. Proponents of raising the debt ceiling claim that
a default on Aug. 2 is unprecedented and will result in calamity (never mind
  that this is simply an arbitrary date, easily changed, marking a
congressional  recess). My expectations of such a scenario are more sanguine.

The U.S.  government defaulted at least three times on its obligations
during the 20th  century.

-- In 1934, the government banned ownership of gold and  eliminated the
right to exchange gold certificates for gold coins. It then  immediately
revalued gold from $20.67 per troy ounce to $35, thus devaluing the  dollar
holdings of all Americans by 40 percent.

-- From 1934 to 1968,  the federal government continued to issue and redeem
silver certificates, notes  that circulated as legal tender that could be
redeemed for silver coins or  silver bars. In 1968, Congress unilaterally
reneged on this obligation, too.

-- From 1934 to 1971, foreign governments were permitted by the U.S.
government to exchange their dollars for gold through the gold window. In 1971,
President Richard Nixon severed this final link between the dollar and gold
by  closing the gold window, thus in effect defaulting once again on a debt
obligation of the U.S. government.

Unlimited Spending

No longer  constrained by any sort of commodity backing, the federal
government was now  free to engage in almost unlimited fiscal profligacy, the only
check on its  spending being the market's appetite for Treasury debt.
Despite the defaults in  1934, 1968 and 1971, world markets have been only too
willing to purchase  Treasury debt and thereby fund the government's deficit
spending. If these major  defaults didn't result in decreased investor
appetite for U.S. obligations, I  see no reason why defaulting on a small amount
of debt this August would cause  any major changes.

The national debt now stands at just over $14  trillion, while net total
liabilities are estimated at over $200 trillion. The  government is insolvent,
as there is no way that this massive sum of liabilities  can ever be paid
off. Successive Congresses and administrations have shown  absolutely no
restraint when it comes to the budget process, and the idea that  either of the
two parties is serious about getting our fiscal house in order is
laughable.

Boom and Bust

The Austrian School's theory of the  business cycle describes how loose
central bank monetary policy causes booms and  busts: It drives down interest
rates below the market rate, lowering the cost of  borrowing; encourages
malinvestment; and causes economic miscalculation as  resources are diverted
from the highest value use as reflected in true consumer  preferences. Loose
monetary policy caused the dot-com bubble and the housing  bubble, and now is
causing the government debt bubble.

For far too long,  the Federal Reserve's monetary policy and quantitative
easing have kept interest  rates artificially low, enabling the government to
drastically increase its  spending by funding its profligacy through new
debt whose service costs were  lower than they otherwise would have been.

Neither Republicans nor  Democrats sought to end this gravy train, with one
party prioritizing war  spending and the other prioritizing welfare
spending, and with both supporting  both types of spending. But now, with the end
of the second round of  quantitative easing, the federal funds rate at the
zero bound, and the debt  limit maxed out, Congress finds itself in a real
quandary.

Hard  Decisions

It isn't too late to return to fiscal sanity. We could start by  canceling
out the debt held by the Federal Reserve, which would clear $1.6  trillion
under the debt ceiling. Or we could cut trillions of dollars in  spending by
bringing our troops home from overseas, making gradual reforms to  Social
Security and Medicare, and bringing the federal government back within  the
limits envisioned by the Constitution. Yet no one is willing to step up to
the plate and make the hard decisions that are necessary. Everyone wants to
kick  the can down the road and believe that deficit spending can continue
unabated.

Unless major changes are made today, the U.S. will default on its debt
sooner or later, and it is certainly preferable that it be sooner rather than
later.

If the government defaults on its debt now, the consequences  undoubtedly
will be painful in the short term. The loss of its AAA rating will  raise the
cost of issuing new debt, but this is not altogether a bad thing.  Higher
borrowing costs will ensure that the government cannot continue the same  old
spending policies. Budgets will have to be brought into balance (as the
cost  of servicing debt will be so expensive as to preclude future debt
financing of  government operations), so hopefully, in the long term, the
government will  return to sound financial footing.

Raising the Ceiling

The  alternative to defaulting now is to keep increasing the debt ceiling,
keep  spending like a drunken sailor, and hope that the default comes after
we die. A  future default won't take the form of a missed payment, but
rather will come  through hyperinflation. The already incestuous relationship
between the Federal  Reserve and the Treasury will grow even closer as the Fed
begins to purchase  debt directly from the Treasury and monetizes debt on a
scale that makes QE2  look like a drop in the bucket. Imagine the societal
breakdown of Weimar  Germany, but in a country five times as large. That is
what we face if we do not  come to terms with our debt problem immediately.

Default will be  painful, but it is all but inevitable for a country as
heavily indebted as the  U.S. Just as pumping money into the system to combat a
recession only ensures an  unsustainable economic boom and a future
recession worse than the first, so too  does continuously raising the debt ceiling
only forestall the day of reckoning  and ensure that, when it comes, it will
be cataclysmic.

We have a  choice: default now and take our medicine, or put it off as long
as possible,  when the effects will be much worse.

(Ron Paul is a Republican  representative from Texas and a candidate for
the 2012 Republican presidential  nomination. The opinions expressed are his
own.)
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ccp
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« Reply #447 on: July 29, 2011, 11:57:31 AM »

Scott G wrote,

"I suspect the great majority of Americans would be stunned to realize that if we
allowed government spending to increase by only 2% a year, then we could probably
balance the budget in about 7 years, without any need to increase tax rates or
actually cut anybody's spending."

Is it possible we can get rid of all our debt and not just " balance the budget?"

Why is it good taxation has to continouosly be done to cover interest rates?

Understand I am a novice so I am not sure my question is clear.
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prentice crawford
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« Reply #448 on: July 29, 2011, 12:04:48 PM »

--------------------------------------------------------------------------------
© Ongo Inc. up12345678downLori Montgomery, Paul Kane and William Branigin
The Washington Post
July 29, 2011 ET
Pres­ident Obama, warning that time is running out to lift the fed­eral debt ceiling, said Friday that a House GOP plan has "no chance of becom­ing law," and he urged Sen­ate Democrats and Re­publicans to come togeth­er on a "biparti­san compro­mise."

Obama spoke as House Re­publican leaders la­bored Friday to res­cue a debt-lim­it plan opposed by their party's arch-conservatives. But he re­it­erated that the House leaders are wast­ing their time by trying to pass a measure that includes a short-term raise of the debt ceiling.

On Capitol Hill, the House GOP leaders offered party members a reworked plan Friday morning designed to appeal to the tea party-allied conservatives, and sev­eral pre­vi­ously skeptical lawmakers said they would now support it. Members who exited a House Re­publican Confer­ence meeting said the new propos­al would not change the first step of their orig­inal two-stage plan to raise the debt lim­it but would call for Congress to send to the states a bal­anced-bud­get amend­ment to the Constitution as a pre­req­ui­site for the sec­ond stage of the debt-ceiling increase to take ef­fect early next year.

The House is expected to vote on the plan sometime Friday, members said.

Howev­er, Obama warned, the two-step House plan "does not solve the prob­lem." He urged the American people to keep up the pressure on their elected rep­resentatives to reach a compro­mise and said the two sides in the Sen­ate are not far apart.

Reen­tering the fray on the negotiations to avert a po­tentially disas­trous U.S. default that is now only four days away, Obama de­liv­ered his hastily sched­uled state­ment in the Diplomat­ic Reception Room at the White House. He did not take questions af­terward.

"Today I urge Democrats and Re­publicans in the Sen­ate to find common ground on a plan that can get support from both parties in the House, a plan that I can sign by Tuesday," Obama said. "There are plenty of ways out of this mess, but we are almost out of time."

Admin­istration of­ficials indicated earli­er that Obama and fel­low Democrats re­main opposed to the House GOP plan and its pro­vi­sion for a two-stage increase in the fed­eral debt ceiling tied to large spending cuts. The White House wants a single increase in the $14.3 trillion debt lim­it that would last into 2013, argu­ing that a se­ries of short-term raises would fail to calm the mar­kets, pos­sibly trig­ger a cred­it-rating downgrade and become embroiled in election-year politics.

House Speaker John A. Boehner (R-Ohio) called a 10 a.m. meeting with his party members to plot the way forward af­ter he was forced to can­cel a vote on his plan late Thursday in the face of persis­tent oppo­sition from recalcitrant conservatives.

In the Sen­ate, Major­ity Lead­er Harry M. Reid (D-Nev.) vowed to proceed Friday with his own bill to raise the debt ceiling. He appealed to his chamber's Re­publicans to help him pass the bill, which he de­scribed as a compro­mise that meets key GOP de­mands, and he invited Minor­ity Lead­er Mitch McConnell (R-Ky.) to a new round of negotiations to modify it so it can obtain the needed 60-vote supermajor­ity in the Sen­ate. He urged House Re­publicans to "break away from the shrill voic­es of the tea party" and return to the party of Ronald Reagan.

"The last train is leav­ing the station, and this is a last chance to avert a default," Reid said in a morning floor speech. "I ask my Re­publican friends, break away from this thing go­ing on in the House of Rep­resentatives." He said a vote against the Sen­ate compro­mise propos­al would be "a vote to default on the full faith and cred­it of the United States."

Sen. Charles E. Schumer (D-N.Y.) said that even if the House Re­publicans get togeth­er and pass their bill, it will not pass the Sen­ate and will not become law. The House, he said, "is pursu­ing a path to nowhere."

Af­ter a night of leg­islative chaos, with con­trol of his caucus slipping in dramat­ic fash­ion from his grasp, Boehner yanked the bill from the House floor and pre­pared to make changes aimed at appealing to his tea-party-influ­enced right flank. Re­publican aides said they hoped for a Friday vote.

In his White House com­ments Friday, Obama made clear that the House effort is a nonstarter.

"Right now, the House of Rep­resentatives is still trying to pass a bill that the major­ity of Re­publicans and Democrats in the Sen­ate have already said they won't vote for," he said. "It's a plan that would force us to re­live this cri­sis in just a few short months, holding our econ­o­my captive to Wash­ington politics once again. In oth­er words, it does not solve the prob­lem, and it has no chance of becom­ing law. What's clear now is that any solution to avoid default must be biparti­san."

Obama said there are "plenty of modifications" that can be made to ei­ther Reid's plan or one offered by McConnell to produce an accept­able compro­mise.

"This is not a sit­uation where the two parties are miles apart," he said. "We're in rough agree­ment about how much spending can be cut responsibly as a first step to­ward reduc­ing our deficit. We agree on a process where the next step is a debate in the com­ing months on tax reform and enti­tle­ment reform, and I'm ready and will­ing to have that debate. And if we need to put in place some kind of enforce­ment mech­a­nism to hold us all account­able for making these reforms, I'll support that too if it's done in a smart and bal­anced way."

With­out an agree­ment, Obama warned, the United States could lose its AAA cred­it rating. "Not because we didn't have the capacity to pay our bills; we do. But because we didn't have a triple-A po­lit­ical system to match our triple-A cred­it rating."

He cautioned those who oppose any tax increases on anyone that a lower cred­it rating could ef­fectively raise taxes on ev­eryone in the form of high­er inter­est rates for consumers.

"And that's inexcusable," Obama said. "There are a lot of crises in the world that we can't always pre­dict or avoid. . . . This isn't one of these crises. The power to solve this is in our hands."

He urged Americans to "make a phone call, send an e-mail, tweet, keep the pressure on Wash­ington, and we can get past this." He said he was pre­pared to work with con­gres­sion­al Re­publicans and Democrats "all week­end long until we find a solution."

House GOP members, for their part, con­tinued to ignore the warnings from the White House and the Sen­ate that their bill stands no chance of becom­ing law.

"I don't have the time, but we will vote today, and it will pass with a signif­icant major­ity in my judg­ment," said Rep. Mo Brooks (R-Ala.). He said he had switched from "lean no" to "yes" on the plan at Friday's House Re­publican meeting.

Sev­eral oth­er members also said they had changed their minds and were now backing the new Boehner plan.

Rep. Jeff Flake (R-Ariz.), who for days had been leaning "no" on the Boehner plan, said as he left the base­ment meeting room Friday morning that he was now a "yes."

"I've always said I came to this town not looking for a view, but for a solution," said Rep. Jeffrey M. Landry (R-La.), who opposed the Boehner plan earli­er this week. "And you know what, the speaker and the leader­ship, I think at the end of the day, I think that's what's in their hearts." He added: "We went in there and we kept discuss­ing it, and we got to where we re­alized both the American people and hopefully that confer­ence is."

In the Sen­ate, meanwhile, Democrats laid plans to proceed with their own debt-ceiling plan in hopes of push­ing a measure through Congress by Tuesday, when the U.S. Treasury says it could be­gin running short of cash to pay the nation's bills.

The late-night drama Thursday devel­oped af­ter debate on Boehner's debt-lim­it bill had concluded and lawmakers were minutes away from what was expected to be a cliffhang­er vote. Suddenly, action on the House floor shifted to a se­ries of non-con­tro­ver­sial measures, leav­ing befud­dled lawmakers debating whether to rename a post office in Hawaii.

Out­side the House chamber, Boehner summoned members of the hold­out GOP South Car­olina del­egation to his sec­ond-floor office just off the Capitol Rotunda. But he appeared to make lit­tle headway and, with­in minutes, freshman Reps. Mick Mulvaney and Jeff Duncan left the meeting, saying they were heading to a nearby chapel to pray for their leaders.

Rep. Tim Scott (R-S.C.) lat­er joined them, and the trio, stalwart conservatives who have steadfastly opposed efforts to grant the Treasury additional borrowing au­thor­ity, told reporters that Boehner's pitch had not been persuasive.

"Divine in­spiration already hap­pened," said Scott, a liai­son to party leader­ship for the Re­publican freshman class in the House. "I'm a no."

A short while lat­er, the South Car­olin­i­ans gath­ered with oth­er undecided Re­publicans in the first-floor offices of House Major­ity Whip Kevin McCarthy (R-Calif.), a usu­al hang­out for many of the 87 freshmen. There, Boehner, McCarthy and House Major­ity Lead­er Eric Cantor (R-Va.) pleaded with their fel­low Re­publicans for support.

Aides said that some hold­outs objected to an item in the bill related to the Pell grant col­lege loan program, complain­ing that it amounted to a $17 billion spending increase. Some members also wanted to see stronger language call­ing for a constitution­al amend­ment to require a bal­anced fed­eral bud­get, aides said.

Across the Capitol, Sen­ate Democrats had been wait­ing to put the Boehner bill to a quick death in a late-night vote of their own. But with House Re­publicans locked in yet an­oth­er closed-door meeting, Reid said on the Sen­ate floor that Boehner and his allies appeared to be "having trou­ble pass­ing their bill" and warned that Congress faced the prospect of yet an­oth­er wasted day.

Dead­line loom­ing

The chaos in the House left Wash­ington no clos­er to a res­olution over the debt lim­it just days before the Aug. 2 dead­line. The national debt hit the current $14.3 trillion lim­it in mid-May. Un­less Congress acts, the govern­ment will be in dan­ger of defaul­t­ing on its obligations as early as Tuesday.

The parti­san impasse is shaking Wall Street and the confidence of top busi­ness leaders. Early Thursday, chief exec­utives of some of the largest U.S. financial compa­nies — including Brian Moynihan from Bank of America, Jamie Di­mon from J.P. Morgan Chase and John R. Strangfeld of Prudential — wrote a letter to Pres­ident Obama and members of Congress urg­ing them to strike a deal this week.

"The consequences of in­action — for our econ­o­my, the already struggling job mar­ket, the financial circum­stances of American busi­nesses and fam­i­lies, and for America's glob­al eco­nom­ic leader­ship — would be very grave," they wrote.

Lib­eral activists and tea party orga­nizers large and small found them­selves aligned in oppo­sition to the Boehner bill. Move­On.org staged a rally on the Capitol grounds, where Demo­crat­ic lawmakers decried the leg­is­lation's deep cuts to govern­ment agencies. They also complained that the measure would set up a sec­ond fight over the debt lim­it next year, forc­ing Obama to endure an­oth­er harrowing bud­get bat­tle in the heat of the pres­idential election campaign.

Meanwhile, FreedomWorks Chair­man Richard K. Armey, the for­mer House major­ity lead­er and a tea party backer, called con­gress­men from Texas and urged them to vote no. Mark Meckler and Jenny Beth Mar­tin, the co-founders of Tea Party Patriots, trav­eled to Wash­ington to decry the spending cuts in Boehner's bill as "fake" and "phantom."

And dur­ing a lunchtime speech at the National Press Club, Rep. Michele Bachmann, the Minnesota Re­publican who is running for pres­ident, repeated her as­sertion that the country would not suffer in the event of a default.

"I don't be­lieve for a mo­ment we will lose the full faith and cred­it of the United States," said Bachmann, who has pre­vi­ously argued that the Treasury would be left with enough cash for crit­ical needs while the rest of govern­ment would be subjected to "tough love." "I am committed to not rais­ing the debt ceiling."

If the House proves un­able to pass its bill, action is likely to shift to the Sen­ate, where Reid was preparing to proceed with his own debt lim­it measure, perhaps as soon as Friday evening. But it was not clear the Reid bill could win approval, ei­ther, and talks over a biparti­san compro­mise have so far failed to yield results.

Through­out the day, House Re­publican leaders had pre­dicted their leg­is­lation would pass the House and move on to the Sen­ate. At an early-af­ter­noon news confer­ence, Boehner chal­lenged Reid to drop his plans to kill the House bill and beseeched "my col­leagues in the Sen­ate" to "pass this bill and end this cri­sis."

"We have a reasonable, responsible bill put togeth­er by the biparti­san leaders here in Congress. There's no rea­son for them to say no," Boehner said. "It's time for somebody in this town to say yes. . . . When is somebody on the oth­er side of the aisle go­ing to take yes for an answer?"

But House Democrats appeared united in oppo­sition to the measure, which would set up a two-stage process for rais­ing the debt lim­it. The first stage would cut spending by $917 billion over the next decade, primarily by making deep cuts to govern­ment agencies. The debt lim­it, meanwhile, would be raised by $900 billion, grant­ing the Treasury a re­prieve until February or March.

The sec­ond stage would in­volve the cre­ation of a new committee made up of 12 lawmakers from both parties and both chambers. The committee would be tasked with identi­fying an­oth­er $1.8 trillion in cuts before the end of the year. If the committee made rec­ommendations and they were adopted, Obama would be au­tho­rized to raise the debt lim­it into early 2013 with­out explicit con­gres­sion­al approval.

White House of­ficials and oth­er Democrats blasted the plan, argu­ing that it would hold a fragile econ­o­my hostage to parti­san sniping over the bud­get at a time when the un­employ­ment rate is stuck above 9 per­cent and busi­nesses are looking for certainty to be­gin hiring. Democrats also noted that, under the Boehner bill, the next debt-lim­it bat­tle stands a chance of consum­ing the Christmas hol­idays, tra­ditionally the bright­est spot of the year for consumer spending.

In a speech Thursday morning on the Sen­ate floor, Reid said: "Re­publicans cannot get the short-term Band-Aid they will vote on in the House today. It will not get one Demo­crat­ic vote in the Sen­ate. . . . The econ­o­my needs more certainty than the speaker's propos­al would pro­vide."

The White House also lashed out against Boehner's bill, with press sec­retary Jay Car­ney call­ing it a "po­lit­ical act" that guar­antees an­oth­er "three-ring circus" over the debt lim­it in a mat­ter of months.

In a White House news brief­ing, Car­ney said the measure would fur­ther dam­age the econ­o­my, increas­ing the "un­certainty" that Re­publicans of­ten point to as a damper on eco­nom­ic growth.

"It's in­­cred­ibly bad for the econ­o­my to have this kind of circus go on in Wash­ington," he said.

The Sen­ate bill

Democrats were in­stead backing a variant of the Boehner bill that Reid planned to introduce. That measure would make the same cuts to agency bud­gets and estab­lish the same debt-reduction committee. But Reid's leg­is­lation would also count more than $1 trillion in savings from winding down the wars in Iraq and Afghanistan, an account­ing move Re­publicans decried as a gimmick. More important, the Demo­crat­ic bill would ex­tend the debt lim­it into 2013.

McConnell pledged his support for the Boehner bill. Though he spoke Wednesday with Vice Pres­ident Biden, McConnell's aides de­nied that he was working to forge a compro­mise with Democrats.

In a speech Thursday morning, McConnell argued that Democrats would support the Boehner leg­is­lation if not for the require­ment for a sec­ond debt lim­it vote early next year.

"It doesn't al­low the pres­ident to avoid an­oth­er national debate about spending and debt until af­ter the next pres­idential election," McConnell said. "This as­sur­ance is the only thing the pres­ident and Sen­ate Democrats are holding out for right now."

Democrats high­lighted the concerns of mar­ket experts, re­leas­ing a video Thursday in which sev­eral warned that Boehner's plan could pro­long the feuding over the debt ceiling and prompt cred­it-rating agencies to downgrade the nation's AAA rating.

As the debt-lim­it drama stretched on, one truth became ap­par­ent: House leaders had come face to face with the re­alities of governing in a new Wash­ington, where trading earmarks for votes was no longer an option and Boehner's pledge to let the House work its will was making it far more diffi­cult for leaders to impose theirs.

Short­ly before 9 p.m., Rep. Jeff Flake (R-Ariz.), who had ex­pressed oppo­sition to the Boehner plan, exited McCarthy's office. He dec­lined to tell reporters if his views had changed. But he praised the lack of horse-trading of the type that marred passage of Obama's health-care leg­is­lation. "It is the most refresh­ing thing in the world to see what's go­ing on in there," Flake said. "This kind of negotiation a couple years ago would have cost about $20 billion."

Meanwhile, Rep. Louise M. Slaugh­ter (D-N.Y.) waxed philo­soph­ical about the sit­uation, saying the GOP the­atrics have convinced her that Congress should not have the power to put lim­its on Treasury borrowing at all. Af­ter all, Democrats have argued, the debt is the result of bud­get deci­sions Congress it­self has made over the years.

"Frankly, I have pondered all this day. Why does the United States of America go through this process?" Slaugh­ter told a reporter. "Nobody else in the world does. It makes no sense at all."



Staff writ­ers Fe­licia Sonmez and Amy Gardner con­tributed to this report.
 
http://www.ongo.com/v/1489468/9933/4222E76223123123249D/obama-urges-senate-to-forge-ompromise-on-debt-limit-rejects-house-efforts?gclid=CNXAgcz_pqoCFdMn2godbh3KYQ

 That last comment by Slaughter certainly doesn't show a Leftist agenda in all of this does it? tongue

                                                     P.C.
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Crafty_Dog
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« Reply #449 on: July 29, 2011, 02:47:19 PM »


=================================
The Patriot Post
Digest -- Friday, July 29, 2011
=================================
On the Web: http://patriotpost.us/edition/2011/07/29/digest/
Printer Friendly: http://patriotpost.us/edition/2011/07/29/digest/print
PDF Version: http://pdf.patriotpost.us.s3.amazonaws.com/2011-07-29-digest.pdf

-------------

The Foundation

"[W]ith respect to future debt; would it not be wise and just for that nation to
declare in the constitution they are forming that neither the legislature, nor the
nation itself can validly contract more debt, than they may pay within their own
age." --Thomas Jefferson

-------------

Government & Politics

-------------

Congress Is Still Stuck in Neutral on Debt

Five days and counting until the end of the world. At least that's what Democrats
would have us believe with regard to the federal debt ceiling. "What we're trying to
do is save the world from the Republican budget," declared House Minority Leader
Nancy Pelosi (D-CA). "We're trying to save life on this planet as we know it today."
Well, Pelosi and her tax-and-spend ilk "succeeded" for one more day when the House
postponed a vote on Speaker John Boehner's plan of spending cuts and debt-ceiling
increase Thursday night. But it was because Boehner (R-OH) couldn't get enough
Republicans to go along with his plan that it faltered. Even if the plan had passed
the House, though, all 53 Senate Democrats had promised to torpedo it in favor of
Majority Leader Harry Reid's plan.

Boehner's plan, revised Wednesday to improve its score with the Congressional Budget
Office, included projected cuts of $917 billion over 10 years with no tax increases.
Most Republicans got in line behind their leader, hoping to win the battle by
offering something to the Senate after the upper chamber defeated Cut, Cap and
Balance
(http://patriotpost.us/alexander/2011/07/21/a-sign-of-sanity-amid-the-budget-banter/
). Others concluded that the dollar amount stretched over too many years was
woefully insufficient, and insisted on passage of a balanced budget amendment
(http://patriotpost.us/alexander/2011/07/28/what-power-to-tax-and-spend/ ). We
happen to think both sides are right.

Republicans control just one-half of one branch of the government, and they have to
start somewhere. Yet $22 billion in cuts this year in exchange for $900 billion more
in debt this year is a sorry deal. Trying to sell it by saying that the $900 billion
increase is conditional on $917 billion in cuts is just Washington math. Even with
the deal, the federal debt would rise several trillion over 10 years, meaning the
ceiling would need to be raised many more times, including again in 2012.

Reid (D-NV) also has a plan to counter those "radical, right-wing, Tea Party
extremists"
(http://www.youtube.com/user/PatriotPost?feature=mhee#p/c/9AF160D8E5444DEC/43/QFUvrX5uaBQ
): Raise the ceiling by $2.4 trillion now, in exchange for cutting $2.2 trillion
over a decade. That likely would avoid having to address the issue again before next
year's presidential election, which President Barack Obama and his fellow Democrats
want to avoid at all costs. However, Reid's plan has more than its fair share of
accounting gimmicks. For instance, half the "cuts" in his plan are the savings from
ending the wars in Afghanistan and Iraq. As columnist Charles Krauthammer quipped,
"I'm told there's an extra $10 billion in here of savings from not invading Normandy
a second time."

For his part, Obama has been remarkably silent this week following his speech Monday
night (http://www.cbsnews.com/8301-503544_162-20083265-503544.html ), which offered
nothing new -- just blame for everyone but him. Perhaps his advisers have concluded
that we're all tired of hearing him read from the teleprompter.

Meanwhile, House Minority Whip Steny Hoyer (D-MD) and Assistant Minority Leader Rep.
James Clyburn (D-SC) are floating a "14th Amendment solution," which they say would
allow Obama to raise the debt ceiling unilaterally. Section 4 of the 14th Amendment
(http://patriotpost.us/document/amendments-11-27-to-the-constitution-of-the-united-states/
) reads, "The validity of the public debt of the United States ... shall not be
questioned." Only a leftist using the "living constitution" could construe such
language to mean that the president can unilaterally incur more debt, a power still
left to Congress. Fortunately, even Obama acknowledges that using the 14th Amendment
isn't "a winning argument."

Besides, even if the nation passes Aug. 2 without a deal, there will still be money
to pay the interest on the debt and other vital obligations. We're pretty sure that,
despite Nancy Pelosi's dire warnings to the contrary, "life on this planet as we
know it today" will continue even without bureaucracies such as the EPA or HUD. The
nation managed for two centuries without either one.

Finally, the White House is prodding the three major credit rating agencies to back
the Reid plan. It's not just the debt ceiling that could cause a credit downgrade,
however. Our long-term trajectory is not sustainable, which is likely why Obama long
ago gave up on his demand for a "clean" increase in the debt ceiling -- meaning no
spending cuts whatsoever.

What remains to be seen in the coming days is whether Congress can pass a deal --
any deal -- to address the issue, however timidly. Indeed, after being stymied
Thursday night, the House turned to the urgent matter of re-naming post offices
(http://blogs.abcnews.com/thenote/2011/07/with-no-debt-limit-vote-house-turns-to-naming-post-offices.html
). The tragedy of it all is that real solutions and fidelity to the Constitution
seem far beyond the grasp of so many of our elected representatives.

-------------

Essential Liberty

"The national debt-ceiling law should be judged by what it actually does, not by how
good an idea it seems to be. The one thing that the national debt-ceiling has never
done is to put a ceiling on the rising national debt. Time and time again, for years
on end, the national debt-ceiling has been raised whenever the national debt gets
near whatever the current ceiling might be. Regardless of what it is supposed to do,
what the national debt-ceiling actually does is enable any administration to get all
the political benefits of runaway spending for the benefit of their favorite
constituencies -- and then invite the opposition party to share the blame, by either
raising the national debt ceiling, or by voting for unpopular cutbacks in spending
or increases in taxes." --economist Thomas Sowell
(http://patriotpost.us/opinion/thomas-sowell/2011/07/26/debt-ceiling-chicken/ )

-------------

On Cross-Examination

In arguing the debt ceiling issue on the Senate floor, Sen. John McCain (R-AZ)
quoted a Wall Street Journal editorial
(http://online.wsj.com/article/SB10001424053111903591104576470061986837494.html ) --
specifically the part criticizing "tea-party Hobbits" for wanting too much. It was a
reference to J.R.R. Tolkien's novel "The Lord of the Rings."

Sen. Rand Paul (R-KY) fired back, "I think in reading the books, the hobbits were
the heroes. They overcame great obstacles, and I think I'd rather be a hobbit than a
troll."
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