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Author Topic: Government programs & regulations, spending, deficit, and budget process  (Read 99941 times)
JDN
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« Reply #350 on: June 04, 2011, 07:15:51 PM »

I understand and basically agree with everything Doug said....

As for Crafty.....


As Doug and you pointed out, I too feel for rules of law and secured creditors.  And I too question the legality and the cost....

That said, secured creditors by definition have no heart and usually (strange not in this case) are on top. 
They can strip the company and do as they please even in bankruptcy court.  Unsecured creditors would be screwed; therefore they too would
be reluctant to continue doing business with GM  Overall, it would be devastating for Detroit which was already reeling in this economy.

Yes, the jobs would come back.  Seattle now has Microsoft.  But that takes time.  Families are destroyed.  And do the former employees of Boeing
have the training and ability to work for Microsoft or one of Microsoft's suppliers?  Hundred's of thousands of employees would have been
laid off in Detroit.  Technically fair, I understand, and maybe in the long run good, but in the short run devastating.  And the "short run" in
this economy is important if you are President, either Republican or Democrat. 

I support bankruptcy.  It is a sort of cleansing process. I don't understand saving the bankers, let Goldman fail, they ARE in the risk business, and very very well paid, but employees i.e. average people are important....

As CCP says, take care of the middle class.

I don't know if some compromise could have been worked out.  It still remains to be seen how much money, if any, the government
lost by making this "investment".  Maybe it will be a gain in the long run?
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DougMacG
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« Reply #351 on: June 05, 2011, 12:33:37 AM »

JDN: "I understand and basically agree with everything Doug said"  - Should have stopped there.  grin

"secured creditors by definition have no heart"

That is not fair.  Maybe they will foreclose what's left of this loser of an investment and donate all that capital to a charity or research that will save a family member's life. How do we know that enforcing their rights under a contract is heartless?  It wasn't the secured creditor who didn't meet their obligations under the contract.  Maybe it was the greedy, short-sighted, self-centered union benefit negotiators who really were the heartless ones, shorting out the oven where the pies are baked.

Every time a tenant thanks me for my kindness and patience (aka stupidity) for allowing them to fall behind on rent, and further behind, it comes back to bite both of us.  Too much debt burden to handle the ups and downs of your business is too much debt burden.  You don't have to fall on a sword and they don't take your first born in bankruptcy.  You get to walk away and start over.  WIth all the unemployment compensation and social programs to confuse people, they end up walking and not starting over.

If secured debt isn't secure, who gets hurt next?  The elephant in the room is all the other new financing and new plants in every other industry that aren't being built and this kind of unpredictability, uncertainty, and uneven application of the law is part of the reason IMO.

Putting the unions ahead of secured creditors was criminal.

Places where laws are applied unevenly depending on who you know and how much political clout you have are called third world countries.  We're getting there.

"average people are important....take care of the middle class."

No. Every obligation in a contract and every party to a contract is important.  Chief Justice John Roberts put it this way answering Dick Durbin in his Supreme Court confirmation hearings: 

"Somebody asked me, you know, 'Are you going to be on the side of the little guy?' And you obviously want to give an immediate answer. But as you reflect on it, if the Constitution says that the little guy should win, the little guy is going to win in court before me. But if the Constitution says that the big guy should win, well, then the big guy is going to win, because my obligation is to the Constitution."

In contract law, it is what's in the contract that counts - if it is a legal, valid, binding contract.  What right did the executive branch of the federal government have to intervene and pick winners and losers?  What article in the constitution authorizes that power?

If you are a highly paid professional in Seattle working for Microsoft or Boeing and you are one paycheck away from starving to death, I would recommend taking night classes at the local technical college in a different field  before the next downturn.  It's a cold, cruel world out there and runaway capitalism is the worst system on earth, except for all the alternatives.

Someone should also point out that in Flint and Detroit Michigan, people voted for the policies that put their industries under.  Cry me a river.  How about accepting the consequences of our actions??


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JDN
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« Reply #352 on: June 05, 2011, 09:10:53 AM »

With no offense meant, I notice that you said your tenant's who are behind in their rent thank you for kindness and patience (your heart) for letting them pay a little late, yet I doubt if anyone thanks your after you serve eviction notices.  When serving papers, you are not being kind or patient, or heartfelt, you are merely, (and rightfully so) protecting your monetary investment.  Heart is irrelevant; the tenant might be left on the street and homeless; contractually that is not your problem I understand.  I doubt however if they are grateful for the opportunity to "walk away and start over". 

I too believe in the overall sanctity of a contract, however you seem to forget that GM was in Chapter 11 Bankruptcy.  While secured creditors are usually a priority, Bankruptcy Judges have wide
leeway, and their actions are legal, not "criminal".  One can argue the secured creditors were steamrolled, but they were big boys; they had choices and chose to accept the terms.

One could call this a bankruptcy combined with a bailout.  Everyone on this forum seems to conveniently forget it was lame-duck President George W. Bush and Treasury Secretary Henry Paulson who initially intervened. To help the automakers through that phase (and a possible Chapter 11 bankruptcy), the administration extended them $17.4 billion from the Troubled Asset Relief Program, which had originally been set up to buy assets and equities from the financial sector in the wake of the mortgage crisis.  Mind you, I don't think we should have helped the financial sector either.  Only the rich got richer at Goldman et al.  But those were Bush's cronies and Paulson's old firm and friends.  Where is the outrage?   shocked

Only after Bush did Obama exacerbate the problem by giving even more money. 

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G M
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« Reply #353 on: June 05, 2011, 10:57:53 AM »

To create, capitalism must also destroy.
You don't have to spend hours comparing this year's Fortune magazine list of top 500 U.S. companies with the list from 50 years ago to understand that cruel truth.
 
The fact that capitalism has to destroy old things in order to create new wealth and higher standards of living for the masses should be obvious to every breathing, thinking adult over 30. It isn't.
 
Many people - mainly the economic illiterates of mainstream journalism and the economic medicine men of politics who call for things like the outlawing of outsourcing - constantly decry or try to thwart the paradoxical process that economist Joseph Schumpeter long ago dubbed "the creative destruction of capitalism."
 
Schumpeter used the term to describe the heartless but ultimately beneficial waves of competition, innovation and entrepreneurial ferment that create and destroy and re-create our economic and social world.
 
Capitalism's creative hurricane is unstoppable. In 250 years, it has transformed us from a nation of sweating dirt farmers to a wealthy post-industrial service economy run by callous-free knowledge workers.
 
The evidence of the damage capitalism does to society is found in history books and on our main streets. Whole industries were destroyed.
 
Canals were made obsolete by railroads. Railroads were nearly wiped out by trucks and cars. Computers murdered the typewriter industry. Digital cameras are destroying Eastman Kodak's 100-year hegemony.
 
Capitalism's mighty wind blows away corner drug stores and topples corporate giants with equal ease. Look at Fortune's list of 10 largest corporations from 1954. General Motors, Ford and General Electric were there, as they are today. So was Esso (now Exxon-Mobil).
 
But so was mighty Gulf Oil, since 1984 a forgotten meal of No. 6 ChevronTexaco. So was U.S. Steel, now 209th on Fortune's list. Swift meats, today part of No. 85 ConAgra, was No. 5 in 1954. Wal-Mart, today's No. 1, did not exist.
 
Remember the Great Atlantic & Pacific Tea Company? Government trust-busters once worried it would monopolize America's grocery sector. Today A&P is virtually extinct, thanks to leaner, smarter chains like Safeway and Giant Eagle - which face the cutthroat predations of Wal-Mart and Costco.
 
Around here, former icons of local commerce like Isaly's, the Joseph Horne Co. and Hechinger's have disappeared. But now we buy what we need at Bruster's, Kohl's and Lowe's, often in greater variety for less. And when poor US Airways joins Pan Am in inefficient-airline heaven, we'll be flying JetBlue or AirTran.
 
The creative destruction of capitalism is not a pretty or tender process, as Pittsburgh's lost armies of manufacturing workers know too well. But the ever-grinding "churn" of capitalism, which simultaneously destroys and creates millions of jobs each year, ultimately produces more winners than losers in the long run.
 
It's a shame when the short-term price of progress is paid in lost jobs or fortunes by people you know and love. But capitalism - even the increasingly impure and over-regulated form we practice -- has made hundreds of millions of Americans rich, healthy and spoiled.


Read more: The creative destruction of capitalism - Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/opinion/columnists/steigerwald/s_186520.html
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DougMacG
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« Reply #354 on: June 05, 2011, 01:38:29 PM »

"the tenant might be left on the street and homeless"

Homeless, lol, there's a term that has lost all meaning in Scandinavian-based Minnesota.  No. They just move on and do it again.  Eviction means front of the line for emergency assistance - your money.  The question is how soon it happens and what is learned from the experience.  What is learned is that payment deadlines come and go without consequence and that the free money not used on rent can be spent on everything else, guns, drugs, booze, cigarettes, whatever one is into.  The larger point is that the investor quits investing when the system prevents you from enforcing the agreed terms of a contract.  How do you measure the economic damage done by investments that are never made?

"Bankruptcy Judges have wide leeway..."??  Not THAT wide!

IIRC, Obama brokered a deal with taxpayer money that kept the company out of the judge's reach, and reordering winners and losers based on political favors and something that resembles your idea of helping the little guy.  What could be smaller than a 200,000 person union that wins healthcare rights for hundreds of thousands of people who don't even work there.  By criminal, I meant that in the general sense of illegal trespassing on private property, and executive branch treason - undermining our economic system and our country from within.  Show me persuasively where they derived lawful power to do that and I will be happy to retract and correct.
---------------
Creative destruction, yes.  If you don't continuously innovate, someone else will and eat your lunch.  But when you lose your market share, lose your business, lose your risk capital, you still get to pull yourself back up and try something else - with valuable lessons learned.
-------------
Answering my own question, how do you measure the economic damage done by investments that are never made?

If economic growth of a 14 trillion dollar economy is 2% and should be 7% coming out of a hole like this, the damage is $700 billion of production per year compounding continuously.
« Last Edit: June 05, 2011, 01:56:40 PM by DougMacG » Logged
Crafty_Dog
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« Reply #355 on: June 05, 2011, 02:27:36 PM »

A "secured creditor" is a creditor who loan is secured by defined assets.  Period.

I suppose I could be wrong, but my clear understanding is that this is something that a bankruptcy judge cannot interfere with.  Period.   

Thought experiment.  Someone declares bankruptcy.  He has a home with a mortgage by a bank in which is in in default.  Do his other creditors get to take a piece of what the home sells for?
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JDN
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« Reply #356 on: June 05, 2011, 02:54:06 PM »

A "secured creditor" is a creditor who loan is secured by defined assets.  Period.

I suppose I could be wrong, but my clear understanding is that this is something that a bankruptcy judge cannot interfere with.  Period.   

So should a contract be a contract be sacrosanct.  The rules change in Bankruptcy Court.  A Judge in Bankruptcy Court has wide leeway to "interfere" as he/she sees fit.  Very wide leeway.
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DougMacG
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« Reply #357 on: June 05, 2011, 03:15:47 PM »

Someone declares bankruptcy.  He has a home with a mortgage by a bank in which is in in default.  Do his other creditors get to take a piece of what the home sells for?
-----------
Can only guess.  If there is cash back, then yes.  Assuming he is underwater on the mortgage, no; I can't see how unsecured creditors or creditors with other collateral could get ahead of the secured liens already in place on the house.  

If the homeowner gets to keep the house, then the judge would have to allow funds to be used for that redemption, or write down the amount owed with Stalinist leeway.  Court proceedings no doubt could be used to delay the foreclosure - at least that is how it worked with a cancellation of a Contract for Deed.

If Obama intervenes, all bets are off. 
« Last Edit: June 05, 2011, 03:32:18 PM by DougMacG » Logged
Crafty_Dog
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« Reply #358 on: June 05, 2011, 06:37:50 PM »

JDN:  I would be very surprised if a secured loan could be interfered with.  Anyone have anything definitive on this?
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G M
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« Reply #359 on: June 05, 2011, 06:49:25 PM »


Secured Loan Definition
 








By Joseph Nicholson, eHow Contributor
 




?
.
 
Lenders are a lot more comfortable putting up money when there's something specific they can repossess if they're not repaid. This is what's called a secured loan, and may be the only kind of credit a person with a poor credit rating can get.
 
Features
 


A secured loan is one in which the borrowed funds are linked to a specific asset, which acts as collateral against the loan. The primary feature of a secured loan is the lender's right to possess the asset if the terms of the loan are materially breached and payment is not made. A mortgage loan is a popular example, where the house is the security. But, if the value of the collateral does not retire the loan, the lender can go after other assets. A nonrecourse loan is a special type of mortgage loan that limits the lender's claim against the borrower to the collateral and nothing else.

 
Function
 


The purpose of securing a debt is to reduce the risk to the lender by creating a strong incentive for the borrower to repay the loan. Individuals with excellent credit history may be able to avoid secured debts by virtue of their credit score. A poor credit history will make it virtually impossible to obtain an unsecured loan, even for routine borrowing such as through credit cards. If the loan principal is large, such as when buying a house or car, the item being purchased is almost always used as collateral against the loan no matter how strong the borrower's credit.

 
Significance
 


The difference between secured and unsecured loans is perhaps most significant in the case of a bankruptcy. Secured lenders have priority over unsecured lenders, and can make a claim against an asset to prevent it from being liquidated and applied to unsecured debts. In the case of good credit, the borrower may receive better terms by opting for a secured instead of unsecured loan.

 
Considerations
 


Individuals emerging from bankruptcy or otherwise encumbered by a poor credit history are only likely to receive offers for secured credit cards. These not only charge a high interest rate for carried balances, up to 20 percent or more, they also require a deposit in a separate savings account that can be possessed if regular payments on the card are not forthcoming. Such an individual will not qualify for standard loans, but may be able to receive a payday loan by proving their employment and promising a future paycheck to secure a present loan.

 
Types
 


A secured debt is distinct from a lien in that a lienor does not necessarily have right of possession. A mechanic, for example, has a statutory lien on the automobile they worked on if they are not paid, but cannot repossess and sell the vehicle without a judgment. The secured lender who provided the loan to buy the automobile, however, can repossess the car and dispose of it as they wish, assuming no other encumbrances.


.

Read more: Secured Loan Definition | eHow.com http://www.ehow.com/about_4680048_secured-loan-definition.html
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Crafty_Dog
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« Reply #360 on: June 05, 2011, 09:22:44 PM »

Over to you JDN grin
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JDN
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« Reply #361 on: June 05, 2011, 09:39:17 PM »

I"m repeating myself; I thought I was clear.   huh  In Bankruptcy Court the Judge has extreme flexibility especially in complicated and large bankruptcies.  If you and I do a BK, we
lose our house, our car, etc.  If a complicated large corporation does it, well, it's up to the Judge to determine how the money is to be divided.

Contrary to the common assumption in the contracting literature that the creditor can seize the collateral on demand, these assets are subject to an automatic stay
which restricts the lender’s collection rights. The collateral can then be used to support the reorganization, provided the secured lender is given “adequate protection”, a flexible
standard determined by a bankruptcy judge.


With secured debt, the creditor’s rights are determined during the bankruptcy process and vary with the realized liquidation value of the collateral. Secured creditors are subject
to dilution in bankruptcy at the Court's discretion."

Is that not clear enough?   grin
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G M
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« Reply #362 on: June 05, 2011, 09:46:02 PM »


http://www.scsuscholars.com/2009/05/sanction-of-victim.html

The sanction of the victim

I found utterly contemptible this statement from President Obama yesterday while addressing the filing of bankruptcy by Chrysler.

While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices. And that's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success.

The group was spooked enough yesterday to put out an unsigned statement of their position. Today in the filing in bankruptcy court we know something of who these thugs who "held out for the prospect of an unjustified taxpayer-funded bailout" are:

Yale University's endowment;

the University of Kentucky's endowment;

the Bill and Melissa Gates Foundation.
Many others bought the debt on the prospect of making money. In so doing they enabled those who might have been burdened by Chrysler debt to receive something now for their bonds: Those buyers provided liquidity to an illiquid market. Those investors are now being vilified by an administration who wanted to use political muscle, having Congressmen call them "vultures" who "will now be dealt with accordingly in court."

Many bought the debt knowing that bankruptcy was possible. They did so under the expectation that the rule of law would apply in America, that their place in line under bankruptcy law was purchased with that debt. President Obama's ire over their unwillingness to give away that place in line -- a place purchased by those endowments and foundations and pensions not for themselves but for students, pensioners and grant recipients -- is an indication that the president thinks his noble ends are superior to theirs. And Rep. Dingell joins him in hoping for what? the equivalent of hoping these creditors end up in a cell with a guy named Butch? And for what? The Journal explains:
The Chrysler creditors at least represent teachers, pensioners and retirees, among others. The Administration is advancing its own social and political agenda through its ever-deeper entanglement with Chrysler and General Motors. That explains why the government is giving 55% of the new Chrysler to the UAW's retiree-benefit trust, a junior creditor, while those ahead of the trust in line get a mere 30 cents on the dollar.
The president is trained in the law and understands the rights senior creditors have. He may hope he gets a better deal in bankruptcy court, but if the creditors are able to force liquidation, the 2012 Republican nominee can remind Detroit that Obama let this go to bankruptcy court because he wouldn't give these creditors an extra $250 million for a right they had paid for.

Labels: economics, rule of law
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JDN
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« Reply #363 on: June 05, 2011, 10:02:22 PM »

Sour grapes of the losers.     grin

Yale and Bill Gates are big boys with high powered attorneys.  They don't like being called names.  So what?  They could have fought and argued; they didn't and that was their choice.

In BK court, some people win, some lose....

That is my point.
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G M
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« Reply #364 on: June 05, 2011, 10:04:04 PM »

WASHINGTON, June 2 (UPI) -- U.S. taxpayers may lose $14 billion of the money spent on bailing out the U.S. auto industry, despite the industry's recent recovery, the White House said.
The loss -- 17.5 percent of the $80 billion in bailout money given to the industry -- was down from $48 billion, or 60 percent of the bailout money, projected two years ago, the White House said in a report titled "The Resurgence of the American Automotive Industry."
 
President Barack Obama Friday visits a Chrysler Group LLC facility in Toledo, Ohio.
 
"There is no joy ... in recognizing that all of this money will not be returned," top White House auto and manufacturing adviser Ron Bloom told reporters Wednesday.
 
But the bailout saved jobs and prevented a broader industry collapse, he said.
 
"So while we are obviously extremely conscious of our obligation to get every penny we can for the taxpayer, we're also not going to apologize for the fact that there are literally hundreds and hundreds of thousands of Americans who are working today" because of the bailouts, Bloom said.
 
The White House report cited "independent analysts" as saying the money invested in General Motors Co. and Chrysler ultimately saved taxpayers "tens of billions of dollars in direct and indirect costs," including the cost of unemployment insurance, taxes the government would have lost if the big Detroit automakers had collapsed "and costs to state and local governments."
 
"Since GM and Chrysler emerged from bankruptcy, the auto industry has created 115,000 jobs, its strongest period of job growth since the late 1990s," the report said.


Read more: http://www.upi.com/Top_News/US/2011/06/02/Auto-bailout-US-taxpayers-may-lose-14B/UPI-88431307003400/
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G M
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« Reply #365 on: June 05, 2011, 10:05:27 PM »

"In BK court, some people win, some lose...."

In this case, the rule of law, the American taxpayers, future generations.....
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JDN
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« Reply #366 on: June 05, 2011, 10:12:29 PM »

Your use of BOLD is interesting.  Why didn't you highlight.....

But the bailout saved jobs and prevented a broader industry collapse, he said.
 
The White House report cited "independent analysts" as saying the money invested in General Motors Co. and Chrysler ultimately saved taxpayers "tens of billions of dollars in direct and indirect costs," including the cost of unemployment insurance, taxes the government would have lost if the big Detroit automakers had collapsed "and costs to state and local governments."

 

Also, if I remember reading, the government actually made money on the bailouts to many financial corporations.  Win some lose some; like buying stock I guess.
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G M
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« Reply #367 on: June 05, 2011, 10:19:18 PM »

Your use of BOLD is interesting.  Why didn't you highlight.....

But the bailout saved jobs and prevented a broader industry collapse, he said.
 
The White House report cited "independent analysts" as saying the money invested in General Motors Co. and Chrysler ultimately saved taxpayers "tens of billions of dollars in direct and indirect costs," including the cost of unemployment insurance, taxes the government would have lost if the big Detroit automakers had collapsed "and costs to state and local governments."

 

Also, if I remember reading, the government actually made money on the bailouts to many financial corporations.  Win some lose some; like buying stock I guess.

Because the white house talking points were bullshiite? Should the US gov't have bailed out the buggy whip companies when the Model T came out and people started buying cars instead of horses?
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JDN
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« Reply #368 on: June 05, 2011, 10:23:04 PM »

Gee now that's a good analogy too.  Your sharp wit is off tonight.   evil
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G M
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« Reply #369 on: June 05, 2011, 10:32:08 PM »

It's a simple question. Should the taxpayers have bailed out the makers of buggy whips when the automobile killed their market share? What of all the candlemakers that lost their jobs when Edison's light bulb made candles a decorative item only?
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JDN
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« Reply #370 on: June 05, 2011, 11:07:01 PM »

But we are still driving cars!  And will be for some time.  No new product is "killing their market share".  So there is a difference.  Your analogy is flawed.  What is your point? 
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G M
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« Reply #371 on: June 05, 2011, 11:43:18 PM »

Should the gov't be subsidizing the failures of private business with our money? What of all the other car companies that went out of business? What of the car companies that don't need a bailout, should they get the same access to taxpayer funds as the badly run ones?
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G M
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« Reply #372 on: June 06, 2011, 12:24:32 AM »

Boy, if I didn't know better, I'd think there was some sort of pattern here......

June 2, 2011
How to Win Payoffs and Intimidate Enemies in Obama's America
By Gary Jason

 


Some recent stories instruct us anew on the cardinal tenets of Obamanomics, a.k.a, pay for play the Chicago way.
 
Consider first the story reviewing the rush of organizations to get exemptions from Obamacare.  So far, nearly 1,400 different entities (businesses, unions, insurers, and state and local governments), covering over three million people, have been given exemptions from the bill by Obama's HHS Secretary Sebelius, and those waivers have a disturbing pattern.
 
The Obama regime clearly played the crony capitalist card in granting these waivers.  While unions represent only a small portion of the workforce (12% overall, and a trivial 7% of all private industry employees), they gave over $400 million in the 2008 election cycle to elect Democrats (especially Obama), and they have been rewarded with over half of all the waivers given out so far.  Put another way, if you are a member of a union that puts cash into Obama's campaign coffers, you are four times more likely than the average citizen to get an exemption from the very law your corrupt, rent-seeking organization helped inflict upon an unwilling public in the first place.
 
Moreover, last month alone saw the Obama regime grant nearly forty exemptions to various tony nightclubs, restaurants, and hotels in Nancy Pelosi's district.  How ironic can you get: Pelosi was the loopy leftist shrew who jammed the law through the House of Representatives, cackling that we had to pass the damn thing in order to find out what was in it.  Apparently even she didn't know what was in it, or maybe just her constituents didn't know.
 
Turning to Obamanomics and taxation, it has often been observed that the jokes a person makes are always an indication of what that person deeply believes.  If that's the case, Obama's recent remarks in his commencement speech at Arizona State University (ASU) -- when he joked about ASU's basketball team defeating his pick in the NCAA tournament -- is revealing.  He "joked" that ASU's president and Board of Regents "will soon learn all about being audited by the IRS."
 
Now, as Glenn Harlan Reynolds noted in his discussion of this incident, this is a repellent and ominous joke.  Reynolds notes that the history of some recent presidents (Kennedy, Johnson, and Nixon come to mind here) who used the IRS to harass opponents makes this sort of joke worse than tasteless -- it threatens the already limited trust the public has in the IRS.  But it is worse than that: the joke indicates that the Chicago Way punish-our-enemies-and-reward-our-friends attitude is never far from Obama's mind.  And the IRS has indeed been more menacing under the Obama regime's stewardship.
 
Consider the recent report that the IRS is increasing its demands on small businesses. Now, small businesses are Obama's least favorite form of business -- they aren't unionized, their principals have an annoying degree of independence, and they don't tend to contribute much to his campaign coffers.  Well, the IRS is now demanding of small companies being audited that they turn over the entirety of their QuickBooks or other accounting software files.  In other words, the IRS is demanding that audited companies turn over not just the documents pertaining to the issues in the audit, but all files.  These would include customer lists, confidential client information, sales records, and personnel records.
 
Not unnaturally, small businesses are worried about the IRS being able to conduct "fishing expeditions," trawling the data for evidence of something that might bring the IRS more money in fines and penalties.  Even worse, clients could then be targeted for investigation, which could be devastating for the viability of those small businesses.
 
Again, there is the authoritarian rage the Obama regime has shown after last year's Citizen United ruling by the U.S. Supreme Court which -- quelle horreur! -- held that businesses have the same rights as other groups in America to spend their money to plead their cases.  Obama obviously feels that only leftist special interest groups such as unions and environmentalist organizations have this right.
 
The Congress, with Obama's support, tried to overturn the ruling legislatively with the Orwellian-named DISCLOSE Act, but that failed.  So Obama has repeatedly promised to issue an executive order to the effect that all businesses bidding for government contracts must reveal the recipients of all their campaign donations -- a clear effort to intimidate businesses into contributing only to "politically correct" causes, such as the Obama reelection campaign.
 
Moreover, as a recent piece reveals, the IRS is now involved in the attempt by the regime to suppress the free speech of opponents.  The IRS has just announced that it plans to retroactively require that political donations to certain 501(c)(4) non-profit political organizations be subject to gift taxes.  As the piece rightly notes, the gift tax has hitherto been used to stop wealthy people from escaping the estate tax by giving their assets away to relatives.  So the sudden, selective, and ex post facto use of this tool to target and intimidate donors to conservative organizations (such as Americans for Prosperity and Crossroads GPS) seems clearly political.
 
Also testifying to the political nature of this IRS program is the fact that the idea was first proposed by leftist advocacy groups such as Democracy 21 and liberal politicians such as Sen. Max Baucus (D-MT).
 
Finally, we should note a sad coda to the whole crony car capitalism that was the Obama's takeover of GM and Chrysler.  I won't repeat the story about how the original secured creditors were stiffed in favor of the UAW, a big supporter of Obama.  But this new story discusses another group of people who got the shaft so that the UAW would score big: namely, unsecured creditors.
 
Overlooked in the auto company bailouts were those people who had received court judgments for harms they suffered from GM and Chrysler vehicles.  The article recounts a number of the thousands of such sad cases.  These debts were largely expunged by the bankruptcy.
 
To be precise, Motors Liquidation Company, the name of the bankruptcy estate for the old GM, which has as assets only 10% of the stock in the new GM, faces $3.3 billion in liabilities from 2,500 claimants, and those victims often are forced to take only 30% of what they were awarded in the form of shares in the trust.  That trust also faces other unsecured creditors (such as those who suffered from asbestos ailments, and owners of defunct dealerships).  Worse, Chrysler claimants have no recourse, because no assets were set aside for unsecured creditors.
 
As Professor Skeel, a bankruptcy law specialist at the University of Pennsylvania, put it, "[t]his was not a normal case. The government was deciding who was going to be taken care of and who was not. ... It would have been easy to put something aside for [the victims of product liability]."  But the good professor overlooks the fact that the people harmed by the defective products made by GM and Chrysler weren't organized into a rent-seeking block that gave tens of millions of dollars to Obama's campaign.  The UAW -- which went to great lengths to protect the drunken, incompetent, and negligent workers who produced many cars that maimed consumers -- was so organized and had given the millions, so the UAW got the spoils.
 
Obama's approach is clear: he employs economic policy to advance his leftist political agenda.  This is crony capitalism in its rankest, most corrupt form.  It is not worthy of even a corrupt machine-run cesspool such as Chicago, much less a nation governed by the rule of law.
 
What is amazing is that the various Republican candidates aren't hammering this issue.
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Crafty_Dog
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« Reply #373 on: June 06, 2011, 08:23:45 AM »

I dislike the term "crony capitalism".  The correct name IMHO is economic fascism and using the word "capitalism" in this context helps smear the name. 

"With secured debt, the creditor’s rights are determined during the bankruptcy process and vary with the realized liquidation value of the collateral. Secured creditors are subject to dilution in bankruptcy at the Court's discretion."

Citation for this JDN?  I thought "secured" meant "secured".

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DougMacG
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« Reply #374 on: June 06, 2011, 09:18:29 AM »

"But we are still driving cars!  And will be for some time.  No new product is "killing their market share"."

Cars change somewhat every year. For the most part it seems to me that competitors Honda and Toyota, along with buying no new car at all, is what is killing their market share.  Really it is their own non-competitiveness killing their market share and profit.  Running our economy at less that 80% efficiency also means the difference for large companies of not making the sales at the margin that pushes you into the black. In other words, government wrongheadedness is a big part of what is killing them in first place.

How does someone say with certainty what new life would or would not have flourished if we weren't propping up dinosaurs.  Most likely the GM brand(s) and most GM employees that would have flourished just fine if the company were allowed to go through the normal, time tested process of reorganization.

Do you really favor government picking winners and losers or just in this case, or are you just picking away at the edges of the real issue?  Did you ever get back to me on where they derive that power, to invest in one business and not others?  Do you agree or disagree with John Roberts point that all people have the same rights and they are not tied to being a little guy or middle class?  Do you agree with my math that the US economy has missed out on roughly $1.5 trillion dollars of new innovation and new production since the end of the recession in June 2009 by shunning pro-growth, freedom-based economic policies and choosing instead to move toward a state directed economy?

Why would it be companies on the brink of failure where we want to put our public investment, if it was constitutional?  Why wouldn't we double down instead on successful companies if we want to leverage our growth?  Just curious.

When we are wishy-washy on principles, the choices we face get really complicated.
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DougMacG
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« Reply #375 on: June 06, 2011, 10:00:02 AM »

"I dislike the term "crony capitalism". 

Agree!  Crony capitalism as it is used is the opposite of capitalism, not a version of it.  Like compassionate-conservative (big government conservative).  Why not just honestly say you aren't a conservative.

Not catchy but I like to call it a state run economy or at least moving toward one.  Allowing capital to move freely to its most valuable use is the opposite of these policies in question.

fascism is just as valid in its second definition in Merriam Webster:  http://www.merriam-webster.com/dictionary/fascism  a tendency toward or actual exercise of strong autocratic or dictatorial control, but in its first definition it seems too strong, true totalitarianism.  Misguided swing voters went to Pelosi-Reid in '06, Obama in '08; we want them back in '012.  Calling them fascists or former fascists is probably not helpful IMHO.
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DougMacG
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« Reply #376 on: June 06, 2011, 11:17:02 AM »

(More famous people reading the forum)

http://online.wsj.com/article/SB10001424052702303745304576361663907855834.html

The Real Cost of the Auto Bailouts
The government's unnecessary disruption of the bankruptcy laws will do long-term damage to the economy.

By DAVID SKEEL

President Obama's visit to a Chrysler plant in Toledo, Ohio, on Friday was the culmination of a campaign to portray the auto bailouts as a brilliant success with no unpleasant side effects. "The industry is back on its feet," the president said, "repaying its debt, gaining ground."

If the government hadn't stepped in and dictated the terms of the restructuring, the story goes, General Motors and Chrysler would have collapsed, and at least a million jobs would have been lost. The bailouts averted disaster, and they did so at remarkably little cost.

The problem with this happy story is that neither of its parts is accurate. Commandeering the bankruptcy process was not, as apologists for the bailouts claim, the only hope for GM and Chrysler. And the long-term costs of the bailouts will be enormous.

In late 2008, then-Treasury Secretary Henry Paulson tapped the $700 billion Troubled Asset Relief Fund to lend more than $17 billion to General Motors and Chrysler. With the fate of the car companies still uncertain at the outset of the Obama administration in 2009, Mr. Obama set up an auto task force headed by "car czar" Steve Rattner.

Under the strategy that was chosen, each of the companies was required to file for bankruptcy as a condition of receiving additional funding. Rather than undergo a restructuring under ordinary bankruptcy rules, however, each corporation pretended to "sell" its assets to a new entity that was set up for the purposes of the sale.

With Chrysler, the new entity paid $2 billion, which went to Chrysler's senior lenders, giving them a small portion of the $6.9 billion they were owed. (Fiat was given a large stake in the new entity, although it did not contribute any money). But the "sale" also ensured that Chrysler's unionized retirees would receive a big recovery on their $10 billion claim—a $4.6 billion promissory note and 55% of Chrysler's stock—even though they were lower priority creditors.

If other bidders were given a legitimate opportunity to top the $2 billion of government money on offer, this might have been a legitimate transaction. But they weren't. A bid wouldn't count as "qualified" unless it had the same strings as the government bid—a sizeable payment to union retirees and full payment of trade debt. If a bidder wanted to offer $2.5 billion for Chrysler's Jeep division, he was out of luck. With General Motors, senior creditors didn't get trampled in the same way. But the "sale," which left the government with 61% of GM's stock, was even more of a sham.

If the government wanted to "sell" the companies in bankruptcy, it should have held real auctions and invited anyone to bid. But the government decided that there was no need to let pesky rule-of-law considerations interfere with its plan to help out the unions and other favored creditors. Victims of defective GM and Chrysler cars waiting to be paid damages weren't so fortunate—they'll end up getting nothing or next to nothing.

Nor would both companies simply have collapsed if the government hadn't orchestrated the two transactions. General Motors was a perfectly viable company that could have been restructured under the ordinary reorganization process. The only serious question was GM's ability to obtain financing for its bankruptcy, given the credit market conditions in 2008. But even if financing were not available—and there's a very good chance it would have been—the government could have provided funds without also usurping the bankruptcy process.

Although Chrysler wasn't nearly so healthy, its best divisions—Jeep in particular—would have survived in a normal bankruptcy, either through restructuring or through a sale to a more viable company. This is very similar to what the government bailout did, given that Chrysler is essentially being turned over to Fiat.

The claim that the bailouts were done at little cost is even more dubious. This side of the story rests on the observation that GM's success in selling a significant amount of stock, reducing the government's stake, and Chrysler's repayment of its loans, show that the direct costs to taxpayers may be lower than many originally feared. But this doesn't mean that taxpayers are off the hook. They are still likely to end up with a multibillion dollar bill—nearly $14 billion, according to current White House estimates.

But the $14 billion figure omits the cost of the previously accumulated tax losses GM can apply against future profits, thanks to a special post-bailout government gift. The ordinary rule is that these losses can only be preserved after bankruptcy if the company is restructured—not if it's sold. By waiving this rule, the government saved GM at least $12 billion to $13 billion in future taxes, a large chunk of which (not all, because taxpayers also own GM stock) came straight out of taxpayers' pockets.

The indirect costs may be the worst problem here. The car bailouts have sent the message that, if a politically important industry is in trouble, the government may step in, rearrange the existing creditors' normal priorities, and dictate the result it wants. Lenders will be very hesitant to extend credit under these conditions.

This will make it much harder, and much more costly, for a company in a politically sensitive industry to borrow money when it is in trouble. As a result, the government will face even more pressure to step in with a bailout in the future. In effect, the government is crowding out the ordinary credit markets.

None of this suggests that we should be unhappy with the recent success of General Motors and Chrysler. Their revival is a very encouraging development. But to claim that the car companies would have collapsed if the government hadn't intervened in the way it did, and to suggest that the intervention came at very little cost, is a dangerous misreading of our recent history.

Mr. Skeel, a professor of law at the University of Pennsylvania, is the author of "The New Financial Deal: Understanding the Dodd-Frank Act and its (Unintended) Consequences" (Wiley, 2010).
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ccp
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« Reply #377 on: June 07, 2011, 11:20:22 AM »

We keep hearing people on TV advising us to buy American brands.  My view is the American taxpayer was screwed over by GM and Chrysler.  And now this.  I will never buy a GM car.  Ever.

***June 07. 2011 6:17AM
GM chief pushing for higher gas taxes
David Shepardson and Christina Rogers/ The Detroit News
Detroit — General Motors Co. CEO Dan Akerson wants the federal gas tax boosted as much as $1 a gallon to nudge consumers toward more fuel-efficient cars, and he's confident the government will soon shed its remaining 26 percent stake in the once-bankrupt automaker.

"I actually think the government will be out this year — within the next 12 months, hopefully within the next six months," Akerson said in a two-hour interview with The Detroit News last week.

He is grateful for the government's rescue of GM — "I have nothing but good things to say about them" — but Akerson said the time for that relationship to end is coming because it's wearing on GM.

"It's kind of like your in-laws: It was a nice long weekend. We didn't say a week," Akerson said with a laugh.

And while he is eager to say goodbye to the government as a part owner of GM, Akerson would like to see it step up to the challenge of setting a higher gas tax, as part of a comprehensive energy policy.

A government-imposed tax hike, Akerson believes, will prompt more people to buy small cars and do more good for the environment than forcing automakers to comply with higher gas-mileage standards.

"There ought to be a discussion on the cost versus the benefits," he said. "What we are going to do is tax production here, and that will cost us jobs."

For the years 2017-25, federal officials are considering 3 percent to 6 percent annual fuel efficiency increases, or 47 mpg to 62 mpg. That could boost the cost of vehicles by up to $3,500.

"You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said.

"People will start buying more Cruzes and they will start buying less Suburbans."

With gas already over $4 a gallon in parts of the country, a higher gas tax is a hard sell.

Rebecca Lindland, an analyst with IHS Global Insight, said higher gas taxes in Europe did lead consumers to buy more fuel-efficient cars.

But she acknowledged that's virtually impossible to see in the United States.

"It's career suicide for a politician to call for raising gas taxes," Lindland said.

Akerson isn't the first auto exec to float the idea of a gas tax to encourage consumers to buy fuel-efficient vehicles. Ford Chairman Bill Ford Jr. has previously advocated a gas tax increase.

On Monday, a Ford spokeswoman said the company "will leave the policy decision to Congress"; in 2009, GM CEO Rick Wagoner called a higher gas tax "worthy of consideration."

Stock boost sought
Akerson believes the Treasury's continued ownership stake in GM — 500 million shares — is dragging down its stock price, which has fallen 23 percent this year, and closed Monday at $28.56. That's well below the $33-per-share it fetched in November's $23 billion initial public stock offering.

"I think that it is an overhang — to have 500 million shares sitting out there — it's a problem," Akerson said, adding that unrest in the Middle East and oil prices also are depressing GM's share price. "They don't know when (the Treasury is) going to come out. Investors hate uncertainty."

David Whiston, an auto analyst at Morningstar, agrees that government ownership is impacting investors' interest in GM.

"There are a lot of money managers that are waiting for the government to exit before jumping in," Whiston said.

The Treasury, which rescued GM with a $49.5 billion bailout and once held a 61 percent majority stake, "will likely look at another (stock) sale in August, after second-quarter earnings are announced, Akerson said.

The Obama administration has made clear it is eager to exit GM — but hasn't laid out a precise timetable.

Asked if GM is considering buying back its stock, Akerson paused for eight seconds before declining to answer directly. "But we have a lot of cash," he added.

At the current stock price, U.S. taxpayers would be out more than $12 billion on GM's bailout. Still, Akerson believes that, in the end, taxpayers will see the government made the right call in saving the automaker, as well as crosstown rival Chrysler.

"We are in the midst of transforming an iconic American company so 20 and 30 years from now (taxpayers) will look at this company and they'll say, 'Absolutely it was the right thing to do,'" Akerson said. "And it shouldn't be measured on did it sell for $43 or $53 (a share) or did they lose a couple billion dollars?"

GM was saved, he said, because of the extreme generosity of Americans — a spirit that helped restore Europe and Japan after World War II and rebuild cities such as New Orleans after natural disasters.

"We're the most generous country, even in terrible times," Akerson said. "We don't walk to the disaster as a nation. … We can't wait to help."

Things are looking up for GM's image, he said. Pollster Peter Hart, conducting research for GM, found 16 percent had a positive view of GM before the bailout. But that had risen to 65 percent early this year, Akerson said.

"I couldn't believe the press we got on the IPO — it was like a $100 million gift," Akerson said.

GM's rebound, he believes, was a "proxy" for the U.S.

"OK, we took the blow as a nation, we weathered the worst, and my God, we're back," Akerson said. "It's why I came here. It was a story of underdog that tripped as we all have in our lives — it was a good feel-good story."

Call for tax hikes
In his interview with The News, Akerson also weighed in on the nation's debt ceiling, saying Congress should raise it from its current $14.3 trillion mark. The government could default on its debt on Aug. 2.

"We're too good a nation to let ourselves be a banana republic," Akerson said, warning that a default would be "unimaginable" and could hurt auto sales.

But he agrees with those who say the country has been spending money it can't afford.

"Now, we need practical decisions," Akerson said. "I think you need to cut the hell out of the budget and you've got to increase taxes … on everybody — including the middle class and the rich people."

Akerson, who describes himself as "a Colin Powell Republican — not a Sarah Palin Republican" — said President Barack Obama has "done a pretty good job on the economy," which, he said, was "a nightmare.

"I don't think he can fix it in four years and I think we just have to stay the course," he said.

Despite his Republican stripes, Akerson is frustrated with the political climate and the media.

He was invited to appear on CBS' "Face the Nation," but said: "I can't go on it. I'm toxic. I'm like a lightning rod. I couldn't have an intelligent discussion without someone saying, 'He's a welfare guy from the bailout.'"

But he noted the bipartisan spirit of GM's rescue and the rest of the U.S. auto industry.

"If we had gone down," he said, "the supply chain would have gone down. … And Ford was hanging on by its fingernails, too."

GM's failure also would have led to Detroit's collapse, Akerson said. "I have not seen a city in this bad a shape since I went to East Berlin in 1969."***



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G M
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« Reply #378 on: June 07, 2011, 01:10:03 PM »

http://www.washingtonpost.com/blogs/fact-checker/post/president-obamas-phony-accounting-on-the-auto-industry-bailout/2011/06/06/AG3nefKH_blog.html

Pants on fire.
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ccp
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« Reply #379 on: June 13, 2011, 11:04:52 AM »

IMO this is another example of government perks that is distinctly unfair.  States giving the film industry tax breaks that no one else gets.  Yes I understand the upside down reasoning that the idea was to bring business, recognition and money into a targeted area that would benefit the entire state.  Nonetheless this is government meddling, this is unfair tax code manipulation that benefits peopel who do not need the benefit while smaller bussinesses and tax payers get stuck with the burden far more than any benefit to them.  I would like to hear Repubs address this crap.  Newt has a point when he notes "conservative social engineering".  I believe this is a perfect example of what he is saying.  Stossel could have a field day on this:

After a decade of escalation, a stupid trend may have peaked
Jun 9th 2011 | LOS ANGELES | from the print edition
 
Lights, cameras, subsidies, action!LOTS of states would love to be California and have their own little Hollywood. Film crews would then come to town and spend money in hair salons and hotels, and local politicians could pose with film stars. So why not call it “economic development” to justify the huge tax credits that lure film producers? As of last year, more than 40 states had such incentives, costing them a record $1.4 billion.

Even California itself plays the game, believing that it has to defend itself against the poachers. In 2003, when only a handful of states (principally Louisiana and New Mexico) offered incentives, California made two-thirds of America’s big-studio films. Now it makes far fewer than half. Film LA, an organisation that co-ordinates permits for film shoots in Los Angeles, says that without California’s own tax credit, “2010 would have been the worst year” since the mid-1990s for filming in Hollywood. As its marketing blog gibes: “It is extraordinarily unlikely that the 137 productions that filmed in Michigan since 2007 chose to shoot there for creative reasons, a favourable climate or a deep and talented film-crew base.”

All this costs money, which legislators volunteer on behalf of taxpayers. Many tax credits (a percentage of a film crew’s local expenditures) exceed the filmmaker’s total tax liability to that state. The credits have even become an industry unto themselves: brokers slice them into tranches and trade them. In Iowa filmmakers were selling their credits until that state shut its programme in 2009. Last month an Iowa judge sentenced a producer to ten years in prison for fiddling credits.

Related topics
Arts, entertainment and media
Entertainment
Movies
Iowa
California
Incentives do not have to involve tax credits. Some states simplify the paperwork by just giving out cash (calling it “rebates” or “grants”). Others exempt film-makers from sales or hotel taxes or give them other perks.

All this is silly. First, as Joseph Henchman at the Tax Foundation, a non-partisan think-tank, puts it, even when a state succeeds in luring film crews, they rarely boost the economy or tax revenues enough to justify the costs of the incentives. Film companies usually import their staff (stars, stuntmen, etc) and export them again when the shoot is over. The local jobs they create (hairdressers, sound technicians, pizza deliverers) are mostly temporary.

Second, since virtually all states are at it, the programmes largely cancel out one another; no state gets a lasting advantage. The craze resembles a beggar-thy-neighbour trade war (with mutually destructive tariffs) or the federal tax code with its loopholes for every lobby and thus higher rates for all. In the language of cold-war nukes, it would be mutually assured destruction (MAD). The only winner is the film industry. In essence, a rich bloke in a Brentwood villa gets money from a poor taxpayer in West Virginia.

Fortunately, this has begun sinking in. Arizona, Arkansas, Idaho, Kansas, Maine, New Jersey and Washington have recently ended, suspended or shrunk their programmes. Many others, struggling with budget deficits, are considering doing the same, investing the money in something permanent or even leaving it to taxpayers. “2010 will likely stand as the peak year,” thinks Mr Henchman.
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Crafty_Dog
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« Reply #380 on: June 15, 2011, 11:53:34 AM »

President Obama's re-election machine is already running full bore, but has his entire Administration also decamped for the campaign trail? We ask because the towering ambitions of Mr. Obama's first two years have suddenly gone into abeyance in his third, apparently to be deferred until years five through eight. The White House is more or less conceding that it doesn't have a chance of winning a second term unless his major policies go on hiatus.

This holiday from committing liberal history began in December with the White House-GOP deal that extended the Bush tax rates through the 2012 election and added a payroll tax cut on employees to 4.2% from 6.2%. These proposals came from the same Democrats who only months earlier had increased payroll taxes to finance their health-care bill and routinely claim that tax rates don't matter to the private economy. But then, 9.1% joblessness and 1.8% growth have a way of concentrating the political mind.

Next came the much-ballyhooed White House scrub for "excessive" regulation, even as hundreds of new rules mandated by the legislation of the first two years continue to be written and to slow business investment. But at least the rule review persuaded the Environmental Protection Agency to stop treating dairy farm milk spills as if they were Gulf oil leaks. That should help next year in Wisconsin.

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Associated Press
 
The White House is more or less conceding that Mr. Obama's major policies must go on hiatus.
.Picking up the vacation pace, this week the EPA delayed by two months the carbon regulations that it wants to impose, even as it resists bipartisan attempts on Capitol Hill to kill them altogether. Next up may be a delay in pending regulations meant to harm coal-fired power, before opponents gather enough votes to kill them. The EPA has already yanked an entire rule that would have forced thousands of businesses to install new industrial boilers.

Maybe the White House should short-circuit all this by dispatching EPA administrator Lisa Jackson to an undisclosed location through November 2012.

Also this week, the Commodity Futures Trading Commission voted—five to zero—to delay by six months the derivatives swap rules that were due this month under the Dodd-Frank financial re-regulation. The alphabet soup of financial regulators will eventually add tens of thousands of pages to the Federal Register, but for now they are conceding that the derivatives market isn't the calamity they claimed it was in the rush to pass the bill.

Then there's health care. Over the last year, the Health and Human Services Department has granted at least 1,372 temporary waivers to ObamaCare mandates, most notably for price controls on private insurance companies. Many have gone to Democratic allies like unions, but many more went to ordinary businesses and even states. HHS has already given a pass to Nevada, New Hampshire and Maine, and another dozen or so have applied or are expected to ask for exemptions.

 Opinion Journal Columnist John Fund on the GOP presidential debate.
.This is less political favoritism than a panicked, ad hoc bid to minimize pre-election insurance disruptions that can be attributed to a law that is still widely reviled. If the law isn't enforced, maybe voters will forget it passed. In its New Hampshire reprieve, HHS admitted that ObamaCare would "destabilize the individual market," though it neglected to mention that this is what ObamaCare is meant to do. Just not yet.

By the way, this waiver process isn't in the law's statutory language. HHS has simply created it via regulation. In other words, the health bureaucracy knew the rules they were writing would be destructive and have created a political safety valve. They have even found a way to override ObamaCare's cuts to the Medicare Advantage program that were counted as "savings" to make the health bill look less spendthrift. Medicare Advantage offers insurance choices to one in four seniors and is popular in, well, Florida, so seniors also get a two-year reprieve.

Why aren't liberals deploring this betrayal of their programs? Perhaps because even they can't ignore reality forever. Mr. Obama's epic fiscal binge, waves of new industrial policy and the political allocation of credit haven't created the boom they promised. If business can now be persuaded that the government assault is over and start to invest again so the economy improves enough for Mr. Obama to win a second term, then a two-year delay in fulfilling their dreams is well worth it.

Liberals figure that as long as Mr. Obama can be re-elected next year on another hope-and-change platform, it will be too late to hope to change anything and he can then return to his legacy project of building a tax and entitlement state on the European model. The economy may benefit from Mr. Obama's temporary amnesty, but the real lesson of this hiatus from liberalism is that it should be shut down permanently.

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Crafty_Dog
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« Reply #381 on: June 20, 2011, 07:35:16 AM »

"It is a wise rule and should be fundamental in a government disposed to cherish its
credit, and at the same time to restrain the use of it within the limits of its
faculties, 'never to borrow a dollar without laying a tax in the same instant for
paying the interest annually, and the principal within a given term; and to consider
that tax as pledged to the creditors on the public faith.'" --Thomas Jefferson,
letter to John Wayles Eppes, 1813
=========================

By MICHAEL J. BOSKIN

Bipartisan budget negotiations to raise the debt ceiling are focused on deficit reduction. That's progress. It's imperative that we rein in spending given the risks posed by our growing debt, ongoing deficits and President Obama's spending binge. But we should be wary of "balanced" spending-cut/tax-hike proposals promising phony future savings. Lawmakers should pay heed to five vital lessons from the history of attempts to consolidate the budget and reform major programs:

1) Cut spending, don't raise taxes. In a comprehensive study of post-World War II fiscal consolidations in developed economies published last year by the National Bureau of Economic Research, economists Alberto Alesina and Silvia Ardagna conclude that successful deficit reduction averaged $5 to $6 in spending cuts for every $1 of tax hikes. Higher taxes more often led to recession. President Obama's and Senate Budget Committee Chairman Kent Conrad's proposals to balance spending cuts with large tax hikes are thus a recipe for failure.

2) Control spending with enforceable procedures. President Reagan twice negotiated large spending cuts in exchange for modest tax hikes (after historic tax-rate reductions in 1981), but much of the spending control never materialized. The Gramm-Rudman-Hollings Act of 1985 required projections of gradual deficit decline to a balanced budget over several years. Not surprisingly, the result was rosy forecasts but little deficit reduction. So lawmakers revised and stretched out the targets, but fared no better.

Similarly, the European Union's Stability and Growth Pact, which in 1997 set deficit and debt limits, was routinely violated long before the current financial crisis and recession.

Some state balanced-budget rules have succeeded by requiring that any shortfalls be made up the following year, thereby decreasing the incentive to fudge in the first place. President George H.W. Bush's controversial 1990 budget deal with a Democratic Congress included caps on discretionary spending and sequestration of funds if they were exceeded. President Bill Clinton and a Republican Congress later renewed the rules. New entitlement programs and tax cuts had to be "paid for"—i.e., there was a "marginal balanced budget" requirement.

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Martin Kozlowski
3) Be wary of baselines and budget gimmicks. Projected savings are usually measured from baselines with rapid increases in spending and rising taxes. The current Congressional Budget Office baseline assumes large automatic tax hikes, far beyond historic GDP shares. The hikes come from the expiration of the Bush tax cuts in 2013, growth of the Alternative Minimum Tax, and continuing "bracket creep," which pushes middle-income families into higher tax brackets. That's how President Obama can call a large tax increase (from today) a tax cut (from baseline).

Conversely, propose slowing projected spending growth (say, to 6% from 7%, as the House Republican Budget Resolution did this year) and you are accused of draconian slashing. We should end autopilot budgeting, and force justification of all spending or tax hikes.

4) Watch out for unintended consequences. Surprises tend to compound and, as Albert Einstein once said, compound interest is the most powerful force in the universe. In the 1970s, with little analysis or discussion, Social Security benefits at retirement were indexed to wage rather than price growth. Because wages generally grow more quickly than prices, price indexing has led to a higher rate of benefit growth. Today, with the baby boomers retiring, wage indexing creates trillions of dollars of future unfunded Social Security liabilities by projecting large benefit increases far beyond tax revenues. Switching to price indexing would eliminate this deficit while maintaining the real level of benefits.

Perhaps an even riskier consequence derives from the explosion, under Democratic and Republican administrations, in the number of people paying no income tax, in part because of refundable tax credits. Last year a majority of Americans paid no income tax. What is really unbalanced is the current revenue system. Partly due to the aftermath of the severe recession, transfer payments are at an all-time high as a share of personal income. These are ominous trends for budget dynamics in a democracy. We need both a broader base of economic activity and a larger fraction of the population financing government spending if we are to preserve a prosperous capitalist democracy.

5) Tackle fundamentals. If spending is projected to grow exponentially, President Obama's proposed temporary freeze on one-sixth of the budget, or even modest cuts, won't help much. We need changes that compound and cumulate over time, especially in Social Security and Medicare, or they will crowd out all other federal spending or drive marginal tax rates over 70%.

We've had successful, farsighted policy reforms that also dealt with pressing short-run issues. President Reagan's 1981 reform of indexing tax brackets to offset inflation still pays dividends by preventing even larger automatic tax hikes. The 1983 Greenspan Commission's phased-in gradual increases in Social Security retirement age were prescient. We can and must immediately address the debt-ceiling issue while focusing on long-term deficit reduction.

Events are rarely kind to those who keep kicking the can down the road, expanding spending and exploding the national debt. Payment ultimately comes from higher taxes, eroding the debt through inflation, or outright default and debt restructuring. The cost of any of these actions will be severe. Just ask taxpayers in Greece or Portugal facing a decade of depressed living standards. Or the Japanese, whose stagnation is measured in decades, not quarters or years.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.
« Last Edit: June 20, 2011, 09:06:26 AM by Crafty_Dog » Logged
DougMacG
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« Reply #382 on: June 20, 2011, 11:33:16 AM »

Boskin is right, hitting hard on the big picture of spending and on a great point Crafty has made often - the wrongheadedness of baseline budgeting.
------------------------------
This (below) easily could go under glibness, dissonance or Pres 2012, but the main theme is regulations destroying manufacturing.  The administration has a stated goal of quadrupling exports.  Hard to do that while you prohibit or cripple the manufacturing of everything.

Bill Daley is the new Obama Chief of Staff.  Going before the National Assn of Mfrs probably wasn't a good idea given the administrations track record and (unintended?) direction of stomping out production and new hiring.

http://dailycaller.com/2011/06/17/daley-can%E2%80%99t-defend-obama%E2%80%99s-%E2%80%98indefensible%E2%80%99-economic-policies/

White House Chief of Staff Bill Daley took heat from business executives Thursday for the Obama administration’s regulatory expansions. Daley also said he didn’t have any good answers for some of what President Obama is doing and expressed frustration about the “bureaucratic stuff that’s hard to defend.”

“Sometimes you can’t defend the indefensible,” Daley said at a National Association of Manufacturers (NAM) meeting.

Daley couldn’t answer basic questions and continually faced criticism from the executives in the room. The business leaders even applauded each other’s criticism of the administration. “At one point, the room erupted in applause when Massachusetts utility executive Doug Starrett, his voice shaking with emotion, accused the administration of blocking construction on one of his facilities to protect fish, saying government ‘throws sand into the gears of progress,’” wrote Peter Wallsten and Jia Lynn Yang in the Washington Post.

Americans for Limited Government Communications Director and former Labor Department Public Affairs Chief of Staff Rick Manning told The Daily Caller that Daley’s inability to defend Obama’s regulations is an indication that the administration’s plans aren’t working. Manning also points out that Daley’s meeting may have large political implications.

“Business community to William Daley, your Jedi tricks don’t work on us,” Manning said in an email. “The chickens are coming home to roost from the wholesale assault by Obama on the free enterprise system and the private job creators who make it run. The meeting itself is incredible in that it demonstrates just how vulnerable Obama feels in 2012.”

The Workforce Fairness Institute’s Fred Wszolek told The Daily Caller that Daley’s lackluster performance is even more questionable when comes to the National Labor Relations Board (NLRB) and its campaign against the Boeing Company. The NLRB has gone after the Boeing Company for opening a new plant in South Carolina. Boeing’s new plant is an addition to its already-existing production lines in Washington state. The NLRB’s case hinges on whether Boeing made the decision to open the new plant as “retaliation” against machinist unions in Washington, even though no jobs were lost there. In fact, Boeing has added thousands of new jobs in Washington.

As a former Boeing board member before taking on his White House job, Daley voted in favor of opening the new South Carolina plant. Republican Sen. Lindsey Graham has challenged Daley to come out and defend his vote in the face of the NLRB’s case, but he hasn’t yet done so.

“Bill Daley is White House chief of staff in an administration that is accusing a company where he served on the board of violating Federal labor law,” Wszolek said in an email. “The individual who launched the complaint against the Boeing Company was appointed to the post by President Obama and is currently a nominee. Now, to top it all off, Daley states he cannot defend the ‘indefensible’ conduct of his own administration, which presumably speaks to the Boeing matter.”

Wszolek questions Daley’s ability to continue “ethically” serving the president.

“All of this leads to one question: how can Daley serve in an administration that he cannot defend and believes his actions were unethical?,” Wszolek said.
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Body-by-Guinness
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« Reply #383 on: June 24, 2011, 09:10:41 AM »

CBO’s Long-Term Budget Outlook

Posted by Tad DeHaven

The Congressional Budget Office released the latest edition of its annual forecast of where the federal government’s budget is headed. The numbers are new but the message is the same: the budget is on an unsustainable path. According to the CBO’s more politically-realistic “alternative scenario,” federal debt as a share of GDP will hit 109 percent in 2021 and would approach 190 percent in 2035.

For those mistaken souls who believe that merely eliminating “waste, fraud, and abuse” in government programs can solve the problem, the CBO has news for you:

In the Congressional Budget Office’s (CBO’s) long-term projections of spending, growth in noninterest spending as a share of gross domestic product (GDP) is attributable entirely to increases in spending on several large mandatory programs: Social Security, Medicare, Medicaid, and (to a lesser extent) insurance subsidies that will be provided through the health insurance exchanges established by the March 2010 health care legislation. The health care programs are the main drivers of that growth; they are responsible for 80 percent of the total projected rise in spending on those mandatory programs over the next 25 years.

Others believe that “tax cuts for the rich” are the source of the problem. But according to the CBO’s alternative scenario, if the Bush tax cuts are extended and the Alternative Minimum Tax continues to be patched, federal revenues as a share of GDP will still exceed the post-war average by the decade’s end. Under the CBO’s standard baseline, which assumes that those policies will not be continued, federal revenues as a share of GDP will go zooming by the historic average. That might be good for politicians, bureaucrats, and other “tax eaters,” but it wouldn’t be good for the country’s economic welfare.

The problem is clearly spending and the GOP has rightly made spending cuts a key condition to lifting the debt ceiling. The magic number being reported is $2 trillion in cuts. That sounds like a lot of money – and it is – but it’s likely that those cuts are to be achieved over 10 years. According to the CBO’s most recent estimates, the federal government will spend almost $46 trillion over the next 10 years. And as Chris Edwards has been repeatedly warning (see here, here, and here), there’s a possibility that the cuts will be of the “phony” variety.

http://www.cato-at-liberty.org/cbos-long-term-budget-outlook/
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DougMacG
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« Reply #384 on: June 25, 2011, 12:32:35 PM »

"take steps to strengthen the safety net. The alternative is unconscionable harm"
(It's already a hammock that has swallowed up 4 going on 5 generations!)

Can you imagine, if you subscribed to the NY Times, and read every word cover to cover everyday, and nothing else, just how miserably uninformed you would be?

I honestly believe you know more in total if you spent that time wandering around observing with your own eyes and ears.

Our own CCP has pointed out that 50% of the people pay nothing whatsoever in federal income taxes and that percentage is rising.  Absolutely no mention of that in this story.

We are spending roughly a trillion and a  half a year more than we take in, close to $4 trillion a year in total, most of that is in the form of government checks to individuals, robbing Peter to pay Paul so to speak.  No mention of that in this story.

We are arguing at the margin about ending some things that were TEMPORARY and containing the increases of some other excess spending items.

The World Bank definition of poverty has been raised from $1.08 to $1.25 per day.  There is no one in America anywhere near that level unless they are refusing government help and these caps and containments on spending have NOTHING to with that.

In walks the NY Times to the discussion:

"Republicans are targeting poverty-fighting programs for deep cuts... Exempting low-income programs has been a major feature of deficit deals going back to 1985. Both sides should publicly commit to that now, and take steps to strengthen the safety net. The alternative is unconscionable harm"

http://www.nytimes.com/2011/06/25/opinion/25sat1.html?_r=1

"Making the poor carry a heavy part of the deficit burden is intolerable."

We have no measurable poor by any global standard.  The ones we call poor are receiving a lot before, during and after any so-called budget cutting conference.  The poor are paying NOTHING!! (in direct federal income tax)   Punishing potential employers for the excesses of government transfer payments creates even more 'poor'.  No mention of that.




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DougMacG
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« Reply #385 on: June 25, 2011, 12:52:41 PM »

Liberals are up in arms because it contains an 18% of GDP cap on spending.

Conservatives should beware of Balanced Budget Amendment talk because without the cap on spending, the amendment is certain to cause tax increases forever.

If adopted exactly as written, it would solve most of our problems.  Current GDP 14.12 T times 18% is 2.5T, coincidentally What we already take in now in a down economy.  Implementation of the amendment as written is Jan 2017, time to phase things in and get our house in order.  Super majority required to raise taxes makes sense because most increases are not across the board to they already lack consent of the governed.  Forces priorities and choices, not just layering of additional spending every time someone has a great idea.  Higher dollar spending is achieved by - growing the economy.  This has no chance of passing 2/3 House, 2/3 Senate and 3/4 state legislatures as written.  And to change the terms is to destroy it, IMO.

---------------------------
http://www.fedsmith.com/article/2957/house-judiciary-committee-approves-balanced-budget.html

The House Judiciary Committee on Thursday approved a balanced budget amendment (H.J. Res. 1) to the Constitution to restore fiscal responsibility and accountability to federal government spending. The proposal for a balanced budget amendment passed the Committee by a vote of 20-12.

The amendment:

    * Requires Congress never to spend more than it takes in
    * Requires a 3/5 majority vote to raise the debt ceiling, with an exception in times of national emergency
    * Requires a supermajority to raise taxes
    * Requires Spending as a Percentage of GDP to not Exceed 18% - Preventing Tax Increases to Balance the Budget
----------------------------
Full text:
http://thomas.loc.gov/cgi-bin/query/z?c112:H.J.RES.1:

Proposing a balanced budget amendment to the Constitution of the United States.

      Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two-thirds of each House concurring therein),
      That the following article is proposed as an amendment to the Constitution of the United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States within seven years after the date of its submission for ratification:

`Article--

      `Section 1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless three-fifths of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.

      `Section 2. Total outlays for any fiscal year shall not exceed 18 percent of economic output of the United States, unless two-thirds of each House of Congress shall provide for a specific increase of outlays above this amount.

      `Section 3. The limit on the debt of the United States held by the public shall not be increased unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote.

      `Section 4. Prior to each fiscal year, the President shall transmit to the Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts.

      `Section 5. A bill to increase revenue shall not become law unless two-thirds of the whole number of each House shall provide by law for such an increase by a rollcall vote.

      `Section 6. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect. The provisions of this article may be waived for any fiscal year in which the United States is engaged in military conflict which causes an imminent and serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law.

      `Section 7. The Congress shall enforce and implement this article by appropriate legislation, which may rely on estimates of outlays and receipts.

      `Section 8. Total receipts shall include all receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except for those for repayment of debt principal.

      `Section 9. This article shall take effect beginning with the later of the second fiscal year beginning after its ratification or the first fiscal year beginning after December 31, 2016.'.
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Crafty_Dog
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« Reply #386 on: June 27, 2011, 12:42:35 PM »



No, The US Is Not Greece To view this article, Click Here
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 6/27/2011


Two-hundred and thirty-five July 4th’s ago, the United States became reality. While there have been plenty of stumbles along the way, other than during the Civil War, doubts about its continued existence have been few and far between. Lately, however, government spending and debt levels have created a mainstream fear that the US is possibly on its last legs – destined to become a future version of Greece.

We don’t agree and, no, we are not sticking our heads in the sand. Our problems are clear.  The budget deficit will be about 8.5% of GDP in 2011, down slightly from 9% in 2010 and 10% in 2009. These deficits are impossible to sustain over the longer run.
 
Meanwhile, the total public debt of the US is now $14.3 trillion and future promised, but as yet unfunded, Social Security and Medicare benefits amount to about $60 trillion in present value terms. Combined, this $75 trillion is roughly five times annual GDP. With numbers like these, how could we not think serious, economy-threatening problems are on the way?
 
Well, for one thing, the very obvious problems in Greece (and other countries and the states) and the fact that politicians can’t hide from the Internet are forcing the issue. Second, the political landscape in the US has changed – perhaps because of point one. Third, the solutions are relatively simple in reality, even though very complicated politically.
 
Part of the solution is higher revenues, and this will happen even if tax rates are not increased. In the past 12 months, revenues have climbed by about $220 billion over the previous 12 months – or, about 0.5% of GDP. We expect revenues to continue this trend, rising from their current level of 14.5% of GDP back to about 18.5% of GDP (a 4% move).
 
Meanwhile, current debt-limit negotiations are likely to cut federal discretionary (non-entitlement, non-interest) spending. In the 1990s, discretionary spending fell from about 9% of GDP to 6%. So let’s say, we go from 9% today to 7.5%, which could be a “low hurdle” given the eventual reduction in operations in Iraq and Afghanistan. Combining this 1.5% of GDP cut with the 4% rise in revenues (total of 5.5%), could bring the annual deficit down to 3% of GDP.
 
Of course, that still leaves the long-term entitlement problem. But even there we can see the outlines of solutions looming in the distance. For Medicare and Medicaid, which are much bigger problems than Social Security, we think ultimately the forces of smaller government win. We do not know whether it will be in 2012, 2016, or 2020. But one of those elections is likely to result in a Republican in the White House with control of both the US Senate and House. And at that point, they can enact major reforms along the lines of some recent proposals to turn Medicare into premium support and turn Medicaid into block grants to the states.
 
Parliamentary rules will allow the GOP to enact these changes with only a simple majority in the Senate (with no chance for a Democratic filibuster). And to reverse these reforms, because it would make future budget deficits larger, Democrats would need 60 votes in the Senate!
 
On Social Security, any change requires 60 votes in the Senate. This means tax hikes (to fill the gap) are as much in play as benefit cuts and this is why it will likely be put off for many years into the future. In the meantime, news stories suggest even AARP is now willing to consider some reductions in benefits. In other words, fiscal reality is beginning to bite.
 
In the end, the road to fiscal redemption is a long one and we’ll be on it for many years. But we think the ultimate destination will be smaller government and more manageable deficits than most investors realize.
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DougMacG
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« Reply #387 on: July 07, 2011, 06:04:43 PM »

Twitter question for the President from Iowahawk.  (He did not answer this one.)

"An $8 billion high speed train leaves Chicago for Iowa City at 8:15am at 40mph. Why?"

http://iowahawk.typepad.com/iowahawk/2011/07/questions-so-many-questions.html
Much more at the link!
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G M
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« Reply #388 on: July 07, 2011, 06:29:33 PM »

Twitter question for the President from Iowahawk.  (He did not answer this one.)

"An $8 billion high speed train leaves Chicago for Iowa City at 8:15am at 40mph. Why?"

http://iowahawk.typepad.com/iowahawk/2011/07/questions-so-many-questions.html
Much more at the link!

Iowahawk is a genius!
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Crafty_Dog
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« Reply #389 on: July 09, 2011, 02:47:23 AM »

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President Obama wants Congress to raise the $14.3 trillion national debt limit, which means he needs House Republican votes. Yet Mr. Obama and the Washington chorus are insisting that in return for doing him the favor of voting to raise that limit, Republicans must also do him another favor by raising taxes.

That's the larger political context for the news that House Speaker John Boehner and Mr. Obama have agreed to go for a big bang debt-limit deal that cuts spending and raises taxes far more than everyone expected. The target is now said to be $4 trillion over 10 years, though that's far less important than the details, which are still murky.

But we're told that the essence of the deal is that Mr. Obama is willing to put larger cuts in Medicare and Social Security and the promise of tax reform on the table, if Mr. Boehner agrees to let the current tax rates on capital gains, dividends and the top two tax brackets expire after 2012.

We can't fault Mr. Boehner for trying, and his arguments for doing so carry some weight. The thinking is that cuts in entitlements must be done on a bipartisan basis, Mr. Obama has incentive to deal to shed his big-spending reputation, and even if Republicans win Congress and the White House in 2012 they won't be able to do much against united Democrats. The Speaker thinks that if he can get Mr. Obama's consent now to put spending on a downward path to 19% of GDP over time (from 24% or so), it is worth moving on taxes.

View Full Image

Reuters
We trust Mr. Boehner also realizes this is a high-risk game for the economy and his House majority. Especially risky is his willingness to "decouple" the Bush tax rates for the middle class and upper incomes. The White House is insisting that as part of any deal the current tax rates on the middle class—the child tax credit, etc.—would be made permanent, while the lower rates on capital gains, dividends and the higher income brackets would expire after 2012. Taken by itself this would be a tax increase pure and simple and violate the GOP's campaign pledge.

But here's what we're told is Mr. Boehner's political kicker: The proposed deal would also include some kind of "trigger" device, so far undefined, that would compel House and Senate negotiators to complete tax reform discussions over the next several months. We're told the White House has said it is open in principle to a top rate of 35% on individuals and something like 26% or 27% on corporations—in return for closing various loopholes.

More troubling than these details is the staggered timing. Republicans would be putting their fingerprints on a tax increase in return for spending cuts as a first order of business, which would raise the dividend and top income tax rates to 39.6% (from 35%), or 41% if you include the phase-out of deductions. (Plus the 3.8% payroll tax hike baked into ObamaCare.) Only then would Mr. Obama and the Democrats negotiate the details of tax reform and lower overall rates.

But why at that point would Democrats want tax reform? They'd have achieved their main political goals of a huge debt-reduction deal, getting GOP cover for a tax increase, and putting Republicans cross-wise with the tea party. Raising tax rates first also makes the math of tax reform that much harder to negotiate on both revenue and income-distribution grounds. Under the Beltway's scoring rules, cutting rates would look like an even bigger gain for higher-income folks and an even bigger revenue loss for the Treasury.

In other words, Mr. Boehner would make his ultimate goal—tax reform—that much more difficult to achieve politically. And that's assuming the entitlement cuts he gets are genuine—not merely cuts to doctors or hospitals that won't happen in practice. It also assumes that the "trigger" for tax reform is strong enough to override liberal obstruction in the Senate. We'll see a unicorn first.

Meantime, such a deal would signal that tax rates are more likely to rise in 2013, which won't help the listless economy. Only yesterday, in response to the June 9.2% jobless rate, Mr. Obama called for an extension of this year's payroll tax cut. So he wants to increase the deficit by extending a payroll tax cut that has coincided with higher joblessness, while raising other taxes in a way that would reduce investment that would create jobs. Republicans who embrace this logic deserve the tea party's disdain.

***
Tax reform is a worthwhile policy goal, and Mr. Boehner is right to pursue it. But the only way he can avoid being taken for a ride by Democrats is if all parts of any deal are negotiated, voted on and then implemented immediately. Two men, one deal, once. Promises of future action aren't credible.

Even if Mr. Obama is sincere on tax reform, he can't guarantee he can deliver Senate Democrats who are desperate to keep their majority in 2012, much less Nancy Pelosi. We're told that in Thursday's White House meeting, Mr. Obama promised to veto any short-term debt-limit deal to give the two sides more time to negotiate. If that's true, then the President isn't serious. It means he is using the pressure of the August 2 deadline to bull-rush Mr. Boehner into a bad deal.

If Mr. Obama is sincere about a long-term spending and tax reform agreement, he'll take the time to get it right. If he insists on issuing ultimatums, then House Republicans would be better off passing a debt-limit ceiling for a few months with comparable spending cuts and letting Senate Democrats do the same. Mr. Boehner shouldn't bet his majority on Mr. Obama's promises.
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« Reply #390 on: July 09, 2011, 12:35:15 PM »


"We are voting on the budget today. It’s a sad state of affairs, we just voted to increase the debt limit. The U.S. total debt at this point exceeds eight trillion dollars. That’s eight trillion with a “t”. So we’ve got to get our fiscal house in order here in Washington. I’m not sure it’s going to happen under the current leadership in Congress. But we’re going to see what kind of difference we can make. To make sure that veterans programs, student loan programs, low income housing assistance programs, homeland security dollars, are receiving the highest priority , not just tax cuts for the wealthiest .1% of the population."
 
This little lecture, remember, came after the Senator had the political fortitude to vote against the debt limit increase.
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DougMacG
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« Reply #391 on: July 09, 2011, 01:06:10 PM »

The junior senator from Illinois, I would guess...

Obama: "The U.S. total debt at this point exceeds eight trillion dollars. That’s eight trillion with a “t”."

No, Senator, that would now be fourteen trillion with an 'F'.

Mentioned previously but I strongly believe that Obama in particular and Dems in general are getting a free pass for their part in bad governance and direction in the 2 years prior to his Presidency.  Everybody knew then that power had shifted and the lame duck became totally inconsequential on all matters domestic.  Debt was 8 trillion and unemployment was 4.4%!  THAT was the mess Republicans left when Obama et al took power.  Welfare rights advocates were empowered and investors were preparing to head for the hills.  Whatever the jobs program was before these guys came in is hope and change we are looking for.
-----
http://money.cnn.com/2006/11/03/news/economy/jobs_october/
Unemployment sinks to 5-year low
Rate posts unexpected drop to lowest since May 2001; job growth revised higher.
By Chris Isidore, CNNMoney.com senior writer
November 3 2006

NEW YORK (CNNMoney.com) -- The unemployment rate fell to the lowest level in more than five years in October, the government reported Friday, a sign of unexpected strength in the job market.  The jobless rate sank to 4.4 percent from 4.6 percent in September, the Labor Department said. It was the lowest since May 2001.
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G M
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« Reply #392 on: July 09, 2011, 03:53:01 PM »

Winnah! grin
The junior senator from Illinois, I would guess...

Obama: "The U.S. total debt at this point exceeds eight trillion dollars. That’s eight trillion with a “t”."

No, Senator, that would now be fourteen trillion with an 'F'.

Mentioned previously but I strongly believe that Obama in particular and Dems in general are getting a free pass for their part in bad governance and direction in the 2 years prior to his Presidency.  Everybody knew then that power had shifted and the lame duck became totally inconsequential on all matters domestic.  Debt was 8 trillion and unemployment was 4.4%!  THAT was the mess Republicans left when Obama et al took power.  Welfare rights advocates were empowered and investors were preparing to head for the hills.  Whatever the jobs program was before these guys came in is hope and change we are looking for.
-----
http://money.cnn.com/2006/11/03/news/economy/jobs_october/
Unemployment sinks to 5-year low
Rate posts unexpected drop to lowest since May 2001; job growth revised higher.
By Chris Isidore, CNNMoney.com senior writer
November 3 2006

NEW YORK (CNNMoney.com) -- The unemployment rate fell to the lowest level in more than five years in October, the government reported Friday, a sign of unexpected strength in the job market.  The jobless rate sank to 4.4 percent from 4.6 percent in September, the Labor Department said. It was the lowest since May 2001.


http://www.verumserum.com/?p=26815

Obama on 2006 Debt Limit Increase (to $8T): “We’ve Got to Get our Fiscal House in Order…Not Sure It’s Going to Happen Under Current Leadership”

Morgen on July 8, 2011 at 6:30 am

From a March 16, 2006 podcast on then Senator Obama’s congressional web site: (click to play)
 
Flashback: Obama on Debt Ceiling Increase in 2006
 

We are voting on the budget today. It’s a sad state of affairs, we just voted to increase the debt limit. The U.S. total debt at this point exceeds eight trillion dollars. That’s eight trillion with a “t”. So we’ve got to get our fiscal house in order here in Washington. I’m not sure it’s going to happen under the current leadership in Congress. But we’re going to see what kind of difference we can make. To make sure that veterans programs, student loan programs, low income housing assistance programs, homeland security dollars, are receiving the highest priority , not just tax cuts for the wealthiest .1% of the population.
 
This little lecture, remember, came after the Senator had the political fortitude to vote against the debt limit increase.  Six trillion dollars in deficit spending later, after 2-1/2 years as president, and 4 years of majority rule in Congress by his party, Barack Obama is once again trying to portray himself as the adult in the room in dealing with the current debt limit crisis. He shouldn’t be allowed to get away with this. Because America has had the opportunity to see what kind of difference he and his party have made, and it has been utterly disastrous.
 
He told us exactly what his priorities were, but too few were paying attention. It was always spending – and more spending. To the spending “priorities” he listed above we can add: government healthcare, auto industry bailouts, public sector unions, green jobs, Fannie/Freddie, wine trains, robotic bees, and apparently even guns for Mexican cartels. Billions upon billions of dollars of net new spending for virtually no lasting economic benefit, and at a price tag of nearly $4 trillion in additional debt just since he entered office.
 
It is a sad state of affairs, and its preposterous that the person chiefly responsible for this explosion in deficit spending should have any credibility in crafting the solution. It’s even sadder that a genuine debt reduction plan is not even being discussed. At best it looks like there may be a deal for a $4 trillion reduction in the total amount of deficit spending over the next decade, which means we are still likely to add at least another $6-8 trillion in additional debt over this period.
 
At some point this profligate spending simply has to end. Hopefully with the election of a more responsible Administration next year, but it seems increasingly likely that its going to take another serious financial crisis to force a solution.
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Crafty_Dog
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« Reply #393 on: July 11, 2011, 03:06:59 PM »


So the fondest Washington hopes for a grand debt-limit deal have broken down over taxes. House Speaker John Boehner said late Saturday that he couldn't move ahead with a $4 trillion deal because President Obama was insisting on a $1 trillion tax increase, and the White House quickly denounced House Republicans for scuttling debt reduction and preventing "the very wealthiest and special interests from paying their fair share."

How dare Republicans not agree to break their campaign promises and raise taxes when the jobless rate is 9.2% and President Obama's economic recovery is in jeopardy?

Related Video

 
Senior Economics Writer Steve Moore maps out the potential agreement for raising the debt ceiling.

We think Mr. Boehner is making the sensible choice. No one wants to reform the tax code more than we do, but passing a $1 trillion tax increase first on the promise of tax reform later is a political trap. If the President were really sincere about reform and a willingness to keep the top tax rate at or below 35%, he'd negotiate that at the same time he does a debt deal. Mr. Boehner will have a hard enough time getting any debt-limit increase through the House, much less one that raises tax rates.

Keep in mind that Mr. Obama has already signed the largest tax increase since 1993. While everyone focuses on the Bush tax rates that expire after 2012, other tax increases are already set to hit the economy thanks to the 2010 Affordable Care Act. As a refresher, here's a non-exhaustive list of ObamaCare's tax increases:

• Starting in 2013, the bill adds an additional 0.9% to the 2.9% Medicare tax for singles who earn more than $200,000 and couples making more than $250,000.

• For first time, the bill also applies Medicare's 2.9% payroll tax rate to investment income, including dividends, interest income and capital gains. Added to the 0.9% payroll surcharge, that means a 3.8-percentage point tax hike on "the rich." Oh, and these new taxes aren't indexed for inflation, so many middle-class families will soon be considered rich and pay the surcharge as their incomes rise past $250,000 due to tax-bracket creep. Remember how the Alternative Minimum Tax was supposed to apply only to a handful of millionaires?

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Associated Press
House Speaker John Boehner

Taxpayer cost over 10 years: $210 billion.

• Also starting in 2013 is a 2.3% excise tax on medical device manufacturers and importers. That's estimated to raise $20 billion.

• Already underway this year is the new annual fee on "branded" drug makers and importers, which will raise $27 billion.

• Another $15.2 billion will come from raising the floor on allowable medical deductions to 10% of adjusted gross income from 7.5%.

• Starting in 2018, the bill imposes a whopping 40% "excise tax" on high-cost health insurance plans. Though it only applies to two years in the 2010-2019 window of ObamaCare's original budget score, this tax would still raise $32 billion—and much more in future years.

• And don't forget a new annual fee on health insurance providers starting in 2014 and estimated to raise $60 billion. This tax, like many others on this list, will be passed along to consumers in higher health-care costs.


There are numerous other new taxes in the bill, all adding up to some $438 billion in new revenue over 10 years. But even that is understated because by 2019 the annual revenue increase is nearly $90 billion, or $900 billion in the 10 years after that. Yet Mr. Obama wants to add another $1 trillion in new taxes on top of this.

The economic ironies are also, well, rich. Mr. Obama is now pushing to reduce the payroll tax by two-percentage points for another year to boost the economy, but he's already built in a big increase in that same payroll tax for 2013. So if a payroll tax cut creates jobs this year, why doesn't a payroll tax increase destroy jobs after 2013?

Mr. Obama is also touting spending cuts he's willing to make in entitlements in return for bigger tax increases, yet the spending increases built into ObamaCare aren't even up for discussion in the debt-limit talks. The Affordable Care Act adds more than 30 million more Americans onto Medicaid's rolls, when that program is already growing by 6.5% this year. So Mr. Obama is willing to cut current entitlements on grounds that they are unaffordable, but he's taken what may be the most expensive entitlement off the table.

We think this was the President's spend-and-tax plan from the very first. Run up spending and debt in the name of stimulus and health-care reform, then count on Wall Street bond holders and the political establishment to browbeat Republicans into paying for it all. He apparently didn't figure on the rise of the tea party, or 1.9% GDP growth and 9.2% unemployment two years after the recession ended.

Last November Republicans won the House and landslide gains in many states in large part because of the deep unpopularity of the stimulus and ObamaCare. Mr. Boehner has a mandate for spending cuts and repealing the Affordable Care Act. If Republicans instead agree to raise taxes in return for future spending cuts that may or may not happen, they will simply be the tax collectors for Mr. Obama's much expanded entitlement society.
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G M
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« Reply #394 on: July 11, 2011, 04:00:25 PM »

http://pajamasmedia.com/tatler/2011/07/11/video-president-obama-promises-massive-job-killing-taxes-if-re-elected/

Video: President Obama promises ‘massive job killing taxes’ if re-elected

From today’s presser on the debt ceiling debate. Check out how the prez frames the debate over taxes.
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DougMacG
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« Reply #395 on: July 12, 2011, 11:09:42 AM »

We have a shutdown currently at the state level over the exact same issues.  I don't see what is so complicated.  Obama may or may not want tax increases to kill jobs in a bad economy.  Same with our new governor.  Both had every opportunity to travel state to state (or county to county) and make certain that like minded candidates would win House and Senate elections of Nov 2010.

You don't raise taxes (or lower them) without consent of the House, Senate and executive.  1 out of 3, and 2 out of 3 is nothing when 3 out of 3 are required.  Obama should know that; it took all 3 bodies, a temporary 60th votes in the Senate, along with deeming things to be passed that weren't to get Pelosi-you have to pass it to read it-healthcare.

You don't borrow over $14.294 trillion federally under current law without consent of the House, Senate and Executive. Two of three ain't bad is a song not a clause in the constitution.

I suppose you can try to bully your way with the other parties, but why should they support new laws they fundamentally oppose, laws that will guarantee their own political defeat.

The answer to deadlock from our new Dem governor not getting his way should have been live within your means, instead it was total shutdown, the public can be damned.  Shutdown the cash registers at profitable state enterprises, shutdown the tourism department in summer, shutdown the wayside rests - motorists can pee in a bottle, and shutdown the treasured safety net for the disabled.

Obama in the model of Bill Clinton wants the same thing.  Shut it all down, why waste a crisis, blame someone else.  But he is wrong.  His view did not prevail in the last election.  A Republican House does not get to appoint Supreme Court Justices and a Democrat President (alone) does not get to raise taxes, increase debt or spend what does not go through a difficult and contentious congressional budget process.  Grow up and govern.
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DougMacG
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« Reply #396 on: July 12, 2011, 04:28:20 PM »

Obama: "this is not just a matter of Social Security checks. These are veterans checks, these are folks on disability and their checks. There are about 70 million checks that go out."

You don't f-in' suppose that is part of the problem?
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ccp
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« Reply #397 on: July 12, 2011, 04:47:32 PM »

"These are veterans checks, these are folks on disability and their checks"

How about his check?  And the other, Lord knows how many, DC employees - our masters.
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DougMacG
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« Reply #398 on: July 12, 2011, 11:13:48 PM »

Moving this over from cognitive dissonance of Republicans thread.  The ink is barely dry on our discussion and the WSJ has already taken most of it for tomorrow's lead editorial:
"The entitlement state can't be reformed by one house of Congress in one year against a determined President and Senate held by the other party. It requires more than one election."

http://online.wsj.com/article/SB10001424052702303678704576442231815463502.html?mod=WSJ_Opinion_LEADTop

Debt-Limit Harakiri
Mitch McConnell isn't selling out Republicans.

Republican Senate leader Mitch McConnell said yesterday he's concluded that no deal to raise the debt ceiling in return for serious spending restraint is possible with President Obama, and who can blame him? We've never thought the debt ceiling was the best leverage for a showdown over the entitlement state, and now it looks like Mr. Obama is trying to use it as a way to blame the GOP for the lousy economy.

This may have been the President's strategy all along: Take the debt-limit talks behind closed doors, make major spending cuts seem possible in the early days, but then hammer Republicans publicly as the deadline nears for refusing to raise taxes on business and "the rich."

This would explain the President's newly discovered fondness for press conferences, which he has rarely held but now rolls out before negotiating sessions. It would also explain why Mr. Obama's tax demands have escalated as the August 2 deadline nears. Yesterday he played the Grandma Card, telling CBS that seniors may not get their August retirement checks. Next he'll send home the food inspectors and stop paying the troops.

The reality is that Mr. Obama is trying to present Republicans with a Hobson's choice: Either repudiate their campaign pledge by raising taxes, or take the blame for any economic turmoil and government shutdown as the U.S. nears a debt default. In the former case Mr. Obama takes the tax issue off the table and demoralizes the tea party for 2012, and in the latter he makes Republicans share the blame for 9.2% unemployment.

This is the political context in which to understand Mr. McConnell's proposal yesterday to force Mr. Obama to take ownership of any debt-limit increase. If the President still insists on a tax increase, then Republicans will walk away from the talks.

Mr. McConnell would then let the President propose three debt-limit increases adding up to $2.5 trillion over the coming months. Senate Republicans (with Majority Leader Harry Reid's cooperation) would use a convoluted procedure to vote for three resolutions of disapproval on the bills. Mr. Obama could veto the resolutions and 34 Democrats could vote to sustain. The President would get his debt-limit increase, but without Republicans serving as his political wingmen.

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. 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?

Republicans who say they can use the debt limit to force Democrats to agree to a balanced budget amendment are dreaming. Such an amendment won't get the two-thirds vote to pass the Senate, but it would give every Democrat running for re-election next year a chance to vote for it and claim to be a fiscal conservative.

We agree with those who say that Treasury Secretary Tim Geithner can cut other federal spending before he allows a technical default on U.S. debt. No doubt that is what he will do. We'd even support a showdown over technical default if we thought it might yield some major government reforms. But Mr. Obama clearly has no such intention.

Instead he and Mr. Geithner will gradually shut down government services, the more painful the better. The polls that now find that voters oppose a debt-limit increase will turn on a dime when Americans start learning that they won't get Social Security checks. Republicans will then run like they're fleeing the Pamplona bulls, and chaotic retreats are the ugliest kind. By then they might end up having to vote for a debt-limit increase and a tax increase.

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 entitlement state can't be reformed by one house of Congress in one year against a determined President and Senate held by the other party. It requires more than one election. The Obama Democrats have staged a spending blowout to 24% of GDP and rising, and now they want to find a way to finance it to make it permanent. Those are the real stakes of 2012.

Even if Mr. Obama gets his debt-limit increase without any spending cuts, he will pay a price for the privilege. He'll have reinforced his well-earned reputation as a spender with no modern peer. He'll own the record deficits and fast-rising debt. And he'll own the U.S. credit-rating downgrade to AA if Standard & Poor's so decides.

We'd far prefer a bipartisan deal to cut spending and reform entitlements without a tax increase. But if Mr. Obama won't go along, there's no reason Republicans should help him dodge the political consequences by committing debt-limit harakiri.
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Crafty_Dog
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« Reply #399 on: July 13, 2011, 02:28:52 AM »

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