Parsing the Republican Shutdown Message

Spoiler Alert: This article is written from a progressive point of view. I’m not going to try to defend Republican points of view. Only trying to provide some insight into why these talking points are frustrating for those with a progressive point of view. These Republican talking points are clearly designed to do two things. The first is to provide Republicans and their supporters a defensible position. The second is to irritate those who disagree with them. I realize that going through this exercise validates that Republicans are accomplishing their second goal.

I’m not going to spend any time doing a similar analysis of the Democratic view because in general I’m in agreement with it. The Democratic position will be reflected in my responses to the Republican position.

Republican talking points were provided by Cathy McMorris Rodgers of Washington, who chairs the House Republican Conference, in an NPR interview with Audie Cornish.

CORNISH: Earlier today, I spoke with Republican Congresswoman Cathy McMorris Rodgers of Washington State. She’s chair of the House Republican Conference. I asked her what she thought of Obama’s statement about a clean spending bill and if it had bipartisan support, why shouldn’t it be brought before the House for an up or down vote.

REPRESENTATIVE CATHY MCMORRIS RODGERS: Because it doesn’t solve the problem and it doesn’t address the concerns that are on people’s minds. The only thing that is keeping us in this shutdown is the refusal of the Senate Democrats, the president, to come to the negotiation table.

ME: The Republicans have tried to blame Democrats for their unwillingness to negotiation. They fail, however, to state the terms of the negotiation. The terms are stark. In return for funding the government, the Republicans are asking the Democrats to adopt large planks of the 2012 Republican platform which voters rejected in 2012. So what exactly are the Republicans willing to offer in return for Democrats giving up part of the agenda that voters endorsed in 2012? They are offering to allow the government to continue to operate.

The Democrats are not saying that they won’t negotiate. What they are saying is that they will not negotiate on the terms that the Republican put forward. Obama, Reid, and Pelosi have said that there will be NO negotiations until Republicans change the terms of the negotiation by passing the CR to fund the government. This is an important political point because if the minority party IS able to extort something from the majority party without giving up anything more than allowing the government to operate; this tactic will be used again by both Republicans and Democrats.

CORNISH: And you said it doesn’t solve the problem. What did you mean by that?

RODGERS: Because it doesn’t solve the problem that we hear from people that we represent all across this country and those are the concerns of out-of-control spending, the record deficits, the economy, the fact that this economy continues to be sluggish. It doesn’t address the concerns over healthcare. I would say that the overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.

CORNISH: But repeatedly this week, we’ve seen polls from CNN, the National Journal, Quinnipiac yesterday saying that by a margin of 72 to 22 percent, voters don’t want Congress shutting down the federal government to block implementation of the Affordable Care Act. They don’t want those two things linked.

RODGERS: The Republicans don’t want to shut down the government and what you’ve seen us doing…

CORNISH: No. I didn’t say shut down the government, but linking Affordable Care to the continuing resolution. That’s what people don’t want.

ME: Audie Cornish challenged Rodgers specifically on her claim that an “overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.” Rather than engage on this point, you’ll see that Representative Rodgers pivots away from her deception. Yet this deception is at core of Republican justifications for their actions. They claim that they are the ones representing the majority interests of the American people. While it is true that the country is deeply split on Obamacare, it is also true that a large majority of the country opposes shutting the government down as a tactic to delay or change Obamacare.

RODGERS: We need to get to the table. We need to negotiate and that is what we’ve been asking for from the House is for the Senate to come to the table, for the president to come to the table. The Republicans are working hard every day to open up the government. Yesterday, we voted on the legislation to open up our national parks, as well as fund NIH.

We need to start taking these steps and it’s a way where we can come to the table, start finding some common ground and hopefully it will build so that we can address these larger issues related to spending, as well as address the concerns that people have over this healthcare law. And the only message that we’ve gotten from the president is that he’s not willing to negotiate but that’s not a way forward.

CORNISH: Do you dispute his argument that there are the votes in the party for a clean resolution to pass?

ME: What Representative Rodgers pivots to is her other talking point that the government shutdown could be easily resolved by Democrats if they would just come to the table.

What Republicans are asking for in this request for negotiation is validation of this shutdown tactic. By using this term “come to the table”, she is suggesting that Democrats aren’t willing to negotiate because they don’t want to give anything up. That’s not true. The Democrats are saying that the very act of coming to the table while the government is being held hostage validates this tactic. What are Republicans going to be willing to give up in order to START negotiations which balances what they are asking the Democrats to give up?

The Democratic response has been, if you are sincere about wanting to negotiate, you have to be willing to bring something to the table. That “something” is a short-term CR to operate the government while both sides negotiate. In other words, you don’t get a validation of this tactic for free.

BTW, some might suggest that this shutdown tactic in the House is no different than the filibuster rule that exists in the Senate. That filibuster rule gives the minority an opportunity to force the Senate to come up with 60 Senators in favor of cutting off debate in order to pass a bill rather than the normal 51. The difference is that this shutdown tactic is being applied to a LAW, not a bill. It is attempting repeal or amend a law without coming up with the votes otherwise required to do so under normal legislative procedures.

RODGERS: What I see is that the Republicans are united in the House. We’re united in this effort to get this negotiation done between the House and the Senate and the president and we believe that needs to happen.

CORNISH: So despite those calls from Republicans this week to have that up or down vote on a spending bill, you’re saying you’re united.

ME: Audie Cornish again catches Rep. Rodgers in another misleading statement. There are plenty of reports from Republican Representatives that if a clean CR came up in House today, it would pass. If that’s true, it undermines Ms. Rodgers claim that the only ones standing in the way of ending this government shutdown are Senate Democrats and the President. It also undermines her claim that House Republicans are simply doing the will of the people. Instead Rep. Rodgers pivots away from this discussion and points to the fact that Republicans have passed a whole set of mini-CR’s to fund the parts of the government that are most popular. The point of this plan is an attempt to focus attention away from the pain that the shutdown is causing and instead support the false premise that it is all the fault of the Democrats.

RODGERS: We are united. We have voted on numerous spending bills to keep the government open and that’s going to remain our commitment. We’re going to continue to work every day to get this government open as much as we possibly can.

ME: The Democrats are certainly not blameless in this episode. They baited Republicans into this tactic in order to avoid a much more serious debt default. That said, the Democrats are also accurate when they say that this represents the actions of a minority in the Republican Party and a minority of voters in general. They are also accurate in saying that this particular tactic undermines the normal democratic process and if successful, will change the way that government works going forward.

For those who want to keep track of individual issues in this ongoing media war, Politifact has a good list.

They include:

“The American people support defunding Obamacare and oppose shutting down the government,” said U.S. Sen. Marco Rubio, R-Fla. Mostly False.

“The United States Senate — Democrats and Republicans — acted responsibly by voting to keep our government open,” said President Barack Obama. Mostly False.

“Today, the House of Representatives did what Washington pundits only a few weeks ago said was impossible: a strong bipartisan majority voted to defund Obamacare,” U.S. Rep. Ted Cruz, R-Texas. False.

The shutdown is projected to result in “$10 billion in costs to the economy per week, said U.S. Rep. Debbie Wasserman Schultz, D-Weston, and chair of the Democratic National Committee. Mostly True.

“Obamacare is an entitlement like Medicare and Social Security is, and so the entitlement carries on even under a government shutdown scenario, said U.S. Rep. Paul Ryan, R-Wis., who is also the House budget chairman. Mostly True.

So now we wait while both parties try to get their message out and rally public support. Boehner is the key. If the number of Republicans in the house willing to vote for a clean CR continues to grow, Boehner will be forced to act. Then it just becomes what sort of face saving maneuver he is going to be able to negotiate with the Democrats. One option is going to be to blame this whole thing on Ted Cruz. We’ll see how that goes.

34 Responses to “Parsing the Republican Shutdown Message”

  1. keith says:

    Jeff,
    Nice pre-amble!!!!

    All I can hope for is they´re gonna get a two fer deal. Two for the price of one.. Hopefully it includes tax reform, entitlement reform, and a promise to delay the individual mandate and change/clean up the ACA…

  2. keith says:

    …..and we´re in the second term. now the pres get thrown under the bus by those who have to make themselves legitmate again… he´s at 41% now in the lastest gallup… maybe he can get lower then bush????

    NYT reporter: Obama admin “most closed, control-freak administration I’ve ever covered”

    posted at 1:01 pm on October 5, 2013 by Ed Morrissey

    Remember when the media rushed to talk about transparency in the Barack Obama “Hope and Change” era? Good times, good times. Leonard Downie, who once worked as the executive editor of the Washington Post and wrote a novel about Washington corruption and the Iraq War, finds a bigger and non-fictional problem in the successor to George W. Bush. Downie gives the Post a preview of his report from the Committee to Protect Journalists which outlines the Obama war on reporters and their sources:

    “A memo went out from the chief of staff a year ago to White House employees and the intelligence agencies that told people to freeze and retain any e-mail, and presumably phone logs, of communications with me,” Sanger said. As a result, longtime sources no longer talk to him. “They tell me: ‘David, I love you, but don’t e-mail me. Let’s don’t chat until this blows over.’ ”

    Sanger, who has worked for the Times in Washington for two decades, said, “This is most closed, control-freak administration I’ve ever covered.”

    Many leak investigations include lie-detector tests for government officials with access to the information at issue. “Reporters are interviewing sources through intermediaries now,” Barr told me, “so the sources can truthfully answer on polygraphs that they didn’t talk to reporters.”

    The investigations have been “a kind of slap in the face” for reporters and their sources, said Smith of the Center for Public Integrity. “It means you have to use extraordinary measures for contacts with officials speaking without authorization.”

    Amusingly, Downie posits this question at the end of the essay:

    Will Obama recognize that all this threatens his often-stated but unfulfilled goal of making government more transparent and accountable? None of the Washington news media veterans I talked to were optimistic.

    “Whenever I’m asked what is the most manipulative and secretive administration I’ve covered, I always say it’s the one in office now,” Bob Schieffer, CBS News anchor and chief Washington correspondent, told me. “Every administration learns from the previous administration. They become more secretive and put tighter clamps on information. This administration exercises more control than George W. Bush’s did, and his before that.”

    Does it even occur to Downie that Obama’s claim to deliver “the most transparent administration ever” (not just incrementally more transparent than before) was simply a load of hogwash? Apparently not — because if Downie and the rest of the Obama-fawning media had to acknowledge that possibility, then they would have to ask themselves why Obama would deliberately set out to make his administration the least transparent ever, as Schieffer acknowledges.

  3. keith says:

    Exchanges Will Raise U.S. Health-Care Costs

    By David Goldhill Oct 6, 2013 7:00 PM GMT-0300

    Ignore the inevitable startup glitches. The new health-insurance exchanges will work just fine — in the sense that all government health-care programs work: Many people will ultimately become dependent on them for coverage. That won’t mean the exchanges have fulfilled their promise, however.

    Forget the superficial comparisons to a commodity exchange, an online retailer or even a bulletin board. The health exchanges won’t resemble any other marketplace. Over time, rather than encourage insurance providers to offer ever more attractive and affordable policies, the exchanges are poised to push up the cost not only of insurance but also of health care itself. That means, if the history of U.S. health-care policy is any guide, the exchanges’ very “success” will have the effect of limiting access to care for the 30 million people who are estimated to remain uninsured.

    Why are things set to go so badly? Because the architects of the health-care exchanges have relied on three crucial assumptions, all of which are probably wrong.

    First, they have assumed that if insurers are prevented from competing on benefit design or on underwriting, they will compete on price. But why should they compete at all?

    Limited Competition

    The exchanges embody what seems like a simple trade: In return for many new customers, insurers accept broad restrictions on their freedom to design and market policies. The biggest requirement is that they agree to insure at the same policy price any and all customers, regardless of their health (with only small formulaic adjustments for age and smoking). From a consumer point of view, that sounds great, and indeed it’s one of the most popular elements of the Affordable Care Act. But from the insurer’s perspective, it courts disaster. With too many sick or high-risk people in its pool an insurer can lose money. So the insurer’s smartest approach is to set premiums high enough to make a profit even if it winds up with a lot of sick beneficiaries.

    Competition among insurers is supposed to counteract this incentive, but the exchanges can perversely limit competition. The same pricing transparency that makes it easy for consumers to shop enables insurers to make sure they don’t charge less than their competitors do. This is how airlines take advantage of their electronic exchanges. It’s not as if insurance is currently a competitive market; even most private companies have trouble getting more than one bid for employee coverage. Rather than compete aggressively for customers, insurers can use exchanges to informally divide the market among themselves at high premiums.

    The designers of the health-care exchanges have also assumed that consumers, by shopping for the best deal, will drive down premiums. However, a major flaw in the design of insurance subsidies will insulate almost all of the initial customers — the estimated 20 million subsidized households — from concern about how much their policies cost.

    Now, it’s not supposed to work this way. Only those Americans who don’t get insurance at work and who have income that puts them between 100 percent (138 percent in Medicaid expansion states) and 400 percent of the federal poverty level are eligible for exchange subsidies. As income rises within this bracket, the subsidy shrinks. But in practical terms, everyone who is subsidized has an infinite subsidy that will make them insensitive to premium levels.

    How can that be? Let’s take an example. A family of four at 138 percent of the poverty level ($32,499) has its premium capped at 3.29 percent of income or $1,071. The rest is subsidy. So, if the cost of a silver plan is $10,000, the subsidy for this family is $8,929. A family at 400 percent of the poverty level ($94,200) has to pay up to 9.5 percent of its income for a plan, or $8,949. So the same $10,000 premium carries a subsidy of only $1,051.

    Insurer’s Perspective

    But now look at those two families from the insurer’s perspective. A $10,000 plan already costs more than the maximum amount either family would pay. If the insurer raises the premium to $10,001, both families get $1 in additional subsidy. If it raises premiums to $11,000, both families get $1,000 in additional subsidy. In other words, no matter how much an insurer raises rates, a subsidized household pays zero more.

    The second-cheapest silver plan is the benchmark for setting subsidies. How can insurers push up premiums artificially on this plan when there are platinum, gold and bronze plans also for sale? Again, easy. By law, these other plans differ from silver primarily by the amount of beneficiary cost-sharing. So the insurer can simply price a silver plan as high as possible, and then adjust the premiums for the other plans accordingly. If these prices end up being too high to attract any actual customers, who cares? Why would an insurer lose the opportunity to share 20 million price-insensitive customers just to compete for a smaller number (the Congressional Budget Office estimates 4 million by 2016) of low-profit price-sensitive ones?

    There’s one more big assumption about the exchanges at work: that the price of health insurance passively mirrors the price of health care. But there’s plenty of evidence that insurance itself can drive up the cost of care — when both insurers and beneficiaries are undisciplined in controlling prices. In what may be the single greatest source of unintended consequences in the Affordable Care Act, insurers are now required to spend at least 80 percent of revenue from premiums on care. Superficially, this means that if they set premiums too high, they will have to eventually refund much of the money that they don’t end up spending on care. But let’s say you’re running an insurance company. You can find ways to spend more money on beneficiaries’ health care — say, with more generous definitions of free preventive care, more expansive rehabilitation services or higher reimbursement rates on doctors’ services — and keep 20 percent of the all money you bring in. Or alternatively, you can spend less on care and give refunds. Easy choice.

    Wrong Incentives

    In the end, we have incentives for insurers not to compete, for customers not to care about price, and for insurers to drive up the cost of care. Not much of a marketplace, is it?

    Of course, it’s still possible that unsubsidized people will flock to the exchanges (especially if many middle-income Americans lose access to coverage at work), rebalancing insurers’ competitive interests. Or that the growing cost-sharing in all insurance will continue to moderate overall demand for services. Or that insurers will figure out clever ways to segregate price-insensitive (subsidized) buyers from price-sensitive ones.

    What’s more likely, though, is that the exchanges will fit into a long pattern of U.S. health-care policy: They will serve a constituency (a policy triumph) while driving up the cost of care (which will be blamed on external factors).

    When Medicare was enacted in 1965, seniors spent about 10 percent of their income on health care and worried about the cost. Today, seniors spend almost double that — about 17 percent of their income — on health care and, of course, still worry about cost. Medicare exceeded its budget projections from day one, and its unlimited-entitlement structure led to an explosion in the volume of care. Nevertheless, the program is hailed as a great success in many corners, and its beneficiaries consider it irreplaceable.

    The new exchanges will undoubtedly also be hailed as a success — no matter how much havoc their perverse incentives cause.

  4. Jeff Beamsley says:

    I hope they make a good deal too, though I doubt it will include any delay in the individual mandate. More likely it will include some changes in the Medical Devices tax and some new taxes to replace that lost revenue.

    More important to the country is that this does not look like any kind of win for Republicans. Dems will win back the house in 2014 and retain the Senate. That plus another potential loss in 2016 will hopefully finally kill off the Tea Party as any sort of viable political power. What Republicans do next is anybody’s guess, but folks like Jeb Bush are waiting in the wings to lead a new centrist party out of the wilderness.

  5. Jeff Beamsley says:

    You need to go back and read Downie’s original article. This guy Morissey just did a right-wing hack job on it. Please don’t post stuff like this from irreputable right-wing hacks.

    Ed Morrissey (born April 3, 1963) is an American conservative blogger, columnist, motivational speaker, and talk show host.[1] He goes by the nickname Captain Ed and he currently lives in the Twin Cities area of Minnesota.[2] He wrote his original blog, “Captain’s Quarters”, from October 2003 to February 2008. He now works full-time as a blogger for Hot Air[1][3] and writes a column for The Week. He also participates in Bloggingheads.tv[4] His opinion articles have appeared in the New York Sun, the New York Post, and the Daily Standard.[1] He is married to the Roman Catholic writer Marcia Morrissey, of Patheos.

    Here are some of the quotes from that article that Morrissey chose not to print.

    Not so now. With the passage of the Patriot Act after the Sept. 11, 2001, terrorist attacks, a vast expansion of intelligence agencies and their powers, the aggressive exploitation of intrusive digital surveillance capabilities, the excessive classification of public documents and officials’ sophisticated control of the news media’s access to the workings of government, journalists who cover national security are facing vast and unprecedented challenges in their efforts to hold the government accountable to its citizens. They find that government officials are increasingly fearful of talking to them, and they worry that their communications with sources can be monitored at any time.

    and

    In addition to ongoing leak investigations, six government employees and two contractors, including fugitive NSA contractor Edward Snowden, have been prosecuted since 2009 under the Espionage Act for providing information to reporters about, among other subjects, the NSA’s communications surveillance, the CIA’s aggressive interrogation of terrorism suspects and, in the case of Army Pvt. Bradley Manning, diplomatic cables and Iraq and Afghanistan war documents.

    Even though they violated laws governing classified information, many of the leakers could be characterized as whistleblowers rather than spies; they publicized actions for which the government should be held accountable. But the Obama administration has drawn a dubious distinction between whistleblowing that reveals bureaucratic waste or fraud, and leaks to the news media about unexamined secret government policies and activities; it punishes the latter as espionage.

    “It was never a conscious decision to bring more of these cases than we ever had,” Matthew Miller, a former spokesman for Attorney General Eric H. Holder Jr., told me. “Some strong cases,” inherited from the Bush administration, “were already in process,” he said.

    “And a number of cases popped up that were easier to prosecute” with “electronic evidence,” including phone and e-mail records. “Before, you needed to have the leaker admit it, which doesn’t happen,” Miller added, “or the reporter to testify about it, which doesn’t happen.”

    Every disclosure to the press of classified information now triggers a leak investigation, said Washington Post national news editor Cameron Barr. “Investigations can be done electronically. They don’t need to compel journalists to reveal sources.”

    The Post’s Justice Department reporter, Sari Horwitz, said a Justice official told her that “access to e-mail, phone records and cellphones make it easier to do now.”

    and

    In response to an uproar from journalists over the secret subpoenas and seizures of phone and e-mail records, the Justice Department somewhat tightened its guidelines for when and how reporters and their records can be subpoenaed. But it kept an exception for disclosures of classified information considered harmful to national security. And while Justice was working with the media on the guideline revisions, it was using the secretly seized AP phone records to identify and convict FBI contractor Sachtleben. In its announcement of his plea agreement, Justice vowed to continue making aggressive use of the national security exception.

    “This prosecution demonstrates our deep resolve to hold accountable anyone who would violate their solemn duty to protect our nation’s secrets and to prevent future, potentially devastating leaks by those who would wantonly ignore their obligations to safeguard classified information,” it stated, adding that, “with these charges, a message has been sent that this type of behavior is completely unacceptable and no person is above the law.”

    Obama and Holder have publicly endorsed a proposed federal shield law that would make it more difficult for the government to compel reporters to reveal sources or turn over records in federal investigations. But it also includes an exception for “classified leak cases when information would prevent or mitigate an act of terrorism or harm to national security,” as decided by a federal judge. In the view of Scott Armstrong, a former Post reporter who is now an independent journalist, the legislation wouldn’t protect national security reporters. “Federal agencies can still investigate us,” he said

    So what is going on?

    The Justice Department IS investigating leaks of data concerning national security issues. They have the right to do this under the Patriot Act originally passed in the Bush administration.

    Leonard Downie Jr wrote a very thought provoking article from the point of view of an investigative reporter on the conflict between the public’s right to know and the administration’s right to protect issues regarding national security. I don’t have good answers here and it IS something that we should be talking about as a country.

    Morissey took this article, ignored the purpose of the article to inform and provoke discussion, and turning it into a right-wing attack on the Obama administration. Nice job.

  6. Jeff Beamsley says:

    Bloomberg published the David Goodhill article in their OPINION section.

    I like David Goodhill. He has a particular point of view regarding the healthcare system and is willing to invest his own time and money to promote that view. He is not running for office. It would be a significant cut in pay for him.

    He is very angry with both the current medical establishment as well as insurance companies because he feels that they killed his father.

    He advocates mandatory accounts into which people would pay a minimum percentage of their income every year. People would receive government coverage for truly catastrophic, unforeseen medical emergencies and procedures, such as those costing more than $50,000. Foreseeable medical procedures, such as pregnancy and end-of-life care, would be paid for from the individual savings accounts. He opposes a single payer system, because he believes it would be influenced by lobbyists.

    There is some libertarianism in his view, but a system like this with government subsidies for those who can’t afford to cover even the $50,000 a year of personal responsibility could work.

    The problem is that it would pretty much eliminate the insurance industry, at least from participating in the medical part of the market.

    If this is something that you support, you should see how you can help him.

    In practical terms, it isn’t going to happen BECAUSE the insurance industry has WAY too much at stake to allow this to every see the light of day.

  7. keith says:

    Parsing the peoples opinion, Obama now at 37%….Will you begin commenting on his poll numbers as you did GW´s?

    As you know I blame them all…
    Also if Obama were at these numbers and ran again he would STILL win…

    News
    U.S.

    Poll: No Heroes In Shutdown, GOP Gets Most Blame

    by The Associated Press

    October 09, 2013 1:19 PM

    WASHINGTON (AP) — President Barack Obama and lawmakers must rise above their incessant bickering and do more to end the partial government shutdown, according to a poll Wednesday that places the brunt of the blame on Republicans but finds no one standing tall in Washington.

    “So frustrating,” Martha Blair, 71, of Kerrville, Texas, said of the fiscal paralysis as her scheduled national parks vacation sits in limbo. “Somebody needs to jerk those guys together to get a solution, instead of just saying ‘no.’”

    The Associated Press-GfK survey affirms expectations by many in Washington — Republicans among them — that the GOP may end up taking the biggest hit in public opinion from the shutdown, as happened when much of the government closed 17 years ago. But the situation is fluid nine days into the shutdown and there’s plenty of disdain to go around.

    Overall, 62 percent mainly blamed Republicans for the shutdown. About half said Obama or the Democrats in Congress bear much responsibility.

    Most Americans consider the shutdown a serious problem for the country, the poll finds, though more than four in five have felt no personal effect. For those who have, thwarted vacations and a honeymoon at shuttered national parks, difficulty getting work done without federal contacts on the job and hitches in government benefits were among the complaints.

    Asked if she blamed Obama, House Republicans, Senate Democrats or the tea party for the shutdown, Blair, an independent, said yes, you bet. All of them. She’s paid to fly with a group to four national parks in Arizona and California next month and says she can’t get her money back or reschedule if the parks remain closed. “I’m concerned,” she said, “but it seems kind of trivial to people who are being shut out of work.”

    The poll found that the tea party is more than a gang of malcontents in the political landscape, as its supporters in Congress have been portrayed by Democrats. Rather, it’s a sizable — and divisive — force among Republicans. More than 4 in 10 Republicans identified with the tea party and were more apt than other Republicans to insist that their leaders hold firm in the standoff over reopening government and avoiding a default of the nation’s debt in coming weeks.

    Most Americans disapprove of the way Obama is handling his job, the poll suggests, with 53 percent unhappy with his performance and 37 percent approving of it. Congress is scraping rock bottom, with a ghastly approval rating of 5 percent.

    Indeed, anyone making headlines in the dispute has earned poor marks for his or her trouble, whether it’s Democrat Harry Reid, the Senate majority leader, or Republican John Boehner, the House speaker, both with a favorability rating of 18 percent.

    And much of the country draws a blank on Republican Ted Cruz of Texas despite his 21-hour Senate speech before the shutdown. Only half in the poll were familiar enough with him to register an opinion. Among those who did, 32 percent viewed him unfavorably, 16 percent favorably.

    Comparisons could not be drawn conclusively with how people viewed leaders before the shutdown because the poll was conducted online, while previous AP-GfK surveys were done by telephone. Some changes may be due to the new methodology, not shifts in opinion. The poll provides a snapshot of public opinion starting in the third day of the shutdown.

    The poll comes with both sides dug in and trading blame while an unprecedented national default approaches if nothing is done to raise the debt limit. Obama plans to invite Republican lawmakers to the White House and meet senators of both parties in coming days. His meeting with congressional leaders last week produced no results. Obama is insisting Republicans reopen government and avert default before any negotiations on deficit reduction or his 2010 health care law are held.

    Among the survey’s findings:

    — Sixty-eight percent said the shutdown is a major problem for the country, including majorities of Republicans (58 percent), Democrats (82 percent) and independents (57 percent).

    — Fifty-two percent said Obama is not doing enough to cooperate with Republicans to end the shutdown; 63 percent say Republicans aren’t doing enough to cooperate with him.

    — Republicans are split on just how much cooperation they want. Among those who do not back the tea party, fully 48 percent say their party should be doing more with Obama to find a solution. But only 15 percent of tea-party Republicans want that outreach. The vast majority of them say GOP leaders are doing what they should with the president, or should do even less with him.

    — People seem conflicted or confused about the showdown over the debt limit. Six in 10 predict an economic crisis if the government’s ability to borrow isn’t renewed later this month with an increase in the debt limit — an expectation widely shared by economists. Yet only 30 percent say they support raising the limit; 46 percent were neutral on the question.

    In Mount Prospect, Ill., Barbara Olpinski, 51, a Republican who blames Obama and both parties for the shutdown, said her family is already seeing an impact and that will worsen if the impasse goes on. She’s an in-home elderly care director, her daughter is a physician’s assistant at a rural clinic that treats patients who rely on government coverage, and her husband is a doctor who can’t get flu vaccines for patients on public assistance because deliveries have stopped.

    “People don’t know how they are going to pay for things, and what will be covered,” she said. “Everybody is kind of like holding their wallets.”

    The AP-GfK Poll was conducted Oct. 3-7 and involved online interviews with 1,227 adults. The survey has a margin of sampling error of plus or minus 3.4 percentage points for all respondents.

    The survey used GfK’s KnowledgePanel, a probability-based Internet panel designed to be representative of the U.S. population. Respondents to the survey were first selected randomly using phone or mail survey methods, and were later interviewed for this survey online. People selected for KnowledgePanel who didn’t have online access were given that access at no cost to them.

  8. keith says:

    Jeff,
    So when ever you read a progressive or Obama talk about our debt payments, please refer them to the echo chambre. The only way we default on our debt is if Obama chooses too. I think this would be better then the suquester. If will FORCE those guys in DC to actually make choices!!! Lets see how long it would take them to make entitlement reform then…. Just think with me there friend…

    Moody’s offers different view on debt limit

    One of the nation’s top credit-rating agencies says that the U.S. Treasury Department is likely to continue paying interest on the government’s debt even if Congress fails to lift the limit on borrowing next week, preserving the nation’s sterling AAA credit rating.

    In a memo being circulated on Capitol Hill Wednesday, Moody’s Investors Service offers “answers to frequently asked questions” about the government shutdown, now in its second week, and the federal debt limit. President Obama has said that, unless Congress acts to raise the $16.7 trillion limit by next Thursday, the nation will be at risk of default.

    Not so, Moody’s says in the memo dated Oct. 7.

    ” We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” the memo says. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.

    The memo offers a starkly different view of the consequences of congressional inaction on the debt limit than is held by the White House, many policymakers and other financial analysts. During a press conference at the White House Tuesday, Obama said missing the Oct. 17 deadline would invite “economic chaos.”

    The Moody’s memo goes on to argue that the situation is actually much less serious than in 2011, when the nation last faced a pitched battle over the debt limit.

    “The budget deficit was considerably larger in 2011 than it is currently, so the magnitude of the necessary spending cuts needed after 17 October is lower now than it was then,” the memo says.

    Treasury Department officials did not immediately respond to requests for comment.

  9. keith says:

    D.C. mayor Gray confronts Reid on Capitol steps over shutdown’s impact on city

    (Melina Mara/ The Washington Post ) – Mayor Vincent Gray, with Senate Majority Leader Harry Reid, stands among U.S. senators in front of the Capitol building on Wednesday.

    (Melina Mara/ The Washington Post ) – Mayor Vincent Gray, with Senate Majority Leader Harry Reid, stands among U.S. senators in front of the Capitol building on Wednesday.
    (Mike DeBonis/ The Washington Post ) – D.C. Mayor Vincent C. Gray stands as Senate Majority Leader Harry Reid concludes a news conference on the East Senate steps of the Capitol on Wednesday.

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    Jeff,
    If politics are theater, it´s never good for your side, the guys in the dark hats, when Harry comes on stage, it´s even worse when he takes center stage…

    By Mike DeBonis and Ed O’Keefe, Wednesday, October 9, 2:39 PM E-mail the writer

    An unusual confrontation took place on the U.S. Capitol steps Wednesday when District Mayor Vincent C. Gray crashed a news conference held by Senate Democrats and asked Majority Leader Harry Reid to exempt the city from the ongoing shutdown.

    “Sir, we are not a department of the government,” Gray told Reid moments after the mayor concluded his own press event about 50 yards from where Reid held one. “We’re simply trying to be able to spend our own money.”

    Republicans hope that passing indivudual spending bills will ease pressure on them to end shutdown.

    SEP 27

    Get the latest news on the budget fight and a possible government shutdown in this daily newsletter.

    “I’m on your side, don’t screw it up, okay? Don’t screw it up,” Reid (Nev.) told his fellow Democrat.

    The intraparty tension comes after the Republican-controlled House voted last week to pass a bill allowing the District to use its locally raised tax funds to maintain operations until Dec. 15. But Democrats, including Reid and President Obama, have held fast in opposition to piecemeal funding bills, saying Republicans must come to a deal to fund the entire government, not just favored segments.

    The District government has tapped a $144 million contingency cash reserve fund to keep its 32,000 employees on the job since the federal shutdown took effect Oct. 1. But the city has frozen many of its outgoing payments in order to conserve the contingency account, which is expected to be exhausted sometime next week.

    At their own news conference on the Capitol grounds Wednesday, Gray and Del. Eleanor Holmes Norton (D) highlighted the partisan contradictions while detailing the drastic effect of the cash crunch on the District government — including schools, health care, services for the disabled and senior programs.

    “Democrats, at this critical moment, have abandoned their long-held principles,” Norton said, calling it “shameful … to hold the city’s local funds hostage to make a federal point.”

    In a particular jab at Democrats, the event featured remarks from Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, who called on Reid and his allies to pass a D.C. funding bill — and at one point alluded to a favored bit of tea party rhetoric.

    “I cannot help but notice your license plates say ‘No Taxation Without Representation,’” Issa said. “Perhaps they should say, ‘Federal government, don’t tread on me,’ instead.”

    Gray thanked Issa for his support and told a supportive crowd of hundreds to push Democrats to “act now” on a D.C. funding bill. As soon as the event wrapped up, Gray walked over to the separate event being held by Senate Democrats on the east steps of the U.S. Capitol.

    Gray cut his way through a bank of TV cameras and walked up to Reid and began speaking with him as senators from Maryland and Virginia explained to reporters the economic hardship facing the two states bordering the nation’s capital.

    Sens. Benjamin Cardin (D-Md.) and Timothy Kaine (D-Va.), in particular, had to raise their voices as they spoke in order to be heard over ralliers who had attended Gray’s event and then turned their attention towards the senators, yelling chants of “Free D.C.”

    Reid (D-Nev.) took questions from reporters, including a question about whether the Senate would vote on a D.C. funding measure.

    “Talk to the Republicans, they’re the ones objecting,” Reid said.

    With cameras rolling, Gray stood a few paces to Reid’s right, staring at the Senate leader. As the news conference concluded and Reid began to walk back into the U.S. Capitol, Gray approached the Senate leader again and made the remarks, prompting the “don’t screw it up” comment.

    Local television reporters began shouting at Reid: “What does ‘don’t screw it up’ mean?”

    Reid ignored the questions and walked away surrounded by aides and security guards, at one point telling reporters that “of course” he supports giving the District the budgetary flexibility needed to continue operating during the partial shutdown.

    Norton left a few minutes later after being approached by Sen. Mary Landrieu (D-La.), who was heard telling her “we’ve got your back.”

    After Reid left the steps, Gray got into a heated exchange with Sen. Barbara Boxer (D-Calif.), who attempted to explain the Hill Democrats’ position to the mayor. “We’ve got to open up this government for all the good people, in D.C., Maryland, Virginia,” she said.

    Gray replied to Boxer: “We’re just asking to spend our own money — our own money, not the federal money.”

  10. keith says:

    Jeff,
    Im almost done with my assignment in Brazil and I´m feeling nostolgic. So I thought i would revisit a speech from the past. Here is a portion of it. Enjoy

    The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is ‘‘trillion’’ with a ‘‘T.’’ That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.

    Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

    I therefore intend to oppose the effort to increase America’s debt limit.

  11. keith says:

    Jeff,
    Here´s the full Speech from the floor of the house.
    How would a young JR Repub senator be viewed making these remarks today? Is this any diferent then Ted Cruz for that matter?

    Mr. OBAMA. Mr. President, I rise
    today to talk about America’s debt
    problem.
    The fact that we are here today to
    debate raising America’s debt limit is a
    sign of leadership failure. It is a sign
    that the U.S. Government can’t pay its
    own bills. It is a sign that we now depend
    on ongoing financial assistance
    from foreign countries to finance our
    Government’s reckless fiscal policies.
    Over the past 5 years, our federal
    debt has increased by $3.5 trillion to
    $8.6 trillion. That is ‘‘trillion’’ with a
    ‘‘T.’’ That is money that we have borrowed
    from the Social Security trust
    fund, borrowed from China and Japan,
    borrowed from American taxpayers.
    And over the next 5 years, between now
    and 2011, the President’s budget will increase
    the debt by almost another $3.5
    trillion.
    Numbers that large are sometimes
    hard to understand. Some people may
    wonder why they matter. Here is why:
    This year, the Federal Government will
    spend $220 billion on interest. That is
    more money to pay interest on our national
    debt than we’ll spend on Medicaid
    and the State Children’s Health
    Insurance Program. That is more
    money to pay interest on our debt this
    year than we will spend on education,
    homeland security, transportation, and
    veterans benefits combined. It is more
    money in one year than we are likely
    to spend to rebuild the devastated gulf
    coast in a way that honors the best of
    America.
    And the cost of our debt is one of the
    fastest growing expenses in the Federal
    budget. This rising debt is a hidden domestic
    enemy, robbing our cities and
    States of critical investments in infrastructure
    like bridges, ports, and levees;
    robbing our families and our children
    of critical investments in education
    and health care reform; robbing
    our seniors of the retirement and
    health security they have counted on.
    Every dollar we pay in interest is a
    dollar that is not going to investment
    in America’s priorities. Instead, interest
    payments are a significant tax on
    all Americans—a debt tax that Washington
    doesn’t want to talk about. If
    Washington were serious about honest
    tax relief in this country, we would see
    an effort to reduce our national debt by
    returning to responsible fiscal policies.
    But we are not doing that. Despite
    repeated efforts by Senators CONRAD
    and FEINGOLD, the Senate continues to
    reject a return to the commonsense
    Pay-go rules that used to apply. Previously,
    Pay-go rules applied both to
    increases in mandatory spending and
    to tax cuts. The Senate had to abide by
    the commonsense budgeting principle
    of balancing expenses and revenues.
    Unfortunately, the principle was abandoned,
    and now the demands of budget
    discipline apply only to spending.
    As a result, tax breaks have not been
    paid for by reductions in Federal
    spending, and thus the only way to pay
    for them has been to increase our deficit
    to historically high levels and borrow
    more and more money. Now we
    have to pay for those tax breaks plus
    the cost of borrowing for them. Instead
    of reducing the deficit, as some people
    claimed, the fiscal policies of this administration
    and its allies in Congress
    will add more than $600 million in debt
    for each of the next 5 years. That is
    why I will once again cosponsor the
    Pay-go amendment and continue to
    hope that my colleagues will return to
    a smart rule that has worked in the
    past and can work again.
    Our debt also matters internationally.
    My friend, the ranking member of
    the Senate Budget Committee, likes to
    remind us that it took 42 Presidents 224
    years to run up only $1 trillion of foreign-
    held debt. This administration did
    more than that in just 5 years. Now,
    there is nothing wrong with borrowing
    from foreign countries. But we must
    remember that the more we depend on
    foreign nations to lend us money, the
    more our economic security is tied to
    the whims of foreign leaders whose interests
    might not be aligned with ours.
    Increasing America’s debt weakens
    us domestically and internationally.
    Leadership means that ‘‘the buck stops
    here.’’ Instead, Washington is shifting
    the burden of bad choices today onto
    the backs of our children and grandchildren.
    America has a debt problem
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    S2238 CONGRESSIONAL RECORD—SENATE March 16, 2006
    and a failure of leadership. Americans
    deserve better.
    I therefore intend to oppose the effort
    to increase America’s debt limit.
    Mr. GRASSLEY. Mr. President, I
    urge my colleagues to vote in favor of
    final passage.
    Raising the debt limit is necessary to
    preserve the full faith and credit of the
    U.S. Government.
    We cannot as a Congress pass spending
    bills and tax bills and then refuse
    to pay our bills.
    Refusing to raise the debt limit is
    like refusing to pay your credit card
    bill—after you’ve used your credit
    card.
    The time to control the deficits and
    debt is when we are voting on the
    spending bills and the tax bills that
    create it.
    Raising the debt limit is about meeting
    the obligations we have already incurred.
    We must meet our obligations. Vote
    for this bill.
    Mr. COBURN. Mr. President, the
    spending process in the Congress is broken.
    Some will argue that now is not
    the time to debate spending reform or
    budget reform. They will say that now
    is not the time to have a debate about
    our country’s spending priorities. They
    will argue that right now we need to
    just ‘‘pay our bills’’ for past transactions
    and discuss reforms some time
    in the future. Raising the debt limit,
    however, does not count as ‘‘paying the
    bills.’’ We are not paying our bills.
    Last fiscal year, the real Federal deficit—
    the amount by which the Federal
    debt increased—was $538 billion. When
    we raise the debt limit, we are not
    ‘‘paying our bills.’’ We are merely taking
    out another line of credit—another
    loan—to allow for more spending that
    we can’t afford. It is akin to a deeply
    indebted family getting a loan for a
    new car or getting a new credit card or
    line of credit without cutting up the
    old credit cards that got them in trouble
    in the first place.
    According to the Congressional Budget
    Office, the Federal Government
    spent roughly $2.5 trillion during the
    last fiscal year. Let’s look at that
    amount of spending another way. If the
    Federal Government spent $2.5 trillion
    last year, that means that on average,
    $6.8 billion was spent each day, or
    $78,418 was spent per second by the Federal
    Government.
    I believe that it is absolutely necessary
    to have an open and honest debate
    about our spending priorities. We
    are getting ready to increase this country’s
    debt limit to almost $9 trillion.
    Over the past 5 years, our national debt
    has increased by $3 trillion, or nearly
    $9,000 per American. That is a lot of
    money. In 1990, our total national debt
    was about $3 trillion. That means that
    it took our country more than 200
    years to accumulate that amount of
    debt—200 years to increase our debt by
    $3 trillion. We just added that much
    new debt in only 5 years.
    In 2001, the share of Federal debt per
    person in this country was a little over
    $20,000. That includes everyone—not
    just those in the workforce. According
    to the Office of Management and Budget
    and the Census Bureau, total Federal
    debt per American will rise to
    $29,000 per American by the end of 2006.
    That is an increase of $9,000 per man,
    woman, and child in this country since
    2001. But a lot of people are quick to
    dismiss that figure. They will say that
    it doesn’t matter, that we only need to
    worry about how debt and deficits compare
    to economic growth or to the size
    of the economy. I think a better rule of
    thumb is how Government growth compares
    to the growth of wages and earnings.
    If regular Americans are tightening
    their belts, the Federal Government
    should do the same instead of engaging
    in yet another spending binge. Since
    2001, total Federal debt per American
    has increased by $9,000. But over that
    same time period, the average wages of
    American workers have only increased
    by $4,200. Over the past 5 years, the
    growth of Federal debt per person has
    doubled the growth of average wages of
    American workers. What makes this
    situation even worse is that that $9,000
    increase in debt per person is just
    going to get bigger and bigger because
    we are not doing anything to cut
    spending or prepare for the impending
    fiscal crisis that will result from the
    retirement of the baby boomer generation.
    Interest on that debt is just going
    to get larger.
    Last year, interest costs—the costs
    of Federal debt that the Government
    must pay to those who buy U.S. Treasury
    bonds—were about 8 percent of the
    total Federal budget. In contrast, the
    average American spends roughly 5
    percent of his or her income on credit
    card debt and car loans according to
    the Federal Reserve. The Federal Government
    spent close to $200 billion on
    interest costs alone last year. According
    to the Government Accountability
    Office, or GAO, interest costs will consume
    25 percent of the entire Federal
    budget by 2035. Let’s put that figure
    into perspective. Twenty-five percent
    of the Federal budget is a huge
    amount.
    By way of comparison, the Department
    of Education’s share of Federal
    spending in 2005 was approximately 3
    percent of all Federal spending. The
    Department of Health and Human
    Services was responsible for approximately
    23 percent of all Federal spending.
    Spending by the Social Security
    Administration was responsible for
    about 20 percent of all Federal spending.
    Spending on Medicare was about 12
    percent of all Federal spending. Spending
    in 2005 by the Department of Defense—
    in the midst of two wars in Iraq
    and Afghanistan and a global war
    against terrorism—comprised about 19
    percent of all Federal spending. Thus,
    if we do not change our current spending
    habits, GAO estimates that as a
    percentage of Federal spending, interest
    costs in 2035 will be larger than defense
    costs today, Social Security costs
    today, Medicare costs today, and education
    costs today.
    No family in America would ever be
    able to manage its finances this way.
    No family would be able to build up insane
    amounts of debt, unilaterally increase
    all of its credit card limits with
    no ability to ever pay them off, and
    still be able to spend, spend, spend
    without any accountability. We have
    some very serious problems to address
    regarding spending priorities in this
    country.
    According to the Congressional Research
    Service, Congress appropriated
    $64 billion in earmarks for 2006, the
    current fiscal year. That doesn’t even
    include the earmarks from the highway
    bill that was passed in 2005. We are
    going to spend $64 billion on earmarks
    and pork projects across the country
    this year even though it is estimated
    that the real Federal deficit—including
    the money that is regularly stolen
    from Social Security—will again surpass
    half a trillion dollars.
    Earmarks are a serious problem because
    they put parochial interests
    ahead of national priorities. They put
    the interests of the next election ahead
    of the interests of the next generation.
    Some, however, argue that earmarks
    are not really a problem because they
    comprise a small percent of the budget.
    They argue that entitlement spending
    is the problem and that we ought to address
    that problem instead of focusing
    on earmarks. These arguments completely
    miss the point.
    If entitlements are the real problem
    and earmarks are not a problem, then
    why did entitlement savings passed in
    the last budget resolution for fiscal
    year 2006 only amount to $5 billion? If
    entitlements are the real problem, why
    did we spend 13 times more money on
    earmarks last year than we saved in
    entitlement programs? At that rate, we
    will solve our country’s fiscal problems
    some time after never. The budget resolution
    we passed last year created entitlement
    savings of about $40 billion
    over the next 5 years. We spent more
    on earmarks in 1 single year than we
    saved from entitlement programs over
    5 years. Over the past 3 years—since
    2004—we have spent nearly $160 billion
    on earmarks and special interest pork
    projects according to the Congressional
    Research Service.
    Since 1994, the number of individual
    earmarks has more than tripled, increasing
    from 4,126 in 1994 to 12,852 in
    fiscal year 2006. Of those 12,852 earmarks,
    over 95 percent were not even
    included in bill language. Instead, they
    were hidden within conference reports.
    Many never even saw the light of day
    until they were snuck into
    unamendable conference reports that
    were sure to be rammed through at the
    last minute. Earmarking is a very serious
    problem that needs to be addressed
    before we can get our fiscal house in
    order. However, there are also other
    spending issues that this body should
    address.
    The issue of improper payments by
    the Federal Government is one that
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    March 16, 2006 CONGRESSIONAL RECORD—SENATE S2239
    can and should be fixed. The subcommittee
    that I chair—the Subcommittee
    on Federal Financial Management—
    has examined this issue in
    depth. We have uncovered numerous
    examples of improper payments that
    waste taxpayer money and harm those
    who aren’t receiving the assistance
    they need. An improper payment is basically
    a payment that was either made
    to the right person in the wrong
    amount or a payment that was given to
    the wrong person, regardless of the
    amount. Improper payments include
    payments that were too high and payments
    that were too low.
    According to estimates by the Office
    of Management and Budget, improper
    payments last year totaled $37 billion.
    That figure is larger than last year’s
    expenditures by the Departments of
    Commerce, Interior, State, and Environmental
    Protection Agency combined.
    The amount of improper payments
    just from last year could have
    completely funded four major Federal
    agencies. Improper payments are a
    very serious problem. For example, 28
    percent of all payments within the
    earned income tax credit program are
    incorrectly made. Thus, for every dollar
    we spend in that program, 25 cents
    are completely wasted. Improper payments
    within the Social Security Administration
    totaled nearly $6 billion.
    And these figures don’t even take into
    account the seven major programs with
    outlays totaling about $228 billion that
    are not yet even reporting their improper
    payments.
    There are some who wish to make
    the issue of spending a partisan issue,
    but it is not a partisan issue. Members
    of both parties are guilty of putting
    short-term interests ahead of longterm
    priorities. Last week, Members of
    both parties voted to ignore Senate
    budget rules in order to spend an additional
    $1 billion that is not paid for on
    home-heating costs even though the
    month of January was the warmest on
    record and winter will be over in less
    than a week. Both parties appear to
    lack the political courage to make the
    hard choices to address our impending
    fiscal crisis. This issue has nothing to
    do with Republicans and nothing to do
    with Democrats—it has to do with
    what is best for the American public.
    Mr. President, the spending process
    in this body is broken. Our priorities
    are completely out of whack. Earmarking
    and wasteful spending are out
    of control. It makes no sense to effectively
    max out our credit cards and ask
    for a higher credit limit when we have
    no intention and no ability to ever actually
    pay for our debts.
    Mr. LEVIN. Mr. President, the outcome
    of today’s vote on raising the
    debt ceiling to nearly $9 trillion is not
    in question, but our future economic
    security will be if we do not change
    from our current disastrous course. We
    will raise the debt limit today so that
    the United States does not default on
    its obligations, but we cannot for a second
    think that we have solved the
    problem or even moved in the right direction.
    This will be the fourth time in 5
    years that we have had to raise the
    amount the Government is allowed to
    borrow. This is a direct result of the
    fiscal irresponsibility of this administration.
    These policies have taken the
    Nation from 2 years of record surpluses
    just 6 years ago—when we were paying
    down our debt—to record deficits and
    debt. We are passing on a crippling burden
    to our children and grandchildren
    and threatening our economic security.
    Since 2002, we have increased the
    debt limit by an astounding $3 trillion.
    And unless we make a significant
    change in our fiscal policies, there are
    additional increases in our future. The
    Congressional Budget Office forecasts
    that our gross Federal debt, which includes
    debt the Government owes to
    the public plus funds owed to Federal
    trust funds, including Social Security
    and Medicare, will climb from its current
    level of $8.3 trillion to $12.8 trillion
    by 2016. Even this extraordinary
    estimate does not include either the
    coming costs of military operations in
    Iraq or the substantial cost of fixing
    the alternative minimum tax, which if
    left unchanged will impose unintended
    tax increases on middle-income taxpayers,
    which most agree need to be
    changed.
    The burden this massive debt puts on
    our children is staggering. Today, each
    American citizen’s share of the debt is
    over $27,000, and it will rise to over
    $39,000 by 2016. Paying off this debt will
    require either extraordinary tax increases
    or significant cuts in critical
    areas such as defense or Social Security.
    Tragically, it will mean that an
    increasing number of taxpayer dollars
    will be spent not on moving America
    forward but simply on treading water
    by making interest payments to our
    creditors. Even under the CBO’s conservative
    estimates, interest payments
    on the gross debt will rise from $352 billion
    in 2005 to $662 billion in 2016. That
    means over the next 10 years, we will
    spend an estimated $5.6 trillion on interest
    payments alone. Making these
    interest payments means fewer resources
    are available for our national
    priorities such as shoring up the Social
    Security and Medicare trust funds as
    the babyboom generation begins to retire.
    Equally disturbing is what this rampant
    borrowing will mean for our economic
    security. As we go deeper into
    debt to foreign countries we are losing
    control of our own destiny. Over 90 percent
    of our newly issued debt is being
    purchased by foreigners. By the end of
    2004, U.S. Treasury debt held by foreigners
    was close to $2.2 trillion, more
    than double the amount that was held
    at the beginning of this administration.
    This large amount of foreign debt
    leaves us vulnerable to the priorities of
    foreign creditors. If foreign investors,
    including countries, were to decide, for
    economic or political reasons, to stop
    financing our debt, the U.S. economy
    would be in for a severe shock.
    Even without a catastrophic event,
    our unbridled foreign borrowing erodes
    our power by providing other countries
    with leverage during trade or other negotiations.
    We cannot delude ourselves
    into thinking we can maintain our position
    in the world if we can’t even balance
    our checkbook.
    We need to turn away from this administration’s
    irresponsible fiscal policies.
    One of the best steps we could
    take would be to reinstate pay-as-yougo
    budget enforcement rules that require
    tax cuts and not just spending to
    be paid for. This approach worked during
    the 1990s to help bring about the
    first surpluses in a generation, and it
    can work again.
    We should also revisit this administration’s
    irresponsible and unfair tax
    cuts that have driven us so deeply into
    this deficit ditch. It is unconscionable
    that middle-class Americans will be
    paying for years for tax cuts that went
    primarily to the wealthiest among us.
    In fact, the top 5 percent of households
    in our country, whose average income
    is more than $250,000 a year, received
    almost half of the President’s tax cuts.
    Today’s action to raise the debt limit
    will hopefully be a reality check on
    what Republican fiscal policies have
    wrought. We need to change course. We
    need to return to fiscal responsibility.
    And we need to start climbing out of
    this deficit ditch before we are buried
    in it.
    Mr. BIDEN. Mr. President, I was necessarily
    absent this morning when we
    considered Senator BAUCUS’s amendment
    to the debt limit increase. If I
    had been here, I would have supported
    the Baucus amendment.
    The Baucus amendment is clearly
    needed. The massive scale of other nations’
    accumulation of our debt has
    added another level of danger and complexity
    to our international economic
    relations.
    This is a two-way street. The tsunami
    of debt created by the policies of
    this administration has to go somewhere.
    China is one of the major purchasers
    of that debt. Japan, Great Britain,
    and others have major holdings,
    too. In the short term, that has soaked
    up a lot of our bonds, and helped to
    keep interest rates down. That is a
    good thing.
    However, that has kept the Chinese
    currency artificially low, and ours artificially
    high. So they can sell their
    products at a discount, and our exports
    are more expensive. That is a bad
    thing.
    Our trade deficit was a record $726
    billion last year; $202 billion of that
    was our trade deficit with China alone.
    But as the rest of the world copes
    with the waves of U.S. debt, we are now
    all in the same leaky boat. There is
    just so much of our debt other nations
    want to hold. The more of it they accumulate,
    the closer we are to the day
    when they will not want any more.
    When that happens, slowly or rapidly,
    our interest rates will go up, the
    value of their U.S. bonds will drop, and
    VerDate Aug 31 2005 05:24 Mar 17, 2006 Jkt 049060 PO 00000 Frm 00015 Fmt 4624 Sfmt 0634 E:\CR\FM\G16MR6.015 S16MRPT1 ccoleman on PROD1PC71 with SENATE
    S2240 CONGRESSIONAL RECORD—SENATE March 16, 2006
    we will all have big problems. We need
    both more awareness, and more understanding,
    of this fundamental threat to
    our economic well being and the global
    economy.
    But the roots of that threat lie in the
    disastrous policies of this administration.
    Because this massive accumulation
    of debt was predicted, because it was
    foreseeable, because it was unnecessary,
    because it was the result of willful
    and reckless disregard for the warnings
    that were given and for the fundamentals
    of economic management, I
    am voting against the debt limit increase.
    In the 5 years he has been in office,
    President Bush has added more to our
    foreign debt that the 42 Presidents before
    him. It took 224 years to accumulate
    $1 trillion of debt to other nations.
    It took President Bush just 5 years to
    more than double it.
    Over $3 trillion in debt, foreign debt
    and debt held by Americans, has been
    piled up by this administration.
    When he set out on the course that
    brought us to this sorry state, the
    President was clearly and repeatedly
    warned that massive tax cuts would
    leave us vulnerable to natural disasters,
    economic slowdown, or threats to
    our national security. ‘‘Don’t worry,’’
    the President told us. ‘‘I know what I
    am doing.’’
    After 9/11, in the face of what he has
    himself called the moral equivalent of
    the World War II, or the Cold War, he
    insisted that while everything else had
    changed, he would not change his economic
    policies.
    Facts had changed. His promise to
    balance the budget, his promise to pay
    down the debt, were proved to be false.
    But he refused to take responsibility
    for his policies. He refused to admit
    that a changed world demanded a
    change of course. His refusal has
    pushed us deeper and deeper into the
    hole.
    His refusal added $450 billion to the
    debt in 2002; it added $984 billion in
    2003; it added $800 billion in 2004. And
    here we are again today, adding another
    $781 billion. With that addition,
    our national debt will be $8.6 trillion at
    the end of this year.
    The President’s budget plans will
    bring that number to $11.8 trillion at
    the end of the next 5 years.
    This is a record of utter disregard for
    our Nation’s financial future. It is a
    record of indifference to the price our
    children and grandchildren will pay to
    redeem our debt when it comes due.
    History will not judge this record
    kindly.
    My vote against the debt limit increase
    cannot change the fact that we
    have incurred this debt already, and
    will no doubt incur more. It is a statement
    that I refuse to be associated
    with the policies that brought us to
    this point.
    Mr. DODD. Mr. President, the Bush
    administration seeks for the fourth
    time in 5 years to increase the indebtedness
    of the United States—this time
    by $781 billion. This body’s consideration
    of that increase allows us a moment
    to take stock of the abysmal fiscal
    health of our country.
    As a Washington Post editorial
    pointed out yesterday morning, this
    President solemnly pledged upon taking
    office to payoff $2 trillion in debt
    held by the public over the next decade.
    It is patently obvious that President
    Bush has not just failed but failed
    spectacularly to deliver on his pledge.
    He has managed to amass more debt
    than any President in history, with no
    end in sight.
    By the end of this year, our gross
    Federal debt is expected to surpass $8.6
    trillion, or nearly $28,000 for every
    man, woman, and child in America.
    This amount represents an increase of
    approximately $3 trillion since President
    Bush took office.
    This dramatic runup in the debt has
    real costs for America’s families—both
    today and for future generations. It
    puts upward pressure on interest rates
    for things like student loans, home
    mortgages, and automobile loans. It
    raises the cost of capital for business
    investment. Each of these, in everything
    but name, represents a tax increase
    on American families and businesses.
    More directly, instead of investing in
    America’s most important priorities—
    like education, health care, and homeland
    security—the taxpayers of today
    and tomorrow must spend more money
    paying off yesterday’s debts. In the
    late 1990s, interest on the debt represented
    a declining share of our total
    budget. Today, that share has begun to
    rise once again, a trend that would
    continue under the budget put forward
    by the administration and the leadership
    in this body. For 2007 alone, taxpayers
    will spend $247 billion dollars on
    interest on the debt instead of American
    troops and veterans or American
    families and children.
    Our leaders have to be candid with
    the American public about the sources
    of this unprecedented level of indebtedness.
    The administration is not incurring
    these debts in order to invest in education.
    They are not supporting States
    and local communities struggling to
    meet their school funding needs out of
    property taxes.
    The administration is not incurring
    these debts to improve our infrastructure.
    States, municipalities, and local
    communities are struggling desperately
    just to maintain the infrastructure
    they have—roads, bridges,
    ports. They are struggling to maintain
    a 20th century infrastructure, let alone
    build a 21st century one.
    Certainly, the wars in Iraq and Afghanistan
    have had a cost. So have the
    terrorist attacks of September 11, 2001,
    and natural disasters. Though the
    President has been quick to blame factors
    like these, the truth is the tax
    policies of his administration have
    played a far greater role in creating
    the budget deficits accumulated on his
    watch.
    Under those policies, this administration
    has spent close to $125 billion on
    tax benefits for the few most fortunate
    households in America—those 0.2 percent
    of individuals making more than
    $1 million per year—while doing little,
    if anything, for families in the middle
    and those working hard to get themselves
    in the middle.
    In a time of war and fiscal and economic
    strain, this administration has
    delivered a tax windfall to the most
    fortunate. Never before has a President
    made this choice during a time of war.
    Regrettably, this kind of shortsighted
    leadership has been
    rubberstamped repeatedly by the leaders
    of this Congress on the other side of
    the aisle.
    I would have hoped, at a minimum,
    that we as a body could adopt measures
    to restore some semblance of fiscal
    sanity, such as pay-as-you-go budget
    procedures or a smaller debt limit increase.
    Unfortunately, neither of these
    common sense reforms was adopted. Indeed,
    the majorimajority even rejected an
    amendment by the Senator from Montana
    to merely study the impact that
    foreign-held U.S. debt is having on our
    Nation’s long-term well-being.
    We cannot erase what has happened
    in the past, but we can demonstrate to
    the people of our country going forward
    that the Senate is willing to take
    commonsense steps to put our Nation
    back on firmer budgetary footing.
    That, regrettably, has not happened in
    the Senate today. However, many of us
    will continue the effort to place our nation’s
    fiscal house on firmer ground.

  12. keith says:

    Now they are headed in my direction!!!!!!!! Please join us Jeff!!!

    By Domenico Montanaro, Deputy Political Editor, NBC News

    Throw the bums out.

    That’s the message 60 percent of Americans are sending to Washington in a new NBC News/Wall Street Journal poll, saying if they had the chance to vote to defeat and replace every single member of Congress, including their own representative, they would. Just 35 percent say they would not.

    According to the latest NBC/WSJ poll, the shutdown has been a political disaster. One in three say the shutdown has directly impacted their lives, and 65 percent say the shutdown is doing quite a bit of harm to the economy. NBC’s Chuck Todd reports.

    The 60 percent figure is the highest-ever in that question recorded in the poll, registered in the wake of the government shutdown and threat of the U.S. defaulting on its debt for the first time in history. If the nation’s debt limit is not increased one week from now, Treasury Secretary Jack Lew warns that the entire global economy could be in peril.

    “We continue to use this number as a way to sort of understand how much revulsion there is,” said Democratic pollster Peter D. Hart, who conducted the poll with Republican Bill McInturff. “We now have a new high-water mark.”

    The numbers reflect a broader trend over the last few years. Americans have traditionally said that while they might not like Congress, they usually like their own representatives. But that sentiment appears to have shifted.

    The throw-them-all-out attitude has slowly taken hold over the last three years, coinciding with two things – the rise of the Tea Party caucus in the House and the debt ceiling fight of 2011.

    In October 2010, a majority of Americans – 50 percent to 47 percent – said they would not fire all congressional members. But by August 2011, 54 percent said they would toss every lawmaker from office; in January 2012, 56 percent said that; and just three months ago, in July, it was 57 percent.

    Frustration was evident among poll respondents across the ideological spectrum.

    “You look at 800,000 people being out of work merely because Congress can’t come to an agreement to do their job, which we sent them there to do,” said a respondent from Mississippi, a strong Democrat. “I am prayerful for a revolution.”

    The sentiment isn’t limited to Democrats. One Ohio woman, who considers herself a strong Republican, said her husband is a federal worker and they are worried about paying the bills.

    “We will not get a paycheck,” she said. “It is federal pay and mortgage is due. Who is going to pay that — Obama or Congress who is still getting paid?”

    Hart points out that the seeds are there to give rise to independent or third-party candidates.

    According to Hart, “Somewhere, someone’s going to pick up and run with the ‘throw them all out’” banner.

    The number of Americans who say they want to fire everyone is fairly consistent among most groups – at around 60 percent – but it spikes among rural voters (70 percent), white independents (70 percent) and those in Republican-held congressional districts (67 percent). Just 52 percent of respondents in Democratic-held districts would vote to fire every lawmaker on Capitol Hill.

    In another sign of dissatisfaction with the state of politics, 47 percent of Americans said they do not strongly identify with either party.

    The numbers in this poll also reflect a broader anger and pessimism among Americans, especially when it comes to the economy.

    A record-low 14 percent think the country is headed in the right direction, down from 30 percent last month. That’s the biggest single-month drop in the poll since the shutdown of 1990. And a whopping 78 percent think the country is on the wrong track. Just 17 percent think the economy will improve in the next year, while 42 percent think it will worsen.

    Americans’ confidence in the economy has nose-dived, they say, because of President Barack Obama and congressional Republicans’ negotiations – or lack thereof – on the budget. Almost two in three – 63 percent – say it makes them less confident that the economy will get better.

    “What these numbers tell us is that the already-shaken public – this kicked the stool out from under them,” Bill McInturff said. “We’re seeing numbers that are associated with historic lows in public confidence.”

    Almost two-thirds – 65 percent – also say the government shutdown is having quite a bit or a great deal of harm on the U.S. economy.

    “That linkage between these actions in Washington and economic confidence and what that means for trying to stabilize our economy, I think at a big-picture level [shows] how destabilizing” the standoff has been for the economy.

    Democratic pollster Fred Yang, who helped conduct the poll with Hart, added that Americans are paying attention to this fight and want it resolved before the debt ceiling deadline of Oct. 17.

    “This isn’t the calm before the storm,” Yang said. “This is the storm before the storm.”

  13. Jeff Beamsley says:

    Obama may be at 37% but Congress is at 5%. This has been the Republican strategy pretty much from the beginning. So this is not the same thing as Bush II. Bush II earned his dismal ratings because of the economy and the Iraq war. Both those situations were the result of his policies.

    When Bush II hit his lowest popularity ratings of 28%, for example, Congress had approval ratings of 20%.

    http://www.gallup.com/poll/107242/congress-approval-rating-ties-lowest-gallup-records.aspx

    According to Gallup, Congress almost always has an approval rating lower than the sitting President.

    The current disgust that many voters have with government in general is the product of Republicans deliberate efforts to grind the government to a halt and blame the President for that dysfunction. The same Tea Party crazies who are suggesting that a credit default isn’t catastrophic are the same group who have no problem with a 5% rating as long as they are simultaneously damaging the President’s popularity.

    62% blame Republicans for the more recent government shutdown and threat to government credit actions which is appropriate.

    You are part of those who blame them all which is certainly your right.

    I’m part of those who blame Republicans for this strategy. That is also my right.

  14. Jeff Beamsley says:

    The reaction to the Moody’s comment is interesting.

    The right wing media jumped all over it with comments like “Moody’s. Obama wrong”, “Moody’s Nukes Obama’s Debt Ceiling Fearmongering”, and “Moody’s on Debt Limit: Calling Obama’s Bluff on Default”.

    I’ve go two responses. The first is that Moody’s has been a consistent critic of the Republican shutdown strategy which clearly Republicans have chosen to ignore.

    Here’s just one example.

    “And this likely understates the economic fallout, as it does not fully account for the impact of such a lengthy shutdown on consumer, business and investor psychology,” Zandi stated in his written testimony. “Any interruption much longer than a month would cause GDP to fall over the quarter, and one longer than two months would likely precipitate another recession.”

    How did the right wing media respond to that forecast?

    “Moody’s track record abysmal”

    The article you posted was from the WashPost. I have no problem with that because it was fairly straight forward reporting and they also reported responses to that memo. My issue is with the right wing media who used that particular memo to justify a larger conclusion which is inaccurate. The right wing media again just cherry picked the pieces of a story that support their view while rejected other advice FROM THE SAME COMPANY which undermine their position. Another example of unreliable reporting.

    So here’s the rest of the story from that same Moody’s memo.

    Even if the government made its Nov. 1 payments, a $29 billion interest payment due Nov. 15 looms after it. Including that payment, Washington is likely to have a cash shortfall of $60 billion to $70 billion from Oct. 17 until Nov. 15.

    Mark Zandi: “If they don’t prioritize payments, there’s no way they make that payment on time.”

    And

    Zandi also urged Congress to raise the debt ceiling before mid-October. “Any delay in raising the debt ceiling would have dire economic consequences. Consumer, business and investor confidence would be hit hard, putting stock, bond and other financial markets into turmoil,” he stated.

    “There will be a violent reaction in financial markets if policymakers fail to act in time.”

    Congress should eliminate the statutory requirement that Congress raise the debt ceiling, he argued. “It is an idiosyncratic, anachronistic and, as has been demonstrated, potentially destructive rule that is detrimental to sound economic policy.”

    So Moody’s position on the debt ceiling is consistent with the rest of the business community.

    The U.S. Chamber of Commerce, which usually sides with Republicans, said shutting down the government is a bad idea.

    “It is not in the best interest of the U.S. business community or the American people to risk even a brief government shutdown that might trigger disruptive consequences or raise new policy uncertainties washing over the U.S. economy,” the chamber stated in a letter to the House of Representatives.

    The chamber also urged Congress to raise the debt ceiling “in a timely manner.”

    The Republican position on the raising the credit limit is fundamentally misleading.

    This IS NOT a discussion of whether or not the government has sufficient cash flow to make payments to bond holders. It clearly does. That’s what the portion of the Moody’s memo that was published says. The government has sufficient cash flow to make interest payments. So from a technical perspective, the government could avoid a technical default on payments owed to bond holders. It WOULD default on payments to other creditors.

    The issue is how the global financial community will react when the government chooses to not to pay some of its bills because of an internal political debate.

    When the VAST MAJORITY of economists and business leaders ACROSS THE WORLD are expressing alarm at even the suggestion that the United States VOLUNTARILY chooses not to pay ANY of its bills on time; we have to take those warnings seriously.

    That’s because investors regard US bonds as the safest investment in the world. The entire global financial system in based on that assumption. That is based on the fact that we are a democracy, the biggest economy in the world, and the largest military power in the world. If we allow political dysfunction to force us to prioritize our bill payment, investors won’t care that they are getting paid first. They know that at some point in the future there is a risk that the same dysfunction could cause their investments to fall out of political favor and not get paid (read China here). They are expecting that the US understands the highly favorable position it enjoys in the financial pecking order and responds with a higher degree of responsibility than is expected from other countries.

    Responsible Republicans know that too and have said so publicly.

    Some of my Republican colleagues are already saying we won’t raise the debt limit unless there’s repeal of Obamacare. I’d love to repeal Obamacare, but I promise you that’s not going to happen on the debt limit. John McCain

    Sen. Mark Kirk (R-Ill.) says he’d vote for a clean debt ceiling increase and vote for cloture, making him the first R to say so

    Sen Murkowski (R-AK), would you vote to proceed to a clean debt limit bill? “I want to proceed on anything.”

    But there isn’t much that they can do because a small minority in the house that is willing to burn the house down if they don’t get their way.

    In a future post I’ll dig into the hows and whys a minority of House Republicans can have such influence over the majority.

  15. Jeff Beamsley says:

    Ted Cruz is attempting to follow the same path that Barack Obama did to the White House.

    I say bring it on!

    If Republicans run Ted Cruz on a Tea Party platform, it will likely be a defeat on the scale of Goldwater or Dukakis.

    As far as the speech itself compared to Obama’s current position, I’ve already responded that I suspect that Obama’s vote was symbolic and reflected his larger opposition to Bush policies rather than practical since there was no chance that his vote would result in any failure to raise the government’s debt limit.

    I understand that this is a nuanced view and you simply view his current position as hypocritical compared to his previous position. That’s certainly your right.

    It doesn’t change the underlying reality however.

    Not raising the government’s credit limit is irresponsible.

    If you want to use that statement to characterize Obama’s Senate speech as irresponsible, that’s fine. The good news is that he is taking a responsible position today.

    If you meant to suggest that his irresponsible speech in 2005 somehow sanctions irresponsible actions by Republicans in 2013, I strongly disagree.

  16. Jeff Beamsley says:

    You have to read this carefully.

    People are angry and have every right to be. The government isn’t working. Worse than that it is actively causing harm.

    A larger percentage of people blame Republicans for this than Democrats or the President. But we are a deeply divided country politically, so there is a still a significant percentage of voters who are happy to blame Democrats and the President too.

    This is, and has been, a Republican strategy.

    We will see if it works in 2014.

    While there is certainly a possibility of a third party, the reality is that voters in most districts will only have a choice between a Republican and a Democrat. Given that choice, I think that it is HIGHLY likely that Democrats will win back the House and perhaps gain a filibuster-proof majority in the senate.

    This is the direct result of Tea Party politics. They had hoped to force the american people to accept the fact that the ONLY way that government was going to work was to give one of the two parties a majority in both houses. At this point I think voters are finally waking up to the fact that Republicans are NOT a responsible party and the only way to get government working again is to hand the keys back to the Dems.

    Obama’s successful message in 2008 was why would you want to give control back to the party that got us into this financial mess.

    Obama’s successful message in 2012 was that Republicans in general and Romney in particular couldn’t be trusted to act in the interests of minorities, the poor, immigrants, women, young people, or organized labor.

    The Democratic message in 2014 is going to be that Republicans can’t be trusted to act in a fiscally responsible manner. So they ONLY way to end this dysfunction, get government working, and grow the economy is to elect a Democrat.

    We’ll see.

  17. keith says:

    We´ll see whats responsible and what´s not responsible.

    *We will not default on our interest payments unless Obama wants too.
    *Not raising the credit limit would FORE us to decide what we wanted to spend Money on and what we didn´t. Both groups in DC certainy can not do this on their own. I saaw where 97% of the EPA were deemed unessential… How about if we just get rid of all unessintails?

    *I like to point out Obama opposition to raising the debt limit for a reason. One, as he now knows fully well, it was na immature thing to do.. he thought he was being brillian. That proves what he was then. I am glad he doesn´t share that same view today. What I am most tired of is novices like him at the age of 47 with NO decernable skills or experiance of any consiquence running and winng the presidency, or seats in congress. Unfortunately very well seansoned pros from positions of high responsibily and authority are not involved. Then you end up with this..Think of it this way, would you rather have the boy child Bill Clinton or the 66 year old version?

  18. Keith says:

    I like this commentary.

    Default Doubters Repudiated by Republican Economists

    Debt-Limit Debate Threatens Markets, Payments
    Republican lawmakers have played down the significance of hitting the debt limit, saying the U.S. can avoid default by putting aside funds to pay bond holders. Economists affiliated with the party aren’t so sanguine.
    Glenn Hubbard, Douglas Holtz-Eakin and Donald Marron, all of whom served in President George W. Bush’s administration, voiced concern that such a strategy could end up hurting the economy even if default were averted.
    “I would still worry about it,” said Hubbard, who was chairman of Bush’s Council of Economic Advisers from 2001 to 2003. “It signals that we have an inability as a nation to get our budget process in order.” That could “do damage to U.S. growth potential and credibility,” he added.

    Default Doubters Repudiated by Republican Economists Citing Harm
    The U.S. government is in the 11th day of a partial shutdown and less than a week away from Oct. 17, the day the U.S. will run out of room to borrow more unless Congress acts to raise the government’s $16.7 trillion debt ceiling, according to President Barack Obama’s Treasury Department.
    U.S. stocks rose, extending yesterday’s gains and sending the Standard & Poor’s 500 Index (SPX) to the highest level since September, on speculation lawmakers were making progress toward an agreement. House Republicans offered a plan to raise the debt limit and end a partial government shutdown that would require Obama to accept policy conditions attached to a spending measure, said two congressional aides.

    Columbia University’s Business School Dean Glenn Hubbard
    Republican Argument
    Some Republican lawmakers have argued that the U.S. can continue to meet interest payments on its debt, even if the government is unable to borrow more money from investors.
    “The country will not default if we don’t raise the debt ceiling,” Representative Ted Yoho, a Florida Republican, said in an interview on Oct. 8. “We’ve got enough revenue coming in to pay our bills.”
    The U.S. takes in about $250 billion a month in tax revenue while paying out $20 billion in interest, said Senator Rand Paul.

    When Does the Money Run Out?
    “If you don’t raise your debt ceiling, all you’re saying is we’re going to balance our budget,” the Kentucky Republican told reporters in Washington Oct. 8. “I think if you propose it that way, the bulk of the American public would say, ’My goodness that sounds like a pretty reasonable idea.’”
    It doesn’t sound that way to Holtz-Eakin, who worked with Hubbard at the CEA and is a former director of the Congressional Budget Office.
    Bad Idea
    “Breaching the debt limit is a very bad idea,” said Holtz-Eakin, now president of American Action Forum, a self-described center-right policy institute in Washington. “While I don’t know exactly what would happen, I don’t want to find out.”
    He said Obama needs to get together with Republicans and negotiate a deal to raise the debt limit. “If he doesn’t, he’s going to be responsible for the meltdown,” the economist said.
    The Debt Ceiling
    In the event the borrowing limit isn’t increased, it’s not clear that Treasury has the capability of ensuring that debt payments are made, Holtz-Eakin said. While the government does take in more money than it pays out in interest each year, that’s not true for each and every day.
    He said it’s ironic that conservatives are arguing the Treasury can prioritize its payments. “These are the guys who don’t think the government can do anything right,” Holtz-Eakin said. “And they’re going to count on Treasury bureaucrats to manage this phenomenal sleight of hand. I don’t believe it.”
    Shuffling Payments
    Even if the government were able to shuffle its payments so as to avoid default, it would still have to cut back on other outlays because it couldn’t borrow any additional funds. And that would hurt the economy, said Marron, a CEA member in 2008 and 2009.
    “If the government has to suddenly move to a balanced budget for an extended period, the U.S. economy would likely plunge into recession,” said Marron, who is now director of economic policy initiatives at the Urban Institute in Washington.
    The nonpartisan CBO has estimated that the deficit was $642 billion, or 3.9 percent of gross domestic product, for the year that ended Sept. 30. That’s down from 9.8 percent in 2009, the year Obama took office.
    Poll Findings
    Almost two-thirds of Americans say a failure to raise the debt cap would be a real and serious problem, according to a NBC News/Wall Street Journal poll. The concern is shared across party lines: 72 percent of Democrats think that way while 57 percent of Republicans and independents say the same. The poll of 800 adults was conducted on Oct. 7-9 and has a margin of error for this reading of plus or minus 4.4 percentage points.
    Greg Mankiw, who succeeded Hubbard as chairman of the Council of Economic Advisers in 2003 and stayed until 2005, agreed that prioritizing payments does entail some peril. “There is recession risk,” he said in an e-mail.
    That danger, though, would be far less than that posed by a potential default. “If people really thought we were going to default on bondholders, that would be terrible,” said Mankiw, who is now chairman of the economics department at Harvard University in Cambridge, Massachusetts.
    Treasury Secretary Jacob J. Lew told the Senate Finance Committee yesterday that a strategy of making debt payments while failing to meet other obligations would be “default by another name.”
    Mankiw took issue with that type of argument. “It’s not a default on the debt,” he told Bloomberg Television on Oct. 9. “What the debt holders care about is how the United States treats its debt.”
    Risky Borrower
    Holtz-Eakin disagreed. “If you managed to prioritize, you would still send a signal to financial markets that you’re not worthy of additional loans, that you’re a risky borrower and your interest rates would go up,” he said. “That’s bad news for the economy.”
    Such skepticism about prioritization doesn’t mean the conservative economists agree with Obama that Congress should just raise the debt ceiling. While Republicans were wrong to try to tie an increase to a delay of Obama’s health-care overhaul, they are justified in seeking changes in the budget in return, Hubbard said.
    “I regret that both sides have taken positions that make it very difficult now to get to where we need to be,” said Hubbard, who is now dean of Columbia University’s Graduate School of Business in New York.
    He said it was “irresponsible” for the president to refuse to negotiate over an increase in the borrowing cap.
    Holtz-Eakin said much the same. “The idea that he’s not going to negotiate is ludicrous,” the American Action Forum president said. “He is going to negotiate and I would encourage him to start sooner rather than later.”

  19. Jeff Beamsley says:

    Let’s take them one at a time.

    *We will not default on our interest payments unless Obama wants too.

    If I recall, it was Republicans who said they were not going to fund the government OR vote to raise the government’s credit limit unless the Democrats and Obama agreed to some set of Republican policy issues. Republicans have also admitted that this strategy is hostage taking and that, according to Mitch McConnell, it only works if the hostage is worth ransoming. So tell me again why Obama should pay this ransom because if he does, he and every other President will certainly face this strategy again?

    *Not raising the credit limit would FORE us to decide what we wanted to spend Money on and what we didn´t. Both groups in DC certainy can not do this on their own. I saaw where 97% of the EPA were deemed unessential… How about if we just get rid of all unessintails?

    We have a budget process. We should not have to go through a threatened shutdown and government default in order to pass a budget. There are currently three budgets on the table. Pass one, or craft a fourth one from the best ideas of the other three. That’s how governments are supposed to run. Suggesting that we should even contemplate a government default in order to craft a budget is, IMHO, insane.

    *I like to point out Obama opposition to raising the debt limit for a reason. One, as he now knows fully well, it was na immature thing to do.. he thought he was being brillian. That proves what he was then. I am glad he doesn´t share that same view today. What I am most tired of is novices like him at the age of 47 with NO decernable skills or experiance of any consiquence running and winng the presidency, or seats in congress. Unfortunately very well seansoned pros from positions of high responsibily and authority are not involved. Then you end up with this..Think of it this way, would you rather have the boy child Bill Clinton or the 66 year old version?

    If this is a summary of your opinion of Obama, that’s fine. I don’t agree. The man won two national elections. He ended two wars. He lead us out of the worst economic collapse in 80 years. He passed the first major ADDITION to the social safety net in 50 years. You may not view those as accomplishments, but history certainly will. He will not only go down in history as a transformational figure. He will go down as the person who defeated the Tea Party and forced the Republican Party back to the political center.

  20. Jeff Beamsley says:

    I will likely post something about Default Deniers, but they share a lot with Climate Change Deniers, Citizenship Deniers, and the whole crop of conspiracy theories that have grown up in that hot house of right wing thought called Fox.

  21. keith says:

    Jeff,
    Use you mind here. We will NOT DEFAULT on our interest payments, that´s the meaning of the word DEFAULT that everyone is concerned about, unless Obama decides to fund the ¨gay arts¨ or whatever else silly thing we have choosen to put in our budgets over the years, instaed of making interest payments on ur debt.

    Did you read the articule I posted above about the republican economists saying the repub thought on the debt limit are not great? I agree with this…
    YOU ALSO SIMPLY CAN´T GET ON BOARD that Obama´s vote against the debt limit was equally as stupid….

    Now you call for a budget, Has Obama ever had one? Why do you want one now?

  22. keith says:

    Back to your Detroit is fine comment. ASk those effected below. It´s a terrible situation. TERRIBLE. However in the words of Mr Orr two days ago, ¨We have no choices in these matters. The choices were made for us a long time ago.¨

    This is the proplem Jeff. Long ago these choices were made for us in the city of Detroit. Now, go to 40,000 feet and look at the choices we are making at the federal level and what choices will we have left in 10 – 15 years. the guys in DC today can´t even make a budget. Who will make the hard choice today to save SS or the CAIDs. NO ONE. These choices are not being made today and in 10 -15 years or many more, some one will say, ¨we have no choices, the choices were made for us a long time ago.¨

    Again I ask you, who will decide between cutting a person who receives $1,500 a month in SS vers the guy who gets $15,000 a month in interest on T-Bills? Will it be fair to pay the rich man his interest and cut the por man his SS? WHo will decide?

    No Jeff, Detroit isn´t fine and it IS na accurate Picture of what we as a country are going to become because of our debt but more importantly our unfunded liabilities, both at the state and federal levels. Its simple math and no one is listening…

    October 15, 2013 at 6:41 am
    Orr cuts Detroit retirees’ health care benefits
    Chad Livengood Detroit News Lansing BureauComments Detroit’s bankruptcy is starting to hit home for 28,500 current and retired city workers who are getting the first glimpse this week at drastic cuts to their health insurance plans.
    Emergency Manager Kevyn Orr announced sweeping changes Monday to health insurance for active and retired workers slated to take effect Jan. 1. The changes will likely face a legal backlash as the city fights to win court approval for bankruptcy protection from its creditors.
    The changes mark the first major dent Orr is attempting to put in the city’s legacy costs at the center of Detroit’s bankruptcy case as he seeks to shift more of the cost burden onto employees and retirees.
    City officials began sending notices late last week to about 8,000 retirees under age 65 that Detroit is axing their city-paid $605 per month retiree health insurance coverage ($1,834 for families) and instead giving them a monthly $125 payment to use towarda private plan on the federal health insurance marketplace exchanges.
    Disabled retirees under age 65 will get a $200 monthly payment for their health insurance needs.
    More than 10,500 retirees over 65 will be offered a Medicare Advantage plan with city-funded premiums, but will be responsible for paying their deductibles and secondary insurance coverage, according to the plan.
    Detroit’s 10,000 active city workers will see their individual deductibles nearly quadruple from $200 annually to $750, while employees with families on the city’s insurance will see their maximum annual out-of-pocket costs rise 50 percent from $3,000 to $4,500.
    Attorneys for Detroit and its numerous creditors are set to begin arguing today in a federal court over the city’s eligibility for bankruptcy. If U.S. Bankruptcy Judge Steven Rhodes determines Detroit meets the criteria for bankruptcy, Orr has signaled his intent to make deep cuts to retiree health care after labeling it an unsecured debt.
    Unlike contractual public pension benefits, retiree health insurance does not have state constitutional protections.
    John Pottow, a bankruptcy law professor at the University of Michigan, said Orr may be challenging a gray area in the Chapter 9 municipal bankruptcy law that doesn’t spell out whether he needs court approval to make sweeping changes to city employee compensation.
    Pottow noted Orr didn’t seek the judge’s approval to enter into a non-monetary lease with the Michigan Department of Natural Resources to operate Belle Isle as a state park.
    “Unless someone objects to it, maybe they’re operating under the assumption that they don’t need to get court approval for the normal course of business,” Pottow said. “If this were Chapter 11 (corporate bankruptcy), he would unquestionably need the court’s approval to make a big wholesale change.”
    A committee representing retirees in the bankruptcy case blasted the changes Orr is imposing, saying they would “eviscerate” insurance benefits promised to retirees as deferred compensation during their public service. The committee claimed Medicare-eligibile retirees could see their deductibles rise $500 and prescription drug costs increase 200 percent to 1,000 percent, depending on the medicine.
    “These reductions, coupled with the city’s threatened pension reductions, (are) Draconian, inhumane and unprecedented,” Terri Renshaw, chairwoman of the retiree committee, said in a statement.
    The committee’s attorneys were scrambling Monday to understand how Orr was imposing changes to long-standing health insurance obligations without the bankruptcy judge’s approval.
    But Renshaw, a retired city attorney, signaled a court battle looms over the cuts.
    “Exposing thousands of retirees on fixed and limited incomes to this burden is unacceptable and we will spend the days and weeks ahead fighting this plan,” said Renshaw, whose committee was set by the bankruptcy court to negotiate with Orr.
    Orr spokesman Bill Nowling said the taxpayer-funded retiree committee is mischaracterizing the city’s benefit changes, which Orr is implementing under his powers as an emergency manager.
    “We obviously disagree in the strongest possible way with the characterizations made by the retiree committee,” Nowling said in a statement. “Its comments continue to show a complete and total disregard for the financial crisis in which the city of Detroit and its 700,000 residents find themselves.”
    Prior to the changes, Detroit’s employee and retiree health insurance expenses were on pace to top $263 million in the 2014 fiscal year, including $105 million to provide secondary insurance for Medicare recipients and $71 million for retirees under age 65, city budget records show.
    The changes in insurance coverage will reduce the city’s annual retiree health insurance costs by $142 million, Nowling said.
    Orr consultants have concluded unfunded retiree health care liabilities alone account for $5.7 billion of the city’s $18.5 billion in debts.
    “Our goal has always been to provide quality coverage that the City can reasonably afford, and we have done that,” Orr said Monday in a statement.
    About the changes■About 8,000 retired Detroit government workers will no longer get a traditional health insurance plan from the city under changes announced Monday by Emergency Manager Kevyn Orr.
    ■The city will give each retiree under age 65 a $125 monthly check to apply toward the cost of buying private health insurance on the new federal exchange at healthcare.gov.
    ■Unmarried retirees under 65 can receive varying taxpayer subsidies if they earn between $11,490 and $45,960 annually, according to the city.
    ■Orr’s office said married retirees with no dependents would be eligible for a subsidized private health insurance plan on the exchange if they earn between $15,510 and $62,040 annually.

  23. keith says:

    Jeff, This I like………..

    The New American Center: Why our nation isn’t as divided as we think

    A new NBC News/Esquire poll shows that a majority of Americans are now in the political center. NBC News political director Chuck Todd discusses the findings with Matt Lauer.

    By Tony Dokoupil, Senior Staff Writer, NBC News

    It’s the most conventional wisdom in Washington, the unchallenged idea that America is a divided nation, a country ripped into red and blue factions in perpetual conflict. The government shutdown this fall would seem like only the latest evidence of this political civil war. But is the idea of two Americas even true? Not according to a new Esquire-NBC News survey.

    At the center of national sentiment there’s no longer a chasm but a common ground where a diverse and growing majority – 51 percent – is bound by a surprising set of shared ideas.

    “Just because Washington is polarized doesn’t mean America is,” says Robert Blizzard, a partner at Public Opinion Strategies, the lead pollster for Mitt Romney in 2012. His firm co-created the survey with the Benenson Strategy Group, pollsters for President Obama, and the result is a nation in eight distinct segments: two on the far right (“The Righteous Right” and “The Talk Radio Heads”), two on the far left (“The Bleeding Hearts” and “The Gospel Left”), and four in the middle that represent nothing less than a new American center (“Minivan Moderates,” “The MBA Middle,” “The Pick-up Populists, and “The #WhateverMan.”)

    The people of the center are patriotic and proud, with a strong majority (66 percent) saying that America is still the greatest country in the world, and most (54 percent) calling it a model that other countries should emulate. But the center is also very nervous about the future, overwhelmingly saying that America can no longer afford to spend money on foreign aid (81 percent) when we need to build up our own country.

    Pluralities believe that the political system is broken (49 percent), and the economy is bad (50 percent) and likely to stay that way a while (41 percent). Majorities fear another 9/11 or Boston-style bombing is likely (70 percent), and that their children’s lives will be more difficult than their own (62 percent), which are either stuck in place or getting worse (84 percent) — while the rich keep getting richer at the expense of everyone else (70 percent).

    The new American center has a socially progressive streak, supporting gay marriage (64 percent), the right to an abortion for any reason within the first trimester (63 percent), and legalized marijuana (52 percent). Women, workers and the marginal would also benefit if the center had its way, supporting paid sick leave (62 percent); paid maternity leave (70 percent); tax-subsidized childcare to help women return to work (57 percent); and a federal minimum wage hike to no less than $10 per hour (67 percent).

    But the center leans rightward on the environment, capital punishment, and diversity programs. Majorities support offshore drilling (81 percent) and the death penalty (90 percent), and the end of affirmative action in hiring and education (57 percent). Most people in the center believe respect for minority rights has gone overboard, in general, harming the majority in the process (63 percent). And just one in four support immigration reforms that would provide a path to citizenship for those who came here illegally.

    Such data provide the richest and most useful portrait available of the modern political mind, complete with hidden affinities primed to sway elections in 2014, 2016 and beyond. “All you hear in Washington is that there’s nothing in the middle of the aisle,” said Daniel Franklin, a principal at the Benenson Strategy Group and Obama’s pollster during the 2012 campaigns. “But it turns out that’s not true. We have a massive American center, and it’s probably been there for years, just waiting to be found.”

    But Washington beware: The people of the new American center aren’t united by easy labels. Some are Republicans (28 percent). Others are Democrats (36 percent). Still others are Independents (36 percent). The people of the center self-describe as liberals (20 percent), conservatives (25 percent), moderates (55 percent) — and 15 percent support the Tea Party.

    Culturally, the center could be the butt of any joke in America, with lives that encompass Duck Dynasty and NPR, baby arugula and all-you-can eat Fridays. The center includes suburban mothers, rural working class men, rich city-dwelling business-people and relatively disaffected young people.

    Yes, the center is mostly white (78 percent) but so is most of the American voting public (72 percent) — and the center is changing. Already it contains a fifth of African-American voters, one in two Latino voters, and half the women in America. The center is roomy, or in other words, welcoming.

    The much-exaggerated death of the center can be traced to the 2000 presidential race, and its famous election night map: the endlessly red heartland, bracketed by blue on the coasts. Pundits rushed in with polls and data, declaring the arrival of two tribes driven apart by geography, cultural and cynical campaigns.

    But the problem was partly an artifact of the polls themselves, which shunted voters into dueling camps, emphasizing difference and measuring ideology in relation to political parties. The Esquire-NBC News survey, conducted nationwide with 2,410 registered voters, took a less common approach to the electorate, measuring a range of opinion, searching for overlap and gauging ideology by issue, not party (see “Methodology,” below).

    Read the full survey results, take an interactive quiz to learn your own ideological niche, or read deeper dives into the crack-up of American optimism, the rise of class as a national concern and the complexities facing both parties in the run-up to 2016.

    Bottom line: The center is real, passionate and persuadable. It leans Democratic but a majority of those in the center agree with a mix of Republican and Democratic ideas, and about the same percentage self-describe as neither liberal nor conservative.

    The center, in other words, is ready to swing — and in the years ahead a nimble political platform could swing along with it.

  24. keith says:

    Jeff,
    Pulled this out ok a commentry. It is exactly what I´ve been saying for years since the cheap debt started. It needs to be addressed or everything else is just window dressing…

    ¨Why is everyone constantly discussing short-term rises and drops in the stock market as if they actually matter? I understand the short news cycle, but this is insane. Our nation has done nothing to address the serious issue of our $17,000,000,000,000 national debt. Until this is addressed, there is no real reason for optimism in our economy. Once interest rates start to rise to attract REAL Treasury Bill buyers after the Fed finally stops fluffing-up the markets with $85 billion in purchases monthly, our economy will be in a serious long-term mess. Even with interest rates at historic lows, our nation paid $360,000,000,000 last year in interest on the debt. Rates could easily rise to 6%… and perhaps much higher. At 6% our annual interest payments will be about $1,000,000,000,000 a year in interest only. Since our government only takes in $2,700,000,000,000 in taxes a year, this means interest on the debt could easily be 37% of this and this guarantees a bad recession. And, GOD FORBID, if interest rates spike up like 1979-81 to the 12-14% range… then about $2,000,000,000,000 a year could be paid in interest only.., and this number will be higher if we continue to borrow another $1,000,000,000,000 a year until then. At that point we will be in the worst Depression EVER… because there is no way to pay this interest without massive tax increases AND massive spending cuts. All of this because our government is too stupid to make the hard decisions now, and all because our citizens are too ignorant and mathematically stupid to demand it! Sorry, but I see no reason to cheer anything in our economy.

  25. Jeff Beamsley says:

    Obama doesn’t get to decide what we pay and what we don’t pay. Neither does the Treasury.

    We pay everything pretty much in a first in first out manner by computer. So the first issue is a technical one. Somebody has to figure out how to screen the payments and choose which ones to pay and not to pay. That’s not the biggest problem, however. The biggest problem in a legal one.

    While it may be POSSIBLE to prioritize payments, legally it is something that Congress has to decide. That’s why we have the whole budget and CR process. If Treasury did it on their own, it would be illegal. If Obama did it, he might have some constitutional foundation in the 14th amendment to do so. But as he has already said, any action on his part to prioritize payments without Congressional authorization is likely going to be challenged in the courts by at least those people who didn’t get paid. Those court cases will put ALL payments made under that sort of plan at risk until the court case is decided. In the meantime investor confidence is going to be shot. That’s why those who propose this wrong-headed “oh it won’t be so bad” option are being called Debt Deniers. It IS that bad.

    As the United States nears default, investors have demanded more compensation for lending to the government, with yields on short-term debt spiking to their highest levels in years.

    BTW, we have already seen short term interest rates on new bond sales jump because of the increased risk investors feel they are taking in making these investments. We are also seeing major financial institutions dumping their bond holdings for the same reason. They clearly don’t share the same view as the Debt Deniers. It IS that bad.

    Republicans, Democrats, and Obama each submitted a budget this year. According to Politifact, Obama has submitted a budget request every year that he has been in office including this year. He submitted his budget this year on April 10th. Here’s a link to that budget. Republicans made a big deal out of the fact that Obama missed the normal February budget deadline. The reality is that House Republicans had no intention of passing a budget this year. Within days of submitting his budget, Republicans stopped talking about budgets. That’s because they already planned to hold the government ransom in order to extort some concessions from the Democrats and the White House.

    As Politifact pointed out, the President doesn’t pass a budget. That’s the responsibility of Congress. The past three weeks should be all of the proof you need that voters should be demanding that Congress pass a budget.

    Obama’s vote against raising the credit limit WAS political. It positioned him as one of the few democrats opposed to the Iraq war which was his basis for running for president. It worked for him, so I would not say it was stupid. It did turn out to be hypocritical, so perhaps that’s a better word. Clearly not “equally stupid” because there was zero risk that his vote would result in a failure to increase to government’s credit limit. That’s the difference between the political position that he took and the political position that Ted Cruz took.

  26. keith says:

    Obama´s budget never got a single vote if I remember correctly. The senate didn´t do its work for years under Dem control also instead going in favor of CR´s. You defended this once if I remember correctly.

    The repubs have looked like idiots recently. I believe they era outwardly concerned about the ACA and Debt. The only spin they can put on the poor showing is ¨we made ourselves look bad to defend the future of América. No Mr & Mrs. Democrat, YOU own the AFA, we did all we could including making ourselves look stupid.¨AS a political consultant I can´t think of anything else currently to advise them to say.

    Bottom line they do own it now. Repubs should have just got out of the way and let the public anger destroy the dems if the system does fail, as it currently is. See interview with CEO of Atena…..

  27. Jeff Beamsley says:

    you asked if Obama has ever had a budget. The answer is yes, he has proposed one every year that he has been in office. The last budget that was passed by Congress was in 2010, which was the last year that the Democrats had a majority in the House. Congress failed to pass a budget this year even though they had a choice of three. That is the fault of Congress.

    Obamacare will not fail for four simple reasons.

    1. The vast majority of employer insured people will see no changes in their policies.
    2. Millions of people who previously could not afford insurance will receive it at a price they can afford.
    3. A comparatively small number of people will see their rates go up as a result of Obamacare (mainly well-off healthy young people). They will still buy insurance even though it may cost them more because they aren’t getting it through their employer AND more importantly they can afford it.
    4. States who have chosen to support medicaid expansion will see an economic uptick driven in part by an increase in population as people who need insurance vote with their feet. Business pressures particularly from hospitals will force all states to participate in expanded medicaid. All 26 Republican governors who have chosen not to expand medicaid will eventually change direction or be replaced by someone supporting this expansion. Money talks and Republicans who refuse to listen will eventually be fired by the same business interests that put them into office in the first place.

    Tea Party people will continue to be angry, but they have now lost credibility with the rest of the country.

    The rest of the country expects government to work and they want Congress and the President to immprove Obamacare, not repeal it.

  28. Jeff Beamsley says:

    Regarding debt and interest rates.

    It is true that if interest rates spike, we are all going to be in trouble.

    It is also true that if oil prices spike, we are all going to be in trouble.

    It is also true that if there if a terrorist releases sarin gas in the New York subway system, we are all going to be in trouble.

    It is also true that if sea levels rise two feet as a result of climate change, we are all going to be in trouble.

    We live with existential risks every day. The reason we are able to live with them is that the possibility that they will actually occur is very small.

    The reason interest rates are low is because demand for our debt exceeds the supply of bonds that we are willing to sell. The reason demand exceeds supply is because the rest of the world is even less predictable than the US. If the most recent Tea Party defeat can convince them to stop launching kamikaze attacks on the economy, our interest rates will remain low for the foreseeable future because of the following factors. The US is one of the world’s largest democracies. The US has one of the largest free market economies. The Federal Reserve is able to act independently from the legislature. US deficits have fallen to safe and manageable levels.

    The truth is that the boogie man that was the debt is no longer hiding under the bed and the Tea Party can’t use this issue to justify their actions anymore. As a result, voters are looking for responsible representatives and a government that works. That stands in stark contrast to the “burn it down and throw all the bums out” Tea Party battle cry. Voters don’t want to hear that anymore and will punish those who continue to act that way in upcoming elections.

  29. Jeff Beamsley says:

    Regarding the American Center, I agree.

    Republicans lost the last election because they failed to embrace this demographic.

    The Tea Party does not represent this demographic.

    Since elections are about choices, rather than polls, this demographic will continue to vote Democratic. That’s because Democrats are currently closer to this center in terms of their policies and platforms than Republicans.

    The smart people in the Republican party know this. The ideological people in the Republican party don’t care.

  30. keith says:

    The things you mentioned are if´s…. Our debt and what is coming is NOT AN IF! It´s coming, it´s enivitable. There is no stopping it… Unless we make changes soon.

    SO again my question. Mr. Savor Works his whole life and saves all he can. Assamses $2 million at the age of 65. He buy 30 treasuries and gets 5.5% (guessing) this provides for him na income of $110k plus $24k in SS. SS goes bankrupt and the govt needs to make cuts in many áreas, AND interest rates are higher.

    Will the person who saved his whole life see reduced interest payments and SS because the Govt ¨GIVES¨him $134k per year and the poor sould who only gets $15k in SS be made whole? Who will be penalized?

    17 October 2013 – 11H37

    Chinese agency downgrades US credit rating

    AFP – A Chinese ratings agency downgraded its US sovereign credit rating Thursday despite Washington’s resolution of the debt ceiling deadlock, warning that fundamentals for a potential default remained “unchanged”.

    Dagong lowered its ratings for US local and foreign currency credit from A to A-, maintaining a negative outlook, the agency said in a statement.

    The announcement came after the US Congress passed and President Barack Obama signed a bill that extends the nation’s borrowing authority and ends a two-week government shutdown.

    “The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged,” Dagong said in the statement, adding Washington’s solvency was vulnerable as old debts were still repaid through raising new debts.

    “Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future,” it said.

    Dagong made headlines in August 2011 when it lowered its main rating for US sovereign debt after Congress passed an earlier bill to raise Washington’s debt ceiling.

    The agency, which is far less prominent than long-established Western competitors including Moody’s, Fitch and Standard and Poor’s, has been working to further raise its profile.

    China’s official news agency Xinhua said Thursday in a bylined commentary that US politicians had held the rest of the world hostage in the crisis.

    But Beijing welcomed the agreement, saying it will contribute to global economic stability.

  31. keith says:

    October 17, 2013 at 1:00 am
    Daniel Howes
    Status quo won’t survive bankruptcy

    Jeff,
    What is importante to remember about Detroit, the city you said was doing great, is that if the chapter 11 is dismissed by the court, THERE IS STILL NOT ENOUGHT MONEY.

    So with this as a backdrop, where are we as a nation as it relates to the times line of events that took down Detroit? If we don´t act we will end up just like this…. FACT!!!!!!!!!!!!!

    SO applaud that the Dems won, you should and the repubs were pathtic, but the dems simply will not prevent this from happening, heck the repubs won´t for that matter…..we repay old debt with new debt. We are underfund on soooo may levels. Impossible if we don´t act not. Or, we make choices amoung citizens… Yes you get yours, no you don´t get yours…

    Daniel Howes

    The chairman of the state Senate Appropriations committee, a Republican, calls the emergency manager’s plan to make Belle Isle a state park “dubious.” The Detroit Institute of Arts wants the state (i.e., Michigan taxpayers) to contribute millions to the city’s workout on behalf of the museum.

    Pensioners and public-sector unions want an insolvent city to honor obligations it demonstrably cannot afford, now or in the foreseeable future. Bondholders happy to reap fat yields from Detroit debt now demand the city honor its “full faith and credit” pledge when there’s no such thing in bankruptcy.

    Mayor Dave Bing complains that Orr, a bankruptcy lawyer, is bungling city operations and frustrating his department heads. Really? As if City Hall under the former NBA great purred with teamwork, political savvy and bureaucratic efficiency.

    Even business leaders theoretically supportive of the historic Chapter 9 are privately squeamish about bankruptcy’s collateral damage, chiefly because the concessions the process aims to impose through the court on everyday city workers and retirees are so comparatively harsh.

    “If you cut their pension dollars too much, what are they going to do to live?” asks a prominent CEO active in political issues. “It’s all about the numbers, but the numbers have consequences.”

    Yes, they do. But this is bankruptcy, as U.S. Bankruptcy Judge Steven Rhodes’ questioning this week is reminding union and pension lawyers (and their clients), and the status quo does not survive bankruptcy. This is what too many warned for too long would happen absent a serious, fact-based restructuring that otherwise would not have materialized before Team Orr did.

    Detroit’s status quo failed. The city couldn’t maintain Belle Isle, and couldn’t operate a world-class museum whose management it outsourced even as the city imperiled its collection to save it. It couldn’t make required contributions to pension plans overseen by ethically challenged boards, and it couldn’t manage its books, its cash flow, its departments and so much more.

    It couldn’t, in plain English, do what needed to be done to a) widely recognize its dire financial predicament so that it could b) begin a methodical process to restructure its balance sheet, rationalize its operations and improve its service delivery.

    Pretending otherwise, as do terminal skeptics of Orr, the emergency manager law and the bankruptcy filing, is absurd. That confuses suspicion and ideological zeal with generally accepted management principles and a long historical record of miserable performance.

    It is, of course, understandable that such endangered constituencies as unions and pensions, bondholders and insurers, are standing astride Judge Rhodes’ courtroom yelling stop. If past (and, to some extent, current) behavior is any predictor of the future, how would Rhodes booting the city’s Chapter 9 petition yield a different result?

    It wouldn’t, at least not in the real world. The interests asking Rhodes to kick the nation’s largest municipal bankruptcy out of court want to turn the calendar back to a time when, what, the city flouted its consent agreement with the state Treasury Department and union leaders insisted no financial crisis existed in Detroit?

    But there is a crisis, and it’s as obvious to average Detroiters as it is to camera crews from “60 Minutes” harvesting B-roll from the city’s dilapidation. It’s obvious to credit ratings agencies, municipal analysts, police officers and firefighters struggling to do their jobs with substandard equipment and shrunken payrolls.

    Yes, I know: Judge Rhodes has yet to decide whether Detroit is eligible for bankruptcy, even though the petition will be three months old Friday. He’s yet to rule whether the state constitution really does protect the vested pension benefits of public-sector employees under federal law.

    The court has yet to consider a “plan of adjustment” from Orr and his team that actually proposes to cut pensions. The court has yet to be asked to confirm a plan that would sell pieces of the DIA’s city-owned collection to raise cash, or would jettison departments and services (such as they are) that define the city bureaucracy and the people who work for it.

    However successful the arguments advanced by unions, pensioners and others, none of it alters the conditions that precipitated Detroit’s bankruptcy filing — or the need for a sustainable workout that changes the status quo, for good.

  32. Jeff Beamsley says:

    As much as you would like to use Detroit as a jumping off point for the whole country, it isn’t.

    I have never said everything was great in Detroit. My issue is that everything isn’t bad. There is growth and renewal occurring even as the financial issues are working themselves out.

    Also your basic assumption regarding Detroit pensions is flawed. The pension plans for Detroit city works were modest at best. The issue was not that Detroit was bankrupt by its pension plans.

    It is a FAR more complex problem than that.

    My list would start with corruption, but there have been many corrupt cities who managed to continue to operate just fine. Chicago is a great example.

    Chicago, like Detroit, also suffered from white flight to the suburbs, but managed to survive that too.

    Detroit collapsed as a functioning governmental entity because it could not come to grips with the fundamental functions that it needed to provide in terms of city services to continue to justify collecting taxes. That’s where Chicago and Detroit diverged. Chicago ALWAYS understood that they had to pick up the garbage, put out the fires, keep the lights on, shovel the snow, and keep the peace. The understanding in Chicago is that everything else was fair game in terms of bribes and kickbacks, but anything that affected basic city services was dealt with quickly and harshly by those in power. Detroit’s neighborhoods collapsed as the basic city services to support them disappeared.

    What exacerbated Detroit’s collapse was the collapse of the domestic auto industry. The auto industry in Michigan was in recession for a decade prior to the financial collapse. So even if Detroit had it’s act together, which it didn’t, there STILL would have been very serious problems because of high unemployment caused by decades of domestic auto manufacturing contraction.

    Next, the bankruptcy process in Detroit isn’t going to solve much of anything until the political climate in the state and at the Federal level changes. As you’ve said, there just isn’t enough money here. The governor and the president both know that Detroit is going to need some help, but Detroit is going to have to clean up its internal politics before that happens. Mike Duggan will likely win the next mayoral election. We’ll see if he will be able to bring the discipline necessary to build some confidence at the state and federal levels that any assistance they provide will be spent wisely.

    Finally, what Detroit needs to do is obvious. It has to get smaller and more dense. That means a large scale program to build new neighborhoods and provide incentives for people to move out of old neighborhoods into new ones. This isn’t something that Detroit is going to be able to finance on its own, but right now the basic economic metrics don’t work. There just aren’t enough people to support the costs to provide consistent city services to the vast swaths of the city that are now sparsely populated.

  33. keith says:

    Jeff,
    Nice commentary again but it doesn´t matter. What does matter is your last paragraph. It doesn´t matter HOW Detroit got in this position. WE, the USA WILL end up in the same place, unable to me our obligations as SS will not be fully funded becasue there won´t be enought workers to support the collectors… So if Detroit got there by White FLight and a crippled Auto Industy and the USA gets there by SS program where not enough Money is collect to cover the millions that are living much longer doesn´t matter. They are both at the same place, unable to meet obligations. SO whle your take on how Detroit got where it is isn´t useful. Denying the USA will eventually get to the same place is the problem. The State of Illinos retires teachers at the age of 52 with full benifits, healthcare and 75% of the best 5 years of pay…. Soon, in not already they will have three generations of teachers. The list goes on and on including the 20 year firefighter vet in NYC collecting $100k plus per year for 60 years or more…..

    Doesn´t matter the particular path the gets you to bankruptcy it jus that you got there…. USA is going exactly as Detriot, unable to pay on future promises made…

    Finally, what Detroit needs to do is obvious. It has to get smaller and more dense. That means a large scale program to build new neighborhoods and provide incentives for people to move out of old neighborhoods into new ones. This isn’t something that Detroit is going to be able to finance on its own, but right now the basic economic metrics don’t work. There just aren’t enough people to support the costs to provide consistent city services to the vast swaths of the city that are now sparsely populated.

  34. Jeff Beamsley says:

    Keith,

    Sorry but your analogy isn’t even close.

    Basically you are saying that because Detroit declared bankruptcy, the federal government will also declare bankruptcy.

    I appreciate your anxiety over Social Security, but there is a HUGE difference between SS and the monetary issues that Detroit was dealing with. They are just not related even in the most creative minds.

    I also appreciate your concerns about defined benefit plans, but we’ve gone over these in great detail too. They are NOT inherently bad programs if the investments are professionally managed. New York is great example of a state that manages the investments to support their pension plans quite well. Insurance companies also sell similar plans as investments. They call them annuities. This is not rocket science. Just requires good management and a level of discipline that most local and state governments can manage quite well and others can’t. The bottom line, however, is that these defined benefit programs are being phased out. Social Security IS NOT a defined benefit program. It is an insurance program.

    We have to make changes to Social Security and Medicare. The nature of the changes are well known. Stabilizing the deficit so that the debt is not getting any worse, give us the chance to make those changes. Once those changes are made, both programs will be healthy through at least the period of time when Baby Boomers will be a strain. 25 years from now, most of the baby boomers will have passed on and the ratio of retirees to workers will return to a balance where both SS and Medicare funding plans will work fine.

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