News

House OKs debt-ceiling bill; Eshoo votes 'aye'

Palo Alto's Democratic representative calls the crisis 'inexcusable'

After weeks of partisan bickering over raising the debt ceiling that threatened to plunge the country into default, a last-minute deal was approved by the U.S. House of Representatives on Monday (Aug. 1).

Rep. Anna G. Eshoo (D-Palo Alto) became one of 95 Democrats who voted in favor of the Budget Control Act of 2011 in a 50-50 split among House Democrats.

If passed by the Senate and signed by President Obama, the legislation will raise the U.S. government's debt ceiling.

In a statement Eshoo released Monday afternoon, she said she voted for the controversial bill because its failure and a government default would spell national and international economic catastrophe.

"I could never sit by and allow this to happen to our great country. While I'm very disappointed that the plan is not a balanced one, including closing corporate tax loopholes and raising revenue, I accept the fact that compromise is necessary in order to protect our country.

"It has been inexcusable for some members of the House to have created this extended crisis which has raised the anxiety of my constituents, angered others, and caused confidence to plummet. It never had to be this way," she wrote.

The bill passed 269 to 161 at about 7 p.m., the Washington Post reported on Monday. Republicans numbered 174 and Democrats 95 in favor, while 66 Republicans and 95 Democrats voted against it.

House Speaker Nancy Pelosi (D-Calif.) also voted in favor of the bill, the Washington Post reported.

The agreement ensures the debt ceiling will be raised through 2012. The nonpartisan Congressional Budget Office said the compromise would cut deficits by at least $2.1 trillion over the next 10 years.

Specifically, it would immediately cut $917 billion. A Joint Committee of Congress will be tasked with identifying an additional $1.2 trillion in savings to be voted on no later than Dec. 23, 2011, Eshoo said.

The vote comes one day before the U.S. Treasury deadline to raise the debt ceiling.

The U.S. Senate is scheduled to consider the measure on Tuesday (Aug. 2). If the Senate passes the agreement, President Obama could sign the deal before midnight.

If the budget act is not approved, the government will have defaulted on its debt for the first time in its history.

The text of the bill can be seen here.

Comments

Like this comment
Posted by Paul Robichaux
a resident of Barron Park
on Aug 2, 2011 at 10:42 am

I am amazed that Rep. Eshoo called the Republicans in Congress "terrorists." I don't want to ever hear another word about incivility in politics coming from her or the members of her political party unless and until she's called to account for this.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 2, 2011 at 11:07 am

I guess the truth is too hard for some to bear, the Republicans are terrorists, and for a cause and strategy that will not work, which makes it even worse.

James Galbraith said it this morning:

The debt deal is bad economics, dishonest government, and surrender to blackmail. The alternative is not default, but government under the Constitution.

On the economics: by slowly choking off public services, public investment and regulation, the deal sets the economy on a path to strangulation. Every dollar cut from the budget, now or later, is a dollar less of private income. Less private income means less consumption, less private business investment, fewer jobs. Tax revenues will fall, and the deficits and debt will in the end not be reduced. The so-called "cloud of debt" will not lift. Contrary to the foolish claim made by the White House today, there is no magic by which "lifting a cloud of uncertainty" produces growth. There is no confidence fairy.

Others have said it too, and this POV is proven out by the last 10 years of a steadily declining economy.

I was very sorry Eshoo voted to be intimidated and give in to the blackmail of the TEA Party/Republicans. The debt rating of the US government is not well served in any case by these same agencies that a few years ago were giving mortgage securities AAA rating. The US is still the best place to invest and will be until we apparently go down without a fight against this internal terrorism or self-destruction.


Like this comment
Posted by Crescent Park Dad
a resident of Crescent Park
on Aug 2, 2011 at 11:33 am

We cannot continue to spend money that we do not have. It's going to take both cuts and revenue increases. We will not survive without both efforts.

But don't be fooled by the rhetoric. For example, there are many who would like "corporate loopholes" closed - no argument here. But just remember this - for every loophole closed, the corporations are going to look for ways to replace the lost profit margin...the consumer will be the likely target. So perhaps Mobil looses its loopholes and/or its subsidies - they are still going to want to make a profit - and they'll do that by raising prices.

And don't be fooled by the "raise the taxes on the rich" slogans either. Raising taxes on the top 1% to the Clinton era rates will do nothing more than help on 1-month's worth of budget. What about the next 20 years? So get ready - we are all going to have to pay more in taxes - that is the reality (I'm not complaining, just being realistic).


Like this comment
Posted by Why do they hate us?
a resident of Stanford
on Aug 2, 2011 at 11:38 am

It is shocking that the Republicans have pledged allegiance to Grover Norquist and not to our country. Why do the Republicans hate America so much? We knew a few years ago that they would be willing to even collaborate with Al Qeida--after all, the republicans clearly stated that their goal was to see Obama fail--how better than to aid in a terrorist attack while he is in office.


Like this comment
Posted by Bob
a resident of Community Center
on Aug 2, 2011 at 11:48 am

Did or did not Anna Eshoo vote LAST THURSDAY in the House for a $90 billion gift' of foreign aid? Much of this goes to buy arms so they can shoot each other and also to buy U.S. bonds on which we have to pay them interest also. Israel reportedly does it. China and Russia are two of the biggest foreign holders of U.S. bonds. And dear Anna was a staunch supporter of Obama-care. Already people with health insurance like Stanford employees will see a substantial increase on premiums over and above the one for this year so that Stanford could stockpile funds to pay for a health plan excise tax to hit in 2014.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 2, 2011 at 12:23 pm

Bob:

Do you have a link for last Thursday's vote you referenced? I was under the impression that the votes on the debt deal took a lot of the time on Thursday, along with the votes on naming post offices while Boehner wrangled tea baggers took much of the day. There was also some time spent on some Interior appropriations and postponed suspension bills.

Which bill/vote are you referring to?

re: you rant on Affordable care Act: perhaps you noticed recently (ie.. the last decade) that all health care insurance has been going up. One of the nails in the coffin for the vote was one of the blues announcing a 70% increase on premiums during the bill's debate.

Blaming the ACA for all premium increase is like blaming higher milk costs on higher oil prices - it may be somewhat related due to transportation costs, but probably not fully.

So again, offer some links on the Stanford increase, please.


Like this comment
Posted by chris
a resident of University South
on Aug 2, 2011 at 12:30 pm

Paul Robichaux,

You are the one who is inflaming the debate. Her statement and the article do not mention the word terrorist.

But let's call a spade a spade. What euphemism do you call a group of misguided zealots who hold the country and its economy hostage?

You should focus your efforts on studying economics and not focus on what names one person calls another. I would prefer dealing with somebody of substance, not somebody who has such a tender psyche.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 2, 2011 at 12:40 pm

Crescent Park Dad ... the point is not to "soak the rich" for the sake of soaking the rich, the point is that with a shrinking economy less people pay taxes, less people work, less companies and less jobs survive, growth goes down the drain.

Taxes need to go up for those who can afford them.

Companies will raise prices, that is unavoidable, but they will also either have to economize, that means less wasteful spending ... yes, the private sector is wasteful too ... and better products - ie. more competition. According to the definition of capitalism that is supposed to be a plus.

But mostly a good result will be seen by growing the economy, that is not just making more stuff, it is the demand side that is the problem. The immediate big win is taking the people who need assistance and putting them to work so they are off assistance and paying taxes.

The people at the top just either refuse to see that or do not see it, or they think they can just jettison problematic people. Enough of that creates enough of a drag to pull the whole system down.

This first order, knee jerk, reaction to the economy is really what is the biggest thing dragging everything down. The economy is a system, not a wild jungle, and it needs intelligent tending and management. Just as in the private sector there are successes and failures, but getting rid of government is not a solution.

Maybe one good investment we could make is getting people to understand finances and how government works. I am amazed at how many people do not get the difference between the debt and the deficit, or which of these numbers being discussed are 10 year numbers and which are annual. The way things look we need very creative and expert thinking to get us out of this, because these numbers are so so very bad that what this is going to morph into is the people of the country paying what amounts to tribute to government debt holdeers ... a strategy that the US has used all over the world to privatize and subjugate people of foreign countries. Now I guess many in America are looking at poor, middle and working class Americans are another country. This is where a kind of racist component to all this comes in.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 2, 2011 at 12:58 pm

"Taxes need to go up for those who can afford them"

No.

We need to return to the sound policies that allow our economy to flourish. Our economy flourished under the tax structures of Bill Clinton. It flourished (much of the time) under the much higher rates under Reagan, Nixon, & Ike.

Bush's tax cuts for millionaires and billionaires did not help the economy. It did NOT create jobs, yet the top 2% flourished for a decade with that giveaway.

It is time for shared sacrifice to include those that benefited the most the last decade.

The top 1/1000th% (400 individuals) average an annual income of $274 million a year. They have prospered mightily under Bush's tax cuts.

This weekend's debt deal cuts services and support for the middle class and poor, for working Americans and the unemployed, for young and the elderly.

What did millionaires and billionaires contribute in shared sacrifice?


Like this comment
Posted by chris
a resident of University South
on Aug 2, 2011 at 12:58 pm

Crescent Park Dad,

How about getting rid of the mortgage interest deduction?
In addition to raising taxes on the top 2% for fairness, this will raise a lot of money.


Like this comment
Posted by Bob
a resident of Community Center
on Aug 2, 2011 at 1:55 pm

My mom retired from Stanford. Her new health insurance premium for a retiree HMO went up $30 a month for 2011 (Health Net), and her annuity pension of 22 years ago is locked in at the rate when she retired. Fixed amount. The 2011 premium was imposed so that Stanford could 'save the money" to cover the excise tax on some health plans to hit in 2014. Never a pension-annuity COLA increase. To read about Stanford's new employee health plan for next year (some favorite HMO"s like Pacific Care and Health Net being dumped), go to Google and type in "Stanford University Health Plan for 2012" The premiums are not announced, but there's a newsletter coming out in two weeks. Retirees? No one knows yet. As for the foreign aid bill? That was on line news at the time from CNN and others...but it was NEVER in the printed press that I could find. Total blackout. The Stanford info is online. And also Obama also signed "Executive Order # "Establishment of the White House Rural Council" on June 9, 2011 in order to 'enhance Federal engagement with rural communities." There will be board members from 25 different executive branches and offices - with staff "to promote economic prosperity and and quality of life in rural America.". Confirmed by call to Eshoo's office. Another commission, more staff. Also ask Google.. "What does it cost to fly Air Force One"? If the Prez wants to come out to chat with Mark Zukerberg,and have dinner, maybe Mark should pay for it. He's got more $$$$$ than the Treasury Dept. Come to think about it, maybe Zukerberg, Jobs, Gates, and Payton Manning and a few more from the NFL could combine and bail out the entire country!!


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 2, 2011 at 2:47 pm

"Most of the above is absolute balderdash. " Walter: that gives you two choices:
- refute with fact
- retreat to your beck/rush cone of silence and continue burying your head in the sand while yelling "ney ney ney ney I can't hear you ney ney ney...."

Bob:
Telling someone they have to find your proof using google is a tacit admission you can't find a link to a reputable source for your facts.

For example, Walter's "absolute balderdash" statement is disproved with a simple link to the Wall Street Journal website: Web Link and you'll see my top 400 claim was factually wrong:

- I said the top 400 average income was $274 million a year

- CORRECTION - it was $271 million per year.

My apologies. I'm sure they'll miss that 3 million bucks a year.

They were taxed at a mere 18%, likely a lower rate than their plumber was taxed, or their lawyer or secretary.

Again, I ask: In the deal this weekend that hits poor and middle class working Americans, both young and old, what did millionaires and billionaires contribute in shared sacrifice?




Like this comment
Posted by A
a resident of College Terrace
on Aug 2, 2011 at 4:20 pm

If they get rid of the mortgage interest deduction, we won't be able to afford our house any longer (even though we bought it a number of years ago and did not pay the current astronomical prices). We will have to sell it and move away...


Like this comment
Posted by A
a resident of College Terrace
on Aug 2, 2011 at 4:21 pm

Good to know that Eshoo voted yes. I won't vote for her any longer or for anyone who voted yes or supported this so-called "compromise" (Obama) on the future.


Like this comment
Posted by whom
a resident of Palo Verde
on Aug 2, 2011 at 4:25 pm

So,whom can you choose for the next time?


Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Aug 3, 2011 at 5:27 am

Walter_E_Wallis is a registered user.

A pity they censored my previous comment. Instead of dreaming up excuses to increase the taxes on billionaires, why not figure out how to reduce the budget of such useless entities as the Department of Education, the Department of Energy, the TSA, Agriculture, Interior, and even the Military [eliminate the virgin earth requirement].
Double the tax rate on billionaires and they just shift their investments to other venues. they didn't get rich by sitting idly by while they were plucked.


Like this comment
Posted by Jarred
a resident of Midtown
on Aug 3, 2011 at 8:58 am

Thank God for the Tea Party!

Annual federal spending at the end of the Clinton administration was about $2 trillion. Over the 8 GW Bush years, it increased to about $3 trillion. Under Obama/Pelosi/Reid, it has increased to almost $4 trillion, and Obama's proposed budget would have increased it to well above $5B over the next 10 years. At present, the federal government is borrowing about 40 cents of every dollar it spends. Federal spending is now over 25% of GDP, in contrast with a post-WWII average of 18-19%. We have a spending problem, not a revenue problem.

Since Obama has been in office, the national debt has risen from about $10T to more than $14T. The trillions spent on "stimulus" have been a complete and utter failure. Economic growth estimates for the last year were just revised down from 2.6% to 1.6%. So, in return for those trillions in stimulus, we have chronic low growth, high unemployment, and now a debt-to-GDP ratio on par with Greece. Nice work, Dems! As if more proof was needed that Keynesianism doesn't work.

The "spending cuts" in the latest deal are only cuts against a projected 10 year baseline of future spending increases. The baseline was to increase debt by another $9T to $23T. Only in Washington would a small reduction in a huge planned spending increase be called a "spending cut".

S&P has said repeatedly, starting many months ago, that they would lower the US credit rating unless we made substantial cuts in future deficits. I recall that they wanted at least a $4T reduction over the next 10 years. The latest deal gives us $2.4T in reductions, and those are heavily backloaded to the end of the 10 year period, and hence subject to revocation by future Congresses. I expect S&P to downgrade US credit within the next year, and we will have earned the downgrade based on the profligacy of the last 12 years, under both Bush and Obama.

I wouldn't sink to the level of the Dems and use the word "terrorist" to describe those who believe in ever-increasing government borrowing and government. The phrase "economic reality deniers" seems appropriate though.

And for those who think only the Dems play partisan politics with the debt ceiling, consider this: in the last 10 cases in which a vote was held on increasing the debt ceiling, Harry Reid voted No in all 5 cases in which the president was Republican, and voted Yes in all 5 cases in which the president was a Democrat. But that doesn't make him a terrorist, just a corrupt, partisan hack, like the rest of them.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 3, 2011 at 9:12 am

Jarred, you are incorrect.

Clinton's debt ended at a manageable and heading in the right direction 6 trillion.
Bush tax cuts added another 6 over 8 year to twelve, then the tarp and bailouts added another 2 trillion to 14 and Obama tossed on another trillion in his supposed stimulus, which was not big enough and also not correctly targeted in the right places to be a stimulus. The point was Bush's debts were deliberate and caused by tax cuts and were claimed to be helping the economy and growth.

It will get worse because we are in a downward spiral and have no hit bottom. People are getting sick, people are losing homes, homes are falling apart and losing values, jobs are being lost, which means less spending and more jobs being lost.

The problem is dropping demand, and rotting infrastructure, physical and people. This seems to be deliberate to me.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 9:51 am

Jarred: "Harry Reid voted No in all 5 cases in which the president was Republican, and voted Yes in all 5 cases in which the president was a Democrat. But that doesn't make him a terrorist, just a corrupt, partisan hack, like the rest of them."

And the same could be said for Mcconnell, Boehner, Cantor, etc.. 70 times, the party in charge of the whichever branch has been responsible for getting Congress's approved bills paid.

The three, McConnell, Bohener, Cantor have voted for debt ceiling raises almost 2 dozen times. After all, they were doing what Reagan told them ("shut up and raise the limit".)

You seem to forget that mere weeks ago the President offered a much larger debt reduction package. Cantor and then Boehenr walked out because the President suggested eliminating wasteful tax loopholes for thing like private jets.

You seem to neglect Boenher's House budget (Ryan) that calls for trillions more in debt and required multiple debt limit raises in order to give tax breaks to billionaires while gutting Medicare.

Jarred: do you support the GOP passed budget that gives billionaires tax breaks while privatizing Medicare?

Your hyperbole with numbers like "trillions in stimulus" needs substantiating links. The stimulus wasn't trillions, despite what glen beck told you. Web Link

And it included the largest middle class tax cut in history. Web Link Without any GOP votes. You can thank Harry Reid and the President. Nancy too!

But your narrative doesn't stand up well when you include facts like that, eh?


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 9:59 am

Beohner promised jobs in November. Jobs are Job One. He promised.

Where are the jobs?

Has any bill he passed even attempted to create jobs? Nay, many of his actions, even if they actually passed, will cost this great country jobs, including this disaster this week.

Like his buddy, Mitch McConnell, who publicly said his first priority was to defeat the President in 2012, who dallies around, hoping things stay bad so they have a chance at retaining the House and a shot at the White House.

Mitch and Bhoener - killing the economy for another year = job 1.

So patriotic.

Where are the jobs bills, Mr Boenher?


Like this comment
Posted by Chris
a resident of University South
on Aug 3, 2011 at 10:40 am

Walter E Wallis,

Please explain how YOU are going to pay for $3 trillion in wars. The items you mention are rounding errors.


Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Aug 3, 2011 at 10:47 am

Walter_E_Wallis is a registered user.

A rounding error here, a rounding error there and pretty soon it mounts up.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 12:47 pm

Walter's answer:

Pay for three trillion in war costs by adding up rounding errors. Never mind his blith response to a subject that includes thousands of American deaths and tens of thousands of injuries with the signature wound of these wars being TRAUMATIC HEAD INJURIES to American soldiers.

Notice how he also misrepresents? He creates an imaginary straw man who wants to "Double the tax rate on billionaires"

The common proposal is for the tax rate for billionaires' income should go back to the Clinton era rates. That's only a couple percentage points above where it is now.

Not double, Walter.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 12:50 pm

There IS a proposal that raises the rates on billionaires more than that. It is form the Progressive Caucus budget plan.

It balances the budget FASTER than the Ryan/GOP house bill that gives tax breaks to billionaires while eviscerating Medicare. Walter prefers the Ryan plan.


Like this comment
Posted by Why do they hate us?
a resident of Stanford
on Aug 3, 2011 at 12:50 pm

[Post removed by Palo Alto Online staff.]


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 12:53 pm

"The People’s Budget eliminates the deficit in 10 years, puts Americans back to work and restores our economic competitiveness. The People’s Budget recognizes that in order to compete, our nation needs every American to be productive, and in order to be productive we need to raise our skills to meet modern needs.

Our Budget Eliminates the Deficit and Raises a $31 Billion Surplus In Ten Years

Our budget protects Social Security, Medicare and Medicaid and responsibly eliminates the deficit by targeting its main drivers: the Bush Tax Cuts, the wars overseas, and the causes and effects of the recent recession."

Web Link


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 12:55 pm

[Post removed by Palo Alto Online staff.]


Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Aug 3, 2011 at 2:40 pm

Walter_E_Wallis is a registered user.

Pass the People's Budget and, within five years, we will be carved up by others; subservient to China, Russia,Iran and a few others. This would be akin to limiting your own police to the city limits and conceding the rest to the crooks. Just the payments in tribute for our ships sailing in foreign waters would be bankrupting. World trade works because we make it work.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 3:24 pm

Well, we got Walter off rounding errors.

Now he's out to tell folks that a working America is bad. Apparently a happy, healthy, working America with a strong economy can't defend it self even if we have more nukes, and carrier battle groups than the rest of the world combined.

I still can't figure out why Walter thinks so little of American ability to defend itself in prosperous times, when that's the EASIEST time to defend ourselves!

So I'll bite: Walter - why would an America that is headed towards paying off all debt, with gainfully employed masses all paying taxes and spending freely, supporting our roaring economy, with a protected social safety net, be carved up in five years?

Don't say it's militarily related, because you said that and were proved wrong in the 90's when Clinton had a great economy with a budget surplus.

The world did not attack us, only 15 Saudis with box cutters.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 3, 2011 at 3:25 pm

"subservient to China"

If we pay down our debt, Walter, how are we any more subservient to China than we are now, or will be while on this path?


Like this comment
Posted by Perspective
a resident of Meadow Park
on Aug 6, 2011 at 8:44 am

And, of course, as absolutely predicted and as attempted to divert by the Tea Party..we are now downgraded by S and P.

S and P and Moody's TOLD us and TOLD us, cut 4 trillion, AND raise the debt ceiling, to keep your rating. Nobody ever said "raise taxes and we won't downgrade you".

The Tea Party pushed the ruling Repubs to try. Ryan's plan would have done this. The Balanced Budget Amend would do this. Both blocked for vote by Reid/Democrats in the Senate and blocked by an absolute declaration of NO WAY by Obama. The Congress did its job..then felt for some reason they had to cave to the Senate and White House, and pass something that purported to cut only 2 Trillion, but in reality will cut 10% of that amount after all is said and done.

What happened to listening to the ratings agency? They told us this would come to pass if we didn't cut 4 trillion...

No great victory for anyone, especially Americans who now will have rising interest rates and inflation. Welcome back Carter malaise and misery. Where is the misery index?

Whose fault? Tired of the blame game, but will jump in..every politician who has borrowed from our future for their desires now for whatever reason. Every politician who lied about Social Security and Medicare being "solvent" out of one side while stealing from it with the other. Every fool, citizen or politician, who refused to listen to facts for the last 20 years and kept voting to kick the debt can down the road, like those monkeys who see nor hear evil in the hopes it doesn't rain down on them. Who are these guys? Every Democrat and almost all Repubs in the DC power group, and every one who votes them in over and over.

Tea Partiers, comprised of 60% Repubs, 20% Dems and 20% Indep, have awoken.

Vote smart in 2012, stop stealing the future of our children. In the meantime, better tighten your belt, our "ruling class" has done it to us again.


Like this comment
Posted by Perspective
a resident of Meadow Park
on Aug 6, 2011 at 9:04 am

AEN: In answer to your last question: because the "People's Budget" reads like a manifesto for destroying our economy. That is how. The goals are pretty, but the methods, as all "progressive" methods do, accomplish the exact opposite of the purported goals.

BTW, did you know that we are THE most "progressive" tax country in all industrialized nations, Europe and otherwise? Web Link

How much more progressive shall we be?

Did you know that we could simply TAKE everything above a million per year that everyone earns in this country, and it still wouldn't cover our budget? And, of course, the next year nobody would be dumb enough to earn more than a million per year. That is the consequence of "progressivism". Web Link

I used to be socialist, too. Then I saw what it did to every Nation that has tried it. I saw that our poor were richer than the poor throughout Socialist Europe, and our middle class not as well off as their middle class, about 20 years ago..No thanks, I learn from others.


Like this comment
Posted by Alfred E Newman
a resident of Atherton
on Aug 6, 2011 at 9:32 am

Perspective:

Read the S&P statement, please. Paste the part of it that says they're worried we haven't, we won't or we can't pay back any obligations.

Can't find it, can you?

Now, about your tea bagging brag. From S&P:

"The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy ... It appears that for now, new revenues have dropped down on the menu of policy options."

S&P just said it.

Thank you, John Boehner & his tea bagging cons, for our first downgrade.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 6, 2011 at 9:52 am

SP should have started downgrading the US when Bush instituted his tax cuts, but they let 7 debt ceiling raised go by and kept silent, as they did with the mortgage securities, and did the same in the dot.com bust.

Who cares. The credit rating agencies are next to useless.

Now, who does it look like is driving this purely political move? Whoever it is is not a very good driver. Why are all of a sudden these ratings to be taken seriously. One by one it shows industries all falling under the hierarchy of the same military-industrial complex that wants to remove all power and all resources from the people and dump debt on their backs, remove social programs - without asking or representing the public.

The idea of too big to fail is being used as a sword to control our own people by the same small group of idealogues that has brought about these failures to the point of being threatening.


Like this comment
Posted by Jarred
a resident of Midtown
on Aug 7, 2011 at 12:59 am

@Anon:
You said "Clinton's debt ended at a manageable and heading in the right direction 6 trillion.". According to www.treasurydirect.gov, the figure was $5.6T
Web Link

You said "Bush tax cuts added another 6 over 8 year to twelve ...". Not true, according to the above link, debt at the end of the GW Bush years was #10.0T. So under Bush, the national debt increased by $4.4T, not by $6T as you claimed.

Now, the national debt is now approximately $14.6T, so it has already gone up by $4.6T in less than 3 years of Obama. Thus, Obama has raised the debt more, in less than 3 years, than Bush did in 8 years.

You also said (apparently in reference to the $787B stimulus bill) "which was not big enough and also not correctly targeted in the right places to be a stimulus". We are in complete agreement that it was ineffective, but for different reasons. I think that it was ineffective because Keynesianism doesn't work, although I agree that it was exceptionally poorly managed as well. But I think you tend more toward the age-old liberal chestnut that if the government spends massive amounts of money and fails to improve the economy, the only possible explanation is that not enough money was spent. This viewpoint has the appealing benefit of being almost non-falsifiable, since there will always be some restraint to prevent the levels of borrow-tax-and-spend that the Krugmaniacs would espouse.

@Alfred E Newman:

You said "And the same could be said for Mcconnell, Boehner, Cantor, ..". I agree that the Republican party forfeited all claim to fiscal responsibility during the GW Bush years. Absent the Tea Party infusion into the GOP party, the Republicans have exactly zero credibility as fiscal conservatives. Out of Democrats, Republicans, and the Tea Party, only the Tea Party has any credibility where fiscal restraint is concerned. If the Republicans bait-and-switch again on fiscal conservatism this time, I think the Tea Party should disassociate themselves from the GOP and let the GOP wither and die.

You said "You seem to forget that mere weeks ago the President offered a much larger debt reduction package." However, the President never provided any details of his plan, so your assertion is hearsay about closed-door negotiations.

You said "You seem to neglect Boenher's House budget (Ryan) that calls for trillions more in debt and required multiple debt limit raises in order to give tax breaks to billionaires while gutting Medicare."

All of the plans, including the final bill, called for trillions more in debt, that's why none of them come close to solving the problem. Do you think the entire $1.5T annual deficit is incurred by giving tax breaks to billionaires? If so, you are tilting at windmills. The estimates for additional federal revenue due to reintroducing the top two income tax bracket that were eliminated in the Bush tax cuts are on the order of $40B-$80B per year. With an annual deficit of $1.5T, that is roughly 3-5% of the deficit. You could do better by just eliminating the Dept of Education, which has a 2011 budget of $77B and produces zero value.

I'd be curious to hear your viewpoint on property rights. Do you believe that people should be able to own property that the government can't seize and redistribute? Or, are you more comfortable with government bureaucrats deciding when a person has "too much", and then taking away the "excess" and giving it to other people (or themselves) in the name of "fairness"? I think I can guess your viewpoint on this.

You said "Your hyperbole with numbers like "trillions in stimulus" needs substantiating links.". I count the 2009 stimulus bill ($787B) as well as QE1 and QE2 ($2T total) as part of the stimulus, as does Alan Greenspan:
Web Link
So, total stimulus spending is now on the order of $2.8T.

If you look at the above link, you'll see the following:

<quote>
In a blunt critique of his successor, Fed Chairman Ben Bernanke, Greenspan said the $2 trillion in quantative easing over the past two years had done little to loosen credit and boost the economy.

"There is no evidence that huge inflow of money into the system basically worked," Greenspan said in a live interview.

"It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion," he said. "Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1."
</quote>

So, as I predicted in my post above, S&P has downgraded our credit, primarily because we made insufficient progress in lowering deficits. As much as the libs will try to pin this one on the Tea Party (or maybe GW Bush or global warming), the fact of the matter is that Obama/Reid/Pelosi owns this from top to bottom, and can add it to their list of economic accomplishments, which now includes: prolonged 9%+ unemployment, the worst recovery from any post-WWII recession by a wide margin, an unconstitutional, job-killing massive healthcare entitlement, and the by far the fastest increase in national debt of any administration ever. But don't worry, the Dems aren't our of ideas yet--we can still try raising taxes and borrowing even more money. It's the new "drink yourself sober" school of economics!

Unfortunately for the Dems and the old-school GOP, there is a new voice of reason in the debate, in the form of the Tea Party. As much as the liberals try use their wholly-owned subsidiary, the mainstream media, to slander the Tea Party, the electorate understands the situation pretty well. We have a spending problem, not a revenue problem. There is exactly one mainstream political movement whose number one priority is reducing government spending, and that is the Tea Party.











Like this comment
Posted by Anon.
a resident of Crescent Park
on Aug 7, 2011 at 2:50 am

Greenspan said:

>>>> “I’m not saying the stimulus is not working, I’m saying it’s working far less than anyone anticipated,” Greenspan said today at the Council on Foreign Relations in New York.

Everyone that was for the stimulus said it was too small. It was also directed way too high, at the very rich people who refuse to pay taxes ...

... which Greenspan also says the Bush tax cuts need to come to an end ...

>>>> He also said he favors raising taxes to curb the federal budget deficit, joining the debate in Congress over whether to extend reductions enacted under President George W. Bush.

You pump out a lot of stuff, and take little pieces of it to support a point that cannot be supported.

Oh, and throw in the old Liberal media line to boot. What nonsense.


Like this comment
Posted by Perspective
a resident of Meadow Park
on Aug 7, 2011 at 9:51 am

I repeat ( sorry gang...seems it is hard to stay on focus on this thread),,..S and P and Moody's told us they would downgrade us if we didn't do 2 things

1) Raise the ceiling
AND
2) Cut 4 trillion.

Repub controlled Congress passed 2 bills that would have filled both requirements.
Dem controlled Senate killed them.

In the end, the "political brinkmanship" of the Dems who refused to allow the cuts brought us to the downgrade.

And, guess what? Another is on the way if we don't cut our spending.

So, STOP SPENDING. We are like spoiled kids who can't understand we have no more money for candy. They are telling us STOP..and we are throwing tantrums.


Like this comment
Posted by Perspective
a resident of Meadow Park
on Aug 7, 2011 at 9:59 am

Jarred: VERY well written

Anon: "Should have started downgrading when Bush blah blah blah". Like the tax rate is not in a vacuum for economic effect ( it is taxes, regulations, trust in our policies to not shift in the winds, that affect businesses and jobs), neither is debt in a vacuum.

If I make a $100,000/year and want to borrow $32,000, no problem, not debt problem, no worries. ( This was Bush years...though, frankly, we people who were the seed corn for the Tea Party were already fed up with the rising debt ceiling then, too).

If I make a $100,000/year and want to borrow $100,000..well, then eyebrows raise and the credit ratings start crashing. That is where we are now.

Which is why we have to cut our spending, cut our borrowing. Simple.


Like this comment
Posted by Perspective
a resident of Meadow Park
on Aug 7, 2011 at 10:06 am

Chris: Get rid of the mortgage deduction to make it "fair' for the top 2% earners to pay more? My God, man,,...how do you think over 65% of all Americans own their home? Do you think 65% of All Americans are in the "top 2%" and should "pay more"???

Good grief, with this constant envy-mongering, take if from those who have more mentality, we are doomed ..

Better to make it harder for people to own homes, their single largest investment in their lives, cause them to rent all their lives and build no equity in a house? That sounds like Europe, where those with property or money were "frozen into place" when socialism hit them, locking out "new money" growth.

No.


Sorry, but further commenting on this topic has been closed.

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