President Barack Obama rejected a short-term deal on raising the debt ceiling, noting that the administration and Republicans are still miles apart when it comes to a long-term solution.
The folks over at Bankrupting America recently put out this video compiling data from polls showing how Americans feel about raising the debt limit, highlighting that most believe the problem is spending, not a lack of tax revenue.
After President Barack Obama’s class warfare rant last week, Sen. Marco Rubio (R-FL) took to the lectern in the Senate and denounced the divisive rhetoric used and explained the opportunity before members of Congress should be used to reform the tax code to make America more prosperous; not punish people for success:
H/T: Dan Mitchell
The Huffington Post has a piece about how Treasury Secretary Timothy Geithner plans to use the Fourteenth Amendment as at least part of his argument regarding the debt ceiling. He even apparently has his copy of the Constitution paper clipped so that it can open it right to that section.
From the Huffington Post:
“I think there are some people who are pretending not to understand it, who think there’s leverage for them in threatening a default,” Geithner said. “I don’t understand it as a negotiating position. I mean really think about it, you’re going to say that– can I read you the 14th amendment?”
Geithner whipped out his handy pocket-sized Constitution. Allen tried to brush it aside. “We’ll stipulate the 14th Amendment,” he said.
“No, I want to read this one thing,” Geithner insisted.
“It’s paper clipped!” Allen observed, noting that Geithner’s copy of the Constitution was clipped so that it would open directly to the passage in question.
“‘The validity of the public debt of the United States, authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion’ — this is the important thing — ‘shall not be questioned,” Geithner read.
It’s funny how Geithner, a member of the Obama Administration, will look at an amendment and insist on the literal meaning of it. I don’t think they’re not wrong either, we constitutionally can not default on our loans if at all possible to avoid it. Personally, I don’t think it’s possible indefinitely, but he’s probably right about the meaning. That’s how I take it anyways.
As House Republicans prepare to make a deal on the debt ceiling with the White House, Rep. Ron Paul (R-TX) is offering a solution that is receiving some praise from The New Republic, a publication ordinarily hostile to libertarianism:
Representative Ron Paul has hit upon a remarkably creative way to deal with the impasse over the debt ceiling: have the Federal Reserve Board destroy the $1.6 trillion in government bonds it now holds. While at first blush this idea may seem crazy, on more careful thought it is actually a very reasonable way to deal with the crisis. Furthermore, it provides a way to have lasting savings to the budget.
The basic story is that the Fed has bought roughly $1.6 trillion in government bonds through its various quantitative easing programs over the last two and a half years. This money is part of the $14.3 trillion debt that is subject to the debt ceiling. However, the Fed is an agency of the government. Its assets are in fact assets of the government. Each year, the Fed refunds the interest earned on its assets in excess of the money needed to cover its operating expenses. Last year the Fed refunded almost $80 billion to the Treasury. In this sense, the bonds held by the Fed are literally money that the government owes to itself.
News broke last evening that Treasury Secretary Tim Geithner, everybody’s favorite tax cheat, may be leaving the Obama Administration once the White House and Congress work out a deal to increase the debt ceiling:
Treasury Secretary Timothy F. Geithner has signaled to White House officials that he’s considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the federal debt limit, according to three people familiar with the matter.
Geithner denied that he plans to leave and said speculation about his departure was being driven by his decision to commute to New York so his son can finish his final year of high school there.
“I live for this work,” he said at the Clinton Global Initiative in Chicago. “It’s the only thing I’ve ever done. I believe in it. We have a lot of challenges as a country. I’m going to be doing it for the foreseeable future.”
Geithner hasn’t made a final decision and won’t do so until the debt-ceiling issue has been resolved, according to one of the people. All spoke on condition of anonymity to talk about private discussions.
Well, I’m not going to miss him if he does leave.
Playing the part of world policeman can be pretty expensive. How expensive? A new study says that the price of our foreign intervention could reach over $4 trillion and cost 225,000 lives; including civilians:
The final bill for U.S. military involvement in Iraq, Afghanistan and Pakistan could be as much as $4.4 trillion, according to a comprehensive report Tuesday.
In the 10 years since American troops were sent into Afghanistan, the federal government has already spent $2.3 trillion to $2.7 trillion, say the authors of the study by Brown University’s Watson Institute for International Studies.
The report calculates not only direct spending on the conflicts but also the long-term costs of caring for wounded veterans and projected war spending from 2012-20.
At a minimum, according to the authors of the study, the final cost for these military engagements will be $3.7 trillion. But the report also points out that their estimates do not include at least $1 trillion more in interest payments and other costs that cannot yet be quantified. Indeed, the report criticized the U.S. Congress and the Pentagon for poor accounting.
You can read more about the study here.
While Republicans are debating foreign policy, they’re largely missing the point. The Bush Doctrine, which has now become the Obama Doctrine, is unsustainable from an economic perspective (not to mention the human toll). This seems to be a point lost on neoconservatives, that taxpayers eventually have to foot the bill for war. That’s not to say there isn’t justification, but most of what we’ve done in the last 10 years has been unnecessary; and sadly, it doesn’t look like it’s going to end anytime soon.
During a press conference yesterday, President Barack Obama stressed the importance of raising the debt ceiling - the statutory limit on the national debt - by the August 2nd deadline and repeating the same tired class warfare rhetoric that we’ve become familiar with since he arrived on the national scene:
In his first full-scale news conference since March, the president insisted that Democrats had compromised in private talks by agreeing to billions of dollars in budget cuts that would hurt their voters. But, he said, Republicans were refusing to bend by not agreeing to eliminate tax breaks to owners of corporate jets and profit-rich oil companies. If Republicans get their way, Obama said, the end result would be unbalanced deal that lifts the debt limit but forces the government to make deeper-than-necessary cuts.
“If we do not have revenues, that means there are a bunch of kids out there who do not have college scholarships,” Obama said. ”[It] might compromise the National Weather Services. It means we might not be funding critical medical research. It means food inspection might be compromised. I’ve said to Republican leaders, ‘You go talk to your constituents and ask them, “Are you willing to compromise your kids’ safety so some corporate-jet owner can get a tax break?”
Just in case any viewer missed his class-clashing message, Obama referred to corporate-jet owners at least three more times before he took his second question.
It has been noted by some observers that the debt ceiling debate could pose problems for Republicans, but it’s also worth noting that Barack Obama is currently facing his lowest job approval rating on the economy:
President Barack Obama is in a fragile position as the 2012 campaign begins: Only 37 percent of registered voters approve of his handling of the economy, his lowest rating ever, according to a new McClatchy-Marist poll.
Another ominous sign for Obama: By nearly 2-1, voters disapprove of how he’s handling the federal budget deficit, expected to hit a record $1.5 trillion this fiscal year, which ends Sept. 30.
“It’s a real caution sign … the four-year lease on the White House is very much dependent on how people end up looking at the economy,” said Lee Miringoff, the director of the Marist Institute for Public Opinion, which performed the survey.
Overall, 45 percent said they approved of the job the president is doing, while 47 percent disapproved, a range that’s held relatively steady since late 2009. As a result, Miringoff said, “this is a very competitive election year.”
The economic numbers tell why: Fifty-eight percent of voters disapprove of Obama’s handling of the economy, comprising 60 percent of independents, 31 percent of Democrats and 91 percent of Republicans.
Obama is vulnerable, though Republicans shouldn’t get too confident given that most of the candidates their field don’t do well in head-to-head match ups. But Obama can’t afford
Facing a long-term budget crisis, the debt ceiling and even more alarming unfunded liabilties (which are, sadly, not on the table at this time for Democrats), leaders in Congress from both parties met with President Barack Obama yesterday to try to work out some sort of deal:
White House spokesman Jay Carney said a meeting between President Obama, Vice President Joe Biden, and Senate Majority Leader Harry Reid, D-Nev., on Monday morning was “good” and “constructive” in moving toward striking a deal to reduce the deficit.
“Coming out of it, the president told me that everyone in the room believes that a significant deal remains possible,” Carney said.
Carney also reiterated the White House’s calls for a balanced approach that includes attempting to increase revenue as well as cut spending. He said possible sources of revenue increases include closing subsidies and loopholes to oil and gas companies, adjusting the way that businesses account for inventory in taxes. He also mentioned “simplifying the tax code,” leaving aside details.
We’ve been hearing for months that if Congress doesn’t raise the debt ceiling that we’ll default and some sort of economic apocalypse will take place, but a Chinese credit rating firm says that we’re already defaulting on our debt:
A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.
“In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.
Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said.
China is by far the top holder of US debt and has in the past raised worries that the massive US stimulus effort launched to revive the economy would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings.
Beijing cut its holdings of US Treasury securities for the fifth month in a row to $1.145 trillion in March, down $9.2 billion from February and 2.6 percent less than October’s peak of $1.175 trillion, US data showed last month.
Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt “effective measures to improve its fiscal situation”.