Rhodes Scholar, former Secretary of Labor and UC Berkeley Prof. Robert Reich
Apparently the bidding began this afternoon. According to the Wall Street Journal (which got the information from GOP leaders), Tim Geithner met with Republican leaders and made the following offer:
— $1.6 trillion in additional tax revenues over the next decade, from limiting tax deductions on the wealthy and raising tax rates on incomes over $250,000 (although those rates don’t have to rise as high as the top marginal rates under Bill Clinton)
— $50 billion in added economic stimulus next year
— A one-year postponement of pending spending cuts in defense and domestic programs
— $400 billion in savings over the decade from Medicare and other entitlement programs (the same number contained in the President’s 2013 budget proposal, submitted before the election).
— Authority to raise the debt limit without congressional approval.
The $50 billion in added stimulus is surely welcome. We need more spending in the short term in order to keep the recovery going, particularly in light of economic contractions in Europe and Japan, and slowdowns in China and India.
But by signaling its willingness not to raise top rates as high as they were under Clinton and to cut some $400 billion from projected increases in Medicare and other entitlement spending, the White House has ceded important ground.
Republicans obviously want much, much more.
The administration has taken a “step backward, moving away from consensus and significantly closer to the cliff, delaying again the real, balanced solution that this crisis requires,” said Senate Minority Leader Mitch McConnell (R., Ky.) in a written statement. “No substantive progress has been made” added House Speaker John Boehner (R., Ohio).
No surprise. The GOP doesn’t want to show any flexibility. Boehner and McConnell will hang tough until the end. Boehner will blame his right flank for not giving him any leeway — just as he’s done before.
It’s also clear Republicans will seek whatever bargaining leverage they can get from threatening to block an increase in the debt limit – which will have to rise early next year if the nation’s full faith and credit is to remain intact.
Meanwhile, the White House has started the bidding with substantial concessions on tax increases and spending cuts.
Haven’t we been here before? It’s as if the election never occurred – as if the Republicans hadn’t lost six or seven seats in the House and three in the Senate, as if Obama hadn’t won reelection by a greater number of votes than George W. Bush in 2004.
And as if the fiscal cliff that automatically terminates the Bush tax cuts weren’t just weeks away.
But if it’s really going to be a repeat of the last round, we might still be in luck. Remember, the last round resulted in no agreement. And no agreement now may be better than a bad agreement that doesn’t raise taxes on the wealthy nearly enough while cutting far too much from safety nets most Americans depend on.
If Republicans won’t budge and we head over the fiscal cliff, the Clinton tax rates become effective January 1 – thereby empowering the White House and Democrats in the next congress to get a far better deal.
Watch that space.
It’s especially interesting to me how House Minority Leader Nancy Pelosi (D-California) and Senate Majority Leader Harry Reid (D-Nevada) will work to get a solution, if the GOP continues its blockade to almost all action.
After redistricting, we live and vote in Johnson’s district, Texas District 30. Johnson won a three-way race, pulling in more than 50% of the total vote against Clayton and local political activist Barbara Mallory Callaway. Clayton had a lot of signs up. I got personal calls from his campaign early on, as opposed to the annoying robo-calls we got from Johnson in the last couple of days before the primary. Incumbency is tough to beat, and even a great campaign ad won’t do it.
Where was Taj when we were in the 24th District, and we needed a good Democrat to beat Kenny Marchant?
It is a good advertisement. Voters would probably like to see a lot more like it, to explain to them who the candidates are, and what the issues in the election are. Ads of this type live in the endangered species zone, when attack ads and negative advertising carry so much clout.
House Speaker John Boehner famously said that he thought the Republicans got 98% of what they wanted in the debt ceiling agreement, crappy as it was. Then, late Friday, Standard & Poor’s announced they had downgraded the U.S. government’s previously unsullied credit rating. God forbid Republicans had gotten 100%, eh?
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.
Obama should have let the Bush tax cuts expire last year, which would have dramatically reduced our deficit. The Republicans held the unemployed hostage and Obama negotiated a bad deal with the domestic terrorists.
Is there more in that report we should read before we get the torches, tar and feathers to meet with our Republican representatives in August town meetings? Would they get the message with polite questions?
Two organizations provide information to Congress in an unbiased manner, with great care for accuracy and completeness of information: The Congressional Research Service (CRS), an arm of the Library of Congress, and the General Accountability Office (GAO), formerly the General Accounting Office. Both agencies share the unique status of being organs of the Congress, and not the executive branch.
Consequently, we and Congress should give particular consideration to a report issued by GAO on February 22, 2011:
Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market
GAO has prepared this report to assist Congress in identifying and addressing debt management challenges. Since 1995, the statutory debt limit has been increased 12 times to its current level of $14.294 trillion. The Department of the Treasury (Treasury) recently notified Congress that the current debt limit could be reached as early as April 5, 2011, and the Congressional Budget Office (CBO) projects that under current law debt subject to the limit will exceed $25 trillion in 2021. This report (1) describes the actions that Treasury traditionally takes to manage debt near the limit, (2) analyzes the effects that approaching the debt limit has had on the market for Treasury securities, and (3) describes alternative mechanisms that would permit consideration of the link between policy decisions and the effect on debt when or before decisions are made. GAO analyzed Treasury and market data; interviewed Treasury officials, budget and legislative experts, and market participants; and reviewed practices in selected countries.
The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred. While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited. This is because the debt reflects previously enacted tax and spending policies. Delays in raising the debt limit create debt and cash management challenges for the Treasury, and these challenges have been exacerbated in recent years by a large growth in debt. In the past, Treasury has often used extraordinary actions, such as suspending investments or temporarily disinvesting securities held in federal employee retirement funds, to remain under the statutory limit. However, the extraordinary actions available to the Treasury have not kept pace with the growth in borrowing needs. For example, unlike the past, the amount potentially provided by the extraordinary actions for 1 month in fiscal year 2010 was less than the monthly increase in debt subject to the limit for most months of the year. As a result, once debt reaches the limit, Congress will likely have less time than in prior years to debate raising the debt limit before there are disruptions to government programs and services. This trend is likely to continue given the long-term fiscal outlook. Failure to raise the debt limit in a timely manner could have serious negative consequences for the Treasury market and increase borrowing costs. Also, some of the actions that Treasury has taken to manage the amount of debt near the limit add uncertainty to the Treasury market. In the past, Treasury has postponed auctions and dramatically reduced the amount of bills outstanding, which compromised the regularity of auctions and the certainty of supply on which Treasury relies to achieve the lowest borrowing cost over time. GAO’s analysis suggests that borrowing costs modestly increased during debt limit debates in 2002, 2003, and most recently in 2010. In addition, managing debt near the debt limit diverts Treasury’s limited resources away from other cash and debt management issues at a time when Treasury already faces challenges in lengthening the average maturity of its debt portfolio. Observers and participants suggested improving the link between the spending and revenue decisions that drive debt and changes in the debt limit. Better alignment could be possible if decisions about the debt level occur in conjunction with spending and revenue decisions as opposed to the after-the-fact approach now used. This practice, which is similar to practices used in some other countries, might facilitate efforts to change the fiscal path by highlighting the implications of tax and spending decisions on changes in debt. To avoid potential disruptions to Treasury markets and help inform fiscal policy decisions in a timely way, Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue. Treasury provided technical comments on a draft of this report, which GAO incorporated as appropriate.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from “In process” to “Open,” “Closed – implemented,” or “Closed – not implemented” based on our follow up work.
* * * * * * *
Matters for Congressional Consideration
Recommendation: The projections of a growing debt burden have raised concerns both in Congress and in the public. Well-designed budget processes and metrics can help as Congress and the President seek to address the federal government’s long-term fiscal challenge. The current design of the debt limit does not engender or facilitate debate over specific tax or spending proposals and their effect on debt. In addition, the uncertainty it creates can lead to disruptions in the Treasury market and in turn to higher borrowing costs. To avoid these potential disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way, Congress may wish to consider ways to better link decisions about the debt limit with decisions about spending and revenue. Such a process would build on the approach used in 2008 and 2009 when Congress passed and the President signed three laws that were expected to increase borrowing with a corresponding increase in the debt limit. This report presents a number of approaches that could serve as a basis for better linking decisions about spending and revenue with decisions about the debt limit.
Status: In process
Comments: When we determine what steps the Congress has taken, we will provide updated information.
Use the links near the top of the report to get to the full report.
Pay particular attention to this, repeated from above:
The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred. While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited. This is because the debt reflects previously enacted tax and spending policies. Delays in raising the debt limit create debt and cash management challenges for the Treasury, and these challenges have been exacerbated in recent years by a large growth in debt.
Tip of the old scrub brush to Michael A. Ryder.
_____________
Wall of shame: Bloggers and others who do not have a clue
In a letter to the Majority Leader of the U.S. Senate, the President wrote:
This letter is to ask for your help and support, and that of your colleagues, in the passage of an increase in the limit on the public debt.
As [the Treasury Secretary] has told you, the Treasury’s cash balances have reached a dangerously low point. Henceforth the Treasury Department cannot guarantee that the Federal Government will have sufficient cash on any one day to meet all of its mandated expenses, and thus the United States could be forced to default on its obligations for the first time in history.
This country now possesses the strongest credit in the world. The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.
I want to thank you for your immediate attention to this urgent problem, and for your assistance in passing an extenstion of the debt ceiling.
Sincerely,
Ronald Reagan
True then. Still true now.
Letter from President Ronald Reagan to Senate Majority Leader Sen. Howard Baker, R-Tennessee, November 16, 1983. The Treasury Secretary at the time was Donald Regan.
Tell Your Congress Member to Support Education over Politics
The Texas Freedom Network and the Texas Faith Network this week joined nearly two dozen national organizations in support of a resolution in the U.S. House of Representatives calling on the State Board of Education to stop playing politics with the education of Texas schoolchildren. We have signed on to a letter to U.S. Rep. Eddie Bernice Johnson, D-Dallas, supporting House Resolution 1593. Congresswoman Johnson introduced the resolution in the U.S. House on July 30. The resolution, which has four other co-sponsors from Texas, calls out the state board for disregarding nearly a year’s worth of work by teachers and scholars who wrote initial drafts of new social studies curriculum standards. It also notes that more than 1,200 history scholars have warned that the heavily revised standards, which the board adopted in May, “would undermine the study of the social sciences in public schools by misrepresenting and even distorting the historical record and the functioning of United States society.”
The House resolution is available here. The letter from TFN and other organizations supporting that resolution is available here.
Teachers and scholars should write curriculum standards and textbook requirements, not politicians.
Texas schools should give our schoolchildren an education based on sound scholarship that prepares them to succeed in college and their future careers. Decisions about curriculum and textbooks shouldn’t be based on the personal and political agendas of state board members.
Because of the size of Texas, publishers often write their textbooks to meet curriculum standards in this state and then sell them to schools across the country. Texas should be a model for good curriculum and textbooks, not a national laughingstock.
You can do three other things to stop radical members of the State Board of Education from promoting their political and personal agendas in our kids’ classrooms:
Congress passed the Chinese Exclusion Act, which barred Chinese immigrants from the United States for 10 years.
1882 Chinese Exclusion Act, page 1 - National Archives
1882 Chinese Exclusion Act, page 2 - National Archives
____________
* I note the image says it was approved by President Chester Alan Arthur (who had succeeded to office after President James Garfield was assassinated a year earlier). The New York Times calls May 6 the anniversary of Congress’s passing the law; if Arthur signed in on May 6, it was probably passed a few days earlier. May 6 would be the anniversary of its signing into law.
** The Chinese Exclusion Act was preceded by the Page Act of 1875, which prohibited immigration of “undesirable” people. Who was undesirable? “The law classified as undesirable any individual from China who was coming to America to be a contract laborer, any Asian woman who would engage in prostitution, and all people considered to be convicts in their own country.” It was not applicable to many immigrants. The Page Act was named after its sponsor, Rep. Horace F. Page of California.
Living through the Watergate scandals and the Constitutional crises they produced — and spending part of that time in Washington, D.C., working for the Senate — I got a wonderful view of how constitutional government works, why it is important that good people step up to make it work, and a glimpse of what happens when good people lay back and let the hooligans run amock.
Over the last three months it occurs to me that we may be living in a similar time, when great but latent threats to our Constitution and the rule of law may be halted or rolled back by one John Dean-like character who will stand up before a group of elected officials, swear to tell the truth, and then, in fact, tell the whole truth.
Teachers, are you taking advantages of these lessons in civics that come into our newspapers every day?
We live in interesting times, exciting times — we live in educational times.
You should be clipping news stories on these events, and you should be using them in your classrooms today, and saving them for the fall elections, for the January inauguration, for the new Congress . . . and for your future classes.
@FLOTUS @whitehouse Thanks for spreading American culture and waving the flag for the arts. Hope you're taping for broadcast!Splashed: 5 hours ago
RT @FLOTUS: Tonight, the President and First Lady will host a concert honoring Carole King—a 2013 Library of Congress Gershwin Prize winner.Splashed: 5 hours ago
RT @TheWarRoomCTV: "All sexual assault victims in the miitary and in civilian life need first responders to be there for them." -@sfpelosiSplashed: 5 hours ago
We've been soaking in the Bathtub for several months, long enough that some of the links we've used have gone to the Great Internet in the Sky.
If you find a dead link, please leave a comment to that post, and tell us what link has expired.
Thanks!
Posted by Ed Darrell 
