Tag: grand bargain

Cross posted from The Stars Hollow Gazette

You can tell it’s an election year, all the hypocrisy comes out of the closet:

After spending weeks subjecting the public to unfounded and widely debunked claims that Obamacare contains a hidden “bailout” for private insurers, Republicans have undertaken a complete reversal, and are attacking Democrats for cutting corporate welfare for insurance companies by too much.

Specifically, they’re attacking the Affordable Care Act’s reduction in overpayments to carriers who participate in Medicare Advantage, reflected in lower payment rates for program providers, which were officially announced late last week. [..]

When confronted, they retreat from pretending to oppose the cuts on the merits, to claiming the real problem is that Democrats used the savings from the cuts to fund Obamacare. But this is a non sequitur. A diversion. The attacks specifically express outrage on behalf of seniors who, Republicans claim, will lose doctors or get stuck with higher premiums specifically as a result of the ACA’s Medicare Advantage cuts.

But remember, Republicans actually support the cuts. All of these supposedly horrible things would happen under their plan, too, regardless of how the savings are spent. So right away it’s clear that the attacks are straightforwardly deceitful.

While some the beltway deficit scolds mourn the death of “entitlement reforms,” the The National Republican Campaign Committee has begun attacking Democrats for supporting Simpson-Bowles:

The National Republican Congressional Committee (NRCC) tried a political ju-jitsu on Thursday as it sought to turn former state CFO Alex Sink’s attacks on David Jolly on Social Security against her. Sink, the Democratic candidate, takes on Republican Jolly and Libertarian Lucas Overby in a special congressional election for an open seat in Pinellas County on March 11.

On Thursday, the NRCC bashed Sink for saying she supported Simpson-Bowles.

What digby said:

I have never understood why Democrats who have to run for office are so wedded to the idea that they will be rewarded for being “the adults in the room” and doing the “hard stuff” like cutting Social Security and Medicare benefits but they do. You’d think they’d remember what happened to them in 2010 when the Republicans ran against the Medicare cuts in the health care reforms by portraying them as monsters turning old people into Soylent Green. But they didn’t.

The president may have decided to keep his proposal to cut benefits from his new budget, but it’s quite clear from the talking points that they still very much want to get “credit” for being willing to do it.

Supporting cuts the social safety net, especially in the state of Florida, is not going to fly very well with elderly voters. And, yes, they do vote. So why aren’t Democrats giving the people what they want, an expansion of Social Security and open Medicare to all?  

Cross posted from The Stars Hollow Gazette

Increasingly over the last few months the sensible people of congress have gotten on board with the idea that Social Security should be expanded. With the failure of many 401k’s and inadequate pension funds, many seniors and future retirees are more reliant on Social Security for a substantial part of their retirement plans. Senators Tom Harkin (D-Iowa), Bernie Sanders (I-Vt.), and Sherrod Brown (D-Ohio) have proposed that instead of switching to a “chained” consumer price index that cuts retiree benefits, the nation should adopt CPI-E, which measures the actual cost of living for the elderly and would raise benefits to meet actual needs.

The latest to voice support for this idea is Massachusetts Senator Elizabeth Warren who took to the Senate floor to criticize the Washington Post‘s editorial that said  called expanding Social Security “wrongheaded” and suggested the nation should instead be more concerned about the higher percentage of children living in poverty. Sen. Warren called this the “uglier side” of the debate on Social Security.

While President Barack Obama and House Minority Leader Nancy Pelosi have expressed their support for cuts to Social Security as part of a budget agreement to trim the deficit, which Social Security does not contribute to, most Democrats wisely have said ruled that out in the current debate talks. We need to make sure that any cuts to the Social Security benefits of our most vulnerable citizens is taken off the table permanently.

In the real world and the reality based community, there is talk about austerity from people who understand the nuances of it and macroeconomic accounting identities. They point out the undeniable fact that there is austerity in the UK, the Eurozone, and yes, the United States. This interactive chart will show this, though I can’t embed it here. So instead, I will add a small snapshot of some of the data.

Net spending in the United States has steadily declined since it rose from 2008 to 2009 when the inadequate stimulus(only $500 billion of direct spending at about 1.5 percent of GDP) was passed. Stimulus packages don’t exist in a vacuum, and you have to count all government spending, which basically shows how exactly the numbers, including the stimulus as this does, didn’t close the output gap. And since the numbers didn’t, that is actually austerity. After all, spending went up in the UK and Eurozone from 2008 to 2009 as well, and since then, their spending has declined. Even though it is on a higher level, it is being cut at an even more alarming rate with its fate set to go below our miserable level by 2017.

I have pointed this out before. Sometimes I get frustrated, and point this out harshly, because some pride themselves on denying this established data to support whatever a politician in their party says or does. I don’t know why. Denying reality is not going to give resources to people who need them. There is a reason my last diary has been cited by the reality based Post Keynesian MMT community, in which I am truly grateful for and humbled by; it is the truth.

The real economy of jobs and wages continues to go nowhere thanks to the lack of deficit spending and an illogical debate in DC about how much austerity we need to appease the invisible bond vigilantes and confidence fairies. It is neoliberal deficit terrorist economic insanity based on lies. And on that note, it is my pleasure to republish a piece by someone in the reality based economic community whom I can now proudly say is a friend of mine, Post Keynesian MMT economist John T. Harvey. He, once again, brings clarity to these matters in a way that only he can.  

Cross posted from The Stars Hollow Gazette

Last night (Jan. 1) the House of Representatives voted to make permanent the Bush/Obama tax cuts on all but the top 1% of tax payers and increasing taxes on on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut. With the bill set to be signed by Pres. Barack Obama, Congress and the White House move to the next manufactured crisis that this bill set up, the draconian sequester cuts to defense and non-defense spending and the debt ceiling, also a manufactured “crisis.” The bill did hold off those draconian cuts for two months, just in time for spending to hit the debt ceiling.

Pres. Obama made it clear in his address after the passage of the “Fiscal Cliff” bill, that he would not allow the debt ceiling to be used as a bargaining chip in negotiations over spending.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. We can’t not pay bills that we’ve already incurred.”

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

This bill was not the best deal as this article on the behind the scenes Senate dealings by Ryan Grym at Huffington Post tells it:

The White House sent Reid a list of suggested concessions as his staff debated what to send back to McConnell. Reid looked over the concessions the administration wanted to offer, crumpled up the paper and tossed it into his fireplace. The gesture was first reported by Politico and confirmed to HuffPost by sources with knowledge of it, who noted that Reid frequently keeps his fire going and is fond of feeding a variety of proposals to it.

Reid’s staff then called McConnell’s office with a simple message: Our last offer stands. There will be no further concessions. McConnell took to the Senate floor, complaining that he had no “dance partner” in Reid, and called Vice President Joe Biden, a man he assumed would be more willing to give. McConnell was right.

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

President Barack Obama has vowed not to negotiate over the debt ceiling, but Democrats in the Senate are worried that they’ve now lost their leverage. “Everyone knew taxes would be raised on high earners,” said the Democratic source. “So with that out of the way, what do we bargain with?”

All they had to do was let the tax cuts end and pass new tax bill that included extension of unemployment benefits, ended unconstitutional the debt ceiling nonsense and added some stimulus to really create jobs, since we all know that tax cuts don’t. But no, Pres. Obama had to have this done and kept backing away from his so-called “line in the sand.”

If anyone believes at this point that Obama stand up to the threats of a government shut down by Republicans refusing to raise the debt ceiling without serious concessions on Medicare and Social Security, consider these three reasons to doubt from Jon Walker at FDL Action

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargain chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When WP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay.

Meanwhile the “irrational exuberance” of Wall St’s feral children over the tax deal abounds with the markets closing on a high. Let’s see what happens in two months when we sit on the edge of another cliff.

Cross posted from The Stars Hollow Gazette

Last night the House of Representatives voted to make permanent the Bush/Obama tax cuts on all but the top 1% of tax payers and increasing taxes on on 77.1 percent of U.S. households, mostly because of the expiration of a payroll tax cut. With the bill set to be signed by Pres. Barack Obama, Congress and the White House move to the next manufactured crisis that this bill set up, the draconian sequester cuts to defense and non-defense spending and the debt ceiling, also a manufactured “crisis.” The bill did hold off those draconian cuts for two months, just in time for spending to hit the debt ceiling.

Pres. Obama made it clear in his address after the passage of the “Fiscal Cliff” bill, that he would not allow the debt ceiling to be used as a bargaining chip in negotiations over spending.

“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. We can’t not pay bills that we’ve already incurred.”

“If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic – far worse than the impact of a fiscal cliff.”

This bill was not the best deal as this article on the behind the scenes Senate dealings by Ryan Grym at Huffington Post tells it:

The White House sent Reid a list of suggested concessions as his staff debated what to send back to McConnell. Reid looked over the concessions the administration wanted to offer, crumpled up the paper and tossed it into his fireplace. The gesture was first reported by Politico and confirmed to HuffPost by sources with knowledge of it, who noted that Reid frequently keeps his fire going and is fond of feeding a variety of proposals to it.

Reid’s staff then called McConnell’s office with a simple message: Our last offer stands. There will be no further concessions. McConnell took to the Senate floor, complaining that he had no “dance partner” in Reid, and called Vice President Joe Biden, a man he assumed would be more willing to give. McConnell was right.

Perhaps the most important concession he wrangled from the administration, which Reid had been unwilling to make, was a two-month extension of the sequester, automatic cuts to defense spending and domestic programs that were supposed to be triggered Jan. 1. Reid wanted much more, worried that the two-month period will simply set up another colossal showdown that will also rope in the debt ceiling and funding for the government. “The deal itself is OK, but sets up Democrats for [a] worse fight and strengthens Republicans’ hand for what they really want: cuts,” said a Democratic source close to Reid. “Biden gave away the store on timeline. Two months and we’re back at this and in worse shape.”

President Barack Obama has vowed not to negotiate over the debt ceiling, but Democrats in the Senate are worried that they’ve now lost their leverage. “Everyone knew taxes would be raised on high earners,” said the Democratic source. “So with that out of the way, what do we bargain with?”

All they had to do was let the tax cuts end and pass new tax bill that included extension of unemployment benefits, ended unconstitutional the debt ceiling nonsense and added some stimulus to really create jobs, since we all know that tax cuts don’t. But no, Pres. Obama had to have this done and kept backing away from his so-called “line in the sand.”

If anyone believes at this point that Obama stand up to the threats of a government shut down by Republicans refusing to raise the debt ceiling without serious concessions on Medicare and Social Security, consider these three reasons to doubt from Jon Walker at FDL Action

1) Failure to stick to previous lines in the sand – In past negotiations Obama has failed to stick to his previous lines in the sand. Obama did not stick to his demand that the Bush tax cuts end for income over $250,000. Similarly despite saying he would not play games with the debt ceiling, Obama seemed to treat it as just another bargain chip when trying to get a deal with John Boehner.

2) Dismissing unilateral action – The Obama administration has dismissed unilateral action to address the debt ceiling. Doing something like invoking the 14th amendment would probably be the easiest way to defuse the fight, but the administration has declared that “not an option.” Even if the Obama team didn’t think it was a legally viable solution by completely removing the threat it has weakened its bargaining position.

3) Allowing the creation of a new super cliff in two months – When WP Joe Biden took over the negotiations from Sen. Harry Reid the major concession he made was to have only a two month delay of the sequestration cuts instead of a one year delay.

Meanwhile the “irrational exuberance” of Wall St’s feral children over the tax deal abounds with the markets closing on a high. Let’s see what happens in two months when we sit on the edge of another cliff.

Up Date 16:33 EDT: Republican Senators have taken Social Security off the table as part of the negotiations for the “fiscal cliff.”

Cross posted from The Stars Hollow Gazette

With the deadline for the expiration of Bush Tax cuts and austere spending cuts, the Senate negotiations have reached a stalemate. At the last minute, the Republicans demanded significant cuts to Social Security benefits. House Majority Leader Harry Reid (D-NV), who was described as  “shocked and disappointed” and this may well be the “poison pill” that ends the charade of “fiscal cliff” talks.

The development came after a long weekend of negotiations during which the two sides had been making progress.

The aide said Democrats had shown flexibility on the major sticking points involving taxes. They had not ruled out maintaining the tax on inherited estates at the current low rate, as Republicans prefer. And they had been open to a deal that would allow taxes to rise on many fewer wealthy households than President Obama had proposed. Republicans were seeking tax increases only on income higher than $400,000 or $500,000 a year, while Obama wanted to set the threshold at $250,000 a year.

But Obama was pressing for $30 billion in new spending to keep unemployment benefits flowing to the long-term unemployed, and he wanted to postpone roughly $100 billion in automatic spending cuts set to hit agency budgets next months. In exchange for those items, Senate Minority Leader Mitch McConnell (R-Ky.) insisted Sunday that Democrats put cuts to Social Security benefits on the table, noting that Obama had offered to do so as part of the big deficit-reduction package he had been negotiating with House Speaker John A. Boehner (R-Ohio.)

Republicans declined to comment on the new offer, but noted that Obama endorsed the adjustment, known as chained CPI, again Sunday, in an interview on NBC’s Meet the Press.

President Obama suggested that he was open to the highly unpopular proposal to cut increases to Social Security by linking it to the “chained CPI” in the context of a larger deal.

The other “monkey wrench” that McConnell threw into the mix was estate taxes which are scheduled to increase to the Clinton level of 55% on estates over one million dollars. The estate tax currently exempts the first $5 million of inheritance and taxes the remainder at 35 percent, which the Republicans want to keep. Pres. Obama wants to make it less generous, reducing the exemption to $3.5 million and taxing the remainder at a 45 percent rate. This tax only affects an extremely small number of people.

Under the Republican proposal, 3,800 people would pay the estate tax year, also near an average of $3.3 million. The GOP proposal would raise $182 billion for federal tax coffers over the next 10 years.

Under Obama’s proposal, 6,500 people would pay the estate tax next year, with an average payment estimated at about $3 million. The president’s proposal would raise $284 billion in tax revenue over the next 10 years.

No action by Congress would send the estate tax back to what it was in the 1990s – with a $1 million exemption and 55 rate percent for the remaining share. That would affect more than 40 million Americans.

Senate Minority Leader Mitch McConnell (R-SC) has reached out to Vice President Joe Biden to break the impasse.

Cross posted from The Stars Hollow Gazette

Barack Obama’s presidential legacy will most likely be that he was the Great Prevaricator. His plan has always been to protect the 1% and sell out the rest of us. So far he succeeded quite nicely, with just a few minor bumps in the road that were possibly preplanned.

Two important points that Jane Hamsher and Jon Walker at FDL Action makes about Barack Obama, that even Marcos Moulitsas gets wrong, is:

1st, Ms. Hamshire writes that Pres. Obama did not capitulate on Social Security cuts and we should stop pretending that he did:

Everywhere you look, the media narrative is that President Obama is “capitulating” to Republicans by agreeing to cuts in Social Security benefits.

And I have to ask, where is this collective political amnesia coming from?

Obama has made a deliberate and concerted effort to cut Social Security benefits since the time he took office.  FDL reported on February 12, 2009 that the White House was meeting behind closed doors to consider ways to cut Social Security benefits, and that the framework they were using was the Diamond-Orszag plan, which was co-authored by OMB Director Peter Orszag when he was at the Brookings Institute.

The birth of the now-ubiquitous “catfood” meme came on February 18, 2009 with this FDL headline:

   Hedge Fund Billionaire Pete Peterson Key Speaker At Obama “Fiscal Responsibility Summit,” Will Tell Us All Why Little Old Ladies Must Eat Cat Food

[..]

The administration backed off its immediate plans for reforming Social Security. The New York Times reported that they were “running into opposition from his party’s left” who are “vehement in opposing any reductions in scheduled benefits for future retirees.” But NYT columnist David Brooks reported that shortly after the summit, “four senior members of the administration” called him to say that Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security.” [..]

In January of 2010, a bill sponsored by committed Social Security slashers Judd Gregg and Kent Conrad which would have created an official commission to make recommendations about the nation’s deficit was defeated by the Senate on a bipartisan vote – 22 Democrats and 24 Republicans voted no.

After the Senate defeat, on February 18, President Obama issued an executive order creating what subsequently became known as the “Catfood Commission” anyway. [..]

The composition of the Commission was conveniently stacked with 14 of the 18 members committed deficit hawks looking to start balancing the federal budget on the backs of old people.

And who supplied the staff to the commission? Why, Pete Peterson.

Are we to believe that the President was blissfully ignorant of the agendas of the people he appointed to this commission, created with the goal of bypassing Congressional process? [..]

The President has been very forthcoming about the fact that cutting Social Security benefits is something he wants to do.  When he said during the debate that he didn’t differ from Mitt Romney on entitlement reform, he meant it.   It’s time for people to remove the rose-colored glasses and stop projecting their own feelings on to the man.  It’s time to take him at his word.

This is what he has always wanted. Ignore it if you choose but the facts and Obama’s actions and words bear it out.

2nd, John Walker points out that Pres. Obama lied about not raising taxes on the middle class. By using the chained CPI, a lower measure of inflation, no only are SS benefits cut, it winds up being it would end up being a significant tax increase on the middle class by causing tax brackets to raise more slowly. While the tax increase would be very small at first, over the next decade it would mean the middle class will pay ten of billions more in taxes. John calls this the “Lie of the Year”

For five years Obama repeatedly and unequivocal promised not the raise taxes by one penny on anyone making less than $250,000. He did so in ads, campaign stops, emails, and interviews. There is probably no other single policy proposal that was more central to both of Obama’s presidential campaigns. Millions likely voted for Obama based on this firm promise.

Yet even before Obama’s second term begins, he has rushed to break this campaign promise. [..]

Obama was not forced by some extraordinary unforeseen event to accept this tax increase. Obama include this middle class tax increase in his counter offer. Obama didn’t need to do this, he chose to do it.

Right after Obama was re-elected, based on a promise not to raise taxes on the middle class, his first major action was to push for a middle class tax increase. This is a pathological level of dishonesty. The only thing more disturbing is the weak shoulder-shrugging response by most of the media to such a profound act of deception.

So whether the Bush tax cuts expire on Dec 31 or the rate of inflation is calculated by the chained CPI, middle class taxes are going up and SS recipients will be eating cat food.

There are those of us who knew this all along but everyone was focused  on the prospects of a Democratic resurgence that would govern from the left. They were blinded by the bright shiny object that was this man who gave a great speech and had an attractive family. But he came from the roots of Chicago Democratic politics and had an agenda that really wasn’t so hidden. He just lied and everyone believed him even though the facts were right in front of them that Pres. Obama is a right wing, corporatist, Republican and has been flat out lying to us all.

Cross posted from The Stars Hollow Gazette

Chris Hayes, host of [Up with Chris Hayes ],  discusses the stand-off between President Obama and House Republicans over the “fiscal cliff,” the name given to the combination of the expiration of the Bush tax cuts and the sequestration cuts mandated by last year’s debt ceiling agreement. Chris’ “filibuster” in the first segment is a “Cliff Note” summation of the debate about the so-called “fiscal cliff.”

Chris is joined for a comprehensive, and somewhat wonky, discussion with Hakeem Jeffries, newly elected Congressman representing the 8th Congressional District in Brooklyn, New York State Assemblyman; Teresa Ghilarducci (@tghilarducci), labor economist and director of the Schwartz Center for Economic Policy Analysis at The New Schoo; Edward Conard, former partner at Bain Capital from 1993-2007 and author of “Unintended Consequences: Why Everything You’ve Been Told About The Economy Is Wrong;” Ohio Democratic Senator Sherrod Brown; and Molly Ball (@mollyesque), national political reporter for The Atlantic.

I found this article  about the debt/deficit/”fiscal cliff” from letdgetitdone quite interesting. It presents a very compelling argument, point by point, why this entire discussion about a “fiscal cliff” is a myth. He concludes his argument:

So, current claims that we have a fiscal crisis, must debate the debt, must fix the debt, and must immediately embark on a long-term deficit reduction program to bring the debt-to-GDP ratio under control, all misconceive the fiscal situation because they are based on the idea that fiscal responsibility is about developing a plan to bring the debt-to-GDP ratio “under control,” when it is really about using Government spending to achieve outputs that fulfill “public purpose.” There is no fiscal crisis that will require “a Grand Bargain” and cuts to popular discretionary spending and entitlement programs. It is a phoney issue.

The only real crisis is a crisis of a failing economy and growing economic inequality in which only the needs of the few are served. MMT policies can help to bring an end to that crisis; but not if progressives, and others continue to believe in false ideas about fiscal sustainability and responsibility, and the similarity of their Government to a household. To begin to solve our problems, we need to reject the neoliberal narrative and embrace the MMT narrative about the meaning of fiscal responsibility. That will lead us to fiscal policies that achieve public purpose and away from policies that prolong economic stagnation and the ravages of austerity.