There’s a reason they talk about 2 August: What the Republican Mainstream Hath Wrought
Reuters reports that the mainstream Republican Party has decided to jump the shark admit it is insane:
David Frum, a former speechwriter for President George W. Bush and a Republican advocate for raising the debt limit, said he holds regular question-and-answer sessions with Republican congressman over a beer.
“I have yet to meet one Republican who actually says a failure to raise the debt limit scares them,” Frum said. “It is deeply, deeply troubling the number of Republicans I now talk to – and I include the mainstream – who think a technical default is manageable.”
Many on Wall Street disagree.
They fear even the briefest default would cause a steep climb in interest rates worldwide and a tumbling U.S. dollar, which would tip a fragile economy back into recession and cause financial market upheaval on a scale not seen since the collapse of Lehman Bros.
Let us be clear: a “technical default” is manageable. It is being managed right now. We’ve been in “technical default” since around May 15th. Vendors are seeing payments delayed, contract signings are being put off, funding is being delayed. We can not pay soldiers, after all. They’re getting food and lodging in Afghanistan or Iraq or Libya anyway; they don’t need money.
Pat Toomey appears to believe that would be a good idea:
Republican Senator Pat Toomey has even introduced legislation directing the U.S. Treasury to prioritize debt service over other payments if the debt limit is not raised. It has 22 Republican co-sponsors in the Senate and 98 in the House of Representatives, although no members of the Republican leadership have backed it.
Good thing Toomey thinks those ungrateful Chinese bondholders are important. But who are they more important than?
Short answer: Republican voters.
Longer answer: Social Security recipients, who traditionally receive their checks and direct deposits on the 3rd of the month.
Which means the funding has to be available—to authorize scheduled ACH transfers, if nothing else—on the 2nd.
Which means— since for purposes of the “deficit,” Social Security is part of the “unified budget”—that Social Security’s EOD balance will decline on August 2nd, since there will be no coupon receipts or security redemptions that day.
In short, Toomey wants to pay bondholders and screw Social Security recipients. And he has at 110 Senators and Representatives who believe that is a good idea.
I want to see all 111 of them meet with all of their SocSec recipients on 3 August 2011 and tell them, “Well, we had to balance the suffering. And it was either you or the Chinese government. And they mean more to us than you do.”
UPDATE: Felix focuses on the same paragraph, reaching half of the same conclusion. Take the next step, mate.
Ken, this statement is untrue: “Longer answer: Social Security recipients, who traditionally receive their checks and direct deposits on the 3rd of the month.” They pay throughout the month.
And this statment is going to upset some regulars here at AB: “Which means— since for purposes of the “deficit,” Social Security is part of the “unified budget”—that Social Security’s EOD balance will decline on August 2nd, since there will be no coupon receipts or security redemptions that day. “
BTW, why do you think there will be no SSTF “security redemptions that day?” Since they are already included in the overall debt totals, they will not add to the debt! It is why/how they are able to use the other retirements’ TFs to continue borrowing today.
Short answer: Coin money. Like 1,000 $1,000,000,000 platinum coins, and deposit them with the Fed.
“I want to see all 111 of them meet with all of their SocSec recipients on 3 August 2011 and tell them, “Well, we had to balance the suffering. And it was either you or the Chinese government.”
Frankly, I don’t give a damn. After all it was current SS recipients that brought this on themselves. Maybe they’ll think longer about the consequences before they pull the lever next time.
MAS, you made a similarly unsupported and extremely general statement yesterday, and when challenged never answered. So what the heck are you talking about here? “After all it was current SS recipients that brought this on themselves. Maybe they’ll think longer about the consequences before they pull the lever next time.”
I’m not trying to be cryptic. It’s perfectly obvious what I mean.
Seniors favored Republicans by 21 points in the midterm elections up from 0 points in 2006. In Mark Kirk’s narrow victory in Illinois he won seniors by 33 points. In my own state of Delaware the only demographic that Christine O’Donnell won was seniors. Take away the senior tidal wave and would have been no change in control of the House.
This is hardly a secret. It was the Republican’s campaign plan. They ran as the defenders of Medicare, because the Democrats had the nerve to propose some modest reforms under ACA that bent the cost curve. Now of course, any one isn’t suffering from dementia knows that the Republicans are no more in favor of Medicare and Social Security than they are in favor of taxing billionaire hedge fund managers at the same rate as working stiffs.
Seniors let themselves get duped. What did they think the Republicans were going to cut? Defense? SS and Medicare are half the budget. The fiscal showdown will obviously come at their expense.
I see, you are of an opinion that seniors are one issue voters, and that issue was repeal of a bad bill, Obamacare. But, you then go on to mention spending cuts, and that seniors did not understand that cuts would come from entitlement programs. You don’t have a very high regard for voters, seniors, nor republicans, and blame them for recognizing really bad legislation and policies.
The Republicans are probably right. They know they can “default” for a few days and force Obama into doing something he doesn’t want to do, and the financial markets will think nothing of it because they realize it’s all a game. After a few days, there would be consequences but they would not push that far and Obama would give in beforehand.
Well, ya’ll, lets not forget that the largest group of lenders to the US is individualal and institutional bond holders (pension funds, insurance companies, mutual funds, and the like. The SSTF is the second largest lender. The Chinese come farther down on the list. So, by this logic, certainly SS checks should be paid in preference to the Chinese.
I don’t know about y’all but I’m pretty fed up with this High Noon showdown stuff the R’s in the Congress are throwing at us. This ain’t dancin’, this ain’t disco, this ain’t no fooling around. If these people don’t cut the SS checks, $60 or so billion goes out of the domestic economy just like that. The whole world will hear the whoosh as the domestic economy takes the hit. Same with all the cuts the R’s want to make. They effectively destroy the US government.
Just like in pick-up sticks, you can’t just start pulling out straws without having the whole pile fall down. We’ll see what they do. One way or another, this isn’t negotiation or even hostage taking. This is nutz. NancyO
Where is Obama???
Where is Reid and Pelosi?
How long has it been since the Senate passed a budget? (I recall they just voted Obama’s latest budget down 97-0 in a perfect bi-partisan vote!)
Yet the evil Bush managed to get all of his budgets passed and lift the debt limit (against the then Senator Obama’s vote), every year in vary bi-partisan votes supporting the President. Yet every single Dem Senator voted against Obama’s budget. Wow.
Tell me again what kind of glorious leader we have in the White House????
Islam will change
Ken,
I second CoRev. Social Security is not part of a unified budget. As I understand Bruce Webb’s post, there is NO such thing as a unified budget. So those SS checks will go out.
Tell me again who led the charge to keep the Obama Tax cuts during the lame duck session? Oh right, Democrats!
Islam will change
Beats me where those people are. If this is chess, I’d say it’s time to let the knights and the bishops do battle. The Dems are greatly hampered by working for the same billionaires that the Repubs do. They are comprimised and actually seem to feel bad about it. Seems to me that the R’s have no such scruples. Thus, this…this….whatever it is. Dumb stuff, just dumb. NancyO
NO, it gets tiresome listening to Dem/lib commenters keep blaming everyone but Congress, especially theirs. No doubt their president has some impact on the issue also.
Maybe, y’all didn’t hear, but the last election was about spending and the Obamacare abortion, but we keep hearing about Bush, Big Money, and those nasty repugs. Come to the table with a proposal! Let them talk.
Sheesh!
buff
i am not sure, but i think Congress has to authorize the SS agency to do its work… even though it is paid for out of the payroll tax. That can be shut down. MOre damn foolishness.
CoRev,
Obama has two options:
1) Come up with a plan that cuts spending and/or raises taxes
2) Demonize Republicans
Option 1 requires the hard work of analysis, making choices, and building a consensus to get something passed. You know, the things a President is supposed to do.
Option 2 requires a teleprompter.
Can you see why we are in this situation?
Buff, as we get closer to the Aug 2 deadline what I expect from Geithner or another Dem staffer to propose to take 100% of SS payments from the ever growing SSTF. Once done it will only take minor legislation changes to temporarily move FICA collections to the general fund. That will extend the current debt ceiling until the SSTF is near empty, and allow annual spending in the ~$3T+ range, growing with economic/jobs growth.
Sammy, great truisms. Leaders lead, and non-leaders… read teleprompters.
Meanwhile, the Dems defeat the Republican Pat Toomey’s bill to prioritze debt and social security payments in the event of failure to raise the debt ceiling.
So who’s fault is it if the US defaults?
Maybe you missed Linda’s post regarding a Democratic budget plan.
Congressional Progressive Caucus People’s Budget beats Ryan’s corporatist budget by a long shot
Or just scroll down a few posts. That’s a perfectly reasonable progressive approach to budgeting in a responsible manner. Why hasn’t the Democratic leadership supported the plan? My best guess is that the leadership of the party has a distinctly different ideology from that of the Progressive Caucus. The current Democratic leadership is actually the old moderate Republican Party. The Progressive Caucus is the old Democratic Party going back to the ’60s. The Republican Party is in actuality the old Tory Party, the one from 17th century England. At best Obama may actually be an old Whig in disguise.
“Democrats don’t just have a proposal that offers a more plausible vision of cost control than Ryan does. They have an honest-to-goodness law. The Affordable Care Act sets more achievable targets, and offers a host of more plausible ways to reach them, than anything in Ryan’s budget. “If this is a competition betweenRyan and the Affordable Care Act on realistic approaches to curbing the growth of spending,” says Robert Reischauer, who ran the Congressional Budget Office from 1989 to 1995 and now directs the Urban Institute, “the Affordable Care Act gets five points and Ryan gets zero.”
The Affordable Care Act holds Medicare’s cost growth to GDP plus one percentage point, which makes a lot more sense. It’s the target Ryan’s Medicare plan originally used, back when it was called Ryan-Rivlin. But the target is not really the important part. The important part is how you achieve the target. And the Affordable Care Act actually includes reforms and new processes for future reforms that would help Medicare — and the rest of the medical system — get to where the costs can be saved, rather than just shifted.
The Affordable Care Act’s central hope is that Medicare can lead the health-care system to pay for value, cut down on overtreatment, and cut out treatments that simply don’t work. The law develops Accountable Care Organizations, in which Medicare pays one provider to coordinate all of your care successfully, rather than paying many doctors and providers to add to your care no matter the cost or outcome, as is the current practice. It also begins experimenting with bundled payments, in which Medicare pays one lump-sum for all care related to the successful treatment of a condition rather than paying for every piece of care separately. To help these reforms succeed, and to help all doctors make more cost-effective treatment decisions, the law accelerates research on which drugs and treatments are most effective, and creates and funds the Patient-Centered Outcomes Research Institute to disseminate the data.
If those initiatives work, they head over to the Independent Payment Advisory Board (IPAB), which can implement cost-controlling reforms across Medicare without congressional approval — an effort to make continuous reform the default for Medicare, even if Congress is gridlocked or focused on other matters. And if they don’t work, then it’s up to the Center for Medicare and Medicaid Innovation, a funded body that will be continually testing payment and practice reforms, to keep searching and experimenting, and when it hits on successful ideas, handing them to the IPAB to implement throughout the system.
The law also goes after bad and wasted care: It cuts payments to hospitals with high rates of re-admission, as that tends to signal care isn’t being delivered well, or isn’t being follow up on effectively. It cuts payments to hospitals for care related to infections caught in the hospitals. It develops new plans to help Medicare base its purchasing decisions on value, and new programs to help Medicaid move patients with chronic illnesses into systems that rely on the sort of maintenance-based care that’s been shown to successfully lower costs and improve outcomes.
I could go on, but instead, I’ll just link to the Kaiser Family Foundation’s
No, I didn’t miss it. It’s already been discussed before.
MAS, they have a law which is likely to be struck down in the courts. Maybe you missed Lyle’s article a few days back or Rusty’s articles on the complexities of implementing ACA. Many thousands of pages of laws and regulations make it confusing at best.
I’ve been paying attention. And so have others. Just try and strike it down. There’ll be hell to pay.
I doubt that there will be much hell to pay. Especially if the SCOTUS does it. If that happens Dems policies will be the laughing stock for a generation.
I believe it will be the end of the Republican Party as we know it.
In fact I hope Republicans increasingly display their insanity for all to see. (Their real colors.) I’m looking forward to the next election. The last special election was a hoot. Keep it up.
CoRev: “ Once done it will only take minor legislation changes to temporarily move FICA collections to the general fund.”
And you think that this Congress will do that instead of taking the even more minor step of increasing the debt limit?
CoRev: “You don’t have a very high regard for voters, seniors, nor republicans, and blame them for recognizing really bad legislation and policies”
That wasn’t to me, but your point about people not being single issue voters is right on. Unfortunately, voting for something you like can get you what you don’t like (on another issue). 🙁
“Unfortunately, voting for something you like can get you what you don’t like (on another issue). :(“
Especially if you’re a fool. When have Republicans ever been known to keep promises to the underpriviledged (which is basically anyone who doesn’t have agency securities, structured finance instruments or derivatives as a significant part of their financial assets), the infirm, or the aged? Get with the program Stan and vote your class instead of being a dope.
Nancy Ortiz: “They effectively destroy the US government.”
That’s the plan, isn’t it? Starve the Beast.
Whose fault is it if the US defaults? The President’s, for not coining money to pay the bills.
Min, in lieu of raising the debt celing, for sure. As an expansion with raising the debt ceiling, only maybe, this time around.
SCOTUS is your hope???
Republicans of course.
It was all those who pulled the lever…………………..
Remember, like most in the gumint Obomber is a lawyer and how do you tell a lawyer is lying……………….?
sammy,
The bill was a charade.
What ethic or moral is there in playing ideology in face of crisis?
Forget the ethic or morals when talking the banks of the potomac.
Perhaps in all this B & F, Kieth Richards might lend the “O” that pair of Brass Balls he received recently? Just a thought !
Y’all– Ezra Klein has an interesting article today about the “More Than Ever” principle guiding consevatives in their efforts to cut spending and destroy the federal government. http://www.bloomberg.com/news/2011-06-09/can-congress-learn-to-love-a-3-1-1-deal-for-growth-ezra-klein.html
The idea is that if you always want to cut taxes, cut spending, and support a the fianancial markets the time to do all of the above is now. But, when times are tough, and people want action to kick start the economy, the time to do all of the above is “Now More Than Ever.” So, asks Klein, will the R’s accept a deal requiring tax increases in some kind of ratio with spending cuts? My answer is maybe, if the ideologues can even go that far. It would guarantee them a victory (at least until the ink dried) that they may not get otherwise. We’ll see. NancyO
Why are we even worrying about blaming someone, sammy? This shouldn’t even be a possibility. This is crazy stuff and not a game for amateurs. No doubt about it, Congressional freshmen are amateurs at best. And, I think, have reached the limit of this gambit. You can’t do this every 15 minutes and stay credible. Eventually, Min’s point is well taken. Congress controls the budget but the Executive controls the Treasury. NancyO
Right you are, Buff. NancyO
CoRev–On day 2, They’re talking already! And, talking;and, talking; and have been since last year! Forget talking. Raise the debt limit and get back to business. This other stuff is just plain BS. NancyO
Rdan–Anyone who’s betting on the Supremes to strike down all of the ACA better get ready to lose his shirt. The ACA is long, complex, and offers a thousand legal interpretations. No Court will want to knock the whole thing out of the park.
They can mess around on the margins, but unless they want to see the entire legal structure of business and industry in the US go up in smoke, they have to sustain it at least as far as the Commerce Clause is concerned. Face it–you want long and complex? I give you Title XVIII of the Social Security Act (Medicare.) It may be hard for politicians to understand, but for government and insurance bureaucrats, it’s a piece of cake. Chocolate, I think. NancyO
Rdan – No that’s incorrect. It’s the evil
Buuussshhh!
Corrected that for you! 🙂
Islam will change
“That’s the plan, isn’t it? Starve the Beast.”
Yes, Min, we all know that. But, shhhh, no one ever really lets it come to the surface.
Nancy,
Even when casually reading the comments here, it is obvious that this is a chess game with children playing with the future of the pawns. It has gone beyond any pretense of caring about this country’s citizens. Think about it. We have someone saying it is the voter’s fault because they were duped. What in the name of all that is sane or fair is the chess move that says “let’s see who can dupe 80 year olds????”. Yet, we still have – it’s the 80 year old’s fault because the duper was the greater duper this time. The same duper may be the greater duper next time too; who knows? (Duper or liar???) Then I see people arguing here and, true or not, many appear not to give a darn about the country or it’s people.
I’ve been nursing a theory about the failure of the “Lenin strategy” and morph into the “starve the beast strategy”. It has a flavor of my way or the highway and reminds one of the Apprentice – you’re fired. I cannot help wondering if many of these dupers actually hoped we would enter a depression in order to regain power in such a way that they could be the “anti-FDR” and anti-New Deal, forming a society that fit their idea of the proper role of worker verses owner. Who knows. Just musing on my part. I’m not sure that crazy stuff can’t be sold every few minutes when people meet diversions and obscurations every minute between the fifteen. And just because the Executive controls the Treasury and has an approved budget/CR doesn’t mean the Executive has the right stuff to just keep paying the bills and put the country’s welfare above their own sense of need to maintain power/weigh politics.
Who believes managing to get into a position of cutting the Federal budget is NOT something Obama wants to do? He did’t set up his Pete Peterson Cat Food Commission for nothing.
He and the Repubs are in tightly choreographed dance to get to the point of being forecd to “change” SocSec, Medicare, and Medicaid. Obama believes St. Ronnie did good things, remember? He wants to be like Reagan, only going further, doing what Reagan dared not do: Undercut FDR’s greatest social programs, cut back LBG’s Great Society programs.
He did give signals during the primaries and the general election, but nobody wanted believe he could mean what he was saying. No, folks, what he didn’t mean were the things he said that made him sound, however briefly, like a Democrat.