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“Negotiate” means talking about ALL options

Golly.  The GOP still hasn’t figured out what’s driving the federal debt?  Let’s try… lack of revenues.

Federal revenues, as a percentage of the country’s economy, are at the lowest point since Harry Truman was President.  (And that was before Congress enacted Medicare, and added Medicare payroll taxes to the federal revenue mix.)

Corporate taxes, in particular, are at record-low levels.  (Just look at the olive-green areas on this graph.)

Federal Revenue Sources as percentage of GDP

The GOP insists on “concessions” from President Obama, in exchange for not driving America’s economy totally off the cliff.

They are insisting on cuts to Social Security and Medicare before they will consider acting on the debt limit.  “My goal here is to have a serious conversation about those things that are driving the deficit and driving the debt up,” according to House Speaker John Boehner.

But will they discuss restoring revenues, as a way of cutting the deficit?  Not a chance, the GOP says.

Wow.

Is Speaker Boehner really contemplating a “conversation”?  (Or is he just expecting the Democrats to surrender?)

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See the data I used in my graph here.

Translating from TeaPartyese: What “negotiate” really means

Stahlwille ratchet head (1/2 SQ)Don’t let them fool you.

When GOP Congressmen say they “just want to negotiate” – what they’re really saying is “we’re going to have it our way”.

And when they talk about “compromise” – they’re really talking about “ratcheting it down even further.”

You know how a ratchet works, right?  When you turn it, the screw can only go one way.  And the Tea Party’s position is: government can only get smaller.

They’re yelling about the federal deficit – and accumulated federal debt – but the only “solution” they’re willing to entertain is to cut spending.  Have you heard anybody suggest raising revenues, lately?

The fact is: as a share of the nation’s economy, federal tax revenues are at almost-record lows. Yes, they were lower, back when Harry Truman was President – but that was before Medicare was enacted in 1965.

Federal Tax Revenues as Percentage of GDP

And it looks like the GOP may have already won the federal budget game.

Remember 2011, when House Budget Committee Chairman Paul Ryan came out with his budget“$4 trillion of cuts over decade

Remember how radical that budget seemed, back then?  How far to the right?  How extreme the cuts appeared?

Now, take a closer look at the “continuing resolution” passed by the Democratically-controlled Senate last week, in a last-ditch effort to avoid the government shutdown.

Yeah, the same “continuing resolution” that the House GOP won’t send to an up-do-down vote, without further concessions.

Funding levels in that “continuing resolution” are about 10% less than what Chairman Ryan proposed, back in 2011.

And it came from the Democrats.

And it’s still not enough for the GOP.

Ratchet, ratchet, ratchet.

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Read more about how the Senate’s continuing resolution compares to the Ryan budget here.

See the tax revenue data that my chart is based on here.

 

 

 

Want to keep the government afloat? Here’s the list of House GOP demands


Just like the old Ginzu Knife commercials… “But wait, there’s more!”

Yes, House GOP leaders are insisting on a one-year delay of Obamacare (aka, the Affordable Care Act) as a condition of resolving this latest federal fiscal fiasco.

But that’s not all they’re looking for.

As compiled by the New York Times, here’s the list of House GOP leaders’ other demands:

…fast-track authority to overhaul the tax code, construction of the Keystone XL oil pipeline, offshore oil and gas production and more permitting of energy exploration on federal lands… roll back regulations on coal ash, block new Environmental Protection Agency regulations on greenhouse gas production, eliminate a $23 billion fund to ensure the orderly dissolution of failed major banks, eliminate mandatory contributions to the new Consumer Financial Protection Bureau, limit medical malpractice lawsuits and increase means testing for Medicare, among other provisions.

Does anybody (other than Fox News and a few hundred Internet trolls) still think the House leadership is trying to “compromise” and resolve this latest Congress-created crisis?

 

It’s Baaack! GOP puts US economy at risk (again) over the Keystone Pipeline

Trans Canada Keystone Oil Pipeline by Shannon Patrick via FlikrJust like an unwanted dinner guest that you can’t convince to leave, the Keystone Pipeline project is still on the GOP’s legislative agenda.  Actually, it’s now at the top of the GOP’s legislative agenda.

Read the news stories: Republican leaders have apparently given up on efforts to rein in their Tea Party legislators.  Last Friday, the House voted – for the 42nd time – in their futile attempt to repeal Obamacare.  Next Monday, the federal government is probably going to close down – because Congress can’t bring itself to pass annual Appropriations bills.  Jobs bills – and legislation to repair long-neglected roads and bridges – are gathering dust on Representatives’ shelves.  Immigration reform isn’t going anywhere.  Common-sense gun reform?  Yeah, right.  (About 8,400 Americans have been killed in the nine months since Newtown.  Crisis?  How many people have to die before Congress considers it a crisis?)

But no matter what else they’ve given up on, Republican leaders are still determined to force through TransCanada’s pipeline project.  Sometime in the next month or so, Republicans plan to use debt-ceiling legislation to bypass the administrative review process and authorize construction of the pipeline by Congressional fiat.

No, it’s not the first time the GOP has used fiscal emergencies to try to push the Keystone project through.  Back in December 2011, the Republicans traded about $30 billion in federal debt for an expedited review process (which resulted in the project being rejected).  Since then, House Republicans have inserted Keystone into four other pieces of legislation, including the federal budget.

But why does Congress even care about Keystone?  TransCanada’s pipeline is nothing more or less than a construction project built by and benefitting a private corporation.  Sort of like… if Walmart wanted to build another gazillion-square-foot distribution center.  (Except that a new Walmart distribution center would probably create more than 35 permanent jobs.  Yep, that’s the number of permanent jobs that Keystone is expected to create: just 35.)  So why is Congress getting so involved in the project permitting?

One more time: Keystone is a construction project of a privately-owned corporation.   (Wondering exactly who owns that corporation?  According to Morningstar’s shareholder records, it looks like a whole lot of TransCanada stock is owned by foreign banks.)

One more time: WHY are the Republicans insisting that TransCanada be allowed to build this pipeline?

And whatever happened to “fiscal responsibility”?  Do Republicans really want our government to default on its bills?  That’s the scenario they’re setting up, by tying the debt-limit increase to construction of this private pipeline.

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You can read (experience?) the GOP’s latest press release about Keystone here.

Read NHLN’s “Why Is the House GOP Obsessed with the Keystone Pipeline” here.

Starting in Detroit… next stop: Social Security

Frederick Bancroft, prince of magicians: the wizard's enchantments, performing arts poster, ca. 1895Buried on the PBS website, there is a blog post that ought to strike fear into the heart of every working-age American.

“Detroit Today, Washington Tomorrow” takes dead aim at the Social Security system, using the same “inflate the numbers” messaging strategy that Kevyn Orr and Gov. Rick Snyder have been using lately in Detroit.

What’s the strategy?

  1. Just pick the biggest number that you can find, and use it to scare the bejeezus out of people.
  2. Once you’ve got folks focused on that huge number, it’s easy to convince them that “oh, we’re so sorry! But Detroit can’t afford to pay the retirement benefits we’ve been promising all these decades.”
  3. Nevermind that all those Detroit workers have been paying into the system, all these decades, and planning their futures based on the promises that were made.
  4. Just keep everyone’s eyes focused on that really huge number – and they won’t even think about questioning your claim that “oh, so sorry! We can’t afford it!”

It’s the rhetorical equivalent of old-fashioned magic tricks.  And just like those old-fashioned magic tricks, it will work so long as people don’t pay attention to what’s really going on.

In Detroit, they’re hiding a $326 million accumulated deficit under the rhetorical handkerchief of $18 billion in total outstanding debt.  They’re basically saying: “don’t look at that smaller deficit number (caused by cutbacks in state revenue-sharing) – look at this huge number over here!  Look at how much Detroit is supposed to pay bondholders back, over the next 30 years!  Look here, Detroit can’t afford to pay back $18 billion right now!  (Nevermind that it’s not supposed to be paid back, for decades yet.)  Look here, if we can’t afford to pay back $18 billion, then we should declare bankruptcy and get rid of the debt (that we owe to our public employees).  We just can’t afford to keep our promises!”

Can’t you just hear the calliope music?   (If not, here’s a YouTube to help get you into a properly gullible mood.)

Now, read that PBS post by Boston University professor (and presidential candidate) Larry Kotlikoff.

  1. All of a sudden, our federal debt isn’t just $12 trillion (the number that outrages Republicans, as long as nobody suggests increasing taxes to pay it back). According to Professor Kotlikoff, “the true measure of our debt – the one suggested by economic theory – is the fiscal gap, which totals $222 trillion.”
  2. Now, keep looking at this number over here – it’s really, really huge.  According to Professor Kotlikoff, “Given the $222 trillion fiscal gap … current policy is clearly not sustainable. Making it sustainable requires either an immediate and permanent 64 percent increase in all federal taxes or an immediate and permanent 38 percent cut in all spending or some combination of tax increases and spending cuts.”
  3. Nevermind all those decades that workers have been paying into the Social Security system. Again, here’s Professor Kotlikoff: “If anything, the Social Security benefits, and not the Treasury bond payments, should be recorded as official debt.”
  4. Keep folks paying attention to that really big number.  Professor Kotlikoff borrows the authoritative voice of former Secretary of State George Shultz to finish his performance: “Our country doesn’t have a lot of elder statesmen to guide us. But this tough ex-marine knows our country is broke, knows our children are threatened, and knows we’ve been hiding the truth.”

Yep, that’s where things are headed.  Detroit today, Washington tomorrow.

They’ve been trying to “reform” Social Security since Barry Goldwater ran for President.

And they’re still trying.

And they’re about to have the biggest Congress-created crisis yet.

  • Read about January’s Fiscal Cliff crisis here and here.
  • Read about the March Sequestration crisis here and here.

There is another “perfect storm” of crises coming up in the next two months: the current federal budget will expire at about the same time that the Treasury runs out of debt limit “headroom” (again, thank our federal and postal service employees, whose retirement contributions provide this reprieve!).

What sorts of magic tricks do you think they’re going to try, then?

Detroit today, Washington tomorrow.

My recommendation?  Remember Professor Kotlikoff’s patter, and keep your eyes on the magicians’ hands.

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Read the LTE in response to this post.

Less than a month to go! Republicans are chasing wild geese while the federal government heads toward default

Canadian GeeseThere’s less than one month to go until the federal government can’t fudge its debt limit anymore. Last week, the US Treasury announced it could run out of artificially-created “headroom” as soon as mid-February.

Ever since then, Republicans have been trying to turn the debt-limit headlines to their advantage. But if you look closely enough at these “wild goose chases”, they just show the growing distance between GOP rhetoric and the reality the rest of us are living in.

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Their first idea? Wait things out. Then, once the Treasury runs out of headroom, just pick and choose which bills to pay. Or, in Republican-speak, “prioritize spending.” Their priorities, according to Reuters: pay the bondholders first; then pay Social Security and military salaries.

The first problem with this idea? The Treasury’s Inspector General has already told Congress that “prioritizing spending” is not – at this point in the crisis – actually possible.

Treasury noted that it makes more than 80 million payments per month, all of which have been authorized and appropriated by Congress… Treasury’s [accounting and computer] systems are designed to make each payment in the order it comes due.

In other words, the system simply isn’t set up to pay some bills and ignore others. How long would it take to completely restructure the federal government’s payment systems, in order to “prioritize” which bills get paid? Undoubtedly longer than the debt-limit “headroom” will last.

Second problem with this idea? How much money will it cost, to restructure the Treasury’s payment systems? Maybe some GOP campaign contributor would be the only IT vendor qualified to make those changes. But wouldn’t that money be better spent on other things?

Third problem with this idea? Stop and think about this, for a minute. Do we really want our country to stop paying its bills, even just some of its bills? Do we really want our country to fulfill its obligations to a select few, and ignore the rest? What would that say about America? (Maybe this is really the first problem with this idea. What are the Republicans thinking?)

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So then, the Republicans went off to a retreat at the Kingsmill Resort in Virginia. (I’m guessing the GOP missed the irony in starting Martin Luther King Day weekend at a former slave plantation. Whatever happened to the Party of Abraham Lincoln?)

There, among three championship-caliber golf courses, GOP members announced their newest idea to deal with the debt limit crisis. The House GOP will concede to a three-month increase in the debt limit, but only if Congress passes a budget within those three months.

Peter PanOk, it’s starting to sound like Peter Pan’s “Neverland” here. Congress created the debt-limit crisis by approving spending but refusing to authorize the debt limit increase. Now the GOP wants to postpone that crisis by creating another crisis.

If nothing else, this really ought to draw attention to just how dysfunctional Congress has become in recent years. They’re answering one failure of Congress with another failure of Congress.

Yes, passing a budget is one of the Legislature’s most fundamental responsibilities. And yes, it has been years since Congress actually passed a federal budget. But isn’t it time to ask, why?

Think about the usual budget process (which is very similar to the way New Hampshire’s Legislature passes the state budget). Usually, the House passes a version of the budget. Then the Senate passes a version of the budget. Then a conference committee figures out a compromise between the two versions. Then the conference version goes back to the House and the Senate for an up-or-down vote.

Do you really think the House and Senate are going to be able to agree on a version of the budget in the next three months?  Congress has been at a stalemate for years.  The last Congress was the most unproductive Congress since they started keeping records.  [Want to know what they did manage to agree on? 17% of the bills that were actually passed involved naming post offices or other public buildings].

But now, after a few days’ “retreat” at a plantation-turned-resort, House GOP members think they’re going to be able to turn this situation to their advantage.

No word yet on whether this latest Republican goose-chase is going to amount to anything more than just weekend headlines.

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Wondering what’s the latest on that “headroom”?

If you remember, our federal government hit the debt limit on December 31st, and the US Treasury started taking “extraordinary measures” to keep the country from defaulting on its obligations.

Smashed Piggy Bank RetirementLast week, the Treasury started starting paying government bills by using federal employee retirement funds to create “headroom” under the debt limit. The “G Fund” is a 401(k)-style retirement program with more than 3 million enrollees, including members of the military.

The law allowing retirement monies to be used to create “headroom” also promises to make members’ accounts “whole” after the crisis has passed. That’s what happened the last time there was a debt limit crisis, back in August 2011; and what happened after the debt-limit crises in 2006, 2004, 2003, and 2002. [Wait… am I just imagining there’s a correlation between debt-limit crises and the Bush-era tax cuts?]

But there’s no word on what happens if this particular debt-limit crisis isn’t solved.

And, no word on what happens if House Republicans decide they want to “reform” federal employees’ retirement benefits again.

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And yes, those unaffordable-but-Congressionally-mandated US Postal Service payments are part of the “extraordinary measures” the Treasury is now taking to keep our government from defaulting on our debt.

“The Postal Service would still have positive net revenue today except for … a requirement that Congress imposed on it in 2006. No other public or private business in America faces this onerous requirement.” Read the letter signed by 82 Members of Congress here.

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One last word about Paul Ryan: he must truly be a special guy. Ordinarily, he would have been replaced as House Budget Committee Chairman this year because of GOP “term limits”. It looks like at least three other GOP Committee Chairs will lose their positions, but Speaker Boehner has already decided to give Chairman Ryan a waiver and allow him to stay on. Read more here.

Adding ‘Headroom’ to the Debt Limit? Thank our Federal Employees and Postal Carriers

US CapitolA few days ago, Treasury Secretary Timothy Geithner told Congress that the federal government would reach its debt limit at the end of this year.  As of January 1st, Secretary Geithner will be taking “extraordinary measures” to buy another two months’ time  for Congress to resolve its self-created fiscal cliff/debt limit crisis.

What are those “extraordinary measures”?  Almost all of them involve using the retirement funds of federal employees and postal workers to create artificial “headroom” under the debt limit.  You can read the details here.

Create your own fiscal crisis… then use it as justification to borrow from employees’ retirement funds (while complaining that long-promised retirement benefits are “not affordable”).  That’s what politicians tried to do here in New Hampshire, back in the early 1980s.

We’re having déjà vu all over again, watching the same scenario play out on the national stage all these decades later.

As of Tuesday, federal and postal employees’ retirement funds will become “headroom” under the debt limit.  Maybe the extra two months will give Speaker Boehner time to reconsider the GOP’s  allegiance to the ultra-rich.  Maybe it will give Congress time to fix the crisis it created.

In the meantime: to all those federal employees and postal carriers out there, “Thanks for the headroom!”

Read more about political attacks on federal employees here.

Read more about political attacks on the US Postal Service here.

 

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