I’m going to be doing some site maintenance this afternoon, which may or may not interrupt service.
The United States Treasury hits the statutory national debt ceiling, that’s what happens!
WASHINGTON (Reuters) – The United States will reach the limits of its borrowing authority on Monday, but don’t expect to hear alarm bells in Washington or on Wall Street.
Rather, that ringing sound you hear is the opening bell in a fight that’s likely to last a full 15 rounds.
It’s a moment the Obama administration has warned about for months. Without congressional action, the Treasury Department will be shut out from the bond markets and the country could eventually default on its obligations, an event that would roil markets and economies across the globe.
There will be little immediate financial impact when the United States reaches its existing $14.294 trillion debt ceiling, as the Treasury Department says it can stave off a default until early August. Observers don’t expect Congress to swing into action until the last possible minute.
Bond markets have remained placid as traders calculate that despite the theatrics in Washington, the chances of default are extremely small.
“I don’t think this is a big story yet,” said Dan Ripp, an analyst with Bradley Woods, a securities firm in New York. . . . .
Unlike nearly every other developed country, the United States can’t increase its borrowing authority without legislative action.
This is a mixed blessing for Congress: The public is overwhelmingly opposed to a debt-limit increase, and the vote to raise the limit is always politically painful. But it gives lawmakers further leverage over federal spending.
“The beauty of the debt ceiling issue is it gets results,” Senate Republican Leader Mitch McConnell said on Thursday.
And leverage is what Republicans need. We won control of the House of Representatives in the last elections, but the Democrats still control the Senate, 53-47, and Barack Obama is still the President. The Republicans already caved in on the FY2011 budget: after laboring mightily, the Congress has produced a mouse, a budget deal which will cut a whopping $38 billion from FY2011 spending. This was the “compromise” reached between the original $100 billion cut proposed, before the Republicans compromised with themselves, and passed an omnibus spending bill which cut only $61 billion from the rest of FY2011, and then wound up having to compromise further with the Democrats, who had proposed huge, draconian, incredibly austere cuts of $6.5 billion.
The Republicans in the House, deathly afraid of the political blame for a looming government shutdown, despite the backing of the base that gave them the House majority in the first place, bought into a much smaller spending cut, and then, after the hoopla concerning this huge accomplishment, this monstrous spending cut, even that turned out to be virtually nothing:
Before we get too far in the new debate on spending, just a word about last week’s news – the so called “historic compromise” that prevented a government shutdown and cut an astounding $38 billion from this year’s budget.
Whether or not you thought the cuts came in the right programs, that’s a big deal. Thirty-eight billion dollars is a lot of money.
Or is it?
Well, thanks to the Congressional Budget Office and some great reporting by the Washington Post, it turns out the government won’t be cutting $38 billion in one year after all.
No, the real cuts will be more like $352 million!
You heard me right, $352 million, NOT $38 billion.
The rest? Mostly smoke, mirrors and accounting gimmicks.
Example: When projects like the Capitol Visitor Center came in under budget – it was supposed to cost $621 million and an actually cost less than $600 – auditors called the unspent, left over money a “spending cut.” The Washington Post found that in 98 cases where the government had allotted money to federal agencies that was never spent, in each case it was called a “spending cut.”
On big-ticket items like aircraft carriers whose full cost won’t come due for five or six years, the entire cost was deducted as a “cut” in this year’s budget.
We bemoan the fact that government can’t break its spending habits, can’t do what it needs to do, but what I find more disappointing — is appalling too strong a word? — is that try as they might, neither side can seem to find a way to tell the truth.
No, appalling is not too strong a word; it might be too mild a word in this case.
Well, while a government shutdown would (probably) have hurt the Republicans politically — though it should have hurt the Democrats even more — as the linked Reuters story notes, the public are “overwhelmingly opposed” to increasing the debt ceiling.
Thirty-four percent don’t know enough about the issue to sayby Dennis Jacobe, Chief Economist
PRINCETON, NJ — By a 47% to 19% margin, Americans say they would want their member of Congress to vote against raising the U.S. debt ceiling, while 34% don’t know enough to say. Republicans oppose raising the debt ceiling by 70% to 8% and independents by 46% to 15%. Democrats favor raising the ceiling by 33% to 26%.
Those are the results of a Gallup Poll, conducted May 5th through 8th, which asked for opinions about raising the debt ceiling but did not offer reasons for or against raising it.
To put it in simple language for the Republicans: Dudes! Your electoral base opposes raising the debt ceiling by a 70% to 8% margin!
There is a huge caveat in there, however. Not in what was asked, but in how questions were answered:
A majority of Americans (57%) say they are closely following the news about “discussions to raise the U.S. debt ceiling, the maximum amount of money the U.S. government can borrow by law.” Republicans are following the issue more closely than are Democrats and independents; upper-income Americans are following it more closely than lower-income Americans; and those with a postgraduate education more so than those with a high school education or less.
Americans are more likely to oppose than favor raising the debt ceiling, regardless of how closely they are following the news about the issue. Among the 23% who are following the debt ceiling discussion very closely, 62% are opposed and 25% are in favor of raising the current ceiling. Among those who are following the issue less closely, opposition outnumbers support by at least a 2-to-1 margin.
I, for one, don’t believe that 57% of Americans “are closely following the news about discussions to raise the U.S. debt ceiling.” While I can believe that Republicans are following it more closely than Democrats and independents, and that higher-producing and better educated Americans are following it more closely than their less educated and poorer brethren — since higher-producing and better educated are coterminous with being Republican — I’d bet a case of Mountain Dew that if you asked 100 adults what the current statutory debt ceiling is, you wouldn’t find more than 20 who’d know it to within a trillion dollars.
But the opening is there for Republicans: if they can educate the American people about what the debt ceiling is, why we’ve reached it, and what would happen if it was raised, the public have a natural inclination to side with the position of not raising it, unless there are real, substantial spending cuts linked to it, something that is secure and solid enough for the American people to say, OK, we can agree to a debt ceiling increase now, because we know that we are on a path to eventually cutting the debt. Without such an agreement, then the public would probably say, we’ll keep the debt limit where it is right now, and take whatever comes from not raising it.
The Republicans can win on this, if they show that they have the courage to fight for the right positions. If they don’t demonstrate that courage, the base will desert them, and they’ll be in the minority once again.
How long do you think it will take before people start blaming this whole thing on the US trying to undercut his candidacy?
COLLEEN LONG | May 15, 2011 12:06 PM EST |
NEW YORK — The leader of the International Monetary Fund, a possible candidate for president of France, was yanked from an airplane moments before it was to depart for Paris and arrested in the alleged sexual assault of a hotel maid, police said.
Dominique Strauss-Kahn, 62, was arrested on charges of a criminal sex act, attempted rape and unlawful imprisonment. He had been taken off the Air France flight at John F. Kennedy International Airport on Saturday afternoon by police officers.
Monsieur Strauss-Kahn’s attorney, Benjamin Brafman, stated that his client denies all of the charges against him. M. Strauss-Kahn was the leading Socialist candidate to challenge President Nicolas Sarkozy in the 2012 elections, but his arrest will probably throw the campaign wide open.
From The Constitution Club:
Conservative forces often complain about losing the grand battle for the heart and soul of America, about declining moral standard, and a certain long term move towards socialism and loss of freedom. Well, atleast when it comes to gun rights, the move seems to be going the other way. Look at the map above, 48 out of 50 states allow residents to carry concealed weapons, and the overwhelming majority have a “shall issue” policy, meaning that concealed permits are given in all but extraordinary circumstances. Oh, and the map is outdated, Iowa has recently become a shall issue state, also Wyoming and Arizona have joined Alaska and Vermont as “Constitutional Carry” states where one can carry a gun without a permission slip from Big Brother. Now the state of Wisconsin is moving towards becoming the 49th state to permit concealed carry, leaving Illinois and DC as the last bastions of tyranny (because when you think of safe places to live, your first thoughts are Chicago and Washington DC).
There’s a good deal more, including the author’s note concerning how violent crime has decreased in the United States since state legislatures started removing the idiotic gun control legislation that was previously on the books, though he does note that correlation does not equal causation.
The author has led an interesting life. His blog biography:
Zazu is not afraid of communism, or pacifism, or socialized medicine. A three time immigrant, he was born in 1983 in Leningrad, USSR. Having gotten tired of the bread line scene, Zazu and family packed their stuff and made aliyah to Jerusalem, Israel. They came during the boom of the peace craze when the Oslo accords were signed and everyone was smoking the crack pipe of reconciliation. Having predicted what is about to happened in that country, Zazu and family flew to Toronto, Canada, where Zazu’s doctor father was told that he could not practice his trade because with socialized medicine there was only so much money to go around among the doctors. Finally Zazu arrived in the US where he made himself a home as a freedom loving, gun owning, troops saluting, hard working, flag waving, socially drinking, Constitution respecting, artsy-fartsy movie watching, libertarian atheist. Like many immigrants before him he is settling the American frontier; bringing civilization to the godforsaken liberal hellhole of Ithaca, NY.
I find that interesting: born in a failing socialist state — please, pardon the obvious redundancy — his family moved to a nation which defends itself strongly (that’s the part our media shows us) but which is very much a European-style democratic socialist state as far as its domestic policies are concerned, and pulled up stakes again, heading for our great neighbor to the North, yet another European-style democratic socialist state. They found real freedom and liberty when they came to the United States. The author’s experiences, mostly as a child, when the state is attempting to use the public schools for socialization, left him sour on socialism and yearning for freedom.
Unfortunately, the map the author presented doesn’t tell the whole story. It concerns whether or not Americans without felony records can carry firearms, but there are various other gun control laws on the books or being proposed. Here in the Keystone State, the good Democrats in the City of Brotherly Love wanted to impose all sorts of gun control ordinances, and get the state legislature to pass companion laws to help them, but the legislature declined¹, and Pennsylvania law is such that cities cannot enact gun control ordinances stricter than the state laws.
Not that that would stop the good Democrats of Philadelphia!
“..because there’s sooo many people with legally registered guns running out and committing murder in Philly.”
Those are the sarcastic words of Sandra Stewart, Republican City Council candidate in District 6. The Philadelphia Libertarian Examiner recently asked her about the City’s latest idea to compile a list of everyone who owns a gun here. The Philadelphia Libertarian Examiner also tried to reach City Council candidate and Republican David Oh by leaving him a voicemail a few days ago, but he’s too cool for school and doesn’t have to talk to lowly websites like ours. . . . .
Yes, the City of Philadelphia wants to make sure that law-abiding citizens are punished for the actions of people whom they refuse to acknowledge are causing the real problems. The Roxborough man who wants to protect his home and family is made out to be the villain, not the illegal immigrants coming here and other ne’er-do-wells buying stacks of guns at K-Mart and shipping them to Mexican Cartels.
The City of Philadelphia knows what’s about to happen. This City is about to go through record financial insolvency. The City will lay off police officers and fire fighters and try to blame everything on the Republican State House of Representatives. Then, crime will spike even further and there will be rioting and looting in the streets. It would look bad to all the people who get handouts from the City if people in say, Bridesburg or Port Richmond, shoot a violent criminal who invades with their crime spree from North Philadelphia.
The City of Philadelphia will have a list of everyone who legally has a gun. If some type of State of Emergency takes place, the City will be able to go around and forcibly collect everyone’s guns. This already happened in New Orleans after Hurricane Katrina – what’s not to say it can’t happen here?
The City also wants to punish people who follow the law and blame them on the reasons why some thugs in Kensington held up a convenience store. City Councilman Darrell Clarke even sent a “kindly worded” letter to Governor Tom Corbett requesting that Corbett look the other way when the City of Philadelphia takes a dump on the Constitution.
Well, it’s pretty simple: if that ordinance passed, and a Philadelphia resident didn’t want his name on that registry, all he’d have to do is buy his gun in Montgomery County. But the problem isn’t with law-abiding citizens who buy guns; the problem is with people who are criminals! The 2007 article from The New York Times I referenced earlier noted that Philadelphia has a much higher murder rate than New York City, but, other than blaming it on poverty, failed to note the real difference: former Mayor Rudy Guiliani (R-New York City) instituted a get tough on crime policy, in which the police cracked down on the low-level offenders, and the courts punished minor offenses harshly. Philadelphia, on the other hand, has what amounts to a catch-and-release program for minor offenses, and then everyone is shocked, shocked! when a police officer is shot by some thug with a sixteen page rap sheet for “minor” offenses, and everyone is asking, “Why wasn’t he already in jail?”
The cause of freedom is winning, but winning slowly, and, regrettably, Zazu’s chosen title, “Total Victory in the Battle for the 2nd Amendment,” isn’t quite accurate.
¹ – When the referenced article was written, in 2007, Democrats had a one-seat majority in the state House of Representatives, while the GOP controlled the state Senate; the Governor was Ed Rendell, a Democrat, former Mayor of Philadelphia, and a gun control advocate. Since the November 2010 elections, both Houses of the state legislature are controlled by Republicans, and our Governor is Tom Corbett, a Republican. Our freedoms are reasonably safe for the next few years.
A couple of interesting posts on taxes. First, from Donald Douglas of American Power:
Maybe he should hold off on tax increases altogether. Let the market work things out and continue to rationalize spending.
At LAT, “Gov. Brown to skip tax increase this year“:
A surge in revenue has prompted Gov. Jerry Brown to scale back his proposal for more taxes, even as his administration on Friday announced its intention to close 70 state parks.
Officials familiar with Brown’s plans said the revised budget he presents Monday will propose raising income tax rates on Californians for four years rather than the five he initially wanted. The higher rate would not take effect until 2012.
The governor will continue to push for a five-year extension of increases in sales taxes and vehicle fees that are due to expire by July 1, according to the officials, who spoke on the condition of anonymity because the plan has not been made public. Brown wants lawmakers to put some levies in place before July 1, to be ratified later by voters, the officials said.
And the second one, from Duffy of The Colossus of Rhodey:
We are continually told that taxes either don’t matter or they somehow grow the economy. This is nonsense on stilts and even the most hardened of Democrats know it. Rather, they use this “logic” as a fig leaf for their desire to take money from others to reward their cronies and spent it as they see fit.
Even Illinois which is Democrat down to dogcatcher is facing reality. Motorola is threatening to leave the state. The taxes are too high and the cost of doing business has made staying untenable. So what did Illinois do? They offered $100MM in tax breaks. One Hundred Million Dollars not to leave.
They have been forced to face the reality that they can only bleed so much from corporations before they leave. Motorola is not a small outfit and moving is going to be expensive. That said, I don’t think they’re bluffing. They’ve run the numbers and staying long term isn’t prudent.
Similarly, Sears the icon of Illinois is pulling up stakes. Think of what it says that the company with the most iconic tower in the midwest is thinking of leaving Illinois. How bad is the business climate? So bad, they’re considering New Jersey. They are also considering Texas which is unsurprising to anyone who’s been paying attention.
Taxes matter. Regulations matter. Capital flight is a reality. Not just from state to state but from country to country. Democrats ignore this reality over and over. Some of them are so brazen as to say “let them go”. That is beyond foolish. Delaware has the jobs it does by making a favorable business climate. Low corporate taxes, solid Court of Chancery and streamlined regulatory environment. Trying to bleed corporations for pet projects is unwise. Better to draw more businesses and ask less of them than to drain those who are here.
More at the link. But we’ve noted before the California business exodus and how taxes and the increased costs of doing business due to increasing regulations are nudging corporations to lower tax/lower cost states.
One thing has jumped out at me. Duffy noted two major corporations preparing to leave, or at least partially leave, Illinois due to increasing taxes. The point behind that is simple: corporations like Sears and Motorola might leave because they can leave. Governor Jerry Brown of California is simply delaying income tax increases, but the taxes he is considering are increased taxes on people who mostly lack the ability to pick up and leave. Dr Douglas is, for example, an associate professor of political science at Long Beach City College; for him to leave due to increased taxes would require him to find another tenured professorship at another college, not necessarily the easiest thing to do. Henry Whistler, the Iowa Liberal who lives in California — don’t ask me how that makes sense — spent a lot of time living poor in the Los Angeles area, but has now managed to establish himself in a growing career; he can pull up stakes and head back to the Hawkeye State, assuming that Mrs Whistler will agree, but that would be at the price of the career he finally got going.
But those wicked ol’ corporations, the ones so many of our friends on the left somehow see as the enemy, many of them do have the mobility to pull out of a higher-cost environment and settle down in a lower cost one.
When we were a manufacturing economy much of what they now believe was true. You could bleed companies like Ford. They had millions and millions of sunk costs in their factories and moving was nearly impossible. Those days are gone and are not coming back. New York City learned this the hard way which is why Jersey City looks the way it does now. Why do I work in Virginia instead of DC? Virginia got smart. They lured businesses away from the District with tax incentives and smarter regulation. They don’t call them the Beltway Bandits for nothing.
Maybe Jerry Brown figured that out, too, and that’s why his proposed tax increases — including the delayed-for-one-year income tax increases — are really aimed at the people who can’t just pick up and move.
Mr Hitchcock started Truth Before Dishonor in 2009, but when he tried to take it from a wordpress.com site to an independent one, he developed some real technical problems getting it working, though when it was working, it really looked good. He recently revived the old wordpress.com site, and now has some content there that he isn’t cross-posting here. It’s worth a look.
From our good friend Henry Whistler:
Or maybe just realizing that talking about cutting spending without raising taxes to reduce the deficit is like talking about not paying on your car loan while refusing to take a better paying job to balance the checkbook. Grown-ups know better:
* A May 11 Ipsos/Reuters poll found that three-fifths of people favor raising taxes to reduce the deficit.
* A May 4 Quinnipiac University poll found that 69 percent of people, including 49 percent of Republicans, support raising taxes on those households making more than $250,000.
* An April 29 Gallup poll found that only 20 percent of people say the deficit must be reduced only with spending cuts; 76 percent say that taxes should play a role.
* An April 20 Washington Post/ABC News poll found that by a 2-to-1 margin people favor a combination of higher taxes and spending cuts over spending cuts alone to reduce the deficit. It also found that 72 percent of people favor raising taxes on the rich to reduce the deficit and this is far and away the most popular deficit reduction measure.
* An April 18 McClatchy/Marist poll found that voters support higher taxes on the rich to reduce the deficit by a 2-to-1 margin, including 45 percent of self-identified Tea Party members.
Republicans are working hard to enforce their no-tax-increase-ever orthodoxy, but there are signs that the dam is beginning to break. On April 7, former Reagan budget director Dave Stockman said, “It is simply unrealistic to say that raising revenue isn’t part of the solution. It’s a measure of how far off the deep end Republicans have gone with this religious catechism about taxes.”
You can’t keep telling people that we’re in a budget crisis and that we have to all be adults, but BTW TAX CUTS ARE OFF THE TABLE I SAID!!!
Well, it seems that the esteemed Mr Whistler sort of ignored something, which I went ahead and highlighted by boldfacing parts of his original. It isn’t so much that people think there should be tax increases, but that a lot of people think there should be tax increases on other people.
Tax increases on themselves? Not so much. So, is “America willing to pay for the government it wants,” as Mr Whistler entitled his article, or is it that America wants other people to pay for the government it wants?
I’ve said it before: I’d be willing to support tax increases, on everybody, but only after we get spending under control. If we don’t do that first, if we let tax increases lead the way, then we’ll get exactly what we’ve always gotten before: a federal government, seeing new revenue, just spending the increased revenue — and more — rather than cutting the deficit.
Just to get the ball rolling on Perry’s new site, I cross posted this article there.