Tag Archive for debt ceiling

Road to … a Banana Republic

Dead set on doing damage

Trampling the republic into a Banana Republic

I wouldn’t be breathing a sigh of relief over apparent agreement over the national debt and deficit. Getting a runner to first base isn’t much, and we haven’t yet got him there (the “fat lady” – the Tea Baggers – will have to commit to the mixed bill at least once more). If there are words in it having more than one syllable, well . . . It’s easy to see why I’m not very confident yet. We have been here before. Remember the Newt Gingrich “Contract With [On] America?” The government shut down in 1995. And what happened? That flareup cost the USA plenty. And U. S. companies slammed on the hiring brakes. Markets HATE uncertainty, and companies, while not fearing the shareholders, tend to take a wait-and-see approach. Why do you suppose we’ve had a “soft patch” in the economy so far this year? When did the Tea-Baggers go to Washington? With all the continuing instability we still look like a banana republic, and interest rates could still rise, perhaps a lot. That would really help the economy, like throwing a drowning man an anvil.

The wealthiest among us drew a pass – again. So, too, have the “job creators,” or corporate titans. McDonald’s created 60,000 jobs or so via a nationwide job fair of sorts over a month ago. Over one million people applied. Bravo for Ronald, but those jobs pay what? $10 an hour? Wow. Pardon me if I’m underwhelmed. Those workers won’t be buying much, beyond toilet paper, gasoline, and beans.

Workers have never claimed a lower share of national income growth than now, after inflation. Total employment remains lower than in late 2008, when corporate profits troughed. Not much sign of a trough now. But there’s no more tailwind from federal spending, and there won’t be any, now that the GOP has arm-wrestled the rest of Washington to no worse than a draw. And it’s all one way with the “Inc.” crowd, which still has more than $1 trillion stashed overseas. The firms intend to either hold their breaths until they turn blue, or secure yet another exemption or sweetheart deal allowing them to repatriate those funds with few or no worries about their disposition. Can you say, it’s third Lexus time? No, the very rich will peel that largesse out of the coffers and invest it. Wasn’t it overinvestment that got us into such a mess in 2007-09? Same verse, different tune in 2000 (Internet bubble).

Numerous banks are repaying TARP funds by – you guessed it – borrowing from the U. S. Treasury. The financial industry spent almost $half a billion last year lobbying in Washington. That’s a lot of champagne, sister. Private-equity fund operators have shown they are willing to repudiate debt at the drop of a hat. Meanwhile, they continue to pay themselves enormous management fees. Banks or bonds, it hasn’t mattered. But stop the (federal) borrowing, they say. I submit these nefarious practices need to stop long before federal “spending” does. And know this: there are no data suggesting that deficit spending in inflationary, either (Federal Reserve Bank of Chicago, 2010).

Those who advocate “austerity” should look around to see how well it’s working elsewhere. In the United Kingdom, austerity has become a dirty word. Retail sales languish, tax revenues are stuck in low gear, and home sales are lousy. A lot to like there. The tea haulers should tell us whether they are aware that in 2007 the average income tax rate for the 400 largest tax returns in the USA was 17%, down from 26% in 1992. Fair share, my butt.

Businesses may claim that regulation or uncertainty or banks’ reluctance to lend lie behind their slow sales, but it’s easy to find the villain here. People out of work don’t buy. Larger firms have made a conscious decision to avoid adding labor. These same firms are taking business away from smaller concerns. No wonder corporate profits are through the roof.

I find it interesting and amusing that the American people have suddenly had it up to here with debt. These are the same people who couldn’t borrow enough. Maxing out three, four, even eight credit cards was pretty common four years ago. So now they’re ticked off at their national government for apparently behaving in similar fashion? I have long advocated higher wages for the “rank and file;” had many of us had higher incomes in 2005 or so, would we have just borrowed more? There’s a bet.

What a fragile, perilous state we find ourselves in. It’s like sailing through an iceberg field while the captain and helmsman are drunk. But don’t be complaining about federal spending if you are benefiting from same. And items as remote as federal prisons, water quality standards, the operation of the federal judiciary, and border patrolling benefit us all. Yup; federal spending. You’d think Uncle Sam was throwing hundred-dollar bills out of helicopters. No, that was said to be Fed Chairman Bernanke’s strategy. No, the only thing we have to fear is (guess what?) Fear itself.

Thanks, Franklin.

Consequences of Not Raising the Debt Ceiling

Hat tip to the National Journal

If Congress fails to raise the debt limit by August 2, the Treasury has only two options: It can default on its debt—meaning, stop paying its creditors around the world—or continue to pay creditors but halt any other federal spending above what the government collects in taxes. In effect, that would mean an overnight spending cut of about 40 percent.

Here are the choices:

1. Cut $125 Billion Per Month
2. Treasury Bonds Collapse
3. Cut Medicare and Social Security
4. Stock Market Plunge
5. Government Furloughs or Mass Layoffs
6. Sky-High Mortgage and Interest Rates


The Republicans would destroy the nation and millions of their fellow citizens to achieve their obsession with “spending cuts.” And they have the gall to consider themselves “patriots”!

Like everything else in their philosophy. It is upside down and inside out. These people are not patriots, they are traitors.

If Republicans refuse to raise the debt ceiling, will President Obama do the right thing and invoke the constitutional mandate that the nation “shall” pay its bills?

Cory Gardner confronted with unexpected town hall meeting

Representative Cory Gardner tried to sidestep much of his Longmont constituency when he scheduled time with the Longmont Tea Party on Wednesday, June 8th. He hadn’t counted on two dozen progressive protesters from Longmont and Eyes on Congress.

Arriving early, those who strongly disagree with Gardner’s wholehearted endorsement of the Republican Ryan budget and policy plan made their feelings known to the literal “drumbeat” made by a Lyons citizen and by a variety of signs. Signs supporting Medicare as it now exists and signs rejecting the voucher/coupon privatization plan were waved at teapartiers as they arrived at the American Legion in Longmont. As he exited his “chauffeured” SUV, Gardner tried unsuccessfully to ignore the protesters as they made their presence felt.

Cory Gardner - prefers Tea Party meetings to Town Halls

Gardner was not planning any town hall events until September. However, to the Longmont 9.12 Tea Party’s credit, they agreed to allow the protesters to join their event, sans signs. Like it or not, Cory Gardner was confronted with an unexpected town hall meeting and had to face as many tough questions and statements as he did from those supporting his agenda.

Well-versed in the Republican talking points, Gardner disingenuously asserted that “the [Republican/Ryan] budget protects and preserves Medicare.” Since the better proportion of attendees were Tea Party Republicans, the audience did not rise up in protest. (Progressives respectfully kept their powder dry awaiting the Q & A to follow the presentation.) Gardner’s assertion that “If you are aged 55 and older, the program will not change.” is factually incorrect. The Affordable Care Act provided Medicare recipients with a select number of diagnostic screening procedures at no cost to the Medicare insured and it also set in place provisions for closing the prescription “donut-hole.” The Republican budget repeals these benefits. Further, Gardner did not address the ramifications for Social Security Disability recipients who have or will become eligible for Medicare regardless of age.

Gardner used the old saw about “creating competition” in the healthcare insurance marketplace because “competition lowers cost.” Anyone with or without insurance who has been paying attention to the rising cost of insurance, employer-subsidized or individual, can attest to how well that hasn’t worked. Yet Gardner and the rest of the Republicans expect us to drink their doctored punch – one more time.

He justifies his voucher plan this way. “The idea is to put you in charge of your healthcare decisions, not the government, not some bureaucrat, and to do patient-centered healthcare.”

Later, during the Q & A, Gardner was taken severely to task over this statement.

One member of the audience aptly brought up the virtually universal experience of those insured in the private marketplace. She spoke of the constant need for preapproval from insurers for medical procedures. She highlighted those “bureaucrats sitting in cubicles somewhere in corporate headquarters who are only concerned with the bottom line.”

Expanding on this, Kaye Fissinger challenged Gardner saying, “You have said in your opening remarks referencing what this lady said about bureaucrats making decisions and you are attributing that to Medicare. I have Medicare and I’m also a cancer survivor. I am here today because of an excellent medical team and Medicare. I did not have to get permission from anybody for any of the diagnostic procedures I needed. I did not have to get permission from anybody for the procedures to determine what physical condition I was in before I had major surgery. And I did not have to get permission from anybody for the treatments I needed, be they surgery, radiation or chemotherapy that ultimately cured me of cancer. So to suggest that the government tells you what kind of treatment you can have and what kind of treatment you can’t have is very disingenuous and I really wish that you and other members of your party would stop doing that.”

Fissinger went on to say, “Medicare does more to control costs than anything else out there. I see my statement of benefits. I know what is billed out. I know what’s allowed. And I know what the 80% is and what the 20% is. If it wasn’t for Medicare setting a limit on what physicians, hospitals and everybody else could charge, we would have a much worse healthcare crisis in costs than we have today.”

Returning to the Republican talking point that attempts to overcome the fact that the Republican budget plan kills Medicare as we know it, Gardner asked Fissinger, Do you think we should protect and preserve Medicare for future generations?

Neither intimidated nor entrapped, Fissinger replied, Yes I do, and I think we should preserve the system we have now, not some privatized voucher coupon system.

Lest there be any doubt whatsoever about where U.S. Representative Cory Gardner stands on the healthcare issue, he emphatically said: “I do not support universal care. I do not support single payer systems.” Medicare IS a single-payer system. He never strayed far from the Republican agreed-upon obfuscation that by voting for the Republican/Ryan plan, they voted to “save Medicare.”

A likely Tea Party Republican stated that she has had Medicare for 15 years and doesn’t like it. It was unclear whether she was enrolled under original Medicare or a Medicare Advantage HMO plan administered by a private healthcare insurer. If the latter is the case, she would be justified. Those plans impose all the barriers and restrictions of other private healthcare plans. And outside of major metropolitan areas where plans DO have to compete and in places like Colorado, they are usually more costly than the Part B premium and provide no more coverage than original Medicare.

Although Medicare dominated the Q & A, it was disappointing to discover how little understanding of the procedures of government, congressional and administrative, that most in the Tea Party audience have. They appear to be driven by what they hear in outlets like Fox News and on talk radio. Those sources are notorious for inaccurate and misleading information and sometimes outright lies.

Also troubling was the expression of resentment and selfishness. Those needing food stamps and disability were criticized. Those individuals whose incomes were so low as to not require the payment of income taxes were condemned. These individuals and families still are required to pay payroll taxes, taxes that are the most regressive of almost any others that are imposed. Yet there was no condemnation of corporations evading and avoiding income taxes while making astonishing profits. And, of course, receiving raucous applause was the tired old idea of eliminating the Department of Education entirely.

Is Ryan Budget the first shot?

And lastly, Cory Gardner should be ashamed of himself for his attitude towards failure to raise the debt ceiling when it’s expected to be reached on August 2nd. Intentionally misleading his audience, he referenced that “the debt ceiling was reached a couple of weeks ago” and that “there was no economic calamity and that the sun still came up.” It was immaterial to him that Timothy Geithner, Treasury Secretary, has been juggling the books to forestall the calamity in hopes that a compromise can be reached that will allow the debt ceiling to be raised. Amazingly, Gardner framed talks with the White House as a debate over “whether or not the debt limit can be raised.”

Statements like that do not portend well. Could the Republicans be planning another episode of disaster capitalism brought about intentionally by creating a “Shock Doctrine” condition? Perhaps that is how they intend to accomplish their “revolution.” That possibility is for another article.