Debt ceiling hit

[Brettmcd]

Details are trickling in, but seriously:

It’s a payday loan that will be thrashed for every political advantage possible. The raw uncertainty isn’t going away.

H.

Yes it will be used for political advantage, but congress cant stop the debt limit increase from taking effect. It happens no matter what, congress can just vote to whine about it happening. I dont see how that makes for uncertainty.

[Houngan]

So, Obama tried to make it look like something reasonable in his speech tonght, saying he had all along stated we needed a balanced approach of cuts and revenue increases. And he tried to make it sound like the “committee” that they will have (6 Dems, 6 GOPs) that will provide the places where the deficit cuts will come from (in the form of bills that the houses will vote on, straight up or down votes) will include tax increases.

But we know that no Republican on the committee is going to vote for a bill to go to a Congressional vote that includes any form of taxes, be it billionaires, oil companies subsidies, hedge fund manager income, etc. And even if they did, the House would vote it down. My understanding is that for something to come out of the committee for vote, they have to have 7 votes, or just one of the other party. And if the committee doesn’t come up with enough cuts that get passed, the “punitive” cuts automatically get enacted which “both party are motivated to avoid.” Gee - I’ll bet those automatic punitive actions include all kinds of spending cuts, but not a single tax modification.

I.e. we’re still going to have the playground assholes dictating the rules of the game.

I can’t predict anything wrt presidential nominees this far out (most predictions are usually wrong from this distance) but I could easily see Romney beating Obama in 2012. Obama’s only hope is that the Tea Party controls the primaries, and he ends up going against a Tea Party candidate.

Yep, you have the thrust of it. I suppose the idea was that if you distill the GOP down to the Old Boys and cut out the new Tea Party idiots you might get some reasonable things done, but recent history illustrates that it isn’t the case. The Dems are trying to do the responsible thing, I’ll grant them that, but it’s ultimately going to wreck us.

H.

[magnet]

Yes, BBA is motherhood, applepie and rosy cheeked children frolicking in the snow with their trusty family dog. It will be a brave politician to vote it down

Didn’t the Senate vote it down just a few days ago? Is anyone planning to vote for it after they voted against it?

[Houngan]

Didn’t the Senate vote it down just a few days ago? Is anyone planning to vote for it after they voted against it?

Sure, because they want to avoid default. It’s the responsible thing to do, capitulate to terrorists.

H.

[JeffL]

I hope that the states that are already on a knife edge of surviving this recession, who go under due to these cuts (all of which land on the middle and lower class,) are ones who put Tea Party candidates in. I want Tea Party members to find their state suddenly can’t provide services they are counting on, that their kids are suddenly hit with severe issues in their schools, etc.

http://apnews.myway.com/article/20110801/D9OR0MOG0.html

[magnet]

I was originally pretty angry when I first heard about this deal, but now that I’ve thought about the details it’s hard to stay angry. Maybe someone can help me.

Let’s assume that the Super Congress fails. That’s pretty much guaranteed. It’s interesting to note that liberals expect the Super Congress to raise taxes, but conservatives seem to believe that the Super Congress is not allowed to raise taxes.

So we should treat the trigger as a foregone conclusion. And the trigger includes:

1. $750 billion in defense cuts. Finally! That’s a win for liberals. It’s hard to get defense cuts.
2. $750 billion in domestic cuts. Boo! But what exactly is going to be cut? Not Medicaid. Not Social Security. Not welfare or unemployment insurance. Not salaries.

Oh, right. Medicare. But not benefits. They are going to automatically cut reimbursements for doctors and hospitals. Yet here’s the funny thing about that. They were already going to cut those automatically. Every year since 1997, in fact. And every year, the GOP and Democrats agree on one thing: restore pay for doctors and hospitals. Last year the House vote to suspend those cuts was nearly unanimous. What are the odds that the medical lobby loses 200 allies in the House this year?

So, not Medicare.

I’m sure there are some other things in the trigger that will annoy me when I find out what they are, but right now it looks like the top liberal priorities will emerge relatively intact.

[theblackw0lf]

I hope that the states that are already on a knife edge of surviving this recession, who go under due to these cuts (all of which land on the middle and lower class,)

http://apnews.myway.com/article/20110801/D9OR0MOG0.html

And the pentagon

350 billion upfront, 550 billion in the trigger

[magnet]

Sure, because they want to avoid default. It’s the responsible thing to do, capitulate to terrorists.

H.

They don’t need to pass the BBA to prevent default. They just need to hold a vote and kill it again.

[BigWeather]

America is screwed. Even if this passes, and there is no guarantee it will, we’re getting a ratings downgrade. Nobody will be seriously fooled by this, it’s kicking the can down the road, and no good plan would have no revenue increases or tax reform.

Regardless, we’re still screwed as this only exacerbates the 20:1 white:black and 18:1 white:Hispanic wealth gap. There is NO pain from what we’ve seen so far on the top (read: mostly white) end. The pain will hit the lower and some of the middle (read: some whites, and lots of minorities). The problem with this is that long term it just isn’t sustainable – we have to find a way to narrow, not widen, this gap.

The problem is that more and more people are getting desperate. Tea Party types get elected when people feel they have nothing to lose. I know personally a couple of people that wanted this default. They have no job, they have no 401K, they have no 529, they are saddled with student loan debt. They are disillusioned to the core with America and politics and want to hit the reset button – just to see what happens. They are also tired of being told every time they turn around “pass this or it’ll be economic calamity.” After a while it feels like the boy that cried wolf. It’s hard to prove to anyone that we’d be much worse off without TARP, cash for clunkers, homebuyers’ credit, etc.

As for this deal, it’s crap. Demand that the revenue side be addressed or it is a no-go. See if they are really bluffing. And if they aren’t, default, and make damn sure that every American understands that it was the refusal of the Republicans to pull the fat cats and corporate types off the teat.

Edit: Just read Magnet’s post. Ok, that’s not so bad, but… Let’s get something on the revenue side. At the very least a guarantee those stupid Bush tax cuts will expire (or be ended even earlier). Let’s tax capital gains as income (or, at least, have it on a sliding scale where you pay income for short-term capital gains and the existing 15% for gains after some time span to encourage longer-term investing – basically instead of < 1 year it is income, > 1 year it is 15% let’s do < 5 years it is income, > 10 years it is 15% with a sliding scale between).

[Wisbechlad]

Didn’t the Senate vote it down just a few days ago? Is anyone planning to vote for it after they voted against it?

They tabled it. I.e. they didn’t actually vote on it. Pedantic I know, but a big difference between “lets vote not to vote on this bill” and voting on the bill. I.e. note a number of republicans also vote to table the house bill

[Jasper_Phillips]

I was talking about this with my father tonight. I am pretty convinced we’re seeing the early stages of the final sclerosis of our Constitutional order. I can’t see the US system making it another 50 years if this keeps up.

Aye. In my more pessimistic moments I expect to live to see it fall apart. We’ll see though; I suspect people thought much the same during the Great Depression. Yet times were much harder then, and still the US survived.

I’m not sure how much of that is structural to the US though, as opposed to FDR. Everything looks so solid and assured looking back into history, but I wonder if we were really that far from dissolving into Crimson Skies style regional powers.

Ultimately, if I had to bet on a most likely outcome for the US in 50 years, it’d be balkanization. Increasingly the Left and Right just want nothing to do with each other, and what there is of the Middle may as well not exist since it just capitulates to the Right.

[mouselock]

Indeed, from the sounds of it they caved on everything rather than growing a pair.

Can someone bitching about this -please- tell me how you think this works out?

Do you think:

1. The WH/Dems “grow a pair” and the country goes into default and it’s worth it because, y’know, at least the republicans didn’t get it their way?

2. The WH/Dems “grow a pair” and some miraculous hail mary idiocy actually works? (14th Amendment/Minting $2T coins.)

3. …?

4. Profit!!!

Seriously, are people saying that the Dems should force default rather than letting through spending cuts with no revenue increase and a symbolic bill for a BBA?

Other than the emotional, knee-jerk response, exactly what would be served for the country as a whole by being as obdurate on the left as we are on the right?

[BigWeather]

Aye. In my more pessimistic moments I expect to live to see it fall apart. We’ll see though; I suspect people thought much the same during the Great Depression. Yet times were much harder then, and still the US survived.

Excellent point. Sometimes a little perspective makes things a bit brighter. However, I believe the government did more stuff right than we have so far (CCC, infrastructure stuff, etc.) and they did have a World War and a decimated post-War Europe to super-charge their recovery. I know things were starting to look brighter by 1939 but I still wonder what would’ve happened without U.S. pre-war manufacturing (liberty ships, supplying Britain, etc.) and of course wartime.

[magnet]

Ok, that’s not so bad, but… Let’s get something on the revenue side. At the very least a guarantee those stupid Bush tax cuts will expire (or be ended even earlier). Let’s tax capital gains as income (or, at least, have it on a sliding scale where you pay income for short-term capital gains and the existing 15% for gains after some time span to encourage longer-term investing).

The lack of revenue is insulting. But recently I’m starting to think that it may not be as bad a thing as I originally believed.

Suppose you had two bad options to choose from:

1. $2T in cuts, $1T in new taxes.
2. $2T in cuts. No new taxes.

If you want to reduce the deficit, then obviously (1) is better than (2). You can also argue that (1) is more fair than (2), depending on how the cuts and taxes fall. But if you were interested in stimulating the economy, from a Keynesian perspective (2) is better than (1).

I have no idea if that was the thinking on the part of the Dem leadership. I’m sort of hoping they weren’t total idiots, but I’ve been disappointed so many times before.

[Alstein]

At least if the Tea Party tries to play hostage again, defense and medicare spending will be cut. I hope they do, as Defense/Medicare are the two areas that most deserve cutting and shredding.

BTW the only way to guarantee a tax hike is to get Congress back, or lose the presidency and then pull a Tea Party stunt yourselves.

[Jasper_Phillips]

Excellent point. Sometimes a little perspective makes things a bit brighter. However, I believe the government did more stuff right than we have so far (CCC, infrastructure stuff, etc.) and they did have a World War and a decimated post-War Europe to super-charge their recovery. I know things were starting to look brighter by 1939 but I still wonder what would’ve happened without U.S. pre-war manufacturing (liberty ships, supplying Britain, etc.) and of course wartime.

It’s a straight forward line of thought – it’s better to stop now and sort things out, default and all, than kick it down the road when it’ll be an even worse problem. The idea is that ultimately letting the crazies run the government will prove worse than simply defaulting now – because they have no intention of stopping.

Were it all somehow assured of stopping right here with this deal, then I’d agree. Sadly, I think that’s putting entirely too much faith in the good will of the GOP. Why would they stop using the Tea Party as a clever cats paw to enact whatever policy they want?

[magnet]

BTW the only way to guarantee a tax hike is to get Congress back, or lose the presidency and then pull a Tea Party stunt yourselves.

There is another way: do nothing at all. Then wait for the Bush tax cuts to expire.

Notably, the GOP wasn’t able to lock those in with this deal. To me that suggests that either they will expire, or the Dems will extract a heavy price for extending them.

[MikeJ]

I’m starting to think that this deal is designed to create a coalition for tax increases. The medical industry and defense are extremely powerful lobbies. If this passes, the default coarse of action will be giant cuts to defense and doctors and the end of the Bush tax cuts.

[Houngan]

I’m starting to think that this deal is designed to create a coalition for tax increases. The medical industry and defense are extremely powerful lobbies. If this passes, the default coarse of action will be giant cuts to defense and doctors and the end of the Bush tax cuts.

No offense Mike, but that’s the worst political read in history.

H.

[BigWeather]

No offense Mike, but that’s the worst political read in history.

H.

It may not be a good read, but Neville Chamberlain would like a word with you.