BBA and Senate Vote to Kill House Plan

Not surprisingly the Senate killed the Boehner plan within 2 hours of its passage. Six Republicans even voted it down - although most of those folks were probably radicals that voted against it because they wanted even more cuts.

Anyone who thinks the Boehner plan was a good one does not understand what it takes or means to amend the U.S. Constitution. The Boehner plan would require any future increases in the nation's debt ceiling to be preceded by the approval of a balanced budget amendment. That means that 2/3 of both Houses of Congress would have to vote in favor of an increased to the debt ceiling.

Getting the deficit under control is important and the BBA may sound like a good idea, except that the federal government needs to have the flexibility to run deficits in order to pay for extraordinary circumstances. In times of war, after natural disasters, or to stimulate the economy there are times when you want the government to overspend.

Radicals forced Boehner to include the language. Let's say that it passed and we changed the Constitution. Then imagine if we had a natural disaster and were attacked by Iran. We would not be able to pay for the appropriate responses because of the BBA. Taxes would have to be raised immediately to raise funds - which would likely be a problem because of the economic uncertainty following these types of events. This would compound our problems but be required because of the BBA. It is an absolutely silly idea because it unnecessarily limits the nation.

More House Nonsense

Boehner was able to scrape enough votes to pass his version of the increase to the debt ceiling. However, it was crazy theatrics that were needed to convince hard-line crazies in the Republican Caucus.

The new bill raises the debt ceiling by $900 billion - which should be good for about 6-8 months of government spending. It cuts $917 billion in projected spending over the next 10 years. However, given current spending levels, we will be back where we are today in just a few months.

The problem is that any future increases to the debt ceiling could only be made under the House plan if the Senate and the House vote in favor of a Constitutional Amendment to require the federal government to balance its budget each year. That means that 2/3 majorities in both houses of Congress would have to support such a change to the Constitution. That will never happen and if Boehner's bill actually became law it would virtually assure that we would have a default on obligations in a matter of months.

The bill will get killed in the Senate and we basically have to see what the House is going to be willing to do. Not much has changed and yet we are getting closer to economic doom.

Obama Hits Lowest Approval Rating

The Gallup tracking poll for the President's approval hit 40 percent . This is not surprising given the economic weakness and the whole ridiculous debt ceiling issue.

The President has failed in two areas that could have dramatically changed the course of the nation and the economic fortunes of all Americans. First, he expanded operations in Afghanistan to no real benefit and he has not drawn down fast enough in Iraq. This has kept up spending on these lengthy and very expensive operations (blood and treasure). Second, he did not allow the Bush tax cuts to expire on those making more than $250,000 or more. Had he done those two things, we would have at least $150 billion per year in the Treasury.

Those were the two biggest things he talked about during his campaign and instead of changing from Bush's policies he adopted them. He has done the same with warrantless wiretapping, Guantanamo/secret prisons, Predator missile strikes, more tax cuts, etc. He is basically carrying on the Bush policies that sent this country into a tailspin.

Frankly, if there was a viable candidate for President that openly and honestly talked about the things that need to get done I would listen. Candidate Obama was much better than President Obama. But, for those Republicans who hate him, I don't know what they are complaining about. He gave them more Bush and even greater tax cuts. There is no real Republican option. Romney? Bachmann? That is even crazier.

House of Reps Nonsense

So after a one day delay, last night the House was supposed to pass Boehner's plan to raise the debt ceiling. When it became clear that the Tea Party folks weren't going to go along with it and that no Dems were going to go along with it, they delayed the vote.

Boehner cannot even pass his own plan and he wants the Dems and the President to negotiate with him. What for?

So he will load up some more goodies for those folks who are on the fence and try to pass it today. I have my doubts because many of the Tea Party folks actually believe default would be a good thing.

With time running out, Boehner is going to have to build a coalition of mostly Dems and the non-crazy Republicans in the House. This means he is going to have to use Senator Reid's horribly flawed plan which will pass in the Senate.

If Congress was actually interested in economic stability and deficit reduction they would immediately pass a debt ceiling increase and then come up with a plan that cuts spending and increases taxes on a one to one basis. This is shared sacrifice.

Cutting Spending vs. Increasing Taxes

We have an unsustainable debt and deficit situation in the U.S. Republicans and Dems have somehow come to the conclusion that taxes should not be raised and spending should be cut. This is exactly the opposite of what you want to do in a weak economy or recession.

If we spent $200 billion per year on infrastructure (schools, roads, bridges, etc.), we could create 5 million new jobs ($40,000/year jobs). That would be more than 400,000 new jobs per month for a year. That would greatly reduce unemployment and increase tax collections and spending in this country.

Part of this $200 billion could come from states and localities who wanted to improve local infrastructure, but we could pay for this spending by ending the wars in Iraq and Afghanistan (about $100 billion per year), eliminating farm and oil subsidies and tax credits ($15 billion per year), and allowing the Bush tax cuts to expire on those making more than $200,000 per year.

Republican Idiots in the House

God bless the Tea Party folks for being worried about the fiscal situation of the House. There is no question that the U.S. government needs to address the structural imbalances that exist that have created the enormous budget deficits and explosion of the national debt.

That said, we need folks in Congress who actually understand what the stakes really are. When you have nutty right wingers saying that default is acceptable or that there won't be any default they have no idea what they are talking about.

The biggest reasons we have the deficits are:

1. The Bush tax cuts
2. The unfunded wars in Iraq and Afghanistan
3. The Republican/Bush unfunded Medicare Part D
4. Interest on these items that have added to the National Debt
5. The Great Recession

Many of the same Republicans that voted for the first 3 are now claiming that Obama is responsible. Silly.

I certainly think Obama has made mistakes - most notably the enormous tax cuts that he put in place with the Stimulus, the extension of the Bush tax cuts, the 2 percent cut in FICA taxes, the failure to end the wars in Iraq and Afghanistan, and the failure to spend more money on infrastructure construction projects. He needs to fight for tax increases to go along with the spending cuts he is willing to make. It is the only option with the deficit crisis we are facing.

If we do not raise the debt ceiling the consequences will be far worse than any situation this country has ever faced except for the Civil War. I am including the attacks on 9/11, Pearl Harbor, the Great Depression, Hurricane Katrina, and the Cuban Missile Crisis. This is not hyperbole or fear mongering - it is a fact. I just hope we don't get to the point where we have to find out.

Another Day Closer to DOOM.

The title of this post is not meant to be funny. If the debt ceiling is not raised the U.S. will default on its obligations. Anyone who thinks that this is even remotely acceptable (i.e., some Republicans and idiots) has now idea what they are talking about. If the Treasury runs out of cash on Tuesday as expected there won't be enough money to pay out Social Security checks on Wednesday. Money flows into the Treasury in different amounts each day, but there won't be payroll receipts high enough to bring in enough FICA money to pay SS. At that point, just think about how much outrage there will be.

As soon as there is a failure to meet obligations, it will trigger a downgrade by the major bond rating agencies. At that point, interest rates will spike affecting all Americans. The dollar will crash and the markets around will tank because there will no longer be any security in the U.S. government.

It would bring an end to American economic power. We have survived major crises in the past and I expect this will get resolved. But it is getting scary.

Debt Ceiling Crisis

After months of non-action I'm going to get back into blogging. Hope everyone is having a good summer.

The debt ceiling crisis is crazy. If we don't raise the debt ceiling, the U.S. will default for the first time in its history. We will see the dollar collapse and interest rates explode. It would be a death blow to our economy that will destroy this country.

Look, we need to have better control of our deficits and national debt, but you have Republican nutcases in the House who are not willing to raise the debt ceiling under any circumstances. Not raising it will destroy this country.

I am greatly disappointed that the President and Democrats are not fighting for tax increases and closing tax loopholes and eliminating unnecessary corporate subsidies. The fact is that the Republican idea that reducing government spending will somehow create more jobs is asinine. If we cut spending in a down economy we will just have higher unemployment. If anything, we need to spend more on infrastructure projects. Corporate profits are at all time highs and rich people in America are the only group in America that has done well since the Bush tax cuts went in place.

It is pathetic what is happening in Washington. I just wish the Dems and Obama would get tougher and stand for progressive policies. Doing more of the same will do nothing to turn the country around.