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From a great blog, ataxingmatter

Reaganomics and the GOP’s Economic Terrorism

This debt-ceiling crisis is one of the GOP’s making and relates directly to the failed policies of militarization, deregulation, privatization, and tax cuts espoused by Ronald Reagan and his satraps. Even the Washington Post (a right-of-center mainstream paper with a reduced staff and a tendency to describe economics and policy in the ‘received wisdom’ of Washington circles, which means that it tends to reflect corporatist and elitist perspectives more than it reflects ordinary Americans’ thinking) recognized the way the Reaganomics tax-cut train has gained speed as it moved out of the station (spurred, of course, by the Koch and Walton money and the power of a dozen propaganda tanks spewing out the dogma on a daily basis)…

So now these unpatriotic government-hating, economy-destroying idiots (sorry, folks, there’s just no other word for them) want to renege on the decisions Congress has made by just not raising the debt ceiling, simply because this anachronistic mechanism happens to be there available for them to use as a tool in their economic terrorism fanny pack. This isn’t the way to make appropriations decisions or tax policy folks. It’s the way to destroy the economy.

and:

They’re bamboozling us, and Obama is betraying us: failing to use the bully pulpit to shame the GOP, he caves instead on core social justice issues

Obama is agreeing to let the Republican’s adle-brained ideology get a victory in this battle, a victory that will be a resounding defeat for ordinary Americans as it undermines an already shaky social welfare system and favors further the corporate giants that are being advanced by the Supreme Court’s radical right and the Tea Party alliance with the economic fundamentalists like the Koch brothers, Heritage Foundation, Cato Institute and others. Instead of shaming them, Obama–surrounded by right-wingers in moderate clothing such as Geithner and the rest–is caving yet again and letting them set the agenda for Congress.

A minority party with a radical slant followed by less than a third of Americans is setting tax, war, and civil rights policy, because we have a president who is either afraid of his shadow, being handled by those who don’t give a damn about the issues that matter, or so sold out by being surrounded by the big money guys that he doesn’t even recognize that he has betrayed union workers, ordinary Americans, the elderly, and everybody who dreams of freedom from a country run by the corporations and the ir wealthy managers and owners for the corporations and their wealthy managers and owners.

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In an interview today, Governor Tim Pawlenty said, “I wish they didn’t raise the debt ceiling.” In response to Governor Pawlenty’s wish, DNC Chair Debbie Wasserman Schultz said:

Governor Pawlenty is hardly the only Republican who would prefer that the United States default on its debt, but as a presidential candidate, his words cannot be dismissed lightly. To allow the United States to default on its debt for the first time in our history would be to allow our economy to descend into another crisis – one potentially even worse than the crisis that befell America under the last Republican Administration.

America cannot afford the kind of reckless leadership that Governor Pawlenty would bring to the table. It’s the kind of leadership that left his home state of Minnesota in dire fiscal straits and caused a government shutdown just months after he left the governor’s office there. It’s the kind of leadership that led to higher taxes for the vast majority of Minnesotans – and higher unemployment across the state. And it’s decidedly not the kind of leadership we need today. Republicans like Governor Pawlenty need to put aside their partisan talking points and start thinking about doing what’s necessary to protect our economy and safeguard our country’s future.

Mark Zandi: Failure To Increase The Debt Ceiling Would Lead To Significant Spending Cuts And A Recession. “‘If we get to August 2 and there is no debt ceiling limit, and there has to be significant spending cuts – even if Congress and the administration reverse themselves days later, I think the damage will have been serious, and we probably would be thrown into a recession,” [Moody's Analytics chief economist Mark] Zandi said.” [Christian Science Monitor, 6/28/11]

Failure To Raise The Debt Ceiling Would Mean Immediate Cuts To Social Security. “The Bipartisan Policy Center studied Treasury Department receipts and expenditures for August 2009 and 2010 and determined that the government likely would not have enough revenue to pay the full $23 billion payment to Social Security recipients due on Aug. 3[…] ‘We should be honest with ourselves what this would be like, and the answer is it would be chaotic,’ said Jerome Powell, a former Treasury official in the first Bush administration. ‘There is no way to avoid really serious pain.’” [USA Today, 6/29/11]

Failure To Increase The Debt Ceiling Could Result In “The Largest Quarterly Economic Decline Since 1947.” The Center for American Progress reported that “a two-month failure to raise the debt limit could result in the largest quarterly economic decline since 1947, when relevant data were first reported. That would obviously be a bigger decline than in any quarter of the Great Recession. And the worst quarter of the Great Recession saw a loss of nearly 2 million jobs.” [Center for American Progress, 7/7/11]

Failure To Increase The Debt Ceiling Would Require A 40 Percent Cut To The Federal Budget, Putting Our Economic Recovery At Risk. “The United States actually already hit the official debt ceiling. But the Treasury Department has been able to delay the real consequences until early August by using extraordinary measures. If Congress doesn’t act by then, however, the federal government will be forced to immediately cut nearly 40 percent from its budget. Since government consumption and investment is a major contributor to overall economic activity—contributing nearly 10 percent to gross domestic product last year—the wider economy would suffer from the magnitude and immediacy of the required cuts.” [Center for American Progress, 6/3/11]

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As discussions regarding a deal to raise the nation’s debt limit continue, GOP politicking has prevented the talks from moving forward. Every day progress toward a compromise stalls, the United States speeds closer and closer to defaulting on America’s debt. From massive job losses to senior citizens having to choose between paying rent and buying food, the consequences of a default are grim.

“As we continue down this reckless path, some in Washington seem giddy at the prospect of a default—that’s unconscionable,” Congressman Jim Himes (CT-4) said. “Are they actually hoping to benefit politically by causing millions of people to lose their jobs, forcing senior citizens who depend on Social Security checks to go without food, and pushing interest rates—for everything from college loans to new home mortgages—into the stratosphere? We simply cannot let this happen.”

Here’s a review of this week’s warning signs that show failing to raise the debt limit would send the American economy into a death spiral.

Tuesday
President Obama announced that the government may not be able to send the Social Security payment seniors are expecting August 3 if Congress fails to raise the debt limit.

Wednesday
Federal Reserve Chair Ben Bernanke explained to the House Committee on Financial Services that failing to raise the debt limit would cause people to lose their jobs.

Wednesday
Moody’s Investor Service announced it would put the United States government’s bond rating up for review, making good on a June promise to reconsider the nation’s credit-worthiness if Congress didn’t make sufficient progress toward a debt-ceiling deal by mid-July. Bernanke told the Senate Committee on Banking, Housing, & Urban Affairs that not raising the debt ceiling would be “a calamitous outcome.”

Yesterday
A Standard & Poor’s official suggested the agency will likely downgrade the nation’s credit rating if the debt ceiling is not raised and the U.S. fails to meet any of its financial obligations as a result, regardless of whether or not the missed payment constitutes a bond default. For instance, if a failure to raise the debt limit prevents the U.S. government from issuing August Social Security checks, S&P will downgrade the nation’s rating.

Today
From Ezra Klein:

It’s not just the recent warnings from Ben Bernanke (“a calamitous outcome”) and Tim Geithner (“catastrophic”). We’re used to those. It’s the credit rating agencies like Moody’s and Standard & Poor’s. They’re telling us, slowly, clearly and with terrifying detail, what they will do if we don’t raise the debt ceiling. Moody’s, for instance, warned that they won’t just downgrade our debt — though they will do that. They’ll automatically downgrade 7,000 municipal bonds, and put many, many more on review. The havoc, in other words, will spread. Not to be outdone, Standard & Poor’s announced that they thought a downgrade in the United States’s credit rating could happen before the end of July — which is one of our first signs that the market may not wait for midnight on August 2nd. Even China, which holds more than $1 trillion of our debt, is warning us to “guarantee the interests of investors.”

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After the initial rejection of the state employee concession package, Dannel Malloy seemed adamant that further negotiations were out of the question, and that massive layoffs were inevitable. Now, after progressives raised holy hell at his unbelievable pettiness, stubbornness, arrogance (you pick) he seems to have changed his tune: (CT News Junkie reports)

“Round one they decided not to accept it. I wouldn’t be surprised to see another round, quite frankly, in which people kinda figure this whole thing out and understand that it would be better to put the state on firm financial footing and to rearrange our relationship with our fellow state employees so it’s sustainable. Right now it’s not,” he said.

Malloy said he believed the unions were currently looking at what he called arcane ratification bylaws which allowed the concession package to be defeated despite a majority of union members supporting it.

“They have to decide whether they want to be responsible for 6,500 state employees losing their jobs. I believe that they’ll rethink this one,” he said.

Of course with his usual lack of diplomacy, bullying, idiocy (you choose again) he’s still putting the blame on the unions if layoffs become necessary – a totally unfair approach.

I’m obviously no fan of his tactics, and I still find his math highly questionable, but if a second round does result in an agreement that avoids layoffs, I’ll be the first to congratulate him.

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Jon Pelto’s latest Wait, What Post goes overboard:

Dan Malloy, Nancy Wyman and the Malloy Administration have failed to provide the leadership necessary to succeed on this vital state issue.

They promised a more sophisticated and honest approach to governing and an “end to politics” as usual. Instead we have gotten the opposite. Less sophisticated, less honest and political pandering of the worst kind.

And in the end, they have earned the title of the “Most Anti-State Employee Administration” since collective bargaining really took shape during the tenure of Ella Grasso.

Not only are thousands of Connecticut families suffering because of this Administration’s failure but many more will suffer as vital services are curtailed.

This is not the Connecticut so many of us have fought for or believe is possible.

I am disgusted by the Malloy Administration’s failure to do the right thing…

And I want my 2010 gubernatorial vote back.

Foley instead? At least with Foley we would have had a Legislature Branch of Government that was willing to stand up and do the right thing. Now we don’t even have that.

My response:

Jon -

I’ve agreed with almost everything you have written, but this goes too far. I, like you, am deeply disappointed by the approach Dannel has taken, but Foley? He would have been 10 times worse. He never would have offered the package Malloy put forward in the first place, an, if anything, overly generous package you and I agreed was based on “smoke and mirrors” and completely unrealistic “savings.”

There is no easy way out of the fiscal mess we are in, and layoffs, realistically, cannot be avoided, although Malloy did try to. Certainly I would have preferred a package with more tax revenue from upper level income earners, but that’s just re-arranging the deck chairs on our very own Titanic.

Please don’t go off the deep end on this – we need your rational voice to keep shedding light on the mysteries of state government.

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Fairfield County on CityData.com’s top lists:

#4 on the list of “Top 101 counties with the highest percentage of residents that drank alcohol in the past 30 days”
#4 on the list of “Top 101 counties with the highest Ozone (1-hour) air pollution readings in 2005 (ppm)”
#6 on the list of “Top 101 counties with the highest Ozone (8-hour) air pollution readings in 2005 (ppm)”
#14 on the list of “Top 101 counties with the best general health status score of residents (1-5), 3 years of data”
#17 on the list of “Top 101 counties with the highest percentage of residents that visited a dentist within the past year”
#32 on the list of “Top 101 counties with the largest number of people moving out compared to moving in (pop. 50,000+)”
#36 on the list of “Top 101 counties with the highest percentage of residents that exercised in the past month”
#46 on the list of “Top 101 counties with the highest carbon monoxide air pollution readings in 2005 (ppm)”
#58 on the list of “Top 101 counties with the highest Sulfur Oxides Annual air pollution readings in 2005 (µg/m3)”
#77 on the list of “Top 101 counties with the highest Nitrogen Dioxide air pollution readings in 2005 (ppm)”
#85 on the list of “Top 101 counties with the highest percentage of residents that smoked 100+ cigarettes in their lives”
#87 on the list of “Top 101 counties with the highest percentage of residents that had a sunburn in the past 12 months”

Read more: http://www.city-data.com/county/Fairfield_County-CT.html#ixzz1RvOuv6Lo

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Amid reports that cuts to Social Security and Medicare benefits may be included in a broader deficit reduction deal, U.S. Senator Sheldon Whitehouse (D-RI) today introduced a resolution to defend these vital programs. The measure, cosponsored by Senators Sherrod Brown (D-OH), Bernie Sanders (I-VT), Jeff Merkley (D-OR), Al Franken (D-MN), and Richard Blumenthal (D-CT), would express the Sense of the Senate that any agreement to reduce the budget deficit should not include cuts to Social Security or Medicare benefits.

“We must keep faith with the millions of Americans who have paid and earned Social Security and Medicare benefits. At a time when people in Connecticut and across the country continue to struggle in this difficult economy, these critically important programs should not be in peril as part of negotiations on the debt ceiling,” said Blumenthal. “We must cut the deficit and debt and put our fiscal house in order, but we cannot violate sacred promises we have made to our most vulnerable citizens.”

The text of Whitehouse’s resolution is below.

————————————————————-

Title: Expressing the sense of the Senate that any agreement to reduce the budget deficit should not include cuts to Social Security benefits or Medicare benefits.

• Whereas over 34,000,000 retired workers currently receive Social Security benefits in amounts that average a modest $14,100 a year;
• Whereas, in 2008, 23 percent of retired workers receiving Social Security benefits depended on those benefits for all or almost all of their income;
• Whereas according to AARP, Social Security benefits kept 36 percent of seniors out of poverty in 2008;
• Whereas reducing Social Security benefits would cause many seniors to have to choose between food, drugs, rent, and heat;
• Whereas 95 percent of seniors in the United States, who numbered almost 37,000,000 in 2008, got their health care coverage through the Medicare program;
• Whereas without Medicare benefits, seniors, many of whom live off of Social Security benefits, would have to turn to the costly and uncertain private market for health care coverage;
• Whereas the Social Security program and the Medicare program are extremely successful social insurance programs that permit seniors in America to retire with dignity and security after a lifetime of hard work; and
• Whereas the Social Security program and the Medicare program help relieve young American families from worry about their own futures, allowing freedom of opportunity

Now, therefore, be it
Resolved, That it is the sense of the Senate that any agreement to reduce the budget deficit should not include cuts to Social Security benefits or Medicare benefits.

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The President in his willingness to reduce Social Security and Medicare, his opposition to “job-killing tax increases:, and his adoption of the argument that austerity leads to prosperity, is being compared to Herbert Hoover by Brad Delong and Paul Krugman

Here’s what Mark Thoma has to say about the President’s latest incarnation:

The president just held a press conference on deficit reduction talks with Republicans. I found the president’s remarks during the press conference disappointing on several fronts. First, I am disappointed that the president seems committed to doing whatever it takes to reach a deal. There are lines that ought to be drawn in the sand, but even when they are drawn the lines are erased and moved as needed. It looks like a deal will be reached, the only question at this point seems to be how much the president will give away to get it. The president was, of course, trying to make it look like he is the one willing to compromise so that if a deal is not reached, the consequences will be blamed on Republicans. But it also appears he is willing to move quite a bit to get a deal done.

Second, I am disappointed that Obama has adopted austerity as a valid means of stimulating the economy, something he made absolutely clear during his remarks. There is no evidence that this works in a situation like ours, i.e. that deficit cuts create so much confidence that they stimulate the economy. However, there is plenty of evidence that the fall in demand from the deficit cuts is harmful, and that such cuts are likely to impede the recovery. The president has embraced the idea that uncertainty about the future, particularly worries about the deficit, is holding back the economic recovery even though this cannot be justified from the historical record. It’s hope over experience.

Uncertainly may be a problem, but it’s not uncertainty about the deficit. What’s holding the economy back is uncertainty about jobs, worries about the slowing recovery, and whether a second recession is coming. The policy the president wants, deficit reduction as large and as soon as possible, is likely to make the prospects for recovery even worse and increase uncertainty. The president claims that the “single biggest boost to business certainty and confidence” would be to cut the deficit, but I think confidence depends much more upon the state of the economy. Evidence of growth and employment increases are what is needed, and until that happens businesses are going to remain cautious. Taking actions that make the economy worse right now is the wrong way to proceed, the drag on GDP growth that deficit reduction causes will have a larger impact on confidence than deficit reduction.

One thing the president said — the third disappointment — was particularly worrisome. He said we shouldn’t be concerned about “job killing tax increases” because there won’t be any tax increases until 2013 when the economy should be in better shape. Thus, he has adopted the Republican argument that we cannot raise taxes when the job picture is so bad. But how does that square with the phrase he uttered repeatedly, “if not now, when?” And more importantly, how does that square with the desire to cut spending? Why is he willing to implement spending cuts immediately but not tax increases? There is evidence that spending cuts have at least as large a negative effect on employment as tax increases, and the impact is likely larger. If the “if not now, when” applies to spending cuts, why not taxes? If the argument that we can’t do “job killing tax increases” now, why is it okay to do job killing spending cuts? If the president is willing to go along with a delay in tax increases over worry about the economy, he ought to also be insist on delaying the spending cuts in the same way.

Read more: http://moneywatch.bnet.com/economic-news/blog/maximum-utility/the-presidents-press-conference-the-disappointing-embrace-of-job-killing-austerity/1535/#ixzz1Ru9fwSUZ