The year is just seven months old but is shaping up as a bad year for the U.S. at home and abroad in both substance and image.
Starting at home, one would have to conclude that regardless of how the debt ceiling issue ends, it is almost certain to be a half measure at best in terms of a long term solution to the country's fiscal condition. The problem is undertaxation, thanks to George W. Bush, and the inability to support the high spending levels to which we've become accustomed. Further, the inability to get beyond short-term, politically driven fixes can be laid to a significant degree on the GOP's lack of leadership against the irresponsible demands of the tea party (TP) and its no-compromise, fiscal extremist supporters in the House of Representatives.
Not only has the TP-driven fracture among Republicans undermined congressional ability to deal with the substance of the spending/taxing issue, but the mess in Washington has further sullied the standing of the U.S. as the gold standard of fiscal responsibility. China, which has a big stake in the soundness of the U.S. government debt, has labeled the floundering and fumbling in Washington as "dangerously irresponsible". It is difficult to sell democracy abroad when our own government is badly broken.
Adding further to the diminished image of U.S. financial responsibility and strength has been the threat of downgrading the country's credit rating by the major rating companies. While at vastly different levels of fiscal soundness, the U.S. now gets bundled with Greece, Ireland, Italy, and a few other European countries, as nations whose credit standing needs to be watched for further signs of deterioration. This comes on top of the worldwide financial crisis three years ago when fast and loose practices by Wall Street and mortgage lenders brought us and some other countries to the brink of financial collapse. Thus, we now face the world with a badly tarnished image of financial stability, reliability, and integrity.
Turning to 2011 as a bad year for the U.S. abroad, it is difficult to know where to start. An obvious starting point would be our two wars in Iraq and Afghanistan, but first a look at the so-called Arab Spring sparked by pro-democracy movements toppling the government of Tunisia followed by the ouster of long-time ally President Mubarak of Egypt. Mubarak's fall clearly undermined our image as a reliable ally. Now once-close Middle East partners such as Saudi Arabia view us as an unreliable partner willing to undermine authoritarian rulers such as Mubarak (and perhaps the Saudi king) with whom we were aligned for decades if the politics of the moment demand it. Mubarak had been our principal spear carrier in the Middle East in seeking a resolution of the Israeli-Palestinian issue and in serving as a military counterbalance to the growing power of Iran. The expansion of Iran's influence was greatly aided by our invasion of Iraq and the toppling of Saddam Hussein in 2003. Now the Iraq invasion is seen by many in the Muslim world as a neo-Christian crusade seeking to implant western political and cultural values in the Muslim Middle East.
Looking at EGYPT today, there are troubling signs that our major hope of preventing the emergence of a strict Islamic regime may be in danger. It was very recently reported that ultraconservative Islamics, along with the large and influential Muslim Brotherhood whose political/religious goals are not clear, have been turning out in very large numbers to protest against some of the political aims of liberal activists.
In IRAQ violence is greater now than it was a year ago with assassinations, bombings, and attacks on U.S. troops increasing rather than decreasing as Iraqi has assumed greater responsibility for its own security. At the same time, Iran has been gaining greater influence in Iraqi affairs.
In AFGHANISTAN the recent killings of the mayor of Kandahar and the half brother of President Karzai have highlighted the fragile nature of political and military control there. This comes at the same time still another U.S. report is issued on the rampant corruption inside and outside of the Karzai government. Meanwhile, at home there is increasing public discontent with the seeming war-without-end which has now been going for ten years.
In SYRIA we had been holding out the hope that the Assad government might somehow be the vehicle for political reform. Instead Assad has cracked down severely on the dissenters and there is evidence that the fighting is becoming a sectarian battle promoted by Assad. With fighting between religious groups possibly emerging, Assad can claim that his government is the only means to protect the various religious and ethnic groups in that country.
In LIBYA. we have passed the baton for getting rid of Qadaffi to NATO but what we seem to have is a stalemated civil war with no near term sign that this will change.
In the ISRAELI-PALESTINIAN confrontation, what can one say? Despite the many international efforts to get peace talks resumed, the issue appears to be stuck on square one.
In sum, to flip the words of a Frank Sinatra song, 2011 so far has not been a very good year.
Sunday, July 31, 2011
Wednesday, July 27, 2011
. . . GO." AND DON'T COME BACK. AND A NOTE ON KARZAI
In the previous posting, I borrowed from British history the frustrated outcry, "In the name of God, go" to characterize what must be the growing national frustration in this country about the inability of the Washington political self-interest establishment to resolve the debt ceiling issue. The posting was particularly aimed at House Speaker John Boehner and his Majority Leader Eric Cantor whose lack-of-leadership strategy seems to be, "if we can't have it our way, we walk away" from any negotiations on proposals that have "compromise" attached or implied. And for Boehner it has become increasingly evident that he is unable to control the tea party (TP) members and their fiscal extremist supporters.
In their efforts to appease the TP and the fellow travelers, which they don't seem to be able to do, both Boehner and Cantor have rejected any proposals that require or imply increasing revenues in any form. The basic GOP idea of a deal is to make deep spending cuts in exchange for increasing the debt limit, and the cuts-only approach will make the deficit go away. For many in the TP and its supporters, however, the demand is to cut spending deeply BUT don't raise the debt ceiling at all. The result is a floundering House GOP leadership with the resultant inability of Congress to enact any resolution of the problem, at least to this point.
Congress and the White House have for some time been floating numerous proposals to raise the debt ceiling, with new ideas coming out almost daily, adding to the bewilderment and frustration of the public. In addition to the cut spending/raise revenues division between the GOP and the Democrats, there is also the politically driven issue of a short term fix to meet the August 2 deadline for default on the national debt versus larger, longer term plans. The GOP wants a short term fix to keep the issue alive to be trotted out again next year in hopes of damaging the re-election of President Obama. The Democrats want a solution that will carry beyond the 2012 elections, giving the voters an opportunity next year to register their party preference before the issue would return to the congressional agenda in 2013.
So as of today, July 27, the parties are deadlocked on both the substance and the time frame of a solution with the default deadline just five days away. And just three days after that, lawmakers are scheduled to leave Washington to begin a month-long unearned summer vacation. It is possible that the vacation could be delayed or canceled to keep Congress in town to do whatever needs to be done to clean up their mess.
The title of this posting is based on the expectation that some kind of minimal band-aid fix will be agreed to and the congressional vacation will occur. Thus another concluding note of frustration. Most of the nation is tired of partisan deadlock and political posturing with the White House and congressional eyes fixed on getting re-elected. The lawmakers will, of course, come back in September but contempt for Congress by many voters at least requires a concluding characterization of frustration. Thus, "And don't come back" -- until you reach adulthood or at least go through puberty.
0-0-0-0-0
And while at it, how about applying the title of the previous post, "In the name of God, go" to Afghanistan, specifically President Hamid Karzai.
Once again Karzai's chutzpah amazes. Despite his depending on the U.S. and NATO for his government's preservation, and U.S. and international money for its fiscal existence (not counting what goes on with the opium trade in Afghanistan), he has once again rammed a stick in our eye. Now, according to a recent U.S. Treasury report, Karzai has blocked U.S. officials from checking on funds being stolen through government corruption or diverted to the Taliban as a bribe not to attack our truck convoys traveling through the war zone.
So for Karzai, it's also "go," but, like Congress, since that doesn't seem likely the message should go to Obama in modified form. "In the name of God, get out" of that pit of corruption and war-without-end which keeps sucking out money we can't afford and killing young men and women which the nation and their families can afford even less.
In their efforts to appease the TP and the fellow travelers, which they don't seem to be able to do, both Boehner and Cantor have rejected any proposals that require or imply increasing revenues in any form. The basic GOP idea of a deal is to make deep spending cuts in exchange for increasing the debt limit, and the cuts-only approach will make the deficit go away. For many in the TP and its supporters, however, the demand is to cut spending deeply BUT don't raise the debt ceiling at all. The result is a floundering House GOP leadership with the resultant inability of Congress to enact any resolution of the problem, at least to this point.
Congress and the White House have for some time been floating numerous proposals to raise the debt ceiling, with new ideas coming out almost daily, adding to the bewilderment and frustration of the public. In addition to the cut spending/raise revenues division between the GOP and the Democrats, there is also the politically driven issue of a short term fix to meet the August 2 deadline for default on the national debt versus larger, longer term plans. The GOP wants a short term fix to keep the issue alive to be trotted out again next year in hopes of damaging the re-election of President Obama. The Democrats want a solution that will carry beyond the 2012 elections, giving the voters an opportunity next year to register their party preference before the issue would return to the congressional agenda in 2013.
So as of today, July 27, the parties are deadlocked on both the substance and the time frame of a solution with the default deadline just five days away. And just three days after that, lawmakers are scheduled to leave Washington to begin a month-long unearned summer vacation. It is possible that the vacation could be delayed or canceled to keep Congress in town to do whatever needs to be done to clean up their mess.
The title of this posting is based on the expectation that some kind of minimal band-aid fix will be agreed to and the congressional vacation will occur. Thus another concluding note of frustration. Most of the nation is tired of partisan deadlock and political posturing with the White House and congressional eyes fixed on getting re-elected. The lawmakers will, of course, come back in September but contempt for Congress by many voters at least requires a concluding characterization of frustration. Thus, "And don't come back" -- until you reach adulthood or at least go through puberty.
0-0-0-0-0
And while at it, how about applying the title of the previous post, "In the name of God, go" to Afghanistan, specifically President Hamid Karzai.
Once again Karzai's chutzpah amazes. Despite his depending on the U.S. and NATO for his government's preservation, and U.S. and international money for its fiscal existence (not counting what goes on with the opium trade in Afghanistan), he has once again rammed a stick in our eye. Now, according to a recent U.S. Treasury report, Karzai has blocked U.S. officials from checking on funds being stolen through government corruption or diverted to the Taliban as a bribe not to attack our truck convoys traveling through the war zone.
So for Karzai, it's also "go," but, like Congress, since that doesn't seem likely the message should go to Obama in modified form. "In the name of God, get out" of that pit of corruption and war-without-end which keeps sucking out money we can't afford and killing young men and women which the nation and their families can afford even less.
Sunday, July 24, 2011
"IN THE NAME OF GOD, GO."
I have always been attracted to the quote, "Depart I say, and let us have done with you. In the name of God, go." This was supposedly first said by Oliver Cromwell in his fight with the British Parliament during the short period of the Commonwealth in the mid-17th century. The quote was trotted out again in May l940 in another speech in the British Parliament demanding the resignation of Prime Minister Neville Chamberlain who had been appeasing Hitler in his territorial demands in Europe and was also too weak a leader to head the war effort which was to come to full fury just a few days later when Hitler launched his attack on France, Britain and everything in between.
It's time again to raise the "go" sentiment, this time aimed at the GOP so-called leadership in the House, specifically Speaker John Boehner and Majority Leader Eric Cantor. Both have and continue to compete over which of them can most appease the tea party (TP) and its supporters who seem determined to push the country into financial default on August 2, when we hit the debt ceiling of $14.3 trillion. And after the mental implant about the August 2 deadline, the administration now seems to be hinting there could be some short wiggle room. But Boehner seems to be the biggest villain on the stage, or at least that's the script he has been handed by the TP.
Just when the public is led to think that he and President Obama have agreed to a deal to raise the debt ceiling and avoid default, Boehner walks away from the talks parroting the GOP and TP mantra of no new revenues which they interpret as raising taxes regardless of the specific origin and form of the revenues to be increased. Boehner, the current lead spear carrier of the House GOP/TP, is actually following the similar antics of Cantor who several weeks ago walked out of bipartisan talks led by Vice President Biden for the same reason -- opposition to any new revenues.
The GOP intransigence on increasing revenues, primarily from the wealthy and large corporations, comes despite the Democratic willingness to give up trillions of dollars in spending over the next decade, including cuts in Democratic-favored programs such as medicare, medicaid, and social security. It must be added, however, that there is some liberal Democratic resistance to cuts in the entitlements. In addition to the basic problem of a clash of partisan ideologies, there is also the less visible problem of competition for the Speaker's job with Cantor having that lean and hungry look of Cassius while waiting for Boehner to make a deal with Obama that will cost him, Boehner, his job.
While August 2 is the much trumpeted deadline set for default to be triggered, perhaps the biggest incentive for cutting some kind of deal between Congress and the White House is the scheduled beginning of a month long vacation for Congress which is to begin less than a week later. But right now it looks like another round of kick the can down the road with some kind of deal that will allow the underworked lawmakers to go on the vacations they don't deserve, followed later with the certitude of having to go through all of this again.
As may seem apparent, this posting flows from considerable frustration with Washington and the political posturing, frustration primarily based on the "no compromise", "to the barricades," position of the GOP which has cowered before the irresponsible demands of the TP and its extreme right wing followers. So thank you Oliver Cromwell for finding the right words and sentiment many Americans share about Washington politics and politicians whose primary focus is the 2012 elections and their re-election, with the added GOP objective of taking over the White House and making Obama a one-term President. Unfortunately, a simple "In the name of God, go" won't work. We are stuck with the mess, the mess makers, and the frustrations that flow from them.
It's time again to raise the "go" sentiment, this time aimed at the GOP so-called leadership in the House, specifically Speaker John Boehner and Majority Leader Eric Cantor. Both have and continue to compete over which of them can most appease the tea party (TP) and its supporters who seem determined to push the country into financial default on August 2, when we hit the debt ceiling of $14.3 trillion. And after the mental implant about the August 2 deadline, the administration now seems to be hinting there could be some short wiggle room. But Boehner seems to be the biggest villain on the stage, or at least that's the script he has been handed by the TP.
Just when the public is led to think that he and President Obama have agreed to a deal to raise the debt ceiling and avoid default, Boehner walks away from the talks parroting the GOP and TP mantra of no new revenues which they interpret as raising taxes regardless of the specific origin and form of the revenues to be increased. Boehner, the current lead spear carrier of the House GOP/TP, is actually following the similar antics of Cantor who several weeks ago walked out of bipartisan talks led by Vice President Biden for the same reason -- opposition to any new revenues.
The GOP intransigence on increasing revenues, primarily from the wealthy and large corporations, comes despite the Democratic willingness to give up trillions of dollars in spending over the next decade, including cuts in Democratic-favored programs such as medicare, medicaid, and social security. It must be added, however, that there is some liberal Democratic resistance to cuts in the entitlements. In addition to the basic problem of a clash of partisan ideologies, there is also the less visible problem of competition for the Speaker's job with Cantor having that lean and hungry look of Cassius while waiting for Boehner to make a deal with Obama that will cost him, Boehner, his job.
While August 2 is the much trumpeted deadline set for default to be triggered, perhaps the biggest incentive for cutting some kind of deal between Congress and the White House is the scheduled beginning of a month long vacation for Congress which is to begin less than a week later. But right now it looks like another round of kick the can down the road with some kind of deal that will allow the underworked lawmakers to go on the vacations they don't deserve, followed later with the certitude of having to go through all of this again.
As may seem apparent, this posting flows from considerable frustration with Washington and the political posturing, frustration primarily based on the "no compromise", "to the barricades," position of the GOP which has cowered before the irresponsible demands of the TP and its extreme right wing followers. So thank you Oliver Cromwell for finding the right words and sentiment many Americans share about Washington politics and politicians whose primary focus is the 2012 elections and their re-election, with the added GOP objective of taking over the White House and making Obama a one-term President. Unfortunately, a simple "In the name of God, go" won't work. We are stuck with the mess, the mess makers, and the frustrations that flow from them.
Wednesday, July 20, 2011
TEA PARTY AND THE WANNABES; CHINA AS A WORLD POWER
A posting last September 20 said the tea party (TP) has taken on the character of a puritanical movement. That is, if you want TP support, you have to endorse its positions on all issues or risk having TP opposition in primary elections. It has already targeted three Senators (Hatch, Lugar, and Snowe because of their supporting the Democrats on some issues. And in the House the TP has intimidated the GOP leadership and most of the rank and file into supporting the TP positions on deficit spending, size of government, and debt ceiling issues.
But among the GOP presidential aspirants the TP has had mixed success in getting its way. Some GOP would-be's are willing to take a stand against the TP on some issues. Mitt Romney has said he believes in global warming and has declined to endorse one strong anti-abortion pledge. Tim Pawlenty, who panders to the extreme right, says he opposes cutting the defense budget which the TP has targeted for cuts to support its bedrock position on reducing federal spending. Jon Huntsman seems to be seeking a more centrist position, is on record in support of gay and lesbian rights, and has declined to sign any of the pledges initiated or endorsed by the TP.
Meanwhile, the current darling of the TP, Michelle Bachmann, founder of the Tea Party Caucus in the U.S. House, is a staunch believer in the fiscal, governmental, and social policy issues of the TP and the extreme right wing of the GOP. Herman Cain, seeking name recognition and grandstanding for the far right, recently chose to spout anti-Muslim, anti-mosque rhetoric during a visit to Murfreesboro, TN, where construction of a new mosque has been a community issue for months. Given the attachment of Bachmann and the as-yet-unknown candidacies of Sara Palin and Texas governor Rick Perry, taking on the TP seems to have less risk for some of the presidential candidates as long as they don't stray too far from the increasingly conservative center of gravity of the Republican party.
0-0-0-0-0
Mike Mullen, Chairman of the Joint Chiefs of Staff, during a very recent visit to China said that country ". . . is no longer a rising power. It has, in fact, arrived as a world power."
In a January 18 posting, the topic was the endless roller coaster ride in U.S.-China relations. In the posting I said, "I don't know whether it's because the Chinese are easily offended or that they think they still need to muscle their way into the role of a world power . . . . If the first, then maybe there isn't too much we can do about it; if the second, 'enough already,' you've arrived."
The Chinese have certainly made their mark on the world stage as a major nuclear power and as a very wealthy nation able to invest its money and win friends and influence people by funding activities ranging from infrastructure projects in Africa to purchasing the bonds of fiscally ailing countries in Europe. But at the same time China doesn't seem able to shake its inclination to look around for things that offend it and then react like a second class power.
The most recent occasion was the Dalai Lama's latest visit to the United States and his meetings with congressional leaders and President Obama. It is difficult to see how the Dalai Lama, who may serve as the spiritual/political head of Tibetan dissidents living abroad, remains much of a threat to China. Tibet has been securely, if forcefully, incorporated into the Chinese state, although not without some recurring unrest, and the U.S. has recognized that de jure and de facto situation. Yet a foreign ministry spokesman said the Obama-Dalai Lama meeting "hurt the feelings of the Chinese people and harmed Sino-U.S. relations," interpreting the meeting as interfering in Chinese internal affairs.
Then there's the case of the Norwegian fresh salmon. Reacting, or over reacting, to the award of the Nobel Peace Prize to a jailed Chinese dissident last year, China started holding up Norway's signature fish export for days or weeks, thus killing the freshness of the fish. Other Norwegian products continued to flow into China with no problem, but in delaying fresh fish sales and marketing, it makes the Chinese look like they chose to get into a bush league argument.
And there were other instances of bush league reaction such as the halting of the sale of rare earth, needed for high tech manufacturing, to Japan over an overblown issue of a Chinese-Japanese boat collision. Bottom line: China should act like a world power with class rather than a second tier rising country looking for ways to be offended.
But among the GOP presidential aspirants the TP has had mixed success in getting its way. Some GOP would-be's are willing to take a stand against the TP on some issues. Mitt Romney has said he believes in global warming and has declined to endorse one strong anti-abortion pledge. Tim Pawlenty, who panders to the extreme right, says he opposes cutting the defense budget which the TP has targeted for cuts to support its bedrock position on reducing federal spending. Jon Huntsman seems to be seeking a more centrist position, is on record in support of gay and lesbian rights, and has declined to sign any of the pledges initiated or endorsed by the TP.
Meanwhile, the current darling of the TP, Michelle Bachmann, founder of the Tea Party Caucus in the U.S. House, is a staunch believer in the fiscal, governmental, and social policy issues of the TP and the extreme right wing of the GOP. Herman Cain, seeking name recognition and grandstanding for the far right, recently chose to spout anti-Muslim, anti-mosque rhetoric during a visit to Murfreesboro, TN, where construction of a new mosque has been a community issue for months. Given the attachment of Bachmann and the as-yet-unknown candidacies of Sara Palin and Texas governor Rick Perry, taking on the TP seems to have less risk for some of the presidential candidates as long as they don't stray too far from the increasingly conservative center of gravity of the Republican party.
0-0-0-0-0
Mike Mullen, Chairman of the Joint Chiefs of Staff, during a very recent visit to China said that country ". . . is no longer a rising power. It has, in fact, arrived as a world power."
In a January 18 posting, the topic was the endless roller coaster ride in U.S.-China relations. In the posting I said, "I don't know whether it's because the Chinese are easily offended or that they think they still need to muscle their way into the role of a world power . . . . If the first, then maybe there isn't too much we can do about it; if the second, 'enough already,' you've arrived."
The Chinese have certainly made their mark on the world stage as a major nuclear power and as a very wealthy nation able to invest its money and win friends and influence people by funding activities ranging from infrastructure projects in Africa to purchasing the bonds of fiscally ailing countries in Europe. But at the same time China doesn't seem able to shake its inclination to look around for things that offend it and then react like a second class power.
The most recent occasion was the Dalai Lama's latest visit to the United States and his meetings with congressional leaders and President Obama. It is difficult to see how the Dalai Lama, who may serve as the spiritual/political head of Tibetan dissidents living abroad, remains much of a threat to China. Tibet has been securely, if forcefully, incorporated into the Chinese state, although not without some recurring unrest, and the U.S. has recognized that de jure and de facto situation. Yet a foreign ministry spokesman said the Obama-Dalai Lama meeting "hurt the feelings of the Chinese people and harmed Sino-U.S. relations," interpreting the meeting as interfering in Chinese internal affairs.
Then there's the case of the Norwegian fresh salmon. Reacting, or over reacting, to the award of the Nobel Peace Prize to a jailed Chinese dissident last year, China started holding up Norway's signature fish export for days or weeks, thus killing the freshness of the fish. Other Norwegian products continued to flow into China with no problem, but in delaying fresh fish sales and marketing, it makes the Chinese look like they chose to get into a bush league argument.
And there were other instances of bush league reaction such as the halting of the sale of rare earth, needed for high tech manufacturing, to Japan over an overblown issue of a Chinese-Japanese boat collision. Bottom line: China should act like a world power with class rather than a second tier rising country looking for ways to be offended.
Sunday, July 17, 2011
EUROPE, THE U.S. AND CREDIT RATINGS
Fitch downgrades Greek bonds. Moody's cuts Ireland's credit rating. Moody and Standard & Poor threaten to lower U.S. credit rating if the debt ceiling issue is not resolved. In making announcements of such actions, the big three of credit rating agencies capture headlines in newspapers and become the talking topics of television news because these agencies are movers and shakers in international financial markets.
What boggles the mind is that credit rating agencies which now bring gloom and doom to fiscally struggling countries are the same agencies attacked just a short time ago for prostituting themselves in overrating the quality of bonds backed by home mortgages and in doing so contributed to the collapse of the housing market which was and remains a major part of our economic time of troubles.
This is not saying that the same people within credit rating firms made and are making decisions both on the quality of housing-backed securities and national credit ratings, but only to suggest the power of these agencies and our willingness to take their advice as a close approximation of the truth. Certainly in rating housing-backed bonds, these agencies raised serious questions about their willingness to compromise their integrity and professional ethics to enrich themselves.
That process went something like this. An investment bank wanted to sell a large bond issue whose collateral is thousands of home mortgages. The particular mortgages involved included solid ones which were certain to be repaid by homeowners while others in the bond package were subprime mortgages which had a high probability of not being paid by the financially unqualified home buyer. The investment banker shopped around the credit agencies and paid a fee to the one which would give the highest rating to the bond issue. So rating agency X said it would give a AA rating to the issue, knowing the bonds had a good chance of going sour because of the bad home loans included in the package. Rating agency Y said it would give an A rating to the package. While both overrated the bonds, X got the fee.
Assessing a country's credit rating is certainly a different process, but are the ratings reasonably accurate? There is no question that Greece, for example, has put itself into such a financial hole that it merits a junk bond rating or something close to it, meaning that if it tries to sell new bonds, it will have to pay a very high interest rate to attract any buyers. But the overall process of rating a country's credit worthiness opens up a range of opportunities for the financial community to make money from low ratings. And don't forget that part of Greece's problem is because Wall Street giant Goldman Sachs and other banks helped Greece to hide the magnitude of its growing deficits.
And this doesn't even get to the messy next layer of credit default swaps which in effect are insurance policies for the investors to protect against losses on the bonds. For example, hedge fund X buys Greek bonds and then buys insurance from another firm that will pay for losses if Greece's credit rating declines to a certain level. If a credit agency or agencies subsequently downgrades the country's credit rating then the insurance policy is paid off to the hedge fund. And as a country's credit rating drops, the insurance on its bonds cost more. So how much are we able to rely on the credit rating agencies which provide various avenues for money making in the bond market, including profits by financial manipulation such as short selling. On the other hand, an investor needs guidance on the credit worthiness of a country before putting his or her money on the line and there doesn't seem to be an alternative to the credit rating agencies for such guidance.
Certainly this is a task worthy of Diogenes carrying his lantern seeking to find an honest man or woman.
What boggles the mind is that credit rating agencies which now bring gloom and doom to fiscally struggling countries are the same agencies attacked just a short time ago for prostituting themselves in overrating the quality of bonds backed by home mortgages and in doing so contributed to the collapse of the housing market which was and remains a major part of our economic time of troubles.
This is not saying that the same people within credit rating firms made and are making decisions both on the quality of housing-backed securities and national credit ratings, but only to suggest the power of these agencies and our willingness to take their advice as a close approximation of the truth. Certainly in rating housing-backed bonds, these agencies raised serious questions about their willingness to compromise their integrity and professional ethics to enrich themselves.
That process went something like this. An investment bank wanted to sell a large bond issue whose collateral is thousands of home mortgages. The particular mortgages involved included solid ones which were certain to be repaid by homeowners while others in the bond package were subprime mortgages which had a high probability of not being paid by the financially unqualified home buyer. The investment banker shopped around the credit agencies and paid a fee to the one which would give the highest rating to the bond issue. So rating agency X said it would give a AA rating to the issue, knowing the bonds had a good chance of going sour because of the bad home loans included in the package. Rating agency Y said it would give an A rating to the package. While both overrated the bonds, X got the fee.
Assessing a country's credit rating is certainly a different process, but are the ratings reasonably accurate? There is no question that Greece, for example, has put itself into such a financial hole that it merits a junk bond rating or something close to it, meaning that if it tries to sell new bonds, it will have to pay a very high interest rate to attract any buyers. But the overall process of rating a country's credit worthiness opens up a range of opportunities for the financial community to make money from low ratings. And don't forget that part of Greece's problem is because Wall Street giant Goldman Sachs and other banks helped Greece to hide the magnitude of its growing deficits.
And this doesn't even get to the messy next layer of credit default swaps which in effect are insurance policies for the investors to protect against losses on the bonds. For example, hedge fund X buys Greek bonds and then buys insurance from another firm that will pay for losses if Greece's credit rating declines to a certain level. If a credit agency or agencies subsequently downgrades the country's credit rating then the insurance policy is paid off to the hedge fund. And as a country's credit rating drops, the insurance on its bonds cost more. So how much are we able to rely on the credit rating agencies which provide various avenues for money making in the bond market, including profits by financial manipulation such as short selling. On the other hand, an investor needs guidance on the credit worthiness of a country before putting his or her money on the line and there doesn't seem to be an alternative to the credit rating agencies for such guidance.
Certainly this is a task worthy of Diogenes carrying his lantern seeking to find an honest man or woman.
Wednesday, July 13, 2011
REDUX: CHARLEY, IF YOU COULD HEAR IT NOW
A year ago on this date when this blog started, the first posting was a look back to l960 when our politics was less noisy and the Cold War and the threat of the Soviet Union was a unifying force for our citizenry. As stated in that posting, "Charley, if you could hear it now," this blog was inspired by a re-reading of TRAVELS WITH CHARLEY by Nobel prize winning author John Steinbeck who made a three-month journey of personal re-discovery around the country with his pet poodle Charley. In TRAVELS Steinbeck gave us his observations and musings on a range of subjects from his enjoyable visit with some migrant French-Canadian farm workers in Aroostook County, Maine, to outrage about the racism he witnessed in New Orleans when it was forced to integrate an elementary school.
One of his l960 observations that seemed particularly out of joint with 2010 when the posting was written concerned the tenor and tone of our politics. At one point in his journey he commented, "I had been keen to hear what people thought politically, those whom I had met did not talk about it. It seemed to me partly caution and partly a lack of interest, but strong opinions were just not stated." In comparing Steinbeck's comment in l960 with our politics 50 years later in the age of Glenn Beck, Rush Limbaugh, and Keith Olberman, my view was that "our politics has morphed from a system of low decibel pluralistic politics characterized by civility. . . to one of high decibel 'to the barricades' confrontation."
Contributing significantly to the clash and clang of our politics in 2010 was the recently arrived-on-the-scene tea party (TP) which held a puritanical view of politics; that is, you must agree with us on all parts of our governmental and social policy agenda, or you are the enemy. At the time of the mid-July 2010 posting, the country was heavily engaged in election year politics and the TP movement, created in early 2009, was pressing its issues through noisy street demonstrations and invasion of local town hall political gatherings where TP adherents shouted down any opposing views. The result: the TP succeeded in getting a number of its candidates elected to Congress. But more importantly, it succeeded in moving the Republican party farther toward the extreme conservative far right.
So in addition to its own election successes, it brought with it to Congress a number of freshmen/women fellow travelers who shared the TP view on issues, particularly its bedrock governmental agenda. That was insistence on the need for major reductions in federal spending and shrinking the size of government to prevent what it believed was unconstitutional intrusion into the country's economic and social/cultural life. The country is now experiencing the result of the TP/fellow travelers success in the current political confrontation over increasing the federal debt limit to head off a fiscal default with all of its negative consequences at home and abroad.
The most visible aspect of this confrontation is the seeming deadlock between President Obama and his Democratic congressional supporters on one side and congressional Republicans on the other side who have adopted the TP "our way or no way" stand on efforts to come to agreement on how to deal with the federal deficit and debt. The GOP way is to make huge cuts in spending but no tax/revenue increases to help cut the deficit. For Obama and his supporters, the deficit problem should be dealt with by a combination of major spending cuts with some revenue increases by ending tax advantages to the wealthy and large corporations.
But behind the very visible issue may be the more subtle struggle between House Speaker John Boehner and his ambitious Majority Leader, Eric Cantor. While Boehner may be inclined toward a compromise solution, he has been backed into a "no compromise" corner by the fiscal hawks made up of TP adherents and a significant number of freshmen House members. Cantor has made his own "no compromise" stand very apparent and has thus has aligned himself with the fiscal hardliners, with the possibility of replacing Boehner as Speaker if Boehner weakens on the "no" compromise", "no revenue increases" stand.
The highly partisan, highly visible confrontation over the debt ceiling, leavened with any personal ambitions, is just the current manifestation of the sea change that has occurred in our political atmosphere since the age of civility in Steinbeck's time. That is not to say there were no strong disagreements between the two parties in the l960 "era", there were. But it was a time when compromise was the dynamic for resolving conflicts. Today compromise is still a way out of the seeming deadlock, but the "no compromise" stand of the Republican leadership and many of the GOP rank and file has made our politics loud and ugly. Sadly, the GOP is anchored to its attachment to the far right wing of the party. And, unhappily, we don't seem to have any unifying force at work to offset that ugliness. Ah, for the good old days of the Cold War and an identifiable enemy beyond the water's edge. Today, to also redux a quote from the first posting, an insightful and prophetic statement from the old cartoon strip Pogo: "We have met the enemy and he is us."
One of his l960 observations that seemed particularly out of joint with 2010 when the posting was written concerned the tenor and tone of our politics. At one point in his journey he commented, "I had been keen to hear what people thought politically, those whom I had met did not talk about it. It seemed to me partly caution and partly a lack of interest, but strong opinions were just not stated." In comparing Steinbeck's comment in l960 with our politics 50 years later in the age of Glenn Beck, Rush Limbaugh, and Keith Olberman, my view was that "our politics has morphed from a system of low decibel pluralistic politics characterized by civility. . . to one of high decibel 'to the barricades' confrontation."
Contributing significantly to the clash and clang of our politics in 2010 was the recently arrived-on-the-scene tea party (TP) which held a puritanical view of politics; that is, you must agree with us on all parts of our governmental and social policy agenda, or you are the enemy. At the time of the mid-July 2010 posting, the country was heavily engaged in election year politics and the TP movement, created in early 2009, was pressing its issues through noisy street demonstrations and invasion of local town hall political gatherings where TP adherents shouted down any opposing views. The result: the TP succeeded in getting a number of its candidates elected to Congress. But more importantly, it succeeded in moving the Republican party farther toward the extreme conservative far right.
So in addition to its own election successes, it brought with it to Congress a number of freshmen/women fellow travelers who shared the TP view on issues, particularly its bedrock governmental agenda. That was insistence on the need for major reductions in federal spending and shrinking the size of government to prevent what it believed was unconstitutional intrusion into the country's economic and social/cultural life. The country is now experiencing the result of the TP/fellow travelers success in the current political confrontation over increasing the federal debt limit to head off a fiscal default with all of its negative consequences at home and abroad.
The most visible aspect of this confrontation is the seeming deadlock between President Obama and his Democratic congressional supporters on one side and congressional Republicans on the other side who have adopted the TP "our way or no way" stand on efforts to come to agreement on how to deal with the federal deficit and debt. The GOP way is to make huge cuts in spending but no tax/revenue increases to help cut the deficit. For Obama and his supporters, the deficit problem should be dealt with by a combination of major spending cuts with some revenue increases by ending tax advantages to the wealthy and large corporations.
But behind the very visible issue may be the more subtle struggle between House Speaker John Boehner and his ambitious Majority Leader, Eric Cantor. While Boehner may be inclined toward a compromise solution, he has been backed into a "no compromise" corner by the fiscal hawks made up of TP adherents and a significant number of freshmen House members. Cantor has made his own "no compromise" stand very apparent and has thus has aligned himself with the fiscal hardliners, with the possibility of replacing Boehner as Speaker if Boehner weakens on the "no" compromise", "no revenue increases" stand.
The highly partisan, highly visible confrontation over the debt ceiling, leavened with any personal ambitions, is just the current manifestation of the sea change that has occurred in our political atmosphere since the age of civility in Steinbeck's time. That is not to say there were no strong disagreements between the two parties in the l960 "era", there were. But it was a time when compromise was the dynamic for resolving conflicts. Today compromise is still a way out of the seeming deadlock, but the "no compromise" stand of the Republican leadership and many of the GOP rank and file has made our politics loud and ugly. Sadly, the GOP is anchored to its attachment to the far right wing of the party. And, unhappily, we don't seem to have any unifying force at work to offset that ugliness. Ah, for the good old days of the Cold War and an identifiable enemy beyond the water's edge. Today, to also redux a quote from the first posting, an insightful and prophetic statement from the old cartoon strip Pogo: "We have met the enemy and he is us."
Sunday, July 10, 2011
POLITICS AT HOME: DEBT CEILING DEAL; JOB PROBLEM
Supposedly this weekend is the crucial period for a make or break deal on the debt ceiling issue. That is, given the deadline of August 2 for avoiding a default, President Obama and congressional leaders of both parties have to come up with some kind of deal for raising the debt ceiling above $14.3 trillion, a package that would include huge spending cuts and revenue increases. If such a deal can be put together Congress will need the time between now and August 2 to write and pass the various pieces of legislation needed to complete the deal.
A grand bargain is a kind of gleam in the eye of persons like myself who just want an end to all of the political posturing and get the issue settled so we can move on to other things. But the weekend could produce, if it produces anything, a not-so-grand bargain that will will put off the big and politically tough decisions to another day. In either case there are certain factors to be taken into account in trying to understand any settlement--large, medium, or small.
Democratic liberals are wary of Obama's seeming willingness to give ground on social security and medicare as potential sources of savings. On the other side, the fiscal hawks are suspicious about Speaker Boehner and Senate Minority Leader McConnell giving ground on the party's no tax increases stand. Depending on which newspaper article you read or which talking head you watch on television, you get varying stories on what the two sides have been cooking up or will cook up on almost any part of the spending cuts/revenue increases issue. If this is supposedly THE weekend for a grand bargain, a mini bargain, or no bargain, perhaps the Monday morning news will enlighten us all. But one thing you can count on without waiting is that almost any agreed upon package, whenever it comes, will defy understanding of we mere mortals.
On both spending cuts and revenue increases there will likely be cuts and increases that occur now and others that won't happen for perhaps two or three years, or more. On revenue increases the fundamental GOP position is that any revenue increases, whether closing loopholes or ending subsidies through the tax code, must be offset by revenue decreases so the final result is revenue neutral; that is, no net change in revenues up or down. To get around this a deal of any dimension may include provisions for more revenues immediately but to be offset the increases sometime down the road, say 1-3 years, by some revenue decreases. Thus the Republicans can stick to their pledge. Likewise in spending cuts. Keep in mind also that all talks of spending cuts is in terms of $X trillions over a 10-12 year period, thus allowing a lot of staging when these will occur. If there is one overriding goal sought by both sides, it is do nothing that outrages too many of the left or right political bases before the 2012 election.
0-0-0-0-0
Speaking of the 2012 election, the GOP is delighted with the last jobs report which showed little increase in new jobs and an increase in the unemployment rate from 9.1 to 9.2 percent. While using the report to attack the President's economic/job creation policies, the GOP continues to push for policies almost certain to keep the job situation bad.
The latest report showed an overall increase of 18,000 new jobs in June but less attention was given to the fact that 39,000 jobs were lost in the government sector last month with a total of 238,000 government jobs lost in the last eight months. It is GOP spending cut policy at the national and state levels that contribute significantly to these job losses which they blame on Obama policies. Further, there is every reason to believe that the GOP will continue to cut government jobs as part of a deliberate but deniable effort to maintain a dismal job picture for 2012.
A grand bargain is a kind of gleam in the eye of persons like myself who just want an end to all of the political posturing and get the issue settled so we can move on to other things. But the weekend could produce, if it produces anything, a not-so-grand bargain that will will put off the big and politically tough decisions to another day. In either case there are certain factors to be taken into account in trying to understand any settlement--large, medium, or small.
Democratic liberals are wary of Obama's seeming willingness to give ground on social security and medicare as potential sources of savings. On the other side, the fiscal hawks are suspicious about Speaker Boehner and Senate Minority Leader McConnell giving ground on the party's no tax increases stand. Depending on which newspaper article you read or which talking head you watch on television, you get varying stories on what the two sides have been cooking up or will cook up on almost any part of the spending cuts/revenue increases issue. If this is supposedly THE weekend for a grand bargain, a mini bargain, or no bargain, perhaps the Monday morning news will enlighten us all. But one thing you can count on without waiting is that almost any agreed upon package, whenever it comes, will defy understanding of we mere mortals.
On both spending cuts and revenue increases there will likely be cuts and increases that occur now and others that won't happen for perhaps two or three years, or more. On revenue increases the fundamental GOP position is that any revenue increases, whether closing loopholes or ending subsidies through the tax code, must be offset by revenue decreases so the final result is revenue neutral; that is, no net change in revenues up or down. To get around this a deal of any dimension may include provisions for more revenues immediately but to be offset the increases sometime down the road, say 1-3 years, by some revenue decreases. Thus the Republicans can stick to their pledge. Likewise in spending cuts. Keep in mind also that all talks of spending cuts is in terms of $X trillions over a 10-12 year period, thus allowing a lot of staging when these will occur. If there is one overriding goal sought by both sides, it is do nothing that outrages too many of the left or right political bases before the 2012 election.
0-0-0-0-0
Speaking of the 2012 election, the GOP is delighted with the last jobs report which showed little increase in new jobs and an increase in the unemployment rate from 9.1 to 9.2 percent. While using the report to attack the President's economic/job creation policies, the GOP continues to push for policies almost certain to keep the job situation bad.
The latest report showed an overall increase of 18,000 new jobs in June but less attention was given to the fact that 39,000 jobs were lost in the government sector last month with a total of 238,000 government jobs lost in the last eight months. It is GOP spending cut policy at the national and state levels that contribute significantly to these job losses which they blame on Obama policies. Further, there is every reason to believe that the GOP will continue to cut government jobs as part of a deliberate but deniable effort to maintain a dismal job picture for 2012.
Tuesday, July 5, 2011
ISRAEL AS A JEWISH STATE
In the U.S. when one talks of a deadline these days it means August 2 when the government is threatened with financial default unless the current debt ceiling is raised by Congress above $14.3 trillion. But there is another deadline a month or so later which has multiple countries and other concerned participants scrambling for a solution, a solution not yet in sight. This involves the threat by the Palestinian Authority (PA) under President Abbas to bypass peace talks with Israel and go directly to the United Nations in September to seek recognition of Palestine an an independent state, which hopefully for Abbas would ultimately lead to membership in the United Nations.
The Palestinian threat to go to the U.N. for recognition came after the so-called peace process between Arab Palestine and Israel broke down last fall. The breakdown was triggered by Palestinian insistence on Israel halting the building of housing settlements on West Bank territory which the Palestinians envision as part of a new independent state. The Israeli response was "no" on a new moratorium while, at the same time, going ahead with approval of still more settlements.
What is interesting now is that the focus for getting peace talks resumed and heading off the U.N. strategy of the Palestinians seems to be not the settlements issue, which is still alive, but on Palestinian recognition of the existence of Israel as a Jewish state for the Jewish people. This issue has been around for a long time but seems to have taken on a new urgency. But this may not be any easier to achieve than dealing with the settlements as the threshold for re-starting the peace talks, particularly if Abbas settles his dispute with Hamas over the composition of a unified government. It may, however, reflect a growing Israeli awareness that the longer time goes by without a resolution of the Palestine independence problem, the less Israel may be a "Jewish state" as perceived since its creation in l948.
This point was made by no less a person than 87-year old Israeli President Shimon Peres, a long time participant in the Israeli-Palestinian/Arab wars and struggles for a peaceful solution. While insisting that the Palestinians would be making a mistake by declaring independence outside of a negotiated settlement, Peres said the failure to make such a deal threatens the Jewish character of Israel. "If there will be one state without a clear majority or an un-Jewish majority, that is against everything we are trying to work for," Peres told CNN in a recent interview. About the same time another unnamed Israeli official said the U.N. strategy could be averted and peace talks resumed by acknowledgment of Jewish sovereignty. Thus Jewishness and acknowledgment of such seems to have replaced settlements as the stumbling block for new talks.
A look at the demographics from an online FOREIGN AFFAIRS article gives substance to what Jewishness may mean to Peres and others. In l996, Israel had 5.7 million people; 15 years later this has climbed to 7.75 million. The population of Palestinian Arabs living in Israel has gone from 1.03 to 1.59 million, representing 27 percent of the population increase. At the same time, the ultra-orthodox Jewish population has gone from about 170,000 to 775,000 and is expected to become an increasing part of the future population. Thus, about 30 percent of Israel's population is made up currently of the two most antagonistic groups, neither of which is happy with the traditional values of Israel, including democratic governance, which is based on the cultural/political values of the European Jews who have long shaped the politics and economics of the country.
Further, about 20 percent of the Israeli population are Russians who arrived within the past 20 years with a background in authoritarianism, not democratic politics. This segment of the population has taken root in the far right wing of Israeli politics opposed to the existence of any independent Palestinian state.
Thus Peres' "Jewish" character of the Israeli state may itself be disappearing or undergoing a fundamental shift from the European-based character of the country of which he is a part. In its place is emerging a country splintered by various factions, with the right wing factions becoming the dominant political players while having a more traditionalist Netanyahou as Prime Minister presiding over an often unruly coalition. So when Peres views a peace settlement as urgent and time is running out, the question becomes running out for whom?
Netanyahou, who sometimes but not other times, seems ready for the peace process to resume has set preconditions for such resumption. Besides acceptance of a Jewish state by the Palestinians, he wants the Palestinians to give up the right of about 1.5 million refugees and their offspring to return to the homes they had within Israel in l948, and to have a security system that includes the presence of Israeli armed forces on the Jordan River, encompassing land of the future Palestinian state. For the Palestinians, these demands are nonstarters which require resolution farther down the line but not as preconditions to even get talks restarted.
The U.N. strategy has problems for all concerned. For Israel such recognition would mean international pressure to make a variety of political, economic , and military concessions in the future. For Abbas the U.N. strategy will lose him support of the U.S. and some western European countries who threatened to work against Abbas in rounding up U.N. votes and also jeopardize the $400 million in annual U.S. aid which the PA receives. For the U.S.. it has some significant non-winning elements since this country can hardly afford to further alienate the Arab world by still another bending over to Israel.
So if the debt-ceiling problem gets resolved, you can shift your attention to the next deadline in September at the U.N.
The Palestinian threat to go to the U.N. for recognition came after the so-called peace process between Arab Palestine and Israel broke down last fall. The breakdown was triggered by Palestinian insistence on Israel halting the building of housing settlements on West Bank territory which the Palestinians envision as part of a new independent state. The Israeli response was "no" on a new moratorium while, at the same time, going ahead with approval of still more settlements.
What is interesting now is that the focus for getting peace talks resumed and heading off the U.N. strategy of the Palestinians seems to be not the settlements issue, which is still alive, but on Palestinian recognition of the existence of Israel as a Jewish state for the Jewish people. This issue has been around for a long time but seems to have taken on a new urgency. But this may not be any easier to achieve than dealing with the settlements as the threshold for re-starting the peace talks, particularly if Abbas settles his dispute with Hamas over the composition of a unified government. It may, however, reflect a growing Israeli awareness that the longer time goes by without a resolution of the Palestine independence problem, the less Israel may be a "Jewish state" as perceived since its creation in l948.
This point was made by no less a person than 87-year old Israeli President Shimon Peres, a long time participant in the Israeli-Palestinian/Arab wars and struggles for a peaceful solution. While insisting that the Palestinians would be making a mistake by declaring independence outside of a negotiated settlement, Peres said the failure to make such a deal threatens the Jewish character of Israel. "If there will be one state without a clear majority or an un-Jewish majority, that is against everything we are trying to work for," Peres told CNN in a recent interview. About the same time another unnamed Israeli official said the U.N. strategy could be averted and peace talks resumed by acknowledgment of Jewish sovereignty. Thus Jewishness and acknowledgment of such seems to have replaced settlements as the stumbling block for new talks.
A look at the demographics from an online FOREIGN AFFAIRS article gives substance to what Jewishness may mean to Peres and others. In l996, Israel had 5.7 million people; 15 years later this has climbed to 7.75 million. The population of Palestinian Arabs living in Israel has gone from 1.03 to 1.59 million, representing 27 percent of the population increase. At the same time, the ultra-orthodox Jewish population has gone from about 170,000 to 775,000 and is expected to become an increasing part of the future population. Thus, about 30 percent of Israel's population is made up currently of the two most antagonistic groups, neither of which is happy with the traditional values of Israel, including democratic governance, which is based on the cultural/political values of the European Jews who have long shaped the politics and economics of the country.
Further, about 20 percent of the Israeli population are Russians who arrived within the past 20 years with a background in authoritarianism, not democratic politics. This segment of the population has taken root in the far right wing of Israeli politics opposed to the existence of any independent Palestinian state.
Thus Peres' "Jewish" character of the Israeli state may itself be disappearing or undergoing a fundamental shift from the European-based character of the country of which he is a part. In its place is emerging a country splintered by various factions, with the right wing factions becoming the dominant political players while having a more traditionalist Netanyahou as Prime Minister presiding over an often unruly coalition. So when Peres views a peace settlement as urgent and time is running out, the question becomes running out for whom?
Netanyahou, who sometimes but not other times, seems ready for the peace process to resume has set preconditions for such resumption. Besides acceptance of a Jewish state by the Palestinians, he wants the Palestinians to give up the right of about 1.5 million refugees and their offspring to return to the homes they had within Israel in l948, and to have a security system that includes the presence of Israeli armed forces on the Jordan River, encompassing land of the future Palestinian state. For the Palestinians, these demands are nonstarters which require resolution farther down the line but not as preconditions to even get talks restarted.
The U.N. strategy has problems for all concerned. For Israel such recognition would mean international pressure to make a variety of political, economic , and military concessions in the future. For Abbas the U.N. strategy will lose him support of the U.S. and some western European countries who threatened to work against Abbas in rounding up U.N. votes and also jeopardize the $400 million in annual U.S. aid which the PA receives. For the U.S.. it has some significant non-winning elements since this country can hardly afford to further alienate the Arab world by still another bending over to Israel.
So if the debt-ceiling problem gets resolved, you can shift your attention to the next deadline in September at the U.N.
Sunday, July 3, 2011
DIOGENES, BRING YOUR LANTERN TO WASHINGTON
The cynical Greek philosopher Diogenes supposedly walked the streets of Athens carrying a lantern during the daytime. When asked why, he said he was looking for an honest man. If Diogenes walked the streets of Washington today, he would despair of finding an honest man or woman, in this case meaning a politician, and might consider using his lantern not for light but for self-immolation.
The current political battle over increasing the federal debt ceiling above $14.3 trillion to avoid default on U.S. debt obligations is obscene. The August 2 deadline for such a default is now less than a month away and the only movement, as opposed to progress, displayed to the public is political posturing. The President, with a re-election stake in the brawl, attacks Congress and says the lawmakers should simply get on with it, do their job, and work toward a bipartisan agreement. As envisioned by the President and many of his congressional supporters, such an agreement might involve $1-2 trillion in reduced spending and perhaps about $400 billion in increased revenue. The GOP reply is read from what is engraved on the party's ideological tablets -- thou shalt not raise taxes. To House Speaker and Senate Minority Leader McConnell it's our way or no way.
For both Boehner and McConnell, who MAY be personally supportive of some carefully disguised revenue increases, the problem is that their party has moved so far to the right that they can't muster the votes needed to support any plan that would increase revenues which to them means raising taxes. In short, they will not jeopardize their congressional leadership positions by stepping forward, taking a risk, and showing some political leadership by changing minds to get the necessary GOP votes to add to Democratic votes supporting a cut spending/increase revenues package. But instead of political courage we get statements reinforcing the intransigence of the far right lawmakers. What's the leadership in just saying "no"?
As a side note on the hypocrisy of the situation, GOP Senator Corker of Tennessee scoffed at the proposals of Democrats to end a variety of corporate tax benefits saying, "If you look at the kind of things that are being thrown out, they go almost nowhere at ending the problem." Referring , for example, to ending the tax write offs for corporate jets, " I mean you've got to be kidding me. We're talking about trillions and trillions of dollars, so these are all poll-tested things." Guess he forgot , for example, Democratic proposals to end tens of billions of dollars in tax benefits to the oil industry, and the billions going to Wall Street hedge fund managers who are grossly undertaxed.. He also forgot an old saying, a billion here and a billion there soon adds up to real money. Guess he prefers to look for every nickel and dime to cut on the spending side.
Leadership generally is not exactly a wonder to behold in this very partisan debt ceiling issue. President Obama uses his bully pulpit to put himself squarely on the side of his political angels -- that is, his own Democratic voting base plus, and hopefully, independent middle class voters. But he is certainly on a firmer leadership ground than the Republicans. Through Vice President Biden's weeks-long, but now collapsed, negotiations with a small group of bipartisan lawmakers there was administration leadership for getting the job done. That is, until the Republicans walked out of the negotiations saying flatly "no" to revenue increases which in any form, such as closing tax loopholes for the upper income earners and corporations, the GOP calls tax increases.
Then Obama had to publicly embarrass the Senate, noting that while efforts to reach agreement seem stalemated, the Senate was taking a week off for the July 4 holiday, a holiday for which most Americans get one day off from work. Senate Leader Reid, a person not easily embarrassed, quickly called off the recess. The House had already taken its weeklong holiday and has another scheduled for July 18-24, which as far as I can ascertain must be related to the waning of a full moon. It would come as no surprise if Boehner canceled that holiday. Put this all together and there is no evidence of any winners for the Profile in Courage award.
At the same time one has to wonder what lawmakers will do while they stay in town. The answer is, probably little. Any agreements to be made right now on the debt ceiling will be made by Obama and the congressional leadership, not the rank and file. But appearances do count and going home to campaign and raise money at this time does seem a bit insensitive. It would be a time for the so-called GOP leadership to engage in changing some hearts and minds, but the more likely use of the time will be for floor speeches, sound bites uttered while seeming to be in a rush, and cable news appearances to harden stands, not soften them.
So Diogenes, think it over carefully. Given the nature of our politics perhaps the search for an honest political person in Washington can be lowered to finding just a modicum of non-politicized leadership. Thus, our much lower expectations. And, besides, we can't afford to lose you or Don Quixote who carries on his own quest by tilting with windmills. Maybe he also should come to Washington, the city of many windmills.
The current political battle over increasing the federal debt ceiling above $14.3 trillion to avoid default on U.S. debt obligations is obscene. The August 2 deadline for such a default is now less than a month away and the only movement, as opposed to progress, displayed to the public is political posturing. The President, with a re-election stake in the brawl, attacks Congress and says the lawmakers should simply get on with it, do their job, and work toward a bipartisan agreement. As envisioned by the President and many of his congressional supporters, such an agreement might involve $1-2 trillion in reduced spending and perhaps about $400 billion in increased revenue. The GOP reply is read from what is engraved on the party's ideological tablets -- thou shalt not raise taxes. To House Speaker and Senate Minority Leader McConnell it's our way or no way.
For both Boehner and McConnell, who MAY be personally supportive of some carefully disguised revenue increases, the problem is that their party has moved so far to the right that they can't muster the votes needed to support any plan that would increase revenues which to them means raising taxes. In short, they will not jeopardize their congressional leadership positions by stepping forward, taking a risk, and showing some political leadership by changing minds to get the necessary GOP votes to add to Democratic votes supporting a cut spending/increase revenues package. But instead of political courage we get statements reinforcing the intransigence of the far right lawmakers. What's the leadership in just saying "no"?
As a side note on the hypocrisy of the situation, GOP Senator Corker of Tennessee scoffed at the proposals of Democrats to end a variety of corporate tax benefits saying, "If you look at the kind of things that are being thrown out, they go almost nowhere at ending the problem." Referring , for example, to ending the tax write offs for corporate jets, " I mean you've got to be kidding me. We're talking about trillions and trillions of dollars, so these are all poll-tested things." Guess he forgot , for example, Democratic proposals to end tens of billions of dollars in tax benefits to the oil industry, and the billions going to Wall Street hedge fund managers who are grossly undertaxed.. He also forgot an old saying, a billion here and a billion there soon adds up to real money. Guess he prefers to look for every nickel and dime to cut on the spending side.
Leadership generally is not exactly a wonder to behold in this very partisan debt ceiling issue. President Obama uses his bully pulpit to put himself squarely on the side of his political angels -- that is, his own Democratic voting base plus, and hopefully, independent middle class voters. But he is certainly on a firmer leadership ground than the Republicans. Through Vice President Biden's weeks-long, but now collapsed, negotiations with a small group of bipartisan lawmakers there was administration leadership for getting the job done. That is, until the Republicans walked out of the negotiations saying flatly "no" to revenue increases which in any form, such as closing tax loopholes for the upper income earners and corporations, the GOP calls tax increases.
Then Obama had to publicly embarrass the Senate, noting that while efforts to reach agreement seem stalemated, the Senate was taking a week off for the July 4 holiday, a holiday for which most Americans get one day off from work. Senate Leader Reid, a person not easily embarrassed, quickly called off the recess. The House had already taken its weeklong holiday and has another scheduled for July 18-24, which as far as I can ascertain must be related to the waning of a full moon. It would come as no surprise if Boehner canceled that holiday. Put this all together and there is no evidence of any winners for the Profile in Courage award.
At the same time one has to wonder what lawmakers will do while they stay in town. The answer is, probably little. Any agreements to be made right now on the debt ceiling will be made by Obama and the congressional leadership, not the rank and file. But appearances do count and going home to campaign and raise money at this time does seem a bit insensitive. It would be a time for the so-called GOP leadership to engage in changing some hearts and minds, but the more likely use of the time will be for floor speeches, sound bites uttered while seeming to be in a rush, and cable news appearances to harden stands, not soften them.
So Diogenes, think it over carefully. Given the nature of our politics perhaps the search for an honest political person in Washington can be lowered to finding just a modicum of non-politicized leadership. Thus, our much lower expectations. And, besides, we can't afford to lose you or Don Quixote who carries on his own quest by tilting with windmills. Maybe he also should come to Washington, the city of many windmills.
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