I Have Decided To Communicate With You To Inform You That I Will Not Communicate With You????

Hot Air posted a story today about a telephone call President Obama made to Speaker John Boehner.

The article reports:

After a week of reports about 90-year-old vets being barricaded out of war memorials and federal park rangers trying to cone off the roads in front of Mt. Rushmore, The One’s decided it’s time for a messaging reboot. He’s holding a snap presser at 2 p.m. ET to remind America that (a) Republicans are suicidally stubborn and unreasonable in digging in when the debt limit is approaching and (b) that he himself is dug in and categorically refuses to negotiate even though the debt limit is approaching.

Speaking of which, evidently we’ve reached the crucial “communications about not wanting to communicate” stage of the negotiations. Next comes negotiations over whether or not to negotiate, and then finally a triumphant agreement to punt this whole process to next year sometime, when we’ll do it all again.

There is a way out of this, but I can guarantee that we won’t find it if people continue saying things like, “I will not negotiate.” As you hear the spin, remember that the House of Representatives has passed numerous bills to fund various parts of the government and that Harry Reid has refused to bring those bills to the floor in the Senate. This is political theater. I only hope that the Americans who have been evicted from their homes and those who have had their businesses closed will be able to recover from this impasse quickly.

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Another Cost Of Runaway Spending

CNS News is reporting today that the amount of the U. S. Government debt held by the Federal Reserve has increased by 257 percent since President Barack Obama was first inaugurated on Jan. 20, 2009, and the Fed is currently the single largest holder of U.S. government debt.

The article reports:

Since Obama has been president, the publicly held portion of the U.S. government debt (as opposed to the “intragovernmental” debt the government has borrowed from federal trust funds such as the Social Security Trust Fund) has increased by  $5,264,245,866,257.40. The $.221369 in additional U.S. government debt the Fed has purchased during Obama’s presidency equals 23 percent of all the new publicly held debt the Treasury has issued during that time.

Please read that again. That paragraph refers to the fact that the government has borrowed from federal trust funds such as the Social Security Trust Fund. Remember, this is the government that is referring to Social Security as an entitlement. I don’t think I am too far off base when I say that the way the government has handled the Social Security Trust Fund should convince us that we should give the government as little of our money as possible–they did not handle money well.

Unless we elect people who are willing to curb Washington’s runaway spending, our nation will be bankrupt by the time the next president takes office.

Trying To Make A Difference When You Really Don’t Have The Power

Admittedly there are some squishy Republicans who are part of the problem and not part of the solution in Washington, but there is also reality. Even if every Republican were on board, there would still be limits on what the House of Representatives could do to stop the runaway spending in Washington. Katie Pavlich posted an article at Townhall.com today outlining the current Republican strategy for dealing with the excessive spending of the Obama Administration.

The bottom line here is simple–as long as the 2009 budget is used as a baseline (because the Senate has not passed a budget since then), America will continue to have trillion dollar deficits every year. Logically, part of the solution is to change the baseline. The way to do that is to pass a new budget. Now for the strategy.

The article at Townhall.com reports:

House leaders on Monday unveiled legislation to permit the government to continue borrowing money through May 18 in order to stave off a first-ever default on U.S. obligations. It is slated for a vote on Wednesday.  

Although President Obama is getting a temporary break from the debt ceiling fight as a result of this latest move by Republicans, he’ll be anything but satisfied. After all, President Obama wants the debt ceiling completely eliminated and White House Press Secretary Jay Carney has repeatedly said a short term increase isn’t acceptable. On the other hand, Carney also refused last week to explain how much of an increase in the debt ceiling Obama is looking for.

There is a very interesting item in the Republican proposal:

The measure also contains a “no budget, no pay” provision that withholds pay for lawmakers if the chamber in which they serve fails to pass a congressional budget resolution by April 15. That’s a provision designed to press the Senate to pass a budget.

I cannot imagine the Senate agreeing to that, but it is an interesting proposal. The vote is expected tomorrow despite the fact that no one is saying how high the debt ceiling should be raised. Does anyone want to try to run their household finances this way?

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Should The Federal Government Have Limits On Its Borrowing Or Spending?

This article has two sources–The Western Center for Journalism and CNS News. Both sources report that the Democrats want to repeal the debt ceiling that limits the amount of money that the government can borrow.

The Western Center for Journalism reports:

House Democrats are pushing legislation to repeal the federal debt ceiling, saying the borrowing limit has no practical purpose and has come to be used for political maneuvering that can have devastating economic repercussions.

New York Rep. Jerrold Nadler said the debt ceiling is arbitrary, doesn’t affect the deficit and has become a Republican means to “blackmail” the country to advance the GOP’s political agenda.

CNS News reports:

Nadler, [Rep. Jerrold Nadler (D-N.Y.)],along with fellow House Democrats Rep. Jan Schakowsky (D-Ill.), Rep. Hank Johnson (D-Ga.), Rep. Jim Moran (D-Va.), and Rep. Keith Ellison (D-Minn.), held a press conference to introduce a bill that would repeal the debt ceiling entirely.

Nadler, taking questions for the group, said the debt ceiling should be taken “off the table” in any negotiations over federal spending, and he refused to say if Democrats should offer any bill that would solve either problem.

“Basically what we’re saying is that the debt ceiling should be taken off the table. There’s plenty to fight about, unfortunately, the levels of taxation, the levels of spending – there are real disagreements on that. You need both houses and the president to agree on that.”

Has anyone bothered to put this in the context of your personal finances? If you were thousands of dollars in debt, with no prospect of paying back what you owe, how would the bank react if you went to them and asked that they raise your debt ceiling? As American citizens, we are not able to continue to spend more than we earn, why are we willing to let the government do this?

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The Facts Beneath The Noise

It’s time for both parties to threaten the American people with doom and gloom–the debt ceiling has been reached, and Washington wants more of our money. The President is saying that Social Security, the military and the veterans won’t be paid (notice he never says that he and Congress won’t get paid), and the Republicans say they are not raising the debt ceiling until someone shows some fiscal restraint. Good luck with that.

Heritage.org posted an article this morning that does actually shed a little light on what is actually at stake underneath all the rhetoric.

The article at Heritage.org reminds us:

“Suggesting that the United States might default on its debt is factually wrong and shameful behavior on the President’s part,” Heritage’s J.D. Foster, the Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, said yesterday.

The U.S. is not going to default on its interest payments, Foster said, and “this assurance rests not on congressional action to raise the debt ceiling, but on the simple fact that the Treasury has far more than enough funds to pay all interest as it comes due.”

The President stated that raising the debt ceiling was not an increase of spending but simply the paying money due from past spending. He compared the Republicans in Congress to someone who eats dinner and refuses to pay the check. Just for the record, the Republicans did not support much of the spending he is referring to. The excessive spending is due to the fact that the Senate has not passed a budget since 2009 and is using the bloated baseline of the 2009 Budget (when the Democrats controlled the House of Representatives) in continuing resolutions. Since the Senate has not passed a budget, there has been no serious Congressional debate on cutting spending since 2009. The President is essentially asking the Republicans to pay for the Democrats dinner!

At any rate, default is not an issue–it is a red herring. I suspect that if the President and Congress were not going to get paid until a deal was worked out, we would have a deal rather quickly. Stay tuned. It might not be a bad idea to get out the popcorn!Enhanced by Zemanta

Spiking The Football Before You Make The Touchdown Is Never A Good Idea

I have no problem with victory celebrations in football. It is a competitive sport and in that setting they are appropriate, but I will admit that President Obama is getting on my nerves with his political victory celebrations. Being President does not mean that you have to destroy the other political party–it means that you have to lead the country and create unity. I guess President Obama never got that message.

Last night Breitbart.com reported on the current state of the fiscal cliff negotiations. It appears as if a deal may have been reached (the question is whether or not the deal will pass in the House of Representatives). With passage in the House not a given, it was rather unwise of the President to spike the football–unless he wants the deal to fail so that he can blame Republicans. I hope that is not the case, because that would be putting politics over the welfare of the country, and I don’t like to think any President would do that.

The article reports:

However, there are several reasons a deal could fail. One is the President’s bizarre press conference earlier today, at which he appeared to mock Republicans and hinted at further tax hikes in the future. The event, timed at a sensitive stage in the negotiating process, irked Republicans and damaged whatever trust might have begun. Obama seems to have been torn between the desire to strike a victorious posture, and the real fear–driven, perhaps, by sharply falling approval ratings–that he would be blamed if the “fiscal cliff” caused a new recession.

The article also reminds us that we have already hit the debt ceiling:

Negotiations will also take place about the debt ceiling. The Treasury reports that the U.S. has officially hit the $16.4 trillion limit on what it can borrow, and that the government must resort to “extraordinary measures” to cover additional borrowing, which it can only do for a few more weeks. Congress will revisit the debt ceiling negotiations of the summer of 2011, even as it struggles with the aftermath of the “fiscal cliff.”

The problem is excessive spending–not lack of revenue!Enhanced by Zemanta

If You Tell A Lie Often Enough People Begin To Believe It

CNS News posted a story yesterday about a comment President Obama made on NBCs “Meet the Press” on Sunday. President Obama stated, “Well, I have to tell you, David, if you look at my track record over the last two years, I cut spending by over a trillion dollars in 2011. I campaigned on the promise of being willing to reduce the deficit in a serious way, in a balanced approach of spending cuts and tax increases on the wealthy while keeping middle class taxes low.”

That statement sounds really good, but what are the facts?

The article states:

According to the White House Office of Management and Budget, federal spending was not cut by $1 trillion in 2011. In fact, in fiscal 2010, federal spending was $3,456,213,000,000. In fiscal 2011, federal spending was $3,603,213,000,000. That was an increase of $147 billion.

While President Obama did not cut federal spending by $1 trillion in 2011, he did increase the debt by more than $1 trillion in that fiscal year. In fiscal 2011, according to the White House Office of Management and Budget, the federal deficit was $1,299,595,000,000. That was up from a deficit of $1,293,489,000,000 in fiscal 2010.

The White House website also repeats the claims of the President, but when you begin to read, you discover that the cuts are over a period of ten years. There are also claims that Obamacare will reduce spending. The only reason Obamacare has not already collapsed under its own weight is that the taxes it increases are collected for years before the benefits take effect.

The thing to keep in mind here is that what is called a spending cut in Washington would be called a spending increase anywhere else. Because of the concept of baseline budgeting, any time a government department does not receive additional money, that department’s budget is considered cut. Until Americans begin to understand that, we are doomed to ever-increasing federal budgets and ever-increasing federal debt.

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Does The President Really Want To Negotiate ?

Today’s Daily Caller is reporting that President Obama has turned down Speaker of the House John Boehner‘s offer to raise tax rates for Americans earning more than $1 million per year. The offer also included raising the government’s debt limit by roughly $1 trillion over its current level of $16.3 trillion.

The article reports:

Obama’s rapid spending — he has raised the national debt by $5.7 trillion since 2008 — means that he must persuade Congress to raise the debt ceiling again in the next few months.

Boehner’s Friday proposal would have transferred another $460 billion from roughly 400,000 investors and entrepreneurs to the federal government by raising their top marginal income tax rate from 35 percent to 39.6 percent.

Other federal, state and local taxes lift the effective tax rate on top earners to well over 50 percent.

The article concludes:

Meanwhile, the White House has demanded that the GOP “acknowledge” that higher tax rates are needed.

This demand for the GOP to abandon its ideological principle against higher tax rates is itself a ideological demand from Obama, and spotlights his gamble that November’s election results can help him win a long-lasting ideological victory over his Republican adversaries.

I am not a big fan of John Boehner, but it does seem that he has done everything he can to try to reach an agreement with President Obama. It appears that it is the President who is not willing to negotiate.

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Haven’t These People Read The Constitution ?

CNS News reported yesterday that Representative Nancy Pelosi has suggested that Congress simply give President Obama the power to personally raise the debt ceiling whenever he thinks it is necessary. Hasn’t this woman read the U. S. Constitution?

The article reports:

The Constitution expressly gives the power to borrow money to Congress–not the president. Article 1, Section 8, Clause 2 says: “Congress shall have power … To borrow money on the credit of the United States.”

When he met with members of Congress on Thursday to discuss a deal to avoid the so-called fiscal cliff that is set to occur at the end of this year, Secretary Geithner suggested that Congress give Obama the personal power as president to lift the legal limit on the federal government‘s debt.

I really can’t think of a worse idea. The article points out that under the arrangement Representative Pelosi proposed, the only limit on the national debt would be President Obama’s willingness to borrow money in the name of American taxpayers. Somehow I doubt that would be any limit at all.

The Constitution was set up to let Congress control the purse strings. Congress is expected to pass an annual budget, and the government is expected to abide by that budget. Unfortunately, The last time the Senate passed a traditional year-long budget was April 29, 2009. Frankly, I don’t see that changing anytime soon.

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Here We Go Again

On Tuesday, CNS News reported that the federal government is expected to reach its legal debt limit before the end of this year. At this point I would like to point out that it has been 1,289 days since the United States Senate passed a budget. It occurs to me that the lack of a budget might be part of the problem.

The article reports:

“Treasury continues to expect the debt limit to be reached near the end of 2012,” says the tenth paragraph of the “Quarterly Refunding Statement” put out by Assistant Secretary of the Treasury for Financial Markets Matthew Rutherford.

“However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America,” said the statement. “We continue to expect that these extraordinary measures would provide sufficient ‘headroom’ under the debt limit to allow the government to continue to meet its obligations until early in 2013.”

It’s time for Congress to work together and pass a budget. There has to be a way to create a budget that combines the idea of controlling spending and streamlining the tax code enough to increase revenues without raising rates.

The current American tax code is a tribute to lobbyists and special interest groups. It needs to be reduced to ten pages or less and put in language that you and I can understand. That is an idea whose time has come.

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What The Republican Debates Should Really Be About

This chart is from the website of the House Ways and Means Committee

America Before President Obama Took Office and Now

  Before Now Change
Number of Unemployed1 12.0 Million 13.1 Million +9%
Long-Term Unemployed2 2.7 Million 5.6 Million +107%
Unemployment Rate3 7.8% 8.5% +9%
“High Unemployment” States4 22 43 +95%
Misery Index5 7.83 11.46 +46%
Price of Gas6 $1.85 $3.39 +83%
“Typical” Monthly Family Food Cost7 $974 $1,013 +4%
Median Value of Single-Family Home8 $196,600 $169,100 -14%
Rate of Mortgage Delinquencies9 6.62% 10.23% +55%
U.S. National Debt10 $10.6 Trillion $15.2 Trillion +43%

1 Number of unemployed in January 2009 and December 2011. http://www.bls.gov/data/#unemployment.
2 “Long-term unemployed” means for over 26 weeks; data for January 2009 and December 2011. http://www.bls.gov/data/#unemployment.
3 Unemployment rates in January 2009 and December 2011. http://www.bls.gov/data/#unemployment.
4 “High unemployment” means having a 3-month average unemployment rate of 6% or higher.  From the Bureau of Labor Statistics’ “Extended Benefits Trigger Notice” for January 18, 2009 and January 22, 2012. http://www.ows.doleta.gov/unemploy/trigger/2009/trig_011809.html and http://ows.doleta.gov/unemploy/euc_trigger/2012/euc_012212.html.
5 The “Misery Index” equals unemployment plus inflation.  For January 2009 and December 2012.  http://www.miseryindex.us/indexbymonth.asp.
6 Average retail price per gallon, January 2009 week 3 and January 2012 week 4. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W.
7 U.S. Department of Agriculture, values represent monthly “moderate” cost per family of four for January 2009 and November 2011. http://www.cnpp.usda.gov/USDAFoodCost-Home.htm.
8 U.S. median sales price of existing single-family homes for metropolitan areas for 2008 and 2011 Q3. http://www.realtor.org/research/research/metroprice.
9 Residential mortgage delinquencies (real estate loans) for 2008 Q4 and 2011 Q3. http://www.federalreserve.gov/releases/chargeoff/default.htm.
10 Values for January 21, 2009 and January 23, 2012.  http://www.treasurydirect.gov/NP/BPDLogin?application=np

This is where the focus of the debates should be.

 

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