Thursday, December 20, 2012

Boehner never had the votes to make a deal

Speaker John Boehner

I've been saying, and tweeting, for weeks that I never believed Boehner had the votes to make a deal, any deal, with Obama.  A deal with Obama is just something the Republican caucus is not interested in making.

Boehner has been posturing and whining for 6 weeks hoping that President Obama would capitulate and hand Boehner a victory.  Boehner needed Obama to give up the raising of any tax rate.  When it was clear to Boehner this wasn't happening, he then threw a 'hail Mary' he called Plan B.  How he could possibly create this dramatic showdown without the votes for Plan B, is mind boggling.

David Kurtz has a very smart take tonight,
It is easy to overreact to these things in the moment, to overread them. But Speaker Boehner just put it all on the line. The entire nation was watching, and he was exposed. He knows it. His conference knows it. Anyone left in Washington who had doubts about this speaker’s clout now knows it, too. In a parliamentary system, he would resign and his party would elect a new leader. We don’t do it that way here … usually. But it’s hard to see how Speaker Boehner continues from here — or why he would want to.
It IS easy to over-read these things in the moment, but why would John Boehner want to stand for Speaker of the 113th Congress after such a humiliating defeat?

What exactly would Boehner be the Speaker of?

Washington Media Village literally can't see elephant in front of their eyes

Since the passing of David Broder, perhaps nobody better personifies the out of touch media bubble than Jennifer Rubin.

Today, Jennifer reassured,
In all likelihood, the majority of House Republicans will vote for Plan B, showing the proper consideration (none) for the unrealistic brand of politics that gave the GOP characters such as Todd Akin and Christine O’Donnell. The more that conservative GOP elected officials establish their independence from these third-party cranks, the more likely it is that conservative goals can actually be furthered. To govern and to influence the process is to deal and cajole and compromise. The House speaker and most GOP House members get that. And the vast majority of the House Republicans have nothing to fear from the Heritage Action Network if they do their job and listen to their constituents.
Jennifer is far from alone. Duncan Black calls the insider media bubble in DC "The Village". Village reporters have spent so much time in DC that they no longer recognize reality. They believe, for instance, against all obvious information to the contrary, that House Republicans are secretly very sophisticated and reasonable and are just pretending to be extreme.  Of course the secretly sophisticated House Republicans would make an eleventh hour amazing deal to transform the Nation's budget and deficit.  They dismiss us on the outside looking in, because we don't have their access to what is really going on. 

David Brooks delusional fantasy for a mega 'Grand Bargain' is a perfect example and Brooks himself, is the ultimate Villager. 

Wednesday, December 19, 2012

Never Again: Debt Ceilings are no longer negotiable

Josh Marshall looks at Obama's new policy of refusing to negotiate debt ceiling increases,
The President has been very clear: he’s not going to get into another hostage negotiation over the debt ceiling....And I think he’s going to stick to that. But there’s a passion and energy behind it that’s made me think (not surprisingly) the President feels guilty about what he allowed to happen back in 2011.  I don’t want to overstate ‘guilt’. Maybe that’s too strong a word — but that he made a mistake, that he shouldn’t have let it happen and possibly set a really bad precedent in enabling extremist behavior.
I don't think there is any question about it, although I would not say 'guilt' so much as 'regret'. An acknowledgement that he made a very big mistake in negotiating the debt ceiling increase. Obama knows he needs to fix it or history will recall his precedent of negotiating very badly, and rightly so. Obama fucked-up big time.

President Obama's Achilles Heel is his arrogance which periodically gets him in trouble. Remember the first Romney debate? Obama refused to take Romney seriously and it nearly cost him his re-election. Obama also refused to take House Republicans seriously and it cost the country dearly.

Monday, December 17, 2012

Gun laws passed today will be for generations yet to be born

Here are some sobering gun statistics courtesy of The Huffington Post.

270 to 300 million guns are owned by 70 to 80 million Americans.  I'm one of them.

45 million Americans own handguns.  I'm one of them.

96 percent of the Gun Lobby's $3 million in donations in 2012 went to Republicans.  Without Republican buy in, Democrats are only tilting at wind mills.  If you want serious gun control legislation, call your Republican politicians and tell them so. Republican Senators and members of Congress could not possibly care less what the Presidents wants.  You, on the other hand, can influence them.

87 percent of children killed in the 23 wealthiest countries are our children -- American children.

Passing more restrictive gun laws will not solve our gun problem over night.  It will take many generations after we pass these gun laws to reduce 300 million guns floating around this country to a much more reasonable level.  And I define 'reasonable' as only having guns related to hunting and sport shooting.   Republicans and NRA Democrats like to use this fact as a justification for doing nothing -- make the perfect the enemy of the good.   This is dishonest and we need to call it as much.

A journey of a thousand miles begins with a single step.  We can make this step now.

Gun buyback programs in big cities can do a lot to reduce guns available for random violence, but only if we seriously limit the market for new tactical guns. 

As I said above, I'm a gun owner.  I inherited several hand guns with my father passed.  I immediately traded all but 1, for a Remington 870 Wingmaster. I also inherited 1 shotgun.  When I was younger, I used to hunt but haven't in many years.   The handgun I kept was a collectable.  It occurred to me this weekend that it was time to dispose of the collectable handgun, but I have no idea how to do so without making our problem worse.  I see no harm in people owning shotguns and bolt action rifles used for hunting.

By the way, I have close to zero hope anything positive will come from the Newtown Connecticut  tragedy.

Thursday, December 13, 2012

The Debt Ceiling has nothing to do with controlling Federal spending

Republicans are being dishonest about the debt ceiling fight, and the liberally biased media is letting them do so, either out of cowardice or ignorance -- probably both.

Congress controls spending and taxing.  The President and Executive branch can only spend money that Congress has authorized.  Congress determines the extent to which the government will run surpluses or deficits by controlling the mix to taxes to spending.  Like any legislative process, the President plays a role.  The President is required by law to submit to Congress a budget with recommendations for spending and taxation, and can veto any budget bill with which he might disagree.  None of this has anything to do with the debt ceiling.

When the Treasury doesn't have sufficient funds to pay all the bills authorized by Congress, it borrows money to cover those costs.

Independent of the budgeting process, Congress, starting in 1939, imposes a debt ceiling as we know it today.

Here is the important part: debt ceiling or not, the President and Treasury can only pay bills authorized by Congress.   By refusing to raise the debt ceiling, Congress isn't raining in an out of control President, they are refusing to pay bills they have already authorized.

Refusing to raise the debt ceiling is the equivalent of you or I deciding to rein in our personal spending by refusing to pay our credit card bill. 

Here is an example.  Congress authorized the purchase of 32 F-35 fighter aircraft from Lockheed Martin in FY 2012 at a cost of several billion dollars.  In reliance on the Congressional authorization and the DoD order, Lockheed Martin shelled out the cost to manufacture these very expensive aircraft.  But if Congress doesn't allow the Treasury to borrow money, Treasury can't pay Lockheed Martin for doing what Congress ask them to do.

If Congress doesn't increase the debt ceiling, Treasury also can't pay interest on Treasury debt that Congress allowed by previous debt ceilings.

The action of House Republicans who want to hold the credit rating of the United States hostage to force their will on all Americans is outrageous and irresponsible.  The U.S dollar is current the international reserve currency which does benefit out economy by bringing lots of foreign money to our shores.  If House Republicans blow this, the economy will suffer for generations.

If Congress wants to rein in Federal spending, all they have to do is actually stop spending.   Don't buy 2500 outrageously priced f-35 fighters would be a great start.

Adjusting 1993 OBRA tax rates for inflation, ctd

Earlier I commented on simply adjusting the 1993 Omnibus Budget Reconciliation Act tax rates (these are the so-called Clinton tax rates) for inflation and otherwise letting the Bush tax cuts expire.

I freely admit that not only do I have no tax expertise, I'm pretty ignorant on the whole subject. 

Following that earlier post, I spoke to an actual tax accountant and he confirmed that if the Bush tax cuts expired, tax rates would automatically go back to those of 1993 adjusted for inflation to 2012 or 2013 dollars. I've also learned that indexing tax rates to inflation was one of Ronald Reagan's actions in reforming the tax code.

So, if we cross the fiscal cliff and the House simply refuses to yield, tax rates for tax year 2013 (married filing jointly) would look approximately like this:

$0 to $59,000: 15%
$59,001 to $143,000: 28%
$143,001 to $224,000: 31%
$224,001 to $400,000: 36%
$400,000 + : 39.6%

I say approximately because I used the inflation calculator from the Bureau of Labor Statistics, but I have no idea how the IRS would actually index the rates.

And remember, these tax rates apply to Adjusted Gross Income (AGI)  which is your net income after all deductions.  Remember also that our tax system is progressive such that your actual tax paid may be calculated on multiple tax rates.  The first $59,000 dollar of AGI would be taxed at 15%, the next $84,000 of AGI would be taxed at 28%, etc.   People who should no better often assume that if you had $143,001 of AGI that all income would be taxed at 31% and that is simply not the case.

Finally, as I've said before, crossing the fiscal cliff provides a great opportunity to really get our fiscal house in order.  If not now, when could we ever get back to more sensible tax rates AND cut $1 trillion dollars from the defense budget? 

Friday, December 07, 2012

Ann Coulter takes Sean Hannity to school on the fiscal cliff

A great argument between Ann Coulter and Sean Hannity. Coulter, to Hannity's surprise, advises Republicans to make a strategic retreat on taxes to move forward while Hannity is demanding the political equivalent of Pickett's Charge.

It get's good at the 2 minute mark. I promise, you will enjoy.

Thursday, December 06, 2012

Excellent Les Miserables wedding flash mob

This is awesome.

Melissa Knowles reports,
The video begins as Danish couple Suzanne and Sune Vibæk Svanekier are delighted when their guests stand to sing 'One More Day.' Members of the wedding party stand one by one and add their voices to the song. Although this is not one of the musical's more romantic pieces, it was chosen because the wedding took place at the Worker's Museum of Copenhagen, a nod to the working class in singing 'One More Day.' The performance peaks when the group gets up to sing in unison. For the big finish, guests are showered with confetti, and the singers are given a standing ovation.
This only works out well if you and your entire wedding party are gifted musical theater singers.

Forget the 14th Amendment, It's a market issue, stupid!

Well, I was really liking my earlier post highlighting what I believed to be the President's power to sell bonds without Congress consent.

Josh Marshall has blown a hole in my theory the size of Texas. Of course he's right, and I feel a little silly.
The White House has made it equally clear that the President and his advisors do not believe there’s a constitutional rabbit he can pull out of his hat to sidestep the whole issue. In other words, no ‘14th Amendment’ solution in which the President just blows through the debt ceiling and continues to sell bonds. They don’t believe the President has the power. And they also believe it’s not viable in market terms since, remember, .... It’s a market auction. You need people to buy this paper that John Boehner and company will be saying is illegitimate. 
I should have thought of this. I'm feeling really foolish right now.

I still believe the President has the 14th Amendment power to sell bonds to service current debt, but that is moot if there is no market to buy them, and/or the sale does even more damage to the full faith and credit of the United States.

The face of gay marriage in Washington State

Meryl Schenker shares with us the face of gay marriage in Washington. She writes,
One month after Washington State voters approved the state's marriage equality law in Ref. 74, same-sex couples get marriage licenses for the first time on December 6th, 2012. At around 1:30am, Larry Duncan, 56, left, and Randy Shepherd, 48, from North Bend, Wash. got their marriage license. The two plan to wed on December 9th, the first day it is possible for them to wed in Washington State. They have been together for 11 years.
The world is changing and I could not be more delighted.

Does the 14th Amendment forbid a default, Ctd.

UPDATE: Before you invest the time read this post, go here first.  While the below is a solid legal defense, the market makes moot Constitutional remedies.

I raised this issue last time the debt ceiling was up.

President Obama is insisting he will no longer negotiate over debt ceiling increases "because we have got to break this habit before it starts."

Of course he's right.  Last time we were facing a debt ceiling crisis, I asked if Obama's negotiation over the debt ceiling had done permanent damage to the Presidency.  The glee with which Republicans in both houses of Congress speak of endless future fights on the debt ceiling suggest that Obama had indeed damaged the Presidency.  When Gingrich tried this ploy with Clinton, Clinton refused to bargain and in the eleventh hour, Gingrich capitulated and moved on to what he thought would be more productive threats: shutting down the government.

Back to Obama's silver bullet.   Section 4 of the 14th Amendment,
Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Weed out the Civil War specific language, for the sake of clarity, and you have this:

The validity of the public debt of the United States, authorized by law,...shall not be questioned.

There are 2 issues here: 1, the repayment of all outstanding debts of the United States, and 2, issuing new debt to pay for current government spending authorized by Congress but for which the Treasury does not have sufficient funds to pay without issuing more debt.

I'm taking up the second matter first, because it's the most complicated.  Reasonable people can disagree about whether §4 allows the Treasury to borrow to fund ongoing spending already authorized by Congress when the Treasury has insufficient funds from income (taxes, etc) to pay the bills.  For example, Congress authorized the purchase of 32 F-35 fighter aircraft from by Lockheed Martin in FY 2012.  In reliance on the Congressional authorization and the DoD order, Lockheed Martin shelled out the cost to manufacture these very expensive aircraft.  Is this a "public debt..., authorized by law" as defined by §4? Lockheed Martin certainly thinks so, and most of their closest and dearest friends in Congress think not. 

The first category is much more straightforward.  This category is all Treasury securities/ U.S. debt issued to citizens, foreigners, investors and the Social Security and Medicare Trust Funds, etc.  There is no question that all debts issued by the Treasury up to the debt ceiling have been "authorized by law".  Congress has never question the legality of this debt.  By the plain language of §4, the repayment of this debt cannot "be questioned", not by Congress or the President.

In short, Congress lacks the power to compel the default of all U.S Treasury debt they have previously authorized.

Will Obama play this card?  I think he is obligated at least as to category one.  If I were him, at 9PM Eastern Time on the day the debt ceiling expires, with no action by Congress, I would go on national TV from the East Room and announce that pursuant to Section 4, of the 14th Amendment to the United States Constitution, the Secretary of the Treasury and the Treasurer of the United States have been directed to use all means necessary including the issuance of new securities to honor the debts of the United States.

I suppose Congressional Republicans could file suit in Federal Court seeking an order compeling the United States to default on it's debt, but I'm willing to wager they will not.

They can alway impeach the President ("high crimes and misdemeanors means what they say it means"), but again, I'm willing to wager recent history would prevail upon them to decide against that action as well.

In short, if Obama chooses this fight to defang the Congressional debt ceiling, I don't see how Congressional Republicans win. All monied Republican constituencies are going to side with getting paid, leaving only the hard-core ideological Right.

What do you think?

P.S.  If I were Pres and forced to operate the government only on current income, the first expense I cut would be Congressional salaries, but that's just me.

Wednesday, December 05, 2012

Adjusting OBRA 1993 tax rates for inflation

The Omnibus Budget Reconciliation Act of 1993 raised income tax rates on those with the top 1.2% of income earners.  These are the so-called Clinton rates currently being discussed.

President Obama and most of the Country wants to restore the top individual income tax rate under the 1993 OBRA while retaining the so-called Bush tax cuts for everyone else.

If the House of Representatives does nothing, the Bush tax cuts of 2001 and 2003 expire at midnight, December 31, 2012, and we return to the 1993 rates.  

OBRA imposed an income tax rate of 39.6% on household adjusted gross income or taxable income (much less than actual income) above $250,000.   But the OBRA adjusted the top income amount for inflation such that the income threshold for the top rate rose every year starting in 1995*.

Obviously, $250,000 in 1993 was much more income than it is in 2013.   In fact, using the Bureau of Labor Statistics Inflation calculator, $250k in 1993 is equivalent to $400k today.

Adjusting the 1993 income threshold to 2013 dollars seems like an easy concession that everyone could agree on.  This is essentially what Warren Buffett suggested (among other things) in his November 25th NY Times OP/ED. Buffett said the threshold should be $500k and that works for me too.  The issue is tax fairness and fairness requires we compare apples to apples. 

Personally, I'd favor a return to all the tax rates of 1993 adjusted for inflation to 2012 dollars.  If we did this, the tax rates on adjusted gross income (married filing jointly) would look like this:

$0 to $59,000: 15%
$59,001 to $143,000: 28%
$143,001 to $224,000: 31%
$224,001 to $400,000: 36%
$400,000 + : 39.6%

If the House passes the Senate bill extending all Bush tax cuts except the top rate, the tax rates would look like this:

$0 to $17,000: 10%
$17,001 to $69,000: 15%
$69,001 to $139,350: 25%
$139,351 to $212,300: 28%
$212,301 to $250,000: 33%
$250,000+ : 39.6%

*Here is a question for which I could not find an answer.  We know that on December 31, all the Bush tax cuts expire and rates revert to the 1993 OBRA.  When I looked at tax tables, I saw that the tax rates from year to year from 1995 to 2001were adjusted for inflation.  So, if we revert to 1993 OBRA, why wouldn't all the rates including the top rate automatically be adjusted for inflation, as they were in 2001, and apparently would have if the Bush tax cuts were never passed? 

Tuesday, December 04, 2012

David Brooks 'Truly Grand Bargain' is delusional

I respect David Brooks. I think he's a bight guy who is considerably brighter than me. But I think today's column is naive and delusional.

Brooks seems blind to just how far the Republican party has sank, and in particular, the Republican House.

Brooks proposes a temporary fix now, with Republicans relenting on tax rates going up on top earners and some cuts in entitlements (nothing on defense) to buy time and kick the can down the road for a truly grand bargain,
But the big [Republican] demand would be this: That on March 15, 2013, both parties would introduce leader-endorsed tax and entitlement reform bills in Congress that would bring the debt down to 60 percent of G.D.P. by 2024 and 40 percent by 2037, as scored by the Congressional Budget Office. Those bills would work their way through the normal legislative process, as the Constitution intended. If a Grand Bargain is not reached by Dec. 15, 2013, then there would be automatic defense and entitlement cuts and automatic tax increases.
Brooks clearly has no idea how bad things are among the Republican party.  The Republican party that Brooks wants to hammer out this bargain no longer exists.  Boehner would have no ability to comply with this.  The core of House Republicans have no desire to do anything to raise money and improve the Federal Government.  They want to destroy the Federal Government for the most part, except the most basic of functions and the DoD.

But even if this weren't true, who among the House GOP has the public policy chops to pull this off?  The House Republican caucus is made up of hard core ideologues, not pubic policy wonks.  This should be clear by Paul Ryan, who's budget math relies on magic and he's considered their genius.

Don't get me wrong, the Democrats aren't exactly a prize, but they at least believe in public policy.

I really don't mean to be hyperbolic but this is so naive it's embarrassing.  Isn't it clear that the House doesn't want any deal with Democrats? They want unconditional surrender.

I've just accepted the fact that we are going off the cliff, and I think it's for the best.  We might dip back into a recession, but it won't be long, because there are trillions on the sidelines waiting to be invested when the markets see certainty.  And how else can we ever hope to really cut back our military defense?

The House Republicans 'plan' is endless debt ceiling crises to literally hold the nation hostage until there is no Federal government to speak of.  They're mad.

Memo to Jennifer Rubin: Admitting the problem is the first step to recovery

Shameless Romney shill Jennifer Rubin advises the GOP not to pay attention to Jim DeMint and all the "usual right-wing screechers" who have no real accomplishments to to point too and spend their time attacking other Republicans. She call's them the 'no' crowd.

While I think Rubin's advice to Republicans is sound, I have to take issue with this:
The joke here is that the mainstream media love the loony express. The engineers on the train to nowhere are useful props for liberals to convince the public that this is what conservatism is. The mainstream media parade the loonies around as the talking heads for the right, as if they represented a majority or even plurality of the party.

It wasn't the MSM or a liberal cabal that threw Bob Bennett under the bus for Mike Lee or Dick Luger for Richard Murdoch. It was Republican primary voters.

It wasn't the MSM or a liberal cabal that nominated Todd Akin or Ted Cruz. It was Republican primary voters.

It wasn't the MSM or a liberal cabal that brought us Sharon 'chickens for medical care' Angle. The Club for Growth and Republican primary voters who chose Sharon over here closest rival by 14 points.  All the MSM did was cover the Republican Senate nominee who was taking on the Majority Leader.

I could go on, and on, and on,.....

You cannot solve a problem until you admit you have one.

Jennifer, the Republican party has a problem. The 'Loony Train' (Jennifer's term, not mine, but great turn of phrase) is running the show.

Admitting the problem is the first step to recovery.