A day that was supposed to bring Washington to the edge of resolving the fiscal showdown instead seemed to bring chaos and retrenching. And a bitter fight that had begun over stripping money from the president’s signature health care law had essentially descended in the House into one over whether lawmakers and their staff members would pay the full cost of their health insurance premiums, unlike most workers at American companies, and how to restrict the administration from using flexibility to extend the debt limit beyond a fixed deadline.
That is the state to which the whole thing has devolved. The denizens of the monkeyhouse are bringing the world economy to the brink of chaos in order to fk their own staffs over on health insurance. Or at least that’s what they say. In reality, what this is about is a rump faction of one of our two major political parties that doesn’t think we should have a federal government at all, that wants to roll back its functions to a state half-past the Articles of Confederation, and that is doing so while believing itself to be some unholy combination of the Founding Fathers and the X-Men. They have cast themselves in their own action adventure movie, and the rest of us serve pretty much the same function as New York City does in The Avengers. We’re the set decoration that gets demolished as Our Heroes fight evil. These are pathetic, worthless children, playing dress-up, and smashing things because they like the sound of things breaking.
By Tuesday afternoon, House Republican leaders were back with a new proposal to fund the government through Dec. 15, extend the debt ceiling into February and deprive not only lawmakers but all their staff members of employer assistance to buy their health care. By extending that provision to staff members, Republican leaders hoped to appeal to its far-right flank, but it angered more moderate Republicans and was not enough for the conservative hard core. Complicating the speaker’s task, Heritage Action, the conservative Heritage Foundation’s political arm, which wields great influence with the most conservative elements of the Republican Party, opposed the plan. “I think there’s always hope there can be a final package I can vote on, but this is not the one,” said Representative Ted Yoho, Republican of Florida, as he and two other Tea Party conservatives left the speaker’s office.
The power rests with Ted Yoho because the castrato Speaker Of The House, Boehner of Ohio, cares more about his job than he does about his country. The power rests with Ted Yoho because the American political system has tolerated carefully cultivated ignorance and carefully tailored bigotry for far too long. Ted Yoho has been coming for years. Ted Yoho was made inevitable by the NCPAC campaigns of the late 1970’s and by the elevation of Ronald Reagan to the presidency in 1980 and, subsequently, to an artificially exalted place in our history after he left office. The Republican party revelled in all the forces that are now tearing it apart. The Democratic party was criminally negligent and abdicated its profound responsibility to fight against those forces; indeed, it spent the better part of the 1980’s and 1990’s trying to surf the wave itself. The Democratic Leadership Council, and Blue Dog Democrats generally, bear a heavy burden of responsibility for failing to demonstrate to the American people in election after election how extreme the Republicans were becoming.
1. What is the Oct. 17 “debt ceiling deadline” and why does it matter?
By the end of the day Oct. 17, the U.S. Treasury will max out its ability to borrow money and be left only with the cash on hand to pay bills going forward.
The Treasury estimates it will have just $30 billion in cash reserves as of Oct. 18, plus any daily cash inflows (tax revenue) thereafter. Bottom line: this would be uncharted and unpredictable territory for the U.S. government. We have never before operated without the ability to borrow more money.
2. When will the U.S. go into default?
The short answer: sometime after Oct. 17 and likely before the end of the month. But default will NOT happen when the clock strikes midnight on Oct. 18.
We do not know the precise day or time when the U.S. will be unable to pay all its bills in full and on time. The nonpartisan Congressional Budget Office estimates a technical default would occur between Oct. 22 and Nov. 1. The independent Bipartisan Policy Center projects default could hit between Oct. 18 and Nov. 5.
There is no official estimate for a date or time of actual default.
3. Why don’t we know an exact date for default?
Treasury officials and independent economists say it’s impossible to know how quickly the government’s cash on hand will disappear after Oct. 17.
Daily inflows of tax revenue are notoriously “variable and irregular,” as are changes in expenditure flows under sequestration and the behavior of investors in Treasury securities. No one can predict precisely how much cash will come in on any given day.
4. What happens if there’s no deal after Oct. 17?
If there’s no deal, the Treasury Department will be unable to issue any new debt on Oct. 18. That means the nation’s credit card is maxed out and all we’re left with is the money in our checking account.
Former Treasury chief of staff Mark Patterson likens it to “driving with your car on empty about to go into the desert and passing the last gas station intentionally and saying, ‘I will take my chances and maybe there will be another gas station on down the road in the desert.’”
“You might be able to go farther, and you just might because cash does come in over the transom at Treasury,” Patterson told MSNBC recently, “but you just don’t know how far you can make it.”
The government will continue to sell T-bills in the marketplace, essentially “rolling over” (or re-issuing) existing debt that has matured. But the open question is whether investors will choose to reinvest and/or demand higher prices. Those dynamics could expedite a cash shortfall.
Bottom line: default would be imminent and unpredictable. Meanwhile, U.S. and global markets could get spooked; rating agencies could downgrade U.S. credit.
Steve Greenberg is a political cartoonist. This week, he chose to lampoon the Tea Party with an editorial entitled “Tea-Hadist,” and we, The Jewish Journal, chose to print it.
The purpose of political cartoons is to comment on both deep and topical political and social issues via satire. They almost always offend someone. Political correctness has about as much place in an editorial cartoons as a bacon-cheeseburger has in a kosher market.
This is not simply my opinion, but that of our publisher, Rob Eshman, as well:
“Steve is a satirist. His point was that in pursuing their ideology, the Tea Party conservatives in the House are actually destroying gov’t for others, as well as the GOP and ultimately their own movement. It’s a point many Republicans have made: John McCain, Peter King and many others. (washingtonpost.com
“Greenberg makes his point via a medium that doesn’t reward subtlety.
Meanwhile, Ben Shapiro, a “nice Jewish boy” at the right-wing Breitbart site, seethed with righteous rage:
On Friday, October 11, the Los Angeles Jewish Journal, which is handed out free to virtually every synagogue in the city of Los Angeles and which has a circulation of 50,000 copies and 150,000 weekly readers, ran a cartoon by Steve Greenberg, who does editorial cartoons for the paper each week. Greenberg’s cartoon, labeled “Greenberg’s View,” depicted a suicide bomber with a Republican button and a Tea Party tri-corner hat, a suicide vest around his waist, a detonator in his hand. “Of course I don’t feel any regrets about the cost everyone will pay for my beliefs! After all, there are 72 virginsawaiting me!” The drawing was titled, “THE TEA-HADIST.”
You know what is despicable, Ben? A small cadre of right-wing extremists in Congress who are threatening to put this nation into default because they do not like the results of the 2012 election. Do you know what can happen in a default? The U.S. Treasury will not be able to pay debts that it already owes: this includes Social Security and Medicare and veterans’ benefits. You know, those veterans you care so much about, because they can’t visit their war memorials?
The U.S. defaulting on its debt will have global repercussions. The national debt will grow even larger as interest rates skyrocket. Families will lose their investments and their life savings. International corporations, which employ millions, will crumble as consumer confidence fails. Unemployment will mushroom in addition to the 800,000 “non essential” federal employees whose unpaid leave you and your cohorts cheered. You think the 2008 financial meltdown was bad? Stick around and see what happens in a default.
And you are angry because JJ compared this to a suicide bomber who blew up a pizza parlor?
Have another one.
THEIR ARE MOAR.
It’s already a MEME Ben, deal with it.
Call it debt-ceiling profiteering. With the federal government just days away from defaulting on trillions of dollars in borrowings, survivalists are bracing for chaos. And the $500-million-dollar-a-year “preparedness” industry is flooding the blogosphere with ads for ammunition, gold bullion, antibiotics, freeze-dried food, sling shots, prefab bunkers, and countless other products to help you brave the impending mayhem.
But one company has been particularly aggressive about capitalizing on preppers’ paranoia, particularly those preppers who see Barack Obama as the first horseman of the Apocalypse. Last week, an anonymous email solicitation went out to readers of the conservative news site, GOPUSA.gov. It warned:
There are three hidden signs that Obama
is about to throw you into a FEMA camp.
They’re on his secret agenda.
But once YOU know these three signs…
youre already one step ahead.
You’re in control.
You can beat them at their own game.
Click here to check them out now,
before its too late.
The link leads to a slick marketing website-cum-infomercial for a video called the Patriot Survival Plan, which is also being promoted on popular conservative sites, such as World Net Daily. The infomercial claims that America is about to experience “a crisis unlike any other in history, a catastrophe that will overshadow, Katrina, Pearl Harbor, 9/11, the Great Depression, even the Civil War.” What’s more, this “financial Hiroshima” is “barreling down on us like a freight train in just 10 months or less…Unless you take some very specific steps it’s virtually guaranteed that you will be left penniless, hungry, and fighting desperately for your life.”
What steps are those? The infomercial doesn’t say.
Instead, it delves into a rant about the Federal Reserve, claiming it’s part of plot by greedy bankers to “rig the entire U.S. economy in their favor” by luring the country into a gargantuan debt it can never repay. Worse, this “Massive Ponzi scheme” is about to “come crashing down.” When it does, neighbors will fight each other to the death over a single can of tuna.
But never fear. There’s a “simple yet stunningly powerful method” that will have intruders “running away from your home like scared little girls.” And you can learn it from “the comfort of your own home,” all for a mere $37.
The Obama administration will have to decide whether to delay — or possibly suspend — tens of billions of dollars in Social Security checks, food stamps and unemployment benefits if negotiations to raise the federal debt ceiling are not resolved this week, experts say, one of the many difficult choices officials will have to make at a time when the government will essentially be running on fumes.
The government will begin Monday with about $30 billion cash in the bank and a little more room to borrow as a result of extraordinary measures launched in the wake of the debt-ceiling crisis. By Thursday, administration officials say they will exhaust all borrowing authority and have only that cash on hand.
Experts on federal finances say that money might be enough to make payments for a few days, but certainly not for more than two weeks. In any event, they say, President Obama will have to make untested decisions about who and what to pay because daily tax receipts will make up only about 70 cents of every dollar of necessary spending.
Economists roundly agree that no matter which course Obama chooses, a drop in federal spending that large would exert a huge drag on economic growth. And in contrast to what happens during a usual downturn — the safety net expands to help the vulnerable — assistance to seniors and low-income people could be delayed or reduced if Congress doesn’t raise the debt ceiling.
Officials may also have insufficient funds to operate major parts of the government that are open in a shutdown, such as the Federal Aviation Administration or the FBI.
On Sunday evening, senior Treasury Department officials convened to discuss the financial market reaction to the continuing fiscal stalemate. While the stock market jumped late last week amid optimism, bond markets remain deeply nervous about a potential breach of the debt-ceiling deadline on Thursday.
Market reactions could be the first direct way that Americans witness the impact of a breach, but the consequences are likely to be felt in numerous other ways.
According to the Bipartisan Policy Center, which has done the most detailed analysis of federal finances in a debt-ceiling breach, administration officials would have to consider delaying or suspending tens of billions of dollars in critical payments to low-income people and seniors.
Under the most alarming scenario, as soon as Friday, payments to Medicare and Medicaid providers, unemployment benefits, Social Security checks and tax refunds would be postponed for one to four days.
Food stamps due to be distributed Oct. 25 could be held until Oct. 30. The same would happen to payments to defense contractors.
With huge payments due in early November, the situation would become grimmer. Nearly $60 billion in Social Security checks, veterans benefits and pay for active-duty troops is due Nov. 1. Those could be delayed nearly two weeks, according to the Bipartisan Policy Center’s analysis.
Meanwhile they’re bitching about stupid memorials.
If House Republicans don’t agree to raise the nation’s debt ceiling and a default ensues, the economic effects would be “catastrophic,” in the words of Treasury Secretary Jack Lew. The nation’s borrowing costs would spike, as would interest rates for average Americans, and the stock market would plummet. But not everyone will lose if a default causes an economic catastrophe. Here’s who could profit from a financial calamity:
1. Short sellers: Most folks invest in stocks and bonds hoping the value of their investments will increase. But there’s also money to be made by short selling—betting that the value of a stock or bond will drop. Short selling is an investment strategy that’s typically employed by sophisticated investors and financial firms, but technically anyone can do it. Investors who bet that the value of US Treasury securities will dip would likely profit. Because a default could cause the US stock market to crash, shorting almost any US stock could make you money. In fact, you can even invest in specific mutual funds that specialize in short selling. “It’s a very powerful and disillusioning feeling to know that smart rich people can make money even when America goes over Niagara Falls in a barrel,” says Jeff Connaughton, a former investment banker and White House lawyer during the Clinton administration.
2. Investors in gold and silver: Gold and silver typically rise in value when when the stock market is volatile, because they hold their value better than paper money or other assets. The price of both metals rose this week as default fears heightened.
3. Bitcoin investors (maybe): The value of this untraceable virtual currency has tracked closely with gold over the past year, suggesting that it could serve as a more stable investment during a financial crisis.
4. Currency traders: Traders who bet that the US dollar will decrease in value relative to foreign currencies stand to profit off of a US government default.
5. Pawn shops: If the effects of a default are catastrophic, stocks will plummet, pension funds could dry up, credit card interest rates will rise, and jobs will be lost. Though credit markets may freeze up, as they did in the wake of the 2008 meltdown, pawn shops ought to do well, as they did following the last crisis.
Maybe it’s the altitude, but I just heard the most amazing thing on liberal MSNBC here on my flight to Atlanta. Andrea Mitchell was interviewing Rep. Jeb (Jeb) Hensarling of Texas, and she felt compelled to point out to Congressman Jeb that lifting the debt ceiling meant only that we would be paying bills for bills and programs that Congress already paid for. Congressman Jeb replied that “this House” didn’t vote for the stimulus, and that “this House’ didn’t vote for Obamacare. This is an interesting exercise in constitutional theory — that one Congress is not required to pay for bills and programs passed by a previous Congress. By this theory, Congressman Jeb and his fellow vandals could demand an elimination of Social Security as a pre-condition for “negotiations” since “this House” didn’t vote for the Social Security Act.
House Republicans, looking for a way out of a budget standoff they began, will offer to President Obama at a White House meeting Thursday a plan to increase the debt limit through Nov. 22, in exchange for a promise to negotiate a deal for long-term deficit reduction and a tax overhaul.
Speaker John A. Boehner, flanked by other Republican members of the House, discussed a short term debt-ceiling proposal on Thursday at the Capitol in Washington.
The debt ceiling increase could come to a vote as soon as Friday, but House Republicans did not intend to reopen the government, hoping that the shuttering of federal programs would keep the pressure on Democrats to compromise.
“What we want to do is offer the president today the ability to move,” Speaker John A. Boehner said. The offer, he said, would be “a temporary increase in the debt ceiling, an agreement to go to conference on the budget, for his willingness to sit down and talk with us a way forward to open the government.”
It’s same nonsense over and over. Short term stop gap bills that just kick the can down the road.
The GOP apparently STILL BELIEVE Obama will negotiate with them. It’s stupidity taken to the next level.
What would Obama gain by agreeing to this boneheaded proposal? Absolutely nothing because we’d be right back here on Nov. 23.
This is not a serious proposal. It’s a slap in the face and a sleazy way to try and score political points so they can pin this shutdown back on Obama (“We offered a way out and he didn’t take it!”).
This is beyond the novelty factor folks. The House GOP have dug their feet in and are seemingly very willing to send this country (and a good handful of others) off a financial cliff in less than two weeks.
This is absolute insanity. There’s no other way to describe it.