Said Obama: "I think that it's lowdown
To set up a Debt Ceiling showdown.
Though the House GOP
May well disagree,
It's a road I intend not to go down."
Battle lines have been drawn over the increase in the federal debt limit, which must happen by March to avoid a government shutdown and likely default. President Barack Obama gave a press conference yesterday in which he pledged not to negotiate with the House GOP over the debt ceiling increase, saying that such crisis-fueled, eleventh-hour bargaining is no way to run the government. The crux of the President's argument is that the Congress cannot refuse to incur the debts for the spending it has already approved; he likened it to beginning a diet by walking out on the rich meal you've just had, without paying the check.
For their part, Republicans clearly intend to use any available leverage to force a reduction in federal outlays, regardless of default risk: House Speaker John Boehner, while acknowledging the economic harm that would come from a default, said: "The American people do not support raising the debt ceiling without reducing
government spending at the same time."
However, the Washington Post's Greg Sargent thinks the Senate Democrats may hold the trump card: if the House passes a bill with both a debt ceiling increase along with big Medicare and Social Security cuts, the Senate could simply amend the bill by stripping out the cuts, and send it back. Sargent believes that the Senate GOP is more politically realistic, and would not filibuster the amendment.
Bottom line: at this point, it's too soon to say that America has passed the era of banana republic politics.
Said Obama: "In term number two,
For Treas'ry I want Mr. Lew.
I'll rely on his talents
To find fiscal balance,
And fight with Republicans, too."
It's reported that President Barack Obama will nominate Jacob ("Jack") Lew, his former budget director and current chief of staff, to succeed Timothy Geithner as Treasury Secretary. As the mainstreammedia will tell you, this signals a change in focus from the global financial crisis that dominated the President's first term, toward budget fights with Congress, and long-term fiscal sustainability. The Wall Street Journal characterizes Mr. Lew as "a veteran of numerous Washington budget battles, stretching back to his work as a senior congressional aide in the 1980s." Oddly, there is little initial signaling of congressional opposition to this proposed nomination, despite Mr. Lew's inflexible reputation and angry clashes with Republican aides during the 2011 debt ceiling fight. Former Senator Judd Gregg, a New Hampshire Republican, may have summed it up best: "He's a tough guy to negotiate with. He has his positions and he doesn't give much ground, though he's really a nice person."
With the Debt Ceiling coming up soon, it
Is time (although some may impugn it)
For coining a halt
To a US default
With a really big monet'ry unit.
A one-trillion coin, it is said,
Could be minted and shipped to the Fed,
In order to pay
What the US of A
Might be forced to renege on instead.
This sizeable denomination
Would be kept out of mass circulation,
The better to sidestep
That such an untried step
Precipitates hyperinflation.
When Republicans finally come round
From running bond issuance aground,
It's back to the Mint
For the Coin, where its stint
Will be wound up with melting it down.
So let's mint The Coin out of platinum!
Though objections there be, we may flatten 'em.
There are ways besides cash
'Round the Debt Ceiling clash,
But there's nothing as clever as that in 'em.
It's an idea so crazy, it just might work: the US Treasury could circumvent the looming debt ceiling showdown by minting a very large denomination platinum coin of, say, $1 trillion. The coin could be deposited in Treasury's account at the New York Fed, where the new funds could be used to pay any of the Federal government's many obligations. First proposed in a comment on an economic blog in 2010, the Coin is within the legal powers of Treasury, which "may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time." Never mind the fact that this law was intended to facilitate minting bullion coins for numismatists - it's on the books. Of course it's absurd to speak of minting a $1 trillion coin to keep the government out of default, but the debt ceiling itself is absurd, as is the threat to throw the nation into default for political purposes. So, it's a case of fighting crazy with crazier.
The "Mint The Coin" movement has been gaining steam thanks to the (only slightly tongue-in-cheek) advocacy of such leading economic writers as Bloomberg's Josh Barro and Business Insider's Joe Weisenthal. For those who fret that the issuance of a $1 trillion coin would ignite inflation of Zimbabwean proportions, a former head of the US Mint (who wrote the 1996 platinum coin law) has weighed in with a cogent explanation of why that would not happen. It all comes down to a choice: would we rather the US Treasury default, or do something absurd?
The super PACs failed in their mission
To win with financial munition.
Though pols who would carry
Find cash necessary,
It's not a sufficient condition.
* * *
The House GOP had consistently
Obstructed Obama insistently,
But now they're at pains,
Having garnered no gains,
To avoid going cliff-diving fiscally.
* * *
The nation would like to see whether
The parties can now work together
To right our finances,
Or what are the chances
That partisanship rules as ever?
The results of the 2012 US elections have provided rich fodder on which political junkies of all stripes may chew. The New York Times reported this morning that wealthy sponsors of conservative super PACs got no return on the investments that they made in such vehicles as "American Crossroads." Co-founded by Karl Rove, this super PAC, along with the affiliated "Restore our Future," collected about $300 million, seemingly for naught. Haley Barbour, the former Mississippi governor and Republican party chairman who helped raise money for the two groups, consoled himself that their spending helped keep the race as close as it was.
House Republicans seem to be chewing a little more thoughtfully these days, as evidenced by their newly cooperative rhetorical stance with regard to the "fiscal cliff." Speaker John Boehner struck the new tone in remarks at the Capitol: "Mr. President, this is your moment. We’re ready to be led — not as Democrats or Republicans, but as Americans. We want you to lead, not as a liberal or a conservative, but as president of the United States of America." Of course, many have already predicted such conciliatory talk, followed by a reversion to partisanship, so we must be cautious in our expectations.
A political party's convention
Brings money, acclaim and attention
To the local milieu,
Including a few
That the chamber of commerce won't mention.
The GOP's next convocation
In Tampa should bring stimulation
To the owners of clubs
Whose customers love
The artistry of denudation.
Though club owners rather not choose
Which party should win or should lose,
According to strippers
The more lib'ral tippers
Are those of conservative views.
In a revealing look at the economic impact of the upcoming Republican national convention, the New York Times lifts the veil on the notorious Tampa strip club industry. When the nation's GOP delegates descend on the city, club owners expect that their employees will be sitting in the lap of luxury, and with good reason: evidence from the 2008 convention cities suggests that, while the average Democrat spends $50 in a "gentleman's club," the average Republican drops $150 (much of it in singles). On a serious note, dancers assert the need for additional stimulus as, in this economy, it's not easy to grind out a living.
"There's belief among Washington's polity
That Wall Street's Republican - solidly,
As we bankers assent
To the GOP bent
To fight against income equality."
"But on social concerns, it appears,
We set such belief on its ears,
In our scorn for the fringe
That would tend to impinge
On the rights of our gay Muppeteers."
According to Bloomberg.com, Goldman Sachs CEO Lloyd Blankfein's gay-rights stance "shows Wall Street's dilemma": whereas the financial titans might like Republicans to regulate banking and labor unions, they'd prefer the Democrats on contraception and marital unions. Mr. Blankfein took part in the "Out on the Street" LGBT Leadership Conference on Tuesday at Bank of America's New York office. As he noted in his earlier, robust endorsement of marriage equality in New York (see the video below), Mr. Blankfein believes that such policies are "just good business," facilitating the recruitment and retention of talent around the world. On the other side, the North Carolina legislature is considering a constitutional ban on same-sex marriage, which Bank of America expects will make it yet harder to attract employees to its Charlotte headquarters.
Said a Patriot, flanked by his lady:
"Though my Giant opponent is shady,
And I may lack for planning
Or adequate Manning,
I've a trophy wife, just like Tom Brady."
Days before the kickoff of Super Bowl XLVI, US Presidential contender Newt Gingrich tried to rally his supporters for the next 46 primaries in the race for the Republican nomination. Though out-organized and outspent by the frontrunner Mitt Romney, Mr. Gingrich hopes that his persuasive powers will win the day. On the evidence of another commanding Romney win in this weekend's Nevada primary, however, money and organization appear likely to carry the election in the next XLV contests.
As for today's Super Bowl XLVI: Go Giants!
Said Gingrich: "It's not contradictory,
In defeat, to forego valedictory;
One may not give up now,
Having taken a vow
To have and to hold out for victory."
Mitt Romney won commandingly in the Florida Presidential primary Tuesday night, capturing 46% of the vote and all of the state's 50 delegates. However, you wouldn't know it from second-place finisher Newt Gingrich, who, with 32% of the votes and no delegates, gave what sounded a lot like a strident victory speech. In the glow of his primary night defeat, Gingrich pledged to supporters that, upon his inauguration, he would repeal health care reform, Dodd-Frank financial reform and the Sarbanes-Oxley corporate governance reform, as well as sign a host of executive orders including a pledge to end "antireligious bias." Thankfully, he saved lunar colonization for another day.
"When desp'rate for polling improvement,
Out the window the positive groove went,
And Republican hacks
Were armed with the facts
From attacks by the Occupy Movement."
Observers from across the US political spectrum have marveled at the rhetorical turn taken in the Republican Presidential primaries. Opponents of front-runner Mitt Romney, notably former Speaker of the House Newt Gingrich and Texas Governor Rick Perry, are decrying Mr. Romney's erstwhile management of the private equity firm Bain Capital as "more ruthless than Wall Street" (in Mr. Gingrich's words) and "vulture capitalism" (in Mr. Perry's). Prominent Republicans, even those not affiliated with Mr. Romney's campaign, have voiced alarm at the seeming attack on free-market capitalism coming from within the GOP. The conservative Club for Growth think tank took Mr. Gingrich to task for his "downright Obamaesque... economically ignorant class warfare rhetoric."
President Obama's campaign of course enjoyed having its arguments advanced by the opposition before the general campaign even begins. "I guess the only downside is that Mitt Romney might not be the nominee," said Obama strategist David Axelrod. For its part, the PE industry's "Private Equity Growth Capital Council" is set to push back with a big PR and lobbying campaign. Finally, the Occupy Movement is left to ask: does this Republican "99%" rhetoric reflect the strength of our ideas, or only the political weakness of certain desperate Presidential candidates?
Said an analyst, voicing complaint:
"Though this Iowa caucus is quaint,
The candidate crowned
May be treated as bound
For the White House, but probably ain't."
Going into the first round of the 2012 Republican presidential nomination season, speculation swirled feverishly over which of Ron Paul or Rick Santorum would "surge" past the well-funded but unloved Mitt Romney to win the Iowa caucus. More than one political analyst, however, has cautioned against ascribing much meaning to this contest. The New York Times "Five Thirty Eight" blog, while valuing the caucus for early evidence of how "flesh and blood voters behave after exposure to the campaigns," allows that "it is true that no delegates will be chosen on Tuesday night, and it is true that the Iowa caucuses have far from a perfect predictive track record, especially on the Republican side."
Said Cain: "With this tax plan of mine, Your taxation is fair, flat and fine!" (But it opens the door For a VAT on the poor); Said the Right and the Left: "Nein, nein, nein!"
With Herman Cain's rise in polls of Republican Presidential primary voters, his "9-9-9" tax plan is getting a closer look. The early findings have both progressive and conservative analysts sounding like hordes of angry Germans. Anti-tax groups such as Freedom Works point out that Cain's 9% national sales tax (and elements of his 9% corporate tax) could act as a Trojan Horse for a larger and much less transparent value-added tax. Meanwhile, the Think Progress blog concludes that Cain's 9% flat income tax, combined with the sales tax and the elimination of taxes on capital gains and inheritances, would dramatically shift the tax burden downward to the poor and the middle class.
Said Bernanke, recounting the facts, While deflecting some Red-State attacks: "The Fed did our part; It's on Congress to start To simplify filing one's tax." Fed Chairman Ben Bernanke addressed the Congressional Joint Economic Committee on Tuesday, and told them that they and their colleagues must work together with the White House to renew the "close to faltering" American economy. His suggested Congressional to-do list includes finding a permanent solution for Fannie Mae and Freddie Mac; easing mortgage refinancing while enabling banks to rent out foreclosed properties; and simplifying the US tax code. At the same time, he dismissed the ever-more-frequently heard Republican criticism that, by keeping interest rates low, the Fed is enabling federal budget deficits. "I don't think that's a valid point," retorted the Chairman.
That the GOP's debt ceiling polity
Viewed a US default with frivolity
So provoked S&P
That investors may flee
To Treasury bonds for the quality. In a move that surprised no-one, the Standard & Poor's credit rating agency downgraded the debt of the US government to AA+ Friday evening, citing primarily the "weakened...effectiveness, stability and predictability of American policymaking and political institutions at a time of fiscal and economic challenges." Since, as many market analysts pointed out, the move was long overdue, no material market reaction was expected. Indeed, the expectation is that Treasurys will remain the safe haven whenever investors panic, so, to the extent that the downgrade has lowered the general risk tolerance, it may even cause net inflows to Treasury bonds. Let the Asian trading day commence!
A fellow who loved a good thrill
Made a bet on the debt ceiling bill,
Going 7 to 3
On a "yes" from the G.-
O.P. Caucus on Capitol Hill.
As the debt ceiling crisis heads toward the Default Date of August 2 with no resolution in sight, many are aware that this impasse has been manufactured by the Republican House majority to force spending cuts on the President and Congressional Democrats. However, some extreme GOP representatives appear to want to force concessions on their Speaker as well. The Wall Street Journal reports that Senators Rand Paul (R-KY) and Jim DeMint (R-SC) wrote to House colleagues that Speaker John Boehner's plan to cut $1.2 trillion in expenses doesn't go far enough. The GOP may yet vote "yea" on a budget compromise, but don't bet your life on it.
Dr. Goose earned a PhD in economics from the Universities of Western Ontario and North Carolina (he migrated every spring and fall). Known for bringing the Dismal Science a little more down, Dr. Goose first made his mark with a research paper entitled "Migrant Labor: Fair or Fowl?" With interests that range from Washington to Wall Street and beyond, Dr. Goose has made it his mission to promote economic awareness through limericks.
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