Things I STILL Do Not Understand: The Debt Ceiling 'Deal' (Part II)

"Let me be clear, there are things in life which I simply do not understand. Perhaps I do not understand certain concepts because they defy logic, or perhaps, more likely, other people who understand them less than I do - keep trying to explain them to me 'incorrectly'..."  

-- Mike Kane 08/03/2011

I've been listening to the TV and radio for the past week trying to get a handle on the whole 'Debt Ceiling Deal' thing. After five days of almost constant-exposure to the 'Smartest People' in the room pontificating about the deal, I have still MORE questions than I did yesterday. Some go back to BEFORE the deal, some DURING the deal, and a few AFTER the deal.

Not wanting to over-burden my already-pounding head, let me ask my questions in no particular order - if you have answers to any of the following, please chime in, if these you leave you scratching your head too, well, I'm sorry...

Question 1:  Treasury Secretary Timothy Geithner told us that August 2nd was the 'Absolute Drop-Dead-Default-Date' to getting a deal together to avoid a technical DEFAULT of the Federal Government.  The original first-ever 'Absolute-Drop-Dead-Default-Date' was May 16th, as outlined in my original post:  Raising the Roof, Or 'Lowering the Floor'?  

Luckily for us, the Obama Administration (working diligently with the Treasury, SEIU, and Martha Stewart's Tax Advisor), FOUND '$136 BILLION' between the White House couch cushions resulting in the date being pushed back to early August.   

So I guess what I'm really wondering is this:  Was August 2nd a REAL date, or merely a Marketing Ploy to scare the Bejesus out of old people, the sick, the handicapped, and the un-informed?  I'm thinking that it was a scam, but hey, what do I know?  If YOU know for sure please get back to me so I can let the President know the next time I'm at the White House helping him look for change in the couch.   


Question 2: Moody's and the folks at the S&P told us that the US Government would need to SLASH spending by about $4 TRILLION to keep its AAA Rating. I wasn't GREAT at Math, but isn't 2.4 LESS THAN 4.00 TRILLION? 

UPDATE:  Friday evening Standard & Poor's lowered the Nation's credit rating to AA+  

Ah, nuts, I guess somebody over at the S&P was even better at Math than I was.  They KNEW that the 'promise' of a $2.4 TRILLION reduction in debt over 10 years is LESS than an ACTUAL $4 TRILLION immediate reduction in Government Spending...

And, per the article 'linked' from the 'Update' line above: 
"S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years.

It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.

S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country's debt." 

You can read the entire article: HERE 

Question 3:  The President, Harry Reid, Timothy Geithner, John Boehner, Mitch McConnell, Nancy Pelosi, Jerry Lewis,  and "Babbu-The-Lizard-Boy" each told us that if we did not resolve the Debt Crisis Dilemma by August 2nd that there would be a profoundly negative impact on US and World Financial Markets. 

Let me be the first to say the following: 

"THANK GOD-IN-HEAVEN THEY ACTED
WHEN THEY DID!" 

If they didn't come up with this last-minute-bipartisan-bit-of-horse-pucky, can you IMAGINE what would have happened to US and World markets?

Can you imagine how WORSE IT WOULD HAVE BEEN!?!?!?!?!?!? 

In case you've spend the last several days sleeping under a bridge abutment, let's recap the excellent financial results following the landmark legislation that 'we-just-had-to-have':

The Dow Jones Industrial Average finished up 60.93 points, or 0.54%, to 11444.61. For the week, the blue-chip index finished down 698.63 points, or 5.75%, its biggest weekly point drop since October 2008. It has dropped 9.75% over the last two weeks and is down 1.15% for the year. -- Wall Street Journal Online, August 5, 2011  
  
So, I'm wondering, if Congress didn't have an arbitrary timeline, the President didn't freak out old people, the sick, the dependent, and squishy-minded Americans who believe that ALL GOOD comes from Government, given the legislation more time AND honest negotiation, would Congress have been able to exorcise the 'really bad aspects' of the recently-passed Debt Limit Increase?  Or, would US and World markets have been impacted LESS negatively as they were FOLLOWING passage of the 'Deal'?

Remember, this 'deal' was supposed to SAVE us from 'Gloomy Financial Uncertainty' - right?

But wait - there's MORE!!! 

The Standard & Poor's 500-stock index edged 0.69 point, or 0.06%, lower to 1199.38. For the week, it finished down 7.2%, its biggest percentage drop since November 2008. The index is down 10.83% throughout the last two weeks.


The Nasdaq Composite Index tumbled 23.98 points, or 0.94%, to 2532.41. The technology-oriented index slumped 8.13% this week and is down 11.42% over the last two weeks.   Source:  Wall Street Journal Online


Question 4:  IF, big 'if', (but better than a big 'butt'!) you are the President of the United States and you KNOW that hard financial times are coming, do you:

a.)  Form a bipartisan committee to recommend how to best weather the impending financial storm?,

b.)  Form a bipartisan committee to recommend how to best weather the impending financial storm and play 70+ rounds of golf in your first two & a half years in office?,

c.)  Form a bipartisan committee to recommend how to best weather the impending financial storm, play 70+ rounds of golf in your first two & a half years in office and THEN disregard the recommendations of the bipartisan "National Commission on Fiscal Responsibility and Reform" LEADING into the financial mess we find ourselves in today?

or, do you

d.)  Do an exclusive interview with 'Tiger Beat' magazine?

The answer, of course, is...  [DRUMROLL]

is...

No, just kidding. 

But you almost bought it for a moment, didn't you?  I mean, it COULD have happened, right?  Unfortunately, it's not real - it's a gag. 

More unfortunately for the country, the actual answer, of course, is 'C' - which can best be summarized as follows:

a.)  Form a committee to reduce government waste
b.)  Golf 'a lot'
c.)  Ignore the committee's recommendations
d.)  Blame it all on Bush, Japanese Tsunami, Arab Spring, and oil prices


Question 5:  Republicans, in their 'Pledge to America', promised to provide 3 days of review for any Bill in the House prior to its being brought up for a vote.  In violating their own stated promise to the American People, they have shown a lack of commitment to their not just Republicans, but all Americans. 

Let me ask you this, who's more at fault for this - President Obama, Congress, or the Treasury for creating the 'crisis' to begin with, or Speaker of the House Boehner for not sticking to his campaign-based principles? 

My opinion?  Boehner 'screwed the pooch'.  When you negotiate from a position of weakness, you take shortcuts, you make 'easier' decisions.  You get what you deserve. 

We, the People, deserve better.

If you have any answers to the above inquiries, toss them in the Comment section below - I'd like to know what you think..

I fear that many in our Nation have more questions than they have answers.  This holds especially true for the man currently sitting in the White House.  Maybe the President can start asking US what we do when our household is spending more than it takes in?

For this, yes, I believe we have many 'answers' for him.  

If only the man would ask someone other than a Nobel-Prize-Winner for an answer from time to time? 

Actual 'Made-Up-Seconds-Ago' Example:  When President Obama needs to know what time it is -- he asks one of his 'Nobel-Prize-Winners' how to deconstruct and then reconstruct a watch using only 'Green Technology' and the power of his 'Awesomeness'.

For the love of God!  Someone, please, from now on when he asks what time it is, tell him the following:

"It's just after midnight, Mr. President.  Get some sleep now...  You've got 18-holes in the morning."

Speaking of time, it's time for me to chase dreams into the night...

I do well with dreams.  Sometimes the waking is the nightmare.

Raising the Roof, Or 'Lowering the Floor'?

I guess it's a matter of perspective...

Look up, look down, look out...

Hey everyone, did you hear about any of the following yesterday:

•THE wedding of the Royals?
•THE birth certificate?
•THE ‘came-this-close- but-not-close-enough’ shuttle launch?
•THE aftermath of the storms which decimated towns and killed hundreds of our neighbors?
•THE ‘Donald’?

If so, you’re like most Americans.
Unfortunately, if you’re like ‘most Americans’ you weren’t looking at, or hearing anything that matters to you, or your family – personally. If you wanted to find any real news, you had to look for it.

The “800 Pound Gorilla in the Room” News Item no one is talking about (again)?

The Debt Ceiling

I pulled out my trusty Gateway laptop and decided to look for the news which isn’t very popular today. But last week, last week, it was VERY popular. I even grabbed an image of last Saturday’s ‘Huffington Post’ Home Page LAST Saturday Morning for a post I never wrote.

This is that image from 7:15am, Saturday, April 23rd:

Articles pulled from the above screen shot of April 23, 2011:

Republicans Downplay Urgency of Raising Debt Ceiling,
Conservative Strategists Warn GOP Against Pushing Debt Debate Too Far…
Default Could Be Doomsday Scenario for Economy
(This last headline is my favorite as it contains all the best “Shock and Awe” scenarios of what would / could / should happen, if Evil Republicans don’t raise the debt ceiling)

According to the article referenced directly above, here are just a FEW of the things which will happen if we don’t ‘Raise the Roof’ on our Debt (luckily they didn’t mention the”Dogs and Cats living together” scenario as referenced in the film, “Ghostbusters”. This is about the only end of the world prediction they left out in the article…):

“Among the first directly affected would likely be money-market funds holding government securities, banks that buy bonds directly from the Federal Reserve and resell them to consumers, including pension and mutual funds; and the foreign investor community, which holds nearly half of all Treasury securities.

If the U.S. starts missing interest or principal payments, borrowers would demand higher and higher rates on new bonds, as they did with Greece, Portugal and other heavily indebted nations. Who wants to keep loaning money to a deadbeat nation that can’t pay its bills? [Moos Note: This actually IS a good question. I wonder why no one in DC is discussing the fact that under this Administration we ARE a deadbeat nation?]

At some point, the government would have to slash spending in other areas to make room for any further sales of Treasury bills and bonds. That could squeeze payments to federal contractors, and eventually even affect Social Security and other government benefit payments, as well as federal workers’ paychecks. [Moos Note: Ah, I knew we'd get to the part about making old people eat dog food sooner or later. We 'crazy free-market' folks can get incensed as well that private businesses working on contracts for the Feds will ALSO get stiffed. Nice touch, article-writer guy...]

…

The debt ceiling will be hit on or around May 16[Moos Note: This has since been pushed back to "Early July 2011" according to Ben Bernanke - what a difference a week makes in DC...], the Treasury Department says. Unlike the threatened government shutdown, the impact would start slowly, but then build mightily until the damage would be so dire that few political leaders or economists even want to contemplate it. The day of reckoning could likely be delayed at least until early July with creative bookkeeping. [Moos Note: Oh, I see that we HAVE gotten creative with the bookkeeping - good for US! We won't have to worry about the end of the world until "Bones" and "House" are both in re-runs over the summer months. I'll pay attention then, when it, apparently, will matter again...]

When the House first rejected the Bush administration’s $600-billion bank bailout in September 2008, the Dow Jones industrials went into a dizzying 778-point tailspin.A whiff of a possible similar stock market collapse came on Monday with a sharp selloff on Wall Street when the Standard & Poors lowered its outlook on U.S. debt to “negative” from “stable,” possibly a first step toward a possible downgrade of America’s coveted AAA credit rating. [Moos Note: Aaaaaaaaaaaaaaaaaaaahhhhhhhhhhhhhhhh!]

“We haven’t downgraded it. We just said, if nothing happens, we may have to,” said S&P chief economist David Wyss. He said a government default remains uncharted territory, “which is one reason why it’s not a good idea to hit the debt ceiling.” [Moos Note: Yes, it's always better to spend MORE in DC - it's the 'responsible' thing to do...]

“There’s reason to worry,” said Wyss. “But my best guess is that we sort of muddle through this. Cuts will be made, they’ll be too little too late, but at least they will be enough to maintain a triple-A rating.” [Moos Note: So, S&P chief economist, David Wyss, you're saying NOT to worry about it after all? But what about the whole "IT'S THE END OF THE WORLD THEME" as posted on the Huffington Post last week? What about that?]

To answer my own question I went to the 7:00am, April 30, 2011 home page of the Huffington Post.  Apparently EVERY Day is about the 'End of the World'...

This is what I found:

I guess the good news is that we’ve moved the needle from ‘Armageddon’ to ‘Catastrophe’.

Progess!

The real catastrophe for me, you, and all of us is if the Republicans, under the shaking, wavering hand of John Boehner, do NOT tie spending cut provisions to the issue of raising the nation’s debt ceiling. The Federal Government must have its financial ‘tubes tied’ so that it does not continue to spawn a dependency class in our nation.

I got into a debate with a friend who had put up a comment and article link about 'Evil Republicans' (you know the drill) I wrote back that I didn’t feel that it was the job of the Federal Government to trap Americans into a cycle of ‘subsistance’ living. One of his college friends shot back a note to me saying, “I vote, and I think everyone should be entitled to a subsistence living!”

 
Okay, let’s go to the Free Online Dictionary for a moment:

sub·sis·tence  
n. 1. The act or state of subsisting.
2. A means of subsisting, especially means barely sufficient to maintain life

This is NOT my vision of, or for, America. But perhaps I am not ‘educated’ enough to know.

What I do know is that I am leaving a country less able to provide for itself to my children than the one my parents left me. For this, I am ashamed, embarrassed, and emboldened enough to speak out.

Our nation will endure. But let me ask this - how much longer will we endure the petty politics, pointless rhetoric, and a profound lack of economically-sound leadership currently found in Washington, DC?

We ARE a nation divided. Roughly one half of America pays to carry the country for the other half’s freight. It’s time ALL of us to begin pulling together. We don’t need to raise the debt ceiling. We need to lower our expenses, pay our bills, and create jobs for those who are ready and able to work. More jobs, more tax collections, fewer ’Subsistence’ payouts as they relate to Unemployment Insurance, Welfare, WIC, you get it, right?

Where is the next great American leader? Come on, give…

The current guy with the Teleprompter?

No, not even close…

My prayers go out to those Americans who have lost so much this prior week. I pray for all Americans. We’ve each lost ‘much’ since we began to ‘Fundamentally Transform of America’. Contrary to popular belife, the transformation began PRIOR to President Obama’s election. It began when Harry met Nancy and the Democratic Party controlled Congress for the first time in decades.

It began when Republicans began acting like the “Other Guys” across the aisle. We now know why it took decades for the Democrats to get back into power. We forget the lessons we learned the last time the Progressive folks had the keys to our government.

Perhaps we’ll remember THIS time?

Note to self: Need to add this to my prayer list this evening…

Have a good weekend folks,

This is what Progressives think of Boehner?  Now that's funny...
Not based any way in fact, but funny, nonetheless

Moo