Voices Faulting G.O.P. Economic Policies Growing Louder - NYTimes.com

 “We were not elected to raise taxes or take more money out of the pockets of hardworking families and business people.” - Eric Cantor, Republican Majority Leader, August 2011

“I think the U.S. has every chance of having a good year next year, but the politicians are doing their damnedest to prevent it from happening — the Republicans are — and the Democrats to my eternal bafflement have not stood their ground,” Ian C. Shepherdson, chief United States economist for High Frequency Economics, a research firm, said in an interview.

You have to hope voices like Shepherdson's will grow louder - and embolden the President who is now "fighting the wimp factor" as Newsweek once said of the decidedly un-wimpy George H.W. Bush.  But Obama is in a deeper hole than Bush the elder was when he lost to "it's the economy, stupid" Bill Clinton.  It may already be too late but Obama needs to find a vision to fight for and that American believe he will go to the mat for.  And time is running short. - GWC
Voices Faulting G.O.P. Economic Policies Growing Louder - NYTimes.com

Enough, already - U.S. debt is the most secure investment

The Times reports

Wall Street stocks plummeted on Monday as skittish investors, already concerned about the economy, struggled to work out the implications of an unprecedented downgrade of the United States government’s credit rating, and sought safer places to put their money.

The "safer place" was... U.S. Treasury 10 year bonds!

So why did the interest rate paid by the downgraded U.S. to lenders  go DOWN not UP?  The stock market fell again today, by 6% pushing it into negative territory for the year.  Why didn't the Republican debt triumph restore confidence in the stock market?

Did the S&P downgrade lead investors to conclude that  U.S. debt is unreliable?  And therefore demand the feds pay higher interest to reflect the increased risk?   NO, because Treasury bonds are actually AAAA! as Obama said.  The U.S. paid less to borrow money today than it did before the debt deal.  And investors bought lots of it.  But you would never know that by following any of the headline news services.

interest rates on 10 year Treasury bonds

What actual investors fear is that the people are going broke - thanks to the government austerity policies that the elite and the deluded applaud as they vote Republican, Tory, Christian Democrat, Berlusconi, etc.
So what actually happened today is the stock market went down, so people bought secure debt: 10 year U.S. treasury notes at 2.4%.  Another group of ignorami (retirement advisers) used to tell us that we could expect an 8% return on our retirement savings.  Really?  10 year treasuries are a good deal - compared with giving Citibank $1 million.  Citi is paying .50%  That is one-half of one percent.

The debt ceiling deal: What should we have expected? — The Monkey Cage

My sentiments, exactly. - GWC

The debt ceiling deal: What should we have expected? — The Monkey Cage:
by James Fearon (Stanford)
"So I don’t know, maybe Obama is bad at legislative poker, but I’d like to know more about how the argument works. Seems to me that he has very little bargaining power to begin with in a legislative situation like this one. And this is not so much because the economy is terrible and his favorability ratings are low, but because the U.S. Constitution has it that Congress organizes its own procedures and makes the laws, basically."

The Nauseating Debt-Ceiling 'Solution' - James Fallows - Politics - The Atlantic

Update: Fallows pessimism draws criticism from readers HERE
The Nauseating Debt-Ceiling 'Solution' - James Fallows - Politics - The Atlantic: "the major steering decisions in national policy make a difference in the long term. It made a difference, for the good, that the United States adopted the GI Bill, and set up the Land-Grant Universities. It made a difference, for the bad, that California passed Proposition 13.

In the short run, the 'bargain' just agreed to offers worse than no hope for addressing the really urgent problem of the moment, harmfully high unemployment. And in the long run, this has been as sobering a case study of a great nation misusing its resources, distracting itself from real problems, and discrediting its political system in the world's eyes as... as I can remember. No 'foreign threat' has been involved here. Not a 'rising power,' like China. Not a 'non-state menace,' like some terrorist. We did this all ourselves."

James Fallows - It's true - the Republican Party is mainly to blame

James Fallows - Authors - The Atlantic:

"Still, anyone who thinks I am mainly blaming the Republicans for the needless debt-ceiling fracas, especially the Tea Party-era House Republicans arrayed behind Rep. Eric Cantor (and Rep. Jim Jordan), is correct. To put the reasons in one place, as things go down to the wire, here they are:

1) The debt-ceiling showdown represents hostage-taking, plain and simple. This is a 'crisis' that need never have happened, regardless of which party controlled the White House."

Obama Should Raise the Debt Ceiling on His Own - NYTimes.com

This could be - and should be now that John Boehner has broken off talks with a week to go - Obama's Truman moment. It is time to seize the steel mills like Harry did in 1949. It's a simple case: the United States meets its obligations as they come due. The President has the inherent power to do what is necessary to carry out the laws. That includes raising the money needed to meet the obligations the nation has lawfully assumed.

Eric Posner and Adrian Vermeule explain how. - GWC

Obama Should Raise the Debt Ceiling on His Own - NYTimes.com: "Where would Mr. Obama get his constitutional authority to raise the debt ceiling?

Our argument is not based on some obscure provision of the 14th amendment, but on the necessities of state, and on the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed."

Plain debt talk from Obama - how we got here

PRESIDENT BARACK OBAMA: 
 It turns out we don’t have to do anything radical to solve this problem. Contrary to what some folks say, we’re not Greece, we’re not Portugal. It turns out that our problem is we cut taxes without paying for them over the last decade. We ended up instituting new programs, like a prescription drug program for seniors that was not paid for. We fought two wars, we didn’t pay for them. We had a bad recession that required a Recovery Act and stimulus spending and helping states, accumulated, and there’s interest on top of that. 


And to unwind that, what’s required is that we roll back those tax cuts on the wealthiest individuals. That we clean up our tax codes so we’re not giving out a bunch of tax breaks to companies that don’t need them and are not creating jobs. We cut programs that we don’t need and we invest in those things that are gonna help us grow. And every commission that’s been out there has said the same thing and basically taken then same approach within the margin of error. 


So my general view is that if the American people looked at this they’d say, “Boy, some of the decisions are tough, but they don’t require us to gut Medicare or Social Security. They don’t require us to stop helping young people to go to college. They don’t require us to stop helping families who have a disabled child. They don’t require us to violate our obligation to our veterans. And they don’t require us to stop, quote/unquote, 'job-killing' tax cuts. They require us to make some modest adjustments to get out house in order. And we should do it now.”  


With respect to Senator McConnell’s plan, like I said, I think it is a ... it is constructed to say that if Washington operates as usual and can’t get anything done, let’s avert Armageddon.

Calculated Risk: Debt Ceiling Charade Update

Calculated Risk: Debt Ceiling Charade Update:
by Bill McBride

"I'm frequently asked why I'm not worried about the debt ceiling, and why the bond market doesn't seem to care.
The answer is the debt ceiling is a joke. It serves no purpose except political posturing.
The budget is about the deficit; the debt ceiling is about paying the bills - and the U.S. will pay its bills".

Debt Ceiling - the Executive Power - the 14th Amendment

“They took the vacation, they bought the car and now they’re saying we’re not going to pay for it” - Barack Obama, referring to Congress, June 29, 2011

Amendment XIV, Constitution of the United States of America

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.

It seems to me dubious that the debt limit is legal.  If the Congress has passed a law and authorized an expense and revenue is in shortfall, doesn't the Executive have the power to borrow the money necessary to pay the bills and execute the laws?