Hoyer Press Staff Blog

Blog posts from the press staff of Democratic Whip Steny Hoyer

July 28, 2011

Today’s NY Times editorial highlights how Republicans are putting our economic security at risk by refusing to compromise on a debt limit proposal. With the Dow dropping over 400 points in four days and our credit rating at risk of downgrade, we’re running out of time to ensure we pay America’s bills. Democrats continue to urge Republicans to work with us on a long-term, balanced agreement to pay America’s bills, reduce the deficit and bring certainty to our economy.

NY Times Editorial

July 27, 2011

America’s Credibility Is at Risk

Until this week, Wall Street has shrugged off each new low in the debt-limit debate, confident — in a whistling-past-the-graveyard kind of way — that Washington would raise the debt limit on time.

Many Republican politicians have insisted that the economy and the country could shrug off a default. Up to Wednesday, the most conservative members of the House seemed to be welcoming a default. They refused to support a plan to raise the limit — and impose overly harsh spending cuts — put forward by Speaker John Boehner.

The cost of this fecklessness should now be clear to everyone. The Dow Jones industrial average dropped nearly 200 points on Wednesday and is down 421 points since Friday when Mr. Boehner left President Obama waiting for a phone call that never came about a deal that never closed...

July 27, 2011

Wanted to be sure you saw this WSJ article about the uncertainty American businesses are feeling as Republicans continue to hold our economy hostage to Speaker Boehner’s short-term debt limit proposal that is dead on arrival in the Senate.

Key Point: “All the uncertainty comes just as businesses were starting to spend some of their record piles of cash. The confusion is also giving them another reason to delay hiring and investment.”

Will Republicans continue to step on the hose just as capital starts to flow back into the economy? Or work with Democrats so that we can take action quickly on a long-term, balanced solution that will reduce the deficit, avoid the catastrophic consequences of default and create certainty so businesses can invest and hire?

July 27, 2011

There are three reasons Democrats want to pass a long-term deal to get a handle on our deficit problem, avoid default and give businesses certainty:

1.) Jobs
2.) Jobs
3.) Jobs

There are three reasons Republicans are insisting on an irresponsible short-term deal that has no hope of passing the Senate. As John Boehner told a radio host today, according the New York Times:

1.) “Barack Obama hates it”
2.) “Harry Reid hates it”
3.) “Nancy Pelosi hates it”

July 27, 2011

According to this Weekly Standard column by Bill Kristol, conservatives should side with Speaker Boehner. Not because it will avoid economic catastrophe or stave off our country’s first default in its history, but because it will be a “victory over Obama.”

Key excerpts:

“To govern is to choose. To vote is to choose. To vote against John Boehner on the House floor this week in the biggest showdown of the current Congress is to choose to vote with Nancy Pelosi. To vote against Boehner is to choose to support Barack Obama. It is to choose to increase the chances that worse legislation than Boehner’s passes. And it is to choose to increase the chances that Obama emerges from this showdown politically stronger.”

“When wavering House Republicans think the current situation through, they won’t choose to join the pro-Obama right. They’ll choose to stand with John Boehner against Barack Obama. Because victory over Obama is no vice. And losing to Obama is no virtue.”

Words not appearing in this column:

Economy
Jobs
Debt
Deficit
Compromise
Default

Word appearing 8 times:

Defeat

Word appearing 13 times:

Obama

July 27, 2011

For those who’ve thought that House Republicans’ actions these past several weeks bear a close resemblance to a two year-old’s tantrum, you should check out this Business Insider piece. It should serve as a reminder to Republicans that they can’t just throw a hissy fit when they don’t get absolutely everything their way. Instead of “storm[ing] off” and “forcing the US into default,” it’s time for Republicans to work with Democrats to pass a long-term, balanced solution to reduce our deficit, pay our bills and give our economy the certainty it needs.

America cannot afford a GOP temper tantrum. The costs of default are too great.

Excerpts:

“But for some of the children in Congress, those gains aren't enough. They want... what they want.”

“And if they don't get it?”

“Well, then, they'll just throw a hissy fit and storm off, forcing the US into default.”

“Needless to say, this isn't admirable behavior. It's not leadership. It's not what the country needs as it struggles to find a way out of this mess. And it's certainly not something these Congress-folk should be commended for.”

“But the answer to our long term financial problems isn't to elect children. It's to elect adults, who can lead us out without clobbering the economy in the process.”

“Yes, the United States needs to focus on its long-term budget problem. Yes, it needs to cut spending. And, yes, the latest plans put forth by both parties probably don't cut spending enough.”

“But the United States also needs to be very careful about how and when it cuts this spending. It needs to cut spending in areas that many of the children blocking a debt deal consider sacrosanct (military, for example). And it also, almost certainly, needs to raise taxes--the mere mention of which makes the children start screaming and stomping their feet again.”

Being an adult means compromising as you strive to get what you want. It means working your way out of problems, not howling that everything must be the way you want it right now. In the case of the government leaders, it means doing the right thing, even if the right thing isn't exactly what your constituents want.”

“It's time for the children in Washington to grow up.”

July 27, 2011

Wanted to pass along this NY Timesarticle highlighting how a credit rating downgrade would be felt across the nation—slowing economic growth “for years to come,” hurting job creation and increasing the deficit.

Key excerpts:

“Some economists say the effects of lowering the federal government’s credit rating to AA from AAA can be measured in the billions of dollars in increased borrowing costs for the government, and in the billions more that consumers, corporations, states and municipalities will have to pay for their credit. It could also erode consumer and business confidence, slowing even further the economy and job creation.”

“The view among many on Wall Street on Tuesday was that long-term Treasury yields could edge up by 0.10 percentage points, to 0.70 percentage points. That would eventually increase the amount of interest the United States pays on its debt by as much as tens of billions of dollars each year. The government now pays $250 billion a year on interest costs to service its debt.”

“The size of the increase depends on how long the stalemate in Washington continues, Terry Belton, the global head of fixed-income strategy at JPMorgan Chase, said in a conference call with reporters on Tuesday.”

“On the high end, the government’s interest payments could climb an additional $100 billion a year, Mr. Belton said. ‘That is a huge number, representing a long-term permanent increase in U.S. borrowing costs.’”

“Rates would also increase on some markets priced off Treasuries, including mortgages, credit cards and student and auto loans, analysts warned.”

“For a typical consumer with a $200,000 mortgage, the increase in yields could translate into an increase of $200 to $400 a year in their loan payments, according to Citigroup analysts.”

July 27, 2011

A look at the morning headlines shows Speaker Boehner is facing opposition from a significant number of conservative Republicans, who won’t vote for his short-term proposal to pay America’s bills. With less than a week until possible default, we don’t have time for the Speaker to rewrite his bill, which is destined to fail in the Senate. Instead, it’s time for Speaker Boehner and House Republicans to work with Democrats on a long-term, balanced approach to ensure we pay our nation’s bills, reduce the deficit and give certainty to the markets.

WSJ: Boehner Plan Faces Rebellion

NY Times: Vote on Boehner Plan Delayed Amid Opposition 

Politico: Markets slip after Boehner delay

CNN: House delays vote on Boehner plan

Fox News: Boehner Rewriting Debt Plan, Vote Delayed Until Thursday

July 27, 2011

Not only does Senator Reid’s long-term, balanced debt limit proposal give our economy more certainty than Speaker Boehner’s short-term bill, but it also reduces the deficit more than the GOP plan. So, our question of the day is this: which proposal should the House consider?

Senator Reid’s Proposal: “CBO estimates that this legislation would reduce budget deficits by about $2.2 trillion between 2012 and 2021 relative to CBO’s March 2011 baseline adjusted for subsequent appropriation action.”

Or

Speaker Boehner’s: “CBO estimates that the legislation would reduce budget deficits by about $850 billion between 2012 and 2021 relative to CBO’s March 2011 baseline adjusted for subsequent appropriation action.”

For House conservatives, who argue they are committed to cutting spending, the choice should be a no-brainer.

July 26, 2011

A look at this afternoon’s headlines shows Speaker Boehner is going to have a tough time passing his short-term debt limit proposal:

TPM: Jim DeMint: Boehner Plan Doesn’t Have The Votes

NY Times: ‘Very Few’ Democrats Will Back Boehner Plan, Hoyer Says

Roll Call: Jim Jordan Pushes Back on Boehner Plan

Politico: Pelosi warms to Reid plan

There isn’t a lot of time to waste. When will House Republicans abandon their ideological agenda and work with us to pass a long-term, balanced proposal that will ensure we pay America’s bills, reduce the deficit and bring certainty to our economy?

July 26, 2011

Wanted to be sure you saw the Washington Post article highlighting the uncertainty felt by the business community as Republicans continue to hold our economy hostage. Republicans often say that we need to give our economy certainty so that we can create jobs, but rather than move forward with a long-term plan that ensures we pay our nation’s bills and reduces our deficit, they are advocating for a short-term proposal that kicks the can down the road and doesn’t give businesses the certainty they need. It’s time for both parties to come together and act quickly on a compromise that pays America’s bills, reduces our deficit and creates certainty so businesses can grow and hire.

Key Excerpts:

Business leaders are becoming exasperated with Washington. And the dysfunction they see in the political system is holding them back from hiring and investing.

Executives lack confidence that political leaders can execute the basic nuts and bolts of governing, as exemplified by the current brinksmanship over raising the debt ceiling, based on interviews with more than a dozen corporate leaders in the Chicago area last week. Indeed, the frustration over the political climate and Washington’s seeming inability to solve problems seems to weigh more heavily in their minds than any specific government policy.

…But in contrast to claims by congressional Republicans that any tax increases whatsoever would stop job creation in its tracks, many executives say they could tolerate somewhat higher taxes if it were part of a broader plan that offered clarity on the nation’s future policies, particularly one heavy on spending cuts.

“What are the rules of the game going to be in the long term?” said Lyle Heidemann, chief executive of the 5,000-store hardware chain True Value. “What our retailers would like to have is consistency and predictability. We can handle decisions we don’t agree with, but that’s easier than not knowing what the decision is going to be.”

The groups that represent businesses in Washington, including the U.S. Chamber of Commerce and the Business Roundtable, have been urging Congress to raise the debt ceiling to avoid the risk of a default or downgrade of the U.S. credit rating, even as many newly elected Republican members of the House — who received support from business interests when running — are reluctant to vote for such a measure. A group of major business groups sent a letter to the president and every member of Congress two weeks ago imploring them to raise the debt ceiling.

The tenor of the debates in Washington has damaged the executives’ sense — long taken for granted — that the taxes and regulatory policies they face will be predictable and reasonably constant. The executives are horrified that the nation might be on the verge of losing its AAA credit rating, and their hunger for a grand bargain — a master plan to determine the nation’s fiscal future over the coming decade — is deep.

July 26, 2011

Yet another poll is out showing that Americans support a balanced agreement to pay our bills and reduce the deficit. This one’s particularly significant, having been taken last night after the President and the Speaker laid out their respective positions. Unfortunately for Speaker Boehner, his short-term, kick the can down the road plan didn’t fare so well:

‘“It does seem to be that the popular narrative is falling on the side of the president on this one,’ Ipsos pollster Julia Clark said.”

“56 percent said they want to see a mix of approaches used in an agreement to raise the debt ceiling.”

“Just 19 percent of Americans said they favor a plan like Boehner’s, which would rely solely on spending cuts to existing programs to reduce the
deficit.”

July 26, 2011

Republicans are holding our economy hostage to their ideological agenda, putting our nation at risk of default just a week from today. Default would have a real impact on middle class families, and at a time when our economy is still recovering, American families can’t afford to pay the price. Take a look at the numbers:

Over $1,000: Increase in mortgage payments for the average family

$250: Increase in credit card interest for the average family

$318: Additional amount families could pay per year on food

$100: Additional amount families could pay per year on gas

$182: Additional amount families could pay per year on utilities

July 26, 2011

As Republicans continue to argue for a short-term compromise, which would not give our economy certainty and hurt job creation, business leaders are calling on Congress to quickly take action and compromise so that we pay our nation’s bills and avoid the catastrophic consequences of default:

Key point: “All of us in the business community have been watching that issue unfold. I think like most Americans, we’ve been confident that people will come to a common agreement,” Smith told POLITICO. “Of course with each passing day and the approaching deadline, there is a heightening sense of nervousness in the business community.”

July 26, 2011

Wanted to make sure you all saw this AP story where Republican Study Committee Chairman Jim Jordan said that when it comes to the Boehner plan, he is confident "that as of this morning there are not 218 Republicans in support of this plan."

At this late hour, Speaker Boehner should heed this warning from his own conference, drop his insistence on an irresponsible short-term bill and pass the proposal outlined by Senate Majority Leader Reid. As Mr. Hoyer said this morning at his weekly pen and pad briefing, Speaker Boehner should not count on Democratic votes to support his short-sighted proposal.

And now it appears he may not be able to count on Republican votes either.

AP: GOP lawmaker: Boehner's debt bill lacks support

By CHARLES BABINGTON Associated Press

WASHINGTON — A top Republican House member says he thinks Speaker John Boehner lacks the GOP votes needed to pass his debt-ceiling plan in the House.

Jim Jordan of Ohio told reporters Tuesday that he's confident "that as of this morning there are not 218 Republicans in support of this plan." That's the number needed to pass bills in the House. Democrats are expected to overwhelmingly oppose Boehner's plan for a two-step debt-reduction process.

Jordan chairs the Republican Study Committee, which includes scores of House conservatives. He says he opposes Boehner's plan because it would not cut spending enough and it would not require a balanced budget.

July 26, 2011

We already know that Speaker Boehner has offered a short-term debt limit plan that would return our country to a state of imminent default within months, subjecting our economy to high levels of uncertainty. Now, CNN has reported that passing the Boehner plan would likely lead the rating agencies to downgrade America’s AAA credit—a step that would destroy jobs by dramatically raising interest rates for millions of Americans. On the other hand, passing the compromise plan put forward by Senate Majority Leader Reid would reduce the deficit by enough, and extend the debt limit by enough, to preserve our top-rated credit. A compromise to raise the debt limit through 2013 would show the world that America can be counted on to pay its bills—but Republicans’ radical and unpopular approach is inspiring no such confidence. Watch the video here.

July 26, 2011

Wanted to pass along this handy list from National Journal summarizing the consequences of failing to ensure we pay our nation’s bills. These are costs Americans can’t afford. We hope Republicans will take note and work with us on a long-term, balanced compromise that would reduce the deficit and ensure we pay our nation’s bills.

National Journal

Six Costs of Not Raising the Debt Ceiling

By Julia Edwards

What started as hot air has now become a thunder cloud. Should Congress fail to reach a compromise to raise the debt ceiling, a multitude of economic sectors could take a hit—if not come to a screeching halt. We review the effects as forecasted by economists and ask “Should you worry?” The answer, in short: Yes, probably so.

1. Global economy: Asian and European stocks “shuddered,” on Monday, as William Alden of the Huffington Post put it, after Congress failed to reach a compromise by the end of last week. The tumble was slight for now, but Alden suggests that the fall was just the first tremors of a greater catastrophe waiting when the stalemate in Washington triggers panic on Wall Street.

2. Government programs: If the Treasury loses its authority to borrow, economist Nigel Gault of IHS Global Insight predicts that the government would have to cut its spending by 40 to 45 percent. Highway projects, federal courts, Pell Grants, and food stamps are all on the line.

3. The recovery: Gains made since the bottom fell out in late 2008 could slip away and “would no doubt have a very adverse effect very quickly on the recovery,” said Federal Reserve Board Chairman Ben Bernanke.

4. Your retirement: This one’s still up in the air. President Obama said recently that Social Security payments are on the line, should the country not be able to borrow. But budget analysts say that the administration could ensure that the checks are paid.

5. America’s credit: Standard & Poor’s said last week that there is a 50 percent chance it would cut the nation’s credit rating within the next three months. If no deal is reached, Standard &Poor’s said that the United States' credit would be reduced from AAA to D.

6. Businesses: In a no-deal scenario, businesses could squeak by without paying increased taxes. But when they see a 10 percent decrease in the gross domestic product, loss of confidence from foreign investors, and a consumer base slipping back into a recession, that tax freeze may look less appealing.

July 26, 2011

Polls show overwhelming support for a balanced plan to reduce our deficit and pay our bills—even among Republicans. House Republicans standing in the way of a compromise and pushing our country toward default are far to the right of most Americans. Last night, President Obama urged Americans who support a compromise solution to contact their Members of Congress and make their voices heard.

Reporter David Weigel asked if any of his readers were following through, and the response he got was a strong “yes.”

July 25, 2011

Pop Quiz for Senator Bob Corker (R-TN):

Which option will keep us from defaulting?

A. Compromise on a balanced package that includes revenues and spending cuts, and increase the debt limit

OR

B. Chill out

Sen. Corker’s Response: B

Wrong Answer. Instead of telling the American people to “chill out and not worry so much,” it’s time for Republicans to stop risking our economic security and work with Democrats to take a long-term, balanced approach to pay our nation’s bills and reduce the deficit so we can give businesses and the markets the certainty they need.

July 25, 2011

Wanted to be sure you saw this White House blog post by White House Communications Director Dan Pfeiffer highlighting Republican opposition to short term debt limit increases. In a quick turnaround, Republicans are arguing for short-term extensions of the debt limit, which would put our economic security at risk and create uncertainty for businesses and the markets.

The White House Blog

Some Republicans in Congress Once Argued Against Short-Term Solutions - They Were Right

Posted by Dan Pfeiffer on July 25, 2011 at 08:00 AM EDT

Despite warnings that a short-term extension could lead to a credit downgrade and higher interest rates resulting in a tax increase on every American, Republicans in Congress continue to push for a “my way or the highway” solution that could put our credit rating at risk and leave the cloud of uncertainty over the American people.

In June, House Majority Leader Cantor “Was Explicit That He Wants A Single Debt Ceiling Vote For This Congress - Not A Series Of Short-Term Extensions.” Now House Republicans are arguing that we should adopt multiple short term solutions that would leave that cloud of uncertainty hanging over our economy continually for the next two years, if not longer.

Indeed, before they were for a short term solution, it turns out they were against it for the very same reasons President Obama believes it is the wrong approach. As recently as earlier this month, Republicans in Congress expressed concern about the impact of a short term solution.

Here are a few examples:

Rep. Cantor, 6/22/11: Cantor "Pushed Back Hard" On Notion of Short Term Debt Limit Increase. "House Majority Leader Eric Cantor pushed back hard Tuesday against Senate Republican suggestions of a scaled-back, short-term debt deal, saying it's 'crunch time' in White House budget talks and 'if we can't make the tough decisions now, why... would [we] be making those tough decisions later. I don't see how multiple votes on a debt ceiling increase can help get us to where we want to go,' the Virginia Republican told reporters. 'It is my preference that we do this thing one time.... Putting off tough decisions is not what people want in this town.'" [Politico, 6/22/11]

Rep. Cantor, 6/13/11: “Was Explicit That He Wants A Single Debt Ceiling Vote For This Congress - Not A Series Of Short-Term Extensions, As Some Have Suggested…’We Are Looking To Try And Achieve Real Reforms, Real Reduction In Spending, So That We Can Accomplish This And Hopefully Get To A Better Economic Outlook,’ Cantor Said.” “Tuesday’s budget meeting is just one of three planned this week by Vice President Joe Biden. And returning from a weeklong recess, House Majority Leader Eric Cantor spoke bluntly of seeing a ‘very sick economy’ at home in Virginia and the need to address the debt issue before the financial markets ‘make this decision for us.’ ‘We feel very strongly that one of the reasons why we continue to see an ailing economy is that people have very little confidence, have very little certainty in terms of where we are headed,’ Cantor told reporters. He was explicit that he wants a single debt ceiling vote for this Congress - not a series of short-term extensions, as some have suggested. But much depends, too, he said, on the final deal between Obama and Speaker John Boehner (R-Ohio). ‘We are looking to try and achieve real reforms, real reduction in spending, so that we can accomplish this and hopefully get to a better economic outlook,’ Cantor said. ‘Because if you don’t, if you just check the box and raise the debt ceiling, I believe the markets take care of it for you. Interest rates will skyrocket, and there will be no way for us to see any return to growth anytime soon. We will have to raise taxes and the rest. No one wants that.’” [Politico.com, 6/13/11]

Rep. McCarthy, 6/24/11: "Shied Away From The Idea Of A Short-Term Solution." "McCarthy shied away from the idea of a short-term solution or a temporary debt ceiling increase in order to buy time on reaching an agreement on entitlement reforms." [The Hill, 6/24/11]

Rep. Camp, 6/21/11: "House Ways and Means Committee Chairman Dave Camp (R-Mich.) also shot down a short-term increase. 'It doesn’t give you certainty,' Camp said. 'Ideally you’d like to get that settled and not have it continually a hanging-over issue.'" [The Hill, 6/22/11]

Sen. McConnell, 6/22/11: “[Sen.] McConnell Declined To Call For A Short-Term Increase In The Debt Ceiling When Reporters Asked Him About It Tuesday. ‘We Are Still Hoping For A Very Large Package That Will Impress The Ratings Agencies, Impress Foreign Countries And Astonish The American People…” “McConnell declined to call for a short-term increase in the debt ceiling when reporters asked him about it Tuesday. ‘We are still hoping for a very large package that will impress the ratings agencies, impress foreign countries and astonish the American people that we’re actually going to come together here and take advantage of this terrific opportunity that’s provided by the president’s request of us to raise the debt ceiling,’ McConnell said. ‘Beyond that I’m not prepared to go, because there are all kind of moving parts underneath those general principles.’ A GOP aide said McConnell’s statement over the weekend was meant to show that Republicans would not accept a bad deal in exchange for raising the debt ceiling. The aide acknowledged that it could be difficult to even pass a short-term increase in the House and emphasized that McConnell wants big cuts and a long-term deal.” [The Hill, 6/22/11]

Dan Pfeiffer is White House Communications Director

July 21, 2011

This morning, Americans for Tax Reform President Grover Norquist made a big splash by saying that allowing the Bush tax cuts to expire in 2012 would not violate his organization’s pledge against tax increases.

Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said. – Washington Post Editorial, 07/21/11

After Norquist and ATR tried to walk his comments back, the Post posted audio of the exchange in which he clearly says the words in question.

This morning, Mr. Hoyer said he welcomed the comments and that he hoped Congressional Republicans would take this into account as they continue to refuse to add revenues to a deficit reduction package.

But Norquist continued to backpedal, saying Whip Hoyer “is wrong” on his position today on MSNBC. We here in the Democratic Whip press shop, can’t help but wonder how “Hoyer is wrong” when Whip Hoyer directly quoted Norquist himself. And now there is an audio recording to back this up.

Whip Hoyer continues to advocate for a balanced approach to reduce the deficit and hopes Republicans will work with Democrats on a big, balanced agreement that includes both revenues and spending cuts. Moving forward, we hope Republicans will heed Norquist’s words and abandon their ideologically rigid position and work with us on a compromise.

July 21, 2011

Key Point: “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Out from under the anti-tax pledge

Washington Post Editorial, Published: July 20

WITH A HANDFUL of exceptions, every Republican member of Congress has signed a pledge against increasing taxes. Would allowing the Bush tax cuts to expire as scheduled in 2012 violate this vow? We posed this question to Grover Norquist, its author and enforcer, and his answer was both surprising and encouraging: No.

In other words, according to Mr. Norquist’s interpretation of the Americans for Tax Reform pledge, lawmakers have the technical leeway to bring in as much as $4 trillion in new tax revenue — the cost of extending President George W. Bush’s tax cuts for another decade — without being accused of breaking their promise. “Not continuing a tax cut is not technically a tax increase,” Mr. Norquist told us. So it doesn’t violate the pledge? “We wouldn’t hold it that way,” he said.

Of course, letting the tax cuts expire is decidedly not Mr. Norquist’s preference. Indeed, as a matter of policy, he is passionately opposed to a single dime in new tax revenue. But the fact that Mr. Norquist interprets his own pledge to permit such conduct suggests that Republican lawmakers who have been browbeaten into abjuring any tax increase, at any time, for any reason, may not be as boxed in as they believe. The official Republican line has been that allowing the Bush tax cuts to expire, even for those earning more than $250,000, would be a job-killing tax increase. The fact that the godfather of the pledge does not interpret the lapse as an increase is significant.

Mr. Norquist’s comments come at a moment of remarkable and welcome fluidity in what had seemed to be a solid wall of Republican opposition to raising any tax revenue at any time for any reason. The surprising reemergence and expansion of the Senate Gang of Six this week was accompanied by a flurry of statements from Republican senators endorsing a proposal that included $1 trillion in new tax revenue. “This is a serious, bipartisan proposal that will help stop Washington from spending money that we don’t have, and I support it,” said Sen. Lamar Alexander (R-Tenn.), the GOP conference chair. “A fair compromise,” said Sen. Kay Bailey Hutchison (R-Tex.). There may not be time to translate the gang plan into law as the debt ceiling looms, but these reactions suggest that future negotiations could be conducted from a base line of reality.

Too often in recent years, the tax debate has resembled a one-way ratchet: Taxes can go down but never back up, except if a booming economy produces additional revenue. It is important to remember that the Bush tax cuts were passed at a moment when, hard as it may be to believe, enormous surpluses were in sight and a big worry among economic poobahs was whether the debt was being paid off too quickly. There is no policy basis for insisting that these tax rates are graven in stone and immune to change given the changed circumstances. And the Norquist pledge, it turns out, is not a suicide pact preventing such a sober reassessment.

July 21, 2011

Wanted to make sure you all saw this article in the New York Times outlining the damage to our fragile economy that default would do. So far, House Republicans have refused to heed the warnings and have refused to work with Democrats on a big, grand bargain approach to deficit reduction that includes revenues.

Maybe these warnings from the Times will wake them up:

“Volatility in stocks has soared, and some investors say stock prices are falling because a United States default could severely raise companies’ costs of doing business.

“In the Treasury market, investors are starting to sell, fearing that the government will not make good on some interest payments that will be due next month. And complex financial instruments that will pay out if the United States defaults have become twice as expensive to buy as they were at the start of the year.

“…The metaphor is a pile of sand,” said Mark Zandi, the chief economist at Moody’s Analytics. “You keep putting one piece of sand on the pile, nothing happens, and then, all of the sudden it just caves.”

“…Deterioration of investor confidence in the United States could also hurt the value of the dollar, according to William H. Gross, co-chief investment officer of Pimco, a bond fund based in California. Mr. Gross said he believed that the dollar would become weaker because of the country’s inability to deal with its rising deficit.

“…One of the worst possibilities that people in the financial industry, like Mr. Lengsfield, have been discussing is that scores of insurance companies, pension funds and mutual funds might be forced to dump their Treasury holdings. Some investors have rules that they cannot hold assets that are rated below AAA. It was this sort of rule that drove the forced selling of mortgage bonds during the financial crisis.”

As the article clearly states, the longer we wait, the more damage is done. Out-of-touch Republicans need to realize we are out of time. It is time to come together around a balanced approach.

July 20, 2011

Republicans may be in denial about the catastrophic consequences of failing to ensure we pay America’s bills, but it’s clear that states will pay the price if Congress doesn’t come together on a balanced agreement to ensure we pay our bills. In case Republicans need a visual to understand the impact, CAP has put together an interactive map showing how states would be affected, with each losing hundreds of millions of dollars if we fail to ensure we pay our nation’s bills.

From the Center for American Progress:

Interactive Map: No Debt Limit Increase Means Big Cuts to State Services

By Michael Linden, Jordan Eizenga

Each year state governments rely on the federal government for between 25 percent and 50 percent of their revenue. The federal government funds hundreds of billions of dollars in state services, including employment and training programs, emergency fire services for rural communities, hazardous waste removal, wildlife conservation, health care services, and even programs to provide bulletproof vests to local law enforcement.

These services will find themselves on the chopping block if the debt ceiling is not raised.

This interactive map shows that no state would be spared by these cuts. Each stands to lose hundreds of millions of dollars in federal funding if the debt limit isn’t increased regardless of how Treasury decides to prioritize payments.

It’s time for Republicans to work with Democrats on a big, balanced agreement to pay America’s bills, reduce the deficit, and avoid drastic cuts to critical programs that Americans rely on.

July 20, 2011

From the Democratic Whip Press Shop:

We know that Republican debt limit antics have reached the point of absurdity when The Onion hits the nail on the head describing the Republicans’ position that’s putting our economy at risk. Republicans may be pushing our country toward default, but at least they’re pushing the bounds of satire at the same time:

Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined

WASHINGTON—Members of the U.S. Congress reported Wednesday they were continuing to carefully debate the issue of whether or not they should allow the country to descend into a roiling economic meltdown of historically dire proportions. "It is a question that, I think, is worthy of serious consideration: Should we take steps to avoid a crippling, decades-long depression that would lead to disastrous consequences on a worldwide scale? Or should we not do that?" asked House Majority Leader Eric Cantor (R-VA), adding that arguments could be made for both sides, and that the debate over ensuring America’s financial solvency versus allowing the nation to default on its debt—which would torpedo stock markets, cause mortgage and interests rates to skyrocket, and decimate the value of the U.S. dollar—is “certainly a conversation worth having.” “Obviously, we don't want to rush to consensus on whether it is or isn't a good idea to save the American economy and all our respective livelihoods from certain peril until we've examined this thorny dilemma from every angle. And if we’re still discussing this matter on Aug. 2, well, then, so be it.” At press time, President Obama said he personally believed the country should not be economically ruined.

July 20, 2011

Wanted to make sure you all saw this post in the Washington Post’s Plum Line blog about how House Republicans are so dug in on the deficit issue, they are not even willing to listen to Ronald Reagan.

The post contains a letter President Reagan wrote to then-Senate Minority Leader Howard Baker in 1983, imploring him to raise the debt limit. “The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate,” Reagan wrote. “The Nation can ill afford to allow such a result.”
 

Key Point: I don’t imagine that House Dems actually think the words of Reagan will sway some of today’s Tea-infused House conservatives. But they are hoping that the specter of Reagan repeatedly urging a debt ceiling hike for the good of America will emphasize to everyone else just how extreme and ideologically rigid the House conservative position has become.

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