Hoyer Press Staff Blog

Blog posts from the press staff of Democratic Whip Steny Hoyer

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.

July 20, 2011

With less than two weeks to go before America defaults on its debts, House Republican Freshman are still trying to score political points and push their extreme agenda, even if it means America not paying its bills for the first time. Or even if it means turning on their own party leaders.

As Politico reports:

“As the bipartisan Gang of Six proposals gained momentum and the president seemed ready to jump on board, some in the vocal class reflected their deep distrust of the institutions warning of an economic Armageddon — not just the White House and Wall Street but their own party in some cases. And while they said they’re sticking to their principles, they also may be taking themselves out of the final phase of negotiations.

“There is no reason to call this thing a default, the issue is whether to have an increase in the debt ceiling,” said Alabama Rep. Mo Brooks, a freshman who sometimes notes that he studied economics at Duke University. “There will not be a default of our credit unless the president decides on his own to breach our obligation to our creditors — that’s an entirely separate issue from raising the debt ceiling, but nevertheless the president has acted like not raising the debt ceiling is equivalent to a default. It is absolutely not equivalent to a default to our creditors.”

“If Congress fails to find a deal to raise the debt ceiling before Aug. 2, the freshmen said it won’t be their fault — it’ll be the president’s

Rather than attacking the President, House Republicans should focus on reality. Default could place social security checks at risk, jeopardize the 401k’s of American workers, harm interest rates for homeowners, and actually increase the deficit.

And clearly, neither the American public, nor Republican leaders agree with House Republicans. More from Politico:

“Never mind the polls that suggest Republicans are losing the messaging war — one this week showed that 71 percent of Americans disapproved of how congressional Republicans were handling the debt ceiling war and another that 67 percent support raising taxes on corporations.”

“…But the freshmen aren’t just attacking Obama — they’re targeting some in their own party. Freshman Illinois Rep. Joe Walsh circulated a letter he said was signed by roughly 50 members asking the House GOP leadership to ‘publicly disavow’ the last-ditch debt-limit proposal pitched by Senate Republican leader Mitch McConnell, vowing not to bring it up for a floor vote ‘in any form.’”

July 20, 2011

While we’re all focused on talks to ensure America pays its bills and we reduce the deficit, this NY Times article caught our attention. Hypocrisy is alive and well among House Republicans:

“Freshman House Republicans who rode a wave of voter discontent into office last year vowed to stop out-of-control spending, but that has not stopped several of them from quietly trying to funnel millions of federal dollars into projects back home.”

“An examination of spending bills, news releases and communications with federal agencies obtained under the Freedom of Information Act shows that nearly two dozen freshmen have sought money for projects that could ultimately cost billions of dollars, while calling for less spending and banning pork projects.”

“Politicians have long advocated for projects on behalf of individuals and businesses back home, even without earmarks. Several lawmakers said they were merely providing a constituent service. But since many of the freshman Republicans campaigned on a pledge to cut spending and to change Washington’s time-honored ways, their support of spending projects suggests that in many cases ideology can go only so far in serving the needs of people back home.”


And our favorite line:

“Opponents labeled the bridge an earmark, but Mr. [Sean] Duffy and Mrs. [Michele] Bachmann said the bridge was critical to handle increased traffic that an 80-year-old bridge nearby can no longer handle alone. They defend the spending by arguing that it was not an earmark since there were no specific costs listed in the bill itself, nor is it a financing bill. The legislation calls only for a bridge to be built.”

So, if they hide the cost, then it’s ok?

July 20, 2011

Now that House Republicans have taken a symbolic vote on their radically ideological “Cut, Cap and End Medicare” bill, perhaps they will listen to the majority of Americans who support a big, balanced agreement and work with Democrats on a compromise that includes both revenues and spending cuts to ensure we pay America’s bills and reduce the deficit.

From the Wall Street Journal:

“Republicans who have refused to compromise with President Barack Obama to avoid a U.S. debt default are heeding the anti-tax wishes of their conservative base but are also risking isolation from many independent voters as public opinion shifts in favor of getting a deal done, a new Wall Street Journal/NBC News poll finds.”

“Of those polled, 58% said they supported Mr. Obama's approach, a $4 trillion deficit-reduction plan over 10 years… In comparison, 36% said they backed the leading proposal among congressional Republicans, which would reduce the federal deficit by $2.5 trillion, also over 10 years…”

“…62% of all Americans, and 61% of political independents, said the GOP should agree to raise taxes to get a deal on the debt ceiling…”

And according to the Washington Post, “A majority view the president as more committed to protecting the interests of the middle class and small businesses, while large majorities see Republicans as defending the economic interests of big corporations and Wall Street.”

Time is running out. Will Republicans stand with the American people? Or continue to pursue their ideological agenda that increases our chances of default and puts our economy at risk?

July 19, 2011
A WSJ/NBC poll released today shows Republicans who continue to deny the catastrophic consequences of failing to pay our bills are out of touch with the majority of Americans. According to the poll, most Americans believe default would be a “a real and serious problem.” Democrats are committed to avoiding the consequences of default and continue to advocate for a large, balanced package to reduce the deficit and ensure we pay our nation’s bills.
WSJ/NBC Poll: Americans Take Debt Ceiling Seriously
A clear majority of the American public now believes a failure by Congress to raise the nation’s statutory debt ceiling would be a real and serious problem, dismissing arguments by some Republicans that the coming debt ceiling deadline is no big deal, a new Wall Street Journal/NBC News poll shows.
For months, a majority of Americans have opposed raising the debt ceiling, giving license to politicians to take a hard line on budget negotiations in Washington. But as the debate has heated up, voter attention has focused on the specifics, the poll suggests. Now 55% say that failing to raise the debt ceiling would be a real and serious problem while only 18% do not believe that. A quarter of the public still say they don’t know enough about the issue to make a decision.
Republicans who continue to maintain that the government can avoid defaulting on its debts even with no increase to the borrowing limit might be listening to their core tea-party supporters. Of voters who identify themselves as tea-party supporters, one-third say failing to lift the ceiling would present no significant problems. But even in this group, a plurality, 47%, say it would be a serious issue. That number mirrors the overall percentage of all Republicans who worry about the consequences of doing nothing.
And those people who feel their economic situation has gotten worse over the last 12 months are among the most worried, with 60% of them saying failure to lift the ceiling would have real and serious consequences.
July 19, 2011

Wanted to make sure you all saw this White House blog post on Republicans’ “Cut, Cap and End Medicare” bill, an extreme proposal that increases our chances of default and makes the same drastic cuts as the Republican budget, which ends Medicare and drastically cuts Medicaid, while preserving tax breaks for the wealthy. Democrats continue to urge Republicans to work with us so that we can enact a large agreement to reduce the deficit and ensure America pays its bills. But instead of acting quickly to avoid the catastrophic consequences of default, Republicans are wasting time with a symbolic vote on this bill that will not pass in the Senate and the President has said he would veto.

The White House Blog

Unbalanced Approach to Deficit Reduction

Posted by Jason Furman on July 19, 2011 at 7:30 AM EDT

Democrats and Republicans agree that getting our fiscal house in order is one of the critical challenges facing America. To address it we are going to have to make tough choices, bringing to the table a commitment to examine every area of the budget and every loophole in the tax code without presumptively taking any of the options off the table. But it is critical that we not bring down our deficits and debt at the expense of economic growth, innovation and job creation, or place the greatest burden on older Americans and the most vulnerable. That is precisely what the House’s Cut, Cap and Balance plan would do – a proposal that White House Press Secretary Jay Carney described as “duck, dodge and dismantle.”

The House plan fails to achieve a balanced plan to reduce the deficit, which is precisely the approach that has worked successfully in America in the past and has recently been recommended by a number of different fiscal commissions.

Let’s start with the “cut” and “cap” portions of the bill. These sections require spending cuts in 2012 and caps over the next decade identical to those in the House Budget Committee Chairman Paul Ryan’s plan., By House Republicans’ own design, achieving those spending levels would require cuts that would be harmful to the economic recovery in the short-term while also damaging our long-term competitiveness and placing a higher burden on seniors and the most vulnerable. To give a few examples:

The bill would abruptly cut more than $100 billion in spending in the first year alone, a step that Congressional Budget Office Director Doug Elmendorf stated would “affect our projections for GDP growth over the next two years.”

  • The House Budget Resolution plan would cut clean energy investments by 70 percent, infrastructure investments by a third, and education and training by 25 percent – cutting 320,000 children from Head Start and reducing aid for families trying to put their kids through college by hundreds, or even thousands of dollars. 
  • It would cut Medicaid by one-third over the decade, and by nearly 50% by 2030. This could, according to the Kaiser Family Foundation, result in 36 million people losing Medicaid coverage, including people with disabilities and seniors in nursing homes. And that comes on top of the 17 million who would lose coverage due to repealing subsidies in the Affordable Care Act.
  • And it would cut programs for the most vulnerable – for example, by food stamp benefits for a family of four by $1,760 per year or cut 8 million households from the program. 
  • Finally, the House Budget Resolution proposed to convert Medicare to a voucher program, increasing costs for Medicare beneficiaries by $6,400 a year beginning in 2021 – with those higher costs increasing over time.
July 18, 2011

This afternoon, Fitch Ratings announced it will place the U.S. credit rating in “ratings watch negative,” which could lead to a credit rating downgrade if America fails to pay its bills. With all three major credit rating agencies reiterating their threat to downgrade the nation’s credit rating and only two weeks until a potential government default, it’s time for Republicans to work with Democrats on a big compromise to reduce the deficit and pay America’s bills so that we can give businesses and markets the certainty they need, and prevent the increase in the deficit that would happen if we were to default on our bills.


Fitch: 'AAA' rating in jeopardy

By: Jennifer Epstein

Another major bond rating firm on Monday reiterated its threat to downgrade the U.S. government to a B-plus rating if the debt ceiling isn’t raised by August 2 and the government defaults on its debts.

The warning from Fitch Ratings comes after Moody’s and S&P warned last week that they would lower the U.S. rating from the top mark of AAA if the country is unable to repay its debts next month.

Fitch said Monday that it will place the U.S. rating in what it calls “ratings watch negative,” a status that can lead to downgrading in three-to-six months.

The ratings agency said it still expects congressional Republicans and President Barack Obama to reach a deal in the next few weeks, but would downgrade the rating if the Treasury Department is unable to pay the $90 billion in Treasury bills that mature on August 4.

“Agreement on a credible fiscal consolidation strategy will secure the U.S. ‘AAA’ status; failure to do so will inevitably weaken the sovereign credit profile and may result in a sovereign rating downgrade,” the agency said in a statement.

July 18, 2011

We here in the Democratic Whip Press shop will give Republicans credit for their transparency. They are not even trying to hide the fact that their “Cut, Cap and End Medicare” bill would end the program’s guarantee.

Republican Study Committee Chairman Jim Jordan said yesterday the plan “basically mirrors the budget proposal that the House passed this year.”

That would be the same Republican budget proposal that ends the Medicare guarantee and more than doubles heath care costs for seniors, all while preserving tax breaks for the wealthy.

And the Republican “Cut, Cap and End Medicare” plan is no different.

But don’t just take our word for it. According to theCenter on Budget and Policy Priorities, the measure:

“…stands out as one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades.”

“…The legislation would inexorably subject Social Security and Medicare to deep reductions.”

“…before the debt limit could be raised, Congress would have to approve a constitutional balanced budget amendment that essentially requires cuts even deeper than those in the Ryan budget. Reaching and maintaining a balanced budget in the decade ahead while barring any tax increases would necessitate deep cuts in Social Security, Medicare, and Medicaid. After all, by 2021, total expenditures for these three programs will be nearly 45 percent greater than expenditures for all other programs (except interest payments) combined. Big cuts in these programs would be inevitable.”

July 18, 2011

Republicans concerned about reducing the deficit should take note of this article in Roll Call today that explains how failure to pay our nation’s bills would actually increase the deficit and “push the economy back into recession.” Though Republicans claim that deficit reduction is one of their top priorities and argue that it is critical to boosting the economy and creating jobs, they are bringing a bill to the Floor this week that increases the risk of the U.S. defaulting, therefore increasing the risk of adding to the deficit.

Democrats continue to advocate for a big compromise to reduce the deficit and ensure we pay America’s bills. We hope Republicans won’t walk away from this opportunity and work with us to pay our nation’s bills so that we can give businesses and the markets certainty they need and ensure we do not increase the deficit by defaulting.

Key Excerpts:

“Republicans have made reducing the deficit their cause célèbre, but a failure to boost the debt ceiling could make the GOP’s policy goals that much harder to accomplish.”

“Without a debt limit increase by the Treasury’s Aug. 2 deadline, budget experts say the country’s budget woes could actually get worse by raising borrowing costs.”

“‘Paradoxically, not raising the debt limit could make the deficit worse,’ said Jerome Powell, a former Treasury official in the George H.W. Bush administration and now a visiting scholar at the Bipartisan Policy Center.”

“Republicans, in particular, could suffer in two ways: They could lose their leverage to force spending cuts that might reduce the deficit, and they are likely to take the political hit for the higher interest rates that would follow an unwillingness or inability to raise the debt ceiling.”

“The results of failing to raise the debt limit would be almost immediate. In August, the Treasury Department is scheduled to borrow $500 billion and pay off $500 billion in expiring debts.”

“‘We have to sell $500 billion of new debt in August to pay off old debt,’ Powell said. ‘In the ordinary course of events, that’s not a problem. But in the middle of all the chaos and bad press that the United States is unable to pay its obligations during that environment, investors are probably going to require higher rates.’”

“Powell, who spoke to House Republicans on Friday, said that if no deal is reached by the time the Treasury needs to pay interest and principal on its outstanding debt, the government would struggle to pay for much else — a spectacle that is ‘completely unprecedented’ and could spook investors.”

“‘So we service the debt and then we don’t service 50 percent of our remaining obligations, [such as education, social safety net and other programs] and that 50 percent is what the public sees,’ Powell said. ‘This gigantic cut in government spending is going to be a major negative shock to the economy, and it could push the economy back into recession.’”

“That economic shock also would likely add to the deficit with lower tax revenue coming in and higher costs to the government, such as increased unemployment insurance expenses due to higher unemployment resulting from a bad econ

July 18, 2011

Wanted to be sure you saw this article in Politico today on the consequences of failing to pay our nation’s bills. Republicans need to take these warnings from financial experts seriously and work with us on a big, balanced agreement to ensure we pay our bills, reduce the deficit and avoid these catastrophic consequences of default.

Key Excerpts:

“A few prominent Republicans, such as Minnesota Republican Rep. Michele Bachmann, a presidential candidate, say nothing much would happen and blast the administration for its ‘scare tactics.’”

But financial experts say hitting the debt ceiling or coming really close to it would destabilize the markets and the economy. Just how dire the consequences would be is difficult to predict, but many Americans could feel the impact almost immediately.”

Stock markets are almost certain to drop sharply. Some analysts say interest rates for Treasury bills and private borrowing would rise abruptly. Others say the flight to safety might actually make investors dump stocks and buy Treasury securities in the short term.

“The first major hurdle comes on Aug. 3, when the U.S. government is scheduled to pay $23 billion in benefits to Social Security recipients. Only $12 billion in revenue is expected that day, leaving the Treasury $11 billion short — and $20 billion in the red when other scheduled payments for that day are taken into account.”

“Obama said in an interview with CBS News last week that he couldn’t guarantee Social Security payments will go out, a statement that could send retirees and disability recipients into a panic.”

“‘I’d say it’s at risk,’ said Jay Powell, a former senior Treasury Department official now with the Bipartisan Policy Center. ‘The president’s statement is correct on its face. He said he can’t guarantee those payments will be made. Even if you pay nothing other than interest, you can’t guarantee it.’”

“The next D-day is Aug. 15, when Treasury owes $29 billion in interest but will already have missed $54 billion in scheduled payments if the debt ceiling hasn’t been extended.”

“‘I believe Treasury will always make sure, before all other government spending, [it has] enough cash to pay the interest on the bonds. That has to be the highest priority,’ Powell said. ‘If we default on interest payments, we can sink the whole boat.’”

“‘If there is a strong view that the bond interest payment won’t be made, and congressional leaders say they are nowhere near passing an increase in the debt limit, then you would start to see the basic underpinnings of the financial system come undone,’ said a senior strategist at one of Wall Street’s largest banks, who spoke on the condition of anonymity because of the political sensitivity of the issue.”

July 18, 2011

Wanted to make sure you all saw this article in Politico this morning on the GOP’s increasingly out-of-touch demands on the deficit negotiations, even as we risk America not paying its bills.

Democrats remain ready and willing to work with Republicans on a balanced package that includes both revenues and spending cuts, and continue to advocate for a big, comprehensive package to reduce the deficit.

But rather than accepting the reality of the situation, the GOP continues to dig in its heels, putting on the floor this week a “Cut, End and Default” bill that is so extreme and draconian, even “much of the deficit-reduction legislation signed by Reagan would not qualify under the new tea-party-driven standards.”

As Politico reports:

“Turning right with a vengeance, Republicans will bring to the House floor Tuesday a newly revised debt-ceiling bill that is remarkable for its total absence of compromise at this late date, two weeks before the threat of default.”

“…But Republican congressional leaders still want a 10-year, $1.8 trillion cut from nondefense appropriations and have added a balanced-budget constitutional amendment that so restricts future tax legislation that even President Ronald Reagan might have opposed it in the 1980s.”

“Indeed, much of the deficit-reduction legislation signed by Reagan would not qualify under the new tea-party-driven standards. And even the famed Reagan-Tip O’Neill Social Security compromise — which raised payroll taxes — passed the House in 1983 well short of the 290 votes that would be required under the constitutional amendments being promoted by the GOP.”

“Dubbed Cut, Cap and Balance, the House bill allows for a $2.4 trillion increase in the Treasury’s borrowing authority but effectively uses the Aug. 2 deadline as a Republican anvil on which to hammer out cuts President Barack Obama would otherwise veto.”

July 14, 2011

Do Republicans really want to stop America from paying its bills? Conservative economics writer Megan McArdle explains just how ugly the consequences will get if the debt ceiling isn’t raised:

Are you really going to just stop funding current military operations on August 3rd? You're going to leave a bunch of guys sitting in Iraq and Afghanistan and Libya with tanks and automatic weapons and no way to get them home?

Going to empty the prisons? How many guards do you think turn up for work when you stop paying them?

How about border control? I don't think it's going to be popular with the GOP base when you cease border enforcement and invite anyone who wants to to stroll across our unmanned border checkpoints. However much you hate the ATF and the DEA, they are a small fraction of this sort of spending at the federal level.

If we cut all funding for "general government", who is going to collect the revenues that you need to pay for all the social security checks and Medicare payments you plan to move out?

How long are landlords going to let tenants ride when Section 8 checks don't arrive? Going to let kids sleep on the streets?

Is your kid planning to take out a student loan for college this fall? Not any more, they're not.

With joblessness going up, you're going to get an earful when unemployment checks don't arrive.

. . . and when the mortgage market shuts down because Fannie and Freddie and the FHA stop writing checks….

To the extent that you fix any of these problems, it means cutting into the sacred four: military payrolls, VA benefits, Medicaid/Medicare, and Social Security. Or defaulting on our debt. Also, when you cut spending, GDP is going to fall, which means that tax revenue will also fall, which means that we probably have to cut even deeper into those politically untouchable programs….

[Failing to raise the debt ceiling] would mean an enormous amount of real suffering: homeless families, hungry old people, nursing homes closing their doors to indigent patients. And the fact that we could do it if we had to doesn't mean that we can therefore do it when we don't have to. If you try to artificially create a situation that requires drastic cuts, voters are going to get rid of you, not the spending.

Paying our bills isn’t a favor for President Obama, it’s a responsibility Republicans share to prevent an economic catastrophe that would impact American families—especially because Republican policies helped run up our debt in the first place. It’s time to take action to ensure America pays its bills and we enact a balanced approach to reduce the deficit that protects seniors and the middle class.

July 14, 2011

The American people know we have to pay our bills, that’s why 74% of Republicans and 77% of independents believe that a deficit agreement should include a mix of revenues and spending cuts, according to a recent Gallup Poll.

Business leaders know we have to pay our bills, that’s why a group of leading business organizations are urging lawmakers to agree to a comprehensive deal to ensure that America pays its bills and reduce the deficit.

And the Treasury Secretary Tim Geithner knows we have to pay our bills, saying today: “We’ve looked at all available options and we have no way to give Congress more time to solve this problem. We’re running out of time.”

Democrats remain ready and willing to work with Republicans on a balanced package – that includes both revenues and spending cuts. But it is time for Republican leaders to accept the reality that they are going to have to work with us, not against us.

Time is almost running out.

July 14, 2011

Republicans may want to check out a poll released by Quinnipiac University today showing that Americans trust President Obama more than congressional Republicans on the economy and agree with the President that deficit reduction must be done in a balanced way – not on the backs of seniors and the middle class. The poll makes it clear that Americans support a comprehensive package to reduce the deficit that includes both spending cuts and revenues, which President Obama and Democrats are fighting for as negotiations continue. Will Republicans walk away from this opportunity to seriously address our nation’s fiscal challenges or will they listen to the American people and work with Democrats on a comprehensive agreement to reduce the deficit and pay our bills?

From Politico:

“…45 percent trust the president more than Republicans on the economy, while 38 percent trust the Republicans more.”

“If there’s no deal to raise the debt ceiling, the poll finds, voters would blame congressional Republicans over the president, 48 percent to 34 percent.”

Survey participants also would prefer to see two measures that Obama has pushed: tax hikes for the rich and closing loopholes.”

Sixty-seven percent say an agreement to raise the debt ceiling should include not just spending cuts but tax increases for the rich and corporations, while 25 percent disagree.”

July 14, 2011

Wanted to be sure you saw this editorial in the Washington Post today on debt limit negotiations. It highlights the opportunity that would be lost if we do not work together on a comprehensive package to seriously address America’s fiscal challenges, which is what Democrats continue to fight for as negotiations proceed.

Key excerpts:

“If this moment could not yield a grand bargain or a even modest adjustment to the nation’s fiscal course, it is hard to imagine what will. An election is always around the corner. The political system is increasingly polarized. Meanwhile, the debt is dangerously swollen and still growing.”

“Even then, no one who cares about the country’s future should cheer a non-solution solution to lifting the debt ceiling. The need to lift the ceiling was, and perhaps still could be, an opportunity to take at least some steps toward fiscal sanity. Mr. Obama was right to try, however late in the game, for a bargain combining new tax revenue with spending reductions, including to entitlement programs. That may be out of reach, but a down payment on fiscal responsibility — a balanced one, combining both tax increases and spending cuts — should not yet be ruled out.”

It’s not too late for a comprehensive agreement to reduce our deficit and ensure America pays its bills. Democrats stand ready and willing to work with Republicans on a balanced package – that includes both revenues and spending cuts. It’s time for Republicans to take responsibility for the debt they helped create and work on a comprehensive agreement to restore our fiscal health and give businesses and the markets certainty they need.

July 14, 2011

Today, two business leaders, US Chamber of Commerce President and CEO Thomas Donohue and Financial Services Forum President and CEO Robert Nichols, warned of the consequences of a default in a USA Today op-ed, putting pressure on Republicans to avoid the catastrophic consequences that would occur.

According to Donohue and Nicols, failing to ensure we pay America’s bills would mean:

Government operations halted: Failing to increase the debt limit would require the United States to immediately cease honoring 44% of its obligations during the month of August, according to an analysis by the Bipartisan Policy Center. The U.S. Treasury is expected to take in about $170 billion in tax revenue in August, but needs to pay $300 billion in expenses. The resulting $130 billion deficit would require the government to pick which programs — Medicare, Medicaid, food stamps, unemployment insurance — to pay for and which not to fund. And there would be little money left to pay our troops or to run the courts, the prison system, the FBI, or other essential operations.”

Our debt and deficit would get worse: The ‘full faith and credit’ of the U.S. government is regarded as iron-clad and virtually risk-free. As a result, the U.S. government enjoys the lowest borrowing costs in the world… It's been estimated that a one-notch downgrade in the nation's credit rating (the smallest reduction) would raise yields demanded by investors by a full percentage point. Higher borrowing costs mean wider deficits and higher debt levels. Even a one-half percentage point increase in rates would increase our annual deficit by $10 billion in the short run, and by $75 billion per year as outstanding debts roll over.”

Implications for the U.S. dollar: The dollar's role as the world's reserve currency facilitates capital formation, trade, cross-border investment, and economic growth, yielding enormous benefit to U.S. savers, investors, businesses and consumers. In recent years, however, the dollar's status as the reserve currency has been increasingly questioned. Other nations have openly called for an alternative to the dollar. A default and subsequent downgrade of U.S. government debt would likely cause a significant depreciation in the dollar and would accelerate calls for a new non-dollar global reserve currency — to the detriment of every American business, saver, investor and consumer.

Implications for U.S. economic growth and job creation: Higher borrowing costs and a falling dollar mean slower economic growth and job creation. According to an analysis by the Federal Reserve, a one-percentage point rise in Treasury yields would reduce economic growth by 0.8 percentage points. That number sounds small, but it is not. Economists tell us it would translate into hundreds of thousands of lost jobs every year. After last Friday's bleak unemployment report the last thing in the world we should do is needlessly trigger the loss of even more American jobs.”

July 13, 2011

Just who are Republican leaders taking their marching orders from on the debt limit negotiations? It certainly isn’t the American people.

According to a new Gallup Poll, 74 percent of Republicans agree that a responsible deficit reduction plan should include both tax increases and spending cuts, while 77 percent of independents believe the plan should include a mix of revenues and spending cuts.

Sound familiar? It is what Democrats have been arguing all along.

Despite the GOP’s refusal to take yes for an answer, Democrats are still pushing for a big compromise that will reduce the deficit in a balanced way. And the American people agree with us. We certainly know that business leaders agree with us.

If Republicans are as serious about deficit reduction as they claim to be, they’ll stop protecting tax breaks for the wealthiest, listen to the American people and join with us to take action so we keep paying our bills and bring down the deficit.

July 13, 2011

Today, Federal Reserve Chairman warned of the “tremendous” consequences if Congress fails to ensure we pay America’s bills.

Key point: "It is a concern," he said before the House Financial Services Committee on Wednesday. He warned that a default on government bonds would send "shock waves through the entire global financial system.”

July 13, 2011

Surely Republicans aren’t actually rooting for the economic catastrophe that would occur if America didn’t pay its bills, but that’s certainly hard to tell from today’s NY Times article:

“Instead, many Congressional Republicans seem to be spoiling for a fight, calculating that some level of turmoil caused by a federal default might be what it takes to give them the chance to right the nation’s fiscal ship.”

So the question is, why do they keep walking away from every opportunity to do something big to reduce the deficit – BEFORE we default on our bills? Democrats are still pushing for a big compromise that will reduce the deficit in a balanced way. If Republicans are as serious about the deficit as they claim to be, they’ll stop protecting tax breaks for the wealthiest and join with us to take action so we keep paying our bills and bring down the deficit.

July 13, 2011

Democrats are ready and willing to work with Republicans on a balanced agreement to ensure we pay our nation’s bills and reduce the deficit. But instead of coming to the table to address an issue they say is a top priority and is critical to economic growth, Republicans are walking away and risking our economy security while protecting tax breaks for the wealthy. Today on NPR Morning Edition, Norm Ornstein summed up the Republican strategy well:

“The President stepped in with something that took Republicans aback by pushing for a much more ambitious plan and giving them a lot of things that they asked for but demanding something that they didn’t want to give up. And they now look like the recalcitrants. So, Republicans in both houses are trying desperately to find a way to shift the blame.”

Instead of shifting blame to Democrats, it’s time for Republicans to share responsibility in addressing the debt they helped create and ensure we pay our nation’s bills.

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