Mish's Global Economic Trend Analysis |
- Deal or No Deal? ABC Says Tentative Deal to Raise Debt Ceiling Reached; White House Aid Denies Report; Does it Matter?
- Canada GDP Declines .3%, Largest Drop in Two Years - Don't Worry It's "Temporary"; Canadian Apologists Be Warned
- 43 Senate Republicans Sign Letter Opposing Reid’s Plan, Impasse Continues; Exchange with a Reader Over Tax Hikes
Posted: 30 Jul 2011 09:14 PM PDT I was just getting ready to make a post titled After "Angry Exchange" Reid Postpones Senate Vote on His Plan; Majority Leader Conrad Hints at Raising Revenue Measures; Compromise in the Air. Just before I hit enter on posting, word came that a deal was reached. I will continue with my original post (so that you can see sausage in the making) followed by the a description of the alleged yet White House denied deal. Hints Compromise Amid Feud Talk of compromise is in the air. House Majority Leader Conrad is surprisingly hinting at revenue raising measures. Meanwhile Senator Kyle suggests more progress is being made than it seems, even though Senator Reid postpones a vote on his proposal after an "angry exchange" with Republicans. This negotiation smacks of a "don't blame me" effort from both parties that will put off all hard choices until later. Reid Postpones Vote After Angry Exchange The New York Times reports Hint of Deal as Congress Wrangles Over Debt Crisis After a tense day of Congressional floor fights and angry exchanges, Senator Harry Reid, the majority leader, called off a planned showdown vote set for after midnight, but said he would convene the Senate at noon on Sunday for a vote an hour later. He said he wanted to give the new negotiations a chance to produce a plan to raise the federal debt limit in exchange for spending cuts and the creation of a new Congressional committee that would try to assemble a long-range deficit-cutting proposal.That sounds like more feud than compromise so let's take a look at the viewpoint on Bloomberg posted roughly three hours later at 10:41. Majority Leader Conrad Hints at Raising Revenue Measures Bloomberg reports Senate Postpones Vote on Reid Debt Plan as Talks Continue "There are negotiations going on at the White House now," Reid said on the Senate floor, and those involved in the talks wanted more time before a vote was held on whether the Senate moved ahead with his measure.White House, Republicans Strike Tentative Deal To Raise Debt Ceiling What follows now is breaking news of a deal. Please consider White House, Republicans Strike Tentative Deal To Raise Debt Ceiling ABC News' Jonathan Karl reports:Deal or No Deal? Even if there is a deal, it is no bargain to anyone. A vote on a balance budget will not pass so why bother other than for political finger-pointing purposes? $1 trillion in presumably back-loaded spending cuts is a farce. The special committee will not accomplish a thing. Even if by some miracle it achieves another $1.8 trillion in spending cuts, that still only brings the total to a lousy $2.8 trillion, or $280 billion a year in a $1.4 trillion deficit. This is not even a reasonable down payment on what needs to happen. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 30 Jul 2011 01:59 PM PDT Lost in the US deficit battles and the pathetic US GDP statistics comes yet another surprise: Canada's Economy Shrank 0.3% in May Posting the Largest Drop in Two Years Canada's gross domestic product fell in May by the most in two years due to temporary disruptions in the mining and oil and gas sector, government data showed.Canadian Apologists Be Warned Canadian apologists say weakness is overstated and temporary. I say it's understated because few realize what is happening and how serious this is. Global stimulus has faded. It's gone. Kaput. And that stimulus was the only thing holding this global economy together. Strip out government spending, QE madness in the US, and unsustainable credit growth in China and you have a flatline global economy at best. It's Not Temporary Headline be damned, it's not temporary. Europe is now in austerity-mode, US cities and states are cutting back, the odds of more fiscal stimulus in the US are roughly zero, the US might (and should) lose its AAA rating, Australia is a basket case on the bursting of its property bubble, Canada has the second or third largest property bubble next to China and Australia, the bond market is targeting Italy and Spain, Brazilian defaults are soaring, China is overheating and needs to slow, yet the average economist is looking for a robust second-half. Go figure. In aggregate, economists are the most optimistic group on the planet. For a look at the US GDP situation, please consider US GDP on Verge of Contraction in 1st Quarter, Mere 1.3% Annual Rate 2nd Quarter; Summary of Massive Revisions; Second-Half Recovery Nonsense Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
Posted: 30 Jul 2011 11:13 AM PDT The impasse continues. Bloomberg reports Senate Republicans Will Reject Reid's Debt Plan. Senate Republicans will block Majority Leader Harry Reid's debt-limit plan this weekend, Minority Leader Mitch McConnell said as a partisan impasse over deficit reduction continued days before a threatened default.Once again, and as recently noted in Great Divide; Boehner Rams Through Bill that Senate Quickly Rejects; Obama's Idle Threats and Fear Mongering the idea of a default is complete silliness. Nonetheless, expect both parties and president Obama to crow when a gaseous plan is passed that will allegedly have "saved the US from default" Fear Mongering Caroline Baum repeated my message on Friday in Obama, Geithner May Regret Threats of Default Instead of dangling the default threat every chance they get, Obama and Geithner should be telling the world that the U.S. has every intention, and the resources, to meet its debt obligations. They should shout it from the rooftops, put a banner on the Treasury Direct website, and use the Sunday talk shows to reassure investors, not frighten them.Toothless Details Senator Scott Brown wants to put "more teeth" in the joint committee plan. One tooth would suffice because the plan is currently toothless. Guaranteed Vote is Meaningless This whole idea of McConnell's about abdicating responsibility to a "powerful" committed with a "guaranteed" vote on proposals is of course ridiculous. Look at the rejection of Reid's plans in the Senate and House, and the Rejection of the Boehner's plan in the Senate. Look at the whining of Nancy Pelosi about cuts to Medicare and Medicaid, and Social Security. So what does the "guaranteed vote" do but put lipstick on a turkey? The "Gang-of-Six" put together a $4 trillion proposal that was a down payment on attacking the deficit and that could not pass. Somehow a "Gang-of-Twelve" is going to do better. Please be serious. The more people you put into a mix, the harder it will be to get an agreement. Even if by some miracle an agreement from the "Gang-of-Twelve" is reached, you still have a hurdle of passing the "guaranteed vote" in the House and Senate. This "Gang-of-Twelve" idea is nothing but a plan to put off doing anything about the deficit until after the election. Republicans and Democrats will both have wimped out if that is the "solution". Exchange with Reader "Grant" Reader "Grant" responded to my post, and we had the following exchange. Grant: Why you take Obama at his word when he says he was willing to make "hard choices" continues to elude me, especially given his track record of reneging on pretty much every campaign promise he made (wars, transparency, civil liberties, indefinite detentions, etc.) still mystifies me. Mish: Nowhere did I say the Democrats would have accepted. Indeed I think and have stated several times before they wouldn't. However, the offer would put Republicans in a No-Lose situation. Would Democrats have gone along? If not, Obama and the Democrats would have been seen as the deal-killers, not Republicans. If the Democrats accepted, it would have been well worth it. Republicans win if the deal was accepted, they win if the deal was rejected. Grant: Except this scenario already played out. Who got the blame? Not Obama. Not the Democrats. Boehner and the GOP did. Mish: And why is that Grant? The answer is Republicans would not accept any tax hikes. My deal allowed them. Some Things Far More Important than Trivial Tax Hikes Some things are far more important than concession on closing a few loopholes to get $1 trillion in tax hikes. President Obama repeatedly said he was willing to make "hard choices". Republicans could easily have put him to the test. My proposal was to challenge Obama to accept the tax hikes he asked for on a 3-1 ratio of cuts-to-to hikes in return for these three things Republicans want.
I would gladly trade $1 trillion in tax hikes for those badly needed measures. Would Democrats have accepted? Probably not but one never knows unless one tries. However, either way the Republicans would have won. Had Obama backed down it would have been his fault. Had he accepted the bargain would have well worth it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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