Central Perk

vineri, 29 iulie 2011

BREAKING: President Obama's Statement on Debt Negotiations

Friday, July 29, 2011

This morning President Obama delivered a statement once again calling on Congress to compromise to avoid defaulting on the Nation’s debt and calling on the American people to make their voices heard in this debate.

Read the President’s statement:

Good morning, everybody. I want to speak about the ongoing and increasingly urgent efforts to avoid default and reduce our deficit.

Right now, the House of Representatives is still trying to pass a bill that a majority of Republicans and Democrats in the Senate have already said they won’t vote for. It’s a plan that would force us to re-live this crisis in just a few short months, holding our economy captive to Washington politics once again. In other words, it does not solve the problem, and it has no chance of becoming law.

What’s clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people -– not just one faction. It will have to have the support of both the House and the Senate. And there are multiple ways to resolve this problem. Senator Reid, a Democrat, has introduced a plan in the Senate that contains cuts agreed upon by both parties. Senator McConnell, a Republican, offered a solution that could get us through this. There are plenty of modifications we can make to either of these plans in order to get them passed through both the House and the Senate and would allow me to sign them into law. And today I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support -- that can get support from both parties in the House –- a plan that I can sign by Tuesday.

Now, keep in mind, this is not a situation where the two parties are miles apart. We’re in rough agreement about how much spending can be cut responsibly as a first step toward reducing our deficit. We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform –- and I’m ready and willing to have that debate. And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.

So there are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have -- bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses. Keep in mind, if we don’t do that, if we don’t come to an agreement, we could lose our country’s AAA credit rating, not because we didn’t have the capacity to pay our bills -- we do -- but because we didn’t have a AAA political system to match our AAA credit rating.

And make no mistake -– for those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that’s inexcusable.

There are a lot of crises in the world that we can’t always predict or avoid -– hurricanes, earthquakes, tornadoes, terrorist attacks. This isn’t one of those crises. The power to solve this is in our hands. And on a day when we’ve been reminded how fragile the economy already is, this is one burden we can lift ourselves.   We can end it with a simple vote –- a vote that Democrats and Republicans have been taking for decades, a vote that the leaders in Congress have taken for decades.

It’s not a vote that allows Congress to spend more money. Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.

Now, on Monday night, I asked the American people to make their voice heard in this debate, and the response was overwhelming. So please, to all the American people, keep it up. If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign -- let your members of Congress know. Make a phone call. Send an email. Tweet. Keep the pressure on Washington, and we can get past this.

And for my part, our administration will be continuing to work with Democrats and Republicans all weekend long until we find a solution. The time for putting party first is over. The time for compromise on behalf of the American people is now. And I am confident that we can solve this problem. I’m confident that we will solve this problem. For all the intrigue and all the drama that’s taking place on Capitol Hill right now, I’m confident that common sense and cooler heads will prevail.

But as I said earlier, we are now running out of time. It’s important for everybody to step up and show the leadership that the American people expect.

Thank you.

P.S. Check out this infographic to find out how we accumulated so mach national debt in the first place:

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54.5 mpg by 2025: President Obama Announces New Fuel Economy Standards

Friday, July 29, 2011

Today, President Obama announced the next phase in the Administration’s program to increase fuel efficiency and reduce greenhouse gas pollution for all new cars and trucks sold in the United States.

These new fuel economy standards will cover cars and light trucks for Model Years 2017-2025, requiring performance equivalent to 54.5 mpg in 2025 while reducing greenhouse gas emissions to 163 grams per mile.

Spanning Model Years 2011 to 2025, these standards will not only save consumers an estimated $1.7 trillion dollars in real fuel costs, over $8,000 per vehicle, but will reduce our dependence on oil and take huge steps to protect the environment, reducing carbon dioxide pollution by over 6 billion metric tons – equivalent to the emissions from the United Sates all of last year.

To learn more about how new fuel economy standards will save consumers money, reduce our dependence on oil and protect our environment read the blog post, view the graphic or download the full report (PDF).

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West Wing Week: "Mutual Disposition"

Your Daily Snapshot for
Friday, July 29, 2011

West Wing Week: "Mutual Disposition"

Welcome to the West Wing Week, your guide to everything that's happening at 1600 Pennsylvania Ave. This week, The President held a town hall, met with the Prime Minister of New Zealand, honored the world series champions, spoke to Hispanic community advocates and addressed the Nation on the importance of compromising on a balanced approach to reduce the deficit. That's July 22nd to July 28th or "Mutual Disposition"

Watch the video

In Case You Missed It

Here are some of the top stories from the White House blog.

Office Hours 7/28/11 or "GREAT question": Brian Deese Answers Your Questions on Twitter
Brian Deese, Deputy Director of the National Economic Council, answered your questions on the ongoing debt debate on Twitter during White House Office Hours.

White House Roundtable Meeting with Rural Leaders
Secretary of Agriculture Tom Vilsack reflects on a meeting held with leaders of rural organizations and the crucial points raised during the discussion on building stronger rural communities across the nation.

Winning the Future by Supporting Local Innovation
Through an inter-agency partnership, $95 million in grants has been made available for communities across the country to build more sustainable infrastructure.

Today's Schedule

All times are Eastern Daylight Time (EDT).

10:20 AM: The President delivers a statement on the status of debt ceiling negotiations

10:50 AM: The President delivers remarks on Fuel Efficiency Standards (audio only)

12:30 PM: Press Briefing by Press Secretary Jay Carney

3:10 PM: The President meets with President Yayi of Benin, President Alpha Conde of Guinea, President Mahamadou Issoufou of Niger, and President Alassane Ouattara of Cote d'Ivoire

Indicates events that will be live streamed on WhiteHouse.Gov/Live

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Seth's Blog : Easy vs. do-able vs. impossible

Easy vs. do-able vs. impossible

Often we consider an opportunity based on how easy it is. The problem with this analysis is that if it's easy, it's often not worth doing. It's easy to start a blog, but of course, starting a blog doesn't really deliver a lot of value. Posting 4,100 blog posts in a row, though, isn't easy. It's do-able, clearly do-able, and might just be worth it.

Successful organizations seek out the do-able. When Amazon went after the big bookstore chains, analysts ridiculed them for doing something insanely difficult. But it was clearly do-able. Persistence and talent and a bit of luck, sure, but do-able.

Sometimes we seek out things that are actually impossible. Building a search engine that's just like Google but better is impossible (if your goal is to dominate the market with it). It's fun to do impossible projects because then you don't have to worry about what happens if you succeed... you have a safety net, because you're dreaming the impossible dream.

Do-able, though, is within our reach. Ignore easy.

• Email to a friend •

joi, 28 iulie 2011

Mish's Global Economic Trend Analysis

Boehner Humiliated, Cancels Vote, Stock Futures Tank; Stocks and Treasuries Unusually Correlated
Not Raising the Debt Ceiling Would be Blessing; Debt Limit Analysis; Interactive Map, You Decide What Not To Pay
Boehner's Credibility Gone in Revised Proposal; Boehner Tells Congress to "Get Your Ass in Line"; Best Deal Republicans Can Get?
Italy Bonds Smacked in Selloff, Yields Now Approach Spain; Vote of "No Confidence" on Debt Plan

Boehner Humiliated, Cancels Vote, Stock Futures Tank; Stocks and Treasuries Unusually Correlated

Posted: 28 Jul 2011 10:00 PM PDT

Thursday morning Bloomberg reported House Majority Leader Cantor Predicts House Republicans Will Pass Debt Plan Today

House Majority Leader Eric Cantor predicted Republicans would pass a debt-limit increase plan today as some freshman lawmakers pledged support for the measure in the face of unified Democratic opposition in the Senate.

Vote Cancelled

Kiss that prediction of Cantor goodbye. Thursday evening Republicans put off vote on debt limit because Boehner clearly lacks the votes.

An intensive endgame at hand, Republican leaders abruptly postponed a vote Thursday night on legislation to avert a threatened government default and slice federal spending by nearly $1 trillion.

"The votes obviously were not there," conceded Rep. David Dreier, R-Calif., after Speaker John Boehner and the leadership had spent hours trying to corral the support of rebellious conservatives.

The decision created fresh turmoil as divided government struggled to head off an unprecedented default that would leave the Treasury without the funds needed to pay all its bills. Administration officials say Tuesday is the deadline for Congress to act.

Senate Democrats stood by to scuttle the bill -- if it ever got them -- as a way of forcing Republicans to accept changes sought by Obama.

Based on public statements by lawmakers themselves, it appeared that five of some two dozen holdouts were from South Carolina. The state is also represented by Sen. Jim DeMint, who has solid ties to tea party groups and is a strong critic of compromising on the debt issue.

Others said conservatives wanted additional steps taken to try to ensure that a constitutional balanced-budget amendment would be sent to the states for ratification. As drafted, the legislation merely requires both houses of Congress to vote on the issue.

Even before the House voted, Reid served notice he would stage a vote to kill the legislation almost instantly.

"No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now," he said.

Boehner Humiliated

Boehner was humiliated and justifiably so. He had nothing to gain and everything to lose by attempting to ram-rod a gaseous bill through the House that was guaranteed dead-on-arrival in the Senate.

Majority leader Cantor made matters worse by predicting passage.

Stock Futures Tank in Unusual Correlation with Treasuries

Please consider U.S. S&P 500 Futures Retreat as McCarthy Says No Vote on Debt Plan Tonight

Futures on the Standard & Poor's 500 Index fell after the U.S. House of Representatives postponed a vote to increase the nation's debt limit, boosting concern that the lawmakers are far from an agreement to avoid default.

S&P 500 futures expiring in September lost 0.8 percent to 1,286.9 at 12:28 p.m. in Tokyo. The decline suggests the U.S. equity benchmark may extend its 3.3 percent slump from the past four days when markets open in New York.

Stocks and Treasuries are moving in tandem twice as often as they normally do, a sign investors are growing convinced the U.S. will lose its AAA credit rating and that an impasse among lawmakers may spur losses in both markets. The S&P 500 has risen or fallen together with 10-year Treasury notes 80 percent of the time in the last 10 days, compared with the average since 2000 of 41 percent, according to data compiled by Bloomberg.

Not Raising the Debt Ceiling Would be Blessing

I am sticking to what I said in Not Raising the Debt Ceiling Would be Blessing; Debt Limit Analysis; Interactive Map, You Decide What Not To Pay

All things considered, especially since Boehner's credibility is gone in his latest gaseous proposal, the best thing for Congress to do would be to NOT hike the debt ceiling and work out a credible plan over the next month.

Is Mish a "closet Liberal-humanist?"

In response to that post I received a humorous email from "BC" who wrote...

Mish, your choices reveal your empathy! Are you a closet Liberal-humanist?!

Your choices favor the elder working class, the working-class and poor ill, unemployed, poor and "food challenged", and imperial legionaries and auxiliaries against the corporate-statists!!!

Are you one of those maladjusted working-class types who just doesn't "get it"?!

Wink , wink ;-) ;-).

To see my choices as to what I would cut and to make your own choices about what to do if the debt ceiling is not raised, click on the above link for an interactive map.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Not Raising the Debt Ceiling Would be Blessing; Debt Limit Analysis; Interactive Map, You Decide What Not To Pay

Posted: 28 Jul 2011 01:03 PM PDT

As the chances of a gaseous Congressional compromise to do nothing about deficit reduction grow larger, inquiring minds wonder just what might happen if nothing passes.

Contrary to popular belief, the US would not default. Troops would still be paid. Medicare and Medicaid would not stop. The Bipartisan Policy Center has a nice analysis in a PDF on Debt Limit Analysis.

NO "SILVER BULLETS" TO EXTEND DATE

Our analysis also shows that the X Date will fall between August 2 and August 9. On July 1st, Treasury publicly reaffirmed their estimate of the X Date as August 2
The 14thAmendment does not provide a reasonable basis for challenging the constitutionality of the debt ceiling. The Administration will not attack the debt ceiling on this basis
Treasury has no secret bag of tricks to finance government operations past August 2. Treasury will not attempt to "firesale" assets during a crisis.
Other ideas are impractical, illegal and/or inappropriate (gold loans, IOUs)
There is no precedent; all other debt limit impasses have been resolved without passing the X Date
The government shutdown of 1995 –96 does not provide a precedent

Prioritization

Obama's, Geithner's, and Bernanke's statements about default simply are not credible. Nor are threats of cutoffs to military pay or Social Security. Indeed those totals allow Medicaid and Medicare to be paid.

The PDF covers alternate scenarios of what can and cannot be paid.

Interactive Map, You Decide What Not To Pay

I contend there is easily a month or more to work out a better deal. There are many programs we can easily do away with that should not be funded at all.

Please consider You choose: who gets paid (and who doesn't)

On August 2, the federal government will not have enough cash to pay for all of its programs and obligations. The U.S. will take in a total of $172.4 billion in revenue during the month, but its total payments exceed $306 billion, resulting in a $134 billion shortfall. If a debt-limit increase is not approved, the U.S. Treasury will have to choose among 80 million monthly payments and prioritize which programs are funded and which ones are not.

Mish Choices

click on chart for sharper image

As you can see, I have $30.6 billion to spare.

The first thing TO pay is interest on the national debt. It is non-payment of interest that would constitute default. Given $29 billion is easily payable, talk of default if Congress does nothing is the height of silliness.

The first thing to NOT pay should be congressional salaries.

As you can clearly see there are many things that would be a benefit to not pay, and never pay again.

Things to Not Pay and Never Pay Again

Department of Education - $20.2 Billion
Health and Human Services Grants - $8.1 Billion
HUD - $6.7 Billion
Department of Energy - $3.5 Billion
Department of Labor - $1.3 Billion
Small Business Administration - $0.3 Billion
Other Spending - $52.8 Billion

Clearly those things would have to be phased out, but the total of those things is a whopping $92.9 billion. That "Other Spending" category may have some essentials, but certainly most of it is not. Also bear in mind, I have $30.6 billion to spread around as needed. Some can go to salaries, but certainly not salaries of Congress.

In contrast, please see Boehner's Credibility Gone in Revised Proposal; Boehner Tells Congress to "Get Your Ass in Line"; Best Deal Republicans Can Get? for Boehner's revised cop-out.

All things considered, especially since Boehner's credibility is gone in his latest gaseous proposal, the best thing for Congress to do would be to NOT hike the debt ceiling and work out a credible plan over the next month.

Addendum:

The link at the top has been changed.

I received an email from Michael Stubel at the Bipartisan Policy Institute thanking me for the post and sending out an updated link.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Boehner's Credibility Gone in Revised Proposal; Boehner Tells Congress to "Get Your Ass in Line"; Best Deal Republicans Can Get?

Posted: 28 Jul 2011 10:54 AM PDT

It was bad enough when Boehner proposed a $3 Trillion deficit cutting proposal that the CBO said would only cut the deficit by a mere $850 billion.

Please see Rating the Obama, Reid, and Boehner Deficit Reduction Plans on Mish's 10-Point Credibility Scale for details.

However, one can make excuses for a "one-time" mistake. However when you submit a second plan that the CBO says will only cut the deficit by $950 billion you lose all credibility. Nonetheless, Boehner tells Congress ...

"Get Your Ass In Line"

Bloomberg reports Boehner Revises Debt Proposal as Aug. 2 Nears

Republican leaders were moving ahead with plans to vote on the measure tomorrow, less than one week before a potential U.S. default Aug. 2, and sought to ease party members' concerns that it wouldn't cut spending enough. The Congressional Budget Office said Boehner's new plan would cut $915 billion in spending over a decade, still short of the $2.2-trillion Senate plan.

Boehner, when asked by radio host Laura Ingraham whether he told members at a closed-door meeting today to get "your A-word in line" behind his debt bill, said: "I sure did. Listen, this is time to do what is doable."

Boehner's plan would promise another debt-limit showdown in the 2012 election year unless Republicans and Democrats agree by the end of this year to reduce deficits. President Barack Obama and congressional Democrats insist on extending the nation's borrowing authority through the 2012 elections, saying continued uncertainty would harm financial markets.

An analysis by the nonpartisan CBO of Boehner's revised plan said it would cut spending by $915 billion, compared with $850 billion for his original plan. This still was less than the $1.2 trillion advertised by party leaders for an initial round of cuts, which prompted leaders to cancel today's scheduled House vote on the bill.

Boehner's Credibility Gone In Second Gaseous Proposal

The best Boehner could come with over the course of 10 full years, is another $65 Billion! My dead grandmother could find more than that.

With that gaseous proposal, Boehner's credibility is burnt toast.

Moreover, the Senate will likely reject any of these proposals of Boehner that require a balanced budget amendment. So what is the point other than to put on a ridiculous show?

It would be one thing if his plan contained debt reductions of substance. But in two attempts, Boehner could only find a mere $95 billion a year in cuts when the deficit is a shocking $1.4 trillion.

On my 10-point credibility scale, Boehner passed #7 "Nauseous" and is now solidly in the #8 spot of "Gaseous". The next step is "Imaginary" where President Obama's nonexistent plan sits.

Governor Chris Christie Blasts Obama

New Jersey Governor Chris Christie blasted Obama for not having a plan, telling the president ""You Can't Lead From Behind".

Please see Chris Christie on Obama's Unwillingness to Submit a Deficit Plan "You Can't Lead From Behind" for details and a video.

Exercise in Futility

Meanwhile in an exercise in futility Boehner Moves Ahead on Debt.

House Republican leaders pleaded with their recalcitrant rank and file Thursday to back a plan to stave off an unprecedented government default next week. The House vote would bring President Barack Obama and congressional leaders one step closer to the endgame before Tuesday's deadline.

Republicans are seeking deep spending cuts in exchange for raising the nation's $14.3 trillion debt limit. The White House has threatened to veto the House GOP bill even if it makes it through the Senate, where it faces unanimous opposition among Senate Democrats. Still, getting the newly modified House plan passed on Thursday was seen as an important step toward the process of finding a compromise between the House and Senate proposals.

In a closed-door GOP meeting just hours before a scheduled vote, Speaker John Boehner, R-Ohio, made headway in getting toward the 217 votes necessary to pass his plan in the House. No Democrats were expected to support it. Boehner told the Republicans he expected to round up enough votes but was not there yet.

"But today is the day," he said, according to people in the room.

"I think it's the best deal we can get," said Rep. Steve Chabot, R-Ohio, who said he had dropped his opposition. Rep. Walter Jones, R-N.C., said he would back the measure to ensure that Boehner "has a seat at the table" for the endgame negotiations.

Best Deal You Can Get?

Notice the rank and file starting to cave in to Boehner's gaseous proposal. Rep. Steve Chabot, R-Ohio called it "the best deal we can get."

No it's not. It's not even the best deal you can't get. The Senate will not go along, so there is nothing to get.

As long as you are going to submit proposals you can't get, you may as well make it a good one. $950 billion over 10 years is not a good deal. It's not even a down payment on a good deal, and with that, Boehner just pissed away his credibility.

In the end, something will pass. But it will not do a damn thing credible to reduce the deficit. Reid's plan and Boehner's plan are both back-loaded.

Republicans had a golden opportunity to attempt to extract some major concessions in return for tiny tax concessions. Instead, they are going to settle for nothing. This fiasco is exactly why Republicans need someone like Chris Christie running for president. No one else has managed to show any leadership.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Italy Bonds Smacked in Selloff, Yields Now Approach Spain; Vote of "No Confidence" on Debt Plan

Posted: 28 Jul 2011 09:32 AM PDT

Investors wasted not time in a vote of no confidence on the latest debt package supposed to save Europe. 10-year Spanish government bonds are back above 6% and yields on Italian government bonds are close behind.

Bloomberg reports Italian Bonds Decline After Borrowing Costs Rise at Nation's Debt Sale

Italian bonds fell for a second day, increasing the yield spread over German bunds, after the nation's borrowing costs rose at a sale of 10-year debt and Standard & Poor's said Greece risks further defaults.

Italy's 10-year yield surged to the most in more than a week amid speculation a probe into a former aide of Finance Minister Giulio Tremonti may force him to step down. German yields fell to near a five-month low versus their U.S. counterparts as American lawmakers pushed conflicting plans to raise the nation's debt ceiling. Bunds rose for fifth day, the longest streak since April.

Italian Auction

Italy sold 2.7 billion euros of its 10-year benchmark security, less than the maximum target of 3 billion euros. The debt was priced to yield 5.77 percent, higher than 4.94 percent the last time the securities were sold on June 28, and drew bids for 1.38 times the securities on offer, compared with 1.33 times. In six sales of 10-year bonds this year, the average bid- to-cover ratio was 1.42 and the average yield was 4.81 percent.

"With Italy investors have recognised that the debt ratio is 120 percent" of gross domestic product, said Julian Callow, chief European economist at Barclays Capital in London. "That's very high. Any country really above 80 ought to be getting concerned and looking at ways of bringing down that ratio. When you're above 100, that's flashing red signals. As well, in Italy you've had very weak economic growth."

Irish bonds advanced for a third day after an S&P report said some provisions of the EU's rescue plan would help protect Ireland and Portugal.

Italy 10-Year Government Bonds

Spain 10-Year Government Bonds

Vote of "No Confidence"

Although yields on Italian and Spanish debt are off the highs of the day, the direction is crystal clear. The proper way to look at trends of Spain and Italy is as a vote of no confidence in the latest plan, not as a vote of confidence on Finance Minister Giulio Tremonti .

Yields on Portuguese and Irish debt fell, supposedly on the belief the latest debt deal will lower borrowing costs. It won't. The S&P''s statement "some provisions of the EU's rescue plan would help protect Ireland and Portugal" is laughable.

There is no way the EU's EFSF, the European Financial Stability Facility, can cover Spain, let alone Italy.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

vineri, 29 iulie 2011

BREAKING: President Obama's Statement on Debt Negotiations