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Boehner abandons goal of $4 trillion debt-reduction package

that has the potential to cause a significantly bad wall street reaction.

it might impress parts of the Republican base, but those same parts are going to be angry even if there's a compromise at the last possible moment.

they probably have until about July 20th to extend the ceiling with minimal consequences. it should have been done already.

A bad reaction? In all probability. A significantly bad reaction? No.

Most likely scenario is that Moody's lowers the bond rating and the markets whine for a bit. There will be no default and, in the long term, not raising the debt ceiling will inspire more confidence in American commercial paper.
 
Am I missing something. Is it only one side holding up any deal? Can we use the democratic proposed budget as a startpoint. Oh wait there has been no budget passed by the senate in nearly 3 years.

We could start with where the Republicans left the bargaining table. $2 trillion and change in cuts on the table at that point.
 
Thats not accurate donsutherland1.

In the beginning, Obama wanted a "clean" debt ceiling hike. As in no spending cuts or tax increases. Clearly that was a nonstarter given the seriousness of the deficits his budgets will create over the next ten years. And it was against the recommendations of his own deficit comittee.

I agree that a clean debt ceiling hike was a non-starter. Fiscal consolidation is needed. The question concerned the magnitude and structure of fiscal consolidation. The parameters of each party were also widely-established. Hence, a better negotiating process would have entailed working toward fiscal consolidation that would be mutually acceptable (meaning no tax hikes but also less entitlement reform this time around) to make a credible downpayment, rather than starting from each side's maximum position. It made no sense negotiations to begin with each side stating its maximum position when there was close to zero prospect that such a position would have any chance of being accepted. This observation in no way blames Congressman Boehner. It is a critique on the overall negotiating process that was set up and pursued, which is separate from the actors involved.

If a smaller deal gets through the house and the senate, then an Obama veto would risk default - the very think the media has been pounding the Reps on for risking.

A smaller deal will get through the House and Senate. It won't be vetoed, as such a move would be reckless. The nation would have a credit downgrade and a long-term increase in its debt service costs were any deal vetoed. Minnesota offers a good case in point. No matter how each side will posture after a deal to re-open the State's government is concluded, each side bears direct responsibility for the increase in that state's debt service costs that will result from its credit downgrade.

In terms of the federal deal, which I fully expect, because so much time was consumed in a negotiating process that was not well-designed, the size of fiscal consolidation will probably be smaller than what might otherwise have been achieved (probably somewhere between the size of the deal $1 to $2 trillion and the $4 trillion to $5 trillion pursued for a larger deal). There is risk that the deal might not even be viewed as credible.
 
I think the biggest news here is going sort of unnoticed: Obama favored a debt reduction package bigger than what Boehner wants. Where is the tea party outrage at the guy they just put in charge?

He wants a bigger deal that would include $1T in additional taxes without any entitlement reform.
 
the 2010 elections were about something relatively simple. Stop The Expansion. Stop The Spending.

Have Taxes Increase To Match Higher Spending wasn't it.


good for Boehner.

I'm not blaming Congressman Boehner. His move reflects the reality of the situation of irreconcilable differences. It's a move that would not have been necessary had the negotiating process been better-designed, namely had the White House set the ground rule that each side open with a position that it felt had realistic prospect of being acceptable to the other. Then, the tax revenue piece, among some others, would have been put aside from the onset and hard bargaining toward a deal would have been underway.
 
He wants a bigger deal that would include $1T in additional taxes without any entitlement reform.

Incorrect.

There is no deal yet, but the ideas under consideration include reductions in spending on the big three entitlement programs: Social Security, Medicare, and Medicaid. That would be a huge concession for Democrats. In return, Republicans would agree to close some big tax loopholes, reducing some deductions and other so-called spending in the tax code as part of a tax reform deal that would also lower corporate tax rates. The net effect of that tax reform plan would be an increase in tax revenue.

As one senior administration official told me, "We need to do something unthinkable on entitlements. They need to do something unthinkable on taxes."

Another White House official acknowledged that Democrats won’t like the proposed reductions in Social Security and Medicare (an understatement), but that the changes would be modest compared to what Republicans have proposed in the Paul Ryan budget plan.

Obama and Boehner Debt Talks: The Grand*Bargain - Politics News - ABC News Radio

So enough of this bull**** that the administration isn't serious about deficit reduction. They're prepared to make some serious, tough concessions. The Republicans have proved that they are not.
 
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Swizz, you just posted an article from Thursday.

Reports have Obama backing away from entitlement reform last night.
 
Swizz, you just posted an article from Thursday.

Reports have Obama backing away from entitlement reform last night.

Really? I haven't heard that. Do you have a link?
 
As there seems to be some misunderstanding concerning my initial comments about negotiating process (namely some belief that I am blaming certain individuals, when I'm not), I'll provide some additional detal. In general, I am contrasting two approaches to negotiations.

Approach 1: Each side starts from its maximum position and then the talks try to move toward some middle ground (not necessarily a midpoint, but somewhere between the two sides). This is a conventional approach. When maximum positions are not irreconcilable, it can produce agreement at some point in time.

Approach 2: Each side offers a position that achieves the most it can for itself, but under the constraint that the proposal is designed to accommodate what the other side's core needs (thus falls short of maximum positions). Each proposal is offered with the hope that it can be sustainable. This approach requires more work, a willingness to understand and accommodate the other side's real needs, etc. It works much better when the maximum positions held by each side are truly irreconcilable. This approach can save a lot of time when the maximum positions are irreconcilable, as it avoids fruitless attempts to reconcile the irreconcilable.

IMO, the second approach was the better one for the fiscal consolidation talks associated with the debt ceiling hike, as a fairly limited amount of time exists before the debt ceiling needs to be hiked.
 
I'm not blaming Congressman Boehner. His move reflects the reality of the situation of irreconcilable differences. It's a move that would not have been necessary had the negotiating process been better-designed, namely had the White House set the ground rule that each side open with a position that it felt had realistic prospect of being acceptable to the other. Then, the tax revenue piece, among some others, would have been put aside from the onset and hard bargaining toward a deal would have been underway.

Mr. Sutherland, can anything be done in the face of the unyielding refusal of the republicans to give an inch on the tax front? I know Jerry Brown did the California budget "without" them. If they remain in lock step, can they be circumvented? Or does America just go down the toilet in the face of continued stubbornness?
 
A Republican House aide told me that the White House “started to backpedal on entitlement reforms too.” He explained, “They [the White House] had started to go back on some of the Medicare and Medicaid reforms they had previously said they were ok with.”

WaPo
 
In the President's shoes, I'd say "Fine. Every offer we have made is now off the table. Let's take a meeting, boys and girls."

Obama faces new obstacles in high-stakes debt talks | Reuters

And the Republicans go first. What are they willing to concede. And I'm not saying they get to lunge across the table and ask for what I just took down. WHAT. ARE. THEY. WILLING. TO. CONCEDE. Give until it hurts, like we just did with Medicare, Medicaid and Social Security.

This is just such bull****.

Aides to Obama and Boehner had been working on a far-reaching package of spending cuts and new revenue that would have reduced deficits by $4 trillion over 10 years and cleared the way for lifting the $14.3 trillion cap on the government's borrowing capacity.

But Boehner's move dampened hopes of any immediate compromise and raised doubts about the chances that Sunday's talks would start moving the budget debate toward an end-game.

"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," Boehner, the top Republican in Congress, said in a statement. "I believe the best approach may be to focus on producing a smaller measure."
 
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Mr. Sutherland, can anything be done in the face of the unyielding refusal of the republicans to give an inch on the tax front? I know Jerry Brown did the California budget "without" them. If they remain in lock step, can they be circumvented?

For this deal, very little can be expected on the tax side. A provision to eliminate ethanol subsidies might be feasible. But the Americans for Tax Reform pledge is too stringent to provide leeway. Under its formula any closure of loopholes/elimination of deductions, etc. must be completely offset e.g., via lower rates so that the overall expected revenue would not change.

Ultimately, in a longer-term fiscal consolidation strategy, some tax revenue increases will be needed. The real battle over that will probably kick off around the time near the expiration of the 2001/2003 tax reductions.
 
For this deal, very little can be expected on the tax side. A provision to eliminate ethanol subsidies might be feasible. But the Americans for Tax Reform pledge is too stringent to provide leeway. Under its formula any closure of loopholes/elimination of deductions, etc. must be completely offset e.g., via lower rates so that the overall expected revenue would not change.

Ultimately, in a longer-term fiscal consolidation strategy, some tax revenue increases will be needed. The real battle over that will probably kick off around the time near the expiration of the 2001/2003 tax reductions.

Thank you, sir. I'm going to go cry now.
 
June 12 Daily News Editorial

Following are then Sen. Barack Obama’s 2006 comments about raising the debt ceiling. Speaking as the junior senator from Illinois, Obama said,

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

“Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

Now it’s 2011 and President Obama wants the debt ceiling raised above its current level of $14.3 trillion.

Are Americans getting the government they deserve?
 
All of the Tea Party influence is in perception and people give them more credit than they are due.

Do they have something to add to the mix?

Yes but until they are better organized and become a real political party they are no more important than a local PTA.

That's putting waaay too mildly.

The tea party is not a distinct political party, for all practical purposes. It's merely a front manufactured to create the illusion of a separate anti-establishment movement to people who are actually naive enough to fall for it (i. e. disenfranchised Right Wingers). The pols claiming to support tea party causes are just lying; they're merely the same stale, pro-establishment bimbos (i. e. bachman, plain) that have made up the GOP all along.

Anyone who believes the tea party actually stands for economic freedom, small government, debt reduction, etc. is 100% delusional. End of story.
 
The tea party is not a distinct political party, for all practical purposes.

Did someone really claim the Tea Party was a distinct political party? Can you name the person who made that statement?


It's merely a front manufactured to create the illusion of a separate anti-establishment movement to people who are actually naive enough to fall for it (i. e. disenfranchised Right Wingers). The pols claiming to support tea party causes are just lying; they're merely the same stale, pro-establishment bimbos (i. e. bachman, plain) that have made up the GOP all along.

Bachman and "Plain" are "bimbos"?

They're doing alright for bimbos. How you doin'?
Anyone who believes the tea party actually stands for economic freedom, small government, debt reduction, etc. is 100% delusional. End of story.

So what do you feel they stand for?
 
Didn't the Obama plan (if you could call it a plan, more like a passing thought read from a random teleprompter) include tax increases?
TEA PARTY wants no tax increase, less spending and limited govt.
I think the biggest news here is going sort of unnoticed: Obama favored a debt reduction package bigger than what Boehner wants. Where is the tea party outrage at the guy they just put in charge?
 
Did someone really claim the Tea Party was a distinct political party? Can you name the person who made that statement?

The supporters of it evidently think so.

Bachman and "Plain" are "bimbos"?

Yes

They're doing alright for bimbos. How you doin'?

I'm not White, so I can't prostitute myself to the (racist) Right. However, I thing I could be good masturbation material.

So what do you feel they stand for?

images
 
The supporters of it evidently think so.

Well if it is that evident then you should have no trouble in pointing out exactly who made the claim.

I'm not White, so I can't prostitute myself to the (racist) Right. However, I thing I could be good masturbation material.

You're a credit to your race!
 
Neither the dems nor repubs have the votes to do this on their own. Compromise is required. For the repubs to fail to do that is crazy on their part, the public in general will blame them. Simpson / Bolls had it right, you have to do everything to solve a problem as big as our deficit. Cut SS, Medicare, Medicaid, Defense, Discretionary, and raise taxes (or at least close ill-advised tax loopholes we don't need).

We need a big deal, and now is the time.

For Boehner to back off shows the repubs have small minds and small balls. Obama is showing the leadership, talking about a 4 trillion dollar reduction (although it is disappointing we don't have any idea YET how those cuts will affect us). 4 trillion is a good start.
 
June 12 Daily News Editorial

Following are then Sen. Barack Obama’s 2006 comments about raising the debt ceiling. Speaking as the junior senator from Illinois, Obama said,

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

“Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

Now it’s 2011 and President Obama wants the debt ceiling raised above its current level of $14.3 trillion.

Are Americans getting the government they deserve?

When Republicans are in charge, Democrats oppose debt ceiling increases and Republicans say it's necessary.

When Democrats are in charge, Republicans oppose debt ceiling increases and Democrats say it's necessary.

Obama isn't substantially different from any other president we've seen in the last 30 years.
 
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