GOP Blasts Obama Stopgap Fix

foxnews

 

President Obama is running into a buzzsaw of Republican criticism that his latest call for a stopgap fix to avert automatic budget cuts is an unserious proposal that would once again lock in permanent tax hikes without addressing the country's spending.
The president is heading to Annapolis, Md., Wednesday to sell that and other policy proposals to Senate Democrats at their annual retreat. With Congress facing a March 1 deadline before sweeping defense and other cuts kick in, Obama on Tuesday said the best thing to do if they can't meet that deadline is to pass a package of "spending cuts and tax reforms" that would push off the deadline for a "few more months."
But Republican leaders roundly rejected the idea.
"It's just more of the same," House Republican Leader Eric Cantor told Fox News.
Cantor and others accused the president of once again "kicking the can" on the debt crisis -- and further, they claimed that after the fiscal-crisis deal yielded a tax rate increase on top earners, Obama and his Democratic allies are trying to squeeze in more tax hikes in lieu of spending cuts.
Republicans also want to replace the indiscriminate spending cuts set to hit March 1. But they want to replace them with other spending cuts.
"(Obama) wants to continue down the path of insinuating that somehow taxpayers have got to put more and more money in, when the problem is spending," Cantor said, urging the president to "lead" on the issue of passing a comprehensive replacement bill.
At issue are the spending cuts set into motion by the 2011 deal to raise the debt ceiling. As part of that deal, Congress teed up more than $1 trillion in defense and other spending cuts unless lawmakers found an alternative that achieved similar deficit reduction. They didn't. Lawmakers, as part of the fiscal crisis deal at the end of 2012, delayed the automatic budget cuts for two months. The next deadline is March 1.
Obama, in a brief statement Tuesday at the White House, urged Congress to give itself time by passing another stopgap.
"There is no reason that the jobs of thousands of Americans ... not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn't come together," Obama said
Noting that Congress is currently working on a broader package, Obama said "at the very least we should give them a chance to come up with this budget instead of making indiscriminate cuts now that would cost us jobs and significantly slow down our economy."
The move, though, raised renewed concerns among Republicans that Obama, after winning tax hikes on top earners during the fiscal-crisis talks, would push anew for more tax increases.
"We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," House Speaker John Boehner said in a statement.
Senate Republican Leader Mitch McConnell accused Obama of wanting to "delay" the cuts "for a few months with more permanent tax hikes at a time when American families are already feeling the pinch of the Obama economy."
He called on the president to propose "significant spending reforms."
"The clock is ticking. It's time to get serious," McConnell said.
Obama is not calling for increases in tax rates, like the kind enacted in the fiscal-crisis deal. Rather, he wants to close loopholes and deductions to raise revenue.
But while Obama wants to use that revenue to close the deficit, some Republicans say that revenue should be used to in turn lower rates and boost the economy.
"I'm disappointed the president today attempted to unilaterally change the terms of the debate on tax reform," Sen. Tom Coburn, R-Okla., said in a statement. "Tax reform does not mean closing loopholes to solely pay down the deficit.  Tax reform means closing loopholes to primarily lower rates for working families in order to promote economic growth, which has the effect of increasing tax revenues for the federal government."
Meanwhile, lawmakers across Capitol Hill are putting out dueling proposals to deal with the March 1 deadline.
The Congressional Progressive Caucus, a group of liberal House Democrats, on Tuesday unveiled a bill that would cancel the looming spending cuts and replace them with tax hikes. It would also cut $300 billion from the Pentagon and divert it to "job creation."
House Republicans are sure to oppose the bill.
Republicans on the armed services committees in both chambers are expected to unveil a proposal of their own on Wednesday.
The automatic cuts add up to roughly $1 trillion over 10 years. While many lawmakers are still committed to achieving that level of deficit reduction and more, the fact that half the cuts hit the Pentagon -- which is already dealing with cutbacks -- and the other half hit domestic programs favored by Democrats has made the current course unpalatable in Washington.
For more than a year, though, lawmakers have been unable to figure out an alternative that is amenable to both sides.

Read more: http://www.foxnews.com/politics/2013/02/06/republicans-blast-obama-stopgap-budget-fix-as-ploy-for-tax-hikes/#ixzz2K8HNZQoP

The Cheapest Obamacare Will Cost Families Is $20,000 / Year

theblaze

www.hyscience.com

Becket Adams/ When the Obama White House and Congress passed The Patient Protection and Affordable Care Act (i.e. “Obamacare”), we clearly recall being told that the bill would save Americans money.

Yet, as CNSNews.com reports, the Internal Revenue Service (IRS) in a regulation issued Wednesday “assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.”

Wait, what?

Yes, while explaining the penalty for not purchasing government insurance, the IRS calculates that the average annual cost for a family will be at about $20,000.

“The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan,” CNSNews.com reports.

“The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan,” the report adds.

Wait a minute. What is the exact language of the IRS regulation?

“The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation states.

Oh.

“Bronze will be the lowest tier health-insurance plan available under Obamacare — after Silver, Gold, and Platinum,” CNS explains. “Under the law, the penalty for not buying health insurance is supposed to be capped at either the annual average Bronze premium, 2.5 percent of taxable income, or $2,085.00 per family in 2016.”

In the new rules published Wednesday, the IRS also made law the regulations regarding the fines and penalties incurred if someone chooses not to buy the insurance. And in an attempt to explain these laws, the agency draws up a few examples.

“[T]he IRS assumes that families of five who are uninsured would need to pay an average of $20,000 per year to purchase a Bronze plan in 2016,” CNS notes.

“Using the conditions laid out in the regulations, the IRS calculates that a family earning $120,000 per year that did not buy insurance would need to pay a ‘penalty’ (a word the IRS still uses despite the Supreme Court ruling that it is in fact a ‘tax’) of $2,400 in 2016,” the report adds.

And just in case you were wondering how convoluted and contrived these new regulations look like, here’s the exact language from the IRS:

Example 3. Family without minimum essential coverage.

“(i) In 2016, Taxpayers H and J are married and file a joint return. H and J have three children: K, age 21, L, age 15, and M, age 10. No member of the family has minimum essential coverage for any month in 2016. H and J’s household income is $120,000. H and J’s applicable filing threshold is $24,000. The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000.

“(ii) For each month in 2016, under paragraphs (b)(2)(ii) and (b)(2)(iii) of this section, the applicable dollar amount is $2,780 (($695 x 3 adults) + (($695/2) x 2 children)). Under paragraph (b)(2)(i) of this section, the flat dollar amount is $2,085 (the lesser of $2,780 and $2,085 ($695 x 3)). Under paragraph (b)(3) of this section, the excess income amount is $2,400 (($120,000 – $24,000) x 0.025). Therefore, under paragraph (b)(1) of this section, the monthly penalty amount is $200 (the greater of $173.75 ($2,085/12) or $200 ($2,400/12)).

“(iii) The sum of the monthly penalty amounts is $2,400 ($200 x 12). The sum of the monthly national average bronze plan premiums is $20,000 ($20,000/12 x 12). Therefore, under paragraph (a) of this section, the shared responsibility payment imposed on H and J for 2016 is $2,400 (the lesser of $2,400 or $20,000)

How President Obama Lost His Shirt to John Boehner

Forbes/ Ralph Benko

The House, under the leadership of Speaker John Boehner, has precipitated a postponement in the debt ceiling fight until May. This represents a strategic choice by Boehner to make the Sequester fight, not the debt ceiling fight, the next major engagement. Much of the mainstream media now is accusing Congress of “kicking the can down the road.” They are missing the strategic implications.

In retrospect, at the Battle at Fiscal Cliff, Boehner took President Obama to the cleaners. He did it suavely, without histrionics. While Obama churlishly, and in a politically amateurish manner, publicly strutted about having forced the Republicans to raise tax rates on “the wealthiest Americans” Boehner, quietly, was pocketing his winnings.

Dazzled by Obama’s Ozymandias-scale sneer most liberals failed to notice that Boehner quietly made 99% of the Bush tax cuts permanent. As Boehner himself dryly observed, in an interview with The Wall Street Journal’s editorial board member Steve Moore, “”Who would have ever guessed that we could make 99% of the Bush tax cuts permanent? When we had a Republican House and Senate and a Republican in the White House, we couldn’t get that. And so, not bad.’”

“Not bad” is a resounding understatement. Dealt a weak hand, Boehner managed to 99% outfox, on tax policy, a president who had the massive apparatus of the executive branch, the Senate majority, and a left-leaning national elite media whooping it up for a whopping tax increase. Even more impressively, Boehner pulled it off with steady nerves while under heavy pressure from the anti-spending hawks in his own caucus.

Boehner, deftly, also dramatically raised the threshold, on which Obama had campaigned, at which the modest 3.6% rate increase kicked in. Yet his biggest win may have been in making the Alternative Minimum Tax patch permanent. This changes the baseline with profoundly positive implications for future tax reform and economic growth.

Boehner thereby won a triple jackpot, a bonanza for conservatives and supply-siders … while Obama, giving up all that for a trivial symbolic victory, lost his Progressive shirt. The mainstream media, with a few exceptions such as Howard Kurtz at the Daily Beast, was too deep in the tank to report that the Emperor has no clothes.

But Obama ended up, at least, shirtless. Next … off come the pants. Here come the real spending cuts. As reported by Moore, Boehner privately told Obama “’Mr. President, we have a very serious spending problem.’ He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: ‘I’m getting tired of hearing you say that.’”

Boehner, last week, again bested Obama by pushing the debt ceiling fight back to May. This is a double whammy by Boehner. According to specialists, by structuring the law to allow new borrowing only to the extent of obligations “outstanding on May 19, 2013, exceeds the face amount of such obligations outstanding on the date of the enactment of this Act” Boehner effectively instituted a spending freeze. This, in the face of Obama’s relentless demand for even more spending, is a victory for anti-profligacy hawks.

There’s a much bigger whammy embedded. Pushing the debt ceiling fight back to May, as the New York Times put it, “re-sequenced” the fight. Re-sequencing was not an idle gesture. It was a major tactical win by the House. The Times reported that “’The president stared down the Republicans. They blinked,’ said Senator Charles E. Schumer, Democrat of New York.” Schumer speaks with macho naiveté.

The Democrats, apparently, still don’t know what Boehner has hit them with. Thanks to the Sequester anti-profligacy conservatives now negotiate from strength. What are the implications of putting the Sequester fight before the debt ceiling fight? Steve Moore:

“The Republicans’ stronger card, Mr. Boehner believes, will be the automatic spending sequester trigger that trims all discretionary programs—defense and domestic. It now appears that the president made a severe political miscalculation when he came up with the sequester idea in 2011.

“As Mr. Boehner tells the story: Mr. Obama was sure Republicans would call for ending the sequester—the other ‘cliff’—because it included deep defense cuts. But Republicans never raised the issue. ‘It wasn’t until literally last week [columnist’s note: just before the deadline] that the White House brought up replacing the sequester,’ Mr. Boehner says. ‘They said, ‘We can’t have the sequester.’ They were always counting on us to bring this to the table.”

“Mr. Boehner says he has significant Republican support, including GOP defense hawks, on his side for letting the sequester do its work. ‘I got that in my back pocket,’ the speaker says. He is counting on the president’s liberal base putting pressure on him when cherished domestic programs face the sequester’s sharp knife. Republican willingness to support the sequester, Mr. Boehner says, is ‘as much leverage as we’re going to get.’”

Will the support of the defense hawks hold? It appears Boehner’s not bluffing. Although Obama’s outgoing defense secretary, Leon Panetta, infamously called the sequester “catastrophic,” the secretary obviously is falling back on the old bureaucratic tactic called “squealing louder than it hurts.” The Washington Post afterward called Panetta “the former (emphasis added) deficit hawk.”

As the Center for Strategic and International Studies, and nobody’s patsy, crisply notes about the Sequester: “This cut is significant to be sure, but it does not reach that of previous postwar drawdowns.”

Catastrophic? Oh please. Panetta surely knows better. The Post reprised a younger Panetta who, at a 1992 hearing (when the deficit was less than half its current size), stated “I think the most dangerous threat to our national security right now is debt, very heavy debt, that we confront in this country.”

“As chairman of the House Budget Committee and later as budget director in the Clinton administration, Panetta was an unforgiving enforcer of the bottom line as the United States grappled with record-size debts. As the largest government agency, the Pentagon found itself a frequent target of his whip, especially as it struggled to justify its missions in the aftermath of the Cold War.

“’I think the most dangerous threat to our national security right now is debt, very heavy debt, that we confront in this country,’ Panetta lectured then-Defense Secretary Richard B. Cheney and Gen. Colin L. Powell, the chairman of the Joint Chiefs of Staff, during a hearing in 1992.”

It now should be clear to every Tea Party Patriot that Boehner is acting with integrity, with acute political sophistication, as an authentic conservative serious about reducing the debt by reducing spending. His claim, to Moore, that “he has significant Republican support, including GOP defense hawks … for letting the sequester do its work,” promises to be a game changer.

Given the assessments by sober defense analysts — and according to other, private, reports from Capitol Hill — there is no reason to think that Boehner is bluffing about having the support he needs to take the Sequester or barter it for even better cuts. And Boehner’s abhorrence of debt appears completely authentic. Moore: “He sees debt as almost a moral failing, noting that when he grew up in a little middle-class, blue-collar neighborhood’ outside of Cincinnati, ‘nobody had debt. It was unheard of. I just don’t do debt’.”

Boehner, having shrewdly identified the conservatives’ point of maximum leverage, appears poised for an historic victory. Boehner may prove himself to be the guy big enough and smart enough finally to engineer something that eluded even the great Reagan: pushing federal spending onto a downward trajectory.

If Boehner succeeds in closing the deal as he, with a critical assist from Senate Minority Leader McConnell, seems about to do he will go down in history as having brought about “the moment when the rise of the oceans (of debt) began to slow” … and our republic “began to heal.” If so John Boehner will deserve to be more than a Republican, conservative, and tea party, hero. He will go up in popular esteem, and down in history, as the master who staunched Washington’s hemorrhaging of America’s wealth.

Obama’s Startling Second Inaugural Admission

frontpagemag

theatlantic.com

By Tom Blumer

President Barack Obama’s second inaugural address on Monday was mostly what one would have expected: A paean to the wonders of statism and how great America could be if we would just overcome our unhealthy legacy. In Obama’s world, we would all be so much better if we could get over obsessions like rugged individualism and the true meaning of the words contained in our nation’s Constitution, and let a benevolent, all-knowing government take more control over our everyday lives.

But in the midst of his “we know better” exercise, Obama made the most stunning admission of abject failure I have heard a president utter in my lifetime. I’ll have more on that shortly.

In his speech, Obama made a pretense of paying homage to our Founding Fathers, but followed it with a clear indication that he believes their wisdom is passé by claiming that “preserving our individual freedoms ultimately requires collective action.” Other than our involvement in wars, which he falsely claims will soon be coming to an end, I can’t imagine what he could be thinking of. Obama even added a dose of coldly calculated and contemptuous ridicule to the mix by including an insulting reference to the modern wartime inadequacy of “muskets and militias.”

Though it was indeed, as the Politico’s Glenn Thrush correctly noted, “the most liberal speech he has delivered as president,” it clearly disappointed some of those in the establishment press who wanted to hear Obama go for his opponents’ jugulars. That group includes John Dickerson, who has been Political Director at CBS News since November 2011.

Dickerson put on his best game face at Slate after the speech, but it’s clear from reading his previous 2,000-word battle plan disguised as a column on Friday that Obama didn’t go as far as he would have liked.

The column’s headlines called for Obama to “Go for the Throat!” and “declare war on the Republican Party.” In his content, Dickerson claimed that Republican recalcitrance meant that “Obama’s only remaining option is to pulverize,” and that the president “can only cement his legacy if he destroys the GOP.” Slate was so thrilled with the piece that it amped up its “most popular” tease list title to read: “Why Obama Should Seek To Destroy the Republican Party.” Dickerson’s occupation of such an influential perch at CBS and the presence of so many others like him at other news outlets largely explain why last year’s establishment press coverage of the GOP primaries and the general election was so ruthlessly biased against Republicans and especially conservatives.

Given the content of the rest of his speech, it was astonishing to hear Obama say the following five words: ”An economic recovery has begun.”

Wow.

We’re just three weeks shy of the fourth anniversary of the passage of the February 2009 “stimulus plan.” It was supposed to turn the economy around after the evil George W. Bush ruined everything. Obama’s Keynesian economists told us that without the stimulus plan’s immediate implementation, unemployment would rise to an unacceptable 9 percent by the summer of 2010. But if we would just pass this monstrosity which nobody read, unemployment would peak at 8 percent in just a few months and gradually fall to 5.2 percent by the end of 2012.

What really happened is that despite the plan’s passage (actually, largely because of it), the unemployment rate hit 10 percent before 2009 was even over, stayed above 8 percent for a post-World War II record 43 months, and is still at 7.8 percent. The Obama government, set into fiscal motion by the Democratic Congress of 2009-2010 and running on autopilot ever since, has run up $5 trillion in supposedly stimulative budget deficits and has been the beneficiary of four years of supposedly stimulative near-zero interest rates courtesy of Ben the Betrayer Bernanke’s Federal Reserve.

Now, after all of that ruinous stimulus, the best our president can say is: “An economic recovery has begun.” It’s almost as if he wants us to believe that this strange, uncontrollable beast called the economy has finally decided to get better on its own.

Unfortunately for those who are unemployed, under-employed, and discouraged, there’s still reason to believe that the economy, after so many false starts during Obama’s first term, is once again sputtering.

Economists have been wearing out their erasers and “delete” keys writing down their estimates of economic growth during the fourth quarter of 2012. The rough consensus is that gross domestic product will grow by an annualized 1.5 percent, down from 3.1 percent in the third quarter – if we’re lucky.

Seasonally adjusted job growth has only averaged 130,000 during the past ten months. That’s below the 150,000 jobs needed just to keep pace with growth in the adult population. Additionally, in a sign that the trend is in the wrong direction, the raw number of jobs changes before seasonal adjustment has been lower than that seen in the same month of the previous year during three of the past four months.

Finally, in perhaps the most ominous sign of decay, last week’s report on initial jobless claims told us that the raw number of claims filed (i.e., before seasonal adjustment) was greater than the comparable week a year ago — the first time this has happened in a truly comparable non-holiday week since October 2009.

The way things are going, Obama’s successor may very well use those same five words — “An economic recovery has begun” — in his or her inaugural address four long years from now.

Who Really Owns the U.S. National Debt? [Preliminary FY2012 Edition]

politicalcalculations

Today, we're taking a preliminary look at just who owns all the debt issued by the U.S. federal government through 30 September 2012 - the end of the U.S. government's fiscal year. Our chart below visualizes what we found:

The information presented in our chart above is preliminary, as the U.S. Treasury typically revises its foreign entity debt ownership data in March of each year.

Overall, U.S. entities own just 65.8% of all debt issued by the U.S. federal government. Ranking the major U.S. entities from low to high, we find that:

• The U.S. government's military retirement fund owns 2.4% of the national debt.
• The U.S. government's civilian employee retirement fund accounts for another 5.6% of the nation's debt.
• The U.S. Federal Reserve, thanks to its quantitative easing programs of recent years, has racked up holdings equal to 10.8% of the total U.S. national debt.
• The U.S. Social Security Trust Fund claims 16.7%.
• U.S. individuals and institutions, which includes regular Americans, banks, insurance companies and other government entities, own 30.4% of the nation's debt.

Meanwhile, foreign entities own 34.2% of all U.S. government-issued debt, with the following nations' individuals and institutions representing the five biggest holders of that debt, again ranked from low to high:

• United Kingdom: 0.9%
• Brazil: 1.6%
• "Oil Exporters", which includes Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait,Oman, Qatar, Saudi Arabia, Algeria, Gabon, Libya, Nigeria and the United Arab Emirates: 1.7%
• Japan: 7.0%
• China (including Hong Kong): 8.1%

All other nations hold approximately 15% of the U.S. outstanding national debt.

The Role of Quantitative Easing in Offsetting Foreign Ownership of the U.S. National Debt

The Federal Reserve's various quantitative easing programs of recent years, where the U.S. government-chartered central bank has purchased large quantities of U.S. government-issued debt in its attempts to keep the U.S. government's spending elevated and the U.S. economy stimulated by lowering long-term interest rates, are especially interesting in the degree to which they've succeeded in offsetting the share of the U.S. national debt owned by foreign interests.

Here, the Fed boosted its holdings of U.S. Treasury securities from a low of $474 billion on 18 March 2009 when it launched QE 1.0 to a peak of $1.684 trillion on 21 December 2011, which fell back to $1.676 trillion by 26 September 2012 - just before the end of the U.S. government's 2012 fiscal year.

The Fed also boosted its holdings of other federal agency debt securities from $48 billion on 18 March 2009 to a peak value of $169 billion on 10 March 2010, which has slowly declined to $83 billion as of 26 September 2012. All told, the Federal Reserve held an additional $1.21 trillion of the U.S. national debt compared to what it did before it began its quantitative easing programs.

As a result, the U.S. Federal Reserve has gone from holding 4.7% of all U.S. government-issued debt as of 18 March 2009 to holding 10.8% of it as of the end of the U.S. government's Fiscal Year 2012. During the peak of the program, the Federal Reserve crowded out almost every other purchaser of U.S. government-issued debt.

Assuming that other U.S. entities would have been unable to accumulate more of the U.S. national debt than they did during this period and that the U.S. government would have spent as much money as it did, if not for the Federal Reserve's quantitative easing programs, the share of the U.S. national debt held by foreign entities would have increased to 41.7%, with the bulk of the foreign acquisitions going to China.

As it stands, a little over 1 out of every 3 dollars borrowed by the U.S. federal government is now owned by foreign interests.

Data Sources

U.S. Federal Reserve. U.S. Treasury securities held by the Federal Reserve: All Maturities. Accessed 14 January 2013.

U.S. Federal Reserve. Federal agency debt securities held by the Federal Reserve: All Maturities. Accessed 14 January 2013.

U.S. Treasury. Major Foreign Holders of Treasury Securities. Accessed 14 January 2013.

GOP Hits Snag With No-Pay Plan

foxnews

House Republicans might run into a snag in trying to suspend congressional pay as a way to nudge budget negotiations along: the U.S. Constitution.

As part of a proposal to raise the debt limit for three months, the House GOP would suspend pay for members of Congress unless both the House and the Senate pass a budget blueprint for the next fiscal year.

The measure plays to public disaffection with Congress, which has been locked in a bitter spending battle, and appeals to the small-government wing of the Republican Party, which doesn’t like government spending to begin with. It is also a dig at Senate Democrats, who have gone for years without adopting a budget plan.

The problem is that immediately withholding pay from lawmakers may be unconstitutional. The 27th amendment states no law changing compensation for members of the House or the Senate can take effect until after the next House election. That means a law, even if it were to clear the Democratic-controlled Senate, which is a long shot, could not be used to withhold pay for almost two years.

To read more from The Wall Street Journal, click here >>

A Debt Limit Strategy Rather Than Tactics

John B. Taylor*

The recent debate about the debt limit focuses on the negative economic impact of a decision by the government not to increase the debt limit. That’s why President Obama says he is asking for clean debt limit increase—one not linked to spending reductions, saying that a default would cause economic harm, and that we should not play chicken with the American economy.

But with current high and growing debt levels a clean debt limit increase would also hurt the economy. If politicians just increase the debt limit now without reducing the rapid growth of spending, then they will be expected to do so in the future and the debt explosion will continue to create a drag on the economy with a likely future crisis. The time pattern may be different with a clean debt limit increase--if kicking the can down the road postpones the harm, but the overall impact is negative, and it could be worse if there is a debt crisis.

There is an obvious way to prevent both evils: follow a policy strategy which links debt limit increases to reductions in the growth of spending. By focusing on tactics--games of chicken, leverage and threats—Washington is ignoring this sensible policy strategy.

In a recent technical paper my colleague Bob Hall, rigorously works out the effects of severing the link between debt increases and deficit spending. He defines a parameter which he calls “alpha.” It’s simply the amount by which politicians reduce the deficit when they increase the debt, measured as a fraction of the debt to GDP ratio. In other words, alpha is an indicator of how much the government “leans against” the debt. As Bob puts it: “Alpha is all-important in the analysis….Governments with no tendency to lean against debt, with alpha = 0, face a likelihood but not a certainty of debt crisis.” The problem with a clean debt limit increase is that it effectively sets alpha to 0.

A much better value of alpha, as Bob shows, is around .1, which, if you measure spending reductions on a ten year basis, translates to .1X10 or 1, or, in other words, a strategy like the one-to-one link sometimes called the Boehner rule. So while some may think of such a rule a threat, it is really a strategy, and a sensible strategy in my view.

------------------

*Professor of Economics at Stanford University

INTERVIEW: We Found A Congressman Who Actually Understands Economics

Joe Weisenthal 

Wikimedia Commons

The idea of circumventing the debt ceiling via the creation of a Trillion Dollar Coin first gained momentum a couple of weeks ago after it was suggested by New York Congressman Jerry Nadler in an interview with Reid Pillifant of Capital New York.

That such an outside-the-box, yet economically sound argument came from Nadler wasn't a big surprise, as Nadler (who represents much of Lower Manhattan) has a history of showing depth in his thinking beyond that of the typical Congressman.

Watching Washington deal with the debt ceiling can be a scary proposition, given the seriousness of the issue, combined with the ignorance, but there are some who get it.

In light of the death of the Trillion Dollar Coin, we caught back up with Nadler to get his take on it, and more broadly what Congress should be doing to help the economy.

On the deficit, he says what virtually no other politician will say, that it's too small: "I think the deficit is not our immediate problem, our immediate problem is unemployment and frankly, I think right now, we should be running a higher deficit, temporarily, to get the economy into high gear."

He also characterized Europe, which has been trying austerity for two years, as a rare real-time economics experiment: "I often say in my speeches, I say, it’s rare in life that you get a controlled scientific experiment. 'Cause you can’t do controlled scientific experiments with real people, normally. But you have it, and if you grasp the economics of the economic recoveries from 2007 in Europe and the United States, they matched, until 2010, when they start to collapse. And then it diverges, and we keep going up, slowly."

Given the unpopularity of more deficit spending, can the public ever be convinced we need to spend more? Here Nadler blames Obama for ceding too much ground and accepting the GOP premise that spending cuts are needed... "Because when the presidents sets the basic terms of the argument, that defines sort of the outer limit to a lot of extent."

As for the debt ceiling, he's very concerned, and he says the best hope is that Wall Street and big business will simply bring enough pressure on the GOP to wake them up.

Big thanks to BI intern Lisa Mahapatra for transcribing the below Q&A.

-----------------------------

BI: What do you think of the coin rejection?

Rep. Nadler: I don’t understand why the president unilaterally disarmed even if he doesn’t want to use it, why not just keep it in his back pocket, follow what Carney said last week... and let them think, you know, that the threat is there.

BI: Right.

Rep. Nadler: He says he’s not going to negotiate, and god knows that I hope he won't, but when it comes to the deadline and they haven’t raised the debt ceiling, what happens then?...I hope he doesn’t negotiate at that point.

BI: So you think he’ll basically have to negotiate, having taken all these off the table.

Rep. Nadler: I don’t know. Because Wall St. and big businesses are going to push very hard on the Republican party not to go into Terra incognita, which terrifies them, and it should terrify them. And the Republicans may cave to that. They may not. I hope they do, and I hope they never get to that point. If we get to that point, it would be very good if we had that, if he had that in his backpocket.

BI: Let’s just take a step back for a minute, forgetting the current debt ceiling negotiations, and what’s your general view, I mean I know like, it seems to me that you have a higher understanding of economics than many congressmen, even the fact that you understood the coin proposal and understood that it wasn’t a joke. What do you think the government’s responsibility right now is, in terms of running deficits instead of stimulating the economy.

Rep. Nadler: I think the deficit is not our immediate problem, our immediate problem is unemployment and frankly, I think right now, we should be running a higher deficit, temporarily, to get the economy into high gear.

We’re in a very slow recovery, unnecessarily so. The deficit has come down from 10.1% percentage in 2009, to 7.1% now, without doing anything. I mean if we could have unemployment down to 5%, which it was in 2005, that would reduce the deficit by 40% by itself. I think this austerity policy of chasing this whole grand bargain thing, I don’t agree with. I don’t think we should be cutting spending at all, except the spending that is really unnecessary, like the military.

And even then, cut that, but increase resourceful (resources) spending. The real reason we have this high deficit we do is because of the counter-Cyclicals, unemployment insurance, food stamps, which is what we’re supposed to do.

I think trying to reduce the deficit right now is wrong, because this position is going to keep the economy in the doldrums and keep the depression going longer and it’s self-defeating.

You look at Europe. I often say in my speeches, I say, it’s rare in life that you get a controlled scientific experiment. Cause you can’t do controlled scientific experiments with real people, normally. But you have it, and if you grasp the economics of the economic recoveries from 2007 in Europe and the United States, they matched, until 2010, when they start to collapse. And then it diverges, and we keep going up, slowly.

BI: Do you think the public could be made to understand this argument. It’s very, economists understand this very well, and the idea that we should be running higher deficits to counteract the slump, but is this a message that can get through?

Rep. Nadler: I think the problem is, it’s practically impossible to get the public to buy that, as long as the president doesn’t. If the president buying into the notion that the deficit is a big problem or that we’re going to have a grand bargain.. Do we revenues as well as cuts, but still do cuts. Very difficult to do against that from the left.

BI: Do you think that the left cedes too much, is that what you’re saying, it cedes too many of the premises of the right about the benefits of cutting spending?

Rep. Nadler: I don’t know, I said from the left meaning... I think the president seems to have ceded the basic argument. And that’s a problem for all of us. Because when the presidents sets the basic terms of the argument, that defines sort of the outer limit to a lot of extent.

BI: Where does your understanding of economics come from, most congressmen don’t grasp the stuff and don’t seem to think about it like this. Why do you understand it so well?

Rep. Nadler: I read a lot, I don’t know.

BI: Who do you like to read?

Rep. Nadler: Who do I like to read? I certainly like to read Paul Krugman, his columns, his blogs. I read, you know various books: currently I’m reading a book, the Donald Bartlett book, The Betrayal American Dream. I’ve read most of Bob Kutner's books.

BI: Are there other people in the congress that sympathize with you? You just don’t hear many politicians talk like this.

Rep. Nadler: There are people who agree. Quite a few people in the progressive caucus that if you look at the progressive caucus budgets, that we vote on every year that we get generally 90 to 100 votes, those budgets either as an alternative democratic budget, we vote the democratic budget and the progressive caucus budget, and subsequent resolutions, those budgets are based on the premises that I’ve been articulating. Based on the fact that we should not be trudging along austerity, that we should be priming the pump and doing straight Keynesian economics.

BI: Do you believe that the US could theoretically have a debt crisis or do you think premise, just the idea that that could happen in the US is incorrect?

Rep. Nadler: I don’t know about could, I assume you could conjure up far-fetched circumstances in which it could occur, but it’s certainly not a likely scenario in the relatively near future. I mean right now, we’re selling our bonds at negative interest rates. I don’t see that.

BI: Now that the coin idea has been taken off the table, you know there’s still some people that think there might be some other loopholes, like the IOU idea. Do you think the White House has any backup options at this point?

Rep. Nadler: I don’t know, I don’t understand. I read something about the IOU thing, I don’t really understand it, I don’t know. They’ve taken the 14th amendment off the table, they’ve taken the trillion dollar coin off the table. The coin, I mean the 14th amendment, I’ve read good constitutional arguments on both sides, and there’s not decent court precedent. But the coin is so clearly legal, so clearly does the job, I don’t understand why they took it off the table, I don’t understand where they are at this point. As I said, I don’t know what actions there are at this point, other than they should have Wall St., big business gets the Republicans backing down.

I should tell you, I am sponsoring a bill, introduced last September, in the last congress, I’m going to reintroduce it this week, on Wednesday, just to repeal the debt ceiling. Because it’s obviously now become a tool of extortion. But we should have done that a long time ago.'

BI: Do you believe that, when the Republicans say that hitting the debt ceiling doesn’t necessarily imply default on interest payments specifically, what do you make of that argument? Do you think prioritization is technically possible?

Rep. Nadler: I don’t know, I’m not an economic expert in the operations of the government to be able to answer that. I do know, I think I read that there were 100 million checks written, I don’t know, that it’s mostly computerized, that even if you wanted it, tried to prioritize it, it’s not going to clear if in fact you physically could. And that may be the case but even so, to say that you’re going to prioritize, to say that you’re not in default if you’re paying the interest on the bonds, but you’re not sending out social security checks, not paying the military, you’re not sending veteran’s benefits, those are defaults on contractual obligations. And legal obligations. I don’t think, the market would look very differently, if you paid the bonds’ interests and you can get away with that for a while, by not paying all the other people, government collapsed and people starved, because they’re not getting social security checks, I suspect that the markets would not brightly on that.

BI: You think the best hope is that big business and Wall Street puts pressure on the Republicans, do you see evidence of that happening in a way you didn’t see in 2011.

Rep. Nadler: Oh yeah, I think we do see evidence that. I don’t think in 2011 anyone took seriously how limiting these people were. I know that now, and i think that they’re beginning to really try to put on the pressure. Whether they, certainly work on people like Boehner, it won’t work on some of these people we’ve seen talk about prioritizing and default and so forth … how that will work out I don’t know.

BI: Thank you.

Read more: http://www.businessinsider.com/interview-with-congressman-jerry-nadler-on-the-debt-ceiling-deficits-and-the-trillion-dollar-coin-2013-1#ixzz2I3y6ejbv

Jon Stewart Fires Back At Paul Krugman: 'If Somebody Is Ruining Their Brand' With The Trillion Dollar Coin, It's You

Brett LoGiurato 

Daily Show host Jon Stewart fired back last night at economist Paul Krugman over the idea of minting a trillion-dollar coin to work around the debt ceiling. It continued a riff that was forged over the weekend when Krugman slammed Stewart for being "lazy" in satirizing the idea.

Stewart mocked Krugman as "the only creature more noble than a freshly felched unicorn" and "the rare gray-bearded urban laureate." He took issue with Krugman calling him "lazy" in a blog post over the weekend, joking that he was "banging it out four days a week, 22 minutes a day!"

Stewart then played a clip of Krugman saying Stewart was "ruining his brand" by not doing enough research and mocking the opposition.

"I'm pretty sure that is my brand," Stewart quipped.

Then he added this kicker: "If somebody is ruining their brand with a trillion dollar coin idea, I don't think it’s the non-economist."

Stewart noted that he was a fan of Krugman.

Watch the full clip below:

The Daily Show with Jon Stewart >>

Read more: http://www.businessinsider.com/jon-stewart-vs-paul-krugman-trillion-dollar-coin-2013-1#ixzz2I3tywUHr

Bernanke urges Congress to raise debt ceiling

Visit NBCNews.com for breaking news, world news, and news about the economy

O'Reilly: The unintended consequences of a liberal America

US budget deficit grows by $260M in December

foxnews

Washington –  The U.S. annual budget deficit is on track to reach $1 trillion for a fifth straight year, though government revenue jumped last month as people paid some taxes early to avoid higher rates in 2013.
The Treasury Department says the federal deficit grew just $260 million in December. But for the first three months of the budget year, the deficit is now $292 billion.
In December, tax revenue rose 12 percent to $270 billion. Spending fell 17 percent to nearly the same amount.
The budget year begins on Oct. 1. The size of the annual deficit will hinge, in part, on how Congress and the White House resolve a debate over raising the nation's borrowing limit. Republicans are demanding deep spending cuts in return for any increase.

Read more: http://www.foxnews.com/politics/2013/01/11/us-budget-deficit-grows-by-260m-in-december/#ixzz2HjcW0jcS

Top Senate Dems Urge Obama to Take Unilateral Action on Debt Ceiling

foxnews

Senate Majority Leader Harry Reid

WASHINGTON –  If President Obama were to break the impasse with Republicans over raising the debt limit by taking unilateral action, such a move would have the potential to set off a firestorm of controversy and spark a protracted legal battle.
Top Senate Democrats say, go for it.
The White House has dismissed talk that Obama would rely on unusual measures to raise the nation's debt limit without Congress' approval, but administration officials also have warned that the country could default on its debt and trigger a new economic crisis if lawmakers don't increase the limit on borrowing.
Senate Majority Leader Harry Reid, D-Nev., is among those urging Obama to consider options like invoking the 14th Amendment to the Constitution to find ways around the $16.4 trillion legal cap on government borrowing. The amendment states that the "validity of the public debt of the United States ... shall not be questioned," which some lawmakers believe permits a way out of the debt limit jam.
The government hit the debt limit last month and is juggling the books to buy additional time for Congress to act. But those moves only buy a few weeks of wiggle room, which requires Congress to act -- likely by mid- to late-February -- to avoid a market-quaking default on U.S. obligations.
The White House has said emphatically that it does not believe that the 14th Amendment permits Obama to ignore the debt cap on U.S. borrowing, though it considered the question during the 2011 debt crisis.
"There is no Plan B. There is no backup plan," White House spokesman Jay Carney said Wednesday. "There is no alternative to Congress raising the debt ceiling."
A letter to Obama on Friday from Reid and Sens. Dick Durbin, D-Ill., Chuck Schumer, D-N.Y., and Patty Murray, D-Wash., doesn't mention the 14th Amendment, but aides to the senators said that's what they have in mind in urging the president to consider unilateral action.
"We believe you must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis -- without congressional approval, if necessary," the letter said.
Battling House and Senate leaders have made virtually no progress on a strategy for legislation to lift the debt cap. House Speaker John Boehner, R-Ohio, insists that any debt increase be matched by equivalent spending cuts. Obama, buoyed by his re-election victory, says he won't negotiate as he did in 2011, when he traded a $2.1 trillion debt increase for tight spending limits on agency budgets and automatic, across-the-board spending cuts if a congressional "supercommittee" failed to reach a budget agreement.
"Senate Democrats cannot ignore their responsibilities for political convenience -- and the American people will not tolerate an increase in the debt limit without spending cuts and reforms," said Boehner spokesman Michael Steel.
The impasse has people on both sides scratching their heads over how it will be resolved. The anxiety is such that some on the left are urging Obama to mint a coin worth perhaps $1 trillion to be deposited at the Federal Reserve and drawn upon to meet government obligations.

Read more: http://www.foxnews.com/politics/2013/01/11/top-senate-dems-urge-obama-to-take-unilateral-action-on-debt-ceiling/#ixzz2HjZi3tYm

PAUL KRUGMAN: The Deficit Is Basically Solved [seriously...?]

are these guys playing around?

----------------------- 

Walter Hickey 

Many people think that fixing the deficit is a painful process that involves deep cuts to crucial programs. Some think the process is too hard, and it's not worth trying yet. 

That's not correct, according to a chart from from the Center on Budget and Policy Priorities' Richard Kogan showing just how far the United States has come in the past two years. 

We've talked before about how the painless and most effective solution to the deficit is additional growth in GDP.  As the recovery progresses and GDP rises, the government will get more revenue from increased productivity. We've also pointed out that — fundamentally — we don't have a spending problem.

CBPP

Paul Krugman made the point that the chart shows how far we've come on the deficit and how easy it will be to solve moving forward. 

Richard Kogan points out that the debt to GDP is very important indicator, and can't rise forever. "If it did," he says, "that would shrink the amount of national saving available for private investment, ultimately impairing productivity growth and, in turn, living standards."

In short, seeing what we're seeing is a good thing. 

The chart shows the stabilization of the debt to GDP ratio of the United States.

As late as 2011, the U.S. was bound for an unmitigated increase in debt to GDP ratio. Thanks to two bills, the deficit is close to coming under control:

• The Budget Control Act of 2011 (BCA), which came from the debt ceiling negotiations and mandates $1.2 trillion in cuts.
• The American Taxpayer Relief Act (ATRA), which was signed two weeks ago to avert the fiscal cliff and raised taxes on high earners. 

The red line on the bottom — which would stabilize the debt to GDP ratio — is what would come of an additional $1.4 trillion in government savings. Such savings could come in the form of either cuts or revenue raises, or a combination of both.

That's all it would take to permanently stabilize the debt to GDP ratio. Yes, the debt will continue to rise, but as long as it's rising at a slower, stable rate compared to GDP, the U.S. will be in an exceptional position moving forward. 

Krugman and Kogan's points are the same: The U.S. has come a very, very long way recently. In the past two years, the federal government has successfully cut the deficit, and is all things considered very close to stabilizing the debt. 

Here's the full CBPP article.

Read more: http://www.businessinsider.com/krugman-the-chart-that-proves-the-debt-problem-is-mostly-solved-2013-1#ixzz2HgWj8p8i

Jon Stewart On 'Mint The Coin'

The idea of minting a trillion-dollar platinum coin to work around the debt ceiling has gained some credible support in what has been just more than a week since its renewed take-off.

Rep. Jerry Nadler supports the idea. Nobel Prize-winning economist Paul Krugman wrote his first print column today advocating the possibility if Republican members of Congress vote against raising the debt ceiling. Even the White House didn't flatly rule it out.

But don't count Daily Show host Jon Stewart among its supporters. He jabbed at the idea in a segment in his show on Thursday, comparing it to newly nominated Treasury Secretary Jack Lew's signature.

"I'm not an economist," Stewart said. "But if we're going to just make [stuff] up, I say go big or go home. How about a $20 trillion coin?" Or, he suggested, maybe a $1 "quillion" coin.

"We don’t need some trillion-dollar coin gimmick," Stewart said. "We need a way to get the world to take the U.S. dollar seriously again."

Then he presented Lew's signature. At least he thought the trillion-dollar coin wasn't as ridiculous as that.

"Hey, Lew, here’s a tip: stop signing all your checks on the tea cup ride at Disney World," Stewart said.

Here's the full clip, courtesy of Comedy Central:http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/the-daily-show-with-jon-stewart---january-10-2013/#clip841462

Read more: http://www.businessinsider.com/jon-stewart-trillion-dollar-platinum-coin-mint-jack-lew-signature-2013-1#ixzz2HgVEPNjy

Funny Money: Pundits float $1 trillion coin as answer to debt-ceiling standoff

Foxnews Is a trillion-dollar coin the solution to the next fight over the debt ceiling? 

Imagine sitting around the kitchen table, trying to figure out how you're going to pay off that next-generation HDTV you just bought.
Then someone has an idea. Brush off one of the old checker pieces in the attic, assign it a value of, say, $2,000 -- and use that newly minted "coin" to pay the credit card.
Such an absurd idea is, pun intended, gaining currency as a technically legal way for Washington to avert a looming fight over the debt ceiling. A Democratic congressman, a Nobel-winning economist and several prominent writers are now floating the idea that the Treasury Department should use obscure powers to mint a $1 trillion coin if Congress does not permit an increase in the debt ceiling.
That coin, then, could be used to pay America's debts.
Rep. Jerrold Nadler, D-N.Y., told Capital New York that the "out of the ordinary" idea could actually work.
"I'm being absolutely serious," he said. "It sounds silly, but it's absolutely legal."
Folks like Nadler point to a tiny section in the U.S. code that allows the Treasury secretary to "mint and issue platinum bullion coins and proof platinum coins" of a size and denomination of "the secretary's discretion." This is mainly for commemorative coins, but the idea that the provision could be exploited as an ace-up-the-sleeve for the administration was first explored during the 2011 debt ceiling fight. Now, it's back.
The trillion-dollar coin idea has attracted more than 4,500 signatures on a White House petition, and, crossing social media's first threshold of acceptance, has earned its own #mintthecoin hashtag on Twitter.
The likelihood of this happening is about as likely as the checkers scenario. But the argument in its favor is that minting a trillion-dollar coin is a commensurately ridiculous response to Congress refusing to pay debts it has already accumulated.
"While this may seem like an unnecessarily extreme measure," the White House petition reads, "it is no more absurd than playing political football with the U.S. -- and global -- economy at stake."
Economist Paul Krugman called it a "gimmick," but wrote that "since the debt ceiling itself is crazy ... there's a pretty good case for using whatever gimmicks come to hand."
Aside from the obvious questions this campaign raises -- whose face would adorn such a high-value coin, and what happens if it's lost in the laundry -- are some more troublesome questions, like what a freewheeling Treasury secretary minting coins of any denomination would do to the markets and inflation.
Bloomberg's Josh Barro tries to dispatch with these concerns by arguing that President Obama could avert the inflation fear by pledging to buy back the new currency as soon as the Treasury Department can borrow again. And then, Barro offers, Obama could revoke the platinum coin authority in exchange for abolishing the debt ceiling.
Joe Weisenthal of Business Insider also claims the coin wouldn't cause "massive inflation" anyway, "because we wouldn't have a gigantic injection of new money" -- just money Congress has already allocated.
But other analysts warn the idea of skirting the debt ceiling by producing astronomically valuable coins is a recipe for market chaos.
"It's just a disguised new form of debt," former Congressional Budget Office director Douglas Holtz-Eakin told FoxNews.com. "This would say (to the markets) they cannot manage their finances as a nation, they're down to gimmicky coins."
He added: "It would have all the implications of near-default."
A column in Britain's The Guardian also panned the idea as one that doesn't work "even as satire," arguing that it could indeed "create a nonsensical level of inflation."
The administration may not dignify the trillion-dollar coin idea with a response. The related petition is still about 20,000 signatures short of the number necessary to elicit a response from the White House.
Still, another debt ceiling fight is looming. The country technically bumped up against the borrowing cap on Dec. 31, but Treasury Secretary Tim Geithner took emergency measures to stave off a crisis. Lawmakers have a matter of weeks to determine what, if any, spending cuts will be mandated in order to win approval from Congress for another debt-ceiling hike.

Read more: http://www.foxnews.com/politics/2013/01/07/funny-money-pundits-float-1-trillion-coin-as-answer-to-debt-ceiling-standoff/#ixzz2HJakqat4

The Trillion Dollar Platinum Coin

Pelosi: Obama Should Raise Debt Ceiling Unilaterally

breitbart

This morning on CBS’ Face the Nation, House Minority Leader Nancy Pelosi (D-CA) blithely announced that if she were President Obama, she would simply invoke the 14^th Amendment to the Constitution and unilaterally raise the debt ceiling:

Well, you ask the Republicans, because we always passed the debt ceiling. When President Bush was president, as he was incurring these massive debts, and the Republicans weren't saying 'boo' at the time. There should be, this is a conversation where there should be no doubt. In fact, if I were president, I'd use the 14th Amendment, which says that the debt of the United States will always be paid.

Just in case Americans missed it, Pelosi left no room for doubt. When host Bob Schieffer asked, “You would just go ahead and do it, you wouldn’t wait for Congress?” she answered, “I would just go do it.”

There is no legal argument that the 14^th Amendment allows the President to ignore Congress’ power of the purse strings on incurring debt. The relevant text reads:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The text of this amendment is clear: no law can be passed which questions the validity of the public debt. But, of course, the debt ceiling does not do that. It merely prevents the government from borrowing more money to pay that debt. Government still carries the debt, and still has to pay it. It just can’t take out a second credit card to do so if the debt ceiling is not increased. (Incidentally, the purpose of the amendment was to prevent Southern states from voting to negate debts incurred by the Union in waging the Civil War against the Confederacy.)

This is even a bridge too far for the Obama administration, which says that the 14^th Amendment does not “give the president the power to ignore the debt ceiling – period,” according to White House spokesperson Jay Carney. But Democrat dreams of executive branch tyranny under Obama continue. And why not? So far, Obama hasn’t been disinclined to ignore the Constitution.

The View from the Bottom of a Fiscal Abyss

Doug Patton

thelastdaysbulletin.blogspot.com

Forty-one dollars in tax increases for every one dollar in spending cuts. That’s the shrewd deal Speaker of the House John Boehner negotiated with President Barack Obama. Obama, Boehner and other congressional leaders have known for a year and a half that these automatic tax increases and so-called spending cuts — also known as the fiscal cliff, or sequestration — were coming, and yet they did nothing. In fact, Obama seemed to gleefully taunt Republicans after his re-election in November, as though he wanted to go over “the cliff.” He taunts them still, and it will get worse.

Of course, the dolts who returned him to office see nothing wrong with penalizing the most productive people in our society in order to give them (the dolts) more free stuff. The indoctrination they have received in our government schools has taught them that even if two plus two equals four, it doesn’t matter because somehow the geniuses who represent us in Washington can make it equal seven.

Apparently, Obama was so exhausted from those two speeches he gave this week that he had to resume his multi-million dollar vacation the next morning. In fact, it was so important that he get back to Hawaii, the president left town without even signing the bill he had told us was so crucial to save us from economic Armageddon.

Before leaving, however, he informed the country that he will entertain no further debates — with Congress or anyone else, apparently — about how much of our great-grandchildren’s money he is spending. This is just a preview of the arrogance that will be on full display during his second term.

It is an inane joke to even talk about spending cuts in Washington. The last president to prevail upon Congress to actually cut government spending was Calvin Coolidge in the roaring twenties (hint: that’s why they roared). Today, what passes for a “cut” is actually nothing but a smaller increase in what they planned to spend.

Imagine a family that made $100,000 in 2012 but spent $150,000, putting the difference on a credit card. Their plan for 2013 (while still earning $100,000, mind you) was to spend $300,000. However, on New Year’s Eve, they decide to be “responsible” and only spend $250,000. In Washington, D.C., instead of a $100,000 increase in spending, this would be called a $50,000 cut.

Of course, in Barack Obama’s world, members of our hypothetical family would be forced to change their lifestyles to accommodate the government. The stay-at-home mom would have to go to work in order to pay for the increased costs of gasoline, food, clothing, housing, insurance, health care, and everything else the family needs to survive. And that, of course, when added together with what could be found in the children’s piggy bank, would reclassify the family as “rich,” which would necessitate an additional tax penalty in order to make them pay their “fair share.”

There is now talk of a challenge to Boehner for the position of Speaker. Do you think it will make a difference? Would House Majority leader Eric Cantor be a better negotiator? Would he be able to stop this spending spree? In the United States Senate — run by Democrats — they have not even passed a budget during Obama’s entire first term.

In a matter of weeks, this temporary New Year’s Eve fix will culminate in exactly the debate Obama claims he simply will not have, the one over raising the debt limit another two trillion dollars — that’s a two with twelve zeros behind it — which will not even fund this out-of-control government for six months.

This is not a fiscal cliff. This is fiscal insanity. It is a fiscal abyss, and we are about witness the view from amidst the rubble at the bottom of it.

The editors review 2012: Economics

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