Obama proposes cuts to social security and medicare

[archibaldcrane]

Amendment XIV, Section 4 states "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." Which basically means that no one - not Congress, not the President, not the Courts or the citizens - can say that there's a hard limit on how much public debt the country can have. Section 5 does allow Congress to pass laws in accordance, which I believe is where the idea of having a debt ceiling came from in the first place, but even in that case it would effectively be only a mile marker.

Pretty sure Obama is going to enact this and be like "I do what I want, get at me bro" if it comes down to defaulting on August 2nd.

And he should.

[Kuya]

From what i'm gathering, the debt ceiling vote was invented to assuage fears of profligate spending during WW1. It didn't work, but for some reason it still exists.

[Zoolander]

Pretty sure Obama is going to enact this and be like "I do what I want, get at me bro" if it comes down to defaulting on August 2nd.

And he should.

Yea, thats what Bill Clinton said a couple days ago:
http://www.npr.org/blogs/thetwo-way/...14th-amendment

Former President Bill Clinton said if faced with default, he would single-handedly raise the debt ceiling using the 14th Amendment and he'd do it "without hesitation, and force the courts to stop me."

Clinton made those comments in an interview with The National Memo, a daily newsletter that concentrates heavily on Washington politics. Clinton also said he thinks that the fact that Congress is allowed to first appropriate funds and then gets a second vote on whether to pay for them is "crazy."

I like your "come at me bro" better though.

The main issue is that we need to have some measures in addition to raising the ceiling if we want to keep our high credit rating. They pretty much all said that meaningful reform has to happen, not just raising the debt ceiling.

[Kuya]

The credit rating is currently in no danger of falling.

[Hyan]

nuclear power is awesome, it's just an example of wishing terrible things to happen to people to prove a point. credit default isn't an inevitability, so there's no reason to blow the horn to summon the apocalypse. if the politicians from BOTH parties don't slap the fuck up though, it'll happen. and that will be an ugly time to live through, especially for the poor...

If this sort of threat isn't enough to make the politicians support tax raises then you're d00med either way. If not now, sometime later.

Standing behind ideals that got old ages ago (in the first world) won't do you any good. You need to face the consequences. Maybe that will ultimately lead to something better later on.

Maybe this is an exceptional case though, or there's no threat after all. Either way just my 2 cents.

[archibaldcrane]

Market has been crushing this week, might finally hit 13,000 again if it keeps up.

[Olo401]

From what i'm gathering, the debt ceiling vote was invented to assuage fears of profligate spending during WW1. It didn't work, but for some reason it still exists.

I thought I heard it wasn't even in existence until 1994 when the Gingrich gang took over.. let me double-check that though.

Edit: Used for the first time for bonds in 1917, and the modern method of using a ceiling for all spending & debt started in 1941.

[Kuya]

A scathing attack from Glenn greenwald against Obama:

Spoiler: show

In 2005, American liberals achieved one of their most significant political victories of the last decade. It occurred with the resounding rejection of George W Bush's campaign to privatise social security.

Bush's scheme would have gutted the crux of that entitlement programme by converting it from what it has been since the 1940s – a universal guarantor of minimally decent living conditions for America's elderly – into a Wall Street casino and bonanza.

Progressive activists and bloggers relentlessly attacked both the plan and underlying premises (the myth that social security faces a "crisis"), spawning nationwide opposition. Only a few months after he unveiled his scheme to great fanfare, Bush was forced to sheepishly withdraw it, a defeat he described as his biggest failure.

But in 2009, clear signs emerged that President Obama was eager to achieve what his right-predecessor could not: cut social security. Before he was even inaugurated, Obama echoed the right's manipulative rhetorical tactic: that (along with Medicare) the programme was in crisis and producing "red ink as far as the eye can see." President-elect Obama thus vowed that these crown jewels of his party since the New Deal would be, as Politico reported, a "central part" of his efforts to reduce the deficit.

The next month, his top economic adviser, the Wall Street-friendly Larry Summers, also vowed specific benefit cuts to Time magazine. He then stacked his "deficit commission" with long-time advocates of social security cuts.

Many progressives, ebullient over the election of a Democratic president, chose to ignore these preliminary signs, unwilling to believe that their own party's leader was as devoted as he claimed to attacking the social safety net. But some were more realistic. The popular liberal blogger and economist Duncan "Atrios" Black, who was one of the leaders of the campaign against Bush's privatisation scheme, vowed in response to these early reports:

Fast forward to 2011: it is now beyond dispute that President Obama not only favours, but is the leading force in Washington pushing for, serious benefit cuts to both social security and Medicare.

This week, even as GOP leaders offered schemes to raise the debt ceiling with no cuts, the White House expressed support for the Senate's so-called "gang of six" plan that includes substantial cuts in those programmes.

The same Democratic president who supported the transfer of $700bn to bail out Wall Street banks, who earlier this year signed an extension of Bush's massive tax cuts for the wealthy, and who has escalated America's bankruptcy-inducing posture of Endless War, is now trying to reduce the debt by cutting benefits for America's most vulnerable – at the exact time that economic insecurity and income inequality are at all-time highs.

Therein lies one of the most enduring attributes of Obama's legacy: in many crucial areas, he has done more to subvert and weaken the left's political agenda than a GOP president could have dreamed of achieving. So potent, so overarching, are tribal loyalties in American politics that partisans will support, or at least tolerate, any and all policies their party's leader endorses – even if those policies are ones they long claimed to loathe.

This dynamic has repeatedly emerged in numerous contexts. Obama has continued Bush/Cheney terrorism policies – once viciously denounced by Democrats – of indefinite detention, renditions, secret prisons by proxy, and sweeping secrecy doctrines.

He has gone further than his predecessor by waging an unprecedented war on whistleblowers, seizing the power to assassinate U.S. citizens without due process far from any battlefield, massively escalating drone attacks in multiple nations, and asserting the authority to unilaterally prosecute a war (in Libya) even in defiance of a Congressional vote against authorising the war.

And now he is devoting all of his presidential power to cutting the entitlement programmes that have been the defining hallmark of the Democratic party since Franklin Roosevelt's New Deal. The silence from progressive partisans is defeaning – and depressing, though sadly predictable.

Identically, Obama is now on the verge of injecting what until recently was the politically toxic and unattainable dream of Wall Street and the American right – attacks on the nation's social safety net – into the heart and soul of the Democratic party's platform. Those progressives who are guided more by party loyalty than actual belief will seamlessly transform from virulent opponents of such cuts into their primary defenders.

And thus will Obama succeed – yet again – in gutting not only core Democratic policies, but also the identity and power of the American Left.

http://www.guardian.co.uk/commentisf...-security-cuts

He is so shrill.

[Demosthenes11]

why is glenn greenwald the only voice of liberalism anymore

[solanis]

The credit rating is currently in no danger of falling.

this isn't true; moody's said kicking the can further down the road would result in a credit downgrade.

[Kuya]

What a very specific statement.

[solanis]

What a very specific statement.

allow me to clarify:

New York, July 13, 2011 -- Moody's Investors Service has placed the Aaa bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.

In conjunction with this action, Moody's has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks. We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the US government or the affected financial institutions.


RATIONALE FOR REVIEW


The review of the US government's bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default.


Moody's considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody's assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate. However, because this type of default is expected to be short-lived, and the expected loss to holders of Treasury bonds would be minimal or non-existent, the rating would most likely be downgraded to somewhere in the Aa range.


The specific rating that would be assigned at the conclusion of the review once such a default is cured would depend on (1) the speed with which the default is cured; (2) an assessment of the likely effect on future borrowing costs; and (3) whether there is a change in process for raising the debt limit that would preclude another default. A return to a Aaa rating would be unlikely in the near term, particularly if there were no progress on the third consideration.


While the debt limit has been raised numerous times in the past, and sometimes the issue has been contentious, bond interest and principal have always been paid on time. If the debt limit is raised again and a default avoided, the Aaa rating would likely be confirmed. However, the outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.


Moody's does not take a position on what measures should be included in any deficit reduction package. Instead, it is the resultant deficit and debt trajectories that are relevant to the rating and its outlook.

http://www.moodys.com/research/Moody...ocid=PR_221800

tinfoil hat bold and big for you

[Kuya]

The article you just posted is emphasized on saying that the US's credit rating would be in peril if the debt ceiling were not to be raised.

[solanis]

The article you just posted is emphasized on saying that the US's credit rating would be in peril if the debt ceiling were not to be raised.

did you not read the article or something? I even bolded it and increased the font size of the relevant parts.

[Kuya]

I highly doubt that, if the government weren't to pass a bill meant to reduce the deficit, its rating would be reduced the next day.

[Demosthenes11]

it doesn't make any sense. The debt ceiling is artificially created by the US, so why would a credit rating change be predicated on that. That is not at all a subjective way of determining rating

[solanis]

I highly doubt that, if the government weren't to pass a bill meant to reduce the deficit, its rating would be reduced the next day.

you don't understand, kuya. that press release means that the treasury's rating is under review right now. they can maintain the AAA rating, or get downgraded. moody's said in that press release that if a default occurs, the AAA is gone for a while. if the default is avoided, they will likely maintain the AAA but with a negative outlook, which means periodic reviews and a credit downgrade. either outcome will send shock waves through the international market.

in summary, that press release means that we can't just put a bandaid on it anymore.

[Headspace]

Made up markets creating worldwide panic and famine

J-BRUCE

[solanis]

Made up markets creating worldwide panic and famine

J-BRUCE

[Tyche]

it doesn't make any sense. The debt ceiling is artificially created by the US, so why would a credit rating change be predicated on that. That is not at all a subjective way of determining rating

The article says it would only be affected if the posturing leads to a default and they don't provide deficit reduction plans. The debt ceiling really has no bearing other than causing the US to default.