Debt will Increase by $7 trillion in 10 Years

Sen. Rand Paul
August 2, 2011

Today Sen. Rand Paul issued an open letter on the subject of the debt ceiling compromise facing the Senate. Below is that letter.

United States Senator, Rand Paul

To paraphrase Senator Jim DeMint: When you’re speeding toward the edge of a cliff, you don’t set the cruise control. You stop the car. The current deal to raise the debt ceiling doesn’t stop us from going over the fiscal cliff. At best, it slows us from going over it at 80 mph to going over it at 60 mph.

This plan never balances. The President called for a “balanced approach.” But the American people are calling for a balanced budget.

This deal does nothing to fix the overreaches of both parties over the past few years: Obamacare, TARP, trillion-dollar wars, runaway entitlement spending. They are all cemented into place with this deal, and their legacy will be trillions of dollars in new debt.

The deal that is pending before us now:

  • Adds at least $7 trillion to our debt over the next 10 years. The deal purports to “cut” $2.1 trillion, but the “cut” is from a baseline that adds $10 trillion to the debt. This deal, even if all targets are met and the Super Committee wields its mandate – results in a BEST case scenario of still adding more than $7 trillion more in debt over the next 10 years. That is sickening.
  • Never, ever balances.
  • The Super Committee’s mandate is to add $7 trillion in new debt. Let’s be clear: $2.1 trillion in reductions off a nearly $10 trillion,10-year debt is still more than $7 trillion in debt. The Super Committee limits the constitutional check of the filibuster by expediting passage of bills with a simple majority. The Super Committee is not precluded from any issue, therefore the filibuster could be rendered most. In addition, the plan harms the possible passage of a Balanced Budget Amendment. Since the goal is never to balance, having the BBA as a “trigger” ensures that the committee will simply report its $1.2 trillion deficit reduction plan and never move to a BBA vote.
  • It cuts too slowly. Even if you believe cutting $2.1 trillion out of $10 trillion is a good compromise, surely we can start cutting quickly, say $200 billion-$300 billion per year, right? Wrong. This plan so badly backloads the alleged savings that the cuts are simply meaningless. Why do we believe that the goal of $2.5 trillion over 10 years (that’s an average of $250 billion per year) will EVER be met if the first two years cuts are $20 billion and $50 billion. There is simply no path in this bill even to the meager savings they are alleging will take place.

Buried in the details of this bill is the automatic debt limit increase proposed a few weeks ago. The second installment of the debt ceiling increase is initiated by the President automatically and can only be stopped by a two-thirds vote of Congress. This shifts the Constitutional check on borrowing from Congress to the President and makes it easier to raise the debt ceiling. Despite claims to the contrary, none of the triggers in this bill include withholding the second limit increase.

Credit rating agencies have clearly stated the type of so-called cuts envisioned in this plan will result in our AAA bond rating being downgraded. Ironically then, the only way to avoid our debt being downgraded and the resulting economic problems that stem from that is for this bill to fail.

This plan does not solve our problem. Not even close. I cannot abide the destruction of our economy, therefore I vigorously oppose this deal and I urge my colleagues and the American people to do the same.

Sincerely,

Rand Paul, M.D.
United States Senator

Debt Deal: ”It’s like Curing a Drunk with Vodka”

By David Lawder
Reuters
August 1, 2011

The tentative deal to avoid a crushing debt default is at best a mild relief for the U.S. economy that nearly stalled in the first half of the year and has yet to show signs of any realistic pickup.

The plan for $2.4 trillion in spending cuts over a decade, if backed by lawmakers, would help lift some of the uncertainty that has weighed on investors, businesses and consumers unsettled by talk about a possible new and deep U.S. financial meltdown.

Still, it does not decisively remove the threat that the nation’s AAA credit rating could be downgraded, an action that would raise borrowing costs across the board, and the prospect of further cuts ahead will cut short any celebrating.

“This will have minimal impact on the economy. The cuts are not there for the first couple of years, which really makes you wonder if they’re really going to happen at all,” said Peter Morici, an economics professor at the University of Maryland.

The prospect of spending cuts is the last thing the U.S. economy needs right now, many commentators say.

Economists were stunned on Friday when data showed the U.S. economy grew just 0.4 percent in the first three months of this year — perilously close to contraction — and picked up unimpressively to 1.3 percent in the second quarter.

Against the backdrop of the weak economic recovery, the divided political parties in Congress appear to have agreed on one thing early on in their dispute over how to raise the U.S. debt ceiling: that spending cuts to narrow the deficit should be phased in slowly. They will be phased in from 2013.

President Barack Obama told reporters on Sunday that the initial discretionary cuts, expected to be about $917 billion, “wouldn’t happen so abruptly that they’d be a drag on a fragile economy.” He added that “job-creating” investments in education and research would be preserved.

But the bulk of the austerity has yet to be defined.

About $1.5 trillion of the planned savings will be decided by a bipartisan congressional commission, leaving unanswered the question as to whether the United States has the political will to tame the country’s growing debt pile once and for all.

Troy Davig, U.S. economist at Barclays Capital, estimated that the deal would only cut $25-30 billion from government spending in the first year, which could shave about a tenth of a percentage point off economic growth.

“It’s not a major drag on growth but when the economy is only growing a point and a half, a lot of economists feel that this is not the right time to be finding fiscal restraint. We will be shifting from massive stimulus to massive restraint.”

Steeper and faster spending cuts could have dealt a knockout blow to an economy reeling from high fuel prices, bad weather, Japan’s earthquake and a depressed housing market, plus a labor market that shows few signs of recovery.

LITTLE SCOPE FOR STIMULUS

Proposals discussed just a week ago included possible new fiscal stimulus measures, such as extending payroll tax cuts for employees and offering them to employers as well.

There appeared to be no room for them in Sunday’s preliminary deal which is expected to be voted on in the Senate on Monday and sent to the House of Representatives for approval. The bipartisan panel, which must draft more cuts by November, could revisit the issue.

There could be some relief among U.S. employers and consumers that taxes won’t rise under the new, hard-fought deal and that the worst-case scenario has been avoided.

The talks have been punctuated by warnings from the Obama administration that financial chaos would ensue if the $14.3 trillion federal borrowing limit is not raised by Tuesday.

That angst has added to a pile of worries slowing consumer spending decisions such as car purchases, according to Detroit executives. Existing home sales in June fell sharply due a big jump in canceled sales contracts.

Obama, too, said he has been concerned about the debt limit battle’s impact on consumer and business confidence. He said he hoped Sunday’s deal “will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.”

Any relief, however, is likely to be short-lived. U.S. jobs data on Friday will probably prove another reminder of the weak U.S. economy. Unemployment is expected to remain at 9.2 percent, according to a Reuters poll.

The budget deal “does nothing to restore household and corporate confidence,” said Mohammed El-Erian, chief executive of bond fund investment giant PIMCO.

“So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise,” El-Erian told ABC’s This Week with Christiane Amanpour.

Just as Washington’s political leaders have run out of money to throw at the U.S. economy, the Federal Reserve looks lacking in ammunition too.

The U.S. central bank waged an massive experiment in monetary policy over the last few years to prevent the 2007-2009 recession from spiraling into a depression, slashing interest rates to zero and pumping $2.3 trillion into the ailing economy by buying debt,

The Federal Reserve is not expected to rush in to make up for the loss of any stimulus to boost growth.

Atlanta Federal Reserve President Dennis Lockhart said on Friday there would be a “very high bar” for more stimulus.

At least the deal taking shape in Washington would push the scary prospect of a U.S. debt default out until after the 2012 presidential election. But investors worldwide will still worry about the ability of the United States to avoid future downgrades of its debt, a move that would probably push up borrowing costs and act as yet another drag on the economy.

“Talk about kicking the can down the road, this is probably the biggest can that’s ever been kicked — appointing another commission to do the heavy lifting another day,” Yale University economist Stephen Roach told Reuters Insider.

The Debt Deal Meaning? It’s Meaningless

by Zeke Miller
Business Insider
August 1, 2011

The “historic, bipartisan compromise” reached to raise the debt limit does not end the struggle to reign in the federal deficit — in fact, it pushes the most difficult decisions off into the future.

More surprising, the debt deal actually cuts almost nothing now–it just promises future cuts that may or may not materialize.

There are very few specific cuts in the deal — and the $1 trillion in immediate cuts are almost entirely constituted of caps on future spending. And those caps are not required to be honored by future congresses.

The “real” spending cuts to current programs will come out of a bipartisan committee of Representatives and Senators, which is charged with finding an additional $1.5 trillion in savings from the federal deficit.

But White House and Republican leaders appear split on exactly what the so-called “Super Committee” can do.

In a presentation to his caucus, Speaker of the House John Boehner said it would “be effectively…impossible for [the] Joint Committee to increase taxes,” even though it could consider reforming the tax code.

White House officials strongly pushed back on that remark, saying revenue-increasing reform is possible — even though it almost certainly would not be able to get through Congress.

The committee is modeled on “BRAC” or the Base Realignment and Closure Commission, whose recommendations are presented to Congress for a straight up-or-down vote with no amendments allowed. Instead of non-partisan commissioners, each congressional leader will appoint three members of Congress to the committee.

If the Super-Committee can’t reach an agreement, or their recommendations cannot pass Congress, deep “real” spending cuts, which are painful to both sides, would take effect. For Democrats, entitlement cuts are at risk, while Republicans would see cuts to defense spending.

Additionally, President Barack Obama has the ability to veto an extension of the Bush tax cuts if he deems the committee’s solution insufficiently “balanced.”

So, again, other than cuts to federally subsidized student loans to graduate and professional school students, the debt deal actually cuts NOTHING now, and only promises future reductions that may never materialize.

In short, for the past month, Congress has been arguing about little more than an agreement to reach an agreement at some point in the future. Your tax dollars at work.

A Trojan Horse called Net Neutrality

By David Kravets
Wired.com
February 4, 2011

The Federal Communications Commission’s net-neutrality decision opens the FCC to “boundless authority to regulate the internet for whatever it sees fit,” the Electronic Frontier Foundation is warning.

Image: wired.com

The civil rights group says the FCC’s action in December, which was based on shaky legal authority, creates a paradox of epic proportions. The EFF favors net neutrality but worries whether the means justify the ends.

“We’re wholly in favor of net neutrality in practice, but a finding of ancillary jurisdiction here would give the FCC pretty much boundless authority to regulate the internet for whatever it sees fit. And that kind of unrestrained authority makes us nervous about follow-on initiatives like broadcast flags and indecency campaigns,” Abigail Phillips, an EFF staff attorney, wrote on the group’s blog Thursday.

And the paradox grows.

In a Friday telephone interview, Phillips was unclear how to solve the problem. What about an act of Congress? How about reclassifying broadband to narrow the FCC’s control if it?

“I’m not sure what I think the right solution is,” she answered.

The agency’s December action has already been attacked on multiple fronts, including two lawsuits.

One side of the debate has focused on claims the FCC overstepped its authority by adopting the principle that wireline carriers treat all internet traffic the same. A chorus of others complain that the FCC wimped out and didn’t go far enough when it comes to wireless carriers.

And the entire debate is littered with competing interests, including the mobile-phone carriers, internet service providers, private enterprise, developers, Congress and, last but not least, the public.

“In general, we think arguments that regulating the internet is ‘ancillary’ to some other regulatory authority that the FCC has been granted just don’t have sufficient limitations to stop bad FCC behavior in the future and create the ‘Trojan horse’ risk we have long warned about,” Phillips said.

But who can be trusted in this debate?

The answer opens Pandora’s box.

Abortion is a Right

Barack Obama says abortion is a constitutional right and that he’s committed to protecting it.

Mail Online
January 25, 2011

President Barack Obama has labelled abortion a ‘right’, setting the grounds for a  new battle with lawmakers determined to roll those rights back.

The President marked the 38th anniversary of the Supreme Court’s landmark decision on abortion by calling the procedure a constitutional right he’s committed to protecting.

But he spoke against a rising tide of anti-abortion activists who sense the time is right for a new push to rein in the broad access to abortions established by the 1973 Roe v Wade decision.

Buoyed by huge election gains for their allies, anti-abortion activists in America head into their annual March for Life rallies on Monday sensing a prime opportunity in many states.

Foes of abortion gained strength in Congress, among state governors and in many state legislatures, raising hopes among social conservatives for a broad surge of anti-abortion bills.

Mr.  Obama’s comments today squared him off against them.

He called on Americans to recommit themselves to ensuring that ‘our daughters have the same rights, the same freedoms, and the same opportunities as our sons to fulfill their dreams’.

The President said the 1973 Roe v Wade decision that legalised abortion affirmed what he called a ‘fundamental principle: that government should not intrude on private family matters’.

Many others disagree.

‘We are seeing a cultural shift toward protecting life and rolling back the tide of unrestricted abortions,’ said Charmaine Yoest, president of Americans United for Life.

In many states, prospects for passage of such measures are bright, although they may face court challenges.

NARAL Pro-Choice America, a leading abortion-rights group, said there are now 29 anti-abortion governors out of 50.

That’s up eight from the 21 anti-abortion governors in place before the mid-term elections – a blow to Mr Obama’s side, as governors have often acted as a firewall for abortion legislation.

Of the 29, there are 15 in states where abortion opponents also control both legislative chambers.

‘In those states in particular, there are almost no pro-choice checks and balances,’ said Donna Crane, NARAL’s director of public policy.

While abortion-rights supporters traditionally hold commemorations of the court decision, the anniversary has become an even higher-profile date for the anti-abortion movement.

Its major event, the March for Life in Washington, D.C., is scheduled this year to take place on Monday – not the anniversary itself – while other events are scheduled throughout the weekend nationwide.

On both sides of the debate, the mood contrasts sharply with 2009 and 2010.

Two years ago, the anniversary came two days after Mr Obama’s inauguration – a time of enthusiasm among abortion-rights supporters, who tend to vote Democratic.

A year ago, the anniversary coincided with the first day of testimony in the murder trial of Scott Roeder, who was later convicted of killing late-term abortion provider Dr George Tiller at his church in Wichita, Kansas.

Kansas is now one of the states where anti-abortion activists hope for dramatic legislative gains.

Its new governor, Republican Sam Brownback, is an ardent foe of abortion who has made clear he will sign restrictive measures that his Democratic predecessors vetoed.

Anti-abortion activists hope to advance bills that would further restrict late-term procedures, increase reporting requirements for abortion providers, and make it harder for abortion clinics to be licensed.

In several other states, Democratic governors who generally supported abortion rights were replaced by Republicans opposed to abortion.

That included the crucial swing states of Wisconsin, Michigan, Ohio and Pennsylvania.

In Pennsylvania, the legislature is expected to convene hearings soon on why states agencies mishandled complaints about a Philadelphia abortion clinic run by a doctor now facing eight murder charges.

In some states, Republican governors and legislative leaders have said the message from the electorate on November 2 was to concentrate on economics and job creation, and have signalled that social issues such as abortion should take a lower priority.

However, Daniel McConchie, vice president of government affairs for Americans United for Life, said there was no reason that Republican leaders couldn’t tackle both the economy and abortion.

‘For them to do nothing, when they have the opportunity to do something, I think would be problematic,’ he said.

‘Social conservatives are an integral part of the electorate.’

At the federal level, anti-abortion forces scored significant gains in the House of Representative.

Majority Republicans introduced two bills Thursday to toughen restrictions on taxpayer funding of abortions. One is aimed specifically at Obama’s health care law; the other would establish a permanent, government-wide ban on federal subsidies for most abortions.

In addition, Republican Mike Pence has introduced a bill that would ban federal family-planning grants to any organization that performs abortions.

It is aimed at the Planned Parenthood Federation of America, a health care provider and advocate of reproductive rights.

Last year that group, according to Mr Pence, received more than $363million in government grants and contracts while performing 324,008 abortions.

Abortion-rights supporters are nonetheless dismayed by their foes’ clout in the House, though these measures might fail to clear the Senate, and would likely face a presidential veto if they did advance.

‘We’re taking all these threats very seriously,’ said Planned Parenthood public policy analyst Emily Stewart.

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