Although failing to raise the debt ceiling by the early August deadline would plunge the United States into a sea of uncertainty, the government might be able to pay the bills and avoid a default on obligations for longer than expected, economic analysts said.
As lawmakers and President Obama rush to craft an agreement to increase the $14.3 trillion debt ceiling, the Treasury Department is standing by its estimate that the government will need to borrow more money after Aug. 2 to pay for all its obligations.
But several new reports — from UBS, Barclays and Wells Fargo — have cast doubt on that estimate. Analysts have said that daily tax receipts have been higher than anticipated and that the Treasury has quite a bit of cash on hand.
As of Friday, according to the Treasury, the government had $85 billion in cash.
UBS estimates the government would run out of money to pay all bills no sooner than August 8.
And have you noticed that usually there’s not a problem in the world that the Treasury can’t solve by firing up the printing press, but in this case Turbo Tim & Company are acting entirely hamstrung by the situation?
Whatever happens, I’ll bet a hundred bucks that they manage to find enough money to pay two things: Congress and the IRS.
Obama saying FDR was a fiscal conservative is kind of like Michael Moore calling Debbie Stabenow “svelte.” It’s a matter of personal perspective.
Even still, Obama’s really getting off the rails these days:
By way of direct comparison, Obama probably does consider FDR a fiscal conservative, and maybe based only on that one-on-one categorization he’s correct. But as a matter of sheer “big picture” reality, Obama’s way wrong:
No one grew the size of government, taxation and spending in peacetime the way Roosevelt did, Powell said.
“FDR tripled taxes and spending more than doubled from 1933 to 1940,” Powell said. “That was the biggest increase in peacetime spending in American history. Before that, the biggest increases in spending came during wars.”
Further, the New Deal did not bring the economy back and prolonged recovery, Powell said, as unemployment was still at 17 percent by 1940, before war spending began to pull the country out of the depression.
“There were a number of New Deal policies that make it harder and more expensive to hire people,” Powell continued. “Compulsory unionism made it more costly to hire people. The more expensive something is the less you get of it. The more you subsidize something, the more you have of it.”
Despite the $500 billion spent under FDR through various programs, the unemployment rate in the United States did not significantly decrease until after the U.S. officially entered World War II in 1941, according to Bureau of Labor Statistics (BLS) records from 1929 through 1944.
Does all that sound familiar? They obviously don’t teach history in law school.
A Republican aide e-mails me: “The Speaker, Sen. Reid and Sen. McConnell all agreed on the general framework of a two-part plan. A short-term increase (with cuts greater than the increase), combined with a committee to find long-term savings before the rest of the increase would be considered. Sen. Reid took the bipartisan plan to the White House and the President said no.”
If that’s true, the Republicans should retreat to their initial Cut, Cap and Balance plan passed by the House and leave that on the table. Put the onus on Obama to either agree that the country needs to get serious about its debt, or let Obama risk running into the August 2nd wall and having the rest of America realize his “Armageddon” talk was a load of Pelosi. Let Obama be the one to explain to his base why he turned down a Boehner offer that included $800 billion in “revenue increases,” and now even his own party is reportedly working on deals that include no revenue increases. Obama seems to have really painted himself into a corner.
Update: Just heard a caller to Laura Ingraham say that the Republicans should take their plan to Pelosi, Reid and Obama but tell them they’ll have to pass it to find out what’s in it. Heh.
Last week, eight smaller banks paid off $103.3 million of the money they borrowed from Treasury as part of the Capital Purchase Program — part of the financial bailout (TARP). Well,sort of:
In finance and banking you always have to read the fine print. And if you go back to the report, you’ll notice that the fine print accompanying the entries for each of the above exits makes reference either to Footnote 49 or Footnote 50. Footnote 49 reads: “Repayment pursuant to Title VII, Section 7001(g) of the American Recovery and Reinvestment Act of 2009 using proceeds received in connection with the institution’s participation in the Small Business Lending Fund.” Footnote 50 reads: “Repayment pursuant to Title VII, Section 7001(g) of the American Recovery and Reinvestment Act of 2009 — part of the repayment amount obtained from proceeds received in connection with the institution’s participation in the Small Business Lending Fund.”
All of which is to say that these banks repaid cash owed to a program run by the Treasury Department by. . . borrowing from another program run by the Treasury Department.
It’s a little like charging your Visa balance at 28% to your Master Card at 26% and then bragging about having paid off your debt.
The purported purpose of the Small Business Lending Fund, established in 2009 under the stimulus, is to “help create jobs and promote economic growth in local communities across the nation.”
Either that or to help give certain bailout recipients the appearance of having paid off their loans when they’ve simply transferred them to a new debt to the Treasury.
Often, when the government throws out the “bailouts are getting paid back faster than expected” line, it’s an illusion — the above is just one example of the sleight of hand involved.
These games aren’t confined to banks. They extend to the auto bailout as well, and get much more expensive than what we were just talking about above.
Last night (or early this morning as it were) I wrote a little at Michelle’s place about the breakdown of the Obama/Boehner debt ceiling talks.
If you saw the president’s hastily constructed press conference, it was classic Obama: Scaring the old and the poor as well as predicting a market panic on Monday. Just the kind of things all responsible Chief Executives do, right?
What happened was this — actually, the Republicans caved a little. Boehner offered Obama $800 billion in tax increases (revenue through “overhauling the tax code”) and an increase in the debt ceiling provided there were at least matching cuts, but Obama wanted $400 billion more in tax increases — that is on top of the $800 billion the Republicans offered.
Now Obama can go back and try to explain to his base and liberal leadership why he turned down $800 billion in tax increases. He wanted more because the “Gang of Six” plan called for over $1 trillion in tax increases and Obama wanted to align himself with that proposal. You’ll notice that Obama is being very careful not to have his own fingerprints on any of this.
The odds now are that the Republicans will return to their original “no increases at all” position and stay there for the foreseeable future. Obama was his own worst enemy on this deal, and the Democrats in Congress are probably happy Boehner wants to remove him from the negotiating loop, though they’d never have the balls to admit that.
At Obama’s press conference, he “summoned” leaders to the White House today. As Charles Krauthammer points out below, Congress and the Executive branch are co-equal. Obama can “summon” nobody. A leader “summoning” other members of government is banana republic stuff — and I wish Boehner would loudly point that out:
Gods of comedy be praised! In a story about Anothony Weiner’s rehab at Dick Tweeters Anonymous it’s revealed that he might be thinking about writing a book:
Up until now, Weiner “didn’t fully comprehend” how destructive his online exhibitionistic tendencies were, the friend said.
“He was totally in denial. He was saying he may be able to write a book. But to think that he’s in a position to write a book, there has to be a redemption.
I’d be remiss if I didn’t help him with a title. “The Tweeter in the Rye” has a nice ring to it — or maybe “Curious Weiner and the Fully Charged Blackberry.”
“The Small-Crank Redemption”? Eh, whatever…
In any case, Weiner seems to be recovering:
“Finally, he did get it. He understood it,” the friend said. “He understood why there was no line of people waiting to hire him.
Would that reason be because the world knows he has a penchant for taking pictures of his johnson at his place of business and sending them to random woman? Usually that’s a desired quality in the business world. Go figure.
Secretary of State Hillary Clinton is in Indonesia — Bali specifically — and she wowed ’em… I mean really wowed ’em:
Hang tight, Bill, she’ll be home soon!
Somewhere a booth at an Asian massage parlor is missing a curtain.
I’m thinking maybe there was a little bit of this action on the plane:
In any case, I’ll be back here in the morning. I might pop in again over at Michelle’s place later, but for now it’s 95 here and we’re getting in the pool. To those of you who are also trapped under the heat dome, stay cool!