It's High Stakes Poker in Washington.

U.S. Treasury Secretary Timothy Geithner says there's no way to give Congress more time on lifting the debt ceiling. "The eyes of the world are on us," he said.Note Geithner's eyes, he is frustrated .

Dueling Democrats and Republicans have squared off in past similar talks over shrinking federal budget deficits. From President Ronald Reagan vs. Democratic House Speaker Tip O'Neill, to President Bill Clinton against Republican House Speaker Newt Gingrich, the head-banging ritual is a time-honored tradition. And it hasn't always been pretty, as the government shutdowns of 1995-96 attest.

In the end, in the past, they always reached a compromise, with both sides accepting spending cuts and tax increases they didn't like. But this time just might be different. The staggering amount of current debt and this year's deficit of $1.5 trillion reach a new order of magnitude. Pressure from tea party Republicans to reject any rise in taxes has upped the stakes and complicated current talks.

All these factors make it wholly uncertain whether a deal to raise the debt limit can be reached by Aug. 2, when the government will begin defaulting on its debt obligations - a development that could spawn chaos in financial markets around the world and kick the U.S. economy back into deep recession.

"The threat of having economic repercussions from not getting anything done is larger now," said Roberton Williams, senior fellow at the bipartisan Tax Policy Center. "We haven't faced the issue of default in the past. Simply not passing a budget so the government can't do anything, which is what we had in 1995 when the government shut down, is very different from 'You can't borrow any money. You can't pay off what you owe people.' "

Credit markets

Much of the concern focuses on higher interest rates that will come if the government defaults. But Bruce Bartlett, a former Treasury official during the Reagan and first Bush administrations, said that's a trivial problem compared to the possibility that credit markets could freeze up as they did in the early 2008 days of the recession. "And that's a realistic possibility that cannot be dismissed," Bartlett said.

Republican refusal to consider tax increases only increases the chances, he said.

"It just seems like there's no middle ground," Bartlett added. "I just don't see where the compromise comes from that allows the debt limit to increase."

Not since the Omnibus Budget Reconciliation Act of 1993, when Clinton raised taxes on high earners, increased fuel taxes and created the 35 percent top tax rate for corporations, has Republican opposition to tax increases been so unified and unyielding.

Back in 1993, every Republican in Congress voted against the so-called deficit reduction act, claiming it would cause another recession just as the nation recovered from the 1990-91 recession.

GOP rhetoric against the legislation was memorable.

"They will remember who let loose this deadly virus into our economic bloodstream," former Rep. Robert Michel of Illinois, the House Republican leader, said of the plan.

"The Clinton tax plan will spur inflation, lose jobs, increase the deficit and hurt our economic growth," Rep. Wally Herger of California protested.

Former Ohio congressman and current Ohio governor John Kasich said he'd "have to become a Democrat" if the Clinton tax plan worked.

The doom-and-gloom predictions were all wrong. The 1993 plan helped usher in the nation's longest period of uninterrupted economic expansion, climaxed by four straight years of budget surpluses.

Williams said the incident shows that trying to attribute or predict U.S. economic performance based on one factor such as tax increases simply doesn't work. "There've been times when we've raised taxes and the economy has done well, and we've had times when we've raised taxes and the economy has not done so well," Williams said.

President George H.W. Bush found that out in 1990, when a recession and a bulging federal deficit forced him to violate his 1988 campaign "Read my lips: no new taxes" pledge. By signing the Omnibus Budget Reconciliation Act of 1990, Bush raised individual income tax rates and Medicare taxes, and phased out personal exemptions for five years.

The economy didn't tank, but it didn't thrive, either, and the political fallout sparked a revolt among the GOP's anti-tax conservative wing. Pat Buchanan challenged Bush's renomination and helped inflame the party's division. Business mogul Ross Perot mounted his third-party candidacy, which split Republican votes and helped Clinton get elected in 1992.

Reagan's tax increases

The elder Bush probably hoped his tax plan would find the same grudging acceptance as Reagan's. "The Gipper," revered by today's Republicans as a conservative icon, signed nearly a dozen tax increases over his final seven years in office to reduce deficits after he had cut taxes deeply in 1981.

Experts still dispute how much the so-called "Reagan boom" years of 1983 to 1989 - when the economy grew as unemployment and inflation dropped - were the product of the 1981 tax cuts or the subsequent tax increases, which helped tame the deficit.

Either way, the fact that Reagan, an anti-tax movement icon, saw fit to raise taxes to reduce federal deficits offers an example that even staunch conservatives can change their stripes if the situation warrants.

"Cutting spending has the same effect on the economy as raising taxes," Williams said. "And if you argue that raising taxes is a bad thing from an economic perspective, you should equally argue that cutting spending will do the same thing."

Today's Republicans, of course, don't see it that way. They want to cut federal spending deeply, but are aghast at tax increases.

Bartlett said George H.W. Bush's political demise convinced Republican leaders that tax increases are political suicide.

"And I don't know that they're necessarily wrong," he said. "At some point the American public is going to have to shift their attitudes (about tax increases), but the (Obama) administration has done nothing to bring them along."

Demagogues & Doom's Day.

Divisiveness has turned Congress into a morass . The debt -Ceiling  is America's run-away monster . It may not be Obama's  fault , but he inherited it , and  Obama dragged his feet with it . While pressure was mounting for two years , the signs of a bad economy finally put debt talks on the table. Reading about Washington's debt-limit shenanigans does a good enough job raising any  blood pressure. But some fleshing out in the latest edition of the Washington Spectator has me in a rage. We already know that the US went from a surplus to the mess we're in largely because George Bush created two wars and a prescription drug plan and cut taxes rather than raising them to pay the bills. In his Spectator article "Debt, Demagogues, and Deficits," editor Lou Debose adds these tidbits:

• Bush's first tax cut resulted in $1.3 trillion in revenue losses over 10 years.
• During the Bush years, Congress - run by Republicans - raised the debt limit eight times, one of them by nearly $1 trillion - "the largest increase ever requested," writes Dubose. The reason the limit needed to be raised? The Bush tax cuts and the unfunded drug plan.

Dubose cites a story told by Bush's first Treasury Secretary, Paul O'Neill, who was fired two years into his job. According to O'Neill, when the Bush administration decided it would seek a second tax cut, he warned that it would have a serious effect on the budget deficit. Vice President Dick Cheney, writes Dubose, "cut him off." Cheney's words: "You know, Paul, Reagan proved deficits don't matter. We won the mid-terms. This is our due."And by the way, as Dubose and others have noted, if Congress were to just let all of the tax cuts expire, the debt crisis would evaporate.Few people in Congress, of course, are willing to propose letting those cuts expire - not even for wealthy individuals. And not even for corporations who are using loopholes (perfectly legal, as writer David Cay Johnston reminds us) to avoid paying their fair share of taxes.  August 2nd  is sure to come , and soon we might be surprised on who is going to sit down and get this mess cleaned up . What a country.!

Obama's bombshell..................

If there’s a government shutdown, "people don’t get their Social Security checks."

President Obama ratcheted up pressure today on Republicans to reach a deal to increase in the debt limit, telling CBS News that seniors’ Social Security checks might not get paid August 3 if the ceiling isn’t raised. Check it out.
President Obama  also ripped  the ante in the ongoing debt-ceiling debate Tuesday, telling CBS News that without raising the ceiling, he can't guarantee that Social Security checks will be sent Aug. 3.
"I cannot guarantee that those checks go out on August 3 if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Obama said. 
White House press secretary Jay Carney refused to speak on the interview, which is set to air Tuesday night, but he agreed that if the Aug. 2 deadline to raise the ceiling isn't met, "we can't guarantee if there were a default that any specific bill would be paid."

Hearing this makes me suspect that Obama is up to something , and it may backfire on him with severe backlash with the stock-market .If the Government defaults on August 2nd , he will have to be blamed . I personally did not like what Obama said , he is fueling the fear mongering by scaring seniors . It also shows what great pressures Obama is under by dragging the weight of the elderly under his feet with such a threat . Whatever the case Obama may have not been truthful . I have here provided a fact check.

THE FACT-CHECK:

With President Barack Obama and Congressional Republicans on a potential collision course over the federal budget, the possibility of a government shutdown is closer than it’s been in years.

Shutdowns occur when appropriations bills expire and Congress and the president are at an impasse. A shutdown typically prevents federal agencies from carrying out any functions deemed non-essential.

A shutdown last occurred in the mid 1990s, when President Bill Clinton squared off against a new Republican majority in the House and Senate. That led to two shutdowns -- one for five days in November 1995 and the other for 21 days from December 1995 to January 1996.

During the past 15 years, lawmakers and the president, despite frequent turbulence, have always managed to come to an agreement on funding bills. But the streak could come to an end this year.

At a Feb. 15, 2011, press conference, a reporter asked Obama whether he was willing to work with Congressional Republicans "to avoid a government shutdown?"

Here’s part of Obama’s answer:

"We’ve got to be careful. Again, let’s use a scalpel; let’s not use a machete. And if we do that, there should be no reason at all for a government shutdown. And I think people should be careful about being too loose in terms of talking about a government shutdown, because this has -- this is not an abstraction. People don’t get their Social Security checks. They don’t get their veterans payments. Basic functions shut down. And it -- that, also, would have an adverse effect on our economic recovery. It would be destabilizing at a time when, I think, everybody is hopeful that we can start growing this economy quicker."

A reader asked us to explore whether it was true that Americans won’t get their Social Security checks if the government shuts down.

First, some background about the laws that govern shutdowns, from a recent briefing paper by the nonpartisan Congressional Research Service.

The Constitution (Article I, Sec. 9) says, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." This is reinforced by the Antideficiency Act, which stems from an 1870 law and which has been revised significantly over the years. That act prohibits federal officials from spending money before an appropriations measure has been enacted, though exceptions exist for "emergencies involving the safety of human life or the protection of property."
But when looking at the fate of Social Security during a government shutdown, there’s an important wrinkle to remember.

Social Security is a mandatory program supported by a trust fund. As such, Social Security benefits aren’t appropriated -- and thus aren’t directly subject to the restrictions of the Antideficiency Act. However, the Social Security Administration’s operational employees are paid through appropriated funds. So the real question is whether a shutdown would prevent those employees from going to work, and if so, whether that would mean the payments wouldn't be sent.

A 1981 attorney general's opinion protects the right of at least some Social Security workers to carry out necessary functions -- and that’s essentially what happened during the 1995 shutdowns.

According to Social Security's official history on its website, 4,780 employees remained at work at the start of the four-day shutdown, while the other 61,415 were furloughed. But this cut "significantly impacted the Agency’s service to the public," the account said, and on the second day, additional employees were recalled to work.

The second shutdown -- which lasted three weeks, the longest in history -- could have brought even more severe consequences. But the agency deployed 55,000 employees and operations remained close to normal. (Experts told us it’s possible that the agency could get by with fewer employees today than in 1995 because today, many Social Security benefits are paid electronically.)

So, in 1995, the bottom line was that checks went out pretty much as they were supposed to. Does that mean they will if there’s a shutdown this year?

White House Press Secretary Jay Carney addressed the question during his Feb. 24, 2011, press briefing. Asked by a reporter why checks might not go out in 2011 like they did in 1995, Carney suggested that at least some beneficiaries may not be able to receive adequate customer services during a shutdown due to workers being furloughed.

"The president was pointing out some of the consequences, the potential consequences of failing to act, of failing to prevent a shutdown," Carney said. "And some recipients, new retirees, new applicants might not receive their checks. If retirees have questions about their checks, if they didn't get their check in the mail, if they had a change of address, all those things could prevent them from getting their checks. So there are, obviously, consequences that directly affect people who are recipients of Social Security benefits."

This statement -- which is noticeably more nuanced than Obama’s original comment -- comes close to the assessments of experts we spoke to. They told us it’s likely that payments will once again be made -- but there’s no guarantee. As CRS put it, while "past experience may inform future OMB and agency decisions," past precedents on activities and personnel "would not necessarily hold for any future shutdown."

Experts told us that there is enough of a gray area that it’s impossible to say with certainty that checks will go out during the next shutdown.

The president and Congress "could decide whether to send out Social Security checks in the event of a shutdown," said Alice Rivlin, who headed OMB under Clinton. "Congress could mandate that enough workers be declared 'essential' to get the checks out or the president could decide to take that action—or not."

John Palguta, a former federal official who is now vice president for policy at the Partnership for Public Service, agreed, saying that it’s "probable" that Social Security payments will continue, but added that "it’s not an iron-clad guarantee."

So at the very least, we believe there’s considerably more uncertainty on this issue than Obama stated in the news conference. While Obama had said that if there’s a government shutdown, "people don’t get their Social Security checks," the reality is that the law provides significant leeway for employing federal workers to carry out Social Security functions during a shutdown, which allowed most checks to go out in 1995.

On the other hand, making that approach work depends on the president utilizing his authority, and on Congress not blocking him from carrying it out. It’s also possible, as Carney suggests, that depending on the number of Social Security employees assigned to work, certain customer services may become unavailable during a shutdown, such as checks not going out to new beneficiaries or those with address changes.

Ultimately, the law and history suggest that it’s likely that checks will go out, though it’s not a certainty. On balance, we rate Obama’s statement Barely True.

Unemployment, what is really wrong.

Unemployment, what is really wrong.

Chart shows 11 years of jobless increases , can't blame all on Obama  ?

'Abysmal' Jobs Report a Blow to Obama

NEWS papers drape the bad News , but Pres. Obama blames :

President Obama addressed the increasing unemployment rate Friday morning, stating that the latest jobs report confirms "what most Americans already know."
"We still have a long way to go and a lot of work to do to give people the security and opportunity that they deserve," he said.
Recent natural disasters, spikes in gas prices, and state and local budget cuts have contributed to the down economy, Obama listed. He also noted that more than 2 million new private sector jobs were added over the past 16 months but that the recession "cost us more than 8 million."

Obama want's you to boycott ATM machines , will you do that?

There's really is one problem by looking at the above chart from the Department of Labor Statistics . The surge in unemployment began in 2008.  I am trying not to point the finger at Obama , but something has slipped . The stimulus money was supposed to save jobs , and create jobs . Was that Obama BIG plan? Throwing darts on Obama alone is just not the problem . He's a symptom.  He's failed to act .  He did not blame NAFTA . Obama blamed ATM’s today for his record unemployment rate… Because we all know ATM’s were just introduced since he took charge of the economy.FOX Nation reported: President Obama explained to NBC News that the reason companies aren’t hiring is not because of his policies, it’s because the economy is so automated. … “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

Look at NAFTA first, over the last decade America sent millions of jobs overseas :

NAFTA requires limits on the safety and inspection of meat sold in our grocery stores; new patent rules that raised medicine prices; constraints on your local government’s ability to zone against sprawl or toxic industries; and elimination of preferences for spending your tax dollars on U.S.-made products or locally-grown food. In fact, calling NAFTA a “trade” agreement is misleading, NAFTA is really an investment agreement. Its core provisions grant foreign investors a remarkable set of new rights and privileges that promote relocation abroad of factories and jobs and the privatization and deregulation of essential services, such as water, energy and health care.
Remarkably, many of NAFTA’s most passionate boosters in Congress and among economists never read the agreement. They made their pie-in-the-sky promises of NAFTA benefits based on trade theory and ideological prejudice for anything with the term “free trade” attached to it Rob Scott at the Economic Policy Institute has released a new study estimating 683,900 U.S. jobs have been displaced due to the rise in the trade deficit with Mexico after NAFTA was enacted. It serves as a grim warning of what could come if Congress were to approve the Korea FTA, which is based on the NAFTA model. Scott breaks down the job displacement by industry and congressional district, illustrating how workers across the country have been harmed as the deficit with Mexico skyrockets.

As Scott notes, corporate lobbyists and administration officials pushing the Korea FTA today sound just like pro-NAFTA government officials back in the early 1990's before NAFTA devastated U.S. manufacturing jobs. Once again they are claiming that a NAFTA-style trade agreement will create thousands of jobs, but this new study is a wakeup call to anyone who views their claims as believable.

Scott highlights the fact that the industrial structure of U.S. trade with Mexico and South Korea are very similar, which portends NAFTA-like job loss if the Korea FTA were to be implemented. The U.S. has huge trade deficits in electronics and motor vehicles and parts with both Mexico and South Korea, and the U.S. International Trade Commission predicts that the U.S. trade deficit in these products will dramatically increase if the Korea FTA were to enter into force.

Daniel Griswold over at the Cato Institute challenged the results of the study, claiming that the study's method of computing job losses is flawed. Proponents of unfair trade may rail against the methodology that Scott employs now, but what did they think of it when they were trying to prove that NAFTA would be a boon for workers before it passed? They embraced it. Gary Hufbauer and Jeffrey Schott, leading NAFTA proponents at the Institute for International Economics, released a study in 1993 predicting that the annual U.S. trade balance with Mexico would improve by $9 billion due to NAFTA, leading to a net increase of 171,000 U.S. jobs. To estimate the increase in the number of jobs, they used same method as Rob Scott used in his latest NAFTA study and applied it to their prediction of the change in trade flows after NAFTA, although their study did not break down jobs geographically.* Perhaps FTA proponents have changed their minds about the method merely because it now reveals all those claims about NAFTA job gains went up in smoke after NAFTA was actually enacted.

Griswold then goes on to belittle the magnitude of the job displacement estimated by the study, comparing it to the 15 million jobs that are created and destroyed annually. It's a silly comparison, because the 15 million figure deals with turnover, whereas Scott's study deals with the changes in the total number of jobs displaced by trade with Mexico at two different points in time, i.e. the net change after all the turnover has completed. 683,900 jobs is a lot of jobs, especially to those workers who have seen their jobs offshored due to unfair trade policy.

*The only significant difference between the studies is that Hufbauer and Schott used estimates from a 1992 Department of Commerce study of the number of jobs supported in each industry by each export commodity to Mexico, for which there is no similar recent data. Scott used data from the Bureau of Labor Statistics on the jobs supported by a given quantity of goods produced in the United States by industry, which gives results similar to the Department of Commerce data..

.

My Question are all the Numbers right? Maybe................................

 The addition of 18,000 jobs is effectively a loss, since the economy must generate about 125,000-150,000 jobs a month to keep pace with the expansion of the work force population.

The employment numbers are far worse than expected. Many economists had expected a gain of over 100,000 jobs last month and thought the unemployment rate would remain at 9.1 percent.
Meanwhile, job increases recorded in previous months were revised downward to 25,000 in May and 217,000 in April.

Obama has 'time' , and to reflect and  act , and MAYBE reverse NAFTA trade agreement .

A Case-Y in Point.

Casey Anthony from photo , dressed for the part.

Young single mom goes parting around leaves her toddler daughter alone at home , she drowns in the pool accidentally . Then another media frenzy begins , and ends in another American legal flop. 

Let's go back and think . Have we seen this before on the News about a young mother who by child neglect  (either kills her offspring )  .  Here is speculation. , she  ( CASEY ) tries  to hide the fact that her daughter may have drowned,  makes it look as if her little girl was kidnapped by a stranger . Dump's her body in the woods. Casey goes on a wild party spree for 33 days. We all have  heard these stories before ?  .  I am not disputing any thing what I've read about the Case. This only shows that Casey was nothing but a dumb 'party girl' . If she did it , the above scenario could be true .  There is a whole lot of evidence of that on the media with photo's videos of her showing off her life style to the world . The now infamous  tattoo with the Italian words "Bella Vita" -Tattoo artist testified that Anthony seemed happy when she got tattoo that means "good life" . The Legal the Defense of Casey was as weak as water . Vary Much like the O.J trial of memory . Yes there was evidence that O.J beat his wife , but oh no the glove did not fit and so ........... The Prosecution's own evidence was just as lame . They only showed in an unprofessional matter because they were out to get CASEY.  Based more on the  media frenzy of accusation . As BAD as CASEY is , the Prosecution chose to use evidence of her lifestyle as a rebel to link Casey to Caylee's death.  The circumstantial evidence , the duct tape was not probably tested with any DNA from Casey . The report of the 'smelly' trunk in the car should have alerted the authorities to use cadaver dogs  . With all else it seems that the system botched it.

 CASEY was already tried by the MEDIA . " She is GUILTY" .

 The Verdict made a fool of the Media . Including Nancy Grace, whose nightly show slammed with speculation tabloid style that there was evidence , and evidence that leaked by the media may have made it easier  for the jurors to condemn. Yet it did just the opposite.It seemed that the Prosecution from the start was on the wagon to condemn Casey to chair from the beginning with out looking for alternative methods of punishment .

T he verdict shocked many legal commentators and trial-watchers who had long assumed that Ms. Anthony would be convicted and perhaps sent to Florida’s death row.

But the jury of five men and seven women, who heard testimony in the month-long trial and deliberated nearly 11 hours, viewed the case differently. The relatively quick not guilty verdicts are an apparent rebuke of the government's case, which lacked any direct evidence of Anthony's involved in the death of her daughter, Caylee. Despite this lack of evidence the state pushed for a possible death sentence.

The state "failed" otherwise to provide any evidence that Casey did it. Jury verdict:

First DEGREE Murder-not guilty
Aggravated Child Abuse-not guilty
Aggravated Manslaughter-not guilty
FOUR counts of lying to Law Enforcement -GUILTY .

Case in point  :

After all, we know exactly as much as we need to pass judgment on Casey Anthony: We know that this is not how the CSI episode ends. We have not waited weeks and months to see her spend four years behind bars for lying to law enforcement. We came out baying for blood.. Yet in the Middle there was innocent blood spilled , that of the little girl.

Southern California Pushes for Secession

On July 4th , many states face huge budget deficits . Some solutions come out of desperation . For California , a state with huge deficits that have gone bust over the decade . Many counties are losing money to support a massive state payouts .

A new push to divide the Golden State in two could make Southern California the 51st state. "Our state legislature that is supposed to be making laws and being respected, imposes laws that aren't even lawful," Riverside County Supervisor Jeff Stone told Los Angeles ABC station KABC-TV. "So I think our state is California gone wild."Stone is proposing that 13 Southern California counties secede from the state, dividing California into a north and south region ‘It has to change,’ he added..

Stone said the new state would consider having a part-time legislature, shifting more power to local government and having a reasonable sales tax.

He is now proposing to hold a public meeting to get feedback from officials and the public on the idea.‘Are there challenges?’ he said. ‘Absolutely. But the destruction of California has to stop and we don’t know what we can accomplish unless we sit down and consider the possibilities.Fellow Riverside County Supervisor Bob Buster called the split-state proposal a ‘crazy distraction.’‘We should begin to get our own budget balanced, which we haven’t done yet, and put in place some of the reforms we need in this county before we try and go and restructure the government in the great state of California,’ he told the Press-Enterprise.‘The temperature has gone up in Riverside County and it seems Supervisor Stone has gotten too much sun recently,’ he added.

"I don't want to just duplicate the problems that we already have in our existing state of California," Stone told the Press-Enterprise, adding that if other counties are interested in seceding, "We would welcome them."

Many criticized Stone's plan, including Riverside County Supervisor Bob Buster, who called it crazy.

"[Stone] makes a lot of good points," Fresno County Supervisor Debbie Poochigian said, according to the Press-Enterprise. "I understand his frustration, but I'm not sure dividing up the state is the answer."

Lauritzen said that over next several months Stone hopes to bring representatives from the other counties together for a symposium on his secession idea.

"We're certainly not saying it would be easy. There are lots of questions," Lauritzen said to ABC News. "But we have reached a point where this discussion just needs to take place."

Both the state legislature and Congress would have to sign off on any plan to split California in two, so even if the other counties like the idea, seceding won't be easy.

Comment from a Latino living in Los Angele us: 

I have to take a bite out of this . The Most southern part of California is mostly ( almost) Hispanic . Most Latino's are Democrat This secession jabber is nothing but a hope of Republicans to take hold of a region-turned-State which historically consists of right-leaning counties. What they are not calculating properly is that the number of Hispanic voters in the region is decidedly on the rise. And us Hispanics in California (or, should I say "The Californias") tend to lean lefty.Also, the whole "protect our borders" line is already a bit too tired. There's no stopping the influx of immigrants, legal or otherwise. (And keep in mind that for every undocumented immigrant into the State, we have 7 fully legalized newborn or immigrated residents in the the plain.)Hispanics already constitute 37% of the State's population, and the Southern portion of the State holds the majority of us. I'm not too sure a seating GOP professional really wants to shift the power balance in this region of California to the Dems, silver platter and all.Dream on, Riverside County Supervisor Jeff Stone, dream on..

Avoiding Government Shutdown ?

Avoiding Government Shutdown?

There are those who believe that the debt ceiling is unconstitutional, according to CNN Money . There are some who believe that, if the current impasse in Congress over whether or not to raise the debt ceiling is not resolved and the debt ceiling is not raised by August 2 (the last day Treasury Secretary Timothy Geithner maintains the government must again reassume its full financial obligations or the nation will face a government shutdown and default on its outstanding loans), President Barack Obama should invoke the 14th Amendment of the Constitution and order that the U. S. Treasury assume its regular payment schedule in order for the government to maintain its operations.

The amendment 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 .”

What does it mean? Simply, it is a sweeping mandate that requires the government to meet its financial obligations, making default an unconstitutional premise. If Congress remains in gridlock and cannot come to a compromise in order to raise the debt ceiling, which is a possible scenario given the current climate of stalemate, the Executive must intercede and charge the Department of the Treasury with paying the operational costs of the nation.

According to an estimate concluded by the Bipartisan Policy Center , a think-tank founded by former Democratic and Republican Senate majority leaders, between 40 and 45 percent of 80 million payments would not be made if the government should go into default. Without a raised debt ceiling, which must be done by an act of Congress, the payment of all of the government’s debts would become impossible. The BPC study also noted that just to make a $29 billion interest payment to investors in mid-August, the government would have to defer 44 percent of federal spending, which would be felt by the broader American economy.

This on top of Treasury Secretary Geithner already juggling expenditures since May, when the debt ceiling was reached and the government stopped borrowing money to pay its debts, in what he has termed “extraordinary measures” in order to pay the government’s bills.

Writing for The Atlantic , Garrett Epps declared that: “If Congress won’t pay them, then the executive must.”

Bruce Barlett at The Fiscal Times agreed , noting the “congressional irresponsibility” should not cause a government shutdown. He also proposed that those worried about Treasury securities sold to pay the nation’s debts could be reassured by the Federal Reserve that it would always be a buyer of such securities.

At the same time, though, prudence must be observed. Epps told CNN Money in an email: “I think ignoring the debt ceiling would and should be at most a last-minute thing, like a tourniquet on a wound, where the choice is between losing a leg and losing a life.”

When asked at a press conference Wednesday evening about the possible invocation of the 14th Amendment, President Obama sidestepped the issue altogether.

Republicans in Congress want budgetary spending cuts for approving the debt ceiling raise. Democrats want Republicans to allow debate on tax increases, something which Republicans absolutely refuse to consider. House minority leader Eric Cantor (R-VA) walked out of negotiations in June when tax increases were brought up. Sen. Charles Schumer (D-NY) says that Republicans are purposely attempting to undermine the economy in order to win the 2012 general election.

If the government is forced to shut down, like it did briefly in 1995 and 1996, all nonessential services will halt immediately. Shutdown could also affect Social Security checks, food stamps, federal worker and military paychecks, government contractor bills and payments to Medicare and Medicaid providers.

The strategy that Republican Senator Pat Toomey, Republican US Representatives Mike Fitzpatrick, Jim Gerlach, Pat Meehan and many conservatives like Jeb Hensarling and Tom Price, M.D., (interestingly Democratic US Rep. Allyson Schwartz also voted for this CR) and Republican leadership is using can be, I call “Selective, Sequential Shutdown”, that is, rather than across the board shutdown, various programs are analyzed for effectiveness and the cost-benefit.

It seems reasonable strategy to me and, certainly, is no betrayal of any campaign promise. I do think the Liberal Democrats will provoke a shutdown and it will be because they refuse to reduce spending as the voters, clearly, communicated last November.

The Morning Call Pennsylvania Avenue reports “Sen. Pat Toomey, after joining a majority of his colleagues to keep the government funded for three more weeks, said his support for the stopgap measure did not come easily. The bill passed 87-13.”