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September 24, 2014 / 29 Elul, 5774
At a Glance

Posts Tagged ‘debt ceiling’

How I Stopped Fearing the Tea Party Apocalypse and Started to Love It

Sunday, October 13th, 2013

The most memorable early executive act on the part of the newly elected President Barack Obama, for whom I voted in 2008, was to embrace his predecessor’s economic stimulus package, push it up to $800 billion and give it to all the many speculators and fat cats who had caused the collapse in the first place.

As far as I was concerned, this was an act of class betrayal of an enormous magnitude. The White House and the loyal media bombarded us with the notion that if we dared permit sick, corrupt financial institutions to meet their natural demise it would mean the end of civilization. They were—so we were told—just too big to fail. Millions of Americans could go underwater with their properties – that we weren’t afraid of, but if AG stock holders were left at the end of the day with what amounted to so much useless paper – that would have been catastrophic.

What Obama should have done back then, which would have surely brought us over the hump in a couple of years—instead of schlepping a delusional recovery for the better part of a decade—was to hand out trillions of dollars to local municipalities, so they would in turn give them to their citizens for make-work. Dig ditches, mow lawns, fix bridges, write poetry, I don’t care. It wasn’t about the end product – it was about getting money into people’s hands so the economy would be resurrected not on Wall Street, but in the thousands of towns and hamlets across America. Because when you give a poor man a paycheck, he goes right away and pays for food, clothing, rent. It’s the best distribution system known to man. If it took ten trillion dollars – what the heck, print ten trillion dollars and send them out to fix the country.

You would be worried about inflation, you’re saying? Well, since the dollar has been taken off the gold standard in 1971, inflation is caused by one, singular factor: what it costs banks to buy money from the Fed, the U.S. central bank. If they pay half a percent or so in interest—as they’ve been doing for decades now—then there’s no inflation. The only other possibility for an inflation is if there’s a shortage of goods, and then too many dollars are chasing too few goods and the prices soar. Look around you – we’re in a merchandizing glut, despite all the economic catastrophes and the poverty line and the single mothers – there are still way too many iPhones out there for each American.

But you don’t have to agree with me on any of the above to understand the following: If, back then, in early 2009, when President Obama was pushing his stimulus package in all the wrong directions, a group of 80 Democrats had stood up on their hind legs and said, Hell, No, We Won’t Go, I and all my Democratic friends would have rushed to the streets to cheer them on.

That’s the part I find hard to accept – why is it that when 80 right-wing parliamentarians are standing on their hind legs and telling their leadership and their president to go to hell, they won’t sign on to what they consider to be a wrong budget policy – why are they being attacked as messianic crazies, just this side of the loony bin?

Former Labor Secretary in the Clinton Administration Robert Reich, whom I happen to like very much, had this to say to Spiegel about the Tea Party Congress members: “Some of them really have contempt for the entire process of government. They’re followers of people who say that we ought to shrink government down to the size that it can drown in a bathtub. They hate government viscerally. They’re not in Washington to govern; they’re in Washington to tear it down.”

I’m not telling you anything you haven’t seen and read over the past month or so, and as the looming date of the “default” grows nearer, those character assassinations will only get nastier. And the polls are showing that America is buying it, and seems to be blaming the Republican party for our economic mess. And since our politicians live and die by the polls, it’s quite possible they’ll find a way out of this crisis, maybe for 6 weeks, maybe for 2 months, who knows.

Obama’s Threats

Monday, January 21st, 2013

In his quest to raise the debt ceiling, President Obama issued a threat in his press conference last week that troops won’t get paid and veterans’ pension payments will be delayed.  He warned of delays in Social Security payments as well.

It’s important to understand that these comments constitute a threat (which may or may not be a hollow one).  Obama is not stating some inescapable reality, to which he along with the rest of us is subject.  If retirees and vets see a delay in their payments, it will be because Obama himself decides to hold the payments up.  Moreover, Obama is not caught in a trap when it comes to paying the troops; he can make sure they get paid, if it’s his priority to do so.

The payments to retirees are going to go out unless Obama stops them.  The debt ceiling doesn’t prevent those payments from being made.  It requires that other types of federal expenditures – current-year operating expenses like federal purchases, welfare outlays, payrolls, etc – be suspended or managed differently.

The two Social Security Trust Funds (one for old-age benefits and one for disability benefits) had nearly $2.7 trillion in assets at the end of fiscal year 2011. The most recent for which a trustees’ report is posted online.  The funds are used every year to ensure obligated pay-outs to beneficiaries, and have been borrowed against many times by Congress, under routine fiscal circumstances.  While repayment of any amount expended during a government shut-down should be part of a debt-ceiling deal, the trusts allow Social Security payments to be made on time during a shut-down – unless Obama decides against that.

Likewise, the Military Retirement Fund had about $428 billion in total assets at the end of fiscal year 2012, three-and-a-half months ago.  The fund’s assets can certainly be used to make on-time pension payments to veterans in early 2013 – again, with a repayment plan as part of the debt-ceiling deal.  In fact, military retired pay is already programmed for electronic distribution throughout FY2013; it takes active intervention to prevent it from being distributed.

Active-duty military pay is a current-year expenditure, and would be directly jeopardized by a government shut-down.  But whether or not the troops get paid is up to Obama’s leadership.  He could agree with Congress to set aside enough to pay the troops while the negotiations continue – a move that could well require cutting or suspending expenditures elsewhere in the federal government, in order to remain under the debt ceiling until a deal was reached.

Obama could also get a read from his attorneys on the precedents for and propriety of borrowing against one of the big trust funds to meet the uniformed payroll during the government crisis.  Paying the troops, especially when the military is forward-deployed and much of it is in combat in Afghanistan, ought to be politically unifying.  It’s hard to imagine Congress trying to impeach or otherwise hobble Obama over the actions he might take to ensure the troops are paid.

What Obama is doing, in effect, is issuing threats about what he will do, if Republicans don’t give him what he wants.  But he’s representing the threats as a consequence for which the GOP lawmakers would be responsible.

This kind of mendacious demagoguery flourishes when the press is biased and/or cowed, and fails to challenge the political leaders.  Every appeal from the leadership gets to be emotional; government is discussed in unaccountable, irrational, and even hysterical terms, as when the president postulated, in his speech on gun restrictions during the same press conference, that the victims of mass shootings had been “denied their rights” by the shooters.  The distinction between committing crimes against individuals, which the citizens can do, and denying the people’s rights – which only government can do – is one of the most important concepts underlying the American system of government.  But Obama elided it out of existence on last week, in his quest to depict the use of firearms as, principally, a means of injuring others.

Parse, parse, parse, my friends.  This president doesn’t speak in the terms of American political philosophy, which holds government and its leaders accountable for meanings both philosophical and practical.  It is not our practice, in American government, to shrug off misleading demagoguery.  That’s not “business as usual” for us.  Our president is supposed to bind himself to constitutional meanings.  He is supposed to depict the actions of government honestly.  It’s a big deal that this one doesn’t.

The Trillion Dollar Coin Approach to Mideast Peace

Thursday, January 17th, 2013

There have been rumors and shmumors about America’s intention of minting a “trillion dollar coin” and sticking it in the Federal Reserve in order to bypass the so-called debt ceiling, which is more of a debt elevator. I couldn’t help but think of the Simpsons episode where the government prints a trillion dollar bill and Mr. Burns and Homer escape with it and somehow it ends up in the hands of Fidel Castro and the country survives on the wealth of the trillion dollar bill.

It is rare that I am dumbfounded, but this time I really am. I don’t know what to say. The mere possibility of the minting of a trillion dollar coin is so despicably absurd that I’m overloaded with a litany of potential sarcastic remarks that none of them can fit through the door of my mouth as they’re all crowding together simultaneously and are now jammed in the back of my throat and I can hardly breathe. Jon Stewart did a pristine job I must say.

Let me just start by saying that the source of this problem is that some primordial government, when it came in and seized the local mints and splayed the king’s face over all the coins, decided to give the monetary unit a proper name instead of a weight. For example, “dinars” instead of “ounces”. Then the Alice-in-Wonderland concept of “face value” was born, which doesn’t really exist. If instead of “dollars” the term for money was “grams” then money would be tied to weight instead of fancy shmancy names like “dollar” and the possibility of printing a gram of money or a “trillion gram coin” would be a lot more difficult for the government to do. So they had to rename the monetary unit to some imaginary term.

Two obvious questions are these, reductio ad absurdums, but it’s hard to engage in those when the premise you are attacking is itself so intensely absurd on its own:

  1. If you’re going to mint a trillion dollar coin, why not mint 16 of them and pay off the national debt?
  2. Why make it out of platinum? Why not elephant dung?

Better yet, you want mideast peace, right? And you love foreign aid and meddling. Then by God go all out! Why use it for such a petty thing as raising the “debt ceiling”? I say give the trillion dollar elephant dung to Israel, and then we can buy all of Syria, Jordan, Lebanon and Egypt and every single Arab in the country, pay them outrageous salaries to tap dance for us, and give them each their own personal trained pet chimpanzee to give them manicures and shiatsu massages and build them all gold-plated ivory mansions so they’ll be happy and won’t have to do anything after the daily tap dance for the Jews? Everyone over here will be rich, obviously, and therefore at peace. And the chimpanzee population will have a big boon.

There’s only one problem. How are we doing to break a trillion to get all this done? The local Five and Dime? Or the Five and Trillion?

And you want to use it to get around your stupid debt ceiling?

My Lord the world has lost its mind.

And don’t forget, there is nothing qualitatively different between a trillion dollar coin, and a one dollar bill.

Visit Settlers of Samaria.

Printed from: http://www.jewishpress.com/blogs/settlers-of-samaria/the-trillion-dollar-coin-approach-to-mideast-peace/2013/01/17/

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