Well, you may have heard the bad news by now…Christopher Hitchens, a writer of considerable courage and integrity, as well as rarely surpassed erudition and elegance, has been diagnosed with esophageal cancer. Hitchens is the sort of writer who has offended almost everyone at some point, but he has consistently, in his days of association with both the left and, if not the right, at least the pro-Iraq War faction of the right, stood up for the underdog in the face of oppression. He has also compiled a long record of distinguished literary criticism, and has established himself as one of the few intellectuals of modern punditry.
Suffice to say, I am a huge fan, and have been for some time. It is with considerable sadness that I ponder the implicatons of the prognosis, as just a little research quickly revealed appallingly low survival rates for this particular type of cancer. The odds are stacked against him, and in an irony that will not escape him, thousands of people across the entire political spectrum are praying for this famously proud atheist to be the rare exception to the rule.
Regardless, he’s not dead yet, and while there is breath, there is hope, so let’s not make this a premature obituary. I’m pulling for you, Hitch – I truly am. Hang tight and fight with all of your considerable might…
You know the moments: the Miracle on Ice comes to mind. For Texas Tech and college football fans, the Graham Harrell pass to Michael Crabtree to knock off #1 UT. The Immaculate Reception. Those moments that will stand frozen forever in the minds of the sports fans fortunate enough to witness them.
Such is Landon Donovan’s goal in the 91st minute today to propel the United States from elimination and a trip home to the top of Group C. Words can’t suffice, so we’ll let the play speak for itself. Unforgettable…
The most remarkable thing about this current World Cup is not that it has resurrected this blog (I’m still alive!), nor that America got robbed (as it surely did of the winning goal against Slovenia), nor the omnipresent droning of the vuvuzelas. It is that this is the first World Cup where you can honestly say, as was once said of pro football in the U.S., on any given day, any team good enough to be in the Cup is good enough to beat or draw any other team.
We have seen some remarkable results – the United States tie against England, England’s subsequent nil-nil match against Algeria, the utter collapse of France, Germany losing to Serbia after aboslutely dominating Australia, Spain’s loss to Switzerland, and perhaps most significantly, the just-concluded 1-1 match that had New Zealand, ranked #78 in the world by FIFA, holding off the defending World Champion and current #5 Italy.
It’s a shock to the system for the European old guard of soccer, but after they recover, they’ll realize it’s good for the sport. This is the first World Cup where the favorites, not just one or two, but as a group, are struggling to even move past the group stage. There are some blaming it on the ball, blamining it on the altitude, blaming it even on the vuvezelas…but what it really means is \that international soccer has finally matured. Talent is no longer concentrated, but is worldwide. Tactics, too, have matured, as coaches have learned how to play a defensive game against the world’s best without completely sacrificing offense.
In short, this World Cup is wide open…very few teams are resting easy, and only one has been eliminated (unfortunately, the entertaining African side, Cameroon). My own pick at this point? Argentina…but it will be a very, very intense set of third round matches in group play as almost the entire field has its tournament on the line. Great stuff!…
In all the years of great musical performances on Saturday Night Live, I think my all-time favorite is the one below (couldn’t do YouTube, because YouTube keeps yanking it down). This is DEFINITELY the most energetic performance I’ve ever seen on SNL, and I think you can chalk it up to a band that was just breaking out, and knew that this was a chance to put an exclamation point on a gig that was broadcast nationwide.
Remember when the whole lefthand side of the blogosphere was all aflutter over a spot poll passed in the immediate wake of the passage of health care reform that showed that the public actually approved of the Democratic plan to bankrupt the nation – er, pass health care reform? This despite months of polling showing how wildly unpopular the plan was?
The smarter and more honest of the liberal pundits pointed out that the poll might be an outlier - and indeed it was. In point of fact, a trend has emerged: support for the plan is sinking like a stone. The trend line is unmistakable, as shown by this chart from Pollster.com:
The other unmistakable takeaway from this chart is that, beginning in July of 2009, there has been no point – none- at which the public actually favored this monstrosity. CBS News covers the latest carnage:
The public is increasingly skeptical of the health care reform bill signed into law last week, a new CBS News poll shows.
More Americans now disapprove of the legislation, and many expect their costs to rise and the quality of their care to worsen; few expect the reforms to help them.
President Obama has continued to tour the country to stump for his new set of reforms. This week he went to Portland, Maine, where he told people it will take more than a week for the benefits of reform to become apparent.
The poll, conducted March 29 through April 1, found that so far the president’s efforts to build up support for the bill appear to be ineffective.
Fifty-three percent of Americans say they disapprove of the new reforms, including 39 percent who say they disapprove strongly. In the days before the bill passed the House, 37 percent said they approved and 48 percent disapproved.
Republicans and independents remain opposed to the reforms, and support has dropped some among Democrats. Now 52 percent of Democrats approve of the new reforms, a drop from 60 percent just before the bill was passed by Congress.
There are those who think the public will forget about this boondoggle and November won’t be bad for the Democrats. There are also those who believe the bill will reduce the deficit. And, of course, there are those who believe in the tooth fairy and inexpensive lawyers. I, however, choose not to live my life in woeful ignorance.
Listen up, folks: when only a bare majority of Democrats approve of the bill that Barack Obama staked his presidency on, he’s treading close to one-term territory…and November is going to be a very, very good month for Republicans. Too bad it took the ruin of the nation to get us there…
A Democratic senator I can’t name, who reluctantly voted for the health-care bill out of loyalty to his party and his admiration for Barack Obama, privately complained to me that the measure was political folly, in part because of the way it goes into effect: some taxes first, most benefits later, and rate hikes by insurance companies in between.
Besides that, this Democrat said, people who already have coverage will feel threatened and resentful about helping to cover the uninsured—an emotion they will sanitize for the polltakers into a concern about federal spending and debt.
On the day the president signed into law the “fix-it” addendum to the massive health-care measure, two new polls show just how fearful and skeptical Americans are about the entire enterprise. If the numbers stay where they are—and it’s not clear why they will change much between now and November—then the Democrats really are in danger of colossal losses at the polls. (emphasis mine)
It’s becoming more and more clear in hindsight that this bill is a fiscal catrastrophe. How bad is the budget picture? This bad:
America is digging itself into a deep fiscal hole. In 2009, the federal government spent $3.5 trillion, but took in only $2.1 trillion in revenue — thus spending $1.67 for every dollar it collected. The resulting $1.4 trillion deficit was equivalent to 10% of the nation’s economic output, the highest percentage since the end of World War II. America’s publicly held debt now totals $7.5 trillion, about 53% of gross domestic product — the highest it has been in more than 50 years.
These figures are alarming, but they pale in comparison to budget projections for the years ahead. Recent numbers from the Obama administration show that if current policies were to remain in place, deficits would average more than $1 trillion annually for the next ten years, amounting to more than 5% of GDP. Those deficits would then ensure that the national debt would grow much faster than the economy: By 2020, the United States would owe more than $20 trillion, the equivalent of about 85% of GDP. At that point, interest payments alone would consume about $900 billion a year — almost five times as much as they did in 2009.
The outlook grows even more bleak when we account for the ongoing retirement of the Baby Boomers and further increases in public spending on health care. According to the Congressional Budget Office, spending on Medicare, Medicaid, and Social Security is on track to grow from about 10% of GDP today to about 16% in 2035. At the same time, the aging of the population means that the labor force — and, therefore, tax revenues — will grow more slowly in the future. The twin pressures of increased entitlement spending and slowing revenue growth mean that the debt will skyrocket — to roughly 200% of GDP in 2035, under one CBO scenario — unless there are dramatic cutbacks in all other government activities or an equally dramatic increase in taxes.
…Our current staggering deficits are therefore just a small part of a much larger fiscal dilemma. The financial crisis has added several trillion dollars to America’s indebtedness, but our structural deficits — which will continue even after the economy recovers — are on track to add tens of trillions of dollars more in the coming decades.
Budget-watchers once spoke of these looming challenges as a distant, long-term threat — something quite separate from the more pressing budget challenges that we might face over, say, the next ten years. That is no longer true. Today, those big “long-term” troubles are our urgent problems; they start to materialize within the usual ten-year budget window. Spending on Social Security benefits, for instance, is projected to exceed Social Security tax revenues in 2010 and 2011, and the Medicare trust fund is projected to run out of money in 2017. We now live in a world in which financial markets speculate about the odds of the U.S. government’s defaulting, and in which major foreign creditors express concern about our ability to pay our debts.
This is the real tragedy of the health reform debacle. Even if the bill proves to be revenue neutral or actually reduces the deficit (a prospect I find highly unlikely for reasons discussed elsewhere), it has taken many of the potential deficit-reducing savings and “revenue enhancements” out of the picture for deficit reduction, since those dollars are by and large pledged to the cause of increasing insurance coverage…meaning, much of the long-hanging fruit is gone, and true deficit reduction of the size that could make a difference will prove very elusive, given the cowardice of Congress with respect to spending cuts, and the vast unpopularity of tax increases.
We’re in for a long, bumpy ride…and we’re running on a single engine and low fuel…
As long as there has been a Congressional Budget Office, there has been a lot of crying from one side or the other of the partisan divide about their latest estimates. So when a conservative such as myself says I don’t believe this health care boondoggle will reduce the deficit, the immediate accusation is one of hypocrisy: you trumpet the CBO’s numbers when they support your argument, and condemn them when they don’t.
Well, sorry, for this blogger at least, that doesn’t wash. I have no problem with the CBO – I believe that it is nonpartisan, as it claims to be, and I believe it has scored this bill properly. The problem is the CBO can only score the bill it is presented, and if the bill as presented doesn’t tell the whole story, then neither can the CBO’s score.
I don’t want anyone to miss the import of Samuelson’s argument, so let’s put a finer point on it: the legislation is front-loaded. Benefits are phased in, but revenues are collected from the beginning. The result is that six years of benefits are paid for by ten years of revenue enhancements (i.e., money from your wallet).
So what? Well, think about it – you can only front load once. Every further year is going to roughly 40% more expensive (1-1 benefits/revenue ratio compared to .6/1). In other words, after the inital ten years (and the expiration of the CBO estimate, I might add), you’re going to need to come up with 40% more revenue for each year, or add even further to the out-of-control deficit.
Only it’s more than 40%, because Democrats are already promising to pass seperate legislation, at a cost of $200 billion, to reimburse doctors for Medicare treatment at a higher rate than called for in the bill. The CBO can’t score that, because it’s in a seperate bill, you see…but, if passed, it raises the cost of the package by a whopping 20% over the first decade.
Here’s the real kicker, though – we raise all this new revenue, and we don’t pay down the deficit, we spend it. Imagine if you, in debt up to your eyeballs, suddenly conceive a plan to raise enough money over a decade to pay down a substantial fraction of your debt (and that’s how big the debt is now – the trillion dollars would only pay down about 7% of our debt) - and then blow virtually every penny of it on new spending. Samuelson again:
Suppose the CBO estimate is correct. So? The $143 billion saving is about 1 percent of the projected $12.7 trillion deficit from 2009 to 2020. If the administration has $1 trillion or so of spending cuts and tax increases over a decade, all these monies should first cover existing deficits — not finance new spending. Obama’s behavior resembles a highly indebted family’s taking an expensive round-the-world trip because it claims to have found ways to pay for it. It’s self-indulgent and reckless.
Let’s get this straight, folks – spilled milk is spilled milk. You can argue until the cows come home that it was George W. Bush who caused the deficit and not Barack Obama. It doesn’t even matter if you are right. How petty and how beside the point! The point is this: Barack Obama passed this legislation – he even said his presidency depended on it. He (and congressional Democrats) bear 100% of the responsibility for spending this money instead of reducing the deficit, and he bears 100% of the responsibility if the legislation proves to actually increase the deficit, as it almost certainly will.
The point is not what happened in the past – that only matters for throwing partisan bricks. The point is what we do today, given the set of circumstances that faces us. President Obama staked his presidency on a policy that is going to bankrupt this nation…so much for sacrifice and hard choices…
Here’s a little Sunday fun – in October, 2006, the Rolling Stones played, incredibly, Zilker Park in Austin in front of about 45,000 people. It boggled the mind to ponder it, and the show was, even more incredibly, better than anyone thought it could be. It was one of those glorious evenings that, for those who were there, lingers on as one of the reasons you live in Austin in the first place. I remember just about every second of that long, fantastic day and night.
It was taped professionally and released as a DVD (The Biggest Bang), so there is incredible footage out there. One great clip is the seldom-played Sway (in all the years since this was released on 1971′s “Sticky Fingers”, I don’t think it’s been played more than half a dozen times live). It was that kind of night – the Stones played a set list that was completely unique, and this is an indication of that. Watch for the killer solo by Ronnie at the end – smokin’!…
The liberal blogosphere and even commenters who lean left here were trumpeting a new poll released earlier this week that showed the public in favor of the health care reforms passed Sunday after months and months of polling showing the public as consistently opposed. It is not surprising that the health care reforms would get a boost after non-stop, largely non-critical coverage from the traditional liberal media that featured the virtual deification of President Obama and Speaker Pelosi. It would have been a shock if there was no bump.
A CBS News poll released Wednesday finds that nearly two in three Americans want Republicans in Congress to continue to challenge parts of the health care reform bill.
…The poll finds that 62 percent want Congressional Republicans to keep challenging the bill, while 33 percent say they should not do so. Nearly nine in ten Republicans and two in three independents want the GOP to keep challenging. Even 41 percent of Democrats support continued challenges.
…[T]here was significant disapproval for the bill. Forty-six percent say they disapprove, including 32 percent who strongly disapprove. Those numbers have barely moved since before the bill was signed.
Americans also did not significantly change their views on the impact of the bill. Thirty percent still say it will make the health care system better, while 33 percent say it will make the system worse.
They have also held relatively firm in their perceptions of how the bill will effect them. Sixteen percent say the bill will “mostly help,” while 35 percent say it will “mostly hurt.”
Note that this poll was conducted post-passage, and think about this summary: a large majority want Republicans to challenge the bill. More voters than not disapprove of the bill, think it will make the system worse, and think it will hurt them personally.
That’s not an endorsement – not by the longest of shots.
What makes this poll more meaningful than the one showing health care reform favored? Nothing, if considered in isolation. However, this poll is much more consistent with a long line of polls stretching back months. It is, in other words, part of a trend, with the earlier poll an outlier.
Now, that could change – maybe there WAS a significant post-passage bump, and a new trend has begun, and it is THIS poll that will prove to be the outlier – but that’s speculation at this point. Further polling will confirm or deny the bounce. It’s a sure sign of partisanship, however, when a single poll is trumpeted and an ocean of contrary ones ignored.
I’ll keep an eye on further polling, and if a new course is indicated, I won’t shrink from acknowledging it…
I based my opposition to health care reform on a simple premise I repeated over and over – we can’t afford it. I never believed the bill would reduce the deficit and I still don’t. And I’m not alone – here’s Jay Cost:
Between now and the next presidential election, ObamaCare is going to pay out virtually zero dollars in benefits, but it will take billions out of Medicare. This is bad for seniors. They have an incentive to oppose portions of this bill (while supporting others, like the closing of the “Doughnut Hole,” which Republicans will never repeal). While the Democrats will claim that this reduction in benefits will have no effect on the quality of their care, CBO is much less certain:
Under the legislation, CBO expects that Medicare spending would increase significantly more slowly during the next two decades than it has increased during the past decades (per beneficiary, after adjusting for inflation). It is unclear whether such a reduction in the growth rate of spending could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or through reductions in access to care or the quality of care. (Emphasis mine)
…After decades of developing a reputation for defending the interests of senior citizens, the Democrats have put it in serious jeopardy with this legislation. And they’ve done so right at the moment when demographic shifts are making the senior population more powerful than ever.
Why create such an imbalance between winners and losers? The Democrats are not fools. Why would they do this?
The answer is pretty simple: to hide the true cost of the bill. They don’t want to push a $2 trillion program now because this country is facing the greatest deficit crisis it’s seen in decades – and such a price tag does not make for good politics these days.
These budgetary gimmicks enabled them to pass the bill, winning over enough self-described “deficit hawks” in the Blue Dog wing of the party to limp to 219 in the House last night. Yet their smoke and mirrors can only mask, not alter the reality, which is this: at a time when the country is facing an enormous deficit problem, the Democrats have created another significant financial obligation for Uncle Sam.
…If it comes down to a choice between a new tax on the middle class or scaling back the unimplemented provisions of ObamaCare, guess what the policymakers in Washington, D.C. will choose. We’re definitely heading toward some kind of hard choice about the deficit. If we weren’t, the Democrats wouldn’t have employed all those gimmicks to claim that the bill costs less than $1 trillion. They know people are worried about this issue.
Last week, President Obama said again and again that the time for talk is over. Yet this week he’s going on the road to defend his new bill. This is why. ObamaCare is politically vulnerable. It lacks the bipartisan support that created and protected new entitlements in decades past. The public does not have confidence in it. Worst of all, it creates an imbalance between winners and losers for four years, and it amounts to a staggeringly expensive new entitlement at a time when the country has to think hard about how to trim its sails.
Want to help save one of Austin’s most cherished music rooms and look damn cool while doing it? Donate to the Save the Cactus Cafe cause by buying one of their new t-shirts. I did, and I can guarantee you, you cannot wear this shirt without getting into a cool conversation with a stranger. It’s just not possible. Save the Cactus is a non-profit, remember, and the organizers are paying themselves exactly squat, so all the profits go directly to the cause.
Townes on summer nights so black that they broke like obsidian,
Butch singing no two songs alike,
Dahvid and I singing “Tower Song” for Townes’ birthday,
Watching Joe Ely put on some of the greatest solo shows I’ve ever seen,
Hanging out with Harry Dean Stanton and Griff at the Hole in the Wall after playing a great gig at the Cactus,
The Cactus was born of something rare and precious,
To create an environment where songs are listened to, respected and revered.
I associate the Cactus with Griff Luneberg,
It was his booking that made the Cactus the mecca for songwriting that it became,
I can’t imagine Austin, much less the universe, without this room of songs.
I was high above the Arctic Circle, in the Norwegian town of Tromsø (“The Paris of the North”) when I received the word that the Cactus Cafe in Austin, on the University campus, was being forced to close. I was playing a great rock-and-roll room that night in Tromsø; I’ve played 10,000 venues all over the world in the past forty years (from Skid Row Canada on up to the David Letterman show) and I would rate the Cactus Cafe in the top 5 music rooms. The insult of closing a culturally important venue was heard ’round the globe; it reached me in the far north.
The Cactus is one of the great music clubs of the world. I’ve played music all around the US, Canada, and Europe regularly for the past 30-some years, and while there are many good places to hear musicians, the Cactus ranks near the top. The strength and value of the Cactus is due to several elements: the history, the physical properties of the room, the location, the clientele, and the management.
Let me stress, it’s not like this everywhere. What exists at the Cactus is a creation of the people who work and have worked there, and it has an intrinsic value to the community and the world at large. Griff Luneburg’s management has kept the Cactus as a venue at the forefront of the music world. The room always sounds great and has first-rate sound engineers. Griff has “trained” the audiences to listen: that’s a key element, and it comes from the club manager’s active involvement. The respect for music has paid great dividends in terms of the level of performance.
Save the Cactus Cafe, folks. This is one of life’s no-brainers…what the heck, I’ve posted it once (it’s even on this front page still!), but I’ll post it again. Austin’s Artist of the Year, playing Austin’s Song of the Year, at Austin’s Acoustic Venue of the Year for nine years running (why only nine? Because the category has only existed for nine years. If the Cactus stays open, it will win for a hundred years running). It’s Bob Schneider, playing “40 Dogs (Like Romeo and Juliette)”, at the beloved Cactus Cafe:
The community organizing group Acorn announced Monday that it would close all its remaining state affiliates and field offices by April 1.
Organize that! Please, please, please, tell me this is no April Fool’s Joke.
Meanwhile, it is David Brooks who takes the prize for the best summary of the fiasco that is health care reform:
This country is in the position of a free-spending family careening toward bankruptcy that at the last moment announced that it was giving a gigantic new gift to charity. You admire the act of generosity, but you wish they had sold a few of the Mercedes to pay for it.
Speaking of charity, if anyone is still around in ten years reading, I’ll make a pledge: if it can be proven in any way from nonpartisan sources such as the CBO that the health care reforms passed this week have reduced the deficit in ten years time, I’ll donate $100 to the charity of your choice to the first person to remind me of this post and send you a cancelled check to prove it…
…and you can actually drive in dowtown Austin again for the first time in five days. Seriously, it’s great to have what has now become, I think I can say without contradiction, the premier music festival in all of the world in town. To give you some idea of the global scope of the festival now, 199 bands came from England alone, followed closely by Canada with 109, and probably a good three quarters of the 1,940 total bands were from out of the country.
SXSW also means the annual Austin Music Awards, and it was a big, big year for Bob Schneider. I remember seeing Bob play with the Ugly Americans at the long-gone and heavily missed Steamboat on many occasions. I have sadly neglected his solo years, and intend to make up for it (ex-girlfriend Sandra Bullock may be missing Bob, too, based on the latest tabloid headlines).
Anyway, Bob won Artist of the Year, Male Vocalist of the Year, Album of the Year for Lovely Creatures, Band of the Year for Lonelyland, Songwriter of the Year, and Song of the Year for the great “40 Dogs (Romeo and Juliette)”. I’ve already highlighted my favorite version of the song from the Cactus Cafe (we’re still fighting to save it – more on that in another post soon), so here’s a great solo version from, of all places, the Rachel Ray Show. Way to go, Bob – you earned the accolades!
Well, let’s not kid ourselves. Health care reform is passing the House today, and it’s very unlikely it can be procedurally derailed in the Senate. The game is, for all intents and purposes, over. The turning point was the CBO report that showed increased deficit reduction (though a higher cost) than the Senate bill. This was big for bill supporters for two reasons: deficit reduction IS an absolute must at the moment, and two, it allowed the use of the less controversial reconciliation option, as opposed to the absolutely weaselly “deem and pass”.
Refusing to face reality is not a strategy, so those of us opposed to this latest entitlement must be realistic. Democrats will hear the judgement of the voters this November, but regardless of how big the Republican gains are, we are stuck with this. I fear that this will some day be seen as the straw that broke the financial back of America. I continue to have zero confidence that this bill will actually reduce the deficit; instead, I would wager a very large sum that it will greatly increase it. I doubt very seriously that Social Security and Medicare were sold as bills that would someday drive the nation into insolvency, but they have.
If this country is to continue in its role of global economic prominence (and it may not for long in any case, given the Chinese economic juggernaut), the best thing leaders of both parties can do now that health care reform is effectively settled is to focus on deficit reduction. We will probably need some new taxes (that’s very hard for me to say, but unfortunately, it’s true) and we’ll DEFINITELY need real spending reductions. I don’t want to hear any blarney about government budgets being tight already – the bloat in the typical government agency is so large that any outside party without a vested interest in the power that comes with enlarged budgets and head counts could easily cut spending by a third without impacting public service whatsoever.
How much confidence do you have that these sorts of cuts will take place – REAL, substantive cuts, meaning permanent reductions in FTE counts, travel budgets, etc.? Not much? Me, either…but that’s what we’re left to fight for.
A real example of a solution, then, in closing: there are many services the government offers that entail people going to “real” locations and standing in line, where they are waited on by very real people who are paid a substantial salary to do things that a website can easily do. Oh, but the the poor don’t have access to computers, is the inevitable reply. Well, fair enough – replace all those government offices that require this totally outdated form of customer service with ONE (or even several, depending on the size of the city being served) office that has free computer terminals and several employees who will provide assistance. Note that this cannot be an ADDITIONAL service that adds to the size of government – it has to REPLACE, permanently, FTEs in buildings across the nation. (By the way, this would mean that large office complexes could be sold for considerable money, as well).
This would be a major initiative, but it’s completely doable, and would save untold billions of dollars annually into perpetuity. This is the kind of thinking we have to embrace. The typical government answer to any problem is to assign resources to it – and resources are expensive, and tend to be permanent. We have to realize that the answer to our biggest problem – a broke government – is to get rid of resources – permanently. It’s going to be ugly – you’ll be fighting the SEIU (government employee union) in a death match – but it HAS to be done.
We can’t afford our obligations already – we just added a trillion more dollars in obligation today. This is an imperative. My number one issue over the last year or so has been the defeat of health care reform. We lost that one. This one, we can’t afford to lose. Reducing the deficit has become the issue that the future of our nation rests upon. It’s as clear as that - cut back or kill the American dream…
Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.
The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10 percent of the economy and raised concerns whether the U.S. deserves its AAA credit rating. The increased borrowing may also undermine the first-quarter rally in Treasuries as the economy improves.
“It’s a slap upside the head of the government,” said Mitchell Stapley, the chief fixed-income officer in Grand Rapids, Michigan, at Fifth Third Asset Management, which oversees $22 billion. “It could be the moment where hopefully you realize that risk is beginning to creep into your credit profile and the costs associated with that can be pretty scary.”
While Treasuries backed by the full faith and credit of the government typically yield less than corporate debt, the relationship has flipped as Moody’s Investors Service predicts the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K. America will use about 7 percent of taxes for debt payments in 2010 and almost 11 percent in 2013, moving “substantially” closer to losing its AAA rating, Moody’s said last week.
“Those economies have been caught in a crisis while they are highly leveraged,” said Pierre Cailleteau, the managing director of sovereign risk at Moody’s in London. “They have to make the required adjustment to stabilize markets without choking off growth.”
Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels, said John Lipsky, first deputy managing director of the International Monetary Fund.
Unfortunately, people are notoriously illiterate about economics, but to those who understand global capital markets, this is horrifyingly close to a major global crisis…
Even loyal Democrats must surely be getting quesy about the prospect of passing major legislation that will have enormous consequences not only for health care, but for the deficit and the U.S. economy forevermore, through increasingly desperate measures that try to cover for the fact that the public is opposed and the votes just aren’t there.
WE UNDERSTAND the administration’s sense of urgency on health-care reform. But what is intended as a final sprint threatens to turn into something unseemly and, more important, contrary to Democrats’ promises of transparency and time for deliberation.
House Speaker Nancy Pelosi told reporters Monday that she is leaning toward a parliamentary maneuver under which the House would vote on a package of changes to the Senate-approved reform bill, and the underlying Senate bill would then be “deemed” to have passed, even though the House had never voted on it. That may help some House members dodge a politically difficult decision, but it strikes us as a dodgy way to reform the health-care system. Democrats who vote for the package will be tagged with supporting the Senate bill in any event. Why not be straightforward about it?
More worrying is that Congress and the country have yet to see the changes, for which Democrats hope to win quick House approval and which they then hope to speed through the Senate under a procedure that would bar filibusters. These changes — the so-called reconciliation bill — are not all minor “fixes”; some could have far-reaching consequences. Such changes deserve to be fully understood and debated before they are voted on.
All of this should give everyone but the most stubbornly partisan Democrats ample cause to reflect: ditch the current package and start over. Involve the Blue Dogs and the Republicans. Accept that such notions as universal coverage and the public option will not pass in the current climate and stick with what reforms will.
This is increasingly turning into a political fiasco of epic proportions. If the Democrats truly intend to use the “deem and pass” strategy (the GOP is forcing a vote on the strategy, as well it should), I deem it likely a large number will not return for another term…
Who will historians blame when they look back on the series of financial catastrophes that led to the inevitable default of America on its obligations and the resulting global depression of the mid-21st century? The New Dealers who started the entitlement wave? The Great Society of Lyndon Johnson that extended it (during the middle of a costly war, no less)? The decision by George W. Bush to not only maintain his package of tax cuts but accelerate and broaden it in the aftermath of 9/11 (and in the middle of TWO costly wars, no less)? The gutlessness of Barack Obama, who promised hard choices during his campaign and his initial speeches, only to cut nothing of substance and indeed, moved for a massive new health entitlement that vastly increased the size of government (in the middle of two costly CONTINUING wars and the worst financial crisis since the Great Depression, ironically, a crisis caused by excessive living beyond means)?
All of the above, probably…but as President Obama and congressional Democrats continue to pay lip service to but substantially ignore the shameful multiyear projections of near double-digit unemployment and massive deficits of a level not seen since World War II, while pushing on a very risky health care entitlement opposed by solid majorities of Americans in virtually every poll, you can bet that the current crop of pols will bear a substantial part of the historical jeering.
The gold-plated credit rating of the United States — an article of faith across America and, indeed, around the world — may be at risk in coming years as the nation copes with its growing debts.
That sobering assessment, issued Monday by Moody’s Investors Service, provided a reminder that even Aaa-rated United States Treasury bonds, supposedly the safest of safe investments, could be downgraded one day if Washington failed to manage the federal debt.
Moody’s said the United States and other major Western nations, particularly Britain, have moved “substantially” closer to losing their gilt-edged ratings. The ratings are “stable,” but “their ‘distance-to-downgrade’ has in all cases substantially diminished,” the credit ratings agency said.
A downgrade would affect more than American pride. The bigger risk would be to the country’s ability to keep borrowing money on extremely favorable terms, and therefore to keep spending more money than it takes in from tax revenue.
A credit rating lets lenders and investors know how likely it is that a borrower can pay back a loan. A sterling rating means there is little for lenders to worry about. A lower one typically results in bond investors demanding higher interest rates on debt.
Those higher rates, in turn, add to the country’s overall debt burden and can force the government to reduce spending, increase taxes or both. That difficulty has been well-illustrated recently in Greece and Portugal, with strikes and protests as citizens march in the streets to oppose tough austerity measures that directly reduce entitlements and state benefits.
“Growth alone will not resolve an increasingly complicated debt equation,” Moody’s said. “Preserving debt affordability” — the ratio of interest payments to government revenue — “at levels consistent with Aaa ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”
…The administration of President Obama estimates that the United States deficit will rise to 10.6 percent of gross domestic product in the current fiscal year, the highest since 1946, and federal debt will reach 64 percent of gross domestic product. Government expenditures are expected to rise to a postwar high of 25.4 percent of G.D.P.
I have been consistent in my opposition to offering anything close to universal health care for a very explainable reason: we cannot afford it. I don’t believe that future Congresses will have anything approaching the political will to make the necessary cuts in Medicare that would result in the lion’s share of the plan’s reported “deficit reduction”. I believe the opposite: a giant, incredibly expensive new entitlement is being born at the exact moment the nation can least afford it.
This nation is broke. Let’s acknowledge George W. Bush had a big part to play in that – but let’s also acknowledge that the Obama administration is fooling no one in continuing to blame it all on Bush. It is Obama’s deficit now – and he could choose to make those hard decisions he promised us, or he could choose to play to the base. It’s obvious what choice he made. History will not look kindly on his failure of leadership in addressing the deficit – the biggest problem currently facing the nation by a whisker, barely trailed by the dismal employment outlook. Universal health care, at this current moment in time, is not even in the top five – maybe not the top ten.
Unfortunately, while the historical judgment will rest on Bush and Obama and the other politicians, it’s we the people that will have to grow used to living in a country where the future no longer looks brighter. America’s politicians, over many generations and from both parties, have failed us. I say again, we are broke – we have been for some time…and while the Krugmans of the world continue to insist we can spend our way out of the hole through some sort of Keynesian miracle, most of us know better. The answer to debt is never more debt. It is less spending. This is fundamental. This is an easy lesson. Alas, it is beyond the mental capacity of our leadership…
…and the reason? Because Congress is full of public “servants” all too ready to prostitute their votes for a little bacon. We’ve already seen what kind of cowardly horse-trading went down to get the votes of Ben Nelson, Mary Landrieu, and other “principled” leaders in the Senate – we can expect more of the same in the House. They’ll get their votes, because there will be more than enough bidders at the horse of pork.
Politics sits at the nexus of power and influence, and its resulting seed is personal enrichment. Public service? You must be joking…let’s get one thing straight – whether the bill is good policy or bad policy is quite irrelevant. What matters is what kind of deals get struck in the back room. You can take THAT to the bank…
Nope, I’m not talking about political tactics…I’m just overdue on congratulating the President on finally embracing the inevitable answer if we are truly going to get serious about carbon emissions reductions: nuclear power. I am delighted to finally see some real movement on the front. Here’s the Dallas Morning News editorial board:
At last, a nuclear energy breakthrough.
It’s impossible to overestimate the importance of President Barack Obama’s plan to finance the construction of two nuclear reactors, the nation’s first in three decades. Regardless of the political risks of alienating the anti-nuke wing of his party, the move is the best effort in years to jump-start the nation’s long-stalled nuclear power industry.
Obama called for a “new generation of clean, nuclear plants” in his State of the Union address last month and is backing it up with $8.3 billion in conditional loan guarantees to a power company consortium in Georgia and more dollars in his proposed 2011 budget for nuclear energy.
Nuclear power in the United States has languished as the result of exaggerated fears of meltdowns, waste disposal controversies and financial concerns. As a supporter of nuclear energy, this newspaper hopes the industry will now have the confidence to make the $6 billion to $8 billion investment required to construct a nuclear reactor without worrying that the federal government will pull the financial rug from beneath it, as happened after Three Mile Island in 1979.
The president’s decision wisely acknowledges that nuclear power is the most practical way for this country to reduce reliance on dirty fossil fuels and to confront the issues posed by climate change. Solar and wind power will be part of the solution, but those alternatives can’t match nuclear energy when it comes to steady and massive electricity production.
For example, even though there hasn’t been a new U.S. plant since the 1970s, the nation still gets more than 20 percent of its electricity from the 104 nuclear power plants still in operation. Those plants also generate about 75 percent of all clean energy produced in the U.S., far more than wind and solar combined. And unlike coal, the nation’s main source of electricity, nuclear plants don’t emit carbon dioxide or other greenhouse gases.
Brand says his turnabout began in 2002, when the Global Business Network, a consulting organization he co-founded, did a project on climate change for the U.S. Secretary of Defense. In an interview with CNN.com, Brand said the project showed him that the globe’s climate can change abruptly: “It goes over some tipping point and suddenly you’re in a situation that you don’t like and you can’t go back. That got me way more concerned about climate as a clear and present danger than I had been.”
Looking for a surefire way to cut greenhouse gases, Brand said the alternative to burning coal became clear: “We already had a very good supplier of …electricity. It worked like mad and was as clean as it could be — and that was nuclear.
“Looking at nuclear more closely made me look at coal more closely and I got to realizing what a horror it was across the board, and as I learned more about nuclear, I started learning all this stuff that my fellow environmentalists had been careful not to let me know about.”
It’s truly a no-brainer. Yes, it’s expensive up-front - but long-term, it’s the only proven way to make massive amounts of clean energy at a reasonable cost…
If you were leading a party that was suffering massive unpopularity, with influential incumbents dropping like flies, polling everywhere suggesting you face a catastrophic reverse in upcoming elections, and dealing with a major financial crisis featuring unemployment that is predicted to hover uncomfortably close to double digits for years to come, you might think that attempting to drive through a health-care proposal opposed by a solid plurality, if not majority, in virtually every poll conducted over the last six to eight months would rank low on your agenda.
Yet the latest scuttlebutt on the never-ending Obamacare debacle is that Democratic leaders are once again trying to ram this dog in through the back door of reconciliation, a manuever that, even if successful, will make the loss of Ted Kennedy’s sacrosanct Massachussets seat seem like the calm before the storm. Can you even CONCEIVE of a scenario – can even the most loyal Democrat or most fire-breathing progressive even envision a set of circumstances – where this will not result in a storm of controversy so large it will engulf the remaining brief years of the Obama administration?
I have to think that the few Democratic incumbents who remain in safe districts are probably NOT suicidal and that this is just a last-ditch attempt to bail out the Titanic with a couple of buckets, but it appears that a real effort to move in this direction is afoot. If the upcoming “summit” is truly responsive to Republican ideas, I support it – but if it’s mere political cover to say “we tried” then swiftly move to reconciliation…well, let’s just say Republicans participating in this exercise need to enter with their skepticism at a very high level, and watch for tell-tale signs of an already-made “consensus” that predates the talks..,
An official student organization has been formed at the University of Texas to lobby the administration and the Texas Union board to keep the Cactus Cafe operating under its current professional management(!). This is the proposal we have been waiting for – and the students have promised to involve the community and the Save the Cactus Cafe nonprofit Friends of the Cactus Cafe:
On January 29th, 2010, the Texas Union Board announced plans to close the Cactus Cafe, citing lack of student involvement in the space and a bi-annual financial deficit of $66,000 to justify the decision. Student representatives on the Texas Union Board acted with no input from the student body at large. As a result, the Graduate Student Assembly (representing over 12,000 graduate students at UT), the 18 College Council Presidents (representing undergraduates in academic affairs) and others have made public statements reprimanding the Texas Union Board for failing to engage the student body in their workings within the Texas Union. Student Friends of the Cactus Cafe will serve as the unified voice of UT students seeking greater representation in this matter and greater transparency in the operations of the Texas Union Board.
Student Friends of the Cactus Cafe will work to convince the Texas Union Board to keep the Cactus in operation as a live music venue under current professional management. We will collaborate with community groups, including Friends of the Cactus Cafe (FOTCC) (a local non-profit organization and its campaign SaveTheCactusCafe.org), to identify both short and long-term solutions to preserving the Cactus Cafe, maintain its financial solvency and further develop FOTCC’s ‘Cactus Cafe Student Initiative’. This initiative includes funding programs for students through the Cactus Cafe such as internships, student performing artists-in-residence and marketing projects in conjunction with the business school to better promote the venue. We recognize the integral role current Cactus Cafe management plays in maintaining the quality of the musical entertainment and cultural environment that makes it a nationally-renowned venue. “I think students could truly benefit from opportunities to interact and learn from that kind of experience.”
Furthermore, Student Friends of the Cactus Cafe opposes recent proposals by students on the Texas Union Board to ‘repurpose’ the venue, hand over its management to an ad-hoc student committee, and add it to the general UT room inventory for use by student organizations. “These proposals are no more supported by the student body than the original decision to close the Cactus Cafe”, says Hayley Gillespie, graduate student and co-founder of SFOTCC.
At least, light is appearing at the end of the tunnel…but we await official word, so keep the pressure on!…