There's just one thing I want to say about S&P's bond-rating downgrade -- then I'll turn the floor over to Andy Borowitz and Ian Welsh

Treasury Secretary Timothy Geithner, explaining his decision to hold onto his current post: “I didn’t want to look for a job -- it’s fucking scary out there.” (See "Bonus Andy" below.)

BOROWITZ REPORT



Predator Drone Seen Hovering over Standard & Poor’s Headquarters

Company Could Be in for Downgrade of its Own, Experts Say



WASHINGTON (The Borowitz Report) -– Just days after downgrading the credit rating of the United States, Standard & Poor’s was on high alert this morning after an unmanned Predator drone was seen hovering over its headquarters in lower Manhattan.



While the mission of the Predator was unclear, some insiders speculated that S & P might be in for a downgrade of its own.



The Predator appeared in the skies above the company's headquarters minutes after it was rumored that S & P was about to downgrade the United States to the same status as Pluto.



As a so-called "dwarf nation," the U.S. would no longer be accorded the same respect as a recognized country like France or Brazil, one S & P source said: "Basically, the United States would be considered a social network with parking."



At the White House, President Obama offered no comment on the Predator’s mission, saying only, “The Predator is an effective weapon against the enemies of the United States of America.”



He did offer apologies for what he called “an accidental Predator missile strike” over the weekend at a golf course in Virginia which narrowly missed Rep. Eric Cantor (R-VA).

by Ken



So, on the first day of trading after the Standard & Poors U.S. bond downgrade, "Stock market plummets after historic downgrade of U.S. credit rating" -- a 5.6 percent drop, Wall Street's "worst day of trading since the 2008 financial crisis as investors reacted to the historic downgrade of U.S. credit by selling so heavy that it wiped out $1.2 trillion of stock market wealth Monday."



There are a number of things that could be said about the bond downgrade, most of them silly -- and there's been no shortage of people saying them. I have just one point to make. For how long now has the Tools of the Oligarchy Right been warning that all sorts of catastrophic mayhem will result from our catastrophic debt catastrophe, including the collapse of the financial markets. The chief threat always has been that the bond market will punish us for our fiscal recklessness. And for how long have people like Paul Krugman been pointing out that bond interest rates showed no sign of going up, that apparently the dreaded bond market had no shortage of confidence in the U.S.'s financial stability. Bond buyers were only too happy to buy all the treasuries put on sale, at historically low interest rates.



This has to have driven the Pete Peterson Doom Via Debt prognosticators absolutely batty. Here they were trying to scare the bejeezus out of us with their phony-baloney "crisis," and the damned bond buyers were too dense to provide the chills the plutocrats' doom scenario called for.



Well, glory be, the bond buyers have suddenly had their confidence shaken, and bond interest rates will go up -- meaning that the bond-buying oligarchs not only have the "crisis of confidence" they've been threatening, but some nice new profits too!



Now here's Ian Welsh's take:

Comments on the S&P Downgrade



by Ian Welsh



Aside from hysterical laughter, here are the key points:



1. Obviously the US isn’t even close to insolvent. The gold in Fort Knox is held on the books at $37/ounce, for example. Most Federal lands are held on the books at 19th century valuations. Not to mention that the US’s debt is denominated in its own currency, which means it could simply be printed, and that the US government has a lot of unused room to tax, should it ever deign to use that on people with money, as opposed to those without.



2. As everyone is pointing out, the idea that S&P, who rated all the subprime trash as AAA, has any credibility, is a joke.



3. However, Obama and Democrats refused to destroy S&P when they had the opportunity and every reason to do so. The submprime crisis could not have been nearly as bad without S&P and the other rating’s agencies rating trash AAA so that investors who must buy AAA by law could do so. To put it simply, S&P engaged in systematic fraud. They, like everyone on Wall Street and in the major banks, have not been indicted for this. The choice to not indict is policy. Obama’s policy.



4. If Obama did not want this to happen, it would not happen. Could you imagine what LBJ, Nixon or Truman (or, hell, Bush Jr.) would have done if a rating’s agency tried this? The President has the necessary tools to utterly destroy S&P and every senior analyst working for them. You could use terrorism statutes or RICO, just as two examples. Send the FBI into their offices, seize all the assets of both the company and everyone working for it, and then got through their records. I guarantee, as absolutely as the sun will rise tomorrow morning, that there is enough evidence of fraud in those records to put them away for life. In the meantime, RICO laws are used to seize all the assets of everyone involved, meaning they will be using public defenders (don’t like a bad law? Use it against real people.) When S&P informed the White House they were going to downgrade, the White House could have quietly let them know what the consequences would be.



5. The US has effectively unlimited drawing rights from the IMF. Those drawing rights mean that if any of the core economies have an AAA rating, in effect, so does the US. (ie. if Germany is AAA, so is America.)



6. S&P knows all this. They are doing this because they know the President and Congress and the real people in the oligarchy want it done. Remember, a downgrade increases rates, and that is a direct increase to their income. And they know the US can pay, they aren’t fooled by idiotic talk about a default. The US may default at some point, but that will be a political decision.



7. This is another manufactured crisis, on top of the original manufactured debt ceiling crisis. The oligarchy wants the opportunity to buy federal assets at dimes on the dollar. They believe they don’t need the poor or middle class anymore, so they are good with getting rid of SS and Medicare. And Obama is, as he always has been, onside with this.



These people, are, however, playing with fire. Just because it’s a crisis that didn’t have to happen, a crisis, that is manufactured as another looting opportunity, doesn’t mean that it won’t have real consequences.

BONUS ANDY



In today's outing, I would say that the "other" jokes appended to the Borowitz Report are actually funnier than the report.

In other financial news:



-- In an effort to find a safe haven, rattled investors fled the dollar today and moved their money into Groupons.



-- In one rare bright spot on Wall Street, manufacturers of red ink posted record profits.



-- And finally, Secretary of the Treasury Timothy Geithner explained his decision to remain at the U.S. Treasury: “I didn’t want to look for a job – it’s fucking scary out there.”

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On the debt-limit front, by this point it was all long since over but the retching

Thomas Friedman, Private Eye
by Tom Tomorrow

[Don't forget to click to enlarge.]

by Ken

I admit was surprised that "the deal" was struck yesterday, which was merely August 1, a full day ahead of the August 2 "deadline." Those who don't understand much about negotiations, at least of the political kind, seem to imagine that putting a deadline on the matter facilitates negotiations and compromise, whereas in reality it almost always assures that no serious negotiating happens until the deadline is a whisper away. Otherwise neither party can go back to its "people" without being accused of having made all manner of unnecessary concessions. How could they possibly have been necessary if there was still XXX length-of-time left?

And you'll notice that over on the Loonified Right, they're hoppin' mad, despite having gotten everything they could possibly have hoped to. But of course there's no reason or sense over there. Their fallback position is always an unbroken: "We're mad as hell, and we're mad as hell."

In the wake of the mournful day there's been no lack of highly sensible writing on the subject, and I had this plan of lifting extracts from half a dozen or so pieces that I read with appreciation. But somehow it all seems beside the point, since sense never had anything to do with it. Over there in the Party of Hello No, they seem almost proud of the fact that not only do they not understand any aspect of either the debt or debt-ceiling problem, they don't know anyone who does, having already thrown anyone who showed signs of having a lick of sense over the edge of the flat earth.

In this vein, it seems to me rather beside the point to upbraid members of Congress for their vote, whichever way they voted. Yes, it might have been interesting if one or both houses had refused to go along with the deal, just as a sign of resistance. But does anyone believe there was any chance of achieving a less onerous deal? There were no votes to be had among the Hell No-ers, and without at least some of them no deal would have been possible -- not to mention the panic all those Fraidy-Scared Pols in the Middle are feeling having to face an electorate that thinks all the pols have been acting like "spoiled children," as CNN's pollsters are reporting. Well, of course the poll-makers undoubtedly designed the poll to prove that point, but still, that tells us something, doesn't it?

About the only vote I can imagine having any force of reason would have been to vote "present," since there was no "good" vote, only a choice of bad ones. As Jonathan Cohn wrote in his fine tnr.com blogpost, "This Is Not Leadership," one of the pieces I planned to cannibalize:

Out of exasperation as much as curiosity, I e-mailed a Washington insider who happens to be among President Obama's most loyal supporters. How, I asked, could Obama agree to such a lopsided deal? This person answered with a different question: What would I have done instead? It took me a few minutes to realize that I didn't have an answer.

By the time we reached this stage, I don't have an answer either. Earlier on there might have been some possibilities, as our friend David Dayen outlined in his fine TAP post, "Turning Points: Five chances to avoid the debt-ceiling fight that Obama missed," but by this month it was all over but the shouting, or should I say retching?


Actual Audio: Obama On the Debt Deal
by scottbateman

I'm not sure what makes this a "comic," or really what it thinks it's doing, but it makes for pretty nauseating listening, and just now it seems like a helpful thing to have concrete reasons for feeling nauseous, seeing as how it's how most of us are feeling anyways.

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The 14th Amendment Blues

The Congressional Progressive Caucus and lots of Democratic candidates and activists have called on President Obama to invoke section 4 of the 14th Amendment to prevent the United States from going into default. New Mexico state Senator Eric Griego summed it up well earlier today when he wrote to constituents that the GOP refusal to negotiate in good faith has left us "teetering dangerously close to losing the full faith and credit of the United States," an unacceptable outcome.

We must put the country’s interests ahead of House Republicans’ insistence on an ideological crusade that takes our country’s future hostage in order to gut Social Security, Medicare and Medicaid to pay for tax cuts for millionaires, Big Oil and other corporate special interests.

We expect Republicans in Congress to own up to their responsibility for fostering the conditions that have led our country to this point. But after spending trillions of dollars in Bush tax cuts for millionaires, paying trillions more on the nation’s credit card for two mismanaged wars under President Bush’s watch and having nearly caused another Great Depression by falling asleep at the wheel while big banks sank our economy, their intransigence is callous at best and morally bankrupt at worst.

That is why on Friday I called on the President to invoke the 14th Amendment to use executive order in raising the national debt ceiling immediately. Then let’s get to work cutting subsidies for big oil and tax breaks for the rich so we can create jobs and reduce unemployment because people are hurting and they want to work.

Not so fast, says my old friend "bmaz," an attorney in Phoenix who blogs at Emptywheel. He made a persuasive argument today on Twitter about why this is the wrong tack to take and, while I'm not entirely convinced, the argument was sound enough for me to ask him to summarize it for us at DWT:

THE CASE AGAINST TURNING TO THE FOURTEENTH AMENDMENT SO FAST

-by bmaz

As about everyone knows by now, the great debate is still ongoing on the issue of the debt ceiling. The frustration of those on the left with the intransigence of the Republican Tea Party, coupled with the neutered Democratic Congress, has led many to call for President Obama to immediately "invoke the 14th." The common rallying cry is that legal scholars (usually Jack Balkin is cited), Paul Krugman and various members of Congress have said it is the way to go. But neither Krugman nor the criers in Congress are lawyers, or to the extent they are have no Constitutional background. And Balkin's discussion is relentlessly misrepresented as to what he really has said. "Using the 14th" is a bad meme and here is why.

The Founders, in creating and nurturing our system of governance by and through the Constitution provided separate and distinct branches of government, the Legislative, Executive and Judicial and, further, provided for intentional, established and delineated checks and balances so that power was balanced and not able to be usurped by any one branch tyrannically against the interest of the citizenry. It is summarized by James Madison in Federalist 51 thusly:

First. In a single republic, all the power surrendered by the people is submitted to the administration of a single government; and the usurpations are guarded against by a division of the government into distinct and separate departments.
....
We see it particularly displayed in all the subordinate distributions of power, where the constant aim is to divide and arrange the several offices in such a manner as that each may be a check on the other-- that the private interest of every individual may be a sentinel over the public rights. These inventions of prudence cannot be less requisite in the distribution of the supreme powers of the State.

Which must be read in conjunction with Madison in Federalist 47:

The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.

This is the essence of the separation of powers and checks and balances thereon that is the very-- root foundation of our American governance. It may be an abstract thing, but it is very real and critical significance. And it is exactly what is at stake when people blithely clamor to "Use the 14th!"

Specifically, one of the most fundamental powers given by the Founders to the Article I branch, Congress, was the "power of the purse." That was accomplished via Article I, Section 8, which provides:

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States...

and

To borrow money on the credit of the United States;

The call to "Use the 14th" is a demand that the President, the embodiment of the Article II Executive Branch, usurp the assigned power of the Article I Congress in relation to "borrow money on the credit of the United States." This power is what lays behind the debt ceiling law to begin with, and why it is presumptively Constitutional. It is Congress' power, not the President's, and "invoking the 14th" means usurping that power. Due to "case and controversy" and "standing" limitations, which would require another treatise to discuss fully, there is literally likely no party that could effectively challenge such a usurpation of power by the Executive Branch and an irretrievable standard set for the future. The fundamental separation and balance of powers between the branches will be altered with a significant shift of power to the Executive Branch.

This is not something to be done lightly or if there is any possible alternative available. Indeed, the only instance in which it could be rationally considered would be if all alternatives were exhausted. That does NOT mean because the GOPTeaers are being mean and selfish. It does NOT mean because you are worried about some ethereal interest rate or stock market fluctuation that may, or may not, substantially occur. It does NOT mean because your party's President and Congressional leadership are terminally lame. That, folks, is just not good enough to carve into the heart of Constitutional Separation of Powers. Sorry.

And for those that are thinking about throwing "experts" such as Jack Balkin in the face of what I have argued, go read them, notably Jack himself, who said before invoking the 14th, first the President would have to prioritize what was paid by existent resources, those that could be liberated and revenues that did still come in:

...certainly payments for future services -- would not count and would have to be sacrificed. This might include, for example, Social Security payments.
....
Assume, however, that even a prolonged government shutdown does not move Congress to act. Eventually paying only interest and vested obligations will prove unsustainable-- first because tax revenues will decrease as the economy sours, and second, because holders of government debt will conclude that a government that cannot act in a crisis is not trustworthy.

If the president reasonably believes that the public debt will be put in question for either reason, Section 4 comes into play once again. His predicament is caused by the combination of statutes that authorize and limit what he can do: He must pay appropriated monies, but he may not print new currency and he may not float new debt. If this combination of contradictory commands would cause him to violate Section 4, then he has a constitutional duty to treat at least one of the laws as unconstitutional as applied to the current circumstances.

So, contrary to those shouting and clamoring for Obama to "Use the 14th," it is fraught with peril for long term government stability and function, and is not appropriate to consider until much further down the rabbit hole. It is NOT a quick fix panacea to the fact we, as citizens, have negligently, recklessly and wantonly elected blithering corrupt idiots to represent us. There is no such thing as a free lunch; and the "14th option" is not what you think it is.

As a parting thought for consideration, remember when invasion of privacy and civil liberties by the Executive Branch was just a "necessary and temporary response to emergency" to 9/11? Have you gotten any of your privacies and civil liberties back? Well have ya?

You have to give the Far Right credit for knowing how to milk an economic meltdown and a phony baloney "debt crisis"

"America is simply not set up to handle one political party that bases its political organizing on an alternate reality and the raw power of propaganda. The U.S. government, and our public debates, are organized around the idea that there’s some measure of good faith in both parties, some common basis on which to make decisions. 


"I do not think most Republicans realize this is how their party operates -- but the more cynical high-level operatives certainly do."

-- Matt Stoller, in a Politico op-ed, "GOP's 'alternate universe'"

by Ken

It's another nice piece our friend Matt Stoller has written for Politico, neatly tracing the history of the Right's calculated separation from reality. There won't be much there that's unfamiliar to DWT readers, but Matt does a fine job of setting out the grim reality and sounding the alarm for the consequences, and more important, this piece wasn't written for DWT readers. How often are Politico readers confronted with the reality of the Right's now-completed leap off the cliff of reality?

For sure this wasn't what our great democratic visionaries, Jefferson and Madison, had in mind. All of their theorizing assumed an educated electorate, in touch with reality and capable of processing it, as opposed to a nation of patiently bred dimwits being led by the nose by opportunistic predators and thugs. But you have to give those predators and thugs credit -- they've done masterful job of training and manipulating their lost legions.

I trust we don't need -- here, at least -- to reestablish the cynical fraudulence of the "debt crisis." The combination of the economic meltdown has provided the billionaire predators and the ideological crackpots (not that the categories are mutually exclusive) of the Far Right with cover for a transformation of the country into their private creamland.

SO SONNY JOHN BOEHNER MANAGED TO RAM HIS
DEBT-REDUCTION PLAN THROUGH HIS OWN PARTY

After the major embarrassment of not being able to get his own crazies to back his crackpot atrocity of a "plan," crazed it up and cracked enough heads to get it past the House. Of course the Senate has already tabled it, and there was never any chance of its becoming law. However, it's now officially the "other side" baseline for any compromise -- for example, against Senate Majority Leader Harry Reid's plan, which instead of being an atrocity is merely an abomination. Seriously, flash back a year and imagine how seriously Harry's plan would have been taken, especially if it had been proposed by a Republican.

But flash back another couple of years, and as Ian Welsh reminds us:

Predicted August 2nd 2008

20) A huge push to gut entitlements in 2009, no matter who is president. Even if the US quickly pulls out of Iraq, the deficit will be totally out of control, and hundreds of billions will be needed for bailouts. A rapid consensus will form that rather than increasing taxes significantly on the rich, or slashing expenses like the military R&D and equipment appropriations budget, that the real problem is people retiring at 65, poor people getting Medicaid and old folks who aren’t destitute receiving Medicare.

On January 4th, 2009, I wrote:

I think I got this one wrong, given the consensus forming for a large stimulus (assuming the Republicans don’t kill it). We’ll see, but I’ve tentatively marked it wrong.

Between the president's one-hand-tied-behind-his-back approach to fighting the depression, the Republicans' tireless efforts to keep it going, and the rise of the radical centrists, it simply took an extra election cycle for Ian's scenario to play out.

CAN GENE ROBINSON NOT KNOW THAT "PROGRESSIVE"

ISN'T SYNOMOUS WITH "DEMOCRATIC"? REALLY?

In terms of selling the "deficit-reduction" package of lies and delusions to the eager-to-be-hoodwinked public, the Right has benefited, as Gene Robinson ventured in his Washington post column "Why progressives need a Big Idea":

Momentum is on [the Republicans'] side, even though they control just one wing of the Capitol -- and even though they advocate measures that most Americans reject.

Conservatives are on a winning streak because they have a Big Idea that serves as an animating, motivating, unifying force. It happens to be a very bad idea, but it’s better than nothing -- which, sadly, is what progressives have.

The simplistic Big Idea that defines today’s Republican Party is that taxes are always too high and government spending is always wasteful. Therefore, both taxes and spending need to be reduced.
Conservatives are on a winning streak because they have a Big Idea that serves as an animating, motivating, unifying force. It happens to be a very bad idea, but it’s better than nothing -- which, sadly, is what progressives have.

The simplistic Big Idea that defines today’s Republican Party is that taxes are always too high and government spending is always wasteful. Therefore, both taxes and spending need to be reduced. . . .

[T]he essence of the far right’s Big Idea fits neatly on a bumper sticker: Cut taxes, cut spending. It’s a simple, powerful message that connects with everyday experience. Who hasn’t encountered an example of government waste and inefficiency? Who enjoys paying taxes?

I can think of no greater threat to our nation’s prospects than the GOP’s policy-by-anecdote crusade against government.

And Gene goes on to list some of the obvious ways in which the U.S. "is falling behind other nations in infrastructure, education and health-care indicators such as infant mortality and life expectancy," and on to issues like inequality of income distribution and energy research and planning.

The only problem I have with the column is that when Gene talks about "the progressive response," he doesn't mean what we mean by "progressive," he means Democratic, and goodness knows, the only group that's less progressive than congressional Democrats is congressional Republicans. I find this kind of shocking from Gene Robinson, who should know better. Nobody has worked harder than the president to make sure that progressive voice are never heard; as we know now, he considers true progressives far more dangerous than far-right-wingers.

But then, as people like Ian Welsh have been pointing out since before President Obama took office, the even larger danger than his actual policies, bad as they may be, is the discredit their failure will bring upon the progressive brand, even though there's nothing progressive about them. In fairness, there are an awful lot of people out there using the "progressive" label to market a radical centrist agenda. We've already had the word "liberal" shredded by the propagandists of the Right; faux progressives may have done the same to "progressive" on their own.

ABOUT THAT SCHEDULING NOTE I PROMISED

When I shoved tonight's "Ring Lardner Tonight" piece ahead to 6pm PT -- on the ground that it was already ready to go, and having gotten home with about 30 seconds to spare to be able to make the switch -- I promised an explanatory note. But you don't want to hear about my day (and why I got home with 30 seconds to spare to make the switch), and I've lost interest in talking about it. You've got troubles of your own.

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You can't tell GOP wingnuts and Teabagging voters and cooking-show contestants and Ring Lardner's Jack Keefe apart without a scorecard

Oh no, Hell's Kitchen is back! At a certain point, congressional Republicans merge in the mind with the people who vote for them and the clueless legions of TV cooking-show contestants and Ring Lardner's Jack Keefe.

by Ken

Not long ago we were told that President Obama's latest "plan" for getting a deficit-ceiling increase included splitting the debt-ceiling and deficit-reduction issues so that "we" would do debt-ceiling increase now and later revamp the tax code -- and I remember thinking what? you're going to let those people tinker with the tax code???

By "those people," of course, I meant the primitive life forms that invaded the 112th Congress. And I had to remind myself that these low-life mental defectives, people you wouldn't trust to walk your dog or sweep out your barber-shop floor, actually have statutory authority to deal with taxes and every other damned thing that comes before Congress. This sounds like really bad science fiction.

I can't help recalling, though, that after all there were constitutionally franchised voters elected these people to public office. And I think back to the time when the Teabaggers were inventing themselves, or being invented, and numbers of my liberal colleagues took us elitists to task for railing at them. Like as if we didn't have the sense to understand that they have grievances. D'oh! Of course they have grievances. But they have walled themselves off from all receptiveness to reality, and it was already clear that once again in their time of troubles they were going to turn to absolutely the vilest people in the universe, who were manipulating them like puppets, only dumber.

Lately I can't seem to escape this thread in human nature: the passionate embrace of the cosmically imbecilic -- and often malignly manipulative. This summer I seem to be watching a crush of those TV cooking-competition shows (you know, Master Chef and Chopped and Chopped and Food Network Star (less egregious than many of the others, I have to say, but still), and now Hell's Kitchen again, and while I've written before about so many of the competitors' staggering lack of self-knowledge and lack of perceptiveness about their rivals, and there it all is again, only now it blends right in with "the busher," Jack Keefe, the "hero" of Ring Lardner's still-sublime "busher" stories.

It's been a treat reimmersing myself in Lardner's You Know Me Al, preparing for its return to in our late-night (9pm PT) comical-writing rotation last night. But it's a complicated sort of treat, because Lardner's understanding of people is so acute Jack Keefe, the big, hard-throwing young pitcher we saw ascend to and quickly fall out of the big leagues when we did Chapter I of You Know Me All, because Jack is, frankly, such a yutz.

To go with that very large natural talent of being able to throw a baseball really hard Jack has, well, nothing. Barely a clue about how to apply his natural gifts in terms of matching pitches to hitters, and as his manager and coaches keep trying to make him understand, a staggering cluelessness (read "indifference") about such hardly subtle phases of the game as holding runners on base and fielding his position. (It's uncanny how exactly Lardner's writing about pitching in 1914 translates to 2011.)

And on a larger scale, Jack takes no responsibility for his actions, and has as little sense of other people's strengths and weaknesses as he has of his own. And nothing is ever his fault. When he pitches, of all the games he loses -- and he loses a lot -- none are ever his fault. It's the fielders behind him, or the hitters' lack of production, or the umpires, or in extreme cases his not being his usual self (which of course happens to pitchers, but they have to go out and keep their team in the game anyway).

And his solution to every life problem, at least in his head, is to want to beat up on the person he's identified as the cause of his problems. It's an interesting question whether Jack is actually a bully or merely has the instincts of one, because there are, as best I can recall, no instances in the stories of his actually doing to anyone the horrible things he imagines -- and not because he really thinks better of it, or rises above it, but because . . . well, as with everything else in Jack's life, there's always an excuse.

One of the fascinations of trying to scope Jack out is that every bit of information we get about him comes from him. Even when he's reporting other people's actions or perceptions, he is after all the one doing the reporting, so it's all filtered through his murky lens.

At least in Lardner's telling Jack's stumbling unperceptiveness becomes entertaining. Unfortunately, there's nobody of comparable talent scripting those food "reality" shows -- and the terrifying spectacle of our social and political realities are all too real. It's fun to have them "written" by someone of a talent I consider Lardner-esque like Tom Tomorrow, but the fact that they're so terrifyingly real only makes it more horrifying.

#

In case you didn't know it, the revolution has already happened, and we lost

House Speaker John Boehner said the White House "moved the goal posts" by demanding an additional $400 billion in revenue during talks over a deal to avoid default. He said he was confident the U.S. will not default but said the White House has "refused to get serious" about spending cuts.

"Dealing with the White House is like dealing with a bowl of Jell-O," Boehner said.

-- a 7:30pm ET Washington Post "Politics News Alert"

by Ken

Compared with thinking about the horror in Norway (about which there doesn't seem to be any news coming in), it's almost a relief to turn to the Theater of the Weird that is our Debt-Ceiling Crisis & Negotiations Inc.

I don't doubt that Sunny John has a point about negotiating with the Obamablob, but when did any right-wing bully ever have trouble getting him to meet them 80 or 90 percent of the way? Besides, when it comes to blobulousness, how can you not return the charge playground-style: "Takes one to know one."

I don't know how this Theater of the Weird tragicomedy is going to work out except that it's going to be really, really bad. In important ways the outcome is predetermined, except for filling in some of the blanks and some of the numbers. As a colleague has been pointing out, the war is over, and we've lost. The oligarchs are in charge, and not many decisions of federal consequence are going to be made which don't meet with their approval.

Call it a civil war, or a New American Revolution, or a putsch, it took place without most of us realizing it was happening, and the New Order was established by the time it was determined that the federal government's basic principle in addressing the economic meltdown was going to be the ensure that the financial elites were made whole.

So I had to chuckle when I saw a piece pumped out by the NYT's DealBook financial-news service, chronicling the woes of the interns to the oligarchs, which starts like so:

"Fewer Perks and More Work for Wall St.’s Summer Interns"
BY KEVIN ROOSE

Wall Street interns have gone from pampered to pummeled.

In better days, college-age interns at the nation’s largest investment banks, known as summer analysts, were treated like young royalty. But shrinking profits and a spate of recent bank layoffs have forced this year’s interns to shoulder full-time workloads.

“I worked 85 hours last week!” said one Goldman Sachs summer analyst, a college senior who spoke on the condition of anonymity because she was not allowed to speak to the media.

“The last two days, I’ve been here until 3 a.m.,” said a Deutsche Bank analyst, who also spoke on the condition of anonymity to protect his job. “My weekends are fun, but that’s about it.”

While hard work has been customary among young finance workers for years, after-hours benefits once made the long days more palatable. . . .

And at this point we're launched on tongue-hanging-out tales of erstwhile intern splendor. The point of the piece, I'm sure, is to spread the word that the banksters are tightening their belts in these troubled times.

Unexpected turbulence in the industry has hit this year’s interns, who say that fewer full-time employees has meant more work for them. UBS and Credit Suisse have both conducted layoffs this year, and Goldman Sachs and Morgan Stanley are cutting back as well.

“Managing directors are telling interns, ‘We’re going to need you to step up,’ ” said one bank recruiter, who spoke only anonymously because she was not authorized to speak to the media.

By all means read the piece. It's entertaining. But I don't believe for a moment it tells us that the banksters are wobbling. What it tells me is that, now that they're consolidating their hegemony, one of the spoils of victory is being able to remake decisions about who has to be paid what. As we've been noting, there appears to be no limit to the greed of our financial lords, and I'm assuming they're simply making new calculations about what they have to pay those summer interns.

Maybe in the past they had to share some of their loot with the fiscal farmhands. For sure now they don't have to. As so many other bulwarks of the old-fashioned middle class have discovered to their chagrin, they're part of the team, they're just hired hands and hangers-on. As regards those poor downtrodden interns, reporter Roose seems to have found no shortage of whiners, but no deniers or decliners.

[D]emand at top-flight colleges for the internships, which had tailed off slightly during the financial crisis, has come roaring back.

“It’s the best way to land a permanent position, it’s prestigious, and there’s a steep learning curve, so you come away having been quickly trained and assigned meaningful work,” said Patricia Rose, director of career services at the University of Pennsylvania.

For their long hours, Wall Street interns are rewarded handsomely. Summer analysts are generally paid based on the prorated salary of a first-year analyst. At Goldman Sachs, for example, a first-year analyst’s salary of $70,000 translates to a summer intern’s pay of about $15,000 for 10 weeks of work, which includes a $2,000 housing stipend, according to one current intern. Interns at the Manhattan offices of BlackRock, the asset management firm, are paid a prorated salary that comes out to around $33 an hour, with time and a half for overtime exceeding 40 hours a week, according to a company spokeswoman.

But for most interns, the real prize is an end-of-summer job offer. Investment banks stock their full-time ranks with former interns, and the pressure to create loyalty during a 10-week summer is palpable. . . .

or interns who survive the summer, the payoff can be big. Top performers are often given offers in the fall for full-time positions that begin the following summer, freeing them from the stress of a senior-year job search.

And even for interns who don’t plan on returning full time next summer, like the overworked Deutsche Bank summer analyst, a Wall Street internship may be good preparation for the trials of working life.

“If I can get through this, I can get through anything,” the intern said.

On the chance that those internships may prove bonanzas, the would be financial wolves and sharks seem happy to take whatever terms are offered, so the oligarchs are adjusting the terms they're offering. "More for themselves" would be the operative economic principle.

#

Today House Republicans Try To Sneak Through Ryan's Kill Medicare Plan Again

This time they've got some new wrapping paper for the thoroughly discredited Ryan budget: Cut, Cap & Balance in the House and a Balanced Budget Amendment in the Senate. And both are actually even worse than Ryan's budget! So while Republican Party hostage takers and terrorists continue to threaten to crash the economy again if they don't get their way on whatever they want this week-- and with a new poll showing that 71% of Americans have no confidence in how Boehner, Cantor, Ryan and their House cronies are handling the debt crisis-- the latest right-wing gimmick will be voted on later today... before disappearing just as Ryan's ridiculous budget did. One measure would seek to limit federal spending at 18% of gross domestic product and the other at 22%. As the Center for American Progress points out, "the last time federal spending dipped under 18% of GDP was 1966, nearly half a century ago. Things have changed quote a but since then." Please click on their infographic to enlarge it:


Like Ryan's rejected and disdained budget, this "plan," would basically gut Medicare, Medicaid and threaten the existence of Social Security and public education. Of course those are all long-cherished goals of the far right. It would virtually guarantee the country's rapid and probably irreversible decent into the ranks of the Third World. Remember Grover Norquist's raging nonsense about drowning the federal government in a bathtub? They're trying it again.

The White House pointed out that the House plan “would undercut the Federal Government’s ability to meet its core commitments to seniors, middle-class families and the most vulnerable, while reducing our ability to invest in our future,” while imposing “unrealistic spending caps that could result in significant cuts to education, research and development, and other programs critical to growing our economy and winning the future.” It would “lead to severe cuts in Medicare and Social Security” and said the Balanced Budget Amendment “will likely leave the nation unable to meet its core commitment of ensuring dignity in retirement.”

The front-runner in the GOP presidential freak show, Michele Bachmann, of course, loves it. I wonder how many of her supporters have the capacity to figure out how badly this would devastate their standard of living. The Democrats on the House Budget Committee put it like this:

The Republicans’ newly introduced “Cut, Cap, and Balance Act of 2011” (H.R. 2560) is yet another attempt to enact the policies they approved with their budget resolution this spring-- to end the Medicare guarantee while continuing tax breaks for special interests and the wealthy. It requires immediate and steep spending cuts starting this October that will put more Americans out of work while the country is still recovering from the worst recession since the Great Depression. It caps total spending-- including mandatory spending programs, such as unemployment benefits, that are designed to grow when the economy is bad-- for fiscal years 2013-2021 at lower percentages of the economy (Gross Domestic Product, or GDP). More immediately, it requires passage of a specific type of a so-called “balanced budget” constitutional amendment by both the House and the Senate before the debt limit can be increased. This new hurdle makes it even harder for Congress to increase the debt limit by August 2, which it must do to avoid fiscal calamity and higher interest costs for consumers and the government alike.

Listening in on a White House press briefing yesterday by Jason Furman from the National Economic Council and Obama's Communications Director Dan Pfeiffer it was clear the White House sees right through the GOP silliness with this new tact to get Ryan's kill-Medicare proposals passed. Pfeiffer:

[I]t’s important also to understand that what this Cut, Cap and Balance plan does is it essentially enshrines into the Constitution the Ryan plan on steroids. Unless House Republicans are willing to raise revenues, significant revenues, something they have refused to do, it would require much deeper spending cuts than in the Ryan plan. This would result in even more devastating cuts to clean energy, education and health care for children and people with disabilities.

The Ryan plan would force a senior to pay more than $6,000 for health care. The plan being considered by the House would require even further Medicare cuts, making health care for seniors much more expensive and less accessible.

And it goes after Social Security. And the whole basis of an American middle class and a progressive middle class society... forever. Furman:

The legislation being considered today, though, goes well beyond the Ryan budget, because it also includes a requirement that both houses of Congress pass a balanced budget amendment before the debt limit can be raised. Now, first of all, this is basically holding the debt-- the equivalent of holding the debt limit hostage to an extreme agenda that’s well outside the bounds of anything that could pass the Senate and likely even anything that could pass the House with the magnitude needed for an amendment of this type.

And the reason for that is clear, is that this balanced budget amendment is essentially historically unparalleled. In the past, balanced budget amendments required you to balance the budget, period; left it to Congress to figure out how to do it. What this balanced budget amendment does-- these balanced budget amendments would do is, number one, add in spending caps. And the spending caps in the balanced budget amendment that are referenced in the legislation and would be consistent with what the legislation requires would require cutting spending by $400 billion per year relative to the Ryan budget.

So the spending caps in these balanced budget amendments that are referenced in the legislation have literally, over the next decade, trillions of dollars of spending cuts above and beyond what would be required in the Ryan budget. It’s almost inconceivable that you would be able to do spending cuts of this magnitude absent dramatic reductions in Social Security and Medicare.

For example, if you exempted defense spending, you would need a 12 percent cut in all spending, including Social Security-- that would be a $2,000-per-year reduction in average benefits-- and a 12 percent reduction in Medicare.

The other reason that those cuts would be virtually guaranteed by the balanced budget amendment is because, unlike previous balanced budget amendments, it has a two-thirds supermajority to raise taxes. That would make it virtually impossible that you would get any additional revenue, which would guarantee that you would need to balance the budget at the expense of spending.

It’s important to understand that you don’t need a balanced budget amendment to cut spending, you don’t need a balanced budget amendment to get the deficit under control. And, in fact, the Ryan budget itself has deficits of over 1 percent of GDP and nearly 2 percent of GDP in most years. So even the Ryan plan would fail the test being put forward in the extreme, radical, unprecedented balanced budget amendments that are contemplated in this legislation.

For all those reasons, the President has said he would veto legislations of this nature, and at the same time, wants to pursue a responsible course that’s both balanced, that’s consistent with economic recovery, and that doesn’t shortchange critical priorities like infrastructure, education, clean energy and Medicare.

Can we save ourselves from ourselves? E. J. Dionne Jr. hopes so, Ian Welsh is doubtful

If you click on this printed version of the Declaration of Independence, and your eyesight is good, you'll be able to read the start of the list of accusatory "he has"es listing the intolerable "repeated injuries and usurpations" of King George III, and see how far down is the first mention of taxes: "imposing taxes on us without our consent." Do Teabaggers read, do you suppose?


"We praise our Founders annually for revolting against royal rule and for creating . . . a representative form of national authority robust enough to secure the public good. It is still perfectly capable of doing that. But if we pretend we are living in Boston in 1773, we will draw all the wrong conclusions and make some remarkably foolish choices."

-- E. J. Dionne Jr., in his WaPo column
"What our Declaration really said"

"[L]ately I find it hard to remember that one good person is worth saving, or that most people are just weak, not evil. The world will burn, in war, and famine, and revolution, and climate change and it will burn because we are so contemptible we refuse to do anything to stop it from burning. . . .

"We have become contemptible. Our leaders, perhaps, are most contemptible of all, but we continue to consent. Oh perhaps polls might say we're not happy, but who cares what polls say? We do nothing, we let our leaders do as they will, and we take on their mores, becoming cruel and debased and uncaring of what happens to our fellows, not even the care of enlightened self interest."

-- Ian Welsh, in his blogpost "Deserve: the deadliest word"

by Ken

I had second thoughts after I wrote the head for my recent piece about Freeman Dyson's NYRB piece about Richard Feynman, "I don't have many heroes, but Richard Feynman is one of them, even though I understand hardly anything about his work in physics." If I think about it, it occurred to me, I actually have lots of heroes. The thing is, they're nearly all lone voices or lone practitioners whose heroic qualities come from the very solitariness of their activities.

Which brings me to the two gentlemen whose recent writings I deferred considering till today, in favor of directing attention back to Howie's recent posts about Arianna Huffington's report on the resiliency she found among all manner of Greeks she found in a recent visit to her native country, in the face of the brutal slapdown being administered by the international lords of "austerity," the greedy financial elites, and Bernie Sanders' recent Senate speech throwing out a challenge to the president to reclaim our basic democratic values.

I'm not sure I can make much clearer than I have (repeatedly) here my esteem for E. J. Dionne Jr., whose unflappably calm and authentically humble voice regularly articulates the sharpest and most articulate cases for those increasingly challenged democratic values. In that sense, this recent column defending the values embodied in the still very much living Declaration of Independence is simply what you'd expect from him. And I guess the same is true of Ian Welsh, whom I depend on for real-world, no-bullshit clarity, and unfortunately that clarity been turning grimmer and grimmer as it becomes clearer how badly Barack Obama has failed at the job of reversing the right-wing model of governance he inherited -- mostly because, as Ian has pointed out numerous times, he never said he was going to, whatever we may have thought we heard from him.

In these pieces E.J. and Ian are sort of looking at the same fucked-up situation, and even sort of asking the same question: On what basis might there be hope for a solution? The difference is that E.J. thinks there might be an answer, and Ian doesn't -- he would be asking the question in the sense, on what basis do we think there might, realistically, given who and what the country has become, be a solution?

In his calm, reasonable way, E.J. makes clear that he has grave fears for the republic because of widespread misreadings of both the Declaration of Independence and the Constitution that falsify both their sense and spirit. He frames this, as you would expect, with exquisite politeness, other people -- me, to pick a random example -- would just say that the present-day Right is made up of people who are either (1) too stupid to know how to read, (2) too lazy to actually read, or (3) too dishonest to accurately represent what they read.

Our nation confronts a challenge this Fourth of July that we face but rarely: We are at odds over the meaning of our history and why, to quote our Declaration of Independence, “governments are instituted.”

Only divisions this deep can explain why we are taking risks with our country’s future that we’re usually wise enough to avoid. Arguments over how much government should tax and spend are the very stuff of democracy’s give-and-take. Now, the debate is shadowed by worries that if a willful faction does not get what it wants, it might bring the nation to default.

This is, well, crazy. It makes sense only if politicians believe -- or have convinced themselves -- that they are fighting over matters of principle so profound that any means to defeat their opponents is defensible.

And he suggests that "we are closer to that point than we think," citing the Teabaggers' choice of "naming their movement in honor of the 1773 revolt against tea taxes on that momentous night in Boston Harbor."

The Teabagger mythology would have it that we've reached the threshold Jefferson set out in the Declaration for overthrowing the existing government. But this is because the Teabaggers are too stupid, lazy, or fearful (though "fearful," I would argue, because of their stupidity or, more likely, intellectual laziness) to think, and simply mainline right-wing talking points engineered by lying thugs (including their Stalinist clergygoons).

Oh, E.J. doesn't put it that way, of course. What he does is to quite reasonably -- as if these people are reachable by reason! -- run down what the Declaration actually says. On the specific issue that is making the debt-ceiling problem a crisis, the Republicans' acceptance of the "no new taxes" mantra, the liars and morons of the Right have, through a dazzling conflation of stupidity and lies, transformed our quite moderate tax burden (both historically and world-comparatively) into a situation of intolerable tyranny, just like, you know, the Decklerahun of Indypendants says.

E.J. points out:

In the long list of “abuses and usurpations” the Declaration documents, taxes don’t come up until the 17th item, and that item is neither a complaint about tax rates nor an objection to the idea of taxation. Our Founders remonstrated against the British crown “for imposing taxes on us without our consent.” They were concerned about “consent,” i.e. popular rule, not taxes.

Nor, E.J. points out, does the list of abuses "really get to anything that looks like Big Government oppression ('He has erected a multitude of new offices, and sent hither swarms of officers to harrass our people, and eat out their substance') until grievance No. 10." The first nine points deal exclusively with "how laws were passed or justice was administered.

The very first item on their list condemned the king because he "refused his assent to laws, the most wholesome and necessary for the public good." Note that the signers wanted to pass laws, not repeal them, and they began by speaking of "the public good," not about individuals or "the private sector." They knew that it takes public action — including effective and responsive government — to secure "life, liberty and the pursuit of happiness."

Their second grievance reinforced the first, accusing the king of having "forbidden his governors to pass laws of immediate and pressing importance." Again, our forebears wanted to enact laws; they were not anti-government zealots.

Similarly, E.J. points out:

This misunderstanding of our founding document is paralleled by a misunderstanding of our Constitution. "The federal government was created by the states to be an agent for the states, not the other way around," Gov. Rick Perry of Texas said recently.

No, our Constitution begins with the words "We the People" not "We the States." The Constitution's Preamble speaks of promoting "a more perfect Union," "Justice," "the common defense," "the general Welfare" and "the Blessings of Liberty." These were national goals.

Of course the very notion that Rick Perry would have anything serious, or even remotely factual, to say about history (or anything else) is preposterous. How the hell would someone like him know? He has devoted his life to not knowing anything except the good old right-wing mantra of greed and selfishness. No, he's just spewing a right-wing lie he heard somewhere. (These days there's no shortage of places to hear the current Top 10 of right-wing lies -- crafting them and spreading them haves become booming businesses.)

We learned it in elementary school: The Constitution replaced the Articles of Confederation to create a stronger federal government, not a weak confederate government. Perry’s view was rejected in 1787 and again in 1865.

It would appear that Governor Perry had already put his brain on idle by elementary school. E.J. also disposes of the nonsensical "Tenther" argument; he might have wondered where the Tenthers were during the Bush regime, which witnessed far and away the most sweeping, unapologetic expansion of federal-government (specifically executive-branch) power in the nation's history.

Ian Welsh is long past being surprised by any of this. And I suspect that I'm like a lot of DWT in vacillating between E. J. Dionne Jr.'s conviction that there must be something we can do to Ian's growing conviction that we've blown all our chances to do anything, and if we take a hard look at ourselves, why should we be surprised? I encourage you to read the piece in full, but here's enough to give you the flavor:

I hate the word "deserve" because lord save us all from what we "deserve", but lately I find it hard to remember that one good person is worth saving, or that most people are just weak, not evil. The world will burn, in war, and famine, and revolution, and climate change and it will burn because we are so contemptible we refuse to do anything to stop it from burning. And maybe that we now includes me, but I'm so very tired of dealing with stupid, cruel, selfish people. Heck, forget selfish, people who won't even look out after their own self-interest, or even understand what it is. . . .

[W]e have selected, to rule our societies, sociopaths at best and psychopaths at worse. They have contempt for those they rule, do not see them as even truly human, and enjoy hurting them. They feel tough when they make the hard decisions, which are somehow always hard for others, but never for themselves. They encourage cruelty in society, from the ground up, and routinely subject the population to humiliating surveillance, force them to abase themselves to the least appearance of authority, whether legitimately used or not, and condone murder and torture and routine humiliation. They don't do these things to themselves, of course, the rich, for example, don't get groped in airports, but they routinely do it to those below them.

And in so doing they teach those below them, to do it to those below them, and below them, and below them, and so on. The sickness comes from the top, a rotten poison which has altered the character of nations. But it came from the bottom, first. It came from a population who became lazy and complacent and thought they had rights they didn't have to guard like a dog with a bone; who thought they could just live their lives and leave politics to other people except for pulling a lever or marking a ballot every four years. It came from people who felt "I've got mine, who cares what happens to anyone I don't know?" Unable to see themselves in others for longer than the gossamer blink of an eye, they were also unable to understand that what was done to others would also be done to them.

We have become contemptible. Our leaders, perhaps, are most contemptible of all, but we continue to consent. Oh perhaps polls might say we're not happy, but who cares what polls say? We do nothing, we let our leaders do as they will, and we take on their mores, becoming cruel and debased and uncaring of what happens to our fellows, not even the care of enlightened self interest, the clear understanding that what is done unfairly, cruely, to someone else, could, probably will, one day be done to us. We pretend to care most about our children, making such a fetish of it that allowing children to roam unattended is virtually treated as a crime, yet we are creating a world in which they will suffer, unimaginably, a world in which hundreds of millions, perhaps billions, of our grandchildren will die.

Lord save us from what we deserve, because what we deserve is what's going to happen: war and revolution, famine and drought, climate change on a scale we truly don't understand.

E. J. Dionne Jr. concludes with a paragraph I've quoted most of at the top of this post, in which he warns of the risk of "draw[ing] all the wrong conclusions and mak[ing] some remarkably foolish choices." For a commentator of his calm, collected demeanor, this is practically screeching in alarm, not all that different from foreseeing "war and revolution, famine and drought, climate change on a scale we truly don't understand."


WHILE WE'RE ON THE SUBJECT OF PERSONAL HEROES WHO
HAVE WRITTEN IMPORTANT STUFF, DON'T FORGET FRANK RICH

Before I had a chance to even take in let alone process Frank Rich's blockbuster New York magazine piece, "Obama's Original Sin," Howie had written about it from Thailand.

Here's where Frank comes to rest:

"A nation cannot prosper long when it favors only the prosperous," Obama declared at his inauguration. What he said on that bright January morning is no less true or stirring now. For all his failings since, he is the only one who can make this case. There's nothing but his own passivity to stop him from doing so -- and from shaking up the administration team that, well beyond the halfway-out-the-door Geithner and his Treasury Department, has showered too many favors on the prosperous. This will mean turning on his own cadre of the liberal elite. But it's essential if he is to call the bluff of a fake man-of-the-people like Romney. To differentiate himself from the discredited Establishment, he will have to mount the fight he has ducked for the past three years.

The alternative is a failure of historic proportions. Those who gamed the economy to near devastation -- so much so that the nation turned to an untried young leader in desperation and in hope -- would once again inherit the Earth. Unless and until there's a purging of the crimes that brought our president to his unlikely Inauguration Day, much more in America than the second term of his administration will be at stake.

#

Is it time for Tiny Tim Geithner to cash in on all he's done to make the banksters happy (and richer)?

Know anyone who could be a bigger friend to the
banksters? That could be our next Treasury secretary.

"I feel the time has come for me to start cashing in for all I've done to help the big boys in the financial sector live long and prosper."

-- what Treasury Secretary Tim Geithner might have said in
response to reports yesterday that he's preparing to step down

by Ken

The reports, circulated by not exactly fly-by-night sources like Bloomberg and the Wall Street Journal, indicated that the Tinyman "is considering stepping down soon after policy makers agree to raise the government's borrowing limit, a person familiar with the matter said." As Robert Kuttner notes in an American Prospect online piece, "So Long, So Long, and Thanks from All the Banks": "That might be a long time from now given that the Republicans could agree to temporary extensions to maximize their leverage."

Naturally, the Tinyman promptly denied the rumors, telling Bill Clinton ("while sharing the stage at a Clinton Global Initiative event"): "I live for this work. I’m going to be doing it for the foreseeable future." Are you starting to feel a bit teary? (If not, you may in a moment, but not for the same reason.) As Kuttner also points out, "His status as a lame duck would undermine his authority on a variety of fronts, from the debt-ceiling negotiations to implementation of Dodd-Frank." But if our Tim has given any thought to his bargaining position, wouldn't that be a first for anyone in the Obama administration?

I read Kuttner's American Prospect while vaguely gathering my thoughts on the subject, and discovered it was no longer necessary to gather my thoughts. Here are his:

Well, good luck and good riddance to Geithner. The problem, given Obama’s own extreme caution and the Republican ability to block anyone who’d be a tough regulator of Wall Street, is that his successor is likely to be even worse.

Geithner’s main role in the great financial crisis was to shore up the large Wall Street banks without demanding any serious systemic reform in return. The window of opportunity in the spring of 2009 came and went with several zombie banks being propped up with hundreds of billions of taxpayer dollars and trillions of dollars in advances from the Fed, but no progress toward the too-big-to-fail problem, much less any major change in the bankers’ business model that caused the collapse.

Geithner’s main function in crafting what became the Dodd-Frank Act and the lobbying around its key provisions was to argue for weaker rather than stronger ones. Backbenchers in Congress like Senators Merkley, Levin, Kaufman, Reed of Rhode Island, and Franken were instead the advocates of strong reforms. Geithner explicitly opposed many efforts by progressive senators to toughen the bill, as when he opposed a ban on “naked” credit-default swaps (the Dorgan Amendment) or setting explicit limits on the market share of large banks or returning to the strict separations between speculation and investment of the Glass-Steagall Act. Obama, to Geithner’s great discomfort, invoked that reform as the “Volcker Rule,” but then Geithner successfully fought to undermine a serious version of it.

One of Geithner’s first administrative acts in making a decision to implement Dodd-Frank was to water down a key provision on derivatives so that any derivative involving foreign currency (a huge part of the derivatives market and Wall Street profits) was exempt from Dodd-Frank’s sunshine and anti-manipulation provisions. The Wall Street Journal piece on Geithner’s likely departure quotes Jim Vogel, a strategist at FTN Financial Capital Markets, as saying, “Since 2009, the capital markets have gotten very comfortable with Secretary Geithner’s steady approach to both the debt markets and financial policy.”

Well, yes, why wouldn’t they be very comfy? Wall Street has returned to pre-collapse profitability without any fundamental change in its business model. Overly complex financial products and proprietary trading, too-big-to-fail banks, and immense Wall Street influence over policy continue to undermine the recovery and pose the risk of a second collapse.

You can see the lingering influence of an unreformed system in the Greek mess. The European authorities are putting Greece through the austerity ringer, in part to protect banks that are major holders of Greek bonds. But the same banks are also holders of credit-default swaps. Hedge funds use swaps to bet on a Greek default, putting the banks at double risk. So a restructuring of Greek debt, of the sort used in the case of much larger Latin American countries in the 1990s, becomes prohibitively expensive.

Geithner’s legacy will be this: He took a historical moment that offered a rare and overdue chance for systemic financial reform and used it instead to paper over the cracks in a dangerous system.

Now, as to why you might be moved to tears, Kuttner has already said it: "The problem, given Obama’s own extreme caution and the Republican ability to block anyone who’d be a tough regulator of Wall Street, is that his successor is likely to be even worse." This morning a colleague was gathering "insider" speculations, and came up with:

* Ben White, Politico "Morning Money": argues first "Why [JPMorgan CEO Jamie] Dimon May Replace Geithner," then "Why Dimon Won't Replace Geithner," then turns to assorted other possibilities: OMB Director Jack Lew, Clinton White House chief of staff Erskine Bowles, current WH COS Bill Daley {"though Daley has the Wall Street problem" --d'oh!), former Deputy Treasury Secretary Roger Altman ("considered a strong candidate though he too is very much enmeshed in the investment banking culture"), and outgoing FDIC Chair Sheila Bair ("would have more credibility with progressive groups" -- well, scratch her from the list).

* Ben White again, with Carrie Budoff Brown, yesterday evening at Politico: Bowles, Altman, Dimon, Daley, and Bair again, plus now New York City Mayor Michael Bloomberg and GE CEO Jeff Immelt -- in case you thought it couldn't get worse.

* Mark Landler, NYT: Bowles, Altman, Fed Vice Chair Janet Yellen, National Economic Council director Gene Sperling.

* Kuttner is intrigued by the idea of Bair, "Geithner's nemesis," and argues that "Obama could send a salutary signal" by appointing her.

The odds of that happening, of course, are infinitesimal. He will probably name someone even closer to Wall Street, if that's possible.

As for Bair, she has told friends that she is likely to teach or go to a think tank, write a book, and speak out. She has no plans to cash in by going to K Street or Wall Street, where she could pull in a salary of $5 million to $10 million.

Let's see where Tim Geithner goes.

Now are you crying?

#

Is the president, that master negotiator, once again prepared to give away the store?

by Ken

I pointed out awhile ago that smart people I know online predicted that the Teabaggers and their allies would meet their doom if they seriously threatened to muck up the debt limit increase, because the really serious people, the ones who own us, are sitting on so much paper whose value will plunge if the world perceives a serious risk of a U.S. default on payments. This, my smart acquaintances insisted, would rouse the Serious People to blow the whistle on the rambunctious kiddies -- no mucking around with real stuff like the grownups' personal wealth.

I speculated that the Serious People who poured so much money into creating the Teabagger menace may now be discovering that they have little power to stuff the toothpaste back into the tube. It may be too that the Serious People can afford to exercise some patience in the admittedly nervous-making game the House Republicans have chosen to play on the debt-limit issue in exchange for what they can extract in negotiations between Congress and the White House.

FDL's David Dayen has been keeping tabs on information dribbling out of the negotiations, and now that the president has officially stepped in, what he's hearing is pretty scary. (Naturally there are lots of links in the post onsite.)

More on the Medicare-for-Revenues Swap Floated in Debt Limit Deal

By: David Dayen Tuesday June 28, 2011 10:54 am

Last week I noted that Max Baucus gave away the endgame in the debt limit talks – aside from the $1.5 trillion or so in spending cuts already agreed to, further cuts to Medicare would have to be teamed with co-equal increases in revenue. This would destroy the competitive advantage for 2012 by giving Republicans a get out of jail free card for their Medicare-ending budget. Instead, Republicans would excoriate their opponents for this new round of cuts to Medicare, something that won them the election in 2010 and which they continue to try in ads this year. It almost doesn’t matter what the substance of these cuts are; they will be spun by Republicans as “Medicare cuts that hurt seniors,” even though they would be voting for them as part of a deal. Indeed, the $500 billion in cuts through ending Medicare Advantage overpayments and other payment reforms, which were in the Affordable Care Act, are also in the Paul Ryan budget that almost every Republican voted for, but that hasn’t stopped the parade of accusations.

We got a little more information on the Medicare-for-revenue trade today from David Rogers.

For their part, Obama and Reid appear prepared to reach much higher, putting substantial Medicare savings on the table if Republicans would accept added revenues. With the House GOP leadership in New York, all of Monday’s White House maneuvering was Senate-centric. But Obama’s hope is that Speaker John Boehner (R-Ohio), with whom he met privately last week, will be intrigued by a bolder package that might also help neutralize the Medicare issue now hurting the GOP among elderly voters.

The Bush-era income tax rates would not be targeted. Instead, the focus would be more on corporate tax subsidies or capping deductions that most benefit the wealthy. Obama identified close to $760 billion in new 10-year tax revenues as part of his new budget “framework” in April, and the idea would be to pick from this menu and test the willingness of Republicans to consider this approach.

House Republicans have not outright rejected this approach. Much depends on the specific tax provisions that would be affected. But the GOP leadership already knows that it can’t expect to bring all its conservatives to the table, and if the package offered substantial Medicare reforms to help stabilize the program’s finances, it could be seen as a victory for the party.

It would be a victory for everyone but senior citizens, and would represent the last straw in the minds of many with the Democratic Party. You would almost have to be an asceticist to deliberately tank your own competitive advantage in this way. Apparently currying favor among the serious people means more than winning elections.

The greatest hope for the holding together of the safety net are Congressional Republicans, who don’t want this deal despite the political benefit, because they are dead-set against raising any revenues (I discussed what revenues are under consideration earlier) . That could lead to a much narrower deal that relies on triggers and enforcement mechanisms to arrive at the level of deficit reduction arbitrarily set as the marker.

Again, gridlock is the great friend of the average American. It’s also the great hazard, with the debt limit looming in a little over a month.

…from Bloomberg:

Making changes to Medicare, such as asking the wealthy to pay a higher price for their premiums, is one idea that has been raised. Democrats have long opposed such a change, arguing it would undermine popular support for the government-run health care program for the elderly.

Still, there are signs they may be softening, with prominent Democrats like Senator Dick Durbin of Illinois, who holds the party’s No. 2 position in the chamber, saying the issue needs to be on the table.

I don’t know what world they think they can make something like that work in politically.

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From sea to shining sea, it's end-of-session legislative madness

LGBT folk and people of a liberal persuasion are discovering that support for modest LGBT legislative progress is the cheapest bone right-of-center Dems can throw us while pursuing their "centrist" agenda. (Meet NYS Gov. Andrew Cuomo.)

by Ken

IN OUR NATION'S CAPITAL: IT'S
THE DEBT CEILING DEADLINE, STUPID

Some months back, smart people I know were downplaying the risk of a failure to increase the debt ceiling, which could be Armageddon for the People Who Matter, our economic lords and masters. They've been happy enough to cheer on the Teabagger hordes, and even bankroll them, but when we alert the financial markets to the real possibility of a U.S. default on its debt obligations, then those people find themselves sitting on mountains of paper that suddenly stand to plunge in value. And these are not people who take kindly to a plunge in value if its their value in danger of plunging.

The theory was that those folks, if it came to it, would crack the whip. Me, I haven't heard the sound of corporatist whip-cracking. Either those folks have discovered that they can profit enough from whatever the congressional extremists extract in exchange for going along with the debt ceiling increase, or else perhaps they've discovered that controlling your Teabagger stooges, once they've been unleashed, is kind of like trying to get toothpaste back in the tube -- not so easy.

Here's The American Prospect's "Balance Sheet" account"

AW, MAN, SUMMER SCHOOL?

Setting an early deadline can be a great way to ensure work gets done on time. That's what lawmakers did when they set an early July goal for a deal to lift the debt ceiling, which we aren’t projected to hit until August 2. The catch is that Congress goes into recess at the end of this week. As Sen. Majority Leader Harry Reid has said, lawmakers might be forced to stay in town through the recess to hammer one out. Or as Senate Minority Leader Mitch McConnell has suggested, lawmakers could come to a short-term agreement for the summer and push off the big stuff until the fall.

There have been a few signals a deal will emerge. House Republicans seem to have accepted the need for tax increases, with Majority Leader Eric Cantor yesterday confirming that "we are not opposed to revenues; we are just opposed to tax increases" (same diff, right?). Vice President Joe Biden and the "Gang of Five" (formerly six) senators say they’re getting close. The group has met with 31 Senators to discuss their tentative plan, which saves $4.7 trillion through spending cuts and revenue increases over 10 years. Meanwhile, Biden says his group is “down to the real hard stuff: I'll trade you my bicycle for your golf clubs." Of course, it's not sports equipment but Medicare, Medicaid, Social Security, taxes -- and our economic future -- on the line.

I would just have to disagree with the notion that "setting an early deadline can be a great way to ensure work gets done on time." This is true if you actually have control of the deadline, but when it comes to most negotiations, you don't. Once the Treasury Dept. came up with its early August date by which the matter must be dealt with, that became the deadline, and you can set whatever make-believe deadline you like, if that's the deadline, that's the deadline.

Except of course in the case of congressional recess. Now that's a real deadline. Oh sure, on rare occasions things get so out of hand that Congress is actually forced to remain in session, but it doesn't look as if that's going to happen again anytime soon.


MEANWHILE IN ALBANY, THIS IS THE TIME
FOR THE LEGISLATIVE GREMLINS TO PLAY

In the interest of concision, I left a couple of points out of my post last Wednesday, "The NYS Senate's day of decision on same-sex marriage: It's a punt!." That, you'll recall, was a deadline that should have been a deadline but turned out not to be, really. 

The key issue I left out is that mostly this logjam isn't about marriage equality at all. It's about what the M.E. opponents and fence-sitters can extract in exchange for even allowing it to come to a vote in the State Senate. At the top of the list is renewal of the state's rent-regulation laws, which in fact have already expired. Again, you'd've thunk that the expiration would be a real deadline, but here in NYS we've played this game of chicken before. When the law slips out of commission, by the time you hammer out an agreement, you can just pound in a little "continuous coverage" clause.

Well, today is the last day of the legislative session, so you'd figure this, surely, is it. Well, maybe yes, maybe no. Here's a Daily News blogpost from early this afternoon:

JUNE 21, 2011 12:34 PM

Breaking: Skelos Says Stalemate Easing In Albany

BY CELESTE KATZ

State Senate Majority Leader Dean Skelos says a "framework agreement" has been reached on all oustanding major issues except gay marriage.

Our Ken Lovett reports:

Skelos said he, Gov. Cuomo and Assembly Speaker Sheldon Silver are on board with agreements to extend the rent regulation law, restore a 421-A property tax abatement for city housing developers, SUNY 2020, a local property tax cap, and a mandate-relief package for localities.

Gay marriage, he said, will be conferenced once there is agreed upon language concerning religious protections. "I think we're going to have a real good concluding package," Skelos said.

No details yet on any of the deals. Skelos said bill language is being worked on, "and hopefully we'll conclude by tomorrow."

Uh, tomorrow? But won't the session be over by then?

That's the thing. While we're all looking at calendars and public battles about same-sex marriage, the underground gremlins who hammer out these later-than-last-minute deals are hammering away. Goodness only knows what's going to slip through.


OH YES, ONE OTHER POINT ABOUT THE
MARRIAGE EQUALITY ISSUE IN NYS AND ELSEWHERE

Cynical observers are noting, and people of a liberal persuasion are beginning to grasp, that in areas with strong liberal constituencies, support for some movement toward legislating acceptance of basic rights for LGBT folks is a really cheap way of throwing the us -- both LGBT folk and people of a liberal persuasion -- a bone while pursuing their right-of-center agenda. (Have you met our governor, Andrew Cuomo?)

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