Super Congress Activate!

Super Congress Activate!

Well last week all appointed members for the first ever “Super Congress” were revealed and here they are in no particular order.

The Democrats -

·         Senator John Kerry

o   Chairman of the Senate Foreign Relations Committee, Senator for over 20 years, and former Presidential Nominee

·         Senator Max Baucus

o   Chairman of the Senate Committee on Finance been a Senator since 1978 one of the longest tenured Congressman in Washington D.C.

·         Senator Patty Murray

o   Chairman of the Democratic Senatorial Campaign Committee and Committee of Veteran Affairs, serving in Congress since 1992.

·         Representative Chris Van Hollen

o   Ranking Member of the House Budget Committee and Congressmen since 2003.

·         Representative Xavier Becerra

o   Vice Chairman of the House Democratic Caucus and member and of the Ways and Means Committee , has been a congressman since 2003

·         Representative James Clyburn

o   Former House Majority Whip, currently Assistant Democratic Leader in the House Representatives and Congressman since 1993.

The Republicans -

·         Senator Pat Toomey

o   Former House of Representatives Congressman and current Junior Senator from Pennsylvania , has served in Congress 1999-2005 and 2010 to present

·         Senator Jon Kyl

o   Senate Minority Whip, Former Ranking Member in the Finance Committee, Former House of Representative Congressman and served in Congress since 1987. 

·         Senator Rob Portman

o   Former House of Representative Congressman, Former Cabinet member for George W. Bush (U.S. Trade Representative and Director of the Management and Budget office) and current Junior Senator from Ohio.  Has served in Congress or cabinet position since 1993

·         Representative Jeb Hensarling

o   Vice Chair on the House of Representative Financial Services Committee and served in Congress since 2003

·          Representative Fred Upton

o   Chairman for the Energy and Commerce Committee and has served in Congress since 1987

·         Representative Dave Camp

o   Chairman of the House Ways and Means Committee and has served in Congress since 1991

Now I know that was very dry and boring but I feel it is important to note a few things regarding the “super congress” appointments:

1.       No member of the “gang of six” was appointed. This could be a positive, in that; everyone will have a fresh start and not coming in with prearranged deals.  However more likely this is going to be a negative, since there is such a small window to get a very large deal done, starting with an already known idea would have provided a great framework to start negotiations.   

2.       All the Republican members of the “super congress” have signed Grover Norquist’s tax pledge stating they will not raise taxes.  This could spell trouble just as it did in reaching our first debt deal and warrants us keeping watch. 

3.       No freshman congressman were appointed on either side, Only experienced, more tenured congressman who understand the importance of this deal were appointed and this should give us all optimism that both sides want a deal to get done.

What do you see in the appointments of the “super congress"?

USA’s Historic Downgrade

USA’s Historic Downgrade

For the first time since 1917 America has had its credit rating downgraded by a significant rating agency, Standard and Poor’s.  This credit downgrade is likely to affect many aspects of the American economy from adjustable home mortgages to student loans, car loans, and credit card rates.  Standard and Poor’s has officially downgraded the United States from its highest rating AAA to its second highest rating AA+.  However like everything else in this debt crisis, even Standard and Poor’s downgrade is not without a bit of controversy.  White House officials have claimed that Standard and Poor’s medium and long term economic projections of America’s debt are “way off”, claiming a 2 trillion dollar error.  In an interview on CNN’s Anderson Cooper 360^o Standard and Poor’s head of sovereign ratings John Chambers said the 2 trillion dollar error did not matter because it doesn’t change the debt-GDP ratio which will continue to rise over the next decade. 

Let’s take a look at that interview conducted by CNN’s Anderson Cooper with Standard and Poor’s head of sovereign ratings John Chambers.

http://www.cnn.com/2011/BUSINESS/08/06/global.economy.cnn/index.html?iref=BN1&hpt=hp_t1

John Chambers : “The political brinksmanship we saw over the debt ceiling was something really beyond our expectations; the US government getting the to the last day before they have cash management problems.  There are very few governments which separate the budget process from the debt authorization process.”

The inability of congress to put political ideology aside and compromise to reach a significant debt reduction plan WAS factored into this credit downgrade because it showed a fundamental failure of congress to compromise and govern as a divided legislative body. 

Cooper: Do you blame one political party more than the other?

Chambers: “No I believe there is plenty of blame to go around.  This is a problem that has been a long time in the making, well over this administration and the prior administration.  It’s a matter of the MEDIUM and LONG term budget position of the United States which needs to brought under control NOT THE IMMEDIATE fiscal position.  It’s one that centers on entitlements and its entitlement reform or having matching revenues to pay for those entitlements.”

So straight from the “horse’s mouth” we DO NOT have an immediate budget problem however for the United States entitlement reform and/or increased revenue is needed to fix our MEDIUM and LONG term budget problems.  Since we have divided government and one party cannot get EVERTHING they want (thats you House Republicans) everyone needs to compromise. 

When speaking to how the United States could have avoid this downgrade. 

Chambers: “It could have come up with a fiscal plan similar to something like Bowles/Simpson commission, which was bipartisan…and came up with sensible recommendations. “

President Obama and Speaker Boehner were getting close to a “grand bargain along the same lines as Simpson/Bowles and the “Gang of six”,  However media reports state that House “Tea Party” Republicans refused to compromise which forced Boehner to withdrawal from those negotiations.  President Obama pushed for a $4 Trillion bipartisan deal which would have put America’s credit rating safe from this downgrade.

Chambers: “I think a key debate coming up regarding the extension of the 2001 and 2003 tax cuts, because if you did let them lapse for the high income earners that could give you another $950 Billion.  I think the question there is:  A. will that be an top of what we have already achieved with the $2.1 Trillion or if that was agreeable you could in vision that being counted toward the 1.5 that the committee is hoping to achieve.”  

Chambers is providing an obvious suggestion to let the tax rates for “wealth/job creators” expire and use that money towards debt reduction.  Who else suggested that?  Right President Obama! It seems clear from this interview that President Obama was completely aware of the standards which this credit agency had laid out for America’s debt reduction agreement.  President Obama was fighting for a debt deal very similar to what is outlined here in this interview.  However Congress (House Republicans) was not willing to compromise and not willing to do what was necessary to avoid this credit downgrade. Now since the “grand bargain” was never achieved we cannot know whether President Obama would have actually been able to get the votes needed to pass entitlement reform but unfortunately we never got that far because of partisan politics in Congress.

This credit downgrade was predictable and avoidable however Congressional politics obstructed policy and once again the American people are left paying for it.  Ideological views stood in the way of practical solutions and on August 5, 2011 we saw historic consequences in the down grade of America’s credit rating. Will this serve as a wake up call for Congressional members?  I won’t hold my breath.  This down grade will likely lead to more of the “blame game” and finger pointing... (Sigh)


UPDATED: 8/8/2011

Markets responded to the S&P downgrade on Monday with even more massive sell offs, leading to a single day stock market drop of 632 points.  In the last two weeks markets have hit lows not seen since the economic collape in 2008. 

Its a deal!

It’s a deal…..

It’s a bad deal, but a deal none the less.  Here is a quick breakdown of what is in the bill. 

·         Debt Ceiling is raised through 2013

·         Over $900 Billion in cuts over the next 10 years

·         Only $22 Billion in cuts before 2013

·         $350 Billion of the $900 Billion in cuts come from Defense over the next 10 years

·         Zero cuts to Medicare, Medicaid, Social Security

·         Establishes “Super Congress” to find additional $1.5 Trillion in deficit reduction

o   “Super Congress” will consist of 6 Republicans and 6 Democrats

o   Increased revenues and entitlement reform ARE an option for deficit reduction

o   Congress MUST vote on recommendations of “Super Congress”

o   If the “Super Congress” can not agree to deficit reduction or congress does not pass the “Super Congress” recommendations “triggers” are in place to automatically kick in.

§  “Triggers” are automatic pre-agreed spending cuts which are designed to encourage a deal

·         “Triggers” are an automatic $1.2 Trillion in spending cuts

o   50% of 1.2 Trillion will cut Defense spending

o   50% of 1.2 Trillion will cut Domestic spending (Social Security, Unemployment, Medicare, Medicaid protected from cuts)

Well that’s the down and dirty of the debt deal. Unfortunately this agreement did not and will not really accomplish anything in long run.  Republicans kicked and screamed that they would only raise the debt ceiling if they got an equal/greater amount in spending cuts.  Well they got their spending cuts, but it’s over 10 years and the debt ceiling is only raised through 2013, so was that really worth all the drama?  Did the deficit get any significant reduction? No, and this is why no one is claiming victory in the debt deal; both sides understand that this deal stinks.  Congress didn’t really accomplish anything; they did the bare minimum to squeak by….as always.

Look it’s a bird, it’s a plane, no its…“Super Congress”….

This “Super Congress”, which reportedly will include 6 Republicans (3 from each House of Congress) and 6 Democrats (3 from each House of Congress) has ZERO chance of successfully reaching a bipartisan agreement for a few reasons.  One reason being, we have done this before with no results.  Remember the President has already appointed his debt commission, and what happened? Both parties ignored their findings and recommendations.  Then there was the “gang of six” a bipartisan group of congressman who put forth a deal which again failed; however this time the “gang of six” proposal was embraced by the White House but failed to get any traction with Republicans because of their RIDICULOUS tax pledge.  Which is another reason why the “Super Congress” is doomed to fail; unless Republicans are willing to increase revenues, and democrats are willing to alter entitlements, serious deficit reduction will remain out of reach.  However if you still need further proof of the inevitable failure of the “Super Congress”, keep watch of who gets appointed to serve on this committee.  Will members of the “gang of six”, who have already agreed to a compromise, have an outlined bipartisan plan and could really put the “Super Congress” down the right path, be appointed or will more partisan hard line members be selected? Do you think John Boehner will appoint House Republicans who are willing to compromise on taxes? Will Harry Reid appoint Senate Democrats that are willing to put entitlements on the table?  The appointments of who will be on this “Super Congress” will signal to the American people whether our political leadership is serious about finding a solution or if they just want to play politics till the 2012 elections. 

UPDATED: 8/5/2011

If you needed more proof that the debt deal was a bad one, the stock market took a nose dive losing 512 in one day, this was the 9th day in a row of falling stock market numbers.  The 512 point loss on Thursday in the markets wipes out all gains made in 2011.  It appears that the only numbers on the rise is Congress's DISAPPROVAL ratings.   

	Approve	Disapprove	Unsure
CNN/Opinion Research	14%	84%	2%

UPDATED: 8/8/2011

Markets responded to the S&P downgrade on Monday with even more massive sell offs, leading to a single day stock market drop of 632 points.  In the last two weeks markets have hit lows not seen since the economic collape in 2008.