The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    Michael Maiello's picture

    Cut And Run?

    Krugman today captures the fear that's been gnawing at me all weekend about Obama.  I get that he's in a rough spot and I get that losing the House had serious consequences for our side of the debate.  I get that the President might have to give up $38 billion in spending that he didn't want to give up.

    But does he have to act like he's enjoying it?

    Obama decided to frame last week's compromise as a victory.  He's proud to say that he and Boehner teamed up to cut the budget.  He's bragging about the size of the cuts.  In short, he's given up the argument and is saying "cuts are good!"  So now we're just arguing about what to cut. If last week's debacle was a triumph, then what's next?

    Maybe Obama should have done something more counter-intuitive -- he could have said that, "The best I could get out of these idiot Republicans was a budget that has $38 billion in extra spending cuts that will hit the economy at the worst possible time.  At least I talked them off the $100 billion ledge because that would have knocked us right back into a recession.  I don't like these concessions or this budget, but I'm signing this because they're holding the country hostage.  But it's this far and no farther."

    What about the debt ceiling debate?  Unless Obama concedes yet again, there is no debt deiling debate.  If these nuts force the U.S. to default on its debt for the first time in history, which will shatter the U.S.'s credit rating and destroy the world debt markets, then the financial sector will rise up and destroy them.  Remember that the reason Wall Street profits bounced back so quickly is that they're using low cost money from the Fed to buy "risk free" Treasury bonds and they're pocketing the difference.  If the Republicans refuse to raise the debt ceiling and cause the U.S. to default, that game will be over and Jamie Dimon will take John Boehner out behind his gold plated woodshed.

    So far as the debt ceiling goes, Obama should demand a condition-free authorization and let that be that.  If they pull the trigger on that, it's their heads in front of the gun.  Obama's people should be having backroom meetings on Wall Street about this topic right now:  "Hi guys, you know how most of your tier one capital is in Treasuries?  The Republicans want to make them worthless.  So you better go talk to them."

    This is not going to work if the president decides to treat the opposition party as if they're his pals.  I understand the impulse to try to claim every moment as a win, but it makes no sense.  Everybody did not win last week.  People who think cutting the budget during an unemployment crisis won.  People who think doing that is stupid lost.  The president should be calling the cuts stupid.  Unless, of course, he thinks the 2011 budget he agreed to is good policy.  He doesn't, does he?




    But does he have to act like he's enjoying it?

    On NY's Brian Lehrer program he asked that question of the abc's white house correspondent.Essentially his answer was: politicians prefer not to present themselves as losers.


    Seems like that's the operative thinking.  Charlie Sheen style politics. Winning!

    Appearances are everything.

    We are an excedingly shallow nation.

    ...default on its debt for the first time in history, which will shatter the U.S.'s credit rating and destroy the world debt markets, then the financial sector will rise up and destroy them.

    No, it seems the banks already have contingency plans in case of a default, NYT April 9 , who knows, they may even make a load of dough off of a default (derivatives, options, calls, short sales etc) like they did with Greece and Portugal, the banks must be saved at all costs, the country....well..:


    ......Executives of the nation’s largest financial institutions in recent days met with Mr. Geithner, House Speaker John A. Boehner, Republican of Ohio, and other lawmakers, arguing for the importance of raising the debt ceiling. Jamie Dimon, the chief executive of JPMorgan Chase, told them that his bank had devised contingency plans to protect its global business in the event of a default......

    They probably bought CDS on the U.S.  But in the event of a default, what issuer will actually have means to pay off those contracts?

    From recent history I would imagine they have some scheme to stiff investors/taxpayers/customers or get the Fed to pay up. Remember, the Fed doesn't have to say who is is giving money to for 2 years under Dodd-Frank.  And the Fed fought that one all the way to the SCOTUS, in spite of the fact that politically, something the Fed did 2 years ago is ancient history, of less interest to the average Joe than who won American Idol last week.

    From "Obama's New Approach to Deficit Reduction to Include Spending on Entitlements", this morning's WashPost front page:

    President Obama this week will lay out a new approach to reducing the nation’s soaring debt, proposing reductions in spending on entitlements such as Medicare and Medicaid and renewing his call for tax increases on the rich.

    In an effort to go on the offensive in the battle over government spending, Obama will look for cuts in “all corners of government,” senior adviser David Plouffe said on several Sunday talk shows.

    Although Obama’s health-care law is projected to curtail Medicare spending over time, “we have to do more,” Plouffe said Sunday, marking the first time the administration has made an explicit commitment to changes in entitlement programs for the purpose of deficit reduction.

    So I guess that means he thinks this is a good idea?  Or is he really just an opportunist?  This is so depressing.

    . So I guess that means he thinks this is a good idea

    Depends on what If it means that the Medicare Advantage plan should be cut back or made self sustaining  most liberal economist or health care analyst will agree.For an added premium- which screens out lower income seniors -the participants get extra benefits. Trouble is the extra costs of Medicare Advantage are so much higher than that extra premium , that Medicare Advantage is  a major contributor to the medicare cost problem.But the republicans oppose any attempts to reform it since it is heavily used by their supporters.

    So premature depression may not be called for.

    He will 'renew his call' on raising taxes for the rich, and that is as far as it will go. No way are the Republicans going to raise any rich person's taxes one farthing. Hopefully some Dem's in the Senate can hold the line on the GOP and Obama.

    Jaime Dimon comments on possible default at Chamber of Commerce March 30th.

    Link in case embed does not work:



    "Pretty strong stance there from Jamie Dimon."

    I guess I still have questions about QE II having helped cause the commodities price increases; things are really getting expensive at the grocery store.  And not just the crops that failed from flood and drought.

    Speculators with fewer places to play and savers with fewer safe harbors are both attracted to commodities. And money is itself a commodity.  Speaking of which, am I the only one around here who keeps getting Forex ads for a free "Currency for Dummies" book?   I consider that ad a warning that professional players may be trying to sucker some amateurs into cashing them out.  I think I will play the free FOREX training game but seriously doubt I will ever bet real money on it but I do not often play lotteries, never go to casinos and rarely bet on sports.   Just not a gambler.

    Yes, the retailization of currency trading has been picking up steam of late, fueled by people's legitimate fears about the dollar losing value.  But it is not a good activity for amateurs, is often based on leverage, and often defies common sense analysis. Case in point -- would you have bought or sold yen after the Japan earthquake.  I would have sold and I would have been wrong.  The Yen soared on speculation that demand for the currency will be fueled by reconstruction.  Who'd have thunk?

    I'm pretty sure that you can invest well and do it your whole life without ever dallying into foreign currency.  You also don't need options, I say.  But now the most vanilla brokerage accounts will sell them to you.

    Jamie Dimon, "I like Ben Bernanke, I like the Fed, everyone on Wall Street likes the Fed, keep the printing presses rolling, printing money doesn't cause inflation".

    Yes, but he's a Democrat, so it's ok, right?  Wink (winky snark/snarky wink)

    "If you can’t take their money, drink their whiskey, screw their women, and vote against ‘em anyway, you don’t belong in the Legislature” is a quote by Molly Ivins (1944-2007) that’s often attributed to Texas politics. The saying was first used by Jesse Unruh (1922-1987) in California politics, cited in print from May 1961. Unruh was talking about lobbyist gifts.

    I think it's that last part--about voting against 'em anyway--that some Democratic elected officials have not quite mastered as of yet. 

    In the current context the saying might be modified to read something like the following:

    "If you can't take their money and vote against 'em anyway, you don't belong in the White House or the Congress."

    Also came across this:

    "I don't know the key to success but I know the key to failure is trying to please everybody."
    - Bill Cosby

    both from:


    Love both but the Molly Ivins quote most. :)


    ....This is not going to work if the president decides to treat the opposition party as if they're his pals....

    So far he's been batting 0 using bipartianship with the GOPers. Which I have to ask...does he really think the GOPer's will capitulate and go along with raising the debt ceiling?  Frankly, I see the GOPer's taking him to task and whittling down an amount less than what will be necessary...they're going to give him an amount just shy to make him decide who gets paid what they're due and who gets left out in the cold. And if the markets go to hell in a handbasket, the GOPers will claim it's all Obama's fault for not allocating scarce resources where they were needed the most.

    I just read a quote from David Stockman, Reagan's budget director, that both sides in this debate are disfunctional. Boehner can't stop crying and Obama folds up like a lawnchair.  He used to immediately begin compromising away his own position, but now...this budget debate...he begins by calling the GOP and asking how much money OVER their top demands it will take for them to sign on. Har!

    God help America!

    I share your concern, but I think that we need to distinguish tactics from strategy.

    This recent clash, as well as the debt ceiling issue, are mainly tactical skirmishes leading up to the 2012 budget fight. I expect that battle to be historic because it will explicitly debut the fundamental divisions between post-Bush Republicans and Democrats.

    The Republicans have already revealed their major strategy--massive cuts for deficit reduction.

    But so far, Obama has been all tactics, no evident strategy. As usual, liberals are second-guessing his choice of tactics, but that's a side issue. The real question is whether Obama will move beyond tactics in this looming war. Will he simply aim to reduce the scale of Republicans cuts, as he did over the past few weeks, or will he develop a genuine Democratic political strategy?


    So Genghis, are you hinting the 2012 Presidential Campaign will be about the 2012 budget?

    Ha. I predict that the 2012 budget fight will define the issues of the 2012 election. Someone at the L.A. Times seems to agree:

    The battle is expected to dominate Washington in the months ahead, spilling into the presidential campaigns with competing outlooks on the appropriate role of the federal government.

    Let's see what Obama has to say on Wed.

    I think Krugman and you and many people misunderstand Obama. He is the post-postmodern president.

    He doesn't care about facts. Nor does he just care about framing the facts. He frames the frame of the facts. Whatever the prevalent frame the Beltway elite comes up with... he makes it his own!


    (yup. Gagadoodoo. Should be his campaign slogan. Better than WTF, in my view)

    Actually... the cuts don't look as bad as feared.

    So will this weaken Boehner's standing with his caucus?  Will there be a revolt by the far Right-wingers against him?  Or will his line to them be, "stay tuned, this is just a warmup, we're coming back for more soon..."?

    I read a comment at another site that said, "If the arc of Obama's Presidency continues at this pace, soon he'll be challenging his own birth certificate."

    Oopsie; WSJ has this up, but don't worry; he'll talk about increasing taxes on the wealthy, too:

    "In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy."


    "The plan released last week by Mr. Ryan (R., Wis.), would make permanent the tax cuts approved under President George W. Bush, close loopholes and lower tax rates. It also envisions essentially privatizing Medicare and cutting Medicaid spending by turning the program over to states to administer. The GOP plan cuts $6.2 trillion over 10 years. Mr. Obama's budget forecast a $1 trillion cut over the same period.

    The cuts Mr. Obama will propose Wednesday to Medicare will differ from the Republican plan. Mr. Plouffe said only that the White House supports the Ryan provisions that preserve Medicare savings already in the health law. On Social Security, Mr. Plouffe said Mr. Obama is willing to work with Congress on a long-term plan, but offered no further details."

    We must not second-guess those details, okay? 

    Oh, by the way... Libya's going to cost us a billion dollars.  How ever did we find the money for that?

    No no no no no no no. I heard it right here:

    It's gonna be free.

    And when our troops arrive, people will give them garlands.

    And the smurfs will reform to sing songs of welcome.

    Oh, and what about that whole idea of paying down the deficit with a transaction tax on Wall Street?  Did we forget that Wall Street caused this whole mess?

    And... happy day... guess who's going to be at Obama's debt speech?  Yep, Simpson and Bowles, the two guys who came up with a plan that the public already roundly rejected.

    You'll learn to like Simpson and Bowles, They'll keep shoving it down your throat till you do.

    If you dont like it down your throat; Its been said enemas are good for you too.  

    Simpson and bowels?

    Sorry, but yesterday was Punday. This is Poo's day.

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