No deal on raising debt ceiling

[TomCADem]

Source: Politico

One day after being named to a presidential task force to negotiate deficit reduction, House Majority Leader Eric Cantor fired off a stark warning to Democrats that the GOP “will not grant their request for a debt limit increase” without major spending cuts or budget process reforms.

The Virginia Republican’s missive is a clear escalation in the long-running Washington spending war, with no less than the full faith and credit of the United States hanging in the balance.

Republicans are floating a wide range of major structural reforms that could be attached to the debt limit vote, including statutory spending caps, a balanced budget amendment and a two-thirds vote requirement for tax increases and debt limit increases. Liberals want a “clean” vote to raise the $14.3 trillion borrowing limit.

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Cantor has casually floated a proposed amendment to the Constitution, originally written by Sen. Mike Lee (R-Utah), that would require the budget to be balanced by prohibiting spending from outstripping revenue in any year without a two-thirds vote of each chamber of Congress. It would also require two-thirds votes for tax increases and debt-limit increases, as well as capping federal spending at 18 percent of the nation’s gross domestic product.

Read more: http://www.politico.com/news/stories/0411/53501.html

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Welcome to California! California is one of the few states that rerquires a two third vote for tax increases, and this has not helped California be more fiscally sound. Quite the opposite, California is in worse position than most states, because Republicans inevitably make demands unreleated to the budget in exchange for passing a budget. Perhaps gutting environmental laws or rolling back taxes. Now, Republicans wants to share the California experience with the rest of the nation.

With Proposition 26, environmentalists have discovered that even boring sounding tax legislation is often used to gut environmental protections such as laws against lead contamination, through arguments that such regulations are actually hidden taxes.

Finally, there is the largely unreported prospect that Republicans are simply aiding huge bets against U.S. Securities by their campaign contributors on Wall Street. By threating to hold up an increase in the debt limit, and raising the prospect of a default, those who bet against the previously safe U.S. Treasuries stand to rake in the profits!

Many folks on Wall Street have begun to bet against U.S. securities:

http://latimesblogs.latimes.com/money_co/2011/04/bill-gross-pimco-treasury-bonds-sold-short-interest-rates-fed-deficits.html

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A negative holding typically indicates the fund is “short” that amount of bonds, meaning it has borrowed the securities and sold them, expecting their market prices to drop. Gross also could be using derivative securities to bet on lower Treasury prices. In the case of bonds, falling prices would mean rising interest rates.

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Eric Cantor has recently raked in contributions from the financial industry:

http://www.huffingtonpost.com/2010/07/28/cantor-rakes-in-wall-stre_n_662423.html

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Back in February 2010, House Minority Whip Eric Cantor (R-Va.) made a pitch to the titans of the financial services industry. "I sense a lot of dissatisfaction and a lot of buyer's remorse on Wall Street," the Virginia Republican said, referencing the industry's supposedly souring relationship with the Obama administration.

The remarks, delivered in the pages of the Wall Street Journal, were part of a broader effort to splinter the relationship between Wall Street donors and the Democratic lawmakers they helped fund to power in 2006 and 2008. For a cynical observer, they appeared to be a signal that the GOP was prepared to do the financial services industry's bidding.

Either way, they appeared to have worked. Months later, an emerging campaign theme is the Democratic Party's trouble collecting Wall Street donations. The Republican Party, save for a handful of members, voted en masse against financial regulatory reform and some GOP lawmakers have pledged to repeal the final product. At the same time, it has been widely reported that Obama has a frosty relationship with the business community. And, perhaps most tellingly, Cantor has seen his campaign coffers bulge.

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[Bandit]

1. Well they know they will more than likely get everything they want so why not ask for the moon.

There is little doubt in my mind the Democrats will roll over and show their belly. It is just what they do starting at the very top of the ticket..

[eilen]

7. I wish the Dems would bring it: tell the Republicans

to fuck off. Tell them to show it, call their bluff. Let them put the nation in default. Do you think Obama has learned anything about these M-F er's yet?

[tularetom]

2. This little boy is blowing smoke and politico is breathing it in

I fully understand that "Wall Street" has no conscience and is quite capable of making money by "betting against America" by crippling US borrowing.

But even for "Wall Street" letting the US slide into third world status is a short sighted approach. They may make money off the debt limit increase refusal, but it may well be their last big payday, because once the credit of the US has gone into the shitter it will be many years before it returns if ever. And these guys basically live off the credit of the US government.

[louis-t]

3. Why does Cantor hate this country so much?

Asshole.

[DCBob]

4. The GOPers are going to cave on this..

Many rich and powerful Rethug donor/lobbyist/corporate types stand the most to lose if there is even a possibility that we hit the ceiling and default on our debts. They are just playing games here to see what they can get. The Dems know the situation.

[IamK]

5. What are the arguments against a balanced budget admenment..???? n/t

[TomCADem]

6. The Great Depression Is Ample Evidence Of Why A Balanced Budget Amendment

...Fool hardy. It forces governments to cut spending in response to an economic slowdown, which would amplify the economic crash. The fact that the U.S. did not slp into a Great Depression in 2008 was due in large part to the policies that Democrats adopted, and which Republicans opposed.

[girl gone mad]

8. Easy solution: keep spending, stop borrowing.

[Devil_Fish]

9. I guess will have to stop these stupid wars, and with the 2/3 majority vote needed to raise taxes,

I guess we will just have to let the Bush Tax cuts for the rich expire. My god how easy, the Dems don't have to do any thing. Not that they do anything any way.

[TomCADem]

10. Look at California, It Is As Blue As Any State, But Corporations Frequently Sponsor Propositions

Most recently, Californians narrowly approved Prop 26, which prohibited fees designed to mitigate environmental impacts. A similar proposition had been defeated a couple of years ago, but with corporations, they can just try again and again until it is passed. Prop 26 was heavily supported by the oil industry.

Also, the Republicans would likely insist on some sort of war exception for national security purposes, and the corporate media will run with that talking point. Why? Who pays for the corporate media? Corporate sponsors.

[DallasNE]

11. Budget Process Reforms

I believe items like budget processes are set at the start of each session of Congress so what is Cantor talking about. Is this the phantom barginning chip ploy?