Debt ceiling forecast: The Good, the Bad and the Ugly

My thoughts on the likely debt ceiling/budget negotiation outcomes. Happy St. Patrick's Day!

An Athlete That In Theory Had Eaten His Fill And Bet His Life That He Could Outrun A Bear

   (Commentary posted by Roger Erickson)



Capex growth to slow

A complication occurred for this "athlete." The belly sequestered all the nutrients, and the legs are screaming & cramping in the 1st 100 yards.

"Structural" adjustments in the legs isn't gonna do squat.

[or rather, using the same word, with different semantics ... anything else but! :) ]

Proper, preventive, training & diet matters, and produces more adaptive resource distributions. We all hope there's another chance to learn that lesson. Praying that the bear catches some other idiot first isn't a reliable survival strategy.

This athlete needs MORE, not fewer, automatic stabilizers. Especially at the policy end. No tool helps much, if it's use isn't practiced, BEFORE it's needed. Even less if it's not even used.

There's many a fail 'twixt the theory & the outcome?

Might wanna pay a bit more attention to the actual operations, regardless of the theory?

gjohnsit — 4 reasons sequestration cuts are about to get much worse

We are 8 months into sequestration, and if you think things are bad now just wait a few more months.

Here is a list and approximate timeline of things to expect in the near future.

Daily Kos
4 reasons sequestration cuts are about to get much worse
gjohnsit

Dave Johnson — Republicans Demand Social Security And Medicare Cuts, Is It Reported?

Republicans are demanding cuts in Social Security and Medicare if Democrats want to change the terms of the “sequester.” I’m sure their Tea Party “base” would be shocked if they understood this. So would most Americans. So is the media giving Americans the information they need in order to make informed decisions?

Yesterday The Hill reported, in “House GOP says sequester is leverage in next budget battle,” that House Budget Committee chairman Rep. Paul Ryan is pushing for cuts in Social Security and Medicare:

In a meeting with House conservatives, Rep. Paul Ryan (R-Wis.), told rank-and-file lawmakers that, as the party’s chief budget negotiator, he would push instead [of killing Obamacare] for long-term reforms to entitlement programs in exchange for changes to sequestration spending cuts that Democrats are expected to demand.

[. . .] Rep. Matt Salmon (R-Ariz.) said that during the GOP meeting, Ryan pointed to sequestration as the party’s leverage with Democrats and said the Republican negotiators would not accept revenue increases in exchange.

“We’re going to try to push for some substantial reforms on entitlement spending and our backstop is sequestration,” Salmon said in describing Ryan’s remarks....

To many in the voting public the word “entitlements” does not translate to “Social Security and Medicare.” Ryan and the Republicans understand this. This is why they talk about “reforming” something that is not clearly understood as Social Security and Medicare.

So again, have any major news outlets explained to the public, using words that the public understands, that the Republican position in the current budget negotiations is a demand to cut Social Security and Medicare?

  Campaign for America's Future

Republicans Demand Social Security And Medicare Cuts, Is It Reported?
Dave Johnson

The obvious Democratic response is to accuse the GOP of attacking Social Security. Doh.

Grover Norquist— Ted Cruz’s strategy failed Republicans, but GOP still has leverage in the sequester

Grover Norquist throws Ted Cruz under the bus and proposes Plan B to save the GOP. when Grover throws in the towel, you know things are going down the tubes for the GOP.

The Raw Story
Ted Cruz’s strategy failed Republicans, but GOP still has leverage in the sequester
Grover Norquist, The Guardian

AFP —IMF predicts U.S. economic growth to slow due to political havoc

The International Monetary Fund on Tuesday cut its growth forecast for the US economy, and warned that Washington’s political paralysis could drag growth down further.

The Fund, in its new World Economic Outlook, said the US economy would grow 1.6 percent this year and accelerate to 2.6 percent in 2014, down respectively 0.1 and 0.2 percentage points from its July forecast.

It said the reduction was due to the impact of the sharp sequester spending cuts instituted by the government earlier this year aimed at trimming the federal deficit....

But it warned that continued political havoc over the federal budget and borrowing cap, which has forced the shutdown of parts of the US government, and more tightening of financing conditions could begin to hurt growth.

The Raw Story
IMF predicts U.S. economic growth to slow due to political havoc
Agence France-Presse

Status of a 'Continuing Resolution'

Report out late yesterday at The Hill on the status of a "clean" CR.

Seems like as of the time of this report there was bi-partisan support in the House for a CR that included large amounts of "sequester cuts".

Democrats are united on calling for a vote on a clean CR, but some of the most progressive lawmakers would oppose the measure.

According to his office, Progressive Caucus Co-Chairman Raúl Grijalva (D-Ariz.) would not vote for a government funding bill that includes the sequester cuts. "Nope, that [spending level] is too low for him," spokesman Adam Sarvana told The Hill.

House Minority Leader Nancy Pelosi (D-Calif.) quickly sought to tamp down suggestions that her caucus is not united. In a memo to reporters entitled "Cantor Can't Count," Pelosi's office said that more than 100 House Democrats have committed to vote for the clean CR passed by the Senate.

"It's time for the GOP to end these games and do what's right for the American people and bring a vote to the floor immediately to end this reckless GOP shutdown," the memo stated.

“Mr. Hoyer has been clear that Democrats support a clean government funding bill, and there is a bipartisan majority in the House ready to pass it [the Senate CR at sequester levels] so we can reopen the government immediately,” said House Minority Whip Steny Hoyer’s (D-Md.) spokesperson, Katie Grant.

If the article is referring to a CR that was passed by the Senate that reduces discretionary spending levels down to $986B for the year, Democrat leadership here, in the persons of Pelosi and Hoyer, is indicating that CR could pass the House at any time with bi-partisan support.

This CR at the $986B annual rate will reduce top-line government discretionary spending by over $20B/mo. which is substantial when they have been spending around the $325B/mo. rate total at present; its around a 6% reduction from the recent rate and does not include any cuts in non-discretionary spending that may be included.

House GOP members call sequester "unrealistic and ill conceived"

Oh, this is good news you may be thinking? The House Republicans finally realize that the sequester is hurting our economy and it should be done away, you believe? Right??

No, sorry, here's the real truth. The Republicans HATE sequester only because it's hurting defense spending and the military and war, which is America's most beloved industry.

"Cuts in the House transportation measure were made deeper by a Republican move to cut an additional $40 billion from domestic programs and transfer the money to the Pentagon."

Yep, that's right. These motherfuckers want to cut every domestic program--aid to seniors, food stamps, education, housing, you name it...to give the money to the military.

Let's face it, America is a warmonger nation. It's really all we care about.

AFP — Pentagon puts 650,000 workers on unpaid leave due to cuts

Austerity bites.

The Raw Story
Pentagon puts 650,000 workers on unpaid leave due to cuts
Agence France-Presse

Warren Mosler — Friday update- deficits matter, a lot!

Macro outlook. Fiscal drag increasing. No obvious offset from other sectors. Potential contraction looming.

The Center of the Universe
Friday update- deficits matter, a lot!Warren Mosler

Economic Surprise Index plummets

And no wonder...fiscal cliff, debt ceiling, payroll tax increase, upcoming sequester. There's a lot that's weighing on economy now.