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Just days from a potential default, House Speaker John Boehner (R-OH) this afternoon rejected Senate Majority Leader Harry Reid’s (D-NV) plan for raising the debt ceiling, saying he can’t support any plan that doesn’t cut entitlement programs like Social Security and Medicare. Reid’s plan, just hours old when Boehner aimed to kill it, essentially called the GOP’s bluff, giving them exactly what they have been asking for all along — spending cuts matching the increase in the debt ceiling and no new revenues.

The White House had already signed onto Reid’s conservative plan, making it the best hope of averting a crisis since Boehner walked out of negotiations Friday. “This is an offer that Republicans can’t refuse,” said Sen. Charles Schumer (D-NY).

Apparently not. The Reid plan “makes no changes to the biggest drivers of our deficit and our debt and that would be entitlement programs,” Boehner said at a late afternoon press conference, flanked by other GOP leaders. This demand seemed to be a brazen moving of the goal posts, as entitlement cuts never appeared to be red-line demand for Republicans for raising the debt ceiling.

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After pushing the government to brink of shutdown last week, Republican Congressional leaders are now preparing to push America to the edge of default by refusing to increase the nation’s debt limit without first getting Democrats to concede to large spending cuts.

But while the four Republicans in Congressional leadership positions are attempting to hold the increase hostage now, they combined to vote for a debt limit increase 19 times during the presidency of George W. Bush. In doing so, they increased the debt limit by nearly $4 trillion.

At the beginning of the Bush presidency, the United States debt limit was $5.95 trillion. Despite promises that he would pay off the debt in 10 years, Bush increased the debt to $9.815 trillion by the end of his term, with plenty of help from the four Republicans currently holding Congressional leadership positions: Speaker John Boehner, House Majority Leader Eric Cantor, Senate Minority Leader Mitch McConnell, and Senate Minority Whip Jon Kyl. ThinkProgress compiled a breakdown of the five debt limit increases that took place during the Bush presidency and how the four Republican leaders voted: (more…)

By Ian Fletcher
Senior Economist, Coalition for a Prosperous America

I shall leave aside for now the strategic question of whether America should stiff China, i.e. repudiate our roughly $3 trillion in obligations to them. Strategically, repudiation of debt and other instruments on this scale is obviously something analogous to the atomic bomb in warfare: a very extreme option, with serious negative side effects, and not something to be taken lightly.

My question in this article is, rather, the ethical question: does America have the right to stiff China? Frankly, we quite arguably do.

Any serious ethical argument on this question turns upon the fact that China has not honored obligations it has assumed towards us, so therefore we are not obliged to honor our obligations towards it. This sounds like a technicality, but in fact, China’s failures to honor its obligations run into the trillions of dollars.

Let’s start with currency manipulation. China engages in this practice to a massive degree, spending roughly a billion dollars a day to drive down the renminbi-dollar exchange rate. And yet China has agreed, by becoming a signatory to the Articles of Agreement of the IMF, not to do so. Article IV, section 1 of this document–which China voluntarily signed–reads: (more…)

By Dave Johnson
Fellow with Campaign for America’s Future

When we hear about the deficits you hear a lot of scare stories, which most “serious” media just echo and amplify. The prevailing “serious” narrative we hear is that we must cut entitlements — any “serious” budget proposal cuts Medicare and Social Security. Even though they just extended tax cuts for the rich the deficits are the worst problem in the world, ever, so we are supposed to be really scared and give in. Seriously.

Polls show that the public wants taxes raised on the rich, cuts in military spending and more & bettter-paying jobs. The public isn’t stupid, because it turns out that these are exactly the things that economists say will get us out of the deficits. But raising taxes isn’t considered a “serious” deficit-cutting option. Either is cutting military. And to top it off, in DC the idea of creating more and better-paying jobs is so unserious that it isn’t even discussed.

Serious Commissions and Gangs Of Negotiators

The public recoils every time politicians get close to reaching their “serious” goal of cutting Social Security or Medicare, instead of raising taxes and cutting military. So the DC elite come up with ways to mask what they are doing : commissions, “triggers,” “caps,” “across-the-board cuts” all of which avoid actually spelling out that these will cut Social Security and Medicare without touching taxes or military. All the “serious” people favor this approach.

There are so many “serious” reporters and editors and politicians and deficit commissions and negotiators and even “gangs” consist of very “serious” people who come up with these “serious” recommendations. (more…)

This is how Republicans govern:

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By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The Republican strategy is to split the vast middle and working class – pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don’t believe these programs will be there for them, and the poor against the working middle class.

By splitting working America along these lines, Republicans want Americans to believe that we can no longer afford to do what we need to do as a nation. They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish.

Republicans would rather no one notice their campaign to shrink the pie even further with additional tax cuts for the rich – making the Bush tax cuts permanent, further reducing the estate tax, and allowing the wealthy to shift ever more of their income into capital gains taxed at 15 percent.

The strategy has three parts. (more…)

Not too psyched for your government services – schools, police protection, road repair — to be slashed because of government debts and deficits? Watch this film about why and how the debts occurred and who really should be held responsible to pay them.

The film clip stars Richard Wolff, emeritus professor of economics at the University of Massachusetts in Amherst and now a visiting professor at the Graduate Program in International Affairs of the New School University in New York. He has a PhD in Economics from Yale University as well as degrees from Harvard University and Stanford University. Wolff has authored or co-authored 10 books and more than 50 scholarly articles and 75 popular articles. His recent work has concentrated on analyzing the causes and solutions to the current global economic crisis.

His documentary film on the crisis, Capitalism Hits the Fan, can be previewed at www.capitalismhitsthefan.com. He also published a book of essays on the crisis in 2010 entitled Capitalism Hits the Fan: the Global Economic meltdown and What to Do About it. Detailed information on and copies of his many writings, audios and videos of his media interviews, lectures, and classes, and his speaking schedule are all available at his website: www.rdwolff.com.

This was first published on the blog site Truthout.

By Les Leopold
Author, “The Looting of America”

January’s reported unemploymentrate remains stubbornly high at 9.0 percent. The Bureau of Labor Statistics’ U6 jobless rate, which stands at 16.1 percent, is more accurate, since it counts “discouraged workers” who’ve given up looking for a job. Right now, more than 28 million Americans are without work or have been forced into part-time work. It will take more than 22 million new jobs to bring the official unemployment rate down to 5 percent (our current definition of full-employment).

Please don’t wait around for John Paulson to create those jobs. He might have raked in a record $5 billion in 2010, but his job isn’t about employing people to make things or provide services. He’s a hedge fund manager. Paulson (a spiritual but not a blood relation of Henry, Bush’s Treasury Secretary) leads the list of America’s top “earners” for the year. If you divide his 2010 take by the standard work year of 2,080 hours, you’ll find that this ubermensch had a wage of $2.4 million an HOUR.

SEC goes after Goldman from Marketplace on Vimeo.

The robber barons of old earned their moniker by commandeering railroad, meatpacking, oil and steel monopolies. Paulson’s was a different kind of theft — but theft it was. In fact, he barely evaded prison for his role in Goldman Sachs’ Abacus deal, which suckered investors into buying securities that were explicitly designed to fail. Paulson colluded with Goldman Sachs to build a synthetic collateralized debt obligation (CDO) that bet on the very worst kinds of mortgage securities. Goldman got the fees and Paulson got a billion dollars for betting against those securities. The investors, trusting GS’s sales pitch, had no idea that Paulson was allowed to pick the most toxic securities to mix into the stew. As Paddy Hirsch of American Public Media’s “Marketplace” points out in this entertaining video , it’s like a gambler and a bookie colluding to field a horse they’ve groomed to lose. Eventually, GS was flushed out into the open by an angry mob of CDO investors and forced to cough up a record $550 million in penalties for “not disclosing the role of Paulson and Co. Inc. in the portfolio selection process and that Paulson’s economic interests were adverse to the CDO investors.” (more…)