Wednesday, November 17, 2010

Last Call

Ohio is completely dominated by Republicans heading into 2011, and the state GOP and Gov.-elect John Kasich are wasting no time in making ordinary Ohioans feel the pain.

According to the Columbus Dispatch, the Republican legislature that will be working with Kasich is very much of the same mind, with potentially devastating effects on the way for the state’s education system. Incoming state Senate President Tom Niehaus has warned school districts to prepare for huge cuts, as “the GOP majority will keep its promise to not raise taxes,” no matter what:
Sen. Tom Niehaus, a New Richmond Republican expected to be the next Senate president, said last week that there will be a projected shortfall of $6 billion to $8 billion in the next state budget and that he is confident the GOP majority will keep its promise to not raise taxes – meaning that deep cuts will be necessary to balance the budget. Asked if some district officials preparing financial forecasts and deciding whether to put levies on the ballot were correct to assume a 15 to 20 percent cut in state aid, Niehaus said that’s what he would plan for if he were in their shoes.
Ohio has already cut both K-12 and higher education funding in response to the Great Recession. To put the new cut that the GOP has proposed in perspective, a 10 percent cut in school funding would amount to districts losing $1 billion. But the Ohio GOP is standing firm against any raising any new revenue, and Kasich himself believes that broadening the tax base or closing tax loopholes qualifies as an unacceptable tax increase.

At the same time that the GOP legislature is telling school districts to prepare for huge cuts, Kasich may also be endangering Ohio’s $400 million Race to the Top grant — awarded as part of the administration’s education reform effort — due to his insistence on dumping some of his predecessor’s policies, which led to Ohio winning the grant in the first place. So Ohio’s schools may be taking a pair of hits from the incoming class of lawmakers.

Throwing away millions in rail stimulus, throwing away $400 million in Race to the Top education grants, and now a 15-20% across the board cut in funding.   Way to go Ohio!

You voted them in.  Enjoy your smaller government, especially when it fails to do anything to alleviate the state's ailing manufacturing and job base.  I'm sure other states will be glad to take that funding off your hands, along with the jobs that funding will create.

Zandar's Thought Of The Day

Your number of the day is 53...the percentage of Republicans who now say there is no solid evidence of global warming.

Majority of Republicans No Longer See Evidence of Global Warming

As I keep saying, our grandkids are never going to forgive us.

Absolutely Taxing My Patience

If you thought Simpson-Bowles was a stupid, cowardly plan that did nothing to deal with health care costs and made punishing cuts to Medicaid, Social Security, and cut taxes for the rich, well you're going to hate the Domenici-Rivlin plan.  Froomkin:

This latest group hails from the Bipartisan Policy Center, and its signature proposal may end up being a whopping 6.5 percent national "Deficit Reduction Sales Tax" -- just the sort of thing that is devastating to people who live on a budget while not really mattering so much to the rich.
In the name of allegedly controlling health care costs, the group also recommends significant increases in Medicare premiums in the short term. And after 2018, Medicare beneficiaries would either be forced to pay out of pocket for any and all cost increases more than one percent greater than the growth rate of the economy -- or they would be invited to leave the government program entirely and find private insurance instead. That would no longer be Medicare as we know it -- or as future retirees expect it.
The group's next most major recommendation for cutting healthcare spending is the imposition of an excise tax on the manufacture and importation of beverages sweetened with sugar or high-fructose corn syrup.
Like the plan from presidential commission chairmen Erskine Bowles and Alan Simpson, this one also would significantly reduce Social Security benefits for most retirees. It doesn't technically call for an increase in the retirement age, like Bowles-Simpson does, but it accomplishes essentially the same thing under another name.
This plan would "index the benefit formula for increases in life expectancy" starting in 2023. In both cases, the net result would be lower monthly benefits. It would also dramatically reduce benefits by changing the calculation of cost-of-living adjustments, and by chopping checks for top quarter of beneficiaries.
Meanwhile, much like Bowles-Simpson, it would actually lower income tax rates for the rich (albeit while removing hugely lucrative deductions). There would be two individual income tax rates, 15 percent and 27 percent, instead of the current six rates that range up to 35 percent. The corporate rate would drop to 27 percent from 35 percent. Capital gains would be taxed at a higher rate, as ordinary income.
Almost all deductions would be wiped away, including the deduction for employee-paid health insurance. The mortgage interest, charitable donation and retirement savings deductions would be replaced with a capped 15 percent credit.

In other words,  cut Medicare, cut Social Security, and add a national 6.5% sales tax on everyone just to pay for lowering taxes on the wealthy...and the plan does nothing to lower health care costs, only what the government is allowed to spend on health care.

Even worse than Simpson-Bowles, the Domenici-Rivlin plan would hammer the poorest 80% of America on food, clothing, and other everyday items and make them pay for more while the wealthiest would end up paying less to the government every year.

"Serious bipartisan deficit reduction" is code for "finish destroying the middle class".

Turn On The Lights, Watch The Roaches Scatter, Part 41

David Dayen recaps yesterday's Senate Foreclosuregate hearings.

I’m going to agree with Yves Smith that yesterday’s Senate Banking Committee hearing on foreclosure fraud went really badly for the banks. Now, it’s a Senate hearing, and it’ll soon be filed away with all the other Senate hearings, never to threaten a banker again. But we’ve gone from a point where this issue was basically just a backwater on blogs to an issue where the chair of the Senate Banking Committee is calling it a crisis and begging the Financial Stability Oversight Council to get involved, because it represents an extreme systemic risk.

That’s not nothing. And if it doesn’t mean anything in terms of Senate legislation, it certainly pricks up the ears of investors, who probably saw dollar signs lighting up in their eyes when they watched this hearing. The exposure of the banks is so clear, the violations of the pooling and servicing agreements so multi-faceted, that their prospects of putting back bad mortgages on the banks just went up. You can read my Twitter colloquy with some other bloggers, preserved by Kevin Drum, on this issue. I would add that the mortgage-backed securities market is so big – $7.6 trillion dollars – that you would only need 8% of them to be put back to wipe out the capital of every major bank. And as soon as one – just one – of these put-back suits is successful, you will see an avalanche of filings.

And the banks will be crushed under the sheer mass of them.  There's a reason why the banks are scrambling to get MERS off the liability hook.  People are PISSED OFF.

Dayen concludes:

What I noticed the most is that the Senators understood the worst of the issue because their constituents told them. Every single one of them had a series of stories to tell about homeowners being victimized by their servicers. This is dangerous territory for the banks and they know it. Reports are that they’ve been scurrying to prevent legislative fixes and basically lobby their friendlies in the Congress. The other day, a Treasury spokesman called the behavior of the servicers “simply unacceptable, and servicers who have failed to follow the law must be held accountable.”

The issue is starting to hit some critical mass, and that’s important.

And baby, this critical mass is going to hit the hell back.  The clock is ticking now for every mortgage bank in the country and they know it.  If the banks lose one of these put-back lawsuits before Congress can sneak a bill through clearing them of all wrongdoing that Obama has to sign, it's over.

The race is now on.

Gender Offenders

Once again, one has to ask why Republicans are misogynists.

Senate Republicans have succeeded in blocking a measure designed to reduce wage disparities between men and women.

The 58-41 vote to take up the Paycheck Fairness Act fell short of the 60 needed to overcome GOP opposition.

Civil rights groups, labor leaders and the Obama administration all supported the bill, which would make employers prove that any disparities in wages are job-related and not sex-based.

Republicans and business groups said the bill would expose employers to more litigation by removing limits on punitive and compensatory damage awards.

The bill was one of the first measures passed by the House last year after President Barack Obama was elected.

Every single Republican voted against this, including Sens. Snowe and Collins (Lisa Murkowski was not present) and Ben Nelson decided to be a dick just because he could to make sure that the White House won't attack the GOP on this, because of course Ben Nelson is the most important guy on Earth.

Meanwhile, the Republican explanation as to why gender paycheck disparity exists in America is interesting.  They freely admit it does exist and that they couldn't support the bill because people would be able to sue because of the disparity.  As to why the disparty is still there in 2010, the reason is because shut up and get in the kitchen you dumb broad, that's why.

Do The Crime, Do The Time

The FDIC is finally, finally looking into criminal investigations of some 50 failed banks.

The FDIC, which is responsible for dealing with bank failures, is probing former executives, directors and employees at failed U.S. banks and is taking efforts to punish alleged recklessness, fraud and other criminal behavior, the Journal said.

Fred Gibson, deputy inspector general at the FDIC, told the Journal in an interview that the probes involve failed banks of all sizes in cities across the U.S.

FDIC is also stepping up civil claims to recover money from former bankers at busted lenders, the newspaper said.

Gibson declined to identify the people or banks under investigation, the Journal said.

"We anticipate results from our investigations, although we cannot predict when a particular case will reach a stage at which disclosure of specifics would be appropriate," Gibson told the Journal. 

As the old joke about a dozen lawyers chained to the bottom of the ocean goes, "It's a good start".  I wonder if the FDIC will ever investigate the big banks that created this mess?  Seems to me there's a lot of fraud going around these days, especially in the mortgage services division.

And I Call Her... Mini-Moose

Willow Palin uses homophobic slurs like "faggot" to attack a Facebook user who dared dis mom Sarah's new show, TMZ reports.

Older sis Bristol joined in the fun and worked in yet another chance to slam her baby daddy, keeping it just as classy. Makes you wonder where they get this stuff, huh? And we are told that "Willow normally doesn't use this type of language, but she felt like she was being attacked along with her family. The source added it was the baby bear defending Mama Grizzly."

Yeah, right. Looks like a chip off the old Moose to me.

[Zandar's note:  She's a 16 year old on Facebook, acting like a 16 year old on Facebook.  The problem is when her mother is making a political career of acting like a 16 year old on Facebook.]

Orange Julius, Ace Attorney

And he has quite the objection to Obamacare.

Speaker-in-waiting John Boehner, R-Ohio, filed an amicus brief Tuesday challenging the constitutionality of the individual mandate in the health care law passed by Democrats earlier this year.

“ObamaCare is a job-killer, and our economy simply cannot afford this unprecedented, unconstitutional power grab by the federal government,” Boehner stated Tuesday evening. “That is why Republicans will continue standing with the American people and fighting to repeal ObamaCare and replace it with better solutions put forth in the Pledge to America to lower health care costs and protect American jobs.”

Boehner’s amicus brief was filed in support of a lawsuit brought by 20 state attorneys general and the National Federation of Independent Businesses (NFIB), the nation’s largest small business association. The brief seeks to overturn what Boehner says is a “government takeover of health care that is costing jobs, increasing costs, and jeopardizing coverage for millions of Americans.”

“I’m proud to join these states and the NFIB in their ongoing effort to overturn this job-killing health care law and protect American workers from its devastating impact.”  Boehner said.

In the brief, Boehner says that the Obama Administration has distorted the Constitution to increase congressional power, which in turn compromises the integrity of the legislative process, and undermines accountability to the American people.

Republican aides privately speculate that Boehner could use the first bill of the next session of Congress to repeal health care.

Good luck with that, OJ.  And actually, I'm glad OJ is overplaying his hand right off the bat, because when this doesn't go anywhere and he starts crying on camera again, Democrats can then say "Where's the jobs, Mr. Speaker?"

Keep up the kabuki, by all means.  Show the American people that the GOP jobs program is nothing more than Obama Derangement Syndrome.

Living In Vida Loko

Sen. Chuck Schumer and the FDA are taking the fight to caffeinated alcoholic drinks like Four Loko and are looking to ban them outright.

Democratic Sen. Charles Schumer, who has pushed the Obama administration to ban the beverages, said Tuesday the Food and Drug Administration is expected to find that caffeine is an unsafe food additive to alcoholic drinks, essentially banning them.

The Federal Trade Commission will then issue letters to caffeinated alcoholic beverage manufacturers warning that marketing them could be illegal, he said. 

"This ruling should be the nail in the coffin of these dangerous and toxic drinks," Schumer said. 

College students have been hospitalized after drinking the beverages, including the popular Four Loko. Four states _ Washington, Michigan, Utah and Oklahoma _ have banned them and other states are considering similar action. Police in Mesa, Ariz., said an "extremely intoxicated" teenager smashed her SUV into a tree Sunday morning after reportedly playing "beer pong" with Four Loko. 

Not sure if I agree with this in particular.   If these are being sold as alcoholic drinks like beer or spirits to adults, then hey, how is adding caffeine unsafe when alcohol isn't exactly a wonder drug?  College kids doing stupid and even fatal things while drunk isn't exactly new in America.

The problem isn't Four Loko, the problem is drinking and doing stupid things while drunk, like driving.  There should be laws against that, you know.

The Return Of "Obama Is Uppity"

Remember when House Republicans invited President Obama to talk to them in January and he answered a number of questions from them, live?  The Republicans don't.  And neither does Politico.

The roots of the partisan standoff that led to the postponement of the bipartisan White House summit scheduled for Thursday date back to January, when President Barack Obama crashed a GOP meeting in Baltimore to deliver a humiliating rebuke of House Republicans.

Obama's last-minute decision to address the House GOP retreat - and the one-sided televised presidential lecture many Republicans decried as a political ambush - has left a lingering distrust of Obama invitations and a wariness about accommodating every scheduling request emanating from the West Wing, aides tell POLITICO.

"He has a ways to go to rebuild the trust," said a top Republican Hill staffer. "The Baltimore thing was unbelievable. There were [House Republicans] who only knew Obama was coming when they saw Secret Service guys scouting out the place." 

Now, this supposed ambush and lecture in January is the reason the GOP is ducking out of meeting with the President this month.  He's uppity, arrogant, and narcissistic!  We don't want to talk to him!  We don't have time for his delusions that he's still relevant!

Only as Josh Marshall points out, it didn't happen that way.

Honestly, I'm not even sure what to make of this. Not only does this version of events seem preposterous on its face, I didn't even realize this was their storyline.

Let's start with this whole idea that Obama somehow just showed up and blew up their retreat. Crashed, ambushed, etc. This was definitely not my recollection. I thought that the House Republicans invited Obama. And he accepted. Indeed, I remember for what I think were several days in advance our Eric Kleefeld telling me how excited he was to see a US equivalent of the Brits' question time.

So was it an ambush? Well, My God, not even close. Here's the press release from Mike Pence, Chairman of the House Republican Conference, thanking the president on January 13th for "accept[ing] our invitation to meet with the Republican Conference later this month." And here's the Politico's write up from January 12th, the day before. In other words, that's more than two weeks before these House Republicans who must have spent the month in a sensory deprivation chamber were stunned to see the president's motorcade driving up announced to crash their party. And if they'd forgotten here's the write-up from The Hill the day before the event ...
Emboldened by an unexpected victory in Massachusetts and frustrated with a "partisan" State of the Union address, House Republicans are eager to meet with President Barack Obama on Friday.
So here they are all gunned up and eagerly awaiting President Obama's ambush of them that they didn't know anything about.

I have to confess that I find it genuinely distressing that these folks can whip up a heap of blatant nonsense like this and it gets played pretty much at face value when a simply look through the archives of the half dozen or more sites that cover Washington show that the whole idea is laughable. 

And yet that's exactly what the GOP and Politico are selling because it serves the "Obama is uppity" meme that's made a serious comeback since the midterms. As Roy Edroso explains, the "Is Obama relevant?" attacks heading into 2012 are going to continue.

The recent election was hard on Democrats, but Obama is still President, and the examples of the 1982 and 1994 midterms suggest that, like Reagan and Clinton, he could bounce back to reelection. Indeed, his approval rating has already bounced, despite the Dem devastation, and is about where Reagan's and Clinton's were after their midterm reversals.

So it's imperative for Obama's opponents that they dirty him up. And as much as they love the idea that he's a Marxist Hitler, they seem to have figured out that this abstruse notion doesn't have much visceral appeal for people who are not themselves. So they're going with something to which ordinary people, who sometimes like to see the lofty taken down, might possibility relate. And if the economy doesn't get much better, the notion that the President isn't fixing it because he looks down on everyone may just stick. So far it's a decidedly minority opinion, but give it time. 

Keep an eye on this one, folks.  No matter what Obama does, the Uppity Black Man meme is back for good.

Irish Eyes Are Crying, Part 6

It's all over but the shouting as Irish banks are expected to agree to a roughly $100 million bailout as bond spreads are crushing the country's ability to borrow.

European Union and International Monetary Fund experts will start scanning the books of Ireland’s debt-laden banks tomorrow in Dublin in a prelude to a possible aid package to stem Europe’s widening fiscal crisis.

Finance chiefs from the 16-country euro area said the joint assessment will determine whether Ireland can patch up the banking system on its own or needs to fall back on the EU-IMF 750 billion-euro ($1 trillion) rescue fund.

“If banking problems are too big for this small country to manage, Europe has made it clear they’ll help,” Irish Finance Minister Brian Lenihan told state broadcaster RTE today as meetings of European finance ministers wrapped up in Brussels.

As Europe struggled to present a united front to maintain its fiscal credibility, Britain said it would back support for Ireland, abandoning a hands-off policy toward the euro region to prevent Irish bank woes from spilling over into the U.K. market.

In a blow to Ireland, LCH Clearnet Ltd. raised the margin requirement for Irish bond trading to 30 percent of net positions, making it more expensive to buy Irish securities.

Irish bonds slipped for a second day, pushing the 10-year yield up 5 basis points to 8.51 percent. The extra yield over German bunds rose 6 basis points to 567 basis points. The spread, a measure of the risk of investing in Ireland, peaked at 646 basis points on Nov. 11.

The Dublin consultations with the ECB, European Commission and IMF will “see if the state is able to cover the needs of the banking sector,” Belgian Finance Minister Didier Reynders told reporters today. “If that’s not the case, there will probably have to be a European intervention.” 

Translation:  Ireland's going to have to take its medicine or the rest of the Eurozone is going to get very, very sick very, very quickly.   The bigger issue is that Ireland's massive austerity package failed across the board.

The country has stopped spending beyond its means, recently bringing its trade account into balance. A double-digit contraction since the 2008 financial meltdown has boosted business competitiveness. The government has slashed spending and socked away enough that it won't need to borrow in the markets till the spring of 2011.

And yet, what does Ireland have to show for it? Even after two years' worth of sacrifices to the financial markets, the long-feared confrontation with bond investors is at hand. The yield on Irish bonds recently jumped 13 consecutive trading days, bringing them near a back-breaking 8%.

Meanwhile, wages have been falling and unemployment has tripled to 13%. So while there is obviously much to be said for putting your national finances in order, in no sense is austerity the silver bullet it has often been sold as.

The only way to fix financial crisis problems like this is to tackle the problems head on and go after the banks, period.  Ireland should serve as a massive warning to austerity hawks that cutting your spending without dealing with the core problem of a broken banking system only leads to disaster.


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