COMMENTARY:
This evening, Sunday, July 31 an apparent ‘deal’ has been reached between Democrats and Republicans on raising the debt ceiling to avoid default, in exchange for $1 trillion in spending cuts. The spending-only cuts represent the long maintained Republican position. No tax hikes. This was essentially the positions reached by the two parties, Reid in the Senate and Boehner in the House last Friday, July 29. Only two other issues remained at that time: Reid’s additional provision for a further $1.044 trillion in defense spending cuts and the Obama demand that no more debt ceiling issues must interfere with the upcoming election season between now and November 2012. Tonight, Reid substituted his Defense cuts with a ‘face saving formula’, in exchange for which the Republicans agreed not to whip him and the Timidcrats again with the debt ceiling tactic before next elections. Both parties then kicked the debt reduction can down the road until November and a report by a new BiPartisan Debt commission submits their recommendations to Congress–for an up or down vote! So much for Democratic debates on what will prove to be massive cuts in social security, medicare and medicaid by year end.
‘The Trillion DOllar Debt Ceiling Deal of July 31’ by Jack Rasmus, copyright July 31, 2011
Sunday evening, July 31, President Obama and Senate Majority and Minority leaders, Harry Reid and Mitch McConnell, announced they had reached an agreement on cutting $1 trillion in spending in exchange for raising the debt ceiling. House Speaker, Boehner, indicated he was also in agreement, subject to voting to take place in the House on Monday.
This latest deal is essentially the same that was reached by Harry Reid in the Senate on July 29 and Boehner in the House on July 27, with two major changesone favored by the Republicans and another by Obama. These two changes were then traded off this weekend, bringing the parties to a deal.
Boehner and Reid essentially came to an agreement last Friday, July 29. Their respective July 29 (Reid) and July 27 (Boehner) positions called for $917 to $927 in spending cuts, only $10 billion apart. Both proposals contained no reference to tax loophole closings. The tax hikes idea was given up by Obama and the Democrats early last week, bringing the Democrats to essentially the Republican position on spending vs. tax hikes. The only substantive difference as of July 29 between the two was that Reid also proposed $1.044 trillion in additional cuts in Defense spending, as well as a measure that prohibited a re-opening of the debt ceiling issue before the 2012 November elections.
Todays Boehner-Reid final agreement effectively drops explicit cuts in Defense, another Republican position all along. Reid’s defense cuts are now replaced with triggers in defense spending reduction. The triggers concept has been a maneuver used by Congress on occasion in the past. It is designed to let one party save face, allowing it to appear that their provision is retained in the bill, when in reality it will never be implemented. In fact, triggers have never been implemented in any instance since 1980 in which they were included in a spending bill.
With Defense spending cuts taken effectively off the table this weekend, the only remaining substantive issue was whether the debt ceiling would be allowed to come up as an issue before the 2012 elections. Republicans now agree it will not.
This Republican shift means Reid’s previously proposed $1 trillion additional cuts in Defense appears, in retrospect, to have been a trading item and tactical maneuver all along to get the Republicans to agree not to revisit the debt ceiling issue again before the coming 2012 elections.
But the Republican leaders in the House and Senate don’t need a debt ceiling issue again to get further cuts. The 2012 budget deadline of October 1 will do just as well for a threat to shut down the government.
So, in summary, it appears the deal just negotiated means both parties agree on cutting $1 trillion in spending only, with no tax hikes. The Republicans will shift to the 2012 budget deadline for a new hammer to extract extra spending cuts. Defense will remain effectively untouched. And, in exchange for $1 trillion in cuts and no tax hikes and leaving defense spending untouched Obama gets an agreement not to raise the debt ceiling issue again before his next election. But don’t think that’s the end of the story. Its just the beginning.
The bigger attack on social security, Medicare, Medicaid is still to come. The next round in what amounts to as class economic warfare by legislation is the 2012 budget negotiations that are supposed to conclude up by September 23. Republicans will get another bite of the apple in spending only cuts at that time. And Obama and Democrats will likely cave in to those demands yet again, as they have repeatedly the past year.
But the even bigger bite will come as a result of another provision in today s agreement: the creation of a so-called Bipartisan Commission to reduce the debt and deficits by even greater magnitudes. That Commission will make still further major proposals for cuts by November of this year, to be voted on by Congress before year-end.
Following Senators Reid and McConnell, President Obama spoke on national TV tonight to endorse the tentative Boehner-Reid agreement and to announce the Bi-Partisan Debt Reduction Commission. In his brief comments this evening he employed an important phrase that TV commentators mostly overlooked. He said, The Commissions proposals will be submitted for an up or down vote only by members of Congress. That means some small group–no doubt appointed by him or Congressional leaders–will now decide solely between themselves composition and magnitude of cuts in Medicare, Social Security, Medicaid, how much tax loopholes will be closed, and how much Defense spending will be cut. The rest of Congress will then be limited to voting yea or nay and that’s it.
The conservative composition of such appointed commissions in the recent past are well known. There was the Simpson-Bowles deficit commission appointed by Obama in 2009 that was lopsidedly conservative. And Obama’s commission to recommend Health Care legislation that was composed of mostly conservative Republican and Democrats. The forthcoming Bipartisan Commission will almost certainly assume the same conservative-leaning composition. We can expect $2 in cuts in Medicare and Social Security for every $1 in tax loophole closing and Defense spending reductions…if were lucky.
This deal of the past weekend to raise the debt ceiling in exchange for $1 trillion in spending cuts–with no tax hikes or defense cuts–shows clearly that politicians in Washington are concerned first and foremost with their re-elections. Democrats don’t want to be confronted with another debt ceiling debacle during their re-election campaign. Both Republicans and Democrats are, furthermore, intent on protecting their Defense industry friends, and on ensuring their corporate campaign contributors don’t have to pay their fair share in taxes. The rest of America gets to pay the bills and pay the price.
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
Article 1 – The Legislative Branch, Section 8 – Powers of Congress
http://www.usconstitution.net/xconst_A1Sec8.html
Excerpt:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow money on the credit of the United States.
14th Amendment:
Section 4 of the 14th Amendment to the U.S. Constitution states that the validity of the public debt, authorized by law, shall not be questioned.
Public Debt Acts:
The First and Second Liberty Loan Acts were each enacted in 1917 during World War, These acts established different public debt limits for bonds, bills, certificates, and notes, and provided for full federal tax exemption for the interest on U.S. government obligations .
The initial Public Debt Act was passed in 1939, but it was the Public Debt Act of 1941 that fully set the modern stage for government debt finance. This 1941 Act not only raised the debt limit, it also eliminated the federal income tax exemption for future issues of U.S. debt, and consolidated virtually all federal borrowing into a unitary system run through the Department of the Treasury.
DISCUSSION:
It appears that the Public Debt Acts are in contravention to the specificities of Article 1, Section 8 and Section 4 of the 14th Amendment, and were, basically “curb appeal” efforts, i.e., any limitation of debt incurred and payment thereof may be unconstitutional.
Based upon Section 4 of the 14th Amendment, anyone who purposes actions or votes in opposition of that Section may be in violation of his or her Oath of Office.
The solution to minimizing U.S. debt would be a combination of legislating appropriate expenditures, equitably raising additional revenue, and passing legislation that would promote healthy and equitable economics.
.CONCLUSION:
There is no reason to raise a “debt limit”, since it appears that a “debt limitation” is unconstitutional. There is no reason or authority for the President to issue an executive order under Section 4 of the 14th Amendment, i.e., what is, is.
mz
July 28, 2011
mikiesmoky@aol.com
SOCIAL SECURITY AND MEDICARE MUST BE FIXED
Social Security, established in 1935, under Franklin Roosevelt, has never been an actuarially sound program
The program’s current configuration can be fixed by eliminating the limit upon which the earnings are subject to taxation as was done, years ago, for the Medicare program.
In addition, all earnings, both earned and passive income should be subject to this 12.4% income tax.
Revenue is generated, for Medicare, by assessing a 1.45% tax on the wages of employees, without limit, with another 1.45% paid by their employers.
Medicare can be repaired by assessing the 2.9% tax to all income, including passive income, such as capital gains, interest, dividends, interest, royalties, and rents.
Waste and fraud, in both programs, must be mitigated.
mz
July 21, 2011
Social Security needs very little ‘fixing’. Relatively minor adjustments can cover the 77 million new baby boomers entering retirement. And let’s not forget both parties in Congress have ‘borrowed’ the more than $2 trillion surplus in the social security trust created since 1986 as result of the major payroll tax hike that then went into effect. The IOUs in the trust fund should be converted to available cash and that would cover the shortfall for retirement. Or just raise the 12.4% tax incidence to all earned incomes; better yet how about all forms of income. That will produce trillions of surplus over the coming decade. The fixes are minor and the opportunities are major. Medicare is another story. That’s a problem caused by more than a decade of double digit health care costs in the US every year, and the refusal to finance Part D since 2005. Why we would not raise the tax rate of 2.9% after two decades of escalating health costs is the secondary source of the medicare shortfall. By the way, the trustees of the Medicare program estimate all that’s needed is a 0.5% increase in medicare tax rate now, and another in another 10 years.