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Monthly Archives: January 2010

"Deficit Peacocks"

30 Saturday Jan 2010

Posted by Craig in economy

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Center for American Progress, deficit hawks, deficit peacocks, New York Times, Paul Krugman

In his op-ed in Thursday’s New York Times Paul Krugman refers to Michael Linden’s piece at the Center for American Progress which makes the distinction between what he calls “deficit hawks” and “deficit peacocks.” Linden describes the hawks as, “those who believe that the long-term deficits pose serious risks, but that short-term deficits are necessary and wise during a recession” and “those who believe that deficits are always risky and should be avoided at all costs.”

The two have this is common:

“Both kinds of hawks are genuine in their concern over our nation’s finances and are sincerely committed to working toward a more sustainable federal budget.”

Then he turns to the “peacocks:”

“Deficit peacocks like to preen and call attention to themselves, but are not sincerely interested in taking the difficult but necessary steps toward a balanced budget. Peacocks prefer scoring political points to solving problems.”

Unfortunately, this category takes in the lion’s share of our elected officials in Washington–on both sides of the aisle–whose top priority is their own re-election, and who see those “difficult but necessary steps” as an impediment to that. After all, difficult choices are not often popular choices.

Linden then lists 4 ways to distinguish the hawks from the peacocks. Peacocks:

“1. Never mention revenues.
Increasing revenues is going to have to be part of the solution for meeting the fiscal challenge. Any suggestion that we can solve this problem solely by cutting spending reveals an utter misunderstanding or ignorance of the budget numbers. Balancing the budget without raising any additional revenue 10 years from now would require cutting every program in the entire budget by more than 25 percent, including all defense spending, Social Security and Medicare benefits, air-traffic-control funding, veterans’ benefits, aid to schools, job training programs, agriculture subsidies, highway maintenance, and everything else.

2. Offer easy answers.
We face a very large budget gap over the coming decade, and the scale of the problem is such that no one solution is going to solve it all. It is going to take a mix of increased revenues, spending reductions, and improved government efficiency to get our fiscal house in order. Those who claim that we could get the budget back to sustainability if we only cut out earmarks, or say that the solution is to simply freeze discretionary spending, are just peddling fiscal snake oil.”

(Note: this article is dated January 20, prior to President Obama’s State of the Union address)

“There are no easy answers to our budgetary challenges. We have an aging population, rising health care costs, and a tax code full of loopholes, exceptions, and targeted subsidies. It is going to take more than simple solutions to meet these challenges. If you hear the words, “all we have to do to balance the budget is…” then you know whoever spoke them hasn’t fully grasped the scope of the problem.

3. Support policies that make the long-term deficit problem worse.
Congress voted repeatedly over the past eight years to make huge tax cuts and create new spending programs without offsetting any of those costs. Many of the very same members of Congress who voted for those policies are now loudly urging the president to clean up the mess that they themselves made.

4. (Sorry, Sen. McCain, but facts is facts.) Think our budget woes appeared suddenly in January 2009.
More than 50 % of 2009’s huge deficit can be directly attributed to policies enacted by the previous administration, and that is not counting the 20 percent that was due to the economic disaster that began and gathered its momentum on President Bush’s watch. President Obama’s efforts to rescue the economy, on the other hand, are responsible for only 16 percent…The Bush-era tax cuts alone will add more than $5 trillion to the budget deficit over the next 10 years.”

Linden concludes:

“There are people from all parts of the political spectrum who strongly and sincerely believe that our current budget path is unsustainable and are committed to taking concrete steps to put the country on a better path. But there are also many who are only interested in scoring political points or in getting in the way of progress on this issue. Sometimes it can be difficult to distinguish between the two. Now, all you need to do to tell the former from the latter is apply any of these four handy tests.”

Obama DOJ: Authorizing Torture Just "Poor Judgment"

30 Saturday Jan 2010

Posted by Craig in Justice Department, Obama, torture

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2002 memo, DOJ, Jay Bybee, John Yoo, Newsweek, OPR, torture

The Obama administration Department of Looking Forward, Not Back has come to the conclusion that the authorization of the use of “enhanced interrogation techniques” torture is nothing more than “poor judgement.” From Michael Isikoff and Daniel Klaidman at Newsweek:

“..an upcoming Justice Department report from its ethics-watchdog unit, the Office of Professional Responsibility (OPR), clears the Bush administration lawyers who authored the “torture” memos of professional-misconduct allegations.

While the probe is sharply critical of the legal reasoning used to justify waterboarding and other “enhanced” interrogation techniques, NEWSWEEK has learned that a senior Justice official who did the final review of the report softened an earlier OPR finding. Previously, the report concluded that two key authors—Jay Bybee, now a federal appellate court judge, and John Yoo, now a law professor—violated their professional obligations as lawyers when they crafted a crucial 2002 memo approving the use of harsh tactics, say two Justice sources who asked for anonymity discussing an internal matter. But the reviewer, career veteran David Margolis, downgraded that assessment to say they showed “poor judgment,” say the sources. (Under department rules, poor judgment does not constitute professional misconduct.) The shift is significant: the original finding would have triggered a referral to state bar associations for potential disciplinary action—which, in Bybee’s case, could have led to an impeachment inquiry.”

Meet the new DOJ, same as the old DOJ.

Geithner, Paulson, and Bernanke at the Oversight Committee Hearings

29 Friday Jan 2010

Posted by Craig in Congress, economy

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Bear Stearns, Ben Bernanke, Dan Burton, Goldman Sachs, Hank Paulson, House Committee on Oversight and Government Reform, Neil Barofsky, New York Federal Reserve, Timothy Geithner

Putting different pieces of testimony from yesterday’s hearings before the House Committee on Oversight and Government Reform, it’s easy to see how the New York Federal Reserve’s “backdoor bailout” of Goldman Sachs and other large banks, via insurance giant AIG, became such a convoluted mess–nobody knew anything about it. Least of all the people who were allegedly in charge– Larry, Moe, and Curly former Treasury Secretary Hank Paulson, Fed chairman Ben Bernanke, and then head of the New York Fed and present Treasury Secretary Timothy Geithner.

“Henry Paulson, who was Treasury secretary at the time, told the House of Representatives Oversight and Governmental Affairs Committee that he had no role in the negotiations that settled the banks’ insurance-like contracts, called credit default swaps, with AIG for 100 cents on the dollar..”

Geithner: “I had no role in making decisions regarding what to disclose about the specific financial terms.. and payments to AIG’s counterparties.” To which Rep. Dan Burton replied:

“U.S. Federal Reserve Chairman Ben Bernanke said on Wednesday he was not directly involved in negotiations with the counterparties of insurance giant AIG, having delegated the duties to the New York Fed.”

“It stretches credulity for us to believe that you had no role in this and didn’t know anything about it when your attorneys and people that worked for you were sending emails all around the place and you were the head of the Fed and you didn’t know anything about it. It just doesn’t make any sense to me and I think a lot of my colleagues feel the same way.”

One thing is clear, though. Despite the Three Stooges being completely in the dark, Government Goldman Sachs made out like bandits in the entire sordid affair. I’m sure it’s strictly coincidental that:

“Paulson is an ex-Goldman chief executive, Geithner’s chief of staff previously worked for Goldman, and Dan Jester, a Treasury point man in the AIG bailout, is a Goldman alum.”

That surely had nothing to do with this:

“An unredacted document obtained by the Huffington Post list the damage in detail. Goldman Sachs alone, for instance, got $14 billion in government money for assets worth $6 billion at the time — a de facto $8 billion subsidy, courtesy of taxpayers.”

But yet Geithner testified yesterday that, “In the end, the prices paid for the securities were their fair market value.” Fair to who, Tim?

Geithner also testified that time was of the essence in bailing out AIG, that there was no time to negotiate terms which might be more favorable to the Fed. But yet:

“Neil Barofsky, the special inspector general tracking the use of taxpayer bailout funds…disclosed this week that he’s opened investigations into the Fed’s candor about the matter, recalled that Paulson, Bernanke and Geithner leaned weeks earlier on failing investment bank Bear Stearns to accept $2 a share to turn over its assets to banking goliath J.P. Morgan Chase.”

I guess there aren’t enough Bear Stearns friends in high places.

A "Deficit of Trust," Mr. President? Here’s Why

29 Friday Jan 2010

Posted by Craig in Obama, Politics

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lobbyists, Obama, State of the Union

President Obama in last night’s State of the Union Address (emphasis mine):

“We face a deficit of trust — deep and corrosive doubts about how Washington works that have been growing for years.  To close that credibility gap, we have to take action on both ends of Pennsylvania Avenue — to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.”

From The Hill this morning:

“A day after bashing lobbyists, President Barack Obama’s administration has invited K Street insiders to join private briefings on a range of topics addressed in Wednesday’s State of the Union.

The Treasury Department on Thursday morning invited selected individuals to “a series of conference calls with senior Obama administration officials to discuss key aspects of the State of the Union address.”

…Another lobbyist said these types of teleconferences occur “all the time.”

…The invitation stated, “The White House is encouraging you to participate in these calls and will have a question and answer session at the end of each call. As a reminder, these calls are not intended for press purposes.

…A handful of lobbyists told The Hill on Thursday morning that they received the invitations and were planning to call in.

Some lobbyists say they are extremely frustrated with the White House for criticizing them and then seeking their feedback. Others note that Democrats on Capitol Hill constantly urge them to make political donations.

One lobbyist said, “Bash lobbyists, then reach out to us. Bash lobbyists [while] I have received four Democratic invitations for fundraisers.”

A “deficit of trust” Mr. President? I can’t imagine why?

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