Tag Archives: tea party

What's the tipping point?

Last week I canceled a trip to be with our grandchildren for Thanksgiving. The tipping point that forced the decision was a combination of unexpected medical co-pays on top of some un-budgeted car repair. While heartbreaking, it was not particularly serious and we expect to visit in a couple of weeks, but it made me wonder. I have made a living as a marketing version of the canary in a coal mine – a preeminent consumer of sorts. For whatever reason, I seem to experience things months or more before others. If something so insignificant could force my decision, could we, the formerly solid middle class, be on the edge of a more dramatic shift?

Hard working families all over our great country are facing tough economic decisions every day. Uncomfortable decisions. Decisions that seem different in scale than they used to be. Admittedly, living within a budget is a responsible and necessary way for each of us to live and manage our money. But what cumulative toll has the horrible economy taken on the type and frequency of such difficult decisions?

The Census Bureau defines poverty as $22,350 annually for a family of four, and near-poor as people within 200% above the poverty line. Officially, one in three Americans is poor or near-poor. Unofficially, it is at least one in two. The real life definition should also include people who are one unexpected event from being without money. Cash poor is not the same thing as poor, but it feels like it for a time and easily can become permanent.

Most of us have have taken some hits in the last few years. Someone in the family was laid off. Someone got sick. Someone entered the work force, but couldn’t find work adequate to pay their college loans. Credit lines dried up with house value. The house didn’t sell. The investment was made worthless. Your health insurance was cancelled, or only offered at a price greater than your house payment. But you endured. Party on.

There are Dominossteps down the ladder for the middle class near poor. Liquidate stocks and savings. Cash in retirement accounts. Sell your house for a smaller house. Sell that house for an apartment. Then a smaller apartment. Give up the life insurance you’ve paid on for twenty years. Give up the private schools. Gave up the extra car. Give up Whole Foods for Publix, then BigLots, then dumpster diving for food. Give up the malls for Walmart, then the charity store. Cancel cable and the newspaper. Unhook the land lines. Postpone preventative maintenance – dental care, health check ups, car tune-ups or new tires, overlook the minor car accident and cash the check. Let the dog die.

The middle class can take some hits. Americans are resilient. We can get smaller and leaner. We can do without. We can ask for help from friends or family. Wishing won’t change it. Remembering accrued disappointment makes it worse.

There must be a point in the spiral – the time or convergence of events, that leaves no options. The moment when all that you have worked for is gone. The time when you change economic classes. When there is no pretending.

A tipping point was first defined in physics as that “small amount of weight to a balanced object that can cause it to suddenly and completely topple.” Al Gore speaks of a tipping point for our environment – when it is too late to avoid the catastrophe that awaits. Is there a tipping point for the middle class? A moment when one extra burden, no matter its size or intended consequence, can cause millions, perhaps, tens of millions of families, to suddenly and completely topple?

What could be the tipping point?

  • This Great Recession is now entering its third year. Extended unemployment benefits, pitiful as they are, are about to expire and we do not have a Congress that will extend them.
  • The temporary payroll tax break is also expiring next month. The jury is out whether the Tea Party will make a deal to extend this tax break for working Americans. In real terms, the disappearance of payroll tax relief will cost the “average” worker about $2,000 next year. Will that be the tipping point?
  • The Bush tax cuts, now in their 10th year, are set to expire at the end of 2012. Included with the 4.6% increase in tax for the wealthy, is a 3% tax increase for most of the middle class – about $2,600 for a family of four – could that be the tipping point?
  • If the Tea Party holds Medicare hostage and Congress doesn’t pass the Medicare “doc-fix” by the end of 2011, something that has been passed every year for almost half a century, doctor and hospital reimbursements will be reduced by 27%. Will your doctor accept Medicare? Will that be the tipping point for millions of our seniors who are barely making ends meet?
  • Gas prices are rising again. Will that tip us?
  • The rising price of rents?
  • Next year’s expected Health Insurance co-pay increases?
  • The rising average credit card rates, fees and penalties? Or debit card charges?
  • Or will it be just one more group of layoffs that causes consumption to drop just enough for business to grind to a halt?
  • Or maybe it will just be something simple happening to one more family. A child who comes home sick from school that causes you to miss work that gets you fired? A speeding ticket that must be paid and causes you to miss a payment on a credit card that causes the rates on all your cards to go to 33.65%, plus late payments and interest on late payments, that can never be caught up? Or your furnace goes out? Or will a parent lose their job and helping them puts your family in the economic spiral?  Or, God forbid, you lose your spouse?

Just a few years ago, the monthly budget’s rounding error for the middle class near-poor was in the hundreds. Now, every penny is counted. They had a stack of credit cards with zero interest rates and seemingly unlimited credit lines. An unexpected expense would just go on the card. Since that time, home values have shrunk and with it, credit lines and flexibility.

The middle class near-poor may not look much different at a casual glance. They may decorate trees for Christmas, but they’ll wrap empty gifts under the tree. 2011 will be another year when Christmas giving will be postponed or homemade. The middle class near-poor are just one more bad thing away from the bottom and none of us are prepared for how to make it there. There is no longer any social safety net. The food kitchens are full and the pantries emptying more quickly than filled. Our government has borrowed all they will borrow and nothing else is expected until after the fall election, or the next.

How long will it take to recover? If all things go well, and they may not, the US economy will take a decade or more just to get back to where we were when Bush left. Another decade to get back to where we were when Clinton left. Given the life expectancy in poverty, two decades will go a long way toward wiping out poverty. The economy can come back more quickly, but only if and only when everyone can have a job and be back in the economy as consumers.

Trying not to leave this story on a gloomy note, there are things you can do.

  • You can join the 99%, occupy and march on Washington and call for repealing laws that caused the grotesque financial inequity in our nation.
  •  You can demand your Congress person do every stinking little thing they can do or spend to get rid of the extra weights on the middle class, the near-poor and those already in poverty. Tell them to stop listening to lobbyists and do what is right for the people they should be representing. Tell them to shut up with the election year fear mongering on issues meaningless to the economy and do something good before we vote them out of office.  Tell them specifically to vote for what’s left of Obama’s jobs initiative, for extension of jobless benefits, extension of the payroll tax cuts, the Medicare “doc-fix” and making permanent the Bush tax cuts for the middle class. Tell them to keep their hands off of Wall Street reform that protects American consumers. Tell them to stop trying to undermine health care reform, but be part of the Congress that will fix it. Tell them to break up the companies too large and with too many lobbyists to fail. Tell them to end special breaks for dirty industries. Tell them to quit wasting money on wars we don’t pay for. Tell them to keep investing in schools and re-training. And most of all, tell them to get to work on the peoples’ business.
  • Watch for the warning signs and stay in touch with those friends who seem to drop out of your circle – they’ll need your friendship.
  • Volunteer and help those who need it now.
  • Get involved with non-profits – each of which is still reeling from the terrible economy and from Bush ending the inheritance tax, but that’s another story. Help people who can’t find work to start a small businesses and teach them how to make it successful. Help feed the hungry. Help teach, mentor and take care of children. Get involved to help seniors and the disabled.
  • If you are in the top 30%, keep giving to charities which help people. Put some of your money toward micro-loans to launch new small businesses.
  • If you are a 1% executive, it is time to fire your lobbyist, take a pay cut and use the money to hire people who need jobs – especially those who have been out of work for a while or been fighting our wars.
  • If you think you are at the tipping point, reach out to agencies who can help you land more softly and not on the street.

Bring Back the Bad Old Days

Bipartisan Congressional leadership meetingOh, how I long for the time when politicians lied to get elected. When a Democrat could run as a hawk and govern as a dove. When a Republican would run as a conservative and it meant they were cautious to change and represented traditional values, not the values of a mob. Oh, for the days when we knew the contract with America was not worth the paper it was printed on.

When getting things done was the goal of both parties and compromise was seen as a victory for each. Incrementalism was the result. Respect was the rule, not the exception. Peace was a goal. Being patriotic included doing what was best for all Americans. Believing in Democracy included supporting majority rule. Laws were meant to protect people. Justice was non-partisan. Giving a leg up to someone less fortunate was an ideal. Educating our young and taking care of the aged were bi-partisan platforms. Delivering jobs in your district was a good thing, because it meant jobs. A time when campaign promises were quickly forgotten to be replaced with the reality of American life. And flip-flops were what you wore on the beach.

Oh, how I long for the time before entertainment news. Before celebrity politicians, pundits and talking points. When extremists didn’t get air time. When politics was dull and before it became a made for TV sport with avid fans* on both sides.

It was Dick Cheney, who said in 2002, “Reagan proved that deficits don’t matter.” It was also Reagan, who proved that raising the debt limit doesn’t  matter – he raised it 17 times in his eight year mythological reign. Bush, Jr. raised it seven times. But now, Obama is President, so it does matter.

It matters, because to win as a Republican, you must, no matter what:

  1. Keep a promise to Grover Norquist never to vote for any additional government revenues, including, but not limited to taxes, fees or ending subsidies;
  2. Keep a promise to the Tea Party to reduce the size of government** and the reach of government regulation;
  3. And keep a promise to Republicans everywhere to defeat President Obama.

Passing a debt limit extension, which has been done 74 times since the law that required it was passed in 1962, may violate promise number three: to defeat President Obama, no matter what.

President Obama did not cause this problem. In fact, he has done more than any President in two generations to help the Republicans keep their promises. Federal, state and local taxes are the lowest per capita since 1955 – well below the high water days of Nixon and Reagan. It is a fact that President Obama has presided over cutting taxes more than any President in history.

But Obama’s help to the Republicans doesn’t stop there. He has secured the Republican promise to reduce the size of government – the number of government workers has gone down by 500,000 since Obama took office.

What more must he do? For the answer, just look back to April when the House Republicans voted to privatize Medicare and increase the costs to seniors an average of $6,000 a year (not a tax). The House Republicans also voted to turn Medicaid, the medical safety net for the poor and disabled, into a voucher system so the states could make Medicaid meaningless (not a tax). Immediately after their votes, House Republicans poll numbers fell off a cliff. They have only one chance to save themselves: force Democrats into drinking the poison tea, too.

Now, we are being held hostage to a crisis totally of Republican promise making – a demand that any agreement to raise the debt limit be matched by permanent spending cuts and include entitlements (not a tax). At least two trillion in additional debt is needed to fund authorized spending through the next election.

Obama, true to his campaign promises saw this as an opportunity to enroll the Republicans to do something meaningful. Why not take the advice of Simpson-Bowles? Cut four to six trillion of the debt by a fair combination of revenue increases and cuts to discretionary and entitlement spending. Nasty compromises required for both parties for the good of the nation to secure our future. No new taxes would be included – just plugging of corporate loopholes, ending of subsidies for corporations who don’t need them, and allowing the Bush tax cuts to finally expire. To protect the fragile economy, neither the revenue enhancement, nor the spending cuts would be immediate. Nor would the entitlement changes privatize Social Security, Medicare or Medicaid — more likely, a means test, and some reimbursement and cost of living changes.

Too bad for all of us. To keep their campaign promises, Republicans won’t do the big deal and may not do any deal. Republicans were gamed last spring by Obama in the continuing resolution deal. The $30-40 billion in cuts turned out to be only a few hundred million – maybe less. Republicans don’t trust Obama – he’s considered too smart for them.

Who will blink and when? The White House told seniors today that they may not get their August 3rd Social Security checks. The pundits are camped in the cable network parking lots. The rhetoric talking points sound as if both sides are going to the mattresses. This is going to be close.

Without an agreement, the Republicans are likely to pass something partisan in the House. Depending on the details, and they are likely to be onerous, it is doubtful that it could even come to the floor of the Senate.

Thursday, Senate Republican leader Mitch McConnell has suggested a back up plan that would give the President new power and release Republicans from having to vote for anything that they have promised not to vote for. Lending authority for the balance of this Presidential term would be granted in three installments of up to $2.4 trillion, provided that the President cut spending by the same amount. Congress’ role would be reduced under special rules such that they would only be able to vote against a Presidential plan. Which of course, Republicans would. Which would then be vetoed by the President. The McConnell plan would give Republicans 100% authority to blame Obama for all of the economic woes, while keeping their agenda of fear in the news, and keep moving the day the world ends as we know it until just before the 2012 election. This plan, is likely a non-starter, as it would be giving the President way more power than Tea Partiers’ are likely to approve in the House.

Scenarios for default are unprecedented and no one really knows how one would play out. The White House may not have the authority to prioritize spending – allowing them to default on some debt to make payroll and pay other bills. At this time, the White House doesn’t plan to use the 14th Amendment, but may anyway. The Supreme Court will surely be called to decide many emergency details.

Should a deal not be done, what happens next is almost too dark to describe — sounding more like apocalyptic fiction than what is so seriously possible.

Inaction by Congress before recessing on August 5th would mean that revenues would only be available to pay 40-45% of our bills (that is 10% of our economy that would be missing in August). Our debt would be downgraded by ratings agencies. Smart money would likely already have made their bets — shorting everything — especially instruments guaranteed by our government — and almost guaranteeing things will get worse quickly. Safe places for cash would be almost impossible to find. The market impact of would be immediate. Everything will begin to go down. At 1000 Dow points down, margins calls will become commonplace forcing the markets lower and increasing computer trading.

The Treasury would be called to make hard and unpopular choices on who to pay with the estimated $172.4 billion of August revenue. Non-essential government workers would be sent home. The parks would close and campers evicted. Payments for Social Security, disability, VA benefits, food stamps, unemployment benefits, Medicaid and Medicare reimbursements, rental assistance, public housing funding, children nutrition programs, Pell grants, state education grants, IRS refunds, military active duty pay, federal employment salaries and others would be at risk. As would contracts for defense, Homeland Security and others.

“Handling allpayments for important and popular programs (e.g., Social Security, Medicare, Medicaid, Defense, active duty pay) will quickly become impossible.” – Bipartisan Policy Center

Here are examples of some of the choices we would have in August from the Bipartisan Policy Center:

Payment scenarious from the Bipartisan Policy Center

Payment scenarious from the Bipartisan Policy Center

The Treasury must also rollover $507.4 billion in debt in August and there may be no takers – interest rates could skyrocket increasing the national debt even more, while reducing funds available to pay bills — and the Fed may have to intervene. Home sales would stop. As markets and currencies tank, people, banks and countries would begin to fail. There will be chaos on all world exchanges and many would be shut down. People would take to the streets. Then it gets really bad.

Even if Congress passes a bill by mid-August, there is great risk that the damage to markets and interest rates would already be so great that we would be thrown back into a deep recession.

More money could be lost in the markets during the first week than is needed for the debt increase. More money could be lost in the subsequent weeks than our national debt. Recession could easily turn into depression. People would jump out of windows. War might be threatened. All because of campaign promises. Oh, how I long for the time when politicians lied to get elected.
________

* Short for fanatics.
** Officially, the Pentagon, CIA, NSA, etc. are not included.

_________

Editor’s note: The post was updated at 7:43 am on July 13, 2011 to correct and provide new details of the Mitch McConnell back up plan as they became available.

Dog Days News

So Blago’s guilty of lying, but after six and half years of Justice Department investigations, many millions spent, federal prosecutors couldn’t convince 12 of his peers that he was guilty of any of the other 23 charges. Blago will likely be re-tried.

Our hemisphere is having the hottest summer ever recorded – wildfires in Russia, an iceberg four times the size of Manhattan has broken off Greenland, and Pakistan has more than 20 million affected by flooding with 8+ million in desperate need of food and clean water – yet, the Climate and Energy Bill is being held hostage by Senate Republicans who continue to deny global climate change has been caused by their hot air.

Caffeinated by the tea party, a one-word “no” platform, 309 Senate bills on Republican hold, gay marriage and immigration laws in the courts, a Muslim community center in Manhattan, and the Bush economy/legacy of failure abandoned on Obama’s doorstep, the Republicans are so poorly managed they only have $10.9 million for fall campaigns – now they get a $1 million partial bailout from News Corp., the owner of the Wall Street Journal and Fox Not-Really-News.

With a “real” unemployment rate of 16.5%, a net loss of 131,000 jobs last month, wage growth a misnomer, the current rate of bankruptcies near a 5-year high, record numbers without health insurance, record numbers of foreclosures, exports tanking, trade deficits exploding, bank earnings weakening, 80% of the exiting stimulus allocated to the states, but only 47% spent, and a second stimulus bill dead in the Senate waters –  the $10 billion subsidy just passed to pay states to keep or hire teachers has many school districts saying they aren’t going to rehire teachers, they’ll try to save it to help next year which is sure to be worse.

Haiti is still in ruins, 1.5 million people are still displaced, only about 10% of the money pledged (including the US contribution) has actually been given, Bill Clinton is out doing collections while Hillary is leading by example: she’s contributed $10 via text to relief efforts, but there’s still hope – Fugees’ rapper Wyclef Jean is running for President.

Gone in August:  Oscar-winning actress, Patricia Neal (84, lung cancer); Bobby Hebb, ‘Sunny’ singer-songwriter (72, lung cancer); “Shot Heard ‘Round the World” baseball player Bobby Thomson (86, long illness); jazz singer, civil rights activist, Abbey Lincoln (80, long illness); actor Paul Rudd (70, pancreatic cancer); film and TV producer, David Wolper (82, heart failure); former Alaska Senator Ted Stevens (87, plane crash in the bad weather that they didn’t check for before taking off); celebrity plastic surgeon, Frank Ryan (50, texting while driving); writer, pundit, segregationist, James Kilpatrick (89, heart failure); Gap Band musician, Robert Wilson (53, heart attack); singer for the Diamonds, Ted Kowalski (79, heart disease); Pardon by Bill Clinton for accepting kickbacks, 18 term Congressman and former Chairman of the House Ways & Means Committe, Dan Rostenkowski (82, unspecified); bluegrass bassist, Mitch Jayne (82, cancer); guitarist, Catfish Collins (66, cancer); writer, philosopher, Mary Anne Warren (88, unknown); Georgia goobernatorial candidate, Karen Handel (48, failed to convince 1,244 more voters she was less evil than Nathan Deal); HP CEO, Mark Hurd (53, complications from greed and sex-related hubris); hate radio host, Dr. Laura Schlessinger (63, fatal hemmoraging of the N word on air); the last US combat troops in Iraq (7, campaign promise); unimaginable numbers of aquatic creatures and birds, plus 80% of the oil that leaked into the Gulf from BP’s Macondo well (3 months, greed, negligence, inadequate regulation and political bribery).

Update, August 21, 2010:

  • Blago: Jurors report that there was only one holdout juror unconvinced of Blago’s guilt on most of the other charges.
  • Hottest Summer: Now heavy rains have devastated China and North Korea leaving 4,000 dead or missing, more than 50,000 displaced and ‘extremely dangerous” cracks have been found in the Three Gorges dam threatening hundreds of thousands.
  • Republican Fundraising: Politico reports the RNC now has only $5.5 million on hand for the midterm elections and $2.2 million in debt.
  • Jobs: For the week ending Aug. 14, new unemployment filings exceeded 500,000 – the worst job report since Nov. 2009.
  • Hope in Haiti: The Haiti electoral commission ruled yesterday that Wyclef Jean is ineligible to run for president .

What would Pat Robertson say?

Goldman SucksLet’s take a quick look at recent legislative initiatives and the relationship of opposition-killing news events:

  • Health care reform – dead in the house and frozen in the senate until Anthem/Blue Cross announces billions in earnings along with huge policy price increases and the tea party takes the Kennedy senate seat.
  • Wall Street reform – seemingly dead in the Senate, then record-breaking Wall Street profits, revelations of sinister-sounding, but all too routine conflicts and manipulation, then Goldman Sachs was indicted.
  • Immigration reform – no one thought this could get a breath of political air during this partisan election season, then along comes Arizona’s xenophobic immigration law.
  • Energy bill – not a hope in hell for Senate action this year and, boom, BP/Transocean’s Gulf oil platform explodes, drill-baby-drill turns to spill-baby-spill and the oil-version of Katrina makes landfall.

Acts of god? A conspiracy of the non-working liberal press? Greed and hubris metastasizing naturally? Or, is Rahm, just that good?