Saturday, February 16, 2013

Sequester: How to take action by inaction or how Congress seems to work now

Government domestic and military budgets will be slashed by a total of $1.2 trillion ($109.33 Billion per year) with cuts coming as soon as March 1, 2013 for some areas.  The automatic cuts will come as a 50/50 blend between defense and non defense spending.  This means $54.667 billion per year for each of these categories.

Although it was never intended to occur, it is nearly a certainty that the sequester will occur.  With the date quickly arriving, the Republicans in Congress have decided to go on recess for the next ten days and will not return in time to do much of anything to avert sequester.

Although Republicans blame President Obama for the sequester, in August of 2011 bipartisan majorities in the House and Senate voted to allow the threat of sequestration to force Congress to act on deficit reduction.  It was thought that the drastic, across the board cuts would be viewed as something that Congress would want to avoid at all costs, thereby forcing them to compromise in a bipartisan way to identify and agree on deficit reduction actions.  This proved to be misplaced optimism.

Recently both parties have put forth proposals to avert the sequester.  House Budget Committee ranking Democrat member Chris Van Hollen has offered an alternate plan that would eliminate excessive agriculture subsidies; apply the Buffett Rule (making 30% a minimum income tax rate on the wealthy) and eliminate tax breaks for big oil.

The Republicans have refused any deal that means an increase in taxes or revenue increases from reduction of special interest tax breaks.  The Republican's alternative to sequestration has proposed strict social program cuts and Corporate tax breaks in exchange for  plugging some tax loop holes. This offer doesn't sit well with Democrats and the President who insist on a balanced approach that includes revenue increases as well as spending cuts.  So we are in a stalemate that will result in sequester.

Some areas of government are exempt from sequester.  These include entitlements such as social security, railroad retirement benefits, Department of Veterans Affairs, pension and special compensation programs.  The Farm Credit System Administration and crop insurance and the FDIC Deposit Fund are exempt.  Some low income assistance programs are exempt such as ACG/SMART Grants, Child Care entitlement grants to States, All Child Nutrition (except special milk programs), Children's Health Insurance Program, Some Pell grants (for first year of cuts only), Medicaid, Supplemental Nutrition Assistance Program, Supplemental Security Income Program, Temporary Assistance for Needy Families.  Medicare cuts are limited but not absent.

Military Sequester
All other areas of government are impacted.  The sequester percentage cuts applied across all remaining government accounts is between 7.6% and 9.4% of their existing budgets.   The military takes huge cuts in all branches of service.   These cuts are sure to impact defense industry contracts, cause lay-offs of civilian labor, the closing of bases, etc.

Social safety net programs such as Special Supplemental Nutrition Program for Woman Infants and Children (WIC) will eliminate $543 million per year and in effect remove hundreds of thousands of families from the rolls.  Low Income Home energy assistance reduction of $285 million will leave hundreds of thousands of elderly and poor Americans fending for themselves to keep warm during the winter months.  The list goes on and on.

Democrats have published a listing of the effects they believe the sequester will have.  See that report here.  The obvious effect of the sequester is that government services will be reduced.  The government has indicated that 750,000 jobs could be affected.  Some economists have stated that the stock market may be affected.

Once the domestic program cuts go into effect I believe they will be here to stay.  I do not see our Congress working out any compromise deal at a later date.  I say this based on Congress' proven lack of ability to do their jobs and their propensity for taking time off.  More importantly Republicans know they would never get Democrats to cut the social safety net so severely  in any other way and they are not going to start being concerned about the poor or helpless now.  That is their mantra.  Only the wealthy deserve entitlements.

There is a very good likelihood that Republicans will re-introduce bills to return military budgets back to pre-sequester levels and Democrats may be forced into voting for the increases either through fear of public embarrassment or falling for Republican false promises for future tax loop hole legislation.  I know that the President will continue to push for tax law reform, but believe it will never happen given the nature of our obstructionist Republicans in Congress and their uncompromising defense of the wealthy, even at the expense of the less fortunate.

The less apparent effect of the sequester is going to be the magnitude of the down-stream effects that these budget cuts will have on our economy and the adverse effect on Americans who depend on government services that will be cut.  We are about to find out.

Whatever happens, remember this day if you are still a member of American society during the 2014 Congressional elections.  In our vote is the power to reverse the damage done.  It is time for middle-class Republicans to voice their opposition to the leadership of their party which has proven that they do not represent you.

Wednesday, February 13, 2013

Rubio's response promotes Romney's policies as a winning approach even though America rejected it once already

Marco Rubio
Cloaked by a different look and different approach, Mitt Romney's policies don't sound any better when Marco Rubio espouses them.

In presenting the Republican response to the President's 2013 State of the Union address, Mr. Rubio had a difficult assignment.  In a nutshell, he had to convince the American people that the Republican approach to economic freedom, as framed by Mitt Romney, is better than the President's plan.

As with most Republicans, Rubio continues to believe that Republican policies are correct and fails to realize that the majority of Americans rejected those policies when they re-elected Barack Obama.   But you can't blame him for trying.  Or can you?

Rubio focused on big government not being the answer.  He claimed that increasing taxes and government spending are not the correct path.  He implied that the growth of government was President Obama's plan.  

Apparently, Rubio is not familiar with the fact that the size of government and the deficit has been reduced during the President's term.  He obviously is sticking by Republican claims that revenue is off the table during deficit talks, despite serious belief by economists that revenue increases must be had for the deficit to be brought under control.  He isn't listening to the President's talk about a balanced approach to deficit reduction.  He has not heard or does not believe that the President has already offered $2.7 trillion of the $4 trillion in cuts that economists believe necessary.

He claims that the opportunity to join the middle class comes from investing your own money to open a business.  By his definition, if you don't have the money, resources or ability to operate a business, then you don't belong in the middle class.  So I guess you are on your own because Rubio claims government help is not the way to the middle class.  He says this even though he received government loans to attend college, he has a government job that pays him $174,000 a year, he has government health care and a government retirement plan, his parents received social security and medicare helped his father die with dignity.  While he was alive, his father had opportunities to create and maintain his restaurant with the help of the government's small business administration.  This is so common of middle class Republicans who privately take from government programs while denigrating these government actions in public.  It must be impossible for a Republican to admit that the government might help anyone.

Rubio attempted to sway America away from the negative image that Democrats have painted of the Republican Party's allegiance to rich people by proclaiming that he (Rubio) still lives in a middle class neighborhood.  Could he have thought of anything else for a little more convincing argument?  No.

How many times did we hear Romney say he would cut Obama Care on his first day in office?  That wasn't enough for Rubio, because he essentially reiterated it by casting fear into the hearts of naive Americans who might believe him.  Let me paraphrase the Republican stand on the affordable health care law:  "Obama Care bad."  We've heard it all before and we rejected the idea when we rejected Romney.

It seemed apparent to me that Reince Pribus was still in control of the Republican party.  Mr Pribus was the architect of the Romney loss and is the newly re-elected Republican National Chairperson.  As Rubio mouthed policies that were exactly the same as those America rejected during the Romney campaign, I kept thinking "there you go again."  

Putting Rubio in front of the camera to represent Republicans is nothing more than a Republican tactic to improve public perception of the party.  We are seeing the repackaging of the Republican party where a softer, gentler party is presented, however Republican policies have not changed at all.  

Saturday, February 09, 2013

Why Republicans in Congress are Guilty of Conspiracy to Obstruct Justice

In 2010 Congress passed the Dodd-Frank Act which establishes the Consumer Financial Protection Bureau (CFPB) as the agency with enforcement power over the Financial industry.  This agency has an important role in preventing another financial disaster as created by a financial industry that enjoyed excessive liberation from regulations during the Bush administration.  The Act is now the law.  

Republicans, in their carefree joy for obstruction of all of President Obama's policies, have decided to take on the CFPB and the Dodd-Frank Act by preventing the approval of Richard Cordray as the CFPB Director.   You may ask, how is this conspiracy to obstruct justice?

We know that crimes were committed that caused the meltdown of financial markets prior to the 2008 crash.  The white collar criminals who committed those crimes are still free.  Although their criminal methods may have become dormant, there is still a public outcry that justice be done by finding and   incarcerating these criminals.  The CFPB is the agency that could make that happen, but their enforcement power is nullified without a Director.  It is the Republicans who are obstructing the actions of the CFPB.  

Congressional Republicans who have sent a letter to President Obama explaining their demands, admit that they are taking the action to reject the President's choice of a Director because they want to weaken CFPB's power.  In using their power to reject the Director, they have lied about their real intentions.  They don't disapprove of Richard Cordray.  They have stated that they will not approve of any Director until the powers of the CFPB as are legally established by the law are changed.  They have conspired to create this fraud against the CFPB and the United States with the admitted intention of obstructing it's legal authority.  This is conspiracy to obstruct and conspiracy to defraud.

The following is the legal explanation of "Conspiracy to Obstruct" (18 U.S.C. 371).

If two or more persons conspire either to commit any offense against the United States or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

The following is the legal explanation of "Conspiracy to Defraud" 

Section 371 contains both a general conspiracy prohibition and a specific obstruction conspiracy prohibition in the form of a conspiracy to defraud proscription. The elements of conspiracy to defraud the United States are: (1) an agreement of two or more individuals; (2) to defraud the United States; and (3) an overt act by one of conspirators in furtherance of the scheme.  The "fraud covered by the statute ‘reaches any conspiracy for the purpose of impairing, obstructing or defeating the lawful functions of any department of Government” by “deceit, craft or trickery, or at least by means that are dishonest.” The scheme may be designed to deprive the United States of money or property, but it need not be so; a plot calculated to frustrate the functions of a governmental entity will suffice.

It is true that Congress has immunity from prosecution for acts they commit in the normal operation of their duties as legislators.  It does not protect them from committing crimes or violating existing laws.  A case could be made for this obstruction being a criminal act where the department they are obstructing is a federal agency and the actions these Republicans are taking is protecting criminals from prosecution and has done so now since 2010.  These Republicans have certainly over-stepped their normal authority and entered the realm of disobedience of law.

At the very least, every one of the 43 members of Congress who signed Mitch McConnell's conspiracy letter should be fined.  But wouldn't it be great if we could end this obstruction by putting them all in jail.  

Monday, February 04, 2013

How Republicans plan to transform the President's budget into the Paul Ryan budget

Republicans in Congress still can't seem to realize that their Party did not win the Presidency in 2012.  And by that I mean they still do not understand and do not represent the expectations of the American people.

One example of this is HR 444 REQUIRE A PLAN Act that was discussed today in the House.

Parenthetically the Act also adds the insulting attack remark erroneously directed towards the President, that it can also be called the "Require Presidential Leadership and No Deficit Act."  My guess is that the Republicans see leadership as making strong cuts into social programs to hurt the Americans who can least afford it and who most depend on it.  This would follow right in step with the Ryan budget and Republicans misguided thinking that revenue is off the table in budget talks.

Mr. Price
The Act introduced by Republican Mr. PRICE of Georgia (for himself, Mr. RYAN of Wisconsin, Ms. JENKINS, and Mr. SESSIONS) requires that, "if the President’s fiscal year 2014 budget does not achieve balance in a fiscal year covered by such budget, the President shall submit a supplemental unified budget by April 1, 2013, which identifies a fiscal year in which balance is achieved, and for other purposes."

It goes on to require that the supplemental budget include budget information required by US code but also include the Republicans wish list of items.  These are (a) An estimate of the fiscal year in which the supplemental budget is not expected to result in a deficit; (b) a detailed description of additional policies needed to accomplish no deficit; and (c) detailed description of the differences between the President's FY 2014 budget and the FY2014 supplemental budget requested.

There is no constituional requirement for a President to offer a budget which will balance by some future date.  Since the 1920's there have only been about three occassions where a budget actually did balance.  However Republicans appeared to be confused about the President's intentions.  They made it seem that this was a simple request that would help them understand where the President stands on balancing the budget.  But what are they really trying to do?

The reason that the Republicans imply they are proposing this Act is because the President's actions during his first term have shown he is not a good financial stewart.  The Act's section on "Findings" indicates that the President can't keep to his promises and has caused the deficit to rise during his term.  It's almost as if the President has authority over financial and budgetary policy and total control of the money that he was charged to spend and spent it unwisely.  Oh wait, that is the job of the Congress!

So what are the Republicans really trying to do by placing this Act into consideration?  I think they have a somewhat sinister plan in mind indeed.

CBO estimates of deficit causes
First, they are trying to create an image in the eyes of Americans that removes themselves from any blame they may have for the country's financial condition.  They won't admit  that it was their Party's administration that got us into the financial situation we are in and largely responsible for the deficit.  The graph at the left is the Congressional Budget Office's estimates of the factors leading to the deficit.  One can see that the largest contributors to our present deficit are the wars and Bush era tax cuts.  But deficits were not that important to Republicans when their guy was President.

Republicans pretend to be the only Party concerned with future generations who will be responsible for the deficit's payback.  While he was Mitt Romney's running partner, Paul Ryan's first budget plan would not balance the budget for thirty years.  And that one was considered harmful to the poor in society and the economy because of the magnitude of its cuts to social programs while at the same time cutting taxes for the rich.  Recently Ryan has been tasked by John Boehner to write a budget that will be balanced within ten years. Without considering revenue increases (as the Republicans believe), Ryan's new budget would start hurting people immediately.

It seems to me that with HR 444 and the previously passed HR 325 that temporarily raises the debt limit with stipulations for "No Budget/No Pay", Republicans are trying to force the President into cutting the social safety net, voucher-izing medicare and medicaid and making changes to social security that would not benefit the American worker.  All of these were Romney-Ryan policies that Americans rejected when they ended Romney's political career in the last election.
Ryan's Budget paves the path to
increased Prosperity for the wealthy
Republicans are really putting the cart before the horse if they think that the President can create a supplemental unified budget without Congress first acting on modifying the tax code and closing loop holes. The President cannot know the impact that new revenue will have to paying down the deficit  until Congress acts on tax law.  So once again Congress needs to understand that tax revenue must be considered and they have a more urgent role in addressing that than the President has to give them a supplemental unified budget.

Fortunately some Democrats understand that Republicans are trying to force a budget that looks like the Ryan budget and have added amendments to the Act to counteract this intention.  Unfortunately none of them was allowed during the actual rules committee session.

Mr McGovern of Massachusetts, a member of the committee made it clear that the members were only made aware of HR 444 on Thursday and the act was not entered until Friday last week.  He felt that there was not enough time to enter amendments.  He also made the point that the rules committee did not have any meetings, markups or open discussion around the need for the act and requested that it was entered into open rules.  That was voted down.

Mr Connelly of Virginia had submitted an amendment that prohibits "additional solutions" in the unified supplemental budget to include conversion of Medicare into a voucher program. However that amendment was not allowed.

Mr. Deutch of Florida submitted an amendment that removes social security from the definition of "Unified Budget" however that amendment was not allowed.

Jackson Lee of Texas submitted two amendments.  One protects the safety net of the most vulnerable in society.  It was not allowed.  The other proposes ending the estate and tax provisions so the applicable exclusion amount is allowed to revert to $1 million and the tax rate is allowed to be 55%.  It was not allowed. 

Chris Van Hollen from Maryland submitted an amendment to replace the entire sequester for 2013 which would cause deep cuts to domestic priorities and defense with a savings from specific policies that reflect a balanced approach to deficit reduction.  He wants to protect the most vulnerable and asks people making over $1 million to contribute more.  He wants to eliminate agriculture direct payments and cut subsidies to large oil companies.  Because he was not present due to his father's death, his substitute for sequester was voted down.

An amendment was submitted by Mark Takano of California which makes changes to the "Findings" section of the act.  He wants clarification that Congress holds responsibility for passing budgets and appropriating funds.  A responsibility that some Republicans have attempted to side-step.  That one was allowed.

Four Republican amendments were approved.  All of them require additional work from the Presdient to present more detail in the supplemental unified budget.

President Obama
As the President has stated publicly, like the Republicans, he also understands that the deficit should be brought under control.  Actions taken since his administration started have reduced the Bush deficit each year and the CBO expects that the deficit will be below $800 Billion by the end of 2013.

But in the President's case, his concern is that deficit reduction be done in a balanced approach with revenue increases and program cuts that do not harm the economy, that do not hurt Americans and are done fairly.

The divergence in the President's policies and Republican policies are fairly obvious to middle class Americans.

That's why he won the election.

Saturday, February 02, 2013

McConnell partners with Crapo and other obstructionist Republican Senators hoping to flush CFPB down the toilet

Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) was created as a new government bureau in 2010 and is tasked with the important role of enforcing laws in the financial industry.  Its founding is the recommended cure for the recklessness in the financial industry that caused the financial disaster of 2008.  Its enactment is legislated through the Dodd-Frank Act.

Crapo (rear) and McConnell
It appears that the Republican obstructionists in Congress do not believe that they have demonstrated well enough their lack of support for the American consumer.  Led by Mitch McConnell and Mike Crapo (pronounced cray-po), forty-three Republican Senators have signed a letter to President Obama indicating that they will not approve Richard Cordray as the Consumer Financial Protection Bureau's Director unless their demands are met.  (Sounds like something a terrorist group might say.)  According to Senator Crapo, it is not Richard Cordray that they oppose, it is the Consumer Financial Protection Bureau (CFPB) in general.

This same scenario happened last year.  The Republicans blocked Richard Cordray so the new Bureau operated without a Director.  But the bureau has no enforcement power under the Dodd-Frank Act unless it has a Director.  So  President Obama assigned Richard Cordray as Director once again, but this time while the Senate was in recess.

A President is constitutionally entitled to make such recess appointments and many of both Parties have done so in the past.  The controversy this time is about the Republicans claim that they were really working and in session at the time of the appointment.  To prevent President Obama from making this appointment, on their way out the door for intersession vacation, Republicans indicated that they were in a "pro-forma" session.  That supposedly means that they are in session and working so they must approve Presidential appointments.  But no one was present or working in the Senate.  It was simply a tactic that Republicans used to block the President's constitutional authority.

In a similar case concerning the National Labor Relations Board appointments, the US District Court of Appeals for the District of Columbia Circuit ruled that the President can not be allowed to make a determination that the Senate is in recess because it could allow him to make recess appointments at any time.  It is my opinion that this decision proves our judicial system is fallible.  Perhaps they do not follow politics, but it should have been obvious or very easy to check that the Senate was in recess.  The mere statement of a "pro-forma" session does not make it so.  The court's decision actually gives license to another example of Republican obstruction tactics where the constitutional rights of a President can be blocked by intentionally lying about being in session.  The decision is expected to be reversed in future court appeals.

To be fair, Republicans have two major demands that would change the autonomous intent of the bureau.

First, they are demanding that the structure of the CFPB be changed.  They believe that there is too much power in the control of one person, namely the Director.  Republicans would prefer to see a board or commission in charge.  My guess is that the Republican's goal for the commission would be to staff it with the same financial experts who helped bring on the financial crises or at least staff it with people whose business interests conflict with the bureau's autonomous role.  Sort of like having gangsters run the Federal Bureau of Investigation.

Second, they want Congress to have oversight of the Bureau's budget.  They claim that the Director can tap into the Federal Reserve System to get any money he feels necessary at any time.  In actual fact however, the Director must submit a budget request to the Federal Reserve with justification and evidence of actuals from prior years.  Legislators have approved this procedure as acceptable when passing the Dodd-Frank Act.  In passing Dodd-Frank they have also approved a discretionary $200 million in Fed funds to be available if necessary, but that discretionary amount must be approved by the  Congressional appropriations process.  Perhaps Republicans don't like Dodd-Frank, but it is the law and they can't simply not abide by its rulings.

In summary, here is my assessment of the situation.  The Republicans do not disapprove of Richard Cordray, yet they are willing to reject him or anyone that the President selects so that they can accomplish their primary political goal of bending the structure of the CFPB into one that benefits their wealthy supporters instead of the American consumer.  I wouldn't expect anything less.