Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: Stop Calling It A “Debt Crisis.” It Isn’t.
OurFuture.org’s Dave Johnson: “The ‘mainstream media’ has decided to name this fight a ‘debt crisis.’ This leads people to think that somehow the country is in crisis over debt, when the crisis is over a few people forcing default if they don’t get their cuts. There is no debt crisis. There is a lot of debt, the result of tax cuts, increases in military spending, wars and giveaways to large corporations that have occurred under the Bushes and Reagan. But the way to solve a problem that resulted from tax cuts and military spending increases is to put taxes back where they were before Reagan, and cut the military back at least to where it was when we were fighting the Soviet Union, even though the Soviet Union is long gone.”
Boehner Comes Up Short, Pulls Bill
Speaker Boehner pulls temporary debt limit increase after failing to corral lunatic fringe. NYT: “It was unclear if the leadership intended to reconfigure the measure and try again Friday, but senior lawmakers were taking procedural steps to do so. The surprise postponement threw the endgame of the debt-limit clash into confusion and raised concerns among some on Capitol Hill that the government was lurching toward a default.”
Boehner’s speakership is “on the line” reports Politico: “On the line: The outcome of a debt-limit increase that has consumed Washington and New York for months, Boehner’s standing in the Republican Conference, and the balance of power between the House GOP and the Democrats who control the White House and the Senate.”
$2.7T in cuts is not good enough for the Tea Party. Bloomberg: “The measure, as it was written yesterday, would provide an immediate $900 billion debt-ceiling increase while cutting spending by $917 billion. It also would set the stage for another $1.6 trillion installment of borrowing authority if Congress enacted a law before year’s end to reduce deficits by $1.8 trillion. The spending cuts are insufficient, argued some Republicans opposing the bill, including about 10 or so of the 87 freshman elected last November who gave the party control of the House and Boehner his speakership. Other opponents insisted the bill must include a balanced budget amendment to the U.S. Constitution.”
Conservatives also rebel over slight increase in Pell Grant funding. The Hill: “House conservatives who have stalled legislation to raise the national debt limit are angry that it includes $17 billion in supplemental spending for Pell Grants, which some compare to welfare.”
Boehner bill would subject poor to new cuts. ThinkProgress: “The Center for Budget and Policy Priorities notes today, however, that Boehner’s plan does not actually exempt programs like Medicaid and food stamps from such cuts. Instead, it does the opposite. Breaking a 26-year policy of exempting basic low-income entitlement programs from across-the-board cuts, both of the House Republican plans — ‘Cut, Cap, and Balance’ Act and Boehner’s debt-ceiling proposal — ‘drop all of the low-income exemptions that have been part of every previous across-the-board cut mechanism since 1985′.”
W. Post’s Jennifer Rubin reports Boehner is not close: “A House aide who was present for much of the wrangling tonight said ‘we were a number of votes short.’ Five? Twenty? ‘Somewhere in there,’…”
Sen. Jim DeMint’s intransigence may mean 5 lost House votes for Boehner. Politico: “The positions taken by Sen. Jim DeMint — a conservative powerhouse nationally and especially in the state — undoubtedly loom large over the [five-member] House delegation [from South Carolina]. The [four] House freshmen periodically put DeMint on conference call to seek his advice on votes. DeMint was a strong opponent of the Boehner plan, appearing at a Tea Party rally Wednesday to urge members of Congress to ‘hold the line’…”
Live by the Tea Party, die by the Tea Party. The Hill: “Several Tea Party organizations are working to punish conservative Republicans who plan to vote yes on Speaker John Boehner’s (R-Ohio) debt ceiling proposal. Tea Party leaders announced Thursday they are targeting Republican Reps. James Lankford (Okla.), Allen West (Fla.), Mike Kelly (Penn.), and Bill Flores (Texas), all four freshmen and declared yes-votes for Boehner.”
Will Boehner change course, pursue bipartisan bill? Politico: “Democrats predicted the postponed vote would provide the leverage they need to convince Boehner to take a different course, one that involves striking an agreement that can pass the House and Senate with bipartisan support … a move certain to infuriate conservatives already angry with the direction of the talks. That appears to be the only way Congress will avert a default. But Boehner has shown no willingness to take this step, alarming the White House and Senate leaders…”
Senate Passage Of Debt Limit Increase Not Assured
Senate aims for Tuesday vote and clock ticks down. W. Post: “…Senate Democrats laid plans to proceed with their own debt-ceiling plan in hopes of pushing a measure through Congress by Tuesday, when the U.S. Treasury says it could begin running short of cash to pay the nation’s bills.”
Reid still needs 60 votes for his bill, prompting negotiations over deficit cutting “triggers.” TNR’s Jonathan Cohn: “One option under discussion would effectively impose a second round of deficit reduction automatically, according to a pre-set formula, if Congress doesn’t make the changes on its own. And, in theory, both parties could live with something that. But, naturally, the two sides have rather different ideas about the precise formula. Republicans would like to see those automatic savings come mostly, if not entirely, through spending cuts. Democrats want a more balanced approach: They would want the savings to come through some combination of automatic spending cuts and revenue increases. (Yet another, milder option would merely force Congress to vote on the Gang of Six recommendations.)”
Dems offer new compromise, smaller debt limit increase now, but no conditions on the next one. Politico: “Under the possible compromise, Congress could still get a second crack at voting on the debt limit within months. But rather than linking the vote to Congress approving the recommendations of a new 12-member committee — as it would be in Boehner’s bill — Democrats prefer McConnell’s proposal that allows President Barack Obama to lift the debt ceiling unless two-thirds of both chambers override his veto of a disapproval resolution, the officials said.”
Will President Act If No Deal?
House Minority Whip Steny Hoyer supports “14th Amendment option” reports The Hill.
Supreme Court may not challenge President’s authority to ignore debt ceiling, argues TNR’s Jeffrey Rosen: “…it’s far more likely that the Court would refuse to hear the case. And even if the justices did agree to hear it, the conservative justices would be torn between their dislike of Obama and their commitment to expanding executive power at all costs. If all the justices are true to their constitutional philosophies, the Court would rule for Obama by a lopsided margin.”
Weak GDP Growth Yet Again
Weak GDP growth in 2Q, held back by cuts to state and local government. Commerce Dept.: “Real gross domestic product … ncreased at an annual rate of 1.3 percent in the second quarter of 2011 … In the first quarter, real GDP increased 0.4 percent … The increase in real GDP in the second quarter primarily reflected positive contributions from exports, nonresidential fixed investment, private inventory investment, and federal government spending that were partly offset by a negative contribution from state and local government spending.”
Poor recovery due to insufficient government action, reports NYT: “The decline in housing prices has made people feel and act less wealthy. Broad measures of wealth have bounced back from the depths of the recession, but the gains are driven by the stock market, which means they are concentrated in a relatively small share of families … Reductions in government spending reduced the pace of growth in the first quarter by more than one percentage point, and the cuts have continued. Last week, the Federal Aviation Administration furloughed 4,000 employees and suspended construction projects employing thousands more because much of the agency’s funding had been waylaid by a dispute between the House and Senate. State and local governments cut workers during the first half of the year almost as fast as private businesses added them. Federal stimulus spending is largely complete.”
Foreclosure crisis hitting communities of color hard. Mother Jones: “For communities of color around the country, a ‘lagging collapse’ may be ahead, said Alan Mallach, a nationally known housing expert who has done extensive on-the-ground research into the foreclosure crisis. Prince George’s county is a case in point. The nation’s wealthiest majority-black county, it has been devastated by the foreclosure crisis. Heavily targeted by subprime lenders in the boom years … The county received more than 7,100 notices of intent to foreclose in March.”
President to announce major increase in fuel efficiency standards today, with support from auto industry. NYT: “While the American carmakers, as well as their Asian rivals, once argued against even minimal increases in government fuel rules, they are acquiescing without protest to an increase to 54.5 miles per gallon by 2025, from the current 27 miles per gallon … G.M., Ford and Chrysler pressed for less onerous mileage goals for their profitable pickup trucks and got them. And the administration agreed to revisit the new requirements halfway through their course … In the end, though, Detroit was faced with an undeniable political reality: there was no graceful way to say no to an administration that just two years ago came to its aid financially.”
Corporations consider suing to block Wall St. reform reports WSJ.