Category: Budget

Yes, This is Fascism

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Rachel Maddow and Naomi Klein on the “Emergency Manager” Bill

In Michigan, the governor is pushing a bill through that would grant Governor Rick Snyder the powers of a dictator.

Basically, he can declare a financial emergency for any municipal government or school district, and then he can assign an “Emergency Manager”, who could, without any review cancel any contracts (including labor contracts), dismiss elected officials, disincorporate towns, and dismantle school districts.

What’s more, the Senate version of the bill allows the emergency manager to be assigned to a corporation, like Blackwater (now Xe) or Halliburton.

There is no criteria for such a declaration, but even if there were, they are also gutting local aid, which pretty much means that they are creating fiscal crises anyway.

Basically, any elected official, and any semblance of due process is to be wiped away, in a bill that really does resemble the Emergency Laws that Mubarak used to rule Egypt with an iron fist for all these years.

This is about a corporate takeover of civil society, and the vesting of near absolute power in the executive.

This is Not Going to End Well

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So, the Republicans got a 2 week extension on the debt ceiling, just long enough to make them sound reasonable, and short enough that they can try to destroy the economy for the 2012 elections with stupid budget cuts.

It’s like the Democrats are playing to lose.

If Obama had any guts, he would make sure that it was Republican oxen were gored by a shutdown, canceling things like the farm aid, etc., but since he doesn’t, you can be sure that the cuts when a shutdown occurs, and it is when, not if, will fall disproportionately on the poor and the Democratic base.

House Votes to Kill F136 Engine

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While I expect to see some continued efforts by GE, Rolls Royce, and their supporters, I think that this is the death knell for the F136 engine:

The U.S. House of Representatives today voted to kill funding the F-35 Joint Strike Fighter backup engine made by General Electric Co. and Rolls Royce Group Plc.

By a vote of 233-198, the House voted to cut $450 million for the engine from legislation funding the Pentagon for the remainder of the fiscal year ending Sept. 30.

It is the first time in more than four years of votes that the House has come out against the GE-Rolls Royce engine for the F-35, the stealth fighter made by Lockheed Martin Corp. In May, 2010, the House voted 231-193 to continue the program.

This is important for a number of reasons.

First, with this defeat on the table, the onus now falls on the supporter of the F136 to bring the engine back, which is hard.

Second, and more importantly, House Speaker John Boehner, whose district, and neighboring districts, directly benefit from the engine, could not whip the votes necessary to support the engine.

Like I said, the engine is toast.

In the long run, this is a bad thing, because leaving Pratt & Whitney as a monopoly supplier for the engine is likely to increase costs, and reduce performance, a lot down the road.

That being said, I do experience no small amount of amusement because Boehner got seriously served on this.

Heck of a Job Boehner

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As part of their continuing resolution, the GOP have voted to defund planned parenthood, the healthcare law, gutting the social security administration, and forbidding the EPA from regulating mercury pollution.

This was all pretty standard. Obama has threatened a veto, and Reid has said that it will never see the light of day, so they can get in their votes, and not see much blowback.

What surprises me though is that they lost on a vote to defund the National Labor Relations Board (NLRB):

Sixty House Republicans joined with every Democrat to beat back an anti-union amendment on Thursday that would have defunded the National Labor Relations Board, a New Deal-era independent agency that arbitrates labor disputes. The sixty defections come as the Midwest GOP governors in Wisconsin and Ohio are launching direct assaults on public employee unions.

Nine high-ranking Republican members of the Education and the Workforce Committee broke with their party to support the agency, including the chairman, Rep. John Kline (R-Minn.). GOP hostility toward organized labor is not a new phenomenon, but the hostility has intensified since Republicans took control of the House; the party went so far as to rename what had been called the Education and Labor Committee, replacing “labor” with “the workforce.”

The fact that, “piling up losses in a chamber where the majority party typically rules with an iron fist,” is telling.

The Republican Party has been anti-union since Abraham Lincoln.  Support for organized labor one of the things that (used to) distinguish between conservative Democrats and liberal Republicans.

Still the fact that Boehner, and  Cantor could not successfully whip the vote on this is telling.

Boehner is clearly the weakest house speaker in decades, possibly since Thomas P. “Tip” O’Neil 1981-3.

My guess is that the nut job in Wisconsin is spooking some of the Republicans in Wisconsin, and neighboring, states.

Wisconsin is beginning to look a lot like MacArthur’s assault on the bonus army, and some people on the ‘Phant side realize that this will not end well.

Props to Obama on Generic Drugs

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Obama’s budget achieves a fair amount of costs savings by shortening the exclusivity period for drugs and ending payments from big pharma to generic drug manufacturers not to manufacture their drugs:

Big pharmaceutical companies could face increased competition from generic drugmakers under two proposals put forth by the Obama administration on Monday despite earlier savings extracted from drugmakers as part of last year’s healthcare law.

President Barack Obama, as part of his 2012 budget proposal, called for cutting the number of years drugmakers could exclusively market brand-name biologic drugs to 7 years from 12.

He also set his sights on ending controversial “pay-for-delay” deals that affect traditional, chemical drugs by giving the U.S. Federal Trade Commission power to block them. Under such pacts, brand-name and generic drugmakers settle patent challenges with payoffs that delay lower-cost rivals from reaching the market.

I’d feel a little bit better about this if he also wasn’t cutting home heating aid to the poor in the same budget though.

It’s Not Just the B Model F-35

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Yes, the F-35B, the STOVL variant has been placed on probation, but the entire program is encountering difficulties.

Most recently it has been revealed that there are problems with the aerodynamics and propulsion for all the models:

Flight testing so far has revealed problems with handling in the transonic and medium angle-of-attack regimes, [reportedly problems with wing drop/sideslip akin to those discovered in flight test for the F/A-18 E/F] and a problem with screech – destructive high-frequency combustion instability in the F135 afterburner – which is preventing the aircraft from achieving maximum power. [Which produces shockwaves, think the “snapping” on a an improperly lit Bunsen burner, writ large]

You know, that alternate engine for the F-35 is starting to look a lot better, huh.

Additionally, there are very real continuing problems with software, with the advanced helmet mounted displays and the vaunted 360° sensor fusiuon for the pilot not working properly.

As to the B model, weight problems is literally a killer.

With conventional and carrier launched variants, weight gain cuts into performance, payload, and range, but with STOVL aircraft, it means that they are simply unable to perform their basic functions:

Gates said that solving the unspecified technical issues now afflicting the aircraft “could” add cost and weight; the program office says that it “will”, and that it will take two years to “engineer solutions … and assess their impact.”

………

Vertical landing is a nonvariable requirement. The required airspeed is zero and can’t be adjusted by a few knots to compensate for extra weight. The JSF key performance parameter for bring-back load – corresponding to two 1,000-pound JDAMs and two Amraams – was set early on at a minimal level.

One reason that Lockheed Martin’s shaft-driven lift fan (SDLF) concept was a winner in 1996 and 2001 was that it seemed to offer thrust margin for vertical landing. At the start of SDD, the F-35B was projected to have an empty weight of 29,700 pounds – not a bad place to be in with (then) almost 40,000 pounds of vertical thrust. But, in the weight crisis of 2004, engineers found that the jet had ballooned to a far higher figure (never actually published) at which it could not land vertically with normal fuel reserves, let alone weapons.

………

Still, the redesign left a fundamental problem: the bring-back load (around 3,000 pounds) was only 8 percent of the landing weight. The result is that the F-35B couldn’t tolerate any OEW growth or thrust shortfall. The engine and transmission are maxed: that’s the issue underlying the repeated delays in powered-lift testing, chronicled here and here.

This is a mess, and much of it is driven by unrealistic requirements for commonality, and placing too much emphasis on the STOVL version, which wastes weight on the A and C variants.

When I worked on the now FCS, it was clear to everyone working on the program that the commonality requirements made the systems more expensive and less combat effective, and the same thing is happening with the F-35.

Howard Dean, Call Barack Obama and Tell Him

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That you will run against him in the primaries unless he drops his idea to cut social security:

The tax deal negotiated by President Barack Obama and Senate Republican leader Mitch McConnell of Kentucky is just the first part of a multistage drama that is likely to further divide and weaken Democrats.

The second part, now being teed up by the White House and key Senate Democrats, is a scheme for the president to embrace much of the Bowles-Simpson plan — including cuts in Social Security. This is to be unveiled, according to well-placed sources, in the president’s State of the Union address.

This is bad policy, it’s bad politics.

You could call it political Seppuku, but I think that is more accurately the deliberate and premeditated murder of the New Deal, and the marginalization of the Democratic Party for at least a generation.

I can no longer attribute this to incompetence or cowardice.  This is deliberate malice:

The Cossacks Work for the Czar

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After spending trillions bailing out banks, and billions paying the banks to pretend not to foreclose on people under the HAMP program, it now turns out that the Treasury Department is refusing to cut loose any money for legal aid for people facing foreclosure:

Treasury Secretary Timothy Geithner has authorized big payouts to banks in an effort to encourage mortgage modifications, but is preventing borrowers in danger of losing their homes from accessing legal assistance under the Obama administration’s foreclosure relief plan — even when banks are wrongfully or fraudulently attempting evictions.

As of August, the administration’s foreclosure prevention program — which had paid a total of $231.5 million to banks — had paid nothing specifically for borrower’s legal fees, despite the urging of congressional Democrats who say legal funding is critical to easing the crisis.

Democrats from foreclosure-battered states are pushing new legislation that would overrule Geithner’s edict, but the legislation is doomed this session with apathy from leadership in both parties and a packed lame duck calendar.

It’s easy to blame Timothy “Eddie Haskell” Geithner for all of this, but the reality is that he is Barack Obama’s man, and he is where he is because Barack Obama wants him there, coddling bankers and defrauding homeowners.

And the Long Term Consequences of Obama’s Capitulation are Worse

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First, it appears that the Republicans have structured the deal to force states into bankruptcy in order to destroy the public employee unions:

Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.

That’s why the most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”

This is juxtaposed with proposals mooted among the Conservative Nomenklatura, most notably in The Weekly Standard, that Congress enact laws allowing states to declare bankruptcy, which in turn would allow them to unilaterally break union contracts.

Additionally, you have the withholding tax holiday, which legitimizes schemes to defund Social Security as a prelude to gutting it, as Nancy Altman, co-director of Social Security Works, so ably notes:

Given that unwillingness to raise taxes by less than a nickel on every dollar earned over $1 million, I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country. Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.

That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels. Unless Congress acts to restore Social Security to solvency, the Treasury bonds held in trust will have to be redeemed, again on top of that new $120 billion transfer from the general fund, starting fifteen years from now, assuming Congress even continues to make the $120 billion every year before that point. These dollars will be competing with dollars for defense, environmental protection, education, school lunches, Food Stamps, Medicare, Medicaid, SSI, Pell grants for low income college students, and every other good and service financed by the federal government.

A permanent two percent cut in Social Security contributions doubles the 75 year projected shortfall. Scrapping the cap (eliminating the $106,800 maximum on earnings), tonally eliminates the shortfall today. If FICA is cut by 2 percent, scrapping the cap gets Social Security only halfway there.

I’m a cynic, and I believe that this is a feature, and not a bug.

On labor, the Obama administration has pointedly sat on its hands with regard to the Employee Free Choice Act (EFCA), and the Obama Department of Education is more virulently anti-union than Bush’s Education Department ever was, as mind boggling as it sounds.

As to Social Security, anyone who appoints Alan Simpson and Erskine Bowles to a “deficit reduction” (catfood) commission, clearly wants to gut that gem in the crown of the New Deal.

These flaws in the “compromise” are features, not bugs. 

After seeing this happen repeatedly, I think that actual intent is a more coherent explanation than simple incompetence.

Obama wants these things to happen.

H/t Yves Smith for the first link.

The Invisible Bond Vigilantes Have Appeared

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Interest rates on Treasuries have surged in the wake of the tax cut capitulation:

Treasury prices dropped Tuesday, pushing 10-year yields up by the most since June 2009, after Congress and the White House compromised on a tax package that is expected to raise the deficit and increase the government’s borrowing needs.

The drop in prices, which move inversely to yields, extended further after the government’s first of three auctions this week drew tepid demand from investors.

Go figure. Barack Obama has managed to capitulated his way into pushing interest rates up.

That will help the economy.

And Here’s Another Shocker from Barack Obama

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It turns out that his pay freeze proposal will cripple the staffing of the Consumer Financial Protection Bureau:

Rep. Barney Frank (D-Mass.) said this week that exceptions may have to be made to President Barack Obama’s proposed pay freeze in order to effectively implement the Wall Street reform bill.

………

Frank said on Thursday he would support providing exemptions to the pay freeze if regulatory agencies, including the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CTFC), can show they are needed to hire the appropriate talent.

………

In July, SEC Chairman Mary Schapiro announced that her agency intends to hire 374 new employees in 2011. She also indicated that to meet the requirements set out in the Dodd-Frank bill, the agency will need to hire up to 800 staff in total.

Mr. Frank, you are being naive. The fact that the pay freeze cripples agencies that regulate the big banks is not a bug, it’s a feature.

Surely, after all he has done to protect the big banks, you can’t think that he will allow the regulatory agencies to staff up with competent and motivated people to actually reign them in?

Silly Congressman, don’t you know that laws are for whistle-blowers, not bankers!

It is Worse Than a Crime, It Is A Mistake

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Well, the White House completely caved on tax breaks.
What the Republicans got:

  • A 2-year extension to all the tax cuts, including the tax cuts for those making more than a $¼ million a year.
  • Setting a new exemption on the inheritance tax at $5 million.
  • Dropping the tax rate on the inheritance tax at 35%.

What Obama got:

  • A 13 month extension to emergency unemployment benefits.
    • Which means that Republicans will kill extended unemployment benefits in January 2012, putting the economy in a tail spin as the presidential election rolls around.
  • A 1-year 2% holiday in Social Security, which will provide a family earning $50K about $1K.
    • The difference is supplied from the treasury, so it does not hit the trust fund, and this is probably the best tax cut for boosting the economy.
  • Continuation of the college tuition tax credit.
    • Which, of course gets taken back out by the financial aid department, which makes awards on the basis to pay.

It’s a remarkably one sided agreement, and Barack Obama followed this up with a lie:

Mr. Obama said he was insisting on a temporary deal on the tax rates for high earners and wealthy estates on the belief that he would ultimately prevail.

“I’m confident,” Mr. Obama said, “that as we make tough choices about bringing our deficit down, as I engage in a conversation with the American people about the hard choices we’re going to have to make to secure our future and our children’s future and our grandchildren’s future, it will become apparent that we cannot afford to extend those tax cuts any longer.”

Let’s be clear, Barack Obama has no intention whatsoever to raise taxes on the rich or on the inheritance of drooling rich heirs.

He’s a pimps harder for the well off than Bill Clinton ever did, and it should be noted that Clinton did it before the rich ratf%$#s on Wall Street blew up our economy.

When one looks at what Obama has done, one can only conclude that we got sold a bill of goods by a Blue Dog.

If he had even the smallest bit of a progressive bent, he would have bent.

He sells out to Republicans because he supports most of their policies.

I’m With Jane Hamsher on This

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Barack “I suck up to Wall Street Like 1000 Hoover vacuum cleaners” Obama is not folding on tax cuts for the hyper-rich, he wanted them to keep their tax cuts all along:

It’s been clear for some time that President Obama made the political calculation that he does not want any of the Bush tax cuts to expire. He doesn’t want to be the guy in 2012 running for President on having “raised taxes during a time of recession.”
But the President also doesn’t want the political blowback of angering people who cheered him on the campaign trail when he promised to let the tax cuts expire. And so rather than just come out and just say that, he’s been actively trying to kill a Chuck Schumer deal to keep them from expiring on income of more than $1 million a year. It was a plan that put the GOP in an awkward position, and had thrown them off message in recent days — hard to be the people fighting for the 315,000 families who fall into that category over the 2 million set to lose their unemployment benefits by the end of the year.

The President argued against the Schumer deal, we are told, because he was concerned about “the cost [to the deficit] and the risk of redefining the middle class as those making over [should read under] one million.”

The President’s argument is, of course, pure crap.

I think that when we look at Barack Obama’s performance on issues of real reform, it’s clear that he falls short of his rhetoric because he does not want real reform.

Financial reform was mostly smoke and mirrors, with small steps, like the Consumer Financial Protection Bureau, being driven by a need to avoid totally alienating his base in 2012.

The same goes for taxes, or for the give-away to health insurers that is laughably called healthcare reform.

Go read the rest.

Finally, Some Competence

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The House just passed the “Democratic version” of the tax cut extension, with the support of only 3 Republicans, and the opposition of of 20 mostly Blue Dog and mostly lame duck Democrats.

I don’t expect to make it through the Senate, but this is both good politics and good policy.

What is interesting is the parliamentary maneuver used to get it passed by a simple majority.

Normally, you need a ⅔ majority vote in the House to pass the bill without the possibility of a motion to recommit, basically a motion to amend and send back to the originating committee, and the Republicans always come up with stuff that will make weak kneed Democrats vote with them, typically having to do with sex offenders, or in this case, Wall Street tax cuts to make the Blue Dog/New Dem squishes tremble.

Well, Nancy Pelosi found a work around:

Brace yourself for some procedural jargon: Dems once believed they were faced with two mixed options for holding this vote. The first was to hold an up-or-down vote under the normal rules. But that would give Republicans the opportunity to introduce what’s known as a motion to recommit — a procedural right of the minority that would have allowed them to tack an extension of tax cuts for high-income earners on to the legislation.

The second option — suspending the rules — would have foreclosed on that right, but would have required a two-thirds majority of the House for passage: 290 votes, an impossible hurdle.

But Democrats figured out a way to avoid this. They’re attaching their tax cut plan as an amendment to a separate bill [the Airport and Airway Extension Act, to wit]. That legislation already passed the House, and has just been returned from the Senate. The rules say it can’t be recommitted. So the GOP’s hands are tied.

You can blame Obama for the election debacle. You can blame Harry Reid. Don’t blame Nancy Pelosi.

She knows what she has to do, and she does it.

Democrats were savaged because they were perceived as being unable to deliver, but Nancy Pelosi was not a part of that problem, she was just the victim.

Why Reaching Across the Aisle is a Stupid Idea

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Arizona Republican John Kyle has announced that he will not allow a vote on the START treaty unless the Democrats capitulate on tax cuts for people making more than $¼ million a year.

I am not disappointed by Kyle, I expect this behavior from post-Reagan Republicans. What does disappoint me is the behavior of Barack Obama, who continues to think that he can dazzle them with his awesomeness and reach across the aisle.

As my brother notes, “Since being ‘nice’ doesn’t work, a sane course might include not being nice….“

The Root of the Irish Economic Problem

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So, they have cut a deal for the Irish to cut their own economic throats, but I think that all the commentary misses the big picture on the Republic of Ireland.

Before the boom, Ireland was a 3rd world country that happened to be a part of the EU.

At the height of the bubble, Ireland was a 3rd world nation that was part of the EU, and part of the Euro zone, which drove a speculative frenzy being driven by massive foreign cash flows.

It was still, and remains, a 3rd world nation that was a part of the EU.

To be fair, it might better be called a 2-¾ world nation, but still…..

Bloody Typical

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So, in the face of GOP gains, largely on the back of the weak tea offered by Barack Obama on healthcare, and jobs, and pretty much everything, Barack Obama has decided that more capitulation to Republicans is in order:

President Obama is often blamed for not reaching out to Republicans. In truth, as Monday morning’s announcement that Obama wants to cut the pay of all federal employees illustrates, he has the opposite problem. Obama frequently proposes essentially Republican policies, which makes it impossible for him to use those ideas to buy Republican votes for bipartisan legislation.

(emphasis mine)

Note here that this already has John Boehner doing the victory dance, and suggesting that there should be a freeze on hiring new federal workers, which, unsurprisingly, would gut increased SEC enforcement, staffing the Consumer Financial Protection Bureau, etc.

I am beginning to think that this guy is a Republican Plant.

If not, I really want to play some high stakes poker with him.