July 27, 2008
Elaine Meinel Supkis
Right behind my back, in the dark, in the Cave of Death, Congress snuck in a proviso to raise the debt ceiling by nearly a trillion dollars to nearly $11 trillion. And they always race to new ceilings! This made nearly NO news at all! And I scan the news closely! Readers email or make comments when news like this breaks yet none of us heard this news. Time to go back to the beginning of the law that forced Congress to set a ceiling and the President to adhere to this. Back, back to the Reagan years when he smiled and said it was OK to go deep into debt and run everything in the red. Today, this ethos is our new Constitution!
With President Bush no longer threatening a veto, the subprime mortgage and Fannie and Freddie “bailout” bill is now sailing through Congress. In anticipation of its enactment, Congress had the foresight to raise the national debt limit to $10.6 trillion. Who says that politicians don't plan ahead?
Once signed into law, the budget busting legislation will hand the Administration a blank check to prop up the ailing home lenders. The ultimate cost is anybody's guess. I believe that the price tag will be higher than just about anyone imagines. Paulson's Bazooka will be locked and loaded with enough fire power to blow what's left of our economy into the dustbin of history.
OK, here is my reaction: GODDAMN IT. What the hell is going on? HAHAHA. No wonder the NYT had that big story about what a pitiful, poor, pathetic outsider and naïf Treasury Secretary Paulson is! The baby didn't know his way about Washington, DC, even though he and his wife give to both the Republican and Democratic parties, hosts politicians, ran in and out of DC giving orders, etc. But he knew no one and knows nothing. And Bernanke is doing his best, even Obama says so! He is struggling to provide Free Funny Money™ to all and sundry in and out of government! The NYT didn't bother trumpeting the dire news in a headline I could see on the front page. When I googled this story to see if there were others covering it, there were only 2 other sources!!!! What the hell is going on here?
Well.....welcome to the Cave of Death. The need to run a global empire means spending money all over kingdom come and giving it away like candy in a perpetual Ground Hog's day but it is always Halloween instead. Once upon a time, not too long ago, either, the business about raising the debt ceiling was front page news. During the Clinton years, the GOP went stark raving mad, howling about this. Of course, it was pure politics since the problem really took off with Ronnie Reagan and Bush Jr simply sent it into high orbit.
Before we go into history here, let's visit Ron Paul and see what he has to say about all this, here is a part of a speech he made way back in 2003:
The administration held a grand signing ceremony last Wednesday to celebrate the tax cut bill, a marginally worthwhile piece of legislation that does reduce income taxes slightly. The East Room of the White House was awash with cabinet members, Congressmen, Senators, administration staffers, supporters, and news media of every kind, all gathered for a perfect political photo-op.
One day earlier, however, the President signed another bill into law without fanfare of any kind. There was no press conference, no cameras, and no ceremony whatsoever. In fact, the White House issued only the briefest comment on this particular bill, even though it affects the American people far more than the modest tax cut bill. The reason for the silence? The President had just approved a whopping $984 billion increase in the national debt, the single-largest increase in our nation’s history. This was hardly a proud moment for the President or Congress, so the White House understandably kept the whole matter very quiet.
For perspective, this latest debt limit increase of nearly one trillion dollars is as large as the entire federal budget in 1985. The embarrassing increase was necessary because federal law limits the amount of debt the Treasury can carry, and the current $6.4 trillion limit had been reached. The federal government across the board has been spending money feverishly, at levels approximately 22% higher than just three years ago. This spending spree caused Congress to raise the debt limit from $5.9 trillion only six months ago, but the new limit was quickly reached.
The House managed to avoid a direct vote on raising the debt limit, instead burying a series of automatic debt increases in the terrible 2004 budget passed in April. The Senate, by contrast, at least held an up-or-down vote on the issue. Yet only one Republican Senator voted against saddling the American people with nearly another trillion dollars of debt. Both parties in Congress clearly now view the debt ceiling law as purely symbolic at best. Privately, most members probably view it as an unnecessary obstacle that should be eliminated, an opinion shared by Federal Reserve Chairman Greenspan.
Over the years, the embarrassing news about the debt ceiling has been allowed to fall further and further into the mists of Avalon, like King Arthur, the Ship of State sails off into the West, never to return. The media has been very cooperative with hiding this news, of course. Bush doesn't determine what is a headline....hell, he does! He has a long record of asking the New York Times and the Washington Post as well as all the major magazines to kill stories and they all kill this story gladly. They don't care. No one running things these days gives even a minor wince when running the US deeper and deeper into debt.
All conversations on all editorial pages about all topics: war, health, welfare, schools, diplomacy, whatever---totally ignores the growing budget deficits and how these are now destroying our future! I wish I could pass a law saying that no article, editorial or TV show can mention the need or desire to spend money on anything without first explaining the budget deficit and showing how these new expenditures will make things worse.
The other day, a poor woman committed suicide when the sheriff came to evict her and auction off her home. It seems she hid the incoming bills and information from her entire family. She just threw it all away and kept on spending money! Then, she shot herself! She is Miz Liberty. She is the US. She acted like Congress, like Bush. She acted like the media. Everyone who is in charge of spending are not passing the information of the rising debt to the rest of us. Now, it is so bad, this isn't even rated a back page story!!!!
Now let's go to when a desperate Congress, like an addict or drunk, decided it was time to set some limits on wild spending, the passage of the law setting a ceiling. This was back in 1985:
The Balanced Budget and Emergency Deficit Control Act (P.L. 99-177, 99 Stat. 1038) is popularly known as the Gramm-Rudman-Hollings Act after the names of its principal sponsors, and was designed to reduce the federal budget deficit. The law did so primarily by setting seemingly rigid deficit limits and authorizing mandatory, across-the-board spending reductions to reach them. Although the Supreme Court ruled that a key part of this mechanism was unconstitutional, the basic concepts embodied in the statute have continued to influence the process for adopting the federal budget.
Although the Constitution does not mandate a balanced budget, it does require Congress to approve all federal expenditures (Article I, section 9, clause 7), and it empowers the federal government to raise revenue through taxes, tariffs, and other measures (Article I, section 8, clause 1). The latter provision also authorizes the government to incur and pay debts. Congress has passed legislation establishing procedures for adopting the federal budget (e.g., the Congressional Budget and Impoundment Control Act) and for handling the national debt (e.g., the Public Debt Act).
The government regularly ran a budget deficit in the years following World War II, but the situation became especially serious in the early 1980s. Between 1981 and 1985 the annual budget deficit nearly quadrupled, and it threatened to remain at high levels indefinitely. Further, if nothing were done, the total national debt would have more than doubled between 1985 and 1990. The Balanced Budget and Emergency Deficit Control Act was adopted in the fall of 1985 in connection with a measure that raised the national debt ceiling.
The law's most important feature was a schedule for reducing the federal budget deficit to zero by 1991. It fixed a maximum allowable deficit for each fiscal year. If Congress and the president failed to adopt a budget that met the target, the law called for across-the-board spending reductions in most federal programs. Responsibility for determining whether the budget satisfied this requirement was given to the comptroller general, who is the head of the General Accounting Office (an agency that does research and investigations at the behest of Congress). The comptroller also had the authority to order the across-the-board spending cuts needed to lower the deficit to the required level.
HAHAHA. This is like a whore swearing she will be a virgin and never ever sell her sex to just any passing gnome with campaign finances stuffed in his pockets! Well, that lasted about.....NEVER. Not even a day! The back door was left open. Congress continued to spread their legs and the lobbyists simply inserted the money where there is no light of day. And the misspending continued merrily forwards. Indeed, note the optimism of the bill's sponsors: balanced budget by 1991. What really happened then?
We went to war with Saddam and as usual, our oil prices shot up, our economy collapsed and the government had to spend lots of money. The war itself didn't cost too much except lives. Bush Sr. boasted that we were now the MERCENARY empire and were for sale to the highest bidders. Well, that didn't last long, either. Soon, all our many allies figured out how to make us pay for their wars and not give us a hand out but instead, give us loans. So the red ink didn't slow down, it increased. For there was a new danger: inflation supposedly went down because the Japanese began to seriously soak up all excess US dollars in their FOREX reserves which went from only $12 billion in 1985 to nearly $1 trillion in 2000.
After 2000, China did the same. So the availability of easy loans was ongoing despite wild US spending. Let's go see various headlines from the last 20 years which illustrate how this news about breaking the budget barriers became less and less important and carried less and less real information until the whole thing was killed:
Congress approved a one-week extension of the Government's borrowing authority today as Senate negotiators said they had reached a compromise on a new mechanism for automatic spending cuts under the budget-balancing law.
Congress approved a one-week extension of the Government's borrowing authority today as Senate negotiators said they had reached a compromise on a new mechanism for automatic spending cuts under the budget-balancing law.
The vote on the debt ceiling increase was 263 to 155 in the House. The Senate approved it on a voice vote and sent it to President Reagan, who is expected to sign it immediately. Approval came just days before the Government would have run out of cash Friday and defaulted for the first time in history.
The compromise on the new automatic spending cut mechanism was reached by the chairman of the Senate Budget Committee, Lawton Chiles, Democrat of Florida, and the committee's ranking Republican, Pete V. Domenici of New Mexico. It is expected to be debated in the Senate Thursday, and both Senators predicted approval. The Reagan Administration has not said yet if it would support the new mechanism.
Deficit Ceiling to Be Relaxed
Under the automatic cut proposal, if the projected Federal deficit did not meet the targets in the budget law, spending would be reduced by equal percentages across the board, except for Social Security, Federal pensions and several programs for low-income families. Half of the cuts would be in the military budget.
Right off the bat! Less than 2 years later, the ceiling was 'relaxed'. The old whore lay back in her bed, her legs spread wide. 'Oooh, gnome, you are so handsome and big!' she sighed. 'Fork it over and I'm all yours.'
Note the last sentence: the military budget was going to be cut. Oh my! Emergency! The hysteria this caused can't be imagined. Someone tell April who was the US ambassador to Bagdad to give Saddam the green light to attack Kuwait!!!!
Done deal! Now, no one is going to cut the military budget. The Cold War was over, time for hot wars. By the way, today, no one in the media mentions deficits and military spending in the same room. They are never mentioned together anymore.
(AP) -- Replaying a drama from last year, the government is once again bumping against the debt limit of $6.4 trillion and the Treasury Department has begun taking evasive actions to prevent an unprecedented default on the national debt.
Treasury Secretary John Snow informed leaders of Congress on Wednesday that the government would reach the borrowing limit on Thursday and he would begin pulling investments out of a $48 billion government pension fund to make room for normal public borrowing auctions.
In a reference to the looming possibility of a war with Iraq, Snow urged Congress to act without delay to raise the borrowing limit.
"I know that you share the president's and my commitment to maintaining the full faith and credit of the U.S. government, especially at this critical time," Snow said in his letter.
Look at how the numbers, under Bush Jr, took off! The $1 trillion deficit of 1982 is now over $6 trillion. But we are at WAR!!! More money must be spent!!!! At least this article mentions them talking about spending money on wars. During all of this, the government passed that Social Security bill that doubled the taxes on the working class. To pay for our retirements. But instead, it was used to pad the budget and thus make the deficits look smaller. It is all gone. It is all just a piece of paper, as Bush once remarked. It is our national SIV.
The strict rules that once limited tax cuts and entitlement spending increases lapsed two years ago. Limits on spending lost their teeth. This year, Congress failed to pass a budget altogether.
Last night, with the federal government warning that it was on the verge of defaulting on its debts, the House rejected efforts to reimpose restrictions on tax cuts and spending, then joined the Senate to raise the federal debt limit by $800 billion, to $8.18 trillion.
The collapse of statutory restraints on the growing budget deficit has alarmed Wall Street, befuddled the Treasury Department and elicited calls for a rethinking of the way the government handles its authority to tax its citizens and spend those proceeds.
"The fact is, very little [budgetary restraint] is left in any real form or substance," said Robert D. Reischauer, a former director of the Congressional Budget Office, now president of the Urban Institute.
With last night's passage of the debt ceiling increase, the government's borrowing limit has climbed by $2.23 trillion since President Bush took office: by $450 billion in 2002, by a record $984 billion in 2003 and by $800 billion this year. Just the increase in the debt ceiling over the past three years is nearly 2 1/2 times the entire federal debt accumulated between 1776 and 1980.
A recession, a sluggish economy and five tax cuts in four years -- coupled with soaring defense spending on wars in Iraq and Afghanistan and rising domestic spending -- have turned record surpluses that Bush inherited into a record deficit of $413 billion in the past fiscal year.
That story was written right about when the housing bubble reached its greatest girth. Note that the economy is still being described as 'sluggish'.
For weeks we have been treated to a virtual Mississippi river of propaganda explaining how high energy costs no longer matter and doesn't effect the markets and interest instability doesn't matter either, housing values will rise forever in a hyper inflated fashion which isn't really a bubble....pop.
OK. Readers of Culture of Life News knows that last week we ran a series of articles explainin the amazing 200+ point climb in stocks which seemed irrational on the surface. The economic indicies are all showing great weakness. The ones that matter the most, the "historic index" if you will, are in terrible shape. No country at any time in history can run the raging trade and budget deficits America has created for very long! It is literally impossible. All kinds of excuses are carted out to explain this situation and to excuse responsibility for it. As our CEO executives get arrested for economic crimes, all wail that they know nothing and have no control over their own criminal enterprises.
One government report after another details the failings and crimes of our own government and all reports end with, "We hold no one responsible for this". Just because one evades responsibility for things doesn't make them dissappear.
And here is my article from the same day the news about the debt ceiling was reported, on November 19, 2005:
Stark memo with no mainstream press trumpets, the Fed decided they are fed up feeding us vital financial information. So they will simply hide it from us so we can't see how much money they are creating out of thin air.Discontinuance of M3 On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.
Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).
So, they will still continue to show us large-denomination "time deposits"-- but they won't show their own contribution to this! You can bet in a year, even that will be hidden from view so the mooing herd of investors can't panic. You know, if you want to kill a lot of cows, you herd them in a large group into an ever tighter corral, smaller and smaller until each one is forced into the ramp that takes them into the slaughter house.
Restrictions, restrictions. Note the currency that will be hidden from view will be the euro. Can't let the Europeans see how the yen/dollar black hole operates. They must be kept guessing.
This news, and I look for this sort of news, slipped by like a thief in the night on 11/10 late in the day, the following day being a holiday and a weekend. This sort of bad news dump is what Bush and his Skull and Bones minions like Greenspan are addicted to doing. It is the "news black hole" they use when they don't want us to talk about something.
Google this information and up until today, you get very little.
And here is my cartoon from back then!
Only a very, very tiny handful of online commentators roared in rage over this news! Note the ceiling news story from the same day made no mention of this breaking news from the Federal Reserve. I got the news from the Reserve itself, I am on their mailing list. I will also note here, they are NOT emailing me or probably anyone, lately! This is just disgusting and part of the whole 'We want to operate in the dark' business.
Most Americans were actually quite happy in November, 2005. Money was flowing out of the Home ATMs like there was literally no limits. But right about then, the Fed began to raise interest rates, fast. This was due to obvious painful inflation. This is why they decided to hide important statistics that show inflation. They could then lie about inflation. This is because these goofy magicians think inflation is psychological, not caused by excess lending.
ARGH. Like we just have to take Prozac and all would be well. Back to the history of the debt ceiling news:
Faced with a potential government shutdown, the Senate votes to raise the nation's debt limit for the fourth time in five years. The bill passed by a 52-48 vote, increasing the ceiling to $9 trillion. The bill now goes to the president.
The debt now stands at more than $8.2 trillion.
Like many cash-strapped Americans who have maxed-out credit cards, the federal government has hit its limit for borrowing funds to keep operating. If the limit isn't raised, the government likely will run out of borrowing authority within days, risking a shutdown.
When President Bush took office five years ago, the national debt was at $5.6 trillion; since then, big budget surpluses have collapsed into huge deficits, and the debt has shot up nearly 50 percent.
Few lawmakers, though, wish to be on record as authorizing more debt -- the House goes so far as to hike the limit automatically. And Senate Democrats are telling their Republican counterparts not to expect any help from them, particularly in an election year.
Here is the NPR graph:
Now here is my own story and cartoon from this same news stream back then, on March 16, 2006:
The tax cutting/cutting citizen's programs GOP Jihad machine is grinding its gears as the USA faces the biggest budget deficits along with the biggest trade deficits in our history. Frist won't allow on the floor debates on these topics. Meanwhile, the clock is ticking and the debt ceiling hasn't been raised to $9 trillion.
As I keep on saying, anyone who thinks this mess will end with a birthday party for us is the sort of person who believes in Santa Claus. Well, capitalism is supposed to be pure Darwin "red in tooth and claw" and the twin to this creature is called "revolution and war" which shadows capitalist expansions and contractions.
This is why FDR and his crew were so very desperate to iron out the peaks and valleys of raw capitalism. They were very aware of the downside. Alas, as the last survivors of the Great Depression die off, the younger generations, pretty old ourselves, will have to relearn all those harsh, nasty lessons.Associated Press: America's deficit in the broadest measure of international trade surged to an all-time high of $804.9 billion last year as the country went deeper into debt to foreigners. The Commerce Department said the deficit in the current account was up 20.4 percent from the previous record of $668.1 billion set in 2004. The current account is the best measure of trade because it tracks not only goods and services but also investment flows between countries.I have drawn so many cartoons illustrating red ink I feel like I live in the Suez Canal. This is way beyond out of control. Everyone I know is fearful that their jobs will be outsourced, frearful of ever finding any work at all, fear is everywhere. The young people I know are not happy about their futures, they are scared and getting increasingly angry. Fear of this sort can and will explode suddenly. All factory workers, across all industries, are being forced back and back and back. They are rapidly losing ground now even if they can't get their jobs exported, the owners of our country simply import more labor, more and more, it just pours in, unstoppable.
This is deliberate. The red ink is deliberate. All Congress has to do is vote for the taxes to be put back to the levels under Clinton. Period. Seems terribly simple, doesn't it?
Then they can vote for tariffs and barriers. Why?
Because they WORK. Since all countries are trying and succeeding in overwhelming us in trade, we have to cut back...let them trade with each other for a while. Meanwhile, to cut down on our energy imports, we impose draconian gas rationing. People with gas guzzlers will just have to bite a bullet. Better than biting real bullets which is what will overtake us if we continue this path.
I also published this story that very same day:
It is now obvious that the real estate market is now a buyer's market which means the home ATM machine is going to cough up $0 for a long time. This was laughably easy to see coming since this happens with near-clock-like regularity. The fiscal policies of Greenspan will make this cycle particularily punishing. This, too, is laughably easy to see coming.
This is so simple: every time housing values crest, foreclosures on the more tenuous properties begin. These are the speculators who put virtually no money down on properties that aren't even really on the market yet. The properties revert back to the developers who frantically, knowing this is now a bad market, will aggressively sell, undermining the profits of other sellers.
This peak always coincides with good times in the labor markets. Labor has already been bleeding badly for several years with incomes behind the rate of inflation. This market would have peaked in 2002 except Greenspan, to help his Skull and Bones Buddy, Bush, kept interest rates artificially low, below the rate of inflation causing one of the biggest run-ups in housing value in our history.
Again: the big move now is to hide our debts from the American people. Just like 99% of the bad news from the war fronts is carefully hidden from view, so is this tsunami of red ink. The trade deficit only makes news when it is slightly smaller. But still running at historic levels of red ink. Which is NEVER mentioned anymore. Back when it was half the present size, it was in the news regularly. Now, it is not. Not even slightly! Gah!
What are we waiting for? The Chinese sheriff to show up to auction off the last of our assets? Then we shoot ourselves?