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EDITOR OF REDSTATE

White House and Congressional Leaders Resort to Fearmongering

If you’ve seen the recent Harry Potter or watched any of a host of exorcism movies, you know that right before the demon dies, he lashes out most brutally and fearfully to try to get you to give up.

We’re seeing the demon of out of control government lashing out in spectacular fashion now before House Republicans kill it.

In one last spectacular bout, the White House and Congressional leaders are summoning Standards & Poor to Congress to scare the beejezus out of House Republican Freshman. They are bringing in the Grim Reaper to proclaim death if a deal is not reached.

House Republicans should first note that S&P did not see the financial crisis come and also note that the White House and Congressional leaders did the exact same thing on TARP.

Then House Republicans need to open their eyes, laugh at death, and finish the exorcism.

They are being asked by their leadership and the White House to embrace one of two poisons:

The first poison, McConnell’s Pontius Pilate Act, would let the President drive up debt by $2 trillion without any cuts.

The second poison, the Gang of 6′s Gangrene, would drive up debt by $2 trillion, not make cuts of $3.5 trillion for ten years and even then depend on subsequent Congresses actually agreeing to those cuts, and also foist on the American public the largest tax hike in American history while being dishonest enough to call it a tax cut.

Poison kills. And either of these poisons, despite what the S&P or any politician may say, will kill the long term prospects of this Republic being financially solvent.

Why?

Because the House GOP is performing an exorcism on government spending. It has the only plan that can pass by August 2, 2011, that cuts spending, caps future spending, and balances the budget. It has the only long term plan that meets the credit reporting agencies’ demands without relying on future agreements to do things Congress has never had the will do to.

The Senate and White House do not want to stop spending. They do not want to be restrained.

So they’ll bring in the S&P, claim disaster, beg for live, and hope the GOP in the House gives up the fight and stops the exorcism before the demon is driven out.

House Republicans: Hold the freaking line. They are trying to scare the crap out of you to prevent you from saving the Republic. Do you really believe the same people and the same bipartisan deals that got us to $14 trillion in debt will somehow get us out of it?

Hold the line.

COMMENTS

  • silentcal2012

    None of your posts ever seriously contemplate the downside of default. You just call it fear-mongering., but even people like Lawrence Kudlow are scared. You may think this is the issue of the day, but it?s not; the issue of the day is still the economy and jobs. As an American first, and a conservative, I find no joy in becoming a banana republic. If we default, it will be a national embarrassment, and for the first time Obama will get to share blame with Republicans.

  • __t_i_m_o_t_h_y__

    My call to Webster this morning included that reference to Allen West and the appeal to courage and bravery had a palpable, positive effect on the staffer I talked to.

    Others may want to try it.

    Steadfast and Loyal.

  • mercyvetsel

    They should invite Sean Egan from Egan-Jones, the independent rating agency that doesn’t accept money from issuers.

    Or listen to his comments on Bloomberg yesterday (5:35).

    Over the weekend they downgraded US debt to AA+ and it was due to the DEBT CRISIS. In the words of Sean Egan, the debt LIMIT crisis is a “Red Herring”.

    Egan-Jones actually predicted the credit crisis of 2008 and they didn’t misrate a bunch of garbage and cause the crisis like the government-sanctioned triopoly (S&P, Moody’s, Fitch) did.

    Or maybe they should invite Bill Gross, the top bond fund manager in the world. He dumped ALL of his treasuries holdings back in March, about the same time when Egan-Jones first put Treasuries on watch for a downgrade.

    Gee, what else was happening back in this spring of 2011? Oh, yeah, that was when the Republicans caved on the budget by saying they would rather spend us into oblivion rather than shutdown non-essential government functions for a few days or weeks.

    Or maybe they should invite the top Chinese rating agency Da Gong. They downgraded US debt a while ago.

    Finally this confirms that there is political pressure being applied to the rating agencies to highlight the Red Herring of the debt limit rather than the real issue the debt.

    As I mentioned in my blog post yesterday, Egan-Jones got a harassing email from the SEC immediately after the downgrade.

    He also said he believes that tremendous political pressure is being applied to the rating agencies.

    -Mercy

  • peg_c

    There can be no default unless 0bama commits an impeachable offense. You think he’ll do that? Many of us don’t. And we are DEMANDING that the GOP freshmen we elected last Nov. stand firm and demand their “leadership” stand firm!

  • Kyle-MI

    If embarrassment is the worst that can happen (I don’t believe it is) then this whole thing is overblown indeed. Argue anything else you want but leave the touchy-feely stuff to the other side.

  • littletboca

    Hopefully, S&P will tell all that the National Deficit is what they worry about the most – they know raising the debt ceiling without reducing the debt bigtime leaves our Nation in a very bad situation.

    Erik, keep doing what you do – we all need you! little tboca

  • silentcal2012

    The worse will be theeffect on skittish employers, nervous investors and all the people suffering in this economy that will get another negartive jolt in August. The touchy feely people are the one celebrating symblic victories that mean little in the real world and cheerleading on blogs.

  • cwilson

    …is if Obama decides to pay non-essential bills, while refusing to pay the interest on the debt. We have the cash flow to pay the debt service, and essential (or political necessary) bills like VA, SS, military pay, etc.

    We would have to furlough a whole ton of timeservers in the various useless agencies (DeptEd, HUD, EPA, DeptInt, DeptEnergy, etc) — but that’s not necessarily a bad thing. But we would NOT default.

    Unless Obama chooses to FORCE a default, by his own free will. Now, he might just hate this country enough to do it, in a fit of pique at not getting raise taxes by a bajillion dollars, but that would be ALL his doing. NOT the Republicans, not the House, not the Senate. ALL Obama (and Tim Geithner).

  • mercyvetsel

    and 0% comes from the absurd Red Herring about the debt limit.

    Okay, pay attention here. The debt limit has nothing to do with a default. This is an absolute lie told by the Obama to create a Red Herring to be broadcast by a compliant press.

    See my earlier comment below or my blog post. The bond market knows the debt limit is a Red Herring, the rating agencies know it’s a Red Herring. Everyone outside of the D.C. spin bubble knows that.

    We need to let the Republican know that we’re watching the market and NOT breathing in the White House BS cloud no matter how far it extends.

  • BA Cyclone

    doesn’t mean the rest of us are just as uninformed. We are not talking about being cavalier with “default”, we are talking about being fiscally responsible with the funds confiscated by government.

    Further, what kind of pro-economy, pro-jobs agenda involves growing government debt at ridiculous rates? These are promises of future tax hikes on said job creators.

    There is no sea of prosperity when government spends 25%+ of GDP, unless you are IN the Government.

    The House GOP has ALREADY PASSED the compromise bill. If the Democrats want to pass a compromise by 8/2/11, they can pass the bill.

  • carolina

    Boehner tweets that this is FALSE.
    Poor lamestream media can’t lie to us and get away with it any longer. Twitter can be useful for real-time rebuttals.

  • carolina

    Boehner tweets that this is FALSE.
    Poor lamestream media can’t lie to us and get away with it any longer. Twitter can be useful for real-time rebuttals.

  • Aaron Gardner

    .

  • Next93

    If we choose to avoid the threatened default by dodging necessary structural changes, we’re setting ourselves up for a guaranteed default in a few years about which there will be no choices.

    I’d rather risk it now, while we still have some options, than wait till the situation is irreparable.

  • mercyvetsel

    They’ll do exactly what they’re told. As we saw in the 2000′s, independent thinking isn’t exactly their strong point.

    I hope that one of our Congressmen is able to ask them about why Egan-Jones and Da Gong have already downgraded US debt or if the debt limit had anything to do with Bill Gross dumping all of his US Debt holdings back in March.

  • Death_of_the_Donkey

    until the markets start to react to a lack of an extension sometime on or around August 2. At that point, we will get the blame for a market dislocation as financial markets will react quite negatively to no debt ceiling raise (and if you don’t like my word, Francis is saying the exact same thing).

  • Aaron Gardner

    Still waiting on your answer on how $111 Billion in cuts will throw the country into recession. You’ve had ample time to read the details I linked you to yesterday.

  • silentcal2012

    Value as practically applied = 0.

    ” There is no sea of prosperity when government spends 25%+ of GDP, unless you are IN the Government.”… What rhetorical flourish. Unfortuantely, I live in the world where Obama in POTUS, Reid controls the Senate, the media works against us, and independent voters reject ideologues and stringent partisanship.

    As of 8/3, the negative headlines will ubiquitous. The public will blame Obama and the Republicans, where now Obama owns the economy.

    While a minority of echo chamber conservatives will be celebrating, a majority of Americans will lament our national turmoil , and those conservatives who think this is something will marginalize themselves in the process and damage the GOP and the conservative brand..

  • Aaron Gardner

    I remember when independent voters rejected that ideologue Reagan. Thank God too.

    /sarc

  • acat

    is the idea that parts of the list – S&P, Moody, etc. – are still acting as if it’s 1953, the U.S. is still *the* world power, only domestic opinion matters, etc. etc.

    I’m not sure how much to value non-domestic opinion, recalling that George Soros isn’t “domestic”, but .. the future does not look good, and if we don’t control our spend (or limit it some other way, limiting revenue ala old Prop 13 coupled with limiting (or, better, *eliminating*) borrowing) we’re going to be back to Carter-era 17% bonds.

    Mew

  • Death_of_the_Donkey

    The link referred to the #111 billion (which is definitely large enough to have a negative economic impact, but it would depend on the private growth component of GDP to see whether it is large enough to tip into recession), but it also referred to having us at 22.5% expenditures to GDP (which is about a 1.5% decline from this year) and since GDP is roughly $14 trillion, a 1.5% decline would be more akin to a cut of $210 billion.

    And once again you keep ignoring that Obama isn’t accepting (not that it will even reach his desk) the CCB plan, which means that we are once again going to go back to “hold the line” and hope that the “fearmongers” (who include many on the right) are wrong, because if they aren’t and the economy/markets bite it around August 2, we will lose the PR battle.

  • Aaron Gardner

    That’s a two way street that we can go round and round on all day.

    And if you can’t manage to understand the details in the legislation that I linked then I don’t really understand why I should trust your analysis in the least.

  • mikeymike143

    unfortunately that is as rare in politics today as dinosaur eggs. the only other person in congress that i think compares to allen as far as integrity and character is jim demint.

  • carolina

    Dem panic? DeMint thinks so.

  • jerry39

    Treating this like an actual debt crisis. The reason there is a debt ceiling in the first place. No one wants to accept that there is not a painless solution, and so they keep looking for a political solution that gives the appearance of compromise and allows each side to say they won.

    But Pretend its your family. Your budget clearly tells you you are headed for disaster – you can borrow another grand on your visa, but after that your done and you know it. You sit down and discuss whether to stop borrowing now and start making hard choices, or go ahead and take that last grand and whistle in the dark?

    What do you do? What do you do?

    In the immortal words of Keanu Reeves – you shoot the hostage.

    Probably too obscure a reference, so I’ll spell it out – you get your house in order now versus having your creditors force you to get your house in order.

  • carolina

    .

  • littlehouse18

    but, I don’t know, somehow it is disconcerting to think of the power these unelected organizations (S & P, Moody’s) have over our republic. Yes, I recognize their expertise, so don’t bash me about that.

  • jerry39

    Dem s to pass and sign CCB how? Assuming they haven’t passed anything by that time – how do they blame the house?

  • red_oakster

    I don’t put too much faith in the principled resolve of independent voters.

  • http://908StraightSt.wordpress.com/ mbecker908

    1. The US defaults ONLY if the Obama Administration chooses to pay for non-essential government functions instead of servicing the debt and paying social security recipients. This analysis has been repeatedly shown.

    2. The problem is NOT revenue, there isn’t enough revenue available to sustain even the reduced spending proposed by the Senate. Only CCB will truly attack the problem.

    3. I’m amazed that anyone thinks that the current interest rates we’re paying on T’s is in any way sustainable. I would posit that the only reason there is ANY demand for US Treasuries is because the EU is in it’s final stages of life. Interest rates for various countries in the EU – Greece, Spain, Portugal and Italy to name a few – is near junk-bond levels now. Ours should be there as well.

    4. Every one of the “downsides” above are absolute certainties, it’s just a matter of “when”.

    Hold the line Freshmen. Hold the line.

  • Spiral

    Several decades ago, anti-communists were accused of fearmongering.

    So, yes. Many people place a high priority on avoiding having the United States welch on its legal-financial obligations because they fear the consequences of such an event.

    As to the larger issue of out of control government spending and the federal debt, this is an issue that should be presented to voters in the 2012 elections.

    To this I can anticipate the resopnse, “But we had an election on this issue in 2010 and the people demanded an end to increased debt.”

    Two problems with this interpretation of the 2010 elections.

    [1] The 2010 elections were mid-term elections, not a presidential election.

    [2] The GOP came up short in the US Senate, though it did make gains. Some tea party Senate candidates lost. In Nevada, Colorado, Delaware and Alaska.

    Rather than attempt to wage this battle now, when the GOP lacks the power to implement a spending cut agenda without threatening to shut down the government or welch on the legal-financial obligations of the United States, it would be preferable to ask the American people in the 2012 election campaign, in both the Presidential race and in the Congressional races, if they want the United States to be like Greece, Argentina or a prosperous, healthy nation.

    The approach some conservatives want the GOP to take reflects an unwillingness to take this issue to the American people during a Presidential election.

    It is unclear what the consequences of passing through August without raising the debt limit would be, both in raw political terms and in economic terms.

    There’s no reason for the GOP to bet the rent money using these tactics when the 2012 election is less than 18 months away and, absent an over dose of Tea Party mania, is shaping up to be a GOP trouncing of the Democrats.

    I like the Tea Party attitudes when it comes to many economic and fiscal policies. But I do not believe many Tea Partiers understand the dynamics of America’s politcal process.

  • snowshooze

    They keep talking about cuts over ten years… but they are only working on a one year budget.
    I wish it was better communicated that those hypothetical cuts only apply to a hypothetical projected budget fantasy.
    If they are going to raise the limit, we want Obama to get it the hard way, one nickle at a time and during the heat of his election push.
    We’ll just meet up here again next year and do her again.

  • Aaron Gardner

    ..

  • PubliusII

    just paying interest on our outstanding debt. The Treasury issues new debt all the time to replace expiring bonds.

    Somebody must buy those bonds, and in the crisis following the lack of a debt ceiling rise, it might become harder for Treasury to issue new bonds at an affordable interest rate. This is true even if the Government has sufficient $$$ coming in to pay interest payments. Suppose lenders demanded 9% instead of 3%? The budgetary deficits would skyrocket, the stock market would tank, and the feedback loop would kick in. We must avoid this.

    A few days ago Francis Cianfrocca proposed short term extensions. What if the House passed a short term extension, say a month, raising the debt limit and cutting real spending, this year, not projections, in an amount equal to the debt limit increase? Dare Reid not to pass it and Obama to veto it?

  • http://jhpruitt.blogtownhall.com/ kipling

    Just received a “State of the Nation Survey” and fundraising request from the National Republican Congressional Committee. My response is simple.

    If you cave and fail to hold the line, then I donate nothing – not now, not in the fall of 2012. I will use my money to support candidates who support true conservative values and who have a backbone. I will send the first $100 to whoever primaries John Boehner and Eric Cantor.

    If you hold the line, then I donate now and more later.

    You make the call.

    Is it fearmongering to state the realistic outcome of their actions?

  • runner12

    Hold. The. Line.

    Do not give into fearmongering. The establishment-types are all about politics as usual instead of taking a stand for fiscal sanity. Do not listen to them House GOP.

    Stand firm!

  • carolina

    3 – 4 trillion in cuts; no tax hikes
    (the stock market has been saying the deal is done)

  • http://travismonitor.blogspot.com Freedoms Truth

    We should be fighting to maximize 2 things:
    1) The budget cuts in FY 2012
    2) The chances to replace Barack Obama.

    Anything else is not relevent because with obama in the WH, we are doomed, and anything in the out-years can be fixed come Jan 2013.

  • Aaron Gardner

    If not, you are just shuffling deck chairs.

  • Finrod

    The one that has a generic Republican leading Obama 47-41, and: Voters not affiliated with either political party favor the Republican 46% to 33%.

  • kestrel

    Speaker Boehner thoughtfully called Rush’s show today, just as we were all wetting our pants over the rumors of an impending deal. The transcript is posted at Rush’s site. (The Speaker assured us that there is no deal.) The striking thing to me in their conversation was Mr. Boehner’s statement (emphasized in bold by me) toward the end of the following sequence:

    SPEAKER BOEHNER: I understand. I’m concerned about the nation defaulting on its credit rating. I’m concerned about us not doing anything about our debt, which will cause our credit rating to fall… I think that’s irresponsible….That’s why we continue to support Cut, Cap, and Balance.

    RUSH: So you’re convinced that a default would make us unable…? We were to be unable to service our debt if there’s a default?

    SPEAKER BOEHNER: I’m concerned that we’re getting into uncharted territory that could wreak great havoc on our nation, and I don’t think it’s necessary to get into that unknown zone and take the chance — and I, frankly, believe that we’ve gotta find a way to cut our budget deficit, cut our debt, and balance our budget… (My emphasis.)

    The fact is that we are already in uncharted territory by having a committed, lawless Leftist in the oval office. Because of this, I don’t think we can avoid getting into a *potentially* devastating ?unknown zone.? Obama is going to drag us into ugly, uncharted territory whether we cooperate or not. So let us go there by choice, on our own terms. Let us find out who we are really dealing with. Hold the line.

    Columbus?
    By Joaquin Miller
    ?
    Behind him lay the gray Azores,
    ??Behind the Gates of Hercules;
    Before him not the ghost of shores,
    ??Before him only shoreless seas.
    The good mate said: ?Now must we pray,
    ??For lo! the very stars are gone.
    Brave Admiral, speak, what shall I say??
    ???Why, say, ?Sail on! sail on! and on!??

    ?My men grow mutinous day by day;
    ??My men grow ghastly wan and weak.?
    The stout mate thought of home; a spray
    ??Of salt wave washed his swarthy cheek.
    ?What shall I say, brave Admiral, say,
    ??If we sight naught but seas at dawn??
    ?Why, you shall say at break of day,
    ???Sail on! sail on! sail on! and on!??

    They sailed and sailed, as winds might blow,
    ??Until at last the blanched mate said:
    ?Why, now not even God would know
    ??Should I and all my men fall dead.
    These very winds forget their way,
    ??For God from these dread seas is gone.
    Now speak, brave Admiral, speak and say??
    ??He said: ?Sail on! sail on! and on!?

    They sailed. They sailed. Then spake the mate:
    ???This mad sea shows his teeth to-night.
    He curls his lip, he lies in wait,
    ??With lifted teeth, as if to bite!
    Brave Admiral, say but one good word:
    ??What shall we do when hope is gone??
    The words leapt like a leaping sword:
    ???Sail on! sail on! sail on! and on!?

    Then, pale and worn, he kept his deck,
    ??And peered through darkness. Ah, that night
    Of all dark nights! And then a speck?
    ?A light! A light! A light! A light!
    It grew, a starlit flag unfurled!
    ??It grew to be Time?s burst of dawn.
    He gained a world; he gave that world
    ??Its grandest lesson: ?On! sail on!?

  • wennejunk

    Shutdown the productive parts of the government, keep the money wasting parts open.

    That turned out well for the Libs, eh? Wonder if he will learn the lesson ahead of time.

  • Scope

    Kudlow also posted an article just today saying that the Gang of 6 plan should not be ignored, as it has credibility.

    The stock market reacted to false reports released that said that a deal was imminent, which was falsely reported by the New York Slimes. The stock market went up for a short period thinking there was a deal. As soon as the NYT report proved to be false, and all of the parties said their was no deal, the stock market immediately went right back down.

    Carolina, please stop posting things until you know what really happened. Thank you. I’m starting to think you work for Kudlow.

  • bs61

    I’m not too worried! I had been watching Cavuto when he got the breaking news of eye rolls and hissing while Geithner was explaining the debt ceiling ‘emergency’.

    I love the Freshmen!

  • acat

    No, I don’t know that someone did… but as you said, rumor comes out, market goes up .. someone profited.

    Mew

  • carolina

    The DOW ended up 152 points – where it was at 10 AM. I don’t see the “right back down” you mention.
    I’m not saying the last “i” is dotted, but I do think there is a basic framework for the final agreement – which obviously the market likes.
    Kudlow had a lot of interesting guests tonight, including Senator Crapo who vigorously defended the ‘teeth’ in the G6 spending cuts. I hope it works out the way he presented it. It also explains (to me) why Coburn would support it.

    What’s not to like about Boehner getting his original target: spending cuts greater than the debt limit ceiling increase with no tax hikes?

    A decent agreement would be good for the country. We’ll see what the final details include. CCB can always be pursued again in the future. I’m optimistic!

  • carolina

    The DOW ended up 152 points – where it was at 10 AM. I don’t see the “right back down” you mention.
    I’m not saying the last “i” is dotted, but I do think there is a basic framework for the final agreement – which obviously the market likes.
    Kudlow had a lot of interesting guests tonight, including Senator Crapo who vigorously defended the ‘teeth’ in the G6 spending cuts. I hope it works out the way he presented it. It also explains (to me) why Coburn would support it.

    What’s not to like about Boehner getting his original target: spending cuts greater than the debt limit ceiling increase with no tax hikes?

    A decent agreement would be good for the country. We’ll see what the final details include. CCB can always be pursued again in the future. I’m optimistic!

  • http://908StraightSt.wordpress.com/ mbecker908

    The only thing that happens in the instance you note is exactly the remedy the Democrats in Congress sought against banks just a few years back. It was called “mark to market”.

    If you think 3% is a good yield on US Ts, your IQ is about 3. Something around 9 as an opening bid is probably about right. Until the market forces their hand, the jerks in the Congress will continue to add new programs and prolong all of the current ones.

    Frankly, I really don’t care if the interest rates go up, and I really don’t care if the Administration is forced to choose between default, shutting down significant sectors of the government (and laying off about 800,000 people), or stopping social security checks. It’s time for a really rude wake up call, hell, it’s way past time.

    We must not “avoid this”. What we need to do is put CCB in front of Obama and see if HE wants to avoid this.

  • http://908StraightSt.wordpress.com/ mbecker908

    Wells Fargo and showed them our family’s 10 year budget. It was very reasonable. I asked them for $575,000 for an Aston Martin Zagato (great investment, it’ll be a collector’s item in ten years – reflected on the balance sheet), one point seven five mill for a house next door to Sarah P, $125,000 for a new BMW 7 series for Mrs908, $300,000 for new furniture for the house and two mill to live on until my social security kicks in at the max rate.

    The branch manager looked at me and said, in a rather disparaging tone, who do you think you are? Harry Reid? Barack?

    I took that as a “no”.

    I’m trying BofA tomorrow.

  • runner12

    Looks like the House GOP Freshmen are not buying what BO and his cronies are peddling. My respect keeps growing for these guys.

  • http://travismonitor.blogspot.com Freedoms Truth

    “If we default, it will be a national embarrassment”

    … yes, it will be. I will also be completely and totally unnecessary as we have far more in revenues than we have in debt interest obligations. We need NEVER go into default.

  • http://travismonitor.blogspot.com Freedoms Truth

    The fact is that in fiscal crises and debt crises, countries that cut spending see not only fiscal balance benefits, but economic growth benefits.

    See:
    http://budget.senate.gov/republican/analysis/2011/2011-05-12WhitePaper.pdf

    http://americanactionforum.org/sites/default/files/Repairing%20a%20Fiscal%20Hole%20IB.pdf

    http://www.heritage.org/research/reports/2010/01/why-government-spending-does-not-stimulate-economic-growth-answering-the-critics

  • averagevoterdotcom

    of the sanity or intent of this criminal potus commie fraud?
    so sure he won’t flush our credit?
    remember that we can unwind any deal in Feb 2012.

  • bcomber38

    What leadership?Baehner is no leader.Mc connell is no leader.they are following obama.I can’t stand these people.The wimps don’t know the first thing about sticking with their voters.Where are the strong men of the republican party.It seems they are saying can’t we just get along?give obama what he wants and we can move behind.Run them out on a rail.Tar and feather.I know I shouldn’t pray for this but we need help from God before we ruin this nation.I don’t know what else to do.God please give republicans some guts to save our christian nation.PS.Give me the strength to ignore all the rinos.

  • BA Cyclone

    As of 8/3, the negative headlines will ubiquitous.

    Just because your spine is made of cooked spaghetti doesn’t mean we all need to live by that. I am glad more than a few of our GOP brethren on Capitol Hill are not following your non-leadership.

    I vastly prefer your “dreadful” supposed headlines, to those already being printed in Greece in 2011.

    Have a great day. Keep your hands of my child’s unearned tax dollars.