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: Discredited S&P Threatens Downgrade If No Cruel Cuts
OurFuture.org's Richard Eskow: "S&P's threatening to downgrade the government unless there's a $4 trillion deficit deal within 90 days. That's a demand, a timeline, and a figure it had never mentioned before ... in October they had concluded our AAA status was 'stable' for the foreseeable future, and that in April they had said we needed to address the deficits within two years rather than 90 days ... [S&P's David] Beers was practically thumping his chest when the Wall Street Journal caught him on his way to meet with Congressional Republicans. 'You have to call these things as you see them,' ... You'd never know that 90% of the subprime-backed mortgage securities S&P and its competitors rated AAA in 2006-2007 - which means they're as sound as Treasury notes - were later downgraded to junk bond status."
Republicans Reverse, Seek Only Temporary Debt Limit Hike
House GOP tries to force minor debt limit increase that would fail to stave off default by Election Day 2012. Politico: "'...we never backed off our opposition to a short-term increase and they never stopped insisting on one, and that’s why talks fell apart,' said a Reid aide. 'By the time Reid went to the White House it was clear none of their proposals met our bottom line of avoiding a short-term increase.'"
House Maj. Leader Eric Cantor flip-flops on short-term debt limit increase. ThinkProgress: "...Majority Leader Eric Cantor blasted Obama for opposing it. The Wall Street Journal reports ... 'Mr. Cantor called the president’s insistence on a deal that carries through the election purely political and indefensible.' But late last month, Cantor himself vehemently opposed a short term deal: 'I don’t see how multiple votes on a debt ceiling increase can help get us to where we want to go ... It is my preference that we do this thing one time. … Putting off tough decisions is not what people want in this town.'"
House GOP aims to pass its own proposal by Wednesday. The Hill: "... Boehner's goal is to have a plan ready for discussion at a 2 p.m. closed-door meeting on Monday with GOP rank-and-file members, after which the legislative text would be posted Monday night. That could set up a vote on a yet-to-be-seen proposal by Wednesday ... Boehner also pointed fingers at the White House ... 'It boils down to this: The president wants his $2.4 trillion debt limit increase all at once, without any guarantees that we’re going to cut more than $2.4 trillion in spending.' ... He said Republicans need to rally behind a new 'measure that has a shot at getting to the president’s desk' but added that a new measure 'should be a package that reflects the principles of cut, cap and balance.'"
Senate Dems Concede On Revenues To Get Long-Term Hike
Sen. Maj. Leader Reid readies long-term debt limit increase package with spending cuts only. TPM: " It's a cuts-only bill (no tax revenue) that Dems believe will score $2.7 trillion in savings. But it will likely rely on a projected 'peace dividend' -- the expected drawdown of forces in Iraq and Afghanistan -- and Republicans have indicated in the past they don't support counting reduced war expenditures as savings ... a highly placed Senate Democratic aide says the hope is that GOPers in both bodies feel pressed to support it on the grounds, more or less, that it's everything they've asked for from the beginning."
ABC reminds that GOPers previously counted savings from war drawdowns in the House-approved budget: " Republicans still won’t like [Reid's plan] because the $2.4 trillion in 'cuts' will likely include more than $1 trillion in 'savings' because the US won’t be fighting a war in Iraq anymore and will be reducing troop levels in Afghanistan. Republicans say that isn’t really a spending cut (although the budget written by Rep. Paul Ryan, R-Wisc., and passed through the House, also includes these savings)."
House Min. Leader Pelosi suggests House Dems may accept Reid plan. Time quotes: "That’s a non-revenue path ... I don’t like it at all, but it doesn’t go near entitlements.”
W. Post's Ezra Klein argues "Republicans already won": "If you take the Republicans' goals as avoiding a deal in which they have to vote for tax increases and denying Obama a political victory, it looks like they have succeeded. That success has come with costs -- they've done themselves political damage, are risking a crisis that could do the economy tremendous harm, and have left the Bush tax cuts unresolved, which means they might end up watching taxes rise much higher than if they'd taken Obama's offer -- but it's still been a success. The question is, what happens if they don't stop pushing?"
TNR's Mark Schmitt hopeful that budget deal will spur tax reform, Obama's "greatest shot at hope and change": "While far from the only cause of structural inequality, the tax code is a big part of it, and tax reform can change it. The first step is to end the special treatment of capital gains and dividend income—not just because the wealthy get more of their income in that form, but because of the incentives it has created to increase inequality and risk. That’s a reform that would both clean up the code and give us more of what we want more of."
Stocks Get Shaky
Market crash may be necessary to end GOP obstruction. Politico: "Ultimately, it took a massive 778-point drop in the Dow, the largest one-day decline ever, to force the House to approve the Wall Street bailout. Some fear it may take a similar market reaction to force Congress and the White House into a debt ceiling extension."
Foreign stocks dip. W. Post: "Asian and European financial markets slid in early trading Monday as investors watched closely to see whether the impasse in U.S. debt negotiations will prompt a dramatic sell-off on global exchanges."
US stocks start to get shaky. Bloomberg: "U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will drop after rallying within 1.4 percent of a three-year high, as President Barack Obama and Congress failed to reach an agreement on raising the federal debt limit, intensifying concern the nation will default."
