MORNING MESSAGE: The GOP Threat: Cut Social Security and Medicare or We’ll Kill The Economy.
OurFuture.org's Roger Hickey: "Here we go again. Republicans are very clear about their latest extortion threat to the American people: Unless you cut Social Security and Medicare benefits, within the next two months we will throw the US economy back into recession – by refusing to allow the US raise the debt ceiling and pay our bills – or by pushing the economy over another fiscal cliff of deep spending cuts and tax increases – or by shutting down the government by refusing to pass a continuing budget resolution. But it is very important for progressives and politicians to remember that most Americans hate what the Republicans are doing here ... Republicans can get their way only if Democrats fail to realize they have the American people on our side."
GOP Tries Cutting Off Tax Talk
Sen. Min. Leader McConnell tries to take more tax revenue off the table in next round of talks. NYT quotes: "The tax issue is finished. Over. Completed. That’s behind us."
Nice try McConnell, says TNR's Jonathan Cohn: "Last week’s legislation raises taxes. Isn’t that enough? Isn’t it time to go back to spending cuts? Hardly. For one thing, last week’s agreement, known as the 'Taxpayer Relief Act,' was not the only deficit reduction legislation that Obama and the Republicans have enacted. Rather, it’s the latest in a series of measures ... Those past measures, which were all spending cuts and no tax increases, reduced the deficit by $1.5 trillion. The Taxpayer Relief Act, which is all tax increases and (almost) no spending cuts, reduces the deficit by less than half that amount. So even taking into account last week’s agreement, deficit reduction has meant more spending cuts than tax increases."
Congressional Dems shrug off McConnell, coalesce around $1T in more revenue. The Hill: "The emerging consensus, however, is that the next installment of deficit reduction should reach $2 trillion and about half of it should come from higher taxes ... 'We’ve done about $2 trillion. I thought $4 trillion is the goal we should reach. I think we’re about half way there. We need another $2 trillion,' said Sen. Ben Cardin (D-Md.) ... He said the $917 billion cut under the Budget Control Act passed in the summer of 2011 combined with $620 billion in revenues from Tuesday’s tax deal and interest savings adds up to about $2 trillion. Cardin said the ratio of spending cuts to higher tax revenues 'should be about even' in the next deficit-reduction deal passed by Congress ... But Democrats in Congress are not yet unified on the issue. Sen. Tim Kaine, a Democrat who won his first term in November’s election, said the spending cut-to-tax increase ratio should be higher."
Barney Frank suggests higher payroll tax for high income. TNR quotes: "We did not get at taxes between $250,000 and $450,000, which makes it good territory for putting it out for the Social Security payroll tax base…There is a segment of income from people who make between $250,000 and $450,000 who we think could sustain an increase in taxes."
"US joins misguided pursuit of austerity" argues FT's Wolfgang Münchau: "The latest US data show that manufacturers may have come out of recession and that employment is rising modestly. But the size of these fiscal measures may well undo this incipient recovery ... What spooks me is the likely austerity pursued even in a moderated form over longer periods. That is already happening, at least in Europe."
Obama Pushes More Health Care Cost Control
President eyes more Medicare cost-savings. Reuters: "Analysts guess that Obama could press for more price competition among drug makers, insurers and healthcare providers within Medicare, or for an acceleration of measures adopted as part of the 2010 Act that aim to move the national care delivery system away from its current fee-for-service cost structure."
Speaker Boehner dismisses President's health care focus in WSJ interview: "The president's insistence that Washington doesn't have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called 'a health-care problem.' Mr. Boehner says that after he recovered from his astonishment—'They blame all of the fiscal woes on our health-care system'—he replied: 'Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem.' He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: 'I'm getting tired of hearing you say that.'"
Beware "the hoax of entitlement reform" says Robert Reich: "Start with the statistics Republicans trot out at the slightest provocation — federal budget data showing a huge spike in direct payments to individuals since the start of 2009, shooting up by almost $600 billion, a 32 percent increase ... But these expenditures aren’t driving the federal budget deficit in future years. They’re temporary. The reason for the spike is Americans got clobbered in 2008 with the worst economic catastrophe since the Great Depression ... Social Security won’t contribute to future budget deficits. By law, it can only spend money from the Social Security trust fund ... The underlying problem is the soaring costs of health care — as evidenced by soaring premiums, co-payments, and deductibles that all of us are bearing ..."
Feds Near Settlement On Foreclosure Abuses
Foreclosure settlement close, reports NYT: "A $10 billion settlement to resolve claims of foreclosure abuses by 14 major lenders is expected to be announced as early as Monday ... An estimated $3.75 billion of the $10 billion is to be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010, these people said. An additional $6 billion is to be directed toward homeowners in danger of losing their homes after falling behind on their monthly payments. All 14 banks, including JPMorgan Chase, Bank of America and Citigroup, are expected to sign on ... It is still unclear how the monetary relief will be distributed among homeowners, but one immediate result of the settlement is the end of a troubled review of millions of loan files ... some consumer advocates expressed concern that the full extent of the damage to homeowners would never be known."
Congress wants to know more about settlement. Bloomberg: "Committee Chairman Darrell Issa, a California Republican, and the panel’s ranking Democrat, Elijah Cummings of Maryland, sent a letter to the Office of the Comptroller of the Currency and Federal Reserve today asking for more information about how homeowners would be affected..."
International regulators weaken proposed bank rules. Bloomberg: "Banks won the delay to fully meet the so-called liquidity coverage ratio, or LCR, following a deal struck by regulatory chiefs meeting yesterday in Basel, Switzerland. They’ll be able to pick from a longer list of approved assets including equities and securitized mortgage debt as they seek to build up buffers of liquidity for use in a financial crisis."
