US Politics Feature: Explaining the Next Fiscal Crisis...Coming To You in 6 Weeks

(Cartoon: Monte Wolverton)

---

After the recent drama and supposed escape from the "fiscal cliff", two developing stories in Washington will affect the global economy. The first is whether Congress can pass measures to address three additional fiscal dilemmas, all of which need to be resolved by the end of March. The second, a vital sub-plot in the larger play, is the intentions and aims of the Republican-controlled House of Representatives.

Near the end of February, the US Treasury will have exhausted all contingency measures to avoid breaching the debt limit, currently $16.4 trillion, and the US will immediately default on 40% of its fiscal obligations. America could still afford to pay foreign debts through its continual receipts of tax revenues. It could even fund Social Security and other low-income payment programs...provided it is willing to make cuts such as the closure of the FBI.

As the talks on raising the debt limit reach the status of Urgent, Congress will also have to address the "sequestration cuts", delayed for two months by the fiscal cliff deal.

Click to read more ...

US Politics Analysis: Trotsky's Icepick and the Fight within the Republican Party

House Speaker John Boehner speaks on Wednesday about the "fiscal cliff" negotiations

---

The murder of Leon Trotsky at Stalin's behest in Mexico in 1940 --- with an icepick that made his ears burn --- has become synonymous with the tendency of supporters of the same political ideology to act more as enemies than friends. The history of Communist movements worldwide, and in the US, is rife with infighting and intrigue, splits and divisions.

Trotsky's Icepick has now reached the conservative movement in the US. The immediate sign is the division over how Republicans should approach the "fiscal cliff" negotiations, but there are also internal recriminations about how and why Mitt Romney managed to lose a winnable Presidential election.

Click to read more ...

US Politics Feature: Can Super-Committee "Get It Done" on Debt Reduction? The Signs Say No

The "Super Committee"Next Thursday, the Joint Committee on Deficit Reduction --- the so-called Super Committee --- begins in earnest its search for $1.5 trillion or more in cuts to the national debt over the next ten years. Its first item, “Overview: Revenue Options and Reforming the Tax Code", will look at ways that the code can be simplified through the elimination of many tax "breaks" currently enjoyed by both individuals and corporations. No surprise there: proposals for tax reform, of varying scales, have been included in every deficit reduction plan that has appeared since the publication of the  Bowles-Simpson report in January, and both sides of the political divide have made noises over the past year that they are willing to consider changes in the way Americans are taxed to help stabilise the debt.

But that is as optimistic, for those who actually want to see the committee achieve its goal, as it gets these days in Washington. Already, the two political parties are staking the same rhetorical and ideological positions on revenues that soured the debt-ceiling negotiations back in July, talks that resulted in historic nationwide disapproval of politicians in Congress.

Click to read more ...

Libya Snapshot: The Last Appeals of the Qaddafi Regime to the US (Dehghan)

The Qaddafi regime carried out an extraordinary clandestine lobbying operation to try to stop NATO's bombardment of Libya, and believed the western allies were likely to launch a full-scale invasion in "either late September or October".

Secret documents in Tripoli seen by The Guardian reveal the desperate attempts made by the Libyan government in its final months to influence US and world opinion. It approached key international opinion formers from the US president Barack Obama downwards.

The regime tried to persuade the Democratic congressman Dennis Kucinich --- a well-known rebel who voted against NATO military action in Libya, and opposed the Iraq war --- to visit Tripoli as part of a hastily arranged "peace mission". The Libyan government offered to pay all Kucinich's costs related to the trip, including "travel expenses and accommodation".

Click to read more ...

US Politics Opinion: "A Plague on All Your Houses"

Sen. Harry Reid, Barack Obama, Sen. John BoehnerWhilst Congress remains gridlocked, which will be the case until January 2013 at the earliest, the markets will look askance at efforts to control American debt and react accordingly, hurting us all. This is what happens when economic issues are politicised. Maybe, Obama will take a leaf from Bill Clinton’s book, moving to the centre and getting popular support for legislation which Congress hears, but I doubt this will happen.

It is in Shakespeare’s Romeo and Juliet that I find the words to sum up my feelings: “A plague on all your houses.”

Click to read more ...

US Opinion: Learning The Ideological and Political Lessons of "Armadebtdon 2011"

When a deal is finally reached on this occasion, who is optimistic that in a year's time, or a decade from now, politicians will have found a way to put aside partisan differences exacerbated by outside groups and face the tough fiscal choices facing the country?

Perhaps it is time for some changes in the way American government operates to meet the modern reality that compromise, on the important matters, is virtually impossible in Congress. Without them --- and it might be as simple, if controversial, as ending the filibuster --- it is impossible to see how Washington can avoid lurching from impasse to impasse.

Click to read more ...

US Politics & Economy Analysis: It's Not the "Bizarro" Tea Party That is the Problem

There is an interesting narrative emerging from the contentious debt limit discussions in Washington: tesponsible politicians from both sides of the aisle have been blocked in their attempts to craft a successful deal by irresponsible, or in Senator John McCain's language, "bizarro" Tea Party politicians.

In the short term that is a fair assessment, possibly without the "bizarro", but in the long term it is a woeful explanation of the present inadequacies of Congress and the President in facing America's debt and deficit problems.

Click to read more ...

US Politics & Economy: Explaining Washington's Dangerous Game of Chicken on the Debt (First, Look at the Tax Cuts)

Photo: Jewel Samad (AFP)Right now the American conversation is being driven by fear, creating a further crisis in the attempt to solve the initial one.  That fear is embodied in the idea that Obama is driving a far-left social agenda and a tax-and-spend socialism, and in the belief that taxes cannot be raised without killing the American economy. But President Reagan raised taxes 11 times, including during a recession, and Obama has cut taxes. Reagan raised the debt ceiling 18 times, and Obama is trying to pass a plan that will only require him to do it once. President Eisenhower stimulated the economy by subsidizing higher education and by building infrastructure, but today he would be considered a socialist for his initiatives. Fifty years later, taxes are at an unrealistic historic level, far lower than they were under all Republican administrations.

The fear is unfounded. The taxes are too low, the debate has gone on too long, and it is time that the Republicans compromise on revenue so that the nation is brought into line with what all of the facts are telling us.

Click to read more ...

US Politics Analysis: The Republicans' Damaging Myth of Lower Taxes = More Employment

Last week, President Obama finally showed some of the leadership over the issue that his critics have demanded. But his new engagement with the debt limit talks, and his desire for a long-term deal, have run headlong into the brick wall of the Republican insistence that spending cuts are the only acceptable means for cutting America's deficits. Even though virtually every moderate media observer is demanding some revenue increases as part of any meaningful deal and even though there is reason to doubt tax increases would be as harmful to the economy as conservatives maintain, Republicans seem prepared to hold this position to the point of breakdown.

Click to read more ...

Libya: How Obama Overruled His Lawyers on Intervention (Savage)

President Obama rejected the views of top lawyers at the Pentagon and the Justice Department when he decided that he had the legal authority to continue American military participation in the air war in Libya without Congressional authorization, according to officials familiar with internal administration deliberations.

Jeh C. Johnson, the Pentagon general counsel, and Caroline D. Krass, the acting head of the Justice Department’s Office of Legal Counsel, had told the White House that they believed that the United States military’s activities in the NATO-led air war amounted to “hostilities.” Under the War Powers Resolution, that would have required Mr. Obama to terminate or scale back the mission after May 20.

Click to read more ...