konane's Blog

Posted by Karl Denninger in Editorial

Source The Market Ticker

".... before our citizens - and government - wake up?

If you remember in October of 2008 I put forward the following:

The Truth is that we now require about $5 of debt to generate $1 of GDP.

The Truth is that the reason you were not asked to approve $700 billion to capitalize 10 new banks, thereby creating seven trillion in lending capacity is that the economy cannot soak up that new lending capacity; each dollar of new debt generates almost no aggregate GDP.  If this were not true then that would be the logical and effective cure for the 'credit crunch" - if the borrowing capacity and impact on GDP necessary to help existed.  They do not. 

The Truth is that you were lied to about the purpose of the TARP/EESA, because what you were sold was mathematically impossible.  It is supposed to be unlawful to lie to Congress.

As I pointed out at the time, the reason they didn't create that $7 trillion in new credit issuance is that there was no more capacity to take on new debt in the private sector.

They knew it.

They lied about what "had to happen" for stability to be restored.

They lied because the alternative was that their friends - powerful friends - would have to go bankrupt.

But it gets worse.  Some of the other points:

The Truth is that the absolute worst thing you can do when "in the hole" like this is to spend even more on a deficit basis, thereby driving the debt ratio higher and return-per-dollar-of-debt in GDP lower.  The last eight years have been disastrous in this regard.

Yet that is exactly what we have done - we have replaced fully 10% of private GDP with public spending, and while the claim was made that this is "temporary" the CBO says it is not, Obama's budget says it is not, and the credit contraction that is continuing in the private economy says it is not.

Bernanke and Paulson, and now Geithner, know that this attempted "reflation" won't - and can't - work.  They have put forward this path not because it is the right thing to do, but because the alternative means a lot of people with power and money will go bankrupt and the Government of The United States will have to change how it finances itself, removing the corrupt influences that have been used to "cook" the books - and outcomes - for the last 30 years.

We have blown three trillion dollars since these intentionally-wrong decisions were made, and we will continue to blow more and more money until the entire banking and economic system collapse unless we change course.

Nate has updated the debt-GDP contribution chart that I posted back in 2008 (and which was originally generated by Legg-Mason - it's not difficult to generate it from the Federal Reserve Z1) and it shows exactly what I was predicting - and why the policies of the government and Fed not only haven't but can't work:

Now let's be clear: Essentially all money is debt in our current system.  As such attempting to "print" your way out, or attempting to "inflate" out, or attempting any act other than forcing the default of the bad debt in the system results in digging the hole deeper and deeper - that is, depressing private GDP further.

Government's efforts have not helped, they have destroyed the four years we had before "zero hour" was reached.  Bernanke's interference in the mortgage market didn't "help" that market, he effectively entirely replaced the private market. The Government's "interference" in the private markets by borrowing and spending $3 trillion over the last two years - more than 9% of GDP annualized - is an attempt to "paper over" the insolvency of private actors in the markets - both borrowers and creditors.

These acts of interference did lead to a huge stock market rally, but just as with all forms of cooking the books they are false dawns and false hopes.  They present a picture of "solvency" that does not actually exist.  They present a picture of private demand in the economy that does not actually exist. 

Since we are now below the "zero line" of GDP-contribution from further debt issuance we simply tighten the monetary flat spin by trying to further print or deficit spend.

The chart in the above link has been updated, of course.  It now looks like this:

Despite all the printing, despite all the borrow-and-spend politics each new dollar of currency is representing a decreasing monetary velocity multiplier - that is, we now get less than one dollar for each dollar - the real rate of return is now NEGATIVE.

As in a flat spin in an aircraft, you cannot pull up and live.  All pulling up does (printing or borrowing more money) is tighten the spiral.  I identified this crossover in December of 2008, and warned of it months earlier. 

We have tried it Bernanke, Paulson and Geithner's way and it has failed.

We will strike the ground unless immediate corrective action - that is, pushing forward on the stick - occurs. 

Taking that corrective action will cause us to lose altitude faster for a while.  If we wait until the ground is "too close", we will strike the ground and (economically) die.  The precise point where there is no longer enough time (altitude) is not known in advance, but that we have far less margin now, more than a year later, than we did in December of 2008 is a mathematical fact.

To halt this process we must take the following actions now:

1. All direct taxes must be scrapped immediately.  This means implementation of something like The Fair Tax.  I fully understand the political ramifications of thousands of lobbying firms and individuals losing their ability to game tax code, and why this sort of reform is unpopular with the political class.  Politics must give way to mathematics; the government must align its revenue with the promulgation of actual business success as measured by actual consumer final demand.  In addition such a change, while radical, would cause an immediate rush into America for the world's business headquarter locations, and with those businesses would come high-paying executive, administrative and manufacturing jobs.  This proposal is an actual bill (HR. 25 / S. 296) which means it can be moved and passed.  We just need the political will to do so.
   
   
2. ALL government support for insoluble debt must be removed.  This means restoring mark-to-market, barring all off-balance-sheet activities and deeming that loans such as HELOCs behind underwater, non-performing firsts be written to recovery value (which in most cases is in fact zero.) I understand that this will expose the existing insolvency of some very large financial institutions.  I also understand this is very politically unpopular for obvious reasons.  It does not matter; this has to be done.
   
   
3. Banks must be required to hold Capital Reserves equal to 10% of their outstanding assets that are secured and 100% against all unsecured loans.  This will cause even more insolvencies, but it will instantly clean up the banking system.  Provide a six month time period for all institutions to come into compliance with (2) and (3), with no extensions, and mandate that any firm that does business in the US must comply - no exceptions.  Going forward the 10% capitalization level (for secured assets) must be monitored and maintained as a "warning level" and firms must be liquidated at 6%.  This will guarantee in the future that the FDIC will never a take a loss on the deposit insurance fund.
   
   
4. Treasury must then use the existing authority under The Constitution to issue non-debt-backed dollars.  This does not require new legislative authority - all existing coins are in fact not debt-backed!  Treasury can thus issue fiat, non-debt-backed currency under existing authority - it has simply refused to do so!  This use should be restricted to funding FDIC pay-out requirements for the firms that become insolvent under this reform process.  This issuance - if limited to FDIC payout coverage - will not be inflationary as it will exactly balance the deflationary force of default on the debt caused by those insolvencies.
   
   
5. An expedited, one-time bankruptcy provision must be made available to consumers so they can enter and process against an expedited Chapter 7 liquidation.  It is essential that we permit consumers to de-leverage back to sustainable levels.  Points #2-4 will insure that banks that fail as a consequence will have their depositors covered.
   
   
6. Credit-Default Swaps - or any other form of derivative - must be forbidden unless exchange-traded with a central clearing and margining counterparty that exposes all information to the market, including bid, offer, size and open interest.  That counterparty must be the buyer for all sellers and the seller for all buyers, as is done today by the CFTC and OCC.  Those firms that cannot post cash margin against their open, underwater positions must tear them up within 180 days.  Speculation is fine - provided you can prove you can clear the trade!  Again, any firm that wishes to do business in The United States must comply in all markets, or be barred from our markets.  Once again this may produce insolvencies but point #4 will (again) guarantee that all depositor guarantees are covered.

Government is enacting "health care reform" today not to reform health care, not to provide health care, but rather to impose an immediate tax on all Americans to attempt to pull up even harder on the monetary stick.

It won't work folks.  It can't work.  More than 18 months ago I identified the primary failure in the path that was being taken, and why.  We have tried it Bernanke, Paulson, Geithner, President Bush and President Obama's way now for nearly three years, and yet there has been no resolution of the debt problem, no resolution of the housing market and no actual economic growth.  Instead we have papered over insolvency and lied about the health of both our banking and economic systems.

Meanwhile the cracks in the dam continue to grow.  Greece is not just "one little problem" over in Europe.  Behind Greece is Spain, Portugal, Italy, Ireland and even Great Britain.  None of these nations have yet taken the actions necessary to resolve the problem, for the same reason we have not - it is politically very difficult to tell the entrenched banking interests "you must eat your own cooking - even if you choke on it."

We still have time to choose between bad and horrifically awful.  We can choose between recognizing the Depression we are already in (private GDP has contracted by more than 10% from the peak, which is the definition of economic Depression) or we can risk Zombieland or Mad Max becoming reality.

Since Europe and the rest of the world show no desire or expectation to do the right thing, we must either firewall ourselves off from their collapse or we will inevitably go down the bowl with them. 

We are risking severe civil unrest and the possible destruction of our republic by our continued refusal to face the mathematical facts, not just a "double dip" recession.  What Greece and other nations are seeing now is nothing compared to what is on the horizon and will reach us if we do not act.

Mathematics yield to no political desire or arrogance wielded by man or woman.  Those relationships described by mathematics inexorably come to pass, unless you change the equations.  In a debt-backed fiat currency world continuing to load debt into a system that has too much debt in it related to production is a futile and self-destructive act, just as is an alcoholic deciding to chug yet another bottle of whiskey.

Economically we are facing liver failure and brain cancer unless we stop gorging on our drug of choice - debt.  Whether the consequence of ceasing to do so is politically expedient or not is, at this point, immaterial.  We are literally gambling with the ability of this nation to continue forward as a going and peaceful, civil concern.

We still have time to act and do the right thing to halt what will befall us should we continue on our present path, but that time is running out."

http://market-ticker.org/archives/2104-How-Far-Down-The-Rabbit-Hole-Must-We-Go.html

Someone sent this in email.

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From Congressman Ted Poe, 2nd District, Texas

Dear Neighbors,

Tonight, in the last hour, politics trumped the people and the House passed the Senate bill by a vote of xxx-xxx.  As promised, I voted NO.

Over the last year, our country has been more engaged in our government than ever before and because of that we remain united to fight another day.  While tonight was a devastating assault on our constitutional rights, it is far from over.  Lawsuits will be filed in every courthouse in America.  I have spoken to Texas Attorney General Greg Abbott and he has the full support, and vigorous encouragement, of the Republican members of Congress to take immediate action on the state level.

As a former judge, I have an appreciation for the laws in our country.  The government takeover of healthcare is unconstitutional.  Our federal government does not have the authority to force us to buy anything.  That's not allowed under any stretch of the law or imagination.

This power grab is not about health, and it's certainly not about care. It's about liberty. It's about federal government control over people's lives. The federal government has no right to dictate to the people their healthcare needs or any other goods or services they deem necessary.

Over 70 percent of the American people are against this bill.  I will continue to fight along side of the people against government intrusion and champion real reform that fixes what is broken and  improves the greatest healthcare system in the world.  No one argues that we need reform, but this bill was not the answer.  It was never about reform – it was always about government control.

Rest assured tonight, this is not over.  Let me leave you with these words:

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

God and Texas,

Ted Poe
Member of Congress
TEXAS

Full credit to Time*treat for the link to this list.

https://www.lotterypost.com/blogentry/38941/viewcomments

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FINAL VOTE RESULTS FOR ROLL CALL 165(Democrats in roman; Republicans in italic; Independents underlined)
      H R 3590      RECORDED VOTE      21-Mar-2010      10:49 PM
      QUESTION:  On Motion to Concur in Senate Amendments
      BILL TITLE: Patient Protection and Affordable Care Act

---- AYES    219 ---

---- NOES    212 ---

Seems the process is not quite over.

____________

http://senate.gov/

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March 21, 2010 Posted by John at 4:13 PM

"With Stupak's collapse, passage of the Democrats' government medicine bill is assured. This is a dark day in American history; one of the darkest. But there are many reasons for optimism. Here are a few:

* The health care battle is just beginning. Next, the Senate will try to enact the House's "fixes" to the original Senate bill. Some Senators say that won't happen. If not, then President Obama has the option of signing the original Senate bill--now passed by the House--Cornhusker Kickback and all. I assume he would do that, but the resulting blowback from House Democrats, not to mention the American people, would be something to behold.

* The health care bill's taxes will go into effect promptly, but its substantive provisions are, for the most part, deferred for four years. This means that we have plenty of time to repeal the legislation. Sure, it will take a new Congress and new President. But repealing this disaster of a bill will by a rallying cry for the American people for years to come. Moreover, even if the Republicans only take over the House in November, and not the Senate, won't it be possible to throw roadblocks in the way of the bill's implementation? Won't budget appropriations be necessary to sustain the various federal tentacles the bill seeks to establish? What will happen if the House simply refuses to fund them?

* I've never been prouder to be a Republican. The party's Congressional leaders have fought this battle to the end on behalf of the American people--with intelligence, toughness, persistence and good humor. The contrast between the parties has never been starker than in today's debate. If any intelligent Democrats were watching--there must be some left--they had to be embarrassed for their party.

* Paul Ryan has emerged as one of the conservative movement's strongest spokesmen. In the years to come, I think we will hear the words "I'm a Paul Ryan Republican" with increasing frequency.

* The health care debate has energized the conservative movement and awoken the sleeping giant, that is, the American people. The Democrats misinterpreted their electoral victories in 2006 and 2008 as a mandate for socialism. Now a majority of voters are intent on disabusing them of that misapprehension. Just about all of the political energy today is on the right--a remarkable fact, only sixteen months after the Democrats' high-water mark in November 2008.

* Barack Obama has used his political capital--pretty much all of it--on unpopular legislation that will continue to rile the voters for years to come. As a result, Obama is a remarkably unpopular second-year President. And he hasn't even experienced any bad luck yet. It is hard to see how he will be able to regain his footing.

So, be of good cheer. To paraphrase a great American, we have not yet begun to fight.

UPDATE: Tim Pawlenty tweets:

Hard to believe Congress would pass this mess of a health care plan. It will put us further into debt & dangerously expand scope of gov't.

PAUL adds: Repeal may not be out of the question, but my advice is to exercise more and improve your diet. Try to minimize your encounters with Obamacare and delay your encounter with the death panel in whatever form it takes."

http://www.powerlineblog.com/archives/2010/03/025892.php

Can you hear us now??????????????????

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March 20, 2010 Posted by John at 2:30 PM

Source Powerlineblog.com

Thousands of Americans are rallying at the Capitol to urge Congress to defeat the Democrats' health care takeover bill. You can follow events on Twitter at #killthebill. This photo was taken at noon from the Speaker's Lobby and posted via Twitter. Click to enlarge

http://www.powerlineblog.com/archives/2010/03/025881.php

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Poll is about 2/3 of the way down the page on the righthand side.  There was no direct link to the poll or I would have posted it.

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http://www.washingtontimes.com/news/2010/mar/18/obama-endorses-immigration-blueprint/

March 16, 2010

"Talking Points vs. Reality

By Thomas Sowell

Source CNSNews.com

"Author and conservative radio talk show host Mark Levin pointed to the U.S. Capitol and told the crowd at the Nov. 5, 2009 House Call rally it belongs to them. (CNSNews.com/Penny Starr)

http://www.cnsnews.com/news/article/62939

"Huge (53%) Tax Increase On SAVERS

Source The Market Ticker   Wednesday, March 17. 2010

Posted by Karl Denninger

If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.

The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."

That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny.

This is unbelievably destructive to capital formation.

For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)

But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.

This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."

So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.

It gets better.  Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit.  Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.

Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.

So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.

And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.

A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.

That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.

When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.

Why?

Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive."

"Unconstitutional Procedure Being Used to Pass Unconstitutional ObamaCare

"House leaders are preparing to ram through ObamaCare this week  without a vote.  Not only is the legislation unconstitutional, but the process being used to pass it is unconstitutional.  The House is preparing a rule that would consider the Senate-passed version of ObamaCare passed in the House even though members would never directly vote on it.  That would violate Article 1, Section 7 of the U.S. Constitution.

Here is how the trick would work:  In the House, the Rules Committee sets up the parameters for debate on legislation.  House leaders are considering a complicated rule that would be structured so that a vote on the rule setting down the structure for the ObamaCare debate would allow the Senate’s version of health care reform to pass without a vote.  First, there would be a vote on a rule.  If the rule is passed by the House, then the House would vote on a health care budget reconciliation measure that is an amendment to the Senate passed ObamaCare bill.  If that reconciliation measure passes, then reconciliation goes to the Senate and the ObamaCare legislation is deemed passed without a direct vote.  The plan for the legislation is unclear.  House leadership will either structure the rule to either immediately present ObamaCare to the President for his signature or they will hold the bill and deliver it only if the Senate passes a health care reconciliation measure.  Either way, the Constitution and the American people are the losers.

Understand that this procedure is drafted in a way so your average American can’t understand it.  The simple way to understand the situation is that the House is trying to pass a bill without a vote.

The Constitution states that the House and Senate are supposed to pass identical versions of a bill before the President can sign it into law.  One of the reasons for this tricky procedure is to provide cover for moderate Democrats who don’t want to vote for the Senate-passed ObamaCare bill because it includes the federal funding of abortion.

Michael McConnell, Professor and Director of the Constitutional Law Center at Stanford Law School, explains it this way at the Wall Street Journal today:

Democratic congressional leaders have floated a plan to enact health-care reform by a procedure dubbed “the Slaughter solution.” It is named not for the political carnage that it might inflict on their members, but for Rep. Louise Slaughter (D., N.Y.), chair of the powerful House Rules Committee, who proposed it. Under her proposal, Democrats would pass a rule that deems the Senate’s health-care bill to have passed the House, without the House actually voting on the bill. This would enable Congress to vote on legislation that fixes flaws in the Senate health-care bill without facing a Senate filibuster, and without requiring House members to vote in favor of a Senate bill that is now politically toxic.

McConnell is right.  The Constitution says that:

Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law.

If a branch does not vote on a bill, then that bill did not pass.  This proposed procedure seems to be a clear violation of the letter and spirit of the Constitution.  There will be debate on the proper remedy for this constitutional affront, but all can agree that, at a minimum, House members can raise a constitutional point of order against the rule.

Liberals in the House understand that this process is hard to defend.  Chris Frates at Politico writes about a leaked memo drafted by Assistant to the Speaker Chris Van Hollen (D-MD) intended to provide talking points to Democrat members when challenged on the unconstitutional process.

The Van Hollen memo also advised members to avoid talking about the process.  “At this point, we have to just rip the band-aid off and have a vote — up or down; yes or no? Things like reconciliation and what the rules committee does is INSIDE BASEBALL,” the memo says. “People who try and start arguments about process on this are almost always against the actual policy substance too, often times for purely political reasons.”

Speaker Nancy Pelosi (D-CA) and the House Rules Committee have come up with a very complicated procedure to get ObamaCare to the President’s desk without House members having to vote directly on the bill.  This procedure is going to be debated extensively this week and may be the key issue as to whether President Obama signs legislation to provide a de facto government-run health care system."

http://biggovernment.com/bdarling/2010/03/15/unconstitutional-procedure-being-used-to-pass-unconstitutional-obamacare/

March 22, 2010, Vol. 15, No. 26

"A stranger moment in politics has seldom been seen. A vast expansion of government that affects every one of the country’s 300-plus million inhabitants may be passed by a hair against fierce and fiercely repeated public opposition by a Congress that no longer speaks for its voters—most of whose members are angry and scared. They are afraid of their voters, and mad at each other, or rather, the Democrats are: The liberals are mad at the centrists, the centrists are mad at the liberals. Democrats in the House are angry at those in the Senate, and deeply suspicious of being betrayed. The centrists are also mad at Obama, for picking the wrong cause (health care and not the economy), doing it in the wrong way (big and expensive, not incremental and smaller), and pushing them to risk their careers in backing a cause and a program neither they nor their constituents want. 

For Obama himself, health care has been toxic, decimating his numbers, and ripping apart his mystique. In the course of the fight his approval ratings have dipped from near 70 to the mid-40s, his magic has vanished, and his words have gone flat. The coalition that elected him has fallen apart, as independents, mistakenly lured by his “conservative” temperament, have fled to the welcoming arms of the opposite party. Polling suggests that all the red and swing states Obama took from George W. Bush have now turned against him. The elections held since health care became the main issue have rendered votes of no confidence: In 2008, Virginia went to Obama by a 7-point margin; in 2009, it elected a Republican governor by 18, a 25-point recalibration. In 2008, New Jersey went to Obama by 15 points; in 2009 it went to Chris Christie by 4. Massachusetts, which went for Obama by 26 points (and which hasn’t had a Republican senator since the late 1970s), gave Ted Kennedy’s seat to a Republican who campaigned against health care, by a margin of 5 points. Respected nonpartisan political analysts now predict a “wave” election for the upcoming midterms, in which the out party wins one or both houses of Congress?—an event that is usually driven by a major calamity like the failure of the Clinton health care reform plan in the 1994 midterms plus congressional scandal or the 2006 loss for Republicans, triggered by congressional scandal and what looked then like a loss in Iraq. Democrats hold massive majorities—18 seats in the Senate, and 79 in the House—but many of the states and districts that they represent now poll as being against the health care proposal, creating a major democratic dysfunction, as many members are voting against the wishes and interests of their districts and states. This lopsided body, in which Democrats are clawing to eke out even a one-vote majority, is a dead Congress walking, out of step with most of its voters, who on this issue at least are temporarily represented by the naysayers on the Republican side of the aisle. Health care reform has dissolved the Democrats’ coalition, and with it much of their moral authority. If health care survives, it will have been passed by the shell of a Congress that outlived its own mandate.

Supporters of the current legislation on health care reform compare this effort to Social Security, Medicare, and the Civil Rights and Voting Rights Acts of the mid-1960s, but the differences between them are stark. None of these passed with substantial majorities of the public strongly against them. None passed without substantial backing from the opposite party. None of them had the remarkable effect of uniting the opposition in monolithic resistance, while at the same time splitting their party, demoralizing it, and setting its various factions strongly at odds. Franklin Roosevelt and Lyndon Johnson never had to spend billions of dollars to pick up the votes of unhappy senators. Their stature was enhanced by passing these measures, not lessened and compromised. And their bills were passed on their merits, not on desperate appeals to save the party and president from a political pasting, which seems the main talking point being used on reluctant members of Congress now. “The crusade that is dragging itself toward the finish line doesn’t quite feel like a triumph, let alone the launch of a new New Deal,” wrote Howard Fineman in Newsweek, even before Scott Brown tossed his bombshell. “The reasons offered .  .  . have been ever-shifting. .  .  . By the time Bill Clinton met privately with Senate Democrats .  .  . it was .  .  . primarily about the political optics: the need to pass something, anything, to avoid defeat.” “Their sole remaining reason for completing the <snip>ed thing is that they started it,” writes George Will, noting that the main passion driving Democrats is a fear of repeating the 1994 wipeout, which they trace, perhaps incorrectly, to the failure to pass health care that year. At any rate, the main emotion among Democrats seems to be a balance of terror: fear of passing the bill against fear of killing it, making them face the wrath of the voters; or their party’s base, leaders, and president. 

No party or president has ever put its members in a vise of this nature before. Or seen its backers make so many strange statements in trying to press a bill’s case. Back in the days before Scott Brown’s victory, when the Democrats still had their 60-man supermajority, the claim was that the fault lay in the “system” and the Senate, and never in the bill. “What precisely is the point of the United States Senate?” asked New York magazine’s John Heilemann. “If a popular, shrewd president coupled with a Congress with a strong majority in both houses held by the president’s party can’t get its program passed .  .  . something is structurally wrong.” What was wrong, however, wasn’t the structure. The president was not in fact shrewd and was no longer popular, the party wasn’t strong but split (at least on this issue), and the bill was disliked by much of the public, which made its objections often and noisily felt.

As for the Senate, it is a more representative body than Obamacare’s defenders believe. In many states having two Democratic senators, the health care bill polls very poorly; indicating not that the Senate rules give the minority too much power, but that in many states represented by Democrats, the senators aren’t giving voice to their voters’ ideas. Virginia, which has two Democrats (James Webb and Mark Warner), strongly opposes the president’s version of health care and gave Republican Bob McDonnell a landslide in the governor’s race to drive home the message. New Jersey, with two Democrats (Frank Lautenberg and Robert Menendez), elected Republican Chris Christie governor to make the same point. Blanche Lincoln of Arkansas is in very deep trouble, as is her fellow Democratic senator, Nebraska’s Ben Nelson, who, when he got the Cornhusker Kickback, was jeered and hissed roundly by resident voters, and saw his numbers plummet. Massachusetts, which between 1978 and 2010 had no Republican senators at all in its delegation, and for eight years had no Republican members of Congress, elected Republican Scott Brown, on a pledge to fight health care. In this sense, John Kerry, Paul Kirk, and even Ted Kennedy, didn’t represent Massachusetts. The woes of the health care reform are not the fault of the Senate at all.

Another strange view now being floated is that the public in general is angry because the bill is held up in Congress, and nothing is now being done. Let’s back up and break this down into two different segments: The liberal base is angry because the bill is being tied up in Congress. The public in general is furious because the bill is still being brought up at all. If the bill is passed, the base will be pleased, but the public at large will be even more furious. And at the last calculation, the public in general was about three times as large as the base. A similar view is that the bill has to pass because it’s unpopular, because it’s only after its passage that its merits can be fully discussed. In this sense, the debate in itself is the primary obstacle.  “We have to pass the bill, so that you can find out what is in it, away from the fog of the controversy,” says Nancy Pelosi. “Once they pass a plan, you can actually talk about a plan,” says E. J. Dionne. “No president can win the argument over health care prospectively because the country is not inclined to believe that Washington can reform a system this complex,” Ron Brownstein quotes White House flack Dan Pfeiffer. “The only way to sell comprehensive reform, Pfeiffer continued, is to pass it despite poor poll numbers, and then build support.” Usually, one builds support before voting, and then votes when one has it. But these are unusual times. 

Strangest of all is the popular theory that if the bill passes?—by bribes, threats, and payoffs, and against fierce opposition—there will be a triumphant, Rose Garden signing, and then the whole issue will fade. Good luck with that. A bill forced through against such popular dissent is likely to start, and not settle, contention, for two big reasons.

First, this bill is not only disliked, it is disliked intensely, and across a wide swath of the population. Majorities not only dislike it, but majorities of those majorities dislike it intensely. Twice as many independents dislike as support it intensely, and the intensity of antipathy has only grown. They dislike it intensely because it will affect them intensely, on a personal level. Tax cuts don’t affect everyone equally. Very few people are ever on welfare. Most people who live long enough do get on Medicare, but not everyone does at the same time. Health care involves everyone, every day, on an emotional, primitive, life and death level. Everyone needs doctors. Everyone has had an experience, or has friends and relations who have had the experience, where the right or wrong medical treatment at the right or wrong time by the right or wrong doctor made the difference between life and death, between a full and a partial recovery, and an experience that was neither traumatic nor financially ruinous, or one that was hell on all counts. Everyone fears a system that could give them the wrong doctor instead of the right one at just the wrong moment, and everyone, no matter how rich, strong, well-connected, or seemingly healthy, knows that an accident or a bad diagnosis can come any day. Polls show that most people believe this plan will make their care more expensive, and at the same time, less satisfactory than what they already have. Add to this the fact that the bill by necessity trips a mare’s nest of hot wires—abortion, rationing, euthanasia on the basis of “social utility,” and the whole moral complex of beginning- and end-of-life issues—and one has no reason for thinking this issue will be laid to rest soon.

Second, the bill’s defenders say “process” themes don’t move the public, and they may be right. But what they call “process” in this case reads like “corruption” to others, such as the bribes, threats, and buyoffs with which the bill cleared the Senate. Three hundred million dollars to buy Mary Landrieu, over a billion to pay off Ben Nelson. Besides being corrupt, the administration is looking inept in the bargain: The past week brought Massapiece Theatre, along with the wavering Democratic congressman whose brother was offered a judgeship just as he was being asked to the White House for a collegial talk. This is beginning to look like The Godfather crossed with a Marx Brothers movie, a bad sign for an administration that came in touting competence and projecting the feel of a Frank Capra film. 

In fact, the process is part of the problem, and stems from the bill’s weakness, which makes payoffs essential: “Because the legislation is frightening and unpopular, Democrats have had to resort to serial bribery,” writes George Will, correctly. “Massachusetts voted immediately after the corruption of exempting, until 2018, union members from the tax on high value” insurance plans. This and the Cornhusker Kickback helped fuel Scott Brown’s upset, which created the need for still more extravagant buyoffs: Each bribe makes the bill more unpopular, creating the need for more bribes. Senate rules may bore voters, but they find this arresting—one reason the strife will go on.

Other big bills may have been controversial, but most passed in the end by comfortable margins. No reform bill on this grand scale has ever passed in the face of such opposition, with solid majorities so firmly against it, with no votes at all from the opposite party, and with the party in power so split. No such bill had an organized opposition?—the tea party movement—in place against it, ready to march at the first opportunity. Opposition to health care has been very good to the Republican party, and as long as it is, the party will use and run on it. Legal challenges from the states, already in progress, will also add to the air of contention. This is a war that could go on for years.

Liberals say Democrats have to pass this bill to prove they can govern. But will the public see wasting a year on something that’s not a priority, then pushing a bill they don’t want through multiple payoffs, and ending up with something they think will make their lives worse as a species of “governing” they want anything more to do with? Meanwhile, the Democrats are in the intensive care unit, their president wounded, their members demoralized, their coalition in tatters. Come November, voters may decide they’d rather be much less “governed”—or governed by somebody else."

Noemie Emery is a Weekly Standard contributing editor and columnist for the Washington Examiner.

http://www.weeklystandard.com/print/articles/dead-congress-walking

Dems sense of urgency to shove healthcare through reeks of desperation for money.  Money to perhaps support yet another war via IOU's like were given to Social Security when they raided those funds years ago. 

Could be I've been reading too many conspiracy theories.  Decide for yourself.

____________

Submitted byTyler Durden on 03/15/2010 15:23 -0500
Source Zero Hedge

"Is war just around the corner? While in theory it would make perfect sense to distract Americans from the long road to US insolvency, and other more pressing issues such as the endless criminality all around us, in practice we have so far heard merely rumors. The Herald of Scotland, however, may have credible proof that a US-led attack on Iran approaches and could be just  days away. The newspaper has procured proof of an arms shipment to Diego Garcia, which consists of "of 195 smart, guided, Blu-110 bombs and 192 massive 2000lb Blu-117 bombs...put in place for an assault on Iran’s controversial nuclear facilities." Additional insight comes from Dan Plesch, director of the Centre for International Studies and Diplomacy at the University of London: “They are gearing up totally for the destruction of Iran. US bombers are ready today to destroy 10,000 targets in Iran in a few hours." Is war imminent? And will Obama repeat Bush's mistake with Iraq, resulting in a huge spike in oil, coupled with a rush to safety in dollars and/or gold? If inflation will not start on its own, its has to be kindled: preferably by a Blu-117 bomb. Is the relatively long period of market stability and low volatility about to come to a sudden end?

More from the Herald:

Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.

The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.

Experts say that they are being put in place for an assault on Iran’s controversial nuclear facilities. There has long been speculation that the US military is preparing for such an attack, should diplomacy fail to persuade Iran not to make nuclear weapons.

Although Diego Garcia is part of the British Indian Ocean Territory, it is used by the US as a military base under an agreement made in 1971. The agreement led to 2,000 native islanders being forcibly evicted to the Seychelles and Mauritius.

The Sunday Herald reported in 2007 that stealth bomber hangers on the island were being equipped to take bunker-buster bombs.

And it gets worse, when one considers the eerie similarities with Operation Desert [blank]. We all know how that whole fiasco ended.

Contract details for the shipment to Diego Garcia were posted on an international tenders’ website by the US navy.

A shipping company based in Florida, Superior Maritime Services, will be paid $699,500 to carry many thousands of military items from Concord, California, to Diego Garcia.

Crucially, the cargo includes 195 smart, guided, Blu-110 bombs and 192 massive 2000lb Blu-117 bombs.

“They are gearing up totally for the destruction of Iran,” said Dan Plesch, director of the Centre for International Studies and Diplomacy at the University of London, co-author of a recent study on US preparations for an attack on Iran. “US bombers are ready today to destroy 10,000 targets in Iran in a few hours,” he added.

The preparations were being made by the US military, but it would be up to President Obama to make the final decision. He may decide that it would be better for the US to act instead of Israel, Plesch argued.

“The US is not publicising the scale of these preparations to deter Iran, tending to make confrontation more likely,” he added. “The US ... is using its forces as part of an overall strategy of shaping Iran’s actions.”

According to Ian Davis, director of the new independent thinktank, Nato Watch, the shipment to Diego Garcia is a major concern. “We would urge the US to clarify its intentions for these weapons, and the Foreign Office to clarify its attitude to the use of Diego Garcia for an attack on Iran,” he said.

For Alan Mackinnon, chair of Scottish CND, the revelation was “extremely worrying”. He stated: “It is clear that the US government continues to beat the drums of war over Iran, most recently in the statements of Secretary of State, Hillary Clinton.

“It is depressingly similar to the rhetoric we heard prior to the war in Iraq in 2003.”

The British Ministry of Defence has said in the past that the US government would need permission to use Diego Garcia for offensive action. It has already been used for strikes against Iraq during the 1991 and 2003 Gulf wars.

We are confident that the administration's diplomatic core is wildly spinning in advance of a possible incursion, and fully expect that Tehran will be exposed as a poison nest full of dirty, smelly CDS speculators who have been controlling the spreads on global credits ever since the late 70's, about the time Iran ceased being a most favored nation (forget that CDS did not come to the scene until the late 90's, at least Ollie North may get a cameo appearance as head CDS Novator). At worst, the Administration will coin a new term for the incursion's target, recycled appropriately from none other than the Oracle of Omaha: Weapons Of Mass CDS-based Destruction and Other Types of Mass Destruction that Speculators Do Good Too."

http://www.zerohedge.com/article/us-preparing-total-destruction-iran

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Pelosi-Once-we-kick-through-this-door-more-reform-will-follow-87741467.html