Debt ceiling madness: Standing on the brink of economic apocalypse

By Michael J.W. Stickings

There may soon be a deal, and maybe even a "grand" one (or maybe this more realistic one), that will see America's debt ceiling raised. It has to be, if economic apocalypse is to be avoided, but the default deniers in the GOP are resisting to the end and seem to have no problem, probably because they have no idea what's really going on here and what the consequences would be, accepting, as Sen. Jim DeMint ignorantly put it, "serious disruptions" to the economy.

Of course, there wouldn't just be "disruptions." Defaulting would wreak havoc on the economy and on millions and millions of Americans:

If Congress fails to raise the national debt limit by early August, the Obama Treasury Department will have to choose between defaulting on obligations to the country's creditors -- triggering higher interest rates and perhaps damaging the country's credit rating for months and years to come -- or freezing outlays to contractors, entitlement beneficiaries and others who are also expecting prompt payment as well. In either case, the macroeconomic impact will be staggering.

This according to Mark Zandi, Moody's chief economist and former McCain advisor.

Now, if there's no deal, there's another option, a constitutional one:

Last month, Treasury Secretary Tim Geithner suggested that the debt ceiling is unconstitutional because of Section 4 of the 14th Amendment, which states that "the validity of the public debt of the United States... shall not be questioned." If the Obama administration were to embrace this view, the country could avoid default in the event that the debt ceiling is not raised by the Aug. 2 deadline.

This may not be the preferred option, and it may just be the option of last resort, but what else is there to do when the other party has succumbed to sheer madness?

And mad it is. House Republicans are actually considering filing articles of impeachment against Obama should he end up having to go the constitutional route. That's how wildly disconnected from reality they and their priorities are, how blindly partisan they are, how closed to compromise in the name of any sort of common good they are, how unable or unwilling they are to dealing in any meaningful way with the country's long-term fiscal problems, not to mention the debt ceiling crisis they themselves have created.

Look, there are good reasons to criticize the president. To say the least, he has handled the debt ceiling issue poorly. He seemed (and still seems) to have all the leverage, with Republicans torn between the party's corporate establishment (which understands that the debt ceiling needs to be raised) and the Tea Party (which fervently opposes any compromise on the debt ceiling and will launch a primary challenge against any Republican who violates its extremist demands). Boehner is the one in the difficult position, not Obama. And yet it is Obama who is the one giving in, and who is prepared to give the other side almost everything it wants just to get a deal done. No, not what the extremists want, but certainly what Republicans should be prepared to accept and what would, for them, constitute victory.

Obama has even put Social Security and Medicare cuts on the table. This has justifiably incurred the ire of many liberals, including this one. It appears that Obama is desperate to do a deal -- or, if not desperate, willing to go to great lengths, willing to give up a great deal, to avoid risking a debt ceiling crisis, even if it would be the Republicans to blame for it. (The White House is pushing back against the story, saying that it "overshoots the runway" and that the president wants to strengthen Social Security. But that's awfully vague and keeps everything on the table.)

But, seriously, impeachment? Republican craziness is piling up, higher and higher, at a time when what is needed is maturity and sobriety, a willingness to work for the American people, including for future generations of Americans, by putting aside ideological extremism and working towards a deal that makes sense to both sides.

Yes, Obama deserves to be criticized -- though we'll have to see exactly how much he gives up if and when a deal gets done -- but we mustn't forget that this is all happening because Republicans simply refuse to work constructively with the president and the Democrats, that is, refuse to help govern the country in any productive way. They're such extremists, and so ignorant of what they are doing, that they're taking the country to the brink of economic apocalypse and are willing, it seems, to pull it into the abyss.

Ultimately, Obama and the Democrats, along with the few Republicans who actually want to help, must do whatever it takes to save America.

Beware those who don't heed history's lessons: A review of HBO's Triangle: Remembering the Fire

By Edward Copeland

"People forget the Triangle fire at their peril... If people want to know what deregulated industry would look like, look at the bodies on the sidewalk outside the Triangle building."
Leigh Benin, Adelphi University labor historian

With big corporations seeking to gain more and more power by using bought-and-paid-for politicians to strip away regulations and weaken workers' rights, there couldn't be a better time to look back at the tragedy of the Triangle Shirtwaist Company fire, which killed 146 people 100 years ago March 25 and brought about the reforms and labor movements billionaires and the historically ignorant seek to dismantle today. A well-done and brief primer on the fire and the events leading up to it and its aftermath premieres on HBO tonight. Triangle: Remembering the Fire debuts at 9 p.m. EDT and PDT / 8 p.m. CDT.

For those unfamiliar with the story of the Triangle fire, this 45-minute documentary gives you almost all you need to know about the 100-year-old tragedy and offers lessons needed for today as it seems we risk the rise of a new Gilded Age where tycoons value profits over the safety of their workers and the government at both the state and national level seems to be more-than-willing co-conspirators with its push to deregulate anything and everything. If one wants to look for modern examples of this, they need looks no further than the lack of safety enforcement at various coal mines that have cost many miners their lives, the BP Gulf disaster which killed their own workers and destroyed an ecosystem and the "fracking" techniques used in the search for natural gas that has been linked to poisoned water sources, cancer deaths and possibly even earthquakes, all of which exploration companies were exempted from environmental laws under the Bush Administration. This doesn't even take into account how the blind eye of regulators allowed financial speculators to cause the biggest financial crisis since the Great Depression and a housing bubble that sparked a foreclosure debacle. Just last week, both parties in Congress, led by Sen. Jon Tester, D-Mont., all still doing the bidding of the big banks, sought to delay the huge fees the banks collect on debit card transactions for another two years, weakening already toothless financial reform legislation. Obama's Treasury Secretary Tim Geithner also is rumored to further water down the reform by exempting currency derivatives from transparency requirements in the legislation. Yes, government of the corporations, by the corporations and for the corporations shall not perish from the United States it seems.

In 1911, out of the ashes of the tragedy of the Triangle fire came reforms for workers, first in the state of New York, that laid the groundwork for FDR's New Deal when he became president 22 years later, reforms that politicians backed by rich businessmen seek to dismantle today as we've seen in states such as Wisconsin, Michigan and Ohio with more on the way.

Tovah Feldshuh narrates Triangle: Remembering the Fire and her calm voice serves perfectly as an invisible teacher. The Triangle Waistshirt Company was one of many businesses associated with the garment industry in the early part of the 20th century in New York. Co-owners Max Blanck and Isaac Harris had hit upon a new trend in ladies' fashion: basically, the blouse. For the first time, women were wearing separate tops just as men did. It made them rich and their company occupied the top three floors of one of downtown Manhattan's newest skyscrapers, the 10-story Asch Building at the corner of Washington Place and Greene Street. The building, now known as the Brown Building and part of the NYU campus, still stands and has been registered a National Historic Landmark and a New York City landmark.

With the huge demand for their product, the Triangle company workers tended to be on the job seven days a week for long hours and little pay and the people willing to be exploited this way did so because they had no other choice. They tended to be newly arrived European immigrants who had been fleeing famine and persecution. Not only did they not find the American dream in their work situation, most could only find living arrangements in tenements on the lower eastside. In the case of the garment industry, most of these virtual slaves were women, especially young women, some not even teenagers yet. To get as much production going as possible, the ninth floor of the Asch Building had been stacked to capacity with 300 sewing machines, leaving barely any elbow room for the workers inside. About a year and a half before the Triangle fire in November 1909, The International Ladies Garment Union Workers Union staged a massive strike demanding better working conditions for women. The 20,000 female strikers who took to the streets was unprecedented — and this was taking place more than a decade before women had the right to vote in the United States. It really was the first head-on clash between the tycoons of The Gilded Age and their corrupt political minions ensconced in Tammany Hall and the growing progressive movement. The strikers may have been women, but it didn't prevent Tammany from sending out police and hired thugs to arrest them and get rough. By the time the strike ended, the workers at Triangle returned to their sewing machines without any union recognition.

As we see today when the gap between what company CEOs make and the wages given to their average workers have reached startling disparities, similar differences existed at the time between company owners and the average Americans. For example, Triangle co-owner Max Blanck surrounded himself with servants and spent more than $100,000 to renovate his home, quite a contrast when the average American in 1911 only made $300 to $600 a year. Yet Blanck and other company heads didn't want to spring for the readily available sprinkler systems for new buildings or follow the recommendation of New York Fire Chief Ed Croker who, after a similarly tragic fire at a Newark, N.J., factory a mere four months before the Triangle fire had killed 25 workers, again mostly women, had suggested that buildings routinely practice fire drills. Company owners, always focusing on the bottom line, felt drills would affect work productivity and since no government regulations existed to enforce the sprinklers or the drills, they had no one twisting their arms to do the right thing.

What's so compelling about Triangle: Remembering the Fire is not just recounting all that missteps that led to the tragedy and can anger you a century later even when the event occurred long before you were born, but also the interviews with people related to both survivors and victims of the blaze. The filmmakers interview Suzanne Pred Bass who had two great-aunts who were in the fire, one who survived, one who didn't, presumably because they lost sight of each other in the smoke that quickly enveloped the ninth floor.

The cause of the fire has never been clear, but most believe a still-burning cigarette tossed into a trash can on the eighth floor quickly consumed the three floors. The switchboard operator on eight notified the 10th floor and the fire department immediately but in her haste, forgot to tell the ninth floor. Though the documentary doesn't confirm it as fact or legend, the story goes that of the two fire escapes on the ninth floor, they kept one locked so that when workers left for the day, they could be searched to make certain that they weren't stealing anything. Those who did survive from the ninth did so thanks to the heroics of elevator operator Joseph Zito who kept overloading his vehicle to get as many out as he could until it finally collapsed under the weight of the panicked who leaped down the elevator shaft to escape the flames. Most of the people on 10 were able to flee thanks to people in a neighboring building who got ladders across the space between the two buildings. Even though the fire department arrived two minutes after receiving the call, once they got to the Asch Building, the ladder trucks only reached to the sixth floor. Many of those who died were killed jumping to their deaths. At first, some bystanders thought they were tossing bundles of clothes out the windows to save them until they spotted the legs, arms and faces beneath them. Some hit the pavement so hard they crashed through glass plates on the sidewalk. In all, 146 died, 129 women and girls and 17 men. The blaze consumed all three floors in just 18 minutes from the time the blaze started and that 18 minute mark was when the last body hit the ground. Of the 146 deaths, 90 leaped to escape the flames.

The horror of what happened led Al Smith, a Democrat thick in Tammany Hall politics who would later lose the presidency to Herbert Hoover, to shake off the cronyism and lead the fight for reforms. New York led the way for proper workweeks and pay and, most importantly, safety conditions for its citizens. It even began to set up a pension system for those too old to work any longer, all ideas that Franklin Roosevelt would bring nationwide in the New Deal. The tragedy showed the need for strong unions and for the government to be for the people, not the corporations, and it is frightening to see the backpedaling that is happening today. Blanck and Harris eventually did face criminal charges for the deaths of their workers, but they were acquitted by an all-male jury and since they had lots of insurance, the fire didn't do much damage to them at all. Because many of the bodies were charred so badly, six couldn't be positively identified but in a separate feature, Triangle: The Unidentified, available only on HBO OnDemand, co-producer and historian Michael Hirsch uses research and genealogical techniques unavailable 100 years ago to give names for the first time to those resting in a mass grave in the Evergreen Cemetery in Brooklyn so now when the names of the dead are ready every year, those unidentified six can now join the other 140.

Triangle: Remembering the Fire premieres tonight at 9 p.m. EDT and PDT / 8 p.m CDT. You owe it to yourself to watch.

Austerity now

By Creature

"I wouldn't do a major second stimulus because I think...we run a risk that it could be counterproductive in creating a lot of additional uncertainty and undermining confidence." Bob Rubin, former Clinton Treasury Secretary and god to current one.

Maybe it's just me, but wouldn't Wall Street be much more "confident" if they knew further stimulus spending was a possibility. More spending means more people can buy their crap. That should be a good thing, no? Only in a world where the haves already got their bailout does this make sense.

Geithner opposes Warren

By Creature

This is why I'm having trouble blogging. Like the public option, having Elizabeth Warren head the soon-to-be consumer protection agency was/is something tangible, some real change a liberal could hang on to. And now it's being slapped away by a White House too enamored with Wall Street to see clearly.

Well, check that, I'm sure they see clearly, they simply don't see it from the "small people's" perspective.

Once again, this will be a test for Obama himself. He got the bill he and Wall Street wanted. Now will he fight for what his base wants? I'm not holding my breath.

Update: Well, it seems the Treasury Department is paying attention and it looks like good news on the Warren front. Here's their response via a direct email to Michael:

“Elizabeth Warren has been a driving force behind the creation of the consumer financial protection bureau, and we have worked very closely with her over the past year and a half to make that idea a reality.

“Given her strong leadership on consumer protection, Secretary Geithner believes that Elizabeth Warren is exceptionally well qualified to lead the new bureau, and, ultimately, that’s a decision the President will have to make.” -- Andrew Williams, Deputy Assistant Secretary for Public Affairs.

On the backs of taxpayers

By Creature

Daniel Indiviglio [via Ezra]:

[The FinReg] Conference reconvened due to the protests from centrists Republicans in the Senate who didn't like the idea of taxing the big banks and hedge funds. Instead, taxpayers will pay for the regulation, since any TARP money unspent was supposed to go towards paying down the deficit.

And, in the NYT today, a little reminder of what our Treasury Secretary was up to at his old job:

The documents also indicate that regulators [Timmy!] ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts. That decision, say critics of the A.I.G. bailout, has cost taxpayers billions of extra dollars in payments to the banks.

The banks escape. The people pay. Same old. Same old.

Low risk of double-dip

By Creature

I sure hope Geithner's right. Reality, however, is painting a different picture. Have we learned nothing from the Bush years?

Geithner gripes

By Creature

If Obama needed an excuse to dump Geithner, this should do it. Mind you, I'm not holding my breath.

Don't steal my lamb

By Creature

I understand why liberals want Geithner to go (Robert Reich for Treasury, anyone), but for Republicans to be after him is ludicrous. If Wall Street was tanking then maybe I see a reason for their bluster. Absent that, they should just shut the fuck up about him. He's our sacrificial lamb.

Geithner, the Tax Man, and the Treasury

By Michael J.W. Stickings

Oh, how the right is salivating over Treasury nominee Tim Geithner and his tax problems, specifically, his failure to pay almost $43,000 in Social Security and Medicare taxes over several years earlier this decade.

Appearing before the Senate Finance Committee on Tuesday, Geithner explained, according to the Post, that the "mistakes on his tax returns early this decade were unintentional and that he has since paid back the $42,702 he owed, including interest... [H]e mistakenly believed that his employer at the time, the International Monetary Fund, was deducting those taxes from his paycheck." Democratic committee chairman Max Baucus called his mistake "serious," Minority Leader Mitch McConnell is withholding judgement, and two other Republicans, Jim Bunning and Jon Kyl, are temporarily delaying his confirmation, but, of all people, Orrin Hatch, one of the most conservative and most partisan of Republicans, came to his defence: "I still support him. I have no problem. He's a very, very competent guy."

But then there are those who are making much ado, such as the Politico's Roger Simon, a noted conservative, who asks today, "What if I didn't pay taxes?" Which isn't fair, of course, because Geithner still paid most of his taxes, he just neglected to pay certain taxes that he thought were already being deducted." It an incredibly and typically idiotic piece.

Then there's The Wall Street Journal, a right-wing rag (in editorial terms), which facetiously calls for "a Geithner tax amnesty." But Geithner didn't "forget" to pay his taxes, it was just an oversight on his part -- a serious one, to be sure, but it's not like he was engaging in tax fraud or otherwise simply refusing to pay his taxes.

And it isn't just the right. Even The New York Times (which is actually far more rightist than most people realize) editorialized that "the disclosures cannot be dismissed so easily, or papered over," that "Geithner must be questioned forcefully about these matters at the hearing next week, and his explanations must be credible."

As the Times reports elsewhere, though, "several tax experts" say that "it is an easy mistake for an employee of an international organization to make." Even the Politico admits this: "Should the U.S. treasury secretary know how to do his own taxes? Maybe not, say payroll lawyers, accountants and tax professors, who consider Timothy Geithner’s failure to pay four years of Social Security and Medicare payroll taxes to be a fairly common mistake — even for a top economist chosen to run the Treasury Department, including the Internal Revenue Service."

And while media outlets like CNN are similarly making much ado and focusing on all the supposed opposition to Geithner, Republicans, with few exceptions, are pretty much on Geithner's side, dismissing the tax oversight and stressing his abilities and qualifications.

Now, this is not to say that I myself am fully behind Geithner. I have my reservations, but they have nothing to do with his taxes. Rather, they have to do with the fact that he once worked for Henry Kissinger (I'd like to know more about what he did for Kissinger & Associates), that he's another Rubin-Summers (who were both enablers of the banking crisis back when they were at the Treasury in the '90s under Clinton), that he has been very much part of the problem with respect to the financial meltdown, and that he's an enthusiastic cheerleader for the ever-growing financial bailout.

Still, I'm not against him -- I trust Obama on this -- and, despite these concerns, I do not necessarily oppose his confirmation. Indeed, as Robert Kuttner (via Benen) noted last September, Geithner is actually quite progressive with respect to regulatory policy. And Paul Krugman likes him, which is, for me, very much in his favour, even if Frank Rich makes a strong and persuasive case against him for being "no less tardy [than Rubin] in discovering the reckless, wholesale gambling that went on in Wall Street's big casinos, all of which cratered while at least nominally under his regulatory watch."

Regardless, it looks like he'll be confirmed. Thankfully, the stupid matter of his taxes won't be his undoing.

We used to pray for them, but it's all over now

By Capt. Fogg

Well, the word is out on Main Street -- Tim Geithner can't be trusted as Treasury Secretary because he is Jewish and Jews have divided loyalty. I was interested to hear that, and not just because Geithner's family assures us he's an Episcopalian raised and married in that Church.

Is the phony honeymoon over? That the Republicans may be abandoning their pretense of being in love with Israel is a possibility. One perennial Troll here at The Reaction called me "an arrogant Kike" for having asserted that, no, Barney Frank bears no discernible responsibility for our global recession, but it's really too soon to tell if the frustrated masses yearning to breathe fire will switch scapegoats and replace witches, liberals, illegal aliens, and the ACLU as hate objects. Maybe they consider all those straw men to be Jewish anyway.

Of course, it's hard to think of any immigrant group that isn't or hasn't been accused of divided loyalty in this nation of immigrants. John Kennedy stared down that bit of bigoted Waspery with grace nearly 50 years ago, but ask a Muslim -- hell, ask someone who isn't a Muslim but has a suggestive name.

Of course, it doesn't often occur except to cynics, that preaching the impending destruction of mankind and the dissolution of secular nationhood might be taken as a dilemma in as much as commitment to preserving the USA and praying for lakes of fire and brimstone aren't compatible, at least to me. I can't think of loyalty more divided than that of the Religious Right, promoting the Christian Bible as the foundation of the United States, rather than its secular Constitution. I can't help but think of divided loyalty when presented with a candidate who looks longingly forward to the destruction of our country and the flight of the elect to the Holy Kingdom of God in Alaska (no witches may apply).

(Cross-posted from Human Voices.)