WASHINGTON—An increase to the federal government's borrowing limit is being considered in talks on extending the Bush-era tax cuts, people familiar with the situation said Friday. They warned, however, that the issue could be too politically toxic to be part of a final deal.
Several congressional aides said a debt ceiling increase was discussed in the ongoing talks between Obama administration senior officials and congressional Democrats and Republicans on how to extend the tax cuts.
Howard Flight, who suggested welfare changes would encourage 'breeding' among the less well off. Photograph: Kieran Doherty/Reuters
David Cameron was under pressure tonight to evict a new Tory peer from the party after he suggested that welfare changes would encourage "breeding" among the less well-off.
Partisan squabbling on U.S. spending priorities continued following the release of the White House's deficit-reduction commission report on December 1. Some Democratic lawmakers lamented proposed cuts to entitlements such as Medicare and Social Security and an increase in the retirement age from 67 to 69, while Republican lawmakers objected to suggested tax increases and cuts to military spending. Though the report is unlikely to garner political agreement on needed cuts, says SAIS foreign policy professor Michael Mandelbaum, it drives home the message that "everybody will have to take a hit." Mandelbaum, author of the book The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era, says an inevitable result of deficit reductions for U.S. foreign policy will be fewer U.S. interventions abroad. Still, he stresses the need for continued military presence in Europe, East Asia, and the Middle East. U.S. presence in East Asia is especially vital to economic growth, says Mandelbaum, since U.S. naval forces protect international trade routes. He says the greatest threat likely to emerge from a reduced U.S. presence abroad is Iran, which could attempt to "control the supplies of oil on which the global economy depends."
How effective is the deficit commission report in rallying political support for the kind of budgets cuts needed to tackle the U.S. debt problem?
I doubt that this report by itself will create a political consensus in favor of the painful adjustments that will be needed. But it does give the issue of deficit reduction higher visibility and brings us closer to the moment when the country will take serious action.
Do the recommendations prioritize in the right areas?
One can quibble with this or that recommendation, but there are two major points that are supremely important emerging from the report. One is that deficit reduction is an urgent priority for the United States. The other is that deficit reduction will have to be broad-based. Everybody will have to take a hit.
When the draft plan by deficit commission co-chairs Alan Simpson and Erskine Bowles was released, U.S. Defense Secretary Robert Gates said the proposed cuts were "math, not strategy" (WSJ) and that they threatened national security. How can the United States strike the right balance between preserving national security and breaking from fiscal dependence on countries like China?
The open international economic order is protected by the U.S. military presence around the world, especially the U.S. naval presence which protects the trading routes.
The first step is to understand that the needs of deficit reduction will require that resources for foreign policy and defense will be reduced. When the country gets serious about deficit reduction, taxes will rise and federal programs including Social Security and Medicare will be cut, despite what politicians promised in the last election. In those circumstances, with Americans paying more to their government and getting less from it, there will be enormous and irresistible pressure to reduce the defense budget and other foreign policy spending. That will be a political reality if not an absolute economic necessity. Given those all but certain circumstances, it is the responsibility of the government and the opportunity of the foreign policy community to think through what the United States' foreign policy priorities should be. What is vital for us and what, while maybe perhaps desirable, is dispensable?
Your latest book argues that deficit reduction will limit the scope of U.S. foreign policy. What will those limits look like, and what does that say about how the United States should be prioritizing its foreign policy investments?
As a result of deficit reduction and the political climate that it will create, we will not engage in the future in the kinds of military interventions that the United States has practiced over the last two decades. For the foreseeable future there will be no more Somalias, Haitis, Bosnias, Kosovos, Afghanistans, or Iraqs. In addition, there will be powerful political pressure to reduce defense spending, to reduce the defense budget, at least somewhat. As I argue in the book, the most important foreign policy priorities for the United States are to maintain the U.S. political and military presence in Europe, East Asia, and the Middle East. And I hope that as the scope of foreign policy is reduced, those commitments will retain support in the United States.
What about the tradeoff between short-term cuts and long-term economic growth? Are we jeopardizing future investments in national security by spending less now to fuel growth?
There's no doubt that the best cure for a deficit is economic growth, and we should not take steps that will artificially choke off economic growth. And we should make investments that will promote economic growth in the future. There is a conflict between what is economically sensible to do in the short term, which may require more deficit spending, and what is economically necessary to do in the long term, which is to reduce our deficits. But where foreign policy is concerned, we have to think about the long term, and that means thinking about setting clear priorities.
My preference would be for more investment in genuine growth-producing programs--especially science, technology, research and development --on which the future of the U.S. economy depends.
There's a lot of belt-tightening going on around the world right now, particularly in Europe. Do you expect U.S. allies around the world to pick up the slack as the United States cuts back?
The United States will continue to be number one, and I do not see any country or group of countries taking the United States' place in providing global public goods that underpin security and prosperity.
That is a very important question, and my answer is a regretful but unambiguous "no." I do not think that our friends and allies will help us pick up the slack. They, too, are economically pressed. That means that the things the United States does in and for the world, if the United States ceases to do them, will not get done. And since most of what the United States does in the world is good for the world, as well as for the United States, a more modest U.S. foreign policy of the kind that is in prospect is not good for the world. But I fear it cannot be avoided.
Are there any foreign policy benefits to a lower-profile United States? Where will the U.S. rank as a global power once we cut back?
The United States will continue to be number one, and I do not see any country or group of countries taking the United States' place in providing global public goods that underpin security and prosperity. The United States functions as the world's de facto government. A weaker United States does not mean that some other power will take the place of the U.S. as the world's government; it means rather the world will get less governance.
China seems to be waiting for U.S. global prominence to decline, but you've said China too, will suffer from a weaker U.S. presence in the Asia-Pacific region.
The U.S. military presence in the Asia-Pacific region gives China's neighbors confidence that if China should undertake aggressive foreign policy, the United States would be on hand to help deter China. If, for whatever reason, the United States should withdraw completely, those countries would be on their own in confronting China. One possible direction that Japanese and Taiwanese foreign policy, for example, might take would be to acquire nuclear weapons, which is certainly something that China does not favor. At the same time, China depends greatly on an open international economic order with free trade and investment. This has helped fuel China's remarkable economic growth. But the open international economic order is protected by the U.S. military presence around the world, especially the U.S. naval presence which protects the trading routes. Without the global U.S. presence, international economic prospects and the economic prospects for China would become much more uncertain.
What other threats will arise from a reduced U.S. presence abroad?
The greatest threat is a much more aggressive and dangerous Iran, which in the worst case could dominate the Persian Gulf and control the supplies of oil on which the global economy depends. There is no power other than the United States capable of checking Iran, and it is extremely important that whatever the economic and political climate the deficit reduction creates, the United States continue this role. A nuclear-armed Iran would be even more dangerous and difficult to control.
The U.S. economy added fewer jobs than expected in November and the unemployment rate rose, dashing hopes that the recovery is gaining momentum.
The U.S. economy added far fewer jobs than expected in November while the unemployment rate rose to 9.8%, the highest since April, underlining continued weakness in the labor market. Evan Newmark, Dennis Berman, Steve Russolillo, Phil Izzo and Sudeep Reddy discuss.
Nonfarm payrolls rose by 39,000 last month as private-sector employers added only 50,000 jobs, the Labor Department said Friday. The jobless rate, obtained from a separate household survey, unexpectedly rose to 9.8%, the highest level since April.
Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 144,000 and that the unemployment rate would remain unchanged at 9.6%.
The previous two months were revised upward, with October job gains at 172,000 from a previous estimate of 151,000, but that didn't help an overall negative report. The weaker-than-expected data caused the U.S. dollar to weaken against major currencies. U.S. stocks fell while Treasury prices rose amid the clear sign of weakness in the economy.
A recent pickup in consumer spending and strong manufacturing surveys had offered hope the recovery might be gaining strength. But the weakness in the jobs market in November, 17 months after the recession ended, is a stark reminder that the path to recovery is likely to continue to be slow and painful.
"Big Sis has a history of pursuing political witch hunts Paul Joseph Watson Prison Planet.com Friday, December 3, 2010 In light of new reports alleging that the TSA is creating a watch list of individuals who criticized the agency as a form of collective punishment, it’s revealing to note that CNN journalist Drew Griffin was also put on a TSA watch list immediately after he filed reports critical of the organization back in 2008.
As we highlighted earlier this week, a reported TSA memo was circulated at the height of last month’s opt out controversy which “officially addresses those who are opposed to, or engaged in the disruption of the implementation of the enhanced airport screening procedures as ‘domestic extremists’.” In response to the story, former Congressman Bob Barr filed a Freedom of Information Act request which demanded to know if the TSA had categorized those leading the charge against invasive security measures, namely Matt Drudge, Alex Jones, and John Tyner, via the websites drudgereport.com and prisonplanet.com, as “domestic extremists”."
Whistle-blowing website Wikileaks has been forced to change its web address after the company providing its domain name cut off service.
EveryDNS.net said it had terminated services because Wikileaks.org had come under massive cyber attacks.
But Wikileaks has already reappeared using a Swiss web address.
Wikileaks has also used micro-blogging site Twitter to urge its fans to redistribute its "raw" net address so it can be viewed at any time.
This numerical internet protocol (IP) address remains live and accessible even when web domains - the normal "www" addresses used to access most sites - are unavailable.
Experts say it is likely that Wikileaks has done deals with lots of web hosting companies, although many are likely to back away from dealing with the controversial site in the light of recent web attacks.
Some of these sites have simply copied Wikileaks' content and put it on a different web server, while others are using different domain names to point at the original content.
The more of these sites there are, the more difficult it will be to shut Wikileaks down, security analyst Paul Mutton told the BBC.
In France, the industry minister Eric Besson has called for a ban of Wikileaks on French servers.
One of the mirror sites, Wikileaks.ch, is currently hosted on servers in France.
Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a stock market sell off starting December 15 as investors move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts.[See who gets the most money from the financial industry.]
While it is unclear how bad the sell off could be, it could wipe out the year's gains, they warn.
"Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased--on Jan. 1, 1987 from 20 to 28 percent--investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax." [See a gallery of political caricatures.]
In a memo to clients, Clifton says that the date most clients are focused on is December 15th for a deal in Congress before beginning to sell. One reason: Many stock options expire that day and investors have to act.
The later Congress acts, he tells Whispers, "the more pressure that will build on the stock market."
Worse, talk that Congress will simply pass retroactive fixes to the tax system won't help, since investors will take the sure thing and sell rather than rely on Capitol Hill. "Fixing the issue next year will not negate these negative impacts," said Clifton. [See a slide show of 10 not so recession proof industries.]
Ditto for a retroactive fix to the alternative minimum tax, he writes in the client memo. "The talk of retroactively fixing the tax cuts ignores the fact that the AMT patch cannot be retroactively fixed and is the largest component of the tax increase. Hence, in March and April, 27 million taxpayers will be facing an additional $70 billion in tax payments. The hit to consumer spending would be particularly significant," he writes.
Partisan squabbling on U.S. spending priorities continued following the release of the White House's deficit-reduction commission report on December 1. Some Democratic lawmakers lamented proposed cuts to entitlements such as Medicare and Social Security and an increase in the retirement age from 67 to 69, while Republican lawmakers objected to suggested tax increases and cuts to military spending. Though the report is unlikely to garner political agreement on needed cuts, says SAIS foreign policy professor Michael Mandelbaum, it drives home the message that "everybody will have to take a hit." Mandelbaum, author of the book The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era, says an inevitable result of deficit reductions for U.S. foreign policy will be fewer U.S. interventions abroad. Still, he stresses the need for continued military presence in Europe, East Asia, and the Middle East. U.S. presence in East Asia is especially vital to economic growth, says Mandelbaum, since U.S. naval forces protect international trade routes. He says the greatest threat likely to emerge from a reduced U.S. presence abroad is Iran, which could attempt to "control the supplies of oil on which the global economy depends."
Wikileaks had defended its decision to publish thousands of secret documents