More fearmongering on the Super Committee failing to reach a deal to avoid the automatic triggered cuts that will come if the committee can't reach agreement soon. If you knew nothing about what the Republicans latest offer was and were just watching the segment above, you'd think both sides were being terribly unreasonable and wondering why, oh why that silly John Kerry won't give in and let the Republicans have what they want and that the Democrats had been offered some sort of "balanced" deal.
From Dave Dayden over at FDL News Desk, here's what the Republicans were offering today -- Republican’s Latest Super Committee Offer is a 181:1 Ratio of Spending Cuts to Tax Increases.
Whoo boy that's some real balance there. Why won't those silly Democrats agree to that very "serious" plan? I can't imagine. Here's more from DDay.
Republicans apparently just submitted a last-ditch effort to get agreement on the Super Committee. It was a $545 billion proposal, less than half of the minimum requirement to avoid all of the automatic trigger cuts. And it included $3 billion in tax increases.
For those of you scoring at home, that’s a ratio of about 181:1.
Democrats rejected it.
It’s almost getting fun to watch the catfood commission fail so thoroughly. If we’re already submitting proposals of less than half the minimum requirement, then there’s nothing left to fear from this thing. It’s also good news that the unbalanced proposal was rejected, because that probably included a lot of cuts already offered in past proposals by Democrats.
It will be fun to watch Alan Simpson and Erskine Bowles and David Walker and Maya MacGuineas and all the rest whine and cry next week when this thing gets a real Viking funeral. What they know, but won’t tell you, is that simply doing nothing would lead to $7.1 trillion in deficit reduction. In other words, just offsetting any changes to current law will accomplish about twice as much as their alleged goal for cutting deficits. They won’t tell you this because it comes primarily from letting tax cuts expire. [...]
The point is not to let all of this happen; the point is not even to pay for all the fixes to this, necessarily. The point is to show that the medium term budget is ALREADY in primary balance, and that just relatively following that guide path – even while allowing for targeted measures to improve the economy – is completely sufficient, rather than cutting everyone’s Social Security and Medicare benefits.
181:1, and host Erin Burnett and her panel of Jim Bianco, John Avlon and David Gergen were allowing the viewers of CNN to think the Democrats were being offered anything they should have taken seriously. We need to just let these Bush tax cuts expire and put an end to this saber rattling over austerity measures, but the Villagers in the corporate media are desperate to continue to push the narrative that there are no solutions for this other than inflicting pain on the majority of the electorate rather than ask the richest among us to pay any more taxes.
Transcript via CNN below the fold.
BURNETT: I'm Erin Burnett. OUTFRONT tonight, countdown.
(BEGIN VIDEO CLIP)
JAMES BELUSHI, ACTOR: Nothing is over until we decide it is. Was it over when the Germans bombed Pearl Harbor? Hell, no.
UNIDENTIFIED MALE: Germans?
UNIDENTIFIED MALE: Forget it. He's rolling.
BELUSHI: It ain't over now. Because when the going gets tough, the tough get going. Who's with me? Let's go.
(END VIDEO CLIP)
BURNETT: We're with you. That was John Belushi inspiring the troops at "Animal House." And that's the kind of inspirational message our Super Committee needs to get the job done.
They have five days to make a deal. Now if you think that's not a lot of time, consider this. Any proposal must be made public 48 hours before the deadline, so the pressure is on.
Now there is still time, but today Democratic panel member John Kerry came out of a closed-door meeting, sounding less than optimistic after his side balked at a GOP offer that didn't have what he felt was enough in new taxes.
(BEGIN VIDEO CLIP)
SEN. JOHN KERRY (D), MASSACHUSETTS: We're still working. I hope we can get there. But I don't know.
(END VIDEO CLIP)
BURNETT: If the committee fails, $1.2 trillion of automatic cuts will kick in. Half from Republicans' sacred cows, like defense, and half from Democratic sacred cows. None from Social Security.
Now the threat of these cuts was supposed to force the panel to take action. But I can't decide what's more offensive. That the cuts don't take place until 2013, after the election, allowing both parties to run for reelection dishonestly, because Americans haven't felt the pain of cuts yet. Or that Republicans and Democrats may agree on only one thing. That they will remove the automatic cuts since they're too painful.
So they'll get no automatic cuts and no negotiated cuts. All this made me feel like Howard Biel in the movie "Network." Here's what every American should do tonight.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I want you to get up right now and go to the window, open it, and stick your head out and yell, "I'm as mad as hell and I'm not going to take this anymore."
UNIDENTIFIED FEMALE: I'm mad as hell and I'm not going to take it anymore.
UNIDENTIFIED MALE: I'm mad as hell, I'm not going to take it anymore.
UNIDENTIFIED FEMALE: I'm mad as hell and I'm not going to take it anymore.
UNIDENTIFIED MALE: I'm not going to take it anymore.
(END VIDEO CLIP)
BURNETT: The bottom line is America must reduce its borrowing, that is a fact. And we must cut spending on things that we all like. If we do not, companies won't hire, our economy won't grow, interest rates will one day go up, a lot, on mortgages, on credit cards, on any kind of loan, on everyone. At the same time, our economy will flatline and people won't get raises.
The 12-member Super Committee has a chance to change the path of American history. To do a deal and to do a deal that is big. $4 trillion or more. If they don't, those 12 people will confirm to the world that this country cannot govern itself, and hand the future on a silver platter to China.
Jim Bianco is president of Bianco Research. David Gergen is a senior political analyst here and John Avlon is a CNN contributor. Jim Bianco, I want to start with you. You have looked at the numbers, you have done the math, how big of a deal do we need to do to really make a difference and tell the world and the markets that lend to America that we're serious?
JIM BIANCO, PRESIDENT, BIANCO RESEARCH: Oh, I think the $4 trillion number that you cited is probably the range that we'd have to do. The minimum, of course, they'd have to do is $1.2 trillion to raise the debt ceiling, which is going to hit again in about six weeks. But if you want to send a very broad message, I'd say $4 trillion if not more. And the more you send, the more you would do, the stronger the message would be.
BURNETT: And if they don't do this -- they don't do a deal and then they get rid of these automatic cuts, as we have heard people like Senator John McCain say that he wants to get rid of, that would mean we have a debt ceiling problem soon, right?
BIANCO: Oh, yes. It'd be August of last summer all over again. Remember, we were talking about default and we were talking about not paying on our debt. And we were all worried about the doomsday scenario. If we call the whole thing off and have no cuts, in six weeks, we hit the debt ceiling again at $15.2 trillion.
I suspect the Tea Party is not going to roll over again. They're going to call for a shutting down of the government again like they were last summer. And we're going to be all over again and the markets didn't like it at all last summer and they probably won't like it again.
BURNETT: I want to ask you about that in a moment. Because that could mean more downgrades, more downgrades, maybe not now, people, but soon, will mean much higher interest rates.
John Avlon, do you think they get it?
JOHN AVLON, SENIOR COLUMNIST, NEWSWEEK/THE DAILY BEAST: They apparently don't, because they're playing chicken again. They're coming up to the clip. And this is pathetic. This is a self- inflicted crisis. They have the mandate to do something and do it big. A hundred and 50 of their colleagues in Congress said, go big, hit that $4 trillion, and yet here they are in the 11th hour and they seem to be struggling to hit $1.2.
Here's the urgency they need. The world's sole super power cannot be the world's largest debtor nation indefinitely. This is a chance to turn it all around. If they fail, it will be a black mark on our nation and we will be back at this negotiation again.
BURNETT: It's -- David Gergen, what -- is this a moment when you have someone like a John Kerry on the Democratic side stand up and say, you know what, I don't care about getting re-elected? I just don't care, because I care about my country more. I mean it seems like we need to hear more of that, don't we?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It's been astonishing. It's the most irresponsible Congress I can remember. And it looks like they're heading towards another cliff without acting.
Look, there are good individuals in this group, but the differences are obviously profound. And what's been stunning to me is that we have lost our capacity to find the middle. To find some way that each side can let go some on their principles in order for the greater good to prevail.
And the -- if this fails, the markets are not going to go down immediately. But as Mr. Bianco said, if this fails and we then void the sequester, these automatic cuts in January of next year, then the markets are really going to take a blow and we're going to the look at -- Moody's and others are going to be looking at downgrades.
BURNETT: What do you think about the scenario, the downgrade scenario, Jim Bianco?
BIANCO: It would be bad. S&P downgraded last summer and the Dow Jones Industrial Average fell 600 points that day. And most people in the market would tell you the second downgrade is actually the one that matters more than the first downgrade. Because then that means that the majority rating of the U.S. is AA plus.
Right now the majority rating is still AAA, even though one of them has AA plus. So the next downgrade would be worse than the first downgrade. It would really fundamentally change the way that we do business in the financial markets. We use treasuries as a cash proxy. We assume that they're AAA rated. Well, if they're no longer AAA rated, they're not cash anymore and a lot of transactions simply cannot occur because there is no cash proxy for them.
(CROSSTALK)
BURNETT: Yes, go ahead.
GERGEN: And as you know, Erin, the other part of this is, this is occurring in a context of enormous anxiety in the markets about Europe. And if you combine a lack of political leadership and Europe and now with a -- yet another failure of a political leadership in America, it's that combination that casts us into an uncertain place.
Who can say with certainty how the markets will respond over the next two or three months if they simply fail this time out? And so they're just playing -- these members of Congress are playing with fire. They are putting our economic, you know, well-being, such as it is, at further risk.
AVLON: That's right.
GERGEN: That's what -- and it's unbelievable to me. It's unbelievable to me, where are the people who want to be president? You know, the presidential candidates on the Republican side, at least Mitt Romney spoke up today, the president, yes, he put a plan out, but they're all AWOL, basically, on trying to get this solved.
BURNETT: Yes.
AVLON: That's right. Well, and as David just syndicated, I mean, you know, this summer when we were having this debate, they were saying, let's go over the cliff, let's default. I mean it's -- this is a fundamental cross section we're at right now. The S&P cited political brinksmanship when they downgraded us and Ben Bernanke echoed it.
Here we are at doing the same political brinksmanship again. And here's what's really sick, you've got political strategists in both parties counseling them not to make a deal, saying, we'll deal with it after the election. Let's keep the election year issue alive. That is so fundamentally irresponsible. We cannot kick this down the road any longer. They need to deal.
BURNETT: Yes, it is. And I'll give the final word to you, Jim Bianco. Because once it happens and once you've lost the faith of the markets, it's not like all of a sudden when you deal with it, it gets -- it's fine.
BIANCO: No, that's what happened in Europe. If you want a one- sentence thing to what happened in Europe, they borrowed too much money, they kicked the problem down the road until it was too late. And now they're dealing with 20 percent interest rates over there. And if we start doing that, we're going to get to the point where the markets are going to blow up, they're going to promise a deal, and the markets are not going to right themselves.
That's what happened in Europe a year and a half ago and we see the mess they're in now and we're playing that same game.
BURNETT: All right. Thanks very much to all three of you. And sure hope those Super Committee members are watching and listening and taking it to heart.
Twenty percent interest rates or remaining the best economy in the world. It's a choice and they can make it.
