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One of the reasons demand could remain soft is because even though there will be modest pay hikes, inflation should pretty much eliminate any consumer purchasing power advantage.
This leaves Obama in a further difficult economic position so he will have to work extra hard to raise enough money to buy his reelection. (See 2 below.)
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If you want John Mauldin's 'outside the box' commentary on our pitiful employment picture go to this site: "What Happened to the Jobs? - John Mauldin's Weekly E-Letter From: John Mauldin
Until Progressives quit trying to break our nation and robbing our piggy banks most small businesses that are domestically situated will not feel confident about increasing employment, expanding or taking risks.
Hunkering down, in hope of survival, is the practical tack!
Raising the debt ceiling is like giving an alcoholic another drink in hope he will stop asking for more.
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Simon Wiesenthal's Director on Obama and Clinton's decision to talk with The Muslim Brotherhood because its prominence has risen.
The KKK was prominent back in my youth but I do not recall the White House negotiating with them. (See 3 below.)
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For those who have never been to Israel and thus Jerusalem and would like to get an idea of its beauty go to this site: This is a must see - if interested in Jerusalem
Amazing photography: http://vimeo.com/15034110
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If you want a good laugh about a serious explanation why Democrats act as they do, Macho Sauce explains Coulter's new book: "Demonic." Click on PJTV.com -"ZoNation: Liberal Hypocrisy: The Devil Made Dem Do It?
Why do Democrats act the way they do? Why are they always lying and accusing people of doing the things that they do so shamelessly? Did the Devil make them do it? Find out."
Meanwhile, you can be indebted to Glenn Reynolds for this debt discussion. PJTV.com:
"Instavision: The Debt Solution: Tax Hollywood and Volvos?
Debt default? Higher taxes? More deficits? No matter how you look at it, the United States faces some tough budget choices. Megan McArdle of TheAtlantic.com joins Glenn Reynolds to discuss the fiscal and political challenges facing the nation"
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Is Obama assisting in the subtle spread of Muslim thinking and Shari education on college campuses by reason of his appointments and funding efforts all in the name of teaching tolerance?
Burying bureaucrats deep into the cavernous nooks and crannies of government is a way to influence long after you are gone. You decide.(See 4 below.)
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Israeli energy discoveries adds fuel to Lebanese border fires.(See 5 below.)
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Peter Wehner believes Obama is intellectually exhausted.
Obama may be exhausted but it is not because he is intellectual. It is more likely he has weighed himself down with albatross ideology.
And The Economist on American labor. (See 6 and 6a below.)
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Negotiations remain fluid but apparently Boehner has backed away from a comprehensive deal.
The idea that America will default on its debt and interest payments, if the debt ceiling is not raised, is crap. Government revenue is sufficient to fund our deficit and interest on same for an extended period. Yes, eventually a true shortfall would occur and would have to be met by cutting spending ,reducing and or eliminating government agencies and employees. So what is so bad about that? (See 7 below.)
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Have a great week.
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Dick
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1)Jobs Figure Devastating for Obama
By Martin Gould
The Obama administration was hit with devastating employment figures on Friday that showed only 18,000 new jobs were added in June – 83 percent less than the projected figure.
It is the second month in a row that Labor Department figures for new jobs have been shockingly low. In May, they stood at just 25,000 new posts.
The result is that unemployment ticked up from 9.1 percent to 9.2, meaning 14.1 million Americans are looking for work. Of those, 44 percent have been out of work for six months or more.
The figures are even worse if “long-term discouraged workers,” those who have given up hope of finding jobs, are taken into account. John Williams of American Business Analytics & Research estimates the jobless figure then would be around 23 percent.
President Barack Obama again attacked Congress while addressing the June numbers. He called for investment in infrastructure, the passing of a patent bill, the signing of trade agreements and an extension of the middle class tax break as ways of getting people back to work, during a statement made in the White House Rose Garden.
Obama said a successful conclusion of talks to raise the debt ceiling would help. "The sooner we get this done the sooner businesses will have the certainty needed to grow and to hire," he said, as he announced that there would be more talks with Congressional leaders on Sunday.
But GOP leaders laid the blame for the disappointing figures firmly at the feet of the president and his policies, linking them to a need to cut government spending as part of a debt ceiling deal.
“In terms of unemployment, the job creation is pitiful, and it’s because of the president’s policies,” Georgia Rep. Tom Price, the chairman of the Republican Policy Committee told Newsmax.TV in an exclusive interview.
Republican National Committee chairman Reince Priebus said, “Each passing unemployment report is a stinging reminder that President Obama has failed to get our economy out of the ditch.”
House Speaker John Boehner called the report “more evidence that the misguided stimulus spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country.”
He added, “Legislation that raises taxes on small business job creators, fails to cut spending by a larger amount than a debt limit hike, or fails to restrain future spending will only make things worse – and won’t pass the House.”
House Majority Leader Eric Cantor joined in the condemnation. “These numbers serve as a warning that as we address the debt limit increase we shouldn’t do so in a way that raises taxes and impedes the ability of small businesses to create jobs and get people back to work."
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Economists had forecast that around 105,000 new jobs had been added in June, but that figure was way off the mark.
The news was particularly disappointing for the administration as payroll company ADP had announced on Thursday that private sector jobs had increased by 157,000 in June, way above the expected figure. The ADP figures are typically an accurate pointer to the jobs figures. But that was not the case this month.
During his statement, Obama said, “We still have a big hole to fill. He said the figures “confirm what most Americans already know – we still have a long way to go and a lot of work to do.”
He pointed out that the majority of job cuts in May came among federal, state and local government workers who have been let go because of cuts and the pressure to balance budgets. A total of 87,000 government jobs have been eliminated in the last two months.
But private-sector job gains were terribly weak, the figures showed. The transportation and warehousing sector added only 3,600 jobs in June; construction shed 9,000 positions and in the financial sector there was a net job loss of 15,000. Even temporary employment is falling, leading to more worries.
Austan Goolsbee, the chairman of the Council of Economic Advisors warned that politicians of all stripes have to work together. He told CNBC that the May and June figures are “a call to action for Washington to stop the bickering, to stop the frankly dangerous actions that doing nothing will have for the economy.”
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2)Inflation to Outpace Pay Raises in 2012
By Forrest Jones
First the good news: You're getting a raise! Now the bad news: Inflation is going to demolish it.
That's going to be the scenario for many in 2012, when inflation will outpace pay raises for many Americans, according to a study released by human resources consultant Hay Group.
Median pay raises for 2012 will come to 3 percent, less than the 3.6 percent inflation rate expected for next year, the Hay Group study shows, according to the Wall Street Journal.
"For conditions to get back to 4 percent increases, we need much healthier and consistent corporate performance and a more positive outlook on the economic environment," says Tom McMullen, a pay consultant with Hay Group.
Under President Barack Obama, fiscal and monetary stimulus measures have pumped tons of money into the economy with the aim of fueling growth and hiring.
Inflation is often found on the flip side of such policies.
Why not bump up pay raises a bit further? Many executives would like to, but political and economic uncertainties call for tighter purse strings, and 3 percent raises are all companies can afford.
Some say inflation rates will remain tame as the Federal Reserve wraps up loose monetary policies, including its recent round of quantitative easing, a $600 billion bond buyback designed to inject banks full of money in order to fuel more lending and stock-market gains.
"As that money stops growing, as the Fed’s balance sheet stabilizes as of tomorrow, I think that will take away some of the inflation pressures," says George Goncalves, head of interest-rate strategies at Nomura Holdings, according to Bloomberg.
"We're not calling for double dip, we're not calling for real disinflation, but lower inflation, sure, and that’s a good thing."
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3)SWC Criticizes White House for Deciding to Formally Open Talks with Muslim Brotherhood
Rabbi Hier: “We should not be talking to an organization that can lay claim to being the world's leading purveyor of anti-Semitism and hatred of Jews."
The Simon Wiesenthal Center criticized the White House for opening talks with the Muslim Brotherhood in Egypt. The Center referred to a news wire story quoting a unidentified senior U.S. official and confirmed today by Secretary of State Hillary Clinton, citing, “The Brotherhood’s rise in political prominence” as the reason for the change in the White House position. “The political landscape in Egypt may have changed since the end of the Mubarak regime,” said Rabbi Marvin Hier, founder and dean of the Simon Wiesenthal Center. “But the Brotherhood’s hatred of Jews and Israel has not changed at all. This seems like a sell out to the European position and I hope it is not a signal that the United States will acquiesce to Europe and begin talking to Hamas as well.”
A few weeks ago, the leader of the Muslim Brotherhood in Egypt, Mohamed Badie (pictured left) said, “Allah has warned us the tricks of the Jews, and their role in igniting the fire of wars… and they labor hard to spread corruption on earth: and Allah does not love the spreaders of corruption.”
Rabbi Hier continued, “We should not be talking to an organization that can lay claim to being the world's leading purveyor of anti-Semitism and hatred of Jews. Legitimizing the Muslim Brotherhood sends the wrong message that you can hate Jews, and still sit and talk with world leaders.”
Support the Work of the Simon Wiesenthal Center so that we can continue to be on the frontlines fighting anti-Semitism and defending the Jewish people and the State of Israel.
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4)The Insidious Kumbaya on American College Campuses
By Ashraf Ramelah
On June 7, President Obama appointed Azizah al-Hibri, a Muslim professor and scholar, to the United States Commission on International Religious Freedom. Obama has already taken al-Hibri's advice to stand up for Muslims against their American critics. According to Daniel Greenfield's article entitled "The Professor Who Sharia'ed Bill Clinton" (FrontPage Mag.com article of June 14), Al-Hibri called on Obama to do so at an ISNA meeting two months before her appointment, and she has spent a good deal of her time promoting Islamic law in the United States advocating that Sharia law is superior to American law.
This April, preceding his appointment of Al-Hibri, President Obama set in motion the Interfaith and Community Service Challenge, an initiative to foster tolerance in religion on college campuses. He designated Eboo Patel, a Rhodes Scholar heading the Interfaith Youth Core, which is an organization that trains "interfaith fellows." Mr. Patel has been known to delegitimize fears of Islam, and he once said that the polarizing opinions held by Franklin Graham and Amjad Choudry were the same -- nothing that a cup of coffee together wouldn't solve (Washington Post, Oct 4, 2010). Patel's Interfaith Youth Core recruits student participants in order to improve inter-religious relations on campus and alleviate potential religious conflict stemming from religious diversity.
Apparently, Mr. Patel, who was named by Islamica Magazine as one of the ten young Muslim visionaries shaping Islam in America, and who served on the president's religion advisory council, has identified religious divides and discovered real solutions to this pervasive American problem. But shaping Islam in America is what the Interfaith Youth Core is really about.
According to a recent New York Times article (June 13) by Laurie Goodstein, entitled "An Effort to Foster Tolerance in Religion," the business of interfaith relations has always been in the hands of "elders and clergy members" of the Christian faith who hosted dialogues and drafted documents "that had little impact at the grass roots." But no worries -- Mr. Patel has a strategic plan, pro bono consultants, templates and spreadsheets, and a budget of millions. As a Muslim, he believes in religious tolerance, and according to Goodstein, he states that "Muslim radicals and extremists of other religions" are recruiting young people, and therefore religious tolerance (such as his own) should "enlist the youth."
Students coming together to do good works in the Interfaith and Community Service Challenge will form interfaith activism to become a "norm" on campus like the women's movement in America, according to Mr. Patel. Does his staff intend to offer a tutorial to explain the acute differences between women's rights in America and women's rights in Islamic countries where his faith is law? I doubt it.
Mr. Patel should also reveal that although his grandmother in Mumbai took in battered women in a generous humanitarian effort characteristic of his Islamic tradition -- an event he credits for the rediscovery of his personal spiritual life -- his tradition has also codified wife-beating, polygamy (multiple wives), female genital mutilation, woman guardianship, honor killings, and female head and face veiling. These practices flourish today within Islamic communities throughout the world.
Although clarification is not a stated goal of Mr. Patel, he could nonetheless achieve a bit of it by instructing his interfaith fellows to emphasize that only one religion subscribes to the concept of jihad (holy war against an infidel enemy), thereby making this one religion, Islam, incompatible with the others (more than three thousand). Mr. Patel's responsibility to this program should include an overview of the so-called tolerance and religious freedom throughout the Middle East in OIC nations, where theocratic leaders have chosen not to sign on to the Universal Declaration of Human Rights.
Since Mr. Patel, according to the Goodstein article, equates imams to saints, he might check in with reality by introducing the results of a four-year study issued recently by the Center for Security Policy ("Sharia and Violence in American Mosques" by Mordechai Kedar and David Yerushalmi, Middle East Quarterly), which has found mosques across America to be repositories and incubators of hate, violence, and jihad funded by foreign sources -- the same sources which influenced the recent shutdown of the anti-Semitic forum (YIISA) at Yale University. Is it any wonder that Mr. Patel finds Hillel, the national Jewish student group, a bit distanced from the MSA (Muslim Student Association) on college campuses?
Although President Obama has already sent two thousand letters to university heads to promote the Interfaith and Community Service Challenge, he needn't bother Georgetown President John De Gioia, who is already running the Wahhabi-oriented Center for Muslim-Christian Understanding. The Center is endowed with a $20-million grant from Saudi Prince Alwaleed Bin Talal (see Patrick Poole, Pajamas Media, June 15) -- but apparently never questioning the Saudi record on human rights.
Will Mr. Patel and his enlightened team educate campus youth in Arabic-language concepts in the Muslim religion, such as the word "taqqiya"? While the Christian and Jewish faiths include the commandment "Thou Shalt Not Lie," the doctrine of Islam advocates lying in certain circumstances, and one occasion is to further the cause of Islam. College campus youth interfaith programs would qualify, I'm sure.
Mr. Patel advances the President's program with the cool slogan "Better Together." He wants to pave the way for such things as Muslim "public school holidays, zoning permits for houses of worship, and religious garb in the workplace" because until this moment, "inter-religious friction was sparking regularly" in the grassroots over these matters. Mr. Patel is correct in pointing out inter-religious friction; open thought and free speech very often spark the MSA to employ oppressive tactics to impede opposing views by Christian and Jewish speakers on campus. But that said, it seems that Patel's slogan predominantly refers to America as better off with Islam in its midst -- a debatable issue. By now we have conclusive evidence that the radicalization of Islam in America and across the world is taking place despite the good intentions of moderate Muslims.
The Interfaith and Community Service Challenge allows our impressionable sons and daughters to conform their thinking to the position that Islam deserves a prominent place in American society. In light of Islam's growing extremism, this is very dangerous. American students will form opinions about Islam through these types of agenda-driven efforts on campuses as well as from Islamic studies departments with their distorted and romanticized views of Islam and its history. What will never be revealed is that the Muslim establishment has no intention of embracing Western democracy. Instead, the establishment will make a convincing feint, all the while using the very freedoms they wish to subvert -- beginning with initiatives like the Interfaith and Community Service Challenge.
Ashraf Ramelah, founder and president of Voice of the Copts, is working on a book about the pre-Islamic Jahiliyyah era with particular emphasis on women under Islam
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5)Israel to set maritime border with Lebanon as tensions rise over gas reserves
Israel to submit proposal to UN on where maritime economic border with Lebanon should be over next few days; Lebanon submitted proposal on position of maritime border to UN last August.
By Barak Ravid
In the next few days Israel will submit to the United Nations its take on where its maritime economic border with Lebanon should be, as the two countries scramble for gas reserves estimated to be worth billions of dollars.
Israel's position is due to be approved by the cabinet today; Jerusalem argues that Lebanon's proposal includes major areas belonging to Israel.
Last August, Lebanon submitted to the United Nations its version of where the maritime border should be - the exclusive economic zone. In November, it submitted its version of its western border, with Cyprus.
The Lebanese proposal does not include the large Tamar and Leviathan gas prospects, operated by Delek Energy and U.S. company Noble Energy. But the National Infrastructure Ministry found that the proposal contains reserves with a potential value in the billions of dollars.
The Lebanese also sent their version to the United States, which conducted an expert review and endorsed the document. A senior Foreign Ministry official told Haaretz that the American diplomat in charge of the issue was Frederic Hof, who was responsible for Syria and Lebanon under the former U.S. special envoy to the Middle East, George Mitchell. Hof has kept the Israel-Lebanon brief despite Mitchell's resignation two months ago.
In April, Hof began shuttling between Beirut and Jerusalem. A senior administration official told Haaretz that Hof's main goal was to prevent the border from becoming a source of tension between Israel and Lebanon, which could give Hezbollah a pretext for targeting Israeli gas installations.
Beyond the political and diplomatic interest, the United States has an economic interest in keeping the parties calm, not least because American companies are involved in the search for gas an oil in Israel, Lebanon and Cyprus. Hof told his counterparts in Jerusalem that Israel should cooperate with setting the maritime border to prevent the creation of an "underwater Shaba Farms," referring to a contested area on the Israel-Lebanon border.
The Foreign Ministry official said Israel had asked the Americans to relay a warning to Lebanon on the matter. Foreign Ministry officials told Hof that Israel would not allow a provocation on the matter or an attack on Israeli gas installations. They said Israel would consider such an attack an attack on its sovereign territory and would retaliate "strongly" against Lebanon.
Hof responded by suggesting that Israel submit to the United Nations its own outlook on the border and try to launch a dialogue. Hof asked Israel not to turn the issue into a political spat but to see it as an economic and technical matter that could benefit all parties.
Israel rejected indirect talks via the United Nations, calling on Lebanon to begin negotiations on all border issues, not just the maritime border. The foreign and infrastructure ministries believe that Lebanon is claiming vast offshore territories that belong to Israel under international law.
"It's important to provide the UN with the Israeli version of the border as soon as possible, to react to Lebanon's unilateral move," a senior Foreign Ministry official told Haaretz. "Not responding could be interpreted as a tacit agreement. We must act fast to ensure Israel's economic rights in these areas."
Israel has become even more concerned about the positioning of the border after learning recently that a Norwegian company has begun searching for gas in the area. The search is due to be completed within months, and the Lebanese government hopes to use the findings to license international energy companies to probe areas that could be in Israel's exclusive economic zone.
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6)A Jobs Report That Defies Description
By Peter Wehner
The political class has already exhausted the adjectives describing today’s bleak/horrible/awful/God-awful/dismal/terrible/absolutely flat out terrible jobs report. The new data showed, among other things, the unemployment rate increasing to 9.2 percent from 9.1 percent even as the labor force got smaller (by more than a quarter-of-a-million people). That is an amazing and alarming phenomenon, since it demonstrates that unemployment has gone up even as the pool of workers shrinks.
The real unemployment rate increased as well, from 15.8 percent to 16.2 percent. There are now more than 14 million Americans out of work, with 6.3 million out of work for 27 weeks or longer. The unemployment rate has been above 8 percent during every month Obama has been president. Only 18,000 jobs were created in June. The government revised April and May’s payrolls downward by 44,000. Average hourly earnings went down while the average time it takes to find a job went up.
There was not a single bit of good news in the Bureau of Labor report. And watching President Obama this morning try to explain this mess and offer solutions to our predicament was painful. He was reduced to listing as one of his policy recommendations streamlining the patent process. That underscores just how intellectually exhausted the Obama presidency is. They have no more arrows left in their public policy quiver.
The president is in quite a bind, then, and today’s developments are a wicked political blow. We’ve now had 29 months of (more or less) dismal jobs reports during the Obama era; there are only 15 monthly jobs reports left between now and 2012. And there’s not only no sign that things will get significantly better; things are actually getting worse (unemployment was 8.8 percent in March). Austan Goolsbee, one of President Obama’s top economic advisers, believes that if things bounce just the right way, we’ll see an unemployment rate of 8.2 percent by the fourth quarter of 2012. That’s higher than when Obama took office and will hardly be a source of comfort to the public. And remember: No president since Franklin Roosevelt has won re-election with an unemployment rate higher than 7.2 percent other than Ronald Reagan.
But of course the problem isn’t simply the anemic recovery and high unemployment; it is, as I’ve argued before, the broader belief that America is on a road toward decline and mediocrity, that our best days are behind us, and that our progeny face a less hopeful future than we did.
This is very corrosive stuff for an American president. And with every passing month, it seems, the news gets worse, our decline seems to accelerate, and the impotence and incompetence of the Obama presidency grows.
6a) Jobless agonistes
HOPES had risen in the past week that America’s economic soft patch was ending. They have just been doused with a bucket of cold water. The job market showed further deterioration in June from May, the government reported today. The number of non-farm jobs rose a meager 18,000, lower even than May’s 25,000 number (itself revised down from the original estimate). The two months together mark a dramatic deceleration from the previous three when payroll growth averaged 215,000 per month.
The unemployment rate, meanwhile, rose for the fourth consecutive month to 9.2%, from 9.1% in May. It was 8.8% in March. The economic recovery celebrated (if you could call it that) its second anniversary on July 1st, and in that time the unemployment rate has moved a lot while ending up almost exactly where it began. America has made almost no progress closing the output gap opened up by the recession. The U-6 unemployment rate, which includes people who have given up looking for jobs and part timers who want full time work, shot up to 16.2% from 15.8% and the average duration of unemployment hit a new high of 39.9 weeks. More women than men lost jobs. Indeed, since the recovery began, women have fared worse than men, a reversal of the pattern during the recession, as a new Pew study documents. Still, the male unemployment rate rose more last month than the female rate.
Digging deeper, the details grow worse. Hourly wages failed to rise and the average work week shrank slightly—bad news for income and thus purchasing power. The survey of households, from which the unemployment rate is drawn, shows a much bigger plunge in employment, at 445,000, than the payroll survey. The household survey is less reliable but is still a useful check. It tells us the payroll report is not understating the strength of the job market.There is no good news in this report; in the category of "could have been worse," private sector job growth was better than the overall total, at 57,000 last month. Public employment fell, for the eighth consecutive month, led by more layoffs by state and local governments.
The best explanation for the sharp slowdown in the jobs market is the confluence of bad luck that hit the economy this spring: a sharp increase in petrol prices, a series of natural disasters, and the Japanese tsunami and earthquake that interrupted supply chains in electronics, automobiles and other industries. Most of these temporary restraints have begun to lift. The weather is back to normal, petrol prices are down 10% (nearly 40 cents per gallon) from their peak, and Japan’s disruptions are ending. Automobile production schedules are ramping up and the Institute of Supply Management found that factory activity improved from May to June. Manufacturing employment rose last month, albeit by only 6,000. Even Greece seems, yet again, to have muddled through its latest confidence crisis (but keep your eyes on much bigger Italy).
In all likelihood, the employment data will improve in coming months as consumer purchasing power and business spirits recover from the fuel price surge. Yet as we argue in an article in this week’s issue of The Economist, there is more to the disappointing trajectory of the recovery than these temporary restraints. America has only just begun to deleverage and a McKinsey study has found that comparable episodes in history have been accompanied by anemic growth and often a return to recession. While America probably won’t fall back into recession absent some new shock, its workers should get used to stop-start growth punctuated with disappointments and soft patches. Americans are not alone in this; Britain has experienced similar disappointments and Spain’s outlook is even more anemic. Both share America’s pre-existing condition of vastly overstretched household balance sheets and the opportunistic infection of exploding government debt.
While most of Europe is ahead of America in implementing plans to arrest the rise in government debt as a share of GDP, America is just beginning. In Washington, the mood surrounding negotiations over an increase in the statutory debt limit took a turn for the better this week as Republicans signaled flexibility on taxes and the Democrats did likewise on entitlements. This may be good news politically but it is ambiguous, and possibly bad, economically, if the final deal front-loads, rather than back-loads, the pain. The steady bleed of public sector jobs shows state and local government austerity is already weighing heavily. Federal fiscal policy is scheduled to tighten in January when a temporary investment tax credit and payroll tax cut expire. Layering on more austerity would pummel an economy still struggling to achieve a virtuous circle of jobs, income and spending. Mr Obama is reportedly pushing to extend the payroll tax cut for another year. That would be good, but that would not represent new stimulus, merely a softening of the fiscal restraint already in train.
And what about the Federal Reserve? Its second round of quantitative easing (QE) was completed at the end of June. The consensus is that it would have to see deflation looming to implement more. I think the bar is lower than that. Ben Bernanke, the Fed chairman, has always worried that rising unemployment could spark a pernicious cycle of declining confidence and spending. If its recent rise continues into the third quarter, expect to see Wall Street raise the odds on QE3. It’s too soon to write the recovery off, but not too soon for contingency planning.
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7)Boehner Backs Away From Comprehensive Debt-Ceiling Deal
By Major Garrett
There's no deal and evanescent hopes in Washington—largely over-wrought to begin with—of a mega deal that wrestled with all of the country's toughest spending and tax issues have been snuffed out.
On the eve of what some thought was a make-or-break White House meeting Sunday, House Speaker John Boehner has pulled the plug—telling President Obama, Wall Street, global bond markets, skittish consumers and pummeled job-seekers Washington can't go long. It's time for a mini-deal, one Obama doesn't want and other House GOP leaders have resisted.
Boehner called Obama Saturday at Camp David and then issued the following statement:
"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase," Boehner said.
White House reaction was to stick to talking points and not attack Boehner directly. Communications Director Dan Pfeiffer issued the following statement: "The President believes that solving our fiscal problems is an economic imperative. But in order to do that, we cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts. We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree."
The tepid White House response may suggest a certain empathy for the difficult position in which Boehner finds himself: "Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington," Pfeiffer continued. "The President believes that now is the moment to rise above that cynicism and show the American people that we can still do big things. And so tomorrow, he will make the case to congressional leaders that we must reject the politics of least resistance and take on this critical challenge."
All week, even as both the president and Boehner were advancing the notion of a big deal that would raise the $14.3 trillion debt ceiling limit and reduce the deficit by $4 trillion over the next 10 years, lawmakers of every political stripe were urging caution.
House Minority Leader Nancy Pelosi, D-Calif., made clear that Democrats would not entertain “any cuts in benefits for Social Security and Medicare,” and Republicans in the Senate were distancing themselves from any possibility of new tax revenue that was reportedly part of the deal.
Senate Minority Leader Mitch McConnell, R-Ky., appeared steadfast in his opposition to tax hikes as well, but suggested that the meeting scheduled for Sunday might still hold promise.
"Like the Speaker, Sen. McConnell has consistently said that we should cut Washington spending without raising taxes on job creators, particularly in the middle of a jobs crisis. And he remains concerned with the Democrats' unwillingness to take steps to protect entitlement programs from bankruptcy, but hopes the President will be able to use Sunday night's meeting to encourage them to take action on needed reforms," said Don Stewart, McConnell's deputy chief of staff for communications.
Boehner had been reportedly willing to consider up to $1 trillion in new tax revenue, mostly through a future tax code overhaul in exchange for an agreement by Democrats to reduce spending on entitlements, including Social Security.
The failure on Saturday disheartened Senate Majority Leader Harry Reid, but he remained optimistic that a deal would be reached.
"I am disappointed that Republicans are unable to work with us to take a historic step forward that would have dramatically reduced our long-term deficit. We asked Republicans to consider a balanced approach that would have required shared sacrifice, but they would not. We still need to make sure we avert the economic catastrophe that would occur if we were to let America fail to pay its bills for the first time in our history, and I am confident that we will. Americans have a right to expect their leaders to rise above partisanship and do the right thing for our economy and the middle class," Reid said.
Anxious Democrats warned the President that the fallout would be severe if he made any deal that cuts Social Security benefits.
Obama and congressional leaders met on Thursday and announced that they would meet again Sunday to work out details. That meeting is still on, but the big deal is apparently off the table.
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