When Congressional Democrats last week pushed to lift the U.S. federal debt ceiling by nearly two trillion dollars, Republicans blasted the move as fiscally irresponsible and voiced concern over the long term consequences of a level of deficit spending not seen since World War II.

So on Monday House Majority Leader Steny Hoyer indicated that lawmakers would seek to pass a temporary borrowing limit to last through 2010.

Still, fiscal conservatives fret over what they view as runaway spending and Congress’ silence over how to deal with the growing deficit….

“We haven’t got any clear indication that there’s a strategy to control this,” said Desmond Lachman, resident fellow at the American Enterprise Institute. “We hear the Obama administration paying lip service but there is no clear indication of how to prevent the U.S. from getting into increasing debt.”

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Democrats plan to allow the government’s debt to swell by nearly $2 trillion as part of a bill next week to pay for wars in Afghanistan and Iraq. The amount pretty much equals the total of a year-end spending spree by lawmakers and is big enough to ensure that Congress doesn’t have to vote again on going further into debt until after the 2010 elections.

The move has anxious moderate Democrats maneuvering to win new deficit-cutting tools as the price for their votes, igniting battles between the House and the Senate and with powerful interest groups on both the right and the left.

The record increase in the so-called debt limit – the legal cap on the amount of money the government can borrow – is likely to be in the neighborhood of $1.8 trillion to $1.9 trillion, House Majority Leader Steny Hoyer, D-Md., said Friday.

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“There is a huge middle class marriage penalty hidden in the House and Senate health care bills. The penalty becomes evident by evaluating questions like the following: How much would two single people, each making $30,000 per year, pay for private health insurance if the Pelosi bill was in effect now? The answer is $1,320 per year for both individuals combined (based on the premium limits and subsidies outlined on the charts below). But how much would they pay for the same level of insurance under the Pelosi bill if they were to marry? Their combined cost would then be about $12,000 a year (the estimated cost for private insurance).

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Most New Yorkers hadn’t heard of Bart Stupak before he attached his devastating anti-abortion amendment to the House’s health-care-reform bill three weeks ago. We know a lot more about him now, of course: that he lives in a Christian rooming house on C Street; that he’s a former state trooper. He has become a symbol of legislative zealotry, living proof that the fight over the right to choose will always attract a more impassioned opposition than defense. (As Harrison Hickman, a former pollster for NARAL, put it to me: “If you believe that choosing the wrong side of the issue means spending eternal life in Hades, of course you’re going to be more focused on it.”) Just a week after the vote, when I reached the Michigan Democrat as he was driving across his district, he seemed dumbfounded that anyone found his brinkmanship surprising. “I said to anyone who’d listen: ”˜Do you want health care, or do you want to fight out abortion?’”‰” says Stupak. He points out that he’d nearly managed to bring down a rule about abortion funding earlier in the summer, this time in a bill about spending in the District of Columbia. “I said, ”˜Look, that was a shot across your bow,’”‰” he recalls. “”‰”˜I was being polite to you. That was a warning.’ And the leadership just blew us off.”

Until it realized it couldn’t, of course. And the results sent chills through the pro-choice world, dampening what was otherwise an impressive victory for Democrats on the issue of universal health care. If Stupak’s amendment holds, then any health-insurance plan that’s either listed on the government-run exchange or accepts federal subsidies””which would likely be almost all of them””would not be allowed to cover abortions. (The Senate bill is better thus far, but what the legislation will ultimately be, assuming it passes at all, is anyone’s guess.) Four days after the vote, Kate Michelman, the former head of NARAL, and Frances Kissling, the former head of Catholics for Choice, warned of an ominous new landscape in a Times op-ed: “The House Democrats reinforced the principle that a minority view on the morality of abortion can determine reproductive-health policy for American women.”

But is that actually right? Was Stupak’s truly the minority view?

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We have now reached the stage of the health-care debate when all that matters is getting a bill passed, so all news is good news, more subsidies mean lower deficits, and more expensive insurance is really cheaper insurance. The nonpolitical mind reels.

Consider how Washington received the Congressional Budget Office’s study Monday of how Harry Reid’s Senate bill will affect insurance costs, which by any rational measure ought to have been a disaster for the bill. CBO found that premiums in the individual market will rise by 10% to 13% more than if Congress did nothing. Family policies under the status quo are projected to cost $13,100 on average, but under ObamaCare will jump to $15,200.

Fabulous news!

“No Big Cost Rise in U.S. Premiums Is Seen in Study,” said the New York Times, while the Washington Post declared, “Senate Health Bill Gets a Boost.” The White House crowed that the CBO report was “more good news about what reform will mean for families struggling to keep up with skyrocketing premiums under the broken status quo.”

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Three House Democrats are ripping a proposed tax on stock transactions, even as the idea gains traction among Democrats desperate to fund jobs creation….

“Proponents of a transaction tax argue that a small 0.25 percent tax on stocks would be paid for by the highly paid financial traders and would not affect most Americans. This is simply not true. A tax on stock transactions would affect every single person who owns and invests in stocks from small business owners to senior citizens,” the letter said.

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Congress has so far sensibly put this off limits. “Audit” has a different meaning in the context of the GAO than in everyday usage. It means examine, investigate, evaluate and, often, criticize. It’s not just crunching numbers. The GAO usually undertakes studies at the request of someone in Congress. This suggests that the GAO could be used to influence or intimidate the Fed through selective investigations, which would involve access to internal Fed documents and interviews with policymakers. The Fed might be pressured to finance government deficits or to adopt an “undue focus on the short term,” Vice Chairman Donald Kohn testified before Congress on July 9. Historically, similar pressures have caused other central banks to unleash inflationary torrents of money, Kohn said.

This is not inevitable, but even the impression that the Fed’s “independence” is compromised could perversely undermine confidence in the dollar, leading to higher market interest rates or a rapid fall in the dollar’s foreign exchange value. Massive projected government budget deficits compound the psychological damage. Similar objections apply to Dodd’s proposal to end the Fed’s power to examine and regulate financial institutions. If this crisis teaches anything, it is that the Fed needs to know more — not less — about large financial institutions.

The Fed isn’t infallible. Its mistakes contributed to the crisis. Its present low-interest-rate policy poses dangers of fostering inflation or new “asset bubbles.” But the congressional Fed-bashing poses greater dangers. Ironically, the destructive remedies being peddled are part of “financial reform” legislation. If this is “reform,” we’re better off without it.

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The Federal Reserve, which has printed money in exchange for assets from the nation’s banks, has long operated opaquely. It is virtually impossible to size up its balance sheet.

So on its face, the [Ron] Paul amendment seems well intended. After all, who can argue with a little more sunlight?

But consider these words of caution from Senator Judd Gregg, Republican of New Hampshire: “Congress has demonstrated time and again its inability to manage the nation’s fiscal policy, illustrated by our staggering national debt in excess of $12 trillion. So how can anyone think that its involvement in monetary policy would be good for the country?”

So any unintended consequences of the amendment ”” what Senator Gregg calls “a dangerous move by this Congress to pander to the populist anger” ”” could indeed lead to less independence for the Federal Reserve, and the result ultimately may not be good for the economy.

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The animus towards the Fed is striking, considering that its unprecedented market interventions almost certainly averted a financial meltdown last year and a far more severe recession. But many congressmen care less about the disaster avoided than the injustice of bailed-out bankers taking home record bonuses as unemployment keeps rising. The Fed is now guilty by association, seen as too close to banks, too quick to bail them out and too generous and secretive when it does so. The Fed’s structure supplies fodder for this critique. The compromise that led to its creation in 1913 split responsibility for monetary policy between politically-appointed governors in Washington, dc, and the presidents of 12 regional banks, whose boards are appointed in part by private bankers.

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For a political horror show, fast-forward to the summer of 2010: The unemployment rate is stubbornly high, hovering between 9.3 and 9.7 percent. Companies are wary about hiring more workers because the economy remains soft. Small businesses, which normally power a recovery, are caught in a credit squeeze.

In this scenario, the jobs outlook will remain bleak for another year. The unemployment rate will remain well above 8 percent in 2011. And the economy won’t bounce back completely for five years after that.

The Democrats, in our scary 2010 movie, will be heading toward the midterm elections hoping to preserve their 81-seat margin in the House. Vulnerable incumbents will be clamoring for more economic stimulus, but the Obama administration will be constrained by the huge budget deficits needed to bail out the economy after the 2008 financial crisis.

I wish that this economic forecast were just a bad dream after too much Thanksgiving turkey. But it’s drawn from the minutes of the Federal Reserve’s Nov. 3-4 meeting, released last week.

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For the investor (the person who risks the capital to create real live self-sustaining jobs), every investment, whether it results in a profit or not, would be taxed two more times.

What is near certainty is that this bill will succeed at driving traders to international markets that are escaping the stilted centralized economy that DeFazio and Perlmutter feel the need to champion.

It’s a given that this misguided vengeance against Wall Street is comfort food for populist legislators, but “Wall Street” isn’t stocked exclusively with revolting would-be criminals. It is made up of retirees, small-business owners, entrepreneurs and parents who invest in their kids’ college funds. At last count, nearly 50 percent of Americans are, on some level, invested in the stock market.

If one was a hopeless skeptic, he might believe these legislators were trying to undermine private sector growth by re-appropriating wealth in such a ham-handed way. Even reliable liberal Sen.Chuck Schumer said that a Wall Street transaction tax had the potential to “harm economic recovery efforts by deterring capital investment.”

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…the general view among independent health care economists is that these changes will not fundamentally bend the cost curve. The system after reform will look as it does today, only bigger and more expensive.

As Jeffrey S. Flier, dean of the Harvard Medical School, wrote in The Wall Street Journal last week, “In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it.”

…the current estimates almost certainly understate the share of the nation’s wealth that will have to be shifted. In these bills, the present Congress pledges that future Congresses will impose painful measures to cut Medicare payments and impose efficiencies. Future Congresses rarely live up to these pledges.

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A House bill still being drafted aims to raise $150 billion each year to pay for new jobs.

Under a bill being drafted by Democratic Reps. Peter DeFazio (Ore.) and Ed Perlmutter (Colo.), the sale and purchase of financial instruments such as stocks, options, derivatives and futures would face a 0.25 percent tax.

The bill, a copy of which was obtained by The Hill, is titled the “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”

Read it all. My response to this horrible idea was posted in earlier comments below:

[The reason this is such a bad idea] has to do with behavioral economics. This kind of a tax changes the playing field as a result of which all sorts of people and participants will change their behavior. ALL of these behavioral changes have to be taken into consideration in order to show the overall tax revenue implications of such a proposal.

If you understand the way markets work, and especially what has happened with the technological and information revolutions since the 1980’s, and that an entire culture and its related multiple additional subcultures have arisen all around the markets as individuals have participated in many ways as never before, then you can see that the collateral damage will be MASSIVE. This MASSIVE change will have significant tax implications which almost all advocates do not even think of, much less mention. The question is the OVERALL tax revenue implications of the proposal given all of the subsequent changes it will cause.

The result will be much less corporate revenue, less individual revenue, job loss, small business loss, website and pay site implications, computer, phone and internet implications, and the list gets very long very quickly. All of those additional changes will result in more revenue loss for the government.

This has nothing to do with supply side economics, John, nor with taxes in general or people paying their fair share. What it does have to do with is the obliteration of the democratization of the markets which has come in new ways in the last few decades.

A sudden crisis is unlikely. Other rich countries with far bigger debts relative to the size of their economies, from Italy to Japan, have soldiered on without hitting a wall. Stable politics, transparent laws and economic dominance give America unequalled credibility with lenders. For all the anxiety the declining dollar drew from China this week (see article), it has no serious rival as the world’s reserve currency. America has sensibly used this fiscal freedom to enact an aggressive stimulus programme. This should be maintained for as long as it is needed.

Yet ignoring the future is also costly. The problem is not the deficits in the next couple of years, but in the years that follow. Uncertainty over how taxes may be raised to shrink deficits may already be weighing on business confidence. Worries about inflation or default could start to push up interest rates. Eventually, private investment will be crowded out.

Barack Obama and Congress can pre-empt such corrosive uncertainty with a plan to reduce the deficit now. Far from requiring immediate spending cuts or tax increases, a credible plan would reassure markets and allow an orderly exit from fiscal stimulus. The Federal Reserve provides a model: it does not plan to tighten monetary policy in the near future, but has signalled its willingness to do so when inflation threatens.

Read it carefully and read it all.

Companies and groups hiring lobbying firms on health issues nearly doubled this year as special interests rushed to shape the massive revamp of the nation’s health care system now in its final stretch before Congress.

About 1,000 organizations have hired lobbyists since January, compared with 505 during the same period in 2008, according to a USA TODAY analysis of congressional records compiled by the nonpartisan CQ MoneyLine.

Overall, health care lobbying has increased, exceeding $422 million during the first ninth months of the year, according to the Center for Responsive Politics, which tracks money in politics. That’s more than any other industry and a nearly 10% jump over the same period in 2008. The center’s Dave Levinthal said the frenzy of new lobbying activity makes financial sense.

“If lobbying didn’t work, people wouldn’t do it,” he said.

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The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit, administration officials said.

There is as yet no agreement within the White House or in Congress on how to try to curb the U.S. jobless rate. But the differences in opinion suggest that rifts could emerge among Democrats as they wrestle with how to beat back the highest unemployment rate in a generation.

The jobless rate, which hit 10.2% in October, has continued to climb despite the implementation of a $787 billion stimulus package in February.

The subheader for the article is: White House Is Unenthusiastic on Legislation That Would Raise Government Debt. To which I respond–good for them. Read it all.

But while our culture of imagination is still vibrant, the other critical factor that still differentiates countries today ”” and is not a commodity ”” is good governance, which can harness creativity. And that we may be losing. I am talking about the ability of a society’s leaders to think long term, address their problems with the optimal legislation and attract capable people into government. What I increasingly fear today is that America is only able to produce “suboptimal” responses to its biggest problems ”” education, debt, financial regulation, health care, energy and environment….

The standard answer [to the the governance problem] is that we need better leaders. The real answer is that we need better citizens. We need citizens who will convey to their leaders that they are ready to sacrifice, even pay, yes, higher taxes, and will not punish politicians who ask them to do the hard things. Otherwise, folks, we’re in trouble. A great power that can only produce suboptimal responses to its biggest challenges will, in time, fade from being a great power ”” no matter how much imagination it generates.

Grandma said that, too.

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It’s simply not true that America is ambivalent about everything when it comes to the Obama health plan.

The day after the Congressional Budget Office (CBO) gave its qualified blessing to the version of health reform produced by Senate Majority Leader Harry Reid, a Quinnipiac University poll of a national cross section of voters reported its latest results.
This poll may not be as famous as some others, but I know the care and professionalism of the people who run it, and one question was particularly interesting to me.

It read: “President Obama has pledged that health insurance reform will not add to our federal budget deficit over the next decade. Do you think that President Obama will be able to keep his promise or do you think that any health care plan that Congress passes and President Obama signs will add to the federal budget deficit?”

The answer: Less than one-fifth of the voters — 19 percent of the sample — think he will keep his word. Nine of 10 Republicans and eight of 10 independents said that whatever passes will add to the torrent of red ink. By a margin of four to three, even Democrats agreed this is likely.

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Take the time to watch it all–he is one of the real heroes of our time.

House Speaker Nancy Pelosi on Thursday played down the possibility of using a stock trade tax to fund jobs legislation, saying it should only be done in conjunction with other countries.

“It would have to be an international rule,” Pelosi (D-Calif.) said at her weekly news conference. She said that she did not want to see trading action move to other countries to avoid such a tax.

She noted, “Other nations have proposed this, and we have been the ones who resisted.” But global consensus would be difficult, if not impossible, to reach by Dec. 18, when House leaders want to finish their job-creation bill.

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Americans are worried about hidden costs in the fine print of health care overhaul legislation, an Associated Press poll says. That’s creating new challenges for President Barack Obama as he tries to close the deal with a handful of Democratic doubters in the Senate.

Although Americans share a conviction that major health care changes are needed, Democratic bills that extend coverage to the uninsured and try to hold down medical costs get no better than a lukewarm reception.

The poll found that 43 percent oppose the health care plans being discussed in Congress, while 41 percent are in support. An additional 15 percent remain neutral or undecided.

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The Catholic Church’s influence in Congress came in part from its longtime support for improving access to health care for poor and low-income Americans. “Health care has been one of their basic goals out there for years,” said Rep. Bart Stupak, D-Mich., the Democratic sponsor of the abortion amendment.

The church also was able to capitalize on good will amassed from years of working with Democrats on issues such as tax credits for the working poor, Immigration, climate change and nutrition programs. In that regard, it earned a level of trust in way that other anti-abortion groups never could.

The church “played a critical role in a number of initiatives over many years that affect our most vulnerable people,” said Ellen Nissenbaum, legislative director of the Center on Budget and Policy Priorities, a group that focuses on policies affecting low-income people.

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Democrats have promised that health reform would reduce health care costs, but legislation the House passed last week would increase costs over the next decade by $289 billion. By 2019, health costs would rise to 21.1 percent of GDP compared to 20.8 under current law, according to an actuarial report prepared by the Centers for Medicare and Medicaid Services.

“With the exception of the proposed reductions in Medicare payment updates for institutional providers, the provisions of H.R. 3962 would not have a significant impact on future health care cost growth rates. In addition, the longer-term viability of the Medicare update reductions is doubtful,” the report said.

In other words, outside of Medicare payment cuts to hospitals, the bill doesn’t curb increasing health care costs. And even the Medicare payment cuts will be difficult to sustain.

The analysis is more bad news for Democrats, who are facing increasing criticism that their reforms don’t do enough to control costs.

Read it all from Politico

There is an air of absurdity to what is mistakenly called “health-care reform.” Everyone knows that the United States faces massive governmental budget deficits as far as calculators can project, driven heavily by an aging population and uncontrolled health costs. Recovering slowly from a devastating recession, it’s widely agreed that, though deficits should not be cut abruptly (lest the economy resume its slump), a prudent society would embark on long-term policies to control health costs, reduce government spending, and curb massive future deficits. The president and his top economic advisers all say this.

So, what do they do? Just the opposite. Their sweeping overhaul of the health-care system””which Congress is halfway toward enacting””would almost certainly make matters worse. It would create new, open-ended medical entitlements that would probably expand deficits and do little to suppress surging health costs. The disconnect between what Obama says and what he’s doing is so glaring that most people could not abide it. The president and his allies have no trouble. But reconciling blatantly contradictory objectives requires them to engage in willful self-deception, public dishonesty, or both.

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“It’s our belief that it’s not just a political and economic issue, it’s a fundamental moral issue,” said David Liners, state coordinator for WISDOM, an interfaith coalition of about 140 Wisconsin congregations working to advance health care reform.

Despite near consensus in the call for reform, there remains widespread debate over who and what procedures should be covered – with undocumented workers and abortion as the main flash points – and at what cost; the role of government and whether the law or conscience should dictate a health care professional’s participation.

Alliances have emerged that reflect traditionally political divisions as much as faith, according to the Pew Forum on Religion & Public Life.

“It’s not a question of whether we need health care reform, but how we do it. And I don’t think government is the way,” said Mathew Staver, chairman of the faith-based coalition Freedom Federation, which opposes abortion and advocates a free-market approach to reform.”We believe individual liberties trump government-imposed obligations,” he said.

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What happens now? Democratic supporters of abortion rights need to accept that their House majority depends on a large cadre of antiabortion colleagues. They can denounce that reality or they can learn to live with it.

There is also a challenge for abortion’s foes, above all the Catholic bishops who have a long history of supporting universal coverage but devoted most of their recent energy to the abortion battle. How much muscle will the bishops put behind the broader effort to pass health-care reform? Their credibility as advocates for social justice hangs in the balance.

And if the Senate forces a change in the Stupak language, one obvious approach would involve a ban on abortion in the public plan — if such an option survives — and the application of Ellsworth’s rules to the private policies sold in the insurance exchange. The alternative would be Stupak’s original compromise offer to Pelosi. There are not many other options.

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The threats hanging over the central bank could compromise its independence, warn Fed watchers. Several crucial decisions are approaching, including how to continue phasing out its emergency efforts to support the economy. The Fed has already said it will wind down the purchases of mortgage securities in March after buying about $1.25 trillion worth. In the more distant future, to avoid the risk of inflation, the central bank will need to raise its target interest rate above the current level near zero.

Rate increases are always unpopular, particularly when the unemployment rate is still high. But the political environment could make the decision even tougher.

“The current unpopularity of the Fed will make it more difficult for them to raise interest rates when the economy recovers,” said Karen Dynan, a former senior Fed economist who now heads the economic studies program at the Brookings Institution. “With the Fed under such close scrutiny, any move to raise interest rates will be challenged even more strongly than in the past.”

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Even as they agreed to postpone a planned face-to-face meeting that had been set for Thursday, Roman Catholic Bishop Thomas J. Tobin turned up the heat Monday on U.S. Rep. Patrick Kennedy over his “rejection” of church teaching on abortion, calling on him to enter into a process of conversion and repentance.

In a letter to Kennedy posted Monday on the Web site of the Diocese of Providence’s weekly newspaper, the bishop disputes Kennedy’s assertion that his disagreement with the hierarchy “on some issues” including abortion did not make him any less of a Catholic.

“Well, in fact, Congressman, in a way it does,” the bishop said in a letter issued just two days after Kennedy was among a group of minority lawmakers who attempted to block tough new restrictions on abortion that were added Saturday to the House’s health-care reform legislation.

“Although I wouldn’t chose those particular words, when someone rejects the teachings of the Church, especially on a grave matter, a life-and-death issue like abortion, it certainly does diminish their ecclesial communion,” the bishop declared.

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President Obama suggested Monday that he was not comfortable with abortion restrictions inserted into the House version of major health care legislation, and he prodded Congress to revise them.

“There needs to be some more work before we get to the point where we’re not changing the status quo” on abortion, Mr. Obama said in an interview with ABC News. “And that’s the goal.”

On the one hand, Mr. Obama said, “we’re not looking to change what is the principle that has been in place for a very long time, which is federal dollars are not used to subsidize abortions.”

On the other hand, he said, he wanted to make sure “we’re not restricting women’s insurance choices,” because he had promised that “if you’re happy and satisfied with the insurance that you have, it’s not going to change.”

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Injecting itself aggressively into the health-care debate, the Roman Catholic Church in America has emerged as a major political force with the potential to upend a key piece of President Barack Obama’s agenda.

Behind-the-scenes lobbying, coupled with a grassroots mobilization of Catholic churches across the country, led the House Saturday to pass an amendment to its health-care bill barring anyone who receives a new tax credit from enrolling in a plan that covers abortion, a once-unthinkable event in Democrat-dominated Washington.

The restriction would still have to be accepted by the Senate, where it will likely face a tough fight. The issue could sink the larger health legislation if the chambers fail to reach agreement, or if any consensus language leads supporters to defect.

The House vote, and the central role played by one of the country’s biggest religious denominations, stunned abortion-rights groups that had worked hard to elect Mr. Obama and expand Democratic congressional majorities. Activists on the left had thought social issues would take a back seat to economic concerns.

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