In the wake of a budget ceiling impasse, markets in Asia are down sharply with China leading the way, down nearly 3 percent.
Seriously, does anyone think Congress will not pass something?
The US is not going to default and everyone knows it. Of course there are plenty of reasons for the global markets to sink, so it’s remotely possible the markets picked this time to worry about the slowing global economy.
New Record High for Gold
One thing does make sense this evening and that is a new high for gold in spite a firm US dollar.
The US is not going to do much about the deficit, nor is the crisis in Europe over. Add in an overheating Chinese economy and a potential downgrade of US debt and gold ought to be headed higher and it is.
Super Committee Nonsense
I thought it was Tim Geithner who came up with the “Super Committee” idea but he was merely silly enough to latch on to it. The latest hare-brained scheme comes from Senate Minority Leader Mitch McConnell and Majority Leader Harry Reid.
Debt ceiling negotiators think they’ve hit on a solution to address the debt ceiling impasse and the public’s unwillingness to let go of benefits such as Medicare and Social Security that have been earned over a lifetime of work: Create a new Congress.
This “Super Congress,” composed of members of both chambers and both parties, isn’t mentioned anywhere in the Constitution, but would be granted extraordinary new powers. Under a plan put forth by Senate Minority Leader Mitch McConnell (R-Ky.) and his counterpart Majority Leader Harry Reid (D-Nev.), legislation to lift the debt ceiling would be accompanied by the creation of a 12-member panel made up of 12 lawmakers — six from each chamber and six from each party.
Legislation approved by the Super Congress — which some on Capitol Hill are calling the “super committee” — would then be fast-tracked through both chambers, where it couldn’t be amended by simple, regular lawmakers, who’d have the ability only to cast an up or down vote. With the weight of both leaderships behind it, a product originated by the Super Congress would have a strong chance of moving through the little Congress and quickly becoming law. A Super Congress would be less accountable than the system that exists today, and would find it easier to strip the public of popular benefits. Negotiators are currently considering cutting the mortgage deduction and tax credits for retirement savings, for instance, extremely popular policies that would be difficult to slice up using the traditional legislative process.
House Speaker John Boehner (R-Ohio) has made a Super Congress a central part of his last-minute proposal, multiple news reports and people familiar with his plan say. A picture of Boehner’s proposal began to come into focus Saturday evening: The debt ceiling would be raised for a short-term period and coupled with an equal dollar figure of cuts, somewhere in the vicinity of a trillion dollars over ten years. A second increase in the debt ceiling would be tied to the creation of a Super Congress that would be required to find a minimum amount of spending cuts. Because the elevated panel would need at least one Democratic vote, its plan would presumably include at least some revenue, though if it’s anything like the deals on the table today, it would likely be heavily slanted toward spending cuts. Or, as Obama said of the deal he was offering Republicans before Boehner walked out, “If it was unbalanced, it was unbalanced in the direction of not enough revenue.”
Constitutional concerns aside, abdicating legislative responsibility to a super committee with super powers is idiotic. Besides didn’t the Gang-of-Six just attempt to do something similar? And where did that plan go after a year of wrangling?
Is a 12 man committee more likely to agree to something than a 6 man committee? Anyone who thinks so has mush for brains.
Of course the whole idea might be to save face for both parties so that no one has to do anything but point fingers and blame the other side for lack of sensible action.
Each passing day delivers more reasons to be disgusted with leaders of both parties.
Mike “Mish” Shedlock
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