Category: Resources

Democrats pull ahead in generic 2012 ballot

Matthew Borghese – AHN News Contributor

Washington, D.C., United States (AHN) – President Barack Obama’s approval rating may have taken a beating following a contentious debt ceiling debate, but his party has pulled ahead of the GOP in a generic Congressional poll released Friday.

Gallop’s first 2012 Congressional survey found 51 percent of voters prefer a Democratic candidate over the 44 percent of Americans who would elect a Republican; only 4 percent remain undecided ahead of November.

The 3-day poll was conducted after the unsettling credit downgrade from Standard & Poor’s, but was completed a day before Wall Street’s dramatic tumble where the Dow Jones Industrial Average dove 635 points on Monday.

“The Democratic Party may be better positioned today to win seats in the 2012 congressional elections than it was leading up to the 2010 midterms that resulted in its loss of 63 House seats and majority control,” explained Gallop’s Lydia Saad. “However, the Democrats’ advantage is currently not as strong as that seen in 2006, when they regained majority control from the Republicans, or in 2008, when they maintained it.”

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U.S. slapped with Standard & Poor’s rating downgrade

Tejinder Singh – AHN News Correspondent

Washington, D.C., United States (AHN) – Standard & Poor’s on Friday downgraded the U.S. government”s “AAA” sovereign credit rating while other two major rating agencies Moody’s and Fitch kept the U.S. at “AAA” but Chinese rating agency Dagong Global Credit Rating Co. on Wednesday cut the U.S. from A+ to A with a negative outlook as Washington went through long-drawn inter-party political bickering before raising the country’s debt limit.

With the U.S. economy already facing an uphill task of recovery, Washington got more worried after the announcement of the downgrade and the U.S. President Barack Obama met the Treasury Secretary Timothy Geithner before he left for Camp David Friday afternoon.

China with its largest hold of U.S. Treasuries commented, by proxy, through its official Xinhua news agency saying that Washington needed to “come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone”.

“We have lowered our long-term sovereign credit rating on the United States of America to “AA+” from “AAA” and affirmed the “A-1+” short-term rating. “We have also removed both the short- and long-term ratings from Credit Watch negative,” the credit rating agency said in a statement.

The downgrade, it said, reflects its opinion that the fiscal consolidation plan which Congress and the administration recently agreed to “falls short of what, in our view, would be necessary to stabilize the government”s medium-term debt dynamics.”

“More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policy making and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011,” the agency said.

“Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government”s debt dynamics any time soon.”

S&P statement said: “The outlook on the long-term rating is negative. We could lower the long-term rating to “AA” within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.”

“When comparing the U.S. to sovereigns with “AAA” long-term ratings that we view as relevant peers “Canada, France, Germany, and the UK” we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others,” it said.

Including the U.S., S&P estimated that these five sovereigns would have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (Britain), with the U.S. debt burden at 74%.

By 2015, S&P projects that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%.

“However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015,” it said.

On Monday, S&P will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors, the statement added.

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Spain loses, Canada wins in Moody’s credit review

Vittorio Hernandez – AHN News

Madrid, Spain (AHN) – Moody’s Investors Service placed Spain on a credit ranking review Thursday for a possible downgrade. The ratings agency said it needs to go over Madrid’s Aa rating because of challenges to the Spanish government to consolidate the country’s fiscal balance.

On the same day, Moody’s renewed the AAA credit rating of Canada. Moody’s said it renewed Ottawa’s rating because of factors that helped Canada emerge from the global financial crisis relatively strong.

The agency cited Canada’s economic resilience, very high government financial strength and low susceptibility to event risk. In its annual report, Moody’s forecast that Ottawa’s debt load will improve in the next few years because the federal government is on track to fiscal consolidation.

The agency added that Canada’s provinces also enjoy high credit ratings despite their relative large budget deficits.

Among the risks to Canada’s outlook identified by Moody’s were the country’s housing market and Quebec’s continued insistence to be sovereign from the rest of Canada. However, the agency stressed that the chance of both risks affecting Ottawa’s credit rating is low.

The review of Spain’s debt rating comes on the heels of cuts in rating made by major ratings agencies to Greece, Ireland and Portugal, which have been hit badly by the eurozone debt contagion.

The two actions by Moody’s, however, were overshadowed by speculation that the U.S. would be downgraded from its AAA rating because of the deadlock among American political leaders on how to raise the country’s $14.3-trillion debt limit.

A scheduled House vote on a two-step bill proposed by Speaker John Boehner that would increase the cap by $900 billion was postponed Thursday evening as Republican leaders sought more support for the measure from party members.

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White House relents more while negotiations continue to avoid debt payment default

Tejinder Singh – AHN News Correspondent

Washington, D.C., United States (AHN) – There was no word on the outcome of the Wednesday evening meetings in the White House where Democratic congressional leaders and the top two House Republicans met with President Barack Obama for separate meetings according to officials.

With the White House and the officials from the leaders participating in the meetings refusing to comment on the outcome, there was another concession offered from the White House to avoid a default on August 2 as President Obama expressed his willingness to accept a short-term plan to up the federal government’s $14.29 trillion borrowing limit according to the White House spokesman Jay Carney.

Explaining the President’s view of the possibility of a short-term extension of the debt limit, Carney in a statement said, “The President does not support a short-term extension of the debt limit, period,” adding, “The only exception to that is in the event that both sides reach a deal on a long-term extension of the debt limit plus significant deficit reduction, and we needed a very short-term extension (like a few days) to allow a bit of extra time for a bill to work its way through the legislative process.”

The statement clarified that the president consented only if the bipartisan congressional leadership reached an agreement “on a long-term extension of the debt limit plus significant deficit reduction” and needed time to pass the legislation.

The move is also viewed as a setback to the earlier confidence projected by the president that Democrats and Republicans can achieve a far-reaching agreement within the limited time and Congress can pass it within the ever-shrinking window.

The lack of enough time is also stressed by both Senate Democrat teader Harry Reid and House Speaker Republican John Boehner agreeing that the August 2 deadline does not give lawmakers enough time to agree, formulate and pass a bill to take care of the subject.

One proposal, that was gaining momentum on Wednesday evening as hectic negotiations continued, is recent one by Reid and Senate Minority Leader Mitch McConnell (R., Ky.) to give Obama the authority to raise the debt ceiling by $2.5 trillion in three installments, unless two-thirds of Congress votes to block it.

Earlier speaking to journalists on Tuesday in the James Brady briefing room at the White House, President Obama had cautioned that “We’re in the 11th hour and we don’t have a lot more time left.”

Obama had added, “The good news is that today a group of senators, the Gang of Six, Democrats and Republicans — I guess now Gang of Seven, because one additional Republican senator added on — put forward a proposal that is broadly consistent with the approach that I’ve urged.”

“What it says is we’ve got to be serious about reducing discretionary spending both in domestic spending and defense; we’ve got to be serious about tackling health care spending and entitlements in a serious way; and we’ve got to have some additional revenue so that we have an approach in which there is shared sacrifice and everybody is giving up something,” Obama said.

Asked to comment if he endorsed the gang of six plan, Obama said, “Just because we might agree in principle with a range of issues with six senators or seven senators, that doesn’t get us out of the House of Representatives; that doesn’t get us out of the Senate.”

“There’s going to have to be a broader agreement on the part of all the leadership that we’re going to get this done in a serious way, and we’ve got a tight deadline to do it,” the president concluded on Tuesday.

According to the White House sources, Treasury Secretary Timothy Geithner would be meeting with the president and the vice-president on Thursday afternoon while Treasury Department officials on Wednesday reiterated that the government would run out of cash to pay its bills if Congress doesn’t boost the $14.29 trillion debt ceiling before August 2.

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White House welcomes Republican Senator McConnell’s latest proposal

Tejinder Singh – AHN News Correspondent

Washington, D.C., United States (AHN) – The White House on Tuesday welcomed the proposal floated by Senate Republic leader Mitch McConnell to increase the nation’s debt limit.

The White House press secretary Jay Carney in a statement said, “Senator McConnell’s proposal today reaffirmed what leaders of both parties have stated clearly, that defaulting on America’s past due bills is not an option.”

Reiterating President Barack Obama’s position from his press conference a day earlier, Carney said, “As the President has said, “If not now, when?” It is time for our leaders to find common ground and reduce our deficit in a way that will strengthen our economy.”

“The President continues to believe that our focus must remain on seizing this unique opportunity to come to agreement on significant, balanced deficit reduction,” said Carney.

Earlier Republican Senator McConnell offered a way out from the political impasse that is clouding the ongoing budget negotiations. McConnell plan outlined Obama to offer a plan lifting the debt ceiling by $700 billion before Aug. 2, the terminal date.

There are more steps in the plan calling for Obama to offer two more debt-limit increases, of $900 billion each, later this year or next year, under the same procedure.

President Obama is continuously meeting with bipartisan congressional leadership to not only raise the debt ceiling before August 2, the date the government is set to exhaust its borrowing authority but also to streamline budgetary details.

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S&P equates delayed Greek debt payment to default

Vittorio Hernandez – AHN News

Athens, Greece (AHN) – Even if the Greek parliament had passed last week two austerity program legislations that paves the way for the release of the country’s second tranche of loan from the European Union and the International Monetary Fund, a ratings agency is still wary of a Greek debt crisis.

Standard & Poor’s warned on Monday that a proposal to restructure Athens’ debt, which would lead to a delay in payment, is equal to a default.

S&P was reacting to an agreement in principle by German and French banks to roll over loans to Greece to give the financially challenged government sufficient time to repay its debts.

The roll over would be done by reinvesting the proceeds of maturing Greek debt into newly issued bonds.

S&P insisted it would still be a default because creditors would need to wait longer to the paid and the value of Greek bonds would be cut. A default could lead to the collapse of Greek banks and later on the Greek economy, followed by Athens’ exit from the eurozone.

The ratings agency pointed out that a Greek debt crisis would immediately spread to European banks, especially French and German banks which are the largest holders of Greek debt. Even before an official default, ratings of French banks have been downgraded because of their vulnerability to the Greek economy.

Experts pointed out that Europe is doing everything it can to avoid a Greek default because such a scenario would lead to payment of credit-default swaps with unpredictable results. The European Central Bank warned that the shock of a Greek default on the global economy could be comparable to the Lehman Brothers collapse in 2008.

The S&P downgrade of Greece last month to CCC from B caused shares of British, French and German banks to go down by 2.3 percent, 2 percent and 1.7 percent.

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Obama’s approval ratings drop as economy stagnates

Ayinde O. Chase – AHN News Staff

New York, NY, United States (AHN) – After slowly inching upward, President Barack Obama’s approval rating has once again dropped, based his handling of the nation’s economy. The downward move ties his lowest rating ever, in of October of last year.

Based on a recent Harris Poll, one-quarter of Americans (27 percent) give the President positive ratings on the overall job he is doing on the economy while almost three-quarters (73 percent) give him negative marks. Last month, one-third (32 percent) gave him positive marks and 68 percent gave the president negative ratings on the economy.

The future of the economy is also seen in a negative viewpoint. In February, more than one-third of Americans (34 percent) said they expected the economy to improve in the coming year, one-quarter (25 percent) thought it would get worse and two in five (42 percent) believed it would stay the same. This month, just one-quarter (26 percent) expect the economy will improve in the coming year, one-third (33 percent) say it will get worse and two in five (41 percent) believe it will stay the same.

One thing the White House also has to deal with in the next few months is the issue of the debt ceiling and whether it should be raised. Only one in five Americans (21 percent) are in favor of raising the debt ceiling while almost half (45 percent) are not in favor of raising it. However one-third of U.S. adults (34 percent) aren’t completely sure if it should be raised nor have a firm grasp of what it is.

If the debt ceiling is not raised, the government will be forced to temporarily stop paying for certain things to conserve funds.

With the presidential election 16 months away, one of the main areas expected to be hotly debated and used as a political hammer will be the economy.

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White House readies for tough choices on budget talks with lawmakers

Tejinder Singh – AHN News Correspondent

Washington, D.C., United States (AHN) – The White House talked tough on Friday about the choices that President Barack Obama is ready to make in reaching a deal with the U.S. lawmakers over the ongoing budget talks.

Citing the presidential meetings on Monday with the Senate Majority Leader Reid in the morning and Senate Minority Leader McConnel in the early evening, Jay Carney, the White House spokesman told journalists abroad Air Force One, en route Washington,’The President is willing to make tough choices, but he cannot ask the middle class and seniors to bear all the burden for deficit reduction and to sacrifice while millionaires and billionaires and special interests get off the hook — are let off the hook.”

Carney minced no words in reflecting the thinking process of President Obama saying, “We won’t support an approach that gives millionaires and billionaires $200,000 in tax cuts annually while 33 seniors pay for that with a $6,000 per person increase in their Medicare costs.”

“We just don’t believe that that’s a fair or balanced approach to solving this problem,” said Carney, adding, “We believe that we can move forward as long as no one in the talks takes a “my way or the highway” approach.”

Asked to comment on the ongoing negative attitude of the Republicans on the budget talks and the White House optimism, Carney said, “We remain confident that we can continue the progress that we’ve made, and that there’s reason to believe that we’ll be able to find common ground to achieve significant deficit reduction.”

To further clarify the basics of his belief, Carney said, “Because the American people insist that we get it done.”

On the question of raising the debt ceiling, Carney reminded the lawmakers: “It is extremely dangerous to play chicken with the full faith and credit of the United States government.”

“We remain very confident that Congress will act responsibly and maintain the full faith and credit of the United States government by raising the debt ceiling,” said Carney, noting, “Raising the debt ceiling is not a vote for spending. It is a vote to meet our obligations and pay our bills.”

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Health On The Hill Transcript: Dems, GOP stake out positions in budget talks

United States (KaiserHealth) – PBS Newshour’s David Chalian talks with Jackie Judd about the latest developments in the budget negotiations being led by Vice President Joe Biden and the role of Medicaid and Medicare in those talks.

Watch the video

or listen to the audio.

Transcript:

JACKIE JUDD: Good Day, This is Health on the Hill. I’m Jackie Judd.

The bipartisan debt-reduction talks led by Vice President Biden enter an intense phase this week with four sessions planned. In the words of the vice president, participants are “getting down to the real hard stuff.” The negotiations, of course, involve spending cuts sufficient to win the Republicans’ backing to raise the debt limit before August 2nd. On “Meet the Press” yesterday, Senator Dick Durbin-the assistant majority leader and a close ally of President Obama’s-suggested Medicare is on the table.

SOUNDBITE:

David Gregory: Would you then support a package that involved cuts to Medicare benefits if that’s what was required for a grand bargain?

Sen. Dick Durbin: I certainly wouldn’t go as far as the House Republican budget, which I think would eliminate Medicare as we know it today. But there are ways to make health savings in Medicare. Health savings that will mean it will be a solvent program for so much longer. We shouldn’t, though, break the basic promise to the American people that Medicare is going to protect them in their retirement.

JACKIE JUDD: David Chalian, political editor for the “Newshour” on PBS, has been following the Biden negotiations closely and he joins us. David, thank you for being here.

What was Sen. Dick Durbin trying to telegraph there? It’s on the table, but we need to protect the promise made to seniors?

DAVID CHALIAN: Right, he completely decided not to answer David Gregory’s actual question and made it about the Ryan budget. My understanding: Democrats on the Hill say that this notion of raising the eligibility age for Medicare, or perhaps means testing on Medicare so that wealthier, elderly Americans pay more for their benefits – those types of savings are very much on the table. Where the Democrats are drawing the line – because they have demonized this Paul Ryan budget to their political advantage, as we saw in that special election in New York – what they need to do is separate themselves from a complete overhaul of Medicare that makes it private and hands out vouchers. That’s where they’re going to draw this dividing line. But I think what you’re hearing, or at least what I’m picking up on the Hill from folks who are involved in these negotiations: what the President laid out in April at George Washington University, where he said IPAB – the Board he has proposed to oversee some of these savings in Medicare and efficiencies – that’s not going to be enough. The Democrats are going to have to come up with a little bit more in Medicare savings in order to, as you were saying, win that Republican support to raise the debt limit.

JACKIE JUDD: And very difficult to broach that subject with voters.

DAVID CHALIAN: It’s politically unpopular, we know that. But this whole notion, Jackie, of what is happening in the Biden negotiations is politically unpopular. The whole thing that’s going on here is, we’re going to touch third rails of politics in order to also do this very unpopular thing that nobody likes, which is to raise the debt limit so that we continue to borrow more money from the Chinese to pay our bills. So, nothing that’s going on there is popular with the voters, except that the voters want something done. They’re tired of seeing the stasis in Washington.

JACKIE JUDD: Last week Sen. Jay Rockefeller, one of the more liberal Democrats in the U.S. Senate, said that he was very concerned that Medicare was off the table, because it has such a potent political constituency behind it. And so people, negotiators, will be turning to look, and Medicaid, which does not have the same political constituency — what are you hearing about that?

DAVID CHALIAN: Well, Sen. Rockefeller has rung the bell on this, and you’ve seen now Democrats coalescing around and saying, this is actually a line in the sand. I think that they’re not willing to cross this notion that Paul Ryan put in his plan, in the House Republican plan, to block-grant Medicaid funding to the states, which will really shift the cost to the states, even though it’s a federal-state program. I think Democrats actually have drawn a line around that, more so than on the two items we were just talking about in Medicare. My sense is that Medicare is still very much a part of these negotiations. They’ll look for savings in Medicaid, but transforming Medicaid in expense of saving Medicare, because that is politically more popular, I don’t think is what the Democrats have planned. And that’s not my sense of the White House …

JACKIE JUDD: And so maybe Rockefeller was just reminding his colleagues, I’m here; I’m watching.

DAVID CHALIAN: I think that’s more of what was happening, perhaps.

JACKIE JUDD: Yesterday on one of the talk shows, the Senate minority leader, Mitch McConnell, said that if a grand deal can’t be made, that perhaps we should begin thinking about a short-term deal to raise the debt limit. Is there a consensus in the Republican Party for that idea, or was he just floating a balloon?

DAVID CHALIAN: I definitely think he was just floating a balloon, and I think he wanted to — remember, he doesn’t have a seat at the table; his representative there is Jon Kyl, his number two. I think he wanted to remind Vice President Biden and those sitting around the table that this is all about everyone not wanting to vote on this again before the 2012 election. So if you want to raise the debt limit enough, more than $2 trillion the president is requesting in order to avoid a vote before election time, there’s only one way to do it, according to Mitch McConnell, and that is entitlement reform and this grand bargain. So I think he wanted to remind everyone, guys, we can do a short-term deal, because Republicans don’t want to look like they are for default. They don’t want to look irresponsible here in any way. But they are only going to raise it a little bit, whatever they can come up with in cuts they’re going to match. And what Mitch McConnell is saying is, bring it back. Let’s have the president argue again six months before his election, eight months before his election, that they need to raise the debt limit. It’s one of the most unpopular votes for members of Congress for either party. Nobody likes to take that vote on raising the debt limit.

JACKIE JUDD: Do you have a sense of what the White House is hoping to be able to say at the end of this week?

DAVID CHALIAN: They have set themselves sort of an internal deadline that they’d like to get this done before the July 4 recess. We know that we have through August 2, as you mentioned at the top of the show. The White House is looking to say, listen, three hours every day for four days this week we now have dug into the hard stuff, as Vice President Biden said. They’re not ready to announce a deal this week. I think this is going to go a little closer to the limit, to the August 2 deadline than many on the Hill would like to see. But the White House is looking for a commitment that a deal is possible.

Can I just add one complication here of what is going to throw the White House off their message a little bit? That Gang of Five, those bipartisan senators that are also trying to work on a huge deficit reduction deal, they’re going to release their plan this week, possibly, according to one of the members, Mark Warner, the Democrat from Virginia. They’re looking for $4 trillion in reductions. They are trying to get buy-in from Republicans on raising revenues, and they are going to attack Medicare and Medicaid, probably more aggressively than the White House would like. So that’s going to complicate what’s going on in the Biden negotiations, as well, because this other plan is going to emerge.

JACKIE JUDD: I guess it shouldn’t be easy when you’re looking for trillions of dollars, right?

DAVID CHALIAN: Right. This is real money and this is upending the course that the country has been on for a decade or so.

JACKIE JUDD: Thank you so much, David Chalian, political editor for the “Newshour” on PBS.

DAVID CHALIAN: My pleasure.

JACKIE JUDD: Great having you here.

– Provided by Kaiser Health News.

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Bernanke warns U.S. legislators of losing AAA credit rating if debt ceiling remains

Vittorio Hernandez – AHN News

Washington, D.C., United States (AHN) – U.S. Federal Reserve Chairman Ben Bernanke warned Congress that the US risks losing its AAA credit rating if the House fails to lift the current $14.3 trillion debt ceiling.

He said if the White House and Congress fail to reach an agreement on the issue by August, the U.S. may soon start defaulting on its debts.

Bernanke pointed out that Congress is using the debt limit issue as a tool to force a necessary and difficult fiscal policy adjustment, but it is a wrong tool. He explained that failure to hike the debt ceiling would be self-defeating if the aim of legislators is to create a roadmap for the U.S.’s fiscal problems.

The chairman stressed that even a short suspension of Washington’s payments on principal or interest could cause severe disruptions in global financial markets and lead to another credit downgrade.

While Bernanke was explaining the country’s debt problems at an event that included legislators and prominent economists, U.S. Vice President Joe Biden held his sixth meeting with a group of lawmakers to forge a deal on the debt ceiling.

Bernanke proposed hiking the federal debt ceiling by $2.5 trillion to allow Washington to operate until early 2013.

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