Pimco CEO El-Erian: Debt Ceiling Deal Will Lead
To More Unemployment, Less Growth, More Inequality

Pimco CEO Mohamed El-Erian

The White House and congressional leaders last night struck a deal to raise the federal debt ceiling, agreeing to cut $1 trillion in spending over the next 10 years, create a special committee to find another $1.5 trillion in cuts, and instituting “triggers” that will lead to automatic cuts if the committee can’t come to an agreement. “Now, this process has been messy; it?s taken far too long. I’ve been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month,” said President Obama during a brief address last night. “Nevertheless, ultimately, the leaders of both parties have found their way toward compromise.”

But left out of the equation thus far is what impact those sorts of cuts will have on an economy struggling to recover from the Great Recession. Mohammed El-Erian, CEO of the bond investment firm Pimco, said yesterday that the deal will weaken the already fragile economy:

The potential budget agreement “does nothing to restore household and corporate confidence. So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise.” [...] “We have a very weak economy, so withdrawing more spending at this stage will make it even weaker,” El-Erian said.

El-Erian added in an interview with Bloomberg, ?When you look at the debt burden, there is a numerator and a denominator. We may end up creating so much damage to the denominator, which is growth of GDP, that what we do in the numerator, reducing the debt, may end up being insufficient.? This conclusion was also made by Nobel Prize-winning economist Paul Krugman, who noted today that the deal “will damage an already depressed economy“:

Slashing spending while the economy is depressed won?t even help the budget situation much, and might well make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.

The House and the Senate could both vote on the debt ceiling deal today. While its possible that the special committee could look at revenue increases, House Speaker John Boehner (R-OH) has already vowed to appoint Republicans to the commission who will vote against any sort of new revenue.

Update

Jared Bernstein, former chief economist to Vice President Biden, wrote today that “these cuts will hurt our ability to pursue what I view as most positive aspects of the President?s economic agenda ? investment in infrastructure, clean energy, research, education. They will pinch programs that are already budget constrained?programs that help low income people with child care, housing, and community services.”

Read The Full Article:
http://thinkprogress.org/economy/2011/08/01/284204/el-erian-debt-deal/

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Pam Geller Justifies Breivik’s Terror:
Youth Camp Had More ‘Middle Eastern or Mixed’ Races Than ‘Pure Norwegian’

Pam Geller with House Majority Leader Rep. Eric Cantor (R-VA)

Popular hate blogger Pam Geller has received scrutiny in recent days as the public became aware that the right-wing terrorist in Norway, Anders Behring Breivik, had praised her blog and thoroughly cited her writing in his political manifesto. After a number of blogs made the connection, as well as the New York Times, the Atlantic, and other major outlets, Geller became incensed and began lashing out at her critics.

In a post defending herself yesterday, Geller — who has called Obama “President Jihad” and claimed that Arab language classes are a plot to subvert the United States — reached a new low. Geller justifies Breivik’s attack on the Norwegian Labour Party summer youth camp because she says the camp is part of an anti-Israel “indoctrination training center.” She says the victims would have grown up to become “future leaders of the party responsible for flooding Norway with Muslims who refuse to assimilate, who commit major violence against Norwegian natives including violent gang rapes, with impunity, and who live on the dole.”

To get her point across, Geller posts a picture of the youth camp children Breivik targeted. The picture was taken on the Utøya island camp about 24 hours before Breivik killed over 30 children, so it is likely Geller is mocking many of the victims. Under the picture, Geller writes: “Note the faces which are more MIddle [sic] Eastern or mixed than pure Norwegian.” View a screen shot (click to enlarge) of Geller’s blog post below:

Could Geller’s outburst of smears be a distraction against mounting evidence that she might have communicated with Breivik in the past? A post from Geller in 2007 reprints a reader-submitted letter in which an anonymous Norwegian complains of Muslim immigration and boasts that he is “stockpiling and caching weapons, ammunition and equipment.” In the comment section, Geller claims that she provided anonymity to the reader to protect him from being prosecuted. Although Geller recently deleted the ammunition line from her post, a cached version is available. As Glenn Greenwald notes, “If this were an attack by a Muslim group, and a Muslim had something like this on his/her website, the FBI and multiple other groups would be swarming.”

Geller, a fixture on Fox News and conservative gatherings, gained a large national following last year after fueling a campaign to smear a planned community center several blocks from the Ground Zero site as a “victory mosque.” Her influence extends beyond Breivik and the anti-Muslim blogosphere to the Republican Party, given the fact she has appeared with politicians like Newt Gingrich. And she is not the only leading conservative to rationalize Breivik’s beliefs and actions. Pat Buchanan wrote a column recently arguing that “Breivik may be right.” On his radio show, Glenn Beck said the youth camp Breivik targeted, which could be compared to the College Democrats or other mainstream political organizations, reminded him of “Hitler Youth.”

Update

Geller appears to have deleted the line about race mixing from her post. A screen shot of the post before the deletion can be found here.

Read The Full Article:
http://thinkprogress.org/security/2011/08/01/284011/pam-geller-race-mixing-breivi
k-right/

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National Security Brief: August 1, 2011

– Lt. Gen. Douglas E. Lute, who oversees Afghanistan and Pakistan strategy at the National Security Council, said the U.S. is “doubling down” on covert drone strikes in Pakistan. “I think there are three to five senior leaders that, if they’re removed from the battlefield, would jeopardize Al Qaeda’s capacity to regenerate,” he said.

– The chairman of the Joint Chiefs of Staff Adm. Mike Mullen said that U.S. and Iraqi military operations against Iranian-backed Shia militias in Southern Iraq had curtailed the attacks against U.S. troops there.

– A new report out from Stuart Bowen at the Office of the Special Inspector General for Iraq Reconstruction says that security has deteriorated over the last year in Iraq, while electricity shortages and corruption have continued unabated. ?Iraq remains an extraordinarily dangerous place to work,? Bowen said.

– Iraqi prime minister Nouri al-Maliki said he is reviving a deal with the United States to purchase 36 F-16s.

– The bomb-making ingredients discovered in the motel room of Naser Abdo, a U.S. soldier accused of planning at attack on Fort Hood in Texas, reportedly match up with the recipe spelled out in the Yemen-published Al Qaeda magazine “Inspire.” A copy of the article with the recipe was also reportedly found in Abdo’s backpack.

– North Korea announced today that it is ready to implement a 2005 agreement calling for it to abandon it nuclear program and called for a resumption of the Six-Party Talks negotiating framework.

– Fierce fighting continued for a second day in the Syrian city of Hama — a center of the revolt against the government — as President Bashar Assad’s security forces killed at least 70 people in the past 24 hours.

– A senior U.S. official reports that U.S.-Saudi nuclear cooperation talks will resume, a move aimed at deterring and containing Iran and potentially keeping a closer eye on Riyadh’s regional ambitions.

Read The Full Article:
http://thinkprogress.org/security/2011/08/01/284139/national-security-brief-augus
t-1-2011/

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Morning Briefing: August 1, 2011

World markets rose today on news that President Obama and Republicans had reached a deal to raise the debt ceiling, with the Tokyo’s Nikkei and London’s FTSE both up 1.3 percent. U.S. stock futures are pointing to a strong opening as well, with the Dow up 153 points 90 minutes before opening.

The New York Times’s Paul Krugman called the deal struck between President Obama and congressional Republicans to raise the debt ceiling an “abject surrender.” Krugman says the cuts included in the deal will “depress the economy even further.”

Adding his voice to the liberal backlash against the debt deal, Congressional Black Caucus Chairman Emanuel Cleaver (D-MO) called the new deal “a sugar-coated Satan sandwich.” He noted that the CBC had not yet formally declared that it would oppose the deal, but said, “This is a shady bill.”

Reflecting the Great Recession and high unemployment, a new poll finds that “more than one third of likely voters believe America’s best days are over.” A clear majority, 6 in 10, believe the other nations are gaining on and possibly overtaking the U.S. “in important ways.”

Norwegian terror suspect Anders Behring Breivik used eBay to buy chemicals and tools for his attacks, according to Britain?s Sunday Telegraph. Breivik bought sulphur powder, a face respirator, and a “hazmat” suit off the web site. An eBay statement said the company was “assisting Norwegian law enforcement in their investigation.”

July was Iraq’s second-deadliest month of the year, with 259 Iraqis dying in violent attacks. “Iraq remains an extraordinarily dangerous place to work,” said U.S. Special Inspector General for Iraq Reconstruction Stuart Bowen. “It is less safe, in my judgment, than 12 months ago.”

Florida has turned down or refused to pursue “scores of millions of dollars” in grants made available by the Affordable Care Act, including those for community health centers and setting up its own exchange. Gov. Rick Scott (R) said the grants “don’t fit” the state or its needs, despite Florida being home to the second-highest rate of people without health insurance.

And finally: Sarah Palin’s favorable documentary “The Undefeated” tanked in box offices, bringing in just $5,200 last week. Not only are overall sales down, but in its third week, per-theater sales also plummeted 62 percent from $6,500/theater to just $1,762/theater.

For breaking news and updates throughout the day, follow ThinkProgress on Facebook and Twitter.

Read The Full Article:
http://thinkprogress.org/politics/2011/08/01/284173/morning-briefing-august-1-201
1/

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EIA Admits its Review of 2010 Energy Subsidies is
Limited, But Still Releases Skewed Report to Congress

As House lawmakers consider spending cuts that would eviscerate energy and environmental programs, a narrowly focused report from the Energy Information Administration is likely to add fuel to the debate over subsidies to renewable energy.

After delaying release the study, which compares 2010 subsidies for fossil and renewable resources in the electricity sector, the EIA sent the document to three members of Congress last Friday.

Climate Progress obtained a copy of the report from the Checks and Balances Project before it was publicly released.

Although sources close to the EIA?s decision to delay the report last week said there were internal concerns about ?quality assurance? and providing a ?full picture? of the subsidies landscape, the agency has decided to go forward with the product anyway.

The report offers up-to-date information on yearly government spending on energy programs; however, its limited scope paints a decidedly skewed picture of the subsidy landscape for energy. The data show that government spending on energy programs has doubled since 2007 from $17.9 billion to $27.2 billion, with renewables in the electricity sector receiving 55% of federal support and generating 10.3 percent of electricity. But the EIA explicitly explains that taking a “snapshot” of yearly subsidies does not tell the whole story:

Focusing on a single year?s data does not capture the imbedded effects of subsidies that may have occurred over many years across all energy fuels and technologies.

For example, many of the expenditures for renewable energy under the loan guarantee program were for facilities that are still being developed and not currently generating electricity. Also, the Treasury Grant program created in place of tax credits ended up front-loading expenditures, thus leading to ?much higher overall electricity subsidy estimates for renewables in FY 2010.?

This latest survey on energy subsidies is a follow-up to a 2008 report looking at FY 2007 spending on energy. That report found that renewables had a higher per-unit subsidy than nuclear or fossil energies ? with renewable technologies getting between .67 to 24 dollars per megawatt-hour of electricity, nuclear getting 1.5 dollars per megawatt-hour and fossils getting between .25 and 29 dollars per megawatt-hour. (The 29 dollars was for refined coal ? those subsidies have been eliminated and don?t show up in the 2010 figures.)

As the EIA admits in both reports, looking simply at yearly energy expenditures does not accurately show how much each sector is getting in subsidies.

By looking at just one year’s worth of spending, the numbers are skewed against capacity that was installed during that time period ? and since renewables represent a large amount of the capacity being put online today, the numbers are weighted against them. A more accurate way to compare yearly subsidies for various energy sources would be to examine the amount of money spent when capacity was actually installed.

Because fossil-fueled plants need a continued supply of fuel over the lifetime of the plant, factoring in direct and indirect subsidies for mining and transportation add more to the cost per unit of energy; by comparison, renewables like wind and solar have no fuel costs.

There are also trust funds associated with black lung, leaky pipelines and nuclear waste storage ? all of which may result in energy companies “receiving an implicit subsidy,” according to the EIA. The nuclear industry also gets an implicit subsidy from the government through the Price-Anderson Act, which puts a limit on liability for a nuclear plant owner in case of disaster.

And of course, the hundreds of billions of dollars in external environmental and health costs that come from burning fossil fuels are not factored in to the subsidies for fossil-based electricity. (As the Tennessee Valley Authority cleans up its $1.2 billion coal ash spill that hurt the local economy and gave people respiratory problems, the folks in Roscoe, Texas have revived their community with one of the world’s largest wind farms ? but that “value” is extraordinarily difficult to quantify within such a limited conversation around yearly government spending.)

In an interview with Scaling Green earlier this year, Chris Namovicz, an analyst at the EIA, explained that there still hasn’t been a definitive count of all these implicit and explicit subsidies:

The EIA addresses many of these limitations in the summary of the report. But because the document was requested by members of Congress with very specific limitations on the guidelines, the agency has no choice but to provide a narrow piece of work.

Republican Senator Lamar Alexander requested the original 2007 report and cited the figures when railing against “Big Wind.” And organizations like the Heritage Foundation and the Heartland Institute continue to use the figures in their effort to stop government support for renewable energy.

The three Republican Representatives who requested the latest report with the same guidelines ? Jason Chaffetz (R-UT), Marsha Blackburn (R-TN) and Roscoe Bartlett (R-MD) ? have not said how they would use the information.

The EIA does a lot of very commendable work. And this latest piece provides a lot of good data. But the limited nature of the request from members of Congress means the agency can only go so far in its analysis. This lead Doug Koplow, a government-subsidy analyst, to ask whether the EIA should do a better job of broadening a piece of research:

When such a request for a non-routine analysis of broad interest to the Congress is placed, should there be a process by which EIA or other statistical agency can vet the scope to a somewhat wider audience ? at least within Congress ? before embarking on the research?  Such input at the early stages could result in a much more robust and useful product, but becomes increasingly difficult to integrate once research is well underway and a delivery time has been committed to.

Questions around the EIA’s delay of the report last week lead three organizations to issue a Freedom of Information Act request on all communication surrounding its release. The Checks and Balances Project, Greenpeace and Oil Change International are requesting more details on whether or not the agency was concerned about the quality of the report.

Read The Full Article:
http://thinkprogress.org/romm/2011/08/01/283959/eia-review-energy-subsidies/

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Debt ceiling deal does not include unemployment
extension

There are some deals that look better the more closely you look at them. The debt ceiling deal is pretty much the reverse. The details that emerge upon closer inspection are things like this:

White House officials confirmed that there would not be an extension of unemployment benefits as part of the final package. The administration had insisted that an extension be part of the grand bargain it was negotiating with Boehner. But when those discussions fell apart, so too did efforts to ensure that unemployment insurance was part of a final package. A senior administration aide added that the president would push for an extension in the months, if not weeks, ahead.

Back when the Bush tax cuts were extended, an unemployment benefits extension was the big thing we were supposed to cheer?and it was important for millions of people who are out of work. But it broke historical precedent and in so doing set up a dangerous new precedent, as Joan McCarter wrote at the time:

Unemployment benefits have always been emergency spending and have always been extended, by Republicans and Democrats alike, and for longer periods than 13 months. Ceding its status and not hammering on the fact that the Republican position is radical is the first problem with this deal. The second problem is that it just kicks the can 13 months down the road, when the GOP will happily find another hostage (Social Security? Medicaid? Pell Grants? More food stamp cuts? It could be anything) to hold out on. And we'll be right back here again.

Under the current debt ceiling deal, Democrats have given away practically everything available and Republicans still have a much-needed unemployment extension to hold as a bargaining chip. In fact, an unemployment extension will be even more sorely needed as this deal craters the economy and puts more people out of work.

Read The Full Article:
http://feeds.dailykos.com/~r/dailykos/index/~3/abDiXyPGd7A/-Debt-ceiling-deal-doe
s-not-include-unemployment-extension

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DeMint Says There’s ‘No Way In The
World’ He Will Support The Debt Deal

Appearing on radio host Martha Zoller’s show this morning, Sen. Jim DeMint (R-SC) blasted the deal to raise the debt ceiling struck between President Obama and congressional Republicans. DeMint told Zoller that there is “no way in the world” that he will support the deal and urged his colleagues to also oppose it. Listen to it:

Read The Full Article:
http://thinkprogress.org/special/2011/08/01/284248/demint-no-way-deal/

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Clean Start: August 1, 2011

Welcome to Clean Start, ThinkProgress Green?s morning round-up of the latest in climate and clean energy. Here is what we?re reading. What are you?

The historic Texas drought is driving bears into urban areas searching for food and water, the latest in a series of bizarre wildlife stories to come out of the deadly hot and dry weather across the nation. [Reuters]

The third-worst drought in state history has killed any hope that Texas oysters would make up for the severe losses in Mississippi and Louisiana, where the shellfish were affected by last year?s oil spill and this year?s massive flooding. [AP]

The drought raking parts of South Texas, which saw little to no relief from Tropical Storm Don which fizzled and evaporated, has gained a new surprise bumper crop of grasshoppers. [KPLC]

Floods claimed their first victim in Japan and nearly 300,000 people were urged to flee their homes as torrential rains that killed dozens on the Korean peninsula swept the country. [AFP]

A landslide triggered by torrential rain has killed four children who were playing under a cliff in western Indonesia. [AP]

Tens of thousands of famine-stricken Somali refugees were left cold and drenched after torrential rains pounded their makeshift structures in the capital, Mogadishu, on Sunday, leading to renewed appeals for aid. [Guardian]

California’s native grasses, already under pressure from invasive exotic grasses, are likely to be pushed aside even more as the climate warms, according to a new analysis from the University of California, Berkeley. [Science Daily]

July’s heat shattered records across most of the nation. [USA Today]

With the start of August, the heat wave across the Midwest and South is expected to continue, forecasters said on Sunday. [Reuters]

Read The Full Article:
http://thinkprogress.org/green/2011/08/01/283980/clean-start-august-1-2011/

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Bachmann Continues To Dodge Ex-Gay Questions

Republican presidential candidate Rep. Michele Bachmann (R-MN) continues to ignore questions about the ex-gay therapy employed in her husband’s clinics. A reporter asked her about the therapy on her way to her car this weekend, and she responded, “I’m focusing on turning the economy around and on jobs so that’s what I’m focusing on.” Watch it:

(HT: The New Civil Rights Movement.)

Read The Full Article:
http://thinkprogress.org/lgbt/2011/08/01/284168/bachmann-continues-to-dodge-ex-ga
y-questions/

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Automatic Medicare Cuts In Debt Ceiling Deal Are
Reminiscent Of Health Reform’s Reductions

If the final debt ceiling agreement makes significant concessions to Republicans in avoiding revenue increases and offsetting the increase with dollar-for-dollar spending cuts, the Democrats may have at least held the line in protecting entitlement programs from automatic across-the-board reductions. Gone are proposals to increase the Medicare eligibility age or block grant Medicaid spending to the states and in their place are the kind of changes advocated in the Affordable Care Act: reimbursement reductions to providers and insurers participating in the Medicare Advantage program.

The proposed legislation would raise the debt ceiling through 2012 by immediately cutting almost $1 trillion from mostly discretionary spending and establishing a joint congressional committee to recommend more than $1 trillion in further cuts. If the committee?s recommendations are not enacted, Congress would either have to approve a balanced budget agreement or accept an across-the-board cut in government programs, including Medicare and Medicaid. But those reductions won’t directly affect beneficiaries:

If the committee failed to reach its $1.8 trillion target, or Congress failed to approve its recommendations by the end of 2011, lawmakers would then have to vote on a proposed constitutional balanced-budget amendment.

If that failed to pass, automatic spending cuts totaling $1.2 trillion would automatically take effect, and the debt limit would rise by an identical amount.

Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare.

Hospitals and doctors will complain about the possibility of future cuts, but as a general sense, it?s difficult to feel much sympathy for providers who will see an increase of revenue as a result of the coverage provisions in the Affordable Care Act. They, after all, can rejoice that Medicaid is exempt from the reductions — a great victory given that providers are already underpaid for their services and any additional cuts would further undermine access for beneficiaries. There just isn’t any real meet on the Medicaid bone.

Update

One health care policy analyst I just spoke to suggested that providers can actually use the cuts to hasten the adoption of delivery and payment reforms — since the legislation establishes a cap but does not specifying how it’s to be reached. Still, most would likely find it easier to simply shift the cost to beneficiaries in the form of higher cost sharing etc…

Read The Full Article:
http://thinkprogress.org/health/2011/08/01/284103/automatic-medicare-cuts-in-debt
-ceiling-deal-are-reminiscent-of-health-reforms-reductions/

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