Mike Shedlock reveals in sarcastic detail the absolute ridiculousness of both the Boehner and Reid deficit “cutting” plans. Boehner cuts a whole $4 billion from the $1.4 trillion 2012 deficit. Those Republicans sure are fiscally responsible. Reid’s plan is a fucking joke. His theoretical cuts in military spending that weren’t going to occur make up the majority of his “savings”. Then he has the balls to calculate interest savings on his theoretical savings and call that spending cuts. These pieces of shit should be strung up by their balls from the Capitol building.

I bet these corrupt slime balls long for the good old days in the 1970s before the internet. Now their lies and misinformation are revealed within hours and debunked by the critical thinking bloggers. This Debt Ceiling Reality Farce is proceeding as expected. The government and MSM are ratcheting up the fear index by dropping stocks and warning about social security checks not going out to grandma. Oh the horror!!!

It’s nothing but lies. August 2 is a fake deadline created out of thin air, just like the prior three fake deadlines. Bennie can create $150 billion of fiat with the press of a button.

Sell the fucking gold Timmy. I dare you.

Rating the Obama, Reid, and Boehner Deficit Reduction Plans on Mish’s 10-Point Credibility Scale

Many people have asked where they can find details of what the budget cuts proposed by President Obama and House Speaker John Boehner.

Because the plans have been in a constant state of flux, and because President Obama did not release details of ongoing discussions, it has been difficult to properly analyze the credibility of the recent proposals.

However, on Monday the CBO chimed in on Boehner’s latest phased-in proposal.

Dear Mr. Speaker:

As you requested, the Congressional Budget Office has estimated the impact on the
deficit of the Budget Control Act of 2011, as posted on the Web site of the Committee on Rules on July 25, 2011.

In total, if appropriations in the next 10 years are equal to the caps on discretionary spending and the maximum amount of funding is provided for the program integrity initiatives, CBO estimates that the legislation would reduce budget deficits by about $850 billion between 2012 and 2021 relative to CBO’s March 2011 baseline adjusted for subsequent appropriation action.

As requested, CBO has also calculated the net budgetary impact if discretionary savings are measured relative to its January baseline projections. Relative to that baseline, CBO estimates that the legislation would reduce budget deficits by about $1.1 trillion between 2012 and 2021.

There you have it. Boehner has proposed a $850 billion reduction over 10 years, a minuscule $85 billion a year on a deficit of $1.4 trillion.

Bear in mind it is far worse than it looks because it is heavily back-loaded. The 2012 reduction is only $4 billion.

ZeroHedge Comments As CBO Scores Boehner’s (Laughable) Deficit Cut Plan, Jay Carney Admits Obama Still Does Not Have An Actual Plan

Boehner’s plan is an abysmal joke, with $4 billion in discretionary spending cuts in 2012 growing mysteriously to $111 billion by 2021, and $0 billion in debt service reduction for 2012 and 2013 (growing to $37 billion in 2021), for a combined cumulative deficit impact of $850 billion, which on a NPV basis is more like $50 billion, but at least it is a plan.

In the meantime, here is what is going on on the other side of the spectrum.

From the NRO: After bobbing-and-weaving for nine minutes, Carney [Obama’s Press Secretary] finally says what everybody knows: the president won’t put his plan on paper because he doesn’t want it to become “politically charged” before a compromise can be reached. In other words, you’ve got to pass it to find out what’s in it.

$1 Trillion Budget Gimmick

House Budget Chairman Paul Ryan writes about Senator Reid’s Trillion-Dollar Gimmick

The $2.7 trillion debt-limit increase proposal offered by Senate Majority Leader Harry Reid contains a $1 trillion gimmick meant to disguise the plan’s shallowness on spending cuts. Supporters of the Reid plan are measuring their savings against a baseline that assumes the continuation of surge-level spending in Iraq and Afghanistan, even though the President has neither requested this funding nor signaled that he might request it. Instead, the President has signaled the opposite: a troop drawdown over the next few years. In other words, the Reid plan is claiming credit for “savings” that were already scheduled to occur, and for “cutting” spending that no one has requested.

Ryan’s article included a humorous flashback to a March 12, 2009 article at Washington Post, Paved With Magnificent Intentions.

Writing on the credibility of Obama’s budget assumptions in 2009, George Will concludes …

Although only a small fraction of the supposedly countercyclical stimulus will be spent by the end of the year, the budget assumes that by then the economy will have perked up, and that it will grow robustly — 3.2 percent, 4 percent and 4.6 percent — in the next three years. Growth supposedly will cut the deficit in half — growth and the $1.6 trillion “saved” by first assuming, and then “canceling,” a 10-year continuation of the surge in Iraq.

Why, one wonders, not “save” $5 trillion by proposing to spend that amount to cover the moon with yogurt and then canceling the proposal?

Obama’s Growth Estimates

  • 3.2% 2009
  • 4.0% 2010
  • 4.6% 2011

How credible was that?

Veto Credibility

The president has vowed to veto deficit cutting legislation if it contains a balanced budget amendment or if it does not go past the 2012 elections.

How credible is that threat? The correct answer is not at all. The veto threat is nothing but hot air because Reid will see to it that such bills will never make it out of the Senate.

Whatever does make it out of the House and Senate, Obama will sign. Thus, a veto is an imaginary threat.

With that backdrop, it’s time to rate the Obama, Reid, and Boehner Deficit reduction plans on a credibility scale.

10-Point Credibility Scale

  1. Golden
  2. Rock Solid
  3. Fudge
  4. Jello
  5. Marshmallow
  6. Cream Puff
  7. Nauseous
  8. Gaseous
  9. Imaginary
  10. Delusional

Scoring the Proposals

  • Given a $1.4 trillion deficit, the latest plan from Boehner to cut a minuscule $85 billion a year (and back-loaded at that) is somewhere between nauseous and gaseous. It’s no wonder that various Tea-Party members will not vote for it.
  • Obama’s plan is imaginary or delusional depending on whether or not the President actually believes he has a plan, when he doesn’t.
  • Parts of Senator Reid’s plan are gaseous and the rest is clearly imaginary.
  • In contrast, the gang-of-six $4 trillion deficit cutting plan has something of the consistency of Jello, fudge, or marshmallow depending on details that were never disclosed.

$4 trillion sounds like a lot but it is only $400 billion a year, while the deficit is $1.4 trillion. Thus it’s tough to give that plan a rating higher than Jello, and impossible to give it a rating higher than fudge.

At this late juncture, the best one can reasonably hope for is a nauseous resolution. Unfortunately, the odds now favor something between gaseous and imaginary with delusional a distinct possibility.

The higher the score, the lower the credibility, and the better for gold.

Mike “Mish” Shedlock


  1. CBO Finds Reid Plan Half A Trillion Short Of $2.7 Trillion Promised; Actual Cuts Are $375 Billion Over Ten Years

    Submitted by Tyler Durden on 07/27/2011 09:26 -0400

    Yesterday, we roasted Boehner over his proposed deficit-cutting plan after it was discovered that it cut about $250 billion less than had been promised. Now it is time to do the same to Harry Reid, after the CBO has just released its analysis of his so-called “plan”, which has double the credibility, and dollar, hole: per the CBO the plan will only generate $2.2 trillion in savings, half a trillion short of the promised $2.7 trillion. But wait, it gets far, far more idiotic. Per the CBO “The caps on appropriations of new budget authority excluding war-related funding start at $1,045 billion in 2012 and reach $1,228 billion in 2021” – that’s right: savings from not fighting future wars – a cool trillion. But why stop there – savings from not declaring war on Mars: $1 quadrillion; savings from not paradropping suitcases full of $1 billion dollar bills for every US citizen: $333 quadrillion, and so forth. But wait: there’s more: “The legislation also would impose caps of $127 billion for 2012 and $450 billion over the 2013-2021 period on budget authority for operations in Afghanistan and Iraq and for similar activities.” But wait, there’ even more: “Savings in discretionary spending would amount to nearly $1.8 trillion, mandatory spending would be reduced by $41 billion, and the savings in interest on the public debt because of the lower deficits would come to $375 billion.” Gotta love the circularity: less interest payments are part of the actual deficit cuts! So, here’s the math: of the $2.2 trillion in “savings” strip away non-savings from non-authorized “wars” and you get… $750 billion… and take out the $375 billion in, no really, interest savings, and you get… $375 billion. OVER TEN YEARS! Is there a wonder why with idiotic leaders like this the true US rating is CCC at best?

  2. Let me add to that “10 point” scale to reflect modern realities:

    11. Insane
    12. Certifiably insane
    13. Cackles of maniacal laughter, aka The Joker
    14. Kim Jong Il approves!
    15. I’madinnerjacket approves!
    16. Congressional
    17. Presidential
    18. Krugmanlike
    19. Geithneriffic
    20. Bernanke-ish

  3. Anybody else get the feeling that a ratings downgrade will happen today? The circus in Washington certainly isn’t engendering confidence.

    1. Thinker

      I think S&P and Moodys are completely captured by the Wall Street powers. They will do as they are told. If a downgrade benefits those in control, it will happen. If not, S&P and Moodys will keep quiet.

      How anyone puts credence in anything these two worthless corrupt organizations put out is beyond me. Read The Big Short by Michael Lewis to see what Wall Street thought of the idiots who run these companies.

  4. Actually I dont think Reid, Ryan, Pelosi or Boehner make these plans and just repeat the plan they were told.

  5. Standard and Poor also thought sub-prime mortgages packaged with other piles of shit were AAA as well, what the fuck do they know. Let’s just move a couple letters around and you have a description of the American middle-class: Stranded and Poor.

  6. Despite the fact that she has spoken against loan insurers Fannie Mae and Freddie Mac, the Washington Post discovered that Rep. Michele Bachmann (R-MN) took out a mortgage totaling $417,000 to help finance her golf course home — backed by Fannie or Freddie.

    Speaking of deluded…

  7. John Stewart et. al. had a field day with Obama’s speech last night. Obama has no plan, and his closing statements were “call your congressman.” He’s waiting for his chance, after the dems and republicans hang themselves, to declare martial law. You wait, it’s not a lunatic fringe idea anymore is it? The President of United States of America himself has no credible plan (except for more spending). It’s not to be believed unless it were true.

    we are so fucked…


  8. This debt issue could be solved quickly, what’s the endgame here? What possible good is coming from our politicians acting like school-kids and dragging this thing through the mud? They ALL look like dickheads at this point, and both sides are lying through their teeth. I don’t get it.

  9. Standard & Poor’s, Moody’s, and Fitch—

    ALL of them rated the bullshit toxic mortgages that precipitated this mess as AAA.

    They did so because the banks pressured them to do so — the fox guarding the henhouse.

    1) Soooo, why, why, why, WHY!!!! … do these mutherfuckers have even one scintilla of credibility???

    2) Why the fuck should we care about their OPINIONS regarding the quality of U.S. government debt?

    3) Most importantly, what is the Constitution mechanism that allows these OUTSIDE organizations to hold the government hostage and dictate results and outcomes ???
    Anyone who can answer the above is entitled to one CONJUGAL visit with me.

    1. Thinker

      I’m sure one or both will downgrade our debt at some point. But the joke is that anyone would really consider our debt AAA today or even five years ago. An 8th grader with a calculator can figure out that our debt path is unsustainable and we will default either through Fed created inflation or outright collapse.

  10. Yikes! HG, didn’t see your post until I finished mine… do NOT read any of the links.

    Doubt they answer your questions, but don’t want to risk the conjugal visit.

  11. Haven’t we seen this a dozen times before in prior budget battles?

    It’s always backloaded. Always projected out over 10 years – or long enough so it will be someone else’s problem. Always making use of absurd or phantom “savings”.

    There is no plan for debt reduction. Only plans to get re-elected.

    1. Brian

      You forgot the NEW COMMISSION that both Boehner and Reid have built into their little plans. We all know that commissions always work. Their bag of tricks is pretty sparse. The game is up.

  12. You know the best way to see how the world is taking all this Kabuki Theater?

    Just watch the FOREX markets. See what the Swissie, the Aussie$, the Brazilian Real, the NZ$ and other currencies are doing against the dollar.

    Hell’s bells… The Aussie buck is over $1.10 this morning. Their CD’s pay real interest too.

    I don’t think BendOverBen has the capacity to screw with the FOREX markets considering how much deep shit he’s already got us into. FOREX is great for watching markets quiver – not so hot for long term judgements. It’s sort of like a great big bathtub full of various kinds of money and the bathtub is nailed to a skateboard with only 3 wheels. It sloshes a lot but is fun to watch..



    By Carrie Budoff Brown, Ben White | Politico

    It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade.

    Even Republican leaders say the country can’t go into default, and they’ll do everything possible to raise the debt limit by Aug. 2.

    But what really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.

    Obama could win and lose at the same time, striking a deal to avoid default but failing to pass muster on the substance of that deal with credit agencies, which could go ahead and downgrade the rating anyway.

    Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.

    It’s what drives his Treasury Department into cajoling and pleading with the bond ratings agencies to be patient, like a harried coach working the refs from the sidelines.

    It’s a factor influencing Obama’s rejection of a short-term deal: The administration believes the ratings agencies won’t like it.

    And it’s what gives these little-known firms a powerful club that they’re wielding with gusto over Washington policy-makers. They hope to force a deal that not only raises the debt ceiling but also makes deep cuts in government spending and eats into the nation’s deficit.

    The threat of a downgrade “is very damaging to all of us, and that would be a product of the dysfunction of Congress” said Rep. Peter Welch (D-Vt.), who led a faction of House Democrats who argued for a “clean” debt-limit increase early in the process, only to watch escalating chatter about the “Armageddon” of a missed deal feed scrutiny of the nation’s fiscal health.

    S&P raised the threat of a downgrade July 14 by declaring that raising the debt limit alone might not be enough. It wanted to see an enforceable agreement to cut $4 trillion over 10 years to affirm the triple-A rating.

    Administration officials were shocked by the move. They suggested privately that it did not seem to square with prior S&P reports, which said the nation’s larger budget problems could be dealt with over several years. Some administration officials dismissed the S&P report as little more than amateur political prognostication by people with limited understanding of how Washington works.

    But the White House’s statements in the past week show a downgrade is now top of mind. Obama himself invoked the country’s triple-A rating in a rare prime-time address Monday as he outlined the consequences of default.

    “For the first time in history, our country’s triple-A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet,” Obama said. “Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis — this one caused almost entirely by Washington.”

    Nearly every debt-limit conversation on Capitol Hill is infused with debate over the potential for either a downgrade, a default, or both. Democrats have embraced the argument of the White House: A short-term plan could result in a debilitating downgrade even if default is avoided.

    Republicans are moving forward with their two-phase plan, but they’ve shown some concern about the possibility of ratings agencies scarring America’s creditworthiness. There’s significant disagreement in the GOP about the prospects of default and downgrade, and some lawmakers believe the administration and congressional leaders have created a false panic to box them into voting to raise the debt ceiling.

    “The reality is these rating agencies have no idea how to rate a $17 trillion economy like the United States,” Rep. Darrell Issa (R-Calif.) told radio host Don Imus on Monday. “They have no idea how to rate the debt worthiness of a $14 trillion debt like the United States.”

    The truth is that Capitol Hill has less insight into the workings of the marketplace than the investment gurus on Wall Street, and even they have varying views on the potential for a downgrade.

    There is also no clear sense of how the ratings agencies would ultimately judge the two major plans in the mix.

    The Senate Democratic proposal calls for a one-time increase in the debt limit through the 2012 elections coupled with $1.7 trillion in spending cuts and about $1 trillion in savings from winding down the Iraq and Afghanistan wars.

    The House Republican bill would raise the debt limit in two phases and mandate a deficit cut of $3 trillion.

    But the second debt limit increase next year would depend on Congress adopting the recommendations of new 12-member legislative committee for $1.8 trillion in cuts — far from certain, given the polarized political environment. That lack of certainty could raise concerns with the ratings agencies, Democrats said.

    Aiming for any ounce of advantage, Senate Majority Leader Harry Reid (D-Nev.) argued Tuesday that his plan would shield the country from a ratings drop, while Boehner’s plan would not — a statement Boehner’s office contested.

    “The $3 trillion House plan is the only one on the table that forces Congress to take on the drivers of our debt,” said Boehner spokesman Brendan Buck, adding that the Reid plan relies on war savings, “an accounting gimmick that will have zero real-world impact on our deficit.”

    On a Tuesday conference call with reporters, bank analysts predicted the odds of a default are close to zero, but warned that a downgrade is a growing possibility.

    An agreement that sustains a top-notch rating would have to include $3 trillion to $4 trillion in budget deficit cuts over the next decade, said Terry Belton, global head of fixed income strategy at JPMorgan Chase.

    Not just that, said Mike Hanson, senior U.S. economist at Bank of America Merrill Lynch, but credit agencies also want the ultimate plan to have strong bipartisan backing.

    “It really is important that we need to have a deal that is fairly comprehensive and has fairly broad support,” Hanson stressed.

    A single downgrade might have limited market impact. But a move by all three main ratings agencies — S&P, Moody’s Investor Service and Fitch Ratings — would likely force huge investment funds that must hold only the safest of bonds to sell en masse. The scary headlines associated with a first-in-history downgrade also could cause smaller investors to panic and dump stocks.

    In a recent interview with POLITICO, David T. Beers, head of sovereign ratings at S&P, said the July 14th report was not a major shift and simply reflected an increased concern that there is no clear path to significant deficit reduction.

    “What we are focused on is not the debt ceiling but the underlying state of public finances,” said Beers, a London-based executive who has conducted multiple meetings with administration officials.

    In order to maintain a triple-A rating, Beers said, “what would have to emerge would be something that has a material impact on the underlying fiscal issues.”

    “None of us know what this agreement is going to look like,” Beers said. “For us to think it is credible it would first of all have to show some choices about what the fiscal priorities are and be actionable in ways that would give us confidence that it is going to be implemented.”

  14. More theater of the absurd. As stated earlier so well by Stuck-in-disguise, who with half a brain gives a shit what the rating agencies say considering past performance. I wouldn’t give you a wooden pecker for all of ’em.


  15. So lets run this down. Obamacare — we said “please slow down compromise on the bill”. Guess what we were told by the prez “I won”. Again “please don’t take over the car companies and change case law” again “I won”. Now 2010 new HOR “we won”. Now it’s lets compromise. If they shove down a POS bill and the rubs pass it then it is over, we will be greece.

  16. “And the tea party hobbits could return to Middle Earth having defeated Mordor,” he said. “This is the kind of crack political thinking that turned Sharon Angle and Christine O’Donnell into GOP Senate nominees. The reality is, the debt limit will be raised one way or another.” -John McCain

  17. Mirror Ball On “You can’t stop the spending, no body can stop the spending…”

    The spending (and the printing) will only stop when one of the conditions below occur –

    1) The United States loses “reserve currency” status and implodes to worthlessness 10 seconds later…

    2) Total Economic Collapse forces it to stop

    3) Jesus returns

    4) The earth is vaporised by a supernova shockwave

  18. More congressionalism.

    Newt, when asked about his Tiffany debt said he “liked doing nice things”

    Some time later Newt held up his camapign T-shirt ;Newt 2012, which was made in El Salvador.

    Thats Nice Newt. Very nice.

  19. Ahh, yes, the New Commission.

    Because we didn’t just have a commission that was ignored.

    A new commission of members of Congress. Wait? Isn’t that what Congress is supposed to be anyway. How about doing their frickin’ job now. They don’t have a plan, can’t agree on a plan, so they’ll punt and talk about it in the future.

    If Congress needs someone to tell them what to do – I’ll do it.


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