The 19 Percent Solution: How to Balance the Budget Without Raising Taxes
Co-authored with Veronique de Rugy
A value-added tax, a soda tax, a gas tax, banning earmarks, freezing a portion of federal spending at “pre-stimulus” levels – there’s no shortage of ideas being thrown out to fix the country’s disastrous balance sheet, which threatens not just near-term economic recovery but the possibility of long-term growth. Like last week’s report from the president’s Commission on Fiscal Responsibility and Reform, most of the current plans to fix the country’s finances rely more on increases in revenues than on cuts in spending. In part due to its heavy reliance on revenue hikes, the commission, charged with balancing the budget by 2020, failed to win enough votes of its own members to present its recommendations to Congress.
Which raises the question: Can America really reduce its debt and deficit without raising taxes to job-killing rates or cutting essential services to developing-world levels? The answer is not simply yes, it’s that we have to.
Raising government revenue – taxes – substantially is not only bad policy, it has proven difficult and ultimately unsustainable for any length of time in the past 60 years. Since 1950, annual government revenue, as a percentage of Gross Domestic Product (GDP), has averaged just below 18 percent despite every attempt to jack it up or tamp it down. Our post-World War II experience shows that if the government is going to live within its means, it can’t spend much more than 18 percent of GDP. Period.
Which is one reason to be happy that the debt commission’s recommendations won’t be presented to Congress anytime soon. The report assumes revenue equal to 21 percent of GDP and struggles to get spending to “below 22% and eventually to 21%” of GDP. That’s a recipe for disaster that would guarantee deficits and red ink.
Similarly, former Sens. Bill Bradley, John Danforth, and Gary Hart, working with the Committee for a Responsible Budget, have offered up a plan to balance the budget by 2020 that relies on revenue hitting 20.8 percent of GDP, a level that hasn’t been achieved once in the past 60 years. Republicans have not advanced any realistic near-term plans. Rep. Paul Ryan’s (R-Wisc.) Roadmap to the American Future does not balance the budget until 2063. The pre-election GOP’s Pledge to America is worthless since it fails to provide specifics (and to the extent it does, it is no good).
The current situation is a bipartisan disaster that requires immediate action. Since Bill Clinton left the White House in 2001, total federal spending has increased by a massive 60 percent in inflation-adjusted 2010 dollars. In fiscal year 2010, which ended September 30, the federal government spent $ 3.6 trillion, or 25 percent of Gross Domestic Product. That’s the most spending, in terms of percentage of GDP, since 1946. Likewise, last year’s $ 1.5 trillion deficit, as a percentage of GDP, was the largest deficit since 1945.
Most economists talk about a debt-to-GDP ratio of 60 percent as a trigger point that makes investors very nervous about a country’s ability to pay its obligations. The debt to GDP ratio was 63 percent this year and the Congressional Budget Office (CBO) projects it will be 87 percent in 2020. Just three years ago, it was 36.5 percent. Not good signs.
So, what would it take to bring federal spending into line with plausible levels of revenue?
The CBO, the non-partisan agency charged with estimating the effects of legislation on government costs, has produced a long-term budget outlook in which Bush-era tax rates remain unchanged. Their conclusion is that over the next decade, “government revenues would remain at about 19 percent of GDP, near their historical averages.” That’s actually a bit higher than the historical average, but is within the bounds of reason.
A balanced budget based on 19 percent of GDP would mean $ 1.3 trillion in cuts over the next decade, or about $ 129 billion annually out of ever-increasing budgets averaging around $ 4.1 trillion. Note that these are not even absolute cuts, but trims from expected increases in spending.
To get a more concrete sense of what getting to 19 percent means, here is a table of projected major budget expenditures in total dollars, followed by the amount that needs to be cut each year from the expected budget to get an annual 3.6 percent decrease across the board.
Looking at the chart below, the question becomes: Could you, say, find $ 129 billion dollars of cuts in a 2016 budget that squeezes through the door at $ 4.3 trillion?
Congress hasn’t even begun real work on the 2011 budget, even though the fiscal year started in October (the government is currently being funded by short-term continuing resolutions; the next one expires on December 18). If they want to get serious about staving off the uncertainty, tax increases, and unrestrained spending that are sure recovery killers, they could put us on a path to a balanced budget right now.
Are our leaders willing and able to identify and cut just $ 25 billion in waste and excess out of more than $ 700 billion in non-defense discretionary spending? Is reducing the $ 714 billion the Department of Defense received in 2010 by a paltry $ 25 billion impossible? Can Medicare and Medicaid, two programs that are infamous for waste and fraud and cost well over $ 720 billion in 2010, find $ 35 billion in efficiences? The specific cuts should be open to negotiation, but the historical record shows that the available level of government revenue is fixed.
If these sorts of small but systematic trims are impossible over the next decade, then really nothing is possible and debt, deficits, and despair are here to stay.
It just might be time to start thinking about moving to Greece.
Nick Gillespie is editor in chief of Reason.tv and Reason.com. Veronique de Rugy is an economist at The Mercatus Center at George Mason University. For more on the topic, go here.
By 6-to-1 Margin, Networks Paint Debate Over ‘Tax Cuts,’ Not Raising Rates
Even with Monday’s deal between President Obama and top Republicans, no American’s income tax rates will actually decline on January 1 (although, if the deal passes, workers will notice a modest reduction in their payroll taxes in 2011). Yet throughout this debate, the broadcast networks have insisted on framing the debate as about “tax cuts” and “tax breaks,” not about forestalling a tax increase that could jeopardize the weak recovery.
MRC analysts reviewed all 23 ABC, CBS and NBC evening news stories about the tax debate from the start of the lame-duck session of Congress on November 15 through December 5, just before the GOP and Obama struck their deal.
Network reporters used the phrase “tax cut” a total of 71 times to characterize the issue at hand. CBS’s Nancy Cordes, for example, talked about “the battle over the Bush tax cuts” on the November 15 Evening News. Two nights later, NBC’s Chuck Todd related a new poll showing how “49 percent say don’t give the wealthy these tax cuts” — as if the “the wealthy” would be getting some new gift from the government.
NewsBusters.org – Exposing Liberal Media Bias
Durbin Once Opposed Raising Social Security Retirement Age: ‘It’s Tough To Say Just Stick Around’
Today, President Obama’s Deficit Commission voted on the recommendations laid out in its deficit reduction report. Included among the report’s recommendations is gradually raising the Social Security retirement age to 69 by 2075. Although the commission failed to get the 14 votes it is required to get in order to pass the plan on to Congress, its recommendations are expected to be taken up in some form by legislators at some point.
Yesterday, Sen. Dick Durbin (D-IL) announced that he will be voting in favor of the commission’s recommendations. The same day, he wrote an op-ed in the Chicago Tribune explaining why he was voting in favor of the plan. While explaining that he believes that Social Security “is the most important social program in America,” he explicitily endorsed raising the retirement age, citing the need to make “hard choices“:
On Friday, when President Barack Obama’s National Commission on Fiscal Responsibility and Reform gathers to consider a plan to bring our national debt under control, I will be voting yes. It was not an easy decision, and I know my vote will be widely criticized, but I believe it is the right thing to do. […]
Social Security is the most important social program in America. The commission creates an actuarially sound program for an additional 75 years. It increases the minimum benefit for the lowest income Social Security recipients and adds a much needed increase in benefits for those above the age of 85. It raises the retirement age one year to 68, 40 years from now, meaning no one above the age of 28 today would be affected and the retirement age would be 69, 65 years from now. […]
My friend, mentor and former Illinois Sen. Paul Simon, echoing former Sen. Paul Douglas , famously said: “To be a liberal doesn’t mean you’re a wastrel. We must, in fact, be thrifty if we are to be really humane.” It’s time for all of us to come together to make hard choices. I am ready to do my part.
Yet Durbin’s position is a disappointing reversal from his previous stance on Social Security. In October, he told Congress Daily that he “opposed increasing the retirement age for Social Security.” In explaining his opposition, he said, “It’s tough to say just stick around and deliver mail for another couple of years, be a waitress for another couple of years“:
Durbin also said that he opposed increasing the retirement age for Social Security – a move called for in a deficit-reduction plan written by House Budget Committee ranking member Paul Ryan, R-Wis. Durbin said raising the retirement age would be unfair to workers who do physical labor.
“It’s tough to say just stick around and deliver mail for another couple of years, be a waitress for another couple of years,” Durbin said. Instead he recommends boosting the percent of wages that can be taxed to fund Social Security. He said in 1983 90 percent of wages were subject to Social Security taxes and now only 83 percent are. He added that the increase would come from beneficiaries “in upper income categories or their employers.”
On many issues, Durbin has been one of the Senate’s strongest fighters for progressive priorities. He led the fight against the Bush Administration’s privatization of Social Security, has been one of the Senate’s top advocates for the rights of undocumented immigrants, has worked towards greater fairness in the justice system, and has been on the right side of nearly every economic justice issue during his time in the Senate.
That’s why it’s disappointing to see Durbin endorse such a regressive proposal. Social Security is currently projected to be fully solvent until the year 2037. After that, it is expected to be able to pay out 75 percent of benefits until 2084 (once you account for inflation those basically consist of full benefits). That does not mean that there aren’t positive and progressive changes that could possibly be made to the system. Raising the Social Security age, however would be a particularly punitive change.
While it is true that average life expectancy has increased over time, these gains are largely a result of life expectancy rising among upper income earners. Among moderate and low income workers, life expectancy has barely changed. And “nearly half of workers over the age of 58 work at jobs that are either physically demanding or involve difficult work conditions.” Raising the retirement age would create enormous burdens on those who work at these jobs.
One place to start in pursuing better, more progressive solutions to the long-term Social Security deficit would be to raise the payroll tax cap. Currently, only the first $ 106,800 of a person’s income is considered taxable for the purpose of funding Social Security. Raising this cap significantly or eliminating it would essentially leave the program fully funded for decades to come, and not create undue hardship on those working physically demanding jobs.
An Election Day poll by Survey USA found that 85 percent of voters are opposed to cutting Social Security, and that Republicans by a 2-to-1 margin back raising the tax cap over raising the retirement age. Should Durbin once again oppose raising the retirement age, he will have a huge majority of Americans at his back.
RNC Chair Candidate Ann Wagner: ‘We Should Not Be Raising The Debt Ceiling’
With the all-important debt ceiling vote looming in the next few months, more GOPers are making their feelings known about the issue. A few conservatives have rightly chastised their Republican brethren for playing games with the debt ceiling and possibly forcing the nation to default on our debt. They include former Florida Gov. Jeb Bush (R), who called such a move “naïve,” and incoming House Majority Leader Eric Cantor (R-VA), who said that those GOPers who vote against raising the debt ceiling and risk a government shutdown will be seen as “yahoos.” Unfortunately, many on the right are ignoring these warnings and instead pitching their tents in the Shutdown Caucus by refusing to raise the national debt ceiling.
Now, one of the candidates to become the next RNC Chairman, former Missouri Republican Chair Ann Wagner, is taking a firm stance on whether her party should fight against raising the debt ceiling. In an interview at the first RNC Chairman debate, Wagner told ThinkProgress, “no, we should not be raising the debt ceiling”:
TP: One of the things that I know is going to be a real big issue coming up and I know Chairman Steele has been outspoken about is the debt ceiling. He said that the GOP is just not going to compromise on that. Is that a call you’d be comfortable joining him in?
WAGNER: No no, I will tell you I believe that the Congress and our new Speaker and leadership will be tackling issues like that. I know for sure what we have to do is rein in spending and this soaring debt. We cannot turn into Greece or — I think Ireland is now on the verge of this also. It’s very important that we bring our debt down. […]
TP: But in order to do that, do you think the next move would be to raise the debt ceiling, or […] (crosstalk)
WAGNER: No, we should not be raising the debt ceiling. But I will leave that to Congress to navigate over the next Congress here.
Watch it:
“Bill for Raising Revenue” bleg
Someone originated the idea that the Senate’s version of the food safety bill might be unconstitutional (presumably if adopted without change by the House) because it contains some revenue-raising provisions. That, it’s been said, violates the Origination Clause, which provides that all bills for raising revenue must originate in the House. The case law gives an extremely narrow reading of the term “bill for raising revenue,” and the Constitution also allows the Senate to “propose amendments as on other bills.” (A revenue-raising provision that’s incidental to a regulatory program, for example, is not a “bill for raising revenue” under precedents dating from 1887 to 1990. And, it’s apparently the accepted wisdom that if a bill for raising revenue originates in the House, the Senate can amend the bill by striking everything after the “Be it hereby enacted” and substituting its own revenue-raising provisions.)
Three More Republicans Declare Opposition To Raising The Debt Ceiling
GOP Reps. Jerry Lewis (R-CA), Jack Kingston (R-GA), and Ron Paul (R-TX)
Three more Republican congressmen are adding their names to the Shutdown Caucus, which is vowing to shut down the federal government rather than raise the debt ceiling and prevent the country from going into default. The new members include Reps. Jerry Lewis (R-CA), Jack Kingston (R-GA), and Ron Paul (R-TX).
Lewis and Kingston, caught in a battle to become the next chairman of the House Appropriations Committee, are each trying to out-conservative the other. Slate’s Dave Weigel notes that both men declared their intentions to oppose an increase in the debt ceiling on a Tea Party Patriots conference call last night. Neither wants to become the next Rep. Fred Upton (R-MI), who is facing a massive Tea Party-fueled uprising against his bid to become the next chairman of the House Energy and Commerce Committee because he is viewed as insufficiently conservative.
Tea Party Godfather Ron Paul also implored his fellow congressmen to stand firm in an editorial, “Don’t Raise the Debt Ceiling!”
The upcoming vote will provide an interesting litmus test for the new Republican congressional majority, especially those new members closely identified with Tea Party voters. The debt ceiling law […] also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing.
If the new Congress gives in to establishment pressure and media alarmism about “shutting down the government” by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that Congress, despite the rhetoric of the midterm elections, is doing business as usual. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude. […]
I have two simple proposals when the new Congress convenes in January. First, refuse to raise the debt ceiling. Find a way, month by month, for Congress to spend only what the Treasury raises in revenue. Second, start over from scratch with the 13 appropriations bills that fund the federal government. Reject any talk of baseline budgets or discretionary spending. It is all discretionary, and members of both parties should vote against any 2012 appropriation bill that is not at least 10% smaller- in nominal dollars- than its 2011 counterpart.
Still, Republican leaders are divided on the issue. While RNC Chairman Michael Steele has vowed, in unequivocal terms, that Republicans were “not going to compromise on raising the debt ceiling,” incoming House Majority Leader Eric Cantor (R-VA) has promised to hold a clean up-or-down vote on the issue because failing to do so would make Republicans look like a bunch of “yahoos.” Just today, former Florida Gov. Jeb Bush (R) admonished Republicans who would play games with the debt ceiling, calling them “naïve” because “you can’t shut down the government.”
Advocating Raising Social Security Retirement Age And Privatization, Third Way Brags Its Proposal Is ‘Hot’
Earlier this month, Alan Simpson and Erskine Bowles, the co-chairs of President Obama’s deficit commission, released their recommendations for reining in the U.S. budget deficit. Part of their recommendations included raising the retirement age for Social Security, a proposal that sparked a wide political backlash.
Now, Third Way, which calls itself the “leading moderate think-tank of the progressive movement,” has revealed its own plan for the Social Security system. The group’s proposal radically alters Social Security much more than the Bowles-Simpson recommendations. Not only does it call for hiking the retirement age, but it also reiterates the Bush administration’s failed call for introducing privatization into the system.
Explaining the plan in an exclusive interview with Bloomberg News, Third Way spokesman Sean Gibbons explained that whatever comes out of the deficit commission’s final report “is going to be a hot potato.” He continued, “So we wanted to send something over that was especially hot“:
Washington-based Third Way said its plan would raise the retirement age, trim or eliminate Social Security benefits for high-income retirees, limit cost-of-living increases and provide money to help young workers create private retirement accounts.
The proposal, to be released after the presidential panel is due to issue its report on Dec. 1, is timed to help create a buffer for congressional Democrats to support politically unpopular deficit-trimming measures, said Third Way spokesman Sean Gibbons. “Whatever comes out of the commission is going to be a hot potato,” Gibbons said. “So we wanted to send something over that was especially hot.” […]
The retirement age, now scheduled to rise to 67 in 2027, would gradually increase to 68 by 2041, to 69 by 2059, and to 70 by 2077. This would reduce total benefits by roughly $ 1 trillion by 2040, according to the plan. The plan would provide annual subsidies of up to $ 500 to help workers under age 30 create 401(k)-style retirement savings accounts.
To start with, Social Security is currently projected to be fully solvent until the year 2037. After that, it is expected to be able to pay out 75 percent of benefits until 2084 (once you account for inflation those basically consist of full benefits). It is far from in crisis. That does not mean that there aren’t positive and progressive changes that could possibly be made to the system.
Raising the retirement age, however, would be a particularly punitive way to solve future deficits in the program’s funding. While it is true that average life expectancy has increased over time, these gains are largely a result of life expectancy rising among upper income earners. Among moderate and low income workers, life expectancy has barely changed. And “nearly half of workers over the age of 58 work at jobs that are either physically demanding or involve difficult work conditions.” Raising the retirement age would create enormous burdens on those who work at these jobs.
And introducing privatization into the system is an idea so extreme that it was even rejected by former President Bush’s own party when it controlled every branch of government. Introducing private accounts into Social Security would create burdensome new administrative costs and force benefit reductions, it would impose significant risk on seniors and would actually cost more than the current system.
In an interview with Bloomberg, Third Way co-founder Jim Kessler complains that “strongest and loudest voices on the left have nailed up the barricades on Social Security and said ‘hell, no’ and don’t want any type of cuts in benefits at all.” Yet it isn’t just the “strongest and loudest voices on the left” that would oppose the punitive cuts and privatization in Third Way’s plan. A CBS News poll taken just days before the election found that that 71 percent of Americans oppose cuts in benefits for future retirees and that 54 percent oppose any hike in the retirement age for Social Security. Meanwhile, a May 2005 poll taken at the height of Republican-led dominance in the federal government found that 56 percent of Americans said it was a “bad idea” to introduce private accounts into Social Security.
One place to start to find better, more progressive solutions involves raising the payroll tax cap. Currently, only the first $ 106,800 of a person’s income is considered taxable for the purpose of funding Social Security. Raising this cap significantly or eliminating it would essentially leave the program fully funded for decades to come, and not create undue hardship on those working physically demanding jobs. An Election Day poll by Survey USA found that 85 percent of voters are opposed to cutting Social Security, and that even Republicans by a 2-to-1 margin back raising the tax cap over raising the retirement age.
Another extreme drought hits the Amazon, raising climate change concerns – With exclusive commentary by forest scientist Simon Lewis
We know from simple on-the-ground knowledge that the 2010 drought was extreme, leading to record lows on some major rivers in the Amazon region and an upsurge in the number of forest fires. Preliminary analyses suggest that the 2010 drought was more widespread and severe than the 2005 event. The 2005 drought was identified as a 1-in-100 year type event.
That’s from an email to CP by forest scientist Simon Lewis, a leading expert on the Amazon (see Scientists: “There are multiple, consistent lines of evidence from ground-based studies published in the peer-reviewed literature that Amazon forests are, indeed, very susceptible to drought stress”).
The figure above is from the University College London Global Drought Monitor via a post by WWF’s Nick Sundt, that I am reposting below. It represents a 1-month assessment period, through 16 October 2010.
But first, here’s a excerpt from an article (with a video) by the Global Post that Lewis recommends, “Rivers run dry as drought hits Amazon: Droughts are growing more severe. Has the world’s largest rain forest reached its tipping point?” In the photo, “Brazilians cross the muddy bottom of the Rio Negro, a major tributary to the Amazon River, in the city of Manaus, Oct. 26, 2010.”
The world’s largest rain forest was dangerously dry, and may well be drying out.
October marked the end of one of the worst Amazon droughts on record — a period of tinder-dry forests, dusty cropland and rivers falling to unprecedented lows. Streams are the highways of the deep jungle and they’re also graveyards for dead trees, usually hidden safely under fathoms of navigable water.
But not this year, and the drought’s significance extends far beyond impeded boats.
While the region has seen dry spells before, locals and experts say droughts have grown more frequent and severe. Scientists say there’s mounting evidence the Amazon’s shifting weather may be caused by global climate change.
The world’s largest rain forest has long been a bulwark of hope for a planet troubled by climate change. Covering an area the size of the continental United States, the Amazon holds 20 percent of Earth’s fresh water and generates a fifth of its oxygen. With the planet’s climate increasingly threatened by surging carbon emissions, the Amazon has been one of the few forces keeping them in check. But the latest scientific evidence suggests the forest may be unable to shield us from a hotter world.
“Every ecosystem has some point beyond which it can’t go,” said Oliver Phillips, a tropical ecology professor at the University of Leeds who has spent decades studying how forests react to changing weather. “The concern now is that parts of the Amazon may be approaching that threshold.”
Phillips led a team of dozens of researchers who studied the damage caused by a severe 2005 drought to trees and undergrowth at more than 100 sites across the Amazon. His findings, published in the journal Science, are troubling.
Through photosynthesis, the rain forest absorbs 2 billion tons of atmospheric carbon dioxide each year. But the 2005 drought caused a massive die-off of trees and inverted the process. Like a vacuum cleaner expelling its dust, the Amazon released 3 billion tons of carbon dioxide in 2005. All told, the drought caused an extra 5 billion tons of heat-trapping gases to end up in the atmosphere — more than the combined annual emissions of Europe and Japan.
It still remains to be seen whether the rain forest’s ability to absorb greenhouse gases has been permanently harmed. “We can’t say for sure — it could be happening now,” Phillips said. “Often you don’t know you’ve passed a turning point until you’ve already passed it.”
Phillips said he’s worried about yet another drought following so closely after the last. Along the edge of the forest in Peru and Bolivia, there were more fires this year than any year on record, he said, along with reports of substantial damage to plants in the normally wet northwestern Amazon.
“The humid tropical forests have evolved at pretty high temperatures but there’s a temperature at which you don’t see them on the planet,” said Greg Asner, an ecologist at the Carnegie Institution for Science. “And some tropical forests in the world now are starting to be exposed to temperatures they’ve never experienced.”
(Courtesy Greg Asner.) Asner recently completed a study of world rain forests showing just how extensive the damage could be. He took 16 leading models for predicting the next century of climate change and essentially created a map — showing hotspots where they all agreed rising greenhouse gases would substantially change the forest.
He found that higher temperatures and shifts in rainfall could leave as much as 37 percent of the Amazon so radically altered that the plants and animals living there now would be forced to adapt, move or die. When other man-made factors like logging are taken into account, the portion of affected forest could be as high as 81 percent.
Asner said melting polar ice sheets aren’t the only climate change sentinels out there. The world’s largest rain forest — drained, drying, sometimes burning — is on the front lines, too, and just as threatened.
“I hate to pit myself against the polar bears,” he said. “But we’re talking about the Amazon, the majority of the biodiversity on the planet is in the humid tropical forests.”
Locals call the Amazon’s annual dry spells “the burning season,” named for the forest fires landholders regularly set to make room for crops and cows. In past decades, fires kindled on the jungle’s edges burned themselves out once they advanced a few yards into permanently damp virgin forest.
But that changed with the 2005 drought, said Foster Brown, an environmental scientist at the federal university in the Brazilian state of Acre….
“The ecosystems here have become so dry that instead of a being a barrier to fire, the forest became kindling,” he said. “We’ve changed from a situation where a relatively small part of the region would be susceptible to fire to the entire region being susceptible to fire.”
Burned forests aren’t the only evidence of drought. This year, one of the Amazon River’s biggest tributaries, the Rio Negro, dropped 13 feet below its dry-season average — to the lowest level on record. Channels in some areas have become little more than winding belts of mud — leaving boats stranded and remote communities cut off from supplies….
“Everything has changed. We don’t know when we can plant. We plant and then the sun kills everything,” Mariazinha said. “If it continues like this, we expect a tragedy.”
And the point she pressed upon her visitors was, perhaps they should be worried, too.
“I ask you,” she said, “as someone who lives in the outside world who knows the tragedy that’s happening there — is there anything we can do?”
Here is what Lewis has to say about the drought:
We need to be a little cautious when looking at these unpublished results as we don’t know the exact details of the techniques used to generate the maps. But, we know from simple on-the-ground knowledge that the 2010 drought was extreme, leading to record lows on some major rivers in the Amazon region and an upsurge in the number of forest fires. Preliminary analyses suggest that the 2010 drought was more widespread and severe than the 2005 event. The 2005 drought was identified as a 1-in-100 year type event, was anomalous as did not occur in a El Nino year, hit South-Western Amazonia hardest (a different pattern to El Nino related droughts), and was associated with high Atlantic sea surface temperatures (not Pacific sea surface temperatures as in El Nino years). Now in 2010, we again have a severe drought, again hitting South-Western Amazonia hard. Atlantic sea-surface temperatures and the north-west movement of the inter-tropical convergence zone seem ripe for careful study to improve our understanding of the 2010 drought.
The good news for the Amazon is that deforestation rates have been radically reduced since 2005, so in that sense the Amazon is doing well. The bad news is these droughts kill trees and promote fires, which are very damaging to forests and leaves them more vulnerable to fire in the future, potentially leading to a drought-fire-carbon emissions feedback and widespread forest collapse. Most concerning of all is that while two unusual droughts clearly don’t make a trend, they are consistent with some model projections made well before 2005: that higher sea surface temperatures increase drought frequency and intensity, leading later this century to substantial Amazon forest die-back.
We ought to remember that every ecosystem has it limits, a point of where they radically change. The open question is whether such a point is being reached in some parts of the Amazon. While little is expected of the climate change talks in Cancun next week, the stakes, in terms of the fate of the Amazon are much higher than they were a year ago in Copenhagen.
And here is an excerpt from a World Wildlife Foundation post by Nick Sundt.
The Amazon region is experiencing the third extreme drought in a dozen years — and it may turn out to be the worst on record. The droughts coupled with recent research findings, suggest that rising atmospheric concentrations of greenhouse gases will rapidly increase the frequency and severity of droughts in the region. The implications for people, biodiversity and climate are ominous.
As the map below shows, most of the Amazon region was afflicted by drought in mid-October 2010, with large areas in the north and west experiencing exceptional drought – beyond extreme. Drought conditions, which now are improving, have been concentrated in Brazil, but extend into parts of neighboring countries including large areas of Bolivia, Peru, Colombia.
According to the classification system used by the University College London (UCL) Global Drought Monitor, exceptional droughts normally should not occur more than a couple of times in a century. Typical impacts include “exceptional and widespread crop and pasture losses; exceptional fire risk; shortages of water in reservoirs, streams and wells, creating water emergencies.” According to UCL, nearly 8.7 million people live in the locations shown above (which include smaller areas outside the Amazon) that are experiencing exceptional drought conditions.
The drought results from a combination of above normal temperatures over much of the region combined with low precipitation. As the figure below illustrates, most of the Amazon region received less than 75% of normal rainfall between 1 July and 30 September. Large areas have received far less precipitation, in many cases less than 25% of normal.
In a press release on 22 Oct (Seca pode bater recorde na Amazônia / Drought may hit record in the Amazon), Brazil’s Amazon Environmental Research Institute (Instituto de Pesquisa Ambiental da Amazônia or IPAM) said:
“The drought of 2010 still hasn’t ended in the Amazon and could surpass that of 2005 as the region’s worst during the past four decades. In the Western Amazon, the Solimões River reached its lowest level in recorded history. In Manaus, the level of the Rio Negro (Black River) is approaching that of 1963 – the lowest in a century. Even if this doesn’t occur, the forest will have already experienced three extreme dry spells in just 12 years, two of which occurred during the past five years: 1998, 2005 and 2010. And this is not including the drought of 2007, which affected only the Southeastern Amazon and left 10 thousand sq. km. of forest scorched in the region…`The Amazon that had wet seasons so well-defined that you could set your calendar to them – that Amazon is gone,‘ says ecologist Daniel Nepstad of IPAM…”
Among the consequences of the drought are extremely low flows on many of the region’s rivers. On 24 October 2010, the Rio Negro, a major tributary of the Amazon, reached an all time low of 13.63 m at Manaus, edging out 1963 when water levels reached 13.64 m (Monitoramento Hidrologico: 2010, Boletim no 33 – 29/10/2010, by the Companhia de Pesquisa de Recursos Minerais or CPRM). In contrast, just last year, the river saw an all time record high of 29.77 m as the region experienced devastating floods. (Relatorio da Cheia 2009 [PDF] [2010], by CPRM). See photos of the flood [PDF]. Records for the Rio Negro extend back 107 years. See also Flooding Near Manaus, Brazil, NASA Earth Observatory, 19 August 2010.
Writing for the New York Times upon his return from Iquitos, Peru, Nigel Pitman reports that “people were deeply upset by the lack of rain.” He explains: ”Long dry spells like these in Amazonia wither crops and worsen air pollution and cut off whole towns from the rest of the world, when the arm of the river they’re on turns to mud. They also destroy forests” (Drought in the Amazon, Up Close and Personal, 12 November 2010). Satellite imagery on 19 August showed a pall of smoke concentrated over Bolivia (see Fires in South America, NASA Earth Observatory, 8 September 2010), where drought conditions allowed fires to burn out of control, prompting the Bolivian government in mid-August to declare a state of emergency.
Dr Richard Bodmer of the Durrell Institute of Conservation and Ecology (University of Kent) and the Wildlife Conservation Society recently reported on the impacts the drought is having on the Pacaya Samiria National Reserve in the Peruvian Amazon. Among the species affected: the pink river dolphin (see photo below). “The conditions have resulted in fewer dolphins observed throughout the Samiria River,” says Dr. Bodmer. “Overall, pink river dolphin numbers have decreased by 47 per cent and the grey river dolphin by 49 per cent compared with previous years’ population estimates. The dolphins have been forced to leave their habitats in the Samiria River and find refuge in the larger channels of the Amazon.” See Amazon drought results in dramatic fall in pink river dolphin populations (press release from Earthwatch).
Pink river dolphin (Inia geoffrensis) in the Rio Negro, Brazil. © naturepl.com/Luiz Claudio Marigo / WWF.
For an outstanding series of photographs documenting the impacts of the drought, see Estiagem na Amazônia posted by Último Segundo (22 November 2010). See also the Reuters video (6 Nov 2010) below for discussion of some of the major consequences of the drought.
Above: Brazil Looks to Ease Amazon Drought, Reuters Video, 6 November 2010.
The 2005 Drought
Just 5 years ago — in 2005 — the Amazon experienced an extreme drought that prompted the government of Brazil to declare a state of emergency in most of the region. In The Drought of Amazonia in 2005 (by José A. Marengo, Carlos A. Nobre, Javier Tomasella in the Journal of Climate, February 2008), researchers said:
“In 2005, large sections of southwestern Amazonia experienced one of the most intense droughts of the last hundred years. The drought severely affected human population along the main channel of the Amazon River and its western and southwestern tributaries, the Solimões (also known as the Amazon River in the other Amazon countries) and the Madeira Rivers, respectively. The river levels fell to historic low levels and navigation along these rivers had to be suspended. The drought did not affect central or eastern Amazonia, a pattern different from the El Niño–related droughts in 1926, 1983, and 1998.”
… The 2005 drought in the Amazon also was notable for its impacts on the global carbon cycle. Though the exact magnitude of the impacts are a matter of debate within the science community (see Amazon drought raises research doubts, Nature News, 20 July 2010), there is evidence that the drought along with elevated air temperatures sharply reduced net primary production (NPP) in the Amazon. NPP is a measure of the amount of atmospheric carbon plants pull from the atmosphere and incorporate into biomass. Where NPP is reduced, less carbon is fixed by plants and more is left in the atmosphere to disrupt climate.
In Drought-Induced Reduction in Global Terrestrial Net Primary Production from 2000 Through 2009 (Science, 20 August 2010) researchers using satellite data found that global NPP dropped precipitously in 2005 to its lowest level of the decade. The largest contributor to the drop was a decline of NPP in the Amazon rainforest that they attributed largely to elevated temperatures and the severe drought.
Similarly, scientists using records from long-term monitoring plots in the Amazon reported in Science a year earlier (6 March 2009) in Drought Sensitivity of the Amazon Rainforest that the drought had a large impact on carbon flows. They note that the Amazon’s old growth forests process 18 Petagrams (or Gigatons) of carbon each year — more than twice the amount emitted annually by burning fossil fuels (1 Petagram = 1015 grams = 1 billion metric tonnes = 1 Gigaton). “Relatively small changes in Amazon forest dynamics therefore have the potential to substantially affect the concentration of atmospheric CO2 and thus the rate of climate change itself,” they said.
They estimated that the drought reduced the biomass carbon balance by 1.2 to 1.6 Gigatons of carbon. “The exceptional growth in atmospheric CO2 concentrations in 2005, the third greatest in the global record, may have been partially caused by the Amazon drought effects documented here,” they add. “Amazon forests therefore appear vulnerable to increasing moisture stress, with the potential for large carbon losses to exert feedback on climate change.”
The scale of such drought-induced changes in the Amazon’s carbon budget can be contrasted with the magnitude of Brazil’s carbon emissions from other sources, and with global carbon emissions from fossil fuels. The Brazilian government estimates that in 2005, carbon emissions from land-use and landcover changes (including deforestation) were 1.3 gigatons of carbon and accounted for 77% of Brazil’s carbon emissions from all sources in 2005 (Segunda Comunicação Nacional do Brasil à Convenção-Quadro das Nações Unidas sobre Mudança do Clima [PDF], Coordenação-Geral de Mudanças Globais do Clima, Ministério da Ciência e Tecnologia, Brasília, 2010).
That is at the low-end of the range of 1.2-1.6 gigatons of carbon that may have shifted to the atmosphere in 2005 as a result of the Amazon drought. In other words, 2005 carbon emissions associated with the drought may have equaled or exceeded those from deforestation in Brazil that year. Furthermore, at the global level, the range of emissions that may have resulted from the 2005 drought is equivalent to roughly 16-22% of annual global carbon emissions from fossil fuel use in 2005 (about 7.4 gigatons of carbon).
The 2010 Drought
Just as the 2005 drought was preceded by an El Niño (from Apr-May-June 2002 through Feb-Mar-Apr 2003), the 2010 drought was preceded by an El Niño (May-June-July 2009 through March-April-May 2010). Consequently, the Amazon experienced well below normal precipitation during the rainy season that normally stretches roughly from September-November through March-May. The National Oceanic and Atmospheric Administration reported in The South American Monsoon System Summary, July 2009-June 2010 [Powerpoint] that precipitation from July 2009 through June 2010 was well below normal over the Amazon basin, consistent with the expected impacts of an El Niño. Furthermore, precipitation was much lower than during the 2002-2003 rainy season associated with the 2002-2003 El Niño that set the stage for the 2005 drought.
Similarly, as in 2005, sea surface temperatures (SSTs) in the tropical North Atlantic ocean in 2010 were elevated during the dry season (normally April-September). The maps below show the global temperature anomalies for September 2005 and September 2010 (around the usual end of the dry season) and show that SSTs in the north tropical Atlantic and the Caribbean in both years show a similar pattern. Likewise, the surface temperatures over the Amazon during both years were elevated — though were substantially higher in 2010.
The Monthly Tropical North Atlantic Index (TNA) (a measure of the average monthly SST anomaly in the region) has been at record high levels (and above the values for 2005) for every month of 2010 through September. The TNA for October was second only to that of 2003. The separate Caribbean SST Index (CAR) has not been at record levels for most months, but has been anomalously high and for most months has been above 2005 levels.
For both the TNA and the CAR indices, the long term trend is upward. See for example the long-term trend for the Tropical North Atlantic Index for the month of September below.
Above: The North Tropical Atlantic SST Index for the Month of September, 1951-2010. SST anomalies (relative to 1951-2000) averaged over the region of the tropical Atlantic between Africa and the Caribbean (the region is indicated by NTA on this map) for the month of September from 1951 through 2010.
As in 2005, these high SSTs in the Tropical North Atlantic are resulting in one of the worst coral bleaching episodes on record in the Caribbean, as well as energizing one of the most active Atlantic hurricane seasons on record. See our recent posting, Sea Surface Temperatures in Tropical North Atlantic Rise to Record Levels in 2010, With Impacts from the Amazon to Canada (16 November 2010).
Are the high SSTs — as in 2005 — also associated with the Amazon drought conditions during the 2010 dry season? The answer is most likely “yes,” but the nature of the connection and the role of other factors (such as the 2009-2010 El Niño in the tropical Pacific) will have to await the published research results of scientists. Similarly, we will not know the impacts of the 2010 drought on the cycling of carbon to and from the Amazon until scientific assessments are conducted and research results are published.
The Climate Change Connection
What connection might these droughts have to rising concentrations of GHGs in the atmosphere and what might we expect during the course of this century as GHG concentrations continue to rise?
The connections between rising GHG concentrations on the El Niños is a matter of scientific interest and debate. El Niño-Southern Oscillation patterns in the tropical Pacific appear to be changing and some research suggests the changes may be related to climate change (see El Niño in a changing climate, Nature, 24 September 2010). However, the science is very much unsettled, so we cannot say anything definitive about the relationship between rising GHGs and the El Niños that preceeded the 2005 and 2010 droughts.
In the case of rising SSTs in the tropical Atlantic — another major contributor to the 2005 drought and likely to the 2010 drought – the connection to rising GHG concentrations is better understood, though there is uncertainty regarding the magnitude of the impact relative to other variables.
When asked about the degree to which rising GHG concentrations in the atmosphere were contributing to the trend of rising sea surface temperatures in the tropical North Atlantic Ocean, Greg Holland of the National Center for Atmospheric Research (NCAR) said at a Congressional briefing on 30 June 2010 that the temperatures could not be explained without accounting for rising GHG concentrations. He said that while some researchers thought the rising GHG levels might account for 60-80% of the temperature anomaly, he estimated that about half was due to rising GHGs.
This is consistent with research results published in Geophysical Research Letters on 29 April 2010. In Is the basin-wide warming in the North Atlantic Ocean related to atmospheric carbon dioxide and global warming?, Chunzai Wang and Shenfu Dong of NOAA’s Atlantic Oceanographic and Meteorological Laboratory, conclude that “both global warming and AMO [Atlantic multidecadal oscillation] variability make a contribution to the recent basin-wide warming in the North Atlantic and their relative contribution is approximately equal.”
If the rise in SSTs in the tropical north Atlantic are being driven in part by rising GHG concentrations in the atmosphere, and if those SSTs are implicated in the Amazon drought of 2005 and potentially in the drought of 2010, then rising GHG concentrations are among the factors likely contributing to those droughts. However, researchers have not at this point definitively attributed either drought to rising atmospheric GHG concentrations.
More importantly rising atmospheric concentrations of GHGs in the future will continue to affect tropical sea surface temperatures in both the Pacific and the Atlantic, and research indicates that this — in combination with rising air temperatures over the Amazon – will increasingly dry out the Amazon. In Amazon Basin climate under global warming: the role of the sea surface temperature (Philosophical Transactions of The Royal Society B, Biological Sciences, 27 May 2008), researchers analyze these connections.
Using a model from the UK’s Hadley Centre, they focused on a period centered around the year 2050. The analysis suggests that SST anomalies in both the tropical Atlantic and Pacific would combine to reduce Amazon Basin rainfall, “leading to a perennial soil moisture reduction and an associated 30% reduction in annual Amazon Basin net primary productivity (NPP). A further 23% NPP reduction occurs in response to a 3.5°C warmer air temperature associated with a global mean SST warming.”
In Drought under global warming: a review (Wiley Interdisciplinary Reviews: Climate Change, 19 Oct 2010) Dr Aiguo Dai of the National Center for Atmospheric Research says that models used by the Intergovernmental Panel on Climate Change in its 2007 assessment “project increased aridity in the 21st century, with a striking pattern that suggests continued drying” over many land areas including “most of Americas.” While acknowledging the uncertainties, he says that the model results appear “to be a robust response to increased GHGs.” He adds: “This is very alarming because if the drying is anything resembling [the model results]…a very large population will be severely affected in the coming decades” in Brazil and many other land areas.
Approaching — or passing — a Tipping Point
The possibility of increasingly arid conditions along with more frequent extreme droughts in the Amazon — and the regional and global implications — is a matter of growing and grave concern. In a report to WWF, The Amazon’s Vicious Cycles: Drought and Fire in the Greenhouse [2.49 MB pdf] (Dec 2007, WWF), IPAM’s Daniel Nepstad concludes:
“Synergistic trends in Amazon economies, vegetation, and climate could lead to the replacement or damaging of more than half of the closed-canopy forests of the Amazon Basin over the next 15 to 25 years, undoing many of the successes currently in progress to reduce global emissions of greenhouse gases to the atmosphere. Counteracting these trends are emerging changes in landholder behaviour, recent successes in establishing large blocks of protected areas in active agricultural frontiers, important market trends favouring forest stewardship, and a possible new international mechanism for compensating tropical nations for their progress in forest conservation, that could reduce the likelihood of a large-scale dieback of the Amazon forest complex. In the long term, however, the avoidance of this scenario may depend upon worldwide reductions of greenhouse gas emissions that are large enough to prevent global temperatures from rising more than a degree or two.”
More recently (in late 2009 and before the 2010 drought), in Major Tipping Points in the Earth’s Climate System and Consequences for the Insurance Sector [PDF], WWF identified the prospect of more frequent extreme droughts in the Amazon and the related rainforest dieback as being among the ”tipping points” that could be passed in coming decades, with ”significant impacts within the first half of this century.”
Given the current drought in the Amazon, the report’s discussion of the 2005 Amazon drought should raise some eyebrows:
“…until more recently, 2005-like droughts may have had a frequency of between 1-in-40 and 1-in-100-years. Recent work, however, suggests that, with the now elevated concentration of GHGs [greenhouse gases] (currently ~430 ppmv CO2e [parts per million, volume, of carbon dioxide equivalent],compared with 280 ppmv CO2e pre-industrial), the return period is of the order of 1-in-20-years and this is likely to increase to 1-in-2 and above by between 2025 and 2050 if stabilization at 450 to 550 ppmv CO2e is achieved (with a higher probability if it is not).”
Given that the 2010 drought is comparable to the 2005 drought — and that they are only five years apart, we already may be closer to a return period of 1-in-2 years than the research suggested.
About the implications of an increase in the frequency of 2005-like droughts, the report says:
“The 2005 drought impacts were relatively severe. However, the social, environmental and economic consequences of such a significant increase in the frequency of 2005-like events are far more than the sum of 2005 impacts x drought frequency. What is currently termed ‘drought’, with such a significant increase in frequency, becomes the norm implying a potentially radical change in hydrological systems in affected regions, with knock-on effects for people, environment, and economy.”
For an excellent discussion of the 2005 and 2010 droughts, climate change and the implications for the Amazon, see the video below from GlobalPost, Rumble in the Jungle: Is the Amazon Losing the Fight Against Climate Change? by Erik German and Solana Pyne. See also their online article, Rivers run dry as drought hits Amazon (GlobalPost, 3 November 2010).
– Nick Sundt
GOP Freshman: ‘Most Of Us Agreed’ That Raising The Debt Ceiling ‘Would Be A Betrayal’
Rep.-elect Bill Johnson (R-OH)
A handful of incoming Republican lawmakers — including Sen.-elect Mike Lee (R-UT) and Reps.-elect Jeff Denhem (R-CA) and Tim Scott (R-SC) — have said that they will not vote to increase the debt ceiling, even though the U.S. government will reach its borrowing limit early next year. “I’m going to vote against raising the national debt ceiling. We simply can’t continue to mortgage the future or our unborn children and grandchildren,” Lee said.
Plenty of Republican freshman besides these three also ran on opposition to a debt ceiling increase, and according to Rep.-elect Bill Johnson (R-OH), many of them have agreed to stick to their guns when the vote comes:
Rep.-elect Bill Johnson of Ohio said those who ran on such messages didn’t intend to reverse themselves now. “Most of us agreed that to increase the limit would be a betrayal of what we told voters we would do,” he said. GOP leaders hope to package a debt-limit vote with significant spending cuts, making it easier for Republicans to vote for it. But it isn’t clear that will be enough for many of the GOP freshmen.
Incoming Speaker of the House John Boehner (R-OH) has been talking to the GOP’s freshmen about the debt ceiling, telling them “we’re going to have to deal with it as adults.” “Whether we like it or not, the federal government has obligations, and we have obligations on our part,” Boehner said. And he’s correct that raising the ceiling affirms that the country will pay off the debts its incurred. As the Center for American Progress’ David Min pointed out, failure to raise the debt ceiling could be disastrous:
The financial markets are on edge today, with U.S. Treasury bonds being the safe haven for most investment capital. Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.
Such a move will also increase long-term deficits and debt, while cutting off Social Security and Medicare benefits for millions of seniors. But if Johnson is to be believed, many incoming Republican freshman will put that second to their Tea Party ideology.
Cross-posted on Wonk Room.
GOP Freshman: ‘Most Of Us Agreed’ That Raising Debt Ceiling ‘Would Be A Betrayal’
Rep.-elect Bill Johnson (R-OH)
A handful of incoming Republican lawmakers — including Sen.-elect Mike Lee (R-UT) and Reps.-elect Jeff Denhem (R-CA) and Tim Scott (R-SC) — have said that they will not vote to increase the debt ceiling, even though the U.S. government will reach its borrowing limit early next year. “I’m going to vote against raising the national debt ceiling. We simply can’t continue to mortgage the future or our unborn children and grandchildren,” Lee said.
Plenty of Republican freshman besides these three also ran on opposition to a debt ceiling increase, and according to Rep.-elect Bill Johnson (R-OH), many of them have agreed to stick to their guns when the vote comes:
Rep.-elect Bill Johnson of Ohio said those who ran on such messages didn’t intend to reverse themselves now. “Most of us agreed that to increase the limit would be a betrayal of what we told voters we would do,” he said. GOP leaders hope to package a debt-limit vote with significant spending cuts, making it easier for Republicans to vote for it. But it isn’t clear that will be enough for many of the GOP freshmen.
Incoming Speaker of the House John Boehner (R-OH) has been talking to the GOP’s freshmen about the debt ceiling, telling them “we’re going to have to deal with it as adults.” “Whether we like it or not, the federal government has obligations, and we have obligations on our part,” Boehner said. And he’s correct that raising the ceiling affirms that the country will pay off the debts its incurred. As the Center for American Progress’ David Min pointed out, failure to raise the debt ceiling could be disastrous:
The financial markets are on edge today, with U.S. Treasury bonds being the safe haven for most investment capital. Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.
Such a move will also increase long-term deficits and debt, while cutting off Social Security and Medicare benefits for millions of seniors. But if Johnson is to be believed, many incoming Republican freshman will put that second to their Tea Party ideology.
Cross-posted on ThinkProgress.
Ignoring The Danger, Rep.-Elect Jeff Denham Vows To ‘Absolutely’ Vote Against Raising The Debt Ceiling
One of the first issues that Congress will take up next year is the ever-important vote to raise the debt ceiling. While the national debt has been a pet cause of Tea Partiers, failing to increase our debt ceiling would likely result in a government shutdown and a worldwide economic catastrophe. A report from the Center for American Progress detailed the possible consequences, including a run on U.S. Treasury bonds, which “would cause the cost of U.S. debt to soar, putting even more stress on our budget,” likely throwing us into a “second, very deep, recession.”
Unperturbed, many in the GOP are steadfast in their opposition to raising the debt ceiling. Incoming Rep. Jeff Denham (R-CA) is the newest member of this growing caucus. In an interview with ThinkProgress Monday, Denham declared that he would “absolutely” vote against an increase. Rather than planning to cast a symbolic “nay” vote, Denham predicted that the GOP would be able to prevent “this next Congress [from] raising the debt ceiling”:
TP: One of the first things that Congress will take up next year is going to be the debt ceiling. Have you determined what your feelings are on how you’re going to approach that vote?
DENHAM: I just don’t see this next Congress raising the debt ceiling. But it’s certainly a challenge we’re going to have to deal with. I mean, there’s a lot of things at play here in this lame duck session.
TP: So you think that’s something that you’ll probably vote against?
DENHAM: Absolutely, yes.
Watch it:
Rep. Eric Cantor (R-VA), the second-highest ranking House Republican, told reporters last month that Republicans will bring up a clean “up-or-down vote” on increasing the debt ceiling next year. It remains to be seen if Cantor will honor this pledge when he likely becomes the Majority Leader during the 112th Congress.
GM raising IPO price
Though General Motors was originally planning to set its IPO price between $ 25 and $ 29, strong demand for the stock leading up to the offering have convinced it to raise that price point to over $ 30 per share. The Associated Press reports:
Investor demand for General Motors’ shares is so high that the automaker will raise the price range of its common stock to $ 32 to $ 33 when its initial public stock offering begins on Thursday, a person briefed on the sale said Monday night.
GM is also planning to sell 9 million more preferred shares than originally expected, the person said.
The final price will be set Wednesday after the stock markets close, but GM intends to announce the new range and the additional preferred shares on Tuesday morning in a filing with the U.S. Securities and Exchange Commission, said the person, who didn’t want to be identified because the moves have not been officially announced.
This is great news for taxpayers. The higher the stock price, the more likely it is that the federal government recovers the full amount loaned to the automaker to help it survive bankruptcy proceedings in 2009. If that price point sticks, the government should make more than $ 2 billion more than expected on its initial sale of preferred stock.
Charles Krauthammer Schools Carlson and Krugman on Raising Social Security Retirement Age
Charles Krauthammer on Friday gave a much-needed education to Bloomberg's Margaret Carlson about why the age at which one can receive Social Security benefits must be raised.
His words on PBS's "Inside Washington" also refuted Paul Krugman's foolish claims on this matter published in Friday's New York Times (video follows with transcript and commentary):
NewsBusters.org – Exposing Liberal Media Bias
Ann Coulter: Stop Liberalism By Raising The Voting Age Back To 21
As the “younger generation” becomes more worldly, increasingly familiar with politics, popular culture, and has increased access to ideas and information people of my age — and Ann Coulter’s – the anti-gay HomoCon headliner has a new fear: the younger generation. As we know, if nothing happens legislatively or judicially in the LGBT rights arena, all we have to do is wait for the people of Ann Coulter’s age — and mine — to die, and the “younger generation” will ultimately take over and vote for equality. So, what is Ann Coulter’s solution? “Repeal the 26th Amendment!” Literally. Raise the voting age from eighteen back to twenty-one.
This is preposterous, but so is Coulter. (Remember, this is Ann Coulter, who lied to support Carl Paladino AFTER Paladino’s war on gays.)
Read: Ann Coulter’s Top 10 Most Disgusting Comments At Gay Republicans’ “Homocon”
Take a gander at Coulter’s “logic” — WHY she thinks voter disenfranchisement is a good idea:
“Obama’s disastrous presidency has already produced Republican senators from Massachusetts, Wisconsin and Illinois; New Jersey’s wonder-governor Chris Christie; and the largest House majority for Republicans since 1946.
“We deserve more. Clinton only threatened to wreck the health care system; Obama actually did it. We must repeal the 26th Amendment.
“Adopted in 1971 at the tail end of the Worst Generation’s anti-war protests, the argument for allowing children to vote was that 18-year-olds could drink and be conscripted into the military, so they ought to be allowed to vote.
“But 18-year-olds aren’t allowed to drink anymore. We no longer have a draft. In fact, while repealing the 26th Amendment, we ought to add a separate right to vote for members of the military, irrespective of age.
“As we have learned from ObamaCare, young people are not considered adults until age 26, at which point they are finally forced to get off their parents’ health care plans. The old motto was “Old enough to fight, old enough to vote.” The new motto is: “Not old enough to buy your own health insurance, not old enough to vote.”
Make sense?
Of course not.
Ann, your prejudices have been so transparent: anti-gay, anti-black, anti-Democrat, anti-immigration, anti-the rest of the world, and now, anti-people-younger-than-you.
That is ageist, and unacceptable.
What you SHOULD be focused on, if you’re so worried about “the younger generation’s” voting ability, is not their age, which is representative of nothing (after all, you’re forty-eight, have no morals, and by my standards, therefore, shouldn’t be allowed to vote either — how’s that sound?) but their EDUCATION. So stop this bunk about getting rid of the Department of Education, and work toward improving the education levels in this country. Let’s stamp out ignorance.
Starting with you.
Related posts:
- Watch Ann Coulter LIE To Protect Gay-Bashing Paladino
- Tuesday’s Top 5 Reasons Why I’m Voting, And Voting Democratic
- Is Dan Savage The Gay Ann Coulter?
Steele Sets Up Government Shutdown Debate: GOP ‘Not Going To Compromise On Raising The Debt Ceiling’
Ahead of tomorrow’s elections, Republicans have been making clear they have no interest in working across the aisle with Democrats to govern the country, with Republican Conference Chairman Mike Pence (R-IN) vowing “no compromise” and Senate Minority Leader Mitch McConnell saying his first priority with a larger GOP caucus would be to beat President Obama in 2012.
Appearing on CNN’s State of the Union yesterday, RNC Chairman Michael Steele echoed this obstructionist pledge. Particularly troubling, Steele told host Candy Crowly the GOP is “not going to compromise on raising the debt ceiling” — something that will almost certainly lead to a government shutdown and economic catastrophe:
CROWLEY: Let me start first with the majority leader of the Senate saying the single most important thing that Republicans want to achieve in the next two years is to make the president a one-term president. You’ve had the Republican leader on the House side saying this is — no, we’re not going to compromise, and you yourself had said that Republicans are not looking to compromise. Is that what you’re taking away from the polls right now, that the American public doesn’t want the Republicans to compromise on anything?
STEELE: Well, I think that, to be very clear here, when we talk about not compromising, not compromising away on the principles that our party have run on and have stood for, for a long time. For example, we’re not going to compromise on creating more debt. We’re not going to compromise on raising the debt ceiling. We’re not going to compromise on increasing the burdens on the backs of small-business owners and families.
Watch it:
Republicans and their outside secretly-funded allies like Crossroads GPS have made government spending and the national debt a central focus of thousands of attack ads against Democrats. Many ads have specifically attacked incumbent Democrats’ previous votes to raise the debt ceiling (which only Congress can and must increase periodically to allow the government to keep functioning). It now appears that Steele is the latest Republican leader to join some of his party’s most extreme candidates in their vow to translate campaign rhetoric into a potentially catastrophic reality.
A report released last week by the Center for American Progress outlined the potentially devastating consequences of failing to raise the debt ceiling:
– Government Shutdown: The budgetary implications of failing to increase the debt ceiling would result in “the immediate cessation of more than 40 percent of all federal government activities (excluding only interest payments on the national debt), including Social Security, military operations in Iraq and Afghanistan, homeland security, Medicare, and unemployment insurance.”
– Default on the National Debt: During the previous GOP-induced debt ceiling crises in 1995-96, the Treasury Department used extraordinary measures to avoid defaulting on the national debt. Deutsche Bank analysts believe that those same measures would be less effective today and the government would “not be able to stave off a government shutdown (or possible suspension of bond payments) for long.”
– Worldwide Financial Panic: “Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.”
– Economic Catastrophe: Suddenly pulling trillions of dollars in public spending out of the economy, as well as inducing a worldwide financial panic and a run on U.S. sovereign debt would “almost certainly result in a severe drop in economic growth and employment” and could potentially “take us into a Second Great Depression.”
– Actually Increase Long-Term Deficits and Debt: By undermining the credit worthiness of U.S. government, annual borrowing costs would skyrocket. A mere doubling of the current rate the government pays for a 10-year Treasury note would nearly double the cost of annual interest payments on the national debt to approximately $ 600 billion—increasing long-term deficits and fueling even more high-cost borrowing. If investors begin pricing a “fear premium” into U.S. debt, costs could be driven even higher.
A vote to raise the debt ceiling will be necessary as early as February of 2011. As Roll Call recently noted, this vote would pose an early purity test for newly-elected tea party-backed members of Congress. With Mississippi Governor Haley Barbour also saying today that a government shutdown is “very likely” if the GOP wins control of the House of Representatives, it appears that the GOP is more interested in fealty to its tea party base than in seriously governing the country — even if that means risking an almost unprecedented economic calamity and needlessly inflicting untold harm on the nation’s prospects for a return to long-term prosperity.
