http://www.zerohedge.com/contributed/2012-11-29/dc-ne-%E2%80%93-drop-dead
( How will the US pay for Hurricane Sandy damages in light of both the Fiscal Cliff and existing limits on payouts of 11 billion ? )
DC to NE – Drop Dead!
If you’ve lived in NY for a long time, it is very hard to forget this now famous, headline. I think the Daily News will be able to reuse this title page again sometime over the next month or two. NY and NJ have stuck out their hands, and requested a very lumpy $80B from Washington to cover the cost of the clean up from Sandy.
Man is this bad timing. If granted, the cost to the Feds would be reflected in the 2013 budget. Good-bye to any hope of improvement in the overall deficit picture if this nut has to be paid. The $80b that has been requested is more than the revenue from a reversal of the +$250k Bush tax cut. It comes to $530 for every worker in America.
The 2011 Budget Control Act limits annual payments of disaster relief to $11B. So the $80B is going to require a special spending bill. That’s not going to be easy to achieve in Washington with all the Cliff/money issues that are now on the table.
NY’s big Democratic Senator, Chuck Schumer is very much in the middle of this. He knows he has problems with this request. From The Hill (Link).
“There is no doubt this is going to be a hard fight. It comes in the middle of strenuous negotiations around the fiscal cliff.”
Schumer is a weasel; he also had this to say about the process of getting the necessary legislation passed:
I am working to keep the quest for Sandy aid separate from the talks and to preserve a tradition of not offsetting disaster relief.
Separate? How can you keep $80B separate? The issue of not offsetting the cost of a disaster by reducing other spending is not going to come easy. Some Republicans are going to insist that there be cuts in the budget to offset a big portion of the Sandy clean up. An aide for Eric Cantor chimed in with this:
Cantor has made clear that needs beyond the $11 billion allotted by the Budget Control Act will be properly considered.
Properly considered? That is Washington speak for, “No way in Hell”.
There is an element of this that is going to prove difficult for the NE legislators. Why are the costs of Sandy so high? Answer:
Schumer wants to do away with limits such as a $31,000-per-home cap on repairs because of high home prices and expenses in the New York area.
Ah! That explains it. The numbers are big because of expensive beachfront homes. This is not going to sell very well, nor should it.
I’m looking for a big fight over this money, and I think it has to be part of the Fiscal Cliff discussions. It is too big a number to sweep under the carpet. There is the broader issue of what really should be the role of the Federal Government when weather turns bad. It’s way past time for a discussion of the costs of cleaning up properties that are in storms way. The folks who don’t live on ocean water, are subsidizing everyone who does.
If you live on the West Coast the weather report this morning is terrible. Another “Pineapple Express” is headed to land. The expectations are for winds north of 80mph and rainfall of as much as 12 inches. If that is what happens, expect to see pictures of houses being washed down the streets of Bel Air. A storm like this could easily cost $10B.
and....
http://www.youtube.com/watch?v=7vThuwa5RZU
http://www.zerohedge.com/news/2012-11-29/market-drops-gop-rejects-obamas-uncompromising-fiscal-cliff-offer
Market Drops As GOP Rejects Obama's "Uncompromising" Fiscal Cliff Offer
Markets sold off earlier today when Boehner commented that "no substantive progress had been made" in the last two weeks, only to recover quite rapidly. The 'rejection' is now in full context as the WSJ has just reported the terms have not changed (or compromised) at all since we first discussed them two weeks ago. A $1.6tn tax increase (upfront), $50 billion economic stimulus, and most importantly (we suspect guided by the miscreant hand of Geithner) the removal of the need for congressional approval to raise the debt ceiling. Overnight futures are down 5-6 points pushing towards Boehner's intraday lows. This should throw a little light on exactly where the negotiations stand (nowhere) and how willing each party is to change and bring hope to the table for compromise (not at all).With DC this far apart still, the game for the next few weeks is not to solve the fiscal cliff but to avoid getting the blame for the cliff-dive.
We can't help but feel like this being Geithner's pet project that a) it is doomed, and b) the angle is all about the debt ceiling. He has already publily commented that we would be better off without that 'check and balance' - but of course in reality all that means is that the nation is free to spend at will theoretically (as if there were a limit now). Perhaps it is a subtle signal that (as we have pointed out) the debt ceiling debate is actually even more important than the fiscal cliff and maybe (just maybe) Timmy G has run out of deferred pension tricks up his sleeve to cover the gap.
Via WSJ:
President Barack Obama made an opening bid in budget talks with Republicans that calls for a$1.6 trillion tax increase, a $50 billion economic-stimulus program and new power to raise the federal debt limit without congressional approval, a broad set of demands Republicans viewed as a step back in talks to avoid looming tax increases and spending cuts.
The proposal, offered by Treasury Secretary Timothy Geithner as he made a round of meetings with congressional leaders in the Capitol Thursday, calls for increasing tax rates on incomes over $250,000, a one-year postponement of looming spending cuts in defense and domestic programs, and some $400 billion in savings over 10 years from Medicare and other entitlement programs.
The details of the proposal were described by congressional GOP officials. Earlier in the day, after GOP leaders met with Mr. Geithner, they made plain they didn't like what they heard."No substantive progress has been made in the talks between the White House and the House over the last two weeks," said House Speaker John Boehner (R., Ohio), who also spoke to Mr. Obama on the telephone Wednesday night.
...The White House offer in some sense amounts to a formal start of the negotiations, which could take many twists and turns before any possible deal is consummated. The White House didn't have an immediate comment....Mr. Boehner's tone was a change from earlier this week when he said he was optimistic a compromise could be reached..."All eyes are on the White House, the country doesn't need a victory lap, it needs leadership," Mr. Boehner said at a news conference in the Capitol. ...
and........
http://www.zerohedge.com/news/2012-11-29/will-reids-rebuff-mark-top-again-transcript-below
Will Reid's Rebuff Mark The Top Again? Transcript Below
Harry Reid's rebuttal full transcript - ES 1410 as he speaks...
- *REID SAYS `WE'RE NOT GOING TO KICK THE CAN DOWN THE ROAD'
- *REID SAYS HE HAD `NICE MEETING' WITH GEITHNER
- *REID SAYS STILL WAITING FOR `SERIOUS OFFER' FROM REPUBLICANS
It seems not saying that Republicans suck is bullish and just the excuse themarket needed tro ramp to VWAP - though we warn of what that means...
Reid: Reasonable Republicans Urge House Leadership To Stop Holding Middle Class Hostage
November 29, 2012
Washington, D.C.- Nevada Senator Harry Reid spoke on the Senate floor today regarding the fiscal cliff. Below are his remarks as prepared for delivery:It took four months, but Republicans are finally realizing the way back from the fiscal cliff has been right in front of them all along.
In July, the Senate passed legislation to give economic certainty to 98 percent of families and 97 percent of small businesses – to every American making less than $250,000 a year.
For four months we’ve been one vote away from a solution to this looming crisis.
And for four months, House Republicans have refused to act.
Instead they have held the middle class hostage to protect the richest 2 percent of taxpayers – people who have enjoyed a decade of ballooning income and shrinking tax bills.
Now reasonable Republicans are coming around to what Democrats have said all along: let’s reassure millions of middle-class Americans their taxes won’t go up by $2,200 on January 1.
Prominent Republicans are calling on Speaker Boehner to end the suspense for millions of American families.
Republican Congressman Tom Cole of Oklahoma urged his caucus to pass the Senate’s legislation keeping taxes low for those making less than $250,000.
And conservative, Republican Congressman Tim Scott of South Carolina admitted yesterday that if the Speaker brought our bill to a vote, it would surely to pass.
It’s time House Republican leadership listened to the will of the American people – and the advice of reasonable members of their own caucus.
The way out of this standoff is clear.
Yet we’re left wondering how long Republicans will force middle-class families to wait and worry.
Unfortunately, resolving this standoff won’t eliminate every conflict over our fiscal future.
If we’re serious about reducing the deficit, it will take a balanced approach.
Last year, we successfully worked across party lines to cut a trillion dollars’ worth of spending we just couldn’t afford.
Now, even our Republican colleagues acknowledge budget cuts alone won’t solve our fiscal challenges.
A majority of Americans – 60 percent – want to end needless tax breaks for the richest Americans. Democrats couldn’t agree more.
But we can argue over whether to give more unnecessary handouts to the wealthy tomorrow.We can discuss balanced, responsible ways to reduce our deficit tomorrow.Let’s take care of the middle class today.
and.....
http://www.zerohedge.com/news/2012-11-29/stocks-slump-boehners-no-substantive-progress-reality-check
Stocks Slump On Boehner's "No Substantive Progress" Reality Check
We are stunned... S&P 500 futures traded 1415 when Boehner began speaking. By the end of his first paragraph we had dropped 8 points and gone red for the day...and further...
- *BOEHNER SAYS `THE WHITE HOUSE HAS TO GET SERIOUS'
- *BOEHNER SAYS DEMOCRATS `COMFORTABLE' GOING OVER FISCAL CLIFF
- *BOEHNER SAYS `NO SUBSTANTIVE PROGRESS' MADE IN TALKS
- *BOEHNER SAYS DEMOCRATS RULING OUT `SENSIBLE SPENDING CUTS'
- *BOEHNER SAYS DOESN'T KNOW WHAT WHITE HOUSE WILLING TO DO
It seems the algos are not amused...
It seems our tweet was replied to...
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