Obama Urges More Investments In Infrastructure & Education (Weekly Address Video)

Weekly Address: Pushing Congress to Create Jobs, Keep College in Reach for Middle Class

President Obama discusses legislation he signed on Friday that does two important things: It keeps thousands of construction workers on the job rebuilding our crumbling infrastructure, and it stops interest rates on federal loans from doubling this year for more than seven million students.


Sources: White House.gov, Youtube

#Don'tDoubleMyRate! Obama Urges Congress To Act On Student Loans NOW!

You could owe an extra $1,000 unless Congress takes action soon.

Taking out Stafford Loans to help pay for college?

Interest rates on new subsidized loans are scheduled to double on July 1 and more than 7 million students around the country will rack up an average of $1,000 of extra debt each. Congress has the power to stop that from happening. Unfortunately, so far, Republicans in Congress have voted to let those rates go ahead and double in order to pay for tax cuts for millionaires and billionaires.

President Obama knows that’s not acceptable. Today, higher education isn’t a luxury – it’s a necessity that every American family should be able to afford. But it’s also getting more and more expensive.

For the first time ever, Americans owe more in student loans than in credit card debt. That’s why the President is calling on Congress to keep interest rates low so that every hardworking student gets a fair shot at the skills and training needed to get a good job in today's economy.


Sources: White House.gov, Twitter, Facebook, Youtube

Obama Urges Congress To Act NOW On Student Loans & Construction Jobs: Weekly Address

Congress Must Act on Transportation Bill and Student Loans

President Obama discusses the urgent need for Congress to act now on two common sense measures to help middle class families: preventing interest rates on federal student loans from going up and putting hundreds of thousands of construction workers back on the job.


Sources: White House.gov, Youtube

Student Loan Debt Interest Rates Increased By Congress! BLACK College Students In Peril!

NOT WANTED!!! BLACK HIGH SCHOOL STUDENTS WHO WANT TO ATTEND COLLEGE!

Congress' Failure to Stop the Interest Rates on Current Student Loan Debt from rising to 6.8% in July, appears to be some kind of Political Strategy to Further Discourage BLACK Students from Attending College.

This includes BOTH Political Parties NOT just the GOP!

I could be Wrong but I believe Congress is attempting to Save that Federal Student Loan Money to Attract More Foreign College Students.

AKA Asian Students, Middle Eastern Students & Hispanic Students!

In other words BLACK People are being REPLACED!

Its Ok if BLACK People go to Prison but NOT to College because Prison is FREE Labor.

Is Ok for BLACK People to accept Low Wage Jobs but Don't Attend College and if you Do Attend College Don't Expect to find a High Wage paying Job.

This is what Congress & some 21st Century BLACK Leaders are attempting to make BLACK People Accept as their NEW Reality.

Politicians Don't Care If BLACK Students Attend College Because They
(Including Many BLACK Politicians) Only See Us As Dispensable, Low Wage, Stupid SLAVES Who Will Do As We Are Told.

Congress & some 21st Century BLACK Leaders wants the BLACK Community to believe there are NOT more BLACK in Jail than in College. They're LYING!

There ARE in FACT More BLACK Men in Jail then in College, I don't care how they try & cook the Numbers to dispel this FACT.

I've Been Warning Ya'll This Negative Stuff About The BLACK Community Was Coming, However Many Of You Have Labeled Me As Some Bitter, Angry Conspiracy Theorist.

Thus Many Of You Keep Ignoring The Obvious Handwriting On The Political Wall!

I am NOT an Angry, Bitter Conspiracy Theorist. I am just really Passionate about the Well Being of the American BLACK Community.

MOST Politicians Just Want The BLACK Vote But Plan To Do NOTHING For Us Other Than REPLACE Us!

They Don't Care About BLACK Voters!

They Just Want Our VOTES!

If BLACK People Attempt To Speak Up, Speak Out Or March Against Systemic Injustice, The Federal Gov't Will Send In The NAACP To Control Us Or Just Shut Us Up Like They Did Mayor Cory Booker.

Like it or not, Accept it or not but BLACK AMERICAN CITIZENS ARE BEING REPLACED.

Its time for the American BLACK Community to recognize that the 21st Century Democrats are NOT the Same Democrats as Bill Clinton & His Crew.

Bill Clinton did a Lot to help & Encourage BLACK Students to Attend Colleges & Universities.

Today's Democrats basically have an Anti-BLACK Agenda.

The Majority of today's current Student Loan Debt did NOT come from BLACK Students.

Instead it was created by WHITE & Foreign Students Studying to become Doctors, Attorneys & Engineers.

Now CONGRESS wants BLACK American College Students To Pay For It!

And if We do NOT Pay for it, the Feds will Confiscate Our Passports, Mess Up Our Credit Reports, Keep Us from Getting Decent JOBS, take our Homes, etc.,

In other Words, another form of FINANCIAL SLAVERY!

The American BLACK Community Must Continue To Pray, STAND & Speak Up About Injustice No Matter WHAT!

THROW THE BUMS OUT!

CONGRESS IS NOTHING MORE THAN A BUNCH OF CORRUPT, MONEY HUNGRY, CROOKS BEING PAID OFF BY LOBBYISTS!

THIS INCLUDES 99% OF BLACK CONGRESSIONAL CAUCUS MEMBERS.

THROW THE BUMS OUT!






Senate fails to agree on student-loan-rate freeze

The Senate held two votes Thursday on measures to ensure that student loan rates for millions of college students do not double in July — and at the conclusion of the legislative action, the issue remained exactly where it began: stuck.

The measures, one offered by Democrats and the other by Republicans, each failed to reach the 60-vote threshold necessary to move forward, as the parties remain at loggerheads over how to pay for the $6 billion loan subsidy.

If they cannot resolve the dispute, loan rates will rise from 3.4 to 6.8 percent on July 1, increasing the cost of college for 7 million students.

Leaders in both parties have said they want to freeze rates for another year. President Obama has barnstormed college campuses arguing for lowered rates. Mitt Romney, the presumptive Republican presidential nominee, has said he agrees that Congress should extend the lower rates.

But as with many issues in Washington, agreeing on the end goal has so far not been enough to get a bipartisan bill.

Democrats have proposed paying for the additional year of loan subsidies by ending a tax provision that allows executives of some small businesses to collect some of their income as business profits instead of wages, allowing them to avoid paying payroll taxes.

Democrats say the provision is primarily used by professionals such as lawyers and consultants, and they sought to end its use by those making more than $250,000 a year.

Republicans said the Democrats’ proposal amounted to a tax increase on those best positioned create jobs in the sluggish economy. They also argued that payroll taxes are earmarked to fund Medicare, and any new revenue should go to the retiree-health program.

On a 51 to 43 vote, the measure failed to advance.

The Republican proposal would have paid for the loan-rate freeze by eliminating the preventative health-care fund created in the 2010 health-care act.Republicans call it a slush fund and have pointed to what they say are misuses in its spending. Democrats note that it funds HIV/AIDS screenings, obesity prevention and other key programs that could help bring down health-care costs.

The Senate Republican bill mirrored a measure adopted last month by the GOP-controlled House. Republicans called the House action a bipartisan vote and said their Senate colleagues should move forward with the bill. Thirteen House Democrats had joined 202 Republicans in supporting it.

The White House has said Obama would veto that bill if it advanced, but it failed to move ahead in the Senate on a 34 to 62 vote.

There had been no suspense over the outcome of the day’s votes in the Senate — they were staged largely so both sides could point to their own votes in favor of lowering rates while highlighting the opposition’s vote against it.

Democrats say the failure to find a compromise is a sign that Republicans do not actually want to freeze rates. Eliminating the health fund, they argue, is a poison pill that Republicans know Democrats can never support.

“The Republican proposal is paid for by stripping Americans of life-saving preventive health care,” said Senate Majority Leader Harry M. Reid (D-Nev.). “The Democratic proposal is paid for by closing a loophole that allows wealthy Americans to dodge their taxes.”

Republicans countered that Democrats are more interested in finding a popular campaign issue for Obama than working out a solution to the loan issue.

“This problem could have been solved weeks ago,” Senate Minority Leader Mitch McConnell (R-Ky.) said. “Democrats weren’t interested. They wanted a scapegoat more than a solution.”

McConnell called on Obama to become more involved in negotiations to find a resolution to the dispute. “As with so many pressing issues, the president has not led on this issue. He has campaigned on it but has not worked to actually fix it,” he said.

The Senate will be on a one-week recess next week for Memorial Day, while the House returns from a one-week break. The two chambers will likely turn their attention to attempting to negotiate a deal on the issue later in June.



Black College Students Will See Interest Rate for Subsidized Stafford Loans Double in July

A dangerous consequence of last year’s federal budget will begin July 1, 2012, and will have a devastating impact on African Americans who need the assistance of loans to attend college. Last year, when congress was trying to find ways to reduce the federal budget during the debt-ceiling debate, they left interest rates poised to increase July 1 for all government student loans.

This means that nearly eight million students nationwide who rely on subsidized loans to cover college costs would see the interest rate double from the current 3.4 percent to 6.8 percent as of July 1, if there is no change made to address this by Congress soon.

Moreover, to make things worse, student borrowing subsidized Stafford loans processed on or after July 1 will no longer receive the six-month grace period in which the government pays the interest.

This rate increase comes as part of a broader piece of legislation known as the Budget Control Act of 2011.

Also, a new problem will arise for graduate students enrolling in a program of study on or after July 1, since now they will no longer be eligible for subsidized Stafford loans. They will remain eligible for unsubsidized loans, which already carry an interest rate of 6.8 percent.

All of this add up to more debt for African American middle-class and low-income students who use the subsidized loans to pay for the ever- increasing price of university tuition and fees that used to be covered by Pell grants and other federal forms of student aid.

Now, students, in order to obtain these loans, must demonstrate financial need and meet income restrictions to receive them.

If the current rate is not stopped by congress, the average subsidized Stafford loan borrower would have an additional $2,800 in college debt over a 10-year repayment term. In addition, borrowers who assume the maximum $23,000 in subsidized loans will see the total of their interest inflate an additional $5,000 over a 10-year repayment period and $11,000 over 20 years.

Over the last 10 years alone, college loan debt has increased from $41 billion to $103 billion, according to a report released by the College Board. It now outpaces credit card debt in the United States, exceeding $1 trillion last year, according to the Wall Street Journal.


Sources: AP, Fox News, Rolling Out, Russia Today, Washington Post, Youtube

Obama & Jimmy Fallon "Slow Jam" To Voters About Student Loan Debt

Sources: NBC, VH-1

Federal Reserve Keeps Interest Rates At All Time Low Until 2014

Fed unlikely to raise rates until at least 2014

The Federal Reserve said Wednesday that it is unlikely to raise interest rates before late 2014, extending a period of record-low rates by more than a year.

The Fed says it is keeping rates low to help lift a weak but modestly growing economy.

The new timeframe hints at details in the Fed's quarterly economic forecast, which will be released later. That will show in what year policy

members expect the first increase in the Fed's benchmark interest rate. The Fed has kept its key interest rate at a record low near zero for three years.

In a statement released after its two-day meeting, the Fed said the economy is growing moderately, despite some slowing in global growth. It held off on any other new steps to boost the economy.

The statement was approved on a 9-1 vote. Jeffrey Lacker, president of the Richmond regional Fed bank, dissented, saying he objected to the new time period.

The extended timeframe is a shift from the Fed's previous plan to keep the rate low at least until mid-2013. The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.

The forecast on interest rates will be released along with the Fed's updated projections for economic growth, unemployment and inflation. Fed Chairman Ben Bernanke will discuss the forecasts and Fed policy at a news conference later Wednesday.

Beyond the adjusted outlook for interest rates, the January statement tracked closely to the Fed's previous comments about economic conditions.

The central bank used the same language in describing Europe's debt problems and the impact on the world economy.

The economy is looking a little better, according to recent private and government data. Companies are hiring more, the stock market is rising, factories are busy and more people are buying cars. Even the home market is showing slight gains after three dismal years

Still, the threat of a recession in Europe is likely to drag on the global economy. And another year of weak wage gains in the United States could force consumers to pull back on spending, which would slow growth.

The Fed has taken previous steps to strengthen the economy, including purchases of $2 trillion in government bonds and mortgage-backed securities to try to cut long-term rates and ease borrowing costs.

The idea behind the Fed's two rounds of bond buying was to drive down rates to embolden consumers and businesses to borrow and spend more. Lower yields on bonds also encourage investors to shift money into stocks, which can boost wealth and spur more spending.

Some Fed officials have resisted further bond buying for fear it would raise the risk of high inflation later. And many doubt it would help much since Treasury yields are already near historic lows. But Bernanke and other members have left the door open to further action if they think the economy needs it.



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Sources: Associated Press, Bloomberg News, CNN, Google Maps

Bernanke Keeps Interest Rates Low Despite S & P's Political Downgrade

Full text of the Fed's Statement:

For immediate release

Information received since the Federal Open Market Committee met in June indicates that economic growth so far this year has been considerably slower than the Committee had expected. Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand.

Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions. More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.

The Committee currently anticipates that economic conditions--including of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ these tools as appropriate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.



What Happens After the Credit Downgrade?

On Friday the U.S. ratings agency Standard & Poor's slapped the United States with a downgrade, demoting the country from a top-notch AAA credit rating to AA+. Although the nation's other two major agencies, Moody's Investor Service and Fitch Ratings, reaffirmed the United States' AAA credit rating, S&P's move triggered fear through the stock market, which on Monday had its worst day since the 2008 financial crisis.

S&P took further action on Monday, downgrading to AA+ the credit ratings of Fannie Mae, Freddie Mac and other entities linked to long-term U.S. debt.

In a statement Friday outlining their reasoning, S&P cited a shaky political climate in Washington, D.C., that nearly caused the country to default on its loans, the fact that $2 trillion in spending cuts under the final debt-ceiling/budget deal fall short of the $4 trillion needed to actually lower deficits in coming years and the refusal from congressional Republicans to raise tax revenues. Some excerpts:

"We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.

" ... The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

" ... Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

If U.S. Treasury bond investors take heed of S&P's downgrade, they could demand higher interest rates from the government -- which would in turn cause interest rates to rise on all Americans. Yet despite the worries stirred up by such a worst-case-scenario "if," President Obama has taken a more reassuring position. In remarks on Monday, he maintained that U.S. treasuries are still the safest investment in the world and that the government is fully capable of paying its debt.

"Markets will rise and fall, but this is the United States of America," the president said. "No matter what some agency may say, we've always been and always will be a AAA country."

Obama agreed with S&P on one thing, though: Political gridlock has indeed kept the government from effectively managing its debt. "We knew from the outset that a prolonged debate over the debt ceiling -- a debate where the threat of default was used as a bargaining chip -- could do enormous damage to our economy and the world's," he said -- although without specifically calling out Republicans.

With that, he launched into his regular stump speech as of late, about solving the debt problem with measures beyond just spending cuts.

"Last week, we reached an agreement that will make historic cuts to defense and domestic spending. But there's not much further we can cut in either of those categories," he said. "What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare."

So ... are we going to be OK or not? The Root spoke with Wilhelmina A. Leigh, senior research associate on economic security for the Joint Center of Political and Economic Studies about what the credit downgrade means for your finances, S&P's spotty track record on good judgment and whether this will give Congress the urgency it needs to seriously tackle the deficit.

The Root: Should S&P have downgraded the U.S. credit rating?

Wilhelmina A. Leigh: I'm not sure I can answer that question. I have to assume that S&P has a list of criteria that you have to meet for a certain rating, and that they made their assessment based on that. However, I'm also aware that before the rating was downgraded, there had been conversations between the Treasury Department and S&P about it.

S&P made a mistake in how they assessed what our debt would be by the year 2021 -- their math as off by $2 trillion. The Treasury Department pointed out that S&P's numbers were in error, and then it appears that S&P said, "Well, we're going to go ahead and [downgrade you] anyway." That could cast some doubt around S&P having looked carefully at whether the U.S. meets AAA criteria. If they decided to just do it based on erroneous data, that could put the downgrade in a different light.

TR: S&P's past mistakes also include AAA ratings provided for Enron, Lehman Brothers and the subprime junk mortgages that triggered the 2008 financial crisis ...

WAL: I think, in some ways, they may have done this as a way to try to clear up their own bad image -- to make it seem like, "This country screwed up, but we're on top of things."

TR: There have been some foreboding suggestions that the S&P credit downgrade means that our standing in the bond market will plummet, causing creditors to turn away from U.S. Treasury bonds and hike up our interest rates. Is that an accurate forecast?

WAL: I don't know that S&P has that much power. If the other rating services, Moody's and Fitch, followed suit, then I would say that we should be very, very concerned. I think what happens from here depends on what the other rating services do.

In the meantime, President Obama is correct that U.S. Treasury bond is one of the most stable, if not the most stable, investment that can presently be made. Our standing in the bond market is still very good, even though the stock markets have gone a little crazy. But there are so many uncertainties, and that's the bottom line here. If the U.S. were facing its challenges, and there weren't ongoing problems in the rest of the world, like in the European markets, then I don't think people would be as jittery about it.

TR: Do you think that more credit rating agencies will follow suit?

WAL: My sense is that if they were going to, they would have done it by now. Moody's, for example, mentioned earlier that they were monitoring the [debt ceiling negotiations] very closely, and I think enough time has passed for them to have looked at how that situation was handled and have made their assessment. So far they haven't acted.

TR: President Obama suggested that the downgrade will light a fire under lawmakers on the joint "super committee" to get serious about taking a balanced approach that combines budget cuts with raising tax revenues. Do you think this stands to make a difference in our gridlocked political discourse around the deficit?

WAL: When I heard that S&P had downgraded the U.S. credit rating, I thought, Maybe this will jolt Congress into realizing that this is more serious than just saying, "Oh, we can pay off our interest but we don't have to pay off the principal." I mean, something has to wake these folks up. It's like cutting away bone and flesh without adding anything. You just can't solve the problem that way.

TR: What if Democrats and Republicans are unable to bridge their differences on that issue? Is there any other way to get the economy growing, or are we just stuck?

WAL: The only two general ways that I know to do that are to cut spending, and the other is to raise taxes. The form that doing either one of those takes will make all the difference. Hopefully, whatever package they come up with will have in it enough of a stimulating effect, so that the economy can move forward. It's not going to be pleasant for many people, but if they can do it in a way where people can see progress, economic growth and a light at the end of the tunnel, then that amounts to something.

Sources: ABC News, AP, Fox News, Huffington Post, PBS, The Root, Yahoo News, Youtube

Standard & Poor's Appeases GOP By Downgrading U.S. Credit Rating; Tea Party Influence

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Visit msnbc.com for breaking news, world news, and news about the economy

S.&P. Downgrades Debt Rating of U.S. For the First Time

Standard & Poor’s removed the United States government from its list of risk-free borrowers for the first time on Friday night, a downgrade that is freighted with symbolic significance but carries few clear financial implications.

The company, one of three major agencies that offer advice to investors in debt securities, said it was cutting its rating of long-term federal debt to AA+, one notch below the top grade of AAA. It described the decision as a judgment about the nation’s leaders, writing that “the gulf between the political parties” had reduced its confidence in the government’s ability to manage its finances.

“The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge,” the company said in a statement.

The Obama administration reacted with indignation, noting that the company had made a significant mathematical mistake in a document that it provided to the Treasury Department on Friday afternoon, overstating the federal debt by about $2 trillion.

“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokeswoman said.

The downgrade could lead investors to demand higher interest rates from the federal government and other borrowers, raising costs for governments, businesses and home buyers. But many analysts say the impact could be modest, in part because the other ratings agencies, Moody’s and Fitch, have decided not to downgrade the government at this time.

The announcement came after markets closed for the weekend, but there was no evidence of any immediate disruption. A spokesman for the Federal Reserve said the decision would not affect the ability of banks to borrow money by pledging government debt as collateral, a statement that could set the tone for the reaction of the broader market.

S.& P. had prepared investors for the downgrade announcement with a series of warnings earlier this year that it would act if Congress did not agree to increase the government’s borrowing limit and adopt a long-term plan for reducing its debts by at least $4 trillion over the next decade.

Earlier this week, President Obama signed into law a Congressional compromise that raised the debt ceiling but reduced the debt by at least $2.1 trillion.

On Friday, the company notified the Treasury that it planned to issue a downgrade after the markets closed, and sent the department a copy of the announcement, which is a standard procedure.

A Treasury staff member noticed the $2 trillion mistake within the hour, according to a department official. The Treasury called the company and explained the problem. About an hour later, the company conceded the problem but did not indicate how it planned to proceed, the official said. Hours later, S.& P. issued a revised release with new numbers but the same conclusion.

In a statement early Saturday morning, Standard & Poor’s said the difference could be attributed to a “change in assumptions” in its methodology but that it had “no impact on the rating decision.”

In a release on Friday announcing the downgrade, it warned that the government still needed to make progress in paying its debts to avoid further downgrades.

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



The credit rating agencies have been trying to restore their credibility after missteps leading to the financial crisis. A Congressional panel called them “essential cogs in the wheel of financial destruction” after their wildly optimistic models led them to give top-flight reviews to complex mortgage securities that later collapsed. A downgrade of federal debt is the kind of controversial decision that critics have sometimes said the agencies are unwilling to make.

On the other hand, S.& P. is acting in the face of evidence that investors consider Treasuries among the safest investments in the world. Yields rose before the Congressional deal on fears of default and a possible downgrade. But after a deal was struck, yields sank as money poured into Treasuries as a safe haven from sharply falling stocks and the turmoil of the European debt markets.

On Friday, the price of Treasuries fell sharply in heavy selling, and yields rose, reversing the moves of recent sessions. The 10-year Treasury note ended the day with a yield of 2.56 percent.

The United States has maintained the highest credit rating for decades. S.& P. first designated it AAA in 1941, reflecting a steadfast belief that the richest nation in the world would not default on its debt payments. The rating was also bolstered by the role of the dollar as the world’s leading currency, ensuring that demand for American debt securities would remain strong in spite of burgeoning deficits.

“What’s changed is the political gridlock,” said David Beers, S.& P.’s global head of sovereign ratings, in an e-mail several days before a debt ceiling agreement was announced. “Even now, it’s an open question as to whether or when Congress and the administration can agree on fiscal measures that will stabilize the upward trajectory of the U.S. government debt burden.”

Experts say the fallout could be modest.

The federal government makes about $250 billion in interest payments a year, so even a small increase in the rates demanded by investors in United States debt could add tens of billions of dollars to those payments.

In addition, S.& P. may now move to downgrade other entities backed by the government, including Fannie Mae and Freddie Mac, the government-controlled mortgage companies, raising rates on home mortgage loans for borrowers.

However, because Treasury bonds have always been considered perfectly safe, many rules prohibiting institutions from investing in riskier securities are written as if there were no possibility that the credit rating of Treasuries would be less than stellar.

Banking regulations, for example, accord Treasuries a special status that is not contingent on their rating. The Fed affirmed that status in guidance issued to banks on Friday night. Some investment funds, too, often treat Treasuries as a separate asset category, so that there is no need to sell Treasuries simply because they are no longer rated AAA. In addition, downgrade of long-term Treasury bonds does not affect the short-term federal debt widely held by money market mutual funds.

In other words, almost no one would be precluded from investing in federal debt, and even the ratings agencies have concluded that few investors would walk away voluntarily.

Sources: CNN, MSNBC, NY Times

Obama Vows Debt Ceiling Talks To Continue Until Deal Made

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Visit msnbc.com for breaking news, world news, and news about the economy

Obama to lawmakers: Meet every day on debt deal

President Barack Obama told top lawmakers on Sunday to be prepared to meet every day this week to hash out a deal to cut the federal budget and raise the debt limit, a Democratic source with knowledge of the talks said.

The Democratic official said that Obama pressed Republicans at a White House meeting Sunday evening to aim for a broad, $4 trillion deficit-reduction package rather than a more modest one.

"If not now, when?" the president asked them when some said it was not the right time to try to craft a far-reaching deal, the official said.

Both sides remained divided over the size and the components of a plan to reduce long term deficits. Saying "we need to" work out an agreement over the next 10 days, the president and lawmakers agreed to meet again Monday.

Obama also sought to use the power of his office to sway public opinion, scheduling a news conference for 11 a.m. ET Monday, his second one in less than two weeks devoted primarily to the debt talks.

But there appeared to be little appetite for such an ambitious plan and the political price it would require to pass in Congress. Instead, House Speaker John Boehner told the group that a smaller package of about $2 trillion to $2.4 trillion was more realistic.

A Democratic official familiar with the session said House Majority Leader Eric Cantor, R-Va., was especially adamant that any deficit reduction package could not contain tax increases and that any new tax revenue would have to be used to pay for other tax benefits.

Obama and the congressional leaders met in the Cabinet Room of the White House for the rare Sunday session. Most appeared in casual Sunday clothes, with open-collared shirts underneath blazers.

Time running out

When a reporter asked, "Can you work it out in 10 days, sir?" Obama replied, "We need to."

Time is becoming increasing precious in the negotiations. The deficit reduction talks are linked to the government's need to increase its borrowing limit, now capped at $14.3 trillion. The Obama administration says if the debt ceiling is not raised by Aug. 2, the nation would default on its obligations, with potentially calamitous financial consequences worldwide.

Officials familiar with the meeting spoke on the condition of anonymity because of the delicate nature of the negotiations. Officials said Obama time and again pressed for a larger package. He also pointed out that the smaller deal of up to $2.4 trillion still would require tax revenues and that not all of the details had yet been worked out.

Earlier, White House Chief of Staff Bill Daley said in a television interview that Obama would not "walk away from a tough fight."

"Everyone agrees that a number around $4 trillion is the number that will ... make a serious dent in our deficit," he said.

But embedded among the tough words was rhetoric that acknowledged the prospects for the "big deal" had become uncertain at best.

Treasury Secretary Tim Geithner said Sunday on NBC’s "Meet the Press" that Republicans "should not walk away now from trying to do something good for the country."

"We’re going to try to get the biggest deal possible," Geithner said.

It was an abrupt change from 24 hours earlier. Republicans late Saturday rejected the $4 trillion proposal, the largest of three under consideration, because its tax increases would doom it in the GOP-led House, Speaker John Boehner said.

The Ohio Republican informed Obama that a package of about $2 trillion, which bipartisan negotiators had identified but not agreed to, was more realistic.

Senate GOP leader Mitch McConnell of Kentucky left little doubt that the $4 trillion deal was dead.

"I think it is," McConnell said. Raising taxes amid 9.2 percent unemployment, he added, "is a terrible idea. It's a job killer."

The International Monetary Fund's new chief, Christine Lagarde, said that if the U.S. fails to raise its debt limit, she foresees "interest hikes, stock markets taking a huge hit and real nasty consequences" for the American and global economies.

"I would hope that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also the rest of the world," she said.

Obama willing to do 'difficult things'

Geithner said Obama “is willing to do very, very difficult political things” including changes in the Medicaid and Medicare programs to reduce future outlays.



He did not specify any changes Obama would consider in those two programs, or in Social Security. Those three programs will account for half of federal outlays by 2021.

The protected debt negotiations took another twist Saturday when Boehner issued a statement saying, that "despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes."

Given that impasse, Boehner said, "I believe the best approach may be to focus on producing a smaller measure."

Why GOP leaders need Democratic votes

“Republicans have told us from the beginning they can’t pass a debt limit increase, they can’t pass a budget deal just with Republican votes. They need Democratic votes,” added Geithner.

Wooing enough Democratic members of Congress to vote for a budget deal, Geithner implied, required Republican leaders to accept that some net tax increases would need to be part of any agreement.

“You have to have balance,” he said, indicating an accord which had nearly equal measures of cuts in future spending and increases in revenues.

But at the same time, he said, “we have to find a way to avoid shifting more of the burden of the tax system to the middle class” — which seemed to indicate that any net tax increases would fall only on higher-income people.

He said an extension of the Social Security payroll tax cut, which Congress enacted last December and which is set to expire at the end of this year, would be part of any accord.

That payroll tax cut was intended to stimulate economic growth and spur job creation. But Geithner gave a somber assessment of the economy, saying that "it's going to take a long time still" before many Americans feel that a recovery is under way. "This is still a very tough economy. For a lot of people, it's going to feel very hard — harder than anything they've experienced in a lifetime now — for some time to come."

What happens after Aug. 2

Geithner warned again that if no deficit cutting agreement is reached and if Congress still refuses to increase the government’s borrowing limit, the government will face default on its obligations on Aug. 2 which “would be catastrophic for the American economy.”
Story: Presidential candidates warn about compromise in debt deal

He added, “The longer we go into July, the more risk there will be in financial markets” with increasing fear among investors that America’s political leaders cannot manage the government’s finances. “You’ll see that reflected in higher interest rates and more concern and loss of confidence,” he said.

He said with no ability to borrow more money from credit markets, it would impossible for the government to finance the $100 billion a week in maturing Treasury obligations — while at the same time paying government contractors and sending benefits to those on Social Security, Medicare and Medicaid.

He seemed to reject the idea that Obama would resort to the Fourteenth Amendment to the Constitution to justify Obama borrowing despite having reached the legal limit — a suggestion some Democrats floated in recent weeks. “There’s no constitutional option,” he said.

Obama's goal: a one-third cut in cumulative deficits

Obama’s goal last week of deficit cuts of $4 trillion over the next decade would have been about a one-third cut in the cumulative deficits, according to the Congressional Budget Office’s most plausible forecast.

Obama was said to be open to changes in Social Security, Medicaid and Medicare. One idea reportedly under discussion in the budget talks was a change in the formula used to make the cost-of-living adjustment (COLA) for retirees collecting Social Security benefits so as to reduce payouts to retirees in future decades.

The stakes are high for Obama. His 2012 re-election hopes hinge not only on reducing America's 9.2 percent unemployment but on his appeal to independent voters who want tougher action to get the country's fiscal house in order.

But Boehner and other mainstream Republicans do not want to be blamed for the economic turmoil that could be unleashed by any government default on its debt.

For his part, Obama is risking a mutiny on the left flank of his party for even agreeing to discuss entitlement programs traditionally protected by Democrats and which many feared would have been curbed under a $4 trillion plan.

Aides to Obama and Boehner were also discussing revenue increases that would have been achieved in part by a streamlining of the tax code, something that appeals to both Democrats and Republicans.

But Democrats' demands for $1 trillion in additional revenue also include eliminating tax breaks and other measures that many Republicans were reluctant to support.


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Sources: CNN, MSNBC, Google Maps

Geithner & Obama Continue To Push $4T Long Term Debt Deal

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Geithner Says Obama to Push for $4 Trillion Deal on Deficit

Treasury Secretary Timothy F. Geithner said Sunday that President Obama would continue to press for the largest deficit reduction possible in negotiations with Congressional leaders over raising the government’s debt ceiling, adding that “it’s not clear that it’s easier trying to do less.”

The remarks came after House Speaker John A. Boehner released a statement Saturday night saying he was pulling back from efforts for a deal that would reduce the deficit by as much as $4 trillion over 10 years. Mr. Boehner said he would instead focus on crafting a smaller package more in line with the $2 trillion to $3 trillion in spending cuts and revenue increases negotiated earlier by Vice President Joseph R. Biden Jr.

On the CBS program “Face the Nation,” Mr. Geithner said the main problem in the negotiations was the Republican insistence that any deal involve only spending cuts and no tax increases.

“And as you saw on the Ryan budget,” he said, referring to a plan proposed by Representative Paul Ryan, Republican of Wisconsin, that would cut entitlement programs, “if you try to do it with just cuts, you’re putting unacceptably deep cuts in benefits for Medicare beneficiaries in the future and you can’t do that politically, and it’s unfair to do it.”

Top Republicans reiterated Sunday that they would not accept a deal that included increased taxes. On “Fox News Sunday,” the Senate Minority Leader Mitch McConnell of Kentucky said that he was “for the biggest deal possible, too, it’s just that we’re not going to raise taxes in the middle of this horrible economic situation.”

Although Republican presidential candidates like Representative Michelle Bachmann, Republican of Minnesota, have said that raising the debt ceiling would be a mistake no matter what deal is struck, Mr. McConnell said on Sunday that “nobody is talking about not raising the debt ceiling. I haven’t heard that discussed by anybody.”

Mr. McConnell said that he had a “contingency plan” for raising the debt ceiling before the Aug. 2 deadline, when the Treasury Department has said the government would begin defaulting on some debt. He said he would reveal his plan later this week if negotiations with the White House fail.

Although some Republicans have questioned whether the United States would truly run out of borrowing authority on Aug. 2, Mr. Geithner repeated Sunday that the date is a true deadline.

“I have to write 80 million checks a month to Americans, including 554 million Americans who depend on their Social Security check,” Mr. Geithner said on “Face the Nation.” “We have to make principal payments or roll over $500 billion of debt in the month of August, about $87 billion in that first week in August.”

“If they don’t act, then we face catastrophic damage to the American economy and the leadership, to their credit, and I mean Republicans and Democrats, fully understand that,” Mr. Geithner added.

He said the outlines of a deal would need to be completed by this week “and certainly by the end of next week” in order to provide enough time for Congress to pass legislation before the deadline.

Sources: Meet The Press, MSNBC, NY Times