By Paul Kiel, ProPublica, and Mitchell Hartman, Marketplace

This story was co-produced with Marketplace. Listen to their coverage.

Seven years after Congress banned payday-loan companies from charging exorbitant interest rates to service members, many of the nation’s military bases are surrounded by storefront lenders who charge high annual percentage rates, sometimes exceeding 400 percent.

The Military Lending Act sought to protect service members and their families from predatory loans. But in practice, the law has defined the types of covered loans so narrowly that it’s been all too easy for lenders to circumvent it.

“We have to revisit this,” said Sen. Dick Durbin, D-Ill., who chairs the defense appropriations subcommittee and is the Senate’s second-ranking Democrat. “If we’re serious about protecting military families from exploitation, this law has to be a lot tighter.”

Members of the military can lose their security clearances for falling into debt. As a result, experts say, service members often avoid taking financial problems to their superior officers and instead resort to high-cost loans they don’t fully understand.

The Department of Defense, which defines which loans the Military Lending Act covers, has begun a process to review the law, said Marcus Beauregard, chief of the Pentagon’s state liaison office.

The act mainly targets two products: payday loans, usually two-week loans with annual percentage rates often above 400 percent, and auto-title loans, typically one-month loans with rates above 100 percent and secured by the borrower’s vehicle. The law caps all covered loans at a 36 percent annual rate.

That limit “did do a great deal of good on the products that it covered,” Holly Petraeus, the Consumer Financial Protection Bureau’s head of service member affairs, said in an interview. “But there are a lot of products that it doesn’t cover.”

Representatives from payday and other high-cost lenders said they follow the law. Some defended the proliferation of new products as helpful to consumers.

A 400 Percent Loan

In June 2011, when Levon Tyler, a 37-year-old staff sergeant in the Marines, walked into Smart Choice Title Loans in Columbia, S.C., it was the first time he’d ever gone to such a place, he said. But his bills were mounting. He needed cash right away.

Smart Choice agreed to lend him $1,600. In return, Tyler handed over the title to his 1998 Ford SUV and a copy of his keys. Tyler recalled the saleswoman telling him he’d probably be able to pay off the loan in a year. He said he did not scrutinize the contract he signed that day.

If he had, Tyler would have seen that in exchange for that $1,600, he’d agreed to pay a total of $17,228 over two and a half years. The loan’s annual percentage rate, which includes interest and fees, was 400 percent.

Tyler said he provided his military ID when he got the loan. But even with an annual rate as high as a typical payday loan, the Military Lending Act didn’t apply. The law limits the interest rate of title loans — but only those that have a term of six months or less.

In South Carolina, almost no loans fit that definition, said Sue Berkowitz, director of the nonprofit South Carolina Appleseed Legal Justice Center. The reason? Ten years ago, the state legislature passed consumer protections for short-term auto-title loans. In response, lenders simply lengthened the duration of their loans.

Today, plenty of payday and auto-title lenders cluster near Fort Jackson, an army base in Columbia, legally peddling high-cost loans to the more than 36,000 soldiers who receive basic training there each year.

Tyler’s loan showcases other examples of lenders’ ingenuity. Attached to his contract was an addendum that offered a “Summer Fun Program Payoff.” While the loan’s official term was 32 months, putting it outside both South Carolina’s regulations and the Military Lending Act, the “Summer Fun” option allowed Tyler to pay off the loan in a single month. If he did so, he’d pay an annual rate of 110 percent, the addendum said.

Michael Agostinelli, the chief executive of Smart Choice’s parent company, American Life Enterprises, told ProPublica he wants his customers to pay off their loans early. “They’re meant to be short-term loans,” he said. He also said that customers who pay on time get “a big discount.” In Tyler’s case, he would have paid an annual rate of 192 percent if he had made all his payments on time.

But Tyler fell behind after only a couple of payments. Less than five months after he took out the loan, a repo company came in the middle of the night to take his car. Three weeks later, it was sold at auction.

“This was something new, and I will never do it again,” Tyler said. “I don’t care what type of spot I get in.”

American Life Enterprises companies operate nine title-lending branches in Nevada and South Carolina. Agostinelli said loans to members of the military are rare for his companies but that service members might go to a title lender for the same reason anybody else does: They need money immediately and discreetly.

Loans similar to the one Tyler took out are broadly and legally available from stores and over the Internet. QC Holdings, Advance America, Cash America and Ace Cash Express — all among the country’s largest payday lenders — offer loans that fall outside the definitions of the Military Lending Act, which defined a payday loan as lasting three months or less.

The annual rates can be sky high, such as those offered by Ace Cash Express in Texas, where a five-month loan for $400 comes with an annual rate of 585 percent, according to the company’s website.

Ace Cash is among a number of payday lenders just outside the gates of Lackland Air Force Base in San Antonio, and it has four stores within three miles of Fort Hood in Texas.

A 2012 report on the Military Lending Act by the Consumer Federation of America found there had been no drop in the number of payday lenders around Fort Hood since the 2006 law went into effect.

Amy Cantu of the Community Financial Services Association of America, which represents the payday industry, said payday lenders are careful to screen out service members for their short-term products. But she acknowledged that payday companies may provide soldiers and their families with other types of loans. “We welcome more products in the market,” she said of the trend of payday lenders increasingly offering longer-term loans. “Options are good for consumers.”

Earned a Purple Heart, Lost a Car

Some lenders apparently haven’t bothered to change their loan products in response to the law.

A 2011 federal class-action suit filed in Georgia’s Middle District alleges that one of the largest auto-title lenders in the country, Community Loans of America, has been flouting the law. The suit names among its plaintiffs three soldiers who took out what appeared to be classic title loans. All agreed to pay an annual rate of around 150 percent for a 30-day loan. All had trouble repaying, according to the suit. One, an Army staff sergeant and Purple Heart recipient, lost his car. The other two managed to pay interest but almost none of the principal on their loans for several months.

The company was fully aware that its customers were soldiers, because they presented their military identifications, said Roy Barnes, a former governor of Georgia who is representing the plaintiffs.

Community Loans, which boasts more than 900 locations nationwide, argued in court that the transactions were not covered by the Military Lending Act because they weren’t loans but sales. Here’s how Community Loans said the transaction worked: The soldiers sold their vehicles to the company while retaining the option to buy back the cars — for a higher price. In early 2012, the judge rejected that argument. The case is ongoing.

Community Loans, which did not respond to numerous calls and emails, has been making loans to service members through businesses with various names.

Leading up to the gates of Fort Benning in Columbus, Ga., Victory Drive is crowded with lenders. Among them is Georgia Auto Pawn, a Community Loans of America storefront where one of the plaintiffs in the class action, an Army master sergeant, took out his loan.

Just another half-mile down the road is a lender advertising “Signature Loans for the Military.” The lender goes by the name of Title Credit Finance, but the parent company is Community Finance and Loans, which shares the same corporate address as Community Loans of America.

A billboard for Title Credit Finance promises to rescue borrowers: Showing a picture of a hamster on a wheel, it says, “Avoid the title pawn treadmill,” referring to customers who get caught paying only interest month after month.

Title Credit Finance offers installment loans, a product which, as the company advertises, does seem to provide “CASH NOW The Smart Way” — at least when compared to a title loan. Interest rates tend to be lower — though still typically well above 36 percent. And instead of simply paying interest month upon month, the borrower pays down the loan’s principal over time.

But the product comes with traps of its own. Installment lenders often load the loans with insurance products that can double the cost, and the companies thrive by persuading borrowers to use the product like a credit card. Customers can refinance the loan after only a few payments and borrow a little more. But those extra dollars typically come at a far higher cost than the annual rate listed on the contract.

At TitleMax, a title-lender with more than 700 stores in 12 states, soldiers who inquire about a title loan are directed to InstaLoan, TitleMax’s sister company, which provides installment loans, said Suzanne Donovan of the nonprofit Step Up Savannah. A $2,475 installment loan made to a soldier at Fort Stewart near Savannah, Ga., in 2011 and reviewed by ProPublica, for example, carried a 43 percent annual rate over 14 months — but that rate effectively soared to 80 percent when the insurance products were included. To get the loan, the soldier surrendered the title to his car. TMX Finance, the parent company of both TitleMax and InstaLoan, did not respond to multiple calls and emails seeking comment.

Another lender on Victory Drive is the publicly traded World Finance, one of the country’s largest installment lenders, with a market capitalization of about $1 billion and more than 1,000 stores around the country. World was the subject of an investigation by ProPublica and Marketplace earlier this week. Of World’s loans, about 5 percent, approximately 40,000 loans, are made to service members or their families, according to the company. Active-duty military personnel and their dependents comprise less than 1 percent of the U.S. population, according to the Defense Department.

Bill Himpler, the executive vice president of the American Financial Services Association, which represents installment lenders, said the industry’s products had been rightfully excluded from the Military Lending Act. The Pentagon had done a good job preserving soldiers’ access to affordable credit, he said, and only “tweaking the regulations here or there to tighten them up” was necessary.

The Commander and the Collectors

It’s not known how many service members have high-priced loans. The Pentagon says it intends to conduct a survey on the matter soon and issue a report by the end of the year.

But some commanders, such as Capt. Brandon Archuleta, say that dealing with soldiers’ financial problems is simply part of being an officer. Archuleta, who has commanded soldiers in Iraq and Afghanistan, recalled fielding numerous calls from lenders trying to track down soldiers who were delinquent on debts.

“In the last 12 years we’ve seen military officers as war fighters, we’ve seen them as diplomats, we’ve seen them as scholars,” Archuleta said. “But what we don’t see is the officer as social worker, financial adviser and personal caregiver.”

While some soldiers seek help from their superior officers, many don’t. That’s because debt troubles can result in soldiers losing their security clearance.

“Instead of trying to negotiate this with their command structure, the service member will typically end up refinancing,” said Michael Hayden, director of government relations for the Military Officers Association of America and a retired Air Force colonel. “It’ll typically start out with some type of small crisis. And then the real crisis is just how you get that loan paid off.”

Soldiers who hide their debt often forego the military’s special aid options. Army Emergency Relief and the Navy-Marine Corps Relief Society offer zero-interest loans. But in seeking that help, a soldier risks alerting the commanding officer to his or her troubles, particularly if the sum needed is a large one.

Russell Putnam, a legal-assistance attorney at Fort Stewart, says he often finds himself making a simple argument to soldiers: “A zero percent loan sure as heck beats a 36 percent plus or a 25 percent plus loan.”

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Debt: Used by the rich to control everyone else

Facts can be a real encumbrance when your trying to enforce austerity on the impoverished masses. Adherents of the ‘keep-cutting-until-it-grows philosophy’ of economics suffered a blow last week as the story emerged that a famed pro-austerity publication by Harvard professors Carmen Reinhart and Kenneth Rogoff was based upon faulty spreadsheet data which had skewed its subsequent results. That such basic computing errors lay behind ideas of Reinhart and Rogoff, who the likes of Paul Ryan and U.K chancellor George Osborne had cited as providing the intellectual authority for their policies, was the equivalent of atheists finding out Christopher Hitchens had just been resurrected by the new Pope and was converting to Catholicism. To confound the pain, the flaw in the spreadsheets wasn’t discovered by a rival Keynesian economics at another Ivy League powerhouse; it was found by Thomas Herndon, a 28-year old grad student at Umass, Amherst. It is easy to see why austerity politicians want to cut funding for all academia bar elitist institutions and traditional programmes. If you let too many of these curious little people into higher education, who knows what else they might unravel?

Reinhart and Rogoff’s popular book ‘This Time Is Different’ was based on their original paper titled: ‘Growth in a Time of Debt.’ Their ideas helped provide an axis upon which the narrative of global recession was reorientated away from a tale of financial sector incompetence towards a story of collective debt. For Reinhart and Rogoff, debt was everything. Regardless of the causes of the crash, for us to recover, we had to simply focus on reducing our debt-to-G.D.P. Ratio, regardless of the externalities of human suffering. This about-turn was employed to turn public rage internally, for as London mayor Boris Johnson told constituents, ‘the time for bashing bankers had come to end.’ If people wanted someone to blame for the cuts and falling living standards then they should blame themselves: we had all lived beyond our means. A simplistic conflation of sovereign debt with household debt was repeated by politicians on both sides of the Atlantic: i.e “think about it like a mum saving on her weekly shopping.” Of course economies don’t work anything like households but that was beside the point. The aim was to make citizens look at the coming cuts to vital social programmes as the price they had to pay for their own previous extravagance.

Politicians know the idea of debt carries a moral weight that is almost impossible to fight against. It delivers the debtor into the complete control of the creditor and if the debt can be imposed on a person for actions outside of their control, it can take away the ideological foundations for calling out any resulting injustice. Debt was the rationale by which Greco-Roman armies took slaves; the slaves owed the conquerors, who could have killed them, their lives and so their unending labour was payment for this debt. Debt is the basis on which Christianity demands obedience to God, continued submission is the debt that the sinner owes to Jesus for his sacrifice on the cross. What unites these two examples is that they are, like the best debts, essentially unpayable. Now we face another unpayable debt, the current sovereign debts of nation-states, which to the lay person seem as infinite as Jehovah, with its figures that rise into trillions of dollars.

Radical Greek Opposition leader Alexis Tsipras  described the global debt crisis as ‘so good that if it did not exist, the elites would have had to invent it.’ The idea that ‘we have to pay our debts’ makes the public reluctantly accept the closing of another library or another cut back in health care. Yet the narrative is disingenuous as politicians never mention that, unlike say a simple bank loan, sovereign debt will never be paid back. It is not supposed to be paid back, it is the motor via which all modern economies function. Apart from one year, the U.S the federal government has been in debt every year since 1776! The ‘communal sacrifice’ of austerity is not meant to pay back the debts of the nation, it is an ideological move aimed at crystallizing the structural inequality of the neoliberal era by breaking down the state funded step-ladders that had helped people improve their lives.

In his excellent book 5000 years of Debt, David Graeber undermines the authority of debt that Reinhart and Rogoff promote. He describes how throughout history, debt forgiveness has ended poisonous circles of suffering. The Occupy Strike Debt programme has began doing this on a small scale by buying up tens of thousands of dollars of personal debt from creditors and forgiving the debtors free of charge. However, despite Reinhart and Rogoff’s work being weakened, this latest hiccup to the proponents of global austerity is likely to have little impact on their policy ideas; ‘we are cutting to pay back your debt’ is simply too good of an argument to give up. Despite this embarrassing revelation and the continued failure of austerity in Europe these, Reinhart and Rogoff have defended their original position. This is because their ideas are less about details and more about providing a framework to justify the pain that everyday people are enduring.

And they would have got away with it too if not for that pesky kid.

(Image via Shutterstock)

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Economists Kenneth Rogoff and Carmen Reinhart.

By Beverly Bandler

Regarding the Austerity Scandal, I wonder if you are as angry as you should be. I am outraged. This is indeed a significant story that the corporate mainstream media appears to be ignoring.

One reader tells me that he has the impression that the Reinhart-Rogoff scandal has not been widely reported. He says Jon Stewart had Thomas Herndon on his program. Herndon is the graduate economics student who revealed the flaw in the R&R data. Herndon said the error in Reinhart-Rogoff’s spreadsheet was so blatant that it was spotted by his girlfriend, a sociology student. (I don’t like to use exclamation points, but this deserves a couple: !!)

This scandal is important because the economic theory presented by Carmen Reinhart and Ken Rogoff was central to the Republican-led demands for sharp austerity even at the cost of continued high and painful unemployment. The two economists claimed that their data proved that government debt equal to 90 percent of GDP would strangle the economy, thus justifying extreme steps to bring the debt down immediately.

However, other economic studies of the same question came up with dramatically different results, showing continued GDP growth at that level of debt. Finally, Reinhart and Rogoff made their data available to a team at the University of Massachusetts at Amherst and the mystery was solved. The two economists had made an obvious computation error. In other words, the austerity hysteria that had fueled Republican insistence on slashing spending was driven by a botched economic analysis.

The Washington elite had made major economic policy decisions that have affected every single American based on a single paper that had errors so blatant that the mistakes were spotted by a sociology student? The elite policymakers then ignored all the reliable economics work of practically every reputable economist in the nation who questioned the Reinhart-Rogoff study?

Would you want a surgeon to do your brain surgery based on one new technique that had never been vetted and was seriously questioned by other surgeons, including some of the best in the field? But that is how the Republicans and some “deficit hawk” Democrats slashed spending and killed proposals to invest in infrastructure, fund research and rehire laid-off police, firefighters and teachers. God help us!

Not only political “elites,” but financial elites bought into the one paper. Bill Gross, manager of the world’s largest bond fund for PIMCO, in 2010 “warned that UK debt levels were too high, leaving gilts ‘resting on a bed of nitroglycerine,’” basing his warning on the widely cited R&R paper now under fire for “possible statistical errors.”

Gross has changed his tune: he is now criticizing efforts by Britain and much of the Euro Zone to cut debt rapidly with severe austerity measures, warning that such action risks stifling recovery. “The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term is the way to produce real growth,” he stated to the Financial Times, “It is not. You’ve got to spend money.”

Slate business and economics correspondent Matthew Iglesias writes “the academic research bolstering the austerity drive was confused, at best.” It is important to remember that the “academic research” to which he refers was one paper, one research study.

Does this mean the political and financial elites have never read the economic history of the Depression? Updated and related empirical studies of same? That they have never read Paul Krugman, Christina Romer, Joseph E. Stiglitz and a host of other prominent economists and instead chose to embrace one paper “as gospel,” not vetting it, not reading the responses to the paper from other economists when it shot out of the gate?

Incredible!

Beverly Bandler’s public affairs career spans some 40 years. Her credentials include serving as president of the state-level League of Women Voters of the Virgin Islands and extensive public education efforts in the Washington, D.C. area for 16 years. She writes from Mexico.

(Originally posted at Consortium News)

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The House of Representatives voted this morning on Congressman Paul Ryan‘s budget proposal.  It passed by a vote of 221 to 207.  The 221 yeahs were all Republican, 197 Democrats and 10 Republicans voted no.   You can read the official vote count here.  You can read the official vote count here.  Read more about the actual legislation here.

This is how the House Budget Committee describes the Republican budget plan:

Washington owes the American people a responsible, balanced budget. This is a plan to balance the budget in ten years. It invites President Obama and Senate Democrats to commit to the same common-sense goal. This budget will achieve the following:

1. Stop spending money we don’t have by cutting wasteful spending.
2. Fix our broken tax code to create jobs and increase wages.
3. Protect and strengthen important priorities like Medicare and national security.
4. Reform welfare programs like Medicaid so they can deliver on their promise.

You can read the summary here and the full plan here.

Before I give my critique of Ryan’s budget, I would like to be very clear about something.  I do not have anything against him.  I just disagree with the approach he has taken to the overall budget and Medicare.

So, I do have problems with Ryan’s budget.  They are:

1. It doesn’t go anywhere near defense spending.  Not only that, despite claiming to be supporters of “fiscal responsibility” the GOP controlled House voted to give the Defense Department more money than it requested.  From the Associated Press, “The House Armed Services Committee on Thursday overwhelmingly backed a $642 billion defense bill that calls for construction of a missile defense site on the East Coast, restores aircraft and ships slated for early retirement and ignores the Pentagon’s cost-saving request for another round of domestic base closings.”  
2. Since the Defense Department budget is off the table, major cuts will be made to other discretionary spending.  It should be noted that this part of the budget is really small and cuts to these programs will not do a lot to impact the deficit or debt.
3. The Obamacare “repeal” isn’t all it’s cracked up to be.  Sure, it gets rid of a lot of it but “Ryan’s budget doesn’t actually assume the repeal of all of Obamacare. It keeps the tax increases and Medicare cuts so that it can balance in 10 years, as top Republicans in the House promised conservatives.”  Link here.
4. It does nothing to address the sequester.  According to the Congressional Budget Office (CBO) the sequester’s impact on the economy is very real.  They looked into this and found, “In the absence of sequestration, CBO estimates, GDP growth would be about 0.6 percentage points faster during this calendar year, and the equivalent of about 750,000 more full-time jobs would be created or retained by the fourth quarter.” More on that can be found here.
5. It fails to address economic growth.  In 1992, one Clinton/Gore campaign slogan was “It’s the economy, stupid.”  That idea applies today.  A better rate of economic growth would solve a lot of our deficit and debt problems.  Louis Woodhill writes this in Forbes: ”The FY2014 Budget Resolution makes a few vague statements about economic growth, but it doesn’t promise that following Ryan’s plan will deliver a growth rate above the woefully inadequate CBO baseline, which peters out to a pathetic 2.19% rate by FY2023. This is what makes the whole exercise a suicide mission for House Republicans.”
6. Yes, we have a divided government but all the reports I have read indicate House Democrats received more votes than House Republicans and the only reason the GOP has a majority is gerrymandering (see my post on the Reform We Need for more on my view on this — and no, both sides try to do it so I don’t put all the blame for gerrymandering on the right side of the aisle).  The bigger issue, is that voters rejected the GOP budgetary priorities when they rejected the Romney/Ryan ticket.  Read more here.

While those are my basic problems with the plan, the specifics of which programs will be cut bother me a lot.  I watched Ryan this morning on the House floor talk about the differences between how Republicans and Democrats view government and I am going to address some of that now.

Ryan said, “This budget debate was constructive. It revealed each side’s priorities. We want to balance the budget. They don’t. We want to restrain spending. They want to spend more. We think taxpayers give enough to Washington. They want to raise taxes by $1 trillion—just take more to spend more. We want to strengthen programs like Medicare. They seem complicit in their demise. We see Obamacare as a roadblock to patient-centered reform. They see it as a sacred cow. We think national security is a top priority. They want to hollow out our military. We offer modernization and reform, growth and opportunity. They cling to the status quo.”

You can watch that below.

My belief is that government exists to do for us collectively what we cannot do individually.  While I do not share Ryan’s view that a balanced budget is the end all, be all of everything (to me that is a GOP “sacred cow”), I am not opposed to it.  The last time we had a balanced budget was not under a GOP administration but during President Clinton’s tenure.  Moreover, the Republicans spent a lot like drunken sailors when they had control so I am not sure what he is talking about there.  I also do not want to “hollow out our military.”  I want to make it more efficient.  I suspect if I were to talk to Ryan, he would have a similar answer to questions about Medicare — he says he doesn’t want to destroy it, he wants to save it by making it more efficient.

I do not think we should cut:

1. Education spending:  our workers compete against workers all over the globe. I would like our people to be as (or more) qualified as anyone else.   I saw an interview with Apple where they said they would love to manufacture more products in the US but we don’t have the numbers of qualified people they need to do it all.  We need more engineers, scientists, etc.  We face shortages in healthcare (nurses, techs and a variety of physician specialties such as primary care doctors and surgeons).  This is not the time to cut education spending.
2. Transportation & infrastructure spending:  Our infrastructure is crumbling.  Our highways, bridges and rail lines are so far behind other countries, it is crazy.  Repairing these systems would be a way to get large numbers of people jobs that cannot be exported anywhere.
3. Clean energy research and development.  I know, I know there have been some bad companies but the more energy sources we have, the lower the costs will be and the less dependent we will be on unstable and unfriendly regimes.
4. Programs to help the poor.  With unemployment where it is, too many people depend on food stamps, unemployment insurance and other programs to cut them off.  One of my mom’s friends (and no, Ryan has never said anything like this — as far as I know), she said “when the little squirrel cannot find a nut, he dies.”  I don’t want that to be our country’s approach to the poor.
5. Medicare — it should not be a voucher system.  You can read about my thoughts on Ryan’s plan for that here.

Watch Congressman Chris Van Hollen (D-MD) talk about the GOP budget plan.  He is also the Ranking Member of the House Budget Committee.

Originally this post was going to be solely about the Republican budget plan in the context of Ryan’s religious views. The US Conference of Catholic Bishops (USCCB) opposed Ryan’s budget last year and have expressed similar concerns with this year’s proposals.  Their opposition stems from cuts to programs such as food stamps, child tax credits and others that help the poor.  Their letters to Congress last year were in response to comments the Budget Committee chairman made:

“A person’s faith is central to how they conduct themselves in public and in private,” Ryan, the chairman of the House Budget Committee, said in the interview. “So to me, using my Catholic faith, we call it the social magisterium, which is how do you apply the doctrine of your teaching into your everyday life as a lay person?

“Those principles are very, very important,” Ryan said. “And the preferential option for the poor, which is one of the primary tenets of Catholic social teaching, means don’t keep people poor, don’t make people dependent on government so that they stay stuck at their station in life, help people get out of poverty, out into a life of independence.”  Source: the Hill.

A statement by the USCCB released yesterday laid out their case for including provisions to help the poor in any budget:

“We support the goal of reducing future unsustainable deficits, but insist that this worthy goal be pursued in ways that protect poor and vulnerable people at home and abroad,” said Bishop Stephen E. Blaire of Stockton, chairman of the USCCB Committee on Domestic Justice and Human Development, and Bishop Richard E. Pates of Des Moines, chairman of the USCCB Committee on International Justice and Peace.

“The moral measure of this budget debate is not which party wins or which powerful interests prevail, but rather how those who are jobless, hungry, homeless or poor are treated. Their voices are too often missing, but they have the most compelling moral claim on our consciences and our common resources. The bishops stand ready to work with leaders of both parties for a budget that reduces future deficits, protects poor and vulnerable people, advances the common good, and promotes human life and dignity,”

The bishops also suggested the following three principles guide lawmakers:

• Every budget decision should be assessed by whether it protects or threatens human life and dignity.
• Every budget proposal should be measured by how it affects “the least of these” (Matthew 25). The needs of those who are hungry and homeless, without work or in poverty should come first.
• Government and other institutions have a shared responsibility to promote the common good of all, especially ordinary workers and families who struggle to live in dignity in difficult economic times.

Ryan responded to the Bishops’ concerns and argued that his budget proposals neither hurt the poor nor do they violate his Catholic faith.  From Town Hall Magazine.

“Our budget incorporates solidarity by recognizing a critical role for government in providing a strong safety net for those in need. And it restores the balance between solidarity and subsidiarity by returning a lot of power to individuals, to families and to communities. We are a nation that prides itself on looking out for one another—and government has an important role to play in that. But relying on distant government bureaucracies to lead this effort just hasn’t worked.

Some Catholics seem to mistake the preferential option for the poor for a preferential option for Big Government. When you look at the results of that approach—one out of every six Americans in poverty today, many of them mired in programs whose outdated structures often act as a trap that hinders upward mobility—that’s just not consistent with how I understand my Catholic faith. We need to break down the barriers to opportunity and attack the root causes of poverty. Informed by constitutional oath and my Catholic faith, this is a moral obligation I take very seriously.”

Ryan also defended the morality of his budget in The World Over with Raymond Arroyo, EWTN:

“These programs aren’t working the way they should. One in six Americans are in poverty today. We have the highest poverty rates in a generation. What House Republicans proposed in our budget was sensible reforms  want to do is put the kind of reforms in these programs – using subsidiarity, solidarity, local control, ideas that worked when we tried them in some other areas in the 1990’s. We want to reform these programs with the idea of getting people out of poverty onto lives of self sufficiency. Right! And there isn’t a monopoly. That’s my point. I can no more claim exclusive justification for my economic and political views than a liberal can for theirs within the Church’s social teaching. This is a matter for prudential judgment left to the laity to exercise their discretion. People of good will can disagree on these things. You have these hits come at you — like that letter — but we should raise the tone of the debate. We shouldn’t just try to shoot the messenger and try to nullify the notion that there are other ways in which to implement Church teaching. That just does a disservice to the kind of debate we need to have.”

Now, I do not doubt Ryan’s sincerity in this area.  I think he does believe that his plans will help the poor and I don’t think he cares more about the rich.  I cannot say the same thing about Mitt Romney — I do believe he thinks his wealth has more to do with how great he is and not so much to do with the incredible opportunities he has had that others have not.  Yes, I am aware of and appreciate the work he has done in his communities to help others, I don’t think he is a fundamentally evil or awful person, I just think he doesn’t get it.  I have read reports that Ryan had suggested the Romney/Ryan 2012 campaign spend some time in lower income neighborhoods in the cities they visited to educate people on how their policies would be more helpful to poor Americans than Obama’s.  These ideas were allegedly shot down because the campaign did not see the value as they did not expect to get any votes in those areas.

(Side note: if these reports are true, Ryan’s idea was a great one and should have been followed.  It may not have gotten a huge number of votes in those areas, though I am sure it would have gotten some, but it would have made the ticket more appealing to a number of people who may have been on the fence.)

The bottom line, however, is that Ryan’s budgets and Medicare plans violate what I think of when I think of Jesus’ teachings.  I am all for the idea that “if you give a man a fish, you feed him for one day but if you teach him to fish, you feed him for a lifetime” but cutting off assistance to people in real need, won’t accomplish that goal.

And if you want to read more about Ryan’s views on how to help the poor and his religious ideology:

1. Op-ed “Government Must Refocus its Safety Net to Those in Need”.
2. Interview with National Catholic Register’s Charlotte Hays – Ryan: ‘We have pursued solidarity but abused Subsidiarity’.
3. National Catholic Register Op-ed:  Applying Our Enduring Truths to our Defining Challenges.
4.  Ryan’s Opening Statement at House Budget Committee hearing on reforming the safety net.

Thank you to everyone who helped with this by sending supporting materials and documents.  Also I was impressed that Congressman Ryan went out of his way to praise his staff (that’s the former Hill staffer in me talking) and with Congressman Chris Van Hollen for thanking Ryan for his professionalism.  I may disagree with him but we should be able to disagree with people while remaining civil and it seems these two men have.  Good for you.

I promise to do an analysis of the Senate Democrats’ budget proposal.

And now for something completely different… (and hopefully fun)

I write political satire as Alyson Durden for Pardon the Pundit.  I have written a number of pieces where I call Ryan a vampire.  Now, I know Ryan is not a vampire and truly hope his staff, who were most helpful when I was researching his response to Catholic opposition to his budget plans, will not be totally offended because I meant it all in good fun.

Some are:

1. Paul Ryan Denies Allegations He Is a Vampire.
2. Ryan Claims “Twilight” Success Means He Does Have a Mandate, Admits He Is a Vampire.
3. Revealed! The Real Reason Romney Picked Ryan Was to Woo the All Important “Twilight” Voters.
4. As the Markets Worry about the Fiscal Cliff, Washington Works to Reassure America it is Working to Save “Twilight”.

And here is a goofy, fake add I put together making fun of a Democratic commercial bashing Ryan for his Medicare plans.  I did send it to his staff and it has received at least one thumbs down so I do hope it wasn’t from them because I was actually trying to point out the absurdity of the idea that his goal is to kill old people.

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The Daily Banter Headline Grab from Huff Post:

Federal employees began receiving furlough notices on Friday, as the deep budget cuts known as sequestration went into effect.

More than 1 million federal employees face the possibility of unpaid time off due to the across-the-board spending cuts. While some notices are going out on Friday, the furloughs will not actually take effect until April, as the government is required to give employees 30 days’ notice.

The Democratic staff of the House Oversight Committee released a furlough notice sent to an assistant U.S. attorney on Friday, which read, “This memorandum notifies you that the Department of Justice (DOJ) proposes to furlough you no earlier than 30 days from receipt of this notice.”

“We recognize the difficult personal financial implications of any furlough, no matter how limited its length. We will make every effort to keep you informed as additional information regarding agency funding becomes available,” the letter added.

The sequester contained in the Budget Control Act of 2011 was originally intended to be so painful — $85 billion in across-the-board cuts to both domestic and defense spending — that Congress and the White House would work together to come up with an alternative plan to reduce the deficit. If they didn’t, the cuts would kick in, as they will on Friday.

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As a political writer, being pissed off about certain issues and policies is like rocket fuel. I’m not an angry guy by nature, but there’s a universe of things in politics that piss me off and, combined with an involuntary need to seek and disseminate the truth, I’m never really at a loss for topics to cover.

But the sequestration issue has been one of those rare items that frustrate me to the point of being incapable of spending time on it. When I read about sequestration, my brain seizes. The stupidity of it all simply confounds me to the point of being speechless. For me, this is a shocking and rare predicament.

It’s not even the chronic brinksmanship — the reoccurring doomsday countdowns and the Republican-manifested economic sabotage that’s behind it all. It’s not the Keynesian in me who opposes the very notion of deficit reduction during a sluggish recovery. Granted, these are both points of irritation, but the characteristic of the sequester that ought to force us all into complete apoplexy and subsequent outrage-induced catatonia is the epidemic of ignorance regarding the status of the federal budget deficit.

There are two sides to this deficit idiocy. Firstly, the completely inexcusable conflation of the deficit and the debt, and, secondly, the total failure to acknowledge actual deficit reduction. The press, and especially the Republicans, refuse to acknowledge that not only has the deficit been reduced by more than half-a-trillion dollars since 2009, but also that the deficit will continue to drop with or without the automatic cuts that appear to be inevitable by the end of the week. As a result, deficit hysteria is based on nearly unprecedented stupidity and deliberate deception. And very few players are innocent in this endeavor.

Turn on cable news and you’ll hear the words “deficit” and “debt” used interchangeably as if they’re the same thing. Not too long ago, Fox News Channel ran a segment in which they aired a clip of the resident discussing in his State of the Union address how his proposals won’t “add a single dime” to the deficit. Then, with a satisfied gotcha tone, they showed how the debt — the debt, not the deficit — has increased by $5.86 trillion since Obama took office. Therefore the president must be lying about the deficit. He’s actually spent a crapload of dimes, they said. 58 trillion of them.

The dishonesty and cynicism is astonishing, even for Fox News. This was a deliberate attempt to deceive its audience into believing the, I don’t know, deficitdebt is not only the same thing but that the president lied to the tune of $5.86 trillion dollars.

On top of the ridiculous lies and inability of too many people to use the correct word to match the numbers, when was the last time you heard anyone on cable news or the Sunday shows, much less the White House press room, note with emphasis that the deficit has been reduced by $555 billion since 2009. Let’s go through this again: the final Bush administration budget bill authorized spending for 2009, creating a deficit of $1.2 trillion by the time President Obama was sworn in. An additional $200 billion was added by Obama by the end of that year, creating a total of a $1.4 trillion deficit. From that high water mark, the deficit has steadily decreased to a projected $845 billion by the end of this year. The CBO projects that by the end of 2016, the deficit will have dropped to $433 billion, for a total of nearly a trillion dollars in deficit reduction in six years.

Here’s a fantastically disgusting example of an obvious lie about deficit reduction. Last week, the president said, “Over the last few years both parties have worked together to reduce our deficits by more than $2.5 trillion.” He’s clearly referring to cumulative long-term deficit reduction and not the year-to-year reduction. But CNS News, a right-wing outfit, claimed, like Fox News, that the president was lying because the debt has gone up. Furthermore, the author, Terence P. Jeffrey wrote:

In fiscal 2008, the federal deficit was $454.8 billion. In fiscal 2012, it was $1.2967 trillion. By this measure, President Obama did not reduce federal deficits by $2.5 trillion. He increased the annual deficit by $841.9 billion.

Needless to say, that’s a complete distortion. The 2012 deficit was $1.1 trillion. Not nearly $1.3 trillion. And, as I wrote earlier, the first deficit Obama ought to be responsible for is 2010 — not 2008 or 2009.

Ultimately, all of the dumbstupid about the deficitdebt has resulted in an American electorate which is utterly clueless on the deficit. Via JM Ashby and Steve Benen, the results of a new Bloomberg poll:

A 62% majority believe the deficit is getting bigger, 28% believe the deficit is staying roughly the same, and only 6% believe the deficit is shrinking.

In other words, in the midst of a major national debate over America’s finances, 90% of Americans are wrong about the one basic detail that probably matters most in the conversation, while only 6% — 6%! — are correct.

I think you get the idea… even though everyone else most definitely does not.

The entire sequestration debate is based on the premise that the government needs to reduce the deficit or else we’re all screwed — and debt and insolvency and Greece. Run for your lives! Thus we either have to come up with a deal or slash an additional $85 billion. Add into the mix the fact that we wouldn’t be in this situation in the first place if the Republicans hadn’t played games with the debt ceiling because of similar misrepresentations of the facts and total lies about the deficit.

Yet David Brooks and others believe that both sides are to blame for it, in spite of the fact that it was the Republican effort to sabotage the economy and, therefore, the Obama presidency, and the party’s reckless decision to use the debt ceiling as a political cudgel for the first time in history. Yeah, the both sides meme is part of the sequestration insanity. All told the sequester is a huge shit sandwich with all the trimmings — everything that’s infuriating and stupid about the current political and fiscal debate, stacked high and tasting appropriately, you know, shitty.

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The Daily Banter Headline Grab. From Reuters:

The U.S. economy could take a big hit from automatic government spending cuts even if Congress only leaves them in place for a month or two.

The cuts were meant to be so painful that they would force Congress to find a more thoughtful way to tighten the budget.

But many analysts assume they will take effect as scheduled, forcing federal offices to furlough some of their 2.8 million workers and trim spending on everything from paper clips to missiles.

It is anyone’s guess, however, how long lawmakers will be able to stomach the economic pain. The duration of the austerity measures will determine the force of the blow to the economy. Some analysts think having the cuts in place for more than a few months could trigger a brief recession.

The Congressional Budget Office said on Tuesday the cuts would translate into $42 billion less in federal spending between the beginning of March and the end of September.

If $6 billion in spending is cut in March – which would be the average decline over a seven-month period – economic growth would be stunted by roughly seven-tenths of a percent in the first quarter, said Omair Sharif, an economist at RBS in Stamford, Connecticut.

“You are going to feel the pain right away,” Sharif said.

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The Daily Banter Headline Grab. From Huff Post:

House Speaker John Boehner says President Obama should drop his proposal to avoid automatic tax increases and spending cuts at the end of the year, and instead embrace a plan outlined by Erskine Bowles — co-chair of the White House’s commission on fiscal responsibility — at a congressional hearing last November.

“The new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our ailing economy,” Boehner writes in a letter (PDF) to Obama. “Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates. On the spending side, the Bowles recommendation would cut more than $900 billion in mandatory spending and another $300 billion in discretionary spending. These cuts would be over and above the spending reductions enacted in the Budget Control Act.”

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The Daily Banter Headline Grab. From Huff Post:

With the tax-hiking proposal President Barack Obama sent to Congress on Thursday, it seems the president is finally heeding a lesson he learned in the first month of his first term.

At a press conference in February 2009, shortly before Congress passed his landmark stimulus bill with very few Republican votes, a reporter asked Obama how he would get more bipartisan agreement for future legislation.

“Are you going to need a new legislative model, bringing in Republicans from the very beginning,” asked NPR’s Mara Liasson, “getting more involved in the details yourself from the beginning, or using bipartisan commissions?

Obama responded that he had, in fact, sought GOP input from the beginning of the stimulus bill’s creation. And he said the Republicans really liked all the nice tax cuts the White House had included in its initial framework.

“I suppose what I could have done is started off with no tax cuts, knowing that I was going to want some, and then let them take credit for all of them,” Obama said. “And maybe that’s the lesson I learned.”

It’s a lesson he put to use Thursday. For weeks, congressional Republicans have complained that the president hadn’t offered a plan to avert the so-called “fiscal cliff,” but on Thursday the Obama administration finally offered a detailed proposal. Republicans are now upset: It includes $1.6 trillion in taxes on the rich, $400 billion worth of unspecified cuts to social insurance programs, and effectively unilateral authority for the president to increase the government’s borrowing limit.

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