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Politics

Shelby Proposes $1 Trillion In Budget Cuts ‘Across The Board’

Last October, during the height of his campaign for U.S. Senate in Utah, Sen. Mike Lee (then a Republican candidate) called for a 40 percent cut in federal spending in order to balance the budget. After his opponent pointed out that the idea is “ridiculously irresponsible” and would cause “utter chaos,” the campaign backed away from Lee’s demand, and he appears not to have made it since.

Last week, Rep. Michele Bachmann (R-MN) similarly proposed outlandish budget cuts, claiming, “My staff and I sat down, we’ve looked at the federal budget, and just our first swipe across the budget, so to speak, we’ve come up with about $450 billion worth of cuts.” Of course, Bachamann has yet to offer any specifics. Sen. Rand Paul (R-KY) said he’ll introduce “a one-year, $500 billion spending cut” this month, but that remains to be seen. This week at a town hall meeting in Alabama, Sen. Richard Shelby (R-AL) one-upped Bachmann and his new Tea Party colleague:

He said in 1980, the U.S owed $909 billion but in 2010, the debt was $13.5 trillion, and that estimate is expected to hit the $23 trillion mark by 2020, unless there is change.

“This is a road to financial destruction,” Shelby said. “No family could operate like that. … We continue to borrow instead of cutting spending. The day of reckoning is coming.”

He said tough choices have to be made. Shelby said government should streamline.

I honestly believe we could cut 30 percent across the board,” he said.

That’s right. According to Shelby, the government can reduce spending by more than $1 trillion. The U.S. federal government is expected to spend around $3.8 trillion in FY 2011. In order to cut 30 percent off that, Shelby would have to come up with $1.14 trillion in savings. But according to Shelby, to achieve this lofty goal, all Congress would have to do is review and analyze programs that started 20 years ago to see if they’re still working. “We don’t know if a program we created in 1980 is still working today,” he said.

Indeed, it’s difficult to conceive of where these spending reductions would be coming from. After all, the House GOP laid out a plan last year to cut $100 billion in spending but found out once they took control in January that they could only find around $50 billion to carve out.

But what would implementing Shelby’s plan mean in practical terms? He would need “across the board” cuts — which includes Medicare and Social Security — because leaving that mandatory spending alone would require eliminating nearly all of the discretionary budget, which includes such expenditures as defense and education.

According to the St. Clair Times, Shelby didn’t offer any specific cuts. ThinkProgress inquired with his office, but they have yet to respond for comment.

Update

Shelby spokesperson Pam Simpson told ThinkProgress that she is unaware of either of Shelby’s 30 percent or 10 percent plans and said the Alabama senator wants to revert back to 2008 spending levels.


Update

,At a town hall event yesterday, Shelby called for 10 percent across the board cuts. It is unclear which reduction figure, 10 percent or 30 percent, he is officially advocating.

Politics

Sen. Shelby’s Pork Lust Forces NASA To Spend $500 Million On Canceled Rocket Program

Thanks to Sen. Richard Shelby (R-AL), taxpayers are footing a $500 million bill for a NASA rocket that the agency has no plans or desire to continue developing. The Orlando Sentinel reports that pork legislation inserted into a spending bill by Shelby earlier this year is requiring NASA to spend millions on the canceled Ares I rocket program through March, even while the agency can’t find funds to begin a much-needed modernization of the famed Kennedy Space Center at Cape Canaveral, Florida:

At the root of the problem is a 70-word sentence inserted into the 2010 budget — by lawmakers seeking to protect Ares I jobs in their home states — that bars NASA from shutting down the program until Congress passed a new budget a year later. [...]

But Congress never passed a 2011 budget and instead voted this month to extend the 2010 budget until March — so NASA still must abide by the 2010 language.[...]

The language that keeps Constellation going was inserted into the 2010 budget last year by U.S. Sen. Richard Shelby, an Alabama Republican who sought to protect the program and Ares jobs at Marshall Space Flight Center in his home state.

His office confirmed that the language was still in effect but did not respond to e-mails seeking details.

Nearly all of the money for the program will go to two defense contractors building the Ares rocket, Alliant Techsystems (ATK) and Lockheed Martin, with ATK receiving the bulk. Defense contractors have been a consistent source of financial support for Shelby’s campaigns, contributing to him at higher rates than to other politicians in his state. In particular, Shelby’s 2010 reelection campaign was the top recipient of funds from ATK’s PAC, receiving the maximum $10,000. And the company’s employees appear to have given more to Shelby than to any other politician in the 2010 election cycle.

Shelby certainly has a flair for the dramatic when it comes to extracting pork money for defense contractors in his state. In a “nearly unprecedented” move in February, Shelby placed a blanket hold on every single presidential nominees being considered by the Senate — more than 70 in total, including “top Intelligence officers at the State Department and the Department of Homeland Security as well as the number three civilian at the Pentagon” — in order to pressure to Obama administration to do the bidding of Northrop Grumman on a $40 billion contract for which they were being considered.

Politics

Flashback: Republican Members Called Obama ‘Anti-American,’ ‘Marxist,’ ‘Gangster’

In an interview with Univision last week, President Obama said: “If Latinos sit out the election instead of saying, ‘We’re going to punish our enemies and we’re gonna reward our friends who stand with us on issues that are important to us,’ if they don’t see that kind of upsurge in voting in this election, then I think it’s going to be harder and that’s why I think it’s so important that people focus on voting on November 2.”

Many conservatives took great issue with Obama’s use of the word “enemies” to describe political opponents. Tonight in Cincinnati, Minority Leader John Boehner (R-OH) will give a major “closing argument” speech in which he will attack Obama for the comment:

Ladies and gentlemen, we have a president in the White House who referred to Americans who disagree with him as ‘our enemies.’ Think about that. He actually used that word. When Ronald Reagan, George Bush, Bill Clinton, and George W. Bush used the word ‘enemy,’ they reserved it for global terrorists and foreign dictators — enemies of the United States. Enemies of freedom. Enemies of our country. Today, sadly, we have president who uses the word ‘enemy’ for fellow Americans — fellow citizens. He uses it for people who disagree with his agenda of bigger government — people speaking out for a smaller, more accountable government that respects freedom and allows small businesses to create jobs. Mr. President, there’s a word for people who have the audacity to speak up in defense of freedom, the Constitution, and the values of limited government that made our country great. We don’t call them ‘enemies.’ We call them ‘patriots.’”

Boehner’s sanctimony is truly stunning, considering that since the start of Barack Obama’s presidential campaign and through his time as President of the United States, an office for which Boehner professes much reverence in his speech, Republicans have directly attacked Obama as everything from a “gangster” to Adolf Hitler, and suggested in myriad ways that Obama is an enemy to America, or perhaps not even actually an American.

A limited collection of the worst things Republicans have said about Obama:

– Rep. Paul Broun (R-GA) was forced to apologize for “calling President-elect Barack Obama a ‘Marxist’ and comparing him to Adolf Hitler.” [11/12/08]

– Sen. Jim DeMint (R-SC) also compared Obama not only to Hitler, but also Hugo Chavez. [07/09/09]

– Sen. Richard Shelby (R-AL) questioned whether President Obama was an American, saying: “Well, his father was Kenyan and they said he was born in Hawaii, but I haven’t seen any birth certificate. You have to be born in America to be president.” [02/23/09]

– Sen. Jim Inhofe (R-OK) also questioned Obama’s citizenship, saying birthers “have a point” and that “I don’t discourage it.” [07/29/09]

– Rep. Michele Bachmann (R-MN) said she was “very concerned that [Obama] may have anti-American views.” [10/17/08]

– Rep. Trent Franks (R-AZ) called Obama “an enemy of humanity” for his pro-choice views. [09/26/09]

– Former Rep. Tom Tancredo (R-CO) called Obama “a more serious threat to America than al Qaeda,” and said he was “a dedicated enemy of the Constitution.” [07/22/10]

– Rep. Steve King (R-IA) said that the Obama administration was a “gangster government.” [11/12/09]

– Bachmann, too, accuses Obama of heading a “gangster government.” [06/10/09]

– As Republican vice-presidential nominee, Sarah Palin famously said Obama is “palling around with terrorists.” [10/04/10]

– Palin also said the president was being advised by “thugs” from Chicago. [06/10/10]

Boehner did not repudiate a single one of these comments, but has suddenly found a sense of political decorum. Perhaps the next time an elected Republican accuses Obama of trying to destroy America, Boehner can give another speech.

Update

This afternoon, President Obama said he wishes he used the word opponents, instead of ‘enemies.’ “Now the Republicans are saying that I’m calling them enemies,” Obama said. “What I’m saying is you’re an opponent of this particular provision, comprehensive immigration reform, which is something very different.”

Politics

Fed Nominee Whom Sen. Shelby Deemed Too Unqualified To Confirm Wins Nobel Prize

Richard Shelby thinks this Nobel laureate is unqualified to set monetary policy.

Richard Shelby thinks this Nobel laureate is unqualified to set monetary policy.

Earlier today, Federal Reserve Board nominee Peter Diamond won the Nobel Prize in Economics along with two of his colleagues. Yet, despite the fact that President Obama nominated this Nobel laureate to the Fed nearly six months ago, his nomination is currently being blocked by just one senator. Sen. Richard Shelby (R-AL) believes that this year’s winner of the highest honor in the economics profession is unqualified to actually set economic policy:

[U]nder an arcane procedural rule, the Senate sent Mr. Diamond’s nomination back to the White House on Thursday night before starting its summer recess. A leading Republican senator, Richard C. Shelby of Alabama, said that Mr. Diamond did not have sufficiently broad macroeconomic experience to help run the central bank. [...]

As Mr. Shelby noted, Mr. Diamond is not a specialist in monetary economics — the control of the supply of credit and the setting of interest rates — which is the Fed’s traditional purview. But of the five current governors of the Fed, only two, Mr. Bernanke and the vice chairman, Donald L. Kohn, are academic economists who specialize in monetary economics. The other three include a former community banker, a former Wall Street executive and a legal scholar.

Shelby, of course, has a history of this kind of abuse of the Senate Rules to prevent eminently qualified nominees from being confirmed. Earlier this year, Shelby briefly took over 70 nominees hostage in an attempt to strongarm the administration into awarding a $35 billion defense contract to his state — although he later lifted these holds once they became politically embarrassing.

But Shelby, of course, is only able to get away with these kinds of shenanigans because the Senate’s rules are shockingly easy to abuse. Indeed, while it is common wisdom that 60 senators are required to get virtually anything done, the reality is much bleaker — most Senate business now requires all 100 senators to consent.

The reason for this is because dissenting senators can force the Senate to waste hours or even days effectively doing nothing in order to pass a single bill or confirm a single nominee. Indeed, as a recent Center for American Progress white paper explains, there isn’t enough time in two entire presidential terms to confirm all of a new president’s nominees by the time that president leaves office:

TyrannyofTime_webcharts-01

In other words, the entire government can be hollowed out by a tiny group of senators with a vendetta. Today, Sen. Shelby thinks that a Nobel laureate doesn’t know enough about economics, so that nominee must languish without an up or down vote.  Tomorrow, another senator could disapprove of a nominee’s haircut, and that alone may be sufficient to spike the nomination.

Economy

Republicans Focus On Consumer Protection Bureau In Bid To Repeal Financial Reform

Sen. Richard Shelby (R-AL)Since the Dodd-Frank financial regulatory reform bill was signed by President Obama — officially putting into place the most significant upgrade of the nation’s regulatory structure since the New Deal — various Republicans have threatened to repeal the legislation. Yesterday, at the Reuters Washington Summit, Sen. Richard Shelby (R-AL) said that the Dodd-Frank bill should actually be reopened in order to “overhaul” the newly created Consumer Financial Protection Bureau (CFPB). “The consumer agency bothers me the most,” Shelby said. “I thought the creation of it and the way it was created was a mistake.”

Shelby’s comment comes just a few days after California’s Republican senate nominee Carly Fiorina said that the only specific program she’d cut from the budget is the CFPB. So Republicans seem to be focusing on the CFPB for the moment, but make no mistake, they want to repeal the bill in its entirety:

House Minority Leader John Boehner (R-OH): I think it ought to be repealed. [7/15/10]

Rep. Mike Pence (R-IN): We need to repeal this new Big Government program. [7/21/10]

Senate candidate Dino Rossi (R-WA): We need to repeal that bill. [7/27/10]

Sen. Jim Inhofe (R-OK): Well yeah. I’m not saying I can, but the answer is yes [I would repeal it]. [8/13/10]

Sen. Saxby Chambliss (R-GA): I’d love for it to be repealed. [7/16/10]

Rep. Michele Bachmann (R-MN): The financial reg reform bill should be repealed. It’s a disaster. [7/27/10]

The CFPB (then known as the Consumer Financial Protection Agency) was the part of the bill most vilified by Republicans during the financial reform debate, as they falsely portrayed it and its director as empowered to deny credit products to middle-class households. It makes sense, then, that they would use the Bureau as the spearhead of their push for repeal, even though the agency fixes a critical gap in the regulatory structure and is the part of the bill that will likely have the greatest tangible benefit on peoples’ daily lives.

And a repeal campaign might not resonate with the American public. According to a Gallup poll released this month, the regulatory reform bill is the only piece of legislation passed by the current Congress of which a majority of Americans approve. In fact, 61 percent say that they approve of the bill, including 62 percent of independents.

Plus, even threatening to reopen the bill, according to bank regulators, raises the prospect of more regulatory uncertainty, which Republicans are constantly claiming they want to eliminate. “I think to go back and completely reopen it now with a whole other set of question marks and uncertainties about what people are supposed to be doing, I hope people would think hard about that,” said FDIC chair Sheila Bair.

Yglesias

High Cost of Fed Vacancies

Does Senator Shelby even know about this Section 13(3) rule? I doubt it.

Does Senator Shelby even know about this Section 13(3) rule? I doubt it.

I’ve been harping on the vacancies on the Federal Reserve Board of Governors for a while now primarily because I think they’re contributing to tight money that’s stifling economic growth. But Economics of Contempt raises a different issue, namely that given the current vacancies it’s actually illegal for the Fed to use its Section 13(3) authority to engage in emergency lending to non-bank entities. The creation of any such facilities requires “the affirmative vote of not less than five members” of the Board of Governors and right now there are only four, plus the three vacancies.

Why does this matter? Well it matters because in the not-so-distant past such emergency lending was used to prevent economy-paralyzing runs in the money market world. Such runs aren’t likely to recur, but as EOC observes one could imagine something like this happening if European sovereign debt problems recur and break a mid-sized European bank or two. I would observe that more generally you never know what’s going to come down the road, and while not every problem should be met with a forceful Fed intervention it would be a disaster for the Fed to not intervene simply because Richard Shelby is being a pain in the ass and won’t bring Obama’s nominees up for a vote.

William Greider’s 1989 book on the Fed is titled Secrets of the Temple: How the Federal Reserve Runs the Country. Whatever you think of the book’s critique, the most important thing it gets right is simply to point out that the Federal Reserve is incredibly important. And yet thought it gets discussed in the business press all the time, Fed issues never make it as a big-time political issue the way Supreme Court nominations do. In this case, both the White House and the congressional leadership seem to me to have fallen into that very trap. But it’s important—very important—that these confirmations get done ASAP.

Politics

Shelby Tells ThinkProgress: ‘I Basically Agree’ With Boehner’s Metaphor That Financial Crisis Is Like An ‘Ant’

This morning, multiple media outlets including ThinkProgress noted comments made by Minority Leader Rep. John Boehner (R-OH) to the Pittsburgh Tribune-Review, in which he told the editorial board that financial reform is like “killing an ant with a nuclear weapon.” In his criticism of the scope of banking reform, Boehner appeared to be minimizing the financial crisis, which caused America to lose over 8 million jobs.

This morning, ThinkProgress caught up with Senate Banking Committee ranking member and financial conference member Sen. Richard Shelby (R-AL) outside of a fundraiser for U.S. Senate candidate Carly Fiorina (R-CA). Asked what he thought about Boehner’s metaphor for the financial crisis and the bill to fix it, Shelby said, “I basically agree with that”:

TP: This morning, it was reported that Minority Leader John Boehner said that financial reform is too broad, it’s basically like using a nuclear weapon on an ant. Do you agree with that kind of sentiment?

SHELBY: Well, I basically agree with that. I voted against it. We could have had a meaningful, substantive bill. There a few good things in it, but it’s a broad reach of power, and you got to ask a question, the real question, ‘are we going to be better off because of this legislation?’ And that’s problematic.

Watch it:

For months, bankers and their lobbyists have coaxed Republicans in both the House and the Senate to fight reform for their industry. At the outset of the legislative process, Shelby told a group of bankers that they could help kill reform if each of them gives $10,000 to Rep. Roy Blunt (R-MO), who is running for Senate. The fundraiser Shelby attended today for Fiorina was hosted by bank lobbyists, including Charlie Black, who is representing a trade group for financial firms, and Dan Meyer, a lobbyist for Goldman Sachs.

Update

In his press briefing today, White House Press Secretary Robert Gibbs said Boehner was “opening one’s mouth and removing most of the doubt that you’re completely out of touch with America.” He added, “It demonstrates how out of touch you are currently and it demonstrates exactly the type of mindset that he would bring to leading the House of Representatives.”

Economy

Shelby Calls On BP’s Tony Hayward To Resign

On CBS’s Face the Nation, Sen. Richard Shelby (R-AL) called on BP’s chief executive Tony Hayward to resign. He said he was appalled at the news that Hayward had attended a yacht race on Saturday in England in the midst of the the oil crisis, calling it the “height of stupidity.” His comments were echoed by Louisiana Republican Congressman Joseph Cao, who added BP is “out of touch”:

SCHIEFFER: You were all over the Gulf Coast region yesterday. Did you run into any yacht racing down there?

SHELBY: I didn’t but I ran into a lot of people, a lot of small medium size businesses… people that don’t have yachts but are concerned about their livelihoods and rightly so. I thought the fact that the chairman of BP had the gall, the arrogance, to go to a yacht race… in England, while all of this was going on here was the height of stupidity. And I believe myself that he should go. I don’t know how he can represent a company in crisis like BP and ignore what’s going on in the Gulf of Mexico…

CAO: I am very disappointed at how out of touch the executives at BP are. Our people are suffering tremendously down here. I just received news from a staffer of mine that a Vietnamese fisherman actually tried to commit suicide. So its a situation that is quite desperate for many thousands of people.

Watch it:

Shelby also called Rep. Joe Barton’s (R-TX) assertion that BP was owed an apology “dumb.” He also invited Barton and Rand Paul — who defended Barton — to come down to the Gulf and “see what’s happening.”

Furthermore, while conservatives have begun attacking the Obama administration for being too tough on big business as a result of the pressure on BP, Shelby pushed back and echoed progressive calls for strengthening regulators:

SHELBY: We need hands-on regulation in this area. Maybe we’ve learned some things — that we can’t take shortcuts. … A lot of it is common sense — and not let the industry run way ahead of the regulators. The regulators have got to be on top of the industry, not the industry on top of the regulators.

Economy

Shelby Blocks Cantwell Amendment Aimed At Removing Derivatives Loophole

Yesterday, Senate Majority Leader Harry Reid (D-NV) attempted to invoke cloture on Sen. Chris Dodd’s (D-CT) financial regulatory reform bill. However, due to the absence of Sen. Arlen Specter (D-PA), Sen. Scott Brown (R-MA) changing his vote, and Sens. Maria Cantwell (D-WA) and Russ Feingold (D-WI) refusing to end debate without consideration of provisions that would strengthen the bill, cloture was defeated 57-42, setting up another try today. (Sens. Susan Collins (R-ME) and Olympia Snowe (R-ME) voted in favor of cloture.)

One of the issues that Cantwell has with the bill is a loophole in the proposed derivatives regulations, first identified by Zach Carter, which allows derivatives traders to circumvent new regulations without penalty. One of the key parts of derivatives reform is the institutionalizing of central clearinghouses, which ensure that both parties have adequate collateral backing their trade. As Carter explained, “under the current bill, there is no penalty for anybody who fails to centrally clear their trades — even though the bill labels this activity illegal. What’s more, even though this behavior is illegal, the trade itself is still valid.”

Essentially, the law as written gives banks the choice of whether or not to follow the new rules, which is obviously problematic. Cantwell, along with Sen. Blanche Lincoln (D-AR), who authored the derivatives reform portion of the bill, have an amendment clarifying the language to remove this hole. But they can’t bring it up for a vote, fueling Cantwell’s opposition to the bill, because Republicans won’t let it come to the floor:

To underscore the Democrats’ point that Republicans were the ones blocking the bill, Mr. Dodd returned to the Senate floor asked for unanimous consent of the Senate to allow a vote on Ms. Cantwell’s derivatives amendment. Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, objected.

Ever since regulatory reform seemed inexorably headed for the finish line, Republicans have been objecting to consent to move any amendments that would strengthen the bill. They objected to Sens. Carl Levin (D-MI) and Jeff Merkley’s (D-OR) amendment institutionalizing the Volcker rule, as well as Sen. Byron Dorgan’s (D-ND) amendment banning naked credit default swaps.

Already, Brown has said that he will likely flip back and support cloture today, and Specter has returned to town, which should be enough to ensure a successful cloture vote. But the problem that Cantwell wants addressed is a key one and there’s no reason for Shelby to be standing in the way, unless he thinks the new laws that the Senate is considering should remain unenforceable.

Economy

With Cloture Vote Imminent, Republicans Protect Big Banks By Refusing To Allow Votes On Amendments

Senate Majority Leader Harry Reid (D-NV) is hoping to invoke cloture on Sen. Chris Dodd’s (D-CT) financial regulatory reform bill tonight, limiting the remaining debate to 30 hours and, in a perfect world, setting up a final vote on the bill for late this week. However, that plan has been all but derailed by Republicans objecting to various important amendments, preventing them from coming to the floor for a vote. Debate up to this point has been moving along at a (relatively) brisk pace, but with the endgame in sight, Republicans are stepping up to defend Wall Street and the financial services industry.

As I noted yesterday, Sen. Richard Shelby (R-AL), on behalf of a bunch of unnamed colleagues, objected to the motion to bring Sens. Carl Levin (D-MI) and Jeff Merkley’s (D-OR) amendment institutionalizing the Volcker rule to the floor. But that was just the beginning of GOP obstructionism last night.

Shelby also objected to an amendment proposed by Sen. Kay Hagan (D-NC) that would limit the number of times payday lenders could roll over a loan to a particular borrower and an amendment from Sen. Byron Dorgan (D-ND) banning what are known as naked credit default swaps. For good measure, Shelby objected to Sen. Ron Wyden (D-OR) bringing up his amendment ending secret holds, which was blocked by Sen. Jim DeMint (R-SC) last week. Watch a compilation:

These amendments would reel in some of the riskiest practices of federally insured banks and ensure fair regulation of one of the most pernicious forms of lending. Yet, Republicans won’t even allow them to come to the floor for a vote, nevermind pass.

Levin and Merkley have said that they won’t vote for cloture without receiving a vote on their amendment, so the GOP’s refusal to allow their amendment onto the floor may very well result in Democrats scuttling their own cloture attempt. “‘It does’ jeopardize the bill,” Levin said. “I’m not inclined to vote for cloture if we can’t get a vote on this.” (To be fair, Dodd has also played a role in preventing votes on amendments, publicly sparring with Dorgan over whether his amendment would ever see a vote.)

Meanwhile, as the New York Times noted, Republicans are reprising their “government takeover” talking point, used so consistently during the health care reform debate, to deride financial reform. “Increasingly, the majority seems to be doing what they did on health care now to Main Street,” said Sen. Lamar Alexander (R-TN). “It looks like another Washington takeover.”

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