No Accident Obama Chooses Words Carefully on Occupy Wall Street

The last thing President Obama and the Democrats want to do is politicize the Occupy Wall Street movement that is spreading to cities around the country, as was demonstrated by his cautious words about the growing protest movement at today's White House press conference.

The once-rapid recruitment of the Tea Party was stunted when it was revealed the movement had been co-opted by the GOP and conservative bank-rollers, like the Koch brothers. The Democrats do not want to make the same mistake with the Pavlovian protests against what the demonstrators say is corporate greed.

The media, though schizophrenic in its coverage, has tattooed the "astroturf" label on the forehead of the Tea Party, while the Occupy Wall Street movement so far remains a grassroots uprising in eyes of the press, which, for better or worse, likes to highlight the anarchist element at its core.

Here is Obama's answer to two questions on the subject by Jackie Calmes of The New York Times:

Q    Thank you, Mr. President.  As you travel the country, you also take credit for tightening regulations on Wall Street through the Dodd-Frank law, and about your efforts to combat income inequality.  There’s this movement -- Occupy Wall Street -- which has spread from Wall Street to other cities.  They clearly don’t think that you or Republicans have done enough, that you’re in fact part of the problem.

     Are you following this movement, and what would you say to its -- people that are attracted to it?

     THE PRESIDENT:  Obviously I’ve heard of it.  I’ve seen it on television.  I think it expresses the frustrations that the American people feel -- that we had the biggest financial crisis since the Great Depression, huge collateral damage all throughout the country, all across Main Street, and yet you’re still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place.

     So, yes, I think people are frustrated, and the protestors are giving voice to a more broad-based frustration about how our financial system works.  Now, keep in mind I have said before and I will continue to repeat, we have to have a strong, effective financial sector in order for us to grow.  And I used up a lot of political capital, and I’ve got the dings and bruises to prove it, in order to make sure that we prevented a financial meltdown, and that banks stayed afloat.  And that was the right thing to do, because had we seen a financial collapse then the damage to the American economy would have been even worse. 

But what I’ve also said is that for us to have a healthy financial system, that requires that banks and other financial institutions compete on the basis of the best service and the best products and the best price, and it can’t be competing on the basis of hidden fees, deceptive practices, or derivative cocktails that nobody understands and that expose the entire economy to enormous risks.  That’s what Dodd-Frank was designed to do.  It was designed to make sure that we didn’t have the necessity of taxpayer bailouts; that we said, you know what?  We’re going to be able to control these situations so that if these guys get into trouble, we can isolate them, quarantine them, and let them fail.  It says that we’re going to have a consumer watchdog on the job, all the time, who’s going to make sure that they are dealing with customers in a fair way, and we’re eliminating hidden fees on credit cards, and mortgage brokers are going to have to -- actually have to be straight with people about what they’re purchasing. 

And what we’ve seen over the last year is not only did the financial sector -- with the Republican Party in Congress -- fight us every inch of the way, but now you’ve got these same folks suggesting that we should roll back all those reforms and go back to the way it was before the crisis.  Today, my understanding is we’re going to have a hearing on Richard Cordray, who is my nominee to head up the Consumer Financial Protection Bureau.  He would be America’s chief consumer watchdog when it comes to financial products.  This is a guy who is well regarded in his home state of Ohio, has been the treasurer of Ohio, the attorney general of Ohio.  Republicans and Democrats in Ohio all say that he is a serious person who looks out for consumers.  He has a good reputation.  And Republicans have threatened not to confirm him not because of anything he’s done, but because they want to roll back the whole notion of having a consumer watchdog. 

You’ve got Republican presidential candidates whose main economic policy proposals is, we’ll get rid of the financial reforms that are designed to prevent the abuses that got us into this mess in the first place.  That does not make sense to the American people.  They are frustrated by it.  And they will continue to be frustrated by it until they get a sense that everybody is playing by the same set of rules, and that you’re rewarded for responsibility and doing the right thing as opposed to gaining the system. 

So I’m going to be fighting every inch of the way here in Washington to make sure that we have a consumer watchdog that is preventing abusive practices by the financial sector. 

I will be hugely supportive of banks and financial institutions that are doing the right thing by their customers.  We need them to be lending.  We need them to be lending more to small businesses.  We need them to help do what traditionally banks and financial services are supposed to be doing, which is providing business and families resources to make productive investments that will actually build the economy.  But until the American people see that happening, yes, they are going to continue to express frustrations about what they see as two sets of rules.

Q    Do you think Occupy Wall Street has the potential to be a tea party movement in 2012?

THE PRESIDENT:  What I think is that the American people understand that not everybody has been following the rules; that Wall Street is an example of that; that folks who are working hard every single day, getting up, going to the job, loyal to their companies, that that used to be the essence of the American Dream.  That’s how you got ahead -- the old-fashioned way.  And these days, a lot of folks who are doing the right thing aren’t rewarded, and a lot of folks who aren’t doing the right thing are rewarded.

And that’s going to express itself politically in 2012 and beyond until people feel like once again we’re getting back to some old-fashioned American values in which, if you’re a banker, then you are making your money by making prudent loans to businesses and individuals to build plants and equipment and hire workers that are creating goods and products that are building the economy and benefitting everybody.

Nowhere in his answers is there a definitive endorsement for the Occupy Wall Street movement, or even the politician's routine stock response that demonstrations are a traditional form of expressing American democracy. Instead, Obama highlighted his own agenda on questions that he was definitely prepped for before going into his press conference.

It sounds a lot like the President is walking a fine line, but it is more like he is doing cartwheels in a crosswalk, much to the delight of the protesters skeptical of Washington and politically savvy Democrats who are aware of the anti-Wall Street movement's room to grow.

Comparisons with the Tea Party aside, that movement has failed to win the support of mainstream middle class Americans hurt by the banking and finance industry's shenanigans, while the opportunity remains for the fledgling Occupy Wall Street protesters.

Bachmann Becomes Punching Bag of Mainstream Republicans

Is winning the pay-to-play Ames Straw Poll worth anything at all?

That has to be a question GOP Rep. Michele Bachman is asking tonight as she finds herself a target of barbs from everyone from leading GOP political consultants, like Mike Murphy, to the bible of mainstream Republicans, The Wall Street Journal.

If the GOP aristocracy gets its way, Bachmann will cede her flavor-of-the-month status to the sixth-place finisher in the straw poll, Texas Gov. Rick Perry, who shunned the unscientific vote in Iowa and instead announced his candidacy in a bigger Southern State (not that it mattered one bit based on his reception by Republicans in Iowa the past two days).

"I think Michele Bachmann is totally unelectable. ... I think Rick Perry is going to take her out," said Murphy, a former advisor to GOP heavyweights like Sen. John McCain (R-Ariz.), former Florida Gov. Jeb Bush and former Massachusetts Gov. Mitt Romney.    

Murphy warned on MSNBC today of "a McGovern moment" that "gives (President) Obama the election" by nominating a hardcore social conservative, like Bachmann, who plays to Tea Party and evangelical base Republicans  -- the so-called T-vangelicals. 

"As a pragmatic right wing consultant type who wants to win the election, I am concerned," Murphy said.

The Wall Street Journal, which turned on the Tea Party when it's members in Congress, including Bachmann, were willing to default on the federal debt rather than reach a deal with Obama, hit the Minnesota lawmaker over her lack of experience.

"Americans are already living with the consequences of electing a President who sounded good but had achieved little as a legislator and had no executive experience. Mrs. Bachmann will have to persuade voters she isn't the conservative version of Mr. Obama," The Wall Street Journal opined today.

Add GOP talk show host Joe Scarborough, Republican media consultant Alex Castellanos and right-wing blogger Erick Erickson of RedState.com to a growing list of conservatives who fear Bachmann cannot win.

At this rate Obama and the Democrats can sit back and just watch the GOP hierarchy duke it out with the rank-and-file T-vangelicals while focusing on Romney, who still looks to be the likely GOP nominee once the family feud is decided.

As for the Ames Straw Poll, only one candidate to win the hugely unscientific vote since its inception in 1979, has gone on to win the presidency: George W. Bush. So history, rather than Republican hysteria, may prove to be Bachmann's demise.

Asian Markets Tank: Europe and US Expected to Follow

Updated on 4:15 p.m. edt

Stock markets tanked around the world today. Welcome back 2008.

President Obama's declaration this afternoon that the nation's man-made economic crisis is "imminently solvable" failed to turn around the stock market's estimated $1 trillion one-day loss triggered by Standard & Poor's contentious decision to downgrade the U.S. credit rating.

The Dow dipped 633 points, closing at 10,811 and the S&P 500 finished down 79 or 6.7%, at 1,119.46. The Nasdaq fell 174.72 points, or 6.9%, at 2,357.69. It is the first time the Dow declined below 11,000 since November.

"No matter what some agency may say, we've always been and always will be a triple-A country," Obama said.

Depending on who you listen to, the blame goes to Standard & Poor's, the Tea Party, Obama, Speaker John Boehner or old-fashioned Wall Street greed. The most likely scenario is that all of the above cost investors a collective fortune today.

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Updated at 8 a.m. EDT

If the Dow Futures and the European and Asian markets are any indication -- and they are -- Wall Street is bracing for a really lousy opening this morning.

The European Central Bank intervened overnight to buy bonds from the wobbly governments in Italy and Spain, but the maneuver only managed to prove what smart money analysts had predicted all weekend: Investors' biggest concern is Standard & Poor's decision to downgrade the U.S. debt rating.

The global stock market rout continued in Europe where nearly midway through trading the aggregate Europe 600 index was down nearly 2%. The big three -- London's FTSE, Frankfurt's DAX and Paris's CAC-40 -- were also down significantly.

Even after the ECB's bond buying spree, Italy's FTSE MIB and Portugal's PSI were down, though Spain's IBEX saw a slight rebound.

The Dow Futures were down more that 200 points.

The European markets tanked after the stock exchanges in Asia lost about 4% of their value and trading in the Tel Aviv market was automatically suspended yesterday after it sank.

Even the decision by Treasury Secretary Tim Geithner -- the last-man standing from President Obama's original economic team -- did little to concern overseas about the U.S. economy. Geithner spared Obama a nearly impossible task of getting a replacement past partisan Republicans in a Senate confirmation process.

Since Friday, S&P Managing Director John Chambers continued to do damage control for his embattled credit rating service amid criticism from many circles, liberal and conservative, who charge the decision to lower the U.S. debt-rating was something between political chicanery and hypocrisy from an outfit with a lousy track record.

S&P cited the GOP for embracing the agenda pressed by its Tea Party wing for failing to reach a grand bargain that included tax revenues.

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And the hits just keep on coming.

The Asian markets followed the Middle Eastern stock exchanges overnight, taking a tailspin after Standard & Poor's controversial decision to lower the U.S. credit rating.

Leading the way in Asia, Hong Kong's Hang Seng, South Korea's Kospi and Japan's Nikkei were all down significantly midway through trading amid fears that the global economy was headed for a serious nose dive.

European and U.S. investors braced for more of the same once their markets open.

Some analysts blamed the world's economy for the market declines in an attempt to take the heat off of S&P, which angered the Obama administration by lowering the U.S. debt rating even after the Treasury Department discovered a $2 trillion error by the credit rating service. S&P blamed Washington's debt shenanigans for its contentious decision, but specifically cited the GOP's Tea Party agenda for failing to allow a broader deal with tax revenues.

As Markets Tank Israeli Protesters Resemble Arab Spring Not Tea Party

The Tel Aviv stock marked crashed and trading was halted today in reaction to the contentious politically driven decision by Standard & Poor's to lower the U.S. debt rating, but the protesters on the streets were not an Israeli-style Tea Party.

In a social justice movement that began as a tiny tent city meant to show the out-of-control cost of housing, more than 300,000 Israelis filled the streets of Tel Aviv, Jerusalem and elsewhere to protest growing economic disparity between the wealthy and middle class citizens of the Jewish state.

The protesters turned their scorn on right-wing Prime Minister Benjamin Netanyahu as the Tel Aviv stock market plummeted by more than 6% overnight on news the S&P had downgraded the U.S. debt rating. The Israeli market closed automatically when stocks tanked.

The stock market in Dubai also crashed, while the Saudi Arabian trading barely rebounded after a severe decline yesterday. Analysts blamed it all on the S&P action.

Investors are now bracing for declines overnight tonight in the Asian and 
European markets and many fear even more gloom and doom when the U.S. markets open tomorrow morning.

The middle-class uprising in Israel appears to have more in common with the Middle Eastern pro-democracy movement known as the Arab Spring rather than the right-wing Tea Party hysteria that S&P blames for lowering the U.S. credit rating from AAA to AA+.

The Guardian of London described it this way: "Despite Israel's relatively healthy economic growth and low unemployment, wage disparities are big, wealth and corporate power are highly concentrated, food prices have increased almost 13% since 2005 and many people spend 50% of their incomes on rent or mortgages."

A sign carried by one protester yesterday written in Hebrew and Arabic said, "Egypt is here."

It should come as no shock that a social justice movement would take root in Israel, since the Jewish state was founded as a European-style socialist market democracy.

The founding father of Israel, the intellectual revolutionary David Ben-Gurion, was expelled from Palestine by the British colonial overlords in 1915 for his socialist activities. He later tempered his personal politics, but never lost touch with his socialist roots.

"Without Hebrew labor there is no way to absorb the Jewish masses. Without Hebrew labor, there will be no Jewish economy; without Hebrew labor, there will be no [Jewish] homeland. And anyone who does anything counter to the principle of Hebrew labor harms the most precious asset we have for fulfilling Zionism," Ben-Gurion said circa 1920, according to journalist and author Tom Segev in his book, "One Palestine Complete."

The Israeli demonstrators promise a million-person march next month, if not sooner given the economic conditions. 

Markets Still Tanking? Debt Debacle a Yawn on Wall Street

Updated at 11:15 p.m. edt

China's largest credit-rating agency, Global Credit Rating Co., lowered its rating on U.S debt from  A+ to A tonight, calling the American economy a "debt time bomb."

Stateside, Moody's credit rating service said while it has a "negative outlook" on the U.S., for now, at least, it will not lower its  AAA credit rating.

Earlier Fitch, the No. 3 rating service, also said it will not lower the U.S. rating from AAA, but put Washington on notice that it's score remains under review.

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Updated at 4 p.m. edt

President Obama signed the new budget-cutting measure into law this afternoon as Wall Street saw its eighth straight day of losses and a new poll showed Americans are disgusted with the bratty behavior in the debt-ceiling fight.

The Dow fell 265 points to finish at 11,866.84. The NASDAQ closed at 2669,24 plunging 75 points, while the S&P 500 fell 33 points, ending at 1,254.05.

The next nightmare for American markets may be the loss of the AAA credit rating the U.S. has enjoyed for the better part of a century.

"While the agreement is clearly a step in the right direction, the United States, as in much of Europe, must also confront tough choices on tax and spending against a weak economic back drop if the budget deficit and government debt is to be cut to safer levels over the medium term," the credit-rating service Fitch said in a statement.

Standard & Poors and Moody's have already put the U.S. on notice that its pristine rating is at risk.

There are also fears the U.S. could slip into a double-digit recession, especially if it turns out the Tea Party-driven debt law ends up costing more Americans their jobs, as some analysts predict.

The image of elected federal officials continued to slide in the eyes of Americans fed up over the handling of the debt debate, according to a CNN/ORC International poll taken yesterday.

The poll showed 52% of respondents are opposed to the debt ceiling deal while 44% favor it --- and 77% of Americans scoffed at the behavior of lawmakers during the debate.

"When three-quarters say that elected officials are behaving like spoiled children, it's probably safe to say that there are no winners," said CNN polling director Keating Holland.

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The new budget-slashing law did little to immediately boost Wall Street and the global markets as the house-of-cards financial system sways amid tanking economies around the world, including the U.S.

The Dow Jones industrial average dipped below 12,000 shortly after the Senate voted 74-26 to pass the complicated, two-tiered measure that for more than a month gridlocked Washington, ravaged the financial markets and angered Americans already fed up with the shenanigans of their elected officials.

"Our economy didn’t need Washington to come along with a manufactured crisis to make things worse," President Obama said after the vote. "It’s pretty likely that the uncertainty surrounding the raising of the debt ceiling, for both businesses and consumers, has been unsettling, and just one more impediment to the full recovery that we need."

He added, "And it was something that we could have avoided entirely."
 
Elements of the Tea Party, seen by some observers as having been duped into carrying the water for Wall Street and corporate interests, has argued that the economy would turn around by dialing down the $14.3 trillion federal debt.

The European banking crisis, stagnant U.S. employment (with more layoffs coming as a result of the new budget-slashing debt law) and unrest in the Middle East oil patch neighborhood are among the factors behind the problems for the markets, analysts believe.

GOP & Dems Talking, But No Closer to a Debt Reduction Deal

The fate of raising the $14.3 debt ceiling will be decided behind closed doors now as the Democratic and Republican leadership engage in a final attempt to reach a deal that will keep the U.S. from defaulting on its loans for the first time in its history.

However, with a little more than two days until the default deadline, there was plenty of evidence of political gamesmanship in play, particularly between the GOP and Democratic leaders of the Senate.

GOP House Speaker John Boehner and Senate GOP leader Mitch McConnell reopened the negotiating channels with President Obama in the past 24 hours, ending a stalemate created when Boehner walked away from the table.

McConnell spoke to Obama shortly before the President summoned the House and Senate Democratic leaders to the White House this afternoon.

"We are now fully engaged, the Speaker and I, with the one person in America out of 307 million people who can sign a bill into law," McConnell said. "I'm confident and optimistic that we're going to get an agreement in the very near future and resolve this crisis in the best interest of the American people."

Senate Democratic leader Harry Reid accused McConnell of grandstanding by saying both sides were close to agreement, saying they were no closer to a deal after meeting along with House Democratic leader Nancy Pelosi at the White House with Obama.

"Republican leaders still refuse to negotiate in good faith," Reid said.  "The process has not been moved forward during this day."

In the only action today in the public eye, the GOP-controlled House voted 246 to 173 to reject a plan by  Reid that would cut the deficit by more than $2.2 trillion over 10 years and raise the debt limit automatically in three stages, but without further votes in Congress.

There still may be a Senate vote on the Reid measure at 1 a.m. tomorrow just to get it into the record as a negotiating point.

The Republicans, led by its powerful extremist Tea Party wing, passed a bill in the House yesterday that would require Congress hold another debt ceiling vote over the Christmas holidays. The Senate rejected the measure.

Democrats charge it is a purely political move meant to embarrass President Obama and boost GOP presidential candidates ahead of the 2012 elections.

Obama and the Democrats call that idea, along with a nearly impossible provision requiring passage of a balanced-budget amendment to the constitution, a non-starter.

Pelosi accused Boehner of selling out a  $4 trillion grand bargain offered by Obama by abandoning negotiations to pander to the obstructionist Tea Party Republicans.  

"He chose to go to the dark side," Pelosi said to boos from the GOP on the House floor, which only prompted her to repeat the line. "He chose to go to the dark side."

House Passes Doomed Debt Legislation; Boehner Fights for Political Life

Updated at 8:45 p.m. EDT

As promised, the Senate rejected a GOP House debt-reduction bill tonight, just hours after Speaker John Boehner pulled off a legislative victory he needed to re-ignite his leadership over his party and its stubborn Tea Party wing.

The Senate voted 59-41 to defeat Boehner's hard-fought legislation, which twice was delayed this week from being brought to the floor because the Speaker had failed to garner enough support to ensure it would pass.

The GOP-led House had passed in the House early this evening. There were 22 Republicans who opposed Boehner and voted down his measure (Politico takes a glance at who they were). A couple of hours later the Democratic-led Senate killed it.

"The bill passed today in the House with exclusively Republican votes would have us face another debt ceiling crisis in just a few months by demanding the Constitution be amended or America defaults. This bill has been declared dead on arrival in the Senate," White House spokesman Jay Carney said in a statement issue just before the Senate vote.

"Now that yet another political exercise is behind us, with time dwindling, leaders need to start working together immediately to reach a compromise that avoids default and lays the basis for balanced deficit reduction," Carney added.

Boehner's bill would have required another debt debate at the end of this year and passage of a balanced-budget amendment to the constitution, or else the U.S. would default on its bills. A constitutional amendment requires the support of two-thirds of Congress and three-fourths of the states.

Experts say it could take up to a decade to complete the process of adding a constitutional amendment.

Senate Democratic leader Harry Reid (D-Nev.) plans this weekend to bring his own bill to the Senate for a vote. If it passes, the House GOP may return the favor and reject his debt reduction measure.

And then comes the real negotiating process, where both sides may have only a matter of hours to find a compromise on how to draw the country's $14.3 trillion debt, or at agree to at least a framework that they can use to extend the talks beyond the deadline Tuesday.

"It's time to be adults," Reid said after the Senate tabled the Boehner measure.

But with three days to go before the U.S. defaults on paying some of its bills, some lawmakers think Washington is cutting it too close.

"It is very dicey at this point. I never thought we would be three days out from driving over the cliff," Sen. Mark Warner (D-Va.). told MSNBC.

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The House GOP resuscitated the political life of Speaker John Boehner, passing his dead-on-arrival partisan debt ceiling measure as the Tuesday default deadline moved dangerously closer amid fears stonewalling in Washington already cost the U.S. a nearly century-old blue ribbon AAA credit rating.

The House GOP voted 218 to 210 in favor of Boehner's two-tiered measure that would guarantee the exact same debt fight at the end of the year, and calls for a balanced budget amendment in the constitution -- two measures that the White House and democrats say are deal-breakers.

Boehner tweaked the measure and scrambled for an additional 24 hours, shaking down House GOP members trying to reach the 216 votes threshold needed to pass the measure. The delay called into question Boehner's leadership and further elevated the prominence of the Tea Party Republicans in the GOP.

In his final remarks before the vote, Boehner took aim at President Obama for failing to put on paper his own debt celing plan, but the Speaker's words easily could have been meant for his detractors in the Republican ranks.

"I stuck my neck out a mile to try to get an agreement with the President of the United States. I stuck my neck out a mile, and I put revenues on the table in order to try to come an agreement to avert us being where we are now, but a lot people in this town can never say yes," Boehner said on the House floor.

Boehner's bill will fail to get through the Senate, but even if it did pass, Preesident Obama would veto it.

For the sixth straight day, the financial markets continued their decline amid the debt standoff, increasingly blamed on the unwavering Tea Party faction which threw down the gauntlet and opposed wiping out corporate tax loopholes or restoring the tax levels paid by the richest Americans during the 1990s.

Some Tea Party leaders, like Rep. Michele Bachmann and Sarah Palin, oppose raising the debt ceiling at all.

Obama, meanwhile, urged Americans to weigh-in on the debt debate by contacting their elected officials. His campaign put out on Twitter the contacts for House lawmakers.

"If you want to see a bipartisan compromise -– a bill that can pass both houses of Congress and that I can sign -- let your members of Congress know. Make a phone call. Send an email.  Tweet. Keep the pressure on Washington, and we can get past this," Obama said. "We are now running out of time."

House Debt Vote a High Stakes Tally for Boehner

Updated at 11:45 p.m. edt

Speaker John Boehner failed to whip up enough votes tonight to pass his debt-reduction legislation, forcing the GOP boss to postpone a vote rather than see his measure go down in flames.

It was a blow to the lawmaker's reign over a House divided between mainstream Republicans and the slash and burn Tea Party faction that arguably controls the direction of the GOP at this point.

Boehner will assemble every GOP House member tomorrow morning to try to get the debt ceiling legislation back on track.

Word of a delay first came at 5:30 p.m. Washington time, some 45 minutes ahead of the scheduled House vote. A few hours later any hopes of a vote fell apart when Boehner's arm-twisting tactics behind closed doors failed to woo enough support for his measure.

Boehner was tweaking the measure late this evening, hoping that by slashing millions in Pell Grants that help poor and middle class Americans pay for college they could buy off the Tea Party.

The White House called the GOP "dysfunctional" because they refuse to compromise, labeling the delay in the vote "a pointless partisan exercise" because the bill will die in the Senate.

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Speaker John Boehner implored Tea Party Republicans today to back his debt-reduction legislation, ignoring Democrats' promise to put a stake in the heart of the measure if it makes it out of the House.

"After today, the House will have sent to the Senate not one, but two different bills that will rein in spending, increase the debt ceiling and bring an end to this crisis," Boehner said early this afternoon. "When the House takes action today, the United States Senate will have no more excuses for inaction."

The Speaker is applying pressure while he is under pressure. Throughout the debt wrangling, the Ohio lawmaker has had to negotiate with his own party's members as much, if not more, as he has had to parlay with Democrats. This vote is emerging as one of the biggest tests of Boehner's ability to hold his caucus together and pass legislation.

"Listen, for the sake of jobs, for the sake of our country, I'm asking the representatives in the House in a bipartisan way and asking my colleagues in the Senate, let's pass this bill and end this crisis," Boehner pleaded.

Boehner's debt legislation needs 216 votes to pass in the House.

Going down to the wire, the Speaker got a boost overnight from the Congressional Budget Office, which determined the Speaker's retooled legislation would reduce spending by $917 billion over 10 years, crossing the $900 billion needed to lift debt ceiling. CBO a day earlier said Boehner's plan would not cover the governments debt payments (CBO also said Senate Democratic plan fell short).

Wall Street, late to the fight, but now fully engaged, also stepped up its lobbying for a deal. More than a dozen leading American financiers also wrote to President Obama and the Congress, begging them to settle the debt deal ahead of Tuesday's deadline. They fear a defeault -- the first-ever in U.S. history -- would be a catastrophe for Wall Street and Main Street.

"A default on our nation’s obligations, or a downgrade of America’s credit rating, would be a tremendous blow to business and investor confidence -- raising interest rates for everyone who borrows, undermining the value of the dollar, and roiling stock and bond markets -- and, therefore, dramatically worsening our nation’s already difficult economic circumstances," the bankers wrote.

Boehner knows his bill is doomed no matter what happens with his House vote this evening. The Senate Democrats are going to kill it and Obama promised to veto it. Obama is adamant that the debt resolution not be a short-term incremental fix. The Boehner measure would force another debt showdown over the holidays at the end of this year.

"Republicans cannot get the short-term Band-Aid they will vote on in the House today," said Senate Democratic leader Harry Reid of Nevada. "It will not get one Democratic vote in the Senate. All 53 members of the Senate Democratic Caucus wrote to the Speaker last night to tell him they will not vote for it."

Ultimately, in the hours immediately after tonight's vote lawmakers from the House and Senate will have to decide what they can pass, and they will be forced to make a deal, or potentially send the U.S. economy into an unknown abyss.

Tea Party Resolute, but Wall Street Finally Freaks Over Debt Debacle

Wall Street and global financiers finally ended a schizophrenic stand on the debt shenanigans in Washington, soundly signaling with a nearly 200-point drop in the Dow Jones industrials today that a default will likely rip apart a weary American economy.

"Right now I'm pretty worried," said Howard Ward, a chief investment officer at asset manager GAMCO, quoted by the Associated Press.

Wall Street, like much of Washington, has been slow to catch up with the will of Americans, who for weeks have indicated in poll after poll that they want a debt compromise. They even would be willing to see revenues increase along with the slash and gut budget savings to get it done, surveys repeatedly show.

Others, like the Tea Party ideologues refuse to give an inch, and that is creating the unfathomable possibility that the U.S. might just default.

"As hours pass and the uncertainty builds, I think the market is starting to price in the potential that we might not have a solution by August 2," Channing Smith, managing director of Capital Advisors Inc., told Forbes. "Confidence in our political system is beginning to fade."

While investors worldwide finally awoke to the dangerous reality that stubborn political gamesmanship and entrenched ideological warfare truly has brought the U.S. to the brink of default, the non-partisan Congressional Budget Office piled on with more bad news.

CBO ruled debt-reduction plans by GOP House Speaker John Boehner and Senate Democratic leader Harry Reid both fall short of their projected savings.

Boehner's debt ceiling plan would cut the deficit by about $850 billion in 10 years, less than the $1.2 trillion claimed, while Reid’s plan would slash $2.2 trillion over 10 years, short of its promised $2.7 trillion in savings, CBO said.

It forced Boehner to retool his legislation, while Reid said his Senate measure could be repaired with a tweak (Reid and the Senate Democrats are unified in the defeat of the incremental Boehner plan, and Obama has promised to veto it. They do not want to revisit this again at Christmas time, as the plan calls for).

The pitiful partisan parlay seems to trigger a battle-a-moment, especially for Boehner, whose shadowboxing with President Obama has exposed a much more unwieldy circular firing squad -- one that pits the Speaker against the House Tea Party faction, at times including his deputy, House GOP leader Eric Cantor, and the mainstream Senate Republicans.

Perhaps fighting for more than just his debt legislation, Boehner decided go to the stick and take on the stonewall Tea Party faction.

"Get your ass in line," he told House Republicans today at a closed-door meeting, where he demanded his caucus vote tomorrow in favor of a retooled two-step debt reduction plan.

"I can't do this job unless you're behind me," Boehner pleaded.

(There are side fights, too: Tea Party scrapper Joe Walsh has decided to take on GOP Sen. John McCain, who has blasted the Tea Party for stonewalling and touting a minority position on lifting the debt ceiling. Walsh blamed McCain for the debt crisis).

As the impasse took a turn for the dramatic away from the public eye, it played out loud and clear on Wall Street. The escapades and impotence of America's elected officials may already have cost the nation its AAA credit rating, even if the problem is rectified, ratings experts have warned.

All the markets appeared to be jolted by the desperate debt dealings:

-Standard & Poor’s 500 fell 27.05 points, 2.03%, to 1,304.89. 
-Dow Jones average declined 198.75 points, 1.595%, to 12,302.55.
-Nasdaq composite dropped 75.17 points, or 2.65%, to 2,764.79.
-10-year Treasury note fell 7/32, to 101 7/32; yield up 2.98% from 2.96%

The standoff in Washington also was a contributing factor to the European markets, though the state of the local economies was big blame for a third straight day of losses.

The pan-European Stoxx 600 index sank 1.1% to end at 267.05. Markets from the FTSE to the Dax -- and everything else in-between -- took a hit.

Asian markets tonight (Washington time) are bracing for more of the same, expected to follow where the U.S. financial markets left off -- in the hopper.

Congress is tasked with raising the country's $14.3 trillion borrowing limit by Aug. 2 to avoid a debt default.

"Given that it is so clearly within the capacity of Congress to find the compromise that could clear both houses and be signed into law to solve this problem, I still believe that because the stakes are so high and because the American public so clearly wants this done in the right way, that in the end, it will get done," said White House spokesman Jay Carney.

Obama: 70M Social Security, Vets & Disability Checks at Risk if No Deal

Same story, different day as the debt negotiations go on.

The congressional leaders from both parties are back late this afternoon at the White House, but this time facing a stark warning from President Obama, who  says he cannot guarantee that Social Security, veterans benefits or disability checks will go out on Aug. 3 if no deal is reached by Aug. 2.

"I cannot guarantee that those checks go out on Aug. 3 if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Obama said in an interview with CBS Evening News anchor Scott Pelley set to air tonight.

Obama, who apparently has not played his lkast wild card in the high-stakes game of political poker, was asked specifically about Social Security, but said the problem is much bigger that that.

"This is not just a matter of Social Security checks. These are veterans checks, these are folks on disability and their checks. There are about 70 million checks that go out," Obama said.

As it stands, Obama won't do a short-term deal and the Republicans say they won't do a deal that includes tax increases.

There is evidence that the showdown over raising the debt ceiling is beginning to take a toll on the financial markets, as analysts blame a downturn in most of the global markets overnight, including Wall Street the past two days, on two main concerns: The growing debt crisis in Europe and the debt shenanigans in Washington.

Meanwhile, Senate GOP leader Mitch McConnell (R-Ky), is offering up a scheme that may allow Obama to raise the debt ceiling with a vote, a veto and override vote.

It is a complex plan that the Democrats will first have to review, but at face value it appears to require something that neither side has for the other: Trust.

Obama Gets Do-Over With Foreclosures by Extending Grace Period

The Obama administration finally got the wake-up call that banks are doing little to counter the housing crisis that is still destroying the American dream of home ownership.

The Federal Housing Administration today ordered banks to extend the mortgage-payment grace period for unemployed homeowners to 12 months for the FHA and Making Home Affordable Program guaranteed loans.

Housing and Urban Development Secretary Shaun Donovan said the FHA new policy was required since few lenders took it upon themselves to voluntarily offer 12-month forbearance periods to unemployed homeowners. Banks have provided a four-month grace period, which amounts to spit in a bucket in a lousy economy like this one.

"We have been disappointed that more services haven’t gone beyond the four months. The reason we took this step now is that in every case that they are doing this, that they go to that 12 months," Donovan said.

"Part of why we are doing this, is to set a single standard, is to try to push the broader market to extend their unemployment programs and forbearance programs," Donovan said.

Obama, who is finally beginning to take a hard look in the rear-view mirror, admitted yesterday during his Twitter Town Hall that his administration’s policies aimed at countering the housing crisis were "not enough."

"The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected," Obama said.

"And so we’re going back to the drawing board," he added.

Some observers believe Obama is taking another crack at easing the housing crunch as part of a re-election strategy, while others think he may have finally realized that he has given Wall Street and the banks a big wet kiss, even as their greed has turned the American Dream into a nightmare.

Lawmakers Urge Recess Appointment for Wall Street Watchdog

Elizabeth Warren has the fire in her belly, but not to run for the U.S. Senate back home in Massachusetts.

The progressive Harvard Law professor wants to run the agency she conceived and proposed after American taxpayers had to bail out greedy, unregulated Wall Street banks: the Consumer Financial Protection Bureau.

"She doesn't want to run. She wants to run the agency," said a powerful ally of Warren's, laughing off the talk of her running against Sen. Scott Brown (R-Mass.) next year.

The problem is some Republicans have already signaled that the marching orders from their Wall Street and banking industry patrons is to block her appointment, which must be confirmed by the Senate.

Now 89 lawmakers are calling on President Obama today to use the "recess appointment" to put Warren in the job -- a temporary maneuver that gets around the partisan Senate confirmation process.

"They would rather hold your appointment hostage and obstruct the process than make sure consumers have a strong advocate on their side," the letter reads.

The Wall Street watchdog agency opens its doors on July 21 and her supporters want her on the job that day. For now,  Warren, currently a Treasury Department adviser, is setting up the agency. 

Some progressives are confident Obama will act, not wanting to pull the scab off his sometimes testy relationship with the activist left, since his re-election is shaping up as a fight that will require every base vote he can find.

The Progressive Change Campaign Committee and liberal organizers have gathered another 250,000 signatures, and counting, the lawmakers said.

So What Does the Tanking Housing Market Mean?

Housing prices have fallen to 2002 levels, but the financial markets responded with an end of the month rally today that ignored the bad news.

Standard & Poor's Case-Shiller Index reported today home price index has declined for eight straight month, dropping by 4.2% the first quarter of 2011.

The Dow Jones average went in the other direction, climbing 128.06 points after a rough month.

Felix Salmon at Reuters takes a shot at deciphering the disconnect between the housing and stock markets.

"I don’t have any good answers here, except to say that if housing is getting cheaper, in many ways that’s a good thing. Sure, it’s bad for banks, and it’s unpleasant for anybody who bought a house as an investment," Salmon writes.

"But in general, the less money we Americans spend on housing every month, the more money we have to spend on more productive sectors of the economy, and the higher our disposable incomes," he concludes.

The question is how long can the financial markets climb should banks feel the heat from the housing decline?

"As snake-bitten banks have discovered in recent years, the heath of the housing market is closely correlated to the health of banks," writes Wall Street Journal blogger Shira Ovide.

One reason the market shrugged off the data may simply be that we have known for months that a double-dip in the housing market was coming.

So this is going to be a wait-and-see moment, unless of course you are the American home owner who purchased property in the past decade thinking it would be a good investment. Those folks already know what it means for them.

Cash-Flush Oil Industry Laughs At The American Motorist

We knew it would happen in this age of greed and corporate welfare.

Amid the worst gas and diesel prices since the economic crash of 2008 under the Bush administration, the oil industry today is reporting whopping first quarter profits worth 10s of billions of dollars:

-Industry giant Exxon Mobil Corp. enjoyed a whopping 69 percent increase in profits.

-Royal Dutch Shell reported its profits rose 30 percent.

-Occidental Petroleum saw a 46 percent gain in profits.

-ConocoPhillips earnings increased 43 percent.

-And last but not least, the corporation that destroyed the Gulf fishing and tourism industry, BP, reported a 17 percent increase in profits.

As Wall Street and the corporate culture of greed wallow in their gluttony, the price of gas rose for the 35th straight day for the American motorist, coming in at $3.89 for a gallon of regular and $4.14 for a gallon of diesel.

Despite the profits and the soaking American motorists are getting at the gas pump,  the Tea Party-driven GOP House majority (courageously on vacation this week) refuses to budge on wiping out $4 billion in taxpayer-funded giveaways to the oil industry

Welcome to another round of stick it to the working man and woman.