2012 - %3, September

Is the Fed Really Buying Three-Quarters of All Treasury Debt?

| Wed Sep. 19, 2012 1:10 PM EDT

The Federal Reserve building.

Here's Mitt Romney responding to a rich donor worried that the United States is heading toward bankruptcy:

Audience member: The debates are gonna be coming, and I hope at the right moment you can turn to President Obama, look at the American people, and say, "If you vote to reelect President Obama, you're voting to bankrupt the United States."…

Romney: Yeah, it's interesting…the former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it." It's just made up money, and this does not augur well for our economic future.

Italics mine. So is this true? Is the Fed really buying three-quarters of all Treasury debt?

The short answer is no. The longer answer is that the Fed has engaged in two rounds of quantitative easing and just recently announced a third. The first one, which started at the end of 2008, mostly involved the purchase of mortgage-backed securities. Purchase of Treasury debt was fairly small. The second round, which took place in the first half of 2011, did consist mostly of Treasury debt. It amounted to $600 billion, and led to a spate of horror stories about how the Fed was purchasing 61 percent of all Treasury issues. Since then, however, the Fed has maintained a steady level of Treasury debt, and the third round of quantitative easing, like the first, is mostly focused on the purchase of mortgage-backed securities. This year, as CNBC reports, the Fed has been a modest player in the market for Treasury debt:

Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt, according to newly released data…The demand among average investors has swelled so much, in fact, that they bought more Treasurys in the first quarter than foreigners and the Fed combined.

Households picked up about $170 billion in the low-yielding government debt during the quarter, while foreigners increased their holdings by $110 billion. The Fed, meanwhile, actually slightly decreased its net holdings.

So Romney is, once again, plucking a scary number he seems to have heard from a tea party symposium somewhere and mindlessly regurgitating it to a receptive audience. But he's wrong. There was a period of about six months during 2011 when the Fed really was hoovering up a big share of all Treasury debt. But that was a one-time deal more than a year ago, and since then the big buyers of Treasury bonds have mostly been the usual suspects: foreigners and US households.

Read the full transcript of Romney's remarks at the private fundraiser.

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Romney Funder's Israeli Newspaper Buries Video Controversy

| Wed Sep. 19, 2012 12:48 PM EDT

The Israeli press gave some attention Wednesday morning to Mother Jones Washington Bureau Chief David Corn's reporting on the video of Mitt Romney at a closed fundraiser, and understandably so: The tape caught the Republican presidential candidate saying that peace between Israelis and Palestinians was "unthinkable," and he would handle the issue by "kick[ing] the ball down the field." Popular tabloid Maariv (who called Mitt "big mouth") and the left-leaning newspaper Haaretz featured Romney's remarks prominently on their front pages. 

Israel's largest circulation newspaper, however, is the tabloid Israel HaYom, which is owned by Las Vegas Sands mogul Sheldon Adelson—who attended a fundraiser for Mitt Romney in Israel over the summer and has given $10 million to the pro-Romney super PAC Restore our Future. Israel Hayom tucked a teaser about the Romney video (focused on the "47 percent" remarksin the corner of its front page and buried the full story on page 23although it got some decent real estate there:

Israel HaYom is seen as very supportive of Israel's prime minister, Benjamin Netanyahu, and his right-wing Likud party. Israeli-American historian Gershom Gorenberg notes, however, that "[O]n the Palestinians, [Romney] has not actually parroted Netanyahu; he has placed himself to Netanyahu's right. The Israeli prime minister, after all, has at least paid lip service to a two-state agreement." Then again, lip service to the two state solution is exactly what Romney has provided in public, his just speaks differently in quiet rooms.

We're Still at War: Photo of the Day for September 19, 2012

Wed Sep. 19, 2012 12:40 PM EDT

Lance Cpl. Stephan DeJesus, a rifleman with 1st Platoon, Bravo Company, Battalion Landing Team 1st Battalion, 2nd Marine Regiment, 24th Marine Expeditionary Unit, fires an M-16A4 service rifle during marksmanship training in Djibouti, Sep. 15, 2012.
U.S. Marine Corps photo by Cpl. Michael Petersheim.

It Turns Out That Mitt Romney Really Does Enjoy Firing People

| Wed Sep. 19, 2012 12:29 PM EDT

Reading a bit more through the full transcript of the Romney fundraiser, we come to this passage:

Audience member: The government in Washington right now is just permeated by cronyism, outright corruption....And I think people are fed up with that....Nancy Pelosi was supposed to give us an honest Congress and has given us just the opposite as speaker. And I think that's a campaign issue that can work well. I'm optimistic that you'll be elected president. And my recommendation would be clean house, immediately. The SEC, the CFTC are disaster areas.

Romney: I wish they weren't unionized, so we could go a lot deeper than you're actually allowed to go. Yeah.

Sadly, Romney didn't elaborate on just which civil service slackers he wishes he could fire with the stroke of a pen, but this might be a fruitful area for someone to explore further. Does he specifically want to fire lots of people at the SEC and the CFTC? Or just fire lots of low-level workers in general? Inquiring minds want to know.

And Now, the Weirdest Excerpt From the Romney Video

| Wed Sep. 19, 2012 12:15 PM EDT

You've seen all the damaging parts of the secret Romney video. Now watch and be amazed at the weirdest part:

Audience member: How are you going to win if 54 percent of the voters think China's economy is bigger than ours? Or if it costs 4 cents to make a penny and we keep making pennies? Canada got it right a month ago. Why isn't someone saying, "Stop making pennies, round it to the nearest nickel?" You know, that's an easy thing, compared to Iran. I want to see you take the gloves off and talk to people that actually read the paper and read the book and care about knowing the facts and acknowledges power. As opposed to people who are swayed by, you know, what sounds good at the moment. If you turned it into like, "Eat what you kill," it'd be a landslide. In my humble opinion.

See? This is the kind of stuff you have to put up with at these events. I mean, what the hell is this guy even talking about? It's a mystery. But whatever it is, I'll bet he thinks it's the wisdom of ages. And since Romney wants his $50,000, he has to smile and pretend it makes sense. Welcome to politics.

VIDEO: Daily Show, Colbert Report Respond to Romney's 47 Percent Comments

| Wed Sep. 19, 2012 12:01 PM EDT

President Barack Obama wasn't alone in responding to Mitt Romney's controversial "47 Percent" comments on Tuesday. The Daily Show With Jon Stewart and the Colbert Report weighed in on Mother Jones' scoop, too. Here's Stewart:

And here's Colbert (Highlight: "I hope to see you all later in the Russian f***pit."):

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Crossroads, US Chamber, and Other Dark Money Groups Notch Big Court Win

| Wed Sep. 19, 2012 11:14 AM EDT
Karl Rove.

Tuesday was a good day for Karl Rove's Crossroads GPS, the US Chamber of Commerce, and the other dark-money groups spending tens of millions to oust President Obama and elect Republicans in the 2012 elections. A federal court reversed a lower court decision from March compelling 501(c)4 nonprofit groups to reveal their donors if they run certain types of TV or radio advertisements close to Election Day—namely, issue ads that mention a candidate without urging viewers to vote for or against the candidate. From now until Election Day, dark-money groups—the bulk of which support conservative-leaning causes—can fund any type of ad they want without needing to name who's ponying up for those ads.

To paraphrase Vice President Joe Biden: This is a big effing deal. Conservative nonprofits are among the biggest spenders in the 2012 election cycle. ProPublica reported in mid-August that just two such groups—Crossroads GPS and the Americans for Prosperity—had pumped $60 million into presidential TV ads. At the time, that was more than all super-PACs combined. Indeed, for all the attention paid to super-PACs, dark-money nonprofits are the bigger political players; in the 2010 elections, nonprofits outspent super-PACs by a 3-to-2 margin, according to an analysis by the Center for Public Integrity and Center for Responsive Politics.

Tuesday's court ruling didn't completely rule out beefed-up disclosure for nonprofit groups, as the appeals court left the door open for the Federal Election Commission to revisit the disclosure rules. (That's unlikely, given the level of dysfunction over at the FEC.) But the decision dealt a stinging blow to pro-reform lawmakers and advocacy organizations that want the public to know who's funding dark-money outside groups. "The Court of Appeals' decision today will keep the American people, for the time being, in the dark about who is attempting to influence their vote with secret money," Rep. Chris Van Hollen (D-Md.), who brought the suit to shine a light on dark money, said in a statement.

The Center for Individual Freedom, a dark money-funded group that fights disclosure laws at the state and federal level, hailed the decision. "CFIF believes that the right to engage in political speech should not be needlessly conditioned upon the loss of anonymity," a CFIF attorney told the Los Angeles Times. CFIF was one of two groups that appealed a lower court decision this spring that forcing nonprofits to reveal certain donors.

Obama is Killing It on Intrade

| Wed Sep. 19, 2012 10:59 AM EDT

Is the release of Mitt Romney's secret fundraising video likely to affect the race much? Conventional journalistic wisdom says yes. Conventional political science wisdom says no. I don't have any wisdom of my own, but here's a single data point to toss into the pot. The chart below shows the Intrade trend over the past couple of weeks, and so far it appears that the video is having about the same effect as Romney's flub after the Cairo attacks. The Cairo gaffe sent Obama's odds of winning from 58% to 67% over the course of a week, and the secret video is on a similar track, boosting Obama from 67% to 69% in a couple of days. Take it for what it's worth.

WATCH: On Letterman, Obama Addresses Romney 47% Comments

| Wed Sep. 19, 2012 10:44 AM EDT

President Barack Obama appeared on "Late Show With David Letterman" Tuesday night and responded to Mother Jones' release of Mitt Romney's controversial comments at a closed-door fundraiser. Here's what Obama said about Romney's claims about the 47 percent:

Well, I don't know what he was referring to, but I can tell you this. When I won in 2008, 47 percent of the American people voted for John McCain, they didn't vote for me. And what I said on election night was, even though you didn't vote for me, I hear your voices and I'm going to work as hard as I can to be your president. And one of the things I’ve learned as president is you represent the entire country. And when I meet Republicans as I'm traveling around the country, they are hard working, family people, who care deeply about this country and my expectation is that if you want to be president you got to work for everybody not just for some.

Liberal Super-PAC Targets Koch Brothers With Attack Ads in Wisconsin and Iowa

| Wed Sep. 19, 2012 10:06 AM EDT
A protester in Madison, Wisconsin, in February 2011 holds a sign linking Gov. Scott Walker to the Koch brothers.

Liberal super-PAC Patriot Majority is taking the fight to Charles and David Koch, the billionaire industrialists and conservative political giants, in the state that helped make the Kochs the bogeymen of the left: Wisconsin.

Patriot Majority is spending a half-million dollars for two weeks' worth of TV, radio, and internet ads in Wisconsin and also Iowa, slamming the Kochs and "their special interest friends" for spending hundreds of millions of dollars to "buy this year's elections." Patriot Majority's Wisconsin ad says the Kochs and their allies want to elect lawmakers who will slash taxes on the rich and cut school funding—parts of what the super-PAC calls the "Greed Agenda."

Here's the Wisconsin ad:

Here's the Iowa ad:

Patriot Majority launched its "Stop the Greed Agenda" campaign in August to push back against the influence of wealthy conservative donors. The super-PAC picked Charles and David Koch as its first targets; future targets might include casino tycoon Sheldon Adelson, who's spent more than $60 million this election to elect GOPers this election cycle. In response, Koch Industries spokesman Phillip Ellender criticized Patriot Majority for seeking to "attack and demonize private citizens and job creators who disagree with them on the direction this country is going."

Wisconsin is especially fertile ground for ads about the Kochs. In February 2011, a prankster pretending to be David Koch tricked Wisconsin Gov. Scott Walker—who had previously never met Koch—into a 20-minute conversation in which Walker bragged of having "dropped the bomb" on organized labor with his controversial anti-union budget bill, and discussed planting provocateurs among protesting union members. Protesters outside and inside the Wisconsin state capital responded with signs saying "Walker Sucks Koch," calling him a "Kochead," and depicting him as a puppet of Koch Industries.

The Kochs and their company, meanwhile, have lent Walker plenty of financial and political support. Koch Industries' political action committee was Walker's number two donor in his 2010 gubernatorial election, and Americans for Prosperity, the nonprofit founded and funded by David Koch, spent almost $10 million to help Walker win his recall election this spring.