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Saturday, July 23, 2011

US debt ceiling: Senate rejects Republican 'cut, cap and balance' bill





Senate rejects Republican 'cut, cap and balance' bill

US President Barack Obama speaking in Maryland 

 "If we don't solve it, every American will suffer," Mr Obama said of the debt ceiling debate

The Democratic-led US Senate has rejected a "cut, cap and balance" bill passed by the Republican-led House.
The bill would have severely cut public spending and forced the government to balance its budget.

 The move highlights divisions within Congress as a deadline nears to raise the US debt limit, analysts say.

On Friday, House of Representatives Speaker John Boehner said a deal to avoid a possible default on 2 August was "not close".

'No agreement'

Republicans and Democrats appeared on Friday to harden their respective positions over the debt issue.

Mr Boehner was quick to quash reports that he was close to hammering out a deal with President Barack Obama.

What happens if US defaults?

Uncharted territory but two scenarios emerge
Worst case:
  • Higher interest rates on mortgages, credit cards and loans
  • Government unable to pay wages to staff, including military
  • Social security cheques stopped
  • Turmoil on international markets
Better case:
  • Default could be avoided by paying creditors, at expense of slashing spending
Sources: Associated Press, CBS, ABC


"There was no agreement, publicly [or] privately, never an agreement and frankly not close to an agreement," Mr Boehner, a Republican, told reporters following a private meeting with House Republicans.
Meanwhile, Senate Democrats complained they had been left out of negotiations, with some warning the president against an agreement that would disproportionately burden the poor by exacting big cuts to social programmes.

In a town hall-style meeting with voters in Maryland on Friday, President Obama warned that every American would feel the economic pain if Congress failed to reach an agreement to raise the US debt limit.

"If we don't solve it, every American will suffer," he said. "Businesses will be less likely to invest and hire in America. Interest rates will rise for people who need money to buy a home or a car, or go to college."

BBC News graphic

The US national debt is currently about $14.3tn (£8.8tr), fed by an annual government budget deficit that reached $1.5tr this year.

The US government's authority to borrow money is limited by statute.

Historically, Congress has raised that debt limit as a matter of routine, but this year, the Republican party - buoyed by a group of newly elected hardline fiscal conservatives in the House of Representatives - has demanded steep cuts to the US budget as the price of an increase.

Who owns the $14.3tn debt?

  • US government owes itself $4.6tn
  • Remaining $9.7tn owed to investors
  • They include banks, pension funds, individual investors, and state/local/foreign governments
  • China: $1.16tn, Japan: $0.91tn, UK: $0.35tn
  • Deficit is annual difference between spending and revenue, $1.29tn in 2010
  • Congress has voted to raise the US debt limit 10 times since 2001
Source: US Treasury, May 2011, Congressional Research Service, Congressional Budget Office

The Obama administration has warned the US risks defaulting on its debt if Congress does not raise the limit by 2 August.

In recent weeks, Republican and Democratic congressional leaders have worked with the White House to devise an agreement that would raise the limit while trimming the budget deficit, but the talks have collapsed several times.

Republicans have fiercely resisted Democratic proposals to raise additional tax revenue by closing tax loopholes that Democrats say primarily benefit the wealthy, while Democrats have vowed to protect social programmes for the elderly and poor from Republican-proposed cut backs.

In recent weeks, the White House and a bipartisan "gang of six" senators have floated proposals to trim trillions of dollars over the next decade.

The plans would cut the deficit through a mix of spending cuts and tax increases, but hardline conservative Republicans in the House of Representatives have urged Republican leaders to reject those.

Meanwhile, Senate Democratic and Republican leaders are crafting a fall-back plan that would enable Mr Obama to raise the debt ceiling unilaterally.

The Republican-led House of Representatives approved the "cut, cap and balance" plan on Tuesday of this week.

It would have reduced government spending by cut spending by $5.8tr over 10 years, capped future government spending at a certain percentage of the US economy, and amended the US constitution to require a balanced budget.

Mr Obama vowed to veto the bill, and the Democratic-led Senate on Friday rejected it, saying it would bring about steep cuts in social programmes.

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Friday, July 22, 2011

Malaysia should do away with outdated laws to meet human needs




Malaysia should do away with outdated laws

Malaysia still has the Internal Security Act 1960 -- which allows for the detention without trial of people deemed to be threats to national se-curity -- for more than half a century.

The phrase "the law is an ass" is attributed to Charles Dickens.

It originates from Oliver Twist after the character Mr Bumble is told: "The law supposes that your wife acts under your direction".

What one of the foremost classical writers of English literature actually wrote was: "If the law supposes that, the law is an ass, an idiot."

No, he wasn't using grammar akin to the Manglish being taught in our schools today. It was just that the rules of the language were not quite defined during his era.

But as then as in now, many laws can be described as asinine. They have become meaningless through the passage of time but are still in force and have become subjects of ridicule.

In the United States for example, incestuous marriages are not deemed illegitimate in the southern state of Alabama.

Another law in Mississippi states that if one is a parent to two illegitimate children, he or she can be jailed for at least a month.

In New York, adultery is still a crime and one can be fined US$25 for flirting.

It is illegal for a woman to be on the street wearing body-hugging clothes but she can go topless in public, provided she is not doing it for any business.

In Denver, Colorado, the law states that dog catchers must notify dogs of impounding by posting for three consecutive days, a notice on a tree in the city park.

Apparently it is also unlawful to lend one's vacuum cleaner to a next-door neighbour.

More than eight women are not allowed to live in the same house in the state of Tennessee because that would constitute a brothel, while Encyclopaedia Britannica is banned in Texas because it contains a formula for making beer at home.

In President Barack Obama's home state of Illinois, it is now illegal to wear sagging pants. A new law requires pants to be "secured at the waist to prevent the pants from falling below the hips, causing exposure to the person or the person's undergarments."

And there are many comical laws still in force in the United Kingdom.

For example, it is illegal to die in Britain's Houses of Parliament and sticking a postage stamp bearing the Queen upside down is deemed an act of treason.

In Liverpool, where footballers and fans tend to strip off their shirts in celebration of goals, it is illegal for a woman to be topless -- unless she is a clerk in a shop selling tropical fish.

As for the outdated legislation in Malaysia, they are anything but funny.

We still have too many laws that allow for detention without trial, contravening the fundamental principles of human rights under the Universal Declaration of Human Rights 1948 and other international conventions.

Malaysia still has the Internal Security Act 1960 -- which allows for the detention without trial of people deemed to be threats to national se-curity -- for more than half a century.

For the record, the ISA has not been used against political opponents since Najib Tun Razak took over as Prime Minister on April 3, 2009.

But it remains in force, despite calls for its repeal by the Human Rights Commission of Malaysia (Suhakam), the Association for the Pro-motion of Human Rights (Proham), the Bar Council, politicians and civil society organisations.

So do other equally outmoded and detestable edicts such as the Emer-gency (Public Order and Prevention of Crime) Ordinance 1969, the Re-stricted Residence Act 1933, Pre-vention of Crime Act 1959 and the Banishment Act 1959.

Under the EO, detainees can be held for 60 days with a possible extension of two years or more without trial.

In 2005, the Royal Commission to Enhance the Operation and Management of the Royal Malaysia Police affirmed that the EO violates international human rights and called for its repeal, saying that it had "outlived its purpose and facilitated the abuse of fundamental liberties".

The detention of six Parti Sosialis Malaysia (PSM) leaders, including Sungai Siput MP Dr Michael Jeyakumar under the EO since July 2 for "allegedly being involved with foreign and subversive elements", has again fuelled suspicions of such misuse.

The six were among 30 arrested on June 25 for allegedly supporting Bersih 2.0 and possessing T-shirts with faces of communist leaders on them.

At a time when public confidence in the police and credibility in the rule of law are being questioned, the continued detention of Dr Jeyaku-mar under the EO can only result in more rancour against the Government.

Dr Jeyakumar, the giant killer who thrashed Malaysian Indian Congress (MIC) supremo S. Samy Vellu in 2008, may be an unwavering socialist committed to his cause, but he certainly does not fit the image of a dangerous or subversive element.

Enough Malaysians, including his colleagues in the medical fraternity have vouched for his humility and integrity, his selfless passion to help the poor and his peaceful approach to politics.

It's really a bit of a stretch to associate Dr Jeyakumar with intending to "wage war against the King" and instigating the overthrow of the Government.

But if the authorities indeed have any such proof, they should charge him and the others using existing criminal laws.

In the bigger picture, Malaysia as a member of the UN Human Rights Council, is not only expected to meet the principles of human rights but also be seen to be respecting and upholding the rights of its people.

Malaysians deserve to be free from laws that breach basic standards.


Law to meet human needs

Putik Lada By Genevieve Tan

We sometimes forget a simple fact about the law: as our needs grow and change, the law can grow and change with those needs.

WHY do we have the law? In other words, what is the law essentially about?

The law is about our needs. Where there is a need, whether it is to eat or to be protected from harm, the law is created to address those needs.

When you want to understand the law, you need to first understand what is the need behind that law.

For example, Article 9 of the Federal Constitution sets out our right to move and live in any part of Malaysia. Why? Because we need to move and settle wherever we want in our country.

When we needed to protect ourselves from being robbed, the law addressed that need by creating section 390 of the Penal Code setting out the offence of robbery.

Simply put, the law accommodates human needs. With that logic, how can we say that we cannot be protected and loved by the law? How can we also say that the law does not serve us?

We sometimes tend to forget. We also sometimes forget another simple fact about the law: as our needs grow and change, the law can grow and change with those needs.

For example, in response to the public’s need to counter corruption, parliament passed the Anti-Corruption Act 1997 and subsequently replaced it with the Malaysian Anti-Corruption Commission Act 2009.

To combat money laundering and terrorism financing, the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 was passed.

Mind you, these laws were passed less than ten years ago. Hence, whether or not these laws are effective, the point remains: the law continues to change as it follows our needs.

What does this say? Like us, our Government realises that they have to respond to our needs to curb corruption or to deal with the problem of money laundering.

After all, our Government, like many other governments, serves us, the people, as we serve them. Without each other, our Government cannot work and we cannot live in this country at all.

The law creates regulations. Without the law, we are without order, stability, regulation and consequently, we would be without peace.

Every piece of legal document that you see came from a source. In Malaysia, we wrote these basic laws into a document called the Federal Constitution.

In Britain, the place from where we derived a lot of our laws, it has no written constitution.

So, if we think of this logically, there was no natural source for laws that outlawed one kind of human or another. There simply was the love to protect and support our needs.

And what was the fifth basic law that was passed by Malaysia?

This is set out in Article 5 of our Federal Constitution which states: “No person shall be deprived of his life or personal liberty, save in accordance with law.”

What was the source before that fifth basic law?

“This Constitution is the supreme law of the Federation and any law passed after Merdeka Day which is inconsistent with this Constitution shall, to the extent of the inconsistency, be void.”

This is my third article on the law and if you noticed, I repeat certain themes. Without any disguise, I see the law as a very simple thing. It even protects companies.

For example, section 222 of the Companies Act, 1965 allows a company to be protected from court proceedings if it makes such an application to the court.

Allow me to show you how much more simple and powerful it can get.

The law creates protection, officers of protection and leaders to protect the law. The law was created to love us.

Take another example, the issue of teenage pregnancy. Teenage mothers and their babies are protected by the usual criminal laws and the Child Act 2001.

However, the current laws on unwed teenage mothers do not provide adequate support systems for these mothers who are abandoned by the fathers of the babies and their own families.

As a result, many of these mothers are forced out into the streets or into shelters.

If we want to change the current laws to address the needs of unwed teenage mothers and their babies, we actually can!

Just like with the Anti-Corruption Act, we can act on our need to punish unwed fathers who have abandoned their pregnant teenage partners and update our laws to give better support to these mothers.

Let’s not forget that blame and causation is not the issue here. The issue here is that we have the power to change the law if we love our needs enough.

As public citizens, we are the reason why there are laws in the first place. As public citizens, we outnumber lawyers, ministers, doctors and accountants put together. So by numbers alone, we as public citizens have more power with the law than our professional colleagues do.

Each and every one of us is more powerful than we think. After all, we have the law that was created to love us and to address our needs.

Like in my last article Mirror, mirror on the wall, let’s just keep things simple.

Let’s use the law and ourselves to treat everyone with courtesy, morality and love.

> Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my.

When great nations go broke !





Why Not? By Wong Sai Wan

Populist decisions and fear of election backlash are the surest way a country would go bankrupt.

TAXI drivers went on strike against the issuing of more licences as part of austerity measures adopted by the government by parking their vehicles on the highway leading to the airport.

Another government had to sell off its embassies in 11 countries to raise RM300mil because it could no longer afford to keep them.

And in a third country, the government is in a tussle with its elected representatives as the country (USA) hurdles towards defaulting on its US$14.5tril (RM43.4tril) debt.

No, none of the countries referred to is Malaysia. Instead, the striking taxi drivers were in Greece, the embassy selling country is Britain and of course with such a huge debt, the third is the United States. It’s frightening to think how these three countries – at one time or another was the greatest country of a certain generation.



In ancient time, Greece was the centre of the universe for everything ranging from democracy to sciences to world conquering feats by its leaders like Alexander the Great.

But it can no longer live on its past glories as it wallows in its own Greek tragedy.

Its economy, the 27th largest in the world, is in ruins just like the things that Greece is most famous for.

Britain – once called by everyone as the United Kingdom or Great Britain – had the largest empire in the world just a century ago with colonies in every continent. Malaysia was once its colony.

The British claimed the industrial revolution as its own and is rightly credited for turning manufacturing into becoming the mainstay of the global economy.

It is now a shadow of its glory days and at best is the rabble rousers in the European Union (EU) zone. Gone are its colonies in every far-flung corner of the world that kept its super economy running.

Now the British have even got to putting for sale its huge Chancery in Kuala Lumpur because it would be cheaper for the High Commission to operate out of a commercial building.

As for the United States, wasn’t it the leader of the free world and the fatherland of industrialisation where hardwork is always rewarded with ample financial gain?

But now the country is bogged down with wars on various fronts from Libya to Afghanistan.

Yes, the United States is still the No 1 country in the world as far as the economy size is concerned but for the first time in the past century, everyone else – especially China – is catching up quickly.

The Americans owe more money to everyone than anyone has in the past.

Go to the website http://www.usdebtclock.org/ and you will get the real time feeling of how much the land of the brave and free owe the rest of the world.

It will probably take hundreds of PhD thesis to explain what went wrong for these three nations but suffice to say that successive governments did not do enough to prevent their economies from falling into such a dark hole.

On top of that politics has played a strong role in pushing these economies into even darker places.

Political opponents in these countries, especially in the United States and Greece, have been playing a game of one-upmanship on every issue.

Even now on the brink of economic ruin, these politicians continue to play the game.

As for Greece, there are enough MPs there who want to play the popular game of not going ahead with the agreed austerity drive because it is supposedly too painful for its people.

But wasn’t it their foolhardiness that brought Greece to this position in the first place.

What was the hurry for Greece to join the single Euro monetary system? It was obvious that it was not ready to meet the standards set by the technocrats in Brussels (where the EU is headquartered). The same can be said of Ireland, Spain, Portugal and many of the old eastern block countries.

It is hoped that the Greek government will stand firm against pressures from the likes of the taxi drivers and proceed with the unpopular austerity measures.

As for the United States, the rivalry of Republicans and Demo-crats is threatening to send the world into possibly the biggest depression ever as there is less than 10 days left before America defaults on that huge debt.

The Republicans, who control the House of Representatives are refusing to approve President Barack Obama’s proposed budget on the debt ceiling because they claim it would hurt the American economy (read the rich).

If they default, the entire world can look forward to decades of depression as lenders will panic and demand all nations to repay their debts immediately.

Our national debt stood at RM233.92bil last year or 34.3% to the Growth Domestic Product.

It used to be worse but some of the debts were repaid in the last decade when the ringgit gained in strength.

Yes, surprisingly our country’s debt is not a huge mountain as some people would like us to believe, but what is worrying is the lack of support for efforts to reduce it further.

A sure way of doing it is by reducing subsidies.

In 2009, it was reported that the Government spent RM74bil in subsidies ranging from social projects to energy and food. This translates to an annual subsidy of about RM12,900 per household.

Cutting back on subsidies would be unpopular with the people. The negative reaction to the floating of the premium petrol prices and the allowing of energy prices to rise are examples of the backlash the Government has gotten from its efforts to reduce its subsidy spending.

The most popular comments against Malaysia’s spending cuts has been to ask the Government to reduce the leakages before even thinking of cutting back on subsidies.

Of course, it does not help the Government’s plans that in the past there has been ample evidence of such leakages.

Something must be done to convince the people there is a total war against wastage including using unpopular means. Why not?

After all, the most important lesson from the Greece, Britain and United States stories is that being popular will only guarantee election victories that will eventually lead to financial disasters.

> Executive editor Wong Sai Wan has been through three recessions and fears the fourth the most.