"We do not have to become heroes overnight. Just one step at a time, meeting each thing that comes up, seeing it is not as dreadful as it appeared, discovering we have the strength to stare it down."
–Eleanor Roosevelt-

Jim Sinclair’s Commentary

QE to infinity as there is no other alternative that can practically be adopted without bringing on the Greater Depression, total dollar destruction and gold at $17,500.

"Gang of Six" budget talks founder in Senate
By Richard Cowan and Andy Sullivan
WASHINGTON | Tue May 17, 2011 8:22pm EDT

WASHINGTON (Reuters) – Deficit-reduction talks among a high-profile group of senators foundered on Tuesday in a bleak sign for other lawmakers trying to hammer out a deal to tackle the country’s budget woes.

Republican Tom Coburn, one of the Senate’s leading fiscal conservatives, told reporters he was dropping out of the bipartisan "Gang of Six" after months of meetings.

"We can’t bridge the gap between what actually needs to happen and what people will allow to happen," Coburn said.

A source familiar with the talks said Coburn had pushed for deep and immediate cuts to Medicare, the healthcare program for the elderly, which were rejected by other members of the group. Coburn’s proposal was described as more dramatic than a plan that passed the Republican-controlled House of Representatives last month.

Richard Durbin, the second-ranking Democrat in the Democratic-led Senate, told reporters the five remaining senators in the bipartisan group would meet on Wednesday and "I hope we can finish this and present it (recommendations) to the Senate."

While he said Coburn had made a "valuable contribution" to the group, "I am not reaching out to him" for further discussions, Durbin added.

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Jim Sinclair’s Commentary

QE to Infinity is guaranteed when the senior representatives of the people are for sale.

Senate blocks bill repealing $2B in oil tax breaks
Tue May 17, 2011 6:52 pm

WASHINGTON — The Senate blocked a bill Tuesday that would repeal about $2 billion a year in tax breaks for the five biggest oil companies, a Democratic response to $4-a-gallon gasoline that might fare better when Congress and the White House negotiate a deal later this year to increase the government’s ability to borrow.

The bill was defeated on a procedural vote. But Democrats hope to build their case to include the measure in a deficit-reduction package being negotiated by key lawmakers and the Obama administration. Lawmakers from both parties are demanding deficit reduction as part of deal to increase the government’s ability to borrow and avoid an unprecedented default on U.S. Treasury bonds.

"This bill says that even the most rich and powerful among us must do their fair share to help us reduce the deficit," said Sen. Robert Menendez, D-N.J., the bill’s sponsor. "Their high-priced lobbyists cannot stop us from doing what is fair and what is right."

Republicans and some Democrats opposed the tax increase, saying it would hurt domestic drilling while doing nothing to reduce gas prices. The vote was 52-48 in favor of the measure, short of the 60 votes needed to advance it. Three Democrats _ Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Mark Begich of Alaska _ joined with nearly all Republicans in opposing the measure. Two Republicans, Olympia Snowe and Susan Collins of Maine, voted for it.

White House spokesman Jay Carney blamed Senate Republican leaders, saying they were more interested in protecting tax breaks for profitable oil companies than finding more responsible ways to spend that money. Nonetheless, he said the vote was an important step toward repealing "these unwarranted subsidies" and said the administration would continue to pursue the matter.

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Jim Sinclair’s Commentary

Oh my, here we come. Confidence in retirement is going to crater.

At a time when the government has invaded retirement accounts of Federal employees, a Federal retirement programs look as if it will not function.

This is why QE will have to go on to infinity. There is no other option.

USPS warns of default on retiree benefits
May 18, 2011
By Jared Serbu
Federal News Radio

The U.S. Postal Service will begin to default on its financial obligations just over four months from now unless Congress takes action to relieve it of its obligation to pre-fund retiree health care accounts, its leader told lawmakers Tuesday.

USPS expects to post a net loss of $8.3 billion for this fiscal year, nearly as much as it lost last year. And with its $15 billion debt limit due to be reached this year, more borrowing is not an option, Postmaster General Pat Donahoe said in testimony before a subcommittee of the Senate Homeland Security and Government Affairs committee.

"Despite our aggressive cost cutting and revenue generating efforts, we are in serious financial predicaments today," he said. "As things stand, we do not have the cash to make the $5.5 billion prepayment for future retiree health benefits due on September 30. And we may be forced to default on other payments. This could extend to operational expenses."

USPS contends the prepayment for future retirees is a financial obligation that none of its competitors, nor any government agency, has to live with. The requirement came along with a 2006 postal reform bill that was passed when mail volume was at its peak.

Officials say the payments were also based on what was then a much larger employee base. USPS has cut its workforce by 113,000 since then. Donahoe said in written testimony to the subcommittee on federal financial management that not only can USPS not afford the future retiree health bill this year, but that without Congressional action, it’s inevitable that the organization will eventually default on payments to employees and suppliers as well.

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