I Hate Dialysis Message Board
Off-Topic => Off-Topic: Talk about anything you want. => Topic started by: Bill Peckham on January 31, 2011, 11:15:52 AM
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Congress is facing a technical vote - to raise the debt ceiling. For this fiscal year expenditures are slated to run ahead of revenues by about 3 to 2 - for every two dollars we take in in taxes we are spending 3 dollars. In order for this to work the US Treasury has to borrow money on our behalf but Constitutionally the Congress - Senate and House - has to authorize the borrowing first by raising our debt limit.
The US House has a Republican majority (spending bills, including the debt increase authorization, have to originate in the House) that is talking about not authorizing the debt ceiling increase or authorizing it only after the Senate (and the administration) agrees to include unspecified spending cuts with the authorization. The problem with the threat to not authorize the debt ceiling increase is that default would cause so many problems that the House probably won't be able to carry through on their threat of inaction. If the threat isn't credible there is no reason to discuss it, the House will have to act.
So with that background I read Senator Toomey's OpEd in Friday's WSJ
http://online.wsj.com/article/SB10001424052748703954004576089963912388314.html (http://online.wsj.com/article/SB10001424052748703954004576089963912388314.html)
Toomey is proposing his legislation to prevent default if the debt ceiling isn't raised, which if nothing else suggests that he thinks the House Republicans will follow through on their threat to not raise the debt ceiling. There appear to be some big issues with Toomey's proposed fix but he raises the basic question:
Should Congress raise the debt ceiling without conditions?
I say yes. Toomey writes "But it would be even worse simply to raise the debt ceiling without regaining control of federal spending." I think this is the core disagreement. I say we have control of our spending. We are sentient humans, with free will - the House Republicans could go through the well trod budget process and propose what ever level of spending they're comfortable with but of course that process, the hearings and reports, will reveal that cutting spending below 19% is very hard. I think the House Republicans see this ploy as an easy shortcut, a way to get their pet cuts through without the messiness of the legislative process.
I think this is a mistake and that in order to make the hard choices the country faces between tax and spending the Congress should have to go through their legislative process. It should be hard.
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The debt limit has to be raised.
There will be promises of cuts. Hopefully they will take hold and do what is right.
One of OOboma pledges over two years ago was to go through the books line by line and cut waste. Well we are still waiting. I think alot of Americans can see waste all over the place. To bad politicians cant see it.
Along with cuts in budgets we need Uniions all of them to start taking some concessions. Funny how they would rather there members be fired (less cash for the union) then to pay a tiny fraction into there pensions and healthcare funds. The union members many i have spoken to are willing to take these steps. But the unions say NO. While there membership gets smaller and smaller. Bad sensless politics.
If we dont raise the debt limit wont we loose our triple A rating?
Both sides need to do what is right for the country. Will they??
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Now this issue is coming down to the wire and if anything it appears the two parties are more entrenched against each other (http://www.washingtonpost.com/blogs/ezra-klein/post/wonkbook-the-two-parties-have-just-begun-to-fight/2011/06/30/AGXMZxrH_blog.html). Potentially this is a huge problem for people who use dialysis - there is the risk that our care won't be reimbursed for a while but I think everyone would believe that eventually the bills would be paid so I doubt this would interrupt our care. The bigger risk in my opinion would be a compromise that gave in to republican demands for cuts. For instance Medicaid cuts that are proposed that would end Medicaid payment secondary to Medicare.
Medicaid is the least well politically defended of the fed's health spending and this cut would reduce Medicaid spending by a great deal so I think the Republicans believe that at a minimum this is the sort of cut they'd need to vote for anything. Even putting aside their objection to anything that nets more revenue, given this negotiating posture - hostage taking an extortion - I think the best way forward is to rely on the 14th Amendment (http://balkin.blogspot.com/2011/06/legislative-history-of-section-four-of.html). I would support the administration if it took the position that not raising the debt limit is unconstitutional thus the administration can spend beyond what was previously authorized.
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The debt limit has to be raised. ... If we dont raise the debt limit wont we loose our triple A rating?
The scaremongers are saying this and also that we will default on our debt. No, this is like when my City Council needs to cut its budget and the first thing they always trumpet on the news is how they will have to cut libraries, schools, and public safety. It's just demagoguery. In the end, in those rare times when they don't get their way and actually do have to cut the budget, none of these cuts are ever made. They somehow find a way to fund these vital services and cut the less important ones. But if they tried to justify raising taxes for a bigger budget by trumpeting about how important it was to raise the salaries of the bureaucratic minions they wouldn't be able to get everyone "riled up."
The U.S. government has plenty of income to service the debt, pay the military, pay Social Security/Medicare, and other essential services. The 2010 breakdown was Social Security 19.6%, Military 18.7%, Medicare 12.8%, Medicaid 8.2%, and interest on the National Debt just 4.6%. That means those budget items could remain untouched (whether they should or not is another issue) and then there would still be 36% of the budget that could face cuts. That does put the budget-makers in a serious quandary, but it doesn't automatically mean we will default on our debt.
Failing to raise the debt limit means ONLY that the government could not issue more debt net of any debt that is retired. As long as the interest on the Federal debt is payed first (remember, it's merely 4.6%), then there is no default. The rest of the pie can then go to everything else--it's just that the pie will finally stop growing unceasingly and some really hard decisions will have to be made. (Just like every family in America has to do when the paycheck doesn't cover the outgo.)
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A little more than 30 years ago we were the largest creditor nation in the world and we have flipped to become the largest debtor nation in the world by far. If anyone thinks that we can continue to spend on borrowed money, that is simply nuts. Look out Greece, wait till America begins to default not just because of the upcoming debt ceiling vote, just the trend of an out of control government hell bent on putting us over the edge. That in the long run will be the biggest danger to dialysis patients when the system itself breaks. If we think that raising the taxes on the rich will cure out of control spending, that makes even less sense since it will only send more jobs over seas reducing tax revenues in the long and short run. Perhaps one day, we can look at historical data for what is the right way to proceed.
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@Hemodoc, no one thinks our financial woes are going to be solved only by raising taxes on the rich. But let's talk seriously about closing some of those tax loopholes. And how about farm subsidies...let's cut those. Most families who have budgetary woes look at both sides of the equation, ie spending and revenue. Loads of families not only cut back on what they spend, but they also take on extra work to increase revenue. Maybe they start charging rent from their college aged kid who lives in the basement. Maybe mom goes out to work now that the kids are grown. Maybe dad puts in for extra hours. Why can't the gov't do the same? Why do people like John Boehner insist that the only vehicle through which we can balance the budget is to cut spending? That seems so inefficient.
I balk at statements declaring that the government is "hell bent" on "taking us over the edge." Are you saying that Congress is working now and has been working in the past toward reducing the USA to penury? That's an extraordinary statement.
@willis, I don't know about you, but I live in a town where we have definitely seen the results of cutbacks and not just "demogoguery." My husband is a city attorney and has had to personally lay off scores of city workers because of budgetary problems. We live at the end of a cul-de-sac, and for two years, our town has had to cut back on de-icing the roads during the winter because of the cost of salt, so getting onto the main road is treacherous. Don't even think about walking; I've slipped several times on the ice. We have a local organization called AID, Association for Individual Development, which is a state sponsored charity that helps disabled adults in housing and employment. They've lost a million dollars of funding. Only now has my brother-in-law found appropriate housing; he is 45 years old. Such cuts may not affect you, but it certainly affects a lot of people who have no voice.
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Oh, and btw, how about ending tax-exempt status for churches/religious groups?
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Oh, and btw, how about ending tax-exempt status for churches/religious groups?
Sure, just as soon as we do the same for all 501c3 tax exempt corporations. Will that save America? In the health care realm, it is the tax exempt corporations such as Kaiser which offer the best outcomes and value for our money. Getting rid of churches and non-profits ain't going to solve our ghastly spending and welfare mentality in this nation. At one time, America had common values of hard work and taking care of our own, but not anymore. We are in many ways already in a worse financial mess than Greece, it is just that no one has yet called in our chips yet.
I would point out that the money that I give to my church is already out of monies on which I have paid the taxes, nor do I claim a tax exemption for them as I am allowed but decline. I render unto Caesar what is Caesar's and unto God what is God's and I don't ask Caesar to subsidize what I have given to God. Our pastor spends a great deal of time working to support his family since the church is too small at this time to give him a full time salary, nor does he have any health insurance for himself or his family. What part of making this church a taxable institution is going to help save America? Sadly, few folks understand the reason why no one in this nation until 1984 taxed any part of the church. In short, up until Ronald Reagan on January 1, 1984 began withholding social security taxes, this nation had believed taxing the churches was taxing God from whom we gather our blessings. Obviously, that is the minority view at this point. I readily wonder why so many people continual call upon God to bless America when at the same time they run away from God and His decrees. You can't have it both ways.
Yes, I do believe our government is hell bent on bankrupting this nation just as all prior democracies over the history of democracy have so done when the voters realize that they can vote to raid the treasury. That is why our founding fathers refused to engage a democracy, choosing a republic which is based on the rule of the law, not on the rule of the majority as we have today. Anything short of balancing our budget and cap spending will fail to solve our insolvency. Spending 42 cents of every dollar that is borrowed is just an astonishing testimony to how far we have gone off the deep end already. I am actually quite pessimistic that Washington D.C has the courage to do what is needed to bring the situation to an acceptable outcome. Collapse of the system is a much greater danger than any so called Republican spending cuts. Folks have quickly forgotten the $500 Billion in Medicare cuts from the so called Affordable Care Act. Sorry, but I am quite pessimistic that America any longer has the common values needed to overcome this mess we are in from lavish spending over the last 100 years. Continuing on the same course will eventually be much more painful than taking the bull by the horns and making the corrections needed today. If folks believe that we can tax and spend our way to prosperity, good luck is all I have to say to that approach.
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@willis, I don't know about you, but I live in a town where we have definitely seen the results of cutbacks and not just "demogoguery."
:rant;
I certainly didn't mean to imply that there haven't been cutbacks in services. What I meant by the demogoguery statement is that politicians on both sides always cast things in the worst possible light when pushing for things like tax increases. That gets their base riled up and hitting the phones. Then they pretend to compromise, falling back to their original (secret) position, and claim victory for saving the schools (or whatever) that were never in danger in the first place.
We are seeing that now for example when discussing Rep Ryan's plan. It's getting "demogouged" to death. No one else has been brave enough to just say, look here, I've drawn up a plan--not a law--let's just start the discussion. But then opponents of Ryan's party don't offer their own plans or even bullet points to discuss. Rather, they get on Meet the Press and lie about the plan, saying things like those evil Republicans want to take away senior's Medicare and Social Security. But that's not in the plan. The proposed changes will not and do not effect ANYONE already on Medicare or Social Security or those older than 55.. It's only talking about how to change the programs for those NOT YET on these programs. To say otherwise is demogoguery (or a less polite way to say that...B.S.)
Then we have the old Washington trick of automatic budget increases. So say HHS has a program that provides heating-fuel subsidies to the aged that has a 10% annual automatic kicker. But some brave Member of Congress proposes that we stop the kicker and only raise the program's budget by 5%. Then the screams come out: YOU'RE CUTTING THE BUDGET! YOU'RE FORCING OLD PEOPLE OUT ON THE STREET SO THEY CAN FREEZE!!" But nothing is being CUT, they are getting a 5% INCREASE. Only in Washington can that be called a "cut." More professionally polished political B.S.
I think, if things were so great, say in 1998, why don't we just tell EVERY department in the Federal Government to pull out their 1998 budget, apply an inflation factor perhaps, and insist they make it based on that amount. If Bush and Obama have really screwed things up so bad, let's just print up a little fiscal time machine and start over.
:rant;
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@MM And how about farm subsidies...let's cut those.
Cutting the people who feed us and the world is not the way to go. If we truly have a depression like before we won't have the small farms of the 30's to fall back on. We would starve. Cutting off the farmers we have left is not that answer. You think food prices are high now...... just wait.
I saw a thing on the news on how this family was being cut Medicaid..... they were watching a big screen TV and I counted 3 cell phones. Your tax dollar at work.
Seriously, we have a long way to go to be poor. If we have another depression I think we will all have SHOES.... 7 pair each!
Just no food.
My friend went down South to help with the Red Cross and floods and ended up going home because all the CHURCHES and FAITH BASED Organizations were already there and helping. Giving and Giving and Giving.
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Wow there is a lot to unpack here. If there wasn't so much at stake it would be interesting watching it unfold but there is a lot at stake, which is why I think the smart way forward is to take the 14th Amendment option. There is no provision in law for the Treasury to pay some bills and not others. Money we owe is due to previously passed legislation and is a contractual obligation. Willis I think your numbers are off but aside from that revenue does not come in proportionally throughout the year - it comes in waves and the big April wave has passed.
Here is a summary of the Ryan proposal:
Medicare
- Prevent a scheduled 29.5% Medicare physician pay cut from occurring in 2012 and prevent further pay cuts through 2021. The plan does not specify how to pay for the changes.
- Close enrollment in traditional Medicare starting with people who turn 65 in 2022. Instead, these seniors would receive vouchers indexed to inflation and based on age, income and health status, to purchase private insurance from health plans.
- Increase Medicare's eligibility age by two months per year starting in 2022 until it reaches 67 in 2033.
Medicaid- Turn federal Medicaid funding into block grants starting in 2013. The grants would grow based on inflation and state populations.
- End Medicaid payments for acute care and dual-eligible beneficiaries starting in 2022.
- Stop Medicaid funding from automatically increasing during a recession.
Health Reform Law- End the law's requirement for individuals to have health coverage.
- Rescind a Medicaid expansion expected to cover 16 million people.
- Repeal health insurance exchanges and coverage subsidies.
- Repeal tax credits for small employers that offer health insurance.
- Retain hundreds of billions in Medicare cuts in the reform law.
- End the process of closing the Medicare prescription drug benefit's coverage gap.
- Repeal the Medicare Independent Payment Advisory Board.
Source: Congressional Budget Office analysis of House Republican budget proposal, April www.cbo.gov/ftpdocs/121xx/doc12128/04-05-ryan_letter.pdf (http://ihatedialysis.com/forum/www.cbo.gov/ftpdocs/121xx/doc12128/04-05-ryan_letter.pdf)
As far as saying Ryan's plan will not effect anyone who is now 65, that isn't even a little bit true. Ryan's plan slashes Medicaid now; the elderly are a huge part of Medicaid spending. Ryan's plan would cut the funding for the poorest of the elderly in 2022- those that are Medicare Primary and Medicaid secondary.
But even if you put aside the cuts to Medicaid effect on Medicare, it is absolutely true that Ryan's plan would, over time, harm today's elderly. Consider a 70 year old using dialysis today, Medicare primary, secondary through his past employment and let's assume he is going to live another 20 years. In 10 years the Medicare pool will start to shrink so his access to care will decline. That's the way insurance works - the rate you pay is due to the size of your insurance pool. Ryan's plan takes the largest insurance pool with the lowest per procedure cost and breaks that pool into smaller pools. It will cause per treatment costs to increase. No insurer, a fraction of the size of Medicare is going to be able to pay anything like Medicare's allowed rates.
This will be a boon to providers. DaVita will be paid a lot more per treatment by people who now 55 and in 10 years will need to buy private insurance and join a relatively small insurance pool. And because Medicare, post 2022, has fewer beneficiaries, our now 80 year old will have fewer options as providers opt out of Medicare. Providers will see Medicare as a dying revenue source that is painless to ignore. And should our 70 year old need to move into a skilled nursing facility it is not at all clear where under the Ryan plan funding for his care will come from since Medicaid for dual eligibles has ended. The other thing I've not seen addressed is who is policing the healthcare market without Medicare? Under what authority would a state survey a medical facility? What would dialysis be like if there were no conditions of participation putting some kind of floor under the provision of dialysis?
Willis you asked where is the Obama plan if Ryan's plan is unworkable? It's in law. It's the Affordable Care Act. Ryan counts the 500 billion in ACA savings too but those are savings that were passed and then used in the last election to frighten seniors. Comparative Effectiveness Research and the Independent Payment Advisory Board were not scored as saving money by the CBO but if they are allowed to work they will improve the efficiency of the system. There are actually about a dozen pilots and investments, for instance electronic medical records, and Accountable Care Organizations that could improve care and efficiency that were passed as part of the ACA. When some of the pilots work or investments pan out we should build on them, and when some of them don't we should try something else. We have the option of incremental change. We have the option of keeping Medicare as a defined benefits plan.
Right now our revenue problems are greater than our expense problems. Revenue and Expenses should be between 19 and 20% of GDP by historic standards. To get there you'd need $3 to $4 of new revenue for every $1 to $2 of cuts. To me the equivalent situation would have been if in 2006 the new Democratic Congress refused to increase the debt limit unless Bush agreed to a carbon tax and a VAT tax without any Medicare or SS benefit reductions. I'm not sure I can imagine what the reaction would have been among Republicans but I think if the House held firm Bush would have gone the 14th amendment route. I think Obama should take that option today.
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I think, if things were so great, say in 1998, why don't we just tell EVERY department in the Federal Government to pull out their 1998 budget, apply an inflation factor perhaps, and insist they make it based on that amount. If Bush and Obama have really screwed things up so bad, let's just print up a little fiscal time machine and start over.
If you use 2001, the last time we had a budget surplus, entitlement and discretionary spending would be about the same as a percentage of GDP. We'd have $500 billion more in revenue and we'd need to cut defense and "security" by about 80%.
Willis that's a great idea!
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@ Willis, I am under 55 and I don't want a voucher system tarted up as Medicare, thank you very much. And I disagree that no one in Washington is working to find solutions. Just because Ryan's plan is cruel and unworkable and NOT what the American people want doesn't mean that there are not other discussions going on. And Bill is right...there IS another plan, and it is law, and it is the Affordable Care Act. Even the GOP themselves are stepping back from Ryan's plan.
I asked my husband just how budget cuts affected the city for which he is an attorney. He told me that they laid off 10% of the city's workforce, both union and non-union. They are not hiring to replace firemen, police, etc who retire. There is now only one firetruck per two firehouses. The City Council has cut to the barest bones because they don't want to raise taxes, but they've come to the conclusion that there are just no more spending cuts to be had. So they are doing weird things like fining people $500 for driving with their stereos too loud, I kid you not.
@ Rerun, farmers don't feed us, agricorporations do. We could all afford to cut back on what we eat in this country. Most of it is crap, anyway, and the fertilizers they use here in the midwest flow down into the Mississippi and into the Gulf of Mexico to create the biggest dead zone yet. Those waters are the livelihoods of shrimpers and crabbers that feed us, too. Farm subsidies are all too often given not to just the cherished small family farmer but to the big agricultural corporations. More corporate welfare.
That's great that your friend found so many faith-based volunteers in hardstruck areas who were helping. Charity is wonderful; I have a long list of charities to whom I give regularly. But would you trust your church to fund your dialysis treatments? Charity is not always sustainable, nor is it always there when you need it.
@Hemodoc, At one time, America had common values of hard work and taking care of our own, but not anymore. Take this statement. How does hard work and "taking care of our own" work for a dialysis patient? What does this even mean? I've worked hard all my life, both in paid employment and by being a stay-at-home mom to look after my disabled son. But that's not going to innoculate me against the whims of bad fortune, and one day in the not too distant future, I'm going to have to depend on the American taxpayer to pay for treatments to keep me alive. That so sucks bigtime that I can't find better words to describe the bigtime suckiness of it all.
I firmly agree with you in questioning why we ask God to bless America while our society is so un-Christian. We are supposed to look after each other, not look after only "our own", whatever that means. Why can't we look after our fellow Americans? When I read here on IHD how much our chronically ill members are suffering financially because they are ill and cannot work, why don't they get more help from their neighbors? Why do we, in this supposedly God-blessed country, allow any one of our fellow Americans to fall into bankruptcy because of illness? Why do we go to church yet let our fellow citizens go hungry or refuse to help pay for their health care? Aren't the poor supposed to be bless-ed? We sure don't bless them. Instead, we puff ourselves up in righteous indignation and yell about "personal responsibility", which is code for "you allowed yourself to become ill or poor or whatever, so screw you."
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I agree completely with Brad Delong, Obama and the Dems are not adept at politics
http://delong.typepad.com/sdj/2011/06/this-is-very-bad-barack-obama-fail-department.html (http://delong.typepad.com/sdj/2011/06/this-is-very-bad-barack-obama-fail-department.html)
I wasn't able to just cut and paste the Delong post because of formatting issues but follow the link.
I think that the story coming out (http://rortybomb.wordpress.com/2011/06/30/republicans-reject-the-republican-offer-on-deficit-cutting-mix-or-democrats-propose-the-aei-plan-on-tax-increases-vs-spending-cuts/) tells me that the Republicans don't care about the debt and Obama's negotiating has already given too much ground.
(My NxStage is in the car and my Mom should be landing in about an hour ... I'm internet free for the weekend I'm not sure if it's :bandance; or :stressed; but I leave it to you guys to figure out the situation in DC)
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Actually, this can be done very easily: stopping all Bush and Obama tax cuts and tax credits and bringing all our troops home from the middle east. This can be done when a high propportion of GOP candidates are defeated in the 2012 election. Meanwhile, just have a temporal lift on debt limits.
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Sorry one last thing... the federal Budget is nothing like a house hold budget and it is nothing like running a business. And the situation in the US nothing like the situation in Greece. But if I had to put the situation into household financial terms then I would say that a super majority of Americans would borrow money at 3 or 4% to put a child through college, support a parent or niece, invest in the family and keep assets in good working order. And a super majority of Americans would borrow money rather than doing anything to their credit score that would increase an incredibly low cost of borrowing.
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Government Farm Payments do not go to BIG corporate farms. The Payment Limitation Rule Adjusted Gross Income stopped all that. But, the media keeps harping on that so the myth goes on. Once in a while a payment slips out to one of the Hilton's but we get it back.
We don't want our food supply to be like our Oil Supply....... coming from foreign interests who can then control what and when we eat.
Farming is not easy and it does not pay well. Farmer's Kids do not want to farm. It is scary.
No Farms No Food.
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One last thought for hemodoc. If your church is too small to support a pastor and his family, then why do you not do the Christian thing and support his family instead of making him rely on a salary? And if we had universal health care, your pastor wouldn't have to worry about health insurance for him and his dependents. But no, we can't have universal health care/single payer system because that would mean Mr. Thiry wouldn't get to ponce around in his costumes in his new million dollar corporate facility.
I passed four "mega-churches" today on my way to the market. These places are enormous. Why should they not pay any tax, at least property tax to the small city in which I live? It's not just our federal government that is struggling under debt, it is also our local governments. Our property taxes are outrageously high, and 95% of it goes to fund our public schools. Why should these stonking great churches not have to contribute to our city government? Why should they be granted tax exemptions? Why shouldn't they pay contributions (taxes) to the efficient running of our town and our public school system?
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One last thought for hemodoc. If your church is too small to support a pastor and his family, then why do you not do the Christian thing and support his family instead of making him rely on a salary? And if we had universal health care, your pastor wouldn't have to worry about health insurance for him and his dependents. But no, we can't have universal health care/single payer system because that would mean Mr. Thiry wouldn't get to ponce around in his costumes in his new million dollar corporate facility.
I passed four "mega-churches" today on my way to the market. These places are enormous. Why should they not pay any tax, at least property tax to the small city in which I live? It's not just our federal government that is struggling under debt, it is also our local governments. Our property taxes are outrageously high, and 95% of it goes to fund our public schools. Why should these stonking great churches not have to contribute to our city government? Why should they be granted tax exemptions? Why shouldn't they pay contributions (taxes) to the efficient running of our town and our public school system?
Dear Moosemom, not sure why you have singled out churches as your target. The Supreme Court has addressed these issues dealing not only with churches but museums and other organizations that offer a social benefit to society. if you think that we should eliminate all tax exempt organizations, what benefits will that be to society when many of them simply close their doors. If you only single out church's that in my opinion is anti-religion.
http://supreme.justia.com/constitution/amendment-01/05-tax-exemptions-of-religious-property.html
Lastly, as far as my pastor goes, I have been quite generous to him personally and will continue in that endeavor in the future. Thank you for asking since indeed I am moved by simple Christian motives but it shall be God as my judge, not anyone else.
Now, back to the issues of our exploding government spending. Borrowing 42 cents on the dollar with the worlds highest corporate tax rates already and spending trillions of dollars on programs of shovel ready projects, haven't you looked at what those projects were? Have you looked at how much fraud and abuse the stimulus generated instead of stimulating the economy.
http://projects.propublica.org/tables/stimulus-investigations
America is heading into a period of economic chaos largely brought on by out of control government spending. Then look at the regulations such as Sarbanes-Oxley Act not to speak of the negative economic impact that the so called Affordible Care Act will reap upon this nation. (what about all of those politically motivated waivers to Obamacare, that is another national outrage) The result will be further erosion of American jobs and more dependence on the government for our provisions. If that is the kind of America you want, then go for it. Just as lemmings march off into the sea every few years, it seems that America will do likewise. So be it.
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Actually, this can be done very easily: stopping all Bush and Obama tax cuts and tax credits and bringing all our troops home from the middle east. This can be done when a high propportion of GOP candidates are defeated in the 2012 election. Meanwhile, just have a temporal lift on debt limits.
What about Obama's wars in Yemin and Lybia? I thought he was the anti-war president?
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In answer to the question this topic asked: NO, Congress should not raised the Debt Ceiling! We need to stop Borrowing money! Proverbs: THE BORROWER IS SLAVE TO THE LENDER!
No to borrowing, Budget, Budget and Budget!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
MooseMom, I owe you an apology for saying the things I said on this thread. I know you & I have talked since, but I feel I should apologize for my hurtful comments to you on this thread. Im so very sorry, and love all of you on IHD. You certainly, didnt deserve it.
Thanks Okarol, again for this opportunity!
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What about Obama's wars in Yemin and Lybia? I thought he was the anti-war president?
We should not waste money on these wars. If any country wants to have an internal war, just let them fight it out. Without the wars during the last 10 years, we would not have the much debt problems. I am very disappointed for Obama to start these wars too. Hopefully the GOP can force Obama to end the Lybia war.
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Lmunchkin.I am not sure who you were posting to, but I will say that my belief that these enormous churches should pay property tax so that our town can hire more firemen is not "anti religion", and I resent hemodoc's implication. This has nothing to do with Jesus Christ but everything to do with having the resources to help people in need, which is what Christ wants us to do. I JUST do not understand why cutting spending is the ONLY option we are supposed to consider.
As for Libya, President Obama didn't "start a war". This was an Anglo-French led campaign following a UN security resolution mandating air strikes to protect Libyan citizens as requested by the Arab League. I personally don't think that air strikes will provide an answer any longer, but Khadafi needs to step down, and I'm sure there are a lot of negotiations going on in that regard.
The GOP-led House threatened to defund our operations in Libya to illustrate their righteous indignation, but in the end, that's not the way they voted. They specifically voted NOT to defund it.
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From the Economist Free Exchange blog:
DAVID BROOKS (http://www.nytimes.com/2011/07/05/opinion/05brooks.html?hp) is in high dudgeon today:
A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth...
But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.
The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.
The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.
The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money. But the members of this movement talk blandly of default and are willing to stain their nation’s honor.
It goes on like that, if you can believe it. And yes, that's David Brooks, not Paul Krugman. To review, Democrats have signed on to trillions in spending cuts. They appear to be offering to accept closed loopholes and eliminated tax expenditures, as opposed to rate increases, as the revenue side of the deal. And we learned yesterday that Democratic leaders are apparently willing to put tens of billions in cuts to Medicare and Medicaid, on top of reduced spending growth rates already offered, on the table.
The Republican response? Leaders are now considering adding to their demands and making a vote on a balanced budget amendment to the constitution part of the final deal. But at this point, Democratic leaders can have little confidence that additional concessions will bring them any closer to a deal. The parties aren't moving toward each other; Democrats are following Republicans to the right, and closer to the cliff's edge.
It is becoming ever more difficult to write about this ongoing negotiation (if you can call it that). Journalists can't see the actual discussions between the two parties and grab at whatever leaks come their way to try and construct a narrative. The economists have mostly concluded that a default would be disastrous, and are keeping themselves busy watching financial markets, looking for any sign that they're becoming worried. It's difficult to know what to look for, however; how would you hedge against default of the world's bedrock, risk-free asset?
In all probability, America won't default; it's still difficult to imagine that it cold come to that. The bigger danger, I think, is that the Republican strategy will either lead Democrats to accept short-term cuts large enough to endanger recovery or will result in a short period of "prioritisation", in which spending is suddenly and dramatically cut back to prevent a default once the money runs out (on or about August 2nd). America may make it through this episode with its credit rating intact and still sustain significant economic damage.
A (http://plainblogaboutpolitics.blogspot.com/2011/07/gop-and-establishment.html) lot (http://www.theatlantic.com/business/archive/2011/07/why-cant-the-gop-get-to-yes/241437/) of (http://www.frumforum.com/default-will-extract-a-political-price-from-the-gop) people (http://capitalgainsandgames.com/blog/bruce-bartlett/2296/debt-limit-options) are alarmed.
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I guess I'm an "independent" because, especially as I get older, I am socially pretty liberal (I don't much care what other people do, so maybe I'm not so much "liberal" as "apathetic"), but I do tend to be fiscally conservative. In the past, I have voted both Democrat and Republican depending upon the issues of the day. I have always been a fan of "the loyal opposition" and feel that people of differing opinions can work together to do what is best for the country as a whole. But the Republican Party of 2011 is unrecognizable to me. That is not to say that I agree with all fiscal policies touted by the Democrats, but there is so little that I like about the policies of the Republicans that I am really astonished that they would so easily and quickly abdicate from their usual platform of fiscal responsibility. Fiscal responsibility isn't just a function of reigning in spending, but is also a function of wise investment, job creation and revenue raising.
I've said before that there is a difference between spending (which these days carries a connotation of irresponsibility) and investment, and this story on The Huffington Post very neatly illustrates that.
http://www.huffingtonpost.com/2011/07/05/freshman-republicans-federal-spending_n_890518.html
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MM I think the tactics are to talk about taxes but the goals are not fiscal. If the goal was a balanced budget of course you would look at the revenue side. The goal is to end or fundamentally change by reducing the scope: Medicare/Medicaid, Social Security and regulatory agencies like the EPA and FDA and entire areas of concern like Education and FEMA. Everything else are tactics.
The current Republican debt strategy is a continuation of the starve the beast approach to governance. Ten years ago the thinking was that debt would be a "fiscal straight jacket for Congress (http://georgewbush-whitehouse.archives.gov/news/releases/2001/08/20010824.html)" but that didn't work because it is very easy for Congress to spend borrowed money. Even the Republican majority Congresses from '02 to '06 never blinked at budget deficits. So, the thinking goes, if that straight jacket isn't enough to change the nature of the federal (and by extension state and local) governance then what is needed is a Houdini proof straight jacket and voila, you have the republican debt limit strategy.
Republicans are wrong to think that the federal government has the ability to pay only their US treasury obligations on time, but even if they could the full faith and credit of the United States would not survive. It's a very dangerous game being played. The full faith and credit of the United States is an asset of immeasurable value; I don't think any previous cadre of Republicans would allow or wish (http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2011/05/14/National-Politics/Graphics/reagan_letter_0514.pdf) our honor to be put in doubt.
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Like the article says, every "earmark" (oh, now they call them "lettermarks"--what the hell is that?) have a constituency that can make a good sounding case for their pet project. But when it's the Federal government giving out the money, then it's nothing more than a redistribution of wealth. That is, the money has to come from somewhere and the somewhere is the pockets of everyone else in the country who aren't involved in the project. Sure some of these projects may have a certain degree of merit.
But when it's the government deciding whether a project is go or no-go rather than the private sector then it is NOT an investment. If it's a good investment then PRIVATE funds would have invested. But they couldn't raise the funds for a risky venture and the taxpayers pony up the money and if it fails the money is somehow gone and we the taxpayers wind up with nothing (google . And if it succeeds we also really get nothing either as the revenue pours into some private or governmental development agency that keeps all the money in the local area. That is called wealth re-distribution.
Now I know all about such things as the TVA, the Interstate Highways, etc. Those are capital intensive projects on a massive scale that no private enterprise could possibly undertake. But that type of Federal spending does come a lot closer to helping the entire country or at least major regions where everyone can benefit generally. Not sure if it's Constitutional even then, but perhaps since they at least multiple states and/or regions a case could be made. (Does anyone care about the Constitution any more?)
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Like the article says, every "earmark" (oh, now they call them "lettermarks"--what the hell is that?) have a constituency that can make a good sounding case for their pet project. But when it's the Federal government giving out the money, then it's nothing more than a redistribution of wealth. That is, the money has to come from somewhere and the somewhere is the pockets of everyone else in the country who aren't involved in the project. Sure some of these projects may have a certain degree of merit.
But when it's the government deciding whether a project is go or no-go rather than the private sector then it is NOT an investment. If it's a good investment then PRIVATE funds would have invested. But they couldn't raise the funds for a risky venture and the taxpayers pony up the money and if it fails the money is somehow gone and we the taxpayers wind up with nothing (google . And if it succeeds we also really get nothing either as the revenue pours into some private or governmental development agency that keeps all the money in the local area. That is called wealth re-distribution.
Now I know all about such things as the TVA, the Interstate Highways, etc. Those are capital intensive projects on a massive scale that no private enterprise could possibly undertake. But that type of Federal spending does come a lot closer to helping the entire country or at least major regions where everyone can benefit generally. Not sure if it's Constitutional even then, but perhaps since they at least multiple states and/or regions a case could be made. (Does anyone care about the Constitution any more?)
Not sure many folks care about the constitution at all anymore. Instead, it is viewed as an impediment to a "modern" society. Sadly, the incredible freedoms we have enjoyed in this nation were from the wisdom and knowledge of the founding fathers and what they recorded in this document.
A question I would want answered is how can you borrow your way to prosperity? We are already at 42 cents on the dollar of spending. Due to the increasing Federal debt and interest on the debt, how is increasing the debt limit without cost cutting going to improve our situation? Sorry, I just can't wrap my head around that sort of magical thinking. Sooner or later, the machine is just going to quit running and break down.
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Not sure many folks care about the constitution at all anymore. Instead, it is viewed as an impediment to a "modern" society. Sadly, the incredible freedoms we have enjoyed in this nation were from the wisdom and knowledge of the founding fathers and what they recorded in this document.
Oh please. The "incredible freedoms" of which you speak were originally enjoyed only by landed, rich white men. Our Founding Fathers were slave owners and certainly didn't think women should vote. These "incredible freedoms" were hard fought for by people who wouldn't have merited a second thought by the revered Founding Fathers.
Lots of people care about the Constitution, but not many people know the history of it. The Constitution vastly strengthed the center of government and took power away from the states as proposed by the originals Articles of Federation. Some states had their own military or their own currency. So all of you who think that the Constitution is supposed to somehow restrain the federal government don't understand the history of this document.
The wisdom of the Founding Fathers is found in the checks and balances provided for in the Constitution, yet it is true that this creates a fair amount of untidyness. I have no doubt that the Founding Fathers understood that life in 2000 was not going to be like life in 1776, so they created a unifying document that would grow as our new nation grew. To think that the Constitution is written in stone would mean that you'd think it is indeed an impediment to our modern society.
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To think that the Constitution is written in stone would mean that you'd think it is indeed an impediment to our modern society.
Of course it's not written in stone...that's why it's been amended 28 times... ::)
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To think that the Constitution is written in stone would mean that you'd think it is indeed an impediment to our modern society.
Of course it's not written in stone...that's why it's been amended 28 times... ::)
Well 27 times anyways.
The issue is reading the Constitution as if the 14th Amendment didn't exist. That's how people end up thinking the Healthcare mandate is unconstitutional and that a debt default is Constitutional.
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Well 27 times anyways.
My bad...good catch. I knew I should have checked with Wikipedia. The principle is still sound. :P
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Not sure many folks care about the constitution at all anymore. Instead, it is viewed as an impediment to a "modern" society. Sadly, the incredible freedoms we have enjoyed in this nation were from the wisdom and knowledge of the founding fathers and what they recorded in this document.
Oh please. The "incredible freedoms" of which you speak were originally enjoyed only by landed, rich white men. Our Founding Fathers were slave owners and certainly didn't think women should vote. These "incredible freedoms" were hard fought for by people who wouldn't have merited a second thought by the revered Founding Fathers.
Lots of people care about the Constitution, but not many people know the history of it. The Constitution vastly strengthed the center of government and took power away from the states as proposed by the originals Articles of Federation. Some states had their own military or their own currency. So all of you who think that the Constitution is supposed to somehow restrain the federal government don't understand the history of this document.
The wisdom of the Founding Fathers is found in the checks and balances provided for in the Constitution, yet it is true that this creates a fair amount of untidyness. I have no doubt that the Founding Fathers understood that life in 2000 was not going to be like life in 1776, so they created a unifying document that would grow as our new nation grew. To think that the Constitution is written in stone would mean that you'd think it is indeed an impediment to our modern society.
Dear Moosemom, it is indeed a truth that many feel we should start over with a modern document and that the constitutional provisions restraining the power of the government are an impediment to our modern age.
As far as understanding the history of our "limited" government, I do understand that quite well. The reason the articles of confederation didn't work was because of anarchy without a central power to establish basic services of currency and military as the main provisions, however, at the onset of the constitution, states had the greater rights in most of the day to day issues of that time such as religious freedom for sure. The last two hundred years is really a study in Federal power grabs that are still ongoing today.
I still enjoy many rights from this document and I am not at all a landed gentry, nor were the millions of immigrants who sought out American freedom in the last three centuries. Slavery was a regional issue that many wished to eliminate at the time of the constitution, but did not have the political backing to accomplish and establish a union at the same time. I remember we had a civil war where millions of people perished to establish that right as well decades later. Even the 3/5ths person counting was a step above the zero rights that they had and was a compromise. Perhaps not a good compromise, but a small step above zero. Today, looking back without the perspective of where it was in 1789 looks absurd, just as history will look back at the most prosperous nation the world has ever known to date that is imploding through debt.
Freedom, absolutely as the world had truly never seen before, not just for those with wealth. Absolute freedom is actually anarchy. Sorry, but the American story is just not portrayed accurately today. Talk about historical revisionism. The Federalist papers spell out how the constitution would limit Federal power and the founders would be shocked by how it has deteriorated today to the place where the Feds now have ultimate power in so many areas of our lives. Was that the original intent of the constitution by the founders, absolutely not, and once again, simply read the Federalist papers to see that was so. The states did relinquish a small part of their sovereignty to gain stability in the economy and for provision of the common defense.
In any case, back to my question, how can we possibly believe we can continue to borrow our way back to prosperity? The simple math is just not on our side for that to work. In such, we will face an austerity program sooner or later when everything collapses upon it's own weight. We are already sending our jobs over seas at such an alarming rate under current regulations and taxes. Is raising taxes really the solution and just keep spending, spending and spending? It is complete lunacy for both parties to continue taxing and spending and borrowing. A balanced budget is a danger to America? How? Just complete madness in my mind to think that we can continue to add more and more debt and somehow become prosperous once again.
I truly see no resolution as this nation simply jumps off the cliff into complete destruction and I am not looking to Washington D.C. for any wisdom on this issue. Truly the foxes are in the henhouse recklessly throwing our future away as the most profligate spendthrifts in the history of the world. Just amazing to me. I have heard reports that we will have riots in our streets by next year and I readily believe we could very well see civil unrest in this nation as never before. Enjoy your freedoms as long as you can, the future doesn't hold well for them to continue much longer as long as we can no longer recognize the common enemies of this nation.
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The 3/5ths clause had nothing to do with conveying some partial rights to blacks and everything to do with proportional representation. And it worked almost immediately. Because of the 3/5th clause Virginia and the southern states had the electoral votes to elect Jefferson over Adams. Slavery was a national issue at our founding and during our first decades, until hundreds of thousands died fighting the civil war.
The basic premise of the Constitution is that people have the right to form a government and manage their own affairs. The Constitution we adopted is clearly intended to "promote the general Welfare". And it has. The United States continues to be the most successful political entity in human history. I don't understand this idea that we need to be "prosperous once again". We never stopped being prosperous.
Can we borrow our way back to [greater] prosperity? Well as compared to not borrowing, yes. If, by borrowing 13 million dollars in bond market at 3% interest allows Tennessee to build a port facility that creates "thousands of jobs" and increases the efficiency of the nation's economy then yes, we should definitely borrow the money. A private, for profit business ,couldn't generate the same benefits, "profits" from the project. There will be dozens of business that use the port to leverage their own investments - the fees they're charges will be used to pay back a lot of the investment directly. Building the port is a sensible project that no private business could be expected to undertake.
As far as understanding the history of our "limited" government, I do understand that quite well. The reason the articles of confederation didn't work was because of anarchy without a central power to establish basic services of currency and military as the main provisions, however, at the onset of the constitution, states had the greater rights in most of the day to day issues of that time such as religious freedom for sure. The last two hundred years is really a study in Federal power grabs that are still ongoing today.
I still enjoy many rights from this document and I am not at all a landed gentry, nor were the millions of immigrants who sought out American freedom in the last three centuries. Slavery was a regional issue that many wished to eliminate at the time of the constitution, but did not have the political backing to accomplish and establish a union at the same time. I remember we had a civil war where millions of people perished to establish that right as well decades later. Even the 3/5ths person counting was a step above the zero rights that they had and was a compromise. Perhaps not a good compromise, but a small step above zero. Today, looking back without the perspective of where it was in 1789 looks absurd, just as history will look back at the most prosperous nation the world has ever known to date that is imploding through debt.
Freedom, absolutely as the world had truly never seen before, not just for those with wealth. Absolute freedom is actually anarchy. Sorry, but the American story is just not portrayed accurately today. Talk about historical revisionism. The Federalist papers spell out how the constitution would limit Federal power and the founders would be shocked by how it has deteriorated today to the place where the Feds now have ultimate power in so many areas of our lives. Was that the original intent of the constitution by the founders, absolutely not, and once again, simply read the Federalist papers to see that was so. The states did relinquish a small part of their sovereignty to gain stability in the economy and for provision of the common defense.
In any case, back to my question, how can we possibly believe we can continue to borrow our way back to prosperity? The simple math is just not on our side for that to work. In such, we will face an austerity program sooner or later when everything collapses upon it's own weight. We are already sending our jobs over seas at such an alarming rate under current regulations and taxes. Is raising taxes really the solution and just keep spending, spending and spending? It is complete lunacy for both parties to continue taxing and spending and borrowing. A balanced budget is a danger to America? How? Just complete madness in my mind to think that we can continue to add more and more debt and somehow become prosperous once again.
I truly see no resolution as this nation simply jumps off the cliff into complete destruction and I am not looking to Washington D.C. for any wisdom on this issue. Truly the foxes are in the henhouse recklessly throwing our future away as the most profligate spendthrifts in the history of the world. Just amazing to me. I have heard reports that we will have riots in our streets by next year and I readily believe we could very well see civil unrest in this nation as never before. Enjoy your freedoms as long as you can, the future doesn't hold well for them to continue much longer as long as we can no longer recognize the common enemies of this nation.
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The 3/5ths clause had nothing to do with conveying some partial rights to blacks and everything to do with proportional representation. And it worked almost immediately. Because of the 3/5th clause Virginia and the southern states had the electoral votes to elect Jefferson over Adams. Slavery was a national issue at our founding and during our first decades, until hundreds of thousands died fighting the civil war.
The basic premise of the Constitution is that people have the right to form a government and manage their own affairs. The Constitution we adopted is clearly intended to "promote the general Welfare". And it has. The United States continues to be the most successful political entity in human history. I don't understand this idea that we need to be "prosperous once again". We never stopped being prosperous.
Can we borrow our way back to [greater] prosperity? Well as compared to not borrowing, yes. If, by borrowing 13 million dollars in bond market at 3% interest allows Tennessee to build a port facility that creates "thousands of jobs" and increases the efficiency of the nation's economy then yes, we should definitely borrow the money. A private, for profit business ,couldn't generate the same benefits, "profits" from the project. There will be dozens of business that use the port to leverage their own investments - the fees they're charges will be used to pay back a lot of the investment directly. Building the port is a sensible project that no private business could be expected to undertake.
As far as understanding the history of our "limited" government, I do understand that quite well. The reason the articles of confederation didn't work was because of anarchy without a central power to establish basic services of currency and military as the main provisions, however, at the onset of the constitution, states had the greater rights in most of the day to day issues of that time such as religious freedom for sure. The last two hundred years is really a study in Federal power grabs that are still ongoing today.
I still enjoy many rights from this document and I am not at all a landed gentry, nor were the millions of immigrants who sought out American freedom in the last three centuries. Slavery was a regional issue that many wished to eliminate at the time of the constitution, but did not have the political backing to accomplish and establish a union at the same time. I remember we had a civil war where millions of people perished to establish that right as well decades later. Even the 3/5ths person counting was a step above the zero rights that they had and was a compromise. Perhaps not a good compromise, but a small step above zero. Today, looking back without the perspective of where it was in 1789 looks absurd, just as history will look back at the most prosperous nation the world has ever known to date that is imploding through debt.
Freedom, absolutely as the world had truly never seen before, not just for those with wealth. Absolute freedom is actually anarchy. Sorry, but the American story is just not portrayed accurately today. Talk about historical revisionism. The Federalist papers spell out how the constitution would limit Federal power and the founders would be shocked by how it has deteriorated today to the place where the Feds now have ultimate power in so many areas of our lives. Was that the original intent of the constitution by the founders, absolutely not, and once again, simply read the Federalist papers to see that was so. The states did relinquish a small part of their sovereignty to gain stability in the economy and for provision of the common defense.
In any case, back to my question, how can we possibly believe we can continue to borrow our way back to prosperity? The simple math is just not on our side for that to work. In such, we will face an austerity program sooner or later when everything collapses upon it's own weight. We are already sending our jobs over seas at such an alarming rate under current regulations and taxes. Is raising taxes really the solution and just keep spending, spending and spending? It is complete lunacy for both parties to continue taxing and spending and borrowing. A balanced budget is a danger to America? How? Just complete madness in my mind to think that we can continue to add more and more debt and somehow become prosperous once again.
I truly see no resolution as this nation simply jumps off the cliff into complete destruction and I am not looking to Washington D.C. for any wisdom on this issue. Truly the foxes are in the henhouse recklessly throwing our future away as the most profligate spendthrifts in the history of the world. Just amazing to me. I have heard reports that we will have riots in our streets by next year and I readily believe we could very well see civil unrest in this nation as never before. Enjoy your freedoms as long as you can, the future doesn't hold well for them to continue much longer as long as we can no longer recognize the common enemies of this nation.
Bill, I don't see going into unmanageable debt as our solution. Too many examples in history of why it won't work. Yet, this experiment in new economics continues to play out and it is likely we shall see soon where it will go. I don't see anything pretty in our future if we just continue to spend blindly. It has never worked before in history and I just don't understand why folks believe it will work this time.
God bless,
Peter
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Bill, I don't see going into unmanageable debt as our solution. Too many examples in history of why it won't work. Yet, this experiment in new economics continues to play out and it is likely we shall see soon where it will go. I don't see anything pretty in our future if we just continue to spend blindly. It has never worked before in history and I just don't understand why folks believe it will work this time.
God bless,
Peter
I don't think our debt is unmanageable. I think our borrowing will have consequences. The issue is that defaulting would have vastly greater consequences. And, if we're talking about the stimulus spending, not borrowing the money would have had greater consequences. Governance is about choices. It's about making good choices.
Not raising the debt ceiling is not a good choice. The current House Republicans ran their 2010 campaign on JOBS. If they now want to instead pass legislation that changes the social compact then that should be their campaign in 2012.
I don't think a 20% level of taxation is a threat to liberty. Our debt is not an existential threat. The tax rates of the 1990s will not cause riots. The deal that is being proposed is not a threat to liberty by any rational measure.
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Bill, I don't see going into unmanageable debt as our solution. Too many examples in history of why it won't work. Yet, this experiment in new economics continues to play out and it is likely we shall see soon where it will go. I don't see anything pretty in our future if we just continue to spend blindly. It has never worked before in history and I just don't understand why folks believe it will work this time.
God bless,
Peter
I don't think our debt is unmanageable. I think our borrowing will have consequences. The issue is that defaulting would have vastly greater consequences. And, if we're talking about the stimulus spending, not borrowing the money would have had greater consequences. Governance is about choices. It's about making good choices.
Not raising the debt ceiling is not a good choice. The current House Republicans ran their 2010 campaign on JOBS. If they now want to instead pass legislation that changes the social compact then that should be their campaign in 2012.
I don't think a 20% level of taxation is a threat to liberty. Our debt is not an existential threat. The tax rates of the 1990s will not cause riots. The deal that is being proposed is not a threat to liberty by any rational measure.
Actually, the 2010 election on the Republican side was overwhelmingly a call for fiscal responsibility, jobs being a result of sound fiscal policy. Are you suggesting another stimulus? What about the inflation of food and other commodities at nearly 100% of what they were a year or two ago? This is hardly ever spoken about in the media. Hyperinflation is a risk from our current fiscal policies. Just ask Germany how that worked for them before WWII?
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Actually, the 2010 election on the Republican side was overwhelmingly a call for fiscal responsibility, jobs being a result of sound fiscal policy. Are you suggesting another stimulus? What about the inflation of food and other commodities at nearly 100% of what they were a year or two ago? This is hardly ever spoken about in the media. Hyperinflation is a risk from our current fiscal policies. Just ask Germany how that worked for them before WWII?
I think this inflation issue is a problem but it isn't the money supply that is driving the price of corn. And it is the record price of corn that is driving the 100% inflation in the corn based food and a other corn based commodities - for instance bacon that comes from corn fed hogs. Corn is at a record price because of our misguided ethanol policy.
Ethanol, it turns out, is pretty pointless. But now that we have an ethanol industrial complex, supported by rural state Senators, it is, and will be, hell to end. Just like our sugar subsidies. And cotton subsidies. And mohair. This continued political support is due to our Constitution. The Senate give disproportionate weight to rural interests - New Jersey has the same number of Senators as North Dakota.
But back to inflation. Aside from inflation due to government intervention in the market, there is no inflation and the bond market has priced in very little inflation risk, the bond market thinks deflation is a bigger threat than moderate inflation - let alone a riot inducing doomsday scenario - so how do you explain the bond market if there is now or soon will be money supply driven (hyper)inflation?
I would note that there were many predictions made often since 2008 predicting inflation within a year. If you rely on people who keep making predictions that the passage of time prove wrong, again and again, then when does it become time to take fresh look at people whose predictions were right? We're in a liquidity trap (http://www.bloomberg.com/news/2011-07-05/the-sorrow-and-the-pity-of-another-liquidity-trap-brad-delong.html). But any time is a good time to phase out ethanol subsidies.
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Actually, the 2010 election on the Republican side was overwhelmingly a call for fiscal responsibility, jobs being a result of sound fiscal policy. Are you suggesting another stimulus? What about the inflation of food and other commodities at nearly 100% of what they were a year or two ago? This is hardly ever spoken about in the media. Hyperinflation is a risk from our current fiscal policies. Just ask Germany how that worked for them before WWII?
Sorry for the double post but I hadn't yet found the http://www.foxnews.com/projects/pdf/pledgetoamerica.pdf (http://www.foxnews.com/projects/pdf/pledgetoamerica.pdf) 2010 Republican Pledge to America (thanks FOX News). I read back through it and I don't see any of today's extreme Republican positions. I see talk complaining about using the 500 billion dollars in Medicare savings on other ACA programs but I don't see mentioned the current Republican plan to keep those savings from the ACA and repurpose them for corporate tax cuts. I see mention of the SS and Medicare costs but their call for action is a call for accounting, setting bench marks and annual reviews.
If one was to take this document at its word, one would expect that the Republican's would be spending their time on our nation's "most urgent domestic priority" by putting forward "A plan to create jobs, end economic uncertainty, and make America more competitive".
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OK, OK, I know! I keep swearing I won't keep walking into these political debates and here I am.
I have not read everything here, nor do I intend to. I was just skimming Bill's post and saw him say Ethanol is "pretty pointless". Could you explain what you mean by that, Bill?
If there is one thing that type of statement will buy you around here it is a lecture from the automotive engineer on how wrong you are. I won't bore you with it - just part of the service I provide to IHD members, I'll listen and nod for you! (Ha! Just kidding, Gwyn - alternative fuels are brilliance itself!)
My husband does not much care for politics of any sort, but he felt so strongly about this that he actually fired off an email to Schwarzenegger about it.
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OK, OK, I know! I keep swearing I won't keep walking into these political debates and here I am.
I have not read everything here, nor do I intend to. I was just skimming Bill's post and saw him say Ethanol is "pretty pointless". Could you explain what you mean by that, Bill?
If there is one thing that type of statement will buy you around here it is a lecture from the automotive engineer on how wrong you are. I won't bore you with it - just part of the service I provide to IHD members, I'll listen and nod for you! (Ha! Just kidding, Gwyn - alternative fuels are brilliance itself!)
My husband does not much care for politics of any sort, but he felt so strongly about this that he actually fired off an email to Schwarzenegger about it.
Corn ethanol is pointless in that it isn't green and the collateral damage to food prices outweighs any economic benefit from its impact on oil prices.
EDITED TO ADD: I see I was not specific in saying corn ethanol in my post above, but anytime I was saying ethanol I meant corn ethanol.
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OK, OK, I know! I keep swearing I won't keep walking into these political debates and here I am.
I have not read everything here, nor do I intend to. I was just skimming Bill's post and saw him say Ethanol is "pretty pointless". Could you explain what you mean by that, Bill?
If there is one thing that type of statement will buy you around here it is a lecture from the automotive engineer on how wrong you are. I won't bore you with it - just part of the service I provide to IHD members, I'll listen and nod for you! (Ha! Just kidding, Gwyn - alternative fuels are brilliance itself!)
My husband does not much care for politics of any sort, but he felt so strongly about this that he actually fired off an email to Schwarzenegger about it.
Corn ethanol is pointless in that it isn't green and the collateral damage to food prices outweighs any economic benefit from its impact on oil prices.
EDITED TO ADD: I see I was not specific in saying corn ethanol in my post above, but anytime I was saying ethanol I meant corn ethanol.
It's been a while, but I remember a Nat'l Geo article about it - there are certain plants that can be used much more efficiently for ethanol. I think the article mentioned sugar cane. Corn ethanol so far is simply not effective on many levels. A crop of corn ethanol gave just about enough energy back to harvest - the next batch of corn ethanol.
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It's been a while, but I remember a Nat'l Geo article about it - there are certain plants that can be used much more efficiently for ethanol. I think the article mentioned sugar cane. Corn ethanol so far is simply not effective on many levels. A crop of corn ethanol gave just about enough energy back to harvest - the next batch of corn ethanol.
Here in Tennessee the ethanol crop is switch grass. I grows very fast with minimal work.
Aleta
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Ah, I see, that makes sense. Gwyn would only be viewing it from the fuel perspective, not the energy that goes into harvesting and processing as that is somewhat outside his purview. He does agree that there are much better sources of ethanol than corn, although he did say that if there is a choice between letting silos of corn rot or converting it to ethanol, it should be converted.
What he thinks is so important about ethanol (E85) is that it burns very cleanly and is the only alternative fuel available today that can be used with existent cars with a simple retrofit. I had heard that corn ethanol used only the tiniest percentage of the corn crop and that the effect on the price was minimal, but cannot remember where I heard this. It would have been around 2008 when the fuel prices were way up and they were rationing certain food products at Costco. Anyhow, thanks for the clarification Bill and jbeany.
Ooooh, switch grass sounds promising, Aleta!
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OK, OK, I know! I keep swearing I won't keep walking into these political debates and here I am.
I have not read everything here, nor do I intend to. I was just skimming Bill's post and saw him say Ethanol is "pretty pointless". Could you explain what you mean by that, Bill?
If there is one thing that type of statement will buy you around here it is a lecture from the automotive engineer on how wrong you are. I won't bore you with it - just part of the service I provide to IHD members, I'll listen and nod for you! (Ha! Just kidding, Gwyn - alternative fuels are brilliance itself!)
My husband does not much care for politics of any sort, but he felt so strongly about this that he actually fired off an email to Schwarzenegger about it.
Corn ethanol is pointless in that it isn't green and the collateral damage to food prices outweighs any economic benefit from its impact on oil prices.
EDITED TO ADD: I see I was not specific in saying corn ethanol in my post above, but anytime I was saying ethanol I meant corn ethanol.
I agree and it damages engines as well. Correct me if I am wrong, didn't they just vote on this in the last couple of weeks and rescind the ethanol subsidies?
I guess it didn't pass, but many Republicans do not support the ethanol subsidy and hopefully it's days are numbered.
http://online.wsj.com/article/SB10001424052702303714704576385902303763720.html
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If the engine is tuned correctly, it won't damage your engine. Gwyn says he would, without hesitation, run any of our cars on E85.
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Here in Tennessee the ethanol crop is switch grass. I grows very fast with minimal work.
Aleta
I think switch grass grows on land that isn't fit for much else vs the black top soil of corn country. And I don't think there are big switch grass subsidies ... but I bet there is a switch grass association - probably the SGA - that is lobbying for switch grass subsidies.
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"Farmers in East Tennessee started planting fields of switchgrass this month, marking the first stage of a 70-million dollar state investment to make ethanol from native plant materials. The state will eventually process the grass in a refinery it’s going to build as part of the project. Even though the refinery won’t be up and running for a few more years, about 16 farmers are jumping at the chance to grow the low-maintenance perennial. WPLN’s Christine Buttorff reports."
http://wpln.org/?p=580 (http://wpln.org/?p=580)
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I don't know much about ethanol from corn or any other plant, but I remember my first thought upon hearing about getting ethanol from corn, and that was to wonder about how much water this would require. I certainly understand that to be able to get fuel from a crop would be wonderful, but with both flooding and extreme drought wreaking such havoc this year, relying on corn for fuel frightens me. Getting it from scrubby switchgrass sounds a bit more sustainable. Can someone explain this more to me? Thanks.
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Actually, the 2010 election on the Republican side was overwhelmingly a call for fiscal responsibility, jobs being a result of sound fiscal policy. Are you suggesting another stimulus? What about the inflation of food and other commodities at nearly 100% of what they were a year or two ago? This is hardly ever spoken about in the media. Hyperinflation is a risk from our current fiscal policies. Just ask Germany how that worked for them before WWII?
Sorry for the double post but I hadn't yet found the http://www.foxnews.com/projects/pdf/pledgetoamerica.pdf (http://www.foxnews.com/projects/pdf/pledgetoamerica.pdf) 2010 Republican Pledge to America (thanks FOX News). I read back through it and I don't see any of today's extreme Republican positions. I see talk complaining about using the 500 billion dollars in Medicare savings on other ACA programs but I don't see mentioned the current Republican plan to keep those savings from the ACA and repurpose them for corporate tax cuts. I see mention of the SS and Medicare costs but their call for action is a call for accounting, setting bench marks and annual reviews.
If one was to take this document at its word, one would expect that the Republican's would be spending their time on our nation's "most urgent domestic priority" by putting forward "A plan to create jobs, end economic uncertainty, and make America more competitive".
I want to bump this and move the ethanol discussion to its own thread. I'd like to hear from those in the don't raise the debt limit school of thought: is it a problem that this action, not raising the debt limit, would be against what was proposed in the pledge? Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness. This is completely at odds with the Republican Pledge, even though today's debt and deficit is well within what was foreseen in 2008.
Compare this to the Republican's number one complaint - the Affordable Care Act. It was campaigned on for over a year. The details of the plan were specific points of contention during the primary. Obama campaigned on healthcare as his number one priority. He carried over 53% of the vote and then did what he said he would do. The Republicans are trying the exact opposite.
And the situation today, Thursday July 7th looks grim. The Market is 100% convinced there is going to be a deal but at this point I don't think the Republicans believe it is in their interest to make a deal. One Republican Representative (http://www.nationalreview.com/corner/271204/thinking-outside-box-lower-debt-ceiling-paul-broun) wants to introduce legislation to lower the debt the ceiling. So a couple weeks to go and it looks like the die is being cast.
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I don't think so Bill. This is just the usual posturing that Washington goes through publicly before the back room deal materializes.
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Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.
How so? You make a strong statement--what analysis is behind these predictions?
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Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.
How so? You make a strong statement--what analysis is behind these predictions?
Seen it before over and over again.
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Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.
How so? You make a strong statement--what analysis is behind these predictions?
Here is a good analysis of what would happen
http://www.npr.org/2011/07/05/137627991/what-a-debt-default-would-really-mean-for-the-u-s (http://www.npr.org/2011/07/05/137627991/what-a-debt-default-would-really-mean-for-the-u-s)
The article gives numbers to illustrate the problem that our inflows and out flows come in spurts. The inflow spurts are heavily correlated to when income taxes are due. There is April 15th but there are also quarterly deadlines for estimated tax payments for those with income not subject to withholding (people who also typically have the highest incomes and thus represent a disproportionate part of our incoming revenue) the quarterly deadlines are Jan 17, Apr 15, June 15 and Sept 15 in 2011 so for 6 weeks after default bills due will be running far below money coming in.
The article also does a good job laying out the timing issue of when bills come due too. Right away there are the SS security checks people depend on - there are a lot of people who need that check for basic survival. To prepare for the treasure interest and roll over due later in the month you would have to assume payment to contractors - everything from office supplies to road construction to military hardware - would stop. So all those workers making all the stuff the government buys would be out of work.
Then comes the interest payments due on treasuries. And the Treasuries due to expire will have to be dealt with and here no one knows what will happen. The 27 billion in expiring treasuries means that we'll be below the debt limit by ~27 billion dollars, so the Treasury could issue new bonds but who is going to buy them and at what price? You have to assume that the price the Treasury will have to pay will be higher than what it is today.
Right? This is a key point to understand if you are to understand why it is indisputable that not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness. Once the interest rate Treasury has to offer to sell t-bills increases, that fact increases interest rates throughout the economy.
What do you think that interest rate will be? What do you think will be the interest rate on the t-bills Treasury will need to sell on August 15th ? Intrest rate changes alone put hundreds of thousands of jobs at risk.
Then what do you think will happen to the value of stocks post default. The reduction in government spending is big enough to describe in terms of GDP. A 40% decrease in monthly government spending would cause a 1 to 2% decrease in GDP. Right now stocks are priced based on a GDP expectation of about 2.5% - the immediate effect of a default would be a collapse of assets prices which would effect anyone with a 401K or who relies on a stock portfolio. As we saw in 2008, as people's asset wealth evaporates there current spending contracts and optional purchases - like automobiles or the kitchen remodel - are put off. This is how interest rates, GDP and the stock market all feed into employment. That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.
The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract. Even if this lasts a day, this will be true. It may be true already.
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One other thing should be noted too - the revenue that routinely comes in is in large part from people's pay check withholding.
Should we go into default I think I would be inclined to change my withholding from 1 to a higher number of deductions which would probably mean that almost no money would be withheld from my next few paychecks.
I think the Republican's plan relies on my (and people like me) cooperation and I am not inclined to cooperate with this madness.
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That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.
Not to say that I disagree with everything above, but I do agree that we are like an aircraft spiraling to earth in a flat spin. Our financial house of cards has been one big ponzi scheme since Bretton Woods was rescinded in 1971. It has been fed by both parties. So sure, we can push on the throttle a few more times but it doesn't do anything but make the plane spin faster and make it even harder to pull up--and make a bigger mess when it finally hits the ground.
The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract.
Well, given especially the loophole that President Obama has suddenly "found" in the 14th Amendment that gives precedence to our debts above all else, and the fact that servicing the debt and principle of our outstanding bonds is about 18% of the (phantom) budget, there shouldn't be any reasons other than political reasons to threaten default. Service the existing debt and there is still more than 80% of the budget for everything else. That 80% by the way was more than enough to cover everything less than 5 years ago. The President and his supporters seem to want nothing but to kick the can down the road--at least until January 2013.
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That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.
Not to say that I disagree with everything above, but I do agree that we are like an aircraft spiraling to earth in a flat spin. Our financial house of cards has been one big ponzi scheme since Bretton Woods was rescinded in 1971. It has been fed by both parties. So sure, we can push on the throttle a few more times but it doesn't do anything but make the plane spin faster and make it even harder to pull up--and make a bigger mess when it finally hits the ground.
The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract.
Well, given especially the loophole that President Obama has suddenly "found" in the 14th Amendment that gives precedence to our debts above all else, and the fact that servicing the debt and principle of our outstanding bonds is about 18% of the (phantom) budget, there shouldn't be any reasons other than political reasons to threaten default. Service the existing debt and there is still more than 80% of the budget for everything else. That 80% by the way was more than enough to cover everything less than 5 years ago. The President and his supporters seem to want nothing but to kick the can down the road--at least until January 2013.
The full faith and credit of the United States means more than meeting bond obligations. But Geitner has said that he does not believe that Treasury has the ability to go beyond what Congress has authorized so really the Administration's hands are tied. There doesn't seem to be a 14 AMendment option in the view of the administration. But I just don't think the math supports your expectation of what can happen.
The math is the math. 29 billion interest payment comes due on Monday, Aug. 15. That's also the day that $27 billion worth of Treasury bonds mature. So just to meet that obligation Treasury needs 56 billion dollars. We have about 12 Billion dollars coming in taxes and then what? How's this suppose to work?
I think you are dividing total US revenue by 365 and comparing it to the total budget divided by 365. That's not a good approximation to the real world. In the real world we won't have the money to meet our T-bill obligations on August 15th. And as a practical matter we can't just not pay our soldiers and essential government personnel and operations so there is one alternative - taxes. In this circumstance I would support a tax on oil at the refinery equal to $1 a gallon. That revenue could be generated quickly, the industry is use to handling a price shock, this would be as if the price of oil increased ~$20 barrel.
Other areas that could generate immediate revenue would be surcharges - so you would have to look for surcharges on businesses that were operating so I think financial surcharges would be one area that would be exploited.
I don't see the House Republican's incentive to accept any sort of deal that could pass the Senate and I believe the bill would have to originate in the House (although there is a routinely used work around so a Bill could start in the Senate). Politically the path of least resistance might require unanimous House Democrat support with the bare minimum of Republicans joining but that seems unlikely so I really don't see how your expectation will be met Peter.
I think your plane analogy is off Willis. We are not in a spiral], we are flying along below trend after a terrifying loss of altitude. There is persistent unemployment and below trend demand, everything else is going to be self inflicted. This entire crisis is due entirely to the political impasse in the US House of Representative. None of this is being compelled by our current level of debt or our anticipated borrowing. None of it. Zero. Zilch. This crisis is the result of political calculus.
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I'd like to hear from those in the don't raise the debt limit school of thought: Does it matter that Representative Cantor is invested in a fund that aggressively shorts US Treasuries (http://thinkprogress.org/politics/2011/07/08/263264/olson-cantor-shorting-treasury/)?
"Cantor owns up to $15,000 in the fund, which is called the ProShares Trust Ultrashort 20+ Year Treasury ETF. Cantor, who leads the House GOP’s debt ceiling negotiations, would see his ETF rise dramatically in value if Republicans allow the country to default on its debt."
A $10,000 investment might not sound like much but if you read The Big Short (http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231) (and you really should) you know how this works. The fund buys, what is in effect, insurance on an unlikely event - US Treasuries suddenly becoming less valuable. This insurance cost is a percentage of the assets being insured, usually around half a percent/year for treasuries. So a $10,000 short would insure $2 million dollars in assets.
I think this sort of investment - betting against the United States - is inappropriate for a member of Congress. Having a Congressman who has made this investment pursue policies that would cause this investment strategy to pay off, should disqualify that person from the privilege of serving.
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Bill, again we are in (at least partial) agreement. This is clearly a conflict of interest. But it would be hard to imagine how any portfolio held by anyone holding Federal elective office wouldn't be rife with conflicts of interest. I'm neither excusing Cantor nor any of the other politicians. This case may be perfectly legal, but it definitely smells bad. I think what we have though is a serious systemic problem. Perhaps like the President, all such affairs should be in a blind trust until leaving office?
BTW... I still don't think there is a chance in hell of any defaults, debt limit or no debt limit. That is unless a default is what the big guys like Buffett or Soros are really aiming for. ;)
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BTW... I still don't think there is a chance in hell of any defaults, debt limit or no debt limit. That is unless a default is what the big guys like Buffett or Soros are really aiming for. ;)
Here's something I didn't know happened (http://www.economist.com/node/18866851):
"America’s only known instance of outright default (other than refusing to repay debts in gold in 1933) occurred in 1979 when the Treasury failed to redeem $122m of Treasury bills on time. It blamed unprecedentedly high interest from small investors, a delay in raising the debt ceiling and a word-processing-equipment failure. Although it repaid the money and a penalty to boot, a later study by Terry Zivney, now of Ball State University, and Richard Marcus of the University of Wisconsin-Milwaukee found it caused a 60-basis-point interest-rate premium on some federal debt. Today that would cost $86 billion a year or 0.6% of GDP, a hefty penalty for something so avoidable."
So we have one data point on the cost of even a temporary - and relatively minor - default.
EDITED TO ADD: Absent a debt limit deal with Congress, the Administration would be forced to break the law (http://www.washingtonpost.com/opinions/five-myths-about-the-debt-ceiling/2011/07/06/gIQANwF01H_story_1.html) (AKA create a Constitutional challenge) one way or the other.
it would be hard to imagine how any portfolio held by anyone holding Federal elective office wouldn't be rife with conflicts of interest.
I think there is a big incentive difference between holding US treasuries or GM stock (or investing in a mutual fund that holds Treasuries/GM stock) v. shorting Treasuries/GM stock. I don't have a problem with elected officials or government employees, betting on the US to win - we don't have a Pete Rose situation here where the absence of an investment would be signalling a lack of confidence.
EDITED AGAIN TO ADD: One other data point is that since about the middle of June Brazilian Credit Default Swaps have been priced lower than US Credit Default Swaps (http://dektag.com/index.php/2011/06/15/brazilian-debt-less-risky-than-us-treasuries/). This means it is cheaper to buy insurance against a Brazilian default than it is to insurer against a US default. So the market believes that a US default is more likely than a Brazilian default. I will note that the market thinks either is very unlikely - Brazil's chance is reckoned at 1 in 300 (1 yr CDS=33 basis points) while the US's is being reckoned at 1 in 200 (1 yr CDS=50 basis points) but still, ultimately the US will now be paying more for our borrowing than Brazil for the foreseeable future. And that's if a deal passes tomorrow.
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Calls/puts...long or short...to those in the financial and futures markets these have no emotional connotations. Buying puts and shorting stocks is a risky business that can cause an investor to lose EVERYTHING, but these transactions provide the liquidity that allow the equity and commodity markets to function efficiently.
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Look at this
http://modeledbehavior.com/2011/07/10/cheaper-than-cash/ (http://modeledbehavior.com/2011/07/10/cheaper-than-cash/)
right now it is as if bond investors are willing to buy 5 year US Treasuries with 0.00% interest AND pay a couple percent for the privilege.
Because there is no where else to go the United States could, if nothing else, offer states and municipalities a 2% interest rate on any five year bond levy and we'd make money while spurring local projects from schools to sewers.
This is the tragic situation. Not only are we threatening to assassinate our own economy we're doing it at a time of unparalleled opportunity. Mad about all the foreigners manufacturing stuff and taking all our jobs? Now is our chance to get some of the money back by borrowing from them for -5% interest. It's actually very sad.
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Bill,
How can Obama claim to be sincere on cost reduction when he won't even put the unspent stimulus and TARP funds on the table of discussion in the debt debate. Sorry, that just makes no economic sense whatsoever to not return those funds now to the treasury in dealing with our current crises. I don't believe he has any intention of reigning in spending what so ever.
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Bill,
How can Obama claim to be sincere on cost reduction when he won't even put the unspent stimulus and TARP funds on the table of discussion in the debt debate. Sorry, that just makes no economic sense whatsoever to not return those funds now to the treasury in dealing with our current crises. I don't believe he has any intention of reigning in spending what so ever.
The Congress controls the purse. Congress was going to get to have a budget debate in the next few months because the '11 - '12 budget starts 10/1. There was no need to conflate the budget negotiation with raising debt ceiling. In fact no matter what happens, we are going to go through another round of it in a month or two ... because they will still have to get to a federal budget, A budget that will certainly spend more than it takes in (because we don't take in enough). The Republican debt limit strategy is hostage taking and extortion.
So my answer to your question is Congress can do whatever it wants. A lot of that stimulus money is already committed - five year projects in their second year, five year research commitments just getting started (like the John Hopkins study I'm volunteering with that is just entering its second year) - but without a link I can't give you a more detailed answer other than Congress controls the purse. If Congress wants to change something there is a well worn path to do it but it would be unprecedented to do it with the support of just 20 to 30% of the American people.
The projected deficit is based on spending bills that have already passed the House and the Senate, and then were signed by the President. Not increasing the debt limit is more like not paying for your meal already eaten then it is saving money by cutting back.
I think this is bad policy. I think what the Republicans are asking for would be bad for the country. But what is truely hard for me to understand, are the politics - this is bad politics. I can't understand the Republicans' actions in terms of political strategy. What I see is a continuation of the narrative of not having a Plan B. Whether it was the McCain campaign or decision on top of decision during the Bush administration, there is never any thought given to what will happen if events don't proceed according to their initial (questionable) plans. Right now the Republicans in the House don't have 218 votes need to pass any debt limit increase. They don't have them.
So, for this to go forward there needs to be a deal that gets some combination of Republican and Democrat votes and such a deal has not crossed the lips of a single republican Congressman, at least not in public (unless you count Senator McConnell's idea) and the Democrats are not in a position to do it alone. How is this suppose to work out from your point of view Peter? What's an acceptable outcome?
How could your predicted backroom deal materialize given the current nose count? ~ 200 Republican (follow party line, would probably take a deal endorsed by their House leaders), ~40 Republican (Tea Party, no increase in the dept), ~150 Democrat (party line, would probably take a deal endorsed by their House leaders), ~40 Democrat (liberal, wont accept cuts to Medicare/SS). Where are there 218 votes for a bill that can get through the Senate? Never mind Obama.
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice. Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend. That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance. Another teaching from the Bible is that we will reap what we have sown.
Not sure if you meant a literal response from your statement, but there it is.
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It is interesting how the media is trying to create a rift in the GOP by going after Cantor. Sorry, hasn't anyone heard of playing good cop, bad cop as a negotiation strategy. All of these antics won't work and the American people are in favor of controlling spending as well. The Dems are the ones playing a dangerous game. The GOP put there budget proposal on record several months ago and to date, we still have no hard offers with any meat from the DEMS. They are simply playing the game of criticizing the GOP and offering no concrete plan of their own.
http://www.foxnews.com/politics/2011/07/14/dems-slam-cantor-as-patience-runs-thin-in-tense-deficit-talks/
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Obama Owns the Debt-Ceiling Fiasco
It doesn't help that he's declared high-speed rail and even unspent stimulus funds as untouchable.
The president has made a bipartisan agreement even more difficult by declaring certain spending off-limits to cuts. Mr. Obama's "untouchable" list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals.
Mr. Obama has offered no evidence since becoming president that he wants to restrain the upward trajectory of government spending. He does want higher taxes to pay for significantly higher federal spending. But he wants Republicans to deliver the tax increases, since Democrats couldn't pass them last year despite controlling both chambers of Congress.
Republicans have wisely declined. Demanding the GOP vote for immediate tax increases that would be offset by vague, future tax cuts conjures up images of Charlie Brown, Lucy and the football. The tax increases would be real—tthe future tax rate cuts would be imaginary. And Mr. Obama has opposed any serious spending enforcement mechanisms, such as a balanced budget amendment or hard caps on spending.
His tone also hasn't helped achieve a comprehensive agreement. The president's two most recent press conferences, in which he accused the GOP of foot-dragging, convinced Republicans that he was interested in scoring political points and attracting independents, not facilitating a deal. Convening high-profile White House meetings without offering substantive concrete proposals and then having his aides leak madly (and inaccurately) to the press afterward further squandered trust.
http://online.wsj.com/article/SB10001424052702304911104576443863077227784.html?mod=WSJ_Opinion_LEADTop
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice. Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend. That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance. Another teaching from the Bible is that we will reap what we have sown.
Not sure if you meant a literal response from your statement, but there it is.
I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ... Reagan's deficit spending strategy, however, is an issue I have a view on.
The fundamental error that the Reagan administration made was thinking that a deficit would force future Congresses/Administrations to shrink the size of the federal government in order to accommodate debt payments. That was still the thinking during the Bush administration. But it doesn't work. It works against the Republican's stated aim by making federal programs more popular. It discounts the cost of federal services. Right now the people are getting $1 of federal spending for $.60 of taxes and people like it. People like a bargain.
That I think is why the Republican proposals to cut spending are so unpopular. Every bit of that spending is popular with someone, and a lot of it is necessary or a good value. Paying for dialysis? I like that. Paying for some new gizmo for the military? It's very popular with the people who make it (I am sure they feel like they are working to benefit the country, and they might be) and it's popular in the community(s) where they're located. NIH research? I think we need all we can get, and many other people feel the same way. Foreign aide to Israel? That has a lot of support. Foreign aid to other countries - this is just about the most popular place in the budget to cut if you poll people but experts say it does a lot of good and is a good value.
But a lot of our very popular spending, in my opinion, may not be a good value. For instance, I'd say the tax deduction for charitable contributions is questionable. Most people have an effective federal tax rate below 17% (PDF (http://www.cbo.gov/publications/collections/tax/2010/average_rates.pdf)) but even using 20% it means that for every dollar not paid in income taxes because of the charitable donation the charity gets $5. That seems pretty good but would it really mean that money wouldn't be donated if it wasn't tax deductible? I don't think so, I'd still donate to the charities I support.
Another one I benefit from that is very popular is the mortgage interest deduction. Housing drives our economy and when people move into a new house they spend money e.g. furniture, appliances, paint, but again how much of a factor is it? It makes a 6% mortgage have an effective tax rate of ~5%, which must have some effect but if you eliminated these popular deductions (and the less popular ones) it would allow us to massively cut rates while increasing revenue. And the revenue increase could be at a low net cost to tax payers because of the efficiency gained.
Not only could the marginal tax rates be halved but it would also allow a massive simplification ... to the point where 95% of the population could receive a tax bill and they could just pay what the IRS says is due and avoid all the time and expense (http://blogs.forbes.com/janetnovack/2011/01/05/tax-waste-6-1-billion-hours-spent-complying-with-federal-tax-code/) that is now spent on complying with the tax code.
Our financial problems are entirely within our ability to manage. One thing that would be very helpful would be if the Republicans decided that surpluses are in their political interests. I think that surpluses would make federal services seem more expensive then under a balanced budget (let alone a deficit budget). The more expensive the services the less popular they will be. The Republicans need to reverse course and embrace surpluses. And surpluses will result if we collect a 1990s level of revenue.
If Republicans want to shrink the federal government they should raise taxes to the point that we are paying down our debt.
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It is interesting how the media is trying to create a rift in the GOP by going after Cantor. Sorry, hasn't anyone heard of playing good cop, bad cop as a negotiation strategy. All of these antics won't work and the American people are in favor of controlling spending as well. The Dems are the ones playing a dangerous game. The GOP put there budget proposal on record several months ago and to date, we still have no hard offers with any meat from the DEMS. They are simply playing the game of criticizing the GOP and offering no concrete plan of their own.
http://www.foxnews.com/politics/2011/07/14/dems-slam-cantor-as-patience-runs-thin-in-tense-deficit-talks/ (http://www.foxnews.com/politics/2011/07/14/dems-slam-cantor-as-patience-runs-thin-in-tense-deficit-talks/)
Obama Owns the Debt-Ceiling Fiasco
It doesn't help that he's declared high-speed rail and even unspent stimulus funds as untouchable.
The president has made a bipartisan agreement even more difficult by declaring certain spending off-limits to cuts. Mr. Obama's "untouchable" list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals.
Mr. Obama has offered no evidence since becoming president that he wants to restrain the upward trajectory of government spending. He does want higher taxes to pay for significantly higher federal spending. But he wants Republicans to deliver the tax increases, since Democrats couldn't pass them last year despite controlling both chambers of Congress.
Republicans have wisely declined. Demanding the GOP vote for immediate tax increases that would be offset by vague, future tax cuts conjures up images of Charlie Brown, Lucy and the football. The tax increases would be real—tthe future tax rate cuts would be imaginary. And Mr. Obama has opposed any serious spending enforcement mechanisms, such as a balanced budget amendment or hard caps on spending.
His tone also hasn't helped achieve a comprehensive agreement. The president's two most recent press conferences, in which he accused the GOP of foot-dragging, convinced Republicans that he was interested in scoring political points and attracting independents, not facilitating a deal. Convening high-profile White House meetings without offering substantive concrete proposals and then having his aides leak madly (and inaccurately) to the press afterward further squandered trust.
http://online.wsj.com/article/SB10001424052702304911104576443863077227784.html?mod=WSJ_Opinion_LEADTop (http://online.wsj.com/article/SB10001424052702304911104576443863077227784.html?mod=WSJ_Opinion_LEADTop)
I think most people already know that both Rupert Murdock's Wall Street Journal and Rupert Murdock's FOX news support the maximal Republican position. The only previous votes that are relevant to the debt limit discussion are the votes that authorized the spending authority that in sum is the federal budget. The spending authority this group of Representatives authorized.
As I have said, the only deal that can get the support of 216 House Republicans (I now think that is the number - down due to vacancies) is one that cuts spending by the same amount the debt is raised and does not increase revenue by any amount. There is no way the President can accept that but that doesn't even matter because there is no way that would pass the Senate - even excluding the use of the filibuster! The Hose Republican proposal couldn't even get 50 Senate votes. I don't think it would get 40 votes. And there is a reason why. The House proposal is deeply unpopular with the American people (http://fivethirtyeight.blogs.nytimes.com/2011/07/13/house-republicans-no-tax-stance-far-outside-political-mainstream/).
So given that. Given that the only proposal that the Republican House can deliver, cannot pass the Senate and is supported by only 20% of the American people what is the President suppose to do? What would be a reasonable demeanor in the face of those facts?
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice. Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend. That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance. Another teaching from the Bible is that we will reap what we have sown.
Not sure if you meant a literal response from your statement, but there it is.
I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...
Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.
A nation that goes into debt becomes a slave to the lender(s).
Deuteronomy 15:6 For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.
Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice. Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend. That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance. Another teaching from the Bible is that we will reap what we have sown.
Not sure if you meant a literal response from your statement, but there it is.
I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...
Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.
A nation that goes into debt becomes a slave to the lender(s).
Deuteronomy 15:6 For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.
Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.
This is a common misconception. US Treasuries are not equities. US Treasuries do not give the holder an ownership interest in the United States. Their value derives entirely from the value of our word. They are uncollateralized loans.
EDITED TO ADD: Wasn't this country founded by incurring a very large debt most notably from the Dutch, securing which loan is said to be Adam's contribution to defeating the British?
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I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.
Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice. Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend. That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance. Another teaching from the Bible is that we will reap what we have sown.
Not sure if you meant a literal response from your statement, but there it is.
I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...
Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.
A nation that goes into debt becomes a slave to the lender(s).
Deuteronomy 15:6 For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.
Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.
This is a common misconception. US Treasuries are not equities. US Treasuries do not give the holder an ownership interest in the United States. Their value derives entirely from the value of our word. They are uncollateralized loans.
EDITED TO ADD: Wasn't this country founded by incurring a very large debt most notably from the Dutch, securing which loan is said to be Adam's contribution to defeating the British?
Bill,
Not sure what you are speaking about with the Treasuries and ownership interest in response to my post. I was speaking of the Fed not the US treasury. A little further explanation would help.
God bless,
Peter
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um it is a thread about our debt limit and your quote says don't borrow money from other nations. The Fed doesn't borrow money.
You're Fed history might be a dog whistle in some circles but I can't hear it ... the Fed hasn't put us in debt.
And I don't think you can actually be a slave if your bondage is based on entirely your word.
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um it is a thread about our debt limit and your quote says don't borrow money from other nations. The Fed doesn't borrow money.
You're Fed history might be a dog whistle in some circles but I can't hear it ... the Fed hasn't put us in debt.
And I don't think you can actually be a slave if your bondage is based on entirely your word.
Fair enough, first of all, I never implied that the Federal Reserve borrows money. In fact, the Fed is the single largest owner of our national debt.
http://www.brillig.com/debt_clock/faq.html
In comparison, the amount we owe to China is only a small fraction of the debt that we owe the the Fed. Most folks do not understand the power that the Fed has over our economy and over our politics. The simple fact that the Fed is the largest single owner of our debt should lead us to ask some questions as Americans. Who OWNS the Fed? Gaining actual lists of the owners is probably impossible for a regular grunt like me or others, but the reports are foreign bankers own the Fed. This is a private bank, it is NOT owned by the Federal government and there is nothing federal about the Fed. They do as they please and tell congress and the president what they are going to do, not the other way around.
So, the Fed is not what many believe it to be. Instead they are the banker that holds us debts. People should be afraid of the Fed more than they are of China.
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10 Things That Would Be Different If The Federal Reserve Had Never Been Created
The vast majority of Americans, including many of those who believe that they are "educated" about the Federal Reserve, do not really understand how the Federal Reserve really makes money for the international banking elite. Many of those opposed to the Federal Reserve will point to the record $80.9 billion in profits that the Federal Reserve made last year as evidence that they are robbing the American people blind. But then those defending the Federal Reserve will point out that the Fed returned $78.4 billion to the U.S. Treasury. As a result, the Fed only made a couple billion dollars last year. Pretty harmless, eh? Well, actually no. You see, the money that the Federal Reserve directly makes is not the issue. Rather, the "magic" of the Federal Reserve system is that it took the power of money creation away from the U.S. government and gave it to the bankers. Now, the only way that the U.S. government can inject more money into the economy is by going into more debt. But when new government debt is created, the amount of money to pay the interest on that debt is not also created. In this way, it was intended by the international bankers that U.S. government debt would expand indefinitely and the U.S. money supply would also expand indefinitely. In the process, the international bankers would become insanely wealthy by lending money to the U.S. government.
http://theeconomiccollapseblog.com/archives/10-things-that-would-be-different-if-the-federal-reserve-had-never-been-created/comment-page-1
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Maybe you could start a thread about the Fed. I'd say that in this context bring it up is just a way to distract from the mess the Republican House has created.
I will note that the Economic Collapse website you linked to seems pretty darn excited at the prospect of the House not doing its job.
Peter I asked, Given that the only proposal that the Republican House can deliver, cannot pass the Senate and is supported by only 20% of the American people what is the President suppose to do? What would be a reasonable demeanor in the face of those facts?
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Maybe you could start a thread about the Fed. I'd say that in this context bring it up is just a way to distract from the mess the Republican House has created.
I will note that the Economic Collapse website you linked to seems pretty darn excited at the prospect of the House not doing its job.
Peter I asked, Given that the only proposal that the Republican House can deliver, cannot pass the Senate and is supported by only 20% of the American people what is the President suppose to do? What would be a reasonable demeanor in the face of those facts?
Bill, without the Fed, there would not be a 14 trillion dollar debt, plain and simple. It owns nearly half of our current debt. They are not our friends and they are not part of the Federal government. Since we are speaking about raising the debt limit that will most benefit the owners of the Fed since that is who is going to get the interest payments, I would say that it is quite appropriate to understand their role in this entire mess since they are the cause.
As far as the popularity of raising the debt limit, I would state that Americans in the last two Gallup polls on this issue oppose raising the limit 2:1:
July 12, 2011
U.S. Debt Ceiling Increase Remains Unpopular With Americans
More are concerned about higher level of spending than risk of economic crisis
by Lydia Saad
PRINCETON, NJ -- Despite agreement among leaders of both sides of the political aisle in Washington that raising the U.S. debt ceiling is necessary, more Americans want their member of Congress to vote against such a bill than for it, 42% vs. 22%, while one-third are unsure. This 20-percentage-point edge in opposition to raising the debt ceiling in Gallup's July 7-10 poll is slightly less than the 28-point lead (47% vs. 19%) seen in May.
http://www.gallup.com/poll/148454/debt-ceiling-increase-remains-unpopular-americans.aspx
I personally don't have an issue about raising the limits at this point if, IF, we begin to take steps to control our spending and bring our house in order just as the Republicans are attempting to do. Obama's proposals will lead us off the brink. No doubt, since Reagan, both the GOP and the DEMS have used deficit spending. The only time it was reversed was during Clinton when the Republicans imposed fiscal spending reductions: Take a look:
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms
So, let's just go back to what worked for Clinton.
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It just is not true to say the Fed currently owns half our debt. Debt held by the Federal Reserve PLUS the other intergovernmental holdings comprise about 50% of all outstanding debt.
http://www.treasurydirect.gov/govt/reports/pd/pd.htm (http://www.treasurydirect.gov/govt/reports/pd/pd.htm)
That 50% includes about ~$2.5 trillion in SS Trust funds and another ~$1.5 Trillion held by other Federal trust funds.
About a third of US Banks are members (aka owners) of the Federal Reserve but it isn't ownership as it is ordinarily understood. They do not have a say in the operations of the Fed and they can not sell their stakes. They receive a set dividend and any profits above that are transferred to the US Treasury.
http://www.federalreserve.gov/aboutthefed/section2.htm (http://www.federalreserve.gov/aboutthefed/section2.htm)
The Fed has nothing to do with how much the Congress has borrowed in the past and it has nothing to do with determining how much Congress needs to borrow in the future.
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Bill, as always you are a gentlemen in your debates which I have always appreciated even though we often disagree.
The issue of the Fed is one that little is written and few know any details since it is shrouded in secrecy. We do know some facts though:
1) The Fed is not Federal at all, it is a privately owned bank.
2) Our currency is fiat money that are simply printed with nothing backing up their value.
3) The Fed exerts enormous control over our economy and our politics. Look up Andrew Jackson and why he got rid of the national bank during his time in office. The same dangers apply to our situation today.
There is a reason that Ron Paul wants to audit the Fed, something that I don't believe will ever happen since the Fed has power over the US government and people and we have none over the Fed. They are the master and we are the slave in this arrangement. Finding reliable websites is a difficult chore when it comes to the issues of the Fed. Here is one that looks like it has reliable information.
THEY PRINT IT - WE BORROW IT AND PAY THEM INTEREST
An example of the process of currency creation and its conversion into "people's debt" will aid our understanding. The Federal Government, having spent more than it has taken from its citizens in taxes, needs (for the sake of illustration) $1 billion. Since it does not have the currency, and Congress has given away its authority to create it, the government must go to the creators for the $1 billion. But the Federal Reserve, a private corporation, does not give its currency away for free! The bankers are willing to deliver $1 billion in currency or credit to the federal government in exchange for the government's agreement to pay it back with interest. So Congress authorizes the Treasury Department to print $1 billion in U.S. Bonds, which are then delivered to the Federal Reserve bankers. (The bonds are a kind of "IOU" that bears interest.)
The U.S. Treasury prints $1 billion in bank notes. The printing cost is about $20.62 per 1,000 bills - it costs the same irrespective of the denomination - the cost of printing a $1 note is about the same as for a $100 note: about .0206 cents. The Federal Reserve "buys" these bills from the U.S. Treasury, paying only for the printing costs. The bills are then exchanged at full face value for the bonds. The government uses the currency to pay its obligations. What are the results of this fantastic transaction? Well, the government's bills are paid all right, but the U.S. Government has now indebted the people to the Federal Reserve bankers for $1 billion plus interest!
Since this process has been going on since 1913, the people are now indebted to the bankers to the tune of trillions of dollars. The people are taxed billions of dollars each month just to pay the interest on this "national debt." With both the principal and the interest climbing every month, there is no hope of ever paying off this "debt." The working people of the United States now "owe" the approximately 300 banking families and their consorts more than the assessed value of all the assets in the United States. And realize, the bankers got all this for the cost of paper, ink, and bookkeeping!
http://www.buildfreedom.com/tl/rape3.shtml
Here is another illustration of how the Fed works:
Here is an illustration to explain how the Federal Reserve works.
1-In 1913 the privately owned Federal Reserve Bank issues the first Federal Reserve Notes to the US Treasury for $1,000 (amount is figurative).
2-The US Treasury now owes the Fed Res Interest + Principal. So the US Treasury is now indebted for $1,200.
3-The US Treasury owes $1,200 but only $1,000 exists. The additional $200 has not been created yet.
4-The US Treasury now has no choice they must go back to the Fed Res and borrow $200. The Fed Res creates the new money and backs it up with additional debt.
5-The US Treasury now owes $1,400. Same problem. Only $1,200 exists. More money most be borrowed.
Today- The US Treasury owes 14.5 Trillion. That amount of money does not exist. The US Treasury needs to borrow more to pay back that interest. Which will only increase the total debt owed next year. What we have here is a dog trying to catch its own tail and running in circles.
http://libertythinkers.com/education/debt-ceiling-hocus-pocus-illusions/
America at this point has no choice but to raise the debt limit because otherwise the Fed will call in the debts and the entire system will collapse. The crises we are in today was foreordained from the moment we turned our treasury over to foreign bankers. This is a topic that I doubt anyone will bring up publicly in these debates other than so called conspiracy nuts, but it is at the heart of the entire debate.
Listen to what Thomas Jefferson had to say about this issue 2 centuries ago:
Thomas Jefferson on the dangers of a central bank wrote:
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. Thomas Jefferson, President of the United States 1801-1809
http://www.worldviewweekend.com/worldview-times/print.php?&ArticleID=3264
Jefferson went even further in his comments:
A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army...We must not let our rulers load us with perpetual debt."
Thomas Jefferson, One of the Founding Fathers 3rd President of the United States of America
Continue reading at NowPublic.com: THOMAS JEFFERSON WARNED AGAINST A PUBLIC CENTRAL BANK | NowPublic Photo Archives http://www.nowpublic.com/world/thomas-jefferson-warned-against-public-central-bank#ixzz1SICs4fWV
What do we do now? If we wish a confrontation with the world bankers, go against the debt ceiling and go further in debt. It would buy some time but lead to the outcome of complete bankruptcy some time in the future, but we would be able to limp along without any great changes. If we choose to not raise the debt ceiling then we will precipitate a conflict with the bankers that have control over our fate through interest rates and other powers completely under their control. Either outcome in my opinion is not acceptable, but for the short term raising the debt limit is less painful. In other words, America is now at the mercy of the international bankers and we are slaves to our lenders. Everyone likes to talk about China, but they are NOT the big player in this entire drama. Can we regain our independence from them? Perhaps but we don't have people willing to go through that painful transition. So be it, raise the debt ceiling and give us a bit more peaceful bliss in our ignorance of what is happening. The politicians and the people cherish security more than true freedom at this time. I see no way but to go forward and raise the debt ceiling since undoing nearly 100 years of slavery to the central bank is probably an impossible act to consider let alone accomplish at this time.
God bless,
Peter
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I think this is a separate question - I'll start a separate thread.
As to raising the debt limit - I'd like to hear what you all expect to happen if the US adds 14 trillion to the debt over the next 10 years - which I would take to be unlikely but possible. What do debt limit raising skeptics think would happen?
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I am completely disgusted with John Boehner. Even the Catholic Church is questioning why he wants to balance the budget on the backs of the sick and elderly.
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I am completely disgusted with John Boehner. Even the Catholic Church is questioning why he wants to balance the budget on the backs of the sick and elderly.
I don't know what to think anymore, but I DO believe that the reason he wouldn't speak to the President about his plans to walk away until so late in the day is because he didn't want to spook Wall Street. He waited until the markets closed for the weekend to throw his hissy fit. The last thing Wall Street wants is a default.
So, that's Coburn, Cantor and now Boehner who have walked away. I find it really odd that they would choose this particular kind of behaviour. I don't think the American people are particularly sympathetic to this tactic.
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We're coming into some uncharted water starting Monday (assuming nothing gets done on Sunday except the Sunday political talk shows).
It is possible that markets aren't going to react, but at some point they have to or they will have stopped functioning as a market. If Bohner can't deliver 216 votes on any sort of legislation other than the highly unpopular cuts only approach, then the only way forward that I see, legislatively, is if the Republican Caucus fractures allowing 24 Reps to join with all the Dems, or some greater number of Reps to join with some portion of the Dems - whatever is needed to get it over the line. Because at this point it can't be done with only Reps.
If that is right then it's going to have to go to the wire for there to be enough consequence for there to be the pressure it will take to fracture the Rep's caucus ... and of course it could be that the Reps don't fracture, or a fracture happens on both sides of the aisle in a way that doesn't allow for piecing together enough votes to pass the House.
Really, from this point, the options just get worse.
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And in the analogies department the one I would make is that it is as if the House Republicans are making the argument that the plane we are in is going to crash because flight is impossible - planes are way heavier than rocks; rocks can't fly; ergo planes can't fly - so we should open the doors and hope something good comes from ending a doomed flight.
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Looking back, I'd say this has been a disaster. And I say disaster because I can't really think of a better word (maybe meinuk could come up with one). Like a hurricane or an earthquake this is going to have long term consequences for what is possible, but of course the difference is that this was purely an artifact of politics gone bad, we've self limited our potential as a country, stunted what economic growth is possible. And like the Japanese earthquake and tsunami this effect on growth is a worldwide problem. It's a disaster.
Clearly the President made a mistake. He miscalculated and should have linked the extension of the Bush tax cuts (http://www.youtube.com/watch?v=UDC8pmfmYc4&) with the debt increase back in December - when facing a hostage situation, take your own hostage - but since that didn't happen, it is hard to argue with S&P's downgrade, given all the Republican presidential candidates have said they would not raise the debt ceiling.
Looking ahead I'm not sure how this resolves. It is interesting to consider the possibility of this leading, over time, to the formation of a third party. The one example of third party success is the Republican party, circa 1850 - 1860. A new party could try to form using their example -establish a political base in the NE, elect people to statehouses and to Congress by drawing away office holders from both the Dems and the Reps and by 2024 they might be in position to change the dynamics of US presidential politics.
Shorter term, it is not clear how this resolves. Supposedly, the military's budget is at stake for the next round of talks but politically that is not a strong threat. Future Congress isn't going to give a wit what this Congress says; the Reps are operating under the understanding that whatever they do, they can undo once they regain the White House.
I don't see a way forward so long as the Dems aren't willing to take the same risks as the Reps. And the Dems shouldn't be willing to take the risk. I don't see the way forward.
It's a hostage situation. The hostage has just been shot in the toe, can we doubt their willingness to shoot them in the head? S&P doesn't.
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Bill,
I would use the words of S&P, they down graded not because of Tea Party activists, but because the debt deal did not deal with the debt problem in any substantial manner. In other words, not enough cuts were made and our debt will double in the next 10 years going to 40% of GDP. How is that "Hostage" taking.
I do agree, why did Obama not take care of this issue when he had control of congress? Even so, since no one is serious about reducing the debt and feel it is not a problem to spend 42 cents of every dollar from borrowing, that is the hostage that is going to cripple our economy and soon lead to a situation where our bankers will be dictating American policy. Sorry, but just because folks can see the writing on the wall that America cannot keep accumulating debt at the rate we are doing does not in any manner constitute a hostage situation. I would simply state that as Obama stated many times, elections have consequences. The Dems lost big time in that last election. Obama knowing this could easily have unilaterally done a lame duck move after the November election that the conservatives could not stop. If Obama is complaining now, I see it as nothing but his own fault on not doing what he wanted when he could have.
Meanwhile, we continue to borrow 42 cents on every dollar of govn't spending, that is the true kidnapper in this entire situation. I defy anyone to produce a historical account of a nation that has gone down this path that did not bankrupt themselves. I go to the store and food prices have DOUBLED in a little over a year, yet no one talks about Obama's inflation. We are already suffering the consequences of printing more and more money and dumping it into our economy.
The one thing I agree on is the fact that Washington does not have the resolve to evaluate and actually do something to improve things. This crises is completely at the hands of the politicians in WA. If Obama had not spent 4 trillion in deficit spending in the first place, we would not be in this situation. He has kidnapped this economy and it only continues. I see very little reason for optimism.
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Bill,
I would use the words of S&P, they down graded not because of Tea Party activists, but because the debt deal did not deal with the debt problem in any substantial manner. In other words, not enough cuts were made and our debt will double in the next 10 years going to 40% of GDP. How is that "Hostage" taking.
I do agree, why did Obama not take care of this issue when he had control of congress? Even so, since no one is serious about reducing the debt and feel it is not a problem to spend 42 cents of every dollar from borrowing, that is the hostage that is going to cripple our economy and soon lead to a situation where our bankers will be dictating American policy. Sorry, but just because folks can see the writing on the wall that America cannot keep accumulating debt at the rate we are doing does not in any manner constitute a hostage situation. I would simply state that as Obama stated many times, elections have consequences. The Dems lost big time in that last election. Obama knowing this could easily have unilaterally done a lame duck move after the November election that the conservatives could not stop. If Obama is complaining now, I see it as nothing but his own fault on not doing what he wanted when he could have.
Meanwhile, we continue to borrow 42 cents on every dollar of govn't spending, that is the true kidnapper in this entire situation. I defy anyone to produce a historical account of a nation that has gone down this path that did not bankrupt themselves. I go to the store and food prices have DOUBLED in a little over a year, yet no one talks about Obama's inflation. We are already suffering the consequences of printing more and more money and dumping it into our economy.
The one thing I agree on is the fact that Washington does not have the resolve to evaluate and actually do something to improve things. This crises is completely at the hands of the politicians in WA. If Obama had not spent 4 trillion in deficit spending in the first place, we would not be in this situation. He has kidnapped this economy and it only continues. I see very little reason for optimism.
Here is a link to the report http://www.standardandpoors.com/ratings/us-rating-action/en/us/ (http://www.standardandpoors.com/ratings/us-rating-action/en/us/)
Reading their analysis they say they aren't taking a position on the balance between taxes and cuts to achieve budget sustainability but they point out that the recently released Bureau of Economic Analysis data revealed that the 2008 downturn was much greater than previously known (thus the counter measures i.e. stimulus, were even less than what was needed) and given the inability of the federal government to effectively tax its citizens the US's willingness (not ability, but willingness) to repay the debt is in doubt.
Compared with previous projections, our revised base case scenario now
assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012,
remain in place. We have changed our assumption on this because the majority
of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act.
I can't understand saying this is a case of "if only Obama had not spent 4 trillion in deficit spending in the first place, we would not be in this situation. He has kidnapped this economy and it only continues." Besides being wrong it is needlessly inflammatory. The only money that the US has spent is money Congress has authorized. The problem is we are unwilling to tax.
I don't think the problem would have been solved in December 2010 if he had made the extension of the Bush tax cuts contingent on a debt increase, I think for the strategy to have worked he would have had to have had a political fight for the last eight months (or possibly longer since the higher revenues from letting the tax cuts expire would have pushed the default date back) but what itwould have done is link the cause and the effect.
I find myself agreeing with those that say the current republican positions would not pass muster in an Economics 102 class (http://noahpinionblog.blogspot.com/2011/08/supply-side-vs-demand-side-recessions.html).
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Bill,
How can we continue to borrow our way to prosperity? I know no historical success for that strategy. I cannot fathom why people believe we can take that approach today and be successful. That is the entire crux of the problem. Cities cannot do it, counties cannot do it, states cannot do it, no other country has ever gotten away with it. Why now will the US turn this into success? At some point we have to look at our spending and make decisions on how to get them in line. Placing the current US, European debt debacle into an historical context yields a very gloomy forecast.
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We also know that trickle down economics certainly does not work. All it does is make the rich richer.
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Bill,
How can we continue to borrow our way to prosperity? I know no historical success for that strategy. I cannot fathom why people believe we can take that approach today and be successful. That is the entire crux of the problem. Cities cannot do it, counties cannot do it, states cannot do it, no other country has ever gotten away with it. Why now will the US turn this into success? At some point we have to look at our spending and make decisions on how to get them in line. Placing the current US, European debt debacle into an historical context yields a very gloomy forecast.
You borrow, you grow, you tax, you repay. The risk is at that at some future date interest rates will go up - how can it be a good idea to speed that process up? Which is all the Reps have managed to do, while people's life time earning is suppressed by prolonged unemployment. Yet another way that the current Republican budget policy is making our long term revenue problem worse - the less people earn, the lower they stay on the pay scale the bigger the Medicare hole we face.
As you have pointed out some 4 or so Trillion of debt is owed to the Fed. What do you suppose would happen if Congress decided to only default on the Fed debt? What would happen if the Fed debt was never repaid? If that portion of the debt was erased? Just about nothing (potential inflation down the road) which is why the Fed is nothing like Chase, a bank owned by the Queen of England or whatever. The Fed isn't owned in the normal sense of the word, no one would experience a presonal financial loss if the Fed's treasury pile disappeared.
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Two days ago, my 19 year old daughter asked "what is going to happen to us?" (meaning her generation) My 14 year old a while longer back, asked "we there ever be a time people have to sell apples again?" Just saying.... this is on the thoughts and minds of young children today.
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... It is interesting to consider the possibility of this leading, over time, to the formation of a third party. The one example of third party success is the Republican party, circa 1850 - 1860. ...
And that led to a devastating civil war...the electoral votes were split between four candidates. If I remember correctly Lincoln is still the President elected with the lowest percentage of the popular vote...something less than 40%. Actually, there was two "third-parties" and the Democrat party was split North/South and nominated two different candidates. So we think things are chaotic now! Sometimes we forget history!
And history also shows that "Honest Abe" got the Republican nomination--the convention was in his home state of Illinois that year--when his delegates packed the convention hall with so many (non-delegate, non-voting) Lincoln supporters that his opponent's delegates couldn't get in the door to cast their votes! (Lincoln himself wasn't there...in those days it was considered undignified for a politician to attend the nominating conventions.)
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Bill,
How can we continue to borrow our way to prosperity? I know no historical success for that strategy. I cannot fathom why people believe we can take that approach today and be successful. That is the entire crux of the problem. Cities cannot do it, counties cannot do it, states cannot do it, no other country has ever gotten away with it. Why now will the US turn this into success? At some point we have to look at our spending and make decisions on how to get them in line. Placing the current US, European debt debacle into an historical context yields a very gloomy forecast.
You borrow, you grow, you tax, you repay. The risk is at that at some future date interest rates will go up - how can it be a good idea to speed that process up? Which is all the Reps have managed to do, while people's life time earning is suppressed by prolonged unemployment. Yet another way that the current Republican budget policy is making our long term revenue problem worse - the less people earn, the lower they stay on the pay scale the bigger the Medicare hole we face.
As you have pointed out some 4 or so Trillion of debt is owed to the Fed. What do you suppose would happen if Congress decided to only default on the Fed debt? What would happen if the Fed debt was never repaid? If that portion of the debt was erased? Just about nothing (potential inflation down the road) which is why the Fed is nothing like Chase, a bank owned by the Queen of England or whatever. The Fed isn't owned in the normal sense of the word, no one would experience a presonal financial loss if the Fed's treasury pile disappeared.
Bill,
I just saw a CNBC special on the 1975 financial crisis in NY City where the banks refused to back the cities unsustainable debt. We are exactly where NYC was in 1975. They had to be bailed out by the FEDs to avoid default. NYC got its house in order under Koch who brought fiscal responsibility back to the city. Take a look at how it happened and what the solution was. Sorry, but S&P is telling us our continued spending and borrowing is unsustainable, this has nothing to do with the Tea party whatsoever, it is our profligate spending that is placing the country at huge risk.
The Republicans on the other hand placed a sensible cut, cap and balance package that the Dems rejected. History is on the side of the Republicans in this debate. The solution for the FEDs is the same as it was for NYC in the 70's when Koch, cut, capped and balanced and got back on a sound footing.
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I just saw a CNBC special on the 1975 financial crisis in NY City where the banks refused to back the cities unsustainable debt. We are exactly where NYC was in 1975. They had to be bailed out by the FEDs to avoid default. NYC got its house in order under Koch who brought fiscal responsibility back to the city. Take a look at how it happened and what the solution was. Sorry, but S&P is telling us our continued spending and borrowing is unsustainable, this has nothing to do with the Tea party whatsoever, it is our profligate spending that is placing the country at huge risk.
hmmm the FEDs, aka President Ford, specifically did NOT bailout NYNY, see NY Post headline attached. It's when easily verified history such as this is misstated that it calls into question the quality of your sources.
The larger point is that the US Federal Government is unlike a city government or state government or a business or a household. Those other entities share the vocabulary of the US's financial situation but they have few of the details in common. For instance, the US government can print money and the US government has vastly greater ability to tax. The demographics of the US are "better" from a financial point of view than NYNY in 1975.
The situation the US faces is not like NY in 1975 or Greece in 2011. It just isn't. The Republican insistence on making these comparisons is yet another way that today's Republicans have turned what it historically meant to be a conservative on its head. The Conservatism of Bill Buckley was said to see the world as it is - that's the fundamental problem - the Republicans no longer seem to see the world as it is.
The Republicans on the other hand placed a sensible cut, cap and balance package that the Dems rejected. History is on the side of the Republicans in this debate. The solution for the FEDs is the same as it was for NYC in the 70's when Koch, cut, capped and balanced and got back on a sound footing.
A balanced budget amendment isn't a good idea and the Republicans know it - as evidenced by the fact that from 1/01-12/06 when they controlled all three branches of government they never once brought a BBA to the floor of Congress. The Republicans are imagining a smaller United States where we shrink to achieve a sustainable budget. This won't work - their policies shrink revenues faster than they shrink spending. We end up poorer, more in debt and with less ability to repay. The only way forward is growth.
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Two days ago, my 19 year old daughter asked "what is going to happen to us?" (meaning her generation) My 14 year old a while longer back, asked "we there ever be a time people have to sell apples again?" Just saying.... this is on the thoughts and minds of young children today.
I see this as an example of your daughter's generation picking up on the signaling coming from our generation. I see our generation signaling that we've lost our nerve, we've lost our belief in American exceptionalism. I think our generation is signalling we've lost our belief in America.
It's as if your daughter's generation is watching as our generation bet against America. Against the country. No wonder she wonders if she'll be selling apples.
I'd tell her that I don't think apple selling is in her future (unless she moves to WA and starts wholesaling). I would tell her that she should never bet against America. There are plenty of people who haven't lost their nerve. At some point this political dynamic will pass like a fever and when she retires into Medicare (at the age of 90 hahah) she'll still live in the world's economic and military hegemon.
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Two days ago, my 19 year old daughter asked "what is going to happen to us?" (meaning her generation) My 14 year old a while longer back, asked "we there ever be a time people have to sell apples again?" Just saying.... this is on the thoughts and minds of young children today.
I see this as an example of your daughter's generation picking up on the signaling coming from our generation. I see our generation signaling that we've lost our nerve, we've lost our belief in American exceptionalism. I think our generation is signalling we've lost our belief in America.
It's as if your daughter's generation is watching as our generation bet against America. Against the country. No wonder she wonders if she'll be selling apples.
I'd tell her that I don't think apple selling is in her future (unless she moves to WA and starts wholesaling). I would tell her that she should never bet against America. There are plenty of people who haven't lost their nerve. At some point this political dynamic will pass like a fever and when she retires into Medicare (at the age of 90 hahah) she'll still live in the world's economic and military hegemon.
Yes, beautifully said, Bill.
Politics are very much on my mind tonight, as Wisconsin sits on the eve of a history-making set of recall elections. I know this economic nightmare will pass like all others before it, I just hope the state where I reside does not have to demonstrate to the world just how awful things can get when politicians refuse to take risks, compromise, look at the world through another person's point of view....
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I just saw a CNBC special on the 1975 financial crisis in NY City where the banks refused to back the cities unsustainable debt. We are exactly where NYC was in 1975. They had to be bailed out by the FEDs to avoid default. NYC got its house in order under Koch who brought fiscal responsibility back to the city. Take a look at how it happened and what the solution was. Sorry, but S&P is telling us our continued spending and borrowing is unsustainable, this has nothing to do with the Tea party whatsoever, it is our profligate spending that is placing the country at huge risk.
hmmm the FEDs, aka President Ford, specifically did NOT bailout NYNY, see NY Post headline attached. It's when easily verified history such as this is misstated that it calls into question the quality of your sources.
The larger point is that the US Federal Government is unlike a city government or state government or a business or a household. Those other entities share the vocabulary of the US's financial situation but they have few of the details in common. For instance, the US government can print money and the US government has vastly greater ability to tax. The demographics of the US are "better" from a financial point of view than NYNY in 1975.
The situation the US faces is not like NY in 1975 or Greece in 2011. It just isn't. The Republican insistence on making these comparisons is yet another way that today's Republicans have turned what it historically meant to be a conservative on its head. The Conservatism of Bill Buckley was said to see the world as it is - that's the fundamental problem - the Republicans no longer seem to see the world as it is.
The Republicans on the other hand placed a sensible cut, cap and balance package that the Dems rejected. History is on the side of the Republicans in this debate. The solution for the FEDs is the same as it was for NYC in the 70's when Koch, cut, capped and balanced and got back on a sound footing.
A balanced budget amendment isn't a good idea and the Republicans know it - as evidenced by the fact that from 1/01-12/06 when they controlled all three branches of government they never once brought a BBA to the floor of Congress. The Republicans are imagining a smaller United States where we shrink to achieve a sustainable budget. This won't work - their policies shrink revenues faster than they shrink spending. We end up poorer, more in debt and with less ability to repay. The only way forward is growth.
Sorry Bill, you don't have the complete story. Yes, Ford did tell them to Drop Dead so to speak at first, but roll the frame ahead a few months and Ford did eventually at the last minute give in and the FEDS did in fact bail out NYC and set up a commission to oversee their financial house.
Infamous ‘Drop Dead’ Was Never Said by Ford
By SAM ROBERTS
Published: December 28, 2006
… Mr. Ford, on Oct. 29, 1975, gave a speech denying federal assistance to spare New York from bankruptcy. The front page of The Daily News the next day read: “FORD TO CITY: DROP DEAD.”
Mr. Ford never explicitly said “drop dead.” Yet those two words, arguably the essence of his remarks as encapsulated in the immortal headline, would, as he later acknowledged, cost him the presidency the following year, after Jimmy Carter, nominated by the Democrats in New York, narrowly carried the state.
“It more than annoyed me because it wasn’t accurate,” he recalled years later. “It was very unfair.”
That view is echoed in an evolving version of historical revisionism. Only two months after saying or meaning or merely implying “drop dead” — or, perhaps, resorting to tough love by holding the city’s feet to the fire — Mr. Ford signed legislation to provide federal loans to the city, which were repaid with interest…
Moreover, the speech spurred New York’s civic, business and labor leaders to rally bankers in the United States and abroad, who feared their own investments would be harmed if New York defaulted on its debt.
Mr. Ford was also an unlikely whipping boy. His resolve against profligacy was stiffened by more inviting villains, especially his treasury secretary, William E. Simon, whom even the president referred to as “hard-nosed.”
http://sweetness-light.com/archive/ford-was-right-to-tell-nyc-to-drop-dead
So Ford did indeed bail out NYC after much international pressure came to him.
In addition, Koch, a liberal democrat became one of the most fiscally conservative mayors NYC has ever seen. He has shown all of us how to overcome the great debacle that Obama is leading us into, it is exactly the plan of the Republicans by cutting spending and balancing the budget. Once again, he is one of your folks heros in the last 50 years. He did remarkably well and we should follow his example.
With New York City's treasury near empty, Koch restored the city's credit in his first term through a series of budget cutting measures, enabling the city to enter the bond market within a few years and raise capital funds. As the city's fiscal prognosis began to brighten, so too did the mood of New Yorkers. The characterization of Koch as low key was soon revised after he took office, with his ebullient personality, and his trademark greeting, "How 'm I Doin'." Under Koch, the city's annual budget doubled to $26 billion and approximately $19 billion was spent on capital projects in the 1980's.
http://www.nyc.gov/html/nyc100/html/classroom/hist_info/mayors.html#koch
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Which was it, Koch's budget cutting or a FED bailout? Ford made a political error and then retreated under fire (http://www.presidentprofiles.com/Kennedy-Bush/Gerald-R-Ford-The-new-york-city-crisis.html), it turned out American's like NYNY. In Ford's own words NYNY bailed itself out but of course that statement was a political calculation because he needed to fend off Reagan in the Primaries.
But whatever, NYNY's situation in 1977 is nothing like the situation the US faces today. It's comparing Apples with a fruit stand.
The United States can't shrink its way to solvency. Walk through what the Republicans are proposing. If a President Perry in 2013 cut that year's US budget by 1.4 trillion in order to avoid having to borrow as much it would result in an immediate contraction of GDP by 10%. That contraction would increase the costs of existing government programs and decrease revenues as unemployment spiked.
That's math. Not borrowing money at this point would contract our country's economy by an amount great than whatever was cut, and then to get the resulting budget in balance you'd need to repeat the cycle.
You can not shrink your way to a sustainable budget. The only way forward is growth and consistent, steady progress towards sustainability.
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Which was it, Koch's budget cutting or a FED bailout? Ford made a political error and then retreated under fire (http://www.presidentprofiles.com/Kennedy-Bush/Gerald-R-Ford-The-new-york-city-crisis.html), it turned out American's like NYNY. In Ford's own words NYNY bailed itself out but of course that statement was a political calculation because he needed to fend off Reagan in the Primaries.
But whatever, NYNY's situation in 1977 is nothing like the situation the US faces today. It's comparing Apples with a fruit stand.
The United States can't shrink its way to solvency. Walk through what the Republicans are proposing. If a President Perry in 2013 cut that year's US budget by 1.4 trillion in order to avoid having to borrow as much it would result in an immediate contraction of GDP by 10%. That contraction would increase the costs of existing government programs and decrease revenues as unemployment spiked.
That's math. Not borrowing money at this point would contract our country's economy by an amount great than whatever was cut, and then to get the resulting budget in balance you'd need to repeat the cycle.
You can not shrink your way to a sustainable budget. The only way forward is growth and consistent, steady progress towards sustainability.
Bill, the current budget is 25% higher now than it was two years ago. Koch was the one that took NYC back from the FEDs control by fiscally responsible actions. It is exactly like NYC just on a larger level.
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^
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hmmm the FEDs, aka President Ford, specifically did NOT bailout NYNY, see NY Post headline attached. It's when easily verified history such as this is misstated that it calls into question the quality of your sources.
I've refrained from joining in on this conversation because I know your agenda and could see where you wanted to take it. There is no point in debating someone who believes in "From each according to his ability, to each according to his needs." However, this comment of yours I can't let go unchallenged.
Right - clearly advocating for a return to the tax rates of the '90s is exactly like advocating for communism.
So what? Ford regretted his speech, the one he later said lost him the election because it could be construed by a reasonable observer to equate to telling NYNY to drop dead. What's the explanation for Ford's own judgement that NYNY baled itself out? He had to keep his true belief a secrete?
But no matter - NYNY's situation in the '70s is nothing like the United States today. Saying otherwise is confusion manifest.
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Right - clearly advocating for a return to the tax rates of the '90s is exactly like advocating for communism.
Ironic, is it not that last year's current account balance was $561bn in the USA compared with $273bn in China. Seems to me that the Götterdämmerung of the US is just over the horizon
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Right - clearly advocating for a return to the tax rates of the '90s is exactly like advocating for communism.
Ironic, is it not that last year's current account balance was $561bn in the USA compared with $273bn in China. Seems to me that the Götterdämmerung of the US is just over the horizon
Really our final act is neigh? Our balance of payments deficit is going to do us in? meh
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Right - clearly advocating for a return to the tax rates of the '90s is exactly like advocating for communism.
Ironic, is it not that last year's current account balance was $561bn in the USA compared with $273bn in China. Seems to me that the Götterdämmerung of the US is just over the horizon
Really our final act is neigh? Our balance of payments deficit is going to do us in? meh
Time to start listening to "Brunhilde's immolation scene."
http://www.youtube.com/watch?v=0xm7wYRS1WA&feature=related
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