Aren't you glad that we have such forward thinking politicians? The reality is that there is little that can be done to bring us to a reasonable amount of debt without completely killing our economy as we know it. We are all nursing a little at the government breast. Some may not want to admit that, but it is true. We have given over our freedom from government meddling for economic security for the masses.
I don't understand why our politicians squirm and fret and put on such a show about this debt limit thing. We all know what will happen in the end.
Happy New Year Storm,
ReplyDeleteWe are indeed all nursing on the government, some getting much fatter then others on that milk. We have given freedom away, that is for sure. Still, it's not unsolvable, it's only unsolvable for now. Periodically, events happen that serve as catalyst for change. What really brings the change though is the emergence of a leader who has the charisma to sell it. I believe a majority of America IS willing to pay some higher taxes and IS willing to see some cuts to safety nets, which, ironically enough, we have come to believe MUST be cut at time when people are depending on them to survive.
Anyway, neither party, IMO, is really stepping up to offer what is being asked for. Well funded minority voices currently have the megaphone and even though the past election was not a result favoring the minority voice, they still retain enough power to drag out what is an inevitable outcome that everyone knows MUST happen, which is that taxes must go up and spending must do down. AND, to truly pay down debt, we MUST run surpluses and use that money to pay debt. That does not sit well with many people but I don't see any other reality.
The Senate approved a last-minute deal early Tuesday morning to scale back $600 billion in scheduled tax hikes and government spending cuts that economists widely agree would tip the economy into recession.
ReplyDeleteThe deal would hike taxes permanently for household incomes over $450,000 a year, but keep existing lower rates in force for everyone else.
It would make permanent the alternative minimum tax "patch" that was set to expire, protecting middle-income Americans from being taxed as if they were rich.
Scheduled cuts in defense and non-defense spending were simply postponed for two months.
Economists said that if the emerging package were to become law, it would represent at least a temporary reprieve for the economy. "This keeps us out of recession for now," said Menzie Chinn, an economist at the University of Wisconsin-Madison
Now we wait to see if the House passes it as well. Hints are that Boehner may refuse to allow a vote in order to try and save his job. Remains to be seen.
For a long time I have advocated the outlawing of special interest groups (lobbyists) in Washington. A little research will show the disproportionate influence these groups have as they promote their own ideals, programmes and pet projects which cost the rest of the nation billions every year. I would think Medical and Defence force procurement lobbyists would be at the forefront of the problem.
ReplyDeleteLobbyists by their access to the seat of power and their financial backing are in a position to disenfranchise the ordinary citizen and in fact they appear to do so daily. I wonder if the perceived harm caused by the lobby groups has a bearing on the perennial problem of low voter turn out in the US.
I realise that the above is off topic but it does lead directly into the situation current in Washington. The joint appears to be permanently gridlocked and even if you had Ike,JFK,FDR or even Lincoln, I very much doubt they would be able to “Lead” the country as a great President is supposed to do.
As with the Gun problem, there is a need to bite the bullet and get the problem sorted from the ground up. Remove the special interest groups and verify the credentials of the law makers. If any are shown to be less than sincere in their desire for the principals laid down by the founders, then out they go and another is found and tested.
I cannot see how America can recover from what appears to be a terminal malaise until there is a return to the core values. From my very first reading of the federalist papers, the Gettysburg address and other well known literature, there has remained in my mind the following “Government of the people for the people by the people” a beacon which should lead ,and did lead, to greatness. I fear however the light has dimmed and with it, the values the founders laid down to begin your existence as a great nation. History tells us though that the inevitable decline of an Empire or a nation occurs at about the same speed that it travelled to reach the apogee of its existence. Where to from here?
Cheers from Aussie
Kingston,
DeleteHappy New Year.
The issue with outlawing lobbyists is that the guardians at the gate are the lawmakers, yes? There are perks to be had from lobbyists. Such a prohibition would in short order be toothless.
Jean
I understand that the debt is bad in the long-term, but is the sky really falling in the short/medium term like the deficit hawks would have us believe?
ReplyDeleteWouldn't gradual spending reduction and tax hikes in conjunction with some borrowing for some infrastructure investment (power grid/energy production/broadband/roads, bridges & waterways) be the most prudent long-term approach? After all, it's never been cheaper to borrow money and infrastructure really does have a long term economically stimulative effect which, of course, would increase revenue intake.
Does that make sense or am I just talking out of my ass?
My understanding of the current finale' to the current crisis is app $41 in tax hikes for every $1 in spending cuts. That does not seem like a particularily balanced approach nor one to applaud.
DeleteWe have seen many instances of tax hikes taking immediate effect and spending cuts seldom if ever materializing. Somehow they are promised at some point in the future.
Or the spending cuts consist really of a slight decrease in the rate of spending increases.
The sky isn't falling as you might have noticed, yet. The issue will begin when they begin raising interest rates so they can sell more treasuries as our creditors demand more. Today the average interest rate is 3% for all debt issued which is 400+ billion. Imagine a 2% overall rise. 320 billion more for 16 trillion in debt. The debt is rising so imagine 20 trillion. 400 billion. Think 700-800 billion in interest is sustainable in this economy?
DeleteSome think the economy is getting better. 211K new jobs vs 160 K is better but not close to whats needed to get people back to work.
As long as we have no real interest in spending cuts, raising taxes is the joke of the century.
Everyone realizes this "Fiscal Cliff" stuff is artificial & self-imposed, right?
ReplyDeleteNone of this crap has to occur ...
pfunky
ReplyDelete"Fiscal Cliff" stuff is artificial & self-imposed, right?
To a foreigner it is just that, an artificial subterfuge to hide the real problem. I.E your fiscal debit together with the debit and deficit fiscal policy which appears to be the aim of both parties.
You probably can get by with the present policy for a while but what happens when the world refuses to buy your paper? We are in the middle of a major crisis at present when your artificial debit limit is reached. What will the world think and do when this limit is exceeded and there is no legislation passed to allow an extension to the limit/.Will the government allows a default and then can you follow the trail downwards as your Credit Rating is again downgraded?
I have heard murmuring from various sources within USA and abroad that the final solution may entail massive default and reorganization of your currency. If this occurs, I sincerely hope that the world which owes America so much, will remember the debit.
Cheers from Aussie
King,
DeleteI just put it out there for discussion. Fake crises seem unproductive to me. It's gonna require long-term policy planning to resolve our debt.
As for the world buying our paper, well the Fed may continue to do that for awhile. Default is not going to happen in the near term, and not a a realistic possibility in the long-term IF (and that's a big "if") we can manage to get our shit together.
My question was aimed to spark discussion. I really don't have the answer(s).
But since we're not gonna default tomorrow, wouldn't it make more sense to actually try to solve our long-term debt problem rather than freak out over short-term, self-imposed fake "crises"?
There is borrowing just to live outside your means, and there is borrowing to invest. If you are thousands of dollars in debt, I don't think it's an outrageous idea to borrow money to go to school for a skill that will improve earning power. Likewise, I agree totally with the premise that some spending can be of the investment variety. Ability to borrow has everything to do with perception. If we are perceived as petulant and not willing to pay our bills, THAT will be our undoing more then anything else. At this point, I think debt ceiling fights are viewed purely as a window into whether or not we want to skip out on our debts.
Deletetaxes and spending are sort of besides the point if your economy is shit. We can't make America MORE attractive to invest in so I think we should instead focus on making it less attractive to be an American company setting up production over seas. We will never pay our debt down without growing our economy. In that light, these crisis talks seem silly to me.
Hmmm. Pass a debt limit increase so we can borrow more money in hopes of eventually growing our economy so we can dribble out a little to pay the interest on the debt, or not pass the increase so we can't borrow anymore and force ourselves as a country to do something about the debt. A bit of a conundrum, yes?
DeleteMax! This constant agreement between you and I has to stop. What will people think?
Jean
Well the backroom deals are done and now we get to lay in the bed that Boehner and Reid made for us seventeen months ago. Taxes are going up, and not just on the rich, if you bother to read the fine print.
DeleteSpending cuts and a restrained budget have been punted two more months down the road so that the markets can return to their love of socialism. In the mean time the Fed keeps our interests rates artificially low by printing 85 Billion dollars more a month and transferring debt onto the next generations.
The media of course had this outcome scored as a loss for the GOP for many many months. Obama did win the day as he got to get back on his airplane for another few rounds of golf.
I would score this Obama second term-House duel 1-0 in favor of Obama in the top of the first inning. Obama has thrown a few spitballs that he may regret when the middle innings of the debt ceiling arrive.
1773-2009 Another band-aid is applied to the gash.
Your second para William, is something I will agree with 100%. I'm not kidding.
DeleteTo blame Reid and Boehnor for taxes going up, however, is really a bogus claim to make. When the Republicans passed the tax cuts in 2000 with an expiration date, they set the stage for the inevitable increase. For six years, they had more then enough legislative power to make as many cuts as possible to justify the tax cuts. They chose not to. To say Obama "won" this round is also a dubious claim. He moved toward Republicans, not the other way around. The Republicans lost that tax debate during the election cycle and the only remaining question was how much did they lose. Well, Obama wanted 250k, and the final was 400k.
As for the American people, we are all losers. This bill has only further cemented the idea that there is no consequence to running up the debt. If we won't raise taxes, what consequence is there? You don't make shit smell sweeter by calling it dung.
If we won't raise taxes, what consequence is there?
DeleteWe won't raise taxes on 47% of the population. That is cemented in place. We will raise taxes on those paying taxes especially the upper 10%.
Day is coming when there will be no choice. Some think we can print our way to success, some think you can cut your way to prosperity.
What we need is a realistic approach to our issue. Everyone pays something, no deductions, low rates. Then when you talk about raising taxes everyone feels the pain 5%, across the board. Enough hammering the minority with out consequence to everyone. Cut, time to look at government, consolidate the multiple programs and decide what we really need and what we don't.
Time to live withing our means and quit spending as if it didn't matter. Maybe it doesn't.
Payroll taxes, specifically deductions for Social Security and Medicare, are going up by 1 or 2 percent for those making under $250K.l For us retirees there is no tax increase, again provided we don't make too much money from our pensions and investments. But, there still remains the fight over raising the debt limit, which is opposed by most Republicans who will try to force the U.S. into voluntary default on the national debt. This is potentially a much greater fiscal cliff for us to face in the next few months. Never waste a good crisis.
ReplyDeleteMick,
ReplyDeleteThere is no default on the debt. If the debt limit is not raised, it means that the government can only spend what it takes in with taxes.
The crisis is yet to come, it will be when we can no longer sell our junk treasuries to other countries and to the people of the US. Personally I wouldn't buy a treasury with your money.
I would like to thank everyone for the optimistic tone in their posts in this thread. It gives me some hope that when the chips really get down, we may actually pull together to solve the problem. The failure to replace the loss of a portion of our manufacturing base with the next big thing has indeed been costly for our government. I think Max is right that we need to focus more on building a sustainable growth economy rather than worry so much about spending at this time. We cannot continue to reward bad decision making on the part of our citizenry. These behaviors result in more load for the producers to carry.
ReplyDeleteThe path we are on is obviously wrong. We can right it.
It will now come down to the debt limit. Despite the house conservatives being upset with the outcome of the media created cliff, they don't seem to be out for Boehner's hide. In my opinion Boehner's and the house had there chance in August 2011. Their deal at that time lead to a foregone conclusion yesterday.
ReplyDeleteLists have been taken, we now pretty much know who will and who won't stand up for our children's economic future. The empty chair in every room will remain until the tide turns. Debt is a terribly dark lover.
Our Tea Party now is faced with the decision we have known was coming. The DEM's party of coalition may soon face a hybrid. After three years of trying to bend the GOP towards our, and in the past their, conservative principles. It appears that effort may morph into a coalition rather than a partnership.
Difficult decisions are already under discussion. When and if the relationship forms it's derivative it will arrive sooner rather than later. The cold civil war that we have been expieriencing cannot remain in place.
1773-2009 Our descendant's will not live in serfdom.