New IMF Head Says US Must Raise Debt Limit, or Face 'Nasty Consequences'

fysdt writes with this from an article on ABC News: "The International Monetary Fund's new chief foresees 'real nasty consequences' for the U.S. and global economies if the U.S. fails to raise its borrowing limit. Christine Lagarde, the first woman to head the lending institution, said in an interview broadcast Sunday that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said. The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2."

Comments

The same threats from banks... in 2008.

[sethstorm]

How about doing something different, and not simply letting the banks loot another time?

Re:The same threats from banks... in 2008.

[Znork]

According to IMF insiders quoted in this article http://www.guardian.co.uk/business/2011/may/19/imf-pressure-appoint-non-european-head Lagarde basically is the banks, as far as bailouts are concerned. I've read elsewhere that she tried to get Lehman bailed out as well. We can expect a lot more of irresponsible lending, borrowing and bailouts with this lineup.

Ah, well, at least now that fondling IMF hand on your bum will only be after your wallet.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

It's not the banks.

It's government debt, eg bonds. Greece's interest rate is like 28%, The US is 2%. Greece's economy has basically gone titsup without default, but they're still expected to default. All the countries that are in trouble their bond rate skyrockets as soon as it looks like the bonds are going to be worthless.

What does the government do with money? It pays government employees (Miltary, Entitlement programs, infrastructure and creditors.) Creditors are other countries/people/businesses, both domestic and foreign. If the US defaults, expect the equivalent of a bank-run on bonds and stocks (equities) to get their money out of the US and into safer places like... Japan or Canada (even if it's only for a short period of time.) Take a look at the price of most of the S&P 500 1 minute before and after the jobs report last friday. So many stocks dropped by 10% for several hours before picking back up, now multiply that in a downward trend, that is what will happen.

Publicly traded companies with stocks worth less than 5$ get delisted, and that means those companies are toast. Companies that are private and those that have physical assets like Apple might survive, but a lot of the service industry does not have physical assets and they are history if the US government defaults. The irony here is that the banks would survive, but they would be calling in their loans, which means 30% interest for you.

Yes it can be doom and gloom, but it's inconceivable that the debt limit doesn't get raised. If by some chance the politicians screw the pooch and don't get it lifted, every last one of them better not be re-elected.

Re:The same threats from banks... in 2008.

[fahrbot-bot]

and not simply letting the banks loot another time

You do realize that the US debt limit has nothing to do with "the banks", right? It has to do with the US being able to pay its obligations to its citizens. Yes, some of those obligations are to banks, but not just US banks, and they are also to other countries. The US has never defaulted on its financial obligations and I'm sure now would be a bad time to start.

Re:The same threats from banks... in 2008.

[hey!]

Er... this has almost nothing to do with what happened with the banks in 2008. In fact, it's about as unrelated as it is possible for one looming economic crisis to be to some recently past economic crisis. The fallout from the prior crisis is a major contributing factor, of course, but if there is any issue of "looting", it's going to be we the people, through our elected representatives in Congress, who do it.

This crisis is entirely voluntarily precipitated by our political leadership, albeit with the excuse that they believe *some* crisis is coming sooner or later. We are facing default not because we've spent more than was budgeted, or more than was appropriated, but because we spent money that as budgeted and appropriated but now Congress won't let the Treasury raise the money to pay the people we owe money to as a result.

Re:The same threats from banks... in 2008.

[ColdWetDog]

No kidding? The IMF is the banker's bank: Of the banks, by the banks, for the banks.

It seems more like

"One Bank to rule them all, One Bank to find them,
One Bank to bring them all and in the darkness bind them"

Re:The same threats from banks... in 2008.

[elucido]

It's not the banks.

It's government debt, eg bonds. Greece's interest rate is like 28%, The US is 2%. Greece's economy has basically gone titsup without default, but they're still expected to default. All the countries that are in trouble their bond rate skyrockets as soon as it looks like the bonds are going to be worthless.

What does the government do with money? It pays government employees (Miltary, Entitlement programs, infrastructure and creditors.) Creditors are other countries/people/businesses, both domestic and foreign. If the US defaults, expect the equivalent of a bank-run on bonds and stocks (equities) to get their money out of the US and into safer places like... Japan or Canada (even if it's only for a short period of time.) Take a look at the price of most of the S&P 500 1 minute before and after the jobs report last friday. So many stocks dropped by 10% for several hours before picking back up, now multiply that in a downward trend, that is what will happen.

Publicly traded companies with stocks worth less than 5$ get delisted, and that means those companies are toast. Companies that are private and those that have physical assets like Apple might survive, but a lot of the service industry does not have physical assets and they are history if the US government defaults. The irony here is that the banks would survive, but they would be calling in their loans, which means 30% interest for you.

Yes it can be doom and gloom, but it's inconceivable that the debt limit doesn't get raised. If by some chance the politicians screw the pooch and don't get it lifted, every last one of them better not be re-elected.

It's not the goal of Tea Party Republicans to get re-elected. The majority of them are operatives for the Tea Party, which is controlled by militia operatives. They want to overthrow the US government itself even if it means launching a civil war.

They are deliberately trying to create an economic crisis because that is the best way to trigger a civil war. They already have the guns, they have the organization(militias) built up, they are ready. The sad thing is most American citizens aren't ready for it or don't want it. But when enough American citizens lose their careers, their jobs, and have no government benefits whatsoever to count on, no unemployment, no welfare, no food stamps, no anything, then the militias can give them one last job.

It's a recruitment tactic. The US government uses the same tactic of sanctions when it wants to overthrow a dictator. It's also because the Tea Party militias are tired of funding the government which is trying to investigate and crush them despite the fact that they've infiltrated the US government and control many politicians, there are still FBI agents who want to crush the Tea Part movement or any extremist movement that seeks to violently overthrow the government or cause a civil war.

Re:The same threats from banks... in 2008.

[Doctor_Jest]

Is your tinfoil hat on too tight? I just want to know if it hurts while wearing it.... Remember shiny side out...

Re:The same threats from banks... in 2008.

[elucido]

It's not the goal of Tea Party Republicans to get re-elected. The majority of them are operatives for the Tea Party, which is controlled by militia operatives. They want to overthrow the US government itself even if it means launching a civil war.

They are deliberately trying to create an economic crisis because that is the best way to trigger a civil war. They already have the guns, they have the organization(militias) built up, they are ready. The sad thing is most American citizens aren't ready for it or don't want it. But when enough American citizens lose their careers, their jobs, and have no government benefits whatsoever to count on, no unemployment, no welfare, no food stamps, no anything, then the militias can give them one last job.

It's a recruitment tactic. The US government uses the same tactic of sanctions when it wants to overthrow a dictator. It's also because the Tea Party militias are tired of funding the government which is trying to investigate and crush them despite the fact that they've infiltrated the US government and control many politicians, there are still FBI agents who want to crush the Tea Part movement or any extremist movement that seeks to violently overthrow the government or cause a civil war.

Well, I have an idea. The Tea Party supporters who don't already live in the Southeastern United States (aka The Confederacy) can all move there and let the people who don't want to be a part of it emigrate to another part of the country. Then, the Southeast can secede from the Union again. I swear, we won't stop you this time!

Currently the federal government (the FBI) plans to investigate the hell out of them. Investigations for the most petty offenses. Informants within their ranks as well. The Tea Party will likely end up like the Black Panther Party. But only if the economy gets better and people can find jobs and grow out of their revolutionary mindsets. When there are no jobs, there simply isn't going to be a better option for most of these people but the option to fight.

Re:The same threats from banks... in 2008.

[Joce640k]

Because the thought of a rich person being denied a bailout is laughable?

Re:The same threats from banks... in 2008.

[Luckyo]

Lagarde is also the politician who has been involved in a huge scandal over offering french troops to Tunisia's ousted dictator Ben Ali to suppress demonstrations.

In other words, she's perfect for the job. She supports dictatorship, systemic oppression of the masses to benefit rich elite and increase of power of private financial institutions at the cost of public ones.

Which is exactly what IMF has always stood for under all the glossy slogans.

Re:The same threats from banks... in 2008.

[Billly Gates]

"This crisis is entirely voluntarily precipitated by our political leadership"

I created my own crises as I prefered not to have my credit rating trashed at home and deal with things on my own terms.

After a nasty divorce I voluntarily repoed my car (totally paid) and sold it to pay off a portition of my exwife's debt. I used the rest of the money to live on and moved back in with my parents. I have cash in the bank now and am looking for work in a new city. Bad position I am in to do this, but it is what I had too to avoid an even worse decision made by the banks at my own expense.

My exwife sold her car for $2,500 and moved back from Alaska to California and she has no job. What did she do? Get a $7,000 car hoping she would be able to pay for it next September if they hire her as a teacher! LOL. I would have bought a $800 clunker and after the first month's paycheck trade it in the for the $7,000 car later. They are not hiring teachers anymore in California and I feel for my step kids. Sigh

6 months from now who will be in a better position? I may have a clunker by then yes. But I will at least have a car and a hopefully inproved credit rating. She may lose her car and get fired from work because she can't show up.

My point? The point is we do need to tackle the debt and trust me it is much better on our terms than the banks terms. I do not want to declare bankruptacy which is what I would have to do if I wanted to keep my car :-(. I would be unemployable with that kind of credit rating and I could never buy a house so that means no retirement. It is no different with the government. Jobs are outsourced, rich have their tax breaks and are lobbying to keep it too themselves or they spend it overseas to help China's economy, but not our own.

I think defaulting is retarded, but I voted for Obama because democrats are more fiscally responsible than republicans. I get flamed for this in CNN postings, but it is true historically. If the republicans want my vote then they need to spend and tax within reason.

I did with my life and it sucked. Government has to do the same until China becomes rich enough for jobs to come back here or we have more businesses paying taxes. All that is long term and short term we need to start by creating our own financial ceilings and repo's and restructuring on own terms before the banks come in.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

What reason would the IMF have to do that? Their entire purpose is to direct resources away from people indirectly by using the state as the enforcer for their policies. They don't care to preserve stability any more than a farmer cares about the stability of his crop. It is only a means to an end and not even a necessary one for the end in question. There are plenty of other metaphorical fields, and while it is convenient that this one is tilled and planted, it is also near overuse.

This isn't speculation either. The IMF, world bank, USAID and other institutions have shown again and again that their policies take from the citizens of a country, and prop up rulers and the wealthy. The 3rd world countries in particular have their rulers bribed with promise of financial aid in exchange for policy implementation that in turn cripples their peoples ability to thrive. Here is a concrete example of what I mean by the abstract general arguments above. The most specific example I studied is Haiti, where agricultural subsidies and bribery encouraged baby doc and other rulers to enact policies that artificially incentivized Haitians to change their economy into a cheap manufacturing export industry. This along with more direct coercion meant that workers had to pack into cities to find work to survive. This however was not done in a natural way, nor was there any centrally mandated creation of decent infrastructure so people were herded into cities(like Port au Prince) in flimsy housing and buildings. The resulting economic damage was ignored by all but economists who do not worship at the alter of the state but when the earthquake hit, direct proof of the harm of this policy manipulation was laid bare for all to see. In the entire time the people of Haiti lived there, earthquakes were endured without even a fraction of the death toll. Why? Because before that coercive centrally planned pressure to live in dense underdeveloped cities, people found it made more sense to stay away from such dangers. They have a history of earthquakes, and knew better. But because employment is more important than possible earthquake, they of course chose to risk it when the option of working outside of the cities was forcibly taken from them.

That is just one specific example, but it is a common story in many developing areas of the world. Africa in particular has a whole set of rulers who have no reason to keep their citizens out of poverty because having poor people is a source of revenue for them. Journalists, economists and writers(like Andrew Mwenda) have been jailed by these African rulers just in pointing out this fact.

Re:The same threats from banks... in 2008.

[interkin3tic]

Sure, lets not let them loot, but I think it would be a mistake to reason that "This group is bad, so when they tell us to do something, it cannot be in our interests to do it."

Re:The same threats from banks... in 2008.

[Edzilla2000]

Lagarde is also the politician who has been involved in a huge scandal over offering french troops to Tunisia's ousted dictator Ben Ali to suppress demonstrations.

Actually, it was not her, it was Michèle Alliot-Marie who offered French "expertise" to the Tunisian government. Both are french, women, and politicians, but that's all they have in common.

Re:The same threats from banks... in 2008.

[PopeRatzo]

Aren't they the ones collecting guns and forming militias across the country?

The Right-Wing extremist group known as "Sovereign Citizens" are currently the most dangerous terrorist threat at work in the United States.

They're basically the Tea Party on steroids. Maybe slightly more coherent.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

get your head out of your ass.

all obligations eventually hit the banks. the hardest. period.

if I owe you $100 (including interest), and pay you $1/month repayment, and I refuse to pay, that's $1/month you are not going to deposit in your bank.

that's $100, you won't be depositing in your bank account.

you've lost out on $100.

the bank has lost out 10 times that, or more.

for every dollar you deposit, the bank is leveraged out 10 times that.

what happens when people borrow more and more, but deposits stay flat? you end up with banks that have 20, 30, 40, 50 times leverage.

in order to keep that ratio sane, banks need their deposits.

people will go broke but once. banks will go broke 50 times over. why do you think banks and related entities have untold wealth? because regular working joes would never be allowed to leverage themselves out at 5:1 much less 50:1.

when hard times hit, people lose everything they have, and have to start over. but central banks and their pets will be allowed to drop back from 50:1 to 20:1, keeping their wealth buoyed to mere astonishing heights instead of the previous astronomical heights.

the truth is, when average working people have to start over, they will shrug off their debts, get back to basics, and go from a net worth of NEGATIVE $150,000, to ZERO. Will they have to do without their SUVs, soccer enrollment for the kids, karate lessons, pantry/fridge full of heat-and-eat 2 minute meals, deluxe smart phones for everyone in the house, high speed internet access, 4 bedroom 2 car garage home, etc etc etc??? yes.

Want to know how much banks and their stewards will lose? Just look at what happened to their stock prices in 2008.

All that paper wealth. Shriveled. Fantastically.

Raising the debt limit is just another attempt at preserving a system that allows the banking sector to enjoy paper wealth at levels 10 to 50 times that of everyone else.

The only one that can compete with the central banks, is the federal government.

Whichever one wins, you lose. Except that they are in a competition, a friendly, sometimes dastardly competition by day, laying in the same bed with each other at night.. Those not invited to the party, are you and me. You lose whatever the outcome.

the best hope is to be born lucky, into a country just starting it's growth period, and die before the apogee is reached.

the U.S. has reached it's apogee 20 years ago. what we're seeing now is desperate attempts to maintain the illusion of sustained flight.

it's done with number tricks, propaganda, mass media, etc.

raising the debt limit is not for the people.

Re:The same threats from banks... in 2008.

[Truekaiser]

well if we default we most likely will have a cheaper labor force then china.

Re:The same threats from banks... in 2008.

[hairyfeet]

Am I the only one that is starting to think this default thing might not be so bad? We've tried bailouts, the banks said "thanks" and promptly foreclosed, we bailed out the ultracorps like GE who said "thanks!" and promptly sent the jobs to India, meanwhile the government is building new aircraft carriers and pissing money into the F35 black hole like the cold war was scheduled to restart next Tuesday and Americans are living in tents because they can't find work. Did I miss anything?

Maybe if we default we won't be able to keep borrowing money, imports will fall off the face of the planet, and we might actually have to start manufacturing things again? Just a thought. But so far we have done everything the bankers wanted and while they got a couple more yachts it certainly hasn't helped this country out, if anything their trickling on the American people has made things MUCH worse.

I really am starting to wonder if it is time for the fall, if it is time for our own Arab spring. it is obvious the elected officials will no longer listen to or obey the will of the people, not on the three wars killing our kids, not on the border leaking like a sieve, not on H1-Bs when there are 100 Americans or more applying for every job, not on anything anymore. maybe it is time for this system to go away and a new one to replace it, one that listens to the people. Because frankly I don't see how we can continue down this path without almost certain full scale class war.

Re:The same threats from banks... in 2008.

[Renraku]

"Because frankly I don't see how we can continue down this path without almost certain full scale class war."

We've been in class war for a while now, it just isn't obvious.

Try fighting your way up from a net worth of $0.00 and living in a homeless shelter up to the middle class. Most places won't hire you if you don't have a permanent address and reliable transportation. You'll end up getting kicked out of the shelter long before you have enough for a rent deposit, and most renters won't rent to you if you don't have a previous address or at least a good credit history. Then you come in to work smelling funny one day because you can't shower daily (no place to shower) and get fired because a customer complained. Now you've got to live on the street for a while before you can get into the homeless shelter.

Then you see every day in the paper that homeless shelters are running out of money while we're sending billions of dollars of aid to various countries, bailing out companies that knowingly risked and lost billions, billions of dollars just vanishing overnight, etc. That is class warfare.

We don't hesitate to hand out billions for free, but we aren't going to hand out billions to the people that really desperately need it right here at home.

It really saddened me that a lot of those free-healthcare-missionaries recently started setting up places here in the United States rather than in remote jungles of Cambodia because neither could afford basic health care.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

Am I the only one that is starting to think this default thing might not be so bad? We've tried bailouts, the banks said "thanks" and promptly foreclosed, we bailed out the ultracorps like GE who said "thanks!" and promptly sent the jobs to India, meanwhile the government is building new aircraft carriers and pissing money into the F35 black hole like the cold war was scheduled to restart next Tuesday and Americans are living in tents because they can't find work. Did I miss anything?

Maybe if we default we won't be able to keep borrowing money, imports will fall off the face of the planet, and we might actually have to start manufacturing things again? Just a thought. But so far we have done everything the bankers wanted and while they got a couple more yachts it certainly hasn't helped this country out, if anything their trickling on the American people has made things MUCH worse.

I really am starting to wonder if it is time for the fall, if it is time for our own Arab spring. it is obvious the elected officials will no longer listen to or obey the will of the people, not on the three wars killing our kids, not on the border leaking like a sieve, not on H1-Bs when there are 100 Americans or more applying for every job, not on anything anymore. maybe it is time for this system to go away and a new one to replace it, one that listens to the people. Because frankly I don't see how we can continue down this path without almost certain full scale class war.

The US won't default on the national debt, even if no deal is reached before the debt ceiling cap is reached, unless the President ignores his Constitutional duties and orders it to not be paid. The US Government will receive something close to $2.6 trillion dollars in revenue for 2012. The interest on the debt is something like $450 billion including SS/Medicare debt interest. This still leaves $2.15 trillion to run the rest of government for a year after making the debt-interest payment in full.

http://en.wikipedia.org/wiki/United_States_public_debt

The economy could be kicked into overdrive and revenues to the Treasury increased immensely. Just remove the big-government, central-command-and-control, high-tax/high regulation, nanny-state yoke from around the neck of entrepreneurs and small/medium-sized small businesses. Lower or eliminate capital gains taxes, particularly those associated with small business and start-up investment and financing. Simplify and lower corporate tax rates.

It's really not rocket science. The economy and employment will shoot up, and revenues to the Treasury will actually increase. The whole concept can be summed up with a twist on an old Joe Walsh album title:

"The Taxer You Regulate, The Unemployeder You Get."

It's basic capitalist economy first-principles. Government creates no wealth or jobs, it can only remove wealth and jobs from the private sector. JFK understood it when he dramatically lowered taxes. It was the solution to the depression of 1920-21. Never heard of it? That's because although severe, it was brief.

From Wikipedia: "President Harding's laissez-faire economic policies during the 1920-21 recession, combined with a coordinated aggressive policy of rapid government downsizing, had a direct influence (mostly through intentional non-influence) on the rapid and widespread private-sector recovery."

http://en.wikipedia.org/wiki/Depression_of_19...

It's not like there are no previous successful examples of how to encourage private-sector growth and higher employment percentages, and raising average standards of living for everyone. The problem is that doing those things doesn't result in the ability to increase politicians' (of either/both parties) and their cronies' (both political and business) wealth and power over the people and guarantee them a career feeding at the taxpaye

Re:The same threats from banks... in 2008.

[smash]

It's the only way things will be fixed. If the US borrows more, then what? Reminds me of the global warming episode of futurama "our handsomest politicians have come up with an idea: we borrow money to pay back the debt. except every time we need to borrow a little bit more. thereby solving the problem"

Re:The same threats from banks... in 2008.

[Datamonstar]

Yes yes yes. Yes. and again: YES. People just don't see that debt means absolutely nothing at all if everyone just defaulted. The money is illusory and so is your obligation to pay it back. You only have to be willing to give up a certain lifestyle that is, in my opinion, self-detrimental in the first place.

Re:The same threats from banks... in 2008.

[hairyfeet]

Ugh, republican, yes? let me ask you something...why is your answer to EVERYTHING give the rich people more money? Town is burning, give rich people more money. No jobs? give the rich people more money. Sitting in the street with a broken leg and no money for a doctor? Give the rich people more money.

Ya know what? We've TRIED THAT for going on 30 fricking years now? Forget trickle down, aka trickle upon? or how about how we gave FREE MONIES TO GE who said "thanks" and then sent their best paying jobs overseas which I'm sure will buy the CEO some more gold toilets and hookers, but help America? Naaah.

If anything taxes on the top 5% should be HIGHER not lower! Money hoarded by the rich is "dead money" its not getting spent, its out of the economy, goodbye. When they will get the living shit taxed out of them if they keep it? Well then they invest it in their businesses so as to lower their tax debt, duh! Taxes have NEVER BEEN LOWER on the top 5%, not ever. Are we better off than those times of high taxes? Can you name ONE time your "give the rich more money" policy has EVER worked? Even one? We've had trickle down, voodoo economics, the "free trade" bullshit under Clinton, and of course Dubya cutting like there was no tomorrow. Are we better off? NO.

That horseshit might actually sell to someone that doesn't know history, has never been here, and of course your constituency which is the rich and the poor suckers in red states that think they are gonna be rich someday, aka "lotto mentality" but everyone else has seen this shit time after time after time only now sadly the Ds are just as sold out as the Rs to the rich so it is SSDD.

That is why I believe we will have our Arab spring, because the public no longer believes in your games. They don't vote NOT because they don't care, it is because they have lost hope that anyone will listen. And when the poor, which outnumber you by a good 10,000 to 1 and rising every day decide to fall behind our own version of Uncle Joe or the crazy Austrian? Well lets just say I hope you have your jet filled up because the fall of Saigon comes to mind.

Re:The same threats from banks... in 2008.

[Doc Ruby]

Defaulting on the debt won't fix anything. It will only break a lot more things. Many of which we can't afford to break.

It won't even stop the US from borrowing. It will merely continue to borrow to the maximum $15T limit. But every dollar it borrows will cost it a lot more. And what will be left to work with won't work as well to stimulate more revenue and regain the "nearly zero risk" rate the US borrowed against for centuries.

But we could just reduce the Pentagon + intel budget to $700B, $500B, then $400B, then $300B over the next 4 years. Which would save a load of money, and stop a load of problems that cost us a load more money.

And we could return to Clinton's tax rates, which were as obviously consistent with a growing economy as Bush's (ie. current) tax rates have been consistent with a collapsing economy.

Either of them, we're OK. Both of them, we thrive.

Or we can do the kind of thing that only a bankster could love: throw the US into a worse deal of borrowing the same vast amount but getting vastly less out of it.

Re:The same threats from banks... in 2008.

[Doc Ruby]

Most of the "entitlement programs" are Social Security and Medicare. That money doesn't pay "government employees", it pays our huge (and overpriced, and inefficient) private medical industry and the entire network of many private industries that old people spend their money on (beyond healthcare).

Also, banks can't just "call in their loans" ahead of schedule, or raise the interest on existing loans retroactively. There's no such thing as a "bank-run on bonds" because bonds aren't liquid until their maturity date.

I agree that the US defaulting on debt, or even just cutting the current stimulative spending (other than the military/intel $TRILLIONS, which are far more stimulative spent nearly any other way), would wreak havoc in the bond markets, and in the stock markets that can delete existing wealth. But let's be correct about how the economics actually work, and what actually works. That makes it easier to see what doesn't.

Re:The same threats from banks... in 2008.

[Cyberax]

"My point? The point is we do need to tackle the debt and trust me it is much better on our terms than the banks terms."

And what are you terms? Make an Apocalypse to erase the slate then start over? That's definitely not a good strategy.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

Ugh, republican, yes?

No, American. I don't care much for either major US political party.

"Rational Libertarian" or "Pragmatic Libertarian" might describe my views best.

why is your answer to EVERYTHING give the rich people more money?

That's because it's not "my answer to everything". I simply don't care whether one is rich or poor, government should only be confiscating by threat of force the minimum needed to fulfill only those things it is mandated by the Constitution to do, and no more.

Wealth redistribution under threat of force is not, and has never been, in all the many times it's been tried throughout history, a successful social engineering tool or financial vehicle for running a country.

Ya know what? We've TRIED THAT for going on 30 fricking years now?

No, it's not been tried since the '30s. There's only been Progressive policies to a greater or lesser extent since the New Deal, and doubled-down on with the Great Society.

If anything taxes on the top 5% should be HIGHER not lower!

Class warfare is what you're buying into. It's a favorite way for Socialist/Communist revolutionary factions to stir up rage & violence in preparation for a coup or government overthrow. No country or society that has engaged in class warfare and wealth redistribution has enjoyed a vibrant, growing economy nor a society where personal freedom has any real meaning.

What we have now is more than half the population pays no Federal income tax at all, while voting to raise taxes on the productive minority to pay for the non-tax-paying, non-producing majority's wants and desires. It's economic slavery. At some point, however, that strategy runs out of "rich" to confiscate wealth from. Then what?

Unfortunately for the redistributors, wealth & capital is portable and goes where economic conditions are best. That's why all the jobs and investment capital are leaving.

Then everybody will be equal...equally poor, miserable, and starving. Welcome to hairyfeet's world.

Re:The same threats from banks... in 2008.

[smash]

It might "break things" in the US. But essentially the US will stop getting a free ride (everyone selling you things on credit, which you repay with more credit) from the rest of the world. Some may view that as "fixing" things.

Re:The same threats from banks... in 2008.

[1u3hr]

Just remove the big-government, central-command-and-control, high-tax/high regulation, nanny-state yoke from around the neck of entrepreneurs and small/medium-sized small businesses. Lower or eliminate capital gains taxes, particularly those associated with small business and start-up investment and financing. Simplify and lower corporate tax rates.

Yeah, right. Like Bush did. He (and Clinton too) took the "nanny-state yoke from around the neck" of the bankers and they fucked the system for all it was worth, and then smart ones cashed out before the crash. So of course, your plan is "do it again" and let another bunch of vultures fuck the country over. Governments exist basically to protect the people who can't protect themselves. Your prescription is pure dog-eat-dog.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

Like Bush did.

Bush is/was a Progressive (as is/was Clinton...both of them) and did no such thing. Party tags mean less than nothing. Party tags are a way to distract & divide voters. The actual divide is between Progressivism and Conservatism.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

Spin it how you will, the debt ceiling should not be lifted. The fact is - if you borrow money without a means to pay it back, it only gets worse. None of those "service industries without physical assets" you speak of *do* anything for our country but suck it dry - none of the government entitlement spending *does* anything for the country but encourage laziness, complacency, and lack of profitability. We need the debt ceiling to stay where it is and all the leeches in the country to start starving until they get to work on something that actually contributes to society *with* tangible assets acquired to add value to the country as a whole over time.

Re:The same threats from banks... in 2008.

[pijokela]

Now, I don't live in the US, but at least here a bank can call in a loan anytime. I think they have to be in "hard times" or something like that, but it is a condition they just declare to be in. Then they can force me to pay back my entire mortgage immediately - which is, of course, impossible if I cannot get a loan from another bank. Are you really sure the banks in the US cannot do this?

Re:The same threats from banks... in 2008.

[hairyfeet]

You mean like trickle down (80-88) voodoo economics (88-92) free trade with countries with no environmental laws (92-2000) and of course lets cut them taxes on the rich a lot! (2000-2008) and finally bailout baby bailout! (2008-present) like that?

Look at what the tax rates were during the best times of this country such as the 50s (which the Rs idolize) and today. You will see that taxes on the top 5% have never been lower not in the ENTIRE history of our tax system. Not once.

So if the libertarian/republican trickle down "Its the gubment!" theory held true, we are living in a utopia right now. Are we? hell in just the last 10 years with EVER lowering taxes on the top 5% we've lost 21,000 FACTORIES even as the politicians tripped over themselves to give ever larger tax cuts to the top 5%, oh and the middle class? They are just about DOA. If the "give the rich more money" theory was sound, where are the results? Where is the trickle down?

Oh right it is actually trickle upon, as in they piss on the peasants while lining their pockets. well that is how revolutions get started my friends. ever hear a little ditty called "no taxation without representation"? Or what the tree of liberty needs to be watered with? If those at the top think the other 95% are just gonna go quietly starve to death in a corner you got another thing coming. Hell we have our own soldiers taking oaths to FIGHT THE GOVERNMENT that trained them! Think this is a coincidence? I think when the shit hits the fan they are gonna find like old Mo Mo the military? Well they got families too and they ain't rich.

It ain't gonna be pretty but perhaps it is just what this country needs. No government lasts forever, just look at how many they have been through in Asia and Europe. Maybe it is time to start over.

Re:The same threats from banks... in 2008.

[Anonymous Coward]

There's nothing wrong with earning your keep and getting paid according to your job, but once you no longer have to work you're about as productive and useful to society as the poor slob begging in the streets.

I never got a job & paycheck from a poor person. Poor people don't own businesses or hire employees. Who, exactly, are you going to "earn your keep" FROM, if nobody is "rich" enough to start or invest in starting a business and hiring employees? The government? Who, exactly, is the government going to get the money from, to pay your wages and operate a business?

Your logic fails. You need to set aside the envy and resentment and think.

Re:The same threats from banks... in 2008.

[DamienNightbane]

Don't associate those of us paleoconservative and libertarian Republicans with the standard crony capitalism big government neocon Republicans that have hijacked the party. Hell, Democrats are just as guilty of crony capitalism if not moreso, they just have a different stable of bedfellows to sell us out to.

We paleoconservatives and libertarians would rather reduce government to the minimum workable size and thus reduce or remove the ability of corporations to use corruption to get ahead at the expense of the American people, regardless of if the corruption is at the hands of Republicans or Democrats.

Personally, I have no problem raising taxes on the upper crust that holds most of the wealth. We'll never pay off the debt unless we milk the people who have made billions gaming the system for everything they have. The issue is that the Democrats tend to want to fuck over the small business owners too, who more often than not report the earnings of their businesses on their own personal tax returns. Raising taxes on them will hurt the economy significantly. Raising taxes on CEOs, bankers, brokers, athletes, and entertainers who make millions of dollars for doing nothing productive will not. You can't just set fire to the yard to kill a few overgrown weeds.

Of course unlike the other free marketeers who are in the pocket of various industries, I'm not worried about jobs being shipped overseas if we raise taxes, because back before the government instituted the income tax most of the government's income was from tariffs. If we would just impose tariffs on imports from places that don't have the same wage and safety standards that we do and make it more expensive to ship shit in from China and India, the jobs will return, and I don't mean $8/hr jobs that you can't reliably live on.

Furthermore, taxes wouldn't be as necessary if the government would stop spending money on things that aren't its business. People didn't need medical insurance before the government got into the business and allowed hospitals to jack prices through the roof since they knew full well that the Feds would pay anything they were charged. Or do you really think that market forces require hospitals to charge you $90 for the same aspirin that you can get for $0.04 at the local drug store? Even the private insurance companies wouldn't stand for such shenanigans if the government wasn't competing with them using our tax dollars.

Re:The same threats from banks... in 2008.

[Loki_1929]

Is your tinfoil hat on too tight? I just want to know if it hurts while wearing it.... Remember shiny side out...

That tactic only works when someone is critical of government. I'm being critical of anti-government extremists on the right.

Maybe you should tell your buddies in the Tea Party to remove their tin foil hats. Aren't they the ones collecting guns and forming militias across the country?

No, they aren't. You seem to think that everyone on the economic right of the political spectrum is preparing for military conflict against the United States government. This is roughly the same as thinking that President Obama is conspiring with Keith Olbermann and Al Franken to use the US military to turn the entire world into a pot-smoking hippie commune.

The various 'Tea Party' groups certainly do have some off-color people and probably a very small number of militia types among their ranks, but the vast majority are average Americans who have long believed that the Federal government is doing too many things and spending too much money in doing them and who've decided to cease being quiet about their beliefs since things like the Bush bailouts and the economic policies of President Obama have become reality. It's just people expressing political opinions. And if people can't peacefully amass to express their shared political opinions without eliciting fear and horror in you, perhaps you need to reconsider the type of society you want. Because it's pretty obvious that one in which citizens may express their opinions openly is not for you.

Re:The same threats from banks... in 2008.

[TheRaven64]

And we could return to Clinton's tax rates, which were as obviously consistent with a growing economy as Bush's (ie. current) tax rates have been consistent with a collapsing economy.

Clinton had an economy artificially buoyed by the dot-com bubble. When this collapsed, Bush allowed a property bubble to take its place. Neither economy was supported by actual production, both were propped up by wild speculation.

Re:The same threats from banks... in 2008.

[rohan972]

Yeah, right. Like Bush did. He (and Clinton too) took the "nanny-state yoke from around the neck" of the bankers and they fucked the system for all it was worth

I do not view banking as the same as private enterprise, since the currency they trade in is government created. While I am generally in favour of as little regulation as practical (note: that's not NO regulations, just keep it minimal) I think that a government created service such as banking should have a high degree of government control.

If an individual could offer their services and employ a few others with little or no government interference it would be very different than giving the banks a free pass to do anything. I would like to see tax taken some other way than personal income tax, so that individuals did not need to report income.

I have a part time contracting business in addition to my full time job. I could give someone a day's work from time to time but the paperwork to do so legally is prohibitive. That's the problem I'd like to see solved. Once my business is going well enough to support me full time, I'll probably end up employing people, but I will delay that until it's absolutely necessary because of the complexity it adds to my record keeping.

Re:The same threats from banks... in 2008.

[rohan972]

Socialism has worked well in big parts of Europe for longer than your country has been around.

I'm not well versed in history, but I thought Europe was mainly controlled by monarchy when the US was founded. Which parts of Europe had socialist governments in 1788?

You're just afraid of equality because it's the antithesis of wealth. There's nothing wrong with earning your keep and getting paid according to your job, but once you no longer have to work you're about as productive and useful to society as the poor slob begging in the streets.

If I make something I should own it. Justice demands it. So if I build a house, it should be my house. If my neighbour works harder than me and builds a better house, we no longer have equality but we do have justice. If he continues to work while I am enjoying relaxing and entertaining in my house and builds another house the inequality is greater, but still just. Now if another neighbour doesn't want to build a house, perhaps because he plans to move cities in a few years, he can pay rent to the first neighbour. If he continues to build houses, the inequality continues to increase but with no injustice to anyone. Eventually the rent will enable him to retire. That his greater productivity obligates him to donate his work to "society" is incomprehensible to me.

Equality of opportunity is good, equality of outcome is gross injustice.

Re:The same threats from banks... in 2008.

[1u3hr]

I do not view banking as the same as private enterprise,

.... right.

Re:The same threats from banks... in 2008.

[Rockoon]

I think defaulting is retarded, but I voted for Obama because democrats are more fiscally responsible than republicans.

They claim to be, thats for sure. But the evidence suggests otherwise, and I am not just talking about the last few years.

See, the Democrats tell you all about the President even though it is the House and Senate that spend money. I am sure you have heard the regaling for President Clinton and his balanced budget by the Democrats. The people actually in control were the Republican majorities in both House and Senate. So those good years you heard about weren't to the Democrats credit, even though they will continue to claim it is.

The problem is that the Democrats continually say one thing (something you want to hear) while actually doing something completely different. I am sure you heard that it was those damn Republicans that ruined ObamaCare (another deception.. it was PelosiCare) but the reality is that combined in both House and Senate, only 1 Republican voted for it. They never needed Republican votes, even though they constantly claimed that they needed them and thats why they were making all those "concessions." They said one thing but reality was starkly different.. they sold everyone out to the insurance companies all by themselves.

The Democrats controlled both House and Senate for 12 of the past 30 years. Whenever they were in control, they never raised taxes on the rich. They however constantly claim that taxes need to be raised on the rich but on more than one occasion they lowered them. They say one thing but do something completely different. For 10 years they had split/joint control with Republicans, and only 8 years were the Republicans in exclusive control.

7.9 trillion of our debt was run up in those 12 years of Democrats control. 3.6 trillion was run up while control was split for 10 years. Only 1.7 trillion of our debt was run up while Republicans had control for 8 years.

You claim that the Democrats are fiscally responsible, but the facts say different. Democrats certainly claim that they are, and if all you do is listen to them (instead of watching what they actually do) then I guess your excuse is that you have been lied to but are too fucking lazy to do anything other than "feel" their words.

Open your eyes. Its not like the truth is hidden.

If your retort to this relies on an appeal to who was President, then you are just lying to yourself in order to justify all these years of believing the other lies. The President doesnt draft the budget, the House does. The President doesnt raise or lower taxes, the House does. From House to Senate to The President. Thats the order of operations on these matters. If things are going really well, then the House gets most of the credit, the senate gets some (but less) credit, and the President gets almost no credit at all (oh.. he didn't veto it.. what an accomplishment.) The same is true when things go badly.. and thats to the tune of 7.9 trillion dollars in deficit spending exclusively owned by the Democrats.

The Democrats will never fix the budget. They are absolutely not fiscally responsible by any measure when you actually look at what they do, rather than listen to what they say.

Re:The same threats from banks... in 2008.

[tbannist]

Actually, I don't think that's factually correct.

From everything I've seen and heard about the Tea Party, the vast majority of the Tea Party people are angry over the recession and have been told by that "nice man on the TV" that their problems are all caused by the government. Many of them figure that it must be true, after all they wouldn't let him say that on television if it wasn't. They're mostly not quite sure why it's the government fault, but they've been assured that there's too much government and too much taxes. So if they get rid of the government and taxes, everything has to get better.

I've seen many of the leaders of the Tea Party movement in interviews, along with various studies and polls of them. Often the Tea Party leaders are unable to present a coherent argument for their positions. The polls and surveys show that the vast majority of Tea Party people are like the angry senior who yelled "Keep your government hands off my Medicare". They are confused and either afraid or angry.

I would suspect that the majority of militia types probably have joined the Tea Party, because the Tea Party manifesto seems to dovetail nicely with the militia manifesto. But I have no basis for that other than it seems reasonable. Of course, even if they did, they'd still be a small minority in the Tea Party.

Re:The same threats from banks... in 2008.

[smash]

Wild speculation by hedge funds, low interest rates and dodgy lending criteria.

Throw enough free money at a market and you can get spectacular short term growth, particularly if you measure it in terms of spending the dollars that you've printed to stimulate it.

It doesn't mean you've actually produced anything new.

Re:The same threats from banks... in 2008.

[seanadams.com]

The default scenario you're describing doesn't sound much different than hyperinflation. I suppose it's nice that we have a choice, but I just don't understand the "raise the debt limit or else" mentality. More spending just postpones and magnifies the eventual collapse.

Re:The same threats from banks... in 2008.

[nharmon]

That money that is being "horded" by the rich is not "dead money". It is invested, or at the very least deposited into a bank where it is being lent out. Rich people who keep their entire fortune in cash sitting in their home safes...don't stay rich for very long.

Re:The same threats from banks... in 2008.

[Chemisor]

why is your answer to EVERYTHING give the rich people more money?

First of all, the question is not whether to "give the rich people more money", but whether to take more money from them. Eliminating a tax exemption is raising taxes, so call it what it is.

Second, this tax hike will not take money from the rich - it will take money from you. The proposals under debate would raise taxes on oil companies, not "the rich". The oil companies are simply going to take that increase and pass it on to the price of oil, which raises the price of gas, which in turn will be paid by you and other poor shmucks all over the recession-hit-unemployed country.

Can you name ONE time your "give the rich more money" policy has EVER worked?

Can you name ONE time your "soak the rich" policy has EVER worked? Even one? Whenever you try to tax the rich, they always pass it on to you. Any business owner will pass the increased costs to the customers. A wealthy man can easily afford lawyers and accountants to find a way around the taxes. If no way can be found, he can pick up and move to another country - something you can't afford to do. In Maryland, for example, the governor recently decided to raise taxes on millionaires to raise revenue. Did any revenue get raised? Nope. Instead, the state's millionaire population was reduced in half. They just picked up and left. If any of them owned businesses, they probably took them too (that's not a public statistic, so I don't know)

In California, the governor decided to soak Amazon to get more sales tax revenue. Did that work? Of course not. Amazon stopped doing business in the state, taking all those "affiliates" and their jobs out of state. Here at least you have a plain example that raising taxes kills jobs. Here you can point to each business and say: the lost jobs went that way.

Re:The same threats from banks... in 2008.

[Hellpop]

Gee, of course they want us to borrow more. Doesn't every bank want that?

Re:The same threats from banks... in 2008.

[roman_mir]

You will see that taxes on the top 5% have never been lower not in the ENTIRE history of our tax system. Not once.

- on paper.

Effective taxes have been much lower before, and people could write off pretty much any spending against their corporate income before, so that's for example why the 94% taxes were never paid (nor were 77% taxes, nor were 55% taxes, etc.)

What people owe in theory and what they actually pay are two different things.

Also if you start looking at tax rates, let's take SS as an example.

A family with income of 250K today is equivalent to a guy maintaining a family on 25K in year 1955.

The guy in year 1955 paid 90 dollars a month to SS. The family of 2, working for their 250K a year today pay over 15%. That's a huge jump, inconceivably huge. That's because SS is not a fund or insurance, it's a wealth transfer program, which requires existing contributors to support the existing receivers, but there is no fund. And even with that 15% tax, SS paid out more than it collected in 2010, so it's in the red. In theory it has 2.5 Trillion of outstanding credit, that the federal gov't owes it. But the fed uses T-bills to 'finance' this ponzi scheme, so that's again, a purely theoretical exercise. The gov't has no money but what it collects in taxes, so it's not gov't that owes that SS money, it's some people who owe some other people. But who signed those contracts? They seem to be very one sided, as in those who are receiving the money signed it, but those who are paying didn't.

They should really skip the country, it's not going to become any better over time.

But back to the taxes: A person making over 250K a year could have paid crazy taxes back in the days if he decided to declare that as personal income. But who wants to do that? Who wants to pay taxes?

That's why people invented all sorts of ideas - dividends, various funds, etc.etc., it's all about not paying the tax, and good for them, they should not pay the tax.

If you are a person making money, you shouldn't be forced to give up your income, especially if you are providing jobs and products/services while doing it.

AFAIC nobody owes you shit.

Re:The same threats from banks... in 2008.

[rtb61]

The 'investment' buys up all the means of production, basically excluding the rest of the market, the majority from gaining access and basically driving them to working in poverty.

The more hoarded all the means of production become, the more isolated the majority of people become from protecting or supporting it. The majority have no means of ever gaining access to it nor do they have any investment in it. The simple fact is, their only way for majority to gain any access to the now totally hoarded ( and priced out of their reach) means of production, is to eliminate the minority and redistribute it and let the cycle turn over again.

Stupid is as stupid does and there is nothing like greed to promote stupidity ie. it's the next generation's problem as long as the current one can wallow like the ignorant pigs they are.

Re:The same threats from banks... in 2008.

[fafaforza]

> Publicly traded companies with stocks worth less than 5$ get delisted, and that means those companies are toast.

They wouldn't. Exchanges would be making exceptions, extending the length of time that you can be below their thresholds. Happened to companies already, SIRI for example, due to the economic times, I guess. They were trading for ~$0.16 for a while, and for under a dollar for years, never got delisted.

Re:The same threats from banks... in 2008.

[Alex Belits]

haityfeet hard at work, posting copypasta for karma.

ALL GLORY TO MICROSOFT!

Re:The same threats from banks... in 2008.

[hairyfeet]

Since I have never talked to a paleoconservative (not even sure what that means, is that like a Barry Goldwater conservative? Be dating myself with that one) so let me ask you something about paleoconservatives...what about medicaid/care, unemployment and disability? Because one thing that truly disgusts me about the current republican party is the almost sadistic glee they get when they do something that will hurt the poor. Listening to them you would think they have an orgasm just at the thought of a poor person hurting with all the joy it gives them.

I'll be honest. After big media hijacked the Ds and big business and religious nutjobs hijacked the Rs I went back to the beliefs my great grandfather instilled in me many years ago...I'm a socialist. I believe ALL men should have the RIGHT to food in his belly, a roof over his head, clothes on his back, and to be able to see a doctor when they are sick...that's it. If they want a widescreen, a car, something bigger than an efficiency apt? Then they should have to work BUT there should be jobs waiting for them, if nothing else WPA jobs where our infrastructure is bettered for us all.

So I simply can't support a party whose current leadership are IMHO sadists whose worship of money is only complemented by their hatred of those without. Maybe paleoconservatives are different, as I said I've never even heard the term before your post so I don't know. What I DO know is that the last major factory in my home town just closed down, more than half the houses are now abandoned, and in this scorching heat there are people living in tents because their benefits ran out before they could find a job.

The fact that this happens in this great country disgusts me and fills me with shame. I simply can't in good conscience support a party that not only thinks that is great but would INCREASE those suffering if possible. I swear the Reps should just admit it and change their symbol to a rich man's shoe stomping on a poor person.

Re:The same threats from banks... in 2008.

[jahudabudy]

I do not view banking as the same as private enterprise, since the currency they trade in is government created
Just wanna say that is an excellent point I've never considered. There really is no such thing as a free market when it comes to currency, unless you wanna go back to beaver pelts and shiny rocks.

Re:The same threats from banks... in 2008.

[SnarfQuest]

One of the lies that Obama is talking about is this non-payment of the debt. Problem is, the debt gets paid first, before any of the other programs, so there isn't any problem with failing to pay off the minimum. It's just his favorite welfare programs that are in danger. Another lie is that we've never failed to pay this off, but it actually happened in the '70s.

What Obama wants to to be able to continue to spend like a drunken sailor in a brothel. He has accumulated more debt than ALL of the previous presidents combined. Not one at a time, but ALL added together. And he blaims the debt on the rich people. Is it any wonder that he's hit the debt limit? Next year, he'll probably need yet another increase.

Re:The same threats from banks... in 2008.

[DamienNightbane]

Yes, like a Barry Goldwater conservative. It's the branch of conservatism that guys like Ron and Rand Paul adhere to. Unlike the Neocons, Paleocons actually follow through with the small government, stay out of your business platforms that they run on.

As far as medicaid/medicare, unemployment, and disability, that isn't the Federal government's responsibility and it's the single biggest factor in the overspending plaguing the nation. Back in the days before such Federal shenanigans, you didn't even need insurance to see the doctor or get a broken arm fixed. Ron Paul still doesn't accept medicare or medicaid when he's practicing medicine; instead he'll work something out with the individual just as doctors did in ages past. Private charities, the local church, friends, and family were usually enough support for those who needed help.

If we eliminate entitlements and let communities take over for caring for the needy and then cut the rest of the budget, defense included, to a fraction of its former self, we could pay off the debt within a decade or so and then possibly eliminate the IRS entirely. It might not be what I'd do personally if I were in charge, but it's better than the alternative.

Re:The same threats from banks... in 2008.

[BranMan]

Now hold on there. SS is not, and should never be thought of as, a handout. Grandma, or her husband, have been paying into SS for fifty years, involuntarily, and is now of an age that some of that money is flowing back to her. That's payback on a loan to SS, and is not any kind of a "gift".

That's what makes me ticked off about the talk of cutting off SS - I paid into it myself for 30+ years, and now you're just going to say "Oh, our bad - nothing left for you". I don't THINK so.

Re:The same threats from banks... in 2008.

[Magius_AR]

bailout baby bailout! (2008-present) ... So if the libertarian/republican trickle down "Its the gubment!" theory held true

You don't think giving a metric %^%$ton of taxpayer dollars to a bunch of corporations isn't the "gubment" fucking things up?

hell in just the last 10 years with EVER lowering taxes on the top 5% we've lost 21,000 FACTORIES even as the politicians tripped over themselves to give ever larger tax cuts to the top 5%, oh and the middle class?

You're cherry picking. By the same vein, I could say Obama claimed spending 1+ trillion dollars in "stimulus" packages was supposed to reduce unemployment and did not. Correlation != Causation. The economy doesn't exist in some kind of bubble where you can attribute everything to a single cause.

Re:The same threats from banks... in 2008.

[cusco]

My mom used to run a credit union in the '70s-early '80s, and in the Reagan years she heard from more than one member that their bank had called in their 5% fixed rate mortgage and offered them the option to either pay it off entirely or refinance at the current double-digit rate. Being credit union members they were able to refinance at the CU's lower rate, but some weren't so lucky. I **think** the laws were changed after that time to prevent them from doing it again, but I'm not sure.

Re:The same threats from banks... in 2008.

[ColdWetDog]

Ron Paul still doesn't accept medicare or medicaid when he's practicing medicine; instead he'll work something out with the individual just as doctors did in ages past. Private charities, the local church, friends, and family were usually enough support for those who needed help.

Sure, that's OK for the $250 - $5000 dollar physician bill. Doesn't work too well for the $20,000 - $200,000 hospital bill. Are medical costs inflated? Sure, but the underlying issue is that we're doing more for people.

"Back in the days before Federal shenanigans" doctors didn't do all that much. Having a heart attack? Here's some oxygen and morphine. Hope you make it. Now, it's drugs, stents, perhaps a bypass or two. Is it 'cost effective'? That's a whole other argument, but to state that Ron Paul understands how to reform the US medical system because he accepts chickens in payment is completely ludicrous. It is a whole lot more complex than that but I don't think Paul really has a handle on it, despite being a physician.

If we eliminate entitlements and let communities take over for caring for the needy and then cut the rest of the budget, defense included, to a fraction of its former self, we could pay off the debt within a decade or so and then possibly eliminate the IRS entirely

We probably could. We would be a nice, debt free third world country. A neat place to live if you're one of the lucky ones (lots of places are nice places to live if you're lucky). But your last statement lets me understand that you've swallowed too much of the Rand Flavored Kool-Aid. Nice talking points, not a very useful way to run a large country.

Re:The same threats from banks... in 2008.

[DamienNightbane]

Sure, that's OK for the $250 - $5000 dollar physician bill. Doesn't work too well for the $20,000 - $200,000 hospital bill. Are medical costs inflated? Sure, but the underlying issue is that we're doing more for people.

No, the underlying issue is that the Feds entering the medical insurance industry and having a blank cheque to do with as they wish are why hospital bills are $20,000 - $200,000. Do you really think that the bills would have ever gotten that high if Uncle Sam wasn't footing the bill? Private insurers would have told the hospital to climb a wall of dicks if the Feds weren't creating a precedent by forking out the cash every time without question.

We probably could. We would be a nice, debt free third world country. A neat place to live if you're one of the lucky ones (lots of places are nice places to live if you're lucky). But your last statement lets me understand that you've swallowed too much of the Rand Flavored Kool-Aid. Nice talking points, not a very useful way to run a large country.

First of all, you don't understand what the term Third World means. Second of all, we'd never end up as some developing world shithole just because we stopped being a welfare state. The country was more than capable of running itself before progressivism and the income tax, and it'd be just as capable today if we went back to a Constitutional government that only does what is expressly authorized in the Constitution. The people do not need the government to hold their hands and hand them cheques every month, and under the Constitution it has absolutely no business doing so. Without entitlements, bureaucracy, and corruption we would have no need for the income tax and any government budget would be adequately handled via tariffs and luxury taxes. There is no Kool-Aid here. The country should be primarily run at a state and local level, not at the Federal level by thousands of clueless bureaucrats.

Re:The same threats from banks... in 2008.

[elucido]

Actually, I don't think that's factually correct.

From everything I've seen and heard about the Tea Party, the vast majority of the Tea Party people are angry over the recession and have been told by that "nice man on the TV" that their problems are all caused by the government. Many of them figure that it must be true, after all they wouldn't let him say that on television if it wasn't. They're mostly not quite sure why it's the government fault, but they've been assured that there's too much government and too much taxes. So if they get rid of the government and taxes, everything has to get better.

I've seen many of the leaders of the Tea Party movement in interviews, along with various studies and polls of them. Often the Tea Party leaders are unable to present a coherent argument for their positions. The polls and surveys show that the vast majority of Tea Party people are like the angry senior who yelled "Keep your government hands off my Medicare". They are confused and either afraid or angry.

I would suspect that the majority of militia types probably have joined the Tea Party, because the Tea Party manifesto seems to dovetail nicely with the militia manifesto. But I have no basis for that other than it seems reasonable. Of course, even if they did, they'd still be a small minority in the Tea Party.

A small but very influential minority, in fact the leadership itself is probably the militias because they'd have the military expertise, the guns, and the intimidation factor to take all the positions of power and influence by force or by fear.

Re:The same threats from banks... in 2008.

[rohan972]

There really is no such thing as a free market when it comes to currency, unless you wanna go back to beaver pelts and shiny rocks.

Currency is an enabler of the free market, just like the court system and police force. The free market system relies on conditions created by the government, such as contracts being enforceable and theft being punishable. A free market banking system should be viewed in much the same light as a free market court system or free market police force. It is corruption.

There is enough bias in favour of the rich in the courts as it is, imagine a system where court judgements were openly sold at auction. Our banking system now is the financial equivalent of that, IMO. Deregulating the banks is destructive to the free market. It is not an example of a failure of the free market, it is sabotage of the free market.

Only in America

[Beelzebud]

can people expect to wage 2 ground wars, and 1 air war, while giving tax cuts to the wealthy.

Re:Only in America

[Beelzebud]

We've had the tax cuts for going on 10 years, and the jobs situation got WORSE. The tax rate on the wealthiest Americans is at the lowest point since the 50's. Without the security of America, those companies wouldn't even exist in their current form, so spare me the crocodile tears for the million and billionaires. If the middle class can be asked to fight their bullshit wars, the rich should have to fucking pay for it.

Re:Only in America

[Beelzebud]

If you think any American based company would move their home base to China (a communist country) you're nuts.

Re:Only in America

[genrader]

Not to mention loopholes created by the richest individuals so that they never have to pay taxes, all while the classist bullshit propaganda idiots can be happy that the "rich" are getting "taxed" at 90%

Re:Only in America

[fahrbot-bot]

can people expect to wage 2 ground wars, and 1 air war, while giving tax cuts to the wealthy.

Obviously, the wealthy do. I believe this is the first time that the US has participated in an extended war w/o raising tax rates. During WWII, the income tax rate reached 94% on income over $200k, from Income tax in the United States, History of top rates:

• During World War I, the top rate rose to 77% and the income threshold to be in this top bracket increased to $1,000,000 ($16 million 2007 dollars); after the war, the top rate was scaled down to a low of 24% and the income threshold for paying this rate fell to a low of $100,000 ($1 million 2007 dollars).
• During the Great Depression and World War II, the top income tax rate rose from pre-war levels. In 1939, the top rate was 75% applied to incomes above $5,000,000 ($75 million 2007 dollars). During 1944 and 1945, the top rate was its all-time high at 94% applied to income above $200,000.

Re:Only in America

[Beelzebud]

Included in the 2.6 trillion dollar figure is the Iraq war which Bush kept off the budget, and the TARP program which Bush passed. Nice try, though.

Re:Only in America

[twistedcubic]

Fool, no one is saying "tax the hell out of the biggest corporations"-- just bring them back to where they were before the unnecessary tax cut. Cutting costs, firing workers, and freezing salaries will happen regardless.

Re:Only in America

[artor3]

You stupid fucker. You think CEOs pay their employees out of pocket? Hell no. Corporations pay peoples' salaries. Raising taxes on the rich has absolutely no impact on this. But they've drummed their lies into your head enough that you're now afraid to tax them, which is why hedge fund managers pay a lower tax rate than their IT staff, despite earning about 50 times as much.

Re:Only in America

[Barrinmw]

Yeah, because there is never momentum in an economy. It couldn't possibly be that the 2.5% increase in unemployment is from the momentum of the recession that occurred on Bush's watch when Republicans let two major bubbles form in the housing and financial markets. At least under Obama, the hemorrhaging of jobs stopped.

Re:Only in America

[betterunixthanunix]

...because any of that happened in the 1950s? We are coming out of one of a period of some of the lowest taxes on the wealthy and on corporations since WW2.

Re:Only in America

[SpongeBob Hitler]

If you tax the hell out of the biggest corporations and wealthiest individuals, what do you think happens?

We wind up with the kind of booming middle class and first-world infrastructure we had during the 50's to 70's?

Re:Only in America

[KDR_11k]

If they can cut costs that easily, why don't they do it? If they can avoid raises and hiring, why don't they do it? Why would they leave that money on the table until the govt asks for it?

Re:Only in America

[hedwards]

You do realize that the shit was just hitting the fan as Bush was leaving office, right? And that when the President took office the economy was more or less in free fall. In that context only a great fool would suggest that it wasn't Bush's fault. The President deserves a great deal of credit for being able to keep the unemployment rate that low considering where he started.

Tax cuts were a significant portion of the problem, they weren't the only problem, but they were a significant portion of the problem. It's doubtful that we'd still be in the mess we're in had Bush not left us with nearly $10tn worth of debt, we could have gotten another round or two of stimulus with that money. But the biggest issue is that Bush left us with two very expensive wars which were providing us with very little bang for the buck.

On top of that under Bush the DoJ effectively stopped investigating antitrust violations and he was very much opposed to the sorts of regulation which would have prevented the sort of catastrophic down turn that later showed up as he was leaving.

Re:Only in America

[TheRaven64]

Odd. I seem to remember the US economy being artificially buoyed by a bubble in the housing market backed by bad debt during Bush's tenure.

Re:Only in America

[Anonymous Coward]

Steve Jobs wants his reality-distortion field back. Anytime you're done with it, OK?

Re:Only in America

[Seumas]

And only in everywhere do people spout this sort of comment, intending it to apply to everyone who makes more money than they do. After all, if the guy down the street makes $100k and you make $75k, then that fucker is rich as hell and you want him to bleed like a schoolgirl on prom night.

Re:Only in America

[c6gunner]

We wind up with the kind of booming middle class and first-world infrastructure we had during the 50's to 70's?

Naw, that only happens when the world is in ruins, and everyone has a personal tax-shelter. If you can get the Germans to act up again, I'm sure you could restore the US to it's former glory.

Re:Only in America

[ultranova]

If you think any American based company would move their home base to China (a communist country) you're nuts.

It's not the communism that's the problem, it's that Chinese are smart enough to protect themselves and their economy, so they'll always prefer their domestic companies and keep even them under government control rather than the other way around.

Draw your own conclusions from the fact that a communist economy is beating our neoliberalist ones.

Re:Only in America

[Seumas]

Two wrongs aren't justified here. We shouldn't be taxed any more than we already are and we shouldn't be engaged in multiple poorly justified military actions (we haven't been at war since WWII) and, while we're at it, we shouldn't be participating in multiple-trillion dollar bailouts or stimulus packages.

The problem is that when you have a free market that isn't free when things go to shit, it's a lot like having a casino that believes in squaring up at the end of the night . . . unless *they're* the ones left owing. There's no accountability and no faith to be had.

Raising taxes is the saddest solution. If we determine that we can simply solve the problem of irresponsible spending by funneling money out of another person's bank account, then we'll simply continue to increase spending (as we always have) until even those cows aren't yielding any more milk and we're back in the same position.

The fact of the matter is, we have to stop being pussies. Stand up and start cutting some shit. "Well, we don't want to upset XYZ demographic" is irrelevant. Your kids might be really pissed if you cut out cable television, but if you can't afford it, then you have no choice.

And for those saying "well, then what would YOU cut?!". I'd cut everything I fucking could. Here, I'll start it off -- take whatever social security taxes you've milked from me already. Keep it. Don't pay me any benefits when I retire. Disconnect me from that whole system. I'm sure there's plenty of other stuff we can cut, but now we've put the first thing on a list. Let's find something else.

Re:Only in America

[Duradin]

War. You keep using that word. I do not think it means what you think it means.

Re:Only in America

[Anonymous Coward]

Does it really matter who passed what at this point? The fact of the matter is that in a fairly short amount of time we threw just as much, if not more, money at institutions that were on the verge of failure than the cost of waging two ground wars and we got no real significant return. This is the crux of the problem and playing partisan games isn't the solution.
 
How much longer are we going to have a majority of voters eating the shit of their parties and seemingly begging for more? How much more do we have to see wasted until we collectively say enough is enough? We've given both parties a turn at their solutions and both have failed. Most of their solutions were the same thing but taken with a different approach. Both parties have benefited businesses that have returned nothing to the tax payers in the way of jobs or reasonable loans. Both parties have passed legislation that has continued to feed into the problems that both parties claimed that they were solving. Can you possibly tell me why you still defend parties that have shown such blatant disregard for the good will of those who pay the bills in this country?
 
We are in a real bad situation here. It seems that any solution is going to be painful. But we have options and those options boil down to which solution will produce the most permanent solution with the least amount of pain. Any reasonable solution is going to burn the ass of the voters and really burn the ass of the government. Sorry, that's the facts of this situation.

Re:Only in America

[HellYeahAutomaton]

Let's not forget about the $24-40 trillion in health-care-for-all program that the current administration has signed us up for over the next 10 years.

Re:Only in America

[interkin3tic]

Only on the internet in 2011 can uninformed trolls STILL be going with the "tax cuts to the wealthy" classist bullshit.

The rich are getting richer and the poor are getting poorer even before they cut our healthcare and give tax cuts to the wealthy. It will become "classist bullshit" when it stops being true.

Re:Only in America

[rubycodez]

that's only if the corporations survive. We need to bring down the megacorporations including the banking cartel. Hard to you to believe, but we can make things, perform services, and grow food without them. This whole thing is about the bankers tightening their grip on the working people.

Re:Only in America

[SomeKDEUser]

No, taxes work also as an incentive to invest. How? Easy, if taxes are low, it is tempting to have your money piled up with some of it invested in stocks as a hedge against sluggish growth/losses.

If taxes are high, your cash is best employed hiring staff and developing products. And indeed, currently, taxes are low and corporations are awash with cash. Yet they are not hiring.

Because low taxes makes that a bad business decision.

Demand higher taxes!

Re:Only in America

[Luckyo]

Fuck, only on the internet in 2011 can uninformed trolls STILL be going with the "tax cuts to the wealthy" classist bullshit.

If you tax the hell out of the biggest corporations and wealthiest individuals, what do you think happens? They just throw up their hands and say "You got me this time government!". No, they maintain their profits by cutting costs, hiring less workers and not giving out raises for the ones they have.

USA glory days of 60sh, 70s and early 80s called alongside no tax breaks for corps, massive financial pressure of cold war and over 90% tax on richest individuals. They'd like to have a word or two with you about real historical facts and the drugs you're doing.

Re:Only in America

[Stormthirst]

Cos you know - giving them tax cuts has worked so well. Utter BS - check your stats a little closer and you'll find that despite enormous tax cuts (or even rebates FFS) they are still shedding staff.

Re:Only in America

[rmstar]

Whether the money goes into the pockets of military contractors or Big Finance doesn't matter, it is still lost to us for no benefit.

You have no idea of what you are talking about. Read the nobel prize winner to understand what's going on. Read the archives: he's got almost a 100% of his predictions right:

http://krugman.blogs.nytimes.com/

Sure, you can continue to be wingnut. You can also base your understanding on sound science and evidence.

Re:Only in America

[rmstar]

If you tax the hell out of the biggest corporations and wealthiest individuals, what do you think happens? They just throw up their hands and say "You got me this time government!". No, they maintain their profits by cutting costs, hiring less workers and not giving out raises for the ones they have.

Get some perspective, moron. We are far from taxing "the hell" out of anything.

Re:Only in America

[Daniel Dvorkin]

You could literally confiscate every dime the wealthy earned last year, and still be nowhere near closing our yearly deficits.

You could easily repeat a stupid and easily debunked lie over and over, and find millions of suckers who believe it.

Re:Only in America

[rmstar]

Draw your own conclusions from the fact that a communist economy is beating our neoliberalist ones.

Do you hear that choppers? They are black. It's the Randroids going after you.

Re:Only in America

[braeldiil]

The top 10% of the population has more than 70% of the wealth in the country. The top 1% has almost 40% of the wealth. The bottom 40% has .2% of the wealth. Like it or not, the rich are going to get soaked to pay the debt, because over the last 30 years they took most of the money from the rest of us.

Re:Only in America

[vijayiyer]

Convenient to call all of the those periods the glory days and not the tech boom of the 90s and early 2000s. A tech boom largely funded by private capital investment that doesn't exist when you tax at 90%.

Re:Only in America

[JDAustin]

You link former Enron advisor Paul Krugman and call people on the right nuts? Krugman is wrong every day and twice on sundays.

Re:Only in America

[Bing Tsher E]

citations?

yelling 'liar liar liar' is grade school tactics.

facts.

put up or shut up.

Re:Only in America

[Jah-Wren Ryel]

You could literally confiscate every dime the wealthy earned last year, and still be nowhere near closing our yearly deficits.

You could easily repeat a stupid and easily debunked lie over and over, and find millions of suckers who believe it.

I first heard Anne Coulter say it a couple of days ago and it struck me as one of those technically true, but utterly irrelevant, slogans politicians pay PR firms to come up with.

The only way I can see it being true is if it is taken literally - confiscate everything the "wealthy" earned, but all of the other taxes we currently collect from the middle class -- those don't count.

Re:Only in America

[Bing Tsher E]

It's about a half day later, and only crickets so far.

Shake that lint out of your head that's making you hear choppers, dood.

Re:Only in America

[Luckyo]

So, in your opinion we didn't have any major investments and breakthroughs based on these investments during 50s, 60s, and 70s?

Sometimes, someone says something that probably made sense in their heads, but is amazingly, mindboggingly stupid when it does come out. This is one of those moments. What, you think cold war was won without major private investment? You would think that the very base for the boom you mention, the fucking INTERNET would qualify. As would things like technological breakthroughs, or even the fact that most families could afford to hold real, honest to guy vacations on yearly basis instead of shaking about their job during vacation and forsaking their children as it is done now.

Seriously, you must be deeply religious. It requires and incredible amount of double-think in terms of connecting fantasy and reality that only truly religious are capable of to believe that low taxes are a requirement for private sector's major investments.

Re:Only in America

[fahrbot-bot]

we can simply solve the problem of irresponsible spending

Of course, what kind of spending is a matter of opinion.

I'd cut everything I fucking could. Here, I'll start it off -- take whatever social security taxes you've milked from me already. Keep it. Don't pay me any benefits when I retire. Disconnect me from that whole system.

That might work for you, but not everyone. You know you're free to return your SSI payments when you get them, if you want. Don't have to accept Medicare either, but good luck getting private insurance.

Re:Only in America

[icebraining]

China hasn't been communist at least since Xiaoping's economic reform circa 1979.

Re:Only in America

[fahrbot-bot]

to pay an ever-increasing tax burden so that perfectly able older, wealthier people can enjoy taxpayer-financed retirement and health care for 20 or 30 years

According to my retirement analyst, the average person has the equity in their home and less than 60k in savings at retirement (also see: http://www.bargaineering.com/articles/average-retirement-savings-by-age.html). It's also almost impossible for people of that age to get affordable individual medical insurance. By these accounts, your questions are flawed. Granted, I agree that there is a lot of over spending - like for the "wars" - but not everything is wasted monies.

As for progressive tax rates, the top rate in the US is currently 35%, but no one - not even corporations - pays that. It's almost always quite a bit less. Hell, my official bracket is 28%, but my effective rate after deductions is 21%. In fact, corporations often pay little or no federal income tax. From http://www.nytimes.com/2011/05/03/business/economy/03rates.html?_r=1 :

A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

I'm not really trying to argue with you, merely pointing out that it's not as simple as you portray.

Re:Only in America

[wavedeform]

And this is different from the last ten years, while the Bush tax cuts in place, exactly how? Businesses are not American. They are loyal to no place. There is a class war going on, and the businesses are winning.

Re:Only in America

[cpt kangarooski]

Our poor and lower middle class don't pay tax at all.

Except for state and local income taxes, payroll taxes, property taxes, sales taxes, and excise taxes, many of which are regressive taxes that have disproportionate effects on the poor, rather than the rich. And also federal income tax, which isn't nearly so avoidable as you think.

But hell -- I'd be happy to shoulder a higher tax burden if we were also soaking the rich and if we were using that tax revenue in a better fashion. We don't need to waste money on our incompetent military (not good for much other than blowing crap up, letting situations degrade, and keeping the USSR from taking over Europe), but we could sure use a good single-payer healthcare system.

Re:Only in America

[thePowerOfGrayskull]

10 percent of a million is a whole lot more than 20 percent of 50,000.

Re:Only in America

[mandelbr0t]

I had no idea it was that bad during WWII. Problems in Greece and Ireland show that socialism is not the answer to worldwide chaos. Still, it's difficult to swallow the idea that the only solution is war, especially when so many people are willing to profit by it. I'm glad that troops are starting to pull out, and that foreign countries are being shown that with sovereignty comes responsibility. War destroys truth, and suppresses freedoms in the name of national security. This can only be tolerated for so long. I look forward to a 21st century where diplomacy, not military might prevails.

Re:Only in America

[tiqui]

When these statistics are cited this way it is extremely misleading, and generally intentionally so

Yes, the rates have been very high at times in the past, but there were also massive loopholes that people like the Rockefellers could sail their yachts through. Historically, the government has taken about 19% of GDP every year (a bit more during WWII) but with the massive increase in spending under Obama we are headed to about 40% in 2075 by the govt's own admission. If you are under the age of 30, you should be very worried about how you will support yourself and your kids in the future; taxes on everybody will need to rise dramatically and Social Security and Medicare will be bankrupt long before you see a penny from them unless they are radically re-structured. The illusion that the left always dangles in front of the masses is that everybody can have goodies payed for by "taxing the rich"; the truth is that while there are some obscenely wealthy people, there are simply not enough of them. The real money is and always has been in the middle class people who each have only limited assets but who exist in great numbers. Part of the deal Reagan made with the Democrats in the 80s was to lower the rates and remove many of the loopholes; that held for a few years, but then the politicians started cutting new loopholes for their backers and started calling for rate increases to deal with it.

Funny, when Reagan used to run $200B annual deficits, the Democrats used to scream that he was evil and irresponsible and dooming the country.... but now with Obama running $1600B annual deficits, we hear crickets from the Dems

As Maggie Thatcher once warned: Sooner or later you run out of other people's money

Re:Only in America

[khallow]

You could literally confiscate every dime the wealthy earned last year, and still be nowhere near closing our yearly deficits.

You could easily repeat a stupid and easily debunked lie over and over, and find millions of suckers who believe it.

Especially if it is true and not a "stupid and easily debunked lie". Keep in mind that a deficit is not a one time thing, but an annually recurring phenomena. While the amounts that the wealthy have provided for the US government's consumption would be a one-time thing.

Re:Only in America

[prowley]

It also buys a lot more bacon sandwiches, which is the type of thing the 50k person would be buying with their tax, as opposed to new yachts and other luxuries that the guy with 10 million would spend it on. But the fact is, they probably wouldn't spend it, it would amass in some portfolio - rich peoples money is dead money, it does nothing to help the economy.

Re:Only in America

[thePowerOfGrayskull]

Ad hominem and straw man - and that was the whole substance of your post? Moving on then...

Re:Only in America

[TheSync]

You should ask someone who made over $200,000 in the 1950's if they actually paid much of their "income" at the high top marginal rates (before the JFK tax cut).

You will find that most high-income people were avoiding taxes in the era before computers could hunt down all your bank accounts. There were a wide number of loopholes and tax shelters.

Re:Only in America

[Loki_1929]

Who's building those new yachts? Could it be, perhaps, a whole bunch of people all making 50k? I'm with you - let's tax away that yacht money. Those guys building them didn't actually need jobs anyway!

As for the "portfolio", where the money is amassed? Unless by "portfolio" you meant "buried in a box in the back yard", that money is making its way into the hands of businesses to help them expand their workforce and purchase new equipment (which must be run by new workers and which was built by workers, all of whom will buy food and other necessities in support of their local economy with the money they make from their jobs). If you want to take that money away too, then I guess those businesses just won't be able to hire new workers or purchase new equipment. Which will then reduce the number of people required to make the equipment, cut the number of people needed to make the parts, hit all the connected local economies, etc.

It isn't about trickle-down or trickle-up or any of that. It's about recognizing the path every dollar takes as it moves through the economy and understanding the impact that any given action (or lack of action) has on everyone else surrounding it. You see yachts and luxury jets as frivolous and worthless things rich people throw money away to get. I see people building, operating, and maintaining those things receiving middle class incomes to support families. I say that not as a rich guy taking weekend trips to the Hamptons but as a middle class nobody driving to work every day in a Honda.

Re:Only in America

[Loki_1929]

Booming middle class? How exactly does the middle class boom when everything they buy costs 20, 30, 40% more (or worse) because of all the taxes being passed down to them by the corporations?

Any time you want to figure out answers on corporate taxes, ask yourself a very simple question: who pays for any and all costs incurred by any given company?

(hint: its customers)

Re:Only in America

[TheRaven64]

Nobody in their sane mind would work for 6 cents on a dollar

Do you honestly believe that people making enough to be in those income brackets ($16 million per annum, in today's money) were working for it? I'd love to know what work you suggest people can do that creates $16 million per year.

Re:Only in America

[Jorth]

He wants government sanctioned theft, it is a disgusting attitude that is present all over. Even in the UK I am hearing more and more about how we should steal other peoples money to pay for a failing public sector.

Re:Only in America

[roman_mir]

Of-course they are working for it. They are working for it, their work allows them to be paid that.

Just because you are not making that, but making much less, while doing something very specific, and you think that whatever it is you do constitutes work, but what they do does not, has no bearing on the fact that they are doing something that allows them to be paid that.

But all of this is beside the point, which is - if you are going to be charged 94% taxes on some specific amount if you declare that amount as your income, you will modify your behavior and make sure nobody sees anything like that as your income.

Re:Only in America

[spiffmastercow]

And only in everywhere do people spout this sort of comment, intending it to apply to everyone who makes more money than they do. After all, if the guy down the street makes $100k and you make $75k, then that fucker is rich as hell and you want him to bleed like a schoolgirl on prom night.

I don't think too many people get their panties in a wad over that kind of difference. What irks me is that someone who makes $1,000 a year is still going to have a great standard of living if he paid a 50% tax rate. But I don't even expect him to *ACTUALLY* pay that much.. Instead, when the tax rates are that high, he'll invest a large portion of that, ultimately creating jobs for maybe 1 or 2 people at, say $50k/year. It's true that these people are "job creators", but there's a caveat: they only create jobs when they're forced to invest, rather than sit on a pile of cash.

Re:Only in America

[kilfarsnar]

I see, so if we tax them more, they just take more for themselves and screw the rest of us. If we tax them less, they take more for themselves and screw the rest of us. I'm starting to see a pattern...

Re:Only in America

[kilfarsnar]

Here's the thing, it wasn't tax cuts that were the problem. Rather it was government organizations like Freddie and Fannie who were lending to poor prospects, and the feds forcing the banks to do the same. The initial implosion of the housing market created the ripple. And until the US has it's financial straights in order(such as not lending to people who can't afford it), you'll continue to repeat this massive fuck-up.

Oh God, this crap again. Fannie and Freddie did not cause the crisis, and the feds did not force bank to do anything. See http://www.ritholtz.com/blog/2010/09/fannie-freddie-acquitted/

Re:Only in America

[x_IamSpartacus_x]

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
The average age of the world's greatest civilizations has been 200 years.
Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

Re:Only in America

[alexo]

Who's building those new yachts? Could it be, perhaps, a whole bunch of people all making 50k? I'm with you - let's tax away that yacht money. Those guys building them didn't actually need jobs anyway!

'Tis a global economy. Manufacturing (yachts included) is cheaper in 3rd world countries. Why pay $50K to a domestic worker when you can pay a fraction of that to a foreign one?

Re:Only in America

[slackbheep]

Even ignoring the political backlash, Social Security is a dangerous place to start simply because so many people are counting on it already. I absolutely agree with what you're saying otherwise. The obvious solution, at least to my admittedly civilian eyes is for the army to figure out how to get by without $600 toilet seats, or just call the whole show off.

Re:Only in America

[jahudabudy]

I'd have some sympathy for that position, except these people had no problems with making their money by utilizing the system when it worked for them. All these wealthy people only obtained their wealth via the system we all contribute to. And now that the system is no longer working to funnel money into their hands, they suddenly want no part of it. Strikes me a lot like somebody that comes to a good party, maybe brings their own side-dish or something to contribute, has a damn good time, crashes on the couch, then leaves in the morning saying "Hey, it's your house, why should I help you pick up?"

Re:Only in America

[rmstar]

Don't know what planet you are living, but on this one he has been incredibly accurate with his predictions.

Re:Only in America

[Luckyo]

You'll also find this to be an urban legend. There were some tax dodgers, sure, but most paid. It was a less selfish era, with known big time CEOs turning down pay raises because, as they put it "I earn enough"/

Re:Only in America

[TheSync]

"It was a less selfish era, with known big time CEOs turning down pay raises because, as they put it "I earn enough"

So you are saying CEOs didn't have company-paid cars, homes, vacations, get corporate gifts of tax-free municipal bonds, and did not have their companies lease capital equipment from executives who then used accelerated depreciation on said equipment and later sold them at a loss?

Or take for example Howard Hughes, who in 1953 avoided taxes by funneling money through the theoretically charitable Hughes Medical Institute, a dummy corporation (which later had to go legit after tax laws changed).

It ended up that the rich paid MORE revenue in taxes to the government AFTER the JFK tax cut.

Re:Only in America

[Luckyo]

I'm saying that they had all the current advantages they do have, AND they had much lower salaries AND many of them generally agreed that they had enough. This was a stark difference in attitude in comparison with extremist capitalism of 1920s and one we have today.

Also, it's nice to know that there have been people of opinion that taxes are for the poor in the times mentioned. I have a surprise for you: these people ALWAYS existed, throughout the history of humanity. And in the big picture, they do not matter because it doesn't matter if taxes are 1% or 99% - they'll put the same amount of effort in to dodge them on principle. Same goes for earnings, and if it is enough or should be increased regardless of financial situations.

People that matter are the ones who don't hold extremist views, and encompass a huge majority among the wealthy. And those held different views in 1950s-1970s in comparison to current period on the subject.

I wonder

[vikisonline]

Does this include the dept of citizens too? Somehow I have a feeling it doesn't

Re:I wonder

[vikisonline]

Just looked it up. Total debt including citizens is $54 trillion, or $669000 per family. Good luck paying that off... http://www.usdebtclock.org/#

Re:I wonder

[cgenman]

To be fair, some of that is corporate debt. And if they're naturalized humans that keep getting larger and larger slices of the pie, they are going to be shouldering some of this debt burden too.

Re:I wonder

[kimvette]

"nobody" meaning you and two other people, plus iDevice users.

Everyone else who uses youtube, yahoo, gaming sites, and so on installs flash. I had flash on my iPhone (Frash - a port of android's flash), until an ios update broke it.

Re:I wonder

[KDR_11k]

Ratings agencies threatened to lower that rating if the US keeps spending irresponsibly.

Re:I wonder

[hey!]

Of course it doesn't include private debt.

Let me lay this crisis out for you. There are five federal government fiscal concepts you need to understand to understand what's going on. (1) Budget; (2) Budget Resolution; (3) Authorization; (4) Appropriation; (5) Debt Authorization. This establishes a kind of belt-and-suspenders-and-another-pair-of-suspenders Congressional control of spending. Why? As you can well guess, control over spending is a major political prize. Roughly speaking, the budget is analyzed, then chopped into little pieces which are then approved piecemeal, giving Congress multiple opportunities to tweak expenditures.

(1) Budget -- the President's proposal to Congress on what to spend in the next fiscal year.

(2) Budget Resolution -- Congress's formal response to the President's budget as a whole; not a "law" per se, but like a letter of intent. It allows government agencies to plan ahead, but not actually spend money.

(3) Authorization -- A law giving Congressional consent to begin work on some program or set of actions that is going to cost money, but not to actually spend any money. Prevents the President from presenting Congress with a fait accompli that would be politically impossible not to fund (e.g. a troop surge).

(4) Appropriation -- A law giving Congressional consent to actually spending money on some program or part of the budget. ** This is where Congress actually gives the Executive branch permission to spend money**. If all the necessarily appropriations aren't passed by the time the fiscal year starts, parts of the government would have to stop running. When this happens Congress passes a "continuing resolution", which allows the effected part of government to continue operating while the appropriation is worked out.

(5) **Debt authorization** -- After the money is spent, the cash to pay the bills incurred has to be raised. Constitutionally this is a Congressional function, but it would be impractical for Congress to vote on every treasury bill issuance, so instead Congress delegates this to the Treasury, authorizing it to raise so much money. *** THIS IS WHAT THE CURRENT FIGHT IS OVER ***.

Normally debt authorization is a routine matter. It is required because the Constitution makes debt issuance a Congressional function, but the Treasury actually does the work. In the current crisis Congress has authorized, appropriated and in many cases *mandated* expenditures, but is refusing to raise money to pay for them after the money has been spent.

This is a new and completely unprecedented kind of crisis. In the 94 years since the current system for handling debt was established, Congress has *never* refused to authorize raising money to pay for expenditures it has appropriated. Not during the Great Depression, not in WW2; not in the stagflation crisis of the 1970s; not in the struggles between the Republican House and the Clinton White House in the 1990s.

Re:I wonder

[Seumas]

To be fair, it's really inaccurate when we take the national debt and divide it by "number of citizens" or "number of families". Only about 100m people pay taxes and of those, many pay an inconsequential amount. It's more fair to say, for example, that (using fake numbers here - I haven't done the math recently) 50% would average around $10k/ea of the debt while the other 50% would average around, say, $50k of the debt. You know, since we don't all pay the same share of taxes.

Re:I wonder

[Joce640k]

I had flash on my iPhone (Frash - a port of android's flash), until an ios update broke it.

You mean "fixed it".

Apple's timely update has saved you from Teh Evilz.

Re:I wonder

[DavidTC]

Yeah, no one seems to understand this.

Guys, we already had the budget debt. Remember the whole 'tax cuts for the rich' Obama wasn't able to get removed? Remember that? Several months ago?

That was the fucking budget.

This is now the Federal government is attempting to operate with our democratically decided and constitutionally passed budget, and needing to borrow more money to do it. (As everyone knew they would.)

And now the right has decided to pretend it's time to make budget decisions again. The joke is, it actually almost is time again, for the 2012 budget. But not for how much we spend in 2011.

It's probably worth mentioning that we're basically the only country in the world where we actually have #5 as a separate process...most countries include, in #4, the authorization to borrow as much as needed to actually implement the budget.

Incidentally, people predicted this back during the budget fight, and that fucking idiot Obama just shrugged it off, because he can't get it through his head that the Republicans are goddamn assholes with no interest in actually running the country, and are, in fact, utterly willing to break it to tiny pieces to get reelected.

No one reads history books anymore...

[Anonymous Coward]

perhaps we should just run up even more debt insuring we will NEVER be able to be rid of it. I think its a very smart plan to just raise it every time we want more money. That way, we can million dollar bills and have a gallon of milk cost $12billion dollars! Genius!

Eventually... if you cant pay.. you cant pay. It MUST be corrected sometime

Re:No one reads history books anymore...

[amorsen]

You don't correct it by telling your creditors: "We could pay you the money we promised you would have on the first of August, but we have decided not to because that would make us too indebted. So go away, you won't get your money back."

That kind of voluntary national bankruptcy is insane. Already the threat of it is causing higher interest rates which makes it even harder to balance the budget. Let us just hope that it does not come to pass.

The sky is falling...OH NO!!! /sarc

[CPTBMan]

It's pathetic how the left (national and international) refuse to admit the fact that the United States pulls in enough revenue each month to service the interest on the debt, which is the only thing that would cause default if not paid. We need to prioritize how we spend the revenue we take in. Servicing the debt comes first followed by the other spending. We won't default if big government spending (i.e. entitlements) isn't paid first. Tax increases on the rich (who already pay way more than their fair share) will not bring down the debt at all if we continue to spend like drunken sailors.

Re:The sky is falling...OH NO!!! /sarc

[headhot]

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." Warren Buffet. His tax rate is lower then his secertary. They pay more then the none rich, because they make retardedly huge amounts of money, but for some reason their taxes as a percent of income is much lower then those of the middle class.

Re:The sky is falling...OH NO!!! /sarc

[CPTBMan]

Not true. I'm middle class and my percentage of taxes is less than 15%. Rich people pay above 30%. That's why it's called a progressive tax system.

Re:The sky is falling...OH NO!!! /sarc

[Anonymous Coward]

Tax increases on the rich (who already pay way more than their fair share)

Care to justify that? Even Warren Buffet one of the richest and most respected financiers on the planet has repeatedly stated that we should cut taxes for the poor, and raise them for the rich;

http://finance.fortune.cnn.com/2010/10/05/buffett-says-cut-taxes-for-the-poor/

Re:The sky is falling...OH NO!!! /sarc

[MrMarket]

Rich people pay above 30%.

False. Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax (and why C-levels get paid in stock as opposed to salary). In the US we tax income from work, but we do not tax income from wealth.

Re:The sky is falling...OH NO!!! /sarc

[vlm]

refuse to admit the fact that the United States pulls in enough revenue each month to service the interest on the debt

The facts are that interest rates on that debt are darn near generational lows. In other words going up by a factor of, say, 10 or so, is neither unlikely nor even really all that historically noteworthy. Now going up by a factor of 20 or so, THAT would be historically high.

Also we can't spend 99.9% of revenue on debt payments. That would cause slight problems with everything else the govt is responsible for. Lets say we can afford no more than 10%.

So, as long as less that a hundredth of the revenue is spent on debt payments, when it inevitably goes up by a factor of ten to 10% ... ummmm ... oh oh ...

The "left" "right" thing is just made up to keep people divided, they both agree on looting the populace. Its just that accidentally, momentarily, the left is sorta on the side of the populace. I'm sure they'll rapidly fix that mistake.

Re:The sky is falling...OH NO!!! /sarc

[kbolino]

I concur completely that we can service the debt just fine without changing the debt ceiling. The 14th Amendment requires the integrity of government debt to be beyond question, and I don't think either party in Congress is willing to play with that fire. I'll also concur that this whole "default on the debt" canard is scare-mongering by the left side of the politcal spectrum.

But make no mistake: there are real, serious, and immediate consequences of not raising the limit, and those consequences will rain down upon everyone. The pensioners and soldiers would be the hardest hit, of course, but a sudden drop in spending in a shaky economy would propagate to every industry, especially those with stronger government dependence (basically, any large contractor).

Furthermore, as others will point out, "the rich" are hardly paying "their fair share" if we identify a "fair share" to be a consistent percentage of income. It is those in the middle quantiles who suffer the greatest tax burden, relative to their means. The poor have exemptions and benefits while the rich have deductions and tax shelters. Closing this gap will not by any means make up the deficit (the rich don't have as much money as people think they do), but it will mitigate some of the ill effects of reaching the debt ceiling. Increasing taxes on those who run the businesses, though, can have as equally negative an effect as a drop in government spending, so the right balance has to be struck.

I just don't think any options should be off the table.

Re:The sky is falling...OH NO!!! /sarc

[fahrbot-bot]

False. Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax.... In the US we tax income from work, but we do not tax income from wealth.

Close. Earnings from investments (et al) are taxed as Capital Gains which, I believe, is currently 15%. As an additional "gotcha" those earnings are taxable even if simply re-invested and/or not redeemed. See: http://en.wikipedia.org/wiki/Capital_gains_tax#United_States

Re:The sky is falling...OH NO!!! /sarc

[vlm]

Not true. I'm middle class and my percentage of taxes is less than 15%. Rich people pay above 30%. That's why it's called a progressive tax system.

Unlikely. My county sales tax is about 5% of the fraction I spend retail, and my property tax alone is about 3% of my gross annual income. And the state got about 4% of my gross annual income. Not counting the feds, or excise or use taxes, I'm already approaching 10%.

Its possible to structure your lifestyle to match the current social engineering tax code, but even then, probably not as low as 15%.

On a big enough scale, its overall a regressive tax system. One of the larger components is vaguely progressive if you stick to wage (not cap gains) income, but that's just for PR reasons, to convince people the overall system is progressive.

Re:The sky is falling...OH NO!!! /sarc

[vlm]

But make no mistake: there are real, serious, and immediate consequences of not raising the limit, and those consequences will rain down upon everyone.

Why are we better off defaulting later, than sooner? Is there any reason not to get it over with and be done with it?

1) Every year for decades, since the 70s, the middle class has gotten poorer, and there is no reason to think this trend will reverse anytime soon. No matter how awful it will be, it will be easier on richer people. Therefore defaulting now will cause less pain than defaulting in a decade. Unless your goal is to increase suffering, you should want to get it over with today.

2) The sooner its over... the sooner its over. Recessions / Depressions linger until the malinvestment is flushed out of the system. Lets get this train back on the tracks and default today so tomorrow we can begin to live again. It would be nice to see a healthy economy again, someday.

3) No one lives forever. In 20 years, I'd rather have 19 years of growth behind me if we default today, rather than dragging the default out a decade thus only having 10 years of growth behind me. I'm still gonna be 20 years older, I'll just be 9 years richer, more or less, if we default today.

4) Kicking the can down the road is expensive. What do we, as a country, really gain by making interest payments for an extra month / year / decade? The only thing worse than throwing money away, is throwing good money after bad. Flush it, and get on with life.

Re:The sky is falling...OH NO!!! /sarc

[KDR_11k]

I think it's just a giant game of chicken. There's no way they aren't going to increase the debt ceiling.

Re:The sky is falling...OH NO!!! /sarc

[hedwards]

It's not a scare mongering its true. The reason why we pay such low interest on our date is because its backed by the US government and the money will be paid. Now if we don't increase the debt limit, investors are going to balk because somebody is not going to be paid. As long as the US government is making the promised payments and is capable of continuing them there isn't a problem.

But, should investors in US bonds start to worry about the security of their bonds, we definitely would see something really ugly. Right now we're benefiting from the fact that investors trust our bonds more than any other set of bonds. A failure to lift the debt ceiling would represent a very clear sign that the deal has been changed. More risk, higher rates demanded for debt, and a very likely scenario where we ultimately have to default because we can't cut our debt fast enough to satisfy our debts.

Considering how in bed the GOP is with Wall Street, I'm surprised that they're even willing to contemplate not paying our bills.

Re:The sky is falling...OH NO!!! /sarc

[vlm]

Considering how in bed the GOP is with Wall Street, I'm surprised that they're even willing to contemplate not paying our bills.

Its both sides, not the GOP. Check Obama's campaign donor record. The govt and the corps have merged, thats the definition of fascism, which is our system.

The reason wall street likes the idea, is wall street makes money of stock trading commissions.

Not increasing the limit doesn't mean we stop paying on previously issued debt, it means we stop issuing new debt. An investor with an extra $1B isn't going to sti on it, they're going to put it somewhere... How about that nice stock exchange?

What it really means, is wall street expects stock prices to implode soon, they need more buyers to push the price up or at least hold it steady. Perhaps their purchased lackeys in the govt could stop competing with them by selling govt bonds, thus resulting in at least some more stock purchases resulting in higher prices?

Or they expect HFT and retail investment volume to collapse, and since they mostly make money on commissions, they need a way to churn transaction volume, perhaps by getting their purchased lackeys in the govt to stop selling their govt bond product, they gotta invest their dough somewhere, how bout that NYSE?

Or there is some kind of inflation play going on here, but I'm not sure exactly what.

Re:The sky is falling...OH NO!!! /sarc

[Seumas]

The government isn't bound by the same requirements as you and I. If we're in debt, we have to pay down that debt as soon as possible, before all our shit is repossessed and we end up living on the street. We don't have the option to say "well, fuck it, we'll just raise our debt ceiling" so we can redirect that revenue to something more fun, like buying votes of elderly people by putting out propaganda that without the medicare/caid/whatever system, they'd all be eating cat food and recycling their own urine for sustenance.

Re:The sky is falling...OH NO!!! /sarc

[MrMarket]

15%Munis have almost no tax

Paper gains are almost never taxed

My main point still holds: we tax work a lot more than wealth in this country

Re:The sky is falling...OH NO!!! /sarc

[Bing Tsher E]

Considering how in bed the GOP is with Wall Street, I'm surprised that they're even willing to contemplate not paying our bills.

See, that's where your cartoon parody 'Evil Republican' stereotype undermines your understanding of reality.

Portions of the mainstream GOP are in bed with Wall Street, but just as many, if not more of the mainstream democrats are in the same bed. Maybe you didn't notice them. They're down there making the sheets move, and making that slurping sound.

Re:The sky is falling...OH NO!!! /sarc

[SomeKDEUser]

Debt-to GDP ratio of the US is low. Interests are amazingly low.

On the other hand, the infrastructure is in not-so good shape, and employment terrible.

So since the world is so ready to give you money (because the US can borrow at nearly below-inflation levels) borrow! Invest! Build the future!

In fact, were it not for the debt ceiling, and the competition between politicians to say the most moronic thing, the US should, at this point in time, borrow tremendous amounts and invest. But noooo, rather, their seems to be a consensus to pander to the most idiotic notions.

"The debt increases! we are taking about TRILLIONS!". Idiots. The economy increases. Only relative amounts matter.
"The US must be like a well managed family, and not have debt". Morons. The US is not a family: it has an army and mints its money. Historically, families which had both turned into states. Your credit rating (rates on bonds) is at an all-time high (rates are amazingly low). This means you can borrow however much is needed. Also, if you have a mortgage, your debt-to-gdp ratio is wayyy worse than that of the US, so even if the US were a family, it is not nearly at unacceptable debt levels.
"Rich people will not invest when taxed". Cretins: they are currently essentially untaxed and sitting on piles of money. Clearly taxing them less will not put this already not working money to work. On the contrary.

There pretty much is no can to kick down the road in the first place. If the current policies of tax decreases and contractionary policy continue, then yes, there will be a problem.
"Entitlements are bad!". Entitlements are better than people starving to death, or roaming bands of pillagers.

Re:The sky is falling...OH NO!!! /sarc

[roman_mir]

Warren Buffet is a liar.

First: he is probably the only person in USA who benefits from death taxes, since those are often paid by fire-selling a company, because estate is normally a bunch of assets, like companies, and to pay those taxes, the money needs to be realized.

So who is on the other side of the trade here?

BERKSHIRE HATHAWAY INC.

The second point is this: when Buffet pays himself dividends, that's because he chooses not to pay himself a salary. Whatever his company makes then, is his income, because dividends are paid after his company balances the books and pays the taxes, and whatever is left over as profits, can be paid out in dividends, and he is the majority shareholder.

His income is thus taxed at 35% corporate and then 15% personal levels.

Don't listen to what this snake sells, he thanked the government for basically saving his ass

Re:The sky is falling...OH NO!!! /sarc

[roman_mir]

Don't let the information that I am about to provide to prevent your spiel there, but consider that people who get paid dividends are owners of the company, and thus they get paid dividends after the company pays all its obligations and taxes, so in reality the taxes of the company ARE the taxes of those, who pay dividends (for example Buffet owns majority of his business), so whatever the business tax is (35% less whatever deductions) AND 15% dividend tax on top of that, that's the tax, not just the 15%.

Re:The sky is falling...OH NO!!! /sarc

[Bing Tsher E]

Buffet is a raider who makes his money by scavenging failed and distressed companies. Of COURSE he is in favor of whatever policies will suck all the capital businesses need out of the economy and into the Treasury.

That the left uses Buffet as their poster-boy rich guy to quote and quote and quote isn't surprising at all.

Re:The sky is falling...OH NO!!! /sarc

[Bing Tsher E]

Every year for decades, since the 70s, the middle class has gotten poorer,

That is complete and utter bullshit.

Those of us who were around in the 70's remember that most families had one television set, and it was in the living room. There was one stereo in the house, again in the living room. Sis may have gotten a record player for Christmas, but it was her biggest present that year.

The middle class today is chock full of gadgets and toys and stuff that nobody could have imagined in the 70's. In real dollars you may have had a point, but in real wealth, which isn't a bank balance, the middle classes right now are FAR better off than they were several decades ago.

Re:The sky is falling...OH NO!!! /sarc

[DerekLyons]

Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax (and why C-levels get paid in stock as opposed to salary). In the US we tax income from work, but we do not tax income from wealth.

Which planet do you live on? On my planet (the one Slashdot is located on) my investments, dividends, bond interest, etc... are all taxed.

Re:The sky is falling...OH NO!!! /sarc

[fahrbot-bot]

Paper gains are almost never taxed.

I'm not sure to what you refer, but dividends and earnings on regular investments and bonds - even if re-invested - are taxed. If held for more than one year, they are taxed at the long-term/capital-gains rate, else as normal income. I know, I have substantial (non-retirement) investments. Now, retirement investments are only taxed as income when they are withdrawn.

Re:The sky is falling...OH NO!!! /sarc

[thePowerOfGrayskull]

And why are you looking at it as a percent? It's not a percent that gets remitted to the government, it's actual money. Dollar for dollar, the wealthiest 10% pay more than the remainimg 90% of the population.

Re:The sky is falling...OH NO!!! /sarc

[colinrichardday]

But are the Democrats failing to do Wall Street's bidding on the debt ceiling? The GP might not be saying that the Republicans are evil for supporting Wall Street, but that they are biting the hand that pays them.

Re:The sky is falling...OH NO!!! /sarc

[MrMarket]

If you're paying 30% on that income, you need a better accountant. You should not pay more than 15% on cap gains (unless you are a day trader), most munis have even lower tax rates, and depreciation on real estate can offset a lot of income on paper while the intrinsic value of the asset probably increased in value. The concept of a progressive tax rate is a joke. The smart money does not pay taxes in this country.

Re:The sky is falling...OH NO!!! /sarc

[DerekLyons]

Your claim was that it was not taxed - now you claim it is taxed.

And "smart money" doesn't mean "rich" either.

Re:The sky is falling...OH NO!!! /sarc

[Attila Dimedici]

The problem is that is not really true. He arrived at that conclusion by calculating taxes she pays that his payment of is capped (FICA) and by not calculating in taxes he pays that she doesn't (certain parts of his capital gains taxes). Warren Buffet says, "I should pay more tax," then he takes advantage of every tax loophole available to him and doesn't take advantage of the fact that he is free to pay more to the federal government if he feels that he is undertaxed. All of which means that when Warren Buffet says, "I should pay more tax," what he really means is that other "rich" people should pay more tax.

Re:The sky is falling...OH NO!!! /sarc

[mldi]

Tax increases on the rich (who already pay way more than their fair share)

Care to justify that? Even Warren Buffet one of the richest and most respected financiers on the planet has repeatedly stated that we should cut taxes for the poor, and raise them for the rich;

http://finance.fortune.cnn.com/2010/10/05/buffett-says-cut-taxes-for-the-poor/

Care to clarify what constitutes as "poor"? Because I'm pretty sure with all the federal credits, programs, etc that only the "poor" qualify for means they don't really pay taxes at all in the first place. Just sayin': it's pretty much just lip-service if you claim to want to lower taxes for the poor.

It'd mean more if you said "middle-class".

Re:File under

[jo42]

"Taxes Bad.", "Spending 10s of billions of dollars in 'wars' killing brown people Good."

Cheap theater

[bradley13]

We all know they are going to raise the debt limit. Every time this comes up, whichever party is in power votes to raise the limit. Whichever party is not in power delays the vote to the last minute, using the occasion for political grandstanding.

It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late. But, no, this is the Congress that still hasn't passed a budget for 2011 - they just gave up, and there is every sign that there will be no official budget for 2012 either.

Re:Cheap theater

[Relayman]

Sorry, it may not happen this time. Just don't make the Aug. 3 Social Security payment and there will be plenty of money to pay the debt and interest and not default. The right is pointing out that default is not a given, you just have to change your spending priorities.

Re:Cheap theater

[dachshund]

It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late.

The time to force fiscal responsibility is when Congress decides what to spend. All we'll get from a debt-ceiling crash is a temporary crisis, some new ugly precedents, and permanent damage to our economy and national creditworthiness.

(The last point all by itself will undo the benefit of any conceivable spending cuts we could make --- it will become much more expensive to roll over the existing debt, and tax revenues will plummet along as the economy contracts.)

Remember that about a decade ago the Federal budget was balanced. Rather than drive the country off a cliff to solve the problem, it would be more useful to figure out what's changed since that time.

Re:Cheap theater

[elucido]

It's sad but you're probably right. The establishment, left and right, could care less about fiscal responsibility.

I think in this instance the extreme left wants revolution, and the extreme right wants revolution. This equates to both sides trying for civil war. Obama and the moderates are trying to prevent that because it would cost many American lives and could damage the country for a generation.

Re:Cheap theater

[Barrinmw]

Except that payroll taxes are required by law to go to social security and medicare. True, it has been raided in the past, but should we really rob our grandparents to keep the wealthy from getting taxed a little more?

Re:Cheap theater

[artor3]

There's no guarantee. In past years, congress was sane. Now it's dominated by idiot tea-baggers who don't really understand the enormity of their actions. Like you, they think that not raising the limit would somehow put us on the track to a balanced budget. It would not. It would devastate the economy, decrease tax receipts, and quite possibly plunge us into a depression. You don't know what you're talking about. You're just duck-speaking the "facts" fed to you by conservative pundits.

Re:Cheap theater

[blackraven14250]

It would not be wonderful if the US defaults on its debt. That could literally mean a worldwide economic collapse worse than the great depression.

Re:Cheap theater

[elucido]

It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late.

The time to force fiscal responsibility is when Congress decides what to spend. All we'll get from a debt-ceiling crash is a temporary crisis, some new ugly precedents, and permanent damage to our economy and national creditworthiness.

(The last point all by itself will undo the benefit of any conceivable spending cuts we could make --- it will become much more expensive to roll over the existing debt, and tax revenues will plummet along as the economy contracts.)

Remember that about a decade ago the Federal budget was balanced. Rather than drive the country off a cliff to solve the problem, it would be more useful to figure out what's changed since that time.

It could be even worse than that. Currently foreign nations don't interfere much with US politics. As long as the USA has it's economy strong why would they? But if the US defaults, foreign interference could result in any number of possible scenarios. You are aware that other governments have a stake in the US government right?

You are also aware that the Tea Party wants to overthrow the US government which a lot of other governments have a stake in? The default would set the stage where foreign governments very well could arm one faction or another or both factions against each other. This would make civil war inevitable because the FBI and intelligence agencies wouldn't be able to pay their contractors. If the intelligence agencies can't do their jobs, there will be nothing to stop a civil war.

Foreign nations expect domestic stability, economically, and otherwise. The instability could cause foreign nations to launch operations to stabilize the USA. Right now the FBI does it, but assume the FBI somehow cannot pay their agents or set their budget, what happens then?

Re:Cheap theater

[Seumas]

Why not? They've been robbing us for decades, to pay for their retirements and social services.

Re:Cheap theater

[vlm]

Right now the FBI does it, but assume the FBI somehow cannot pay their agents or set their budget, what happens then?

Local cops and county sheriffs? Not thinking one of numerous "safety nets" disappearing will automatically result in complete systemic collapse. Also not saying nothing bad at all will happen. But somehow I'm not seeing the local cops going "Oh you're in a militia? Oh OK you can fire that AK down the street then. I thought for a second you were a gang member. But its all good. Carry on, citizen..."

Re:Cheap theater

[Seumas]

You're kidding, right? Congress has been dominated by giant pussies for decades, who do whatever the president demands of them. They may bitch and whine and moan, but when it comes down to the voting and the actions, they're less a counterbalancing branch of the government than they are the lapdogs of the president (whichever president it is at the time).

Frankly, it's time to fucking grow up and stop spending more than we make. It's bullshit to say "you can't point that gun against our head!" when referring to refusing to raise the debt ceiling. Continuing to have unrestrained spending forcing us to continue raising our debt is itself a threat held against our own heads. When someone has a spending problem, you cut up the fucking credit cards. I don't see how difficult this is for us to understand.

I mean, really, what do you expect to happen? We're going to raise the ceiling this time around and everyone will promise to "be really good" next time? The democrats will promise not to spend zillions on more bullshit social programs and the republicans will promise not to spend billions on bullshit military actions? Really? If we just promise to let them go over this one more time?

This is the same fucked up "logic" that the public was fed to justify bailing out corporate America. Feed them bullshit through the media until everyone was worked up into a frenzy. We can't afford NOT to hand out seven trillion dollars! If we don't, the entire country will be bankrupt and you will be eating road kill off the streets as your house burns to the ground and your entire family contracts malaria!

All these endless threads here about "conservatives durp durp" and 'liberals durp durp". Let's call it what it is... fucktards and fucktards. And both groups of fucktards are trying to scare the shit out of you to continue raping us all. And we're fucking falling for it, like morons.

It's clear what's going to happen. We'll raise the ceiling into the indefinite future and we'll continue to spend more and more into the indefinite future, until our deficit becomes so large that it topples over and the whole country is done. There will be a breaking point, eventually. We have to get control of this bullshit, sooner rather than later. But... we won't. And so we'll get what we deserve.

Re:Cheap theater

[Bing Tsher E]

should we really rob our grandparents to keep the wealthy from getting taxed a little more?

Ummm, you've got it wrong there.

Should our grandparents continue to rob their grandchildren, to keep making payments on that condo down in Florida?

I read an article recently about the re-migration of middle class Blacks down to the south. The details in the article were interesting: it's retired Government Civil Service workers, Teachers, and Trade Union lugs who can afford to be doing that. Not the regular folk who worked/work in the private sector.

Re:Cheap theater

[Shark]

They will raise the debt ceiling. The depression will happen anyway, only then you'll owe more.

The IMF will bail you out, and they will have their list of conditions as to how the US should be run. Whatever personal liberty you do not realize you have now do not weigh very much on that list.

So, who do you want to be taken over by? The constitutionalist fanatics in the tea party or the IMF?

Re:Cheap theater

[cgenman]

It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit.

Yeah, it would be great if our credit rating were downgraded. That would be wonderful. Paying extra percentages on the 14 trillion we already owe and can barely pay is a wonderful way of staying afloat. In fact, I stay up nights thinking "Gee, I wish the value of the dollar entered the sort of massive decline that Mexico saw in the 90's."

What I really wish is that the Republicans or Democrats actually believed that a balanced budget was worthwile. I'm sorry, if you're willing to axe a historic deal because you don't want to close tax loopholes on the most profitable industry in America (all the while cleaning up after its oil messes), then you're just a posturing nit. Oh no, we can't lower military spending. Oh, Social Security is sacrocent. And while we're at it, let's extend those tax cuts for the rich again, and keep taxing income from stock accounts at half of what normal income is taxed as.

Re:Cheap theater

[Anonymous Coward]

It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late.

...because nothing says fiscal responsibility like defaulting on your debt.

Re:Cheap theater

[Chaos Incarnate]

It may damage the country for a generation, but at least it would force a solution, instead of this endless spiral into chaos.

Re:Cheap theater

[dachshund]

I think we're deep off into fantasy territory at this point, but --- there is a scenario in which different jurisdictions start to pull away from the Federal government or tacitly support terrorist organizations. You saw this with the KKK in the deep South prior to the 1960s. It takes a strong central government to keep that under control.

Of course, in practice will never happen. The Federal government isn't going to let the country disintegrate over a debt ceiling crisis. The executive will do what it takes to keep things under control, and the laws will simply bend or break to suit that purpose.

This is why it's generally not a good idea to put the rule of law on a collision course with national survival --- the rule of law always comes out the worse for it.

Re:Cheap theater

[CrimsonAvenger]

Remember that about a decade ago the Federal budget was balanced.

Umm, no. Check the US Treasury's website, and you'll see that the National Debt has increased every year since 1956.

Re:Cheap theater

[rubycodez]

it would mean a banking cartel collapse, while nations would have to be self-sufficient for awhile. I'm not seeing the downside, a little sacrifice is worth it to hear the sodden thop of bankers and wall street tycoon's bodies hitting the pavement in suicide dives as their interests tank. Those are the SOBs with our lawmakers in their pockets, financing both sides of wars to live on human misery, to hell with them and their system.

Re:Cheap theater

[rubycodez]

that would be great to have the dollar collapse on the international scene, so we'd have to be self-sufficient for awhile. The globalists that are draining our wealth depend on the current system, let's burn it down.

Re:Cheap theater

[haruchai]

There's a way out, if Obama has the nerve. Leave the limit as it is and then pick and choose which bills get paid and which programs get funded. I believe he has sole authority to do this. If he follows through the TeaPublicans will bitch, cry and moan as always but they'll agree to raise the limit.
And, if he has a lick of sense, he shouldn't make any concessions. They walked out of the negotiations so, this time, they get to eat it and smile.

Re:Cheap theater

[haruchai]

You're both wrong - Congress has been dominated for decades by greedy self-serving career politicians who whore themselves out to industry and get regularly sucked off by lobbyists. And then there are the crazy ones who get secret messages from above beamed directly to their brains, sometimes while enjoying the charms of whores, rentboys, and industry lobbyists.

Re:Cheap theater

[haruchai]

Oh, for fuck's sake - listen up closely; I'll say this again.

Ready? SOCIAL SECURITY HAS A $2.5 TRILLION SURPLUS. IT'S NOT A FUCKING PROBLEM AND WE HAVE DECADES TO IMPROVE IT.

Re:Cheap theater

[pankajmay]

You obviously lap up the right propaganda and spew it all confused and wrapped up in your own world and view of events.
The June 2011 economics analysis data shows that the US has actually been much better than its target deficit reduction for 2011 -- in effect so much so that the US is fully expected to achieve its deficit reduction targets for 2012 with no need to take "harsher" decisions. Perhaps you would like to read the reports on Economic indicators before firing off your words.

The Government didn't bail out the banks because it was fully tied up with the fat cats; the Government had NO choice but to facilitate the bailout, because BANKS ARE INTERCONNECTED, hence so were the millions of mortgages, loans, debts, and receipts. Had AIG collapsed in the free market style -- the shock would have been so strong to the economy that we would really have needed an event like WWII to rescue us out of it.

And don't forget -- the bailout program was actually done in the last days of President G.W. Bush.

And the US is not like your family that you need to lecture about "cutting" spending and lecture on prudent usage of resources. YES that needs to be done -- but you are holding the fragile recovery hostage by holding the debt ceiling limit steady. If the US' AAA credit rating is harmed due to this posturing the interest will pile up so fast that it will end up increasing your debt, and such a strong shock to the economy that it will take decades to recover.

But the biggest reason is that with such posturing, the US will no longer whet the appetite of risk averse investors. In effect, money that used to come back here in case of global crises will no longer come back here. With this trust erosion the US will lose its dominance in the Global Economy. Which other country will step in? We do not know for sure, but the fact is that US will not be able to reclaim that title because of its own fragile recovery -- the net effect; you can say bye-bye to US leverage and capital influence.
So get your head out of that all-knowing sand hole, read the actual Economic data before you throw around your wisdom!

Re:Cheap theater

[mogul]

It's clear what's going to happen. We'll raise the ceiling into the indefinite future and we'll continue to spend more and more into the indefinite future, until our deficit becomes so large that it topples over and the whole country is done. There will be a breaking point, eventually. We have to get control of this bullshit, sooner rather than later. But... we won't. And so we'll get what we deserve.

Or you will start a war to rob some other country its wealth. Soon or later it will look like the easiest soloution to you.

Re:Cheap theater

[Attila Dimedici]

The IMF will bail you out, and they will have their list of conditions as to how the US should be run.

With what money? The reason the IMF insists that the U.S. must raise its debt limit is because the money it uses to bail out other countries mostly comes from the U.S. government. If the U.S. does not raise its debt limit it will not be able to borow the money to fund the IMF.

Re:Cheap theater

[Rockoon]

"I only hope that when Generation Xers are finally running things, they'll have the courage to kill all these boomers, one by one, in their hospital beds and their nursing homes. Kill them and loot their pensions and estates, and throw them out into the streets with nothing. If they don't, the boomers will take everything they can and keep it for themselves. They're trying now to arrange for the next two generations to pay off their debts, having already put young people deeply in hock. Boomers are living off their grandchildren's money and will try to steal everything else before they're gone.

If you young people want to know who to kill, I'll tell you. There are two schools of thought on this: Some say the baby boomers were born between 1946 and 1964. Others will tell you 1942 through 1960. Just to be on the safe side, I'd say kill everyone between the ages of thirty and fifty-five. The boomers used to say, "Don't trust anyone over thirty." Well, the stakes are a little higher now. So ask to see a driver's license and then strangle a boomer. Thats by advice. I always like to have something uplifting to offer along with all the gloomy shit."
This was penned by George Carlin in 1997 for his book Brain Droppings, but may have been part of his insightful comedy act prior to then.

Re:Cheap theater

[LordLimecat]

Paying extra percentages on the 14 trillion we already owe and can barely pay is a wonderful way of staying afloat.

The alternative sounds equally disastrous to my mind-- give the government free rein to spend even more of the money we dont have and dig us deeper?

Re:Cheap theater

[bhampton]

Amen

Re:Cheap theater

[Pstrobus]

And the surplus was used to buy Treasury Bonds thus it now counts as part of the national debt. Sure, we "owe it to ourselves" but we still owe it.

Consider the irony of paying taxes to contribute to a fund that buys debt we have to pay via taxation.

Re:Cheap theater

[dkleinsc]

Also, the $2.5 trillion surplus that Social Security has is in ... wait for it ... US Treasury Bills. Any possible balancing of the general budget by trimming Social Security comes at the cost of defaulting on those Treasury Bills, which is exactly what this whole debt ceiling business is about trying to avoid (at least in theory).

Ergo, anyone advocating cutting Social Security in the name of preventing debt default is basically advocating destroying the village in order to save it.

Re:Cheap theater

[roman_mir]

2.5T USD surplus .... in T-bills, government obligations.

Government doesn't have any money, 40-50 cents on any dollar spent is borrowed. The so called surplus is a gimmick, it doesn't exist. It's like me writing a check to me for a billion bucks. I must be a billionaire.

SS paid out more in 2010 than it collected - any accountant can explain to you what it means, it's in the red, as in insolvent.

It's insolvent today, it's not going to be solvent tomorrow, because this is a ponzi scheme, a pyramid, and the bottom is falling off.

Re:Cheap theater

[Shark]

Same as usual. With money they just create out of thin air. This isn't a transfer of wealth or value. Not even of money. It's a transfer of sovereignty with debt as an excuse.

They've been doing that for years, look at just about all of south America. They back a government that racks up debt, let it collapse and then hold the population hostage with that debt. It's a bit naive to think that because they've been doing it with the blessing of the US before that they wouldn't do it *to* the US now.

Re:Cheap theater

[Attila Dimedici]

Yes, but there is nobody else to pretend to get the money from, so the IMF would not be able to "lend" the money to the U.S. to "bail" it out. I understand what you are saying and am quite sure that the IMF would happily do it to the U.S.. The problem that the IMF would have is that there is nobody out there who could pretend to have enough money to bail the U.S. out if it got into the position of not being able to maintain the illusion of paying its debts.

Re:Cheap theater

[Magius_AR]

There's a way out, if Obama has the nerve. Leave the limit as it is and then pick and choose which bills get paid and which programs get funded. I believe he has sole authority to do this. If he follows through the TeaPublicans will bitch, cry and moan as always but they'll agree to raise the limit.

You have a very strange view of the problem. Democrats care more about raising the limit than Republicans. Without raising taxes, you could axe ALL discretionary spending and we'd still be short. Aka, his ability to "pick and choose what gets funded" (even if he legally has that ability, which I'm pretty sure he doesn't) would be limited to "everything" + some chunk of Mandatory spending (social security/medicare)

Re:Cheap theater

[haruchai]

The red flag regarding unwittingly giving the President sole control on all spending was raised by pundits on the right.
Go argue with David Frum and Fox News.

Blegh

[ModernGeek]

When are we going to get rid of this garbage money system and get rid of the entire idea of taxation? Just let the government create money when they want to do something. All money is is allocation of resources.

Re:Blegh

[phantomfive]

At first I was going to mock your silly idea, but then I thought about it.

Essentially your idea is to have the government extract taxes from people equally by creating inflation, and thus taking money from everyone according to how much they have. It seems like a good idea on the surface, because we get rid of the expense of paying for the IRS, and it's fair: it taxes people according to their wealth.

In practice, it seems there might be obstacles. Countries like Zimbabwe and Brazil have tried similar schemes, and it seems to have had a real negative effect on their economies. Although it would seem fair, ultimately it would not be, because rich are much more capable of putting their money in inflation-protecting schemes, whereas the poor are hurt by constantly rising prices. Given these two considerations, I would be very cautious about moving the entire system over to that method quickly.

Re:Blegh

[TheRaven64]

It's an interesting idea. If, rather than taxing, the government just prints more money, then government spending directly causes inflation. This is equivalent to taxing people proportionally to the amount of money they have. There are a few problems I see with this idea:

The US dollar's value comes from tax. Everyone in the US has to pay some dollars to the US government every year and this means that there is a guaranteed market for dollars - you can always swap them for goods or services with a US taxpayer. If the government stops taking in dollars for taxes, there's no reason for anyone else to accept them for payment either.

You remove the way of taking money out of the system. This means you're likely to end up with very high inflation rates.

The tax becomes proportional to the amount of money you have in US dollars. This effectively makes it a regressive tax, because it's very easy for the rich to turn their capital into other forms, and much harder for the poor. Few people really have millions in the bank - they have millions invested in property, stocks, and so on. If they do have millions in the bank, then they'll decide to have millions in Swiss Francs or some other stable currency. Meanwhile, the person with only a few thousands in savings has a much harder job.

Re:Blegh

[hedwards]

Because you'd still be paying taxes, you'd just be paying them in terms of loss of buying power. And consequently the rich would still skate by without paying their fair share, they'd just have an even easier way of doing it as they wouldn't keep USD as their currency, they would just keep a small amount on hand to pay bills converting from whatever currency they're using at the appropriate time.

Re:Blegh

[johnjaydk]

Essentially your idea is to have the government extract taxes from people equally by creating inflation, and thus taking money from everyone according to how much they have. It seems like a good idea on the surface, because we get rid of the expense of paying for the IRS, and it's fair: it taxes people according to their wealth.

Nice try. Now have a look at who holds their money in cash and bank accounts vs. who holds it in financial assets and is protected from inflation. Guess who gets shafted by inflation. Thanks for playing.

Re:Blegh

[IICV]

Although it would seem fair, ultimately it would not be, because rich are much more capable of putting their money in inflation-protecting schemes, whereas the poor are hurt by constantly rising prices. Given these two considerations, I would be very cautious about moving the entire system over to that method quickly.

You think currency trading microtransactions are bad now, just imagine how that shit would go under this system - the US Gov't announces that they're going to inflate the dollar by x%, and suddenly all those microsecond-scale automated systems drop all their wealth into some other currency. Then, once the inflation has happened, the money comes flooding back - it's still worth as much, but the dollar is worth less than it was before, so the total wealth is conserved.

Essentially, unless such an inflationary system was globally coordinated among all markets (hah, good luck), it would be worse than useless.

Re:Blegh

[phantomfive]

Oh hello, you must be one of those people who sits in a conversation looking for anything you think is wrong, and then annoy everyone by showing how much smarter you are.

Please read the entire post next time, it'll make you look less of a jack-ass.

The only "nasty consequences" require courage

[scottbomb]

The US won't "default" no matter what happens. Enough tax money comes in every day to sustain the interest payments on the debt. The tough decisions politicians need to make are the budget cuts. Obama and the Democrats don't want to cut anything (except for defense). The elephant in the room is all those people on the welfare dole. "Entitlements" account for the vast majority of the budget. Does a millionaire retiree really need that $2000 social security check and medicare? Those programs should be means-tested. Otherwise, they're just Ponzi schemes that are approaching the inevitable demise of more people taking out than putting in.

For those who want to raise taxes, I ask you: When has a tax increase ever created a job? On the contrary, Reagan knew what Kennedy (JFK) knew: tax cuts INCREASES private investment, which increases jobs, which adds more TAXPAYERS to the system. We don't need more taxes, we need more people paying taxes. Obama can sing his class warfare song (rich vs. poor) all he wants but the fact of the matter is, rich people INVEST their money. That creates jobs. Confiscate their money through taxation and that's less money available to invest. It's really quite simple. I'm glad my boss is a millionaire. If he wasn't, I might be unemployed right now.

Re:The only "nasty consequences" require courage

[genner]

The US won't "default" no matter what happens. Enough tax money comes in every day to sustain the interest payments on the debt. The tough decisions politicians need to make are the budget cuts. Obama and the Democrats don't want to cut anything (except for defense). The elephant in the room is all those people on the welfare dole. "Entitlements" account for the vast majority of the budget. Does a millionaire retiree really need that $2000 social security check and medicare? Those programs should be means-tested. Otherwise, they're just Ponzi schemes that are approaching the inevitable demise of more people taking out than putting in.

For those who want to raise taxes, I ask you: When has a tax increase ever created a job? On the contrary, Reagan knew what Kennedy (JFK) knew: tax cuts INCREASES private investment, which increases jobs, which adds more TAXPAYERS to the system. We don't need more taxes, we need more people paying taxes. Obama can sing his class warfare song (rich vs. poor) all he wants but the fact of the matter is, rich people INVEST their money. That creates jobs. Confiscate their money through taxation and that's less money available to invest. It's really quite simple. I'm glad my boss is a millionaire. If he wasn't, I might be unemployed right now.

I used to agree with this line of thinking. The problem is the rich aren't investing in US companies. The current tax breaks are creating jobs they just happen to be in China.

Re:The only "nasty consequences" require courage

[cowboy76Spain]

tax cuts INCREASES private investment, which increases jobs, which adds more TAXPAYERS to the system.

Oh, the infamous Lafffer curve (too lazy to post a link to wikipedia, check it yourself). Too bad it has not been proved, nobody knows where the optimal point is (why they always assume the optimal point is with LESS taxes, and no with more?), and everything else. But it gives some people a good mantra to repeat and repeat.

As other post has already put, everyone is willing to make sacrifices and cut costs... unless it is in something that benefits them.

At least some people is honest and choses consequently "I want good public services and I'll pay the taxes needed to/I do not want good public services but I want less taxes instead". Others just say"If I pay less taxes then everything will magically solve". With the first people one can try to get to a common point, arguing with the later ones is just a waste of time.

Re:The only "nasty consequences" require courage

[istartedi]

programs should be means-tested

In theory that sounds like a good idea. In practice, the means-testing beurocracy exceeds the cost recouped. A more efficient method is to tax social security benefits as ordinary income. Of course, this will never happen because "tax" is a 4-letter word in Washington. Instead, we'll probably waste money with means testing.

Re:The only "nasty consequences" require courage

[graveyhead]

Oh yeah! The failed economic policies of yesteryear. Great. Thanks.

Need more taxpayers - yeah right. You claim there's no class warfare but then plainly state that you think the middle class should pay.

AND STOP SAYING WE WANT TO INCREASE TAXES. All that needs to happen is that the Bush tax cuts that should have expired long ago, SHOULD ACTUALLY EXPIRE.

We don't want to raise the taxes you twonk, we JUST WANT THEM BACK AT REASONABLE LEVELS.

Re:The only "nasty consequences" require courage

[artor3]

Taxes pay for the government, which sure as all hell creates jobs. Tax cuts, however, give money to the rich who invest it...overseas.

I agree that social programs should be means tested, but that alone won't balance the budget. We need to raise taxes back to a reasonable level. Obama offered $3 trillion in spending cuts in exchange for $1 trillion in taxes. It was the idiot Republicans who refused. They'd rather this country die in poverty than raise a single dollar in taxes from their rich benefactors.

Re:The only "nasty consequences" require courage

[vlueboy]

It's a lick your recent hunting wounds and hunt elsewhere change. You're stating what we have suspected, but still refuse to accept*: that US jobs are "Cursed if the corps don't get more cash... and even if they do get it."

* Because there's no "way out" of the IT job exodus other than going to live in Asia using a radically different lifestyle, income base, freedoms, and worst of all... language.

Re:The only "nasty consequences" require courage

[Xyrus]

The Laffer curve is a miserable failure, as anyone with even the slightest knowledge of economic history can deduce.

The only private investments tax cuts will spur will be in paying accountants to find new and unique ways to hide the taxable income in esoteric financial constructs designed specifically for the wealthy.

Balancing the budget requires cutting spending AND raising taxes.

Re:The only "nasty consequences" require courage

[V-similitude]

The US won't "default" no matter what happens. Enough tax money comes in every day to sustain the interest payments on the debt.

Under current treasury rates sure . . . But the moment the US has to start defaulting on its non-debt obligations (such as social security and medicare checks) in order to pay the debt, the rating agencies will downgrade us, which will force (by their own risk policies) hundreds of major financial institutions to dump treasuries, causing rates to skyrocket. It'll be less than a month before we don't make enough in revenue to roll our debt. That's all not to mention that once payments on social security and medicare stop, those people will stop spending the money they now don't have, which will send us into another recession, which will quickly drop our revenues.

Though I guess I agree that we won't technically default on our debt. Because as soon as the downgrade happens and our interest rates skyrocket, the debt limit increase will be pushed through congress so quick, there won't be time for any debate. But that'll be too late. The US's monetary reputation will be irreparably damaged, and interest rates will be that much higher for a long time for us.

But sure. We won't technically default, so Obama's wrong, right??

Re:The only "nasty consequences" require courage

[KDR_11k]

Don't you know that taxes work like homeopathy?

Re:The only "nasty consequences" require courage

[genner]

So either stop price-fixing in the labor market (i.e., minimum wage laws) or else slap tariffs on incoming goods. You can't have free trade (or anything remotely like it) while legislating quality-of-life. Not unless you rule the entire planet. We have to pick.

Tariffs are pretty much the only answer if the US wants to continue it's current quality of life. The problem is it most likely will never happen until till it's too late. Right now emerging countries like China are dependent on us as consumers so tariffs could still work. When the quality of life is raised up in enough in China that they can start selling stuff to themselves were pretty much doomed no matter what happens.

Re:The only "nasty consequences" require courage

[Sycraft-fu]

Well there's some pretty good proof of the Laffer Curve in the form of some countries where the taxes are completely retardedly high, usually import taxes, and they just get completely ignored. Everyone finds/bribes a way around. Also a simple though experiment shows it must be true at some level. Consider:

If you were required to pay 100% of your income in tax, would you pay it all, and go homeless and starve to death, or would you find a way to avoid at least some if not all of the tax?

However, as you accurately point out, the question is where the optimal point is. The idea that it is lower is supported by all of no evidence. In fact historical evidence would indicate that indeed it much higher. The way some people act, the lower your taxes the higher your revenues which is provably bogus by looking at the other extreme, a 0% tax rate.

Unless we discover that in fact revenues DO go down when we raise taxes, well then we shouldn't be crying about this. So far, I've never seen this. Even for "easy to avoid" taxes. My state raised the sales tax not long ago to cover education and police. There were plenty of stupid crys of "People will just shop online, you'll lose more!" Well guess what? Didn't happen, the tax is bringing in the extra money projected. Hasn't changed my spending habits one bit, and I'm someone quite accustomed to purchasing online. I still buy things in store plenty for all kinds of reasons, convenience, availability, perishability, cost of shipping, and so on.

Clearly we were NOT at the peak, as people wanted to say. It isn't worth your time to try and avoid a 9% tax. You buy online when it is convenient, or the item is not available locally, you don't when it isn't. Tax plays little to no role in deciding that. Now were it 90%? Ya, I can guarantee I'd do everything I could to avoid it since what choice would I have? I couldn't afford to spend that kind of money and still buy what I needed.

The general idea is correct, but the idea that we are past the optimum point is stupid and has no evidence.

Re:The only "nasty consequences" require courage

[0123456]

The Laffer curve is a miserable failure, as anyone with even the slightest knowledge of economic history can deduce.

The Laffer curve is common sense. At 0% tax rates the government has no revenue because there's no tax. At 100% tax rates the government has no revenue because no-one in their right mind will work to see everything they do stolen by the government. Hence revenues must peak somewhere between 0% and 100% tax rates.

Of course common sense is pretty rare after a century of compulsory schooling by government teachers.

Re:The only "nasty consequences" require courage

[johnjaydk]

Oh, the infamous Lafffer curve (too lazy to post a link to wikipedia, check it yourself). Too bad it has not been proved, nobody knows where the optimal point is (why they always assume the optimal point is with LESS taxes, and no with more?), and everything else.

One has to marvel at small government people who point to the Laffer curve. The curve shows the optimal strategy for a bloodsucking leech (government in their point of view) and they complain that the bloodsucker is doing a bad job. The contradiction is mind blowing.

Never mind the fact that, the only proof for the Laffer curve is repeated assertion. But I guess that's good enough for economics these days. Particularly the Chicago branch of economics.

Re:The only "nasty consequences" require courage

[vlm]

why they always assume the optimal point is with LESS taxes, and no with more?

Back when Laffer was new, as a species we had a century of experience with increasing taxes, never decreasing. Or at least the ratio must have approached 1000 to 1.

Less taxes was radical, something new is bound to have "some" reaction, good or bad. More taxes was ultraconservative, been doing that since my great great great grandfather's era.

Its hard for young people born after that era to understand taxes had more or less never been lowered in human history other than as part of invasion or revolution.

Given centuries of experience, vs "Regan tried it for a decade in the 80s" I'm still not certain we have enough data.

Re:The only "nasty consequences" require courage

[vlm]

we'll probably waste money with means testing.

That is NOT waste but growing a new constituency of middle class means testing jobs. This is mostly a board of hard core science diploma holders or equivalent. Where do you think most of the French Lit or Modern Art diploma holders end up? Not McD's that's all illegal aliens where I live, unless you're an illegal with a Russian History degree thats off limits. Not on the streets. Maybe 1 in 1000 become famous or professors or famous professors. The remainder work up at the state office building and the fed building downtown etc as mid level whatevers.

Re:The only "nasty consequences" require courage

[Seumas]

I'll take fewer public services for less taxes. Right off the bat, I'm ready to give up my social security. I'm sure I can come up with others, if you give me another five seconds to think about it.

Re:The only "nasty consequences" require courage

[Seumas]

Are we still pushing this meme that the Bush "tax cuts for the wealthy" were really tax cuts exclusively for the wealthy?

Re:The only "nasty consequences" require courage

[naoursla]

Means testing will just discourage people from saving on their own. $1M isn't really that much to retire on if you live 30 years after retirement.

Re:The only "nasty consequences" require courage

[Seumas]

Overall, I think I paid around 38% in taxes last year (not including sales taxes and things like property tax). Is that not enough fucking taxes? Just how much more do I need to pay for it to be "fair"? It's not like I'm living in a mansion. I've got family members I could be helping get through school. I've got a mortgage on an average house in an average neighborhood with average guys and their average families. I've got a savings account I'm hoping I can keep putting enough into so I can retire, some day. I've got a budget and have to think carefully about my spending. If I lost my job, I'd be in a bit of a crunch.

I'm a fan of fair taxation, but I'm not a fan of using "tax the rich durp durp!" as an excuse for fiscal responsibility. Taxes bring in such a ludicrous amount of revenue that there's no excuse for the entire country not to be living in a near fucking utopia. The only thing stopping us is the utter corruption and unaccountability for the irresponsibility in government. I can't say I have a problem with anyone fighting strongly against a single point of higher tax, until some sanity is shown in how that revenue is going to be spent.

I think most rational people actually don't mind chipping into the pot, when they can see the fruits of their contributions. You'd have to be a fool to voluntarily hurl your money into a sucking bottomless pit, though.

Also, what we're usually calling "rich" in these discussions is almost always laughably small. I might easily concede that someone earning millions a year is rich, but I'd have a hard time saying the same about someone making $150k or $250k. There's a difference between making enough money to not really have to worry about it and making enough money that you have a solid gold umbrella holder and you use hundred dollar bills to start your kindling in the fireplace.

Re:The only "nasty consequences" require courage

[ph1ll]

Two points don't make a curve.

Re:The only "nasty consequences" require courage

[Teun]

I see you have trouble looking at the international picture, some countries with the highest taxes like Germany, The Netherlands and Denmark are presently doing best.

Money passed through taxes and the government is usually spend locally and thus of direct benefit to all.

Re:The only "nasty consequences" require courage

[js_sebastian]

The US won't "default" no matter what happens.

I also don't think the US will default. But miss ONE payment on interest, and see how the rating agencies downgrade you and your cost of capital shoots up. All that posturing in congress could get very expensive for the treasury.

On the contrary, Reagan knew what Kennedy (JFK) knew: tax cuts INCREASES private investment, which increases jobs, which adds more TAXPAYERS to the system.

Raegan raised taxes three times, according to CNN. http://articles.cnn.com/2011-05-09/opinion/zelizer.reagan.taxes_1_tax-cuts-tax-increases-support-tax-reform?_s=PM:OPINION. The current budget cutting zealots, on the other hand, want to cut expenses while not touching defense, and not touching subsidies to industry (such as ethanol subsidies).

Re:The only "nasty consequences" require courage

[jpapon]

You want to cut the minimum wage? Seriously? I'm sure we'll all be happy once we are working in fiscally sound sweat shops...

Re:The only "nasty consequences" require courage

[Jsutton1027w]

Actually, two points make a line, which is "a special case of a curve, namely a curve with a null curvature." http://en.wikipedia.org/wiki/Curve

Re:The only "nasty consequences" require courage

[cgenman]

"Entitlements" account for the vast majority of the budget.

Actually, Defense still counts for almost 2/3rds of the federal budget. http://www.wallstats.com/deathandtaxes/

Reagan knew what Kennedy (JFK) knew: tax cuts INCREASES private investment

Yes. And faced with fiscal realities, Regan also pushed through 130 billion in tax raises. No business makes more money by taking less in. That's just a fantasy. If you're throwing 100 million in tax cuts to chase 1 million in growth, you're going to be stuck in a massive national deficit, like we have been for the past few decades.

Re:The only "nasty consequences" require courage

[SydShamino]

Taxes are lower now than they have been in decades. If your argument were true, why hasn't this translated into a low unemployment rate?

Might the fact be that companies and rich individuals, who are reaping the benefits of the existing ultra-low rates, are simply not using their money to create jobs in the United States? That perhaps a sizable number of them are either sitting on cash or investing overseas?

The government spends every penny they take in. (I doubt you'll argue with that.) If that money is given to rich people, some of them will spend some of it here to create jobs. I'd rather see the government spending redirected to domestic programs that will build infrastructure, invest in the future, and create jobs here than give it to people who might or might not (but probably won't) use it to benefit their country at all.

Re:The only "nasty consequences" require courage

[dogmatixpsych]

Yes, but then we get to purchase cheap Chinese products that raise our overall standard of living. Further, if Chinese people are making more money, they will turn around and spend that money to make more money. Some of it will be invested directly in the U.S. economy. Yes, we need more jobs here but we need incentives for people and businesses to create jobs here rather than mainly abroad (although the companies certainly can do both). Sorry, I don't have time to expand on this more.

Re:The only "nasty consequences" require courage

[Issarlk]

So that's a straight line? Between the value of 0$ at 0% Taxation and 0$ at 100% it would then mean that the revenues from tax are 0$ at every taxation.
Obviously the government gets more than 0$ from taxes, therefore it can't be a line and is necessarily at curve. QED.

Re:The only "nasty consequences" require courage

[microbox]

Of course common sense is pretty rare after a century of compulsory schooling by government teachers.

What you say about the Laffer curve is true, except I suspect from your "compulsory government schooling" jibe, that you believe the optimal tax level is less then the current level. Funny that these things comes together.

Re:The only "nasty consequences" require courage

[KingMotley]

That is essentially what the stimulus checks are... "reduced taxes", and it works everytime... to some extent.

Re:The only "nasty consequences" require courage

[Solandri]

Oh, the infamous Lafffer curve (too lazy to post a link to wikipedia, check it yourself). Too bad it has not been proved, nobody knows where the optimal point is (why they always assume the optimal point is with LESS taxes, and no with more?)

Outside of economic circles, the general case of the Laffer curve is known as the Mean Value Theorem. So I'd say it's been solidly proven. The only question is, as you point out, where the optimal point lies.

Re:The only "nasty consequences" require courage

[DavidTC]

When the quality of life is raised up in enough in China that they can start selling stuff to themselves were pretty much doomed no matter what happens.

Uh, no, at that point they'll have to be paid enough to afford that, and hence Americans can compete with them for jobs.

Or, alternately, and I know it's crazy, we could have Americans making the stuff for us by then.

The problem isn't other countries competing for jobs. No one cares if Canada competes with the US for jobs. We might moan a little that they got a certain factory instead of us, but, in the end, we know we're going to get the next one. Because you have to pay them roughly what you pay us.

It's when uneven economies compete, when it's possible to pay someone 10 cents an hour to do something that requires $7 an hour here.

We need tariffs against countries with uneven pay scales. Canada, France, Germany, fine, we can compete on even footing with them. But not with economies with dirt poor workers.

Which, must be pointed out, are often because they operate essentially slave labor in dangerous work environments. Aka, like China does.

Re:The only "nasty consequences" require courage

[larry bagina]

Treasury bonds have a fixed interest rate so dumping will not affect the interest rates on existing bonds. (The exception being TIPS which are linked to the CPI, which the government controls).

Re:The only "nasty consequences" require courage

[rbarreira]

At 100% tax rates the government has no revenue because no-one in their right mind will work to see everything they do stolen by the government.

This is probably false. If the government seized all your income but then gave you food, shelter and entertainment I'm sure many people would work.

Re:The only "nasty consequences" require courage

[DavidTC]

No, he's just stating a fact.

If you have County A where there are minimum wages, and child-labor laws, and safety standards, and worker's comp, and unemployment, and a security net, and workers expect health care, etc, etc, and Country B where none of that is true...hiring workers will, by definition, be cheaper in Country B. This is an unavoidable fact.

Thus, if somewhere allow goods made in either country to be freely sold in a location (Be the location they're being sold Country A, Country B, or even unrelated Country C), then companies will set up shop in Country B, all other things being equal. This is also an unavoidable fact.

So we, in Country A, have exactly two options, and only two options to make companies set up shop here:

1) We can either remove all the stuff that makes us different from Country B. Remove min wage laws, remove social security, remove safety stuff, etc. Or:

2) We can set up tariffs from goods produced in Country B, to make it more expensive for them to be produced there. (And hope we have enough of a customer base that companies won't just ignore us, which luckily we do. And if we don't, we should team up with Europe and Canada so we do.)

That's it. Those are the actual two options that we actually have. There are no other options, there is no debate possible, it's simply a fact.

And I agree with him completely. Those are our choices. I'm not entirely sure how you decided that he was in favor of the first choice, but I'm in favor of the second.

Re:The only "nasty consequences" require courage

[phantomfive]

It's more complicated than a curve. To determine whether a tax cut will improve/hurt the economy and revenue overall, you need to consider two things:

A) Where the revenue is coming from. Some types of tax hurt the economy more than others. For example, from experience it seems a capital gains tax will hurt the economy more than a VAT. There are theories about why, but that's another topic.

B) What the tax money would have gone to (if it wasn't cut). Road building is a good example of spending that improves the economy more than the money it took to build it (although we are talking about good roads, not bridges to nowhere).

Figure out those two things and you can figure out if a tax cut will hurt or improve the economy, and whether it will increase or decrease revenues.

Re:The only "nasty consequences" require courage

[phantomfive]

That's pretty dumb, the Laffer curve is a very real thing, as can be realized by the simple thought experiment of, what would happen if the government taxed at 100%? Obviously no one would have any money to spend, and the next year revenue would drop through the floor. Use your brain a bit, please. The only question that is even remotely controversial is where on the curve exactly you switch from hurting the economy to helping it.

Re:The only "nasty consequences" require courage

[roman_mir]

I used to agree with this line of thinking. The problem is the rich aren't investing in US companies. The current tax breaks are creating jobs they just happen to be in China.

- obviously, and they are correct in doing so. Anybody creating jobs in USA or other Western nations is punished today.

The punishment comes in many forms: from high taxes, to insane business regulations, to insane labor laws, to insane subsidies to the competition, but it's not just high wages of Americans or Europeans.

It's really about government causing capital flight, that sends jobs away, why else do you think it's happening?

So while cutting taxes is always good (it's never good to give money to government), but it's not enough. As long as government regulates business, creates labor laws, makes it difficult and expensive to hire people with all the laws and regulations, it's not going to happen.

If government gives employees special privileges, then it means it puts special obligations on the employers. For example minorities, women, whoever are not basically young white men have various laws providing them with ability to file lawsuits against the company, whether it be for 'wrongful termination' (even if they are terminated for performance), or be it some 'intolerable work environment' (when company gets sued for actions of some asshole working for the company), it provides an excellent reason not to hire.

If hiring over 50 people puts the company into special category, which requires it to give special treatment for whatever reason, then company won't go over that threshold, and some other company will shrink to get below it.

Minimum wage laws during millions of people sitting on unemployment is criminal.

Re:The only "nasty consequences" require courage

[lyml]

And that is also a worthless statement. We know optimal tax income is between 0% and 100% tax rates, but still have no information on which side of this optimum we're at. Hell optimal tax rate could even be 99.99% as far as we know thus making the Laffer curve a useless financial concept.

Re:The only "nasty consequences" require courage

[Bing Tsher E]

Actually, Defense still counts for almost 2/3rds of the federal budget.

Pardon me for interrupting your daddy warbucks hatefest, but a big chunk of defense spending can be effortlessly reclassified as entitlements. Military pay, veterans benefits, etc. It's not all just spent on evile nukes.

Re:The only "nasty consequences" require courage

[del_diablo]

Would not 100% tax theoretically be a society based on resources instead of fiat?

Re:The only "nasty consequences" require courage

[Anonymous Coward]

Tell me this, great purveyor of common sense: where is the optimal point between 0% and 100%? You don't know? Who woulda thunk? So the whole curve between 0% and 100% is pretty nonsensical because we have no way of knowing what it looks like. For all we know it's not a parabola, not a curve. There's no real data. Common sense tells me that I can't use some theoretical parabola for which no data exists to make a conclusion about anything.

But politicians frequently repeat the mantra that "lower taxes increase spending." They point to this theoretical parabola as evidence. And they call it "common sense." That's what the parent was decrying. He never claimed that a 0% or 100% tax rate was sustainable -- that part is common sense. With or without the imaginary curve in between.

Personally, I don't believe in the curve at all. I believe that inflation will always adjust itself to the tax rate, so that the 0% and 100% rates are connected by a flat line. Adjusting taxes is something with short term effects and those effects are completely dependent upon many economic variables. Basically, one can't say "raising taxes does this" or "lowering taxes does this" because it's all circumstantial. For instance, when inflation is rising at an unhealthy rate, raising taxes is often a good way to slow it down. But not necessarily. It's foolish to think there are many absolutes in economics.

Re:The only "nasty consequences" require courage

[ralphdaugherty]

Some of it will be invested directly in the U.S. economy.

No it won't. The Chinese are not as stupid as you.

Re:The only "nasty consequences" require courage

[mywhitewolf]

yeah, isn't that essentially communism?

Re:The only "nasty consequences" require courage

[mywhitewolf]

considering the average citizen only makes approx 2 million in their working life, half of that to retire on should be more than enough.

Re:The only "nasty consequences" require courage

[ralphdaugherty]

Military pay

Military pay is entitlements? You teabaggers are nuts.

Re:The only "nasty consequences" require courage

[bitbucketeer]

Your "honest" people don't seem to have a problem with the theft that is income taxes and sales taxes and for some reason they never consider good private services that compete to keep prices down. "The socialists believe in two things which are absolutely different and perhaps even contradictory: freedom and organization." - Élie Halévy

Re:The only "nasty consequences" require courage

[naoursla]

To maintain your standard of living after retirement, you need to save about 30% of your post tax income (in the absense of SS). If I earn $100k year, I need to live like someone earning $70k a year who isn't saving for retirement. That suggests a few choices:

1) Continue working hard and saving for a $70k lifestyle.
2) Work less hard, earn $70k and don't save.
3) Continue working hard, don't save, and live a $100k lifestyle.

I don't see any advantage to #1. Do you?

Re:The only "nasty consequences" require courage

[haruchai]

Since so much of our manufacturing has moved overseas, mostly to China, why would they need to invest in the US economy? Apart from real estate, perhaps?
Anything they want, they already know how to make.
The only thing the US has left that China might want is intellectual property, which they can either buy cheaply or simply steal, like they've done for decades.

Re:The only "nasty consequences" require courage

[V-similitude]

Treasury bonds have a fixed interest rate so dumping will not affect the interest rates on existing bonds.

Yes, our obligations on existing bonds won't be affected. However, we have to roll something like $100 billion in bonds every week. That means that we pay back the principle and issue new debt to do so (we could still issue some amount of new debt within the debt ceiling since the old debt would be maturing). Obviously, for this new debt, we'd be feeling the effects of the dumping pretty hard. And we definitely don't have enough revenue to pay back every bit of existing debt right as it matures without issuing any new debt (weekly revenue is closer to $50 billion).

Re:The only "nasty consequences" require courage

[dogmatixpsych]

Ad hominem attacks show a dizzying intellect.

If you must know, I was merely proposing a hypothesis that might be either true or false or even just partially true. It's the scientific method - propose a hypothesis and then see if it is falsifiable. Instead of trying to insult my intelligence (I'm well aware of the limits of my intellect), you could counter with research or even just expert views on the matter showing that the Chinese do not in fact invest in the U.S. economy and will never do so in the future. Like I said, it was a brief comment without full development because I am limited in the time I can spend on commenting on ./. It is a comment meant to spur commentary, hopefully from someone who has international business experience and a background in economics (I know, there aren't many non-tech people on Slashdot but there might be some).

In any case, China is the largest holder of U.S. public debt (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt), which means that they have invested in the U.S. economy, even if it is through these Treasury securities.

Re:The only "nasty consequences" require courage

[dogmatixpsych]

China imported about $92 billion worth of products from the U.S. in 2010 (http://www.uschina.org/statistics/tradetable.html). That's less than the U.S. imports from China but China would struggle more without those imports. They are trying to become self-sufficient (yes, often by unfair trade agreements and through IP theft) but will not be able to in our current world. It's just not possible to be completely insulated economically, even on an import level.

As I commented above, China is the largest foreign holder of U.S. Treasury securities - over $1 trillion worth. They are already heavily invested in the U.S. economy and continue to become more so.

Re:The only "nasty consequences" require courage

[dogmatixpsych]

To be more accurate, proposing a hypothesis and then seeking to falsify it is only part of the scientific method and not all of it, as I said. I should have been clearer in my previous response.

Re:The only "nasty consequences" require courage

[ralphdaugherty]

Ok, I retract my comment. You are clearly very thoughtful.

regards

Re:The only "nasty consequences" require courage

[ralphdaugherty]

China just made a major diversification out of US treasuries. And all they were doing with it before was currency manipulation to keep their imports cheap.

We need large import tarriffs on imports from countries running significant trade deficits with us.

And yes, I have a dizzying intellect to be sure. :)

Re:The only "nasty consequences" require courage

[lennier]

Back when Laffer was new, as a species we had a century of experience with increasing taxes, never decreasing.

"Species"? Economic policy as a biological imperative? That's an... interestingly broad broad brush you're painting 21st century political theory with.

Even restricting yourself to the last 5,000 years of recorded human history, I think you'll find that something equivalent to taxation has been around since the time of the Pharoahs, and that it manifestly could not have constantly risen since then, or we'd be paying more than 100% of our income. And given that in the ancient world it *was* common to appropriate 100% of an individual's income - they called it "slavery" - I think you'll also find that taxes have fallen quite a bit since then.

But yeah, other than that, taxes had never ever fallen in the entire million-year history of the human species until Ronald Reagan was elected.

Re:The only "nasty consequences" require courage

[mywhitewolf]

I think I see your point. (that choice 1 is the correct choice?, but most people opt in for choice 2 and 3.) and MOSTLY agree because although most people who take choice 2 and 3 do so for selfish reasons, its not as bad as it sounds I'll play the devils advocate here.

whats a safer investment: shares? property? monetary funds? maybe even gold? regardless of what you invest in, if the FUTURE GENERATION cannot support themselves, you aren't going to be supported either as everything you hold value in will plummet. HOWEVER a safer investment would be if you invest in the future generation (IE, spend that $30k a year, ). not only does this alleviate the burden of individuals predicting their future, but it also stimulates the economy NOW (while the US needs it) and sets up the security and confidence of the future generation in the Government.

obviously in the real world things aren't that simple and a middle ground approach is best.

Re:The only "nasty consequences" require courage

[mywhitewolf]

also the value of your wage (especially between $70-100k) has very little to do with how hard you work. my wife earns half as much as i do and works twice as hard and is formally better educated than i am. your wage is all about taking advantage of situations or skills, not about "putting in the hard work".

Re:The only "nasty consequences" require courage

[naoursla]

There isn't a "correct" choice. #1 is the one that gives people incentive to save and be less of a burden on the rest of society. You want to set policy to encourage people to make that choice.

I don't know what investments are "safe". I do know that earning more than "average" from an investment requires either a lot of work or a lot of luck. I prefer to put my hard work into my career and aim to preserve my investments by keeping up with inflation. I think that expecting more than that without making that your profession is unrealistic.

I've also thought that maybe encouraging no savings and making everyone rely on SS might not be a bad idea for the reasons you mention. That is what the OP calls a Ponzi scheme. I disagree that it is a Ponzi scheme. Sometimes SS runs a surplus and sometimes it runs a deficit. As long as those balance out, then everything is okay. The problem is that the surplus/deficit runs last for decades.

Re:The only "nasty consequences" require courage

[DesScorp]

The Laffer curve is a miserable failure, as anyone with even the slightest knowledge of economic history can deduce.

The only private investments tax cuts will spur will be in paying accountants to find new and unique ways to hide the taxable income in esoteric financial constructs designed specifically for the wealthy.

The fact that your post is a +5 insightful really makes me wonder if the lunatics are running the asylum at Slashdot.

Your post... besides being conspiracy theory gibberish... both ignores history and reality. Raising tax rates is usually when people rush to "pay accountants to find new and unique ways to hide the taxable income". High taxes are when tax shelters... blessed by Congress to reward and punish certain economic behaviors... really take off. You don't hide money when you can keep more of it. You spend or invest it. You hide it when you think the government is coming to take more of it.

Re:The only "nasty consequences" require courage

[ph1ll]

... or you could have two straight lines. Or you could have many curves with several localized maximum points. Or you could have...

You're really missing the point of the grandparent post.

And as for your puerile ad hominem attack that I must have gone to a government school, I schooled in Europe where we have some excellent government schools.

Good day to you.

Re:The only "nasty consequences" require courage

[haruchai]

Thanks for that link - it'll make finding certain stats much easier. But looking at the stats for China's imports and exports with both the US and rest-of-world, I'm not convinced they need the US as much as you may think.
But I'm quite surprised to see their volume of trade with the rest of the Far East.

Re:The only "nasty consequences" require courage

[Attila Dimedici]

Actually, someone did calculate the optimal tax rate. If I recall correctly, it is to decrease income tax significantly from where it is right now and increase capital gains slightly (although it may be the other way around). It wasn't as completely proven as the falsity of Keynesian economics, but the numbers looked about right because they disagreed with the doctrinaire positions of both sides of the tax debate.
What I love about the current debate is that the Democrats are arguing, based on Keynesian economic theory, that you can't cut government spending during an economic downturn without making things worse. Yet they want to raise taxes during that same economic downturn, which Keynesian economic theory says will make things worse, as well.

Re:The only "nasty consequences" require courage

[drsmithy]

At 100% tax rates the government has no revenue because no-one in their right mind will work to see everything they do stolen by the government. Hence revenues must peak somewhere between 0% and 100% tax rates.

The "miserable failure" comes from the inability of anyone to put numbers on there other than 0 and 100.

Re:The only "nasty consequences" require courage

[Rockoon]

Here is the thing. China gets buttloads of U.S. Currency from Americans, and there are only so many things that can be done with it and those things are not without their downsides.

Lets suppose you buy a Wide Screen LCD made in China for $100 before local markup. You purchase it from China instead of from a US manufacturer because the labor cost ratio is something like 10:1 right now. So now someone in China has your $100, but what can they do with it?

They normally dont want to buy US goods because the labor cost ratio is still 10:1 (ie, its cheaper to make the thing in China.) In some cases they buy from the US because they either dont make it, dont have the expertise (yet) to make it at the required quality, or the good is fad-driven. The trade deficit indicates quite clearly that they simply cannot offload all the money back to the US as simple mercantile trade. So they still probably have $

So they still have a large fraction of that $100 you gave them. They can lend it to the US government and figure out what to do with it later, but the US government isnt borrowing limitlessly either. All-told they only have about 1 trillion in US treasuries, a very far cry from the entire trade deficit compounded over decades.

They could buy up their own currency in foreign hands using US dollars, but the scale at which they would have to do it would inevitably drive up the value of their own currency and drive down the value of the US currency .. something that would eradicate that 10:1 labor cost ratio which they depend on to sell their goods and keep their own economy moving.

They could buy deeds to property in the US, but the US property market has crashed hard in recent years.. so prior investments they have made arent looking so hot now...

So then there is the reality. A lot of Chinese business globally and locally conducted is using US currency, for they have no other choice. Year after year, China becomes more and more reliant on the US dollar and they can't do a damn thing about it without destroying their economy.

Re:The only "nasty consequences" require courage

[sznupi]

You almost made it safe by focusing on "the last 5,000 years of recorded human history" / ~since the Pharaohs of the Two Kingdoms. Then you had to throw in millions. In such form, I'm afraid it to be disregarded by tax abortionists (roughly as a group) as some devil's propaganda or smth.

Re:File under

[Anonymous Coward]

Tea baggers are the only ones? How about sane humans who don't rack up credit card after credit card or economists or don't simply rubber stamp government data? Or maybe anyone who understands that individuals can govern their own affairs? Tell us where you get your impeccable economic logic.

The problem with "fiscal responsibility" ...

[khasim]

Force some fiscal responsibility, even if it is probably too late.

EVERYONE wants lower taxes and reduced spending and "fiscal responsibility".

The problem is that each person has a DIFFERENT idea of what the government should be spending money on (and what programs should be cut) and what should be taxed.

And that doesn't even factor in the ear-marks and riders and other pork that gets attached to garner votes.

Re:The problem with "fiscal responsibility" ...

[Relayman]

I like the Tea Party people like Michele Bachmann who decry government spending but line up for their share of welfare, in the form of farm subsidies in her case.

Re:The problem with "fiscal responsibility" ...

[skegg]

EVERYONE wants lower taxes

This shouldn't be true ... but it pretty much is.

Here in Australia, there's been a steady DECREASE in personal income tax rates over the past couple of decades. There's also been a corresponding INCREASE in the cost of health care and education; two areas which, although still heavily subsidised by the government, now see individual citizens shouldering a larger SHARE.

What gauls me is all the poorer people cheering lower taxes when they don't realise they and their families have historically been subsidised by wealthier tax payers.

If you lower income tax rates by 1%, a less-wealthy person saves, what, $400/year? A wealthy individual, however, saves $2,000/year. However the cost of living will now go up -- let's say by $700/year for the poorer person, and $1,500 for the wealthier person. Who's better off now?

I do not wish to enter into debate regarding the merits of wealthier individuals subsidising less wealthy individuals. All I'm saying is that lower tax rates should not be in the interests of everyone.

Re:The problem with "fiscal responsibility" ...

[xero314]

EVERYONE wants lower taxes and reduced spending and "fiscal responsibility".

This is not true at all. I for one, which is enough for it to not be EVERYONE, do not want lower taxes. Taxes in my country are unbelievable low. On the other had I do want a change in spending, away from national offense, and away from corporate welfare.

Re:The problem with "fiscal responsibility" ...

[Rich0]

Yes, but most people who want higher taxes want those taxes to be on somebody else, for the most part.

I'm not saying this is wrong, but in America everybody wants their free pony... Or, at least a majority do, which is all it takes.

Re:The problem with "fiscal responsibility" ...

[ThurstonMoore]

nothing wrong or hypocritical about playing
by the rules as they exist, while
simultaneously saying the rules are stupid
and should be reformed.

You're a fucking idiot. That is the definition of hypocracy.

Re:The problem with "fiscal responsibility" ...

[LordLimecat]

The problem is that each person has a DIFFERENT idea of what the government should be spending money on (and what programs should be cut) and what should be taxed.

I think talking about cutting spending HAS to be on the board when the discussion is "we're spending too much". If someone has an alcohol problem, and runs out of alcohol, you dont go get them more; if the government has a spending problem and runs out of money, why do we want to entrust them with MORE money prior to seeing some good-faith cutting in spending?

Forgive me, but that seems bass-ackwards.

Re:File under

[mamer-retrogamer]

That's a nice straw man constructed by you and GP.

I disagree with the notion that the only way out of the current U.S. debt mess is to accrue more debt.

Re:So

[vlm]

When is the EU going to put it's house in order......starting with Greece?

Shouldn't Iceland be first? Maybe they haven't rolled over completely to central control like other European states, but they are part of the Schengen, so they kinda count...

Pretty much every country in the EU is slated for economic collapse except Germany. Later this fall, maybe sooner, we will hear about Portugal and Spain.

oh no

[phantomfive]

said in an interview broadcast Sunday that it would cause .... stock markets to fall.

Oh, no! Please don't let the stock market fall! Anything but that! It'll be a tragedy for all the people who've bought non-dividend paying stock at prices far higher than they're worth!

It's been pointed out before, and is worth pointing out again, but US government default is prohibited by the 14th amendment of the constitution. Whether they follow it or not is left to be seen.

Re:oh no

[phantomfive]

Dividends are related to how much profit the company is making; a drop in the stock market alone will not cause a drop in dividends.

People tend to be afraid of stock market drops, because they have the perception that the drop in the stock market caused the great depression. It did not, it merely accompanied the depression.

This is more than a theoretical issue: people often focus on trying to improve the stock market number, instead of trying to improve the economy as a whole. Trying to raise the stock market by printing more money, by borrowing more money, is counter-productive and causes problems.

Re:oh no

[Kwesadilo]

It's been pointed out before, and is worth pointing out again, but US government default is prohibited by the 14th amendment of the constitution [wikipedia.org]. Whether they follow it or not is left to be seen.

IANAL, but if the US government defaults, aren't they just saying that they are unable to meet their obligations? That doesn't sound the same as questioning the validity of the public debt. To do that, I should think they would have to default and then lie and say they didn't.

Re:oh no

[roman_mir]

US government default is prohibited by the 14th amendment of the constitution

- why are you saying things without understanding them at all?

That's not what the amendment says. Read it:

14th Amendment
Amendment XIV
Section 1.

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

ok, done with that part, next:

Section 2.

Representatives shall be apportioned among the several states according to their respective numbers, counting the whole number of persons in each state, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the executive and judicial officers of a state, or the members of the legislature thereof, is denied to any of the male inhabitants of such state, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such state.

- by the way, being 21 at those times is like being at least 30 nowadays in terms of work experience.

Next.

Section 3.

No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any state, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any state legislature, or as an executive or judicial officer of any state, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

I could have skipped this, but whatever.

Finally:

Section 4.
The
validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

OK, how the fuck do you get from : VALIDITY SHALL NOT BE QUESTIONED

to

Defaults are prohibited?

WTF?

Listen, why don't you fucking read the fucking thing you fucking referencing first, OK?

"Validity shall not be questioned." - means it's fucking valid. Nothing else. It doesn't mean anybody must pay! It only means this: yeah, it's a valid claim.

And WHAT is the debt in question by the way?
authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, - well fuck me! Clearly this is all about the debts of US, so that they always must be repaid! NOT.

I am amazed, I am fucking amazed at people here. Do you know that USA defaulted on its debts already? It defaulted on its debts and its promises already? Do you know when? 1971, when it defaulted on the promise to pay gold for the dollar, that's when it defaulted, and since then the v

Re:oh no

[phantomfive]

ok, you really did NOT have to quote the entire 14th amendment there. And you are really negative. Cheer up man, it's only an economic crash! It's not the end of the world! Be a bit happier!

Look, here's the deal, we both have the 14th amendment text. It's an annoyingly ambiguous text, so our interpretations may differ. Based on the historical genesis of the particular paragraph, and based on previous court cases, I suspect that the Supreme Court will interpret it to mean that the US must pay interest on the debt before it pays other obligations, including military, social security, and medicare. But it doesn't matter what I think, it doesn't matter what you think. All that matters is what the Supreme Court thinks.

If the French were upset in 1971 about defaulting on gold, they should have sued. That's their fault.

Re:oh no

[phantomfive]

The text is not entirely clear to the modern reader, but historically the meaning has been interpreted to mean that the US government must pay its debts. There is no reason to think that the supreme court would interpret this amendment otherwise.

Re:oh no

[roman_mir]

Somehow there is no problem for the courts 'interpreting' the law when it concerns private citizens.

So if you murder somebody, I don't see them trying to do an interpretive dance around that fact and come up with a different explanation on what that law really says.

But when it concerns the law, which is supposed to apply to the government, now all of a sudden we need an 'interpretation'?

That's a bunch of nonsense.

SCOTUS is not supposed to be interpreting the law, he is supposed to be upholding it.

There is nothing to interpret there. When somebody says: validity will not be questioned. They mean just that. That it is valid, and it cannot be declared invalid by the government. That's all there is to it. It doesn't mean it must be paid at all. But it's valid.

Same with the rest of the Constitution - it does not need interpretation, it needs honest fucking people being judges, so they would uphold the fucking law.

Re:oh no

[phantomfive]

But when it concerns the law, which is supposed to apply to the government, now all of a sudden we need an 'interpretation'? That's a bunch of nonsense.

But come on, laws for private citizens are interpreted all the time. Recent cases have concerned the death penalty, or patents. Please at least act like you have some knowledge.

Re:oh no

[del_diablo]

Mod up, things should work like that.

Re:oh no

[zill]

If the 14th amendment didn't apply to President Roosevelt and President Nixon, what makes you think it still applies today?

In the end the Constitution is just black ink on dead trees. It needs the cooperation of all three branches of the government to enforce it. Unenforced clauses will fall into de facto obsolescence.

Twice in history, first in 1933, and again in 1971, those checks and balances have failed.

Re:oh no

[Rich0]

OK, how the fuck do you get from : VALIDITY SHALL NOT BE QUESTIONED

to

Defaults are prohibited?

Simple, see Perry vs US.

The Supreme Court has already ruled that the 14th amendment forbids Congress the power to default on government obligations. The Supreme Court, per the Constitution, is the ultimate arbiter of what the Constitution means.

In any case, nobody is going to default on anything. They'll just keep printing money. A few billions more dollars in circulation will not have the same effect on the US economy as defaulting on even a single $25 savings bond. And, as numerous others have pointed out, the US can solve this problem at any time by spending less, and taxing more to pay for the excess of the past. We're nowhere near the point where recovery is going to be impossible.

Re:oh no

[AlamedaStone]

the Constitution - it does not need interpretation

I wish you'd have written this at the top of your first post so I could just skip over them all. If you sincerely believe in a purely literalist reading of the Constitution... man... no wonder you're so angry. That's just not how civilization functions, mate.

Re:oh no

[phantomfive]

The 14th Amendment applied very strongly in the days of Roosevelt. Read Perry vs the US for the court case. The court stated clearly that the US government, although it had devalued the currency, must still pay its bonds. Relevant quote from the document, in case you don't want to read the whole thing:

We conclude that the Joint Resolution of June 5, 1933, in so far as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.

The court ruled that the government didn't technically default on any of the loans, because they paid back the bonds according to the terms of the bonds.

Likewise today, if we see a stealth default, with inflation jumping massively due to the printing of extra dollars, then the people who own treasury bonds will be paid according to the terms of the bond. Unless they bought inflation protected TIPS, they will lose money. Those are the terms of the bond. (Note: even with TIPS, they may still lose money, since the inflation index is measured by the US and may not reflect the true inflation cost).

In other words, the US must honor the terms of its bonds, but they can be sneaky in the way the terms are honored. I know of no relevant court cases that happened during the Nixon shock; if you know of any, please let me know.

Re:oh no

[doesnothingwell]

Oh, no! Please don't let the stock market fall! Anything but that! It'll be a tragedy for all the people who've bought non-dividend paying stock at prices far higher than they're worth!

To the IMF:

American citizen here, unemployed and uninsured. Bring it! I will bring the popcorn.

Re:oh no

[roman_mir]

The Supreme Court, per the Constitution, is the ultimate arbiter of what the Constitution means.

- that's as good as having no Constitution at all.

Constitution is the las applied to government, that's why they don't uphold it but they 'interpret' it.

When it's criminal law for individuals, they don't interpret it - if you kill, you kill. They just need to prove it.

But if you are a government, all of a sudden there are all sorts of people who want to give a different meaning to any law that is supposed to apply to the government.

SCOTUS is a joke, it has outlived its purpose once it started 'interpreting' the law.

Re:oh no

[Anonymous Coward]

a drop in the stock market alone will not cause a drop in dividends

This is partially true. However, the wealth destruction effect of a broad crash can impact the bottom line of individual companies, ultimately reducing or eliminating dividend payouts. Ford Motor Company has still not restored its dividend, even though it didn't go through Chapter 11 like the other 2 of the Big 3.

There's another counter-intuitive thing I like about dividend stocks though, especially if you are enrolled in a DRIP. Given a steady dividend, you actually prefer a lower share price. Why? Because over time the compounding at higher rates trumps share price. If you don't believe me, spreadsheet it out. The one stock that remained a bright spot in my portfolio through the entire financial crisis was a utility stock in a DRIP. I actually welcomed the higher yield over a two-year period. Now it's got a higher share price, but I accumulated a lot more shares when it was yielding more!

Re:oh no

[jimicus]

Oh, no! Please don't let the stock market fall! Anything but that! It'll be a tragedy for all the people who've bought non-dividend paying stock at prices far higher than they're worth!

What do you think the majority of pension fund managers do when they're trying to invest money for capital gains rather than return? You may be rather more exposed than you think.

Re:oh no

[dkf]

It's been pointed out before, and is worth pointing out again, but US government default is prohibited by the 14th amendment of the constitution. Whether they follow it or not is left to be seen.

There are things they can do that aren't a default but might as well be. For one thing, the government (including the Fed) has got their hands on the printing presses; they can just make money out of thin air (and crush the debt with inflation).

Re:oh no

[pavon]

Same with the rest of the Constitution - it does not need interpretation, it needs honest fucking people being judges, so they would uphold the fucking law.

That is just silly. Picking a section at random, let's look at the 4th amendment:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

What exactly is an "unreasonable" search and seizure? That is pretty damn vague language there, not black and white at all. There is no way to read and apply that without inserting some interpretation for the word unreasonable. The justices can look at common law and political essays of the time to try to determine the intent of the founding fathers; but even they had many differences of opinion on these matters, so that isn't cut-and-dry either. Furthermore, at a minimum they will still have to interpret by analogy to extend historical interpretation to circumstances that didn't exist back then. English isn't computer code. It is inherently imprecise and will always require some amount of interpretation. Your "they shouldn't interpret" rant basically boils down to "they should interpret it the same way I do".

I agree that there are some cases where I think the supreme court interpretation has gone beyond what any of the founding fathers intended, but there are far more cases where I may dislike their interpretation but recognize that it is a perfectly reasonable way to interpret the constitution; both what was written and what was intended.

Re:oh no

[roman_mir]

again, it does not need an interpretation.

Did they write the paper in Chinese? Turkish maybe? Farsi?

No. It's English, and it's not that different from current form of it. What is needed is not interpretation, what is needed is people with some integrity, who will not cater to every government demand to bend the Constitution, which is the law, that government must abide by, to allow them to do whatever they want. Anything they want.

Re:oh no

[phantomfive]

Heh, nope! I'm one of the lucky people who doesn't have a pension! If we focus on the economy, the stock market will take care of itself. In any case, it's foolish to make decisions based on the stock market being at a particular price. That's how bad ideas like TARP get passed.

Re:oh no

[phantomfive]

In other words, the stock market is merely a vague representation of the surrounding economy. Take care of the economy, and the market will improve on its own.

There's another counter-intuitive thing I like about dividend stocks though, especially if you are enrolled in a DRIP. Given a steady dividend, you actually prefer a lower share price.

That's a good point.

Re:oh no

[Rich0]

What system would you propose? Ultimately whoever has the guns gets to decide what the rules are. Unless you want to start a revolution that would be the Federal Government.

And courts are more than happy to interpret laws applied to ordinary people too. Oh, and the executive branch is more than happy to interpret court interpretations. In the end everybody gets away with whatever they can get away with, from the top to the bottom, and including you and me as well...

Re:oh no

[roman_mir]

Unless you want to start a revolution that would be the Federal Government.

- the federal gov't has usurped the power that does not belong to it, so clearly it needs to be removed, where is the question?

Re:So

[shoehornjob]

Then Portugal comes next. Looks like the UK was smart enough to keep their own currency.

banking system must be re-imagined

[nido]

There have only been a few times that the United State's debt was paid off. Economic depression immediately followed.

The problem is that money is borrowed into existance. No new debt == no new money.

Presidential candidate Ron Paul has a good temporary solution for the debt ceiling: start tearing up the bonds that are held by the Federal Reserve. The Fed returns the interest paid on these bonds to the treasury anyways...

Read about this option in Ellen Brown's recent piece, QE2 Shocker: The Whole $600 Billion Wound Up Offshore

Re:banking system must be re-imagined

[amorsen]

Ellen Brown seems somewhat confused:

The one thing QE2 did for the taxpayers was to reduce the interest tab on the federal debt. The long-term bonds the Fed bought on the open market are now effectively interest free to the government, since the Fed rebates its profits to the Treasury after deducting its costs.

That is a rather large benefit.

Hitting the Debt Limit doesn't mean Default

[billstewart]

The US Constitution says the government isn't allowed to default on the debt. But the Debt Limit Law isn't in the Constitution - it's just a law that says that Congress doesn't authorize borrowing more than $X, and requires some actions if we hit that limit, including not spending more money than we're taking in. It's questionable whether it really even applies, because Congress has passed a budget law since the last Debt Limit Law update, and that budget says they're going to be spending more than they're taking in so they're going to be in more debt.

So what can the Executive Branch do when they hit the debt limit?

• - They could stop paying back debts that come due, but that's not only unconstitutional, it's not going to help the deficit problem any.
• - They could stop paying Federal employees (not sure if that's big enough to help.)
• - They could stop paying Social Security checks, and try to make the Republicans take most of the blame for your grandma being thrown out on the streets, hoping that the Democratic Party leaders don't get stomped in the next election by upset Democrats.
• - They could cut all the Republican Party's favorite programs, especially most of the military contracting boondoggles. (Unfortunately, some of those can't be done instantly, especially shutting down the wars, and Obama doesn't want to be accused of losing the wars for political reasons, and he seems to like the TSA and Homeland Security.)
• - They could declare that the most recent Budget supersedes the older Debt Limit law.
• - They could close the Washington Monument!

I'm guessing that they'll probably do a combination of politically unpopular spending cuts and Federal pay cuts and try to blame the Republicans, plus the Washington Monument's going to be doomed until there's a solution. I don't think they'll default on the debt, not just because it's unconstitutional, but because it seriously degrades their chances of borrowing any more money in the near future, which they want to be able to do - Obama's threatening that, but I think it's more of a political game of chicken.

Re:Hitting the Debt Limit doesn't mean Default

[King_TJ]

Great summary, Bill! I completely agree with you on all of this, and truthfully, these are the realistic facts about the situation that neither political party has much interest in the public knowing. Everyone involved is too busy spreading F.U.D. so they can manipulate it to further their respective agendas!

The only reason I can see for the "Debt Limit Law" at all is to ensure that the topic comes up for debate and in the news media every time the "magic number" is hit that they set. Legislation governing what they plan to spend or save is already passed anyway.

Re:Hitting the Debt Limit doesn't mean Default

[TopSpin]

But the Debt Limit Law isn't in the Constitution

Congress has exclusive power to incur debts. Treasury acknowledged this two days ago. At most the US is obligated to service interest on existing debt, such that the 'validity of the public debt ... shall not be questioned.' At no point does the constitution require the Congress to incur new debt (i.e. raise the debt limit) for any reason, and Obama has no power to do so.

Some things that are actually not in the constitution: Social Security. Medicaid. Medicare. Food stamps. WIC. Section 8 housing. Individual Mandate. Agriculture subsidies. Unemployment compensation. Fanny Mae. Freddy Mac. Farmer Mac.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

The US Constitution says the government isn't allowed to default on the debt.

- what a bunch of BS.

I responded to a similar bunch of nonsense right here

But let me provide an important perspective: the people who are deciding on this "debt ceiling" ruse are in Washington DC right now, so clearly the so called 'ceiling' will be raised, don't worry about it, they are just fucking with you.

So when to worry? When the people in China and all over who hold the debt decide that your ceiling shouldn't be raised.

Of-course for the past 6 months the Fed was buying 100% of all new debt (QE2 was equal in size to the amount of new debt created in that time period for a reason, it's not a wild coincidence,) and they are buying the outstanding debt on the market as well, which isn't rolled over. They want to keep interest rates low at expense of inflation.

Re:Hitting the Debt Limit doesn't mean Default

[omb]

First Madame Lagrande should STFU, she is not American and this is NOT a IMF issue it is a US domestic political one.

Second, she is factually wrong, the market is not a suicide pact.

Third Bhoener is the architypal RINO and the GOP needs to be rid of him as soon as possible, while his sort is in Washington NOTHING will get done.

Re:Hitting the Debt Limit doesn't mean Default

[SomeKDEUser]

f you stop paying your employees, this is a default. And it will be understood as such by the quotation agencies. Then the US loses its AAA rating, and many large bondholder become forced to sell US bonds. Then the interest rates go up (whereas now they are so low, only incredibly thick stupidity makes congress not borrow more).

And the debt situation becomes worse as it rolls over. But hey, the tea party is working so hard to make the US a third world country, why not let it?

Re:Hitting the Debt Limit doesn't mean Default

[dachshund]

Congress has exclusive power to incur debts. Treasury acknowledged this two days ago.

Yep, but here's the problem. Congress has passed a budget appropriating money and laying out specifically how the Treasury is to spend it. Simultaneously, Congress has decided to prevent the Treasury from issuing new debt to pay for these appropriations.

Thus the question is not whether the Treasury can override Congress. Instead, it's a question of whether Congress can override Congress. Any way this breaks out, the Treasury will be breaking one law or another, and setting some new, dangerous precedents.

You clearly think that the Treasury should break the law by failing to spend money as specified by Congress. That's an interesting theory. But once you've authorized Treasury to break the law, who says how they should break it? Why shouldn't President Obama simply instruct the secretary of the Treasury to zero out every program he finds personally objectionable?

Because this is illegal? That hardly has any meaning anymore.

Re:Hitting the Debt Limit doesn't mean Default

[Xanthas]

You forgot the one that most likely will happen:

- The president will order the Treasury to make good on debt payments without changing any federal spending citing the Constitutional requirement to make good on public debt payments. This will be in blatant violation of the Debt Limit Law, but in this situation, it's a law vs. the Constitution. Remember the president IS a Constitutional scholar...

An interesting side effect of this is that it would likely enormously shift the balance of budgeting power away from Congress to the Executive. I'm not sure any Congressmen or Senators would like that, so they will probably update the limit before this becomes a necessity.

Re:Hitting the Debt Limit doesn't mean Default

[Mr. Arbusto]

Alright, southern states can't get out of the debt the US incurred by fight the civil war....got it.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

The congress has made a rule that it can't create spending beyond a limit. That's fine, I don't see what the issue is. It doesn't matter if we hit the congressional debt ceiling because this forces the executive branch to pay interest on the debt because the debit itself cannot be questioned and it's the executives job to cut the checks. But per congressional rule, new spending can't happen. It wouldn't mainly mean a total government shutdown doing nothing but paying the debt with current revenue, since congress hasn't passed a budget and can't, per their rules, authorize more spending.

You might be aware of this, but we've been running without a budget for almost 2 years. Continuing resolutions have just been passed, with new spending tacked on. The debt has been entirely a congressional issue with spending going into over driver for the past 12.

First and formost....stop spending. Keep paying the debt until it's back to something reasonable. It's on congress to balance the budget and reduce spending, all the president can do is propose and veto or sign on spending.

Re:Hitting the Debt Limit doesn't mean Default

[lennier]

Obama doesn't want to be accused of losing the wars for political reasons

Why not? Is there any other valid reason for starting or ending a war but honest, democratically-debated political views? What else is a government for, but to enforce policy?

Re:Hitting the Debt Limit doesn't mean Default

[TopSpin]

Yep, but here's the problem.

There are even more problems than you think. Investors won't touch debt issued without the authority of Congress. It isn't enough to usurp the prerogative of Congress and ignore the debt limit. Investors, with actual money, must then be found. Investors that can be convinced these `rouge' Treasury notes enjoy the full faith and credit of..... whom? Some congressman yelling about `illegal debt' and calling for impeachment?

Good luck with that!

setting some new, dangerous precedents

This debt crisis has been a long time coming. Voices have warned about the consequences of chronic deficit spending for decades. There aren't any easy answers left no matter what billstewart et al. wish to believe. They can blame it on corporations, Bush, Republicans, capitalism, white people, Christians, the `rich,' Bilderbergs, assault rifles or whatever else they've been taught to hate. It doesn't matter any more because the jig, as they say, is up.

What we're left with is one of four possibilities. One, we'll do the politically difficult thing and balance the budget, or get fairly close. Two, kick the can a few more years and have our creditors balance it for us. Three, try and fail at the first and then eventually suffer the second anyways, like Greece. Four, print ourselves into a currency crisis, in which case you're back to number two.

Why shouldn't President Obama simply instruct the secretary of the Treasury to zero out every program he finds personally objectionable?

Because the constitution assigns priority to certain obligations of the Federal government. Sentence one; "provide for the common defense." Article 1, Section 6; pay the congressmen. Others include maintaining the "validity of the public debt," which amounts to redeeming Treasury notes as they come due.

After that? Obama will pick his favorites and pillory Congress for the ensuing disaster. The dependents will protest and burn stuff, like they have in France, the UK, Greece and other Western debtor nations. Then the voters will decide.

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

"Of-course for the past 6 months the Fed was buying 100% of all new debt (QE2 was equal in size to the amount of new debt created in that time period for a reason, it's not a wild coincidence,) and they are buying the outstanding debt on the market as well, which isn't rolled over. They want to keep interest rates low at expense of inflation."

That's a misconception. QE2 did essentially nothing to keep rates down and inflation up. We're in a liquidity trap and monetary policy (QE) has absolutely no effect.

As witnessed by commodity prices and rates after the QE2 has ended.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

1. Who says QE ended? Just because the name 'QE' ended doesn't mean they the Fed will stop buying Treasury debt. Do you seriously believe they will risk to have higher interest rates at this time, when all of their charlatans, they call 'economists', are telling them they must stimulate and when the unemployment is getting higher (which was obvious it was going to do, stimulating economy via gov't spending only causes more imbalance in the system)?

2. QE was absolutely there to keep interest rates down to buy out Treasury debt. The Fed's real policy is obvious - monetize government's debt. They are constantly worrying about deflation in US government and in the Fed and Treasury, while deflation is the FIX for the problem of mis-allocation of resources, it's not a problem in itself, it is what should happen - contraction and a bust, so that debt can be restructured, companies can go bankrupt, spending can be stopped, credit can be reallocated from unproductive parts of economy to new productive parts of economy, it's basic stuff, which they hope you don't understand. It's what 1921 depressions has clearly shown: let the depression take course and do one thing - cut government spending by a huge amount. Recession should be have been allowed in 2001, but Clinton and Bush didn't allow it, pushed interest rates down to 1 and then 0% and started pumping money in.

Of-course Bush cut taxes, but he increased spending by a huge factor, and regulations weren't removed to allow people to compete with established monopolies, and money was printed and spent and borrowed, thus more capital was leaving. What is it supposed to do, stay and be destroyed? That's why jobs left - capital left.

3. Commodity prices are not supposed to just fall if government stops buying treasuries for a few days. There is all that money out there, created by QE2 and other bail outs and stimulus plans, any new dollar is inflation.

Re:Hitting the Debt Limit doesn't mean Default

[TheSync]

"Why shouldn't President Obama simply instruct the secretary of the Treasury to zero out every program he finds personally objectionable?"

Why not? The President must pay debts and must appropriate money from the Treasury as per law, but when the Treasury runs out of money, the President can't appropriate any more. Obviously the President has to triage non-debt payments.

I'd start by not paying Congress...

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

"1. Who says QE ended?"

Well, Treasury and Fed. They've really stopped pumping liquidity. And this had no effect whatsoever on economy. None. Zip. Nada. The rest of your argument fails, because it contradicts reality.

Oh, sorry. I've noticed that it's 'roman_mir' who has no problem living in an alternative reality. He has a privilege to rant about evil government, while sitting in world's best naturally protected country with pretty socialistic government - which happens to be a libertarian paradise in his mind.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

Well, Treasury and Fed. They've really stopped pumping liquidity. And this had no effect whatsoever on economy. None. Zip. Nada. The rest of your argument fails, because it contradicts reality.

- really? Bernanke said on multiple occasions that his policy helped to bring Dow up. Simultaneously he said he doesn't understand why commodities are going up.

Yes, they said QE is over. That's what they are saying. How much time before the Fed is buying T-bills again? 2 weeks? 4 weeks?

It doesn't matter what they call it, I am looking at the new T-bills issued, once the Aug 2 goes by and the so called debt 'ceiling' is once again raised, the Fed will be back buying T-bills, and Treasury will be back, printing new coupons by the ton. And the Fed will be buying them by the ton.

Oh, sorry. I've noticed that it's 'roman_mir' who has no problem living in an alternative reality. He has a privilege to rant about evil government, while sitting in world's best naturally protected country with pretty socialistic government - which happens to be a libertarian paradise in his mind.

- I lived in North America for 16 years, I moved. Just like anybody with any sense would move their business out of that country, I have all the reasons in the world to talk about this, I am an example of 'jobs leaving' or capital leaving for reasons of government destroying economy. Why would I stay and watch once again a collapse around me? No thanks.

BTW., I spend more than half of my time in Russia and Asia, but I do reside in Europe, you are right. So what? Aren't you in the story where the IMF head says something to the US government? She is not talking out of Boston, New York, right? Shouldn't you be maybe a little less hypocritical?

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

"- really? Bernanke said on multiple occasions that his policy helped to bring Dow up."

Not the past tense. QE1 _might_ have helped to ease panic and lift Dow. QE2 had exactly zero effect. Quantifiably.

Wanna bet? Barring debt ceiling fiasco or some sort of cataclysm there won't be significant (at least 2000 points) and persistent Dow drops during the second part of the year even if QE3 is not attempted. Ah, and QEs were quite visible to all players. It's kinda hard to hide 4B purchases happening each day.

"Simultaneously he said he doesn't understand why commodities are going up."

Demand from China, India and other growing economies is pushing prices on the market. Simple supply and demand. What is so complex here?

There's no significant inflation in the USA. The average wage has actually gone _down_ this month and was stagnant before that.

"Just like anybody with any sense would move their business out of that country, I have all the reasons in the world to talk about this, I am an example of 'jobs leaving' or capital leaving for reasons of government destroying economy. Why would I stay and watch once again a collapse around me? No thanks."

That's kinda curious, since government in the USA has been doing almost exactly everything that you preach. And behold! It doesn't help the economy.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

Oh, sure I will bet. I will absolutely bet. I will bet that there will be QE3, even if not under that name before September 5th.

As to Dow dropping - this is purely an inflation driven rise, there is nothing else at all that pushes those numbers up, they are supposed to fall in a deflationary bust, but since the fiat is being pumped into the system, it's going up.

As to commodities - yes, there is demand. But not to the tune of 10% per year prices going up, which they are. The demand is created with the new fiat that the Fed pushes into the system, and with the response to that push by other nations, who devalue their currencies as soon as their manufacturers put the USD into banks, which they get from US because of those other governments subsidizing the US consumer.

There's no significant inflation in the USA. The average wage has actually gone _down_ this month and was stagnant before that.

- Ha! USA exports inflation to the rest of the world, because it's not producing shit, but its buying the products from producer nations, so the fiat ends up in banks in Asia. In US the 0% interest at the Fed's discount window allows the financials to take up that debt and make the spread on T-bill purchases, which is another way for the Fed to monetize Treasury debt.

That and so called currency swaps with other countries, which again, are a way to monetize US debt.

As to wages going down - that is your response to me claiming there is huge inflation?! Yes, wages are going down as they must, because that is the only weapon left in US productive arsenal. Unless government kills off a lot of regulations and taxes and subsidies to monopolies and stops spending and inflating, there will be nothing else that US manufacturers will be able to compete on, only this - pushing wages down. They have nothing else they can do to compete at all. They can either push wages down or they can move to other countries.

This absolutely does not mean there is no inflation, it just means there is inflation AND the wages are going down. That's what it means - a double whammy.

So, how much extra money do you have that you want to bet with?

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

"Oh, sure I will bet. I will absolutely bet. I will bet that there will be QE3, even if not under that name before September 5th."

That's not a bet I offer. My offer is: "There'll be no major and persistent DOW drop at least until the end of year even if QE3 is not enacted, barring cataclysms like debt ceiling fiasco". Besides, rates on T-notes will stay low, probably below 4% and definitely below 5%. I'm willing to bet on it $250 or 5 grams of gold or equivalent in any currency of your choice.

That's what we call "a prediction" here in economic science. Can you make a corresponding prediction? What would happen if QE3 is not enacted (I know that you believe that it would)?

"As to commodities - yes, there is demand. But not to the tune of 10% per year prices going up, which they are."

Actually, it's close to 20%. And it's really real - China and India are growing that fast (China is almost back to double-digits growth).

"The demand is created with the new fiat that the Fed pushes into the system, and with the response to that push by other nations, who devalue their currencies as soon as their manufacturers put the USD into banks, which they get from US because of those other governments subsidizing the US consumer."

There's been no significant changes in the USD exchange rates recently. So this is also false.

"- Ha! USA exports inflation to the rest of the world, because it's not producing shit, but its buying the products from producer nations, so the fiat ends up in banks in Asia. In US the 0% interest at the Fed's discount window allows the financials to take up that debt and make the spread on T-bill purchases, which is another way for the Fed to monetize Treasury debt."

Again, USA can only 'export' inflation if country's local currency is pegged to dollar. So USA cannot export inflation to Japan or Europe, for example.

And no, inflation is NOT possible without almost immediately rising wages. That's Macro 101.

Re:Hitting the Debt Limit doesn't mean Default

[pijokela]

Of-course for the past 6 months the Fed was buying 100% of all new debt (QE2 was equal in size to the amount of new debt created in that time period for a reason, it's not a wild coincidence,) and they are buying the outstanding debt on the market as well, which isn't rolled over. They want to keep interest rates low at expense of inflation.

And this is how US will always prevail. You pay the Chinese with dollars and inflate them so low that you can pay back. What I do not understand is how a country can do this and still have the lowest possible interest rate, because the inflation causes the real interest payed to be negative. Has to be somehow related to the fact that the interest rates are determined by American companies.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

Back to front:

And no, inflation is NOT possible without almost immediately rising wages. That's Macro 101.

- nonsense. There is inflation going on right now and wages are staying where they are or dropping. Inflation is expansion of monetary supply, not rising prices, as they teach you in your Keynesian schools of 'economics', (which it's not.)

Again, USA can only 'export' inflation if country's local currency is pegged to dollar. So USA cannot export inflation to Japan or Europe, for example.

- nonsense.

As USA export inflation to China, the subsequent rise in commodities prices push inflation to the rest of the world. China uses commodities to produce for most of the world, and the higher prices for the commodities then affect everybody, including Europe, Japan and the rest. Besides, Europe is doing its own rounds of inflation just fine, and Japan bought into using inflation to fight the 'evils' of deflation in the nineties and though they printed only enough for prices to fall a little or to stay where they were before, it still is inflation. They didn't print enough to cause massive price hikes, but they were supposed to have massive price drops, and they 'saved' their population from the 'evil' of having low prices, thank you very much, all to subsidize the Western consumer by stealing the purchasing power of the Japanese producer.

There's been no significant changes in the USD exchange rates recently. So this is also false.

- really, so CAD and AUD being above USD, the Swiss Franc being at near 1.20 (thank you, thank you), the Japanese yen staying where it is right now even with their insane policy of inflation and after their catastrophes of the late, the NZD at all times high, even Euro, with all the problems of Europe being at what, 1.41 to 1? I don't know what you consider significant, but to me, truly, the only significant thing is this. That's the only real money AFAIC. Not an investment. Not a commodity. Money.

Actually, it's close to 20%. And it's really real - China and India are growing that fast (China is almost back to double-digits growth).

- I calculate my numbers, I don't count on others to do it for me.

But let me explain something to you, that they don't teach you in your 'economics' classes apparently.

A growing economy with a growing demand GROWS SUPPLY. That means the prices go down, not up, in growing economies, because there is money to be made by increasing supply and selling more, and that happens because the market sends signals that more of whatever is required, so prices on that 'whatever' go up and then there is more supply. It's really that simple.

The demand is artificial, it comes from inflation, that's why the prices for commodities are in a 10 year bull market, not because there is more demand from China. If China produces more demand it also produces more supply. If China cannot produce more supply, others produce more supply.

The prices for oil are at an all time LOW today. All time low if counted in real money. 10 silver cents US per gallon. That's lower than in recorded history of USA ever, the lowest in history was 25cents, but of-course they also had people checking your oil at the gas pump, so maybe the comparison is just a little off by that amount.

That's what we call "a prediction" here in economic science. Can you make a corresponding prediction? What would happen if QE3 is not enacted (I know that you believe that it would)?

- economic science in universities of the world is a misnomer. I can make predictions, I made predictions and based my behavior on them, that's why I left that continent 2 years ago. That's why I sold properties and got gold. I make predictions.

QE3 will happen, so that's my prediction.

If Q

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

"- nonsense. There is inflation going on right now and wages are staying where they are or dropping. Inflation is expansion of monetary supply, not rising prices, as they teach you in your Keynesian schools of 'economics', (which it's not.)"

WRONG!!! Inflation is BY DEFINITION rise of prices throughout the economy. If you do not understand this, then read your friendly dictionary, look up words like "definition" and "logic". You're free to define your own term, like "looney inflation" or "mumbo-jumbo" and write your own economic theory. However, you're trying to redefine an existing term and carry on with predictions based on old definition - that's a huge NO-NO.

For example, let's redefine 'deflation' as: "Rising wages throughout economy caused by massive government subsidies". That'd be great, right!

"As USA export inflation to China, the subsequent rise in commodities prices push inflation to the rest of the world. China uses commodities to produce for most of the world, and the higher prices for the commodities then affect everybody, including Europe, Japan and the rest."

Wrong. That's not possible, or I'd be rich arbitraging exchange rates between renminbi and (say) euro. China's pegging their currency to dollar would just cause exchange rates between renminbi and unpegged currencies to float. So if US devalues USD by 10% then renminbi will be automatically devalued by 10% - so trade between two countries won't be afftected. However, for the rest of the world Chinese and US-made goods would suddenly cost 10% less.

"- really, so CAD and AUD being above USD, the Swiss Franc being at near 1.20 (thank you, thank you), the Japanese yen staying where it is right now even with their insane policy of inflation and after their catastrophes of the late, the NZD at all times high, even Euro, with all the problems of Europe being at what, 1.41 to 1?"

So? There's been no large fluctuations of USD to EUR since last year which kinda proves my point. QE2 had essentially no effect on the economy.

"A growing economy with a growing demand GROWS SUPPLY. That means the prices go down, not up, in growing economies, because there is money to be made by increasing supply and selling more, and that happens because the market sends signals that more of whatever is required, so prices on that 'whatever' go up and then there is more supply. It's really that simple."

Unless you are resource-constrained. Which you are. There's only so much oil to be pumped and we're at the peak right now (or past it). There's only so much arable land, and it's peaked few years ago. With biofuels adding additional pressure. That's what causes the price spikes.

And nobody cares about silver or gold in international trade, that's why they've lost most of its price. And would lose again once the economy straightens up.

"1. There will be QE3, whatever they call it."

I can't make prediction here (that's a purely political problem). So no bet on this.

"2. DOW will go down in terms of gold, as it must, because of the depression in US."

Define "will go down" - I'd say at least by 15% by the end of the year should be OK? If it's OK then I'm in.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

WRONG!!! Inflation is BY DEFINITION rise of prices throughout the economy.

- right. That's why it should not be called economics, but should be called 'tarro card reading' or whatever, and it's political BS, because before US went off the gold standard the definition was very simple and clear - expansion of money supply

Prices do not EXPAND or CONTRACT, prices RISE or FALL. This double speak that they have been involved with, ever since the establishment of the Fed has changed the perception of the people when it concerns economics and money. People don't know what a dollar is, Bernanke doesn't know. It's because dollar is nothing. It's 0 of anything, but it used to be exact equivalent of some amount of gold.

1988 edition of Websterâ(TM)s Dictionary defines inflation as follows: âoeAn increase in the volume of money and credit relative to available goods, resulting in a substantial and continuing rise in the general price level.â - it's an increase in volume of money.

It causes prices to go up, but it's first of all an increase in volume of money. Just because they can redefine a word, doesn't mean the can redefine the idea.

Wrong. That's not possible, or I'd be rich arbitraging exchange rates between renminbi and (say) euro. China's pegging their currency to dollar would just cause exchange rates between renminbi and unpegged currencies to float.

- Chinese central bank is printing currency to buy the USD out of banks, that hold USD for the companies, who send their products to USA, Europe, etc. Thus they are subsidizing the US consumer by buying US currency. Then they buy US debt with that.

As there is more Chinese money due to this in China, there is more demand for the same amount of commodity, thus prices go up in Chinese money, so china sees huge price spikes, to the order of 15-25% a year. Chinese are forced to buy at these levels, as they are the ones using this stuff for production. This pushes the prices up for everybody else who buys these same commodities, because they trade in USD for these commodities.

Whether the local exchange rate can be used for arbitrage - sure it can, but everybody is busy printing their currency now, it's a race to the bottom in terms of currency value. Good thing Switzerland does not. So Franc is at all time high, while unemployment is 3%. Did they teach you that in your macro-'economics' class? Because by the Keynesian shamanism this is a paradox.

So? There's been no large fluctuations of USD to EUR since last year which kinda proves my point. QE2 had essentially no effect on the economy.

- CAD used to be 60 cents US back in 96 I believe. So that's a 'fluctuation'? Franc used to be 25 cents. That's a 'fluctuation'?

Euro and Yen are flawed currencies for the reasons similar to US. But Japanese have a large productive sector and most of their public debt is to the Japanese people. Big difference. Europe is busy bailing out German and French bankers (that's what it means, when they talk about 'bailing out' Greece. It's bad for the Greeks in the long term, but at least those bankers, with close gov't ties will be bailed out.)

Again, I don't consider USD or Euro to be money. These fiat currencies do not store value.

Unless you are resource-constrained. Which you are. There's only so much oil to be pumped and we're at the peak right now (or past it). There's only so much arable land, and it's peaked few years ago. With biofuels adding additional pressure. That's what causes the price spikes.

- In case of oil the supply is limited, I agree.

But not with everything else, and oil didn't go up much faster than any other commodity that is in the bull market for the last 10 years.

but again, and again and again, in REAL money oil is CHEAPEST EVER. 10 silver cents US per gallon. Neve

Re:Hitting the Debt Limit doesn't mean Default

[Attila Dimedici]

Actually, the Constitution says that Congress must authorize all debt that the U.S. government takes on. Before the first debt limit law was passed, whenever the Treasury Department needed to borrow more money, Congress had to pass a law authorizing the specific instrument of debt that Treasury was going to issue. In the 1917, Congress decided that Treasury needed to be able to adjust the type of instrument being used to finance government debt according to market factors and that this required being able to change things more rapidly than a bill could be passed in Congress, so they authorized Treasury to borrow up to a particular amount. This means that Treasury does not have Constitutional authority to borrow beyond that amount. Only Congress has Constitutional authority to borrow money for the Federal government.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

You pay the Chinese with dollars and inflate them so low that you can pay back

- right, that go on as long as the other side keeps buying the worthless dollars for their productive output, but since the other side has a weird government making decisions in terms of printing its currency to buy the USD that companies put into banks, that they get for selling their products in US, they will keep doing so until there is political pressure for them to stop. For example a revolt among the people of China who don't want to see prices rise 15-25% a year, so while they are the producers of the world, they can't buy the very products they produce because their money is losing value and thus they don't have the purchasing power.

In China if they stop buying US dollars and debt, their standard of living will skyrocket as their currency will appreciate in value and prices for all products will fall substantially.

What I do not understand is how a country can do this and still have the lowest possible interest rate

- the Fed has been buying 100% of any new US Treasury debt for the last 6 months. At the same time it's buying much of the debt that comes to market and which is not rolled over. At the same time, they are providing 0% discount rates, letting the banks to "borrow" at that rate to turn around and buy T-bills as well, so they think they are in the 'green' doing that (as long as real rates stay low.) At the same time the Fed is doing all sorts of currency swaps with other central banks for those banks to keep buying some of US debt as well.

This started with Clinton and Rubin and Greenspan, it became worse under Bush and is now rampant. How long will this last? I am not certain, but no country doing this is going to prevail.

The only thing it will 'prevail' at is going to be destruction of its own currency and economy.

Re:Hitting the Debt Limit doesn't mean Default

[billstewart]

Dude!! You win Teh Internetz for the day!

Re:Hitting the Debt Limit doesn't mean Default

[billstewart]

They do have to authorize that debt. But by authorizing spending, without authorizing taxation to cover the spending, that's what they're doing. I did forget one other option the Treasury has, which was "Sell the gold in Fort Knox, just to annoy Ron Paul."

Re:Hitting the Debt Limit doesn't mean Default

[Attila Dimedici]

NO, actually, they don't. Constitutionally, spending is a different authorization than debt. The Treasury Department does not Constitutionally have authority to issue any instruments of debt. The only authorization that Treasury has to issue an instrument of debt is the law passed by Congress which, also, establishes the debt ceiling. When the debt ceiling is reached, Treasury no longer has any authority to issue instruments of debt (bonds, etc) because their authorization to issue instruments of debt is part of the same law that establishes the debt ceiling. Outside of the law that establishes the debt ceiling, all instruments of debt issued by the U.S. government must be individually approved by Congress.

Re:Hitting the Debt Limit doesn't mean Default

[dachshund]

This crisis has not been a long time coming, it's been coming since about 2000, when we went from a balanced budget to one that wasn't even close. I say this not to point fingers, but just to point it out: we balanced the budget a decade ago. We can do it again.

That we haven't done so is simply a function of poor policy choices. Identify those problems and rectify them. If you find that your political views lead you to to support politicians who make those choices, stop voting for them. If you can't stop doing voting for them, please move to a different country.

Just as an aside I'd like to point out that we're not really in a debt crisis. A debt crisis happens when investors aren't willing to lend you money --- or will only due so at high interest rates. That's what's happening in Greece right now. When you're in a debt crisis you'll do anything to get out of it --- that's why Greece is proposing huge, unpopular cuts and huge, unpopular tax increases.

The US is not suffering a debt crisis. Interest rates on government debt are at historic lows, and there's no sign that they're going to go any higher. It's nothing at all like Greece.

We have a "debt crisis" in the same way that you might develop a "heart condition" after shooting yourself in the chest. If we keep fucking with the US credit rating we might manufacture a debt crisis, but it will be a problem of our own creation.

Underneath all that I'm trying to make a very simple point. We have to deal with the debt, but the negotiation in Washington is batshit insane. At best it does nothing, at worst it crashes the economy and reduces government revenues to the point that the deficit gets even worse.

We can eliminate the debt the same way we did in the 90s --- by increasing tax rates and gradually cutting back on spending. It doesn't have to happen in a day and it shouldn't happen in a day, and it doesn't require us to dismantle the welfare state. Anyone who says it does is misinformed, or else they're just offering up their policy preferences.

Re:Hitting the Debt Limit doesn't mean Default

[dachshund]

Here's a Wikipedia chart showing the public debt (red line) since the 40s:

http://en.wikipedia.org/wiki/File:USDebt.png

The basic story: huge debt from WWII followed by declining debt through the 70s. An explosion of debt during the 80s when Reagan took charge. A decline of debt during the 90s under Clinton. A return to the upward trend in the 2000s with Bush.

They say that everyone is entitled to their own opinion but we all have to start with the same facts.

Re:Hitting the Debt Limit doesn't mean Default

[dachshund]

You've opened my eyes.

In any case, I'm perfectly willing to give credit where "it's due" --- as long as we both agree that the budget was balanced due to significant tax increases and spending cuts (including military!) passed during the 1990s.

Now that you've pointed out all the good things the Republicans did for us in the past, here's your chance to convert me into a Republican voter today: all you have to do is convince me that today's Republican party will support the same policies again. And moreover, that won't fall into that ugly "Democratic" trap of passing more deficit-financed tax cuts.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha - QE3 is coming, the DOW was up, what, 160 points or so?

As long as Bernanke opens his mouth, he talks about printing money. As long as he talks about printing money - the DOW goes up, and you are talking about economics?

Pfffffft.

Money printing and inflation policy is not economics, but it surely moves prices up.

Re:Hitting the Debt Limit doesn't mean Default

[Cyberax]

Well, that changes nothing about my prediction. There'll be no inflation and there'll be no economy recovery as a result of QE3. It might as well not exist. Commodity prices also won't be affected much by it.

And inflation in this context means: "An increase in the volume of money and credit relative to available goods, resulting in a substantial and continuing rise in the general price level". You conveniently forgot the: "resulting in a substantial and continuing rise in the general price level" in your answer to me.

Right now, increases in monetary base DO NOT result in continuing rise of the general price level.

So my bet is: "There'll be no significant fall in the DOW or in commodity prices or rise in T-note rates even if there's no QE3. If there is QE3 then there'll be no significant core inflation and there'll be no significant increase in the economic growth" - for the next 6 months. Both predictions are result of a bog-standard Keynesian analysis. I'm willing to bet $250 or 5 grams of gold on it.

Re:Hitting the Debt Limit doesn't mean Default

[roman_mir]

Aah, excellent, so you are willing to bet that there will be no 'significant core inflation', as in prices for goods that are not food and energy will be stagnating in USA, right? Core inflation is the most heavily manipulated type of metric by the government, so you are willing to bet there will be no significant rise in it. You are correct about that, but not because of your reasoning, you are correct about that, because I predict that they will change the way they calculate core inflation yet again.

The 'significant rise of general price level' - do you mean all prices, or do you mean 'core'? If it's all prices, including food and energy, then how much is 'significant' for you and what are you measuring against?

In gold (in real money), these things are cheap and getting cheaper. In the inflated US fiat, these things will be priced higher and higher the more money is printed. What is 'significant'? Bernanke has this fixation on about 2.5% inflation, so I must take that it is an insignificant amount, yes?

I will win this bet on oil alone, as it will be over 115USD/barrel in 6 months for sure, but that's not 'core', right?

There'll be no inflation and there'll be no economy recovery as a result of QE3.

- recovery as a result of stimulus? That is a basic impossibility. There cannot be a recovery based on stimulus. There can be a temporary increase in spending, that's all, but no recovery.

Inflation is money printing, so any new dollars in the market are inflation. What is 'significant'?

Right now, increases in monetary base DO NOT result in continuing rise of the general price level.

- for USA, which exports its inflation to the producer nations. Those do experience 15-25% inflation due to this process.

So what is significant? How much over the 2.5%, for which Bernanke is 'shooting', (and which he overshot already by a large factor) is 'significant'?

Oh, and to me 'Keynesian analysis' sounds exactly like "Astrological reading", but even worse, as government is acting upon this nonsense.

I am willing to make the bet that if QE3 does not happen AND if there are no more bail outs of banks in that time, no stimulus by the government, the DOW will plunge in real terms.

If QE3 does happen (and it is happening, it's 99.99% unless there is some weird event, like the US government is blown up into pieces by a bomb), then DOW will gain in nominal terms, but will still plunge in real terms.

You see, AFAIC there is no difference what US gov't is doing, US economy is screwed, so DOW is plunging in real terms no matter what. But nominal terms, measured in US dollars - this is the function of US Fed, printing money. DOW going up is only due to inflation. So what's 'significant'?

Re:This threat isn't from banks this time

[elucido]

My mistake.

Here are the URLs.

http://www.godlikeproductions.com/forum1/message1029116/pg1
http://restoreamericaplan.blogspot.com/
http://www.youtube.com/watch?v=clkRYkIx4Ks
http://nesaranews.blogspot.com/

It's the Tea Party behind this budget nonsense not the banks, not Obama.

Tea-baggers????

[AliasMarlowe]

The only people who dont seem to understand this are the tea-baggers, but I don't find that particularly surprising, since their total understanding of economics is, "Taxes Bad."

WTF have tea-baggers got to do with economics or politics? Is it really true the USA now has a political movement devoted to tea-bagging?

Re:Tea-baggers????

[vlm]

The only people who dont seem to understand this are the tea-baggers, but I don't find that particularly surprising, since their total understanding of economics is, "Taxes Bad."

WTF have tea-baggers got to do with economics or politics? Is it really true the USA now has a political movement devoted to tea-bagging?

Yes the politicians are the "catchers" and the big corporations are the "pitchers". Note we live in a cultural structure called fascism where the corps and govt have merged, so its kind of ambiguous as to who is who, but if they're "catching" in the media, then they're the politicians and if they're not discussed in the media except by the loyal opposition, they're probably the "pitchers".

Re:Tea-baggers????

[SpongeBob Hitler]

The only people who dont seem to understand this are the tea-baggers, but I don't find that particularly surprising, since their total understanding of economics is, "Taxes Bad."

WTF have tea-baggers got to do with economics or politics? Is it really true the USA now has a political movement devoted to tea-bagging?

It's related to the "Invisible Hand".

Money allows for humans to exchange their labor

[nido]

All money is is allocation of resources.

The only resource that matters to humans are hands and minds working to solve human's problems. Minerals in the ground are just minerals in the ground, without humans to extract them, or to design & build the machinery that can extract them...

A cartoon:

[Anonymous Coward]

A relevant cartoon.

Re:A cartoon:

[QuantumPion]

That's pretty cute! The welfare dinosaur disguised itself as a rich person to avoid being cut by the democrats!

Re:File under

[Anonymous Coward]

You think that's bad? Here's Glorious Leader Obama: "We must spend our way out of this recession". He was also against raising the debt limit in 2006:

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

So Obama will just have to flip-flop after he flip-flops on the flip-flop! This guy's politics gets better by the day. His recent antic of releasing oil from the SPR is just icing on the cake. Showing true colors of the community organizer elevated to the Presidential office.

Eventually, you get caught.

[sethstorm]

The US can go all over the world if it pleases. Jurisdiction won't stop a sufficiently motivated government to handle your sabotage.

Expect a Civil War if the US defaults

[elucido]

And that means we could end up with a war at home along with the wars overseas.

Re:Expect a Civil War if the US defaults

[elucido]

What? Why?

Because people will fight when their money is cut. And spending cuts, or default, would result in a huge amount of people having their money cut, a huge amount of people unemployed.

Re:Expect a Civil War if the US defaults

[Seumas]

I don't think you have your finger on the pulse of America (what little pulse there is). Unless you're going to acknowledge the same civil rights to gay people that everyone else has on a federal level, or you're going to shut down the NFL, or you're going to ban latte's, there is nothing that will ever cause the US to erupt. If that video of our troops unloading on unarmed people with really pathetic commentary on the open mics didn't cause a riot, nothing will. If Goldman Sachs executives running the treasury giving massive bailouts to Goldman Sachs didn't cause riots, nothing will. If going to war for almost a decade against a country that didn't attack us for reasons that were later acknowledged to be manufactured and false (and that we're still participating in) didn't cause riots, nothing will.

Re:Expect a Civil War if the US defaults

[Bing Tsher E]

We're talking about far more serious stuff than that.

We're talking about retirees from the Civil Service not getting their monthly stipend. I can already hear the rev of the RV engines as they get ready to roar up from Florida to Washington.

Re:Expect a Civil War if the US defaults

[Ogi_UnixNut]

Don't worry, if you default they won't be able to afford the fuel to get to Washington, let alone do anything else.

Re:So

[amorsen]

Iceland is not a problem. Their only problem is that other countries are trying to get the Icelandic government to pay for the losses of the Icelandic banks.

The EU countries are heading for collapse because the European Central Bank is fighting inflation during a recession. Once the stricken countries wise up and leave the Euro, they will recover just like Argentina did after leaving the USD.

Re:The Tea Party wants "nasty consequences"

[DNS-and-BIND]

Ok, you realize this is a play right out of Saul Alinsky and Mao Zedong? For those of you who don't know (and who doesn't?) the way it worked was: the people don't realize they're oppressed. They need to be liberated and enjoy the benefits of a socialist government. We, the good guys, need to nudge the people along the holy path to goodness. So, we attack the government, the government attacks back, but we, the good people, make sure we're nowhere around so that the retaliation falls on innocents. These people, having been harmed by our provocations, provide recruits and financing for further revenge-motivated attacks. Repeat, etc. Dividing the country into factions? It's already happened, and it was done by leftists. You didn't see that map after the 2008 election: every state who voted the correct way was labeled "America" and the states who dissented were labeled "Dumbfuckistan".

Doesn't it suck when the enemy learns and uses your own tactics against you?

Oh They'll Do It

[Greyfox]

Even ignoring the entire world economy collapsing, the political consequences alone would be grave indeed. Stiffing millions of seniors, the most consistent voting block, out of their social security would be a good way to insure your political demise in the next election. That's assuming they wait that long and don't start initiating recalls. There's some question as to how legitimate those would be for Congress, but I bet people would be willing to find out. You'd also likely be stiffing hundreds of thousands of military personnel. That brings its own host of problems, not the least would be pissed off military personnel remembering who you are come election time. Or really just pissed off military personnel remembering who you are, period.

I keep expecting this to turn into some huge political opportunity for Obama. He could use it as an opportunity to bring all our troops home from Iraq and Afghanistan, citing fears that they'd be stranded there if Congress doesn't reach an agreement. Once all our guys are out of Pakistan, no sense in giving them billions of dollars of aid anymore either. If they want to have a revolution and get into a nuclear war with India, that's none of our concern. It'd also provide a good excuse to sell off some of the gold in Ft. Knox, since it's not backing our dollars anymore.

Of course even if he can completely capitalize on it and manage to undo most of the damage wrought by the Bush Administration and its rubberstamp Republican congress in the previous 8 years, President Pailin will just fuck everything within 6 months of taking office in 2016, anyway.

Not surprised she said that

[chebucto]

Given that every other reputable economist from the left to the right has said exactly the same thing.

I'm not an economist myself but my understanding is that US debt is used as a fundamental, secure collateral for many (most?) other financial transactions; reducing confidence in US debt reduces confidence in the underpinnings of huge swaths of the economy.

Add to that the fact that interest rates on new US debt will rise (including debt that is rolled over), raising borrowing costs for the us government considerably.

http://www.economist.com/node/18866851

http://www.economist.com/node/18928600

Re:Not surprised she said that

[SuperCharlie]

Many countries are also abandoning purchases of US debt. China and Russia are systematically reducing their holdings. We can not afford even a small increase in interest, it would in fact be devastating, but that appears where this train is heading.

Re:Not surprised she said that

[Seumas]

You know, the more money you owe in relation to your income, the worse your credit score becomes. I don't follow the logic that increasing our deficit increases our reputation and stability. The only confidence to be had in our debt is that we'll continue to incur more and more that we will never actually pay on. But, I guess the world can continue to thrive on an infinite supply of meaningless IOUs.

Re:Not surprised she said that

[DavidTC]

Uh, not raising the debt limit isn't 'not getting more debt'.

Not raising the debt limit is not paying the minimum balance due on your credit card.

Gee, I wonder why that would hurt your credit rating?

Re:Not surprised she said that

[aminorex]

Interest rates will go exactly where the FRB wants them to go. If interests rates rise, they can buy bonds in POMOs. Raising the debt ceiling will not make U.S. bonds and bills more secure. It will make them less secure, because the debt will expand to unservicable proportions. It doesn't matter much whether an Economist is left or right. If they can't catch mice, don't put them in charge of the stable.

Re:Not surprised she said that

[perryizgr8]

actually it is. increasing the debt limit is borrowing money to pay off your existing debts. only now you owe somebody else, and a bit more.

Both sides are unreasonable

[the linux geek]

The Republicans are wrong to assume that cutting spending alone will produce a surplus. Take a lot at this graph.

link

US tax revenue is about $2tn. You aren't going to be able to cut $1.3tn without dipping into mandatory expenditures (social security, healthcare, etc). Defense is big, but not big enough to cover the difference, and there's no realistic way to do massive cuts to defense without resulting in massive unemployment (industries related to the DoD are enormous.) Long-term, the various healthcare programs do need cuts taken out of them, and real tax increases are going to be needed to produce a surplus. Even then, it won't be easy, and I'm unconvinced that either party is willing to take the necessary steps.

Re:Both sides are unreasonable

[artor3]

Obama offered a plan for $4 trillion in deficit cuts, with 75% coming from spending cuts (including cuts to entitlement programs). The Republicans turned it down, because in their minds even $100B a year in tax hole closures and rate increases is too much. They are now pursuing only a $2T deficit reduction package, all because they care more about their rich benefactors than the economy.

So don't go saying both sides are unreasonable. The Democrats have been perfectly reasonable. It's the tea-baggers that are the problem.

Re:Both sides are unreasonable

[Seumas]

I still don't get the conflict, here.

If you're spending more than you earn, you have to cut luxuries. Cable television. Maybe even things like internet access. If you are spending (and already owe) a *lot* more than you're spending, you have to start cutting more things. Like the quality of the food you buy, maybe your transportation, maybe even your health care and maybe even your shelter.

Yeah, there's a lot of stuff that might hurt to cut on a government level. So what? If we can't pay for it, we can't pay for it. It's not magical math.

Re:Both sides are unreasonable

[hedwards]

Indeed in a normal year the GOP would have jumped at that deal, which is because it's a rather extreme deal. I'm not familiar enough to comment on it too much, but the tax increases are pretty minimal and are mostly the result of closing loopholes.

Re:Both sides are unreasonable

[defcon-11]

It should also be noted that those plans area actually $4 trillion and $2 trillion over 10 years, so a measly $200 billion per-year.

Re:Both sides are unreasonable

[haruchai]

The GOP haven't been "normal" since Obama took office. They've been working from a playbook that says 2 things - 1.) We don't compromise 2.) If Obama proposes something and we accept it, it's a compromise. See rule 1

Re:Both sides are unreasonable

[mabhatter654]

the GOP is just a pack of wild dogs lately... ever since Cheney "cleaned house" on "disloyalty" they've been nothing but "our team versus your team" for over a decade. Remember a DEMOCRAT President and a REPUBLICAN Congress under Clinton was able to do this... There's no political gain in saying Obama had an OK idea so they have done nothing but shit-can it for years coming up with more and more wild and extreme things. The same thing is happening faster at the state level.. it's open season on Unions, education, etc... anything vaguely "liberal" simply for the sake of "winning". The current crop of Republicans are Vile, Vile people it's time for the party to be disbanded. Historically this happens very quickly.. often in only 1-2 Presidential elections... we'll see how much longer the public eats their shit.

Looking for Economic Wisdom?

[bromoseltzer]

This isn't the place!

You could try http://krugman.blogs.nytimes.com/

Unless they don't

[elucido]

And the Tea Party certainly does not want the Republican politicians in office to vote on raising the debt limit. The Tea Party politicians lead by Ron Paul of Texas follow the instructions and listen to the militia, not the President of the USA.

They simply don't care if the US defaults because if the US defaults it only will increase their membership and their power. A weak economy helps militias to grow in size and in power. There will be many more revolutionaries the higher unemployment goes, and they want unemployment to be as high as possible so they can has as many recruits as possible.

Re:Unless they don't

[Seumas]

You do realize that "the tea party" and "republicans" are not the same thing, right? The Tea Party was a libertarian movement (which is entirely unrelated to republicans) that was simply raided by the republicans who stole the name (and therefore, the party, as far as the media is concerned). It's kind of like how there are hackers and crackers and crackers have stolen the term "hacker" for themselves, leaving hackers to cry foul with nobody listening.

Ron Paul hasn't lead the tea party for a long time as it was stolen by the psychotic republicans like Palin and Glenn Beck. In fact, Paul said as much a year or two ago, when he was quoted as saying (in regard to the party being hijacked by republican nutjobs) "you are being taken for a ride". Frankly, it's kind of sickening to see you lump the two together.

GOOD. About time.

[PC and Sony Fanboy]

I'm so glad that the US isn't pushing the rest of the world around on this issue. It's about time those hot-headed, arrogant, right wing crazy puritan grandkids stopped behaving like they still own the world.

Hey americans. It's 2011, not 1945. You no longer own the world.

Re:GOOD. About time.

[Dutchmaan]

I'm so glad that the US isn't pushing the rest of the world around on this issue. It's about time those hot-headed, arrogant, right wing crazy puritan grandkids stopped behaving like they still own the world. Hey americans. It's 2011, not 1945. You no longer own the world.

Yeah, now you can deal with China pushing the world around, which I'm sure will be equally, if not much more pleasant.

Re:GOOD. About time.

[PC and Sony Fanboy]

Yeah, now you can deal with China pushing the world around, which I'm sure will be equally, if not much more pleasant.

Heh, unlikely they'll be worse than the americans. Don't you remember what the US put the world through? I believe they skipped out on WW I, and only came into WW II when they were attacked. "Protecting others"? Nope. At least the chinese don't try to hide their hypocrisy.

Re:GOOD. About time.

[Dutchmaan]

Trust me, any.. and I mean ANY country with enough power is going to be an asshole.. China just hasn't been strong enough yet, but you'll see... China can and will be just as much if not more of an asshat than the US ever was. As would ANY country. So spare me your America/Western hatred as if you have some culturally moral ground to stand on.

Re:GOOD. About time.

[PC and Sony Fanboy]

Trust me, any.. and I mean ANY country with enough power is going to be an asshole.. China just hasn't been strong enough yet, but you'll see... China can and will be just as much if not more of an asshat than the US ever was. As would ANY country. So spare me your America/Western hatred as if you have some culturally moral ground to stand on.

Spare me your anti-eastern hatred as if you have some culturally moral ground to stand on.

Re:GOOD. About time.

[Dutchmaan]

LOL! anti-eastern? is that how you read it? I'm not anti-eastern.. I'm anti-hypocrite.

Re:GOOD. About time.

[PC and Sony Fanboy]

LOL! anti-eastern? is that how you read it? I'm not anti-eastern.. I'm anti-hypocrite.

It must be hard, hating yourself then. I suppose it's kinda like catholic guilt, and you just stop thinking about it after a while.

Seriously though, you're anti-american then... but you're standing up for the USA, and against China. That's kinda ... hypocritical. I suppose you were attempting some sort of sarcasim/humour. Well, good luck with that, and don't quit your day job.

I suppose you could view china as saying one thing, then doing another. But their actions could reflect their belief system. You know, "It's for the good of the people". Or, "It's for the stability of the country". Sure, it's probably not true, but it's a value judgement.

The US on the other hand, "brings" democracy to other countries, then refuses to let them run themselves. Most americans preach freedom of speech and freedom of information, then lock up dissenters and strip human rights away from prisoners.

I'm not saying I particularly like china any more than I like the USA - they're both bottom of the barrel, and both have severely disillusioned citizens who tend to believe whatever they see on the news. I am saying that I don't think that any american that has participated in the democratic process has any sort of moral authority when talking about china. I am also saying that any american that hasn't participated in the democratic process (for whatever reason) isn't qualified to talk about the democratic process.

Re:GOOD. About time.

[Dutchmaan]

You are completly getting me wrong. I call out anyone who tries to justify their agression with morality. US, China, anyone, and believe me I have been called "anti-american" many times. It just irritates me to see countries try to use the US as justification for their own asshatness... I see the countries blindly following the same path to irresponsible use of power the west used. Im seeing it increasingly with China, theyre feeling strong and a sense of nationalism is growing. Its inevitable for any country when they come into power.. Maybe it just irritates me to see people the world over all doing the same shit while pointing fingers. We're all people and no one is above corruption.

Re:GOOD. About time.

[PC and Sony Fanboy]

I call out anyone who tries to justify their agression with morality.

Oh, by the way, I think we need to give to the poor. So I donate some of my income to the united way. That makes me a genius. Also, it reinforces my completely unrelated points that I've made previously. I mean, since that's what you're trying to do ... since you're obviously unable to defend your ideas, you'll just defend your personal integrity. They're not the same, by the way. Like I said before, I don't really expect you to understand.

Re:GOOD. About time.

[Dutchmaan]

Ya.. I looked at your other posts, and you're pretty much a tiny little asshat in each and every one. Have a good life freakshow.

Re:GOOD. About time.

[PC and Sony Fanboy]

Ya.. I looked at your other posts, and you're pretty much a tiny little asshat in each and every one. Have a good life freakshow.

Exactly! You disagree with my points, but can't disagree with the facts. So you disagree with my personality, and pretend that you're the better person because of it.

And you *may* be a better person. I'm not here to decide that. But you seem to be confused on the difference between being right and being better.

Of course, reverting to ad-hominum attacks isn't usually a sign that you're a better person. Usually it implies a small mind that can't comprehend big ideas... too bad we're not even working on big ideas here - just garden variety ideas that don't get airplay on fox news. So I guess it's understandable that you don't really *get* it... You've been told what your opinion is, but one has told you which facts you need to back it up yet.

Re:GOOD. About time.

[PC and Sony Fanboy]

You don't understand something here. If "they" stop regurgitating anti-US propaganda, they will incur the wrath of their miserable, smelly, crusty, bearded Marxist college professors and won't graduate college. Then they will have to WORK for a living instead of parasitizing via occupations such as writers of children's books, patent attorneys, cloud storage engineers, and investment managers for Ivy League universities.

EXACTLY. If I don't do it, I'll end up working in a factory, making less than minimum wage, and drowning my sorrows in cheap beer while watching fox news explain why this has been caused by the foreigners ... a life the AC parent is quite familiar with.

Heroin

[srussia]

In other news, heroin addict must get another fix or face "nasty consequences".

Re:Heroin

[artor3]

Yes, that's pretty accurate. Including the part where trying to quit cold turkey (what the Republicans want) will kill you. Stepping down carefully, through the $4 trillion in cuts proposed by Obama (and rejected by the GOP), is the smart thing to do.

Re:Stop Spending!

[Barrinmw]

Why do you hate your grandparents?

Re:File under

[artor3]

Then you're an imbecile. If we default, the economy will tank, and it will become that much harder to pay off the debt. We have to accrue more debt while working to reduce the deficit, both by spending cuts and revenue increases.

The Deal Is Tonight

[SuperCharlie]

In the dead of the night, tonight, Sunday, behind closed doors, the 11th hour deal will be struck to raise the debt limit, to maintain the rich tax breaks, and continue deficit spending.

Our politicians both left and right are merely pawns of the bigger global interests of the Federal Reserve and of the ever widening group of "too big to fail' corporations who have bought our government.

I predict tonight (Sunday) after 9pm pacific time when everyone has gone to bed and it is too late to publicize, that Monday morning will show that "they did the best they could".

They will trumpet a "hard" negotiation which will not even pay for the interest that WE paid this year and will pat themselves on the back and go back to their constituents to blame the other side for not budging.

We are on the edge of total financial collapse and are being milked of every dollar they can get before we riot in the streets because of unemployment and inflation.

We should all be ashamed of the beast we have created which serves neither liberal nor conservative but merely serves to transfer wealth to their masters and pass laws which boggle the mind until you realize who they truly benefit.

Instead of sweeping reform, once again, we have received sweeping "the same".

Re:He means Tea Party

[Doctor_Jest]

Repeating it doesn't make it true. Nice that you continue to post these things, though. :-)

Would you like the litany of fringe groups in the Democratic Party posted too? Balance the fringe out? The point is, ironically, that there are always groups like these and no, they are not any more powerful than they were last election cycle. But it's fun to pretend, isn't it?

Why tinfoil hats don't work any more

[billstewart]

Aluminum foil doesn't do the same job - you need real tin.

Re:Why tinfoil hats don't work any more

[Bing Tsher E]

But where can you buy tin foil? Out of the Fisher's Scientific catalog? The same section where you buy gold foil?

The right doesn't want to prevent default

[elucido]

The (Tea Party) right wants to trigger a civil war. They know when enough peoples lives are at stake, it will wake up the passions in our country and many more people will be ready to fight. This would help them recruit people into their militias but it most likely could backfire as well. Those people who they cut off social security or government programs, they could just as easily and in all probability will join leftist socialist underground groups and prepare to go to war against their extreme right militia groups.

And this is why the situation wont end well for the nation. There will be a lot of people in the position to be recruited into ANY group. The nation will break into factions, most likely based on location, culture, tribe, and political ideology, and then these factions just like in other civil wars around the globe (including in Iraq) will fight for power violently.

This happens in the third world countries all the time. The only reason it hasn't happened in the USA is because the FBI have an excellent counter intelligence program. This will all change if the USA defaults. The default could set the stage for civil war that even the FBI wont be able to stop.

Re:The right doesn't want to prevent default

[Seumas]

I can't tell if you're retarded or insane.

Re:The right doesn't want to prevent default

[mywhitewolf]

entertaining though.

Re:The right doesn't want to prevent default

[mabhatter654]

That makes a lot of sense... There are plenty of alt-history games out there and uniformly the US breaks into about 5-6 regions based on what they think is important.

It tends to break into North East, Midwest (Great Lakes states), South, Texas, California, and "flyover" (which sometimes breaks along the Northwest rockys/plains)

1. California and Texas are as big as any two European countries put together, so they could be more effective without the Feds.

2. The Northwest/Rocky states would just about break even, but they would rather be poor and free than do what the Feds want anyway. They'd be harsh but highly libertarian/liberal....

3. The Plains would be very, very poor in every resource but rich in food the others need, they'd either be fought over for the food supply or able to barter some good deals for cartage and food with the other states, they'd probably gain a lot of Amish.

4. The Midwest and South would probably be tough but OK. They get more tax money for roads and such then paid in but would settle without trying to keep up with competition from other States.

5. The Northeast would probably have the biggest change because so much wealth is tied to Washington. They'd end up holding the bag as the last corner of the "USA" so it'd be a toss if the banking and financial centers would outweigh the crushing debt.

Right now Washington DC politics plays these regions off each other much more than working FOR them. If you look at the lines for things like Gay Marriage, Right-to-die, legalized "vice-sins" as well as social structures and economic status, the country tends to fall into these regions already. When Yellowstone goes Boom this will be exactly what's left... minus the Rocky and Plains (breadbasket) states.

Re:The right doesn't want to prevent default

[Kagura]

His name is John Titor. It's okay, he's from the future. Well, maybe not our future.

Re:File under

[shoehornjob]

"Taxes Bad.", "Spending 10s of billions of dollars in 'wars' killing brown people Good."

And yet General Petraeus cried foul when Obama announced he was bringing home (est 33k) troops from Afghanistan. We are pouring billions of dollars that we can not afford into a war that has surpassed what we spent in Iraq.

14th Ammendment

[mdsolar]

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."

Even if it is insurrection the debt must still be paid. But, credit default swaps on the tea party should be pretty pricey.

Re:File under

[mamer-retrogamer]

You falsely assume that if we don't raise the debt ceiling that U.S. government will necessarily default.

No, this is Federal Gov't Debt only

[billstewart]

This doesn't state or local government debt either, or money that politicians have promised people, like government employee pensions, future Social Security, or forty acres and a mule or pot for every chicken.

The Debt Ceiling is a law limiting how much money Congress authorizes the US Treasury to borrow for the various operations of the Federal government. Because Congress's budgets have been running large deficits for years, they're going to hit the limit they've authorized in about a month (technically, they hit it a few months ago, but the Treasury could play some games moving money from one pocket to another that let them stretch out until August.)

Re:File under

[Rockoon]

Since 1981, the debt ceiling has been raised by 13.2 trillion dollars.

7.9 trillion was under Democrat controlled House and Senate.
1.7 trillion was under Republican controlled House and Senate.
3.6 trillion was under a split of House and Senate.

My source is the New York Times

Yes. Clearly the Democrats see no problem at all with raising the debt ceiling, but those damn tea-baggers refuse to do it without serious spending cuts.

(that period where we nearly balanced the budget? The one you give major gushing credit to Clinton for? Republican's controlled both House and Senate and accomplished it as part of their Contract With America.)

Re:The Tea Party wants "nasty consequences"

[elucido]

Ok, you realize this is a play right out of Saul Alinsky and Mao Zedong? For those of you who don't know (and who doesn't?) the way it worked was: the people don't realize they're oppressed. They need to be liberated and enjoy the benefits of a socialist government. We, the good guys, need to nudge the people along the holy path to goodness. So, we attack the government, the government attacks back, but we, the good people, make sure we're nowhere around so that the retaliation falls on innocents. These people, having been harmed by our provocations, provide recruits and financing for further revenge-motivated attacks. Repeat, etc. Dividing the country into factions? It's already happened, and it was done by leftists. You didn't see that map after the 2008 election: every state who voted the correct way was labeled "America" and the states who dissented were labeled "Dumbfuckistan".

Doesn't it suck when the enemy learns and uses your own tactics against you?

Unlike you I realize that governments are oppressive. And unlike you I realize the Tea Party if they manage to overthrow the current US government would result in an even more oppressive government than anything we have ever had. The government we have isn't perfect but at least we know what to expect and what not to expect. During a revolution you never know what to expect in the end. Look at France, look at Iran.

And I'm not saying the factions don't exist, these factions always exist. I'm saying what the Tea Party is doing, and if the nation defaults, it could take a nation that votes to solve it's problems within the legal system and turn it into a nation fighting a life and death physical war to solve it's problems. When you cut people off social security, off welfare, off healthcare, and pursue policies which can raise unemployment over 20% (a default could do just that), then you are setting the stage not for just a minor political dispute which can be solved non-violently, but a life and death struggle for control of the country itself very much like what happened in the last US Civil War.

I personally don't want to see my friends and family members die in a civil war. And I doubt you want to see that either.
The extreme left and extreme right are willing to die and kill for ideology, and they could very well push the entire nation into factions. To put it blunt, millions of people will fight when their lives are threatened, and cutting people off social programs directly threatens lives. When you do this you will almost guarantee that some radical left or right wing group is going to recruit these left behind people. The vast majority of them will be young people as the unemployment rate is very high too, and also they will be educated people because these are college graduates who can't find jobs.

So you'll have a bunch of really smart, perhaps even brilliant educated professions who will be unemployed. Can you be surprised when you see groups like Lulz Sec and Anonymous forming and hacking everything? These aren't stupid people, these are intellectuals. And if the US defaults it will get much worse as the extremists will have even more gifted, more educated, smarter, people to choose from.

Several Inconvenient Truths About The Debt Ceiling

[mousse-man]

- Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decresed on a year-over-year basis was 1960
97% of today's funded debt has been accumulated since August 1971 - the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
- The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
- Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
- Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
- Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.

In other words, cut the US budget in half to stop the situation from getting worse. Then start working on your debt mountains.

Re:This threat isn't from banks this time

[Stradivarius]

Tea Party which is holding President Obama hostage on the budget. They simply do not want Obama to pass a budget

Well, when the Democrats controlled the House, the Senate, and the Presidency in 2010, they failed to pass a budget. The Tea Party didn't have any power to stop them back then.

The Tea Party wants a budget - they just want it to be balanced, rather than simply pile on more and more unsustainable debt.

the losses of the Icelandic bank depositors

[YesIAmAScript]

No one cares about the losses of the banks. But the banks guaranteed the deposits in their banks. And the government guaranteed those deposits. And then the Iceland government actually took possession of the bank's assets. The Icelandic government has to make good on their promises to depositors.

By not doing so, their currency has gone soft and isn't freely convertible with other currencies. How this makes Iceland not a problem I don't know.

The EU countries are headed for trouble because there are countries depending on borrowing to get by and their cost of borrowing is now too high. This is because by EU regulation they were not allowed to be bailed out so the countries had to borrow individually based upon their own credit. Now, even though bailouts are allowed, the political will is flagging.

I agreed leaving the Euro would help Greece a lot.

So that's why the US wanted her as head of IMF

[fluor2]

So that's why the US wanted her as head of IMF

Re:So that's why the US wanted her as head of IMF

[hedwards]

That's not really insightful, anybody knowledgeable enough about economics to be head of the IMF would have come to the same conclusion. In fact I came to that conclusion and I've had very little training in economics. It's one of those the sky is blue observations.

The rates that investors typically demand for their money is related to the perceived risk. Right now that risk is low because investors believe that the US will do whatever it needs to do to keep paying those bonds off. But, if the debt ceiling isn't lifted and or we stop paying our bills that would undoubtedly trigger investors to demand more for their risk.

It takes a certain level of delusion to believe that there is something special about the US which would prevent that from happening if we start defaulting on our debts. And unfortunately, right now US Savings bonds and the like are still the best bonds to invest in, if the GOP has its way, they're likely to not be worth the paper they were printed on.

Re:So that's why the US wanted her as head of IMF

[dkf]

It takes a certain level of delusion to believe that there is something special about the US which would prevent that from happening if we start defaulting on our debts. And unfortunately, right now US Savings bonds and the like are still the best bonds to invest in, if the GOP has its way, they're likely to not be worth the paper they were printed on.

For US investors, it's not too terrible to invest in US government debt: they'll get what they're promised, to the letter. The issue is that there might be other better investments elsewhere, and the "to the letter" could be much less than you would want if inflation gets too high. Do not trust the government (or anyone else in high finance). Foreign investors carry a lot more risk holding US government debt, as it's not just a bet on whether there will be a default (very unlikely, because of the 14th Amendment) but also a bet on whether the currency will hold its value enough for it to be worthwhile.

Re:File under

[artor3]

The only way to avoid default without raising the debt ceiling would be a massive, panicked slashing of every government program, which would be just as devastating. You dumb fuckers are playing with fire here. Try to realize that.

Re:Stop Spending!

[hedwards]

I'm sorry, but that's still a default on our debt. Whether we default on it all at once or over several months, the effect would largely be the same. Defaulting on any of it would result in higher interest rates demanded to lend the US government money, which would in turn make it harder to pay our debts and the very real potential for a downward spiral and collapse of the bond market. The bonds that the US government issues are the safest in the world, which is why the rates are still so low, but that isn't set in stone and whenever the GOP talks about this sort of default it makes it that much more likely that we will be downgraded.

Re:The Tea Party wants "nasty consequences"

[elucido]

Let me guess, you represent the Tea Party?

threats, I'll give you threats!

[Anonymous Coward]

How's this for a plan, screw the IMF, screw the FED, screw IRS, hang the lawyers (which will include most of the politicians), imprison the rest of the politicians, put everyone of the bankster on trial, freeze all accounts over $500,000, enforce the rule that all accounts over $500,001 request a release of funds after a thorough investigation of where the money came from. Reinstate the backing of any and all currencies by precious metals. Sure, this is untenable, but if these banksters continue to believe that war is the only profit making scheme, then let's go to war against the banksters!
We have been screwed enough by these degenerates, don't you think?

Re:threats, I'll give you threats!

[perryizgr8]

How's this for a plan, screw the IMF, screw the FED, screw IRS, hang the lawyers (which will include most of the politicians), imprison the rest of the politicians, put everyone of the bankster on trial, freeze all accounts over $500,000, enforce the rule that all accounts over $500,001 request a release of funds after a thorough investigation of where the money came from. Reinstate the backing of any and all currencies by precious metals. Sure, this is untenable, but if these banksters continue to believe that war is the only profit making scheme, then let's go to war against the banksters!
We have been screwed enough by these degenerates, don't you think?

there's not much "we" left after all that.

Re:He means Tea Party

[artor3]

By all means, please tell us which "fringe" movements in the Democratic party have a caucus of sixty-four congressmen.

Your party has gone off the deep-end. They are trying to destroy the country. Take a step back from the red vs. blue sports fan mentality for a moment, and look around you.

Iceland and Schengen, EU, EEA, Euro Zone

[billstewart]

Schengen's not particularly relevant - that's about whether the countries are friendly enough with each other to demand passports when people travel between them. Iceland's not part of the Euro Zone, and is a candidate for membership in the EU but hasn't yet been admitted (and since it just lost a lot of economic stability, that may take a while). It is a part of the European Economic Area, so it gets to do relatively free trade with Europe.

Re:Iceland and Schengen, EU, EEA, Euro Zone

[vlm]

Schengen's not particularly relevant - that's about whether the countries are friendly enough with each other to demand passports when people travel between them. Iceland's not part of the Euro Zone, and is a candidate for membership in the EU but hasn't yet been admitted (and since it just lost a lot of economic stability, that may take a while). It is a part of the European Economic Area, so it gets to do relatively free trade with Europe.

True but I thought Schengen and EEA was a very large fraction of the way to EU... For all intents and purposes they're part of the EU other than some signatures?

Kind of like those guys that insist Texas is technically a separate country and not a state of the US because of some ancient irregularity in the statehood process a long time ago, which may even be technically and historically true, but frankly doesn't matter, for all intents and purposes its a US state. Does that comparison alter your opinion?

Re:Iceland and Schengen, EU, EEA, Euro Zone

[Xest]

"True but I thought Schengen and EEA was a very large fraction of the way to EU... For all intents and purposes they're part of the EU other than some signatures?"

Not in the slightest.

EU membership requires a lot more changes than that, most prominently adherence to EU laws and regulations.

To enter the EU you have to adhere to certain principles and demands. Serbia for example has been blocked from joining the EU until it handed over all it's war criminals to the ICC, and now they've finally handed Mladic over they can start their bid, but it's taken them some time. Iceland would likely have to stop or drastically reduce whaling. All conutries joining must adhere to European directives on things like telecommunications, human rights and so forth.

The EU isn't just a free trade zone, it also mandates certain laws and rights which all have to be implemented- the European Telecommunications Directive for example mandates that ISPs should be allow common carrier status, the European Working Time directive mandates that employees are allowed to refuse to work more than 48hrs a week on average over a 3 week period with no threat of repercussions.

It standardises many such things relating to justice, infrastructure, pricing, trade and so forth. It also of course means having representatives in the European parliament which must be elected via a form of PR. Even little things must be done, for example the EU defines protected foods such that for example, Cumberland sausages must be made in Cumberland, England, to allow cultural protection of such historic goods throughout the EU- if Iceland has a firm selling Cumberland sausages made elsewhere then it has to mandate that they stop that.

There's an awful lot to do seeping into every facet of every day life, and not many people realise it. The EU has changed most people's lives in Europe for the better through again for example the Working Time Directive and again not many people realise it.

Your Texas analogy doesn't really fit - to stick on the same note though it'd be more like comparing the differences between Canada and a US state- it's like saying because Canada is a signatory to NAFTA and because border controls aren't terribly rough that Canada is like a US state already- obviously it's not, the differences between Canada's obligations to the US government and Texas' obligations to the US government are immense. Just as the obligations of Iceland to the European parliament are quite distinct from the obligations of say, Britain to the European parliament. Jokes aside, Canada is quite clearly still an independent nation from the US, just as Iceland is from the EU despite free trade agreements and more lax passport controls.

Re:Iceland and Schengen, EU, EEA, Euro Zone

[billstewart]

Even Schengen's been having trouble recently - one result of the Arab Spring has been a lot of refugees from North Africa going to Italy, and countries like France are talking about reinstating border controls to keep Those People from moving on to France. (No comment on the EEA - Wikipedia knows more about it than I do.)

Texas is a part of the United States, and you can ignore the very small number of crazies who pretend it's not. There's a much larger group of annoying-but-not-necessarily-crazy types who say that because of the treaties by which Texas joined the US, Texas does have the legal right to secede, and also that it has the right to split into five smaller states if it wants to, both of which are technically true but not necessarily a good idea. As Xest says, that doesn't really correspond to Iceland at all.

Re:He means Tea Party

[elucido]

Repeating it doesn't make it true. Nice that you continue to post these things, though. :-)

Would you like the litany of fringe groups in the Democratic Party posted too? Balance the fringe out? The point is, ironically, that there are always groups like these and no, they are not any more powerful than they were last election cycle. But it's fun to pretend, isn't it?

Go for it. Post all the fringe groups.

It's the Tea Party that is currently fucking with the budget. So while you can post left wing fringe groups, you and I both know they aren't the ones responsible for the current crisis.

Nasty Consequences?

[Culture20]

What's she going to do, rape one of our hotel maids?

Re:Nasty Consequences?

[Thing 1]

+1, Conspiracy-Theories-Not-Always-Wrong

Don't need to physically move overseas ...

[perpenso]

You missed moving to china.

If you think any American based company would move their home base to China (a communist country) you're nuts.

They do not need to physically move overseas. The can move manufacturing and other aspects of production overseas. They can then engineer the accounting so that the profits are booked by the overseas entities and taxed by their local governments. For example the overseas entity can charge the US entity a value close to the US retail price rather than a price close to the actual manufacturing cost.

Re:There are consequences to your actions...

[vlueboy]

The politicians need to quit doing feel-good crap to get reelected and start becoming stewards for our nation - or there won't be much more feel good crap to do.

Shamefully, the difficult part is that this never happens because of pressure to conform, the lack of incentives to excel and the lack of punishment to those who fail to be a good example.

For instance, you can't just fix a broken company by having everyone in a *struggling* company promise that they'll work 100% harder for the next quarter (more productivity, more work hours, more projects, less facebook access...) to rake in more cash.

The result is that the lazy do nothing new, and ensure that the boss hears about who is "upstaging" them by setting up an unfairly good example not easy to follow. The reality is that nobody punishes the lazy unless they badly mess up anyway... which rarely happens because the lazy touch as little stuff as they can in their daily faked workflow. The end result is that the hard-workers either get tired and return to the usual pace, or push too hard and get burnt out and fired / quit. The people in the middle just sigh their thanks that the pressure if off them and there won't be any need to take a firm stand in either excellence or obvious slacking.

Isn't this like The Prisoner's Dilemma?

Re:Stop Spending!

[KDR_11k]

Why would raising taxes DECREASE revenue? The economy isn't in a bad state so the uphill comparison is wrong.

And sure they can cut spending. Where do you think they'll cut first?

Re:File under

[Lehk228]

i agree, we should increase taxes to cover our current spending.

Re:This threat isn't from banks this time

[Duradin]

You forget that the Tea Party had the power of FILIBUSTER! (by agreement, they didn't even have to do anything, just say they were filibustering and magically things more than just a simple majority to pass)

Budget cuts? nah, don't need them.

[bussdriver]

You can increase revenue and that will help fix the budget issues. Sure we spend too much; not arguing that. We can afford to fund this budget without the end of the world happening -- don't listen to the propaganda. It will not kill you if your taxes match your spending-- and if they did, then you might spend more wisely...

A big chunk of the current budget issue is the economy tanked and the revenue is based upon the economy-- so if you CREATE JOBS even at the cost of increasing debt it will pay back quickly. If you raise taxes... Taxes haven't been enforced or as high as they need to be for a generation - bridges falling down etc..

Re:Budget cuts? nah, don't need them.

[ikkonoishi]

Because the best way to fix a puncture wound is blood transfusions. No need to remove the metal pipe imbedded into your torso. Just pour more blood in there, everything will be fine.

Re:Budget cuts? nah, don't need them.

[Fjandr]

and if they did, then you might spend more wisely...

I think this part is overly optimistic. Politicians won't spend more wisely with increased taxes. It's not their money, and since both parties spend like drunken sailors, without real consequences from voters, they have no incentive to show responsibility in spending it.

Re:File under

[Bing Tsher E]

a massive, panicked slashing of every government program,

I hadn't noticed the big cloud of black smoke wafting this way from Minnesota (I'm southeast of the state) from their massive panicked slashing.

Maybe a good stiff 'Wake the Fuck Up' alert event would be a good thing.

Re:Just watch money as debt

[Anonymous Coward]

Looks like the John Birch Society is alive and well.
Did you get your talking points from the Creature of Jekyll Island?

Re:Several Inconvenient Truths About The Debt Ceil

[Lehk228]

doubling the effective tax rate would be more effective, do so in a weighted fashion so that 80% of the increase falls upon those with 80% of the income

Re:This threat isn't from banks this time

[artor3]

The Democrats never controlled the Senate, except for a period of a few months, and even then it was only if count Lieberman as a Democrat. The Republican willingness to abuse the filibuster led us to a state of minority rule, in which our country was held hostage by the representatives of barely over a third of its population.

He's exaggerating, but not as much as you think...

[rsilvergun]

Several top flight Republicans are serious about crashing the economy to keep Obama from a second term. There's quotes floating around the 'net from more than one US Senator where they say they'd rather sink the US then let him win. They might be right, Obama could be the one to bring Socialism to the US. His health care plan looks poised to wreak the current system, and then he can move in with a real solution (that doesn't involve parasitic "insurance" companies). This would be Great for the American People, no so much for the ultra wealthy.

And besides, is your a super rich Republican, what do you care if the US Economy crashes? It's not like it hurts you one whit.

Re:Who is going to enforce that and how?

[Temkin]

Ok... You're drinking a bit too much of the KoS koolaid. The "Tea Party" is hardly armed to the teeth. It hardly even exists in an organized sense. You're cherry picking phrases and grandstanding because your positions are not popular enough to carry Congress. Sorry... Sucks to be you. Elections have consequences.

Re:The Tea Party wants "nasty consequences"

[vlm]

During a revolution you never know what to expect in the end. Look at France, look at Iran.

Bad examples. Iran especially bad example. Assuming you're talking about the 1970s revolution and not alexander the great era. Even France during the revolution, fundamentally, didn't really change much other than killing a bunch of pigs at the top, some pigs had royal blood, some pigs did not, but it didn't really matter all that much, other than as an oddity that the royals got a rare and sound smashing.

As for the tea party types, come on, think about it. Look at who they hang out with, to see who they like. I feel extremely confident taking the completely wild guess that a fundamentalist christian theocracy is a somewhat more likely outcome, than say a Buddhist monarchy or Sharia law.

Thru current media and govt propaganda, with the assistance of the media, I'm not even sure formalizing the christian theocracy would really change all that much. We already have an informal christian theocratic / fascistic state. For example, instead of politicians being required by the media to be Christian, they would in addition have some redundant law requiring it. Would it really change anything for 99% of the population? Probably not. Back to American Idol, now wearing slightly less skimpy outfits. Who cares.

Re:Stop Spending!

[0123456]

Why do you hate your grandparents?

Because they spent decades partying as they built up huge debts that they now expect their grandchildren to pay?

That which cannot be paid, will not be paid.

[Nurf]

The solution to debt is not more debt. At some point someone is going to have to be grown up about this. It would be nice if they were grown up sooner, so that it hurts less. I'm not holding my breath.

Also, the US makes enough tax income to pay interest on it's current debt. In other words, "default" is not a consequence of refusing to raise the debt limit. Something will have to go unpaid, but it doesn't have to be the USA's debt interest. People are running fast and loose with the meaning of the word "default". Don't let them take you in.

Social security is an unfunded liability, currently funded through a Ponzi scheme, which is just now entering the "not enough new suckers" phase. (No, really, it is. There is no SS "trust fund". I can write checks to myself all day; it doesn't mean I have more money.)

Medicare is a disaster in terms of cost.

The US spends each day double what it takes in in taxes.

The US decided to take what was entirely a private problem (big banks would go bankrupt because they made bad bets on housing) and turn it into a government problem by bailing private entities out that should have gone bankrupt, and then guaranteeing lots of other debt. This actually prolongs the problem and makes it worse.

The Federal housing entities are some of the worst culprits, helping blow the housing bubble, and now pretending they are not bankrupt. They will have to implode and be shut down at some point. Bye bye Fannie and Freddie.

The inmates are running the asylum. It seems the solution to being seriously in debt is to spend more. There is also apparently a magical money multiplier that makes government spending somehow blessed and better than private spending. We have economists making arguments based on very dubious differential equations in which they carefully never specify their boundary conditions. The well known "economists" are more about justifying their political leanings than any actual scholarship.

Public union pensions for federal and state workers are unfunded to the tune of tens of trillions of dollars. These will never be paid out.

All of these chickens will have to come home to roost. Arguing about Democrats or Republicans or Left or Right completely ignores the fact that reality will eventually force a solution.

The current administration will do all of the worst possible things they could do. Not because they are evil, or Democrats, or whatever, but because bureaucracy is about protecting the way things are now. Their universe does not include actions which could fix this problem, because they would change the power balance and the money flows upon which they depend. The Republicans are being forced to pay lip service to the concept of being fiscally responsible by entities such as the Tea Party, but I can't see them doing anything real. They too are bureaucrats, and they too have rice bowls to fill.

If any entity did force some kind of resolution, it will be vilified by all and sundry, because resolution involves the death of a million sacred cows at all levels of this society. There's no upside for a politician in being vilified for doing something that will hurt this much, even if it's the right thing to do.

It would be nice to say that we get to pick whether we try to deal with it now, and maybe have a little control, or later, when it will be completely out of our control. In reality, I can't see that choice having any chance of being presented.

The Financial Crisis never ended. It was just temporarily papered over by insane government spending. Now we just have a bigger can to kick down the road.

A massive failure is coming, whether it be a cascade failure, or death by a thousand cuts. I have no idea when or how. I wish it would happen sooner so I can start concentrating on rebuilding, instead of trying to dodge falling pianos while the world at large tries to pretend we're in a light summer rainstorm.

Re:That which cannot be paid, will not be paid.

[misexistentialist]

The government will just sit back and let inflation fix everything. Moderate inflation of 100% or so. Social security, savings accounts, pensions, the price of bread have little meaning for Congressmen anyway.

Re:That which cannot be paid, will not be paid.

[aminorex]

Inflate it to zero.

Re:That which cannot be paid, will not be paid.

[makubesu]

Why do we need to pay back our debt? We've been in debt since the start, except a brief moment in 1835! http://en.wikipedia.org/wiki/History_of_the_U.S._public_debt#By_decade When Ronald Reagen is spending like crazy, apparently we don't have to pay back the debt. When George W. Bush is spending like crazy, we don't need to pay back the debt. But when President Obama is faced with an economic crisis which drastically cuts revenues, suddenly we have to pay back the debt. Suddenly big government spending is going to run us into the ground. Suddenly we can't wait another year, we have to cut today!

No we should be focused on jump starting our economy. Use the fact that we have this loan to invest in our future, so that we'll be stronger than ever 50 years from now, and this debt will look insignificant.

Re:That which cannot be paid, will not be paid.

[Nurf]

They can certainly do that with old debt, as long as they don't expect to sell any more treasuries in the meantime.

So, sure. They can default on all the existing debt, as long as they are willing to run the government on actual income after that. I don't have a big problem with that. Lending money is a form of gambling. Sometimes gamblers lose.

I just can't see the current crop of politicians dealing so well with having their purse strings cut. :-)

Re:That which cannot be paid, will not be paid.

[Ralph Spoilsport]

Interesting how you can go on such a long list of expenses and completely miss the pentagon which (in combination with defense related departments) eats trillions of dollars a year. Now why do you suppose you didn't see that, especially with a war in Iraq and Afghanistan that were started under false pretenses and neither of which attacked the USA on 9/11 (as it was Al Queda, a non-state org which attacted the USA)? Why are you blind to THAT bit of nastiness, eh?

Re:That which cannot be paid, will not be paid.

[Nurf]

You can borrow until people decide you have no chance of paying back, then they refuse to lend you any more and demand their money back. This is not about partisan politics, so give it a rest. Reagan and Bush sure helped the USA down this path, but it is true that the Obama administration has been spending at about double the rate of the previous administration, and people who buy government debt (and thus are loaning the USA money) are noticing, and they are worried. If you really want someone to blame, blame FDR and Hoover for starting the USA down this path. Really though, it's just the way things are now regardless of who is nominally in charge. The bus has no driver.

I agree we should jump start our economy. Forcing those who are holding bad debt into bankruptcy, and cutting government spending to meet _existing_ tax revenues would be a good start. It would hurt like hell for a short while, but the economy would dramatically improve. I am not aware of any historical examples where government spending did anything beside drive the government into more debt, making things worse down the road (Japan is the perfect example). I am aware of examples where cutting spending and forcing bad banks into bankruptcy solved a country's financial problems in less than three years. Most recently, Iceland, and further back, the USA in 1920.

Re:That which cannot be paid, will not be paid.

[Nurf]

You can inflate away old debt, but you lose the ability to sell new debt if so. Even if the government essentially defaults on all its existing obligations through inflation, I can't see politicians figuring out how to survive without being able to borrow money like crazy. :-) It'll be fun to watch though!

Re:That which cannot be paid, will not be paid.

[Nurf]

I have no axe to grind here. One problem with the US two party system is that if you disagree with someone, they think you are in the other party, and assume all kinds of stuff about you. Don't, it's sloppy thinking. I'm not even American.

Defense spending is not part of a circle of bad debt that has a chance of generating a cascading failure across multiple markets.

Also, it's not a financial obligation already promised. Some might argue that staying in certain countries is a moral obligation, but the USA could slash defense spending without generating cries of default, or making pensioners eat dog food.

Also, defense spending may be a lot, but it is still chicken feed compared to the stuff I have already mentioned. Unfunded pension liabilities are close to 130 trillion (not a typo) dollars, and many of those pensions were invested in the housing market. Last I checked, the Fed is in hock for around 12 trillion dollars when you include things like guarantees on debt that is certain to go bad. Fannie and Freddie are basically a 100% loss in a 6 trillion dollar market. Defense spending is typically 0.5 to 1 trillion a year. It's significant, but like I said, not part of the interlocking bad debt that is truly going to screw the US.

If you take your blinkers off and read what I said again, you will noticed I did not specify what had to be cut, just that things have to change, and that bureaucracies are not capable of doing that.

So, why did you assume I had some axe to grind about the military? Hmm? Perhaps you should think about that.

Re:That which cannot be paid, will not be paid.

[Fjandr]

(No, really, it is. There is no SS "trust fund". I can write checks to myself all day; it doesn't mean I have more money.)

Unfortunately, there are enough people out there who don't believe the government writing checks to itself fails to result in increased capital, including economists, that the lie will continue to be told until it's too late to do anything that is not incredibly drastic.

Re:That which cannot be paid, will not be paid.

[TheSync]

Social Security is indexed to inflation, but the retirement age has been pushed up a few times, plus Social Security retirement income is now taxable to some extent if you have other income.

Re:That which cannot be paid, will not be paid.

[argStyopa]

Interestingly, as bad as the situation is in the US, it seems that the economic outlook in every other developed country is nearly as bad or worse.

Europe has the exact same problems except with an even larger demographic issue, a larger entitlement expectation, and the largest holes (the PIGs) shouldn't obscure the insolvency issues faced by the 'stabler' countries like the UK, Germany, etc. which has been nicely camouflaged by the 1990s adoption of their very-own-third-world-labor force (Eastern Europe) which will expire shortly when the Eastern Euros start to wonder why they don't get 72" flatscreens and 36 hour work weeks like their Western cousins.

Japan is moribund. Russia is pretty much a slavic-speaking Sicily. China - for all the quivering fear of its growth in the West - is a disaster waiting to happen; it's a beautifully-growing industrial economy...until you realize that's all economic smoke & mirrors, what little real growth is leveraged on a populace that's 40% peasant farmers, and their male/female demographic danger by 2040 is real and terrifying.

The world's going completely to hell, and while the US is doing its best to keep up, I'd say in terms of real fundamentals - food, water, natural resources, space - we're golden.

Re:That which cannot be paid, will not be paid.

[roman_mir]

It's like Peter Schiff talks through your account, keep it coming.

Re:That which cannot be paid, will not be paid.

[phantomfive]

When you put it that way, maybe we SHOULD build a wall.......

Re:That which cannot be paid, will not be paid.

[Specter]

Well said.

Oh, forgot to mention.

[rsilvergun]

Please don't let a few conspiracy loons distract you from the very real conspiracies that are out there. Remember, a conspiracy is just a bunch of people getting together to plan something. The Republican's don't bother to hide their conspiracies. Just read what comes out of their think tanks and you'll see. For a concrete example, google 'The Southern Strategy' and Reagan.

Re:Oh, forgot to mention.

[Bing Tsher E]

Better yet, instead of googling and finding an echo chamber of left websites explaining what 'the consipiracy' is doing, just get involved. go undercover and participate in a few Tea Party events.

Of course, you'll discover they are regular mainstream boring people, with a few loonies thrown in who everybody else ignores.

Or, just stick to reading the left's websites. It wouldn't be as fun if the 'teabaggers' just seemed like the ordinary boring people they are.

Re:Oh, forgot to mention.

[Quiet_Desperation]

I know, geez. I rarely even come to Slashdot anymore. It's turned into Grand Ideological Loon Central. The geekverse has been completely taken over by wannabe revolutionaries with skulls full of horseshit.

Re:This threat isn't from banks this time

[Dachannien]

They didn't have the power of FILIBUSTER! in the House, where there is no ability to filibuster (all debate is limited in time by the passage of resolutions defining the rules for consideration of a bill). All budget resolutions start in the House, as mandated by the Constitution, and in 2010 (before Republicans gained control of the House), the House failed to pass a FY 2011 budget before FY 2011 started. Finally, the Tea Party didn't gain strength inside the beltway until January 2011, when the newly elected members of Congress were sworn in.

Both sides are scaremongering

[billstewart]

Sure, the Democrats are scaremongering to say that they won't be able to pay the debt if the Republicans don't raise the debt limit (and taxes), but the Republicans are doing some scaremongering to say that there'll be a default if the Democrats don't agree to cut spending radically, because they're not going to cut the debt limit without it.

I really miss Alan Grayson, a loud-mouthed Florida Democrat who proposed the "War Makes You Poor Act", that required the government to either raise taxes or identify specific cuts in spending any time it spent money on a war, just to annoy the Republicans who did want new wars but didn't want to raise taxes to pay for them.

Re:This threat isn't from banks this time

[interkin3tic]

The Tea Party wants a budget - they just want it to be balanced, rather than simply pile on more and more unsustainable debt.

No, their goal is to spare their corporate masters any hardship, the alternative is making us mere mortals bear the weight.

There are three ways to deal with not enough money in a budget. One is to go deeper into debt. They're refusing to allow that to happen, having finally seen how dumb that was, though when Bush was in office, they didn't mind flying wildly into the red.

The second is to increase taxes. The Bush tax cuts caused the debt crisis, so one would think that raising taxes as PART of the solution would be a no-brainer. But they're refusing that too, saying it will prevent economic recovery.

The last option is to cut spending. That's the only one left. Military spending is a major part of the budget, but all sides are too chicken shit to talk about that. There's been some token cuts, a plane no one wanted got cut after much controversy, but no one seems to be saying "We can't pay for Iraq and Afghanistan anymore."

So the path of least resistance is cutting the citizen's healthcare and retiree benefits, since citizens aren't paying for their campaigns. And to be fair, the citizens are too stupid to fight back.

Re:So

[Teun]

Except that the problem has little to do with the currency in which the budgetary imbalance is expressed.

Investors are looking at the chances a nation has to relinquish their debts and the UK has huge debts.

The saving grace for the UK is that the present government looks willing to do some severe cuts to balance that budget.
Now we have to see if they are capable to pull it off, even with the option to devalue the Pound the UK is compared to N/W Europe not exactly a competitive place...

Re:The Tea Party wants "nasty consequences"

[elucido]

Oh give me a freaking break. You're comparing the Fascist takeover attempt within the military back in the days of Smedley Butler to the Tea Party? That's utterly silly. You simply don't understand how a coup works. It is a measure that is carried out within the government, not without.

You don't think the Tea Party has infiltrated the US government? The Tea Party themselves admit it in this video.

The reason why Smedly Butler uncovered the conspiracy is that it was within his own ranks, and they tried to recruit him to go along with it.

And you don't think the Tea Party is trying to coup Obama? They wont even admit Obama is an American citizen. Nor do they want to pay taxes. And some of the same last names from the same big corporations are involved as were involved with the American Liberty League led coup.

Now, trying to pin Butler with FDR is a bit silly as well. He did it for America, not for FDR. Smedly Butler wrote a nice essay called "War is a Racket" (I'd highly recommend it) regarding the war that FDR was waging and really disliked FDR in every way. . .

And I'm sure many Generals dislike Obama. The point is there are Tea Party militias deliberately recruiting from the military ranks. The FBI specifically says the Tea Party represents the biggest threat to the USA since Al Qaeda. See for yourself here:

So either you are wrong about the danger the Tea Party poses or Robert Mueller/FBI Director is wrong.

so yeah. . .

Why in the hell would there be the need to have a coup in America to install a Fascist system? We're already highly fascist.

And who is to blame for that? Maybe just maybe the Tea Party operatives are more thoroughly infiltrated into government than you think they are. You do realize they control the congress right? Or are you one of those tin foil wearing conspiracy theorists who believes Obama is a fascist and Bush is an alien?

If someone wanted a Fascist America, all they'd have to do is pop on American Idol and just let things run their course unimpeded.

The FBI has always gone after any protest group, right wing or left wing. They go after environmentalist organizations, anti-war groups, small government groups, libertarians, animal rights guys, anti nuclear energy groups. . . they even went after civil rights groups in the 1960s.

And do you know why? Because of the continuous threat of coup attempts. They went after these groups (usually) to prevent civil unrest, to prevent civil war. The majority of the groups they conduct counter intelligence on are actual revolutionary groups who view the US government as illegitimate. Of course sometimes they get it wrong and I'm not defending the actions of the FBI on every case. The FBI can be corrupted just like any organization but in this specific time and in this specific case with regard to the Tea Party, the FBI is actually in a position to prevent an actual civil war.

They had files on any public figure that had any opinion left or right on politics, harrassing and possible worse against such figures such as Ernest Hemmingway, Bob Marley, John Lennon, George Carlin, and even Martin Luther King Jr.

And where did you see me defending these actions? I don't.

The Tea Party has nothing to do with militias. It's something that was started to support Ron Paul's 2008 Presidential campaign,

The militia movement stronghold is in Texas. The Tea Party strong hold is in Texas. Alex Jones is in Texas. Ron Paul is in Texas. Ron Paul has appeared on Alex Jones in Texas. Either Ron Paul is appealing to the sovereign citizens movement and m

Re:The Tea Party wants "nasty consequences"

[Temkin]

It's always hilarious when liberals turn pro-America and want the FBI to imprison dissidents for sedition.

Or support free speech, so long as they agree with it, and voting rights, only for people they deem smart enough to vote.

doubtful

[Weezul]

I'm afraid the 14th Amendment doesn't prevent default. Any constitutional scholar will tell you it merely prevents paying the confederate war debt while imposing the union's debts upon the south. And SCOTUS would eventually be forced to hand down exactly that ruling.

Yet, the 14th Amendment does buy Obama some wiggle room while the courts decide that issue.

Should Obama use this wiggle room to issue new debt? NO! I'm afraid that'll make him look weak, give the Tea party more power, and merely postpone the default until the courts are forced to order a default.

Instead, Obama should simply stop paying federal contractors in Tea party controlled states, especially military contractors, lay off TSA, DEA, ATF, etc. personnel, eliminate oil subsidies, etc., thereby forcing congress to the table while still paying federal debts.

Would the courts support this use if the 14th Amendment? Hell no! But they'd take their sweet damn time issuing that ruling because they know the Tea Party are idiots intent on wrecking the economy.

Re:doubtful

[gtall]

"military contractors, lay off TSA, DEA, ATF, etc. " You mean they could remain on furlough until some heinous crime or terrorist act happens. Then Obama would get screwed. And those aren't the agencies driving the debt. 2/3 of the budget is ENTITLEMENTS. Fail to attack those means you do squat against the debt.

There is another aspect to the debt. The Bush tax cuts were enacted when they "could see surpluses as far as the eye can see". Well, that lasted...well...it didn't last. Why didn't it last? Two elements: (1) Bush never funded the wars, and (2) the Clinton years were the dot.com bubble. Regarding (2), there was deadlock between Congress and the White House, neither would agree to the other's spending plans. So they simply stopped increasing spending lest their enemies get the leg up in the next election.

In addition, the economy changed during the aughts. Companies shifted more of their operations overseas due to shortsighted Business School Product, and an antiquated tax structure that made it prohibitive for Big Business to invent in the U.S. The latter is open to speculation. Anyhow, the anti-regulation atmosphere of the Bush Years (although started under Clinton attempting to "triangulate") allowed investment banks to invade the loan market. They were aided by the credit rating agencies, and Congress who thought any business is good business. Their bright idea was to securitize (sp?) loans and sell them widely...with collateral "guaranteed by the rating agencies".

That alone wouldn't have caused the current mess.The missing element was the American people. Being greedy and too dumb to understand (or read) the fine print, they bought houses they couldn't afford, bought second houses, flipped houses, took equity out of their houses to piss off on large SUVs (thereby distorting the car market), etc.

This encouraged the Contractors. It used to be you found a contractor to build a house the bank decided, based on your financials, to loan you the money to have build. But in the rarefied atmosphere of no-one minding the store, mega-contractors took over. They will buy a 100 acres or more and build speculation houses (spec-houses). And the American people sucked them right up. Being dumb, you could buy one and think it was worth the purchase price. Being greedy, you could buy one with the intention of flipping it.

And now, the chickens have come home to roost. And everyone wants to point fingers. There is plenty of blame to spread around, and I've neglected several miscreants.

And the Tea Party is not intent on wrecking the economy. The economy is already wrecked, now we are only fighting on how to fix it.

Re:doubtful

[ralphdaugherty]

2/3 of the budget is ENTITLEMENTS

The post right above yours says 2/3 is defense, and they cite a source.

Re:doubtful

[CrimsonAvenger]

The post right above yours says 2/3 is defense, and they cite a source.

Let's see. A quick check shows that in 2010, the Federal budget was $3.55 trillion.

If 2/3 of that were Defense, then not more than about $1.2 trillion could be included in EVERYTHING ELSE.

Another quick check shows ~$2 trillion in Mandatory spending. Interestingly enough, "mandatory spending" doesn't include Defense.

Which means that unless 1.55 is 2/3 of 3.55 (it's not), AND the Defense budget is all of the budget other than "mandatory spending" (it's not), then the assertion that Defense is 2/3 of the budget is false, even if the OP cited a source.

Note, for reference, that the Defense budget is less than half of the discretionary part of the budget, and the discretionary part of the budget is less than half the total budget.

Re:doubtful

[ralphdaugherty]

yes, you're right. I looked it up and it's ony 20%. I checked the link and it was to a source that adds in defense related spending from other departments, but it was still less than a trillion, less than 1/3.

Thanks for pointing that out.

Re:This threat isn't from banks this time

[zoney_ie]

If they want a balanced budget and less debt, how does opposing taxation fit in with that?

Re:Stop Spending!

[Sulphur]

Why would raising taxes DECREASE revenue? The economy isn't in a bad state so the uphill comparison is wrong.

And sure they can cut spending. Where do you think they'll cut first?

http://www.investopedia.com/terms/l/laffercurve.asp

Re:This threat isn't from banks this time

[gtall]

More accurately, it is the U.S. Government and the American people that are behind "this budget nonsense". The U.S. Gov. made promises it couldn't keep, and the American people decided sometime in the last decade that they could all be the ME generation.

The American people have another problem: they do not value education. Look at all the Asian Tigers, education is number one with them. Here in the U.S., the Republicans seem to think science either grows on trees or is a liberal plot to re-edit the Christian Bible. The Democrats are all for science as long as it supports their pet beliefs (and if their pols can get some good pork out it, all the better).

American Big Business has forsaken education when they allow a company to be run top to bottom by Business School Product. BSP does not understand how the mettle of a company should be centered on pride of workmanship and new ideas. They only understand widgets. Unless that changes, American Big Business will continue to slowly circle the toilet bowl.

Ever increasing debt

[ksemlerK]

Yes, we need to raise the credit limit. Everybody knows the solution to when you can't pay your maxed out $100,000 CC bill is to raise your credit limit to $300,000. After all, it solves the immediate problem of running out of credit, and who worries about the future payments once you run out of the credit given to you. You can just raise it again next year to $720,000, and keep up the cycle of perpetuating debit. When they refuse to raise the credit limit again, who cares? You are dead, and now your heirs of will are stuck with the bill.

Seriously though, why do we even have a "debit limit", when it is raised every year? The solution to a debt problem is not an increased credit line, it's getting your financial affairs in order so you make more then you spend, and allow yourself enough leverage to start paying down the debt.

Re:Who is going to enforce that and how?

[gtall]

I think you are basically correct. One thing the Tea Party fails to understand is that they do not actually have a mandate. They were born in a crisis, but they have yet to stand for election in how well they manage to alleviate that crisis. They could easily get booted in the next election and merely be a footnote in history.

I don't think the emphasis on fiscal responsibility is the sum total of the Tea Party, at least to hear them talk. The plan to turn Medicare over to the insurance companies was not an entirely fiscal plan. It is loaded with the politics of taking the government out of health care. And it wouldn't actually fix the rise in health care spending, just change who pays for it, and who suffers from it.

A balanced budget amendment is another wookie defense. It sounds good, but it would have prevented the U.S. from mobilizing as it had to during WWII.

I heard a good snippet from a press conference/book advert of Thomas Friedman. It turned out Alan Simpson was in the audience. Someone quipped maybe Simpson and Erskine Bowles should run as a presidential-vp presidential team. The notion got a long, loud applause. Hear, hear, let some adults take control. Simpson mentioned that they calculated there was $1.1 Trillion in tax expenditures. In case you've been brain dead for the last year, a "tax expenditure" is a tax loophole.

haha, you're scared of the tea party

[rubycodez]

you don't care that our government is already committing far bigger abuses than George III and the British in the 1700s. You don't care that our lawmakers are in the pockets of huge corporations. You don't care that our money is out of control of congress but instead placed in the hands of a private banking cartel that looted us in the name of "bailouts". You don't care that our government is funding cia military operations with narcotics, is on the both sides of the war on drugs. you don't care that we have mass murdered hundreds of thousands instead of fighting any real "war on terror" to line the pockets of big corporations. Instead, you are terrified of little old ladies waving tea bags. No tea party member has gone shooting and killing people at political rally, but left-wing nut job recently has.

Re:haha, you're scared of the tea party

[ralphdaugherty]

but left-wing nut job recently has

He was a right wing nut job, along with the Republican candidate he admired waving his AK-47 around.

Re:haha, you're scared of the tea party

[rubycodez]

false, described by his friends as "left wing and quite liberal", Jared Lee Loughner's favorite book was "the Communist Manifesto"

Re:haha, you're scared of the tea party

[ralphdaugherty]

false, described by his friends as "left wing and quite liberal", Jared Lee Loughner's favorite book was "the Communist Manifesto"

wrong, it was one of many political books he had, including Atlas Shrugged and Mein Kampf.

There was never an indication that his "favorite" was, you just pulled that out of your ass, typical right winger that your are.

And you never mentioned the AK-47 waving Republican candidate that Laughner admired.

Who in my opinion inspired him to put a bullet in a Democrat's head after she won the election.

Go teabaggers.

Re:Just watch money as debt

[cgenman]

Fractional reserve banking is more like promising more money than you have, with the knowledge that the amount of people actually using it won't exceed the amount that you have. This is the same for internet connectivity, power supply, gym memberships, and many other businesses.

Re:File under

[rubycodez]

no, the private banking system known as the "federal reserve system" would have problems with the values of its securities. The pyramid scam known as the stck market, which trades overvalued paper, would have problems. We'd be forced to manufacture more at home as our money wouldn't be taken abroad. this would not be a bad thing. Bring it on, more evil systems would collapse than good, and those who know how to create real wealth can get the parasites off its back.

Re:File under

[rubycodez]

I'm all for that kind of devastation, the federal government is a monster that needs to be slashed to a third its present size or less. Bring down the parasites of the global banking cartel that took 70% of the bailouts. You are scared of such "fire"? you are a coward who chooses slavery over freedom. I say burn, baby burn.

Re:This threat isn't from banks this time

[Nutria]

Because the economy is dynamic, not static.

People change their behavior when tax rates rise (by spending less, therefore driving the economy into a recession meaning less total tax revenue and more gov't spending on unemployment insurance, welfare, etc which then ratchets up the debt) and fall (by spending more, therefore boosting the economy therefore increasing total tax revenue and reducing unemployment insurance, welfare, etc which then shrinks the debt).

The big intellectual failure of "progressivism" is not realizing this truth of human nature.

What is needed is

1. a mathematic model which recognizes this dynamicism and determines the minimum tax rate which maximizes total tax revenue, and for
2. leftists to stop thinking that wealth is a bad thing.

Re:File under

[rubycodez]

the amount of troops is a token, means nothing, just un-surging the surge while the war merrily tools on. In short, more hot air from the flatulent barack.

Opinion from the political fence

[microbox]

I sit on the fence with politics, where I can see huge problems with the political "discourse", which is more about sides than ideas.

For example, it amazes me that Republicans think of themselves as the fiscally responsible party, since they have a history of /rampant/ government spending on social programs (e.g.: Medicaid Part D), and the military. George W was the worst president in all of history in this regard. His own treasury secretary, Paul O'Neil, resigned because of W's irresponsible attitude.

If you think this is just partisan spin -- a lot of the financial crisis can be laid on the shoulders of Larry Summers (Clinton's secretary of treasury), but that part of the story really goes back to Ayn Rand's prodigy, Alan Greenspan. Greenspan and Summers were thick as thieves, and their continued to increase through the 80s and 90s up until the present. Rand's fundamental idea is progressive politics (i.e.: more liberal than conservative), but it happened to be popularised by Thatcher and Reagan, and then continued through the Clinton era.

If you pull your head out of your partisan ass, you might discover that the world is far more interesting then the tired black and white, four-legs-good, two-legs-bad memes that float around your head. Modern political history really is very interesting, and Paul O'Neil's story is an interesting one, and a key to understand the current debt crisis. I would also learn something about deficit spending, which is almost universally supported as an essential ingredient in abating deep recessions and depressions.

I suspect my words are wasted on you, because partisans are far more interested in talking then learning anything. They just want to own the debate, so that they feel "right", and there-by avoid the imminent threat of discovering that they really know jack shit.Both sides of the political "discourse" clutch at whatever strawmen are within arms reach, and alas, nothing of consequence is ever said.

Re:This threat isn't from banks this time

[PopeRatzo]

The U.S. Gov. made promises it couldn't keep

They were on track to keep all those promises until Reagan and the New GOP got it's hands on it.

Even to this day, Social Security does not add a nickel to the budget deficit. Medicare could be made solvent simply by raising the cap on medicare taxes. Nobody would suffer. In every single poll, a large majority of Americans would prefer a European-style socialist setup, as long as it's not called that. But transnational corporations have such a death-grip on the government and courts that it's not going to let go willingly.

The US is headed for at least a quarter-century of very bad times. The nihilistic "supply-side" economic theory that has gripped the political class thanks to unlimited influx of corporate money will not let go until we suffer some pretty catastrophic times.

As crazy and wrong as he is, Glenn Beck is unintentionally correct about one thing: It's important to keep close family and community ties going into the next decade and beyond. We are going to need each other. Skynet is coming, but it's not going to be as much fun as the movies. The hunter-killers are called "corporations".

Re:File under

[astar]

default projections are based on a refusal to prioritize... Let us say you want to obey the 14th amendment. Not a problem. Let us say you wanted real bad to bail out the speculators. Then there is a problem.

Pooh, I checked my inbox for the slugs to cite, but could not find them. here is my memory.

14th amendment says we *will* pay for some things. Figure that is debt service, social security, medicare, congressional and other government pensions :-), and DOD. Does not require us to keep things going otherwise. Current receipts will do the absolute requirements just fine.

The slugs had various people running the particular numbers. As opposed to, well, however you want to characterize what the Treasury secretary says.

"not a problem" is sort of as applied to the "possible", where "possible" ultimately relates to laws, sometimes of physics. :-)

Re:File under

[Logic Worshipper]

The doesn't take into account when, how long, and under what circumstances democrats or republicans controlled congress.

Re:This threat isn't from banks this time

[DavidTC]

I wish people would stop confusing the 'debt limit' and the 'budget'.

If people want to play budgetary games over the budget, go ahead.

The debt limit, however, is just how much money we can borrow for our already existing budget.

Threatening to not raise that is like a group of people purchasing a big screen TV, and then some members of the group claiming the TV was too expensive so we need to remove the money out of the checking account before that check clears, so it will bounce.

Oh, and that means that all checks will start bouncing, not just the TV check.

That is not a fucking way to operate a country. You want to argue over how much money we fucking spend, argue it when we decide to spend it, not by saying 'Hey, I know we agreed to spend this money earlier, and already wrote the check, but we were just kidding.'

what we COULD do

[RobertLTux]

get a number of companies to go into afganistan and start mining the huge deposits of minerals that have been found. Even if we work with the locals (and only get say 40% of the value) we could pay for both the afgan and iraq war in a few months time (heck get some of the Corps of Engineers working on getting the mining rolling (with of course the roads needed to get the minerals out)).

heck some folk say that there is a trillion dollars worth of minerals (not counting indirect worth of course) waiting to be grabbed.

Simply not true

[microbox]

Obama and the Democrats don't want to cut anything (except for defense)

This is just untrue. Obama is proposing $3 of tax cuts for every $1 of tax increase. Spending cuts are across the board, and both discretionary spending and Medicare/Medicaid are taking far bigger hits than the military. Did you deliberately miss the memo?

btw, Reagan /increased/ net tax revenue by closing loopholes for the rich. Reagan also introduced spending rules that mandated that all government spending must be accounted for by either a tax increase or a budget cut. George W. waited for those rules to expire before engaging in the worst big-government spending spree in all of history.

Furthermore, you should also learn what the paradox of thrift means.

You have a lot to learn, lol!

Re:File under

[Rockoon]

The graph clearly shows when and how long. Are you being intentionally blind?

Re:Several Inconvenient Truths About The Debt Ceil

[feepness]

Clinton had 4 years where budget was in surplus and the US was paying down the debt.

This is simply untrue. The debt increased every year.

Saying anything else is Enron accounting and calls deeply into question any source which does so.

More on the budget

[bussdriver]

-Obama added the wars to the budget so all that military spending that was 'off the books' is now on the books making the budget look much larger when it was there before but was outside the budget!

-When we have a surplus, state or federal there is a big push from our fools to give tax rebates and tax cuts INSTEAD of paying off the debt. This is what we do each time so the debt grows.

-The deficit and debt are two different things people confuse too often. Fixing the deficit does not fix the debt and the interest on the debt only compounds creating more deficit problems.

-Cutting the budget in half will not stop the situation from getting worse. Breaking even will not stop it-- the only way for things to not get worse is if we pay back the interest on the debt and actually break even.

-Trickle down economics do not work; it has a bad reputation... Well, the terms are considered bad-- we've simply shifted the terms while still supporting supply side economics with Democrats slowly warming up to it as well. What is clever is the use of cover terminology that can be swapped out after it takes too much damage. Today its all veiled in terms of jobs-- the rich provide jobs etc. Its just another way of selling the same old failed economics which made huge gains around the Nixon era when the powerful started think tanks to legitimize their positions (the beginning of the modern corporate info war.)

There are other issues leading to a collapse around 2020 besides OUR money mismanagement. Its all interconnected to a point where repair is impossibly difficult.

Re:More on the budget

[defcon-11]

The deficit and debt are two different things people confuse too often. Fixing the deficit does not fix the debt and the interest on the debt only compounds creating more deficit problems.

The interest we pay on current debt is included in the budget, so if we were to pass a break-even budget, we would be paying down debt.

Re:More on the budget

[L4t3r4lu5]

-When we have a surplus, state or federal there is a big push from our fools to give tax rebates and tax cuts INSTEAD of paying off the debt. This is what we do each time so the debt grows.

So, you're telling me that Democracy works until the general public realise they can vote themselves largesse from the public coffers? I'm sure I've heard that before.

Re:More on the budget

[LordLimecat]

-Obama added the wars to the budget so all that military spending that was 'off the books' is now on the books making the budget look much larger when it was there before but was outside the budget!

And for good measure added another war, too!

Re:More on the budget

[dkleinsc]

Trickle down economics do not work

My preferred term these days is "tinkle-down economics" - anyone who's not at the top of the heap gets pissed on, and the further down you go the stinkier it gets.

Re:More on the budget

[DetriusXii]

Rural electrification happened only through government intervention. The free market never stepped up to the plate to provide that infrastructure. Firefighting was socialized as a service because the private for-profit firefighting was a terrible service that often times did not protect their clients against the fire. The socialized health care systems are simply more efficient that the United States health care system.

Re:More on the budget

[bussdriver]

No I did not! Bush left the wars OUTSIDE the budget and just stuck them directly onto our debt. In fact, he wasn't the only one to hide military spending in that way. Obama is actually being HONEST at his own political expense by making the cost of war far more open.

Re:More on the budget

[bussdriver]

Not true. Most the debt consists of PAST debt compounding over decades. I believe it was in the 70-90% range so Bush's idiocy didn't create the majority of the debt.
Deficits can go over 100% of GDP for sort periods of time as they did for WW2-- the deficit is less of a problem than the debt is-- because the debt will grow on its own and provides large owners a great deal of power over your nation; during WW2 much of the debt was internal to the nation; now it is foreign or bankers (who have no loyalty.) Foreign debt was one of the ways the USA built its empire - its the best means of empire building where you can also be "the good guy."

If that were easy, it would have been done already

[golodh]

Problem is,

(1) the majority of business *cannot* survive a month without their credit lines, many of them cannot survive a week.

(2) most consumers cannot go without their bank account: that's where their credit card is anchored, their mortgage is serviced from, where their paycheck is paid into, and where their bills are paid from.

Doing without banks is only marginally easier than doing without money and going back to a barter economy. It's not impossible (e.g. the Afghans manage) but it's not possible to run a big complicated economy that way. And either move causes so much friction in day-to-day commerce that it's sufficient to cause the entire economy to go into a tailspin. If you thought that the 'virtual' money in banking accounts doesn't impact the real bricks-and-mortar economy, read up on the banking crisis of 2008 and the resultant depression.

Bottom-line: you *need* banks, even if you' don't like it.

Unfortunately, banks tend to be intertwined (each and every bank is tied to most others through *massive* borrowing and lending. Topple one and you hurts lots of others. In other words: there is a really stiff penalty if you let one topple. Lehman brothers was comparatively small, so the impact could be absorbed. Try that with e.g. Citibank, and you're in real trouble.

Now how do you ensure that banks don't take undue risks, without micro-managing them and wrapping them up in red tape?

I don't know. Fact is: the more risk you take, the more higher the yield is you can ask when you lend money. As long as people pay up, you will be competed out of the market unless you take as much risk as your colleagues.

Therefore banks (and especially their management) haven't got much of an incentive to observe higher safety margins than those required by regulation (which is a poke in the eye for libertarians of all stripes).

Complicated eh? All the snappy, easy solutions have been tried already ... and rejected.

The other IMF goal is to redistribute wealth.

[Anonymous Coward]

The other IMF goal is to redistribute wealth; that is not a secret. The IMF seems like a Ponzi scheme.

Re:Stop Spending!

[microbox]

Raising taxes will only further DECREASE revenue.

That is just an opinion that the vast majority of economists (and educated people) disagree with. Sometimes I wish we could send all the people like you to a separate country, so that you can screw up your own lives without affecting mine. Perhaps the feeling is mutual =). There is no tax, and no government in Somalia. Go for it.

Re:This threat isn't from banks this time

[mosb1000]

What is the point of having a debt limit if you just raise it every time you get up to it? And why do people like to talk about social security as though it is money spent. I hate to break it to you, but that check is going to bounce no matter what we do.

but the wars are not the problem.

[Shivetya]

The problem is jumping nearly 25% is expenditures in two years. You can totally remove the defense department and their four wars (there are two air wars, don't forget Sudan) and you would still be half a trillion in the hole.

You want to know what the wars are, they are the distraction to keep people looking over there instead of where they should be looking.

Talking the wealthy cannot fix it, it has been shown you could take all the money earned above 250k and still not come close enough to balancing the budget.

There are three major problems.

1) Entitlement expenditures are too high, we are running out of other peoples money

2) Spending on everything is else is out of control (including and especially defense)

3) Not everyone has to pay taxes as such not everyone feels the pain. Believe me, if the bottom half had to pay in 10 or 20% of their income then perhaps politicians might feel it.

We have President Wall Street - He got in on the backs of Main Street America and then forgot about us - oh, until he needs us again for 2012. Soon as he gets in again you can rest assured he will forget us again. He will get all cozy again with his rich CEO buddies from Google, GE, and anyone else willing to pad his wallet and that of his party. You can bet he already has lined up his millions after he is out.

We are out of other peoples money, its time to realize that the fastest way out is to stop spending so much. The government is stifling the economy through its heavy borrowing and our President is handing over us to his banking buddies. For all the angst people had with Bush Jr being a tool of business they seem to miss that we have that and worse. We have ex-Wall Street insiders running the economic course in our White House!

Re:but the wars are not the problem.

[Cyberax]

"The problem is jumping nearly 25% is expenditures in two years. "

Jumping what? Expenditures have not risen 25%, in fact they have barely risen 2%: http://www.angrybearblog.com/2011/02/federal-spending-growth.html There was no meaningful expedinture growth to speak of.

And repealing tax cuts would solve the deficit problem nicely.

Re:but the wars are not the problem.

[Rockoon]

That graph you linked to ends with ~13% growth, and thats adjusted for GDP rather than for Tax Revenue.

Are you stupid?

Re:but the wars are not the problem.

[Rockoon]

~13% per year is *more* than 25%, when its over 2 years.

Are you hiding now?

Re:Who is going to enforce that and how?

[elucido]

Ok... You're drinking a bit too much of the KoS koolaid. The "Tea Party" is hardly armed to the teeth. It hardly even exists in an organized sense. You're cherry picking phrases and grandstanding because your positions are not popular enough to carry Congress. Sorry... Sucks to be you. Elections have consequences.

I'm not a member at DailyKos. This is Slashdot. And my opinion of the Tea Party is based on my own research into the Tea Party. They existed long before they called themselves the Tea Party. They've been trying to launch coups and the best way to launch a coup is to stop paying taxes so they want to not have to pay any taxes at all if it were up to them.

They want the government out of everything because they are an anti-government movement not because they want limited government. They don't set any real limits do they? They wouldn't mind reducing defense, healthcare, social security, even if they know ultimately this will cost the country more than if they pay for it.

They appreciate the crappy economy and don't want a strong economy because then Alex Jones, Ron Paul and the Tea Party will lose support of the mainstream.

Re:Who is going to enforce that and how?

[elucido]

I think you are basically correct. One thing the Tea Party fails to understand is that they do not actually have a mandate. They were born in a crisis, but they have yet to stand for election in how well they manage to alleviate that crisis. They could easily get booted in the next election and merely be a footnote in history.

I don't think the emphasis on fiscal responsibility is the sum total of the Tea Party, at least to hear them talk. The plan to turn Medicare over to the insurance companies was not an entirely fiscal plan. It is loaded with the politics of taking the government out of health care. And it wouldn't actually fix the rise in health care spending, just change who pays for it, and who suffers from it.

A balanced budget amendment is another wookie defense. It sounds good, but it would have prevented the U.S. from mobilizing as it had to during WWII.

I heard a good snippet from a press conference/book advert of Thomas Friedman. It turned out Alan Simpson was in the audience. Someone quipped maybe Simpson and Erskine Bowles should run as a presidential-vp presidential team. The notion got a long, loud applause. Hear, hear, let some adults take control. Simpson mentioned that they calculated there was $1.1 Trillion in tax expenditures. In case you've been brain dead for the last year, a "tax expenditure" is a tax loophole.

If the Tea Party does not have the mandate who is going to stop them? If the FBI isn't going to stop them then who? And if they aren't stopped and the US defaults that is unacceptable.

Re:The Tea Party wants "nasty consequences"

[f16c]

Back at ya!

Re:The Tea Party wants "nasty consequences"

[elucido]

It's always hilarious when liberals turn pro-America and want the FBI to imprison dissidents for sedition. It was a phenomenon unknown before three years ago. Dissent is patriotism, remember? Forgot already, did we? Obama's mentor, Ayers, founded a violent leftist group that detonated a bomb in the US Capitol building.

P.S. You've gotten your arguments confused: the "left and right are the same" argument is reserved for use defending outrageous acts by liberals.

Only I'm not a liberal, I'm a rationalist. I don't want to have a civil war because I care about people in this country. If that makes me pro American then so be it. What do you expect? I live here. I have friends and family here. Damn right I'm pro American. Why the hell aren't you?

If it takes the FBI to protect America from civil war so be it, and I don't even like the FBI all that much. Just because there are extremists on the left who want civil war it does not mean I support those extremists either. Anyone who is pushing for civil war is pushing to get people killed. Those people may include people I care about so f*ck civil war and anyone pushing or it.

Re:Several Inconvenient Truths About The Debt Ceil

[dkleinsc]

The trouble with your entire argument is that you assume that the only possible way to balance the budget is to cut spending in half. There's another way about equally likely (that is, whelk's-chance-in-a-supernova likely), namely double tax revenue to solve the budget problem.

As far as what taxes to hike, there are a lot of choices: dividends, business profits, FICA for income currently above the cap, capital gains, or upper end of the income tax range. All of those have historically low tax rates, and have done better than ok in the last few years.

Re:The Tea Party wants "nasty consequences"

[elucido]

It's always hilarious when liberals turn pro-America and want the FBI to imprison dissidents for sedition.

Or support free speech, so long as they agree with it, and voting rights, only for people they deem smart enough to vote.

What does free speech and liberals have to do with any of my posts? I never said I was for liberals, or against. And I never said I was against free speech. I said specifically I'm against the Tea Party, and that specific type of conservatism, because they are destructive to the nation itself.

Re:The Tea Party wants "nasty consequences"

[elucido]

During a revolution you never know what to expect in the end. Look at France, look at Iran.

Bad examples. Iran especially bad example. Assuming you're talking about the 1970s revolution and not alexander the great era. Even France during the revolution, fundamentally, didn't really change much other than killing a bunch of pigs at the top, some pigs had royal blood, some pigs did not, but it didn't really matter all that much, other than as an oddity that the royals got a rare and sound smashing.

As for the tea party types, come on, think about it. Look at who they hang out with, to see who they like. I feel extremely confident taking the completely wild guess that a fundamentalist christian theocracy is a somewhat more likely outcome, than say a Buddhist monarchy or Sharia law.

Thru current media and govt propaganda, with the assistance of the media, I'm not even sure formalizing the christian theocracy would really change all that much. We already have an informal christian theocratic / fascistic state. For example, instead of politicians being required by the media to be Christian, they would in addition have some redundant law requiring it. Would it really change anything for 99% of the population? Probably not. Back to American Idol, now wearing slightly less skimpy outfits. Who cares.

And you want that fundamentalist Christian theocracy? I don't. And I'm sure millions of people around the country don't. So they'll never have that without a civil war and they basically know it.

If we already have a christian theocratic fascist state it proves my point that the Tea Party has infiltrated government. But I don't think it's as bad now under Obama as it would be under Palin or Bachmann. They'd f)(ck our country up.

Re:Stop Spending!

[rtaylor]

It is very possible the US is too far on the left of the curve and optimal revenue might require a tax increase.

Not that simple

[chebucto]

To be sure, Republicans claim the Treasury can just "prioritise" interest payments to avoid a default. Read the meticulous analysis that Jay Powell of the Bipartisan Policy Center did of the Treasuryâ(TM)s cash flows in August for a sense of how risky that is. Among his findings:

        For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment. And Aug. 15 presents a triple threat: a $19 billion daily deficit, a $29 billion interest payment and a quarterly refunding auction to pay off a maturing $27 billion bond.

Even assuming that Treasury manages to remain current on its debt, the firestorm that arises when vendors, pensioners and soldiers stop getting paid will be unprecedented. As the nonpartisan analysts at ISI Group note, the failure of TARP to pass on the first try in the fall of 2008 may not do justice. The main fallout then was the plunge in the stock market. This time, it will not be just financial market turmoil but âoevoter outrage associated with the prospect of an immediate 44% cut in federal spending that would instantaneously overwhelm the Capitol Hill switch boardâ. Both parties will be blamed, but Republicans more. After all, some, such as Michele Bachmann, have opposed raising the ceiling precisely to induce cuts on such a scale.

http://www.economist.com/blogs/freeexchange/2011/06/republicans-and-debt-ceiling

So just stopping spending isn't that simple, and if you do manage to do it without defaulting on debt payments, you'll disrupt many lives.

Re:Not that simple

[flyingrobots]

Never said it would be easy or painless, only necessary.

Re:The Tea Party wants "nasty consequences"

[elucido]

When was the last time the ELF or ALF killed anyone?

Now look at the right and you find guys like Jarred Loughner who tried to kill a liberal politician. You have people killing abortion doctors, bombing abortion clinics, equating abortion to genocide, talking about 2nd Amendment solutions.

Re:The Tea Party wants "nasty consequences"

[elucido]

If we do have another civil war, the republican faction will win. Just look at who the military votes for. They're as American and apple pie with good-ol family values.

But lets assume shit really hits the fan. Civil nuclear warfare may become a new concept with devastating results. The rest of the world will be watching the news with a bowl of popcorn and rice.

America. The white-hot flame. How quickly we shined brightly. How quickly we became extinguished. Is that what you want written into their text books for all future generations of humanity to read?

Like they won the last civil war? It's not that simple. The military isn't all Republican. The military also isn't all members of the Tea Party or of militias. It's actually split fairly evenly which means we don't have any clue how it could go. We don't know how many informants there are in any of these groups. Also as a matter of funding if there is civil war both sides wont be equally funded. Who will the Tea Party and their few hundred thousand members get their funding from? The Koch bros? They'd be up against not just the US government, but possibly other governments as well.

Civil war is not fun, it's hell. Civil war is the worst possible kind of war. It's not going to be a matter of who has the most guns or who has the low level soldiers from the military because the war ultimately will be down to who has the most financial funding, who has the best weapons, who has the best position and the coastlines actually have far better positions than the middle America. The people living on the coasts can and will be able to receive trade from other nations while the people in the middle of the country will have to build everything themselves.

You forget about the fact that Arizona, Texas, Florida, are all near Mexico. Horrible positioning, as Mexico could invade during a civil war and they'd have to deal with that as well as deal with other problems. They would have some things going in their favor, but in general it would suck for all factions on all sides as the entire nation is weaker divided and foreign nations will be in a position to take full advantage of it. China, Russia, Mexico, off the top of my head.

IMF

[hackus]

Crooks and Criminals = IMF

How many banks have told people that Oh, you are in debt. No problem, take on more debt! That will fix your problem!

The only reason why they are suggesting this is because they want every country they can to go bankrupt, and privatize the infrastructure of the country afterwards.

See what they are doing to Greece? Those idiots in Greece voted to increase the debt limit and now the IMF is asking for some of the islands, their bridges and historic works of Art to be used as collateral to private foreign interests.

By the time the IMF gets done with Greece, the citizens of that country won't even own their own water works, Hospitals or government buildings.

The IMF will own everything.

Now, the IMF has its sites set on the USA. By the time they get done, we won't even have a national park anymore, it will be owned by IMF private investors.

-Hack

Re:IMF

[dkf]

See what they are doing to Greece? Those idiots in Greece voted to increase the debt limit and now the IMF is asking for some of the islands, their bridges and historic works of Art to be used as collateral to private foreign interests.

As opposed to letting their own megarich — the people who have been most assiduous in avoiding taxes in the first place — get those things for a pittance? While that might be the traditional way of the Greek government, nobody else was willing to let them get away with that sort of a travesty. Privatize if necessary, but get the proper price so that the debt can be paid off. A bargain-basement chummy old-money privatization helps nobody except a bunch of people who are a large part of the problem in the first place (i.e., that the Greeks don't pay enough taxes to cover the expenditures of the government).

I do not know whether it is the IMF that is stopping such shenanigans, but if it is, good for them! (It might also be the other Eurozone governments.)

Re:IMF

[LordLimecat]

By the time the IMF gets done with Greece, the citizens of that country won't even own their own water works, Hospitals or government buildings.

So, to your mind, Greece and its citizens bear no responsibility for their debt?

Re:IMF

[bhampton]

I have to eat. Clothing appropriate to the climate is always nice, as is protection from inclement weather. You say you 'own' this land, these means of production? How? Since when? Since we've decided to 'close' the frontiers, there is no choice - we are all a part of the system and must either play by the rules or make new ones - making new ones is generally reserved for those in power. Read John Brunner's 'Total Eclipse'.

Re:banks

[TaoPhoenix]

The Banks go Marching Two by Two Hurrah! ...

And we all come crashing down!

Re:Homeless

[TaoPhoenix]

Been there, learned a trick.

  If you saw anything coming before hand, you might still have a car left. You can sleep in your car. Your first X bucks go to a gym membership. That's your shower. Then your next $20 goes to one of those fancier "street boxes" where they can't tell what 188 Main St #24 is.

Rent + cars are the killers of today's economy - a lot of places have really skewed rents vs the jobs available.

Nasties

[isochroma]

The cunt must be referring to the "nasty consequences" that Iceland has experienced. These consequences aren't 'nasty' for the people, but for the bankers. So she is quite correct that 'nasty consequences' will follow an American default. It's time to see the huffing, puffing, threat-dealing strawbitch for who she is and who she represents - the tiny fraction of 1% that thinks that they can just keep stealing from the workers.

Re:The Tea Party wants "nasty consequences"

[Temkin]

What does free speech and liberals have to do with any of my posts? I never said I was for liberals, or against. And I never said I was against free speech. I said specifically I'm against the Tea Party, and that specific type of conservatism, because they are destructive to the nation itself.

In all fairness... I was pointing out the amusing positions taken by others elsewhere. However, I can't say I've reviewed every post you've made here. You're quite prolific... So much so, that it might be amusing to screen scrape this discussion and do a post / word count frequency analysis and figure out how fast you type. I mean... If the numbers are too high, you'd be exposed as an organized multi-person astroturf effort... I suspect in the end it would show just 1 guy working his shift...

You certainly got your message out... "The Tea Party is extreme!!! Be Afraid!!!!" I feel all put upon... But hey... I live in Texas. You know, that Tea Party stronghold that's home to 1 in 12 Americans, and sizable fraction of the jobs created since the '08 election... That's certainly destructive to... Hmmm.... Your political goals maybe?

Re:Stop Spending!

[aminorex]

Your grandparents got nothing out of it. They were ripped off by a Congress bought and paid for by multinational corporations. The worst you can blame them for is voting for the sock puppets.

Re:Several Inconvenient Truths About The Debt Ceil

[aminorex]

Inflation is the most progressive form of income tax.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

In other words, cut the US budget in half to stop the situation from getting worse.

Or, just put taxes back to where they were under the Clinton administration and close the existing tax loopholes. Which would do more to remedy the budget than any right-wing proposal yet. I'm willing to listen to a solution that includes both budget cuts and raising taxes. But any solution that *doesn't* involve raising taxes and closing loopholes at all doesn't strike me as really being pointed at solving the deficit. From what I see, it's using a scare of "deficit bad! deficit bad!" to cancel spending that the right-wing doesn't like for ideological reasons.

some facts

[t2t10]

People should get some facts before engaging in these black-and-white discussions.

Taxes on the top 0.01% have fallen dramatically to match those of the top 1%. Does that make sense? Probably not. Is it responsible for our economic problems or debt? Probably not.

http://taxprof.typepad.com/taxprof_blog/2011/06/ny-times-who.html

http://visualizingeconomics.com/2007/11/03/nytimes-historical-tax-rates-by-income-group/

Another little fact of interest to this group is where all those "rich people" come from: Silicon Valley and New York. Without those counties, income inequality in the US hasn't increased significantly over the last few decades. Yes, the gap between the rich and the poor that is supposedly condemning us to third world status soon is just the result of the IT revolution.

http://www.nytimes.com/2006/09/21/business/21scene.html

Frankly, most of the taxing or spending decisions currently debated in Congress are irrelevant and merely political posturing. Personally, I think they increase the taxes on the top 1% significantly, but it won't make any difference. But at least they can then move on to more important things.

Re:This threat isn't from banks this time

[ralphdaugherty]

I hate to break it to you, but that check is going to bounce no matter what we do.

right wing rubbish. SS checks are not going to bounce. Go rabble rouse with your tea party friends.

Re:This threat isn't from banks this time

[DocHoncho]

The point appears to be so that Congress can play these stupid games every so often. Oh, and so some of our more soft-headed citizens can pretend that the debt limit actually means something, or keeps the total national debt contained.

Please IMF go away!

[ChilyWily]

In my humble opinion...

The IMF is the same old bunch of people who have been shunned around the world for the misery they bring to the common person in any country that they have helped themselves to.

Most recently, see how the South American/Latin American countries rejected them and their so-called austerity measures - the social sector cut backs that would have brought million into poverty and taken services away from those that needed them most, were averted simply because the governments in those countries did not believe the scare mongering from the IMF.

Today the IMF seeks a place for itself in a world that sees them for the scam they are and so now they are trying to "re-image" and "re-invent" their "role" in the world, trying to bait everyone and anyone so that they can start their games anew.

Re:This threat isn't from banks this time

[mosb1000]

That wasn't really what I meant. Hoverer, if things keep going as they are, there will come a point when SS checks will bounce (I'd assume they'd take some corrective action before that happens, like not issuing bad checks). Even a government check can bounce. I got one from the state of CA a couple years back that the banks refused to accept.

Re:This threat isn't from banks this time

[ralphdaugherty]

Understood, But that was a state check, not a fed government check. It is not a given that a fed government check will bounce. It is not even possible.

Still, I agree with your general point and you have personally experienced some of the bad stuff yet to come.

regards

the Shadow Banking System and Lehman 2.0

[decora]

there are massive hordes of credit default swaps against US debt out there right now.

credit default swaps are almost completely secret. nobody knows how many are out there. there could be a hundred billion, there could be 10 trillion.

if you allow the US debt to default, it will make the Russian and Asian defaults of 1997/1998 look like a kids birthday party.

When Lehman went under, the money market funds started to crash, and then the credit system started to crash. Yes, McDonalds was going to have problems meeting payroll.

the US government is like tens of thousands of Lehman Brothers, not in its operation but in the tentacles it has to every other financial product and financial system on the planet. credit default swaps against US debt are just the tip of the iceberg - and they are completely secret. we have no idea how many other products and institutions of the 'shadow banking system' are linked to US debt, or what the repercussions would be.

we would see currency devaluation on a massive scale. we could see entire companies disappear overnight. we could see entire countries central reserves emptied, overnight.

it could make the AIG bailout look like a child asking for 5 cents for a gumball.

it would be like taking a cigarette lighter and throwing it into a fireworks factory.

----

some people want to see the factory blow up. yes, it would be awesome, and serve the factory owners right for running such a sweatshop. but it is completely irresponsible to allow it to happen.

the only safe way to take apart the fireworks factory is brick by brick, slowly, over time. not in a massive explosion that will destroy an entire quadrant of the city.

Re:the Shadow Banking System and Lehman 2.0

[corbettw]

The US will not default on August 2. Let me repeat that: the United States Federal government will not default on August 2nd.

Why? Because the Federal government collects more than enough in taxes to pay our debt service through the remaining fiscal year (September 30th), and beyond. We do not need to raise the debt ceiling to pay our debts.

We do, however, need to raise the debt ceiling for the government to continue providing services and paying its employees. But you know what? Fuck it, shut it down. Stop paying the employees, stop buy shit, stop sending out free money to people. And when that happens, and the majority of Americans realize their lives are continuing on just as before, with literally no change to their lives, maybe then they'll realize just how useless and pointless the government is.

Re:the Shadow Banking System and Lehman 2.0

[Alex Belits]

And when that happens, and the majority of Americans realize their lives are continuing on just as before, with literally no change to their lives, maybe then they'll realize just how useless and pointless the government is.

Any pointers, what should I loot first?

Re:the Shadow Banking System and Lehman 2.0

[corbettw]

So the only thing keeping you from stealing from your neighbors is the existence of the Federal government? What a sad commentary on your morals and values.

bailout was not the only alternative for lehman

[decora]

just because she didnt want to let lehman fail doesnt mean she necessarily wanted to bail it out.

there are other ways to do it. when ordinary banks fail the FDIC takes them over, puts a few people in prison, pays off some creditors, winds it down, and keeps things going in an orderly fashion.

of course, since Lehman was an "investment bank" (not an ordinary bank) in the US, the FDIC, the Comptroller of the Currency, and the Fed did not technically have legal jurisdiction over it.

letting lehman just go bankrupt caused a lot of problems. institutions who had money saved there in europe couldnt get their savings out. also investors in lehman, like the "good as money" money market funds started losing value, which caused a mass panic and helped the credit markets seize up, which meant that ordinary business activity, like mcdonalds payroll, was threatened. it was like one of the last dominos to start the global run on the global financial system in sept 2008.

if i understand it correctly, she probably would have wanted us to 'go cowboy' on Lehman, and do something like have the FDIC take it over, even though it wasn't technically under FDIC jursidiction. in Paulsons book he talks about how he is continually hamstrung by what is allowable legally for him to do as treasury secretary. he is always worried about doing whats legal.

however, technically, we had no right to invade Iraq, to writetap american citizens, to set up secret prisons and torture POWs. why couldnt we bend the rules in this case? i think thats where she might have been coming from.

solutions

[decora]

1. enforce transparency with laws

2. put people in prison for breaking the laws

i know they sound too simple, but that is basically what happened in the US from the 1930s to circa the 1980s, when it had the 'best financial system in the world'. the SEC & financial laws were somewhat well enforced (especially compared to every other country) and these companies had to show what they were doing in public.

that broke down with the rise of the 'shadow banking system' and the end of the rule of law, which many people will say began in circa the 1980s when the big investment banks stopped being partnerships and started being 'shareholder driven'. the rise of special purpose entities, collateralized debt obligations, off-balance sheet special investment vehicles, and other various creatures of the shadow banking system destroyed all semblance of transparency. modern large banks do not have any idea what their actual financial condition is - it is simply too complicated to properly calculate it or to know what they have at risk.

yves smith covers a lot of this at nakedcapitalism.com

Re:Just watch money as debt

[Nikker]

That is so wrong you actually were able to negate the entire definition. The fractional reserve system is there for select banks only. The Federal Reserve will allow these banks to over extend all of their assets in pursuits of loans on the promise that the Fed will rescue them if enough people pull their money out.

So a non backed bank would actually have to make $1 to loan out one dollar. While a Fed backed bank would only have to have someone else deposit the same $1 in hopes you won't come back to get it before they get paid back on the loan, if so they call up the Fed and ask for the balance. While the entire idea of the system is to make money out of nothing the whole time to cover the people pulling the money out while loans are being collected, no one starts reclaiming the money once the loans are paid. So you get inflation. Now the Fed says to everyone at once we are no longer going to cover anyone (see 2008 TARP) so now someone else has to take the debt which is the government (in other words the people) while taking houses and lives at a fraction of their actual cost all being earmarked by cotton based currency.

its not a war, its a contingency operation

[decora]

except of course if you want to put long hairs in prison, then its 'we are at war!'

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

Sorry that won't work (http://www.heritage.org/budgetchartbook/total-tax-burden). Even if you raised tax rates to the highest tax burden in US history, that won't fix the problem. This is because the problem is not an income problem, it is an outgo problem that has no control (http://www.heritage.org/budgetchartbook/growth-federal-spending-revenue).

Basically it is like you gave your teenager a $10,000 limit credit card and they went crazy charging things. You gave them a good talking to and called and had the limit raised because there was a legitimate need for some expenses Now they have reached the limit a second time. You are faced with bills that you can pay the bills but unless you take the credit card away from them this cycle is going to continue until you can't pay and are bankrupt.

You have a choice, follow them into bankruptcy or take away the credit card and make them live within their means.

as a member of the bottom half

[decora]

every time i buy food, 8% goes to the government. since i spent roughly 1/3 of my income on food, thats a 2.7% tax rate just to eat. i pay rent. i dont know how much my landlord pays in taxes, but im sure they take it out of my hide. i pay for gasoline. again, taxes. and then every month out of my paycheck, comes money to pay social security &c.

add it all up, and i am paying a hell of a lot more than 15% that i would pay if i was a day-trader swapping stocks around.

Re:What happens if the govt just allocates money

[salesgeek]

The government can do this. It causes inflation. What they aren't telling you is that inflation is what is needed when the problem is that you national budget is being crushed by interest payments. The government gets out of debt, the bankers don't get to make much money for a few years, the grass gets a little greener, the sky a little bluer and there are faeries and ponies for everyone.

Re:This threat isn't from banks this time

[khallow]

It is not a given that a fed government check will bounce. It is not even possible.

Except, of course, we see in this story a scenario where it can happen. Just because the US government can print unlimited money, doesn't mean that they will.

Re:Just watch money as debt

[cgenman]

You make it sound like banks joining the fractional bank system are rare. Pretty much all banks that make loans are part, and a big reason is because the regulation helps keep them from going straight to poop.

Now the bank makes a loan to someone. That loan comes in the form of an account at the bank. The bank then sets aside a fraction of the total loan (usually 10%, but I'm not sure what it is right now), and loans that out. That is in the form of a deposit. They take 10% of that aside, and loan the rest out again.

In the minds of the people who they have loaned money to, they've created money out of nothing. I have a business loan for 100k, therefore I have one hundred thousand dollars, and that much debt to pay off. But few people use all of that money right away. In practice, aggregated over many deposits and loans, no more than 100% of the initial deposit are ever actually out spent at one time. So no money is created out of thin air, just the perception of money.

For real money out of thin air, you need the Federal Reserve Bank.

The first thing the U.S. should cut...

[tiqui]

Our survey says.... ding ding ding:

The IMF!

The gas bags who run the various unaccountable globalist organizations need to learn to keep a low profile. They do not win friends among their funders by continually poking fingers in their eyes, and they certainly cannot be winning friends among the world's poor as they lend money to dictators and later demand austerity from the poor who suffered under those same dictators...while wining-and-dining each-other in high-end facilities from New York to Paris. It's not much money relative to the U.S. economy, but as an American taxpayer who is tired of being lectured by flakey euro quasi-intellectual crypto-socialist jerks who can never see an end to the good things they can do to the poor of the world with my money I would get some measure of satisfaction from seeing the IMF on the chopping block.... I Think I will call my congresscritter in the morning....

Re:Stop Spending!

[flyingrobots]

We are one of the highest taxing countries in the world. It is cheaper for folks to do business elsewhere.

I agree with your point that zero taxes are also bad. We need government like we need air to breathe and governments need money to operate. Right now we are over taxed and we over spend.

One of the results of over taxation is outsourcing, of people, jobs and businesses. Make it affordable to do business here and you will see an increase in revenues, and jobs.

The best analogy is a sub way system. If you raise rates, you lower participation. People take cars or do something else. Lower rates, and more people ride == more revenue. Yes, you can lower it to where revenue will drop. It's a curve. But you raise it too much, and you will loose revenue.

A business works the same way, if prices are hiked, demand will be reduced and there will be fewer sales. It's the old adage, I'd rather take a large sack of coins to the bank than a handful of cash.

Re:Several Inconvenient Truths About The Debt Ceil

[ralphdaugherty]

I spent too much time today reading on the debt limit crisis, but after looking at everything have come to the conclusion that we need to raise taxes significantly, doubling our tax revenue.

This is a modified version of what I've always proposed, that is, tax rate based on spending, but we're past the niceties of deciding what to spend on. For better or for worse, we've pretty much committed to what we spend on for various good reasons. We need to pay for it.

In the process we also take a step toward flat tax in that I propose we raise all the various tax rates to the same rate, the middle class income tax rate of 35%. After we start running surpluses and pay down debt then we can lower that rate.

I don't think the low tax rates, let the wealthy invest to create jobs is working. The wealthy are not investing the money in the US, and jobs aren't being created.

While I think we should have some CCC type programs to put laborers to work until manufacturing ramps up again in the US, helped tremendously by a new large tarriff on imports from countries running a trade deficit with us, the goal of doubling the tax revenue is to balance the current budget and get the money immediately spent and back into circulation and generating new tax revenues without new spending programs.

We also need to stop business as usual, everything will be fine government operations with great budgetary pressure all the way down the line.

This basically affects those who are wealthier than middle class. I have a feeling they'll make out fine from this.

  rd

Re:This threat isn't from banks this time

[khallow]

This just indicates a lack of discipline and coherence in the Democrat side. They had almost 60 votes. They couldn't get deals with Republican defectors to overcome the filibuster (a traditional legislative tool dating back as far as I know to the establishment of the Senate) and I'm cool with that. As I see it, if they couldn't overcome the filibuster and pass legislation, then they didn't deserve that legislation.

Re:This threat isn't from banks this time

[Duradin]

Whose tune is the GOP dancing to? Why that'd be the Tea Baggers' tune.

How many Republicans didn't sign that ATR blood oath? Ya, I thought so.

Re:Stop Spending!

[flyingrobots]

Bond market is not worried about the possibility of raising the debt limit. The rates are still effectively zero.

The Fundamental Problem is Net Energy

[cbarcus]

The economic situation is not going to improve until we solve the Energy Crisis. We are sitting on the solution, Liquid Flouride Thorium Reactors, a Green Nuclear technology that has the potential to radically transform our society for the better, but we need to aggressively pursue its commercialization immediately.

To summarize, this technology was already prototyped back in the 60s at Oak Ridge National Laboratories, so it definitely works. What remains involves system integration, scaling, interfacing with carbon collection systems and fuel production facilities, cost reduction, updating materials, and configuration exploration (among other things). What we will end up with will be far more affordable, safer, efficient, flexible, and scalable than what is currently available. Imagine complete energy independence, ample social services for everyone, massive carbon sequestration, and super cheap carbon-neutral synthetic fuels (check out Green Freedom).

We only require the will to become our own savior. If we continue our current course of confusion and division, we get the opportunity to watch the demise of Democracy and Freedom.

My prediction;

[Anonymous Coward]

My bet (if I were casting bones or rolling dice) is that ideology will persevere, no new taxes, no cuts to social programs, the debt ceiling will not be raised, and the US will follow Greece into economic oblivion. Then the righteous ideologues (not just the politicians, but those that put food and water into their cages), will suffer actual REAL PAIN! Social programs will have no choice (sadly) but to be cut by 10% or more. Those not wanting more (or any) taxes will suffer *REAL PAIN* when their dividends and stocks and the entire market drops by 25% or more. There is no room left for 'too big to fail'. Things will head south. The only difference between last time and this time is that last time, those who caused the crisis last time never learned a damn thing. There will be real poverty in the US, and people with money will spend a lot of money hiring people with guns to keep people with no money but enough for guns from shooting them. The pain will be real. Things are going down. People on Wall Street won't jump, they will be pushed. This one is going to hurt.

Re:This threat isn't from banks this time

[zemkai]

With respect... the Democratic party held control of Congress from Jan 2007 - Jan 2011. Obama was president from Jan 2009 - current. During the overlap period, the Democratic Congress did not pass a single budget.

The Tea Party may make a fine demagogue, but please get your facts in a row. They are hardly to blame for our current situation.

Re:Stop Spending!

[lennier]

On the bright side, they sure do know how to party.

Re:The Tea Party wants "nasty consequences"

[colinrichardday]

According to your link, the Business plot was to happen in 1933/4. But the Office of Strategic Services (the precursor to the CIA) wasn't founded until 1942. The CIA itself was not established until 1947.

Re:This threat isn't from banks this time

[Jeremi]

What is the point of having a debt limit if you just raise it every time you get up to it?

Originally, Congress had to individually approve every single expenditure, no matter how trivial. As the nation expanded and the number of expenditures grew, that quickly that become impractical. So in order to avoid spending all their time voting on e.g. $5,000 for toilet paper, they agreed to authorize yearly spending up to a given amount instead.

The point wasn't to limit spending, but rather to avoid governmental gridlock.

Borrowing without planning to repay = THEFT

[duh_lime]

If I were younger, I'd be even more pissed off! Think about YOUR share of the Federal debt: anywhere from about $46K per citizen to $130K per taxpayer. Unfunded obligations/liabilities brings that to over $1 Million per taxpayer. http://www.usdebtclock.org/ Do you understand that?

If you're reading this page, you're probably a taxpayer. If not yet, then you will be. Did you enjoy that money being spent in your name? You're liable for it! Even if you don't pay off your share, you'll be paying the interest on it! Think about it: $130K would buy a really amazingly sweet ride, like a 2011 Corvette ZR1. You don't have that ride, now do you? But, you have to pay the bill. Not so fair, is it? And, if you don't pay the bill, don't worry... your kids will get to keep paying it off. Nice parent you are!

That's where I really get ticked-off: My kids aren't old enough to vote, but that doesn't stop the politicians from borrowing money "in their name". I call that THEFT! It is just PLAIN EVIL.

I'm willing to go toe-to-toe with anyone to argue the benefits and pitfalls of taxes vs. spending. But leave my kids out of it! If we can't pay for something this year, then we don't do it! Pick on someone your own size! Don't steal my kids' money before they can vote! Don't steal their money before they're born!

As I tell the younger folks in my office: When are you gonna say, "We're just not gonna pay back the money you borrowed and spent without our permission!" ?

Re:Borrowing without planning to repay = THEFT

[Nurf]

I hear you.

Sadly, I think the politicians like to think they can pay it off somehow. There will be unicorns or something. Or, some other bag holder after they get out of office, and it won't matter because they'll have their airports named after them and a nice golden parachute. They have to lie to themselves to be able to live with the system they are a part of.

Taxes are essentially money taken at gunpoint, and money borrowed by the government is essentially money taken from your children at gunpoint. We don't get to refuse to pay. I don't even get to vote. :-) However, unlike a lot of Americans, I did choose to live here, because I know how bad it can be elsewhere.

I treat it as the cost of living. There are worse places to live than the USA (I've lived in some of them), and I can work hard and save hard, and spread my money around in many forms, and hope that I get to keep a small part of it eventually. I'd love for things to be better than that, but I can't see a way to make it happen. I know I'll land on my feet, but I am now saving for a future family, and that's going to make things much more difficult.

Re:Borrowing without planning to repay = THEFT

[SupraTT GOP]

Nurf! You have done EXCELLENT work here. Please allow me to call you friend. I hope many Slashdot readers will permit themselves to comprehend.

Tax Incidence

[mrmike37]

You don't appear to understand a concept called tax incidence. The person writing the tax collector check is not always the person who is truly paying the tax. Capital gains are taxed on capital assets. Capital assets are generally income producing assets. Income of income producing assets are taxed at ordinary income tax rates. The value of an asset is the present value of its payments. When you reduce those payments with income tax, you reduce the value of the asset. Therefore, the owners of the asset pay a tax in the form of a lower asset value. Capital gains is a double tax, just like a dividend tax. Warren Buffett is brilliant, but his statements on that particular subject are just wrong.

Re:The Tea Party wants "nasty consequences"

[colinrichardday]

As an atheist, I care. Whatever social rejection atheists now face will become much worse if it can codified into law. As for your cavalier attitude towards the death toll of the Reign of Terror, note that in eleven months 16,000 to 40,000 people were killed, out of a population that is less than one-tenth of the current population of the US. http://en.wikipedia.org/wiki/Reign_of_Terror

Re:New IMF Head?

[colinrichardday]

He was killed after trying (and failing) to assassinate Hitler.

Blatantly False

[DesScorp]

Rich people pay above 30%.

False. Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax (and why C-levels get paid in stock as opposed to salary). In the US we tax income from work, but we do not tax income from wealth.

We tax all forms of income, including investments, and then sometimes we'll slap taxes on top of those taxes. You've never heard of capital gains taxes? We often tax wealth twice. First we'll tax corporate profits, and then we tax those same profits in the hands of private shareholders. When corporations get away with not paying taxes... GE is a good example here... it's because they've made crony capitalism deals with the government, often getting huge tax credits for things like "green initiatives". This is why I want an across the board flat tax on all first time income. Not only will everyone, rich and poor, have skin in the game, it'll stop the insane practice of Congress using taxation to shape consumer behavior to their political liking.

Re:Blatantly False

[pavon]

We often tax wealth twice.

And the two rates combined are still less than the tax on normal income.

This is why I want an across the board flat tax on all first time income.

I'd agree with this. Eliminate corporate income tax and tax capital gains at the same same flat rate as income. Unfortunately, every flat tax that has every been proposed eliminates taxes on capital gains, which basically makes it a "fuck the working class" tax, not a flat tax.

Ah, young anarchists

[DesScorp]

nothing wrong or hypocritical about playing
by the rules as they exist, while
simultaneously saying the rules are stupid
and should be reformed.

You're a fucking idiot. That is the definition of hypocracy.

Playing by the rules while changing them is the only way to succeed in politics and finance and business. Taxation rules are so perverse, due to Congress using it to reward and punish behavior, that you can't operate an enterprise at all without playing by those rules. What you're demanding is that anyone critical of bad rules must take an ascetic stance and divorce themselves from reality. That's just dumb. You'll make a big statement all right... right before you go out of business.

The idea is to save the system by reforming it, not destroy it. Are agricultural subsidies corrupt and a bad idea? They certainly are. But if you turn them down, you're going to be out of the farming business the way it's currently structured. So a farmer could take your stance... refuse the subsidies that all of his competitors are getting... and go out of business. That means the farmers that like those subsidies will win, and nothing will change. Or, you can play by the rules, and convince enough people to change the system to where bad policies are phased out. That's how real change happens in the real world.

Re:Homeless

[eugene ts wong]

Those are great ideas.

"Constitutionalist Fanatics"?

[DesScorp]

The constitutionalist fanatics in the tea party or the IMF?

Help me out here. What makes a constitutionalist fanatical? The idea that we should... follow the Constitution? Wasn't that the whole point of creating it in the first place? It's not supposed to be optional. What would be so fanatical about actually governing according to what it says? That's why we have a Constitution.

Maybe we've become so used to our politicians ignoring it that your attitude is actually mainstream. We did our best to ignore the 2nd Amendment for years. We heartily ignore the 4th. We still ignore the 10th.

If you're right, and the Constitution is "optional", then what's the whole point of American government then?

Re:"Constitutionalist Fanatics"?

[Shark]

Heh, don't get me wrong... I'm a constitution fanatic myself and I don't even live in the US ;) Just referring to posts below saying the tea party people want to overthrow the US government and that they're no better than terrorists and what not. I personally think it's quite sane and healthy for your country to try and go back to its roots.

Actions and Reactions

[DesScorp]

I used to agree with this line of thinking. The problem is the rich aren't investing in US companies. The current tax breaks are creating jobs they just happen to be in China.

Thank your government for that. Example: Congress votes to penalize creation and sale of incandescent light bulbs. Result: companies close American incandescent light bulb factories, and open new factories in Asia. So perhaps "green jobs" were created. But not in the manner that those politicians thought, apparently. So laws that Americans didn't want are now resulting in the losses of American jobs and replaced with Asian jobs.

Re:Stop Spending!

[BoberFett]

Why do you hate your children?

I certainly don't hate them, but...

[DesScorp]

Why do you hate your grandparents?

Because they spent decades partying as they built up huge debts that they now expect their grandchildren to pay?

I see more and more people are starting to take this position. I revered my grandparents... three served in WWII... but their generation got the ball rolling on huge government and expensive entitlements that we and our children never asked for and are now stuck with. As another poster here at Slashdot put it, "Can we stop calling them the greatest generation now?"

Re:I certainly don't hate them, but...

[blue trane]

Think outside the box! Focus on innovation. Predictions of doom and gloom for grandchildren have been around since day one of this country, when Alexander Hamilton assumed the states' war debts. And they have never come true, because the US always kept innovation going, and standard of living increased for all generations of grandkids...

Job theft, a Texas pastime.

[sethstorm]

N/T

Re:Job theft, a Texas pastime.

[Temkin]

Job theft, a Texas pastime.

At least we pay federal taxes... Unlike when jobs are off-shored.

the budget is the least of our problems.

[turkeyfish]

"There are other issues leading to a collapse around 2020 besides OUR money mismanagement. "

You got that right! By 2020, the heat waves will be kicking in a serious way, with virtually no fresh water to be had for irrigation of crops and summer time temperatures in the mid 130's. Looking back on the 2011 debt crisis and the great recession will seem like nostalgia for the good old days.

Re:Stop Spending!

[DesScorp]

Why would raising taxes DECREASE revenue? The economy isn't in a bad state so the uphill comparison is wrong.

And sure they can cut spending. Where do you think they'll cut first?

It'll increase it at first, and then decrease it when the risk/reward curve goes south as costs become to high for investors and businesses. Some people who have made enough money will just quit, But most will get various congresscritters to approve tax shelters for supporters, and others will simply reduce their business or conduct more of it abroad. The tax shelter issue will also give us high rates but also ensure that many people legally won't have to pay them.

Re:Stop Spending!

[DesScorp]

Raising taxes will only further DECREASE revenue.

. Sometimes I wish we could send all the people like you to a separate country, so that you can screw up your own lives without affecting mine. Perhaps the feeling is mutual =).

It is. And it would make an intersting experiment, no?

There is no tax, and no government in Somalia. Go for it.

And there's lots of taxes and lots of government in North Korea.

Reality

[TheSync]

1) The 14th Amendment requires the executive branch to pay debt service
2) A Supreme Court decision during the Nixon presidency says the executive branch must appropriate money from the treasury as directed by Congress.

So here is what will happen if the debt ceiling does not get lifted. The US will continue to service Federal Debt as Constituionally required. Money left over in the treasury is appropriated as per law, until you run out of money to appropriate.

The executive has to decide in what priority to appropriate non-debt payments. I'd put Congressional salaries last in line...

Re:This threat isn't from banks this time

[CountBrass]

"then they didn't deserve the legislation"- but what about your citizens, did they deserve the legislation?

This anti-democratic attitude strikes me as being the rotten core of your partisan political system.

At some point

[turkeyfish]

At some point the inevitable will happen. The wealthy will have to pay more taxes, if for no other reason that soon, they will be the only folks with any money to tax. The problem with the economy is that wealth is already so concentrated in a few hands that there isn't enough money in circulation to support a 350,000,000 person economy. The only real question is whether the wealthy can starve that number down to say 35,000,000 before the 350,000,000 eat them first.

Blame the creditor? Really?

[DesScorp]

Not raising the debt limit is not paying the minimum balance due on your credit card
rating?

That's absolutely silly. That's like saying that if Mastercard doesn't raise your borrowing limit, then you'll have no choice but to stiff them. Nevermind that you've now proved an inability to pay them what you owe them already. Why should you be given a higher debt limit?

Not raising the debt celing simply means that we can't borrow anymore until we've got our current out-of-control spending under control. You can still pay the debt without borrowing even more money.

We have a debt ceiling problem because we can't seem to put a ceiling on our spending. Fix the later and you'll fix the first. Meantime, start cutting expenditures, and you'll free up money to pay those debts, and then you've paid your creditors and you haven't defaulted and at the same time, haven't raised the debt ceiling. Cutting spending is the answer, not borrowing even more money. Cut entitlements, cut the military budget, call something from all Federal departments.

Re:If that were easy, it would have been done alre

[Bert64]

You split the banks up...
Don't let any single entity become too big, if its too bit to fail then its simply too big.

Then ensure that any bank which fails won't be bailed out, if there is a fallback (bailout) then whatever you do isn't a risk as far as the bankers are concerned.

Re:Bullshit, since that "freedom" did the opposite

[Anonymous Coward]

Entrepreneurs, small businesses, and other business are not gods, nor human shields for the private sector.

You're right. They ARE the private sector. And the private sector is the place where wealth and jobs come from. When government takes wealth away from the private sector or places burdens upon the private sector, there will be less money for everyone and fewer jobs.

The more freedom you hand to business, the more slavery you get.

How'd that work out for Soviet Russia, anyway?

At some point employers will hire out of fear, and the US will prosper.

No, they'll simply move to someplace where they can't be reached or go out of business altogether. Equal misery for all, right?

"Democrats have been perfectly reasonable"

[DesScorp]

Obama offered a plan for $4 trillion in deficit cuts, with 75% coming from spending cuts (including cuts to entitlement programs).

One, Obama denies putting any entitlements on the table right now, and two, every single time Congress enacts a "mix of spending cuts and tax raises", we always get the tax raises, but the spending cuts don't happen. I've seen this all the way back to the 80's. They'd be nuts to take that deal. Suckers and Chumps to take that deal.

Spending is the problem. If taxes are raised, politicians will just spend it. This has been proven by history, time after time. If you think this is "perfectly reasonable, then you are part of the problem.

Ah, the "surplus"

[DesScorp]

Clinton had 4 years where budget was in surplus and the US was paying down the debt.

This is simply untrue. The debt increased every year.

Saying anything else is Enron accounting and calls deeply into question any source which does so.

Not to mention that the "surplus" was based on paper dot com profits, an economy based on smoke and mirrors. When the dot com became the dot bomb and the economy went boom, so did the "surplus". It returned to the ether from which it came. The whole "surplus for years to come" was based on the worst kinds of wishful thinking.

Is this really the answer?

[jevring]

I like how "increasing our debt" is a perfectly viable solution to "fixing our debt". Isn't this just going to compound the problem? If you can't pay back 100 dollars, what makes you think that you can pay back 150? Are those extra 50 that you are borrowing magically going to turn your economy around so that you can pack back the first 100? If so, why didn't you take better care of the first 100?

Shark

[splashbot]

Loan shark threatens debtor, news at 11, after the movie.

Greece isn't socialist

[SmallFurryCreature]

In a socialist country, people pay taxes. Greece is famous for its dismal tax collection. What Greece really is is SPEND SPEND SPEND. Its politicians cared only about making EVERYONE happy. Plenty of benefits, low taxation just to buy voter favour. It is what happens when your economy essentially is fueled by the outside world. Greeks have never contributed anything to the EU, they have only be taking. Same with all the other EU economies that are falling down. The EU want to grow and to keep its new members happy it kept giving them more and more money without demanding anything in return.

Democracy is the problem, it is next to impossible to get elected with sensible policies if your opponent can promise the moon and never be called out on it by the press/people.

Re:What happens if the govt just allocates money

[blue trane]

What causes inflation? Inflation is psychological. If I'm selling widgets and suddenly there's more money in circulation, why do I have to raise my prices? It's a choice, one that doesn't have to be made. It's not a law!

Re:Stop Spending!

[blue trane]

Make taxes voluntary and print the budget. As long as we innovate, the currency will remain strong, as Japan's is despite a 200% debt-to-gdp ratio.

You should read up on the IMF

[Colin Smith]

Also on The World Bank, and the Exchange Stabilization Fund.

Which means reading up on a guy called Harry Dexter White. None of these organizations are lily white. They exist to project power and achieve geopolitical aims, which makes the recent Dominique Strauss-Kahn controversy highly suspect.

Anyway, the US government already hit the debt ceiling a month or two back, what they have been doing in the meantime is raiding federal employees pension schemes, to the tune of several hundred billion dollars. Once that is all gone (real soon now), they'll start closing down government departments and selling stuff to pay the bondholders. There will be no default even if the ceiling is not raised.

In the meantime, if you hold government bonds which you know are going to decrease in value, what do you do? You sell them and put the money elsewhere. Where? Stock market. The recent rally in the stock market is the smart money getting out of US government bonds ahead of the next set of auctions, at least till the debt ceiling is sorted. It certainly isn't because the economy is running on all cylinders, heading for another recession is more likely.

(Oh, also read up on Fractional Reserve Banking, the source of all these problems in the America and Europe: http://video.google.com/videoplay?docid=-2550156453790090544)

Re:You should read up on the IMF

[rtb61]

The big punishment will be the immediate replacement of the US dollar as a global trading currency. Likely to be replaced with the Euro, once done, it will never be undone and the Republican's will pay a massive price for basically crippling the value of many of the US rich and greedies, capital assets.

So massive trading or more specifically dumping of the US dollar and US debt, for a short period, creating global economic instability, for a few months, followed by extended economic instability for the US for a decade or more, something the US will never recover from.

From a global perspective, whilst there is initial loses (that loss defined by their current holding of US dollars and debt), many regions will significantly prosper at the US's expense, paying off loans on a collapsed US dollar and, gaining significant competitive advantage over the US economy for a significant period.

The question is how great was the foreign interest in getting the US to default and permanently weaken the US economy, how much was spent on lobbyists and campaign contributions to get the US government to put the economic gun to it's own head and pull the trigger.

So will the GOP immediately kill the US dollar as a global trading currency or not (after this little political game they have certainly shortened it's life by a lot).

Re:You should read up on the IMF

[Colin Smith]

The big punishment will be the immediate replacement of the US dollar as a global trading currency. Likely to be replaced with the Euro

Nope. The Euro is toast. And I live in Germany. They screwed up the central bank's ability to print money, which means the European countries are likely to default and cause the European financial system to implode. At least the USA can inflate and take a currency devaluation hit instead.

Maybe SDRs, but basically not really. Chinese Yuan as the third trading block... Unlikely, their economy is as screwed as the US, but in the other direction. I'm betting on gold, it has the history, no counter party risk.

Re:You should read up on the IMF

[rtb61]

A global trading currency is more the least worst currency of the ones available ie. what is better than the euro and still acceptable to large number of countries.

Gold is a failure ie it ends up stockpiled and can never be used, whilst it has many uses. Any rare metal will still be subject to high fluctuations due to market manipulations.

In today'c currency trading terms, the euro would only really be a token global trading currency, with computers direct exchange in currencies between trading partners can more readily be calculated on cross markets, just using the euro as a cross market indicator.

So it would not be the same as the to be rejected US dollar global trading currency, more of a light version.

Cargo Cult economics

[Colin Smith]

This is more than a theoretical issue: people often focus on trying to improve the stock market number, instead of trying to improve the economy as a whole. Trying to raise the stock market by printing more money, by borrowing more money, is counter-productive and causes problems.

You should send a letter to Dr. Bernanke with this information. His Cargo Cult economics appear not to have helped much.

Re:Cargo Cult economics

[phantomfive]

At least we don't have to worry about deflation.

Re:Cargo Cult economics

[Colin Smith]

At least we don't have to worry about deflation.

52 Trillion US dollars of debt out there.

Yup you do. 1.6 trillion in stimulus doesn't cover it.

They're basically going to be printing for a decade to stop the deflation. Some BIG numbers coming.
 

Re:Cargo Cult economics

[phantomfive]

Bernanke has stated he is willing to do whatever it takes to avoid deflation. He has also demonstrated his willingness by his actions. Deflation is not something that will happen on his watch.

Republicans and Democrats are the same party

[Colin Smith]

Same beast behind both parties. Go look at their contributers.

The divisions between the two are simply a divide and conquer strategy. Keep the rubes divided and diverted from the real problems and issues.

Bush vs Obama? Fools arguments, all the presidents since JFK have been puppets.
 

Re:File under

[TapeCutter]

So Obama will just have to flip-flop after he flip-flops on the flip-flop!

Every economist in the fucking universe (with the possible exception of Greenspan) will tell you that governments should spend during a recession and pay down the debt when not in recession. My enormously unpopular opinion is that the bailouts, enacted by governments of all politcal colours around the world averted a 1930's style depression.

Oblig. car analogy: Bitching about the bailouts is like bitching about the $500 insurance excess on a $30K claim. .

It IS the banks

[Colin Smith]

Banks follow the Basel rules, it means that they have to have a certain percentage of "Tier 1 capital". That basically means AAA rated sovereign debt. If the bonds they hold are re-rated and no longer qualify as Tier 1 capital it means that the banks will have to pull in hundreds of billions of loans as the proportion they are allowed to lend is reduced.

This is why Greece is a problem for the EU. Particularly French and German banks. The bailouts for Greece are not for the Greek government or people, they are for the French and German banks who are exposed to Greek (no longer sovereign; Greece is no longer a country) debt and would have to pull in loans.

Greece's interest rate is like 28%,

No, their bond yield is 28%, the interest the bond pays is almost certainly much much lower. As the value of a bond decreases, (e.g. â100 bond is now worth â25) the yield it provides as a percentage, increases. It means that Greek bonds are seen as risky, but they'll still be paying 6% interest, or whatever. You simply got them on sale at 75% off. The ECB will end up owning most Greek debt (no matter what the politicos think just now) and it won't be at 28% interest.

Yes it can be doom and gloom, but it's inconceivable that the debt limit doesn't get raised. If by some chance the politicians screw the pooch and don't get it lifted, every last one of them better not be re-elected.

There will be no default. The debts will be paid one way or another the only question is what gets cut from the budget if the limits are not raised. It's just enforced vs voluntary cuts.

Wouldn't worry about it too much. Of much more concern is the yield on new treasury issuance, because that absolutely will cause recession.

Right and wrong

[migloo]

Lagarde is right and wrong:
Raising the debt limit now may prevent immediate nasty consequences.
But it will cause much nastier consequences in the (not so) long term.

Runaway debt leads to collapse or war or both.
Unfortunately, any responsible politician suggesting debt restraint would incur electoral defeat.

The bond markets are huge

[Colin Smith]

There's no such thing as a "bank-run on bonds" because bonds aren't liquid until their maturity date.

Yes there is and they are. The bond market is huge, it's much bigger than the stock market. Obviously the liquidity of particular bonds differ, but US treasury bonds are typically highly liquid. We're talking nearly a trillion $ traded per day in the US alone.

I can buy for example Greek bonds at far below the face value. How is that not a "bank run on bonds"? It's people dumping them because the perceived risk of default has changed for the worse. The market value is far below par. Same is happening to Italian bonds just now.

Also, banks can't just "call in their loans" ahead of schedule

Yup. I think you will find they mostly can. Usually some reason is required, but I suggest you look at the small print.

and in the stock markets that can delete existing wealth

You can't delete wealth.

The notion of net worth is complete bollocks: If the amount of money in existence is cut in half, so is the net worth.

=> The stock markets are not real wealth, it doesn't exist. If/when people start exiting the markets, e.g. The boomers retiring enmasse, the notional value drops, because it was never there. Numbers in a computer are not wealth, they are only a claim on wealth.

Well, those claims are simply not going to be honored because the wealth is not there.

But let's be correct about how the economics actually work, and what actually works. That makes it easier to see what doesn't.

Like The Bernank's Cargo Cult economics?

Re:The bond markets are huge

[tbannist]

I can buy for example Greek bonds at far below the face value. How is that not a "bank run on bonds"? It's people dumping them because the perceived risk of default has changed for the worse. The market value is far below par. Same is happening to Italian bonds just now.

He's technically correct, that's a "crash" not a "bank run". A "bank run" causes a bank to run out of money so they can't pay back their debts which can cause the bank to fail. A "bank run" on the United States would involve creditors demanding their money immediately, something you probably can't do with most U.S. bonds. A crash involves the perceived value of the item decreasing significantly.

I know it's a small point that might not matter much to your argument, but using the right terms can help make the argument clearer.

Re:The bond markets are huge

[Colin Smith]

I know it's a small point that might not matter much to your argument, but using the right terms can help make the argument clearer.

Jesus Christ... If you want to be pedantic you can't have a bank-run against anything but a bank.
 

Re:The bond markets are huge

[jahudabudy]

Also, banks can't just "call in their loans" ahead of schedule
Yup. I think you will find they mostly can. Usually some reason is required, but I suggest you look at the small print.

I think you're confusing what he is saying. Yes, a bank can (sometimes) call in a loan YOU owe IT ahead of time. A bank CAN NOT cash in a US bond before its maturity date. The only thing a declining bond market does is impact the US government's ability to raise future funds via selling bonds in the future. It does not impact at all the current debt due to outstanding bonds.

Re:The bond markets are huge

[Doc Ruby]

A "bank run" isn't when some other bank buys a bank or its assets for less than the bought bank paid for them before. It's when a bank's depositors withdraw their money. A "bank run on bonds" would be, if anything, if the borrowers rushed to pay off their debts early. There is no such thing as that, and it is certainly not happening now. And if the lender is bought by another party, it makes no difference whatsoever to the borrower - unless the new party offers terms the borrower prefers to the old ones, at the borrower's discretion.

Just because banks have vastly oversaturated the debt markets with nonperforming debt doesn't make a "bank run on bonds". It's a "bond market crash", and it's been fully underway for over 3 years. Indeed, the crash has largely recovered, though another one is gathering potential as banks restart a bubble cycle with their bailout money.

I have owned several large debts in the form of mortgages, including a current one. I have owned corporate bonds, secured personal debts, securitized debt instruments, and many other forms of debt. I have of course read every word of the "fine print", and spent quite adequate time and money on lawyers when closing each debt deal. I also have the usual credit card debts, whose fine print I'm also familiar with. None of those loans can be "called in at any time". Likewise public debts, like the Treasury bonds sold to China and other foreigners, cannot be just "called in" like some hysterical people like to say.

Bonds are contracts to pay. Only a fool signs contracts that the other party can control at their whim later, changing the value balance unilaterally. Though plenty of fools did sign debt contracts that could change the value balance over time, like adjustable rate mortgages, those terms aren't reset by the lender, but by some outside fact the lender doesn't (at all directly, anyway) control: the Fed's prime rate, etc. Even the dumbest loan contracts didn't include a clause allowing the lender to call them in whenever they wanted ahead of maturity. Though there quite possibly were some like that, in the huge, unregulated, and eventually totally insane debt markets, they are the minority, and nearly no private individual is obligated under any like that.

The forest fires of Arizona just deleted wealth. Credit crashes that bottleneck cash flow forcing foreiture of accumulated assets delete wealth.

If the money in existence is cut in half, equally across everyone with money (as in currency crashes), the net worth is not cut in half. It stays exactly the same. Money is finance, not wealth.

The stock markets are finance, not wealth. But plenty of property is bought with either loans against stocks, which is increased wealth even though it comes with (greater) increased cost. Or bought with cash proceeds from selling stocks for more than they were bought. All of that increased property ownership is wealth. BTW, the stock market has grown in value even as Baby Boomers have retired. Wealth has grown even more steadily than the stock market, or the money in circulation, each of which are financial descriptions of the wealth that have (largely) inflated and (somewhat) deflated over the bubble/crash cycles of the past decade and a half since Boomers started retiring en masse.

Bernanke's economics is as voodoo as was Greenspan's. But all finance is voodoo: it depends on the instilled faith that accepting a note in exchange for labor or property will be reciprocated later when exchanging the note for others' labor or property. Like voodoo, it usually works. Even when it's dressed up in the most ridiculous props, often fails catastrophically when most needed and relied upon, and promoted by the most obvious charlatans. The placebo effect is real, even if its mechanics are in our minds. But just as the placebo's chemistry is real while its believed mechanism is not, so too are the mechanical economics I described real even as the political economics practiced by Bernanke not. The economics you described aren't real, th

Re:The bond markets are huge

[Doc Ruby]

Mortgages are bonds owed to a bank.

You're not being anti-pedantic. You're being counterfactual. Even when someone points out the central point of your error, politely and gently. I can see now that our argument isn't going to teach you anything, and probably teach me little, too, while trying to educate you. I'll humor the argument as long as it's not insulting, and I don't get bored.

Re:The bond markets are huge

[Doc Ruby]

Please give me an example of a loan a bank can call in ahead of time. And some idea of how common that kind of loan is in circulation.

Re:The bond markets are huge

[jahudabudy]

Oh, I have none. If it is something that exists, it is likely very rare. The previous poster was just getting very confused, and rather than get bogged down arguing a tangential point (b/c I'm not CERTAIN that there is no such thing; financial markets are insane), I simply accepted it for the sake of pointing out why it is irrelevant to the discussion.

Re:The bond markets are huge

[Doc Ruby]

Evidently all your economics takes to disappear is confrontation with someone who knows what they're talking about.

REAL solutions to our economy. Jefferson said it.

[crhylove]

The Median income in 1964 was $6,600. That seems low compared to the median income of 2004: $54,061.

However: The median car price was $3,500. Less than a years salary. In 2004, the AVERAGE car price was over $30,000. So in 1964 a car cost Just 53% a years salary. In 2004 it's 55% a years salary.

Not a big difference you might say, but now days cars are made out of plastic, have planned obsolescence and do not last nearly as long. There are STILL 1964 Dodge Darts on the road, that have had a minimum of maintenance. There is NO FUCKING WAY a 2004 Ford Fiesta is going to make it to 2044. NO WAY. So the value in 1964 is much, much higher, and that's not even the worst of it.

1964 House: $18,900. Well less than THREE TIMES a years salary. 2004 House: $221,000. Well over FOUR TIMES a years salary.

Take a look at bread, gas, and real commodities like Gold/Silver, and the picture is even scarier.

The American dream slipped away a long time ago. It started with the creation of the FED in 1912, and moving from the gold standard. It continued when JFK was shot in the face, since he wanted to RETURN to the gold standard. Then Reagan and all the corrupt corporate bankers that have been running the show since: INCLUDING all the Goldman Sachs guys in Obama's administration..... Well, we the people got completely screwed out of every dime. And we let it happen. We let it happen because we let corporations take over the news and television airwaves, and got drugged out on corporate pharmaceuticals, and the obvious tranquillisers like fluorine in the water. We need a violent revolution where these bankers are all killed. And then we need to get back on the gold standard and eliminate the FED. There's really no other way to avoid our current situation.

Thomas Jefferson said it best: "I believe that banking institutions are more dangerous to our liberties than standing armies. 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 [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

You can disagree with me, if you'd like. But try to disagree with Thomas Jefferson. He was much, much smarter than you or I, and had done oodles more research, besides.

Re:This threat isn't from banks this time

[Loki_1929]

The US government cannot print money. That ability has been granted exclusively to the Federal Reserve by the Federal Reserve Act of 1913. The United States Treasury may request money be printed, but the ultimate authority to do so (or to refuse) lies with the Federal Reserve. This was done intentionally under the assumption that it would remove monetary policy from the hands of politicians and protect the value of the currency of the United States from political meddling (exactly the kind you mention).

Now, whether the Federal Reserve has done that job or not is certainly debatable. Either way, the US government cannot print a single US Dollar on its own without a complete reversal of the Federal Reserve Act.

Resolutions

[pokyo]

What is the point of having a debt limit if you continuously raise it? I'm glad to see that the United States approaches their problems like I do with my New Year resolutions. I'll start going to the gym tomorrow.

Re:Homeless

[Skal Tura]

Just hope that you got big enough car to fit a bicycle in it (or attach to it safely), because you won't afford gas to go to work, and you still need to goto gym and car :)

Well, i know gas is way cheaper in US (~1/4th of price here) but still.

Re:Several Inconvenient Truths About The Debt Ceil

[djmurdoch]

Say half of the top 20% leave; the US government is now down 40% yearly income due to those 10% relocating.

I'm not sure how many "income earners" there are in the US; let's guess 150 million (but that's probably low). So you are suggesting that 15 million rich people will leave the US if taxes go up. That's just not believable. Currently, there are only about 6 million US expats in total.

And where would they go? There are tax havens, but those are for people who already have their wealth and don't need to earn any more. Most of the top 20% of "income earners" are still working to earn that high income, they aren't living off their investments.

Re:oh no -- #14

[scharkalvin]

It has been suggested that the 14th amendment of the constitution might give the president the power to raise the dept ceiling by a decree if necessary to satisfy the terms of that amendment. So far the president has declined to comment on this other than stating his belief that congress will do what they are required to do. The end result of a failure by congress to act might be that all members of congress, the courts, and the president (and his staff) would not be paid, while all other business goes on as usual. I think that would be proper.

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

What I see going on is something like this analogy:

You make a really good income but find that your family has been spending more than you make for quite a while and have now run up credit card and mortgage debt to the point (you are up against your debt ceiling) that after paying interest you can't pay all the monthly bills. You don't get another credit card/loan to continue on. Rather you sit your family down and level with them that this can't go on. In this analogy their response is to tell you that the problem is that you aren't bringing in enough money (I'll let you decide which political party represents you and which is your irresponsible family)! Their proposal is that if you will agree to bring in additional money, they will cut back on their expenses a little, but under no circumstances are they going to cut back enough to balance the budget (even over a 10 year period). They have become accustomed to their spending habits and are unwilling to reduce them and it is your responsibility to make more money even if you have to embezzle it from the company you work for (they make a lot of money and can afford it).

See how ridiculous this is? That is not how things work in the real world. In the real world you IMMEDIATELY cut your expenses back to the point where you are no longer going into the hole and then you determine how you might increase your income and whether that increase (taking a second job, etc) is worth it for the extra income. There is cost associated with gaining the extra income and you must weight the pros/cons of going after more money and it should be debated/decided.

Re:Bullshit, since that "freedom" did the opposite

[sethstorm]

You're right. They ARE the private sector. And the private sector is the place where wealth and jobs come from. When government takes wealth away from the private sector or places burdens upon the private sector, there will be less money for everyone and fewer jobs.

So are the people that work for them. Why does business get to place burdens on those who work for them, but it is not OK to do the same to business? Being friendly to workers/jobseekers by not giving them unreasonable burdens is business-friendly - for treating any of them with more respect through reasonable requirements and more secure arrangements results in better work.

No, they'll simply move to someplace where they can't be reached or go out of business altogether. Equal misery for all, right?

What makes the world more connected (and easier to do send work anywhere) is what makes it impossible to be out of reach. Remote islands can be found with satellite imagery, corrupt countries can swing in any direction(SE Asia), DNA can out people under false identities, records are being shared amongst various countries, and that living in isolation exacts a high cost.

Re:oh no -- stock market

[scharkalvin]

The stock market rises and falls on speculation. The price of a stock should depend on the companies actual worth, which can be measured (how accurate such a measurement is depends on if the books have been cooked or not). What actually does happen is that the stock price depends on what investors THINK will happen to the value of the company, which can be based on rumor, inside or public information, and overall trends in the market as a whole. Speculation is sort of a stampede effect however, not always driven by reason but by herd instinct.

Senator Obama voted against debt ceiling increase

[Chemisor]

in 2006. Here's then Senator Obama's argument against raising the debt ceiling:

This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America's priorities.

I agree completely.

Telling the US

[EzInKy]

Telling the US that it must do something is the best way to get it to do nothing.

Zombie Apoclypse!

[DarthVain]

Where the Rich are dragging around a heavy suitcase full of pretty paper, and the rest of us are zombies.

Wealth is only wealth if you have some means of which to protect it, like rule of law and an ideal that what you have is worth anything. Even little dictators need a way to pay off their goons, and if your money is worthless, well don't bet on a lot of help.

I'll make my investments in food and ammo, and wait for the coming storm, hope you have an umbrella!

More of the same

[Quiet_Desperation]

Oh boy, a politicial thread! Let's see what's up!

"Bark bark bark Rethuglicans ams teh evuls! Grrr! Howl! Spit!"

"Bark bark bark Dumbocrats ams teh evuls! Grrr! Howl! Spit!"

News for nerds! Stuff the politicians laugh their asses off about. And remember, they're laughing at you, not with you.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

First, you'll notice above that my comment wasn't saying ONLY raise taxes. It was saying that any serious proposal to eliminate the deficit and the debt will include tax increases AS WELL AS budget cuts. So my main point remains - if the debt is such a worry, then there should be tax cuts ALSO. And if the debt is really such an all-fired crisis suddenly, now that a Democrat is President, then why should tax increases be OFF the table? You're welcome to base some sort of reply on "trickle-down economics" or a variant, but be warned in advance that trickle-down AKA supply-side AKA Reaganomics AKA Voodoo Economics is thoroughly disproved and no longer taken seriously by any nonpartisan economists.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

It is funny that when right-wingers say "make them live within their means", it almost never seems to apply to corporations or the military.

It's almost like this rule is only applied towards spending that right-wingers don't like. Which almost always is spending on women's health, public education, programs for the young or the elderly, or anything that doesn't benefit a Christian church, a corporation or a personal friend.

Coincidence - or SATAN??

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

What I see is more like this analogy:

Ever since you were born, you and all your brothers and sisters have been working on Daddy's farm. A certain percentage of what everyone earns has been put aside for the family's needs - medicine, schooling, and protection i.e. guns and guard dogs.

A couple of years ago, on the theory that it would make everyone make more money, the family started putting less money aside from what everyone made. This had no discernible effect on the family fortunes, besides less money actually being saved.

Your older sister and brother went to college. Now it's time for you. But when it's time to pay your tuition, dad says "Nope, sorry kiddo. It's time for austerity now. Daddy lost a lot of money on the stock market, and barely has enough money to buy guns and keep giving money to your rich uncles and aunts, so they can hopefully pay the rest of you some more money if they feel like it."

And when you say, "But Dad we already tried that, and they didn't give us any more money at all. They just kept it." he says, "Nyahhha nyahhh!! I can't hear you!"

And when you say, "We'll have more money if we just start saving more again from what everyone's making. Why not put the amount we're saving back to where it was 9 years ago?" Daddy tells you to shut up and get in the fields.

Re:oh no -- stock market

[phantomfive]

I'm not sure what your point is, or how it is related.

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

I guess fundamentally we must decide two things: 1) When has the government (federal, state, and local) reached the limit of how much total money it should take from individuals in the form of taxes. The top 10% of taxpayers are already paying 70% of the taxes. Should they be paying 80%, 90%, 100%? Class warfare that is being used to say the "rich should be pay more" is great for a 6:00 news soundbite, but is neither a fair or a workable solution. The path we are on now is such that if we took 100% of the income of the top 10% of the wage earners in the US we won't balance the budget! 2) While I agree that "trickle down" hasn't worked, I don't think increasing taxes on the highest 10% (or 1%) will fix that problem whatsoever. We don't have an income problem, we have an outgo problem (i.e. spending more than we make). Continuing to hold spending cuts hostage to increased taxes just shifts the focus off the problem and makes for good politics (for democrats).

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

I don't agree with your analogy. The government didn't give any money to rich uncles and aunts. Not taking money in taxes isn't giving them anything. Unless you subscribe to the theory that all the income belongs to the government and anything that they let us keep is what they "gave" us. That's pretty close to communism. If you believe that the "rich" aren't paying their taxes, then why does the top 10% of wage earners in the US pay 70% of the taxes. Should they pay 80%, 90%, 100%? You pick a number that you think is fair. But the problem is no matter what number you pick YOU WON"T BALANCE THE CURRENT BUDGET. There isn't enough money to tax our way out of this situation. So now focus on the REAL problem: expenses (i.e. entitlements) and get out of class warfare politics. Perhaps there are tax deductions (loopholes) that need to be reviewed, but they are tiny and basically inconsequential when it comes to the sizes of deficits we are talking about. Funny think about deductions (loopholes) they were put in the tax law for some reason and unless that reason is no longer viable, eliminating them will have a negative affect on someone that benefits from them.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

I don't agree with your analogy. The government didn't give any money to rich uncles and aunts.

Then how are companies like Exxon and GE not only NOT paying taxes, but **getting refunds**?

The fact that the most profitable companies in history are actually being PAID money by poor and middle class taxpayers, shows that's exactly what's happening.

Second, also note the financial bailouts - which gave banks money without restrictions in order to save the economy. Which the companies then spent on giving BILLIONS in bonuses to the same people who cratered the economy. Now note that this is a **net win** for them - the government has given them FAR MORE money than it taxed. Which also exactly matches my analogy.

You'll note that my analogy didn't say "ALL your uncles and aunts."

Therefore, even though you don't like my analogy, I think you can see that it still stands. Also note that these loopholes are the ones that the GOP is interested in preserving.

Interesting, isn't it? It's all "austerity" when the elderly need some pennies to keep their houses warm in winter. But when a company like Exxon or GE, or a wealthy non-producer like a hedge fund manager needs buckets of gold to stay comfortable? Somehow we can afford that.

Why is that? I'd love to hear why that's good for America.

Finally, I'd like to note once again that you're misconstruing what I'm saying as concentrating ONLY on raising taxes. I'm NOT doing this. What I want to hear is, if the debt is such a huge problem then why is raising taxes ENTIRELY off the table?

Why not a balanced approach of raising taxes and cutting the budget? What is wrong with that, besides supply-side economics which once again have been proven not to work?

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

I think any such approach should be centered around this fundamental point: what is the tax rate that works best for America?

It seems that the tax rate that helped America to its worldwide success was in the past much higher on the wealthy. So it appears from past historical experience, and the present of our competitors who all have higher tax rates on the wealthy, that that is the direction we should go in.

I don't see how it's bad for the wealthy to pay 70% of the taxes, if they're earning around that much in terms of wealth. Which they are.

But what I think is more important than how much they are taxed, is how that money is spent. What is the best way to invest money in America?

Because money once gathered can be blown irresponsibly or spent wisely and yield a return. For example, you could spend a lot of money on programs which generate no effective return, such as war, or spend it on programs which continue to return for the entire country. Such as interstate roads, rural electrification, social security, and public education.

Once a reasonable non-partisan estimation of what the most effective kind of programs are, and what the long-term gains we want to achieve are, taxes should be estimated around that.

I also think a flat tax rate is kind of silly. The poor and the middle class simply do not have the level of disposable income that the upper classes do. So to simply have the same tax rate for everyone is unfair to the majority of the US population.

Re:Stop Spending!

[microbox]

Leaving aside blind dislike for a moment... see if you can find any country in this list that you would like to live in, that has a smaller tax revenue than the USA:

List of countries by tax revenue as percentage of GDP

There is something /intelligent/ to cognize there. What do you think?

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

They are getting refunds because our elected officials decided to promote some economic activity (i.e. increased oil well drilling, etc.) by giving a deduction. Now we can argue if that was a good idea (many of them are not), but don't pretend that removing the deduction will only result in more taxes and have no other affect. This is a dynamics problem not a statics problem. Every decision that is made has a ripple effect and often unintended consequences. Every dollar taken in taxes isn't available for investment. Those Exxon and GE stockholders are making profits and unless they are putting them underneath their mattresses, those profits go somewhere (that they won't go if they are taken in the form of taxes). Frankly I've NEVER believed that taxing corporations would work. They either just raise their prices to cover the taxes and in effect, the customer pays the tax anyway or they lobby for loopholes that get them out of the taxes altogether. I'm a big fan of the flat tax put forth by Senator Shelby many years ago (http://heraldnewsmedia.com/content/?p=2012), but that didn't go anywhere because 50% of the people on the low end aren't paying any taxes now (and they don't feel the responsibility to contribute at all) and there is another group on the high end that aren't really paying a fair amount in taxes (this we agree on, but even if they did we won't fix the problem). BTW-Corporate income taxes only represent 12% of the total collected (2010 http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm) so if you could double them (which you can't) it won't even come close to the shortfall.

Re:Big enough

[TaoPhoenix]

Sure, good point ...

I have a minivan, and I'm racing the national default to pay it off.

Really, I'm starting to get really nervous about the Mayan date for the end of the world... the national collapse of the US might just do it...

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

Let's be truthful. The fair thing is for everyone to pay the same amount. How would you like it if when you went to a restaurant or movie theater they asked your income and set the price based on that number? That wouldn't be fair and you know it. Now unfortunately the fair thing isn't workable, so we have to do something that is minimally unfair; like take more taxes from people that are more productive. Do you really believe it is fair to take 70% of someone's income? I'll bet if you started a company and it was very successful, you would not be remotely interested in contributing 70% in taxes. You make $10 million and pay $7 million in taxes. In theory you might say: I could live on $3 million, but I would bet my house that you would do everything in your power (deductions) to minimize those taxes. You worked really hard for a a really long time to be a success. The flat tax is not that everyone pays the same amount, rather it is the same percentage (with a REALLY low floor). I sincerely believe that it is ridiculous that anyone would pay NO taxes (whether on the low or high end). Everyone should contribute some amount no matter how low or high their income is. Everyone in the US benefits from being here and should be expected to contribute towards paying the government's bills. The very idea that I can live in the US and rationalize that I shouldn't contribute is IMHO un-American. I do make special exemptions for the mentally/physically challenged people. We are a big enough country to take care of these individuals. Everyone else needs to get off their asses and get to work. If you goofed off in school and didn't take advantage of your time there, you are reaping what you sowed. If you are too lazy to put in the 16 hour days for 10-15 years it takes to really get ahead, quit whining. I think you are on the right track when you say "For example, you could spend a lot of money on programs which generate no effective return, such as war, or spend it on programs which continue to return for the entire country. Such as interstate roads, rural electrification, social security, and public education." I think the rub is that there are programs that have never worked, but we the response from many is that "We just need to spend more". We don't seem to be ever able to get rid of programs that don't work or subsidies that are no longer needed. They just keep piling on. We can't even agree on how to measure success. Example: the money spent on education has gone from $14B in 1980 to $43B last year and students keep falling further behind. Clearly the increased spending didn't produce expected results, but Obama's solution is to recommend that the 2011 budget be raised to $68B! A liberal never met a spending program that they didn't like or one that was over funded.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

Let's be truthful, and live in reality. The fair thing for everyone is that people pay something in line with what they can **AFFORD**.

Otherwise you're asking someone who is using and benefiting from 5% of the country, to pay as much in cash as someone who is using and benefiting from %70 of the country.

If you are only using a car to go work, you are benefiting from less of the roads than the President of a company whose employees use that road to drive to work, ship products on, etc. Ditto for the police, fire department, and military. Even Social Security, which means that the employer has a workforce which is secure and isn't demanding a similar set of benefits from the company.

We're either a nation or we aren't. If we are, we all work together. Which means that some people who benefit more as a percentage, pay back a higher percentage.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

They are getting refunds because our elected officials decided to promote some economic activity (i.e. increased oil well drilling, etc.) by giving a deduction.

OK! So this is exactly in line with my analogy of paying money to aunts and uncles, in the hopes that they'll give money to others - which they haven't. Here, I'll quote that part of the analogy again for you:

dad says "Nope, sorry kiddo. It's time for austerity now. Daddy lost a lot of money on the stock market, and barely has enough money to buy guns and keep giving money to your rich uncles and aunts, so they can hopefully pay the rest of you some more money if they feel like it." And when you say, "But Dad we already tried that, and they didn't give us any more money at all. They just kept it." he says, "Nyahhha nyahhh!! I can't hear you!"

So, can you admit that my anology is actually apt? As that money given to them would easily pay for a great many of the programs which we allegedly can't afford?

BTW-Corporate income taxes only represent 12% of the total collected

And? Is that any reason to not include closing those loopholes, as part of the deficit reduction?

Basically, is there ANY REASON to not include closing those loopholes, as part of the deficit reduction? Since reducing the debt and deficit is so all-fired important, right?

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

>>Basically, is there ANY REASON to not include closing those loopholes, as part of the deficit reduction? Since reducing the debt and deficit is so all-fired important, right?

It is not that reducing the debt is "so all-fired important" it is the deficit that has gotten out of control. We can manage the debt. Our debt ($14 trillion) is about 7 times revues ($2 trillion). That's like someone that makes $100K having $700K in debt. Pretty close to the limit, but not completely outside what might be serviceable. It is the $1.5 trillion deficit that can't be maintained. That's like adding $75K per year to their debt in the example above. It cannot supported.

>>So, can you admit that my anology is actually apt? As that money given to them would easily pay for a great many of the programs which we allegedly can't afford? What money given to them? The government didn't give them any money. Letting someone keep the money they earn isn't giving them anything. Also, one man's loophole is another man's deduction. Do use any loopholes (take deductions) on your income taxes? Which ones are you willing to give up? I'm guessing none of them. What kind of effect do you think the elimination of the mortgage interest deduction would have on the economy and jobs? How about the deduction for children (actually it may be time to get rid of this one because we don't really need to motivate people to have more children do we)? The elimination of a deduction (loophole) will have an effect on the economy, some smaller than others but no deduction elimination will have no effect. Increasing taxes might temporarily increase revenues, but eventually there will be an offsetting negative effect as well. Fundamental question: Do you believe that there is a maximum total percentage (below 100%) of the total incomes of businesses and individuals should the government take in the form of taxes? When we reach that number what should happen?

Re:This threat isn't from banks this time

[PopeRatzo]

Citaction for your poll data re "majority of Americans would prefer a European=style socialist setup", otherwise I'm calling bullshit.

If I responded to Anonymous Cowards, I would include a link to the Pew Research Poll from June showing that between 77 and 86 percent of US adults do not believe Social Security and Medicare should be cut. I would call those programs "European-style Socialism" but maybe we should call the European systems "American-style Socialism".

As long as you don't use the world "Socialism", in every single poll, Americans by a large majority prefer things like single-payer health care, government pensions (social security), etc.

In fact, in the Pew Poll I mentioned above (you can google it, AC) even a solid majority of Republicans and Tea Party members favor leaving Social Security and Medicare alone or making them even stronger.

Yes, Americans want what the Europeans have, but they don't want "Socialism". The corporate media have demonized the word, but the preference for socialized programs have not faltered.

I didn't forget that one - reread my comment.

[billstewart]

One of my list items was "- They could declare that the most recent Budget supersedes the older Debt Limit law." That's how you constitutionally ignore most of the debt limit law. On many other topics, I've wished that the President would use his Constitutional Scholarship powers to find what he has to do and do it, instead of using them to find loopholes or opportunities for delaying his responsibilities by wording his refusal to obey the Constitution in clever ways, but it's not like his predecessor was any better.

I did forget to put "Oh, Noes!!!" after the closing the Washington Monument bit, though :-)

(Had to read that one three times)

[billstewart]

Sorry - "QE2 was the size of..." leads to "When did we start talking about ocean liners here?" "No, wait, Queen Elizabeth - does he really mean Maggie Thatcher?" "Oh, right, Quantitative Easing, never mind" :-)

We're talking about a different problem here

[billstewart]

> There aren't any easy answers left no matter what billstewart et al. wish to believe.

There are two radically different problems here - what to do to avoid disaster when the US hits the entirely artificial Federal Debt Limit in a month or so, and how to deal with the actual problem of Federal debt, budgets, unfunded pensions and other obligations, and general financial and demographic mess the country is in. Yes, the latter is really really hard, and we not only have to balance the budget, we either have to run it into a major surplus to pay back the Social Security Trust Fund, which was invested in "perfectly safe" T-bills instead of in the market, or shaft the Baby Boomers much earlier than 2036 or whenever it is they're currently (pretending we're ok until) planning to shaft us. But I'm not talking about that problem.

I'm talking about the artificial Debt Limit that we're about to hit, which the President, Congressional Democrats and Republicans are playing partisan chicken games with, threatening that the country will fall into Disaster! Chaos! Anarchy! Dogs and Cats Living Together! if the other side doesn't immediately give in, with the primary stakes being political support for the 2012 election. One side has already thrown the spare steering wheel out the window, while the other side's driver is sticking his head out the window making moose-antler faces. At some point in the next month, either they're far stupider than I give them credit for and they'll crash, or they're both going to swerve a bit, just miss each other, and give each other high-fives where they hope most of the audience can't see, and the real question is how far on which side of the road they'll be when they do it. If Obama's extra-clever he can jump out of the car, change his clothes, and he and Geithner can show up as the Keystone Kops and make the Congressional Democrats and Republicans stop the game before they crash.

I think Obama has the advantage here, and if he's good at it he can pin most of the blame for the problem on the Republicans, and if not, he's going to fall really hard, because "It's still the economy, stupid!" and he's let the Republicans frame the debt as his problem, not Bush's. I did miss one other option he can use, which is "Sell the gold in Fort Knox, mostly to annoy Ron Paul, but also to make the Tea Baggers and Republicans take responsibility for their spending." (And you may have noticed that Obama's been quietly selling off the Strategic Petroleum Reserve, which not only makes gas prices a bit lower but also gets the Treasury some cash, even though, as when GHWBush did it during the First Gulf War, he hasn't timed it for the best profit or market benefit.)

Re:We're talking about a different problem here

[dachshund]

I was under the impression that the Democrats were willing to sign a clean Debt Ceiling increase bill, exactly the same kind we've signed every previous time this happens.

Was I mistaken about this? Have the Democrats tacked on some unreasonable conditions, without which they're willing to let us crash into the debt ceiling?

I believe in political accountability, so if Obama is being unreasonable I want to know it.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

It is not that reducing the debt is "so all-fired important" it is the deficit that has gotten out of control.

OK, fine. It's only "gotten out of control". My question remains the same: is there still ANY REASON not to include closing those loopholes, as part of the deficit reduction?

What money given to them? The government didn't give them any money.

Come on now. Just go back several comments in this thread. You know when Exxon, GE and others received a REBATE? That means they were given money - and MORE MONEY than they paid in taxes. That means they paid zero taxes, and then received MORE MONEY after that.

That means the government gave them money. Its MORE than "allowing them to keep the money they paid", which merely means they would be riding for free while using the country's services.

If you think that means the government DIDN'T give them money, then please explain how giving them back MORE MONEY THAN THEY PAID isn't actually giving them money.

Is there any part of that which is not clear? Otherwise, can we move forward so that you can at least admit that the government made them money? Since, well, the government gave them money, and once again MORE MONEY than they paid?

Re:This threat isn't from banks this time

[khallow]

The US government cannot print money. That ability has been granted exclusively to the Federal Reserve by the Federal Reserve Act of 1913.

That is a law which can be overturned by another such law. It's a really bad idea, but printing money is a common (perhaps even the default) ploy for desperate governments.

Re:The Tea Party wants "nasty consequences"

[Magius_AR]

I'm an entirely different animal. I have no political objectives. I have only financial objectives, and the Tea Party is f_cking with the national economy. I'm not an extremist, with the left or the right,

What you claim and what you preach are not the same. You come out attacking Republicans, highlighting in particular two morons (Palin/Bachman) who you attack with some zeal, and as far as I can tell attribute no ills to the other side.

You don't think Obama was "f_cking with the national economy" or indirectly attacking your benefits by wasting 1+ trillion dollars on ineffective stimulus? We wouldn't even have a debt ceiling problem atm if not for all that wasteful spending. Yet you've chosen your camp.

Re:This threat isn't from banks this time

[khallow]

"then they didn't deserve the legislation"- but what about your citizens, did they deserve the legislation?

No, they didn't either. I count them implicitly since the Democrats were acting as delegates for the constituents who elected them.

This anti-democratic attitude strikes me as being the rotten core of your partisan political system.

It's a natural result of having a group of people with divergence interests. It's not my job to sacrifice my interests for some else's interests solely on the basis that they managed to get a majority in the legislature for a couple of years.

As I see it, the failure of the Democrats to do much in the 2009-2010 was primarily due to the ideological blindness and incompetence of the political leadership. If these legislator's goals are a priority of a large enough fraction of the US voters, then there will be future chances. If it's instead a passing fancy, then there won't.

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

I think you picked up an an article that was subsequently corrected:

http://blogs.forbes.com/energysource/2010/04/07/exxon-says-it-does-pay-u-s-income-taxes/

Oh and by the way, they employed over 100,000 people that paid taxes as well.

You might also want to look at this about GE:

http://www.theatlantic.com/business/archive/2011/03/did-ge-really-pay-no-us-taxes-in-2010/73178/

They had huge losses in the GE Capitol division and the losses washed out their profits of the other divisions. What is so hard to understand about this?

Empirical data

[microbox]

So the /only/ OECD country that pays less taxes then the USA is Turkey (by a slim margin). Taxes are almost /double/ in Norway, Sweden, Denmark and Italy, and these countries are nothing like North Korea. In fact, Norway as a /higher/ GDP per capita then America.

Do you have any empirical data that already shows that paying less taxes will somehow improve the economic situation? I am not talking about shoot-from-the-hip theories, but actual data.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

Well, ok. I guess we have to wander all the way into the weeds for this.

From your own article that you cited:

Although I came up with that by reading the company’s annual 10-k filing with the SEC, ExxonMobil spokesman Alan Jeffers assures me that this is wrong, that Exxon did indeed pay substantial income taxes to the U.S. Treasury in 2009, and that it overpaid taxes in 2008. How much? Well, Jeffers says so far he’s not at liberty to disclose that information. “That’s not something we’re required to disclose, nor do we.”

So, which are we to believe - the actual statement filed, or the word of a spokesperson who refuses to actually divulge any information?

I prefer to go with the facts, until the facts are disproven by other verified statements.

To quote from the other article you cited, re: GE,

And the New York Times was wrong because, even leaving aside the income tax issue, there is simply no way that GE's US tax bill in 2010 can be fairly described as being "none." GE paid many different kinds of US taxes in 2010--state, local, payroll, etc.--and, according to Eisele, its 2010 income tax bill (which still has yet to be determined) is likely to be positive.

...this is conflation of the worst sort.

Leaving it aside is avoiding the facts rather than proving them wrong. We are talking about the amount of money that GE paid as a business. If GE made a profit as a business, it should pay taxes as a business.

And, according to the NY TImes article - which the NY Times stands behind, and which GE has demanded no retractions from: http://www.nytimes.com/2011/03/25/business/economy/25tax.html

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion. ...Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

So you tell me - what is so hard to understand about that? If GE made a profit, it should pay taxes on that profit. If it is legal for GE to avoid paying taxes on that, then those are legal loopholes that should be closed. And certainly should be closed before we do other things in the name if "budget austerity" like cut off the oil heat for the elderly in winter. Right? If not, why not?

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

Sort of "newspaper semantics". They made a paper profit in a year, but they had carry forward losses that offset the profit and reduced their taxable income to zero. If I have a company that loses money for several years and then I have a breakout year and make $20 million dollars. The newspaper reports that I made $20 million dollars but paid no taxes. Sounds like "the man" is sticking it to us again. I paid no taxes because I had losses that were greater than the $20 million in profits. The newspaper is looking for a headline and got one (same with GE/Exxon). But they weren't completely honest with you. The profit was a "paper" profit not a real one.

Re:What happens if the govt just allocates money

[salesgeek]

Inflation is generally caused by increasing the amount of currency in circulation, which lowers the value of the dollar. Even if you aren't impressed, the rest of society will and will raise prices on you, thereby forcing you to raise your selling prices as your costs go up.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

So? Let's say that's the case. *I* can't do that, as a private taxpayer. If I lost $50k in one year and then made $50k the next year, I still have to pay taxes on the year I made $50k.

What is a single reason why this tax loophole should NOT be closed, if reducing the deficit is of such importance?

How does keeping this loophole open help pay the debt, if corporations can do that while I can't? Since it is an established fact that trickle-down theories don't work, what other possible reason is there that this is a good thing?

Why is it that, IN SPITE OF OUR DEFICIT AND DEBT, we can afford to let corporations do that - but we CAN'T afford to give the elderly far, far less in oil subsidies so they can keep themselves warm through the winter?

Re:He means Tea Party

[Doctor_Jest]

My party? Just because I want balance?
Why do you think those republicans caucus with the Tea Party? Because they're militia nuts who want to be out of a job? No. Does the environmental wing of the Democratic Party side with the fringe groups who want to kill anyone who doesn't live in a teepee made from their own shit? No. Because the term "fringe" means just that.

Just like the fringe of the Republican party... the Democrats have their fringe. When the fringe becomes a majority voice in EITHER party (I am not convinced there are two parties anymore)... then we can revisit this issue. Otherwise it sounds like a bunch of partisan bluster.

I've got two words for anyone who doesn't think there are fringe groups in the Democratic Party as well "George Soros."

(I never said there WEREN'T fringe groups... I just do not equate those with any of the mainstream politics of even the Teabaggers.)

Take a step back from characterizing any disagreement with you as being someone from 'the other side'... and think for a moment before you buy into the phobia. Do I believe the Democratic Party in the Northeast is run by the Black Panthers? No, but I can cite several mainstream media (and no, not just Fox News) outlets who did stories on just that unsubstantiated nonsense. (google is your friend.) Giving the story ANY credence even "asking" if it is true means that they believe, even a little, that there was voter intimidation by the Black Panthers. Do the Black Panthers control the Congressional Black Caucus?

Take a step back from believing in the scare-tactics and realize that the Teabaggers are a crude implementation of Libertarian philosophy that doesn't want to overthrow government... just to pull its power down to constitutionally provided levels. There are nuts... just like there are nuts in the Democratic party... what you have to realize that if you are looking for boogey-men... you will find them. On either side of the aisle.

Go to opensecrets and find some of the interesting donors to Democratic (and Republican) candidates... the nutjob fringe of the Tea Party is the least of anyone's worries.

Re:He means Tea Party

[Doctor_Jest]

Do you realize that the current President argued on the Senate floor in 2006 AGAINST raising the debt ceiling?

Do you realize that with the exception of the stupid tax on jet airplanes (remember how well that worked for yachts?) the Democratic party wants MORE money to solve the problem of OVER-spending by BOTH sides of the aisle?

How this is a "Tea Party" fucking with the budget is frankly tilting at windmills... convenient scapegoat because of their fringe (that you so acutely documented)...

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

Sorry this is from a fringe group:
http://www.heritage.org/budgetchartbook/federal-government-revenues

http://ntu.org/tax-basics/who-pays-income-taxes.html

One of the things I love to mention, and this is from a great President (JFK)... he LOWERED the marginal rate for the top bracket and actually INCREASED revenue... because if you change the marginal rate upwards, you freeze the money over that amount into savings or bonds or something that doesn't generate revenue (he has a great speech about it somewhere... I forget where I read it.)

But let's be frank... people who complain there is a revenue problem because of lower tax rates forget the difference between MARGINAL and EFFECTIVE tax rates... It's a spending problem. It has been since the last years of the Carter Administration....

But never let facts get in the way of a good partisan rant...

Re:Several Inconvenient Truths About The Debt Ceil

[lbates_35476]

Actually you are quite wrong. You can carry forward losses and that has been a part of tax law for a LONG time. The problem with individuals is that many of them can't really have losses because they don't have the ability to go below zero unless they have other than normal W2 income. You can't really get a negative W2. Now if you invest $50,000 in a company and it goes bankrupt, you can apply that $50,000 loss against future income until the loss is all gone (even into future years). I know this is true because I has a lady embezzle a rather tidy sum from my company and the carry-forward loss took several years to use up on my personal return. That is what the companies are doing. Take this very important tenant of tax law away and corporations would not invest in many ventures that might not pay off the first year. They aren't cheating, they really lost the money. They are just recognizing that fact when they finally do make money. This doesn't make them money in any way and they eventually have to pay taxes on all of it. They aren't getting any "free lunch", it is just fair and I doubt hardly anyone with any experience in business would refer to this as a loophole.

As to reducing the deficit: the US government now pays around $400B per year about 1/6 the total budget yearly in interest. If we keep borrowing $1.5trillion per year (what will be borrowed in 2010) soon that number will so large that it is unserviceable debt. That is why we MUST fix the deficit. We can chip away at the debt over time (just like you would do as an individual if you found yourself in this situation), but we must not continue to spend more than we make first. Then let's see if there are ways that make sense to everyone involved to increase revenues. The old saying goes "When you find yourself in a hole, STOP DIGGING"

As to your second point. The government doesn't have the responsibility to give anyone (except for the mentally/physically disabled) anything. That is the job of the individual, their churches, and their families. This is a fundamental difference in belief between liberals and conservatives. We can't pay people not to work, supply them with unlimited medical care with prescription coverage, pay them to have children out of wedlock, and expect it all to work out. They are provided a free education and if they are truly poor, financial aid and pell grants are available for post-secondary education. Having worked my way through school and then paying off my student loans after, I know it can be done.

Re:Several Inconvenient Truths About The Debt Ceil

[jbeach]

Actually you are quite wrong. You can carry forward losses and that has been a part of tax law for a LONG time. The problem with individuals is that many of them can't really have losses because they don't have the ability to go below zero unless they have other than normal W2 income.

So, actually I'm quite wrong except that I'm right. Please look at the bolded area of your own quote, above. Most individuals only have normal W2 income.

Take this very important tenant of tax law away and corporations would not invest in many ventures that might not pay off the first year. They aren't cheating, they really lost the money. They are just recognizing that fact when they finally do make money.

Oh, come now. Exxon and GE are far from having their first years in business. And, more importantly, their STOCKHOLDERS know and are well aware these companies are profitable. And if they in fact actually losing so much money, and this is NOT some clear and obvious tax dodge, then why haven't their stocks tanked?

So please, if you will, come back to the main point, and please answer this question:

IF paying down the deficit and debt is so important, then WHY can't these loopholes be closed for established corporations that have no real losses, only clever bookkeeping that has no effect on their actual stock market value? Why must the deficit be paid ONLY by budget cuts, in your opinion?

I mean, let's say this really is supposed to be such a Darwinist society that we simply CAN'T afford to give pennies to the poor. In that case, then why CAN we lose BILLIONS in tax revenue from HUGE corporations WHILE they are having their most profitable seasons ever? Why aren't the huge corporations strong enough to take the tough love that the weak, poor and elderly are supposed to get?

No, you're not mistaken

[billstewart]

The Republicans don't want to raise the debt ceiling. The Democrats do. Since the House of Representatives is controlled by the Republicans, the Democrats need to either offer the Republicans a deal that the party as a whole will accept, or at least offer terms that are good enough that a few dozen Republicans are willing to go against party discipline and vote with them. So far, the Republican Party's suggestions about what they'll accept are roughly along the lines of "We want you to roll back Obamacare, The Great Society, and half the New Deal, plus we want a Balanced Budget Amendment. And a pony."

One of the big problems is that the Tea Party is ideologically committed to balancing the budget - the issue that created them as a movement was the sudden discovery in 2008 that Federal Budget Deficits are Bad, which had not been a problem when George W. Bush was in office and the Republican-controlled Congress had doubled the Federal Debt, but now it was obviously a serious problem. On the other hand, the Party Machine candidates are ideologically committed to not raising taxes, and maintaining the Bush-era tax cuts for the rich, and that's mandatory for any deal approved by the party leaders and their corporate sponsors. And the Party Machine doesn't want to risk alienating the Tea Party wing too much, especially when it's easier to play chicken with the Democrats.

One of the two major US political parties hasn't had a balanced budget since the Eisenhower Administration. Neither has the other one, but the Democrats like deficit spending for Keynesian ideological reasons, and the Republicans (except Nixon) pretend they don't.