Slashdot Mirror
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."
How about doing something different, and not simply letting the banks loot another time?
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
can people expect to wage 2 ground wars, and 1 air war, while giving tax cuts to the wealthy.
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
Just looked it up. Total debt including citizens is $54 trillion, or $669000 per family. Good luck paying that off... http://www.usdebtclock.org/#
"Taxes Bad.", "Spending 10s of billions of dollars in 'wars' killing brown people Good."
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.
Enjoy life! This is not a dress rehearsal.
"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.
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.
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.
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.
"First they came for the slanderers and i said nothing."
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/
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?
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.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
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.
A relevant cartoon.
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.
"First they came for the slanderers and i said nothing."
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.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
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.
Why can't
In other news, heroin addict must get another fix or face "nasty consequences".
Set your phasers on "funky"!
Why do you hate your grandparents?
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.)
"His name was James Damore."
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.
~X~
- 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.
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.
So that's why the US wanted her as head of IMF
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??
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.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
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.
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.
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?
Justice is the sheep getting arrested while an impartial judge declares the vote void.
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.
Don't you know that taxes work like homeopathy?
Justice is the sheep getting arrested while an impartial judge declares the vote void.
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.
I can't tell if you're retarded or insane.
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)
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..
Democracy Now! - uncensored, anti-establishment news
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.
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.
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?
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.
---
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.
If they want a balanced budget and less debt, how does opposing taxation fit in with that?
-- *~()____) This message will self-destruct in 5 seconds...
Two points don't make a curve.
--- "We've always been at war with Eastasia."
"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.
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.
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.
-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.
Democracy Now! - uncensored, anti-establishment news
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.
If corporations are people, aren't stockholders guilty of slavery?
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.
Like all pain, suffering is a signal that something isn't right
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.
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
It is very possible the US is too far on the left of the curve and optimal revenue might require a tax increase.
Rod Taylor
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.
If corporations are people, aren't stockholders guilty of slavery?
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?
If corporations are people, aren't stockholders guilty of slavery?
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
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
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.
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.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
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.
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.
"I do not agree with what you say, but I will defend to the death your right to say it"
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.
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.
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
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.
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.
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.
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
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.
Life is hard, and the world is cruel
"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.
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.
Life is hard, and the world is cruel
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.
Life is hard, and the world is cruel
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.
Life is hard, and the world is cruel
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. .
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
The "miserable failure" comes from the inability of anyone to put numbers on there other than 0 and 100.
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.
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
--
make install -not war