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Debt Deal Reached
Global markets are on the rise in response to a deal between President Obama and congressional Republicans on the debt. The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
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As an engineer that uses math on a daily basis, the more I read about the rising debt the more confused I am. It seems that a strategy of Reagan's was to take in less money in taxes than the government spends and this strategy has been intact for far too long. So if you're trying to balance a budget, how in the hell do you justify spending way more money than you take in? Either you have to raise taxes or cut spending. It's pretty clear that Clinton was the only president to break from this norm since then and now we're shocked that our debt crises get worse and worse every term?
... so basic that when you're taught how to balance a checkbook in high school, they don't even teach it in Math class. It's a general life skill and our country is failing at life in general.
I don't spend more money than I take in. I see commercials for people like that who have credit card debt because they couldn't do some simple balancing and see that they were spending more than they made. Why on Earth are we still implementing tax cuts and deficit spending?! Have we given up any hope of ever getting out of the red as a country?
This is very basic math
My work here is dung.
Debtor says, "I would like to borrow some money."
Creditor says, "And what do you owe now?"
Debtor: "So much I need at least 145 years to pay it back."
Creditor: "Tell me your plan."
Debtor: "I have no plan to pay it back. I will only pay the
interest."
Creditor: "You want your kids, grand kids, and great grand kids to pay it back?"
Debtor: "It will be very painful for me not to get the loan. I can print up some money if I need to."
Creditor: "You have no plan."
Debtor: "I am working on a plan to borrow a little less than usual - 10% less."
Creditor: "You have no plan to balance the budget, you plan only to keep borrowing, you print up money, you dump your debt on 3 future generations and counting, and you want us to believe you have integrity, and are worthy of credit and trust?"
Debtor: "I want what I want when I want it, and I want it right now.
Give me the loan or I will print the money!"
Can someone explain to me why US Treasuries should be rated AAA in the first place?
Money is paid out to investors out of new investor's money, and the cycle continues. Last time I checked, this is also known as a Ponzi Scheme and it is inevitable that it eventually collapses.
These are the same people who rated junk mortgage bonds as a good investment, so I'm not surprised.
I dream of a nation where a man is not judged by his skin color but by an number assigned by a credit rating agency.
An agreement has been reached, but it hasn't been passed by either the house or senate yet. (It's almost certain to pass the senate, as that's where the compromise originated. The house, on the other hand...well, we'll see.)
Yet, in the back of my mind, there was a part of me wondering whether an agreement would ever be reached. The conspiracy theory in me kept saying that there were enough rich fat cats who were paying off key congressmen to sabotage the process and make sure that no agreement was ever reached. Why? Because billions of dollars had been invested in credit-default swaps against the United States debt.
Well of course government debt should be downgraded from its "perfect" rating because the idea of even -having- 14 trillion+ of debt is absurd. The US is equivalent to a family living off of their credit cards and using one card to pay another. There is no real way to gain more revenue short of raising taxes which will lead to an overall worsening of the economy because it will force companies to move overseas because there is absolutely no reason to do business in the US anymore when compared to China/India and other developing nations.
Taxation is legalized theft, no more, no less.
The government is slated to spend almost 10 trillion more over the next decade due to built-in yearly spending increases.
So if we cut 1 trillion, we're really going to be spending 9 trillion more.
If the plan was to just freeze spending, the CBO would score that as a 9.5 trillion "cut".
Would a US Credit Agency really reduce the USA's credit rating? Somehow I don't see that happening and all, given the inherent corruption in the US government and financial institutions. I guess it depends which commercial banks have the most clout, the Federal Reserve, Goldman, Citi?
Didn't Jeferson try to kill the federal reserve once?
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Going further in to debt is not a good strategy to becoming debt free. A person can't drink themselves sober, and economies can't borrow themselves out of debt. The US government should have minted two $1 trillion dollar platinum coins, thus creating debt free currency, deposited that into the Federal Reserve Bank, and then wrote checks against it. Instead they're going to borrow $2 trillion from the private Federal Reserve Bank. Now the US is going to have to make interest payments on that borrowed money. The US spends 500 billion dollars a year on interest payments. If they had created the money at the mint, they wouldn't have to pay interest on it. Watch the recent Still reports to learn more about this: http://www.youtube.com/user/bstill3
"Most economists think this isn't enough"... Try: "Most economists think that cutting spending during a recession is a recipe for disaster."
The Republicans even got their Medicare cuts. The only bright point in this is that the cuts won't take effect for another couple of years (from TFA), I guess the hope is that the recession will have eased by then. If it hasn't, we're in for a very tough time.
The USA having a triple A rating says more about the rating companies than about the USA
For someone from a country with a better grip on its economy, the whole ordeal seems rather strange:
According to Lexington at the Economist, this whole hoopla was the Republican's fault.
the Republican House has come up with is a non-solution (since the Senate cannot buy it) to a problem entirely of the Republicans' own making. The reason for this crisis is that instead of just raising the debt ceiling in the customary way so that the government can pay the bills Congress has already run up, the Republicans decided to point a pistol at the American economy and threaten to pull the trigger if they did not get the spending cuts they wanted.
Also, I think it was horribly hypocritical of the Republicans to blame "entitlement programs" for the problems and never mentioning the wars and their action of lowering taxes during war time - that's what killed us. All the other reasons like Obama Care are just distractions - especially when you consider that it hasn't even taken effect yet. And why is SS on the table in this context? Bullshit!
Yes eventually Social Security will have to be addressed but to include it in the debt ceiling was ludicrous.
By the way, the debt ceiling allow the government to pay it's current bills and nothing more. Thinking that it allows for increasing government spending just shows how little we Americans truly understand how our government operates - myself included.
The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
Of course it's not going to do anything substantial. You really thought the Republicans were fighting this fight truly to solve and end the debt woes of this country rather than politicking for 2012? Especially when the terms of last 3 Republican presidents accounted for $9.5 trillion of the $14 trillion this country carries? This in no way makes excuses Obama pushing even more debt on pile, but the Republicans hardly have a case for being "fiscally conservative" when Reagan, Bush and Bush Jr piled on 67% of the current debt.
Yes, but when using your checkbook you take the value of the currency as a given. A state has (limited) control over the value of it's currency (by limiting or expanding the available sum of printed money), thereby it also has (again, limited) control over the value of it's own dept. Now you might say that playing with the value of the currency can have complex consequences, and that would be true. Still, macro economics work differently than micro economics.
I completely agree that the analogy is not perfect (never is). What I'm asking is why, if people like Cheney said that "Reagan proved deficits don't matter" then why are we seeing negative effects? Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right? If you're saying that a checkbook deficit and national deficit are two completely different things then why are we seeing a threat of losing our credit rating and other money problems that are associated with drowning yourself in debt on a personal level?
My work here is dung.
The actual funny part is.... You all still think there is a difference between republicans and democrats.
They've kept that thru all of this. It's outstanding. Best scam ever. Wish i'd thought of it.
Keep the population arguing over D/R while we rob them all blind. It's genius!
Oh wait... i live here too.. shit.
http://www.youtube.com/user/bstill3#p/a/u/1/Rq8s0JShs7o
"No plan under serious consideration cuts spending in the way you and I think about it. Instead, the cuts being discussed are illusory and are not cuts from current amounts being spent, but cuts in prospective spending increases. This is akin to a family saving $100,000 in expenses by deciding not to buy a Lamborghini and instead getting a fully loaded Mercedes when really their budget dictates that they need to stick with their perfectly serviceable Honda." http://www.ronpaul2012.net/2011/08/01/ron-paul-on-the-debt-ceiling-debate-just-freeze-the-budget/
Dallas Real Estate
Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right?
Deficits don't matter as long as we keep getting loans.
If we lose our AAA rating...to be honest it wouldn't really mean diddly in the short run (10 yearsish). But following that, it's possible that the world bank might make it so the reserve is no longer in dollars. (fuck you europe and your euro. and shutup china, no one wants to rely on the yuan) This...would hurt us a great deal.
There's a great deal of background information about it, but the gist of it ends up being that, if we're no longer the de facto currency of the world, a HELL of a lot less money will be coming into us in terms of investments. And that'll screw our economy faster than a power drill through cheese.
Yeah, but will the Congress play along? We've seen no evidence that they are following their "leadership" thus far: Boehner's bill only being passed after placating the far right wing, Reid's bill not passing 49 - 50 in his majority Senate, after objecting to his own cloture vote.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
The US spends more money on its military than all other countries combined. Why not save a bit there, on the biggest budget post of them all? Saving some small posts here and there without even looking at the expenditures that really digs holes in the wallet seems, insane.
Seems military spending is sacred even if countless research has show excessive waste and that US military could get by on half the money without any noticable effect on the defence capabilities.
To an outsider it looks as if the US is on the exact same path as the USSR was some years ago when it overspent all its money on the military complex. Once that happens the US will have the exact same situation that Soviet has had, with states wanting to jump off the sinking ship.
HTTP/1.1 400
There's only a crisis because there's a Democrat in the White House and Republicans are willing to force a default to get their demands met.
Debt service is still at a very managable level. Debt is a long-term problem. We have a short-term problem called a **** economy that's going to cost us way more in the long-run than the debt.
We *should* be spending boatloads of money right now. There's no demand. Tax cuts won't help - the rich and Fortune 500 are sitting on trillions of dollars in cash because there's no one to buy their products and they won't start hiring until there is. The only entity that can kick-start demand is the government. Unfortunately, Republicans (and too many Democrats) think that we should kill demand even more by imposing austerity. Ask the Europeans how that's working out for them: it isn't.
What happened to JOBS JOBS JOBS? The only bills Republicans have passed in the House would kill jobs and make things worse. Every person that's unemployed is one more person not paying taxes and is one more person using social services. The Republican plan is to increase their numbers.
We need bigger stimulus programs. That's what got us out of the Great Depression - the New Deal and a stimulus program of government spending called World War 2. Do you know what sent the economy into a recession two years into FDR's term? Spending cuts to appease Republicans.
And thanks to low interest rates, it actually *cheaper* to borrow now than to wait until we have cash on hand. Provided we invest it in getting people back to work, education, technology, etc instead of going to war over seas and to cut taxes, it'll pay itself back in increased revenues easily.
I love how politicians try to commit future governments.
This rating scale isn't linear is it.
The potential downgrade has little to do with the amount of debt owed - rather, it is a reflection of the rating agencies' assessment of how likely we are to repay our bonds. Originally, simply raising the debt ceiling would have been sufficient to satisfy the rating agencies. However, now that Republicans have made clear that raising the debt ceiling is an opportunity to extract concessions with the nation's credit rating on the line, some of the rating agencies wanted to see that Congress was capable of reaching agreements without blowing up the world economy.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
The Yuan IS the USD at the moment, until the Chinese government says otherwise. The Euro may not work on a basic level, but at least blind people can tell the banknotes apart...
âoeCongress consistently brings the government to the edge of default before facing its responsibility. This brinksmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar.â Ronald Reagan 1987
US economy is in recession and never was out of it of-course as the latest government revisions of GDP are showing.
You can't handle the truth.
Because we have a media that's interested horse races and terrified of being called "liberal".
Because every story is He Said/She Said even if the He Said is complete bullshit.
Because there's no real debate, it just ends with "We're going to have to leave it there" and go to commercial.
Because you have Fox News which is a committed propaganda arm of the Republican party.
Because corporations have discovered opinion is more profitable than journalism.
Because the "center" in this country would pass for far right in any other democracy.
...sound like it is a battle between common sense or good ideas, and Republicans?
Well, yes, but it's not that much of a mystery why they do so. The role of the Republicans in US political theater is to be so crazy that the Democrats sound sane by comparison. Then the Democrats make a 'compromise' that consists of about 95% of what the Republicans said they wanted, and 5% of what the Democrat's corporate backers wanted, and 0% of what Americans wanted. Then the Democrats go to the TV cameras and explain that this was the best deal they could make, which the Republicans go to Fox News and cheer about their triumph of will. (What made the recent health care law different was that in that case it was about 75% of what the Democrat's corporate backers wanted, and only 25% of what the Republican corporate backers wanted.)
Any idea that the US government is representing the will of the American people is an illusion.
I am officially gone from
Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right?
Deficits don't matter as long as we keep getting loans.
If we lose our AAA rating...to be honest it wouldn't really mean diddly in the short run (10 yearsish). But following that, it's possible that the world bank might make it so the reserve is no longer in dollars. (fucked you europe and your euro. and shutup china, no one wants to rely on the yuan) This...would hurt us a great deal.
FTFY... US fucked Europe and Euro... let's see how it's like to stay at the receiving end now.
As for relying on yuan... it's not about what you want or not! Maybe you don't know yet, but you are already relying on it.
Questions raise, answers kill. Raise questions to stay alive.
What I'm asking is why, if people like Cheney said that "Reagan proved deficits don't matter" then why are we seeing negative effects? Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right? If you're saying that a checkbook deficit and national deficit are two completely different things then why are we seeing a threat of losing our credit rating and other money problems that are associated with drowning yourself in debt on a personal level?
We are entering heavily disputed territory here, but I would say that the problem is not the dept per se, but the inability of the US state to turn the available ressources into something that generates wealth, hence repay in the form of taxes. Things like stimulous plans, science, education. Not things like war (especially not losing wars, ethics ignored for the sake of the argument). Also, the political climate in the US seems to heavily favor privatizing everything that has the option of generating profit (e.g. Running expensive universities to train people to be scientists, then pay them to be scientists. In case they research something profitable, they can create a start up and the profit goes into private pockets. While the researcher in case sure is happy, economically speaking that sounds insane to me).
All this wrangling has nothing to do with the debt or trying to help the economy. Some people were just horrified when Obama was elected and will do anything, even sell their own country down the river, to get him out of office Following Rush Limbaugh logic, conservatives can't be seen as doing anything that might help the president. Hey, if the country defaults, there is a 50% chance Obama will get blamed and might lose the next election! Those odds are good enough for us!
Sorry, but gray text on gray background is making my eyes bleed.
I wonder: what happens when the rest of the world finally realizes that the US govt can't pay its debts? What kind of collapse are we looking at?
Right !! If you believe any of that shit you are one sorry ass motherfucker, motherfucker !!
Believe it or not, you will still remain with a sore ass (after the politicians raped you from left or right).
Questions raise, answers kill. Raise questions to stay alive.
Oh, that's simple. The other party may be based on less backward ideology, but it is just as corrupt, and full of cowards and idiots.
Contrary to the popular belief, there indeed is no God.
To be clear it isn't the all Republicans that have held up any deal but the Tea Party faction of the Republicans. Some Republicans have been willing to deal and compromise like Speaker of the House Boehner. His party however hasn't supported him.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Because Republicans appeal to old people who are brain washed, Rich people, and Christians. There are enough of these 3 groups in America to keep the Republicans more than relevant. Most people who are Republicans are brain washed either by the church or by society.
Kind of hard to explain to people the problems in what they believe in if they refuse to think for a second that their wrong.
For another Global Fried Chicken, errh Financial Crisis as the credit limit is increased on America's Credit card. It's amazing how perception can be changed with an acronym.
I think that the Republican party has played a stupid game with international investors because this is a real confidence shaker for those who invested into a US economic recovery, how stupid of me. Even though I actually agree with their premise, it's really irresponsible considering they left the poison challis for Obama in terms of the costs of two wars. Still it seems they did get their way, but I'm certain their are better investments on the horizon.
Very clever politicians those republicans, very clever indeed.
My ism, it's full of beliefs.
Because you didn't look closely enough. The real battle is between Dems and Repubs. Your mistake was thinking that Democrat ideas are any better than Republican.
Tax Increases + Cuts to programs that people like = Less votes for the Congressman voting on it = A "no" vote.
Basic common sense has nothing to do with this. It's just that no politician wants to be the fall guy who tells the American people that they have to sacrifice anything, that they can't have all these programs, subsidies, wars, etc. and not have to pay for them with higher taxes.
SJW: Someone who has run out of real oppression, and has to fake it.
Mr. Cheney, your breakfast is ready. Now leave the computer alone and get over to the table.
We've got your favorite today, Lucky Charms and fresh-squeezed baby's blood!
You are welcome on my lawn.
Because the overwhelming majority of news reporters are Democrats, therefore they report the news in ways that look good for the Democrats (often because they view the facts that make the Republican view look sensible as irrelevant, since they do not report those facts you are unable to judge for yourself, from your worldview whether or not those facts are indeed irrelevant). An important thing to realize about reporting (especially political reporting) is that if a story makes it seem as if one side in a dispute makes no sense, the story is probably not accurately reporting either the expressed motivations of that party, or leaving out facts which inform the position taken by that party. This does not mean that if you knew those facts you would agree with that party, it just means that if you knew those facts you would understand their logic.
Basically, U.S. politics can be divided in to two camps. One group thinks that the federal government is too big and spends too much money. The other group thinks that the federal government is too small and doesn't spend enough money. Along with this division are divisions about what people think the government should spend money on (this last is further complicated because some people may believe that some things should be government funded, but not funded by the federal government). There are numerous other complications, some of which are common to every democracy (such as the group that believes that national sovereignty should be gradually subsumed to international bodies)
The truth is that all men having power ought to be mistrusted. James Madison
Go back to China you commie!
I've had a feeling for weeks now that the way the situation was handled may have been politicians' plan to 'save the country from financial crisis in the zero hour' by compromising. I can only hope the American people see the travesty this has caused and it all backfires on the politicians.
The problem is of course on spending side. Every single Reagan budget was pronounced DOA by Tip O'Neil (D), Speaker of the House. Every single budget that Congress approved was far larger then what Reagan wanted but had no choice but to sign it.
Lets get back to this disaster. US Budgets since Nixon days (Congress wanted to punish Nixon for holding back authorized spending on their projects) have been on automatic increases which is referred to Baseline Budgeting. Current US Budget is set to increase 7.5% annually. That means in ten years, if the "cut" $2T in "savings" means we actually spend $7T more. That is "Washington's Math" that we cut $2T from a $9T increase, but that's an evil thing to do. Note that if we have 100% tax on those making $100K or more, we are still short about $400B annually. If you think high taxes on the Rich is apart of the solution, take a look at NY State, they did this and the rich have either left or are in the process of leaving and lowering NY's revenue generation. Same has happen to the US, the rich will simply invest more overseas or leave and join their overseas investments. This is not a revenue problem, this is a spending addiction issue.
That means in 2022, we will have $22T in debt. I should be rejoicing in this? Right now the $14.7T is being funded in mostly short term debt, that means about a third of that debt is under 12 months before it matures. Right now we are paying about 1.5% APR on that debt when we typically pay about 5.5% for the 80s and 90s on the national debt. So on a monthly basis, we are paying roughly $28B. Imagine if that debt goes to ~6% interest? That jumps monthly payments to $112B monthly payment on the national debt or $1.14T in sudden expense to the US Budget for $14.7T we already have. Greece is paying 13.5% so if no one will buy US debt again (Chinese have already said no more) and we had to pay that today, that's $252B monthly or $3T annually in debt payment, but that is on 14.7T, try 13.5% on $22T.
Then add in QE I, II, and possible III to the US dollar supply, and we have massive inflation that will be hitting. Most of the QE "printed" money is sitting in banks. That dam will eventually break and we will have inflation, it's going to be 20% or will it be close to 100% is the only question. The perfect storm is coming, Wall Street CEOs have been dumping their own stock holdings at unheard of ratios, they know what is going to be happening. If you think we have alot of bank closings, just wait, the FDIC will break less Feds print more money to cover it, which will add to inflation. Why do you think Silver and Gold are so high and more are buying? india and China are buying about 38 tons of gold monthly, US is about 11 tons monthly as the smart money leaves paper for assets they can touch. Hell, by 2013, Mexico's Peso will be back by silver. And we are supposed to be happy about $2T reduction of the baseline increase of $9T? Mind control via propaganda.
Honest answer is that people have different ideas on what"common sense" is.
Funny enough an essay by Thomas Paine titled "Common Sense" lines up more closely with some (certain not all) Republican ideas than any Democrat ideas.
What people forget: Dollar money is all about belief, and very little about actual value.
And "raising the debt ceiling" means printing more Dollars.
Imagine you could just print more money to pay your debts.
The problem is, that China and others could stop believing in the value of our Dollars, if we keep printing new ones to "pay" them with them.
And if they do that, we may still have "money", we may still be able to "pay" internal things like medicare, but we can't import stuff anymore.
Which is very bad, since the USA is so dependent on imports, it would fall apart without them.
In Reagan times, we could simply print more money, and they would still believe in it. Now, and that is they key here: The global belief that the USA is a superpower that can't possible fall apart, is gone.
And the worst thing is, that the US population itself could start losing belief in the Dollar then. Look as Germany after WW1, or Zimbabwe, to see what that could mean. Itâ(TM)s not pretty. It would make the US a 3rd world nation, with people starving, companies going bankrupt and government losing control in weeks.
There is a simple solution here. Stop spending money. End all entitlement programs. That will surely piss off the socialists, but I don't care. It will stop theft from those who work to give tot hose who don't. A lot of tax revenue will be freed up to pay the debt, and those who live on welfare, unemployment, and other socialist programs will ahve to find something productive to do with their lives, which will most likely involve paying taxes, instead of looting from those who pay taxes.
Along similar lines, end all foreign aid. If Americans want to offer foreign aid they will do so of their own will as they often do in the form of large domations. The socialists will hate this, but I don't care. There is no justification to steal from one man and give that money to another, after government takes a little off the top of course.
Then end all of our unconstitutional wars, and pull troops out of that 150+ countries we have troops stationed in. This will piss off the neocons, but I don't care. They will no longer be able to wage unconstitutional wars and invade sovereign nations who have not aggressed against us. The savings will be enourmous.
As a further extension of ending wars, end the "war" on drugs. The neocons would hat this, but I don't care. Prohibition does not work, and only breeds crime and funds criminal organizations. Legalization, regulation, and taxation of recreational drugs in the same manner as the recreational drugs already legal in the States (alcohol, nicotine) will drop the "street price" substantially and pull the rug out from under the violent criminal organizations. Many of the costs of border security would disappear, as there would be no economic reason to smuggle drugs. In fact, some of these violent groups may make a shift towards legal and legitimate transport businesses since that would be the profitable ways to transport drugs. We would also have a large all volunteer army pulled in from 150+ countries with nothing to do (no one attacks the U.S., not since Japan in 1941). Those on active duty could serve as interrim boarder security during the transition, and then move on to responding with additional manpower and machinery for major domestic issues and natural disasters that are large enough that States cannot effectively deal with them on their own.
There are plenty more ways to save money, but I think these are some of the major points that will save a lot of money as simply and quickly as possible. It all boils down to respect of natural rights and free market principles.
About the only thing right about the summary is the spelling.
The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
This debt crisis is entirely manufactured and artificial, the reason the country's AAA rating could be downgraded is because idiots are playing political games with our credit worthiness, and most economists think that the economy needs stimulus, not immediate cuts in spending. (Oh, and since current Congresses can't bind future Congresses, the $ 2 trillion number is also meaningless.)
> Because the overwhelming majority of news reporters are Democrats,
Past a certain point, only the facts can speak to the heart of the matter. You can only do so much to skew the presentation of those facts if you do your job as a journalist.
Besides, it's not as if there are no dissenting opinions anyways.
Call "the biased liberal media" another element of the crackpot teabager mentality.
The vast majority of US views favor spending more. There's only real question is what to spend it on.
A Pirate and a Puritan look the same on a balance sheet.
Bad things may happened but there should be progress after all. Thanks for keeping us updated with the latest. http://articles.brightbridge-wealthmanagement.com/
If everyone did as you say, then true, the system would collapse. But I don't think every one would do that, because there is simply too much at stake. Would you really want everyone to stop paying, leaving those legitimately collecting benefits out in the cold?
The system WAS an altruistic one where we help those in need today with the expectation that we will be helped by future generations. The problem is that the future generations are the present generations, who have more self-centered attitudes.
The potential downgrade has little to do with the amount of debt owed - rather, it is a reflection of the rating agencies' assessment of how likely we are to repay our bonds.
Please reread what you wrote: The amount of debt you owe has little to do ... with the likelihood that you can repay that debt...?
So, to keep the analogy the same as the current US situation: if I take on so much credit card debt, that I need to get new credit cards just to keep paying the interest on the old credit cards, it will (supposedly) have little effect on my credit rating, because it (supposedly) does not affect my ability to repay the principal.
This is your assertion, now please support it with evidence.
Ah, a deutcher. So tell me, what does unter gleeben glauben glowben mean?
Basically, U.S. politics can be divided in to two camps. One group thinks that the federal government is too big and spends too much money.
This is the TEA Party.
The other group thinks that the federal government is too small and doesn't spend enough money.
And this is everyone else.
Along with this division are divisions about what people think the government should spend money on
For instance, Democrats want to spend money on bureaucrats. Republicans want to spend money on the military-industrial complex.
It still has to pass both the house and senate. The house may still be a problem.
Until it does and is signed, "the check is in the mail".
Laffer curve:
http://en.wikipedia.org/wiki/Laffer_curve
Reagan argued that the government's tax rate was higher than optimal. By lowering the rate, the economy was boosted, so basically 17% of an economy generating M dollars is much more than 30% of an economy generating J dollars where M >> J. Reagan increased individual inflation-adjusted income tax revenues to the federal government by 13% throughout his tenure, despite cutting the top income tax rate from 70% to 28%. Although the percentage of taxation with respect to the GDP fell, the government was making more inflation-adjusted money than it ever had before. Basically the government invested in the economy, and got major returns on its investment, it was a win-win, for both the private and public sector.
Please bear with me. One thing the Democratic party; and yes I will call them out on this; and they supporters on various blogs and the media won't tell you is this.
Raising taxes does not always generate revenue, in many cases it lowers revenue. Why? Because government projects which involve tax rates assume behavior does not change.This have been demonstrated as being false. When you make it expensive to make more money people tend to do less of it. A great example involving Reagan was during his acting days (yeah, before he was in office) there was a limit to how much they made before the government took 90%. His view was, why would he bother to work when every dollar over that amount was taxed so high?
The "bad" side effect of lower taxes is that the rich get richer because they do more of what makes them rich. They end up paying more in taxes because they don't cap their income. They don't feel a need to because they don't have an artificial barrier to success.
The real problem current isn't one of income, it is one of unrestrained spending. It is failed Keynesian policies that the supporters of such don't want to acknowledge but simply come up with excuse after excuse as to why this spending didn't work.
So if you want more income for government then GUARANTEE the tax rates and keep them low. The US taxes foreign income which also explains why many companies either get bought out by foreign firms or try their best to keep profits overseas. We have a President who vilifies business and the rich, that is the actions of a twelve year old - it is the actions of someone on the campaign trail not someone ALREADY IN THE OFFICE.
So, again, behavior is key. If you want a certain behavior you set your policies to that. This means, that yes, the rich will need to get richer because frankly they need the incentive. This will in turn mean more money for government to spend.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Because you have to have an alternative to the Democrats when you get pissed off at them. Both parties have carefully crafted the political system so that other parties find it difficult or impossible to break in. Polarization is achieved by focusing on hot button divisive issues. I deeply suspect it is a "hey look over there" tactic while the two of them do whatever the fuck they want behind the scenes. As long as people have the "anybody but x" mentality, nothing will change.
My best answer to this is that the Republicans are a much better run machine when it comes to politicking than the Democrats. especially when they have such effective media outlets, such as Fox News, and pundits such as Rush Limbaugh and Anne Coulture. These outlet effectively play on people's fear and emotions to make it sound like all Democrats are almost worse than Satan, since they want "death panels", are evil since they want to abort fetuses, and are hedonistic atheists and have no morals.
Notice that most of the above examples pretty much have nothing to do with government and its governance or policy. These are just distractions for people that don't want to think analytically about the real problems our country faces. Instead, they have effectively made our politics an us vs them contest, which is really sad.
My favorite recent talking point is about their reason for not wanting to raise taxes or to close tax loop holes. The talking point is that "we cannot tax job creators." I can't help but find this laughable since if jobs had a negative correlation to the tax rate, we would not have a 9% unemployment rate. It would be
p.s. Posting anonymously since I modded another post in this thread.
Not one person has used the phrase "fractional reserve banking" in over 200 comments, which presumably means you don't actually understand why there is such a huge 'debt' in the first place.
I say 'debt' because more than 90% of the money that was lent was COUNTERFEITED into existence by the banks and the 'Federal' Reserve. Why doesn't your government just tell the lenders to go take a running jump, and ask them what they intend to do about it, since presumably the government represents the people, and controls the army, the police and the courts?
Oh, wait...
The JEWS control your Congress. The JEWS own the banks, hence the counterfeiting (what, did you expect honesty from Jews?). The JEWS control the army, the police and the courts, and hence the JEWS control YOU and your family, who have to work like slaves to pay back these bloody parasites.
When are you going to wake up?
(Cue 'useful idiots' actually defending the very scum who are leading your country into civil war, and are flooding every white country on Earth with millions of third world parasites, who are quite clearly destroying our countries...)
But, in a way, that's true. Debts don't matter.. as long as the slaves keep the faith, this can go on indefinitely. The economy is a religion that believes in a non-existent.. 'thing' that needs to be wound up like a clock.
For justice, we must go to Don Corleone
You are correct that only the facts can speak to the heart of the matter, but a reporter will only report the facts that they think are significant. As a result, if the person who is reporting an incident does not share your worldview, they may leave out facts that you would consider important. When they leave out facts that one of the parties in a dispute consider important, that party will likely appear irrational.
The truth is that all men having power ought to be mistrusted. James Madison
that would save $300+ million per year. Whether or not you agree with abortion or not and whether or not the previous caught on tape lies they have been involved in, I think most of us are decent minded enough to agree that we shouldn't be funding a company that could easily raise enough money on their own. I really dont know the amount that we as taxpayers pay in 2011 but it was more than 300 million last year or the year before. there are roughly 300 million in the US. Why not give every american tax breaks with this extra money? Heck, if Obama really wanted a nanny state he would take the $300 million and give 1 million to each american.
Let me help you get this straight: no rating agency was seriuosly suggesting downgrading the U.S. credit rating UNTIL Republicans threatened not to raise the debt ceiling. They were a long way from worrying about whether we would have enough revenue to pay interest, even with the great recession.
That's because there is a big difference between being in a lot of debt (federal deficit) while having a job you won't lose (taxes), and starting to tell your bank you won't be making your next credit card payment not because you don't have the lower interest credit line (HELOC) to offload the debt to, but because you simply refuse to. Once you start acting irrationally (teabagger) then you become a less reliable debt issuer (borrower).
Is that clear enough now?
Someone had to do it.
The government borrows credit, not money. It is Not the same although it is measured in the same units. Banks keeps the money for themselves and only so much to cover i.e. cash withdrawals. The numbers you see in your internet bank are just credit.
Slashdot tends to run heavily Liberal, so all the stupid ignorant stuff the Democrats do either gets ignored or attributed to the system as a whole.
This is mostly because of all the non-American readers like yourself - America, compared to most of Europe, is very conservative, so the party closest to the European liberal movement is generally cast as "the good party" (ie. more like us) and the more conservative groups cast as "the bad party" (ie. not like us), even though most Democrats would be classified as ultra-cons in most European countries. I see that a lot with the BBC reporting, too (they're actually better at fact-reporting on US politics than the American news, since they can't exactly have much of an agenda).
But yeah, when you said "circus" you pretty much hit the nail on the head. Both major parties are messed up beyond belief, and the only third-party to get a decent cut of votes is the single-issue Green party (which is also pretty messed up).
If you owe the world a lot of money and instead of paying them back, you buy arms and say "you will get it when you get it" it works... for a while... until the people you owe money to start getting armed too. Then you have a problem.
China owns a lot of US debt. China is getting pretty well armed. The rest of the world is starting to distance itself from the US and I guarantee you no one else will come to support the US when that happens. So... what I think we are seeing is that inevitable thing is getting closer to happening. The first major step I expect to see (and this is WAY into the future) is China "reposessing" [read: occupying] the closest US controlled territory. Once that happens and all hell threatens to break loose, China will not leave (because they never do) and the US will simply have to accept it. Then later it will happen again.... then again... And finally, threats will be made with regards to Hawaii -- the 50th state of the US. I wouldn't dare speculate as to what would happen or how that would go down, but I think by that time, we will know who our true friends are and I don't suspect there will be many, if any, left.
Sound kind of far out? A bit crazy? I don't think you've been paying attention to China's behavior and their habit of just taking things, claiming it was "always theirs to begin with" and then just sitting on it like a giant fat Budda that no one can move.
The USSR collapsed under their own weight and the US is setting itself up to do the same thing. And the multi-national corporations are the only entities which are poised to survive a US collapse. So perhaps the "Robocop" series' "OCP" company taking over cities and such isn't quite so crazy after all. And the fun thing is, the "debt" is owed by all people of the US. Think on that.
and we, the rest of the world, are her feeders. We've cought in our fetishism.
We've come to the point where we must decide if to saw up bigger doorposts, or put her on a slightly better diet. /the-tiny-swedish-voice
The evidence is right there, in the fact that the US still has a AAA rating.
I am trolling
I know this is a troll, but I fear some people actually think that cold-turkey entitlement cutoff makes sense.
If you yank the support out from under such a large portion of the population who *cannot* realistically find work right now (and even if they can find work with non-living wages), you make a lot of people very desperate. Out of this desperation at best you will have higher crime rate as people resort to whatever means possible to keep themselves fed and sheltered. On the worse end of the scale of possibilities, the internet tough guy lynch mobs for the rich become real. This is why the rich and comfortable should not begrudge welfare and similar things, they are the things pacifying the poor to stave off more risky behavior. Police forces will need more money and those not on welfare would incur higher risk. This is also why the wealthy should be all about tax hikes if the government situation seems sufficiently dire to threaten those programs, it would be far cheaper than the alternative.
Foreign aid is a little less absolute, but similar principles apply. If *no one* helps then violence bred by desperation is likely to threaten our resources, our travelers, whatever these nations can get at to extract resources from wealthy nations. You think no one should 'steal' from one and give to another, but without foreign aid there is a chance the afflicted nation will endeavor to steal with no regard for the welfare of the victims. At that point you'd gain the perspective that calling foreign aid spending 'theft' is really inaccurate. Scaling things back I could see, but I think that foreign aid is a small piece of the pie.
I also agree that our military is overextended and measures must be taken to scale back our presence, but being all or nothing stands to seriously destabilize some places absolutely dependent upon our presence.
XML is like violence. If it doesn't solve the problem, use more.
they have to. The campaign on "we're going to give you stuff". More entitlements. More defense spending, etc. They can't go to Washington and just say, "We're broke. The treasure chest is empty." Instead, there has to be a crisis so that they can say they had no choice.
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba
What people forget: Dollar money is all about belief, and very little about actual value.
The current and previous governments are/were both very concerned with ensuring that it's as much of the latter and as little of the former as possible. It's the reason we're in Iraq right now. Saddam Hussein killed thousands of his people, invaded neighboring countries and was an all-around unconscionable human being but it took him floating the idea of selling oil in Euros before it became necessary to remove him from power.
The US Government realizes that the actual value of the US Dollar is based on the things that are required to be US Dollars. If and when there are suggestions about changing the World Bank's reserve currency, the currency used in the oil exchange and things of that nature, there will be a violent reaction ranging from character assassination to an actual targeted assassination to all-out war. But you can be entirely sure that absent any rational argument for the Dollar being worth something, the US will bully its way into providing irrational reasons.
Please reread what you wrote: The amount of debt you owe has little to do ... with the likelihood that you can repay that debt...?
Afaict the majority of the US debt is denominated in US dollars and the US government can create US dollars out of thin air either directly or by ordering the fed to print them and hand them over. So really the only way for the US to default on their debt is if they "choose" to do so (in this case by refusing to raise a self-imposed "debt limit").
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
you fucking butchered his sentence and then attacked him based on something that wasn't said at all. lrn2quote and stfu
It's also important to remember that during Reagan's time we were getting like 3-4:1 GDP growth for our federal spending while now we get about $0.65-0.75 on the dollar in GDP growth per federal dollar spent. And that GDP growth would mean increased tax revenue for the foreseeable future. I'll leave speculation on our current poor rate of return for another time.
Check out my lame java blog at www.javachopshop.com
Adding on to what skids just said, Ezra Klein did a pretty good job of summarizing S&P's movement over the past year, so I'll let him do the work:
In short, our debt/GDP ratio is not what's driving the potential downgrade; rather, it's the concern that we won't be able to make the decisions necessary to eventually get our debt/GDP ratio stable. As I said, the amount the US owes has little to do with our credit rating (note: not "nothing," but "little"), since we are financially able to repay our obligations and any likely new obligations for the foreseeable future.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
Our press supports the Democrats.
FTR, I'm not a Republican. It's just obvious to any rational observer without party allegiance.
The point is that it is not the USA's ability to pay that the rating agencies are concerned with but willingness to pay. The ability to pay is not in question.
And look how well our rating agencies did by giving AAA ratings to the very banks that had such lousy policies on home mortgages. They were paid by the folks who they were rating. Talk about conflict of interest and its still going on. They are the folks who helped make the melt down happen. What else can go wrong?
You incessantly babble on about something as relevant as Justin Bieber's boxer shorts when, quite simply, the mafioso banks made you an offer you can't refuse
For justice, we must go to Don Corleone
Sounds more than a bit far out and almost totally misinformed.
China's military options for collecting on their debts are almost zero. Where will China export the goods it needs to keep its economy going if they start a war with the United States?
Further, China buys US treasuries to keep their currency valuation down so that they can continue to be the low-cost contract manufacturer to the world. Without keeping their currency low, the strength of their economy would push their currency higher, making them uncompetitive as exporters and pretty much derailing the vast majority of their economy.
A derailed economy REALLY scares the Chinese leadership, as their number one focus is maintaining order and putting a couple hundred million people out of work does not help with order.
The US is almost totally in control when it comes to Chinese owned debt. Its denominated in our own currency. Any threat to dump it would probably be met by a US threat to simply void it. They could stop buying it, but it would have a deleterious impact on their currency valuation.
What's missing from the recent coverage over the the debt ceiling dust up is the sentiment of many Republicans that Government is too big and by squeezing it from a revenue side they hope to stop its expansion and try to shrink it. This has been a long-term Republican strategy, but its largely been a failure. It may have slowed some expansion, but generally speaking the net outcome has been to cause deficits to be run up.
I largely think that some tax increase is necessary. I'd personally like to see a tax increase across the board, including low-income earners. I'd eliminate the earned income tax credit that basically allows some 40 percent of the population to pay no taxes -- I don't think a reasonable tax on them would amount to much, but I think it creates a free ride which is a poor tax policy. I think it would also philosophically undermine the "40 percent of Americans pay no taxes" line which is used to refute increasing taxes on the wealthy who can frankly afford to pay them.
More importantly, we need to have a long discussion in this country as to what's vital from the government (roads, infrastructure, safe food and medicine as a start) and what's merely nice if we can afford it.
I'm surprised by the amount of different viewpoints represented by tech-geeks here. However, having said that, it's ultimately unsettling because it would seem most people have no idea about concepts in macro-economics.
So, I thought I'd compile a few points for people to take into account before they make a final conclusion about this situation we're in (No, not just America, the world)
1. This is NOT the first time we’ve raised the debt ceiling.
2. Most countries peg their currency off of ours, which allows us a lot of freedom when it comes to dealing with debt. We may owe a lot of money but there are countless countries who owe AMERICA a lot of money. So for instance, China is so successful when it comes to cheaper prices because it will lower their prices based on our dollar so that they can keep the same level of competitive advantage. China does own a lot of our deficit but without our demand they are worthless (for the time being)
3. We have done a lot of favors. Most notable mentions are to Japan, Germany, and China after World War 2 because the United States paid for most of the rebuilding and aid that went into reestablishing these great nations. (and must I mention, we didn’t ask for that back yet)
4. Back before World War 2, we originally got off the gold standard for multiple reasons but the biggest one being, A DEBT THE US COULD NOT COVER that includes, social programs like SOCIAL SECURITY, and I don’t know, a more well known problem, World War 1. Germany got off the gold standard a long time ago because they needed to pay for WW1 and because they were already in a deficit.
5. Adding more debt is a bad thing, AU CONTRAIR my lads, if you look at history, it would seem most times we needed to spend money to get out of a recession but we have a tough time dealing with after-effects, or basically, inflation. The way we’ve dealt with it is basically by sitting still, we haven’t done anything. We’re supposed to reduce the budget but we never do, no one really ever does by that much. Think about it, my grandfather always said blablabla icecream use to be 5 cents, well now it’s 2 dollars but our quality of living is still the same if not higher.
A final, moot point.
We will never rid ourselves of debt, especially with a system that makes money out of thin air by adjusting credit regulations. It is inevitable; we cannot and will not go back to a gold standard When it comes down to it, we can borrow as much money as we’d like so long as the US still stands as the international market-place for the world. We no longer are a manufacturing nation credit has become our bread and butter. It all just comes down to whether the bank will give us more credit should they, no.. Will they? Yes. Why? Because the United States with a limited budget is bad for everyone.
People pay us to police the world
Just take the OP and substitute "Moderate Republicans" for "Democrats" and "Tea Party" for "Republicans" and we see what we have here is more kabuki where we've found an even crazier uncle for the crazy uncle to pretend to be reining in, so the Democrats can compromise away even more, because after all, before it was just one crazy uncle, now it's two, and one of them it totally batshit.
It wouldn't work, except that the giant independent/centrist majority of the U.S. are conflict-averse weaklings who worship anything bearing the "compromise" label and are afraid to take sides or stand up for principles.
Someone had to do it.
To me, it always sounds like, "I'm going to save you".
"I'm going to save you from the horrible economy. This means spending many billions of dollars."
"I'm going to save you from the turrurists. This means spending many billions of dollars."
"I'm going to save you from the Russians. This means spending many billions of dollars."
etc, etc. It's that pesky problem... to make it sound like you actually are saving someone, you have to spend money. Cutting anything is unpopular... even for the worthless shit. Jacking up taxes to pay for worthelss shit... even less popular. As everyone has noticed, but done nothing about, that's a recipe for disaster.
As a matter of fact that's just about correct, if I understand it right. I know you're trying to be snarky, but I think in approximation and analogy that's how it works. The issue isn't directly how much US owes compared with its wealth (it would never be the absolute value of the debt, anyway), but whether creditors are willing to keep lending, which of course depends on other interrelated things like the growth of the US economy, the money supply, the rate of inflation, interest rates, and how the play of all of these factors and others in the economies of other countries in the world effect their credit-worthiness relative to the US. If lenders start to decide they don't trust the US to hold their money, more than they do any other country, that's when the American national debt becomes a huge problem for everyone. And I think it's true that one of the reasons this could happen is if people start to see the risk of American default because of the overwhelming size of the debt relative to the US economy.
You're absolutely right I should support all this with evidence, and I'm astonished that it seems to be really hard to find reliable explanations of the dynamics of government debt online. Maybe I'm using the wrong keywords. However, the US Government Accountability Office has a pretty good explanation of the reasons why creditors generally buy US debt. It doesn't say exactly what I'm saying, but gives a more detailed explanation of the way US debt works.
I'm not an economist, of course, so possibly talking out of the wrong end.
Or maybe we would revive our manufacturing infrastructure, so we could make our electronics and toys and cheap you-assemble furniture ourselves, which would create jobs and keep more money circulating within our own borders. Maybe the value of the dollar would fall, making it more expensive for offshore labor, which would bring jobs back home. Maybe oil would become so expensive as a result that we have no choice but to invest in renewable energy and public transportation. Maybe goods would become more expensive, so maybe we'd stop buying disposable things and make better use of what we do have. We wouldn't like it one bit, but those are all things we have to do anyway, sooner or later.
Fun with Anagarams! LADS HOST, SHALT DOS. HAS DOLTS. AD SLOTHS, HATS SOLD. ASS HO, LTD.
The top 1%ers, where is that top 1% of wealth?
Is it under a mattress?
No, for the most part it's invest in companies, keeping business going, keeping people employed.
Bill Gates, most of the wealth in Microsoft. Warren Buffet, most of the wealth in various stocks and dozens of companies under Berkshire Hathaway. Larry Ellison, most in Oracle stock. Walton family, Wal-Mart stock. Koch brothers, stock in a large number of companies under the Koch umbrella. Michael Bloomberg, most of the wealth in Bloomberg L.P., a financial news and services company he started in the 80s. That's the top 10.
Let's see, employees:
Microsoft: 89,000
Berkshire: Many tens of thousands
Koch: 70,000
Walmart: 2,100,000
Bloomberg: 13,000
I know, let's confiscate everything and put all those people out of work
they report the news in ways that look good for the Democrats
If that's what they're trying to do, they're astoundingly incompetent.
Polls (such as Gallup) currently put approval rating of Democrats and Republicans at about 30%. That means that right now we actually have a plurality of voters that disapprove of both major parties but have nowhere to go.
I am officially gone from
We've been lowering taxes to pay for worthless shit. That's a recipe for disaster. Who starts two wars and then lowers taxes? And then he borrowed all the money and kept it off the books like it didn't need to be paid back. It's not all Bush's fault, in fact, I think Reagan and Clinton set us up for failure. It's just that the Bush tax cuts, two wars, and Medicare Part D (which was passed unpaid for) was the killing blow to the economy.
No, really it does.
Deleted
It's that simple.
Look up Fractional Reserve Banking. Money (credit) is borrowed into existence. When you take a loan out, your bank creates money and gives it to you. They didn't have the money before the loan was made.
Deleted
Afaict the majority of the US debt is denominated in US dollars
Just for clarification, ALL of the US debt is denominated in US dollars. We are a sovereign issuer of debt denominate solely in a currency that we have monopoly control over, and the rest of your point is correct and accurate.
Clinton in 1995 presented a budget that never attempted to balance the budget. I know because I was actually paying attention in 1995. I'm not even relying on something I read. I'm relying on memory.
What happened is that the Republican Congress reduced the rate of increases in spending and Clinton, to his credit, went along for the ride.
Let me repeat: reduced the rate of increases. That's all it took.
People should look into Hauser's Law. The amount of tax revenue to the federal government as a percentage of GDP is pretty stable no matter what the tax rates are doing. So spending above that norm isn't going to balance the budget and taxing your way into a balanced budget isn't going to work. At least not at these spending levels.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Is this where I complain about the government, and in particular, the political party that I hate?
There are 0x40000000 types of people: those who understand 32-bit IEEE 754 floating point, and those who don't.
Please reread what you wrote: The amount of debt you owe has little to do ... with the likelihood that you can repay that debt...?
Well, depends how you look at it. The amount of debt alone isn't important; it's the amount of debt compared with likely future income. And in the case of the federal government, we'll almost certainly repay that debt, even if it's ultimately done with an inflation tax.
For example, Greece and Portugal and Ireland and Italy would not be such problems if it were not for the Euro. If they still had their own currencies, they'd have inflation on their currency and the citizens in those countries would pay for their expenses. But since they are all using the Euro, that inflation would also affect Germany and France, forcing those countries to bail out their Euro counterparts to avoid inflation on their currency.
Anyway, for the federal government, the size of the debt does not matter in terms of our ability to repay it. It most certainly matters in terms of future economic stability, but the people who will be screwed will be your average citizens.
paintball
"Reagan proved deficits don't matter" then why are we seeing negative effects? Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right?
You are connecting our debt to our credit rating. They have nothing to do with one another at this point in time.
We may lose our AAA rating because we have shown to the world that we can't agree about how we are managing our debt... and that we nearly defaulted on our loans because cooler heads didn't prevail. NOT because we actually can't pay for our debt. We can for the foreseeable future.
Do we need to get our spending under control? Yes. But, are we losing our AAA rating because of our debt (the actual money we have borrowed)? No
China owns about 7.5% of our debt. Japan and the UK each own almost as much, and are our very close allies. The American public owns almost half our debt. If it ever came time to divide up America's assets to pay off its creditors, China would not exactly take a high priority, certainly not enough for them to start seizing US territories. And if China has a habit of "just taking things" and thinks it can tussle with the US and its allies, they would have Taiwan back by now.
How does it feel to be just smart enough to repeat a talking point, but not smart enough to know that what you're repeating isn't true?
And "raising the debt ceiling" means printing more Dollars.
This is just plain wrong. In fact, raising the debt ceiling is the option that AVOIDs having to print more money.
When the US raises the debt ceiling, it allows the government to sell more debt. When the government sells debt, someone else BUYS that debt. The total number of dollars stays the same - the government isn't printing more money, it's just paying somebody else interest to use the dollars they already have. If that person didn't buy the debt, because they didn't want to or it were not available to buy, then they'd presumably to something else with that money.
If what you were saying were true, then everytime someone used a credit card, they'd be printing money too.
On the converse, if the debt ceiling is NOT raised, one way out of that situation would be for the Fed to mint a $5 trillion coin, and then the government could use that to keep paying what congress already demanded that the government spend. THAT *WOULD*, however, destroy confidence in the currency.
paintball
Deficits don't matter so long as the economy is growing faster than the debt. It's like buying something with a credit card knowing you're going to get a raise before the bill comes due. Works fine, as long as those raises keep coming. Once they stop -- or worse, you get a cut -- you're screwed. Guess what happened to the US economy?
As for tax increases/cuts - static analysis of tax-generated revenue is wrong, because it doesn't take into account the effect of the tax on the activity you're taxing. Below a certain rate, it will have little effect. Above some rate (which is going to vary with whatever it is you're taxing and how you're taxing it), it's going to discourage that activity, resulting in net lower tax income. On the whole, Republicans like to argue that we're above that point, and we should cut taxes further, where Democrats like to argue that we're below that point, and should raise them.
why is this topic even on slashdot?
...and when a bunch of Republicans realized this was true of the current Republican leadership, they created the "Tea Party" movement.
Have a look at Zeitgeist and you will understand why this system is doomed to fail. Sooner or later it will come down. And people should start think also that a rich country is a country where EVERYONE get a medicare not only the richest. money are just numbers on a pc. Also south park made a great episode about it ;)
Resources not numbers.
I don't like it when people make Social Security a moral imperative. It isn't. It's a practical imperative. Social Security is essentially "living too long" insurance. Everybody pays into it, and when you get old enough, you get paid so that you don't have to keep working to avoid living on the street. This is done in a very, very financially efficient manner. Were you to replace the same program with some private equivalent, much more money would be lost to administration (like advertising), profits, etc. Medicare / Medicaid works the same way - insuring old people isn't profitable, so the government has to do it. And Medicaid steps in to care for people who no longer have any assets.
The reason social security is a practical imperative is that it's better than any alternative. You have to ask yourself, what do you replace social security with? Well, the same thing that exists in 2nd and 3rd world countries: Extended families.
So, you might get lucky - your parents both die of heart attacks when they're 65 and leave you a nice inheritance. Or, you might not get lucky. Maybe your parents live to 85 years old and have a debilitating condition like Alzheimers that requires round-the-clock care. In that case, under the current system, social security pays enough for them to not live on the street, and Medicare covers their hospital bills and some prescriptions. It doesn't cover nursing home care though, so your parents will use all of their assets paying for nursing home care (or, more appropriately, you'll use all their assets paying for nursing home care) until they are broke. At that point, Medicaid will step in and cover their nursing home care.
If you eliminate social security and medicare and medicaid, you instead have different choices: Start bankrupting yourself paying for your parent's care, let your parents move in with you and do nothing except work and have everyone in your family take turns bathing and wiping the ass of your parent, or let them die in the street.
Social Security and Medicare isn't just for old people either. Let's say your sister or brother gets in a car accident and has brain damage and can no longer work or really care for themselves. Social security and Medicare will pay enough that they won't have to live on the street and, once they are completely broke, get their medical bills paid. Remember, since they can't work, they lose any insurance they had.
Without social security and medicaid, once your brother or sister has no assets left, you can bankrupt yourself paying for their care, or let them die. Those are your options - let 'em die, or become bankrupt - because of an accident. Or maybe it's cancer. But as soon as you're sick enough that you can't work, you're sick enough that nobody has to pay for your medical care either.
So, sure, we can get rid of social security and medicare and medicaid. That's likely, at some point, to really make your life difficult. That's a huge cost to you - you lose a big benefit. What do you get? Do your taxes go down? To you get to keep more of your money? No. You don't. The benefit of getting rid of social security and medicare and medicaid is that the richest Americans can continue to pay 15% taxes on their capital gains and dividends while the rest of us pay up to a marginal 43% combined on income and payroll taxes.
The rich don't want to cut social security and medicare and medicaid to help you - they want to cut them to help them.
paintball
This is complete bullshit.
China's record is pretty exemplary when it comes to international aggression. The last time they were a global superpower they build oceanic ships, took a look around and then decided they were quite happy with what they had.
Sure they've got disputes about Taiwan and Tibet but historically they have been in and out of Chinese control. Put them aside and China has to be one of the least bellicose nations on Earth.
This is coming from a Brit and we've been at war with more countries than anyone else.
Short version: You don't pay social security / medicare / medicaid taxes for future benefits. You pay them so if your family or friends get too old and or too sick, you're not faced with having to care for them yourself or watch them try and live in the streets.
paintball
You also forget that the Republicans HAVE to be Obama contrarians, even when he's spewing their own far right bullshit. e.g. Republicans: We should bring democracy to the people of Libya! Obama: Send in the troops! Republicans: Are you mad? We can't afford another war!
Clinton was the only president to break from this norm since then
Thought exercise - if Clinton was a break from the norm, why did debt continue to increase under his watch?
Numbers can be made to say anything, the final tally does not lie...
This is very basic math
You are doing basic math, they are not. Do not trust the maths of government, for it is subtle and quick to indent. Any "cut" not done now is not a cut, it's a promise to cut that they can quietly dispose of when the curtain has fallen.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
We don't need to get a "new" credit card just to pay the interest on our loans. We could do that okay. We need to get a "new" credit card so that we can continue to spend like drunken sailors. Only problem being, our sailor's pay ran out, and this ship never sails.
Dirty little secret being, if we hadn't come to a debt agreement, the world as we know it would not have come to a screeching halt. We DO have enough money coming in to cover the bare essentials going out. The soldiers would still get their paychecks. Social Security and Medicare would have enough to cover their costs. Congress and the President (unfortunately) would probably still get their paychecks too. Yeah, the government would go on an abrupt starvation diet, but it'd live. Most of them (probably) know this, but either can't afford to say it or don't want to draw fire from all sides when a few left/right pet projects don't get funded. But if you noticed that neither party was particularly eager to bail out of this national game of "Chicken", now you know why.
The crucial thing that all the talking heads are missing is that you and I are users of money. We have to get money before we can spend. The US federal government, on the other hand, is an issuer of money. They have to spend money before they can get it back.
We are the players of World of Warcraft, and the US federal government is Blizzard. Everything else follows from this when you think about it logically (and are prepared to challenge everything you've known so far about macroeconomics).
If you want to really challenge your understanding of all this, I suggest you read about Modern Monetary Theory. Some initial pointers are: this overview, the book 7 Deadly Innocent Frauds, and the blog of economics professor Bill Mitchell - for your particular question particularly the series Deficit Spending 101: #1, #2, #3.
The Cliff Notes version is that because - in the long run - the private and external sectors save in financial assets, the currency issuer must run a deficit to maintain aggregate demand at a level where the economy does not tank - after all, the money that is being saved by the private and external sectors has to come from somewhere. The government surplus under Clinton was only possible due to the financial engineering that allowed the private sector to accumulate massive debts. These debts ultimately were not sustainable, and so it is quite reasonable to say that the Clinton surpluses are one of the causes of the global financial crisis. What we are seeing now is that the private debt burdens are shifted back to the government.
The Bush tax cuts cut taxes for everyone, not only the rich.
While that's TECHNICALLY mostly true, it's not true in spirit.
Let's say I have $10,000 that I'm going to give to 100 people. If I give one of them $9,901 and 99 of them $1, would it be fair to say I just gave $10,000 to a group of 100 people?
That's basically the way the Bush income taxes worked. Middle class Americans saw their post-tax income go up 1%. The ueber-rich saw their post-tax income go up 6%. They used a token tax cut for most of us to buy support for a huge tax cut for the uber-rich.
The Obama tax cut saved most Americans much more on their taxes than the Bush tax cuts. Cutting 2% from the payroll tax did almost nothing for the ueber rich, but made a big difference for Americans who actually work for a living.
One doesn't get rich by stealing from the poor. But one who is already rich can get filthy rich by stealing from the middle class - one way to do that is make the middle class pay a 15.4% tax on their jobs, and 25% on any additional income, while only paying a 15% tax on your income because, already being rich, you don't have to "work" anymore and can just "invest".
Federal taxes are currently set up to reward people for already having money.
I'll tell you how to fix the US economy, btw. Eliminate payroll taxes right now, for employees and employers. Make taxes on capital gains and dividends the same as income taxes. If that' still not revenue neutral, up everyone's income taxes by whatever percentage is needed to keep overall revenue the same.
Result: Creating a job in American just became 15.4% less expensive. People who ACTUALLY create jobs get a nice tax cut. Workers get a tax cut. People who only increase profits by shipping jobs overseas get a big tax increase. Result: Huge incentives to create jobs in the US, growing the US economy, and hopefully even making it a long-term wash for the people who don't create jobs.
paintball
When we do pull out they will be missing all of those local jobs.
I've seen a couple communities in Germany devastated by the loss of US military bases. Aside from local national jobs on the base, many local businesses cater to the now-missing Americans, and many landlords depend on Americans to keep their units full.
However, when a smaller US base is in the middle of an otherwise large and successful city, they can't wait for the Americans to leave. The property is usually quite valuable, and either the government, a university or a business wants to use it.
And I don't care about that end. If we do not need that base for a clear strategic reason, get rid of it.
Also for the curious, US and Denmark (something to do with Legos or Escher I'm sure) are the only ones WITH debt ceilings.
http://www.piie.com/realtime/?p=2280
http://www.piie.com/realtime/?p=2292
Atlas Shrugged : Thematic Story
Medicare isn't a pet issue of Democratic Party members. Republican Party members and Democratic Party members join together to muck with the Medicare fee schedules.
And every time they do, the likelihood of an actual fee adjustment drops. The data is quite telling.
2012's preliminary Medicare Sustainable Growth Rate findings would have a 29.5% cut in provider fees (the size of the cut is entirely due to the fact that a bipartisan action from the US Congress which is signed by the president never lets a year's cuts happen anymore, so they build up), but the last time that the fees actually did go down was 2002.
Since 1992, the actual physician fee changes has been an increase of 43.7%, and if the fee cuts were actually allowed for 2012, it would drop to 2.1%.
Imagine a huge cruise ship with lots of passengers, roughly split into 2 ideological groups. One group wants to steer the ship to the right of every obstacle. The other group thinks it is better to steer to the left. There is a massive rouge wave coming from behind.
That's it. There is no avoiding this problem.
Quite so. The Republican party serves the interests of its cronies in the Military Industrial Complex, and then simply don't think beyond that. At all. They don't really have to, do they? After all, the angry God is on their side.
-- thinkyhead software and media
You and a bunch of other ignant fools said "there is actually a disincentive to go out and look for work" here and all over the internet.
And to that, I say: CITATION NEEDED. Citation needed from some sort of authoritative source, not "the man in the pub" or "a radio talkshow host". You self-interested pieces of shit, show us the numbers that say people don't want to work, or that they're living high on the hog on unemployment, on their $400 a month. Show us the data. And not some Heritage Foundation fiction, show us something that isn't coming from a right-wing sewage tank.
We're waiting. We're waiting for all these mythical welfare queens--after decades of existing only in the lies and fictions of the hard right--to turn into reality at last. Only you look around and what do we have? People who want to work hard but the economy's been fucked so they're fucked too. Well, wait long enough and we're all fucked. The line between any two of us is much thinner than you realize, or maybe you're just scared to admit it.
And while we're waiting, let's talk about this "taxation is theft" crock of shit. Taxation is part of your obligation as SOMEONE LIVING IN SOCIETY. Taxation is a part of the social contract, the ethics of which go back much farther than that thoroughly-debunked pseudo-philosopher Rand you're cribbing this nonsense from.
You don't want taxes? Fine, let's take away all the societal support structures that make your money worth anything. Now you can hoard all the useless piles of metal you want, and your faith in its "intrinsic value" will sustain you until you starve to death.
Apple currently has $63 billion is in securities, which mainly means stocks and bonds. That's most of their money that you are referencing.
Apple also has $12 billion in cash and cash equivalents. This is the highly liquid assets you refer to. Now of course no reasonable company just lets that sit. Almost all of that is invested in short-term treasury bills, preferred stock, commercial paper, money markets, etc.
Apple also has 49,400 employees.
No, no, no, don't even THINK about suggesting we stop the taxpayer funding of the biggest baby killing machine in the country.
The pro-abortion people will be all over you. Yes, pro-abortion. I'm pro-choice, believing I don't have the right to force my views onto a woman's right to choose what she does with her own body. Most of your PP supporters are actually pro-abortion.
TEA PARTY: Yes, but NOT the things we benefit off of.
This is totally false. The Tea Party is willing to cut things they benefit from, or will benefit - Social Security for one, but other programs too.
Find one instance of the Tea Party meeting a real cut they did not like. Even the military is game, in moderation.
The Tea Party is formed on the basis of smaller government and reduced spending. Rational people understand that means cutting programs that affect them, and they are fine with it. Joke about the Tea Party and rationality all you like, but in the end they are the only ones consistently holding the rational position given the problem with debt that we have,
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Why haven't I heard anybody discuss cutting foreign aid? People don't want medicare, medicaid or social security to get slashed? That's fine, we can concentrate on spending money to help out citizens as long as we stop throwing money at the rest of the world
The thing about the Brits is somehow you have the chutzpah to hold a "Commonwealth Games"[1] and people actually show up ;).
Heck a few countries that weren't ex-colonies actually applied (and got) the privilege of pretending to be like an ex-colony...
FWIW, I live in an excolony and in that colony the Brits were probably a lesser evil compared to the rulers they supplanted.
[1] Interesting thing to call it too right?
compared to probably 99.999998% that say they would but are just lying. Remember how the Airlines are pocketing the FAA taxes now instead of passing the savings back to the consumers? It's pretty much the same with employers.
How could TARP lose money? The fed gave money to the banks at near 0%, which then bought treasuries that were guaranteed to return more than the money they got. Being paid to lend money to the govt. Give me some of that action! Oh wait I'm not one of the select friends in high places.
However TARP was a drop in the bucket. The GAO audit of the fed showed 16 trillion was loaned out to financial institutions around the world. 16 trillion makes 750 billion look small potatoes.
Rolling Stone article describing some of this. My favorite highlights
It's this sort of using connections to make a ton of money, blatantly, that gets people pissed. This is the 1% that's benefiting from all of this mess. No different than GE paying 0 in taxes because they can afford 1000 lawyers, while the typical small business can't bounce money around the world and have enough lawyers to do it. When the game becomes so obviously stacked against the other players it's time for some changes.
For all you sheep that just do not get it. Congress and the President have had DECADES to fix this issue, but for some reason decided to wait until the last minute. The reason is because there is money to be made, and at our expense. It has nothing to do with Republicans -vs- Democrats, or House -vs- Senate, or the President. It has to do with making money, just like the Bank bailout did. Get educated.
Republicans want to make sure that the rich keep this money and use it to line their own pockets and occasionally give money back to said republicans my means of bribes (political contributions). One only needs to look at past history to show this, yet the neocons keep finding feeble minded idiots willing to ignore reality to believe their BS.
I'm guessing you haven't heard anything about China's claim to Okinawa or to other territories not generally associated with China.
Taiwan has defensive capabilities and China is not yet that bold... but I have little doubt that they will be soon enough. That will likely be at the very moment people are powerless to do anything about it.
A "right" cannot exist where it depends on the labor of another.
I guess a partisan political issue that is 100% manufactured drama is now "news for nerds"? Oh wait, Slashdot dropped that tagline.
C'mon, this is just click bait for the traditional leftist Slashdot base, half of whom post as ACs when criticizing those evil politicians with R's next to their name, and the other half when criticizing the evil D's.
As one wise person said somewhere in this discussion, some day you'll be old enough to realize they are both the same, and you'll be sad at the YEARS you've wasted arguing on behalf of one side or the other.
Now get off my lawn!
I was wondering when we were going to see an idiot attempt to go all the way back to Carter to place the blame on someone else. You might want to be a little more subtle on your attempt to blame the housing crash on minorities, however, most people have figured out your code words. The claim that the rich are struggling to pay the lowest tax rated of 60 years is hilarious, however. Keep up the good work, we can all use the laugh.
"No plan under serious consideration cuts spending in the way you and I think about it. Instead, the cuts being discussed are illusory and are not cuts from current amounts being spent, but cuts in prospective spending increases. This is akin to a family saving $100,000 in expenses by deciding not to buy a Lamborghini and instead getting a fully loaded Mercedes when really their budget dictates that they need to stick with their perfectly serviceable Honda." http://www.ronpaul2012.net/2011/08/01/ron-paul-on-the-debt-ceiling-debate-just-freeze-the-budget/
Lisa: I'll stop buying Malibu Stacey clothing.
Bart: And I'll take up smoking and give that up.
Homer: Good for you, son. Giving up smoking is one of the hardest things you'll ever have to do. Have a dollar.
[gives a dollar bill to Bart]
Lisa: But he didn't do anything!
Homer: Didn't he, Lisa? Didn't he?
Slashdot tends to run heavily Liberal, so all the stupid ignorant stuff the Democrats do either gets ignored or attributed to the system as a whole.
Since when are Democrats liberal in any way, shape, or form?
With the first link, the chain is forged.
corporate backers...
Any idea that the US government is representing the will of the American people is an illusion.
You keep talking about corporate backers getting what they want, but then you end with that sentence. I don't get it, it seems self-contradictory.
I hear this a lot and read various papers on the subject that are handed out. Still, they seem all say "put us in charge so we can make a government for the workers!" Of course, they never actually get around to saying how they plan to do that. Their goals never seem to be stated farther than "put us in charge". Even here, I see the rally call, but no information. No plan. No party name or platform planks. No even a link. When they do speak, Socialists tend to have the same faults as the Tea Party. They say they have some sensible goal "government for the people, reduce government debt, etc" but when you ask how and they actually get around to telling you the details, the crazy comes out.
If our economy can't survive without trillion dollar deficits, then it's already blown up. If you think the Democrats work to cover their own ass, then you need to ask why the president insisted on kicking the can for the next increase past the next election.
We are borrowing massive piles of money with no viable plan to ever stop borrowing, and using it to buy goods from foreign countries. Do you expect them to keep shipping us happy meal toys and oil forever in return for printed paper? You seriously think we even deserve a AAA rating right now? Would you keep giving your money to someone that can't seem to ever stop asking for more?
This will end in complete disaster. The massive cuts will happen, one way or another. You cannot soak the rich out of this mess; most of their wealth you eye so jealously is just pretend paper too. You can't kick the can forever. Austerity will happen to us (and most of Europe). Brace yourself.
They're liberal compared to the other major US political party. The only way you can't consider them liberal is in comparison to other countries, or in comparison to extremely minor parties.
Afaict the majority of the US debt is denominated in US dollars and the US government can create US dollars out of thin air either directly or by ordering the fed to print them and hand them over. So really the only way for the US to default on their debt is if they "choose" to do so (in this case by refusing to raise a self-imposed "debt limit").
The US has been doing that for years, but when done to excess it has severe consequences - the US now on a trajectory where debt will become worse and worse without some magical growth wand or excessive devaluation of the currency. Devaluation is typically the easiest way out of default, but it is not without consequences, particularly for normal voters. Suddenly their life's savings are worthless, imports from abroad are twice the price, food is incredibly expensive when priced in dollars, travelling abroad is expensive, and, perhaps most importantly for the US - why would the rest of the world continue to use dollars as a reserve currency if it is constantly losing value? Now perhaps a soft default as you suggest is worth doing to escape the even worse consequence of a hard default, but it is *not* without consequences, which are often most harshly felt by those who are least to blame for the original debt. Obviously printing more money can help to some extent in extremis, but if employed too often it will backfire. QE1+2 have arguably already caused huge swings in global markets, huge food price increases for millions worldwide due to speculation on commodities, and lining the pockets of hedge funds, not any real or appreciable economic growth.
If it was as easy to devalue your way out of a squeeze as you suggest, why would the US bother borrowing money at all - after all, if they need some more, they can just print it!
The US government can't order the Fed to just 'hand it over'. That money is loaned to the US at interest. The amount owed to the Fed (principle + interest) is more than the amount of money available, and can never be paid back except by extracting it from somewhere else outside of the US's economy.
If your debt is growing more slowly than your income, then yes, you can grow that debt however you like and you will still end up in a sounder position than when you started. The fact that gets drowned out in also this is that the US's long-run GDP minus it's cost of borrowing is still something like 2.8% - in other words, the debt can grow at anything less than 2.8% a year and it will reduce as a share of GDP, which is ultimately the only number that really matters.
[FUCK BETA]
You started with Reagan to pad your stats. The slide started well before him. Don't remember the Carter recession? Rampant inflation?
The Democrats ran the House from 1955 to 1995 (40 years solid!). During that same time, Democrats held the Senate for all but three terms. In fact, from 1933 to 1955, the Republicans held the House and Senate each for only two terms.
After 1995 the Senate is mixed, and the House is Republican except for two terms. The presidents are pretty much mixed during this entire period.
But let's go post-war, which excludes the Roosevelt/Democrat domination. Of the 34 sessions since:
Democrats in charge of Senate: 24 terms, 71%
Democrats in charge of House: 25 terms, 74%
Democrats in as President: 16 terms, 47%
It's quite apparent, Democrats have been running our legislature, while presidents have been pretty much equal. In addition, through this history Democratic presidents far more often had the luxury of working with a Democrat-dominated Congress.
It's quite simple, and, no, it's not about Obama or the Democrats (as the singer says, "you're so vain").
The grassroots Tea Party movement got several well-established Republicans thrown out of office in 2010, and narrowly missed many others, which they are aiming for in 2012. This seriously shocked the Republican establishment. The current lot of wasteful Republicans are afraid they'll lose their jobs if they don't at least make a grand showing of an attempt at fiscal responsibility.
So you have some new Republicans in office who actually want to fix things, but they're new, with little actual power. The rest don't really care, they just want to keep their jobs. It's all a show.
I hope you're right.
All this talk about Reagan's deficit spending, Clinton's deficit spending, and Bush's deficit spending is very interesting. But why is it that no one wants to talk about Obama's deficit spending? He is on pace to double Bush's spending, and triple the per-year deficit spending.
Let's stop arguing about who is worse, and concede that they are all to blame. Then let's get on with finding a way to build budgets closer to $$OUT = $$IN.
I don't think that word means what you think it means.
um, no. It is about the debt-to-gdp ratio. The debt ratings agencies have said as much, saying that even $4 Trillion in cuts may not prevent a downgrade of the U.S. debt rating. The U.S. is on the path of greece with both republicans and democrats sitting on their hands. This deal is a joke, raise the ceiling to allow $2 more trillion of spending over the next year, and "pay" for it by cuts over the next decade. China and Russia are going to dominate in the future.
Debt as percentage of GDP:
U.S. - 58.9%
China - 17.5%
Russia - 9.5%
sources:
http://www.newsdaily.com/stories/tre76r5w6-us-usa-ratings-sp/
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
They care about having customers to employ their workers. Past money spent is under the bridge. Sure they'll pick up commodities where they can with it, but really, by the time they finish spending it, the dollar is going to be toilet paper. It's the real stuff like the jobs, the factories, the infrastructure etc that they were after, and you gave them that... LOL. Paid them to take it.
Thing is, Americans are no longer the customers they were. So China has started appreciating their currency and is actively diversifying out of US debt.
Customers? There are 1.2 billion Chinese. Bout ~400 million modernised, that's more consumers than America, ~800 million still to go.
http://www.cnbc.com/id/43877263/
Basically, you've been betrayed. You have elected traitors, you work for traitors, but in a democracy you get the government you deserve.
Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting. -- Sun Tzu
China won, without a shot being fired. It is now only a matter of time, in less than a decade, as your public debt (never mind private and commercial debt) grows larger than 100% of GDP, China will become the pre-eminent nation on the planet... And it took only 50 years, basically only 1 generation, the Boomers, to do it.
Deleted
Their income tax rate is already far higher than anyone else. In fact, those 1%ers pay 38% of all federal income tax.
Which is why we have the lower capital gains tax. If they re-invest their income, then income derived from that investment is taxed at a lower rate, and one that makes up for the inherent government tax known as inflation. This serves your purpose of encouraging investment.
Oh, wait, you probably have a rant somewhere else complaining about the low capital gains taxes.
Then after that you of course start blurring the lines between individual income taxes and corporate taxes, and foreign corporate taxes. And then
You don't even know the terminology. It's called the "double Irish" to which you can add a "Dutch sandwich." Get an education, then get back.
As I explained above, they're saying that *now*. As recently as six months ago, they were saying that we needed to come up with a plan (note, that's come up with, not implement) in the next five years. Our fiscal outlook hasn't changed significantly in the past six months. The ratings agencies are reacting to political change, not economic change.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
The debt ceiling needed to be moved through to 2013 to prevent another potentially catastrophic game of chicken. It's an issue that's easy to demagogue, with an impact of triggering a larger depression if the ceiling isn't lifted in a timely manner.
No one is projecting trillion dollar deficits indefinitely. The reason the deficit spiked is because revenues plummeted when the economy plummeted, along with comparatively small automatic stabilizers and fiscal stimulus.
I hold some treasuries as part of my retirement, and will continue to do so. The debt of the US has been and remains the safest in the world, notwithstanding the insanity of a few members of Congress.
Finally, our economic situation will only end in disaster if we collectively allow it to do so. We need to bring our revenues and spending into line in the medium-long term, but austerity measures in the short term only make that harder. We need to get the economy moving again, and we need to curb health-care spending in the medium-long term (perhaps with less demagoguery about "death panels"), neither of which will be helped by wasting human capital in the name of fiscal self-flagellation.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
The alleged quote from Cheney is a gross oversimplification of reality. It would have been more accurate if he had said "small deficits don't matter much."
The largest deficit during Reagan's term was about $220 billion. Even after accounting for inflation, that doesn't come close to the devestating effects of this year's $1.5 trillion shortfall. (Also, keep in mind that every year Reagan proposed a budget in which the deficit was smaller than the previous year -- and every year, Congress pronounced his proposal "dead on arrival." So it would have been still more accurate if Cheney had said "Congress in the 1980s proved that moderately-sized deficits are not fatal.")
There's actually very little difference between an individual's personal debt and the national debt. Our current $14.3 trillion national debt is a hole. Our options are to
(1) dig ourselves out (i.e., start paying down principal),
(2) continue to live in the hole at the same depth (i.e., pay interest on the debt forever, without changing the amount of principal owed), or
(3) dig ourselves deeper.
Guess what -- the "debt deal" being voted on tonight digs the hole deeper (albeit at a slightly slower rate than during the first half of the Obama administration). As difficult as it would be to dig ourselves out of a $14.3 trillion debt, after a few more years of these huge deficits it's going to be impossible.
I think risom was trying to say that it's possible for a country to weasel out of its debt by inflating its currency (i.e., paying off creditors with dollars that aren't worth as much as the dollars that were originally lent). Be sure to consider all the downsides of that approach:
(1) It's fundamentally dishonest.
(2) It erodes the life savings of all of the country's citizens.
(3) It may take decades to restore trust in your creditors that you aren't going to do that to them again.
(4) Inflation cuts both ways: the revenue dollars the government is still able to collect hold less purchasing power than they used to, and interest rates rise during periods of inflation, so as old debt gets rolled over, the government must pay more interest on it.
(5) You run the very real risk of losing control of the situation and slipping into hyperinflation.
An extreme form of this weaseling is redenomination. For an extreme example of redenomination, see the history of the ruble: http://en.wikipedia.org/wiki/Russian_ruble
That whole article is summed up in this amazing sentence: "By calculating the product of all six redenominations, it is seen that a seventh ruble is equal to 5E15 original rubles."
That that is is that that that that is not is not.
sigh... you're a complete idiot. keeping the war funding off the budget did not keep it off the books. It kept the spending from being a budgetary asset. when the wars are over, the money allocated to them disappears When its on budget, all the money allocated to it can be spent on other things. Not really smart to do it the later way now is it. But that's how the US government works. And yes, we have already seen claims of paying for crap with savings from ending the wars. So Obama basically made emergency spending permanent spending.
It would make the US a 3rd world nation
I doubt that the US will ever stop allying itself with the US. That is as ridiculous as the idea that the US could become a 2nd world nation, allied with the Soviet Union. Too crazy, the shit ain't happenen' nigga!
That's actually exactly what a credit card company would want. They dont want you to pay down the principal, they make less money that way. While having too much revolving debt on the books can negatively impact things, as long as the interest is paid, it's a secondary concern. If you don't understand how a credit card works, I think you're ill suited to contribute to this conversation by demanding proof of basic economics.
What I'm asking is why, if people like Cheney said that "Reagan proved deficits don't matter" [washingtonpost.com] then why are we seeing negative effects?
What Cheney meant was Republicans are free to raise the deficit to ridiculous heights and pay no political price for it. Reagan is practically considered a god by "conservatives" and he happily created the largest deficit in the history of the world to that point.
IOW, Cheney meant that deficits had no political pricetag, which was pretty the basis for every decision he made as president.
Top 1%, over $380,354, 38.02%
Top 5%, over $159,619, 58.72%
Top 10%, over $113,799, 69.94%
Bottom 50%, under $33,048, 2.7%,
Note that's adjusted gross income, not gross. A single guy earning over $40,000 could easily be in this last category. This doesn't count that a large percentage of the below 50% mark are receiving welfare benefits that do not apply to the AGI, resulting in a net far negative taxes paid.
And don't forget, that when most of us die our money simply goes straight to our kids. When the ultra rich die, the government will take about 35% (used to be 50%) yet again of the money it's already taxed at least once, if not more.
Why pussyfoot around. Just confiscate all their money and be done with it. That's what you want afterall, isn't it? Do we get to shoot them, too? Or are you going to leave out that traditional aspect of the great proletariat revolution?
Corporate backers aren't the will of the majority of Americans, they're the will of the very small minority of Americans with a large amount of wealth.
If we assume that having over 50% of the stock of a corporation pretty well determines what the corporation will do, then corporations collectively answer to at most 2-3% of the American population (see this study based on 2007 distribution, if anything stocks are more concentrated now).
What the politicians answering corporate backers rather than the will of the people means is that if 95% of the population wants a measure to pass, but the 2-3% who control major corporations want it to be defeated, it will be defeated, and vice versa. And this isn't a hypothetical: Most of the measures that Elizabeth Warren was planning for the Consumer Financial Protection Bureau had the support in polls of something like 85-90% favorability, and she couldn't get the job to push them through, much less make them a reality.
I am officially gone from
BLAH BLAH BLAH BLAH teabagger BLAH BLAH BLAH
It's interesting how a single word tells so much about the writer.
Maybe it'd help if you read the rating agency's report in question?
Note that yes, they agree that the current sort of debt payment standoffs are bad (who knows if they too blame such things on the scary teabaggers!), but note what they put in for the third point. For some reason, they thought that the large deficits and overall indebtedness was more important than the current kerfuffle over the debt ceiling.
My view is that in the absence of some closing of the gap between US government spending and tax revenue, S&P (as well as other ratings agencies) would still be issuing warnings just due to the massive deficits currently being incurred. The current disagreements might have pushed on the decision a bit early, but it'd still happen.
As to your comments about default and the rating of the bond, keep in mind that inflation is another cause of bond rating downgrades.
The US credit rating has been in danger of being downgraded for years, and the credit rating agencies themselves say it's because of out of control spending.
http://www.ft.com/cms/s/0/40f3a2be-bfa9-11dc-8052-0000779fd2ac.html
I'm actually in the class that we are talking about (but not by much, I'll admit). you are suffering from a refusal to recognize your lack of morals and therefore assume that being apathetic, self centered leach on society is a good thing. you are wrong.
1. It doesn't matter. The cost of money will rise or fall based on other factors as well. This is just one of many. And not the largest and most important factor at all.
2. It's the Spending Stupid. What's more important? Borrowing more money we can't pay back or cutting spending so we need to borrow less?
3. Moody's and S&P. Fuck'em. The real problem is that we need deeper cuts than politicians have the nutz to muster. If Moody's and S&P were not on the take... they would be recommending just that. But they have a vested interest in US borrowing.
It's not rocket surgery.
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in 1971 when USA unilaterally cancelled the direct convertibility of the dollar to gold and "persuaded" Saudi to remain only US dollars in return for oil.
http://news.slashdot.org/comments.pl?sid=308999&cid=20762065
As a result, rest of the world started hoarding dollars so that they can buy oil from OPEC.
Unlike Reagan era due to Globalization Americans have to compete with the World to earn US dollars.
http://en.wikipedia.org/wiki/File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png
Slashdot = Sarcasm
Because you listen to the MSM maybe? It's just two heads of the same coin really, republicans usually catering to traditional corps like big oil, democrats bending over to the MAFIAA.
"People don't want to learn linux" hasn't been a valid excuse since '03.
I've noticed a trend here that people think the rich pay a less proportionate share. I guess the liberal media is doing well in its class warfare campaign. I thought /. folks were smarter than to believe what they've been fed. In 2008:
The top 1% earned only 20% of all income and paid 38% of all income taxes.
The top 5% earned 35% of all income and paid 59% of all income taxes.
The top 10% earned 46% of all income and paid 70% of all income taxes.
As you go below that it starts inverting, percentage of taxes paid equals out, and then percentage of income becomes greater than taxes paid, so that the lower-earning half in this country make 13% of the income, but pay 3% of the taxes.
Although it's not on the chart, given the trend it's most likely that when you get into the bottom third no taxes are paid, and in fact they receive money in federally-funded benefits.
Source, with links to original IRS data.
Our tax system is already quite progressive.
Now you're talking about other taxes, not income tax. Of course, the things they do buy are often subject to the higher luxury taxes.
they need to scrounge more to save more...stop spending so much on military when you just pulled out of war, you dont need bigger guns anymore, everything is cyber warfare.
You do realize that putting 2 trillion into the economy will have the same effect in terms of inflation regardless of whether or not that money is borrowed at interest or created debt free. The problem with borrowing it is that the government has to pay interest to the banksters, which means you are subjected to higher taxes and the government has less money available to pay its bills. The banksers (who are shareholders of the private Federal Reserve Bank) just take all that cash the government pays them in interest and uses it to buy hard assets like land, gold, corporations, and to gain influence via bribing elected officials and paying lobbyists.
You do realize that the reason nobody in mainstream media ever discusses the advantages to givernment (not private Federal Reserve Bank) issued debt free currency is because the mainstream media is OWNED by the banksters and if anyone ever breathed a word of it they would lose their job!
The debt of the US has been and remains the safest in the world
Actually, Canada's debt is rated at the same level as the U.S. debt. with no warnings about a future potential downgrade. So it might be more accurate to say the U.S. debt remains among the safest in the world. I'm sure there are a few other countries as well who have triple-A ratings and better economic outlooks than the U.S. The chance of the U.S. losing it's rating is real, and getting worse. The cuts from this deal will backfire a little on the U.S. so cutting 2.4 trillion from the budget will also reduce revenues as well, unless the U.S. economy starts performing much better. As long as the Republicans have power and near-unanimously oppose discussing raising taxes or at least stopping tax cuts, the U.S. is pretty likely to lose it's rating and that means the percentage of spending on servicing the debt will rise substancially.
The issue with Greece and the like are not actually the amount of debt, but their inability to control how fast it's growing, and the ratings agencies have made it worse by increasing the amount those countries have to pay to service their debts. Greece owes less per capita than the U.S.
Fanatically anti-fanatical
Unless the revenue amounts to less than the payments on current debt then even in the case where they refuse to take on more debt they still have the income to make those payments and avoid a default.
So it might be better to say:
the only way for the US to default on their debt is if they "choose" to do so (in this case by refusing to pay their creditors out of existing revenue)
1) Had built an ocean-going fleet before anyone else had explored the world, then simply BURNED it on orders from the emperor and never built another
2) Got their butts kicked by a bunch of nomads, time and again, over the course of centuries.
3) Threw ungodly effort, and a thousand years, into building a wall to keep said nomads out, rather than building a military that could wipe them out.
4) Recently, got their butts kicked by the Japanese, almost to the point of losing their entire country, while the Japanese were also invading a bunch of other nations / colonies at the same time.
5) More recently, jumped in on the side of North Korea, pushed a massively outnumbered US force down most of the peninsula, then lost most of that force in a forced retreat when the US cut them off in turn.
6) Even today, China has close to zero ability to project power more than a couple of hundred miles from their borders, in any direction.
Take on Taiwan, outnumbering them hundreds to one? Maybe. Other than that? Meh. Militarily, the Chinese fail to impress.
This debt issue won't be solved by just cutting expenses, and it surely won't be solved by cutting taxes. It is going to require both increased taxes, reduced subsidies, and reduced entitlements. Part of the problem with America is that it believes entitlements are best when paid to people that have a vested interest in getting more money, and the medical profession has discovered they can bleed the country via the poor and elderly by charging way more than they should for services.
We see this in the military as well, where we spend 7 times more than China and feed it into a system that is largely welfare for crummy engineers. This isn't to say that some of the money spent on defense doesn't produce top notch gear, but I've interviewed enough people that have many years experience in defense contracting and have found NONE of them worth hiring.
When the pain gets great enough we will address the problem, we could address it sooner if we had leaders that valued the country more than their personal bank account.
They were a long way from worrying about whether we would have enough revenue to pay interest, even with the great recession.
As a matter of fact revenue is unquestionably greater than the interest payments. So I assume they're still a long way from worrying if there's enough revenue to cover interest.
and starting to tell your bank you won't be making your next credit card payment not because you don't have the lower interest credit line (HELOC) to offload the debt to, but because you simply refuse to.
Why are you suggesting that the only two choices are to borrow money or to not pay anything back? Are you sure there's no other choice?
The people talking about default are using it as a scare tactic, and it would be their choice to default or not, regardless of whether the debt ceiling is raised or not.
Maybe we should cut the military spending a little. Cut down on a few jets and a giant nuclear powered city-sized carrier and see what that gets us. I'm not saying we should outright disarm--but maybe if we scaled things down just a little but kept provisions in place for a few years to maintain inactive fighters and ships we could keep our "shores protected" and still not be spending more than the top 15 non-US nation's military budgets combined. Unfortunately, the first google result for "cut military spending" is an article explaining that any cuts to our military will result in an immediate invasion of our nation by a combined force of Muslims, Chinese and everyone who isn't Israel/South Korea...
Ginga no Rekshiya Mata Each page.
This is about INCOME tax.
You are talking about WEALTH.
Most wealth has already been taxed at least once in one form or another as it was gained. Much of that wealth is also in the form of stocks. It can't be utilized. It's just a number on an accounting sheet. It needs to be converted to a form that will be taxed yet again in order to support a rich lifestyle.
I was under the impression that the federal reserve was created by an act of congress and as such can be disbanded, restructured or ordered to do stuff in the same manner.
Am I wrong?
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
Creditors rarely want the debtor to repay the loan. If I lend a tenner to a mate at an interest rate of two pounds a week, and he only ever pays me the interest, then after five weeks, I've got my money back, after ten weeks, I've doubled my money, and after a year, I've got ten times as much money as I lent him. If he pays me back after five days, then I've got my money back, and nothing else. So, quite simply, as long as the US are still able to pay the interest, it's in NEITHER party's interest to repay their debt. Any government suggesting they needed to pay back debt would be voted out next election, and the creditors are happy as long as the US don't default.
There's no problem until the US is unable to satisfactorily pay up. As long as they can keep up with their payments, there are no problems.
We should have lots of jobs soon, right? As I recall, that was the justification.
If not, we'll know that this group is just keeping it for itself.
If we stay at 9%, we'll know this was a bad idea.
The argument goes. (And I can't say I like it) If you have a credit card and you don't default on it, you are a good risk and are therefore entitled to a second credit card. You may be living in a cardboard box and off two minute noodles to do it, but as far as the credit agency is concerned, based on past performance you are low risk. Conversely if you live in a 14 Bedroom Mansion but default on your loans, you may find the banks want to Raise Interest Rates or Want Collateral before they will loan you more money.
If you are a country who looks at their budget and decides that 14 Trillion is all you think you can pay back without ruining your cardboard box, this is an arbitrary limit set by YOU. Not the credit agency. It's also why the RestOfWorld still has the shakes about investing in the UnitedStatesOfAmerica (for various values of investment and shakes). It is quite possible that the austerity measures built in to the current agreement will mean Credit Agencies downgrade your rating not because you think you can pay back the debit, but because they think you can't.
Now excuse me while I exchange my USD for VND.
A sig is placed here
To display how futile
English Haiku is
"The Japanese and Chinese at the peril of their own economies have been subsidizing US consumers, which doesn't speak highly of their economic understanding."
As I see it, a reason for China (but not Japan) to do this was to gain access to US technical know how over the past two decades. So one might say Chinese citizens were essentially being taxed by China to pay for knowledge transfer from the USA. But now that China knows pretty much everything the USA did about making stuff, and is leaping ahead in some areas, things have changed...
But yes, otherwise this is stupid. These countries could just print money (or create credit) and give it to their own citizens (like with a basic income) who can then buy the products and use them in the country.
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
You wrote
That statement had a pretty clear meaning. You obviously thought the 1%ers pay less income tax than their income share, which would make your anti-rich sentiment feel vindicated because that would show they are freeloading. Then I showed you that the truth is the exact opposite -- they pay more.
You just blew right past that; it didn't even register. You simply moved the goalposts to another place you thought you'd be right, but you still weren't.
That's the problem here. No amount of facts can penetrate the mind of the liberal who has been indoctrinated in the class warfare mentality. The rich are evil, period, and they must pay.
This is an issue of income tax. We have a separate wealth tax, called the estate tax. Only the rich pay it. Debating with class warfare liberals is like dancing on Jello, constantly shifting under you.
Wealth can take a lot of forms that don't necessarily mean living rich, here's an extreme example to get the point across. Imagine a relative willed you $34,000 of Apple stock in December 1997. That didn't make you rich, you continue your regular mid-paying job, but you did have 10,000 shares of Apple stock.
Now let's say you didn't want to risk your money, or were just greedy and wanted the cash. You sell it next month for $45,000. You made $11,000, but the government took a good chunk of that in capital gains tax.
But let's say you took the risk, you left your money there. They've since split twice, so you'd have 40,000 shares now. Each share is worth $390 now, making you worth $15,600,000 (minus adjustments for inflation). Thanks to the vision of that evil top 1% wealth guy known as Steve Jobs, you're rich.
But do you necessarily live any differently? You're rich on paper, but that's not cash or money in the bank you can spend. You will be taxed if you cash-in on any of that, taxed on the dividends if Apple hadn't stopped paying them, and of course taxed when you spend it, taxed even more depending on current luxury tax rates, and taxed every year after that if you spent it on a big house or car. It will also be taxed very highly when you will it to your heirs.
What if your riches were in an inherited parcel of land that similarly exploded in value over these 14 years, such as by getting caught in an expanding downtown? You've been paying increasing property taxes every year, the government got its share. And when you sell it, you pay capital gains. In fact, you probably would have sold the property long ago since you couldn't afford the property taxes.
So the numbers look big, but that's about it. The government will get its share in multiple ways, often taxing the same dollar several times over, if the wealth is actually realized to support a wealthy lifestyle.
Then maybe you should be grateful of the current situation where they pay disproportionally more of their income instead of bitching that the rich don't pay their "fair share."
it's only because of predatory policies where the affluent affect our political process disproportionately that many of these people have wealth at all! (see mickey mouse act - one of hundreds - that only create massive social inequity)
I'm not grateful that a politically connected tyrant is paying less their "fair" share! I don't agree it's fair! "But do you necessarily live any differently?" my ass. They would have how, much, let's be conservative - 6 million on paper? What bullshit for you to say someone with 6 mil on the books lives like a teacher on a teachers salary!
It's disproportionately wrong for the political system to create and uphold laws that prevent the flow of wealth in this society, or worse, direct it. (see supreme court; companies; unlimited donations; political causes)
It's disproportionately wrong for you to act as if this extreeeeeeeeme wealth distribution is some how NOT the product of manipulation, opportunism, and downright unethical corruption and graft.
CS majors know the time/space tradeoff, but they never get taught the 3rd, crucial, tradeoff of the set: comprehension!
Are you willing to give a break to those who are rich simply because of their talent or hard work? I doubt it. They're rich, so they're evil. They must be punished.
Jeff Bezos was born middle class and founded Amazon. Jack Taylor built Enterprise rentals from scratch, but it was still small by the time his son came long and made it into the multi-billion dollar company. Steven Spielberg got rich making movies people like to see, and his works would still be under copyright according to the copyright terms of over a hundred years ago. John Tu got rich making good computer memory at Kingston. What predatory policies did they leverage?
George Soros made his money in hedge funds, so I guess he would be one of your evil rich based on predatory policies. Oh, wait, he's a big-time Democrat, so he gets a pass, as long as he keeps using his billions to fund liberal causes.
What's fair to you? Shoot them and take all of their money? Hey, we can be the USSR! Exactly what level of wealth gets you that bullet in the back of the head?
I said it was an example, made more extreme so as to be illustrative even for the dumbest and most liberally class-warfare indoctrinated. Apparently not.
Yet you want "prevent the flow of wealth" to those who work to obtain it, instead directing that flow to those who do not. That is the very definition of taxation to achieve "equality."
I'm sure some of it is. For example, ACORN was extremely unethical and corrupt, and used its political connections to siphon money from the rich in order to work against their interests.
I see here the desire to use all of those things in order to leverage the deadly force of government to take more money from those who have worked for it, and give it to others.
You are precisely correct. It is not about whether you can pay off the debt, it is about whether you can pay the monthly payments on all the debts you have. People with the best credit ratings are those who never pay off their debts, but always keep their debt from spiraling out of control. People like this are of most value to creditors as they keep themselves perpetually in debt by not paying off what they owe, instead only paying what is technically just interest back to the creditor. Guess what? The more interest you pay, the higher the credit rating gained from perpetuating the debt so if you take out a new credit card to pay for the old one, as long as you never reach a stage where you have to default on either, your credit rating will look awesome.
Yeah, and Ted Bundy was a saint compared to Hitler...
With the first link, the chain is forged.
"kochsucker" gave you away. Poor wittle Soros fan doesn't like the competition?
Of course everybody owes to their society. Those who could be considered successes, living well with a good expendable income, already pay almost all income, capital gains and estate taxes in this country.
I'd call that giving back.
You seem to want more. How much is enough for you? 50%? 100%? Shall we just arrest them as counterrevolutionary bourgeosie and confiscate all of their wealth?
Those being well-fed due to food stamps and other assistance directly owe those who are paying for it. That would be the wealthy. I never hear thanks, only more bitching.
No, we don't. Switzerland currently has a higher Gini index in terms of wealth, and several countries have a higher index in terms of income.
You also mentioned history. Ancient Rome had a much more skewed distribution, as did British India and 17th Century Holland.
But note that this is relative. Richer societies tend to have the most skewed wealth and income distributions. A higher index does not necessarily mean a higher quality of life. For example, Bangladesh has a much more equal wealth distribution than we do, but that's because almost everybody is dirt poor, they have almost no wealth among themselves to be unequally distributed.
How do you define Jobs? Paul Allen has his money in Microsoft stock, where much of the employment is going overseas. But he owns the Sehawks, employeeing a lot of Americans. He has a full-time crew of 60 on his mega yacht, probably all American, do those count? But they're more like personal staff. And then there's his investments -- his $30 million paid American workers at Scaled Composites to make the world's first private manned spacecraft.