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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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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!"
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.
Why on Earth are we still implementing tax cuts and deficit spending?
Well.
*cough*
Let me lay out the situation as best I understand it.
DEMOCRATS: Let's cut some spending (BUT NOT MEDICARE/MEDICAID/SOCIAL SECURITY) and raise taxes on the rich.
REPUBLICANS: Let's cut MORE spending, but leave taxes as is (OR LOWER THEM. THAT'D BE COOL TOO)
TEA PARTY: Cut spending. DON'T TOUCH TAXES UNLESS YOU'RE CUTTING THEM. YOU'RE CUTTING MY GOVERNMENT PROGRAMS THAT I BENEFIT OFF OF? WHAT THE FUCK MATE?
Sane Politician: Wait, didn't you say to cut spending?
TEA PARTY: Yes, but NOT the things we benefit off of.
Sane Politician: Uh.
As for raising the debt ceiling, we're like...the only country that has a debt ceiling that limits how much we can borrow. So that results in craziness every few years.
And yes, this time around the really hellhole was caused by the hardliner Tea Party senators. The normal Republicans wanted to get this shit done sooner, and the Dems were like, "fuckall we'll bend over backwards to get this shit through. Shit, we want to raise taxes, but FUCK taxes so we can get this through NOW." The Tea Party was, essentially, fanatically fighting for an ideology that doesn't really work in the real world.
If you want them to raise taxes, get more Dems in office. They may be just as crooked as the Republicans, but at least they come off as willing to raise taxes.
And no, shut up about the laffer curve. Assuming it works, and IF we're at the right side of the laffer curve, explain to me why the economy went up like a rocket back when tax rates were higher than the shithole of an economy we have now.
Well, gov *does* take in ``taxes'' what it spends... just depends on what you consider a ``tax''. For example, by expanding the money supply, inflation can be viewed as a flat tax on everyone. It's not visible, and that's what makes it politically attractive (e.g. politicians would have a hard time saying they want to raise taxes by 10% on *everyone* and *everything*, no exceptions), and yet they do that every time more moneh is printed.
In that light, the recent government stimulus can be viewed as, ``we'll flat tax everyone using dollars and use that money to attempt to fix roads and bridges'' (I say attempt, 'cause... well... I haven't seen much improvement in the last few years).
Regan's plan was the same that MANY American households use every day: they put whatever they desire on the credit card and make the minimum payment. This has become the Republican mantra. Recall Dick Cheney's "Regan proved deficits don't matter". The notion that increased taxes cost jobs has been proven countless times, and defies logic, yet somehow it's the cornerstone of the current deal. Most borrow and spend households eventually end up in bankruptcy court, failing the death of a rich relative. Since the US doesn't have ANY relatives, I think we all know how this is going to play out in the long run.
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.
What we really need to do is:
A) End the many wars we are involved in (Iraq, Afghanistan, Libya, "war on drugs", etc.)
B) Close a lot of unneeded military bases in various countries, not only would this save a lot of money, we'd gain the respect of other nations.
C) Work to privatize social security, but those who've paid in need to get the money that was taken from them by force and promised to them. If the government wants to run social security, make it a voluntary program.
D) Sell a lot of the vacant, unused and generally worthless land holdings the US has. While selling it in the bottom of the market isn't ideal, it will help reduce unneeded staff, and gain the government more revenue.
Do all those and we'll end up doing better than "cutting" 1 trillion only to spend 10 trillion more down the line.
Taxation is legalized theft, no more, no less.
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.
The 14th amendment guarantees that the sovereign debt of the USA will be payed back. The AAA rating comes from the fact that US Bonds are the most secure way to guarantee a specific return on your investment. They are the least risky investment in the world.
Of course they'd reach a deal. This is all theater. A bunch of showboating and grandstanding to get your name out there and get people hearing your soundbites while, in the end, accomplishing nothing and buckling. Spend two months saying "we spend too much!" and then agree to some bullshit "we agree to cut our expected spending over the next decade and count it as actually cutting costs" and call it "job done".
Trust fund? There are no trust funds. The US government owes more debt to the US government than any other entity including China. Those trust funds are a bunch of IOUs from the government to the government.
The reason the whole system hasn't collapsed is that pretty much every other government in the world pretends the US government's system is working so their governments don't collapse. Pretty soon someone is going to officially notice and then we'll have to do a giant do-over, probably in the form of world war 3, 4 and 5 to sort out the mess.
So if you're trying to balance a budget ...
That's where you went wrong in your analysis. The Republican Party has absolutely no interest in balancing the budget. This has been shown time and time again: For instance, when George W Bush took office with a slight budget surplus if you count Social Security (which you probably shouldn't), he immediately cut taxes to put the budget in a hole.
Based solely on their actions when in power, this is what the Republican Party really believes in:
1. Cutting taxes on the wealthiest Americans. That's why, if you're somebody who makes their living off of investments, you pay a 15% capital gains tax, whereas if you make considerably less by working you pay a 25% income tax and a 12% FICA tax. Thanks to their actions, the tax rates are the lowest they've been since at least the 1940's.
2. Neutering or completely getting rid of any government agency that could serve as a check on corporate power. They would love to live in a world without the EPA, OSHA, MSHA, NLRB, or the SEC.
3. Getting rid of anything that smacks of aid to the poor and downtrodden. Social Security, Medicare, Medicaid, TANF, food stamps, housing assistance, and minimum wages all come under that category.
4. Expanding the 'national security' portion of government as much as possible, preferably with large no-bid contracts for their family, friends and business associates. They like being able to spy on anybody and everybody, starting wars that they don't need to start, and taking over Latin American countries with little or no military forces to speak of.
I'm no supporter of Democrats either, but one of the biggest myths out there is the idea that the Republicans want to balance the budget when it's abundantly clear they have no intention of doing so.
I am officially gone from
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
In a Ponzi scheme, payments are made solely through new investor's money. The government, on the other hand, does have a fairly sizable revenue stream.
Since money is fungible, you can't say that the money to pay back bonds is necessarily paid with the income from the issuance of new bonds and not from revenues. This applies to individuals, too -- if, every month, I put $1000 on a credit card and pay it off every month, it's logically the same as having a perpetual balance on the card. The creditor certainly doesn't think so, though (in only one scenario am I charged interest, and most credit card companies will get upset if you don't pay *anything* back), because in the former scenario, I have revenue backing my credit.
I used to live in the US for about 4 years. I didn't take ANY credit at all (just renting my place and bought used cars). In the end, I got some customer card refused in some shitty store because I didn't have any "credit history".
In other words, the store refused to trust me because I didn't have any debt. I tried to explain that I was paying everything cash, and that this was way better than paying with credit, but alas.
The US as a society is completely screwed in this regard. To be trusted, you need to have had many debts and you need to display your spotless track record of reimbursing this debt. The fact that you have no debt (and never had) is a mark of distrust. How more screwed up can it be?
It's not surprising (to me) that the government is thinking along the same lines.
Write boring code, not shiny code!
It's hard to fix something without spending anything. The USA had a decade of almost unregulated Enron economics and the hole it fell into can't be patched for free.
...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
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.
Same individuals who paid into social security for all their working careers? The same social security fund which is actually quite liquid but the politicos keep draining it?
If social security gets cut off, refund all money paid into it plus interest to every taxpayer who isn't drawing from it.
"Work to privatize social security"
Dear god, no, no and thrice no
social care of those less fortunate souls who cannot afford to live without financial help is the moral responsibility of society as a whole (i.e the government as the body that represents the country) Otherwise the streets would be ovverun with homeless, people.
Would you really let your neighbour die through lack of food or medicines because they have no money and the government has no social security program? If so you;re a heartless bastard,
social care is an obligation, not something that government should abolish responsibility for,
Small type-o: DEMOCRATS: Let's pretend to care and cut some spending that equates to less that 1% of overall spending. As long as the spending doesn't affect my special interests. And raise taxes on the rich disproportionately to anything anyone else is paying. God forbid someone ELSE has to pay anything. REPUBLICANS: Let's shout louder about cutting MORE spending, but in reality make things worse. As long as the spending doesn't affect my special interests. Of course, leave taxes as is (or LOWER them). TEA PARTY (with tears in their eyes): The debit is killing us, our children. Burn it all! P.S. I haven't heard one tea-partier speak to saving their own special interests in lieu of cutting spending. Just the opposite. They seem far too willing to make take a hatchet to the whole thing and with some short-sighted proposals that defy logic. Disclaimer: I voted for the tea party candidate in my state. And write him when I think he's being a bone head.
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.)
Sovereign debt is absolutely nothing like private debt, and only a fool would compare the two. Beyond the fact that it is borrowing money (and thus must be repaid) they have virtually nothing in common.
Families have limited assets that they can mortgage and sell to pay off debts. Families have limited incomes and limited options for expanding said income.
Governments do not have these problems. A government can lay taxes and print money. Governments also don't "die." In the long run, a country's "income" (GDP) is always expanding. This means the total debt load is not important, only the ratio of debt to GDP matters. As long as that ratio is kept to a manageable level and your interest rates are low, you can keep on borrowing.
By the way, current interest rates are near zero percent, and if you factor in inflation the real interest rate is negative. It would be stupid not to borrow as much as you can possibly get away with under terms like that. Debt and taxes are not the US' problem. Our real problem is being embroiled in a liquidity trap.
Republicans have fucked this country six ways to Sunday and voters have ordered them to fuck us some more because they don't have a clue about, well, anything.
Check out my world simulator thingy.
TEA PARTY: Yes, but NOT the things we benefit off of.
Making that into a Tea Party-only sentiment is a little dishonest.
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.
There even is a reason for that: currently, the problem is that all those people with lots of money try to accumulate it.
Because the economy is bad and investing it is a sure loser. So better accumulate, just in case.
The result is that there are no investments, no hiring. And the economy stays bad.
If you tax a lot, then there is a) an incentive to have the money spent, b) the government can always build more infrastructure, give allowances to the jobless, which helps the economy. Of course, there is the added benefit that the society becomes more equal, and that the interests of everyone become more aligned, which makes for saner politics.
BTW, the rates you are citing are the marginal rates. It works like that: your first x dollars are not taxed. The next x are taxed at some rate, then the next at a higher rate, and so on until you reach the maximum rate.
Wow, now there's a post it's hard to quantify the amount of wrong in it.
First, the "love thy brother" moral is not Bible specific, it is at the core of almost every secular societal system and almost every religious belief system. It's called basic human decency, and further, even sub-human species demonstrate this behavior as a basic survival trait. Were you a meerkat and took that attitude, you'd freeze to death or be eaten by a hawk, likely before you procreated, not that it would matter because if you did, you'd abandon your offspring. That we've devolved to the point where there is a notable portion of the population as sociopathic as you and who are tolerated is further indication that we've escaped beyond basic evolutionary pressures to the point where maybe we will need an extinction-level event to regain our competitiveness as a species.
Secondly, when people form a charity they want it to be effective and powerful. Whether that charity gives out food, or prevents innocent people from being shot in the head by sociopaths, it will have to exert influence and, yes, occasionally use force. Government is our biggest and most powerful charity. You could equally well say that giving to private charity is society's way of abdicating the maintenance of a functional government, i.e. the duties of citizenship in a representative democracy to actually pay attention and vote. "It's not my fault the government sucks ass, I gave all my money and spare time to the much more worthy cause of Bible camp and fetus-saving."
Someone had to do it.
You ignore history.
Society pre-Social Security was LITERALLY Dickensian! Chuck didn't make up the conditions he wrote about.
Relying on charity to SCALE is naive to the point of being not sane.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
Question - Might that $300 million be an investment that saves the government a lot of money?
You know, in
-Medicaid or unpaid emergency room care for pregnancies, miscarriages, and births
-Medicaid or unpaid care for STDs
-Social Security disability payments for children born with severe birth defects due to lack of proper prenatal care
-GDP shrinkage from family members having to stop working to care for the above children
-Prison housing expenses for extra unwanted children from late teens onward
-Police expenses from extra unwanted children from late teens onward
Also,
That's $1, you moron.