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US severely exposed if rates rise: Erskine Bowles
CNBC ^ | 02/03/2014 | Matthew Belvedere

Posted on 02/03/2014 7:57:47 AM PST by Rusty0604

Edited on 02/03/2014 9:19:23 AM PST by Admin Moderator. [history]

The United States spends about $230 billion a year in finance payments to creditors—a level that could more than double if interest rates returned to more normal levels, anti-debt crusader Erskine Bowles warned on Monday.

If interest rates were to return to a median level they were in the 1990s, we'd be spending not $230 billion a year but $650 billion a year," the former co-chair of the president's debt commission said.


(Excerpt) Read more at cnbc.com ...


TOPICS: Business/Economy
KEYWORDS: debt
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1 posted on 02/03/2014 7:57:47 AM PST by Rusty0604
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To: Rusty0604

Tell us something we don’t already know. Gee, what a precient observation. BTW, interest on the debt last year was almost 500billion and the jackass in the whitehouse wants to raise it much farther.


2 posted on 02/03/2014 8:00:15 AM PST by Mouton (The insurrection laws perpetuate what we have for a government now.)
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To: Rusty0604

Which is precisely why the Fed will have to continue to buy treasuries to keep interest rates low. We have painted ourselves into a corner.


3 posted on 02/03/2014 8:01:55 AM PST by fhayek
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To: fhayek

‘zackly.


4 posted on 02/03/2014 8:02:31 AM PST by Eric in the Ozarks ("Say Not the Struggle Naught Availeth.")
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To: Mouton

The Obama administration warned on Monday it could start defaulting on the government’s obligations “very soon” after hitting a limit on the national debt later this month.
Treasury Secretary Jack Lew said the federal government should hit the ceiling by the end of February unless Washington raises the nation’s limit on public borrowing.

The federal government would then burn through its remaining cash more quickly that it would at other times of the year because the Treasury will be issuing tax refund checks, Lew said.
http://www.cnbc.com/id/101359298


5 posted on 02/03/2014 8:02:53 AM PST by Rusty0604
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To: Rusty0604

Default, dear Brutus, is not in our stars, but in our future


6 posted on 02/03/2014 8:03:05 AM PST by ClearCase_guy (Anti-Complacency League! Baby!)
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To: Rusty0604

Gee... whenever we TEA Party types bring this up... we are wackobirds and wackadoodles for thinking that way.


7 posted on 02/03/2014 8:03:49 AM PST by LibLieSlayer (FROM MY COLD, DEAD HANDS! BETTER DEAD THAN RED!)
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To: Mouton

Simpson-Bowles is a very reasonable plan. I wish Republicans would support it.


8 posted on 02/03/2014 8:03:50 AM PST by babble-on
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To: LibLieSlayer

Yea, this guy is a Democrat so it’s OK.


9 posted on 02/03/2014 8:05:31 AM PST by Rusty0604
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To: Rusty0604

That’s why packing the Fed moved up on the Democrap priority list.


10 posted on 02/03/2014 8:05:53 AM PST by Buckeye McFrog
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To: babble-on

Gee this was brought up when Perot ran in the nineties. Glad you can now see it.


11 posted on 02/03/2014 8:05:58 AM PST by jimpick
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To: Rusty0604

Bowles - It’s the coolie labor rates and pollution, stupid.


12 posted on 02/03/2014 8:06:36 AM PST by ex-snook (God is Love)
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To: Rusty0604

What’s 5% of $17,000,000,000,000?

Don’t need a PhD in economics to know this is a problem...


13 posted on 02/03/2014 8:07:49 AM PST by LucianOfSamasota (Tanstaafl - its not just for breakfast anymore...)
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To: Rusty0604
The argument has nothing to do with responsible people who pay their own bills and prepare for futre financial obligations. These low interest rates on savings have made it impossible to do so. What's happened is the little guy has subsidized reckless government debt and global economic practicies.

So what do I care if the global economy collapses and the Federal Reserve doesn't get money from bogus loans back? BRING IT ON !!

14 posted on 02/03/2014 8:10:02 AM PST by grania
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To: Rusty0604

because the Treasury will be issuing tax refund checks, Lew said.

Along with hefty EICs, a completely misapplied federal welfare system.


15 posted on 02/03/2014 8:10:40 AM PST by Mouton (The insurrection laws perpetuate what we have for a government now.)
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To: babble-on

Simpson-Bowles doesn’t address Medicare/Medicaid, the biggest drivers of our debt.


16 posted on 02/03/2014 8:11:21 AM PST by kabar
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To: Mouton

Massive debt is going to crush us at some point. It’s a ticking timebomb.

Politicians of both parties use debt to buy votes and will not stop spending until they are forced to do so by a debt service crisis. We are screwed.


17 posted on 02/03/2014 8:13:00 AM PST by Starboard
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To: LucianOfSamasota

And the debt will continue to increase by $600 billion or more per year, especially since we just suspended sequestration for two years with the Ryan-Murray deal.


18 posted on 02/03/2014 8:13:25 AM PST by kabar
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To: LucianOfSamasota

$17 trillion grossly understates the real amount of debt (by over $100 trillion) when the unfunded liabilities are included. See bottom line in link:

http://www.usdebtclock.org/


19 posted on 02/03/2014 8:19:43 AM PST by Starboard
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To: kabar

Sequestration was just another political hoax on a gullible public that deserves the government it votes for.


20 posted on 02/03/2014 8:21:40 AM PST by Starboard
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To: Rusty0604

A massive, progressive, socialist, nanny-state government like we have now can not exist without the Federal Reserve and its ability to monetize US Government debt, and manipulate interest rates.


21 posted on 02/03/2014 8:21:56 AM PST by PGR88
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To: PGR88

The Fed now holds $4.3 trillion of our debt, making it the largest holder of our $17 trillion debt.


22 posted on 02/03/2014 8:27:52 AM PST by kabar
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To: Rusty0604

To put this in perspective.

Thanks to the US Government’s INSANE spending and deficits levels...

A rise in interest rates will mean we will spend more money on servicing the debt than on national defense.

Military Spending - 19% of the Federal Budget ($670 Billion) per year

Entitlement Spending - 58% of the Federal Budget ($1.65 Trillion) per year.

In 2010 (last year figures are available) - the deficit is 62% if GDP - a figure not seen in 60 years.

Where does it end? Look at Greece and Argentina today.

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

http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png


23 posted on 02/03/2014 8:28:53 AM PST by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: Mouton

I give the guy some credit.
One of the VERY FEW in office or media willing to talk about it.
Most are pretending it can’t ever happen.


24 posted on 02/03/2014 8:29:33 AM PST by nascarnation (I'm hiring Jack Palladino to investigate Baraq's golf scores.)
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To: kabar
Simpson-Bowles doesn’t address Medicare/Medicaid, the biggest drivers of our debt.:

Spending on Americans is not the problem. It's money on the rest of the world with constant wars, nation building and trade deficits.

25 posted on 02/03/2014 8:29:45 AM PST by ex-snook (God is Love)
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To: fhayek
Yup: The Fed will continue to buy T-Bills, and in effect, never ask that the money be re-paid.

Think of the enormous power having access to trillions of freshly printed money gives to the Fed, the banks that own it, and their favorite political cronies who can continue to spend like there's no tomorrow.

The Us is quickly becoming a corrupt 'populist' oligarchy a la Argentina-- and soon, we'll even speak Spanish!

26 posted on 02/03/2014 8:49:14 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: ex-snook

Nonsense— the greatest spending is on Social Security, Medicare and Medicaid, plus other entitlements— these dwarf all other spending.


27 posted on 02/03/2014 8:50:55 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: Rusty0604

Let’s see:

$17,258,471,483,278.83 in debt X 10% interest rate = $1,725,471,483,278 in interest per year

Total actual revenue from all US income taxes collected in 2013 fiscal year was $1,589,900,000,000. ($1,316.4 B Individual Taxes and $273.5 B Corporate Taxes)

Any one see a problem in the future? Remember what rates Carter left us with!


28 posted on 02/03/2014 9:06:15 AM PST by tired&retired
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To: pierrem15

You haven’t deducted all Americans have paid into SS & Medicare. Spending in other countries is a total waste.


29 posted on 02/03/2014 9:08:25 AM PST by ex-snook (God is Love)
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To: tired&retired

I found a really good analysis at this site: http://www.usgovernmentrevenue.com/federal_budget_actual


30 posted on 02/03/2014 9:12:00 AM PST by tired&retired
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To: Rusty0604
Don't you just love extrapolation of garbage....???
31 posted on 02/03/2014 9:17:44 AM PST by tired&retired
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To: ex-snook
Spending on Americans is not the problem. It's money on the rest of the world with constant wars, nation building and trade deficits.

Two thirds of our almost $4 trillion budget is spent on the entitlement programs, food stamps, etc, It is on automatic pilot and will consume the entire budget if these programs are not reformed.


32 posted on 02/03/2014 9:20:19 AM PST by kabar
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To: Rusty0604
Interest expense as a percent of GDP:


33 posted on 02/03/2014 9:24:46 AM PST by Wyatt's Torch
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To: kabar

This doesn’t include a deduction for what Americans paid into SS and Medicare. As Reagan would say ‘we paid for this mic’.


34 posted on 02/03/2014 9:24:55 AM PST by ex-snook (God is Love)
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To: ex-snook
We haven't paid nearly as much as the benefits cost, and most of the money we put in is immediately loaned to the federal government to support current spending: that's how we've been snookered. Most of the money we have paid has already been spent.

If Social Security were a real insurance policy based on actuarial data and not politician's promises, we'd probably have to pay 25% of our income (or more) into it to make up for missing contributions from those already enrolled.

In Singapore, which has a real forced retirement savings plan, the young pay 40% of income into it.

35 posted on 02/03/2014 9:27:11 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: pierrem15

How’s Singapore doing?


36 posted on 02/03/2014 9:29:33 AM PST by ex-snook (God is Love)
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To: LucianOfSamasota
What’s 5% of $17,000,000,000,000?

About $150 billion less than $20,000,000,000,000, which is where we'll be in Jan 2017.

BTW, 5% of $20T is:


37 posted on 02/03/2014 9:34:40 AM PST by Night Hides Not (For every Ted Cruz we send to DC, I can endure 2-3 "unviable" candidates that beat incumbents.)
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To: ex-snook
SS and Medicare are pay as you go programs, i.e., today's workers pay for today's retirees. SS has been running in the red since 2010 and Medicare since 2008.

This graph shows that the average man and woman (average defined in the study as average income over their working lives and living to the average life expectancy) who start receiving benefits in 2010 get over 3 times more in benefits than they pay in to the system! Of importance, the study accounts for inflation by calculating all past taxes and future payments in 2010 dollars to provide an accurate comparison.

If the notion that Medicare recipients are simply "getting back what they paid in" is false then where is the money coming from? Simply, the excess received is being borrowed from younger generations and the cost is more than we can bear.

38 posted on 02/03/2014 9:37:45 AM PST by kabar
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To: pierrem15

“Loan Rates in Argentina Reach 65% Annually; Is 65% a Good Rate?”
Read more at http://globaleconomicanalysis.blogspot.com/2014/02/loan-rate-in-argentina-hits-65-annually.html#k2UAh12KoPCt2Tsq.99


39 posted on 02/03/2014 9:38:13 AM PST by Rusty0604
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To: Rusty0604

Rules and laws no longer apply to the communists.


40 posted on 02/03/2014 9:39:03 AM PST by LibLieSlayer (FROM MY COLD, DEAD HANDS! BETTER DEAD THAN RED!)
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To: ex-snook

Very well— I think their PPP per capita income is now #3 (US is #6)


41 posted on 02/03/2014 9:41:19 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: Night Hides Not

Our new Secretary of the Treasury?


42 posted on 02/03/2014 9:42:07 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: tired&retired

Gotta love the oily smoothness of that curve: like Mann’s climate data, those figures are better massaged than Tony Soprano coming out of Madame Chi’s Rub-Down in Hoboken.


43 posted on 02/03/2014 9:44:36 AM PST by pierrem15 (Claudius: "Let all the poisons that lurk in the mud hatch out.")
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To: Rusty0604

We don’t have a spending problem. We have a paying for it problem...At least that is what a democrat told me.


44 posted on 02/03/2014 10:08:56 AM PST by Organic Panic
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To: kabar

The problem with SS is the exported jobs. American workers and their employers pay in. Let’s say there were 10 American workers for each retiree. Now 7 or so of these workers are on exported jobs and neither they nor their employers pay in. Put a SS tariff on all imports to equalize the SS cost to American companies, level the playing field. This can be fixed.


45 posted on 02/03/2014 10:45:21 AM PST by ex-snook (God is Love)
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To: Rusty0604
Why is this such a mystery. (rhetorical) Y'all should know that I've heard a pattern around here from those 'with a dog in the fight' (i.e., those in financial services, including a friend of mine), talking up the pluses of economic reports and almost 'talking-point' point-by-point rejection/explanation of negative stats.

I wish Conan would do one of these on 'Economics'...

46 posted on 02/03/2014 11:11:38 AM PST by logi_cal869
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To: logi_cal869

See a lot of that on CNBC. Not from Rick Santelli.


47 posted on 02/03/2014 11:22:02 AM PST by Rusty0604
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To: pierrem15

It’s based upon assumptions....

The best part of it is how they turned the current trend around before they extrapolated it into the future!!!


48 posted on 02/03/2014 11:44:30 AM PST by tired&retired
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To: babble-on

“Simpson-Bowles is a very reasonable plan. I wish Republicans would support it.”

Please don’t tell me you really belive that. Its a terrible plan. Its right up there with the Gang of 8.


49 posted on 02/03/2014 11:48:25 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: ex-snook
The problem with SS is the exported jobs.

If so many jobs were exported, why are we bringing in 1.2 million legal permanent immigrants a year and 700,000 guest workers annually on temporary work permits? We have 45 million foreign born in this country.

American workers and their employers pay in. Let’s say there were 10 American workers for each retiree. Now 7 or so of these workers are on exported jobs and neither they nor their employers pay in.

In 1950 there were 16 workers for every retiree; today there are 3; and by 2030 there will be two workers for every retiree. We have an aging society. 10,000 baby boomers retire daily and will continue to do so for the next 20 years. SS is going broke because it is a Ponzi scheme. Unless we raise taxes or decrease benefits, we won't be able to pay full benefits.

Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes the 2013 Annual Reports.

Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

Social Security and Medicare together accounted for 38 percent of federal expenditures in fiscal year 2012. Both programs will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment and, in the case of Medicare, to growth in expenditures per beneficiary exceeding growth in per capita GDP. In later years, projected costs expressed as a share of GDP trend up slowly for Medicare and are relatively flat for Social Security, reflecting very gradual population aging caused by increasing longevity and slower growth in per-beneficiary health care."

In 1970 the population of the US was 203 million; today it is 317 million, and by 2060 it will be 420 million. According to the projections, the population age 65 and older is expected to more than double between 2012 and 2060, from 43.1 million to 92.0 million.

The older population would represent just over one in five U.S. residents by the end of the period, up from one in seven today. The increase in the number of the “oldest old” would be even more dramatic — those 85 and older are projected to more than triple from 5.9 million to 18.2 million, reaching 4.3 percent of the total population

50 posted on 02/03/2014 1:11:11 PM PST by kabar
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