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Tim Pawlenty: Don't raise the debt limit - reform entitlement spending
Washington Post ^ | 21 Jan 2011 | Tim Pawlenty

Posted on 01/21/2011 3:35:29 PM PST by Notary Sojac

Contrary to what many people are saying, when the national debt approaches the limit, it does not mean that the federal government suddenly won't be able to pay its bills.

Default on such debt need not occur if Congress passes and the president signs a law directing the Treasury to sequence our spending and prioritize the payment of interest and principal on the debt, as well as other critical budget items.

Simply guaranteeing that the government will pay its outside debts would not solve our fiscal crisis. But it would properly frame our fiscal challenge - as a choice not between more debt and default, but between more debt and responsible spending reductions that would ensure we don't trigger a default. And by signaling to world markets that the United States is serious, it would buy us time to restructure entitlement spending and end the Ponzi scheme being run by the federal government.

Setting aside the false threat of defaulting on our debt payments, the upcoming debate over raising the debt limit is a similar moment for Washington. Entitlement programs need to be dramatically reformed. Given no other choice, I believe a bipartisan consensus could be created around ideas such as means-testing the cost-of-living increase in Social Security benefits, capping and block-granting Medicaid payments to states, and moving Medicare to a more efficient, pay-for-performance model.

While national defense is obviously a top priority, even the Pentagon needs to pursue greater efficiencies by using priority budgeting to ensure that our military remains the most capable and effective in a dangerous world.

Last year's midterm elections demonstrated that the public is eager to cut the deficit. But every program has an interest group that will fight hard to defend it. We can succeed only if lawmakers are given no other choice.

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


TOPICS: Government; News/Current Events; Politics/Elections
KEYWORDS: entitlements; minnesota; mn; palin; pawlenty; presidentpawlenty; timpawlenty
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Yeah, yeah, yeah, tell me again about how Pawlenty is a big RINO and how only by supporting S*A*R*A*H can we get conservative results.

Well so far, I have yet to hear S*A*R*A*H call the entitlements the Ponzi scheme that they are or suggest the major cutbacks and restructuring that Pawlenty is talking about here.

Most of what I hear from S*A*R*A*H is feel-good, we-can-solve-these-problems-painlessly talk.

What we need is a President who is not afraid to say that to get our economy back on the right track, we are looking at a couple of decades of belt-tightening austerity even if we do all the right things.

1 posted on 01/21/2011 3:35:33 PM PST by Notary Sojac
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To: Notary Sojac
P-spend-a-plenty is a DFL’er in Rino clothing.

Sarah is real.

BTW, Minnesota is full, of pussies, Alaska has Tough Guys.

2 posted on 01/21/2011 3:41:33 PM PST by Leo Farnsworth (I'm not really Leo Farnsworth.)
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To: Leo Farnsworth

The Pawlenty slander campaign is now underway.


3 posted on 01/21/2011 3:42:38 PM PST by rahbert
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To: Leo Farnsworth
Two ad hominems in two lines, nothing else to say.

The content - to - electrons used ratio in your post is 0.00.

4 posted on 01/21/2011 3:43:44 PM PST by Notary Sojac (We have had three central banks in America's history: two of them failed and so will this one....)
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To: Notary Sojac
Most of what I hear from S*A*R*A*H is feel-good, we-can-solve-these-problems-painlessly talk.

Most of what I've heard from Sarah Palin since she resigned as governor is her calling Obama on the carpet over a number of issues. She is usually the first out of the gate to do so. Where has Pawlenty been on all this? Or Romney, or Huckabee, etal? Hiding because they don't want the flak that Palin and Rush have received. I don't vote for cowards.

5 posted on 01/21/2011 3:44:26 PM PST by upsdriver (to undo the damage the "intellectual elites" have done. . . . . Sarah Palin for President!)
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To: Notary Sojac

BTW, you couldn’t post this article without attacking Sarah Palin? I would have rather commented on what Pawlenty wrote about. You know now where this thread is headed.


6 posted on 01/21/2011 3:46:25 PM PST by upsdriver (to undo the damage the "intellectual elites" have done. . . . . Sarah Palin for President!)
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To: Notary Sojac

Under no circumstances can we raise the debt limit, and under no circumstances can we deliver anything other than a balanced budget to the president. He can refuse to sign it, but we have to give it to him.

To do anything else will mean we’ve bought the Obama deficits and have made them our own.

And, as a practical matter, if you can’t cut spending when you are bankrupt and facing economic collapse, there really is no hope for you.


7 posted on 01/21/2011 3:46:34 PM PST by marron
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To: upsdriver
Actually it's because I increasingly -want- to support Palin.

But I won't do it until I hear her advocating some major tough love on the fiscal issues. (entitlements and Wall Street corporate welfare).

I want a budget cutter from hell for President.

8 posted on 01/21/2011 3:49:39 PM PST by Notary Sojac (We have had three central banks in America's history: two of them failed and so will this one....)
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To: Notary Sojac
BS.

Pawelenty is a DFL’er in Rhino clothing.

He's NOT a conservative.

YOU want HIM as a CONSERVATIVE leader?

Ya, sure, can you borrow me a dollar? I need to be wenting from the fun I'm having with you...

9 posted on 01/21/2011 3:50:08 PM PST by Leo Farnsworth (I'm not really Leo Farnsworth.)
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To: Notary Sojac

Wasn’t he gov when the I-90 bridge collapsed? I’ve wondered how he managed to ditch that scandal.


10 posted on 01/21/2011 3:50:26 PM PST by dajeeps
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To: Notary Sojac
I am not a fan of Pawlenty, but he is dead on re the entitlement programs. It is where most of the uncontrolled spending is taking place.

This puts our budget problems in some perspective.

11 posted on 01/21/2011 3:50:26 PM PST by kabar
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To: Notary Sojac

Good rhetoric and bad ideas from Tim Pawlenty.

Means-testing Social Security cost of living increases? Terrible idea! Tim wants to reward the Federal government for provoking more inflation? Instead just tax the social-security payment if you have to. People in high tax brackets will pay more tax, but everyone will get their COLA.


12 posted on 01/21/2011 3:50:41 PM PST by devere
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To: marron
Here is the reality. We take in about $2.2 trillion in tax revenue from all sources. This just covers our entitlement spending and debt servicing costs. Our total budget is $3.5 trillion. The remaining $1.3 trillion to operate the entire government, including DOD, is borrowed.

So how do you balance the budget this year or next? We will have to raise our debt ceiling regardless. We need a long term plan to cut spending, but it will not happen overnight.

13 posted on 01/21/2011 3:56:11 PM PST by kabar
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To: Notary Sojac

That’s fair enough. She does need to come out with convincing specifics when she runs, and I hope we move on to that next phase soon.

But it’s also good to remember that any presidential candidate can roll out any platform they think will sell. As Reagan said, “trust but verify” by their record of character and what they have actually done. Also important is how effectively they can sell their platform directly to the public, because they’re going to need to go beyond the media to win public support for their policies directly.


14 posted on 01/21/2011 4:00:25 PM PST by 9YearLurker
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To: Notary Sojac

Even RINOs get it sometimes...and can feel the political winds blowing. America is sick of out-of-control government spending.


15 posted on 01/21/2011 4:03:19 PM PST by TheBattman (They exchanged the truth about God for a lie and worshiped and served the creature...)
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To: Notary Sojac

This isnt a Palin vs Pawlenty it is us the taxpayer vs the socialists.

I say horray to Pawlenty.


16 posted on 01/21/2011 4:12:21 PM PST by stockpirate (Hey congress, it's our government and our money, DO NOT RAISE THE DEBT LIMIT!)
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To: Notary Sojac
I thought Governor Pawlenty was the only Republican who publically came out to actively support Governor Palin after the assassination attempt on Rep. Gabby Giffords.

I don't know enough about him, but wasn't he being 'groomed' for years to run as VP with John McCain?

17 posted on 01/21/2011 4:12:51 PM PST by hennie pennie
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To: Notary Sojac

He has some ideas. Some of them pretty good. I will sit back and wait to hear them duke it out.


18 posted on 01/21/2011 4:17:29 PM PST by dforest
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To: Notary Sojac

The best idea is NOT to raise the debt ceiling. We need to live within our means. I’ll support anyone who is in favor of it-Pawlenty, Palin, Ol’ McDonald.


19 posted on 01/21/2011 4:24:55 PM PST by HarleyD
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To: Notary Sojac

Same here. After reading in Going Rogue how Sarah Palin approached the state budget in Alaska, I believe she is the best one to tackle the budget. Of course, she’ll need serious help from the House, Senate and the American people.

IMO, there are lots of politicians who would “like” to slash the budget but when push comes to shove, they cave. In Palin, I see someone who doesn’t cave. A media fabricated public opinion doesn’t seem to sway her.

She’s mentioned that she if for eliminating spending, reducing burdensome regulations and cutting taxes. I think that’s a good base to start from. The campaign hasn’t started yet.


20 posted on 01/21/2011 4:29:31 PM PST by upsdriver (to undo the damage the "intellectual elites" have done. . . . . Sarah Palin for President!)
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To: Notary Sojac

Perhaps you should try decaf.

I’ll be voting for Palin, the next President of the United States.

PALIN 2012


21 posted on 01/21/2011 4:41:33 PM PST by Gator113 (I'm voting for Sarah Palin, Liberty, our Constitution and American Exceptionalism.)
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To: kabar
We take in about $2.2 trillion in tax revenue from all sources. This just covers our entitlement spending and debt servicing costs. Our total budget is $3.5 trillion. The remaining $1.3 trillion to operate the entire government, including DOD, is borrowed.

What was our budget in 2008?

22 posted on 01/21/2011 4:52:43 PM PST by marron
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To: marron

$2.9 trillion


23 posted on 01/21/2011 5:17:56 PM PST by kabar
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To: Notary Sojac

Say it loud FRiend.

This is a leader talking. He knows what needs to be done, is arguing the truth and knows the people will come to support him because people want to support the truth.


24 posted on 01/21/2011 8:25:47 PM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: marron

“To do anything else will mean we’ve bought the Obama deficits and have made them our own.”

Amen!


25 posted on 01/21/2011 8:27:32 PM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: kabar

“We need a long term plan to cut spending, but it will not happen overnight.”

Why not?

At Obama’s spending rate we will reach the default limit for our debt in three years. At most Republicans’ spending rate we will do it in five.

How long is your long term?

To knowingly support either option while knowing the consequences is _ _ _ _ _ _?


26 posted on 01/21/2011 8:32:02 PM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi
Why not?

I thought my post was pretty clear as to why. The fact that our entitlement programs and debt servicing costs consume virtually all of our tax revenues means that we will have to make some very difficult choices. Those who advocate not raising our current debt limit seem to be living in a fantasy world.

What cuts would you make to balance the budget this year and next? FYI: We will be reaching our debt ceiling limit in three months or less.

Check out this video to give you a glimmer of what we are facing.

27 posted on 01/21/2011 10:04:52 PM PST by kabar
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To: kabar; Notary Sojac
The fact that our entitlement programs and debt servicing costs consume virtually all of our tax revenues means that we will have to make some very difficult choices.

The choices will not be easier tomorrow. And they won't be easier after we raise the debt ceiling again, and yet again.

If we can't make the difficult choices today, why would we be able to make them tomorrow?

28 posted on 01/22/2011 12:58:04 AM PST by marron
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To: kabar
Well I'm glad you asked. :)

Current Federal Cash Flow

$0 Deficit Funding Levels

Our choices are fairly simple at this point. We can either balance it by September or as our publicly held debt rises from $9T to $14T we will default. Then we will have no SS, Medicare and a aircraft carrier going up and down each coast.

I'm sure you have the best of intentions but our debt and deficits are simply a matter of arithmetic. One doesn't have to put on a tin foil hat to look at it, just green eye shades. Once it is seen, it is simply a matter of will to deal with it.

29 posted on 01/22/2011 5:49:39 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: Notary Sojac

How about we cut the scope of the government to put it back into it’s constitutional role in America?

Chopping and trimming at “entitlements” (I take it Pawlenty is referring to stealing Social Security and Medicare - benefits Americans and their employers paid into all their working lives) is not going to solve the problem of our massive government nor it’s out of control spending.

It would be nice if Pawlenty respected the constitution. Being a Rino, he’s never thought about it.


30 posted on 01/22/2011 6:20:33 AM PST by SaraJohnson
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To: marron
We are not going to make the difficult choices in the next three months, i.e., the reform of the entitlement programs. If you don't raise the debt limit, the country will go into default and we won't be able to fund the entire government including DOD.

You have to be realistic. Spending has to be cut and we can start doing that immediately, but taking down the government without a plan would be disastrous. The Reps should use the debt ceiling as leverage to start a long term deficit reduction plan.

We have 54 million on SS, 60 million on Medicaid, 47 million on Medicare, and 43 million on food stamps. Do you really believe that reforming these programs will be easy or that we can have a political consensus in a divided government? The Dems control the WH and the Senate. Some very painful decisions lie ahead for this country. There is no easy way out.

31 posted on 01/22/2011 7:45:17 AM PST by kabar
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To: kabar
We have 54 million on SS, 60 million on Medicaid, 47 million on Medicare, and 43 million on food stamps.

Too many people think that taxpayers owes them a living. Dependency is a mental illness and many of our citizens (particularly seniors) have become morally weak and decadent.

All these welfare programs should be terminated and the sooner the better.

32 posted on 01/22/2011 7:51:47 AM PST by Walts Ice Pick ("I'm not going to shut up!" - Sarah Palin)
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To: Notary Sojac

Are you able to compose a comment that would tell the reader what you believe about Pawlenty without trying to tear down Palin? Is Pawlenty that weak?


33 posted on 01/22/2011 8:01:52 AM PST by JustaDumbBlonde (Don't wish doom on your enemies. Plan it.)
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To: MontaniSemperLiberi
Our choices are fairly simple at this point. We can either balance it by September or as our publicly held debt rises from $9T to $14T we will default. Then we will have no SS, Medicare and a aircraft carrier going up and down each coast.

There is no way we can balance the budget by September. The draconian cuts you propose would never pass Congress. The budget deficit should be reduced on a long term glide path. We raise our debt ceiling to avoid default. There is nothing magic about $14 Trillion in publicly held debt. FYI: We must raise the total debt ceiling--not just the publicly held debt. Intragovernmental holdings [SS,Medicare, and other trust funds] are included in the current $14 trillion national debt.

I'm sure you have the best of intentions but our debt and deficits are simply a matter of arithmetic. One doesn't have to put on a tin foil hat to look at it, just green eye shades. Once it is seen, it is simply a matter of will to deal with it.

That is exactly my point. The idea that we can have entitlement reform in three months is a non-starter. Nor can you make the huge cuts in government operations that you propose. You not only have to deal with arithmetic, you must address the political landscape.

34 posted on 01/22/2011 8:13:35 AM PST by kabar
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To: Walts Ice Pick

And if pigs had wings they could fly. Exactly how many politicians of any stripe are going to terminate all welfare programs?


35 posted on 01/22/2011 8:16:06 AM PST by kabar
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To: kabar

First you’re getting the numbers wrong.

Our total debt is $14T. Our publicly held debt is $9T. The difference, $5T, is intra-governmental held debt and, as you correctly say, not important because we won’t pay our own debt. (As an economic aside, note that the people who charged the debt, our grandparents, can’t pay it to the people who need it, our parents. That’s a thinker.)

There IS something magical about the (publicly held) debt to GDP ratio. Bond holders typically refuse to lend when it gets around 100%. We don’t know when our bond holders will refuse to lend but the past is prologue. It will depend on the confidence they have in our ability to pay at that time. They will have no confidence when interest rates rise to the point that new debt cannot be paid without defaulting on old debt.

Our current debt to GDP ratio is $9T/$14T x 100% = 64%. Under Obama’s $1.4T annual deficit plan, we will add 10% per year, leaving us three years to default. Under the Republican’s $1.1T plan, we will add 8% per year, leaving us five years to default. This time to failure calculation assumes that our current historically low interest rates stay historically low. They won’t and and must go up exponentially, the closer we get to 100%.

Personally what I have learned in my life is to get from denial to acceptance as quickly as I can. Bargaining is the hardest step. To get past it, I do what I can do to be as certain as I need to be that there is a problem that needs to be solved. Then it’s just a matter of character.

As for politicians accepting this problem, Patrick Henry saw this situation coming. At the time the states were being asked to consolidate under one government to pay off the debts from the Revolutionary war. Patrick Henry looked at the proposed constitution, saw a fundamental problem with it and said,

“I say they may ruin you; for where, sir, is the responsibility? The yeas and nays will show you nothing, unless they be fools as well as knaves; for, after having wickedly trampled on the rights of the people, they would act like fools indeed, were they to publish and divulge their iniquity, when they have it equally in their power to suppress and conceal it.

Where is the responsibility—that leading principle in the British government? In that government, a punishment certain and inevitable is provided; but in this, there is no real, actual punishment for the grossest mal-administration. They may go without punishment, though they commit the most outrageous violation on our immunities.”

He was right, they are knaves but not fools. They will obscure the truth as much as they can. Why do you think they spend so much time pointing fingers at each other? The only reason they get away with that is because voters have forgotten that in our system of government, only the House is responsible for what the House allows. The House Republicans will have only the House Republicans to blame if/when we default.


36 posted on 01/22/2011 10:50:05 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi
Our total debt is $14T. Our publicly held debt is $9T. The difference, $5T, is intra-governmental held debt and, as you correctly say, not important because we won’t pay our own debt. (As an economic aside, note that the people who charged the debt, our grandparents, can’t pay it to the people who need it, our parents. That’s a thinker.)

I don't have the numbers wrong. Economists disagree about the importance of the Intragovernmental Holdings portion of the debt, but it is imnportant to understand that this debt is also interest bearing. And when SS goes into the red as it has this past year and this year and peramently in 2016, the non-market T-bills in the Trust Fund will have to be redeemed by the USG from the General Fund to pay benefits. The government must come up with real money by borrowing it or reducing spending elsewhere. The Intragovernmental Holdings represent an unfunded liability, which is why it is included in the total national debt.

There IS something magical about the (publicly held) debt to GDP ratio. Bond holders typically refuse to lend when it gets around 100%. We don’t know when our bond holders will refuse to lend but the past is prologue. It will depend on the confidence they have in our ability to pay at that time. They will have no confidence when interest rates rise to the point that new debt cannot be paid without defaulting on old debt.

There is not doubt that our bond ratings and interest rates to borrow will increase. Japan's debt is over 125% of GDP now. That is the danger we face with increasing our national debt, i.e., the debt servicing costs and rising interest rates. It is a downward spiral.

Our current debt to GDP ratio is $9T/$14T x 100% = 64%. Under Obama’s $1.4T annual deficit plan, we will add 10% per year, leaving us three years to default. Under the Republican’s $1.1T plan, we will add 8% per year, leaving us five years to default. This time to failure calculation assumes that our current historically low interest rates stay historically low. They won’t and and must go up exponentially, the closer we get to 100%.

What you seem to be missing is that Congress will have to raise the debt ceiling in three months not three years. The debt ceiling applies to our total debt including the publicly held debt and intragovernmental holdings. We can keep on raising the ceiling as we done for many years rather than default. That brings its own dangers, but as long as we keep printing money, we can pay our debts, albeit with a declining dollar.

He was right, they are knaves but not fools. They will obscure the truth as much as they can. Why do you think they spend so much time pointing fingers at each other? The only reason they get away with that is because voters have forgotten that in our system of government, only the House is responsible for what the House allows. The House Republicans will have only the House Republicans to blame if/when we default.

There is plenty of blame to go around including the American people who are uninformed and unengaged. Most would prefer to keep receiving government handouts without understanding that we can no longer afford to do so. The people don't want the politicians to treat them as adults nor do they want to feel the pain of the decisions that must be made.

By 2030, one in five residents in this country will be 65 or older, twice what it is now. The baby boomers are retiring at the rate of 10,000 a day and will continue to do so for the next 20 years. In 1950 there were 16 workers for every retiree; today it is 3.3; and by 2030 it will be just two. The welfare state has bankrupted us.

37 posted on 01/22/2011 11:46:57 AM PST by kabar
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To: kabar
Okay, I think you’re asking good questions. The implications of the governmentally held debt are particularly vexing to figure out. To really understand it, one has to look at spreadsheets to figure out where the money goes in each and every year. It's actually much easier to do it now that even SS is runing a deficit.
I don't have the numbers wrong. Economists disagree about the importance of the Intragovernmental Holdings portion of the debt, but it is imnportant to understand that this debt is also interest bearing. And when SS goes into the red as it has this past year and this year and peramently in 2016, the non-market T-bills in the Trust Fund will have to be redeemed by the USG from the General Fund to pay benefits. The government must come up with real money by borrowing it or reducing spending elsewhere. The Intragovernmental Holdings represent an unfunded liability, which is why it is included in the total national debt.

You’re 100% right about that…. up to the point you said, "will have to be redeemed by the USG from the General Fund to pay benefits." We agree on that. Yet you make a logical leap to "The government must come up with real money by borrowing it or reducing spending elsewhere." A leap too far. As the publicly held debt increases, the amount of money the government must pay to make the minimum payments on that debt increases. You know that. You are confusing yourself by crossing two scenarios,

  1. The total debt limit is not increased and increased SS payments are made by cuts to everything else.
  2. The total debt limit is increased and SS is paid by increasing the publicly held debt because SS is now operating in the red.

Either way, the publicly held debt will increase until it reaches 100% of GDP when we will be forced to default. Today’s GDP is $14T which is our current debt limit.

That’s why economists don’t like intergovernmental holdings. Because the concept makes scenario A theoretically possible and yet we operate under scenario B.

Practically all that matters to bond buyers is our publicly held debt because "The government must come up with real money by borrowing it or reducing spending elsewhere." All that matters is cash flow. ( Current Federal Cashflow )

There is no doubt that our bond ratings and interest rates to borrow will increase. Japan's debt is over 125% of GDP now. That is the danger we face with increasing our national debt, i.e., the debt servicing costs and rising interest rates. It is a downward spiral.

Yes! Correct! It is a spiral but airplanes wouldn’t go into spirals if pilots knew exactly when they would go into spirals. What you are imagining is that we metaphysically know the maximum debt ratio AND all our bond buyers agree with us. They won’t. Some will bail when they think we can’t make interest rates of 4%, some when it is 6% and so on.

You are arguing that the hard limit is 125% or a bit higher. You don’t know that it is. What we do know is that it is around 100%. Sometimes its higher, sometimes it is lower. For Greece, even with the backing of the ECU, it was 115%. The exact point is dependent on circumstance. Just because YOU think it’s 125% doesn’t mean that other people think that’s the limit. Japan is the exception that proves the rule. It’s not even that good an exception. The truth is, we will default when OTHER people think we’ve reached the limit. Maybe you feel that every bondholder will think by your rules. Good luck with that. They don’t call them bond vigilantes because they follow rules other people think are reasonable.

What you seem to be missing is that Congress will have to raise the debt ceiling in three months not three years.

The Congress will raise it in three months to last how long? One year? Two? Five? Congress can raise it up to the point that the total government debt minus the intragovernmental holdings equals the publicly held debt equals 100% of GDP.

The debt ceiling applies to our total debt including the publicly held debt and intragovernmental holdings. We can keep on raising the ceiling as we done for many years rather than default.

No. No, no we cannot. Your "many years" is not my "many years". The total debt can be raised until the publicly held debt reaches 100% of GDP, give or take depending on bold holder opinions and unknown interest rates. At the Republican’s spending rate, we will reach a historically reasonable risk of forced default in just five years. Five years isn’t much to me.

That brings its own dangers, but as long as we keep printing money, we can pay our debts, albeit with a declining dollar.

Please be serious. If that’s the point off all this then…. I’m guessing you’re about 23 years old. Your parents should come find you and set you straight. There is no way you could understand most of what you wrote and not understand why trying to inflate our way out of a short-term held debt is a bad, bad idea.

There is plenty of blame to go around including the American people who are uninformed and unengaged. Most would prefer to keep receiving government handouts without understanding that we can no longer afford to do so. The people don't want the politicians to treat them as adults nor do they want to feel the pain of the decisions that must be made.

If that is true then it all doesn’t matter. What I think is true is that the American people, even the educated ones, don’t know how deep a hole we are in and how fast we are digging. If the House doesn’t hold the line on debt, the American people won’t know why debt is important until it is too late. That is why Paulenty’s point is so helpful. It forces the clarity we need to get our spending under control. Most Americans don’t understand there is a hard, literally killing limit to deficit spending. If they do find out after it happens, God help anyone within ten miles of the Capitol. It will mean and end to our way of life, end of our constitution, old people will die needlessly, etc. Decisions have consequences and sometimes are out of proportion to what we think is reasonable.

By 2030, one in five residents in this country will be 65 or older, twice what it is now. The baby boomers are retiring at the rate of 10,000 a day and will continue to do so for the next 20 years. In 1950 there were 16 workers for every retiree; today it is 3.3; and by 2030 it will be just two. The welfare state has bankrupted us.

True. Now is the time to deal with it as we are sure that our (publicly) held debt to GDP ratio is manageable. If we wait until it might not be, it will be too late. At that point other people, far more brutal people, get to decide what the consequences are. What makes sense to me is to have the retirement age increased each year to keep the percentage of people on SS what it is today.

38 posted on 01/22/2011 7:33:21 PM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi
Either way, the publicly held debt will increase until it reaches 100% of GDP when we will be forced to default. Today’s GDP is $14T which is our current debt limit.

Not true. There is no automatic default when the publicly held debt reaches 100% of GDP. There is no hard limit.

Please be serious. If that’s the point off all this then…. I’m guessing you’re about 23 years old. Your parents should come find you and set you straight. There is no way you could understand most of what you wrote and not understand why trying to inflate our way out of a short-term held debt is a bad, bad idea.

Tell that to Bernanke and his quantitative easing. The dollar is still the world's reserve currency. I am guessing you are about 15 years old.

The Congress will raise it in three months to last how long? One year? Two? Five? Congress can raise it up to the point that the total government debt minus the intragovernmental holdings equals the publicly held debt equals 100% of GDP.

Where do you come up with this nonsense about the imaginary point of when the publicly held debt equals 100% of GDP. Yes, bond ratings will decline and the cost of borrowing will go up, but there is no automatic default. The real problem is when debt servicing costs continue to eat up more and more of the federal budget that we can no longer operate our government. Then we are forced into default. Congress has been raising the debt limit for a long, long time.

What makes sense to me is to have the retirement age increased each year to keep the percentage of people on SS what it is today.

It makes more sense to means test it. SS is not our biggest problem. It can be solved relatively easy thru a combination of ways. I prefer privatizing it with a small defined benefit program. Raising the retirement age every year is simplistic and won't work for those blue collar workers who have been engaged in hard physical labor. Some slight increases in the retirement age, changes to the computation of benefits and COLA, and small increases in payroll taxes can keep the system solvent.

Medicare and Medicaid are by far our biggest problems and the most difficult to solve. These programs are bankrupting the nation.

39 posted on 01/22/2011 10:17:30 PM PST by kabar
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To: SaraJohnson

You are missing the point: it’s “entitlements” that consume about 60% of the federal budget. Year after year after year. They are the legacy of FDR and LBJ.

The Framers never heard of either FDR or LBJ, so I’m not sure how the programs they started in the last century fit into the original intent of the Constitution limiting the powers of the federal government. I suspect the Framers would be appalled at what has come to be considered “provid[ing] for the ... general welfare.”

Congress got itself into a bind by making “entitlements” untouchable. That has to change. It cannot be sustained without driving the country’s economy over the cliff.

“Entitlements” include SS, Medicare, Medicaid, and all the welfare programs, food/shelter, etc. They have to be brought under control. And it’s about time someone came out and said so.

Virtually everything about the SS program is arbitrary: the limit on earned income that’s taxed for SS/Medicare, how much SS pays out, how one qualifies, the age when one can start to collect, how and when SS income can be taxed, and on and on.

I’ve read that the average SS recipient collects in 4.5 years what s/he paid into the program over his/her working years. How can that NOT be a Ponzi scheme? That could well be considered ‘stealing’ from our children and grandchildren. I’m not willing to do that.


40 posted on 01/22/2011 11:03:09 PM PST by EDINVA
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To: kabar
Not true. There is no automatic default when the publicly held debt reaches 100% of GDP. There is no hard limit.

You’re right. It not a hard limit. It’s an unknown limit. If you don’t like 100%, do your own research and pick your own. At debt increases of 10% per year (Obama) or 8% (Republicans) the difference between the historical 100% and Japan’s 125% is two to three years. When it happens the people across America that other people look to explain this stuff will NOT say, "Well no one saw that coming."

Tell that to Bernanke and his quantitative easing.

Bernake has made mistake after mistake. Quantitative Easing Explained. He’s buying government bonds now to keep interest rates down which . . . Lord help us.

The dollar is still the world's reserve currency. I am guessing you are about 15 years old.

Still? That is the point. When we default your sentence will read "The dollar was still the world's reserve currency."

Where do you come up with this nonsense about the imaginary point of when the publicly held debt equals 100% of GDP. Yes, bond ratings will decline and the cost of borrowing will go up, but there is no automatic default. The real problem is when debt servicing costs continue to eat up more and more of the federal budget that we can no longer operate our government. Then we are forced into default. Congress has been raising the debt limit for a long, long time.

Yes, right, the actual number whether its 125%, 90%, 99%, 113% is dependent on circumstances, bond buyer opinion, domestic interest rates, foreign interest rates, etc. etc. I think though you are starting to admit that there is a point when the debt increases exponentially then geometrically (the exponent of interest starts to increase too all derivatives are increasing, it doesn’t have a finite convergence). That limit is a matter of opinion and your, mine, Obama’s, Republicans’ etc. opinion doesn’t matter. It’s only bond buyer’s opinion that matters. When enough of them think we will default, we are forced into default. Historically bond buyers flee around 100%. Pick your own limit. Just because you refuse to pick one doesn't mean bond buyers wont and it doesn’t change the decision we need to make today. What do you think our limit will be? I'll give you a reference, "This time it's different."

It makes more sense to means test it. SS is not our biggest problem. It can be solved relatively easy thru a combination of ways. I prefer privatizing it with a small defined benefit program. Raising the retirement age every year is simplistic and won't work for those blue collar workers who have been engaged in hard physical labor. Some slight increases in the retirement age, changes to the computation of benefits and COLA, and small increases in payroll taxes can keep the system solvent.

Means test it? Commie. ;) Seriously though, even though there are worse problems, it doesn’t mean SS doesn’t need to be cut. To balance the budget we need to cut SS, Medicare and Defense by about 30% and the rest need to be cut 50%. THAT is how high our deficit is.

Medicare and Medicaid are by far our biggest problems and the most difficult to solve. These programs are bankrupting the nation.

Hmmm kind of like the interest rate is higher on those two than SS which makes them almost impossible to deal with. Where have I heard that before? Medicaid needs to be block granted to the states. Medicare needs to be turned into a voucher that seniors can use to buy their own senior health care program. Either that or single year benefits need to be capped at, say, $80k per year. We simply can’t afford to pay for all the technology that the folks like Genetech and GE can come up with. I’m waiting for news of the first $1billion dollar pill.

41 posted on 01/23/2011 8:24:27 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: SaraJohnson

If the only thing the government did was pay for SS, Medicare, Defense and made minimum payments on the debt, it would cost about $2.9T. Our revenue is expected to bring $2.4T.

(millions)
Department of Defense-Military $723,703
Department of Health and Human Services $926,236
Interest on Treasury Debt Securities (Gross) $464,706
Social Security Administration $789,034


42 posted on 01/23/2011 8:34:12 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi

They need to pay us back the money they confiscated from our employers and us for a retirement benefit they can not afford to pay and then end the sham programs.

If they can pay off the banksters and corporations of the world for the shams and failure, they can pay off the American people they shook down.


43 posted on 01/23/2011 8:43:17 AM PST by SaraJohnson
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To: EDINVA

I am not missing any points.

Social Security and Medicare are not “entitlements” like welfare and other free stuff the government dishes out. People and their employers paid their money to these so-called “retirement” benefits. Many people are depending upon those retirement benefits (they planned their retirements around them) to survive through their old age.

It is you who is missing the point here. This is a fraud. It is theft. It is a lie to call retirement benefits paid for by people “entitlements.” If they could find the money to pay off unions, corporations, National and International banksters, they can find the money to pay retirees back the money they stole from them for a socialist scam.


44 posted on 01/23/2011 8:49:54 AM PST by SaraJohnson
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To: SaraJohnson

Unfortunately that money was spent on roads, fighter planes, MRI machines, education, etc. etc. It’s gone. The only way for them to pay for it is to borrow it.


45 posted on 01/23/2011 9:03:57 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: SaraJohnson

You’re right it was fraud. They lied. Unfortunately our constitution has no penalty for a majority of congressmen lying.

As Patric Henry said during the ratification of the Constitution,

“I say they may ruin you; for where, sir, is the responsibility? The yeas and nays will show you nothing, unless they be fools as well as knaves; for, after having wickedly trampled on the rights of the people, they would act like fools indeed, were they to publish and divulge their iniquity, when they have it equally in their power to suppress and conceal it.

Where is the responsibility—that leading principle in the British government? In that government, a punishment certain and inevitable is provided; but in this, there is no real, actual punishment for the grossest mal-administration. They may go without punishment, though they commit the most outrageous violation on our immunities.”


46 posted on 01/23/2011 9:07:05 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi

They mananged to borrow money to bail out the banksters’ scams. They can borrow money to bail out their own scams or make the necessary cuts to make that happen. It is not alright to steal from the American people.


47 posted on 01/23/2011 9:13:47 AM PST by SaraJohnson
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To: SaraJohnson

I’m sorry but the bank has been robbed and they’ve ridden off on their horses.


48 posted on 01/23/2011 9:33:38 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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To: MontaniSemperLiberi
Still? That is the point. When we default your sentence will read "The dollar was still the world's reserve currency."

If/when we default, the dollar will no longer be the world's reserve currency. The Chinese, Russians, Arabs, etc. are looking to supplant the dollar, but they don't have any real substitute except for a basket of currencies. The US economy is three times that of China. The Euro is collapsing. Any default by the US would send the global economy into a tailspin. The US consumer has acted as the world's global economic engine. A broken dollar will make it very difficult for Americans to buy imports.

Means test it? Commie. ;) Seriously though, even though there are worse problems, it doesn’t mean SS doesn’t need to be cut. To balance the budget we need to cut SS, Medicare and Defense by about 30% and the rest need to be cut 50%. THAT is how high our deficit is.

You don't cut with a meat ax. Moreover, it much more difficult than that for the entitlement programs, which will face an increase in enrollees as our population ages, i.e., the number of people over 65 will double to twice what it is now in 20 years and by 2030 one in five will be 65 or older. As I have stated previously, we need a long term plan on how to reduce our deficits and institute fiscal responsibility. There are many different ways to do that, but in the end, it all boils down to political will by our political leadership and the people. There is no easy or painless way out of this mess.

Hmmm kind of like the interest rate is higher on those two than SS which makes them almost impossible to deal with. Where have I heard that before? Medicaid needs to be block granted to the states. Medicare needs to be turned into a voucher that seniors can use to buy their own senior health care program. Either that or single year benefits need to be capped at, say, $80k per year. We simply can’t afford to pay for all the technology that the folks like Genetech and GE can come up with. I’m waiting for news of the first $1billion dollar pill.

There is no doubt that health care must be rationed. I would rather have the people do it than the government. Paul Ryan, Tom Coburn, Rep. Price, and others have some good plans to address the problems. Unfortunately, they don't have the support of the Dems or many Reps. I am pessimistic about anything being done until it faces crisis proportions and then the government will be forced to act making things much worse.

49 posted on 01/23/2011 9:42:26 AM PST by kabar
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To: kabar

“As I have stated previously, we need a long term plan on how to reduce our deficits and institute fiscal responsibility.”

As I have stated, we don’t have a long term before our debt buyers flee and we have to cut a deal with whoever holds our bonds at that point.


50 posted on 01/23/2011 9:48:21 AM PST by MontaniSemperLiberi (Moutaineers are Always Free)
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