Skip to comments.Ex-CBO Directors: Crisis May Come Before Lawmakers Agree To Debt Ceiling Hike
Posted on 06/08/2011 8:10:59 PM PDT by PieterCasparzen
WASHINGTON (Dow Jones)--Lawmakers may not reach an agreement to tackle the ballooning federal debt until financial markets indicate they are losing confidence in the United States' ability to pay its obligations, former heads of the Congressional Budget Office warned Tuesday.
Borrowing rates for the federal government remain at historically low levels, but confidence could erode quickly, Tuesday's panelists said. Douglas Holtz-Eaken, who headed the CBO during the George W. Bush administration, predicted a crisis of confidence in less than two years unless action is made to reduce long-term deficits.
Concerns about market confidence could be constructive, some panelists said. Alice Rivlin, who ran the CBO during the first Bill Clinton administration, said success depends on a bipartisan group of lawmakers, including the president, "being scared enough that they recognize they have to put together a package that they aren't going to like."
Rivlin said that happened last year, when conservative Republicans like Sen. Tom Coburn (R., O.K.) supported the Simpson-Bowles commission report that recommended about $4 trillion in cuts over ten years, partly by eliminating tax loopholes. Though the elimination of such loopholes could lead to some Americans paying more in taxes--a prospect that is normally anathema to Republicans--Coburn said it was in the best interest of the country.
"We've got to get that spirit to come to the fore because people are scared enough of the consequences that they're willing to give up something for the good of the country," Rivlin said.
The panelists rejected the idea floated by some Republican lawmakers that the U.S. could avoid defaulting on its bonded debt even if the debt ceiling isn't raised by Aug. 2, simply by prioritizing federal revenues to ensure principal and interest payments are made before any other federal obligations.
(Excerpt) Read more at online.wsj.com ...
Gee, I thought the crisis was supposed to hit a few months ago? Starve the beast!
Gosh, I wonder how they got to be ex-CBOs...
The structural problem is in the handouts, nominally called “entitlements.” I’m afraid we lack the political will as a nation to confront these structural problems. So this is all kabuki theater in the ballroom of the Titanic.
Government will not allow itself to shrink, so there’ll be more QE/monetization. Starve the beast.
They think cutting the budget is a joke They're full of Obama's hope So the economy only gets worse And we the taxpayers are broke
The biggest fear of the political elite scumbags is that government will shut down and normal, working, traditional American families will barely notice. It will be the bums, deadbeats, and parasites who comprise the Democrat party “base” (aka, the “free shit army”) who will howl the loudest.
Whatever... They better not raise my taxes.
Republican Members of the Committee On Appropriations
HAROLD ROGERS, KY
C.W. BILL YOUNG, FL
JERRY LEWIS, CA
FRANK R. WOLF, VA
JACK KINGSTON, GA
RODNEY FRELINGHUYSEN, NJ
TOM LATHAM, IA
ROBERT B. ADERHOLT, AL
JO ANN EMERSON, MO
KAY GRANGER, TX
MICHAEL K. SIMPSON, ID
JOHN ABNEY CULBERSON, TX
ANDER CRENSHAW, FL
DENNY REHBERG, MT
JOHN R. CARTER, TX
RODNEY ALEXANDER, LA
KEN CALVERT, CA
JO BONNER, AL
STEVE LATOURETTE, OH
TOM COLE, OK
JEFF FLAKE, AZ
MARIO DIAZ-BALART, FL
CHARLES DENT, PA
STEVE AUSTRIA, OH
CYNTHIA LUMMIS, WY
TOM GRAVES, GA
KEVIN YODER, KS
STEVE WOMACK, AR
ALAN NUNNELEE, MS
Total Republican members: 29
Ranking Member, Norm Dicks (WA)
Marcy Kaptur (OH)
Pete Visclosky (IN)
Nita Lowey (NY)
José Serrano (NY)
Rosa DeLauro (CT)
Jim Moran (VA)
John Olver (MA)
Ed Pastor (AZ)
David Price (NC)
Maurice Hinchey (NY)
Lucille Roybal-Allard (CA)
Sam Farr (CA)
Jesse Jackson Jr. (IL)
Chaka Fattah (PA)
Steve Rothman (NJ)
Sanford Bishop (GA)
Barbara Lee (CA)
Adam Schiff (CA)
Mike Honda (CA)
Betty McCollum (MN)
Total Democrat members: 21
Eliminating a tax loophole is not a cut in spending. Nor is lowering taxes. I know it's a difficult concept to grasp, but the only way to cut spending is to actually cut spending.
If we eliminated all non-defense discretionary spending it still would not balance the budget.
That is the flawed logic that CONGRESS uses to CONTINUE HAVING THEIR BUREAUCRACY.
Just because cutting the bureaucracy will not elmininate a deficit completely, it will only cut it by hundreds of billions of dollars, is not a valid reason to not make the cuts.
Say I earn $5,000 per month personally, but spend $8,000 per month, borrowing $3,000 per month to cover the difference.
My monthly deficit is $3,000.
Can I argue that I should not reduce my spending on my established routines of dinners and hotels by $1,000 per month - because it will not eliminate my monthly deficit ?
NO - THAT’S A JACKWAGON STATEMENT OF SOMEONE TRYING TO KEEP SPENDING AND BORROWING.
They will eventually not be able to borrow any more and go bankrupt and be forced to work out the debt they have amassed.
YES, YOU CUT THE $1,000 AND THEN YOU TAKE A LOOK AT WHAT ELSE IS GOING ON AFTER THAT.
In the case of our federal racketeers called Congress, they immediately want to start cutting Medicare by pushing the burden of paying for medical costs onto us dumb citizens. That simply allows them to KEEP THEIR FEDERAL EMPLOYEE BUREAUCRACY GOING - WITH NO CUTS TO IT AT ALL.
People may say they think it’s necessary to allow Congress to start down the slippery slope of cuts to medicare - BUT WAIT UNTIL YOU HAVE ELDERLY PARENTS WHO ARE BARELY SQUEEKING BY. THEY PLANNED THEIR LIFE OUT BASED ON LIES. IT’S DIFFERENT WHEN YOU SEE YOUR OWN PARENTS CHOOSING BETWEEN FOOD, MEDICINE, HOME HEATING OIL AND PROPERTY TAXES THAT HAVE SOARED TO WHAT USED TO BE PAID FOR RENTING AN APARTMENT JUST A FEW YEARS AGO.
The real problem is that Medicare and All medical insurance is a middle man. If we paid monthly capitation payments DIRECTLY to medical providers - and the system was structured correctly - our medical costs we be kept very nice and manageable. I’ve worked in the corporate office of Prudential back in the day and I know that I have excellent answers on this, but that’s another whole story.
It is rapidly coming down to choosing between the Federal Bureaucracy and people who have worked their whole lives - I say get rid of the bureaucracy.
If people don’t have very high earnings and are just getting by for their whole life but not able to save or invest and they live in a high-cost state - they will be financially crushed by retirement.
THE GOVERNMENTS (LOCAL, STATE, FEDERAL) are then horribly lying to them their whole life by having a DEFINED BENEFIT PLAN for their retirement in SS instead of a DEFINED CONTRIBUTION PLAN, where they have an ACCOUNT - AND THE SEE THEIR BALANCE GROWING OVER TIME AND IT’S THEIR MONEY.
There always was the COUNTY POORHOUSE. Everyone hated that idea. Everyone poo-poos it now.
But Duh. That is the MOTIVATION for people to realize that THEY MUST MAINTAIN GOOD FAMILIES THAT TAKE CARE OF THEIR OWN ELDERLY and THEY MUST EARN, SAVE AND INVEST ALL THAT THEY CAN, that two jobs, working Saturdays, living like a pauper, buying a property or two, getting involved in owning investments of various kinds, diversifying, etc., IS THE WAY TO LIVE LIFE.
EVERYBODY BEFORE WWII AND THE ADVENT OF OUR IDIOTIC MODERN SS SYSTEM KNEW THIS. MANY PEOPLE USED TO BE VERY WELL PREPARED FOR RETIREMENT THAT DID NOT EVEN MAKE THAT MUCH. PEOPLE WOULD VERY TYPICALLY NOT BORROW AND BE EXTREMELY FRUGAL WITH THEIR MONEY AND EARN ALL THAT THEY COULD AND STOCKPILE INVESTMENTS. We all have grandparents and older people we knew that did this, of course some did not. Most families used to take care of each other and their elders. What is amazing to me is that some of these “rich” old folks never got past the 8th grade. One of my grandfathers was forced to quit school and support his family while still a child. Was a very kind man, WWII vet enlisted when he was over 40. Did very well for himself.
Bottom line, Government spending is one of the responsibilities that government elected officials have that requires them to have THE PUBLIC TRUST. BANKRUPTING THE GOVERNMENT is the ultimate failure in their responsibility and shows a callous treasonous attitude on their part.
To balance the budget without increasing taxes there needs to be a 50% cut in all non-defense discretionary spending and a 30% cut to Defense, SS and Medicare.
This is incorrect. The choice is how much we cut both. If we choose to do one or the other, the system will collapse and then all the old sick people will die.
A few months ago I posted the numbers to FR. In summary,
Revenue in 2011 is expected to be $2,425,725 million.
2011 costs in 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
Comes to $2,903,679 million. A $477,954 millon deficit. Note this does not even count necessary programs like Federal Prisons and the like and projections of federal revenue are actually down form earlier in the year when I compiled these numbers.
So as you can see, we have to make cuts to the big three. It's that bad.
If you care to go through the numbers in detail, you can by clicking on the following links:
Dollar for dollar.
IN THE CURRENT YEAR.
You think Congress will agree to that ? I doubt it.
No, I don’t think congress will agree to it, Republican or Democrat.
Fundamentally our system is out of equilibrium. Old Liberals in their desire to “make things better’ have failed to recognize that a system out of sync with natural relationships is doomed to fail. New School Leftists, in their desire to make things how they want them, are hurrying up to make it fail.
I think our founders had it right. Have a “system” that is not really a system. Have a society that is in equilibrium with natural law and makes decisions based upon what is most natural and allows God’s will to act.
I think we have one of two futures. One future is like our founders thought best. One that has a government that seeks to protect the natural and free relationships between people and no more. That would happen after a lot of pain and chaos. The second future is one where we have unnatural relationships forced upon us through continual pain and chaos.
Of course, all that could be prevented if we were to get our budget balanced but like you and I think, that probably won’t happen. Our president is trying to break us and our “Conservative” party is doing no more than making the case they really want to stop it. I will forgive neither.