Skip to comments.No One is Serious About Debt
Posted on 12/07/2012 6:44:59 AM PST by SeekAndFind
The "fiscal cliff" deal House Republicans and President Barack Obama are debating can be called many thingsthe "avoiding a political nightmare" deal or a "Yes, Mr. Obama, may I have another" dealbut please let's stop referring to it as a "deficit reduction" deal. We've yet to see a serious proposal on debt.
Actually, by proposing a tax increase for spending with no real corresponding cuts, the president has been arguing for growing deficits. And with a priority on "fairness" over prosperity, any chance of easing the $16 trillion national debt through an economic boom in the near future is improbable.
When you cut through the coverage, in fact, you'll also find that the second most pressing item on the president's agendaafter tax hikes on the wealthy and small businessesis winning the unlimited authority to raise the country's debt limit. Obamawho personally sat down with CEOs at the Business Roundtable to press his caseargues that having a cap on debt, rather than unlimited debt, is a "bad strategy" for the nation.
After that, much of the deceptive "savings" or "cuts" offered by Obama were already coming from the winding down of campaigns in Iraq and Afghanistanthis itself supposedly temporary spending that is now baked into the baseline. You will remember that for Democrats, including the president, funding these wars by borrowing was unconscionable. Turns out, only the wars were the problem, not the trillions.
Similarly, Americans may also remember our "one time only" stimulus bill. That dramatic bump in spending is also now a forever spending baseline. The imagined "savings" from that kind of accounting is very much like the "savings" a person might realize after someone steals their car but is nice enough to throw them a couple of dollars for bus fare home. Thank you, Mr. President!
But all of Obama's pro-debt expansion policies don't excuse Republicans for calling their own proposal a "credible" $2.2 trillion plan on "deficit reduction." Even if we were to concede for a moment that the plan would cut the debt, by the time we realized $2.2 trillion in savings, the Congressional Budget Office projects that debt as a share of GDP will have reached 100 percent. By 2035, we're looking at 200 percent.
Or put it this way: The entire Republican plan would only pay down the $220 billion in net interest the United States owes on its debt every year. Well, if by some miracle that interest stayed at $220 billion. Which it won't.
The Republicans' offer also contains $800 billion in new "revenue" garnered from tax reformpartially from closing loopholes on the wealthywhich surrenders to the notion that "revenue" rather than "spending" drives the deficit.
The Republicans' offer has $300 billion in cuts to discretionary spending over 10 years. Well, the U.S. government's outlays in October alone were $304 billion.
The GOP offered $600 billion in 10-year health care cuts through Medicare and Medicaid, which is less than Obama was willing to risk as seed money for Obamacare. Then again, the president's new budget only reduces Medicare and Medicaid spending by $340 billion over a decade. Democrats have no interest in reform.
Our potential unfunded liabilities, what our government has promised to spend on entitlement programs in the future and won't have money to pay, are estimated to total anywhere from $87 trillion to $100 trillion. That doesn't even include Obamacare's unseen costs.
Fiscal cliff? We've already taken that dive.
They have no intention of paying back any of the debt.
It will simply “go away” with the crash.
I just hope that ‘bammers and the rest of the elitists haven’t “secured” the debt with our land and resources.
You’re right, Mr. B. My thoughts exactly.
If anyone needs me, I’ll be in my bunker cleaning my guns. ;)
The only thing Ø is serious about is successfully pulling an O’Dinga, or what he hoped Zelaya (Honduras, 2009) tried to do, or what Morsi is in the process of doing right now. The only thing in question is can our Constitution withstand the blow - is it a mortal blow, a flesh wound, or something in-between.
I am under the serious belief that both parties are acting the way we “expect” them to act - but both have the same end goal...collectivism and global elites dominating the rest of us...
I do not trust any in Washington - even though they speak out against this Administration - at the end of the day, nothing is done...we expect speeches to be followed by action on the GOP side, but no action has been taken thus far...
We are beyond seriousness at this point!
It begins to seem that the problem is the resolve of the GOP. The Democrats are congenitally incapable of reason. Boner must go!
I think we have an advantage/firewall of our state governments.
These will remain when the fedgov collapses.
No they won’t..They are all way too dependent on federal funding.
RE: They have no intention of paying back any of the debt.
It will simply go away with the crash.
You realize what happens to you and me if America (God forbid ) defaults on debt...
No country the size of the United States has every gone into default on its debt.
The debt is not just numbers; it is real money that has been lent with REAL expectations of RETURNED payment. The debt is owed to multi-national banks, foreign countries, and the public itself through treasuries.
If an individual defaults on a loan, the debt does not disappear. Instead, the bank takes the loss. If the United States goes into default, much of the world will suddenly face the prospect of losing about $14 trillion dollars. The results likely will be catastrophic.
Many of the world’s largest banks, which are still hardly on solid footing after the 2008 financial crisis, would go bankrupt due to their exposure to the United States.
Credit for simple things like houses and car loans may become unavailable as a result (that’s you and me affected right there ).
Most large companies use short-term credit to make their payrolls. That credit would disappear, and as a result, many workers would have to start going without a paycheck (you and me again right there ).
There is a very real possibility that people would go to their local bank or ATM and NOT BE ABLE to withdraw cash from their account (you and me again right there ).
Hyperinflation could very likely ensue as the United States dollar becomes basically worthless. The “full faith and credit” of the United States is the only thing holding up the value of the dollar, so when that credit is gone, it is hard to imagine the dollar’s surviving with it.
Prepare yourself for the dollars on a wheelbarrow just to go shopping.
In response to the crisis, businesses would once more lay off workers, only worsening matters and creating a downward economic cycle, which results in a depression. The stock market would plummet as well, negatively affecting the 401(k) accounts of millions of Americans.
The price of oil would skyrocket, and with it likely the price of gasoline.
And PREPARE YOURSELVES FOR RIOTS ON THE STREETS AS PEOPLE FROM THE INNER CITIES RUN OUT OF THEIR GOODIES.
Pretty interesting to consider the various outcomes. I agree no one in DC and some states care anything about paying their debts or cutting spending. If they raise taxes significantly w/o cutting spending its just deferring the inevitable. If they cut spending a bit thats simply another deferral. If they cut spending significantly the Entitled Class will riot. If they steal everyones retirement the tar & feathers come out. No matter what they do it wont be enough, the debt is just too big. They’ve (really we’ve) painted themselves into a corner. I dont see this ending well no matter what happens. I think most in DC have figured this out and are preparing for it.
Yes, I realize the catastrophic result, and that’s why I started down the “prepper” road about 4 years ago.
No kidding. We’ve ben watching this train coming for years. I’m getting tired of waiting for it. It’s inevitable so I just wish it would get here and get it over with.
Even any talk of cutting spending is to save a million here, one hundred million there, and maybe even a wild one billion here. Doesn't anyone realize that 3 Billion in savings only cuts the deficit for ONE DAY...ONE DAY...and then what. Another 3 billion and we are up to 2 days. Big @@X! deal.
-Money is not linked to gold or silver, and hence has no intrinsic value.
-No matter how badly we eff things up the Euros will always be ten steps ahead of us.
-Too many creditor regimes would face the wrath of their own people (Saudis, ChiComs) if they lost us, their best customer.
Hence everyone has incentive to just keep the crap game floating for a long, long time. They will keep lending us Monopoly money to buy their stuff and we will keep pretending we are gonna pay them back.
Intrinsically I think voters in the West have figured this out.
Going over the cliff was all part of Obama's plan to remake America. What's worse is that the republican party is standing aside and in most cases helping the letting the little dick-tator destroy this country.
Democrats think it a meaningless abstraction, and that the government can put everyone to work at good-paying union jobs building roads, filling potholes, and repairing bridges with money taken from "the rich" or else digitized into existence by the Treasury. Republicans think we can grow our way out of it without cutting Federal entitlement spending. They continue lie to themselves and lie to us.
The coming crash will be monumental and entirely deserved.
“I just hope that bammers and the rest of the elitists havent secured the debt with our land and resources”
I’m sure they have. But the key word there is ‘our’ land. Your land and my land have been put up as security so that our creditors will continue throwing good money after bad. When we finally do default, they padlock our doors and we’re put on the reservation. With no recourse at all.
The elite’s assets, however, are safe from any future claims. You can bet on that.
No doubt. But it is Congress that spends the money - OUR money, that is, which they take to be theirs.
But the media says we’re at the fastest deficit reduction since WWII, and that Obama has a blockbuster plan for the budget (/sarc)
Then again, when you look at the source, it’s Bob Cesca
I likes your thinkin’, MrB...
I think the political jerks in DC know what is coming; but they also think they personally will not be affected since they (think) they have amassed enough wealth through decades of being corrupt to weather the storm. If the SHTF in a massive way, however, (and it looks like that’s a good possibility) no one will be immune. It’s going to get really ugly.
What if the gov held a T-bill auction, and nobody came?
I’m in Illinois. Our “firewall” is already in flames.
The "Primary Dealers" always come.
That's one of the conditions of being a "Primary Dealer".
The problem will arise when the rest of the world stops pretending the Benbernank isn't then buying the T-bills from the Primary Dealers with freshly-printed dollars and starts pricing oil in something other than US dollars. That means that to buy oil we have to buy some other currency with dollars, and that's when the music stops.