America's debt

[_CY_]

The Republicans are playing a cynical political game with hugely high economic stakes

IN THREE weeks, if there is no political deal, the American government will go into default. Not, one must pray, on its sovereign debt. But the country will have to stop paying someone: perhaps pensioners, or government suppliers, or soldiers. That would be damaging enough at a time of economic fragility. And the longer such a default went on, the greater the risk of provoking a genuine bond crisis would become.

There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. ~

we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. ~ America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.

And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.

Both parties have in recent months been guilty of fiscal recklessness. Right now, though, the blame falls clearly on the Republicans. Independent voters should take note.

http://www.economist.com/node/18928600

 

[SMS]

We will not, can not, go into default. The US government currently brings in more than enough revenue to service the debt. It's the rest of the unearned entitlements and unconstitutional programs that will have to go. Not sure where they got their numbers but our gross debt to GDP is much higher than 65% and projected to go through the roof. Laughable that they claim 65% of your income tied to debt is "perfectly affordable"...what kind of economic buffoonary is that?

Using pensioners, soldiers, and suppliers as pawns is the true cyncial 'political game'. There is plenty of other spending that can go into 'default' before those highly emotional examples. Defense should be cut last since it is one of the few functions of today's government that is spelled out in, and authorized by, the Constitution.

You could tax every 'rich' person at 100% and we still couldn't balance the budget, let alone start to tackle the debt. That's a fact...not opinion. America doesn't have a tax problem, it has a spending problem. Period.

http://www.usgovernmentspending.com/downchart_gs.php?year=&chart=H0-fed&units=p

 

[mugsy]

SMS is correct - the hugely political game is being played by Democrats who insist that the only solution is default and ruin. That simply isn't true. Instead the President could go to Sec'y Geithner and say if we cant go borrow more and we move debt coverge to the top of the list - what's left? That's our operating budget for now. It might be tight but there are ways to manage it. Instead we get "need more debt authority" which we never fail to max out because it gives us breathing space and then we "whew, glad that's over" and then go back to business as usual.

Even if you don't want to do that there is a way out cut spending equal to debt raise sought. Historically, raising taxes keeps the system undisciplined by feeding the monster. There was a time - when balancing budgets was routine and the income tax wasn't around (so raising funds was difficult for the Federal government) that a tax raise might be used as part of the solution but I no longer have confidence in that.

Now I will go off on a tangent I think to solve the systemic problems we face - not just balance a single budget - we need to repeal Income Tax authority to severely limit routine revenue raising capability of the Federal government - you could still raise money but folks would have to see and knowingly pay for each penny of revenue being raised, and repeal the 17th Amendment (direct election of Senators) thereby restoring the direct voice/influence of States in the Federal government they once instituted.

We have become too Federal centric and have given too many easily abused tools for revenue raising to the Federal government. My rambling ends here now.

 

[mugsy]

BTW - no one thinks we will "balance the budget" as a result of the negotiations - no one from either side - we just need to establish a downward trend on spending without killing the off the best source of new jobs, the private sector.

We also need to remember that taxes are money people earn that is then taken away under threat of force (jail time). We need some level of taxation for defense, some essential services, etc. but it is still someone else's money. I heard a talk show (Bill Maher) host talking about how the Republicans want to "give Federal payments" to people/companies. Direct subsidies do that, and I oppose them, but tax cuts simply let people keep what is theirs to begin with - it is intellectually dishonest to pretend that isn't the case and our government officials need to never forget that no money belongs to the government "by right" but only by consent and true necessity.

 

[SMS]

FWIW, it is very relevent to add that the Republicans are not opposed to raising the debt ceiling. They are oppossed to raising it without a clear plan to reduce spending in an effort to avoid what mugsy correctly termed 'undisciplined' feeding of the monster. Show us you are serious about reducing spending, and we will allow a raise in the ceiling to keep us going forward.

Anyone that says we have anything other than a spending problem is starting from a bankrupt and unsupportable position. If you are broke, you stop spending...you don't go around to your neighbors asking for more money.

 

[okie98]

On a fixed income, I have to handle my funds carefully. When cost for necsssities go up, I have to cut spending in other areas (guns and fun). I am not an economist but it seems to me that Congress (regardless of party) needs to wake up and smell the coffee!

 

[Biggsly]

We just need to borrow more money. If we can borrow more money, we can use it to pay back the other people we have borrowed from. I think this is the Govs plan.

 

[farmer17]

The founding fathers did a great job of designing the U.S. Government but the design did not evolve with time and the job of president today, is way to complex for one man to handle. The president in my opinion should not have anything to do with the economy. Health care, the military, foreign policy, social security, domestic issues, disasters, etc. are plenty for one man. There should be a government agency created that we can call the Dept of Receivables and it would project how much money is coming in that year from the IRS, tarrifs, fees, licenses, fines, etc., and that is how much money there is to spend. Another elected official we can call the Chief of Finance determines how that money will be spent. No more borrowing with no plan to pay it back, the taxpayers are spending way too much of their income on interest.

 

[HMFIC]

SMS already said it all...

To think that this is the Republican's fault is just laughable. Don't get me started on Bush spending like a druken sailor, but Obama has FAR eclipsed him.

It's almost as funny as Obama crying daily about Republicans wanting tax breaks for coroporate jets (not true), when in fact HIS "bailout" program provided a 2 year extention on amoritization for coporate jets and HIS democratic congress at the time passed it. Not one single Republican voted for it...

Independants had better realize that Obama's policies have completely sunk us. Unemployment is up, job growth is nonexistant, the bailout money they were shoveling into the economy on the backs of us taxpayers is done. Time for a change...

 

[Twmaster]

This is not a Republicans vs. Democrats issue. This is a government out of control issue. For anyone to try and pin this issue on one party or another is simply full of ********. More than enough blame to shoulder on each side of the aisle.

I'm a relatively simple man. Often I see things in simple terms. To my eyes owing other people more than 14.5 TRILLION dollars is simply wrong. 40% of every dollar our government spends goes to service debt. That is insanity.

If I had my way there would be no increase in the debt limit. None. Congress, Mr. President, deal with it.

My disgust knows no bounds these days.