Posts Tagged ‘national debt’

The low-information voter has triumphed.

Here’s a new Pew poll that should depress anyone who knows how to balance their checkbook. The poll shows Americans oppose spending cuts for government  . . . in every area — even for foreign aid.

48 percent support cuts for foreign aid. So almost half think foreign aid should be cut.  That’s the lone ray of hope in this poll. But with that lone exception, support for spending cuts doesn’t reach 35 percent . . . for anything else.

So all these people who oppose any and all spending cuts must include a lot of people who regularly vote Republican, voted for Romney. Go figure.

Only 20 percent support cuts for farm subsidies (which mostly go to giant agribusiness). Just 21 percent support cuts for Solyndra-style energy subsidies and the U.S. Department of Energy — which should be renamed the Department of Energy Prevention.

The U.S. Department of Energy produces zero energy, just prevents energy from being produced.

Similarly, the U.S. Department of Education should be renamed the Department of Education Prevention.

Does anyone think the quality of education in America has improved since the U.S. Department of
Education was formed under President Jimmy Carter in 1979?

The national debt stands at $16.6 TRILLION. We have trillion-dollar annual deficits as far as the eye can see. The federal government now borrows 40 cents of every dollar it spends.

Every baby born in America today now owes $52,834 on the national debt.

We’ve just added a gigantic new entitlement  program (the largest entitlement program of all time for America) with ObamaCare.

So government spending is just going to get even more out-of-control, if that’s even imaginable.

In terms of our national debt, we’re already in worse shape than Greece. Our only advantage is we can just print up more money, like confetti. Greece can’t because it’s part of the European Union.

But the American people see no problem with any of this. They want to spend more, not less . . . just like Obama.

Americans overwhelmingly support the Lindsay Lohan approach to fiscal discipline.

How well do you think this story is likely to turn out?

President Obama keeps telling us how great government is.  He’s having a tough time selling this message even though we are getting all this government at a 42 percent discount.

That is, we are getting government for 42 percent less than it actually costs because the federal government is borrowing 42 cents of every dollar it spends.

Obama’s big bureaucratic government vision is becoming less and less popular by the day.

Recent Rasmussen polls show that . . .

• 55 percent want ObamaCare repealed compared to 39 percent who oppose repeal;
• 69 percent say spending cuts should be considered for all government programs;
• 66 percent say government should cut spending to help the economy;
• 49 percent think government anti-poverty programs increase poverty compared to 45 percent who think these programs might be helping at least some;
• 45 percent fear the government will try to do too much to help the economy compared to 43 percent who fear the government won’t do enough; and
• 72 percent say small businesses are primarily responsible for their own success compared to 13% who disagree.

So  Most Americans think government is much too big and spends way too much.  Most Americans also think government is too inefficient and is often counter-productive.

Right now, government might not seem so bad because we really aren’t feeling the true cost of government. Politicians have learned that they can spend money like drunken sailors and pass the bill (42 cents of every dollar they are spending) on to future generations to pay.

So many Americans might not be thrilled with what we’re now getting from our government, but they feel we are at least getting something, so are willing to put up with it.  You can live pretty well on your credit card for a while, until the bill comes due and the piper must be paid.

But what if we actually had to start paying what government really costs with a, well, about a 90 percent tax increase?

Of course, a tax increase on that level would collapse the economy overnight, so the revenue would not actually come in. Capital and businesses would flee the country. We would rapidly implode to banana republic status.

But a 90 percent tax increase is about what it would take to pay for the federal government we are now getting.

How popular do you think government would be then?

WASHINGTON POST: Standard & Poor’s announced Friday night that it has
downgraded the United States credit rating for the first time, dealing a huge symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bi-partisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings later on.

The decision came after a day of furious back-and-forth between the Obama administration and S&P. Government officials fought back hard, arguing that S&P made a flawed analysis of the potential for political agreement and had mathematical errors in its initial report, which was submitted to the Treasury earlier in the day. The company had overstated the U.S. deficit over 10 years by $2 trillion, officials said.

Read more here >>>

WASHINGTON TIMES: U.S. debt shot up $239 billion on Tuesday — the largest one-day bump in history — as the government flexed the new borrowing room it earned in this week’s debt-limit increase deal.

The debt subject to the statutory limit shot way past the old cap of $14.294 trillion to hit $14.532 trillion on Tuesday, according to the latest the Treasury Department figures, which are released on the next business day.

That increase puts the government already remarkably close to the new debt limit of $14.694, which means one day’s new borrowing ate up 60 percent of the $400 billion in space Congress granted the president this week.

Debt numbers go up and down regularly, depending on what the Treasury Department is redeeming or issuing on any day, but have been on a steep upward trend for the past decade as spending has ballooned and revenues have fluctuated.

Read more here >>>

HERITAGE: Today or tomorrow, the Senate and House will vote on the Budget Control Act of 2011, which would increase America’s debt ceiling. The deal relies on an insufficient level of cuts, a “super committee” tasked with brokering a grand bargain that will lead to massive tax hikes, massive defense cuts, or both. It remains insufficient to the task at hand and the standards which Heritage Action for America has set forth during the course of the debate.

Read more here >>>

HERITAGE: If you’re a liberal, there is a lot to love from the latest debt limit deal coming out of Washington. Like many of the other plans that have been floated around town (except for Cut, Cap, and Balance), it lays the groundwork for massive tax hikes or the gutting of defense or both while “protecting” entitlements from critically necessary reforms – all things liberals love.

The latest deal closely mirrors the last couple floated around and voted on. It would create a “Joint Committee” that is tasked with finding at least $1.5 trillion in deficit reduction. The difference between this bill and the last couple are the deadlines and penalties imposed on this committee.

By November 23, 2011, the committee must produce a proposal and Congress must then vote on that proposal by December 23, 2011. Either this proposal is enacted or a Balanced Budget Amendment (a stripped down BBA, which would allow for tax hikes to balance the budget) is sent to the states, and then the debt ceiling can be increased again by $1.5 trillion.
If both the committee and the BBA fails, then across-the-board cuts would apply to the budgets for fiscal years 2013 – 2021.
A review of the bill finds the across-the-board cuts ($1.2 trillion) will be evenly split between security and non-security programs. That means that $600 billion will come from security spending, with the Pentagon likely to absorb most of those cuts. In other words, the cuts are incredibly weighted against defense.
Medicare would be subject to cuts under the trigger, but they would only come from Medicare doctors’ payments. This is bad…and something Washington has tried before. Cutting reimbursement rates will result in doctors taking less Medicare patients, which is why Congress never follows through on cuts which already exist in law. In other words, it will never come to pass.
There seems to be little incentive for liberals to work with conservatives to find additional deficit reductions, especially on the spending side. Either they hold strong for tax hikes and “conservatives” give in, or they block all progress and defense gets gutted. Entitlements remain untouched. Doctors ultimately get made whole through yet another “doc fix.” No consequences for liberals.
So why the acrimony from liberals? The only possible answer is that they didn’t get their tax hikes and defense cuts right now. Oh, and there was not another big-government stimulus tacked onto the proposal like so many had requested.

In truth, the spending “caps” increase each year, instead of decreasing or remaining the same, and the “cuts” still result in more government spending in FY2013 and beyond.

In 2010 there was a committee like this, and look what happened, government grew. All of the other 16 committees grew government, hiked taxes and simply added to the problem. Remember 1982, and 1990? Tax hikes, no spending cuts actually took place. We are heading down the exact same road, and this so-called “super committee” handed the liberals a win wrapped in a bow paid for by the American people.

Read more here >>>

Also, under this plan, there is no scenario where the budget balances . . . ever. Nix the “Gang of Six.”

INVESTOR’S BUSINESS DAILY: No wonder President Obama has so heartily endorsed the “Gang of Six” deficit plan. Just like everything Obama has offered so far, it’s short on details and long on tax hikes.

Soon after the “Gang of Six” — a bipartisan group of senators that has been trying for months to put together a deficit reduction plan — issued its new proposal, President Obama praised it as “a very significant step” that represents “the potential for bipartisan consensus.”

What it really represents is Washington at its worst.

The “plan” Obama was praising isn’t a plan at all, but a few pages of bullet points with vague concepts, promises of future cuts, and confusing, and at times contradictory, numbers.

Read more here >>>

Wow! George W. Bush was really, really awful too — but not nearly as bad as Obama. No President has ever been as bad as Obama. He is literally the worst President in the history of the country, no contest.

So Republicans don’t do so well on spending either, not even Reagan.

The big difference, of course is that the major entitlement programs were all initiated by Democrats. So Republican Administrations had little choice but to manage the explosion in spending.

The best period, in terms of not adding so much to the national debt were the Clinton years, from 1995 through 2000. Remember, Republicans took control of Congress in the big sweep of 1994 and forced Clinton to declare that “the era of big government is over” and rein spending in.

But Republicans don’t do so well when they have the Presidency and both chambers of Congress either. Or at least, they sure did not do so well during the G. W. Bush years.

Still, nothing compares to the spending spree we’ve seen under Obama when Dems also controlled both chambers of Congress.

Hat tip to David Boaz of the Cato Institute for the chart.

No tax increases either. Just tax and spending cuts. Scale back the entire Federal government to Constitutional size, in accordance with the Tenth Amendment.

House Speaker John Boehner and the GOP leadership in Congress are doing a decent job by insisting on no new taxes. They want spending cuts only in exchange for agreeing to raise the federal debt ceiling.

But House Republicans should not agree to raise the debt ceiling at all, period.

It’s not a debt ceiling if Congress keeps raising it.

The federal debt is now nearly $15 TRILLION. The federal government borrows 40 cents out of every dollar it spends.

Can you imagine what would happen to you, your home and your family if you were borrowing 40 cents out of every dollar you spend — year after year, decade after decade?

Once you’ve maxed out your credit cards, do you get to just raise your debt ceiling?

You should not be living off your credit cards to begin with, but that’s another topic.

When your expenses exceed your income, you have no choice but to scale back your expenses — sometimes way back, quickly.

Not raising the debt ceiling would force Obama to agree to cut programs and eliminate entire government agencies.

The federal government brings in enough tax revenue to pay for interest on the debt. So there’s really no need to default on the debt.

But the federal government does not bring in enough tax revenue to pay interest on the debt plus everything else it’s paying for. Real cuts would have to happen — massive cuts.

We’d have to raise the age for receiving Social Security to 70. We could certainly live with that. We’d have to do the same with Medicare — no Medicare until you’re 70.

We’d have to adopt the Paul Ryan Medicare plan — gradually wean ourselves off it.

We’d have to get rid of ObamaCare (which wouldn’t be the least bit painful; it would be wonderful).

We’d have to not hire those 15,000 new IRS agents needed to enforce ObamaCare. We’d have to cancel the building of 159 brand new government agencies required to administer ObamaCare.

We’d have to eliminate useless federal agencies such as the Departments of Education, Energy, Commerce, Labor and HUD.

We’d have to cut the military budget.

Why are we now spending twice what we were spending at the peak of the Cold War on the military?

We can’t afford to spend $700 billion on this any more. Bin Laden’s dead. It’s time to start scaling back our military commitments.

What would be the consequence of not raising the debt ceiling?

There would certainly be pain.

The stock market would likely drop 1,000 points in the short-term. A lot of government workers would lose their jobs and, gulp, have to get jobs in the private sector (where results and productivity are expected).

Anytime you enforce discipline, it hurts.

Dieting is no fun.  Do you know anyone who loves to diet?

It’s unpleasant to say: “Honey, we just can’t afford that vacation we were planning.”

Discipline and restraint are never fun.

But the alternative is we keep going down the current road to serfdom and ruin.

The time is now to start reducing debt without tax increases, with spending cuts only.

We could do that simply by going back to 2008 spending levels.

Why can’t we go back to 1998 spending levels?

I don’t remember that as being so disastrous. In fact, the country was doing just fine.

Better yet, let’s go back to Constitutional spending levels. If our federal government actually followed the Constitution, it would be about a third the size it is now.

Most of what our federal government does today is unconstitutional.

The Tenth Amendment to the U.S. Constitution states as follows:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

James Madison, the father of our Constitution (who wrote most of the Constitution), actually thought adding the Tenth Amendment was unnecessary because the entire Constitution is about limiting and defining the precise responsibilities of the federal government.

The Tenth Amendment, Madison thought, would be duplicative. As Madison put it:

The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.”

James Madison, Federalist Paper No. 45

But America’s other Founding Fathers wanted to make absolutely certain there could be no misunderstanding about the very limited role of the Federal government, so insisted on adding the Tenth Amendment.

The Tenth Amendment is really a summary statement of what the Constitution is all about.

Most of the governing in America was supposed to be handled by state and local government, or by families and individuals.

The federal government is supposed to do only a few very specific things, such as provide for the common defense, set up a system of justice, ensure domestic tranquility, establish a currency, ensure the free flow of commerce among the states, and that’s about it.

The federal government is supposed to do only those functions that only a national government can do.

The rest of the governing was supposed to be handled by state and local government.

So if Massachusetts wants to mess up health care with ObomneyCare, it’s free to do so. But no one is forced to live there.

A social safety net is best handled by state and local government, which can better see who really needs help . . . on the principle that government governs best when it’s closest to the people.

So no more raising the debt ceiling, period.

It’s time to lower the debt ceiling and start forcing the federal government to divest itself of most of what it’s doing.

Now is the ideal time to  start forcing the federal government to scale itself back down to Constitutional size.

LARRY LINDSEY-WALL STREET JOURNAL: Washington is struggling to make a deal that will couple an increase in the debt ceiling with a long-term reduction in spending. There is no reason for the players to make their task seem even more Herculean than it already is. But we should be prepared for upward revisions in official deficit projections in the years ahead—even if a deal is struck. There are at least three major reasons for concern.

First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.

The 10-year rise in interest expense would be $4.9 trillion higher under “normalized” rates than under the current cost of borrowing. Compare that to the $2 trillion estimate of what the current talks about long-term deficit reduction may produce, and it becomes obvious that the gains from the current deficit-reduction efforts could be wiped out by normalization in the bond market.

Read more here >>>

CNBC: When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco’s Bill Gross told CNBC Monday.

Economist Bill Gross

Much of the public focus is on the nation’s public debt, which is $14.3 trillion. But that doesn’t include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

Taken together, Gross puts the total at “nearly $100 trillion,” that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won’t find a solution overnight.

Read more here >>>

Greece gets set to default as S&P cuts debt rating to world’s lowest

CNBC: Standard & Poor’s downgraded Greece’s credit rating by three notches Monday, making it the world’s lowest after the agency said a likely debt restructuring would be considered a default.

USA in Worse Shape Than Greece

A restructuring of Greece’s debt — either with a bond swap or by extending maturities on existing bonds — looks increasingly likely to be imposed by European policymakers as a means of sharing the burden of Greece’s crisis with the private sector, S&P said in a statement.

“In our view, any such transactions would likely be on terms less favorable than the debt being refinanced, which we, in turn, would view as a de facto default according to Standard & Poor’s published criteria,” the agency said.

In such a case, S&P added, Greece’s credit rating would be lowered to “selective default,” or SD, while the ratings on the country’s debt instruments would be cut to D.

Read more here >>>