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 ...
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.
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
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.
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.
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.
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.”
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.
I’m sorry but the bank has been robbed and they’ve ridden off on their horses.
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.
“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.
We need a long term plan, including some confidence building measures that demonstrate commitment to the plan whether it is a Constitutional amendment, law, etc. Broadening the tax base, requiring a cap on the federal budget linked to GDP, and other such measures will help keep our debt buyers from fleeing. The UK has taken some very tough measures for that reason. Continuing to spend with trillion dollar deficits every year will destroy any confidence in holding our debt.
Congress needs to start the process of cutting now, but there is no way we can balance the budget anytime soon. That is just the reality. We need a glide path to fiscal responsibility, not a nosedive.
If by long term you mean before the adjournment of the 112th Congress and without increasing our publicly held debt to 100% GDP then we agree.
The only way to have the clarity we need to have those decisions made is to refuse to raise the debt limit just as Pawlenty has argued. That is leadership talking and not excuses nor blame shifting.
Sorry, Sara, but it is you who is confusing “entitlement” programs with “welfare” SS/Medicare/Medicaid ARE the three major entitlement programs. If you think I am wrong, call your local SS office and ask them if SS is considered a federal “entitlement” program.
I mean a long term plan that has milestones, benchmarks, etc. beginning now and continuing into the future. We are still a long way from the publicly-held debt exceeding 100% of GDP. The debt ceiling will have to be raised this year regardless since it applies to the entire debt.
The only way to have the clarity we need to have those decisions made is to refuse to raise the debt limit just as Pawlenty has argued. That is leadership talking and not excuses nor blame shifting.
Agreement to raise the debt ceiling should come with conditions. The GOP must educate the public or we will have a reprise of the Clinton debacle. Obama and the Dems will be playing a game of chicken on the debt ceiling. Their propaganda efforts have already begun, i.e., they are forecasting a disaster for our economy if the debt ceiling is not raised immediately.
So you think the 112th congress should make promises for the 113th just like the 111th did for this congress. Planning to have someone else solve our problems that we must solve ourselves is not a plan. That’s a form of voter extortion.
It has to be much more than promises. It has to be laws and perhaps a Constitutional amendment. Obamacare is not a promise.
Funding Obamacare is a promises that the 111th congress made that the 112th congress won’t keep. The Obamacare law will be on the books but about as enforceable as the Alien and Sedition Acts were after the Anti-Federalists were swept into power.
Until the law is repealed, they will have to fund it. They can slow down the funding and the implementation of the law, but repeal is necessary. It is the law.
No they don’t. Frankly you are going off the deep end. Nothing compels the 112th congress to follow the lead of the 111th. Go back to your polly sci professors and ask them. You have a fundamental misunderstanding of our constitution. No one can make them vote for funding. No president can arrest them. No judge can convict them. No president can put them in jail. No president can dissolve the House. This is the basic theory of checks enshrined into our constitution.
This is why the soon to expire CR and the Debt Limit are so important. Without congressional authorization the government stops to a halt. The president has no standing to spend any money. Any action to spend money is unconstitutional.
Madison lives.
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