Posted on 06/30/2008 6:06:46 AM PDT by Diana in Wisconsin
Tax rates could double. Spending on education, research, health and even Social Security could be squeezed tighter than ever. And foreign governments could use powerful financial leverage, rather than military force, to impose their economic and political agendas on the United States.
All because the U.S. national debt - which is being financed on a daily basis by the governments of China and a host of oil-exporting states, among others - has made this country far more vulnerable than its elected leaders let on, says David Walker, who recently finished a 10-year stint as U.S. comptroller general and head of the Government Accountability Office.
The nation's former auditor-in-chief will outline this crisis scenario today in Milwaukee, when he and an entourage of like-minded Washington policy analysts make their latest stop on Walker's Fiscal Wake-Up Tour.
Foreign governments and investors now hold fully half of the United States' total outstanding debt, making Washington susceptible to a new form of geopolitical conflict that Walker calls "financial warfare."
"I'm sure that people during the Roman Empire never thought that that Rome would fall," Walker said in an interview last week.
The tour began over two years ago and has visited 40 cities so far. The idea is to stoke change at the grass-roots level because, Walker said, elected leaders have been unwilling to address America's impulse to live beyond its means. Tour participants say they are acting in the spirit of Paul Revere.
"I believe we will wake up and make tough choices," Walker said. "The question is when. Will it be before, or after, a crisis?"
Walker and his group span a wide ideological spectrum. Appearing with him in Milwaukee are:
• Stuart Butler, vice president of the conservative Heritage Foundation, which has close ties to the Bush Administration.
• Alice Rivlin, former director of the Office of Management and Budget under President Clinton and now with the center-left Brookings Institution.
• Robert Bixby, director of the centrist Concord Coalition, which focuses solely on national budget policy. Its board includes former Federal Reserve chairman Paul Volcker, former Clinton Treasury Secretary Robert Rubin, and former senators Sam Nunn, a Democrat, and Warren Rudman, a Republican.
Since March, Walker has been working as founding president and chief executive of the Peter G. Peterson Foundation. Peterson, a billionaire co-founder of the Blackstone Group private equity firm and commerce secretary under Richard Nixon, launched the foundation to lead a fiscal reform movement.
In congressional testimony last week, Peterson called the nation's borrow-and-spend practices "undeniable, unsustainable and yet politically untouchable." He said if policies remain unchanged, federal commitments including debt service over the next 75 years will total $53 trillion - which comes to $175,000 for every man, woman and child in the U.S. today.
"A lot of politicians know we have this problem and don't do anything about it," Bixby said. "What gets us on the road is a shared concern that we're dumping a huge - and some argue an immoral - burden on future generations. The immoral part is that we know we're doing it and we don't care."
Shadowing candidates
As the 2008 presidential campaign began, Walker's tour began shadowing the primaries. Stops have included New Hampshire, Ohio, Michigan, Iowa and a February visit to Madison.
Bixby follows the spending and tax pledges of both party's candidates. Without quibbling about what he calls the questionable budget math of John McCain and Barack Obama, Bixby arrives at a different point: Even if either candidate is able to finance his campaign pledges in a budget-neutral way, the nation's fiscal imbalances will continue to worsen.
"We cannot afford the fiscal policy that we already have," Bixby said.
Even before the baby boomer generation has begun to retire, Social Security, Medicare and Medicaid constitute 42% of the federal budget, he said. In the next 30 years, the share of population that's older than 65 will hit 20%, from 13% currently, which commensurately inflates the cost of those programs. At the same time, inflation in health care costs far outstrips economic growth, meaning that Medicare and Medicaid in 40 years will be as big as the entire federal budget today.
In less than 20 years, those three programs, plus interest payments on America's debt, will consume all the tax revenue the nation can expect by then, Bixby said.
"You'd get a crisis long before this," Bixby said.
And then there's what Walker calls financial warfare. Japan and China are America's two biggest lenders. Great Britain is third, followed by a bloc of oil-producing states including Iran, Kuwait, Saudi Arabia and Libya.
So in trade and military disputes, China, as America's No. 2 lender, holds considerable influence.
Foreign lenders, Bixby notes, can demand conditions - or threaten to stop buying U.S. Treasury securities, or even dump their existing holdings outright. To lure other buyers of Washington's debt, U.S. interest rates would then have to rise sharply, throttling the nation's economy.
"It means foreigners have more leverage on us and we have less leverage on them," Walker said. "You have to pay attention to your bankers."
"I don't think we should assume that we are too big to fail," Bixby said.
Growth not enough
All on the tour agree it's a fantasy to argue that the U.S. can grow its way out of its debt, Bixby said. "The economy would have to grow at an implausible rate forever," Bixby said.
Walker and his entourage also concur that few politicians are prepared to deal with an issue that will require sacrifices and hard choices - telling Americans that they cannot borrow forever.
But the next president and Congress cannot duck the issue entirely. For instance, a large portion of President Bush's tax cuts are scheduled to expire in 2010, and many want to extend them.
Walker and the Peterson Foundation are pressing the issue in several other ways.
The foundation recently acquired distribution rights to a documentary film, "I.O.U.S.A.," to be released in 13 cities in August. Walker calls it an "economic 'Inconvenient Truth.' "
The foundation has published "A Citizen's Guide to the Financial Condition of the U.S. Government" on its Web site, www.pgpf.org.
As for the tour, Walker said the biggest audience response comes from the slide he reserves until the end - his three grandchildren.
"We are not only putting ourselves in debt and expecting our kids to pay for it," he said, "we're cutting back on investments in the future."
Walker and his entourage also concur that few politicians are prepared to deal with an issue that will require sacrifices and hard choices - telling Americans that they cannot borrow forever.
Are these the same politicians that have been telling us that importing is good and that we don’t need manufacturing?
OPEC could buy up America’s own energy resources, oil fields, etc. Or it could simply become to expensive for us to develop what we have.
I think the bottom line to us serfs is the following:
1. Interest rates must and will go up
2. Get out of debt
3. Live well below your means
4. Save
This “serf” and the generation of “serfs” before her have always lived that way. ;)
If you buy a Swiss watch, you are not adding to the national debt. If a politician in D.C. spends more than we take in as taz revenue, he adds to the national debt. Understand the difference?
Nice mathematical obfuscation.
In other words, $2,333 per person per year - or, assuming a working life from age 21 to age 65, then $4000 per year.
Or 9.1% of per capita GDP - assuming that the US population does not increase at all in 75 years.
as long as the American people are addicted to getting the “freebie” from the gov’t nothing will change. For we have become addicted that that most addictive and destructive substance known to any system of “ self government”. OPM (Other Peoples Money) And as long as we elect pushers (er ah I mean politicians) who’s great claim is that they will provide more of it, we will be vulnerable.
First thing I would do was stop all monies going to other countries until our debt is settled. We are giving North Korea 36 million or more...that would go to the debt immediately. Isn’t that what we do for our family budget. How many people in huge debt give their poor relative a “loan”...hopefully not too many. Why does America? We cannot afford to be giving out money like water any longer. Stop the insanity!!! Wake up America!
“I think the bottom line to us serfs is the following:
1. Interest rates must and will go up
2. Get out of debt
3. Live well below your means
4. Save”
or, the government can opt for inflating the way out of debt and obligations.
Your choice - the prudent one - is one that takes sustained effort and discipline for individuals and government.
The inflation choice - the easy one - allows politicians to demagogue, point fingers, and shift blame - and then institute social programs, and “security measures” to deal with the effects
Now, there used to be a time when one could trust our government to do the right thing. It’s too easy to keep promising the big promises, then blame someone else when the promises are either fulfilled or fulfilled at pennies on the dollar due to hyperinflation.
The hard way requires tough leadership & sacrifice, the easy way requires continued irresponsibility and short-term thinking. Which one do you think our government will take?
Long before the money runs out, American-plan socialism will distract citizens with the usual array of deceits.
Blame will be assigned to some sections of the population, terror will be unleashed upon them, injustice will be a way of life.
Just the normal socialist stuff - nothing to see here.
“Just the normal socialist stuff - nothing to see here.”
Yes, and the sheeple will just keep moving on.
“Social Security, Medicare and Medicaid constitute 42% of the federal budget”
And of that 42%, how much is being spent on illegal alien families with anchor babies?
END BIRTHRIGHT CITIZENSHIP and stop all federal (and state) aid to illegal aliens.
IMO, this is a greater magnet than jobs and doing just as much damage, if not more.
Why shouldn't we extend them? Mr. Walker doesn't say what might happen to the national debt if those tax increases he seems to be in favor of cause a prolonged recession - which they will.
Mr. Walker, like so many others, thinks that our money in the hands of people who cannot control their spending is better than us being allowed to keep it. Our national debt is about 66% of GDP. Japan's is 160% of GDP. I wonder if Walker believes Japan is more doomed than we are and should immediately increase taxes? The only real alternative is to cut spending on entitlements. Given Obama's appeal, I'm not holding my breath.
you will not see any progress on these issues from either presidential candidate.
The the poll taken last week shows Americans’ confidence in congress is at an all time low nearly hitting a 10 per cent approval rating. The world’s confidence in America as the economic engine of a global economy seems to be at an all time low as well, if the crashing and bottoming of the dollar has any significance. I read those two as the seeds of economic decline which have been planted over the past years have finally matured and we have absolutely NO SIGNS of any leaders or leadership from any sector that might be able to effectively address the reality that we find ourselves in.
The politicians will take the easy way out and try to inflate their way out of this mess - which WILL lead to much higher interest rates (as the world is not going to fall for it)...
The FED can only control very short term interest rates. The rest are set by the market.
FROM:
http://www.abovetopsecret.com/forum/thread366951/pg1
posted on 27/6/2008 @ 17:07
more infoWhat is a billion? Too true to be funny
If this is the wrong spot for this mods, please move it to the right place!!
VV
The next time you hear a politician use the word ‘billion’ in a casual manner, think about whether you want the ‘politicians’ spending YOUR tax money.
A billion is a difficult number to comprehend, but one advertising agency
did a good job of putting that figure into some perspective in one of its releases.
A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.
While this thought is still fresh in our brain, let’s take a look at New Orleans. It’s amazing what you can learn with some simple division
Louisiana Senator, Mary Landrieu (D),is presently asking the Congress for $250 BILLION to rebuild New Orleans.
Interesting number, what does it mean?
A. Well, if you are one of 484,674 residents of New Orleans (every man, woman, child),you each get $516,528.
B. Or, if you have one of the 188,251 homes in New Orleans, your home gets $1,329,787.
C. Or, if you are a family of four, your family gets $2,066,012.
Washington, D.C. < HELLO! >
Are all your calculators broken??
Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Perm it Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax),
IRS Penalties (tax on top of tax),
Liquor Tax,
Luxury Tax,
Marriage License Tax,
Medicare Tax,
Property Tax ,
Real Estate Tax,
Service charge taxes,
Social Security Tax,
Road Usage Tax (Truckers),
Sales Taxes,
Recreational Vehicle Tax,
School Tax,
State Income Tax,
State Unemployment Tax (SUTA),
Telephone Federal Excise Tax,
Telephone Federal Universal Service Fee Tax,
Telephone Federal, State and Local Surcharge Tax,
Telephone Minimum Usage
Surcharge Tax,
Telephone Recurring and
Non-recurring Charges Tax,
Telephone State and Local Tax,
Telephone Usage Charge Tax,
Utility Tax,
Vehicle License Registration Tax,
Vehicle Sales Tax,
Watercraft Registration Tax,
Well Permit Tax,
Workers Compensation Tax.
STILL THINK THIS IS FUNNY?
Not one of these taxes existed 100 years ago,
and our nation was the most prosperous in the world.
We had absolutely no national debt,
had the largest middle class in the world,
and Mom stayed home to raise the kids .
What happened?
Can you spell ‘politicians!’
And I still have to ‘press 1’ for English.
I hope this goes around the U S A at least 100 times!!
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