US In Danger of Defaulting on Its Debt

Politics US Politics
1

A deal was reached between the Republican Speaker of the House, John Boehner, and the Democratic President, Barack Obama to raise the debt ceiling and prevent the US from defaulting on its debt. But the GOP members of the House refused to consider it, because it raises taxes. That’s crazy. They would get 4 dollars of spending cuts for every 1 dollar raised in taxes. The no-tax mantra has reached manic proportions. This editorial from Gloria Borger about says it all.

[quote]Washington (CNN) – So all the congressional leaders and the president are locked in a room. They all have one goal: raising the debt ceiling. They all agree it’s important. They also agree that it’s urgent, because by August 2, the United States will have run out of money to pay its bills.

So, as the president asked, “if not now, when?”

He might also have asked: “if not us, who?”

Alas, the “who” part is the real problem. The Republican party has evolved, before our very eyes, into a purist, anti-tax troupe that cares more about its no-new-taxes mantra than deficit reduction. It has defined itself downward, to borrow Pat Moynihan’s phrase: from a big-tent, fiscally conservative party into a coalition narrowly and blindly carved to fit a political bumper sticker.

How else to explain the GOP’s refusal to even consider a potential deal cooked up by the president and House Speaker John Boehner? When the Democratic president even considers a $4 trillion plan that counts $3 in spending cuts for every $1 of tax increases, serious-minded GOP deficit cutters would normally rejoice.

Instead, Republicans balked at Boehner. The speaker then had to disown his own work, which was formidable in theory: new revenues, yes, but in exchange for reforming the tax code to lower top rates. It’s the obvious deal, but it could not be made.

That’s because Republicans have moved beyond politics and into theology: Offered an exchange of billions in taxes for trillions in deficit cuts, they could not see their way beyond their no-tax religion. A definitional moment, to say the least.

It comes as no surprise, but it disappoints all the same. More than 230 House Republicans – along with 40 GOP senators – all signed a no-tax pledge. Back in 2008, John McCain refused to sign one, rightly arguing that no president should lock himself into that box.

But this time, most GOP presidential candidates are anything but pledge-averse. In fact, they’ve fine-tuned the business of fiscal pledging. Mitt Romney, for instance, has signed the “cut, cap and balance” pledge–a hydra-headed monster: opposition to raising the debt ceiling until there are spending cuts, caps on spending and (why not?) congressional passage of a balanced budget amendment. As for Michele Bachmann, she’s holding out until the pledge also calls for repeal of health care.

How about this pledge? “I won’t commit to anything that will at all anger, upset or endanger my base of support. And I hate taxes, and promise to fight against them forever and ever.”

But how about a pledge to keep the country running, not to mention a pledge to try and reduce the deficit? Whatever happened to that? Republicans are fond of claiming that Obama does not pay homage to the notion of American exceptionalism. But how can you level that claim when your party is happy to let the nation default on its debts? (Or, as GOP presidential wannabee Tim Pawlenty put it, “I hope and pray and believe they should not raise the debt ceiling.”) Is that what Tim Pawlenty really prays about?

Pawlenty continued, according to The New York Times: “These historic, dramatic moments where you can draw a line in the sand and force politicians to actually do something bold and courageous are important moments.”

That much is true. But, sad to say, the moment has been hijacked by the purists and stolen from the rest of us.[/quote]

2

I’m surprised anyone still believes in this pantomime which is the U.S. government’s consideration on whether or not to raise the debt ceiling. Its 100% inevitable that they always will, because if they don’t the U.S. dollar would collapse overnight and be entirely worthless. These people are simply pretending they have some sort of a choice. The tax issue is a non issue. The public are taxed through massive inflation. Whether they pay their taxes to the government and then the Fed, or directly to the Fed is neither here or there.
The U.S. government was bankrupt from the very first day they created a fiat currency. The game is to keep the masses dumb enough to fail to realize that their labour is being sold to the bank, at a rate on par with slavery. If the government really wanted to do something about the diminishing value of the Fed’s currency, then they would simply confiscate it and demolish the Fed. Almost none of them actually give a shit though or are knowledgeable enough about their own system to do so.

3

Conspiracy alert! Conspiracy alert! Conspiracy alert! Conspiracy alert! Conspiracy alert!

4

So much for ‘deficits don’t matter’.

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No one blamed Obama yet?

Its all his fault you know, he’s a Muslim, born in Kenya and not even an American. Communist too, exchanging terrorist fist bumps. The Republicans are just showing what good negotiators they are.

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The Republicans could really shoot themselves in the foot here, if they haven’t already. They don’t understand that in order to win the next election, they need to get the people in the middle, not just their hardcore base.

I believe that there’s a narrowing window of opportunity to sort America’s woes with money out. With economic instability will come political instability. The current crop of loons will look downright moderate compared to those by the end of the decade if America doesn’t overcome these issues very soon.

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[quote=“GuyInTaiwan”]The Republicans could really shoot themselves in the foot here, if they haven’t already. They don’t understand that in order to win the next election, they need to get the people in the middle, not just their hardcore base.

I believe that there’s a narrowing window of opportunity to sort America’s woes with money out. With economic instability will come political instability. The current crop of loons will look downright moderate compared to those by the end of the decade if America doesn’t overcome these issues very soon.[/quote]
Either way, Tea Party wins!

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Haha. Not if America becomes a socialistic banana republic Latin American country!

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The right wing in this country doesn’t care about the health of our country, doesn’t even care if America becomes a third world nation, the only thing they care about is the corporate masters they serve. Raising taxes would slightly inconvenience them, and that is worse than ruining the lives of 95% of the country.

The Democrats are only slightly better in that regard.

How about we get some money from our run away military budget that exceeds the rest of the world’s military budget combined?

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Still wouldn’t be enough in the medium to long term.

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Pinocchio Obamas’ nose continues to grow…

[quote]Official Treasury Reports: Coffers Full Enough to Cover Social Security, Medicare, Medicaid, Veterans, Federal Salaries and Interest—Without Borrowing a Dime
(excerpt)
[i]“I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” Obama told CBS News anchor Scott Pelley in an interview.

However, according to the Daily Treasury Statements published by the U.S. Treasury Department, the ongoing flow of federal tax revenue since the Treasury declared that it had hit the debt limit on May 16 has been more than sufficient to cover the combined costs of federal spending on interest payments, Medicare, Medicaid, Social Security, the Veterans Affairs department and federal workers wages and insurance benefits (including wages and insurance benefits for military personnel).

"Specifically, according to the Daily Treasury Statements, as of the close of business on May 16, the federal government had taken in $1.333454 trillion in tax revenues since the beginning of fiscal 2011. By the close of business on July 7, tax revenues for fiscal 2011 had grown to $1.629630 trillion. Therefore, between May 16 and July 7 the federal government took in a total of $296.176 billion in new tax revenue.

In that same time period, total interest payments on the national debt equaled $14.632 billion.

Thus, the new tax revenue of $296.176 billion the federal government took in between May 16 and July 7 was enough to pay the federal government’s $14.632 billion in interest obligations during that period 20 times over."[/i]

Further financial specifics are outlined in the article.

Whats that phrase?..Oh yeah…"Crisis Crisis Crisis…Elderly, Children, Women and 'Minorities hardest HIT!..Its the “Republicans Fault!”…SS…DD…:smiley:

So…where is that U.S. taxpayer money going…?

[i]"Obama’s 2009 Supplemental Appropriations for Iraq, Afghanistan, Pakistan, and Pandemic Flu was revised and “passed by the full committee.”
It gives billions creepingsharia.wordpress.com/200 … o-enemies/
of U.S. taxpayer dollars to countries and entities that support Sharia law and/or harbor, hide and support those who want to destroy the U.S. and our allies.
Read the summary from David Obey’s office that was quietly released last week with nary a word from any media.

• $3.6 billion, matching the request, to expand and improve capabilities of the Afghan security forces

• $400 million, as requested, to build the counterinsurgency capabilities of the Pakistani security forces

• Afghanistan: $1.52 billion, $86 million above the request

• West Bank and Gaza: $665 million in bilateral economic, humanitarian, and security assistance for the West Bank and Gaza

• Jordan: $250 million, $250 million above the request, including $100 million for economic and $150 million for security assistance

• Egypt: $360 million, $310 million above the request, including $50 million for economic assistance, $50 million for border security, and $260 million for security assistance

• Pakistan: $1.9 billion, $591 million above the request

• Iraq: $968 million, $336 million above the request

• Oversight: $20 million, $13 million above the request, to expand oversight capacity of the State Department, USAID, and the Special Inspector General for Afghanistan to review programs in Afghanistan, Pakistan and Iraq
• Lebanon: $74 million

• International Food Assistance: $500 million, $200 million above the request, for PL 480 international food assistance to alleviate suffering during the global economic crisis

• Refugee Assistance: $343 million, $50 million above the request, …including humanitarian assistance for Gaza. Funding for the UN Relief and Works Agency programs in the West Bank and Gaza is limited to $119 million (Note: Gaza = Hamas)

• Disaster Assistance: $200 million to avert famines and provide life-saving assistance during natural disasters and for internally displaced people around the world, including Somalia, Zimbabwe, Ethiopia, the Middle East and South Asia

•Peacekeeping: $837 million for United Nations
peacekeeping operations, including an expanded mission in the Democratic Republic of the Congo and a new mission in Chad and the Central African Republic

• Department of Justice: $17 million, matching the request, for counter-terrorism activities and to provide training and assistance for the Iraqi criminal justice system"[/i][/quote]

ROI on this…anyone? Pat on the back for the U.S.A…anyone?

Tee time?..(or is that TEA time?..heh heh heh)

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Well, maybe this time next year a trip back “home” will be dirt cheap with my NT dollars.

Dr_McCoy 13

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True, we need cuts everywhere, but cutting the sacred cow military budget in half would get us 400 billion a year closer, not exactly chump change. But we certainly would need to also entitlement programs and increase taxes. But it won’t ever be truly solved until the economy turns around and revenues increase. This can only be done, in my opinion, by eliminating “free trade” and re-instituting tariffs. American workers simply can not compete with workers earning near slave wages in China and Vietnam. Trade deals can certainly be worked out, especially with nations where workers make a living wage, such as Japan and South Korea (and to an extent Taiwan). However, NAFTA and trade deals with third world Asian countries pretty much amount to the selling of American middle class jobs for the profits of the few.

How tell China, whom we owe a shit load of money to, that we aren’t going to be buying their shit anymore, is beyond me, however.

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True, we need cuts everywhere, but cutting the sacred cow military budget in half would get us 400 billion a year closer, not exactly chump change. But we certainly would need to also entitlement programs and increase taxes. But it won’t ever be truly solved until the economy turns around and revenues increase. This can only be done, in my opinion, by eliminating “free trade” and re-instituting tariffs. American workers simply can not compete with workers earning near slave wages in China and Vietnam. Trade deals can certainly be worked out, especially with nations where workers make a living wage, such as Japan and South Korea (and to an extent Taiwan). However, NAFTA and trade deals with third world Asian countries pretty much amount to the selling of American middle class jobs for the profits of the few.

How tell China, whom we owe a shit load of money to, that we aren’t going to be buying their shit anymore, is beyond me, however.[/quote]

So, let’s say your tariffs work and manufacturing jobs come back to America. So the US now produces goods which they need to sell to the rest of the world. Except the rest of the world has now reciprocated on the tariff front… ooops. Go ahead scrap NAFTA. You know what the major imports into the US from Canada and Mexico are? Energy. You understand that Engery is not a product but a resource that the US economy needs right?

The dept ceiling should be scrapped entirely. It’s been raised something like 70 times. At some point it should be recognized that it is meaningless. If you want to read something amusing have a look at Senator Obama’s speech in 2006 against raising the dept ceiling. Funny what happens when the shoe is suddenly on the other foot isn’t it?

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Not at all, that would be their most desired outcome.

Something about cutting off ones nose to spite ones face.

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And of course here’s something that says just the opposite.
content.usatoday.com/communities … security/1

I just quit trying to figure anything out. debt, who’s lying, global warming, algore’s intronet
They can have it.

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And yet the evidence suggests that trade deals have benefited the middle class. See that discussion here.

Let’s try and keep this on topic. The US is in immediate danger of defaulting on its debt, something that would be entirely unprecedented in American history. Regardless of who runs the national committees, I consider, as do most people I believe, President Obama to be the leader of the Democratic Party, and Speaker Boehner to be the leader of the Republican Party. They came up with a major overhaul of the federal budget that is about the most effective compromise imaginable, with pain on both sides (cuts to entitlements for the Democrats, tax hikes for the Republicans), and what is the result?

The result is that Democrats and Republicans both accuse their respective leaders of reneging on promises and betraying their principles. They appeared at least willing to negotiate on a short term deal, but President Obama rejected that. This piece by David Gergen says it well:

quote – It’s hard to remember a simmering crisis when America’s political leaders have painted themselves into so many corners, but that’s where we are as we face a potential default on our national debt. As leaders return to bargaining Monday afternoon, they had better find their way out soon, or we will pay a fearful price.

The Republicans were the first to paint themselves into a corner. No fewer than 230 members of the House, mostly Republicans, signed pledges during their campaigns that they would refuse to raise taxes when they went to Washington. Their resistance to new taxes is entirely understandable: As The Wall Street Journal editorialized Monday morning, joined by columnist Ross Douthat in The New York Times, conservatives feel strongly that Obama raised spending enormously in the first part of his term and they don’t want to become, as they say, tax collectors for the welfare state. And besides, more taxes are on their way through President Obama’s health care plan.

But as Speaker John Boehner has discovered in his attempts to forge a grand bargain, their hard-line stance has also made it virtually impossible to negotiate a deal that gives even a little bit to the other side. They have tied their own hands.

The Democrats didn’t take long to paint themselves into a corner, too. As debt negotiations have gotten under way, they have become increasingly insistent that they will not accept any significant deficit reduction deal unless it includes a swatch of higher taxes. When Obama raised the stakes last week by putting Medicare and Social Security cuts on the table, Democratic resistance to a mega-deal went sky-high. As a friend mused, their response to entitlement cuts had echoes of “Don’t touch my junk.”

Obama, to his credit, has been pushing both sides to come off their hard-line positions and seek compromises. On the substantive issues, he has been the most flexible of any of the players on the field.

It was thus stunning Monday morning that in his press conference, the president painted himself into a different corner, insisting that he would refuse to accept any short-term deal, even one that would be good for 180 days. Clearly, Obama thought he would gain additional leverage with his veto pledge, but in truth, he is now blocking what may be an essential way out if we are to avoid a default.

In effect, we now have three different major actors in this drama standing in their respective corners, insisting that they will not move and demanding that someone else cave. If everyone hangs tough, we will have a disaster.

Republican and Democratic leaders on Capitol Hill, fortunately, agree that it is essential to avoid a default on the debt. They are right. But to get there, each side is going to have to give a little. It is impossible to imagine either side doing what it would take to reach a $4 trillion deal; the GOP won’t ever agree to tax increases of as much as $800 billion to $1 trillion, nor will Democrats agree to major entitlement cuts. They especially won’t do it in the rush of last-minute negotiations over the next few days.

But in the name of fiscal sanity, they may be willing to agree to a much more modest set of compromises – something that prevents default, allows dust to settle, gives them a chance to build up support back home and keeps negotiating over a longer period of time.

For that to happen, however, Obama must be willing to drop his resistance to a short-term bridge solution. It is never wise for a president to paint himself into a corner of his own making, as he will almost surely learn.

None of this is pretty. None of it solves the underlying problems. Not long ago, it seemed like the worst of all options. But if the choice comes down to default vs. short-term patch, let’s take the patch. To get there, all parties – Republicans, Democrats and Obama – must break loose from their corners.[/quote]

Gergen wrote a follow up piece today, explaining the president’s rationale for not accepting a short term deal, effectively stating that the president hopes the crisis provides an opportunity for a historic deal that will get the US back on a sustainable fiscal path. Also, pushing the long term deal off closer to elections reduces the chances of it taking place at all, and the failure to achieve a long term deal with spook the financial markets. Personally, I think Obama has been the adult in the room throughout this crisis. And by the way, those “tax hikes” aren’t really tax hikes at all. Boehner wants to overhaul the tax code to eliminate virtually all loopholes, which would bring in US$1 trillion in revenue a year, next to US$4 trillion in spending cuts.

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From what that article says, the Democrats’ and Republicans’ hardline positions hardly seem equivalent: no cuts without tax increases as well, versus no new taxes, period. It’d be easier to reach an agreement if Republicans appreciated the reality of Reagan’s administration half as much as the myth.

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A fair point. Actually, I do think the majority of the blame lies with the Republican Party on this particular instance. Like I said in the original post, the “no tax hike” mantra has reached manic proportions.

Still, the first editorial I posted noted that conservative websites have derided Boehner as a traitor to the cause, when all he’s doing is following a variation of the “Zero Plan” recommended by the bipartisan Boyles-Simpson Commission (what Dr. McCoy lovingly refers to as the “Catfood Commission”). The Zero Plan simplifies the tax code dramatically, halves the number of tax strata, lowers the rate of all strata, but still manages to bring in US$1 trillion in additional revenue by eliminating all loopholes. So it’s not even a tax hike, just eliminating loopholes for special interest groups that the Republicans rely on. And they won’t even accept such a minor concession. Indeed, it’s the Republicans primarily responsible for holding up a deal.