US Debt Ceiling reached

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US Debt Ceiling reached

Postby Inglonias » Tue May 17, 2011 1:07 pm UTC

Source

Spoiler:
WASHINGTON — The Treasury secretary, Timothy F. Geithner, officially informed Congress on Monday that the government, as projected, had reached its $14.3 trillion debt limit and had begun taking what he has called “extraordinary measures” to meet obligations while lawmakers and President Obama seek a budget deal to raise the limit.

Mr. Geithner, in a letter to Congressional leaders of both parties, stood by an earlier projection that even with the Treasury’s accounting maneuvers, on Aug. 2 “the borrowing authority of the United States will be exhausted,” ultimately threatening a government default.

With the House in recess all week, few members of Congress were even in town, and budget talks between Vice President Joseph R. Biden Jr. and Congressional leaders were suspended. But a bipartisan “Gang of Six” continued negotiating toward a long-term debt-reduction compromise in what could be their make-or-break week.

The focus of budget attention was in Mr. Obama’s hometown, Chicago, where Representative Paul D. Ryan of Wisconsin defended the House Republican budget he wrote, and its Medicare proposals in particular, in a speech to the Chicago Economic Club.

As dozens of protesters marched and chanted outside, Mr. Ryan told his business audience, “Our budget proposal makes no changes for those in or near retirement, and offers future generations a strengthened Medicare program they can count on, with guaranteed coverage options, less help for the wealthy and more help for the poor and the sick.”

The speech by Mr. Ryan, the chairman of the House Budget Committee, was part of a Republican effort to counter intensifying criticism from Democrats, who hope to exploit the Medicare controversy to take back seats in 2012. That would be payback, as Democrats see it, since they lost their House majority in midterm elections last November after Republicans campaigned against Medicare reductions in Mr. Obama’s health care law.

The message on one of the protest signs — “Hands Off Medicare” — was also seen last year at conservatives’ protests against Democrats. Yet despite that sentiment, which is also reflected in national polls, Republican and Democratic leaders agree that Medicare and Medicaid must be squeezed for savings because rising health care prices and an aging population make those programs the main drivers of the projected and unsustainable growth of the nation’s debt. But their approaches are far apart.

The House Democratic leader, Representative Nancy Pelosi, was in New York on Monday, along with the two Democratic leadership lieutenants she named to the Biden budget talks, to meet with financial industry and news outlets about the debt. She told Bloomberg Television that “we are open to many” suggestions for Medicare savings, adding, “We cannot take that off the table.”

“But one suggestion we are not open to is the abolishment of Medicare,” she said. “That is what the Republicans have put forth in their budget.”

While Medicare savings under the Democrats’ health care law and pending proposals would come mainly from reduced federal payments to doctors, hospitals and insurance companies, the budget put forth by House Republicans would cut spending by turning Medicare into a system of vouchers for future beneficiaries to buy private insurance, but in amounts that would not keep pace with the projected inflation of health costs.

The Congressional Budget Office has said the Ryan plan would drive up health care costs for older Americans in the future and limit their coverage. But Mr. Ryan framed his proposal as a way to slow the growth in Medicare spending while giving older Americans more control over their care choices.

His plan would “give seniors the power to deny business to inefficient providers” while Democrats would “give government the power to deny care to seniors,” Mr. Ryan said.

Republicans have acknowledged that the two parties will not be able to agree on Medicare and other entitlement programs — a “big, grand, global bargain” on debt reduction, as Mr. Ryan put it — before the August deadline for increasing the debt limit.

Given that, the goal in the budget talks is twofold: to find up to $2 trillion in specific multiyear savings from other programs, including farm subsidies, and to agree on mechanisms in the budget process to force the two parties to find more savings in the future, including in Medicare and other entitlement programs.

“For every dollar the president wants to raise the debt ceiling, we can show him plenty of ways to cut far more than a dollar of spending,” Mr. Ryan said, echoing the position of Speaker John A. Boehner of Ohio.

Democrats demand that higher revenues also must be part of the equation, particularly from the wealthiest Americans. Ms. Pelosi signaled one concession: while she repeated Democrats’ demand to end the Bush-era tax cuts after 2012 for the richest households, she said she would support making repeal apply to those with taxable income above $1 million instead of $250,000.

Mr. Ryan opposed any tax increases and accused Democrats of “class warfare” for pitting Americans of different incomes against one another. “Class warfare may be clever politics, but it is terrible economics,” Mr. Ryan said.

He said he would decide this week whether to seek the Senate seat in Wisconsin that Herb Kohl, a Democrat, is giving up. Mr. Ryan said he wanted to retain an influential role in the fiscal debate, which would seem to weigh in favor of his staying in the House.

Jackie Calmes reported from Washington, and Carl Hulse from Chicago.

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Re: US Debt Ceiling reached

Postby Le1bn1z » Tue May 17, 2011 1:18 pm UTC

We did warn you about cuts to math in schools.

To balance a budget you need to raise taxes and cut spending.

Now, if you look at your work for the past 10 years.... ok, see the mistake?
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Re: US Debt Ceiling reached

Postby Diadem » Tue May 17, 2011 2:14 pm UTC

So if I understand that correctly, the shit will hit the fan on August 2nd if they can't reach an agreement.

Or will there be additional extentions and measures that can avoid a default past August 2nd even if no agreement is reached?
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Re: US Debt Ceiling reached

Postby Tirian » Tue May 17, 2011 2:35 pm UTC

If nothing is done, then someone isn't going to get paid on August 3. I suppose it would be up to the administration to decide whether that was bondholders or senior citizens or military contractors or any of the other gazillion entities the government gives money to.

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Re: US Debt Ceiling reached

Postby AvatarIII » Tue May 17, 2011 2:43 pm UTC

Le1bn1z wrote:To balance a budget you need to raise taxes and cut spending.


they could do that in one foul swoop by introducing a countrywide VAT

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Re: US Debt Ceiling reached

Postby Dauric » Tue May 17, 2011 2:50 pm UTC

AvatarIII wrote:
Le1bn1z wrote:To balance a budget you need to raise taxes and cut spending.


they could do that in one foul swoop by introducing a countrywide VAT


That just raises taxes, it does nothing to cut government spending, though it would impact -consumer- spending, but that would reduce income from sales taxes.
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Re: US Debt Ceiling reached

Postby podbaydoor » Tue May 17, 2011 2:51 pm UTC

fell swoop.

Unless that was a Freudian slip.
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Re: US Debt Ceiling reached

Postby AvatarIII » Tue May 17, 2011 3:05 pm UTC

podbaydoor wrote:fell swoop.

Unless that was a Freudian slip.


it was possibly a freudian slip, once, that has entered my mind and stayed there, although i honestly didn't realise that the correct term was fell swoop, reminds me of the time i corrected someone for saying "mother-load" instead of "mother-lode" not long ago, i guess you win some and lose some.

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Re: US Debt Ceiling reached

Postby Enokh » Tue May 17, 2011 3:19 pm UTC

Everything will be fine. They'll wait until the absolute last minute because each side will try to use the "looming threat" to gain political clout, but August 3rd will come and everything will still be fine.

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Re: US Debt Ceiling reached

Postby zmatt » Tue May 17, 2011 3:20 pm UTC

Well maybe if they didn't spend so much this wouldn't be a problem. The government has the fiscal responsibility of a college kid with a credit card. maybe if lawmakers were held accountable for their budgetary actions every now and then they wouldn't be so lose with OUR money.
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Re: US Debt Ceiling reached

Postby BlackSails » Tue May 17, 2011 3:34 pm UTC

zmatt wrote:Well maybe if they didn't spend so much this wouldn't be a problem. The government has the fiscal responsibility of a college kid with a credit card. maybe if lawmakers were held accountable for their budgetary actions every now and then they wouldn't be so lose with OUR money.


Worse than that. At least college students have low credit limits and parents to yell at them.

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Re: US Debt Ceiling reached

Postby Роберт » Tue May 17, 2011 3:47 pm UTC

BlackSails wrote:
zmatt wrote:Well maybe if they didn't spend so much this wouldn't be a problem. The government has the fiscal responsibility of a college kid with a credit card. maybe if lawmakers were held accountable for their budgetary actions every now and then they wouldn't be so lose with OUR money.


Worse than that. At least college students have low credit limits and parents to yell at them.

Yeah, I'm having trouble imagining a college student with a multi-trillion dollar credit limit maxing out on debt.
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Re: US Debt Ceiling reached

Postby Silknor » Tue May 17, 2011 3:49 pm UTC

Diadem wrote:So if I understand that correctly, the shit will hit the fan on August 2nd if they can't reach an agreement.

Or will there be additional extentions and measures that can avoid a default past August 2nd even if no agreement is reached?


Well it might not be exactly August 2nd, but yes, without an agreement, bad things will happen by then (they could start earlier if people think we won't manage to make the deal in time).

I believe the administration is asking for a $2 Trillion increase in the debt ceiling (and that this is supposed to last at least through the 2012 elections). It is possible that Congress and the administration could agree to pass a small increase to buy themselves more negotiating time.

@zmatt: Yes, because deficit financed tax cuts are more fiscally responsible than deficit financed spending. This also wouldn't be a problem if we taxed more (and if it weren't for the recession, we wouldn't even be close to the debt ceiling). It's a little hard for lawmakers to be held accountable by a public who wants both lower taxes (except on the very rich) AND opposes cuts to almost every program (while claiming they want lower spending in general).
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Re: US Debt Ceiling reached

Postby Dark567 » Tue May 17, 2011 4:08 pm UTC

Silknor wrote:It's a little hard for lawmakers to be held accountable by a public who wants both lower taxes (except on the very rich) AND opposes cuts to almost every program (while claiming they want lower spending in general).
and Ice Cream. Don't forget they want their Ice Cream too.


Yum. Ice Cream.
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Re: US Debt Ceiling reached

Postby Dauric » Tue May 17, 2011 4:29 pm UTC

Silknor wrote: It's a little hard for lawmakers to be held accountable by a public who wants both lower taxes (except on the very rich) AND opposes cuts to almost every program (while claiming they want lower spending in general).


I chalk this up to a severe leadership deficiency in politics. Politicians aren't leaders, they're followers, following the opinion polls and crowds of people so that they can remain in their positions for another term.
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Re: US Debt Ceiling reached

Postby yedidyak » Tue May 17, 2011 4:42 pm UTC

Dauric wrote:
Silknor wrote: It's a little hard for lawmakers to be held accountable by a public who wants both lower taxes (except on the very rich) AND opposes cuts to almost every program (while claiming they want lower spending in general).


I chalk this up to a severe leadership deficiency in politics. Politicians aren't leaders, they're followers, following the opinion polls and crowds of people so that they can remain in their positions for another term.


Well, yes, the leaders don't get elected.

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Re: US Debt Ceiling reached

Postby Steroid » Tue May 17, 2011 4:54 pm UTC

And they shouldn't be. Politicians should be both willing to champion unpopular causes and accept the consequences of losing the elections and their job for it. We should disincentivize careerism in politics and bring in people who understand that public service is just a temp job for people who can cut it in the private sector.

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Re: US Debt Ceiling reached

Postby Inglonias » Tue May 17, 2011 5:02 pm UTC

Steroid wrote:And they shouldn't be. Politicians should be both willing to champion unpopular causes and accept the consequences of losing the elections and their job for it. We should disincentivize careerism in politics and bring in people who understand that public service is just a temp job for people who can cut it in the private sector.


While I agree with you on the surface, something tells me its easier to say that than do it.

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Re: US Debt Ceiling reached

Postby Silknor » Tue May 17, 2011 5:29 pm UTC

Yes, clearly the reason people enter public service is that they can't cut it in the private sector. Except you know for all those people who were highly successful in the private sector and then used that success and the associated wealth to help get elected. Who was the last president who couldn't cut it in the private sector? Can you name any current Senators who fit that bill? Even a lifetime of public service wouldn't show they couldn't cut it in the private sector, only that they choose public service.

@Dauric:
Is politicians trying to be reelected really a failure/deficiency on their part? We do elect politicians to represent their constituents, and reelection is probably a better indicator of that then being wildly unpopular. Yes, short-term political incentives screw up long-term policy making. But our system of government is somewhat designed to ensure representation and accountability instead of long-term policy making (no I'm not saying that representation or accountability is great, but compare it to a system where each elected official is limited to one longer term, eg a 6 year presidency or 10 years in the Senate, that system would be less accountable and representative but short-term incentives would be less likely to trump long-term policy).
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Re: US Debt Ceiling reached

Postby Dark567 » Tue May 17, 2011 5:38 pm UTC

Silknor wrote:Yes, clearly the reason people enter public service is that they can't cut it in the private sector. Except you know for all those people who were highly successful in the private sector and then used that success and the associated wealth to help get elected. Who was the last president who couldn't cut it in the private sector? Can you name any current Senators who fit that bill?
Its my understanding that Biden didn't do so well as a lawyer. But thats the exception, a majority of congress is made up of millionaires that have become so by their own means.
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Re: US Debt Ceiling reached

Postby Dauric » Tue May 17, 2011 5:48 pm UTC

Silknor wrote:@Dauric:
Is politicians trying to be reelected really a failure/deficiency on their part? We do elect politicians to represent their constituents, and reelection is probably a better indicator of that then being wildly unpopular. Yes, short-term political incentives screw up long-term policy making. But our system of government is somewhat designed to ensure representation and accountability instead of long-term policy making (no I'm not saying that representation or accountability is great, but compare it to a system where each elected official is limited to one longer term, eg a 6 year presidency or 10 years in the Senate, that system would be less accountable and representative but short-term incentives would be less likely to trump long-term policy).


I'm not making a moral evaluation, though I can see how I came across that way, simply a statement of fact that the system -as structured- favors those who 'play the re-election game' as opposed to those who would actually make sensible policy even if it meant sacrificing their position.

I'm not so sure that representation is best measured through re-election though. 'Perceived representation' perhaps, but no so much "Representation of Interests", which (IMO) is the important part. If a politician is re-elected based on his wildly popular "Free Ice Cream For Everyone Forever" legislation, yet he's reasonably aware (through political opponents, economic studies, basic arithmetic...) that said legislation will either require ruinous taxation/borrowing to pay the ice-cream makers, or break the wider economy in such a way that will leave large quantities of his constituency without a job, but that will happen well after his career is over so he'll leave that for someone else to solve.. I submit that this behavior is not -actually- representing his constituents at all regardless of how many time he's re-elected.
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Re: US Debt Ceiling reached

Postby Ptolom » Tue May 17, 2011 5:53 pm UTC

Steroid wrote:And they shouldn't be. Politicians should be both willing to champion unpopular causes and accept the consequences of losing the elections and their job for it. We should disincentivize careerism in politics and bring in people who understand that public service is just a temp job for people who can cut it in the private sector.

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Re: US Debt Ceiling reached

Postby Silknor » Tue May 17, 2011 6:06 pm UTC

I think we agree on all that. Reelection is certainly never going to be a great indicator of how good a job a politician is doing. But on average I think being popular probably indicates something good. I'd point out though that it's not unambiguously clear that your hypothetical politician is doing a poor job representing his constituents. That really depends on how much legitimacy we give to the policy preference of "screw the next generation". Which tends to occur just about everywhere, sadly. I don't mean to say that it's good policy overall, but it's certainly a common outcome.
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Re: US Debt Ceiling reached

Postby Mokele » Tue May 17, 2011 6:21 pm UTC

Much as it's fashionable to paint politicians as craven panderers who'll do and say anything to get re-elected, at least part of the blame comes down on the heads of the electorate, most notably the low average attention span.

My department recently had a seminar series that included a few talks on interacting with policy-makers (mostly relevant to the ecology folks in terms of global warming), and one thing they pointed out what that any controversial legislation must be passed within a year of the election. Within that year, Senators/Representatives are willing to back things across party lines etc. because they know the public will have completely forgotten when they come up for re-election. The next year (after which all of the Reps and 1/3rd of the Sens will face re-election, and during which they must campaign), nobody will take any risks that could bite their re-election bid in the ass.

So it's not just that the drive for re-election leads politicians to favor short-term solutions, but also our own (collective) short memory that allows them to do so and ensures most people will never bother actually connecting the dots between current outcome and long-ago votes.
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Re: US Debt Ceiling reached

Postby Garm » Tue May 17, 2011 6:47 pm UTC

It would help if the media would pitch in and remind us how things got the way they did. Counting on public opinion polls is a horrible way to run the country but because they allow the media to shape the narrative and the poll numbers malleable enough to allow politicians to say almost whatever they want about any poll.

The Republicans ran on this deficit reduction platform because it polled well, not because they actually care about it (evidenced by the fact that the Republicans were successful on both a state and federal level but have produced approximately zero job creation bills and nearly a thousand restricting the reproductive rights of women). If we still had a reasonable media in this country there would be tons of coverage about how the Bush tax cuts are the main source for the deficit and quotes like this from Rep. Ryan wouldn't go unchallenged:

“We need to address the drivers of our debt. The whole reason we’re running into this debt limit so soon is because of the spending spree that has occurred over the last two years.”
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Re: US Debt Ceiling reached

Postby Steroid » Tue May 17, 2011 8:02 pm UTC

Garm wrote: If we still had a reasonable media in this country there would be tons of coverage about how the Bush tax cuts are the main source for the deficit and quotes like this from Rep. Ryan wouldn't go unchallenged:

“We need to address the drivers of our debt. The whole reason we’re running into this debt limit so soon is because of the spending spree that has occurred over the last two years.”

Or if we stopped going through this cycle. No one goes to someone who has credit card debt and says, "The fact that your job doesn't pay you enough is the main reason you have to keep charging everything." If you have a deficit, which is more going out than taken in, you can't localize the problem to either the outgo or the intake. Either/both is/are the problem, and either area or both can be an area for a solution.

We all understand that there's a divide about if we should take more spending money from people in the form of taxes or if we should cut government services that might be needed but which we can't afford. Pretending that either opinion is unacceptable or false-to-fact isn't going to advance the other option; it's going to maintain the gridlock status quo.

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Re: US Debt Ceiling reached

Postby Wodashin » Tue May 17, 2011 8:23 pm UTC

Cutting spending > Raising taxes > Neither

Both would be best, but cutting spending would be a more assured thing. Raising taxes only works to a point, and isn't the most efficient way to do things. We should be cutting far more in spending than in raising taxes. It's a much more concrete way to get things done.

The thing with the credit card analogy is that one would seek to cut spending before trying to make more money. One could do both, but it'd be easier to cut spending more, at least analogously to our government, since not everything we spend is necessary. Making more is harder than spending less. Both should get to a point where its comfortable though, and the main problem is that, even if we were to agree that we HAD to cut or HAD to raise taxes, they'd still argue on how to carry it out. Well, we should cut, but we can't cut THAT. That would be political suicide! We should cut this thing that your party likes, not this thing that we like.

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Re: US Debt Ceiling reached

Postby Enokh » Tue May 17, 2011 8:34 pm UTC

Wodashin wrote:Cutting spending > Raising taxes > Neither

Both would be best, but cutting spending would be a more assured thing. Raising taxes only works to a point, and isn't the most efficient way to do things. We should be cutting far more in spending than in raising taxes. It's a much more concrete way to get things done.


This.

Raising taxes without fixing our spending issue just means that our government will spend more money (and not on our debt).

I say take 10% off of ALL Federal spending. Then, take the number that 90% works out to, and only allow that to increase at the same rate as inflation for the next 10 years. I feel as if it has to be a flat percent from everything, otherwise it'll just be endless bickering about where we cut from.

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Re: US Debt Ceiling reached

Postby Mokele » Tue May 17, 2011 9:18 pm UTC

Wodashin wrote:Cutting spending > Raising taxes > Neither

Both would be best, but cutting spending would be a more assured thing. Raising taxes only works to a point, and isn't the most efficient way to do things. We should be cutting far more in spending than in raising taxes. It's a much more concrete way to get things done.

The thing with the credit card analogy is that one would seek to cut spending before trying to make more money. One could do both, but it'd be easier to cut spending more, at least analogously to our government, since not everything we spend is necessary. Making more is harder than spending less. Both should get to a point where its comfortable though, and the main problem is that, even if we were to agree that we HAD to cut or HAD to raise taxes, they'd still argue on how to carry it out. Well, we should cut, but we can't cut THAT. That would be political suicide! We should cut this thing that your party likes, not this thing that we like.


I actually disagree, and I think the current state of affairs largely shows why - just as how individuals can have large, unpredictable expenses (car breaks down, major medical issues), so too can governments (natural disasters, economic collapse, wars). While taxes fluctuate with incomes (thus making them vulnerable to economic declines), expenses can vary too - we've pissed away over a trillion dollars in Iraq and Afganistan in less than a decade, and Katrina wasn't exactly cheap. Plus, just like in individuals, there's a bottom to cutting spending, a minimum set of government services that the public will accept (determined by voting) and which taxes must cover.

Honestly, if we want to get control of the budget, the first place to look is Defense - we spend more than every other country on the planet combined, and 6x more than the next-highest spender (China). In FY 2010, it was roughly 20% of *all* federal expenditures.
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Re: US Debt Ceiling reached

Postby sardia » Tue May 17, 2011 9:40 pm UTC

Enokh wrote:
Wodashin wrote:Cutting spending > Raising taxes > Neither

Both would be best, but cutting spending would be a more assured thing. Raising taxes only works to a point, and isn't the most efficient way to do things. We should be cutting far more in spending than in raising taxes. It's a much more concrete way to get things done.


This.

Raising taxes without fixing our spending issue just means that our government will spend more money (and not on our debt).

I say take 10% off of ALL Federal spending. Then, take the number that 90% works out to, and only allow that to increase at the same rate as inflation for the next 10 years. I feel as if it has to be a flat percent from everything, otherwise it'll just be endless bickering about where we cut from.

If you were a politician, you have just offered your wrists out for slitting, if not committed political suicide.
Notes: 2010 expenditures: 3456 Billion
2010 tax receipts: 2162 Billion
10% off of expenditures is 345.6 billion dollars, now go find another 948.4 Billion in revenue or spending cuts. At 10% faster than inflation growth rate, it'll take 4 years for revenue to get to profitable status. At a more conservative 5% growth, it'll take 8 years to do so. This is assuming the other conservative theory that revenue is a constant percentage of GDP is true.

Lastly, wodashin, don't paraphrase the Laffer curve, we all know that taxation as it approaches 100% is counterproductive. What we don't know is when tax rates give less revenue, but guess what? We know that certain tax hikes can give us more revenue, because we lived through those tax rates for years. Remember the years before the Bush Tax cuts? The government received more money during that time and not less compared to now. Of course we're assuming that all other things are the same, but that's beyond the scope of our economic knowledge.

Mokele wrote:
I actually disagree, and I think the current state of affairs largely shows why - just as how individuals can have large, unpredictable expenses (car breaks down, major medical issues), so too can governments (natural disasters, economic collapse, wars). While taxes fluctuate with incomes (thus making them vulnerable to economic declines), expenses can vary too - we've pissed away over a trillion dollars in Iraq and Afganistan in less than a decade, and Katrina wasn't exactly cheap. Plus, just like in individuals, there's a bottom to cutting spending, a minimum set of government services that the public will accept (determined by voting) and which taxes must cover.

Honestly, if we want to get control of the budget, the first place to look is Defense - we spend more than every other country on the planet combined, and 6x more than the next-highest spender (China). In FY 2010, it was roughly 20% of *all* federal expenditures.

Sadly, cutting defense won't get you there. If you set defense at 0, you still need to find another $300 or so Billion. If you cut the entire budget by 35%, then you'll have balanced the budget without raising taxes.

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Re: US Debt Ceiling reached

Postby Bright Shadows » Tue May 17, 2011 9:47 pm UTC

sardia wrote:
Mokele wrote:Honestly, if we want to get control of the budget, the first place to look is Defense - we spend more than every other country on the planet combined, and 6x more than the next-highest spender (China). In FY 2010, it was roughly 20% of *all* federal expenditures.

Sadly, cutting defense won't get you there. If you set defense at 0, you still need to find another $300 or so Billion. If you cut the entire budget by 35%, then you'll have balanced the budget without raising taxes.

Mokele wrote:Honestly, if we want to get control of the budget, the first place to look is Defense - we spend more than every other country on the planet combined, and 6x more than the next-highest spender (China). In FY 2010, it was roughly 20% of *all* federal expenditures.

You see why your reaction wasn't applicable, or should I give the 'all or nothing makes no sense' speech?
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Re: US Debt Ceiling reached

Postby Bubbles McCoy » Tue May 17, 2011 10:23 pm UTC

@sardia - it would probably make more sense to use 2015 as a baseline for budgets rather than 2011, there are a lot of temporary programs running right now that combined with the economic downturn make things look worse then they are. That's not saying that everything will be sunshine and lollipops five years from now, but no one is really expecting the budget to be balanced by the end of the year so much as the hope is we can make changes to scheduled spending/taxes as to ensure things are balanced in the future. The deficit will be half what it is today even with the Bush tax cuts still around, making things like defense cuts or 10% across the board somewhat more serious proposals.

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Re: US Debt Ceiling reached

Postby Wodashin » Tue May 17, 2011 11:58 pm UTC

I never said raising taxes won't or doesn't work. I just said that raising taxes is less help than cutting spending. Cutting spending is far more important, but both, as I have said, would be welcome. The problem is that no one agrees on how to do this because it's all politicized. People want to cut the wasteful things, but wasteful is different to different people.

For example, we may spend a lot on defense, but a lot of that is for foreign relations really more than actual defense. Defense and war spending are not the same. Some like the Ronpaul would say that the whole foreign interests thing is wasteful, but others would disagree. I don't really have a side as I don't know enough. All I know is that there are multiple sides on everything.

People never want their thing to get cut. They always want the other guys' stuff to lose funding.

Raising taxes can work, but it can only do so much. It's a much less feasible way of solving the problem. It can help, but cuts are the main deal.

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Re: US Debt Ceiling reached

Postby SummerGlauFan » Wed May 18, 2011 2:56 am UTC

Mokele wrote:
Wodashin wrote:Cutting spending > Raising taxes > Neither

Both would be best, but cutting spending would be a more assured thing. Raising taxes only works to a point, and isn't the most efficient way to do things. We should be cutting far more in spending than in raising taxes. It's a much more concrete way to get things done.

The thing with the credit card analogy is that one would seek to cut spending before trying to make more money. One could do both, but it'd be easier to cut spending more, at least analogously to our government, since not everything we spend is necessary. Making more is harder than spending less. Both should get to a point where its comfortable though, and the main problem is that, even if we were to agree that we HAD to cut or HAD to raise taxes, they'd still argue on how to carry it out. Well, we should cut, but we can't cut THAT. That would be political suicide! We should cut this thing that your party likes, not this thing that we like.


I actually disagree, and I think the current state of affairs largely shows why - just as how individuals can have large, unpredictable expenses (car breaks down, major medical issues), so too can governments (natural disasters, economic collapse, wars). While taxes fluctuate with incomes (thus making them vulnerable to economic declines), expenses can vary too - we've pissed away over a trillion dollars in Iraq and Afganistan in less than a decade, and Katrina wasn't exactly cheap. Plus, just like in individuals, there's a bottom to cutting spending, a minimum set of government services that the public will accept (determined by voting) and which taxes must cover.

Honestly, if we want to get control of the budget, the first place to look is Defense - we spend more than every other country on the planet combined, and 6x more than the next-highest spender (China). In FY 2010, it was roughly 20% of *all* federal expenditures.


Honestly, the first thing we should look at are the bullcrap federal agencies that were intended to be temporary yet not only continue past their mandate, but increase their budgets each year. Examples include the agency set up to fix the voting system after the Bush-Gore fiasco, which was supposed to be shut down three years later but is still there with an increasing staff (and department t-shirts). Or wasteful and inefficient policies like the war on drugs.

Heck, a great deal of our defense budget is the fact we are fighting 2 (now 3) wars, not the actual defense department/military itself. Pulling out of Afghanistan and Iraq would go a huge way to lowering the deficit.
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Re: US Debt Ceiling reached

Postby podbaydoor » Wed May 18, 2011 3:51 am UTC

A lot of defense spending also goes into the military-industrial complex. We have Army bases that are in so much disrepair that whole buildings burn down because the electrical grid is shot and the sprinkler system is defunct, but we can also afford fat contracts for companies to turn into monetary sinkholes that get fatter every year.
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Re: US Debt Ceiling reached

Postby cjmcjmcjmcjm » Wed May 18, 2011 4:43 am UTC

Solution: cut spending. If necessary, revert to pre-Bush tax rates
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Re: US Debt Ceiling reached

Postby SummerGlauFan » Wed May 18, 2011 4:47 am UTC

podbaydoor wrote:A lot of defense spending also goes into the military-industrial complex. We have Army bases that are in so much disrepair that whole buildings burn down because the electrical grid is shot and the sprinkler system is defunct, but we can also afford fat contracts for companies to turn into monetary sinkholes that get fatter every year.


I agree that that is part of the problem as well, though you'd have to basically go through each of those contracts to see what's useful and what is not. Plus a lot of those contracts are a result of the wars (ex: security firms like Blackwater).

cjmcjmcjmcjm wrote:Solution: cut spending. If necessary, revert to pre-Bush tax rates


This. Raising taxes may be necessary in the long run, but trimming the fat should always come first.
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Re: US Debt Ceiling reached

Postby Garm » Wed May 18, 2011 5:16 am UTC

My general opinion on the subject is that if you're not talking about raising revenue, you're not really serious about lowering the deficit. Spending cuts? Sure. It's high time we withdrew from Afghanistan and Iraq. It's high time we reformed our pension systems and took a good hard look at doing some serious overhaul on medicare and medicaid (and continue to reform this countries fucked up health care system). But that's not going to balance the budget. We also need to raise taxes back to where they were before W. took over, close tax loopholes and give some more money to the IRS ($10 to $1 return rate, baby).

edit: don't forget that the Republicans are largely responsible for getting us in this mess, why should we trust them to get us out
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Re: US Debt Ceiling reached

Postby Jahoclave » Wed May 18, 2011 5:23 am UTC

SummerGlauFan wrote:
podbaydoor wrote:A lot of defense spending also goes into the military-industrial complex. We have Army bases that are in so much disrepair that whole buildings burn down because the electrical grid is shot and the sprinkler system is defunct, but we can also afford fat contracts for companies to turn into monetary sinkholes that get fatter every year.


I agree that that is part of the problem as well, though you'd have to basically go through each of those contracts to see what's useful and what is not. Plus a lot of those contracts are a result of the wars (ex: security firms like Blackwater).

cjmcjmcjmcjm wrote:Solution: cut spending. If necessary, revert to pre-Bush tax rates


This. Raising taxes may be necessary in the long run, but trimming the fat should always come first.

Or, we could act like responsible adults and do both. We know that major cuts to domestic programs aren't going to be very helpful to the population, especially when we're already underfunding areas. Slashing budgets to the point of collapse isn't going to be a productive move.

But we aren't in an either/or situation. We can trim the fat, yes. But, I doubt that the fat will get us there, well, unless you consider a vast part of the military budget that continues to get larger to be completely fat. But, recognizing that we'd like to keep some semblance of a functioning government that can help the people, raising taxes, especially on that one segment of the population that continues to see massive increases in their wealth while the middle class slips away, can help prevent having to slash budgets so severely.

quite frankly, if it comes between billionaires paying an extra 100k in taxes and children not getting enough to eat; fuck the billionaires who have made out like bandits from all the anti-people policies they've bought and paid for.

That, and perhaps Republicans could realize that they're not responsibly cutting the budget but rather trying to punish segments of the population that they see as primarily democrat voters.

When they come out and say, "Hey, we know you like NASCAR and all, but we're in a serious budget crisis and advertising on cars really isn't a government priority so we're going to cut that to save money" I might respect their attempt a little more.

Or, if you want to save money on welfare, structure welfare to honestly help people get out of poverty.

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Re: US Debt Ceiling reached

Postby SummerGlauFan » Wed May 18, 2011 5:39 am UTC

Jahoclave wrote:
SummerGlauFan wrote:
podbaydoor wrote:A lot of defense spending also goes into the military-industrial complex. We have Army bases that are in so much disrepair that whole buildings burn down because the electrical grid is shot and the sprinkler system is defunct, but we can also afford fat contracts for companies to turn into monetary sinkholes that get fatter every year.


I agree that that is part of the problem as well, though you'd have to basically go through each of those contracts to see what's useful and what is not. Plus a lot of those contracts are a result of the wars (ex: security firms like Blackwater).

cjmcjmcjmcjm wrote:Solution: cut spending. If necessary, revert to pre-Bush tax rates


This. Raising taxes may be necessary in the long run, but trimming the fat should always come first.

Or, we could act like responsible adults and do both. We know that major cuts to domestic programs aren't going to be very helpful to the population, especially when we're already underfunding areas. Slashing budgets to the point of collapse isn't going to be a productive move.

But we aren't in an either/or situation. We can trim the fat, yes. But, I doubt that the fat will get us there, well, unless you consider a vast part of the military budget that continues to get larger to be completely fat. But, recognizing that we'd like to keep some semblance of a functioning government that can help the people, raising taxes, especially on that one segment of the population that continues to see massive increases in their wealth while the middle class slips away, can help prevent having to slash budgets so severely.

quite frankly, if it comes between billionaires paying an extra 100k in taxes and children not getting enough to eat; fuck the billionaires who have made out like bandits from all the anti-people policies they've bought and paid for.

That, and perhaps Republicans could realize that they're not responsibly cutting the budget but rather trying to punish segments of the population that they see as primarily democrat voters.

When they come out and say, "Hey, we know you like NASCAR and all, but we're in a serious budget crisis and advertising on cars really isn't a government priority so we're going to cut that to save money" I might respect their attempt a little more.

Or, if you want to save money on welfare, structure welfare to honestly help people get out of poverty.


Oh, yay! Snark AND strawman AND responding to things I did not say. You get a prize!

I did not say to not raise taxes. Certainly repealing W's rich tax cuts will help. However, cutting spending (especially in the massively over-bloated areas that always seem to avoid cuts, along with pointless government agencies that were supposed to have been temporary to begin with, and the now THREE wars we are in) should be the priority. Especially since it will (hopefully) work to reverse the train of thought in Washington that throwing money around like candy is a good thing. Even if all our deficit went away right now, we'd immediately begin racking up debt at a monstrous rate with out current mindset.

I agree with you that both major parties, for the last few decades at least, have been to blame for the mess we are in. Neither party, and probably no politician in Washington who has actually voted on anything, has their hands clean of this.
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I knew from that moment that she was something special"


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