Debt ceiling talks: Whose fault?

[DrFever]

So here we are with a bank that legally counterfeits the money you borrow but expects a full value (plus interest) repayment. But what's good for the Federal Reserve is good for the government itself, and this is where we get back into that funny word "deficit spending". The government spends more money than it takes in. It has for many years now. The Federal Reserve, being the only lawful source of this fiat money, prints up the excess cash the government needs (or manufactures a credit line in a computer). This extra cash is treated as a loan, in order to keep the government overspending from further eroding the worth of the dollar in the world market. The government (meaning the taxpayers) is on the hook for the full face value, plus interest. But there's another problem. The government is borrowing so much money that it drives the interest rates up! You pay MORE interest on your mortgage, car loan, and credit cards, because the government cannot balance its books. That extra interest you pay is therefore another hidden tax. The government, in its "generosity", gives you a tax credit on mortgage interest that is higher because of their own borrowing!

Yet another stunt the government has pulled is to "borrow" from the various trust funds under its control. Some $2 billion has vanished from the trust accounts of Native Americans (presently suing the Departments of the Interior and Treasury), and nearly ¾ of a TRILLION dollars has been removed from your Social Security retirement trust fund and spent in the last 8 years.

There has been some shuffling around to try to conceal the real scope of the problem. Over the last several years, the Federal Government has been sending less tax money back to the states than it takes in in taxes. This means that the states have to borrow MORE money to cover their obligations. The net result is that the debt is being transferred to the states, to conceal its true size. The government will easily admit to a $3 trillion "publicly held" debt, grudgingly concede that it's "unfunded liability" brings that number to almost $7 trillion, but the real hard truth is that total government debt, state and federal, is now over $14 trillion dollars, or about 50,000 for every man, woman, and child inside the United States. Since 1960, the taxpayers have shelled out $15 trillion in interest payments alone, while the principal continues to rise.

If the government has to borrow your retirement money when things are supposed to be so good, under what conditions can it repay the money? Or is that government IOU in your retirement account merely a promise to either tax you a second time or stiff you on the benefits you thought you were paying for?

 

[tet1953]

All true, Dr. but it is that higher interest rate that works to keep inflation in check, is it not?

 

[BendBrewer]

If the government has to borrow your retirement money when things are supposed to be so good, under what conditions can it repay the money?

Talk to the guy that gave the rich a bunch of Tax cuts the last time we had a Surplus instead of paying our debts down. He's in the Texas Phone book under the B's.

 

[DrFever]

Talk to the guy that gave the rich a bunch of Tax cuts the last time we had a Surplus instead of paying our debts down. He's in the Texas Phone book under the B's.

Are Bush-era tax rates for the rich a kind of rocket-fuel for the economy? Or would this be an unfair giveaway to the rich at a time of historically large federal deficits?
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Chart: The impact of extending the Bush tax cuts
Rich Clabaugh/Staff

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• Taxes
• Politics
• Government and Politics
• Public Finance
• Economic Policy
• Domestic Policy
• Political Policy

That's the politically volatile debate surrounding the tax-cut deal worked out by President Obama and congressional leaders this week. The president agreed only to a temporary, two-year extension of tax cuts for households earning more than $250,000. But in a press conference Tuesday several reporters asked if he had caved in to Republican pressure.
Bush tax cuts 101: Who will get what if Obama deal passes?

Mr. Obama says he is choosing to work out a compromise that helps middle-class and poor Americans, while not making the tax breaks for top income brackets permanent. The debate over tax rates for the rich will remain as election-campaign fodder heading toward 2012.
Here's a summary of the pros and cons of extending Bush tax cuts for the rich:
Yes, extend tax cuts for the rich

The US tax code is progressive, and arguably the Bush tax cuts increased the relative burden on the rich. In 2004, the top 20 percent of households paid a larger share of all US income taxes than they did in 2000, before President Bush took office, according to the conservative Heritage Foundation.
Where fans of low-income tax cuts emphasize the benefits of added consumer spending, proponents of tax cuts for the rich say the move boosts savings and investment – and thus helps the economy.
Also, although the rich spend a bit less of each tax dollar saved, their role in consumer spending is very important. Finally, conservatives emphasize that raising tax rates can backfire, pushing capital out of the country or causing the wealthy to seek tax-shelters.
No, let tax rates for the rich rise

Where conservatives argue that the Bush tax cuts helped make a weak economy stronger after 2001, liberal economists say they see scant evidence of this. And now, with gargantuan budget deficits, they say the responsible thing is to ask America's "haves" to pay at the tax rates they did in the late 1990s.
Just because the US tax code is progressive doesn't mean it's as progressive as it should be, these critics add. America's wide gap between the rich and the middle class or poor has widened considerably in recent years. Extending the Bush tax cuts would be worth about $340,000 in 2011 to the average household that ranks in the the top 0.1 percent by income, according to an analysis by the nonpartisan Tax Policy Center.
The trend of widening inequality appears to be driven less by tax rates than by economic forces, such as wages that rise fastest for the skilled and educated. But some economists worry that American society and democracy will become less stable if this trend continues.
Whichever side is right, ending tax cuts for the rich will not close the federal budget gap by itself. Yes, it's big money. The tax breaks are estimated at $700 billion over the next decade. But Obama's bipartisan fiscal commission last week outlined a goal of nearly $4 trillion in deficit reduction over 10 years to restore the government's fiscal health

 

[BendBrewer]

Which Bush Tax Cuts are you referring to?

The Tax Cut he gave when the economy was so strong? The tax cut Bush gave when Bush projected a $5.6 trillion surplus?

Or the other tax cut Bush gave when the economy tanked after his first tax cut? The Tax Cut Bush gave as a result of a recession that started on his watch AFTER his first tax cut?

Which of the 2 completely different tax cuts are you referring to?

 

[mame]

Just a quick observation on how the poll is shaping up so far... 9 people chose to blame the conservatives vs. 4 who chose to put equal blame. No one is solely blaming the liberals... Sure, a sample size of 13 is pretty fucking small but I think it's worth noting that not even any presumed righties are attempting to put the blame on the left for the breakdown in budget talks.

 

[mame]

An article from the NYtimes argues Obama has the advantage:

Last year, President Obama and House Republicans managed to reach a last-minute accord on preserving the Bush tax cuts, and then in April they just barely averted a government shutdown. But now, in this debate over the debt ceiling, each side seems ready to make a stand at last and find out whom the voters really trust when it comes to righting the nation’s finances.

The question is whom you would rather be if this thing does, in fact, escalate into a full-blown crisis. As things stand today, I’d much rather be in the president’s shoes than in those of his adversaries, and not only because he tends to dress better.

I say this because politicians very often get themselves into trouble when they subscribe to what you might call the transference theory of political popularity. This is the theory that suggests that the enemy of the person voters don’t trust is someone they will inherently trust more. Or to put it another way: if you’ve lost faith in that guy over there, and I walk up and kick him in the teeth, then your faith will be somehow transferred to me.

This is the political theory under which George W. Bush’s advisers were operating when they predicted spontaneous outpourings of support from Iraqis once American troops toppled Saddam Hussein. Anyone who’d spent a little time in Iraq should have known that while most Iraqis were going to be glad to be rid of Saddam, that didn’t mean they were ready to embrace his deposer, either.

And this is effectively the same theory that Republicans in Washington have adopted since last November. They mistake disappointment with Obama’s policies for an emphatic validation of their antigovernment rhetoric. They think the voters have to trust someone, and since they’re not so enamored of Mr. Obama’s performance, that someone must be them.

But politics really isn’t binary; it only seems that way. It’s possible for voters to rebuke Mr. Obama and trust his opposition even less. And in fact, polling shows that’s exactly what’s going on.

In a New York Times/CBS News poll from a few weeks ago, Mr. Obama maintained a tepid approval rating of 47 percent, with 44 percent of the voters registering disapproval. But only 20 percent approved of Congress, versus 70 percent who disapproved. Those are Roger Clemens-type numbers. They don’t get you anywhere near the Hall of Fame.

Polls also show that the president remains personally liked by large majority of the public. But really, the discrepancy in their approval ratings probably has less to do with Mr. Obama or House leaders personally than it does with the nature of our system. Presidents always seem bigger and more commanding than members of Congress. Even a beaten-down president tends to be more compelling than some guy who needs to wear a lapel pin just to make sure he can ride the right elevator.

This is why President Clinton squashed his Republican opponents during the government shutdown in 1996 and again after his impeachment in 1998. Even disgraced, he managed to come off like the only grownup in town, a real-life Gulliver tottering while tiny people scurried to bind his ankles together.

The Republican nominee in next year’s election, whoever that turns out to be, might be able to stare down Mr. Obama on something as consequential as the debt ceiling and come away looking larger and more capable. But not so for your average Congressional leader, which is probably why the shrewd Mr. Boehner appeared so eager to cut a deal until his caucus rebelled over the weekend.

Working in Mr. Obama’s favor, too, is that he seems now to understand this power dynamic and how to use it. Earlier in his presidency, Mr. Obama seemed to think he could best his opponents by appealing to their sense of shared responsibility and chatting them up at Super Bowl parties. It didn’t work.

Now, though, he seems to get that a president wins when he boxes in his adversaries, forcing them either to compromise on his terms or to risk the political consequences of appearing intransigent. For the past week or so, the president has relentlessly sought the mantle of maturity, casting himself as the guy seeking bold and far-reaching compromise while his opponents seek the lower ground of marginal change.

Republicans may be right on this point; it may not be the wisest thing in the world to remake the entire federal budget in the space of a furious few days. But to the extent that Mr. Obama gets his message across more effectively, he hands Republicans the unenviable choice or either joining him in a comprehensive solution or looking self-interested for backing away and imperiling the economy.

Does that mean voters won’t blame Mr. Obama for a crisis over the debt ceiling? It doesn’t. But they’ll probably blame Congress even more. If you’re Republican right now, the flawed theory of transference is one you’d probably rather not put to the test.

 

[DrFever]

cmon peeps jesus christ wake up doesnt matter any tax shit that goes on USA will never get out of debt just declare chapter 9 would be better off flag changed to chinesse and life goes on its only the inevidable

how long do you think these other countrys are goin to carry you FACE it YOU hit rock bottom your fckt your education is dumb your healthcare is fckt your national debt is halarious your exports are nil, your dollar isnt worth wiping anyones ass with

yup just keep makin money ya dumb kunts money you dont have lmao

 

[beardo]

Everyones stupid for thinking they need all that money its the stupidest thing I have ever heard-they need to stop all spending and start from scratch maybe one million a year should be the whole budget.

 

[tet1953]

Every time we get into one of these stalemates and they start talking about government shutdowns etc. they always warn about SS checks going out. What really ticks me off about that is the fact that SS should not require any borrowed money at all. All that FICA money you pay every payday goes into the general treasury, not a SS "trust fund" as it should have. They've been "borrowing" from it for decades, using it for earmarks, subsidies for oil companies, billions for other countries..the list goes on. If SS had all the money that was paid into and intended for it, I'm pretty sure it woud be solvent for everyone reading this, probably their kids too.

 

[undertheice]

Just a quick observation on how the poll is shaping up so far... 9 people chose to blame the conservatives vs. 4 who chose to put equal blame. No one is solely blaming the liberals... Sure, a sample size of 13 is pretty fucking small but I think it's worth noting that not even any presumed righties are attempting to put the blame on the left for the breakdown in budget talks.

just what do you think the results of your poll really show. i suppose we could look at it from your limited perspective, that even the conservatives can see how wrong their stance is. we could merely consider that there really are no blind conservatives here or that they have just ignored this poll. there is, of course, another answer that is less palatable to the statists here, that there is an honesty inherent in conservatism that is lacking in the liberal camp. where liberal philosophy fully embraces the rulings of its masters, conservatism contains a distrust of even its own leaders. american liberalism is based on the naive notion that the will of the people is of paramount importance and that a single political party is capable of representing that majority or even willing to do so. for conservatives it is the will of the individual that matters most, not the whims of the unruly mob, and they realize that no party can truly represent such diversity.

 

[mame]

just what do you think the results of your poll really show. i suppose we could look at it from your limited perspective, that even the conservatives can see how wrong their stance is. we could merely consider that there really are no blind conservatives here or that they have just ignored this poll. there is, of course, another answer that is less palatable to the statists here, that there is an honesty inherent in conservatism that is lacking in the liberal camp. where liberal philosophy fully embraces the rulings of its masters, conservatism contains a distrust of even its own leaders. american liberalism is based on the naive notion that the will of the people is of paramount importance and that a single political party is capable of representing that majority or even willing to do so. for conservatives it is the will of the individual that matters most, not the whims of the unruly mob, and they realize that no party can truly represent such diversity.

I follow facts and evidence, not people. Even as someone who voted for Obama and plan on doing so again in 2012, I absolutely disagree with plenty that he has said/done, I am not some mindless sheep taking rhetoric at face value. You seem to think that liberals are sheeple and that only conservatives can think for themselves... you're wrong.

 

[NoDrama]

I follow facts and evidence, not people. Even as someone who voted for Obama and plan on doing so again in 2012, I absolutely disagree with plenty that he has said/done, I am not some mindless sheep taking rhetoric at face value. You seem to think that liberals are sheeple and that only conservatives can think for themselves... you're wrong.

I thought this was very interesting!! You disagree with the current policies, but are willing to do it again for four more years for what reason? I mean I voted for Bush Jr. the first time because it was in my best interest, the second time I voted my conscience, not my greed. But If I were to take your view on things i would have voted for Bush again becasue it was better for me personally, fuck whats good for the country??

Im not sure what your position is, more clarity needed.

 

[redivider]

i got this mame.

see nodrama loves the semantics of forum dialogue.

he disagrees with Obama b/c he extended the bush tax cuts, hasn't ended our two pointless wars, his stimulus package was NOT big enough and the money went out too slowly, and he's also not lived up to his promise to give so called 'terrorists' a fair day in court.

probably missed something.

but compared with the radical wave of ultra conservatism that has taken over the republican party, there's no realistic candidate any person with half a brain would vote for.... based on politics and economics..

i understand the republican race isn't even about that... it's about marriage, and christianity, and 'family' and anal incontinence.....

 

[mame]

^^ pretty much.

I'm voting for a lesser of two evils, partly on the hope that Obama's rightward shift is political and only termporary and partly because I dont agree at all with anything the Republicans have said and/or done.

 

[tet1953]

So now the Republicans want a deal that will require going through all this 3 more times before the 2012 election. Obama has gone against powerful people in his own party and refused to take entitlements off the table, and he wants a larger package that addresses the problems beyond the election.

How can there be any doubt which side is responsible for the stalemate? Conservatives say that it is just sticking to ideals, but any informed person knows the truth -- they think the continued fighting and chaos in the markets will get them the government in 2012. Not only is that just the wrong thing to do, it is a huge miscalculation as well. Were they to be successful in causing default and another recession (at least), it would backfire.

 

[undertheice]

I follow facts and evidence, not people.

ah yes, that great liberal devotion to fact. i've watched as you have trotted out fact after fact and find i am spectacularly unimpressed. what you seem to miss is that each and every fact is open to interpretation, that no occurrence is independent of its surroundings. your strict adherence to keynesian economic mythology and utter denial of the merits of free market solutions are perfect examples of the none too equitable nature of your quest for fact. what you are following is the liberal party line, the interpretation of evidence that best suits your own desired outcome.

i know y'all would love to believe that the tenets of your faith are based on sound reasoning, but it is little more than an ivory tower version of mob mentality. the short term solutions of statist dogma only embrace efficiency, what will most quickly serve the people, and ignore the long term success that individualist solutions have always brought. of course your solutions will work, anything can be made to work, but our goal shouldn't be the mediocrity of a herd existence and that is precisely the result of handing economic control over to the state. this is, after all, what increased taxation and the over-regulation of the free market will do.

lacking a formal education, i am forced to take a realistic approach to any question. perhaps it's time you took a step back from all you have been taught about how things should work and infused your mind with a mild dose of reality. the following are a few simple facts, unadulterated by the agenda of politically motivated buffoons. first and foremost is that governments do not play by a different set of rules than the rest of us. their motivations are the same, expansion and influence, and the consequences of their actions, though spread out to the people they rule, are the same as for any one of us. the second and equally important fact in this matter is that debt only breeds growth to a certain extent. at some point the investment of borrowed funds cannot pay for the fees involved and we are fast approaching that point, if we have not already reached it. finally, government produces nothing. it may regulate, but all that we pump into the state is lost to the real producers of the nation. we support a bureaucracy that often works at counter-purposes and whose true devotion is only to its own continuation.

 

[NoDrama]

Bush put us in two wars...Afghanistan and Iraq..Question how much do you think those wars cost...Next question.. how did he pay for those wars ???? He didn't he left the problem to Obama..Taxes have to be raised..Thats how you pay for your wars ( at least since WWI )...Next

Obama got us in two wars also, Libya and Yemen plus drone strikes in Pakistan, certainly this must be considered peace measures, how else do you explain the Pulitzer prize? How is he going to pay for it all? By having you pay for it.

 

[NoDrama]

So if Obama is unable to get the debt ceiling raised none of you are going to vote for him, correct?

 

[skiweeds]

bad place to post the poll because almost everyone here is a liberal baised being hippys and all.

i put at least some blame on them all but i mostly blame the liberals for their outrageous spending. they create useless government jobs for useless people that have useless kids that grow up to be useless scumbags and work more useless created government jobs. i may be kind of a nihilist but society is fucked and everyone can go fuck themselves except for me, my friends, and my family.

and obama is no better than bush. hes still continuing a war which most of you are against. then you all just repeat what you hear from the bullshit media that bush got us stuck in the mess. all obama has to do is pull out and bring everyone home. everything was already fucked and always will be, we got osama, its time to leave. obama is just a warlord like bush. the media except fox news makes you all think the republicans are the bad guys and liberals are the good guys. you are all brain washed and they got you by the balls. democrats and republicans are basically the same thing. they both suck! democrats just keep making excuses why their still fighting. vote libertarian! put the power back in the people. although with how many idiots are out their, maybe the power in people isnt such a good thing. thats why i say fuck you all!