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View Full Version : Standard & Poor downgrades US credit: now AA+ not AAA


LonesomePolecat
08-05-2011, 08:46 PM
Standard & Poor just downgraded America's credit from AAA to AA+. No, this is not the End of the World as We Know It, though obviously there will be some consequences, and I'd like to see some opinions and views as to how this is going to affect not only America's economy but the global economy as well.

But mainly I'd like to ask the lefties on this board: Do you believe that America can take on unlimited debt? Standard & Poor obviously doesn't think so, and while US treasury bonds are still considered the safest investment around, there does seem to be a growing perception around the world that our pile of debt is becoming unstable. Yet the Democrats and the left in general have fiercely resisted any meaningful cuts in federal spending as though there was not one cent (except maybe for military spending) that could be cut from the federal budget without causing national and global economic disaster. It was painfully obvious during the recent budget standoff in Congress that many Congress critters (admittedly of both parties) were simply protecting their politically crucial pork barrels while using a lot of pious rhetoric to cover up their corruption.

So, how much debt is too much debt? And, other than tax increases, how do lefties propose to deal with the problem of massive public debt? Is there no point at which the financial cost of some program that you advocate outweighs whatever benefits it may provide, assuming there are actually any benefits whatsoever? Or do you believe that our debt is somehow not a real problem?

Yes, I know there's been a lot of scare talk about our debt among righties, but even so I have to insist that over the long term the United States is in serious trouble. Tax hikes will have to be part of the solution, which won't please righties at all, but they're only a part. Sooner or later the United States will have to make serious and painful cuts in federal spending, and the longer we wait the more painful the cuts will be. How do you propose to make those cuts?

I am not trying to be confrontational here. I'm not baiting you. But all too often it seems to me that the left thinks America has unlimited wealth which you may spend as you please without regard to practical consequences.

Der Trihs
08-05-2011, 09:01 PM
:rolleyes:

And of course the downgrade has nothing to do with the Republicans taking the national and world economy hostage. And the debt has nothing to do with the insane spending of the Republicans and their mania for low taxes at any cost. Frankly it should have been downgraded long ago, a country that lets such lunatics and incompetents as the Republicans into positions of power is not a good long term bet for economic or any other kind of stability.

Giraffe
08-05-2011, 09:05 PM
I'm not seeing this as a signal that our debt is too large for our GDP so much as a consequence of telling the world that the chance of a U.S. default is non-zero. And we have the Republicans to thank for that, for choosing to play politics with our global economic reputation.

There was no reason to create this debt ceiling crisis. None. And now we're all going to pay the price...

initech
08-05-2011, 09:06 PM
I think the only logical solution is to dissolve Medicare and Social Security, then lower taxes.

Lobohan
08-05-2011, 09:07 PM
Standard & Poor just downgraded America's credit from AAA to AA+. No, this is not the End of the World as We Know It, though obviously there will be some consequences, and I'd like to see some opinions and views as to how this is going to affect not only America's economy but the global economy as well. It's currently only one of three. So I doubt that it will have huge effects yet.

But mainly I'd like to ask the lefties on this board: Do you believe that America can take on unlimited debt? Standard & Poor obviously doesn't think so, and while US treasury bonds are still considered the safest investment around, there does seem to be a growing perception around the world that our pile of debt is becoming unstable. Yet the Democrats and the left in general have fiercely resisted any meaningful cuts in federal spending as though there was not one cent (except maybe for military spending) that could be cut from the federal budget without causing national and global economic disaster. It was painfully obvious during the recent budget standoff in Congress that many Congress critters (admittedly of both parties) were simply protecting their politically crucial pork barrels while using a lot of pious rhetoric to cover up their corruption. You're not correct. The Democrats are offering to cut quite a bit. Unlike the Republicans, the Democrats also want to increase revenue.

So, how much debt is too much debt? And, other than tax increases, how do lefties propose to deal with the problem of massive public debt?With huge cuts. You should take some time to go over the last few weeks in the news. The Democrats had the largest deficit reduction on the table.

Is there no point at which the financial cost of some program that you advocate outweighs whatever benefits it may provide, assuming there are actually any benefits whatsoever? Or do you believe that our debt is somehow not a real problem?Republicans don't think it's a real problem. Because they aren't willing to raise taxes to cut it.

Yes, I know there's been a lot of scare talk about our debt among righties, but even so I have to insist that over the long term the United States is in serious trouble. Tax hikes will have to be part of the solution, which won't please righties at all, but they're only a part. Sooner or later the United States will have to make serious and painful cuts in federal spending, and the longer we wait the more painful the cuts will be. How do you propose to make those cuts? Remove the Bush tax cuts, pull back the wars and stimulate us out of recession. As it happens that will nearly balance the budget.

I am not trying to be confrontational here. I'm not baiting you. But all too often it seems to me that the left thinks America has unlimited wealth which you may spend as you please without regard to practical consequences.Republicans are responsible for the vast majority of the current deficit. Not listening to them would be the best thing we as a country could do.

Der Trihs
08-05-2011, 09:07 PM
There was no reason to create this debt ceiling crisis. None. And now we're all going to pay the price...And they are going to create it again, and again, and again. And quite possibly deliberately force a default on top of it.

Simplicio
08-05-2011, 09:10 PM
I'm not seeing this as a signal that our debt is too large for our GDP so much as a consequence of telling the world that the chance of a U.S. default is non-zero.

No need to guess. The statement from S&P says it explicitly (http://www.hindustantimes.com/Full-text-of-S-amp-P-statement-on-US-downgrade/Article1-730003.aspx).

The OP is a pretty boring list of strawmen.

As to the practical consequences, I suspect they'll be pretty close to nil. S&P was last seen rating Mortgage Tranches as AAA, and its not like they have any information on the worthiness of Treasury Bills that the rest of the market doesn't. I can't really picturing their opinion changing anyones mind about the creditworthiness of the US, one way or the other.

LonesomePolecat
08-05-2011, 09:10 PM
:rolleyes: :rolleyes: :rolleyes: :rolleyes: :dubious:

Sorry, Der. The idea that Republicans and conservatives are entirely responsible for our debt crisis just won't fly.

CaptMurdock
08-05-2011, 09:13 PM
I am not trying to be confrontational here. I'm not baiting you.
I want to accept your assertion that you want to be non-confrontational but...
But all too often it seems to me that the left thinks America has unlimited wealth which you may spend as you please without regard to practical consequences.
Really?? Do you really think everybody who styles himself as Left Of Center think that the national debt is paid with Monopoly money? Do you think The Left (tm) has absolutely no understanding whatsoever of economics? That they're a bunch of overage, tied-dyed, granola-eating hippies living in communes and listening to the Grateful Dead? :smack:

Nobody I know of, styling himself a liberal or even a moderate, has, to my knowledge, said that the federal government should not cut any spending at all. The debate centers around as much a) where to cut as b) how much to cut.

It was painfully obvious during the recent budget standoff in Congress that many Congress critters (admittedly of both parties) were simply protecting their politically crucial pork barrels while using a lot of pious rhetoric to cover up their corruption.

I agree with you there. Everybody who's trying to cut the pork off the other guy's pet barrel has their own sacred bacon Not To Be Touched. Other than completely outlawing lobbying, I don't see a way out of that, do you?

Der Trihs
08-05-2011, 09:15 PM
:rolleyes: :rolleyes: :rolleyes: :dubious:

Sorry, Der. The idea that Republicans and conservatives are entirely responsible for our debt crisis just won't fly.Entirely, no. Overwhelmingly, yes. And unlike the Democrats, the Republicans are deliberately making it worse with lunacy like the debt ceiling hostage taking.

Inbred Mm domesticus
08-05-2011, 09:19 PM
According to the S + P, who actually did the downgrading (http://www.cnn.com/2011/BUSINESS/08/05/global.economy.cnn/):

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics

In other words, the Republican's rhetoric and willingness to use our debt as a bargaining chip has resulted in our credit downgrading.

Your point of view lonesomePolecat, that Democrats' intransigence on spending, a view that does not reflect the facts, is linked to our credit issues is completely wrong. The linchpin to all these relationships is the Republicans and their desire to make cuts that will never happen, pass legislation that will never leave the House, and threaten our economic standing to make a symbolic point. They are avoiding governance and making noise. Real leaders raise taxes when its needed and make 4 trillion dollars worth of cuts. Pseudo leaders and politicians with the mentality of internet trolls pass Balanced Budget legislation when default is a real possibility.

elfkin477
08-05-2011, 09:23 PM
I think the only logical solution is to dissolve Medicare and Social Security, then lower taxes.Sure, and when the old people starve to death, our national health care costs will bottom out too since they're the ones using the most and most expensive of it. With potential savings like this how can this not win?


Other than people not wanting old people to starve, that is.

DWMarch
08-05-2011, 09:25 PM
The US government owes 45% of its debt to itself. That's 3.85 trillion dollars right there. It could be declared out of existence as easily as it was declared into existence.

The problem however is that the entire US economy runs on debt. Without debt, no one can buy a house or a car or afford education. No one could afford health care. No one could buy anything without saving up the money first. Debt is the fuel of the US economy and it is never going away.

I don't understand the fear of debt. It's arbitrary and meaningless. Are all the holders of treasury bonds going to come calling at once? Is China going to build the world's biggest tugboat and tow Manhattan Island to the other side of the world?

Remember a story from a few years ago of how some jerk phoned a McDonalds pretending to be a cop and convinced a girl to strip naked and do all kinds of embarrassing things because of the empty threat that this "cop" was going to come down there and make everyone's life miserable? That's what the Republicans are doing to the United States right now. They have created this problem and the atmosphere of fear that surrounds it. Give it some thought and you will realize that at the end of the day it has no impact on you whatsoever. Give it some more thought and you may come to realize that you need not buy into the fear created by artificial crises and those who seek to benefit politically from them.

initech
08-05-2011, 09:28 PM
Other than people not wanting old people to starve, that is.

Listen, you wanna make an omelet...

This is a serious failure of the Obama Administration. 2008 showed us that these agencies were willing to issue AAA ratings if they stood to make enough money in the process. Obama was clearly supposed to slip S&P an extra tenner and totally missed the cues. That's what happens when socialists are allowed to be President.

joebuck20
08-05-2011, 09:33 PM
Sure, and when the old people starve to death, our national health care costs will bottom out too since they're the ones using the most and most expensive of it. With potential savings like this how can this not win?


Other than people not wanting old people to starve, that is.

So in other words, death panels.

rocking chair
08-05-2011, 10:01 PM
it appears that most are calling s&p out on a math error that was first offered as a reason for the downgrade.

then s&p went with the political reason for a downgrade.

it seems they were as stubborn about downgrading as some members of congress were for not raising a debt ceiling.

if the downgrade was for a fiscal reason it would be taken quite a bit more seriously.

the fact that it appears to be for a political reason, well, hopefully it will knock some sense into some people should they think about holding the credit of the usa hostage again.

although from some of the statements coming out now... i'm not sure the lesson has been learned.

and now, now! romney has something to say about this? where was he again this past week or so?

by the by pimco had downgraded the us mid july. so it isn't just s&p.

coremelt
08-05-2011, 10:01 PM
:rolleyes: :rolleyes: :rolleyes: :dubious:

Sorry, Der. The idea that Republicans and conservatives are entirely responsible for our debt crisis just won't fly.

The idea that anyone could NOT see that it's the republicans fault is laughable. Clinton gave you your first surplus in decades, the debt was going DOWN. Shrub (Bush Junior) blew it all in the first year of office and started you down this current path, and then his tax cuts finished the job.

And then the republicans showed the rest of the world they would risk default just to make a political point. So yeah, I blame that pretty squarely on the GOP. Your OP is a joke.

John Mace
08-05-2011, 10:04 PM
As someone not affiliated with either party, I have to say that the Dems have certainly been the saner of the two in recent years. Republicans, under Bush, went on a wild spending spree. When they had their chance to redeem themselves in 2010 with an upset election, they go off the deep end pretending like the debt ceiling is something you fuck around with-- like it's related to money we're going to spend in the future. And with their obsession with abortion laws, Sharia, and whatnot, they don't seem to be taking governing seriously.

We used to say that the Dems never miss an opportunity to miss an opportunity, but I think the Pubbies have them beaten at that game now.

Try2B Comprehensive
08-05-2011, 10:06 PM
But all too often it seems to me that the left thinks America has unlimited wealth which you may spend as you please without regard to practical consequences.

Americans will have to work it off.

elfkin477
08-05-2011, 10:43 PM
So in other words, death panels. I think removing their source of income and medical care would allow social darwinism to off them without spending money to form any fancy death panels.

ITR champion
08-05-2011, 11:19 PM
But mainly I'd like to ask the lefties on this board: Do you believe that America can take on unlimited debt?
..
So, how much debt is too much debt? And, other than tax increases, how do lefties propose to deal with the problem of massive public debt? Is there no point at which the financial cost of some program that you advocate outweighs whatever benefits it may provide, assuming there are actually any benefits whatsoever? Or do you believe that our debt is somehow not a real problem?
Personally I have been concerned about the national debt for a while. I do not think that blaming it all on the Republicans is the correct response. For at least as long as I've been alive (I'm currently 28), both parties have generally been in favor of big spending and offered little in the way of revenue increases to offset that.

What I think is that we should cut federal spending. The federal spending that I want to cut is that which is either neutral or harmful towards human well-being. That would include things such as:

The military
Farm subsidies
Medicare part D, which is really a handout to pharmaceutical companies
Subsidies to the oil and energy industry
Various other corporate handouts disguised as good things, such as money for 'employee training' that never actually occurs.

However, when I look at the Republican budget plan I don't see cuts to these programs, or at least not big ones. Even as they complain non-stop about spending and the debt, the Republicans appear bound and determined to protect the military-industrial complex, the agriculture-industrial complex, the energy complex, and every other complex that involves massive corporations. The Republicans only want to cut programs that benefit ordinary people. Let them offer cuts to corporate handouts and they'll have me on board.

Omg a Black Conservative
08-05-2011, 11:49 PM
Really?? Do you really think everybody who styles himself as Left Of Center think that the national debt is paid with Monopoly money? Do you think The Left (tm) has absolutely no understanding whatsoever of economics? That they're a bunch of overage, tied-dyed, granola-eating hippies living in communes and listening to the Grateful Dead? :smack:

I do.

Nobody I know of, styling himself a liberal or even a moderate, has, to my knowledge, said that the federal government should not cut any spending at all. The debate centers around as much a) where to cut as b) how much to cut.

Cut the things which contribute the most to the Federal debt. Seems like a no brainer to me. Unfortunately, Democrats/liberals tend to want to mess with those things which would have minimal effect on the Federal debt while refusing mess with those things which constitute the bulk of the Federal debt.

It's seriously like turning a blind eye to the guy who steals $10M from a bank to catch to the guy who stole a $.50 candy bar from the store.

yorick73
08-05-2011, 11:52 PM
The idea that anyone could NOT see that it's the republicans fault is laughable. Clinton gave you your first surplus in decades, the debt was going DOWN. Shrub (Bush Junior) blew it all in the first year of office and started you down this current path, and then his tax cuts finished the job.

What surplus? The debt never went down...it continued to grow under Clinton.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

Shagunathor
08-06-2011, 12:08 AM
What surplus? The debt never went down...it continued to grow under Clinton.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

Those numbers don't seem to match the CBO's, which does show a surplus under Clinton. I wonder what the difference in accounting between the two is.

http://www.cbo.gov/ftpdocs/108xx/doc10871/HistoricalTables.pdf

Simplicio
08-06-2011, 12:13 AM
Those numbers don't seem to match the CBO's, which does show a surplus under Clinton. I wonder what the difference in accounting between the two is.

http://www.cbo.gov/ftpdocs/108xx/doc10871/HistoricalTables.pdf

The first link counts intergovermental debt (basically the SS and Medicare Trust fund), the CBO just counts debt owed to the public. In anycase, during the last years of the Clinton Administration, the gov't took in more money then it spent, which I think most people would count as a "surplus".

Ravenman
08-06-2011, 12:14 AM
What surplus? The debt never went down...it continued to grow under Clinton.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm
The total outstanding debt would include the increasing balances held in the Social Security Trust Fund. In contrast, the debt held by the public would exclude the trust fund. Clinton was, indeed, paying down the debt to the public.

BigT
08-06-2011, 12:26 AM
I do.

Which means you are speaking out of prejudice and not actual facts, which means you have no knowledge of the situation and that everything you say on it can be safely ignored.

I've never seen anyone walk so easily into an obvious trap. Hint: the correct answer to "are you prejudiced" is supposed to be "no."

yorick73
08-06-2011, 12:30 AM
The first link counts intergovermental debt (basically the SS and Medicare Trust fund), the CBO just counts debt owed to the public. In anycase, during the last years of the Clinton Administration, the gov't took in more money then it spent, which I think most people would count as a "surplus".

If the government took in more money than it spent then the national debt would have gone down instead of up.

Finagle
08-06-2011, 12:30 AM
What surplus? The debt never went down...it continued to grow under Clinton.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

That chart only goes through 1999. If you look at the historical data for 2000, it looks like the debt had indeed shrunk by a tiny bit. In 1999, the remaining balance on the debt limit was 263 billion (ftp://ftp.publicdebt.treas.gov/opd/opdm121999.prn) while at the end of 2000 it was 369 billion. (ftp://ftp.publicdebt.treas.gov/opd/opds122000.prn) (for the same total debt limit of 5.5 trillion).

There might be some kinds of accounting magic going on there, and certainly it wasn't a dramatic reverse, but at various points at the end of Clinton's term, the debt did seem to be heading down.

Simplicio
08-06-2011, 12:33 AM
If the government took in more money than it spent then the national debt would have gone down instead of up.

It did. Hence the CBO numbers.

yorick73
08-06-2011, 12:33 AM
The total outstanding debt would include the increasing balances held in the Social Security Trust Fund. In contrast, the debt held by the public would exclude the trust fund. Clinton was, indeed, paying down the debt to the public.

The balances held in the SS trust fund are intragovernmental debt. Spending the money in the SS trust fund to pay down public debt is nothing more than a shell game. Total debt increased.

Omg a Black Conservative
08-06-2011, 12:33 AM
Which means you are speaking out of prejudice and not actual facts, which means you have no knowledge of the situation and that everything you say on it can be safely ignored.

Well, since Democrats/liberals tend to believe that the government should spend more money, and that there are enough rich people to fund those government expenditures, I'd think it safe to say if anyone should be ignored, it should be them, on account of living in a fantasy world.

I've never seen anyone walk so easily into an obvious trap. Hint: the correct answer to "are you prejudiced" is supposed to be "no."

Why's that the correct answer?

Simplicio
08-06-2011, 12:39 AM
The balances held in the SS trust fund are intragovernmental debt. Spending the money in the SS trust fund to pay down public debt is nothing more than a shell game. Total debt increased.

If you think the SS fund is a shell game, then the conclusion is that debt went down. After all, if the SS fund "doesn't count", then we don't owe it money and its silly to count it as debt.

Again, revenues were larger the expenditures in 1999, which is a surplus by pretty much any sensible definition. If you count the debt owed to the SS fund, then your counting spending on SS in future decades as part of the 1999 budget, which makes little sense.

yorick73
08-06-2011, 12:42 AM
It did. Hence the CBO numbers.

The CBO numbers simply are not telling the whole story. It only lists public debt. Pull out your calculator and see for yourself that their numbers don't add up.

yorick73
08-06-2011, 12:47 AM
If you think the SS fund is a shell game, then the conclusion is that debt went down. After all, if the SS fund "doesn't count", then we don't owe it money and its silly to count it as debt.

Again, revenues were larger the expenditures in 1999, which is a surplus by pretty much any sensible definition. If you count the debt owed to the SS fund, then your counting spending on SS in future decades as part of the 1999 budget, which makes little sense.

You are missing my point. The money in the SS fund was spent. The public debt was paid down by borrowing more money from the SS fund in the form of intragovernmental debt. Public debt went down and intragovernmental debt went up. This is the equivalent of taking money out of your left pocket, putting in in your right pocket, and claiming that you now have more money than you started with.

Simplicio
08-06-2011, 12:53 AM
You are missing my point. The money in the SS fund was spent.

No it wasn't. The fund grew in 1999. Its projected to be spent in the future, but it wasn't spent in 1999. The fund continued to grow for the next decade.

The public debt was paid down by borrowing more money from the SS fund in the form of intragovernmental debt. Public debt went down and intragovernmental debt went up. This is the equivalent of taking money out of your left pocket, putting in in your right pocket, and claiming that you now have more money than you started with.

But again, when you add everything up, the government made more in tax revenues then it spent in expenditures. If you ignore all the passing from pocket to pocket, the gov't ended up in the black.

ITR champion
08-06-2011, 12:59 AM
Cut the things which contribute the most to the Federal debt. Seems like a no brainer to me.
Hey, this is good news. A liberal like me and a conservative like you both agree that we should cut defense spending. That's the biggest chunk of federal expenditures (http://www.usgovernmentspending.com/), after all. Now that we're in agreement about what we want to cut, the rest is just details.

yorick73
08-06-2011, 01:06 AM
No it wasn't. The fund grew in 1999. Its projected to be spent in the future, but it wasn't spent in 1999. The fund continued to grow for the next decade.

Of course it was. Any surplus in a government trust fund is used to buy government bonds. In effect the trust funds are lending this money to the government. This money is then spent by the government for everyday operations.


But again, when you add everything up, the government made more in tax revenues then it spent in expenditures. If you ignore all the passing from pocket to pocket, the gov't ended up in the black.

You cannot ignore the passing from pocket to pocket. That is what the CBO did and that is the problem. How can you claim there was a surplus yet we borrowed $133 billion in Clinton's last budget, $18 billion the year before, and $130 billion the year before that.

If there was a surplus you would expect either the national debt would decrease or, if the entire surplus were spent, the debt would stay the same. National debt increased every year.

Simplicio
08-06-2011, 01:06 AM
But again, when you add everything up, the government made more in tax revenues then it spent in expenditures. If you ignore all the passing from pocket to pocket, the gov't ended up in the black.

To expand on this with made up numbers, the gov't made 50 dollars from income tax and 50 dollars from SS payroll taxes, and then the general fund spent 55 dollars while SS spent 40. The General fund borrows five from the SS fund to cover its expenses, and so intragovermental debt is increased by 5.

But thats just passing money from one pocket to another, at the end of the day, the gov't still made five dollars more then it spent. Parts of it owe other parts money, but its still running a total surplus.

ETA:
You cannot ignore the passing from pocket to pocket. That is what the CBO did and that is the problem. How can you claim there was a surplus yet we borrowed $133 billion in Clinton's last budget, $18 billion the year before, and $130 billion the year before that.

See above. We borrowed it from ourselves. The total financial situation of the gov't improved, and we ran surpluses by any reasonable definition.

Omg a Black Conservative
08-06-2011, 01:08 AM
Hey, this is good news. A liberal like me and a conservative like you both agree that we should cut defense spending. That's the biggest chunk of federal expenditures (http://www.usgovernmentspending.com/), after all. Now that we're in agreement about what we want to cut, the rest is just details.

You could cut defense spending to 0% and it still wouldn't solve our debt. I'm okay with cutting defense, SS and Medicare spending by 50%. Are you?

Oh, and as per your link, the biggest contributor to federal expenditure is healthcare (18%) with pensions and defense spending being tied for second (16%). So if you want to cut the 'biggest' expenditure in its entirety, then that'd be health care spending and the rest would be just details.

(Though I'm sure you wouldn't go for that.)

Whack-a-Mole
08-06-2011, 01:14 AM
Well, since Democrats/liberals tend to believe that the government should spend more money, and that there are enough rich people to fund those government expenditures, I'd think it safe to say if anyone should be ignored, it should be them, on account of living in a fantasy world.


The fantasy world is the one you are living in.

I provided you with CBO data (http://boards.straightdope.com/sdmb/showpost.php?p=14074805&postcount=450) that showed if the tax cuts are allowed to expire revenue and expenditures align pretty closely.

You responded with some hocus-pocus about the AMT and 2035 but the page I cited clearly specifies (and sorry I did not respond in that thread...bolding below is mine):

The extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2021
and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates
several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to
sustain for a long period.

No mention of AMT out to 2035 in that bit. Note the alignment of the chart by 2015 (and running up to it before that).

This is based on current law. I.E. If no one fiddles with anything, as things stand today, that is what will happen (the Bush tax cuts will expire on their own if no one does anything).

Simplicio
08-06-2011, 01:15 AM
Thinking further, Yorick, I think your picturing the CBO as counting the SS fund as cash when they compute public debt. And thus double counting the money thats put into it. But thats not what they're doing, the bonds in the fund aren't counted as "income", anymore then aircraft carriers or other things the gov't buys are. The money raised by selling bonds to the fund is counted, but the bonds themselves aren't, so the money only gets counted once.

Simplicio
08-06-2011, 01:17 AM
You could cut defense spending to 0% and it still wouldn't solve our debt. I'm okay with cutting defense, SS and Medicare spending by 50%. Are you?

Medicare and SS have dedicated taxes that pay for them. If you cut the programs by 50%, I doubt people are going to accept paying those taxes at the previous rates. As a result, I'm pretty skeptical that cutting them would really do much to balance the budget.

Carmady
08-06-2011, 01:19 AM
I could swear there was a thread a few years ago in which many of the board Republicans responded to criticism of Republicans cutting taxes for the richest Americans while simultaneously instigating enormous, crippling spending by saying that the debt didn't matter.

Now that their wariness of the debt has been kindled, we will no doubt be able to come to an agreement that both revenue increases from those most able to afford it (increased taxes, closed loopholes, etc) and spending cuts will be needed. And certainly we will agree that we can't automatically put wars and corporate handouts off the table of things that could potentially be cut. Democrats will of course want to devote 40% of the budget to financing PBS, but I am confident that they realize the situation is too grim for that to pass. With the brain power of both parties working on this, I predict a resounding success.

Shayna
08-06-2011, 01:22 AM
This notion that debt is necessarily a bad thing is utterly absurd. Especially when there is high unemployment in the nation.

The interest rate on U.S. debt is so low that $1 trillion incurs only $25 billion in interest per year. Borrow $1 trillion and start roads projects and bridge projects and any number of other things the government is actually responsible for doing, and at the end of the year you've spent $1,025,000,000,000.00.

The Republican way, we take that $1 trillion and pay it to our creditors. Now we don't owe $25 billion in interest for the year. YAY - Savings!

Uhm, no.

Now you have 10 million people unemployed who are collecting federal unemployment. Over the course of that same year, no jobs are created, no roads are repaired, no bridges are reinforced, basically nothing gets done. And the cost of 10 million unemployed to the nation is $250 billion.

So now, instead of putting 10 million people to work (and by the way, collecting taxes on that income, which isn't even figured into this little equation), and spending only $25 billion for interest payments, we have a crumbling infrastructure for the low low price of $1,250,000,000,000.00, or 10 times what carrying that $1 trillion in debt would have been.

We're fucked because Republicans can't do math and don't understand the first thing about macroeconomics. We're being led around by the nose by a bunch of retards.

We’ve known for over 60 years that in a situation that we’re in now where there is persistent shortfall of demand, government can invest in public works projects and other things that will get the economy back on its feet. It could be done.

It’s quite easy to do. The workers are there who know how to do the jobs. The market’s happy to lend us the money. As Ezra said, they’re eager to loan us more money at very low interest rates. The cost of debt compared to the cost of unemployment is incredibly low. A trillion dollar deficit costs us $25 billion a year to pay the interest on that. If we have an extra ten million people unemployed that’s $250 billion lost forever each year, so it’s a 10 to 1 tradeoff. We’re focusing on deficit reduction when we really ought to be focused on job creation, and we know how to do it.

Focusing on the deficit, cutting spending that’s going to make the deficit bigger. What we’re doing now is just unimaginably stupid.

http://www.msnbc.msn.com/id/26315908//vp/44028185#44028185 It stuns me that after 30 years of empirical data, Republicans flat out refuse to see that supply-side economics is a steaming pile of crap. It was an intentional lie created by one man, Jude Wanniski.

Wanniski was the Grover Norquist of the '70s. Nobody ever elected him to anything -- he was a journalist for g-d's sake. But he wielded great power and control within the Republican party. He invented the "supply-side economics" terminology as nothing more than a craven way to get Republicans to win elections, by turning them into "the second Santa Claus". The Two Santa Claus Theory (http://en.wikipedia.org/wiki/Jude_Wanniski#The_Two_Santa_Claus_Theory) By 1974, Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their "big government" projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. They kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class. Americans loved it. And every time Republicans railed against these programs, they lost elections.

Everybody understood at the time that economies are driven by demand. People with good jobs have money in their pockets, and want to use it to buy things. The job of the business community is to either determine or drive that demand to their particular goods, and when they're successful at meeting the demand then factories get built, more people become employed to make more products, and those newly-employed people have a paycheck that further increases demand.

Wanniski decided to turn the classical world of economics – which had operated on this simple demand-driven equation for seven thousand years – on its head. In 1974 he invented a new phrase – "supply side economics" – and suggested that the reason economies grew wasn't because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money. The more things there were, the faster the economy would grow.

Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years (http://www.commondreams.org/view/2009/01/26-0) Just once, I would like a Republican on this forum (or anywhere for that matter), to acknowledge that this theory has been tried and has failed -- repeatedly. Look at the facts, the cold, hard facts of how "politicized" that entire crap, made-up theory of "supply-side" economics actually is. And admit the truth.

Ravenman
08-06-2011, 01:24 AM
You are missing my point. The money in the SS fund was spent. The public debt was paid down by borrowing more money from the SS fund in the form of intragovernmental debt. Does this REALLY have to be explained again?

The money from the trust fund was not spent. No money was borrowed from the trust fund. The trust fund continued to grow, because the SS surpluses were invested in the safest investment in the world (at that time).

The government bonds were "deposited" in the trust fund. There was no money taken from the trust fund. It kept getting bigger.

The money the government raised by selling the bonds was used for other things. You cannot claim that Social Security funds are being diverted to other purposes, because the value of the trust fund continues to grow. It's a simple fact.

Omg a Black Conservative
08-06-2011, 01:24 AM
The fantasy world is the one you are living in.

I provided you with CBO data (http://boards.straightdope.com/sdmb/showpost.php?p=14074805&postcount=450) that showed if the tax cuts are allowed to expire revenue and expenditures align pretty closely.

You responded with some hocus-pocus about the AMT and 2035 but the page I cited clearly specifies (and sorry I did not respond in that thread...bolding below is mine):

No mention of AMT out to 2035 in that bit. Note the alignment of the chart by 2015 (and running up to it before that).

This is based on current law. I.E. If no one fiddles with anything, as things stand today, that is what will happen (the Bush tax cuts will expire on their own if no one does anything).

Unlike you, who didn't even read what you provided me, I quoted for you what was in the report verbatim. That wasn't some 'hocus-pocus'; that was a simple copy and paste. Just because you don't like what the report says, doesn't mean you can dismiss it-- especially since you, initially, brought it up. Just because you skipped over pages 3 and 60, doesn't mean they don't exist.

Edit: The baseline scenario assumes the Bust Tax Cuts end.

One long-term budget scenario used in this analysis, the extended-baseline scenario, adheres closely to current law. Under this scenario, the expiration of the tax cuts enacted since 2001 and most recently extended in 2010, the growing reach of the alternative minimum tax, the tax provisions of the recent health care legislation, and the way in which the tax system interacts with economic growth would result in steadily higher revenues relative to GDP.

yorick73
08-06-2011, 01:25 AM
To expand on this with made up numbers, the gov't made 50 dollars from income tax and 50 dollars from SS payroll taxes, and then the general fund spent 55 dollars while SS spent 40. The General fund borrows five from the SS fund to cover its expenses, and so intragovermental debt is increased by 5.

But thats just passing money from one pocket to another, at the end of the day, the gov't still made five dollars more then it spent. Parts of it owe other parts money, but its still running a total surplus.

ETA:


See above. We borrowed it from ourselves. The total financial situation of the gov't improved, and we ran surpluses by any reasonable definition.

I'm not sure what your reasonable definition is. Intragovernmental debt is not a wash simply because we owe money to ourselves. That money is owed to current and future trust fund recipients just like regular debt is owed to someone at a later date.

The simple fact is that national debt increased during every year Clinton was in office. Why would we need to borrow money if we are running a surplus?

Simplicio
08-06-2011, 01:28 AM
I'm not sure what your reasonable definition is. Intragovernmental debt is not a wash simply because we owe money to ourselves. That money is owed to current and future trust fund recipients just like regular debt is owed to someone at a later date.

The simple fact is that national debt increased during every year Clinton was in office. Why would we need to borrow money if we are running a surplus?

I'm not sure I can explain it any better then I did in post #39. Maybe you can tell me if something from that post doesn't make sense and I'll try and clarify?

yorick73
08-06-2011, 01:30 AM
Does this REALLY have to be explained again?

The money from the trust fund was not spent. No money was borrowed from the trust fund. The trust fund continued to grow, because the SS surpluses were invested in the safest investment in the world (at that time).

The government bonds were "deposited" in the trust fund. There was no money taken from the trust fund. It kept getting bigger.

The money the government raised by selling the bonds was used for other things. You cannot claim that Social Security funds are being diverted to other purposes, because the value of the trust fund continues to grow. It's a simple fact.

Yes, I think it does need to be explained. Government bonds are debt. The SS fund is flush with IOUs from the federal government. The SS trust fund is required by law to buy bonds with any excess revenue. Where does that money go? Into the general fund.

yorick73
08-06-2011, 01:33 AM
I'm not sure I can explain it any better then I did in post #39. Maybe you can tell me if something from that post doesn't make sense and I'll try and clarify?

You didn't explain it in post #39. We can argue all day about intragovernmental holdings and public debt. The bottom line is total national debt which takes both into account. That number increased every year.

Simplicio
08-06-2011, 01:35 AM
You didn't explain it in post #39. We can argue all day about intragovernmental holdings and public debt. The bottom line is total national debt which takes both into account. That number increased every year.

But we agree total gov't revenue was greater then total gov't expenditures, right? From my example in that post, the gov't still took in 5 more dollars then it spent. Again, I don't think you can reasonably say there wasn't a surplus then, regardless of the state of the gov'ts internal book-keeping.

Omg a Black Conservative
08-06-2011, 01:35 AM
Medicare and SS have dedicated taxes that pay for them. If you cut the programs by 50%, I doubt people are going to accept paying those taxes at the previous rates. As a result, I'm pretty skeptical that cutting them would really do much to balance the budget.

If they aren't already, I'm fairly sure that SS and Medicare pay out more than they receive or will be soon in the next 10 - 15 years. Therefore, limiting the amount paid out by SS and Medicare would balance the budget (or capping the amount on can receive). Sure, people wouldn't be happy about it, but it's necessary.

This notion that debt is necessarily a bad thing is utterly absurd. Especially when there is high unemployment in the nation.

The interest rate on U.S. debt is so low that $1 trillion incurs only $25 billion in interest per year. Borrow $1 trillion and start roads projects and bridge projects and any number of other things the government is actually responsible for doing, and at the end of the year you've spent $1,025,000,000,000.00.

The Republican way, we take that $1 trillion and pay it to our creditors. Now we don't owe $25 billion in interest for the year. YAY - Savings!

Uhm, no.

Now you have 10 million people unemployed who are collecting federal unemployment. Over the course of that same year, no jobs are created, no roads are repaired, no bridges are reinforced, basically nothing gets done. And the cost of 10 million unemployed to the nation is $250 billion.

So now, instead of putting 10 million people to work (and by the way, collecting taxes on that income, which isn't even figured into this little equation), and spending only $25 billion for interest payments, we have a crumbling infrastructure for the low low price of $1,250,000,000,000.00, or 10 times what carrying that $1 trillion in debt would have been.

Japan and its 'Lost Decade' says hello.

yorick73
08-06-2011, 01:39 AM
But we agree total gov't revenue was greater then total gov't expenditures, right? From my example in that post, the gov't still took in 5 more dollars then it spent. Again, I don't think you can reasonably say there wasn't a surplus then, regardless of the state of the gov'ts internal book-keeping.

No, total revenue was less that total expenditures as should be clear from the fact that total national debt increased. You are getting bogged down in the internal bookkeeping which shows that public debt, which is only one part of total debt, decreased.

Whack-a-Mole
08-06-2011, 01:42 AM
Unlike you, who didn't even read what you provided me, I quoted for you what was in the report verbatim. That wasn't some 'hocus-pocus'; that was a simple copy and paste. Just because you don't like what the report says, doesn't mean you can dismiss it-- especially since you, initially, brought it up. Just because you skipped over pages 3 and 60, doesn't mean they don't exist.

Edit: The baseline scenario assumes the Bust Tax Cuts end.

I quoted verbatim too.

Current law, as it stands, will align revenue and spending pretty closely.

Do you disagree with the CBO on that?

Simplicio
08-06-2011, 01:43 AM
No, total revenue was less that total expenditures as should be clear from the fact that total national debt increased. You are getting bogged down in the internal bookkeeping which shows that public debt, which is only one part of total debt, decreased.

In my example in post #39, total debt increased by zero dollars, while revenues exceeded expenditures by 5$. In that case, are you denying there was a surplus?

Little Nemo
08-06-2011, 01:52 AM
Sorry, Der. The idea that Republicans and conservatives are entirely responsible for our debt crisis just won't fly.Republicans and conservatives are entirely responsible for the debt crisis. They're only about ninety percent responsible.

Here's the Presidents (http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.png) who increased the national debt as a percentage of the GDP: Ford, Reagan, Bush, Bush, and Obama. Here's a list of Presidents who lowered the national debt as a percentage of the GDP: Truman, Eisenhower, Kennedy, Johnson, Nixon, Carter, Clinton.

As you pointed out, Democrats would prefer not to cut government spending. But they've offered to do so. Republicans would prefer not to raise government revenue. They refuse to consider it.

As far as government spending, the biggest percentage increases in the federal budget occurred during Reagan's and Bush's administrations.

Omg a Black Conservative
08-06-2011, 01:52 AM
I quoted verbatim too.

Current law, as it stands, will align revenue and spending pretty closely.

Do you disagree with the CBO on that?

Current law-- if everything is left alone-- will align revenue and spending pretty closely in part by extending the AMT to affect 50% of households (something you've yet to acknowledge). Just how well do you think subjecting an extra 47% of households in the U.S. to the AMT will go over with Democrats and their base, who adamantly scream about how only the rich should be taxed and decry tax increases on the middle class?

It's funny how that works. People don't want to cut the entitle programs, but they don't want to pay tax increases for them, either.

Simplicio
08-06-2011, 02:14 AM
In my example in post #39, total debt increased by zero dollars, while revenues exceeded expenditures by 5$. In that case, are you denying there was a surplus?

Here's a more accurate example, with (very) approximate real numbers. In 2000, the US gov't got 1.4 trillion in income tax and 600 billion in SS tax for a total revenue of 2 trillion. Total SS spending that year was 400 billion, while the general fund spending was about 1.5 trillion. So the gov't took in about an extra 100 billion dollars. Hooray!

So the general fund decided to pay down 100 billion dollars worth of debt. But first it has to get money to cover its own deficit, plus its mandated by law to buy off the entire SS surplus anyways. So it sells SS 200 billion in bonds, and uses the 100 billion left over after its own expenditures to pay down the pre-existing debt from previous years.

So the intra-govermental debt goes up by 200 billion dollars, but the debt to the public goes down by 100 billion. By Yoricks accounting, then, we've increased the debt by 100 billion dollars, but in reality, the gov't took in 100 billion dollars more then it spent, and now owes that much less then it did the previous year. By pretty much any definition then, there was a surplus.

Whack-a-Mole
08-06-2011, 02:32 AM
Current law-- if everything is left alone-- will align revenue and spending pretty closely in part by extending the AMT to affect 50% of households (something you've yet to acknowledge). Just how well do you think subjecting an extra 47% of households in the U.S. to the AMT will go over with Democrats and their base, who adamantly scream about how only the rich should be taxed and decry tax increases on the middle class?

It's funny how that works. People don't want to cut the entitle programs, but they don't want to pay tax increases for them, either.

AMT could be easily modified to exclude people below a certain income if they wanted to.

Yes that would pull the alignment of revenue and expenditures out of line but then that graph was not made with current budget cuts which just happened in mind. I doubt exempting people of moderate means from the AMT would have a dramatic impact anyway on that graph.

And please list the "entitle" programs you think should be reduced or cut entirely.

yorick73
08-06-2011, 02:36 AM
Here's a more accurate example, with (very) approximate real numbers. In 2000, the US gov't got 1.4 trillion in income tax and 600 billion in SS tax for a total revenue of 2 trillion. Total SS spending that year was 400 billion, while the general fund spending was about 1.5 trillion. So the gov't took in about an extra 100 billion dollars. Hooray!

So the general fund decided to pay down 100 billion dollars worth of debt. But first it has to get money to cover its own deficit, plus its mandated by law to buy off the entire SS surplus anyways. So it sells SS 200 billion in bonds, and uses the 100 billion left over after its own expenditures to pay down the pre-existing debt from previous years.

So the intra-govermental debt goes up by 200 billion dollars, but the debt to the public goes down by 100 billion. By Yoricks accounting, then, we've increased the debt by 100 billion dollars, but in reality, the gov't took in 100 billion dollars more then it spent, and now owes that much less then it did the previous year. By pretty much any definition then, there was a surplus.

No, intragovernmental debt is still debt owed to someone. Why are you trying to differentiate between public and intragovernmental debt? TOTAL national debt increased. Your example is like saying you make 40K a year and borrow 5K from a friend. You spend 42K so you have a 3K surplus. Hooray! Don't you see the absurdity of this situation.

Simplicio
08-06-2011, 02:49 AM
No, intragovernmental debt is still debt owed to someone. Why are you trying to differentiate between public and intragovernmental debt? TOTAL national debt increased. Your example is like saying you make 40K a year and borrow 5K from a friend. You spend 42K so you have a 3K surplus. Hooray! Don't you see the absurdity of this situation.

Again, my point is that revenues exceeded outlays. In my example total gov't revenues exceeded outlays while total debt still went up. We can debate whether or not that should "count" as a surplus afterwords, but do you agree that it is the case? If not, can you point out the flaw in my example?

Whack-a-Mole
08-06-2011, 02:50 AM
Interesting:

"France, which has a far higher debt per capita ratio than the U.S., still enjoys a AAA rating." (cite (http://finance.yahoo.com/blogs/daniel-gross/u-credit-rating-victim-gop-sabotage-021622372.html;_ylt=AjY6F7sIuUmU31RVCNXhEg1O7sMF;_ylu=X3oDMTE1ODFyN2xyBHBvcwMzBHNlYwN0b3BTdG9yaWVzBH NsawNpc3RoZXVzY3JlZGk-?sec=topStories&pos=main&asset=&ccode=))

So why the US?

Der Trihs
08-06-2011, 02:57 AM
Interesting:

"France, which has a far higher debt per capita ratio than the U.S., still enjoys a AAA rating." (cite (http://finance.yahoo.com/blogs/daniel-gross/u-credit-rating-victim-gop-sabotage-021622372.html;_ylt=AjY6F7sIuUmU31RVCNXhEg1O7sMF;_ylu=X3oDMTE1ODFyN2xyBHBvcwMzBHNlYwN0b3BTdG9yaWVzBH NsawNpc3RoZXVzY3JlZGk-?sec=topStories&pos=main&asset=&ccode=))

So why the US?To answer for anyone who doesn't read your link, France doesn't have the Republicans trying to steer it towards disaster.

Omg a Black Conservative
08-06-2011, 03:06 AM
AMT could be easily modified to exclude people below a certain income if they wanted to.

The AMT already excludes people below a certain income level. The AMT is, in essence, a "rich" tax.

Yes that would pull the alignment of revenue and expenditures out of line but then that graph was not made with current budget cuts which just happened in mind. I doubt exempting people of moderate means from the AMT would have a dramatic impact anyway on that graph.

So we're back to the "tax the rich" thing? All right. Here's a simple question for you. At what income level should the AMT kick in? And should it be adjusted for inflation (which it is currently not)? Do you seriously not realize that there simply aren't enough rich people in the U.S. to sustain such a tax increase required to balance the Federal budget?

And please list the "entitle" programs you think should be reduced or cut entirely.

Medicare
Medicaid
SS

No, you don't need to get rid of them completely, but their benefits need to be slashed or time-capped or something.

Shayna
08-06-2011, 03:25 AM
Medicare
Medicaid
SS

No, you don't need to get rid of them completely, but their benefits need to be slashed or time-capped or something. No they don't. Medicare is more efficient than private insurance in every possible measure, from cost of overhead to reimbursement times, payment accuracy and use of technology (Humana & Cigna are still cutting checks -- in 2011! Medicare has moved to electronic transfers).

Social Security has absolutely nothing whatsoever to do with debt or deficits, so why you think that needs to be cut is beyond my imagination.

And doing away with medical care for the poor and impoverished is just, well, sickening.

Captain Amazing
08-06-2011, 03:35 AM
No they don't. Medicare is more efficient than private insurance in every possible measure, from cost of overhead to reimbursement times, payment accuracy and use of technology (Humana & Cigna are still cutting checks -- in 2011! Medicare has moved to electronic transfers).


I don't know if what you're saying is true or not, but is that really the issue, though? I mean, lets assume it's 100% and Medicare is more efficient than any private insurance. But the inefficiency in private insurance plans isn't paid for by the government. It's paid for by the people who have the insurance. So from the standpoint of the federal budget, the increased health care cost doesn't matter.

In other words, if there was a procedure that cost $100 if Medicare covered it, and cost $120 if a private insurance company covered it, but the first was being paid for out of the budget and the second wasn't, if I wanted to balance the budget, I'd get rid of the second and keep the first.

SecondJudith
08-06-2011, 04:43 AM
I really don't get the mindset that argues for taking health care away from the ill, poor and elderly before taking more money from the wealthy. Why are rich people's bank accounts more important than human lives?

RTFirefly
08-06-2011, 05:21 AM
Interesting:

"France, which has a far higher debt per capita ratio than the U.S., still enjoys a AAA rating." (cite (http://finance.yahoo.com/blogs/daniel-gross/u-credit-rating-victim-gop-sabotage-021622372.html;_ylt=AjY6F7sIuUmU31RVCNXhEg1O7sMF;_ylu=X3oDMTE1ODFyN2xyBHBvcwMzBHNlYwN0b3BTdG9yaWVzBH NsawNpc3RoZXVzY3JlZGk-?sec=topStories&pos=main&asset=&ccode=))

So why the US?
Atrios (http://www.eschatonblog.com/2011/08/stupids.html): "Apparently we're supposed to care about what some idiots at some corrupt organization think about anything."

RTFirefly
08-06-2011, 05:27 AM
Medicare
Medicaid
SS

No, you don't need to get rid of them completely, but their benefits need to be slashed or time-capped or something.Why?

(ETA) You can say we should slash their benefits, but demonstrate to me that we need to, please.

As a nation, we can certainly afford the 6% of our GDP that would maintain Social Security indefinitely. And pretty much every other advanced nation can afford to provide health care for its citizenry; how come the Greatest Nation That Ever Was can't?

The question that needs to be politically addressed is why we spend twice as much as everyone else in the world on health care without getting noticeably more out of the deal.

Rune
08-06-2011, 05:36 AM
To answer for anyone who doesn't read your link, France doesn't have the Republicans trying to steer it towards disaster.From the outside it looks more like the sentiments expressed in this post, and most of this thread, is the single largest problem. The USA is a divided house. The right is more concerned about blaming the left, and the left is more concerned about blaming the right, than either are about solving the problems of the nation. Bickering while Rome is burning. I don’t know where the article gets its numbers from either. France has a debt to GDP of about 85%, and a deficit in 2011 of about 5.7%, which with current initiatives will be reduced to 3-4% in 2013. The USA (IMF) has a debt to GDP of close to 100%, and a deficit at close to 10%, which Obama has promised to cut to only half by 2013. Also Germany has France’s back, or some of it. Nobody is standing with the USA. In any case, France should probably be downgraded too.

Der Trihs
08-06-2011, 06:27 AM
From the outside it looks more like the sentiments expressed in this post, and most of this thread, is the single largest problem. The USA is a divided house. The right is more concerned about blaming the left, and the left is more concerned about blaming the right, than either are about solving the problems of the nation. Oh, garbage, that's standard right wing rhetoric. Trying to deflect blame for their actions by insisting there's no difference between right and left, both sides are equally to blame, etc. No; overwhelmingly the problem is the Right. They aren't merely more concerned about blaming the Left than they are about solving the problems; they aren't interested in solving the problems at all. On the contrary, they are trying as hard as they can to make those problems worse. And pretending that they are well meaning, pretending that they have the slightest concern for the welfare of this country just makes it easier for them to drive the country off the economic cliff. Something they've just demonstrated their willingness to do.

Whack-a-Mole
08-06-2011, 09:21 AM
The AMT already excludes people below a certain income level. The AMT is, in essence, a "rich" tax.

So we're back to the "tax the rich" thing? All right. Here's a simple question for you. At what income level should the AMT kick in? And should it be adjusted for inflation (which it is currently not)? Do you seriously not realize that there simply aren't enough rich people in the U.S. to sustain such a tax increase required to balance the Federal budget?

AMT is not indexed to inflation so over time more and more people fall under it. You noted this yourself about what happens by 2035. What you are not taking into account is the CBO says revenue and expenditures will pretty much align by 2015 (it'll race that way once the Bush tax cuts expire). As such it will not be a result of the AMT gathering in substantially more people under it to fix US deficit spending. Ending the Bush tax cuts will.

Further, as I mentioned, AMT could be easily modified to stop it from continuing to gather more people under it if congress wanted to (not saying they will or won't, just saying they could).


Medicare
Medicaid
SS

No, you don't need to get rid of them completely, but their benefits need to be slashed or time-capped or something.

Why are these "entitlements"? Ok, Medicaid is. Do you really want to, as Shayna mentioned, do away with medical care for the poor?

As for the other two, last I checked, I am paying for them. The government is not giving people a handout. It is giving them back money they paid in.

I grant the programs need modification because as they stand they are losing more than they are taking in. Social Security because the Baby Boomer population bubble is hitting and a shitty economy that does not see enough people with jobs paying into the system. Medicare because health costs are spiraling out of control far, far past the rate of inflation in the economy.

How about we fix the economy and get people back to work and then reign in absurd healthcare prices first rather than reducing benefits? How about making people who earn money via Capital Gains taxes (already substantially lower than the income tax) pay a percentage in FICA taxes? How about removing the cap in FICA taxes (or raising it)? These all seem better first steps than kicking grandma to the curb.

It may well be some modification to those programs will be needed anyway and I, personally, am not opposed to looking at doing that. Fix the real problems first though.

Clu-Me-In
08-06-2011, 09:45 AM
Listen, you wanna make an omelet...
That's what happens when socialists are allowed to be President.


At least now we know where you're coming from with the above comment - straight out of left field with no gloves.:rolleyes:

Dr. Drake
08-06-2011, 10:14 AM
From the outside it looks more like the sentiments expressed in this post, and most of this thread, is the single largest problem. The USA is a divided house. The right is more concerned about blaming the left, and the left is more concerned about blaming the right, than either are about solving the problems of the nation. Bickering while Rome is burning. I don’t know where the article gets its numbers from either. France has a debt to GDP of about 85%, and a deficit in 2011 of about 5.7%, which with current initiatives will be reduced to 3-4% in 2013. The USA (IMF) has a debt to GDP of close to 100%, and a deficit at close to 10%, which Obama has promised to cut to only half by 2013. Also Germany has France’s back, or some of it. Nobody is standing with the USA. In any case, France should probably be downgraded too.
Oh, garbage, that's standard right wing rhetoric. Trying to deflect blame for their actions by insisting there's no difference between right and left, both sides are equally to blame, etc. No; overwhelmingly the problem is the Right. They aren't merely more concerned about blaming the Left than they are about solving the problems; they aren't interested in solving the problems at all. On the contrary, they are trying as hard as they can to make those problems worse. And pretending that they are well meaning, pretending that they have the slightest concern for the welfare of this country just makes it easier for them to drive the country off the economic cliff. Something they've just demonstrated their willingness to do.I think you've proved Rune's point. He (she?) never said both sides were equally to blame. She (he?) said that bickering and finger-pointing was a large part of the problem. And you responded how? By ignoring the numbers and jumping up to make sure we blame the Republicans.

For the record, I don't think you're wrong about the Republicans. But realistically, how does blaming them solve our problems? Are you expecting the addlepates who vote for them to wake up and go, "oh, I get it now! Well, no more Tea Party for me, then"?

Stratocaster
08-06-2011, 10:22 AM
No they don't. Medicare is more efficient than private insurance in every possible measure, from cost of overhead to reimbursement times, payment accuracy and use of technology (Humana & Cigna are still cutting checks -- in 2011! Medicare has moved to electronic transfers).Even if we buy this, it completely misses the point. The concern is not how administratively effective we can distribute $450B every year. The concern is the $450B. How efficiently this is conducted--really, you think that's the primary concern relative to the debt problem?Social Security has absolutely nothing whatsoever to do with debt or deficits, so why you think that needs to be cut is beyond my imagination.SS is currently unable to meet its obligations with current SS tax revenue: (http://www.msnbc.msn.com/id/41272983/ns/politics-more_politics/#.Tj1afYLcy0U)CBO said that Social Security will pay out $45 billion more in benefits this year than it will collect in payroll taxes, further straining the nation's finances. The deficits will continue until the Social Security trust funds are eventually drained, in about 2037.

Previously, CBO said Social Security would start running permanent deficits in 2016. In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.As of 2011 it pays out more than it takes in. I'm going to keep it that simple, since this particular point invariably turns into an endless discussion of whether or not the SS Trust Fund holds "true" assets, what happens to mney put in the general fund, etc. Right now, we can't pay out the currently due SS payments with the current SS tax revenue, and we need to fund the shortage with other sources, including the issuance of debt.And doing away with medical care for the poor and impoverished is just, well, sickening.So we should just assume that since the angels are on our side, this will take care of itself?

40 cents of every dollar the Feds spend we have to borrow. Think about that. Doesn't matter which party got us here--that's where we're at. About 2/3 of the Federal budget is for Medicare, Medicaid, SS benefits and defense. There is no solution to the debt crisis without addressing those expenditures. Hand-waving and hand-wringing will not get it done.

elucidator
08-06-2011, 10:25 AM
... Are you expecting the addlepates who vote for them to wake up and go, "oh, I get it now! Well, no more Tea Party for me, then"?
Actually, they may very well be doing just that. When was the last time you heard a Fox headline like "Tea Party rally draws one hundred million....". Public opinion about them is decidedly negative. Lots of people would like to be part of a new, enthusiastic "grass roots" movement, damned few like being a joke. They had scheduled a whole bunch of conventions and conferences that have been canceled for lack of support.

Smart money, and mine as well, says they are toast.

Dr. Drake
08-06-2011, 10:29 AM
Actually, they may very well be doing just that. When was the last time you heard a Fox headline like "Tea Party rally draws one hundred million....". Public opinion about them is decidedly negative. Lots of people would like to be part of a new, enthusiastic "grass roots" movement, damned few like being a joke. They had scheduled a whole bunch of conventions and conferences that have been canceled for lack of support.

Smart money, and mine as well, says they are toast.Well, that's great to hear, but dollars to doughnuts they're still going to vote Republican and they're still going to be bitterly opposed to a compromise with *shudder* Democrats.

elucidator
08-06-2011, 10:34 AM
Oh, sure, they're the same 20% of the electorate they always were, the knuckle-walking right. Its simply that they are no more important than they were. Its a standard fantasy of the right that, really, deep down they are the majority, "America is a center-right nation" yadda-blah, yadda blah. The "Real" Americans, you know the drill.

gonzomax
08-06-2011, 10:40 AM
The head of Std. and Poors was on CNN this morning. He said a big factor was the holding of the debt ceiling hostage. He mentioned that it was routinely raised in the past and now that has changed and bankers can't trust it any more. He also mentioned that revenue was not included in the agreement ,nor were cuts as extreme as they expected.

Whack-a-Mole
08-06-2011, 10:40 AM
Even if we buy this, it completely misses the point. The concern is not how administratively effective we can distribute $450B every year. The concern is the $450B. How efficiently this is conducted--really, you think that's the primary concern relative to the debt problem?

We (or at least I) pay for Medicare via a tax explicitly meant to pay for it.

Further, the solution is not to stick it to the elderly but rather to fix the rampant problem we have with medical costs.

Sure cutting benefits is easy but the underlying problem of health care costs in the US remain so down that road lie ever deeper cuts. How about fixing the real problem?


SS is currently unable to meet its obligations with current SS tax revenue: (http://www.msnbc.msn.com/id/41272983/ns/politics-more_politics/#.Tj1afYLcy0U)As of 2011 it pays out more than it takes in. I'm going to keep it that simple, since this particular point invariably turns into an endless discussion of whether or not the SS Trust Fund holds "true" assets, what happens to mney put in the general fund, etc. Right now, we can't pay out the currently due SS payments with the current SS tax revenue, and we need to fund the shortage with other sources, including the issuance of debt.

Nice try to deflect the very real and not to be missed problems with your argument.

SS, in theory, is sitting on a trust fund which is able to keep paying out more than it takes in for decades. Yes, the government borrowed all that money and left SS with a stack of IOUs. It is not proper to now say though that the US should stick it to grandma because it does not want to pay its debt. SS is not a handout. Grandma paid into the system.

Again, diminishing benefits does not fix anything. The real problem is a shitty economy and not enough people in work paying into the system. Would SS still have a shortfall? Maybe. If the economy was good and unemployment low could SS ride the shortfall out? I dunno...maybe. But you need to fix the real underlying problems first. Then, if SS is insolvent, you start looking at means to make it solvent again by restricting benefits or other means.


So we should just assume that since the angels are on our side, this will take care of itself?

40 cents of every dollar the Feds spend we have to borrow. Think about that. Doesn't matter which party got us here--that's where we're at. About 2/3 of the Federal budget is for Medicare, Medicaid, SS benefits and defense. There is no solution to the debt crisis without addressing those expenditures. Hand-waving and hand-wringing will not get it done.

Medicare is paid for by taxes explicitly meant to pay for it. Yes, they are costing more than they take in. See above.

You really want to restrict medical care for the poor even further than it is? Healthcare costs need to be reined in and this problem his helped a great deal.

That leaves Defense on your list.

elucidator
08-06-2011, 10:45 AM
Reading Slander and Poop's press releases is really starting to tick me off. It appears, upon reading, to be a critique of government inefficiency and ineffectiveness, which is all very well, but that's not what they're about, its not their job to make such judgments. Who asked them to? And by what right or credential do they claim expertise?

And in the area of expertise they are supposedly trustworthy, they have shown themselves to be either bumbling incompetent or corrupt. So why should anyone give a rat's about what they think about our government?

Unleash Elizabeth Warren!

Stratocaster
08-06-2011, 10:45 AM
Whack-a-Mole, there are just too many straw men in your post to respond to, so I won't try. I'll just close by saying I did not propose screwing over grandma or the poor or those (like me) who have paid umpteen thousands into SS. My question is an adult one that seems to be avoided by many: How will we do so? How will resolve our debt crisis, our downgrade, and not impact the beneficiaries of these entitlements, given the math we face? "But we have to" isn't helpful.

John Mace
08-06-2011, 10:58 AM
Actually, they may very well be doing just that. When was the last time you heard a Fox headline like "Tea Party rally draws one hundred million....". Public opinion about them is decidedly negative. Lots of people would like to be part of a new, enthusiastic "grass roots" movement, damned few like being a joke. They had scheduled a whole bunch of conventions and conferences that have been canceled for lack of support.

Smart money, and mine as well, says they are toast.

Indeed. I don't remember the exact numbers but recent polls show support (or favorability ratings) for the TP has dropped from something like 40% to less than 30%. I think these recent events may mark the "high point" of their influence, and that we will see them significantly diminished in the next election. One can only hope.

Whack-a-Mole
08-06-2011, 11:06 AM
Whack-a-Mole, there are just too many straw men in your post to respond to, so I won't try. I'll just close by saying I did not propose screwing over grandma or the poor or those (like me) who have paid umpteen thousands into SS. My question is an adult one that seems to be avoided by many: How will we do so? How will resolve our debt crisis, our downgrade, and not impact the beneficiaries of these entitlements, given the math we face? "But we have to" isn't helpful.

And I answered you.

Put people back to work.

Fix healthcare in the US (i.e. reign in the spiraling costs in the system).

Once that is done see where we stand and consider next steps if necessary.

Whack-a-Mole
08-06-2011, 11:08 AM
Reading Slander and Poop's press releases is really starting to tick me off. It appears, upon reading, to be a critique of government inefficiency and ineffectiveness, which is all very well, but that's not what they're about, its not their job to make such judgments. Who asked them to? And by what right or credential do they claim expertise?

And in the area of expertise they are supposedly trustworthy, they have shown themselves to be either bumbling incompetent or corrupt. So why should anyone give a rat's about what they think about our government?

Unleash Elizabeth Warren!

While my disdain is similar to yours for S&P and the other rating agencies which seemed to think Credit Default Swaps were AAA investments at the end of the day it is their business to determine risk. Risk, I think, would include a political analysis when it comes to a country.

elucidator
08-06-2011, 11:12 AM
I am reading several center-lefty sources who tell me that this is more a critique of Republican stubborness and short-sightedness than anything else.

Example:

...Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act...

PrettyVacant
08-06-2011, 11:12 AM
Well, the folks who own the USA aren't happy:

China, the world's largest holder of US debt, condemned the "short-sighted" political wrangling in the US and said the world needed a new and stable global reserve currency.

In a comment article the official Xinhua news agency said China had "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country."

Seems like the master plan Phase One is gearing up....

gonzomax
08-06-2011, 11:14 AM
The Repubs ,working for corporations over the people ,have done everything they could to subvert Obama's presidency. Rightys whine about the cost of the Health System, but prevented him from a single payer system that would have gone a long way toward fixing it.
The debt ceiling is a new righty ploy. It was never a big deal. Now it will likely be a political football forever. When the Repubs bring in another Bush type president, will the Dems fight raising the debt ceiling automatically? I do not know.
The Repubs have fought hard to keep the Bush tax cuts in place. Allowing them to expire would have gone a long way toward fiscal responsibility. The debt would have been much smaller and projected debt would have been rosier.

Simplicio
08-06-2011, 11:15 AM
I dunno, if China says they think our debt is unsafe while at the same time buying hundreds of billions of dollars of it at near zero interest rates, I tend to think their actions speak louder then words.

elucidator
08-06-2011, 11:15 AM
And so now the Chinese Communists are giving us shit for not being sufficiently capitalist? What a long, strange trip its been.

PrettyVacant
08-06-2011, 11:18 AM
I dunno, if China says they think our debt is unsafe while at the same time buying hundreds of billions of dollars of it at near zero interest rates, I tend to think their actions speak louder then words.

Depends why you think they bought it in the first place. Safe to assume it wasn't a purely a financial investment. I'm not sure it was even in the top two reasons.

PrettyVacant
08-06-2011, 11:19 AM
And so now the Chinese Communists are giving us shit for not being sufficiently capitalist? What a long, strange trip its been.

You obv. know they're about as 'communist' as Donald Trump..

Simplicio
08-06-2011, 11:21 AM
Depends why you think they bought it in the first place. Safe to assume it wasn't a purely a financial investment. I'm not sure it was even in the top two reasons.

Naw, they bought it to keep their currency low relative to the dollar. But I doubt they'd keep buying (especially at near zero interest rates) if they though there was a risk of it not being paid back. A trillion dollars is a lot to loose.

Saying your worried about someone not paying you back while buying huge amounts of their debt at very low interest is silly.

Johnny L.A.
08-06-2011, 11:22 AM
I dunno, if China says they think our debt is unsafe while at the same time buying hundreds of billions of dollars of it at near zero interest rates, I tend to think their actions speak louder then words.

And so now the Chinese Communists are giving us shit for not being sufficiently capitalist? What a long, strange trip its been.

In 2010 SCOTUS ruled that corporations have Free Speech rights, the same as citizens. Given the massive amount of investment China and other foreign interests have made in American corporations, China has every right to express its opinion and to influence American elections.

elucidator
08-06-2011, 11:25 AM
They have every right to speak their minds and try to influence American elections. As soon as they extend the same rights to thier own people, I will be suitably impressed.

China Guy
08-06-2011, 11:28 AM
And so now the Chinese Communists are giving us shit for not being sufficiently capitalist? What a long, strange trip its been.I think that Chinese capitalists would probably be accurate these days. Yep, what a long strange trip.

Simplicio
08-06-2011, 11:29 AM
In 2010 SCOTUS ruled that corporations have Free Speech rights, the same as citizens. Given the massive amount of investment China and other foreign interests have made in American corporations, China has every right to express its opinion and to influence American elections.

Err...what are you talking about? I never said anything vaguely like "China doesn't have the right to express its opinion". They can express their opinion about whatever they want, I just think that their actions obviously show they're lying about their opinions.

There are plenty of threads about Citizen's United if you want to kvetch, I don't really see any reason to hijack this thread.

septimus
08-06-2011, 11:32 AM
But mainly I'd like to ask the lefties on this board: Do you believe that America can take on unlimited debt?

"Unlimited debt"? Do you think, maybe, this question is misphrased?

Yet the Democrats and the left in general have fiercely resisted any meaningful cuts in federal spending ...

Both Parties resist spending cuts. The GOP resists taxes.

So, how much debt is too much debt?

I wonder if you think such a question could have a serious answer. 13 trillion just right, but 14 trillion too much? I'll bet I know your answer: GWB's debt was just the Goldilocks level, and budget balancing was needed beginning January 2009. :cool:

I'm not baiting you.

Some of your phrases do a good imitation of it.

It's not clear how much U.S. Treasury will lose in added interest due to the ceiling circus; one estimate is $100 billion per year. Wasted spending on interest forced on us by the people who pretend to be worried about government waste.

Stratocaster
08-06-2011, 11:32 AM
And I answered you.

Put people back to work.

Fix healthcare in the US (i.e. reign in the spiraling costs in the system).

Once that is done see where we stand and consider next steps if necessary.That was your plan? Reduce unemployment and fix healthcare? No need for further details, that's good enough for me.

Why didn't I think of that? Get President Obama on the phone, he'll want to hear this. Problem solved, I can feel the debt evaporating as I type this!

PrettyVacant
08-06-2011, 11:33 AM
They have every right to speak their minds and try to influence American elections. As soon as they extend the same rights to thier own people, I will be suitably impressed.

Why elections? Chinese opinion actually matter now - today - when the USA forms fiscal policy. This isn't some future abstraction.

Johnny L.A.
08-06-2011, 11:33 AM
They have every right to speak their minds and try to influence American elections.

The decision overruled restrictions in Austin v. Michigan Chamber of Commerce and McConnell v. Federal Election Commission that limited corporate spending to oppose or support political candidates. By removing the restrictions, corporations can spend whatever they want for whatever candidate or cause. Yes, it's 'trying' to influence elections; but 'trying' yields better results when you have a huge bankroll.

Euphonious Polemic
08-06-2011, 11:34 AM
I dunno, if China says they think our debt is unsafe while at the same time buying hundreds of billions of dollars of it at near zero interest rates, I tend to think their actions speak louder then words.

You're looking in the rearview mirror while driving. I would not count on China buying hundreds of billions of dollars of your debt in the future:

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s official Xinhua news agency said in a commentary.

Simplicio
08-06-2011, 11:38 AM
You're looking in the rearview mirror while driving. I would not count on China buying hundreds of billions of dollars of your debt in the future:

I would. US debt remains the safest investment in the world in the eyes of the market, as demonstrated by its low interest rates. And China continues to want to keeps its currency artificially low to feed exports.

Its also worth noticing that we've been asking China to buy less of our debt for most of the last decade, because its keeping the Yuan high relative to the dollar. Its not like they're doing us some awesome favor by buying it. Again, demand for US debt is high, we wouldn't have problems selling it even if the Chinese reduced the amount they purchased.

China Guy
08-06-2011, 11:38 AM
Reading Slander and Poop's press releases is really starting to tick me off. It appears, upon reading, to be a critique of government inefficiency and ineffectiveness, which is all very well, but that's not what they're about, its not their job to make such judgments. Who asked them to? And by what right or credential do they claim expertise?

And in the area of expertise they are supposedly trustworthy, they have shown themselves to be either bumbling incompetent or corrupt. So why should anyone give a rat's about what they think about our government? I think the rating agencies were fraudulently guilty in the run up to the great reset.

That said, they are pretending to do their jobs again now. And political risk is a big factor in a sovereign debt rating. Without apportioning blame, the US has shown that government is gridlocked and unable to effectively address the current economic challenges. Be clear, it's the political gridlock and not the level of debt that caused the downgrade.

Not hard to understand.

That said, the real bitch is that ratings are all predicated on the US being AAA. Theoretically at least, you can't have corporate debt rated higher than sovereign debt. Implying that GE and Microsoft now are AA+.

It's also implicity, that since US is global fiat money, the only major debt market of sufficient liquidity and investment timeframe, and the biggest economy, rates other sovereign ratings as being equal or lessor than US sovereign ratings.

At least moody's and Fitch (although Fitch is much less important) still rate the US as AAA. Gives markets and risk managers wiggle room.

Johnny L.A.
08-06-2011, 11:38 AM
I don't really see any reason to hijack this thread.

Not trying to hijack the thread. But we are dependent on foreign loans. Given that lowering the credit rating might very well increase interest rates, and given that China is a huge investor, the possibility is there for China to promote or oppose one candidate or another through their corporate proxies by putting out more ads for their position than their opponents do.

BDBoop
08-06-2011, 11:44 AM
Might be helpful.

http://transcripts.cnn.com/TRANSCRIPTS/1108/05/acd.01.html

COOPER: Why did S&P downgrade the United States' credit rating today?

CHAMBERS: Well, I think there were two reasons.

The first reason is the one that you have outlined, being our view of the political settings in the United States have been altered. We have taken them down a notch, the rating down a notch. The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations, the U.S. government getting to the last day before they had cash management problems.

There are very few governments that separate the budget process from the debt authorization process. And we also think more broadly that this debate has shown that although we do have an agreement that will and we do believe will deliver at least $2.1 trillion of savings over the next decade, it is going to be difficult to get beyond that at least in the near term. And you do need to get beyond that to get to a point where the debt-to-GDP ratio is going to stabilize.

Euphonious Polemic
08-06-2011, 11:59 AM
I would. US debt remains the safest investment in the world in the eyes of the market, as demonstrated by its low interest rates. And China continues to want to keeps its currency artificially low to feed exports.


Try looking at the evidence instead of your feelings:

“International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” Xinhua said.

In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the de facto global reserve currency.

But I don't imagine your average Tea Partier understands even an iota of what that would imply.

Whack-a-Mole
08-06-2011, 11:59 AM
That was your plan? Reduce unemployment and fix healthcare? No need for further details, that's good enough for me.

Why didn't I think of that? Get President Obama on the phone, he'll want to hear this. Problem solved, I can feel the debt evaporating as I type this!

If your plan amounted to "spend less" then the detail I provided is commensurate with that.

Are we to have a thread on methods to reduce unemployment and save healthcare?

gonzomax
08-06-2011, 12:02 PM
S & P also said that the decision did not address S.S,, Medicare or allow for additional revenue. Since many rightys have signed a pledge to no raise in taxes, nothing will get better.

The Other Waldo Pepper
08-06-2011, 12:09 PM
In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the de facto global reserve currency.

But I don't imagine your average Tea Partier understands even an iota of what that would imply.

Starve the beast?

gonzomax
08-06-2011, 12:16 PM
The Repubs are playing a dangerous game to defeat Obama. They are putting the country at risk to play political games. The world looks at us like an ungovernable mess . They were amazed that the Repubs would take the debt ceiling to the limit like they did.
What would they do if they had presidency, House and Senate? Bush would be the good old days.

Simplicio
08-06-2011, 12:23 PM
Try looking at the evidence instead of your feelings:

Umm, low interest rates are not "my emotions". They're far more concrete evidence then the diplomatic tit-for-tat statements of Chinese officials.



In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the de facto global reserve currency.

Except they're not acting like they're actually considering it. They're just saying they're considering it. Just as they did the last six times they've "considered it". China is far more addicted to a low value Yuan then the US is to selling China treasury bonds.

I_Know_Nothing
08-06-2011, 12:39 PM
Really?? Do you really think everybody who styles himself as Left Of Center think that the national debt is paid with Monopoly money? Do you think The Left (tm) has absolutely no understanding whatsoever of economics? That they're a bunch of overage, tied-dyed, granola-eating hippies living in communes and listening to the Grateful Dead?

I do.


Um...nobody likes to be a stereotype.

initech
08-06-2011, 12:42 PM
At least now we know where you're coming from with the above comment - straight out of left field with no gloves.:rolleyes:

Whoosh. Also, I don't really think the downgrade could've been avoided if Obama had slipped S&P a ten dollar bill. Just to avoid confusion. :)

The Other Waldo Pepper
08-06-2011, 12:42 PM
Um...nobody likes to be a stereotype.

Hey, that's a stereotype!

The_Peyote_Coyote
08-06-2011, 01:02 PM
The Repubs are playing a dangerous game to defeat Obama. They are putting the country at risk to play political games. The world looks at us like an ungovernable mess . They were amazed that the Repubs would take the debt ceiling to the limit like they did.
What would they do if they had presidency, House and Senate? Bush would be the good old days. Posted by Gonzomax.

I would imagine:
Unlimited defense spending
Privatization of Social Security per Shrub's original attempt to do this
Medicare replaced by a voucher system that benefits insurance companies
Deep, deep cuts to Medicaid
Religious persecution of Muslims and an attempt to limit the First Amendment to Christians only
Deep cuts to Planned Parenthood
Continuation of the War on Drugs

Stratocaster
08-06-2011, 01:08 PM
If your plan amounted to "spend less" then the detail I provided is commensurate with that.

Are we to have a thread on methods to reduce unemployment and save healthcare?I didn't offer a plan. I was commenting on the lack of one. And I think you should see if you can get your "just reduce unemployment and fix healthcare to eliminate the debt" plan onto this program (http://www.youtube.com/watch?v=tNfGyIW7aHM), it will be be perfect, no need for a new thread. :D

yorick73
08-06-2011, 01:34 PM
Again, my point is that revenues exceeded outlays. In my example total gov't revenues exceeded outlays while total debt still went up. We can debate whether or not that should "count" as a surplus afterwords, but do you agree that it is the case? If not, can you point out the flaw in my example?

If revenues exceed outlays then debt does not go up. The government borrowed money from the SS trust fund and counts that money as income. It is not income. It is money borrowed from a trust fund that must be paid back. It is nothing more than an accounting trick. The ONLY number you need to know is the national debt. If the national debt increases over a particular year then the government spent more than it collected in revenue. It is that simple.

Simplicio
08-06-2011, 01:36 PM
If revenues exceed outlays then debt does not go up. The government borrowed money from the SS trust fund and counts that money as income. It is not income. It is money borrowed from a trust fund that must be paid back. It is nothing more than an accounting trick. The ONLY number you need to know is the national debt. If the national debt increases over a particular year then the government spent more than it collected in revenue. It is that simple.

Then what is the flaw in my example?

The SS Trust fund is funded by a tax. That tax is indeed income for the gov't.

Euphonious Polemic
08-06-2011, 01:57 PM
Except they're not acting like they're actually considering it. They're just saying they're considering it. Just as they did the last six times they've "considered it". China is far more addicted to a low value Yuan then the US is to selling China treasury bonds.

I suppose then you'll have no problem finding six quotes from the past wherein China says: "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option"

Or

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,”

I guess these six times in the past also coincide with a downgrade to the rating of the US from AAA to AA plus, so it's just the same old news all over again. Have I got that right?

yorick73
08-06-2011, 02:03 PM
Then what is the flaw in my example?

The SS Trust fund is funded by a tax. That tax is indeed income for the gov't.

Your flaw is that, just like debt incurred from borrowing from China, that money has to be paid back at some point. When that debt comes due, just like when our other debts come due, it must be paid. But the money is not there anymore...it has been spent. So, that money was borrowed and a debt was incurred. Whether that debt is to China or to our own trust fund the result is identical. This is the equivalent of getting a paycheck but putting all your expenses on a credit card and calling your paycheck a surplus.

I_Know_Nothing
08-06-2011, 02:09 PM
Hey, that's a stereotype!

My screen name is self refuting also. I guess its a habit.

Simplicio
08-06-2011, 02:26 PM
Your flaw is that, just like debt incurred from borrowing from China, that money has to be paid back at some point. When that debt comes due, just like when our other debts come due, it must be paid. But the money is not there anymore...it has been spent. So, that money was borrowed and a debt was incurred. Whether that debt is to China or to our own trust fund the result is identical. This is the equivalent of getting a paycheck but putting all your expenses on a credit card and calling your paycheck a surplus.

The difference is that when we borrow from China, we're borrowing from Chinese revenue streams. The money borrowed isn't income for us, its debt. When we borrow from SS, we're borrowing from one gov't revenue stream and putting it in another account. The money was still part of gov't revenues, people paid payroll taxes, it just went to the General Fund instead of the SS payouts for that year. In the future, the General Fund has an obligation to reverse this and pay into the SS fund, but in that case, again, the money that people pay in income tax but that in turn is used to pay for SS will still be gov't revenue. It won't go to some third party.

My wife and I put open seperate accounts to put our pay-checks, and agree that I pay our utilities and she pays the rent. The first month there's a big connection fee for starting the utilities so I come up short, so I take the money out of her account to make up the difference, and tell her I'll put the money back after my next paycheck. Our family isn't "in debt", our total revenues from our paychecks still exceeded our outlays for paying rent/utilites. We're still running a "surplus", even if we now have some "intrafamilial debt"


Again, this is just arithmetic. My previous example (post #59) had a case where revenue exceeded outlays, but the total debt increased. You claim this is impossible. But then there must be a mistake with my example. So where exactly is that mistake? Address the example specifically, where did I screw up my math, because to me it appears that what you claim is impossible is in fact pretty easy to do.

yorick73
08-06-2011, 02:51 PM
The difference is that when we borrow from China, we're borrowing from Chinese revenue streams. The money borrowed isn't income for us, its debt. When we borrow from SS, we're borrowing from one gov't revenue stream and putting it in another account. The money was still part of gov't revenues, people paid payroll taxes, it just went to the General Fund instead of the SS payouts for that year. In the future, the General Fund has an obligation to reverse this and pay into the SS fund, but in that case, again, the money that people pay in income tax but that in turn is used to pay for SS will still be gov't revenue. It won't go to some third party.

The third party is the retired person who is collecting social security. Any surplus the SS fund has is converted into government securities. When the fund can no longer pay out it will need to cash in those securities. Unless the government is running a surplus in the general fund it will have to borrow money from China to repay that debt. So, in the long run, intragovernmental debt becomes sovereign debt. Just like money owed to China the income will have to come from taxpayers. Hence, it is very much a real debt.

My wife and I put open seperate accounts to put our pay-checks, and agree that I pay our utilities and she pays the rent. The first month there's a big connection fee for starting the utilities so I come up short, so I take the money out of her account to make up the difference, and tell her I'll put the money back after my next paycheck. Our family isn't "in debt", our total revenues from our paychecks still exceeded our outlays for paying rent/utilites. We're still running a "surplus", even if we now have some "intrafamilial debt"

Your example is flawed. A better example is that your wife pays the rent and any additional money in her account is transferred to your account. You give her an IOU for the borrowed amount. She fully expects to be paid back so, on her books, she claims that the IOUs are money. You, on the other hand, claim that you are running a surplus because your wife's money is now in your account.


Again, this is just arithmetic. My previous example (post #59) had a case where revenue exceeded outlays, but the total debt increased. You claim this is impossible. But then there must be a mistake with my example. So where exactly is that mistake? Address the example specifically, where did I screw up my math, because to me it appears that what you claim is impossible is in fact pretty easy to do.

Of course it is impossible. As I have explained, the flaw in your logic is that you actually consider intragovernmental debt and public debt to be two separate things. If you add them together you get the national debt. In your example, the general fund now owes the SS fund 200 billion yet pays down 100 billion of public debt. In your mind the 200 billion owed back to the SS fund doesn't count, but the 100 billion paid to reduce public debt does count. I think you are twisting yourself like a pretzel to find a surplus when it is clear from the national debt figures that the exact opposite is true.

Der Trihs
08-06-2011, 03:02 PM
I think you've proved Rune's point. He (she?) never said both sides were equally to blame. She (he?) said that bickering and finger-pointing was a large part of the problem. And you responded how? By ignoring the numbers and jumping up to make sure we blame the Republicans.

For the record, I don't think you're wrong about the Republicans. But realistically, how does blaming them solve our problems? It makes a solution theoretically possible. Instead of the Obama strategy of pretending that people who hate you and want you to fail at any cost have some sort of interest in compromise or in the nation's welfare. The first step to solving the problem is acknowledging that the Republicans are a central part of it. Any solution is going to require working around or overcoming the Republicans; if the rest of us won't or can't do so, then there's no solution at all and we're all screwed. We'll just have to watch as they drive the country to economic disaster.

AndyLee
08-06-2011, 03:04 PM
So how long till the credit card companies use this as an excuse to up my credit rate?

Simplicio
08-06-2011, 03:10 PM
The third party is the retired person who is collecting social security. Any surplus the SS fund has is converted into government securities. When the fund can no longer pay out it will need to cash in those securities. Unless the government is running a surplus in the general fund it will have to borrow money from China to repay that debt. So, in the long run, intragovernmental debt becomes sovereign debt. Just like money owed to China the income will have to come from taxpayers. Hence, it is very much a real debt.

You could make that point for pretty much any future obligation of the government. Even if the SS fund didn't exist, we'd still need to meet future SS obligations with future tax revenue or borrowing. Deciding that 1999 is they year we're going to count some fraction of that as "debt" is silly, it will be debt when and if we need to borrow to actually raise the money to pay for Social Security (or whatever other program).

But in anycase, thats tangential to my main point, which is that revenues exceeded outlays in 1999.

Your example is flawed. A better example is that your wife pays the rent and any additional money in her account is transferred to your account. You give her an IOU for the borrowed amount. She fully expects to be paid back so, on her books, she claims that the IOUs are money. You, on the other hand, claim that you are running a surplus because your wife's money is now in your account.

But again, the point of my example is that while I may be in debt, our family revenues exceeded our outlays. Our total family debt remained zero.

Of course it is impossible. As I have explained, the flaw in your logic is that you actually consider intragovernmental debt and public debt to be two separate things. If you add them together you get the national debt. In your example, the general fund now owes the SS fund 200 billion yet pays down 100 billion of public debt. In your mind the 200 billion owed back to the SS fund doesn't count, but the 100 billion paid to reduce public debt does count.

But again, the revenues exceed outlays. We can debate what "counts", but my point is just the arithmetic. It is possible for revenues exceed outlays and yet for the total debt to increase, as my example shows.

Jonathan Chance
08-06-2011, 06:13 PM
Lonesome Polecat, I would appreciate your presence in my latest thread. (http://boards.straightdope.com/sdmb/showthread.php?p=14109840#post14109840)

LonesomePolecat
08-06-2011, 07:00 PM
Lonesome Polecat, I would appreciate your presence in my latest thread. (http://boards.straightdope.com/sdmb/showthread.php?p=14109840#post14109840) Nah. You can have your two minutes hate without me.

yorick73
08-06-2011, 08:42 PM
You could make that point for pretty much any future obligation of the government. Even if the SS fund didn't exist, we'd still need to meet future SS obligations with future tax revenue or borrowing. Deciding that 1999 is they year we're going to count some fraction of that as "debt" is silly, it will be debt when and if we need to borrow to actually raise the money to pay for Social Security (or whatever other program).

But in anycase, thats tangential to my main point, which is that revenues exceeded outlays in 1999.



But again, the point of my example is that while I may be in debt, our family revenues exceeded our outlays. Our total family debt remained zero.



But again, the revenues exceed outlays. We can debate what "counts", but my point is just the arithmetic. It is possible for revenues exceed outlays and yet for the total debt to increase, as my example shows.

Correct me if I'm wrong but I think you are trying to say that revenues exceeded outlays. :) The general fund ran a deficit and SS as well as other trust funds ran a surplus. The surplus from the trust funds was transferred to the general fund and spent.

If this money borrowed from the trust funds was all being used to pay down public debt we would call that a balanced budget. The intragovernmental debt increase was greater than the public debt decrease. So, the money was spent elsewhere. Combine this with the fact that the national debt increased and there is no credible way you can claim a surplus existed. This is an accounting gimmick created by moving money around.

Note that this is not a criticism of the Clinton administration. The government has been doing this for quite some time in order to hide the true cost of government. There is no question that the years we are arguing about are the closest we've come to a balanced budget in recent history.

Whack-a-Mole
08-06-2011, 09:28 PM
I didn't offer a plan. I was commenting on the lack of one. And I think you should see if you can get your "just reduce unemployment and fix healthcare to eliminate the debt" plan onto this program (http://www.youtube.com/watch?v=tNfGyIW7aHM), it will be be perfect, no need for a new thread. :D

So, pointing out there are more fundamental underlying problems that need fixing is valueless unless I include a detailed plan that fixes all the county's woes based on that? :rolleyes:

Stratocaster
08-07-2011, 05:41 AM
So, pointing out there are more fundamental underlying problems that need fixing is valueless unless I include a detailed plan that fixes all the county's woes based on that? :rolleyes:Well, yes, as a plan to address the needs of Federal entitlement programs in order to help eradicate the debt problem, it's virtually valueless. Don't change how you framed your response. I commented on the lack of a strategy and you asserted you had provided one. You are now acting as if you just made an offhand comment about fundamentals.

No biggie--no one has these details as far as I can discern. So I reiterate:My question is an adult one that seems to be avoided by many: How will we do so? How will resolve our debt crisis, our downgrade, and not impact the beneficiaries of these entitlements, given the math we face? "But we have to" isn't helpful."Reduce unemployment and fix healthcare" isn't a terribly helpful answer to this. It's one notch better than saying, "we'll fix the economy and then the tax base will grow." Um, okay.

Simplicio
08-07-2011, 09:58 AM
Correct me if I'm wrong but I think you are trying to say that revenues exceeded outlays. :) The general fund ran a deficit and SS as well as other trust funds ran a surplus. The surplus from the trust funds was transferred to the general fund and spent.

So you agree then that revenues exceeded outlays? I stress it over and over again because again, I think thats pretty much what most people would define as a "surplus". Regardless of intragovernmental debt, if you totaled up all the money the gov't collected in 1999 in taxes and subtracted all the money the gov't spent, you end up with a positive number.

Monocracy
08-07-2011, 10:32 AM
But again, the revenues exceed outlays. We can debate what "counts", but my point is just the arithmetic. It is possible for revenues exceed outlays and yet for the total debt to increase, as my example shows.
We are debating what counts, that's the point. Social Security is a seperate, self contained, self-sufficient system which has nothing to do with the general fund. When we're discussing how well the government balances the budget, SS has no part in that. So SS should be considered a third party when discussing money that is borrowed from the fund.

But in any case, Clinton did a great job reducing the defecit to almost nothing. His last year in office, the deficit was only around $26 billion, which rounds to 0 when you measure it in 100s of billions.

Simplicio
08-07-2011, 10:42 AM
We are debating what counts, that's the point. Social Security is a seperate, self contained, self-sufficient system which has nothing to do with the general fund. When we're discussing how well the government balances the budget, SS has no part in that. So SS should be considered a third party when discussing money that is borrowed from the fund.

Get the Government out of my Medicare!!

But in anycase, if SS is a third party, then if SS runs a deficit, are those not "real" government deficits? Cause if we can do that, and the same applies to Medicare (whcih also has a dedicated tax and a Trust Fund) then you just "solved" the longterm deficit problem. Hooray!

But otherwise, it seems silly to say that SS surpluses don't "count" in the governments favor, but SS deficits count against it.

Monocracy
08-07-2011, 11:01 AM
But otherwise, it seems silly to say that SS surpluses don't "count" in the governments favor, but SS deficits count against it.

SS deficits don't count either. When it starts running a deficit, SS will cash in those IOUs it's been giving the general fund all these years. It will always be a seperate system from the general fund.

Simplicio
08-07-2011, 11:21 AM
SS deficits don't count either. When it starts running a deficit, SS will cash in those IOUs it's been giving the general fund all these years. It will always be a seperate system from the general fund.

When the fund runs out, will it still be separate? Much of projected future deficits come from Medicare running out its trust fund and then being obligated to spend far in excess to what its pay-roll tax takes in a few years. If you say those deficits aren't "real" gov't deficits, then the US is in pretty good financial shape.

I actually think the idea of giving safety net programs dedicated taxes and funding sources is a good one. But pretending that they're then somehow not government programs and shouldn't be counted in government revenue/expenditures is silly, and leads to obviously false conclusions.

Lobohan
08-07-2011, 11:35 AM
I skimmed the thread, and I didn't see if anyone had posted this:

Compared with previous projections, our revised base case scenario now
assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012,
remain in place. We have changed our assumption on this because the majority
of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act. (http://www.ft.com/intl/cms/af2c4fac-bfc2-11e0-90d5-00144feabdc0.pdf)Emphasis mine. Oh noes!

Whack-a-Mole
08-07-2011, 11:47 AM
Well, yes, as a plan to address the needs of Federal entitlement programs in order to help eradicate the debt problem, it's virtually valueless. Don't change how you framed your response. I commented on the lack of a strategy and you asserted you had provided one. You are now acting as if you just made an offhand comment about fundamentals.

No biggie--no one has these details as far as I can discern. So I reiterate:"Reduce unemployment and fix healthcare" isn't a terribly helpful answer to this. It's one notch better than saying, "we'll fix the economy and then the tax base will grow." Um, okay.

When the alternative being given here is "cut spending" (which I note is thin on details as well...what spending and how much?) is given it is fine to point out that such an approach does not address the underlying problems. The real fix is to sort out the jobs problem and to reign in spiraling medical costs.

There is nothing wrong with pointing that out and a detailed plan for doing it is not necessary to make that observation.

Nor do I think this thread is the place for laying out a detailed plan. No question such a fix is not easy and certainly the best way to go about it is highly debatable. If you want to start another thread that explores such details then go for it.

yorick73
08-07-2011, 12:22 PM
So you agree then that revenues exceeded outlays? I stress it over and over again because again, I think thats pretty much what most people would define as a "surplus". Regardless of intragovernmental debt, if you totaled up all the money the gov't collected in 1999 in taxes and subtracted all the money the gov't spent, you end up with a positive number.

No...for the fourth time. IF revenues exceeded outlays (on and off budget), THEN the national debt would not have increased. The money borrowed from the trust funds was spent...not saved. A portion was used to pay down public debt but the intragovernmental debt and the national debt both increased more than the public debt decreased. Hence, more was spent than was received. Or, if you prefer, outlays exceeded revenues.

gonzomax
08-07-2011, 12:35 PM
Rebuilding the infrastructure is not intended as a waste of money. It is honest work that needs to be done. One "expert' on TV today, said putting a bridge rebuilding off for 2 years results in 5 times the cost.
Putting people back to work will not be all deficits. The workers pay taxes. They increase demand . The salvation of the economy is to get people back to work one way or the other. If we just continue to cut, there is no rebound mechanism. it is like giving up and saying we can do nothing. Cutting results in needs for more cuts. What kind of America do we visualize . A small. weak one with low taxes and no programs for anybody who isn't rich. Or do we face up to the problems and level the p-laying field so all people get benefit ?

rocking chair
08-07-2011, 12:49 PM
I skimmed the thread, and I didn't see if anyone had posted this:

Emphasis mine. Oh noes!

it does explain why the white house was calling for, asking people to call congress for a balanced plan, with revenue and cuts. going for the "big" deal.

boehner walked away. they went with the cuts only plan.

the only way the white house could have been any more obvious is if they said flat out: "s&p will downgrade us if you don't sign on to this."

i'll also bet that it was said behind the closed doors. perhaps not in the exact words above, however, something close to it.

Monocracy
08-07-2011, 01:30 PM
When the fund runs out, will it still be separate? Much of projected future deficits come from Medicare running out its trust fund and then being obligated to spend far in excess to what its pay-roll tax takes in a few years. If you say those deficits aren't "real" gov't deficits, then the US is in pretty good financial shape.

I actually think the idea of giving safety net programs dedicated taxes and funding sources is a good one. But pretending that they're then somehow not government programs and shouldn't be counted in government revenue/expenditures is silly, and leads to obviously false conclusions.
I think combining all government revenues and expenditures is what leads to false conclusions. For example, if a corporation owns a chain of restaurants which loses $2 million a year and a chain of supermarkets that makes $5 million a year, and you ask how the restaurant chain is doing, it doesn't help to say that the corporation made $3 million. You need to look at the figures for the restaurants alone.

Likewise, when you add in SS's $200 billion surplus to the federal deficit, you're not really seeing how well the US is doing at balancing the budget. You need to look at the figures for the general fund alone.

gonzomax
08-07-2011, 05:32 PM
S&P says there is a one in 3 chance that they will downgrade it further. Now lets get the rating agency leaders in jail for their part in the mortgage theft. They feel pretty confident that they can shake up the world markets .

Martin Hyde
08-07-2011, 06:22 PM
S&P says there is a one in 3 chance that they will downgrade it further. Now lets get the rating agency leaders in jail for their part in the mortgage theft. They feel pretty confident that they can shake up the world markets .

Yeah, the U.S. finding manufactured reasons to jail executives from S&P in response to this would inspire confidence in the U.S. in the market.

Confidence that we were turning into Russia, anyway...

gonzomax
08-07-2011, 11:17 PM
There are 3 ratings agencies. Only s&P has downgraded the US. They have threatened to do it again. Yet what about the others? If we are so bad, why don't they do it too?
Something is not quite right.

Dr. Drake
08-08-2011, 12:22 AM
There are 3 ratings agencies. Only s&P has downgraded the US. They have threatened to do it again. Yet what about the others? If we are so bad, why don't they do it too?
Something is not quite right.Agreed, but you don't know whether S&P is too low or the others are too high. (Or all three are too high, which seems unlikely.) Perhaps Moody's & Fitch have a vested interest in the status quo? Perhaps companies whose calculations rely on having the USA be the gold standard (so to speak) are reluctant to look to closely lest they have to re-calculate every single rating from scratch?

gonzomax
08-08-2011, 10:56 AM
I have a slight suspicion that downgrading the US credit was a tactic for S & P. If the government had intended to go after them for their terrible behavior in the mortgage fiasco, they can not now. It would look like retribution for the downgrade instead of doing justice.
They AAA rated subprime mortgages for years. Those are definitely wrong. Now they are suddenly gifted with high ethical standards. They hid them well the last couple decades.

RTFirefly
08-08-2011, 11:28 AM
Looks like the reaction of the markets to the S&P's downgrade is to...treat U.S. treasury bonds as even more desirable than ever! (http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/)

As I write this, the yield on 10-year Treasuries is down to an astonishingly low 2.37%. And the U.S. can borrow money for 5 years at less than the inflation rate - inflation-indexed 5-year Treasuries have a current yield of -0.75%.

The U.S. government can borrow money for cheaper than free!!

If the bozos that run our government (and I'm looking at the GOP; most Dems would go along with this in a heartbeat) had a clue, they'd be borrowing as much money as we could use to sink into infrastructure projects NOW, while both capital and labor are as cheap and freely available as they are likely to ever be - unless the economy gets even worse, of course.

Because, you know, if someone paid you to borrow money, rather than the other way around, you'd borrow if you could make intelligent use of the money. Hell, you'd probably borrow just to invest in the stock market.

gonzomax
08-08-2011, 11:34 AM
The DOW is down 340 right now. The stockmarket no longer is a reflection of the economy. It is a gambling casino with the movers being high speed computers that buy and sell millions of shares in fractions of a second. They also buy and sell across the globe hunting for the smallest bit of info that results in huge trades.
Since Obama came in ,the market doubled. In the past we would think that portended a good financial future. Not any more.

Kearsen
08-08-2011, 12:08 PM
According to the S + P, who actually did the downgrading (http://www.cnn.com/2011/BUSINESS/08/05/global.economy.cnn/):



In other words, the Republican's rhetoric and willingness to use our debt as a bargaining chip has resulted in our credit downgrading.

Your point of view lonesomePolecat, that Democrats' intransigence on spending, a view that does not reflect the facts, is linked to our credit issues is completely wrong. The linchpin to all these relationships is the Republicans and their desire to make cuts that will never happen, pass legislation that will never leave the House, and threaten our economic standing to make a symbolic point. They are avoiding governance and making noise. Real leaders raise taxes when its needed and make 4 trillion dollars worth of cuts. Pseudo leaders and politicians with the mentality of internet trolls pass Balanced Budget legislation when default is a real possibility.

I don't parse that quote the way you did, not by a long shot. To me it says, the budget cuts/taxes aren't enough to ensure a logical fiscal recovery.

Jas09
08-08-2011, 12:25 PM
Looks like the reaction of the markets to the S&P's downgrade is to...treat U.S. treasury bonds as even more desirable than ever! (http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/)

As I write this, the yield on 10-year Treasuries is down to an astonishingly low 2.37%. And the U.S. can borrow money for 5 years at less than the inflation rate - inflation-indexed 5-year Treasuries have a current yield of -0.75%.

The U.S. government can borrow money for cheaper than free!!This is the laughable part of this whole deal (well almost as laughable as the fact that the SS Trust Fund debate somehow showed up in this thread too...). S&P was shockingly late in dropping the ratings on Ireland, Spain, and Iceland. Now, when they are proactive about the ratings for the US, the markets don't give two shits. S&P's ratings are pretty much worthless. I might go so far as to say that debt ratings for sovereign governments in general are worthless.

US Bonds are still the safest investment in the world, just like they were last week. Risk is relative - compare UK bond prices (AAA according to S&P) with US ones...

I don't even thing the equity market movements have as much to do with the S&P downgrade as they do with the European debt issues, and the general economic outlook (sluggish GDP growth and recession fears in particular).

gonzomax
08-08-2011, 01:11 PM
From the S&P 8 page report
Compared with previous projections, our revised base scenario, now assumes the tax cuts of 2001 and 2003 ,due to expire in 2012 , will remain in place. We have changed our assumptions on this because the majority of republicans continue to resist any measure that would raise taxes.
Perhaps our conservatives can figure it out. but i doubt it.