Of course, complicating all this is that a lot of people simply don’t understand the consequences, or don’t believe in them.
Not that I blame them; it is somewhat more complicated than the usual financial transaction, given the global nature of the markets and all the factors involved. Thus a lot of it is trusting the word of those in power in some way, so I can see skepticism arising.
Toss in the fact that most of those people who say they are willing to not raise the debt limit even in the face of significant cuts will magically have foxhole conversions when it happens only complicates matters.
This is another issue where the American electorate is, quite simply, irrational. Each subgroup considers the others to be expendable and none of them have enough clout to pull it off alone. So everyone will pay the price and that will make them find their love for big government within a week or two of real cutting.
Not sure what you mean. Just preliminary discussions. If the previous budget threat from earlier this year is any indication, for that it was defining non-essential and essential services. It also meant separating employees into the two groups to determine would would be laid off (non-essential - no work at all) and those who would just keep things oiled and greased (essential, working no more than two hours a day). In the case of not raising the debt ceiling, it may be more of the same but with a caveat that essential services would be even further restricted.
Keep in mind China has already upped the ante by divesting itself of short-term US securities, is pondering the long-term US securities it still holds, and is putting pressure across the board that the debt ceiling must be raised.
It’s because people realize deep down that no matter how we cut the deficit far enough to stop the growth of the debt, we’re going to be plunging America into chaos, which may end in rioting and rebellion.
There’s no way around it. You must cut social security, you must cut welfare, you must cut medicare, or the debt will continue to rise. Even if you also cut the military and raise taxes for the rich, you must do this.
The word you’re looking for is “Quicksand”.
Actually, the Bush tax cuts along with the Iraq fiasco, have created the current excessive debt issue. Social Security is funded separately and can sustain itself if the current cap is removed completely (meaning the rich pat their fair share).
Most of our current deficit is the result of the recession. Low economic activity plus high demand for government services (see unemployment/food stamp/medicaid/etc.). In a normal economy, our deficit would be closer to 500 billion.
The Bush tax cuts reduce revenues by about 2.5% of GDP.
The wars in Iraq and Afghanistan are worth 1% of GDP
There, we’ve just balanced the budget.
The problem, as you correctly note, is that medicare is going to be a problem some day (social security is entirely manageable because we can peg social security payments to grow at exactly the same rate as the economy without short changing anyone or increasing the relative burden on society, assuming we have reasonable population growth rates). We cannot continue to have the largest line item on our budget growing at significantly higher rates than our economy in general. We have to stunt the growth rate.
Also reinstating tax cuts for the lower income brackets gets very hard unless you are in a boom economy and who the heck wants to take away the punch bowl just when everyone starts having fun.
The Bush tax cuts are indeed slated to take the lion’s share, or close to it, of our budget deficit in the future. If not now.
And 500 billion, right now, would still be monstrous.
As it stands we’re looking at a deficit of 1.4 trillion.
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/23/AR2010072304101.html
I don’t see how we’re going to get the deficit down without some major crisis-inducing pain, what with the Republicans not willing to raise taxes for the rich or cut the military. They’re 100% united in Congress, and in fact they want lower taxes for the rich and for corporations.
So the reality of it is that unless the Democrats in the Senate cave in again, we’re going to slam into the debt limit at full speed. Which frankly I am not fretting about, because all it will mean is the exchange rates will reverse and American workers will wind up doing jobs exporting stuff to China and Brazil. Now you guys might not like the idea of horrible factory work coming back here but we’ll also be getting back legions of programming, service and textile jobs, too. All of which will be quite welcome to all the millions of unemployed teenagers and workers who are languishing without jobs now. Especially with the benefit of our overtime and workplace safety laws, which China does not and never will have.
Bring on the debt limit and the dollar crash. China’s gonna have 700 million middle class by 2020; that’s one hell of an export market that will finally be open to American workers.
Eric Cantor is refusing to go any further in discussions.
What does this mean for the economic health of the country… indeed, the world?
Ten GOP sens. vow no debt-ceiling hike without balanced-budget amendment
They really want default and all the economic repercussions that portends. At what point will their corporate handlers jerk their chain?
As I said in another related thread I started, some thing that said “corporate handlers” will just juggle their investments so they’ll make money off the crash(es), and thus not do anything at all.
I’m a little skeptical of this, but it’s out there.
The Republicans may be betting that with unlimited dollars for swaying voters in the next election thanks to Citizens United, they can persuade voters that the resulting economic crash is all Obama’s fault. Sadly, they may be right.
Where would they get said money? From the companies whose stock prices they just cratered?
Sure, there’s plenty of crazy-stupid right wing corporate types out there.
Devil’s advocate (that I just thought of): why would they do so? In a post-crash America, would such be at all a good investment of their money?
To balance that, a (partisan) blog quote I posted in my other thread about one theory of what might happened, which involves sufficient Congresspeople not being convinced of the stakes behind default:
It would be a terrible investment. Hence, “crazy/stupid.” But they may be thinking “We need to take a one-time economic hit to get the power of the federal government under control” not realizing that one time hit may sink them for all time. Hence, “crazy/stupid.” Of course, all our fortunes will be destroyed along with theirs, but like those conservatives like to say, “Freedom ain’t free” or to put it in non-moron, “Idiots with money are still idiots.”
The Republicans will cave. They have basically said as much to wall street and the chamber of commerce. If the Democrats fold again when the Republicans have shown everyone how weak their hand is, then Democrats might as well pack it up and build a new party around Kucinich or Nader.
:
No you don’t
No you don’t
Bingo.
Not if you get medicare costs under control.
I fear the Dems will fold.
That means denying health care coverage to a LOT of seniors. A HELL of a lot. Even the Tea Partiers don’t want anyone touching their Medicare. People even oppose cuts to Medicaid.
Republicans are already begging for mercy after touching that rail.
BTW how much money do you expect to save by completely eliminating or privatizing Medicare?
The key will be to getting the health care system under control. It’s starting to look like a racket, just like the financial industry. Doctors order expensive tests they don’t really need cause they get a cut of the money. Big Pharma comes out with new drugs that are no more effective than the old, generic drugs, but which they can charge new drug prices for, and prolly slipping money to doctors for prescribing them. HMOs have turned into middlemen that just mark up the cost of health care, they’re doing damned little to control the cost except deny patients coverage. It’s freaking stupid, but our wonderful capitalist system rewards certain kinds of stupidity, so guess what? It’s freaking unstoppable. Just like the finance industry. (For the record, our government still hasn’t bothered to enact legislation or regulations that will prevent a recurrence of the Great Recession. Just so ya know.)