Are You Scared Yet? Read this!

[PoliticalChic]

1. For seventy-two of the last hundred years, the government has spent more than it has taken in.
2. And over the last fifty years, the government has run deficits forty-four of those years: that’s 88%!
3. Over the last ten years, deficits in nine. Historical Tables | The White House

4. There seem to be only two ironclad rules of government: Rule no.1: Always try to expand;
Rule no. 2: see Rule no. 1. Beck, Balfe, “Broke,” p. 115

5. How does the Obama fiscal policy impact our future? Well, debt is significant for several reasons..

a. “In 2010, these interest payments (net of some interest income) will claim $209 billion, or about 6 percent of the budget.” Policy Basics: Where Do Our Federal Tax Dollars Go? — Center on Budget and Policy Priorities

b. Based on future ability to pay its debts, each nation is give a rating. “The big three agencies are Fitch, Moody's and Standard & Poors. What they do is assess how likely a borrower is to be able to repay its debts and help those trading debt contracts in the secondary market.” Debt crisis: how Fitch, Moody's and S&P rate each country's credit rating. Visualised - with a spreadsheet. UPDATED | World news | guardian.co.uk.

c. The costs of borrowing are contingent on the rating. Currently the US is listed as AAA, Stable…and this keeps the interest costs of borrowing low. Recently, for example, Greece was downgraded to BB+, Negative, and the cost of its debt rose to over three time that of the US.

d. Moody’s warned that if the U.S. credit rating was at risk if economic growth was slower than the Obama administration projects. US credit rating at risk, Moody's warns - Telegraph And this is an administration fraught with bogus calculations!

e. JUPITER, FL--(Marketwire - May 10, 2010) - Weiss Ratings, an independent rating agency covering the nation's financial institutions, issued a challenge today to Standard & Poor's, Moody's and Fitch: To downgrade the long-term sovereign debt of the United States in order to help protect investors and prod Washington to fix its finances. Weiss Ratings Challenges S&P, Moody's and Fitch to Downgrade Long-Term U.S. Debt

6. The International Monetary Fund, the IMF, recent report on “Gross Financial Needs,” figures out how much money each nation needs to raise each year based on deficit, and maturity length of existing bonds; i.e. dependent on issuing new debt. The US is second worst of all advanced economies, needing 32.2% of GDP just to keep everything going [table 6, page 23]! Compare to the nations we read about in trouble: Greece is 21.5%, Portugal 21.8%, and Spain 20.7%. http://www.imf.org/external/pubs/ft/fm/2010/fm1001.pdf


How about some 'hope and change'?

 

[hortysir]

To whom do we owe this money?
What happens if we default?

 

[loosecannon]

The International Monetary Fund, the IMF, recent report on “Gross Financial Needs,” figures out how much money each nation needs to raise each year based on deficit, and maturity length of existing bonds; i.e. dependent on issuing new debt. The US is second worst of all advanced economies, needing 32.2% of GDP just to keep everything going

That is primarily true because we have annual deficits now in the 1.4 trillion range. If we cut the deficit to pre 2009 levels we would be in far better shape than Japan, Greece, Ireland.

 

[william the wie]

The reappointment of Bernancke and rewarding Geithner's perceived incompetence as NYC Fed president with the secretary of treasury slot is a major league pr problem. The growing consensus (which may be 180 out from reality) is as follows:

Rescuing the relatively small Bear Sterns while letting Lehman fail was bass-ackwards. (This could be true but I have no idea how it could be proven.)

That the housing boom was primarily a payoff to Democratic politicians. (I have trouble understanding this argument in particular. The Democratic take over of congress came after the boom and this part of the argument does not reach the level of good nonsense in my opinion but it is still widely held because the bust happened mostly in Democratic precincts.)

Until those concerns are addressed the budget deficit will keep causing greater problems.

 

[PoliticalChic]

The International Monetary Fund, the IMF, recent report on “Gross Financial Needs,” figures out how much money each nation needs to raise each year based on deficit, and maturity length of existing bonds; i.e. dependent on issuing new debt. The US is second worst of all advanced economies, needing 32.2% of GDP just to keep everything going

That is primarily true because we have annual deficits now in the 1.4 trillion range. If we cut the deficit to pre 2009 levels we would be in far better shape than Japan, Greece, Ireland.

Alas, if only it were that simple...

The IMF report calculates the percent of GDP that each advance country willl need to cut from deficit in order to be at a sustainable level of debt in 2030. For the U.S., it’s 12% of GDP over the next 20 years. [table 1, page 60] That would be $85 billion per year, cut, with no increases in debt…You up for it?

 

[loosecannon]

Alas, if only it were that simple...

The IMF report calculates the percent of GDP that each advance country willl need to cut from deficit in order to be at a sustainable level of debt in 2030. For the U.S., it’s 12% of GDP over the next 20 years. [table 1, page 60] That would be $85 billion per year, cut, with no increases in debt…You up for it?

12% of $14.26 trillion is $1.7 trillion. So you are dividing that amount by 20 years. While your text seems to be saying 12% of GDP needs to extracted from the deficit every year, not just over a 20 year period esp since GDP is not static over 20 year spans.

And while I admit $1.7 trillion sounds about twice as high as I would expect $85 billion/year is far too small a number imo. Esp considering the liabilities shortfalls.

I think the IMF is saying $1.7 trillion /year. Because if we reduced our deficit $85 billion/year we would still have a trillion dollar annual deficit as far as the eye can see. Like for the next 40 years.

 

[loosecannon]

The reappointment of Bernancke and rewarding Geithner's perceived incompetence as NYC Fed president with the secretary of treasury slot is a major league pr problem. The growing consensus (which may be 180 out from reality) is as follows:

Rescuing the relatively small Bear Sterns while letting Lehman fail was bass-ackwards. (This could be true but I have no idea how it could be proven.)

That the housing boom was primarily a payoff to Democratic politicians. (I have trouble understanding this argument in particular. The Democratic take over of congress came after the boom and this part of the argument does not reach the level of good nonsense in my opinion but it is still widely held because the bust happened mostly in Democratic precincts.)

Until those concerns are addressed the budget deficit will keep causing greater problems.

You are saying the ratings agencies are responding to dissatisfaction with Benby and Geithner, as in a vote of no confidence in the form of a ratings downgrade?

 

[PoliticalChic]

The reappointment of Bernancke and rewarding Geithner's perceived incompetence as NYC Fed president with the secretary of treasury slot is a major league pr problem. The growing consensus (which may be 180 out from reality) is as follows:

Rescuing the relatively small Bear Sterns while letting Lehman fail was bass-ackwards. (This could be true but I have no idea how it could be proven.)

That the housing boom was primarily a payoff to Democratic politicians. (I have trouble understanding this argument in particular. The Democratic take over of congress came after the boom and this part of the argument does not reach the level of good nonsense in my opinion but it is still widely held because the bust happened mostly in Democratic precincts.)

Until those concerns are addressed the budget deficit will keep causing greater problems.

Sorry, Two-W, but the housing meltdown is a tale for another place and another time...This one is about the terrible position that our 'leaders' have put us in....and the prognosis for same...

But if that isn't enough of a headache, as you seem to wish to add the Democrat-provenanced-meltdown, how about I ante up the position the states have placed themselves in:

To get an idea of the characteristics of public fiscal calculations, take a look at state budgets. States, unlike federal, budgets, cannot run as deficits. “Virtually all states have balanced budget requirements, so they must take actions to close these deficits.” (State Budget Deficits for Fiscal Year 2004 are Huge and Growing, Revised 1/23/03)
So, what to do? Simple: conjecture a better world!

a. In 2008, states reported that their public-employee pensions were underfunded by a total of $438 billion. But independent estimates say the underfunding is closer to $3 trillion. Why? The states make up estimates of return at unbelievable levels: the median investment return factored in by state pensions is 8% a year! AEI - The Market Value of Public-Sector Pension Deficits

b. An example? “The official state estimate in underfunded pension liabilities to New Jersey’s public workers stands at $46 billion. It is one of the highest liabilities in the nation, averaging $5,200 per capita. The estimate is based on an assumed rate of return on pension assets of 8.25 percent –“
National Taxpayers Union - Overvalued and Underfunded: New Jersey?s Pension Time Bomb

c. Now, what happens if the state cannot pay the pensions? Taxpayers are legally obligated to make up any difference between what’s been promised and what can actually be paid.
Pension Pulse: Pension Woes May Deepen Financial Crisis


Scary enough yet?

 

[PoliticalChic]

Alas, if only it were that simple...

The IMF report calculates the percent of GDP that each advance country willl need to cut from deficit in order to be at a sustainable level of debt in 2030. For the U.S., it’s 12% of GDP over the next 20 years. [table 1, page 60] That would be $85 billion per year, cut, with no increases in debt…You up for it?

12% of $14.26 trillion is $1.7 trillion. So you are dividing that amount by 20 years. While your text seems to be saying 12% of GDP needs to extracted from GDP every year, not just over a 20 year period esp since GDP is not static over 20 year spans.

And while I admit $1.7 trillion sounds about twice as high as I would expect $85 billion/year is far too small a number imo. Esp considering the liabilities shortfalls.

I think the IMF is saying $1.7 trillion /year. Because if we reduced our deficit $85 billion/year we would still have a trillion dollar annual deficit as far as the eye can see. Like for the next 40 years.

1. You may check the report yourself; I gave you the link.

2. If you think that cutting off $85 b a year is chicken feed, see if you can recall the last time any amount was reduced.

3. There seem to be only two ironclad rules of government: Rule no.1: Always try to expand;
Rule no. 2: see Rule no. 1. Beck, Balfe, “Broke,” p. 115

4. Average Annual Spending Increases (excluding interest)
a. JFK 4.6%
b. LBJ 5.7%
c. Nixon 2.9%
d. Ford 2.7%
e. Carter 3.2%
f. Reagan 1.9%
g. BushI 2.0%
h. Clinton 1.9%
i. BushII 5.6%
Historical Tables | The White House
*all of these are increases...

 

[loosecannon]

Alas, if only it were that simple...

The IMF report calculates the percent of GDP that each advance country willl need to cut from deficit in order to be at a sustainable level of debt in 2030. For the U.S., it’s 12% of GDP over the next 20 years. [table 1, page 60] That would be $85 billion per year, cut, with no increases in debt…You up for it?

12% of $14.26 trillion is $1.7 trillion. So you are dividing that amount by 20 years. While your text seems to be saying 12% of GDP needs to extracted from GDP every year, not just over a 20 year period esp since GDP is not static over 20 year spans.

And while I admit $1.7 trillion sounds about twice as high as I would expect $85 billion/year is far too small a number imo. Esp considering the liabilities shortfalls.

I think the IMF is saying $1.7 trillion /year. Because if we reduced our deficit $85 billion/year we would still have a trillion dollar annual deficit as far as the eye can see. Like for the next 40 years.

1. You may check the report yourself; I gave you the link.

2. If you think that cutting off $85 b a year is chicken feed, see if you can recall the last time any amount was reduced.

3. There seem to be only two ironclad rules of government: Rule no.1: Always try to expand;
Rule no. 2: see Rule no. 1. Beck, Balfe, “Broke,” p. 115

4. Average Annual Spending Increases (excluding interest)
a. JFK 4.6%
b. LBJ 5.7%
c. Nixon 2.9%
d. Ford 2.7%
e. Carter 3.2%
f. Reagan 1.9%
g. BushI 2.0%
h. Clinton 1.9%
i. BushII 5.6%
Historical Tables | The White House
*all of these are increases...

I tried to open the PDF and my computer froze.

I am going by what you said: 12% of GDP reduced from the deficit either over 20 years or each year for 20 years.

If we only reduce the deficit $85 billion, then we will still have a trillion dollar annual deficit as far as the eye can see.

If we have to reduce the budget enough to produce a budget surplus of $85 billion/year then that is a whole lot closer to a $1.7 trillion annual cut in spending.

 

[PoliticalChic]

12% of $14.26 trillion is $1.7 trillion. So you are dividing that amount by 20 years. While your text seems to be saying 12% of GDP needs to extracted from GDP every year, not just over a 20 year period esp since GDP is not static over 20 year spans.

And while I admit $1.7 trillion sounds about twice as high as I would expect $85 billion/year is far too small a number imo. Esp considering the liabilities shortfalls.

I think the IMF is saying $1.7 trillion /year. Because if we reduced our deficit $85 billion/year we would still have a trillion dollar annual deficit as far as the eye can see. Like for the next 40 years.

1. You may check the report yourself; I gave you the link.

2. If you think that cutting off $85 b a year is chicken feed, see if you can recall the last time any amount was reduced.

3. There seem to be only two ironclad rules of government: Rule no.1: Always try to expand;
Rule no. 2: see Rule no. 1. Beck, Balfe, “Broke,” p. 115

4. Average Annual Spending Increases (excluding interest)
a. JFK 4.6%
b. LBJ 5.7%
c. Nixon 2.9%
d. Ford 2.7%
e. Carter 3.2%
f. Reagan 1.9%
g. BushI 2.0%
h. Clinton 1.9%
i. BushII 5.6%
Historical Tables | The White House
*all of these are increases...

I tried to open the PDF and my computer froze.

I am going by what you said: 12% of GDP reduced from the deficit either over 20 years or each year for 20 years.

If we only reduce the deficit $85 billion, then we will still have a trillion dollar annual deficit as far as the eye can see.

If we have to reduce the budget enough to produce a budget surplus of $85 billion/year then that is a whole lot closer to a $1.7 trillion annual cut in spending.

OK...ya' sold me! So how long do I have to give up bying new boots to make up my portion of the 85 b?

 

[CrusaderFrank]

Why Obama talked about Hope and Changes, not many people realized he did not mean a change for the better

 

[Toro]

So if we are all really scared of the deficit, we aren't for extending the Bush tax cuts permanently, right?

Extension of the Bush tax cuts may cost the Treasury up to $4 trillion over the next 10 years.

 

[PoliticalChic]

Why Obama talked about Hope and Changes, not many people realized he did not mean a change for the better

Bad news, CF...it's not just him.

In fact, he is simply the logical continuation of what we elect....
Who could get elected telling the nation...I mean the 'special interests'- that would be all of us...that we have to cut spending and taxes..both!

CF, we're on the Titanic...Tytler was correct:

"No republic has long outlived the discovery by a majority of its people that they could vote themselves largesse from the public treasury."
Alexander Tytler

 

[PoliticalChic]

So if we are all really scared of the deficit, we aren't for extending the Bush tax cuts permanently, right?

Extension of the Bush tax cuts may cost the Treasury up to $4 trillion over the next 10 years.

Slow down, Canuck...the prescription is this: cut spending and cut taxes. Both.

 

[uscitizen]

National debt increase by president:
> Ronald Reagan’s First Term – $656 billion increase

> Ronald Reagan’s Second Term – $1.036 trillion increase

> George H.W. Bush’s Term – $1.587 trillion increase

> Bill Clinton’s First Term – $1.122 trillion increase

> Bill Clinton’s Second Term – $418 billion increase

> George W. Bush’s First Term – $1.885 trillion increase

> George W. Bush’s Second Term – $3.014 trillion increase

> Barack Obama’s First “Year” – $1.573 trillion increase

The National Debt by President The National Debt Crisis

 

[PoliticalChic]

National debt increase by president:
> Ronald Reagan’s First Term – $656 billion increase

> Ronald Reagan’s Second Term – $1.036 trillion increase

> George H.W. Bush’s Term – $1.587 trillion increase

> Bill Clinton’s First Term – $1.122 trillion increase

> Bill Clinton’s Second Term – $418 billion increase

> George W. Bush’s First Term – $1.885 trillion increase

> George W. Bush’s Second Term – $3.014 trillion increase

> Barack Obama’s First “Year” – $1.573 trillion increase

The National Debt by President The National Debt Crisis

What's your point?

You don't like Reagan?

You don't realize what he did for the world?

Both?

 

[loosecannon]

OK...ya' sold me! So how long do I have to give up bying new boots to make up my portion of the 85 b?

forever.

 

[PoliticalChic]

OK...ya' sold me! So how long do I have to give up bying new boots to make up my portion of the 85 b?

forever.

Yikes!

 

[loosecannon]

So if we are all really scared of the deficit, we aren't for extending the Bush tax cuts permanently, right?

Extension of the Bush tax cuts may cost the Treasury up to $4 trillion over the next 10 years.

Amen. In a sane America extensions would be off the table.