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July 12, 2011
By Randall Hoven
American Thinker
Excerpt:
Personally, I think a lot of areas could use some cutting. Maybe we fiscal conservatives should not let this crisis go to waste. Now could be a great time to get rid of the Departments of Education and Energy and virtually eliminate their budgets. Now could be a great time to throttle back on the intrusive police powers of the DEA and BATF. Now could be a great time to get the federal government out of market manipulation in housing and other "commerce", and end a lot of crony capitalism and corruption by taking some piggy banks away from bureaucrats.
The trouble is that the decisions on where to cut would come from the Treasury Secretary and ultimately President Obama. At least that is how I understand the process, which is fraught with legal and constitutional uncertainties.
That is, the real danger is not in the debt ceiling itself, but in giving Obama the power to cut $1.1 trillion however he pleases. Obama could very well decide to not make interest payments, thus defaulting. He could decide to not pay our military men and women. He could decide to short-change seniors dependent on government pensions. In short, he probably could bring about financial Armageddon with a few strokes of his autopen.
LINK
This isn't even close to being the worst case scenario. Not only is it not even in the same ballpark, its not even in the same city, state, country or even continent.
The worst case scenario by far is a default which triggers a serious of events which causes the financial system to implode, and makes the Lehman-induced collapse in 2008 look like child's-play.
I cannot believe the politicians would be this fucking stupid to play chicken with this. But today, we started looking at ways of protecting ourselves if this happens.
Note the insanity from our leftist friends. It never ends with these nutcases.
The interest on the debt will be serviced either way; there is no automatic default . . . unless of course Obama doesn't apply available revenue to it. It's up to him. It's also up to him to stop playing games and get real about cuts without increased taxation. The problem is not revenue, it's spending.
The people are with the House. They don't want the ceiling raised without real cuts, and they don't want taxes raised on anyone.
The American people just ain't buying Obama's shoe shineanymore.
Hi
Since you seem to know a lot, tell me, how much will the Treasury be refunding and how much interest will be due in the first two weeks of August? Also, how much tax revenues will be coming in?
Thanks.
By the time the debt ceiling is reached, most of Fiscal Year 2011 will be behind us. FY 2012 starts October 1. So I will use FY 2012 numbers to guide this exercise.
OMB estimates FY 2012 revenues to be $2.6 trillion. So if the debt ceiling is not raised, the federal government would have to get by on that for the year. That is more than the federal government spent in any year prior to 2006.
But OMB estimates 2012 spending to be $3.7 trillion, or $1.1 trillion more than revenues then. Somehow, spending would have to be "cut" (from the expected levels) by 29.5%.
To avoid default, interest payments would have to be made. OMB expects them to be $243 billion in 2012. That would leave $2.4 trillion for everything else.
If Social Security and Medicare are also untouched, that would leave $1.1 trillion for everything else. That is, we could avoid default and pay seniors every cent they expect from Social Security and Medicare, and still have well over one trillion dollars left for everything else.
The trouble is OMB estimates everything else to cost $2.2 trillion. So to leave SS and Medicare untouched, and also not default, the rest of the 2012 budget would have to be cut by $1.1 trillion, or about 50%.
They're gonna raise the limit again..and again.....and again......and again..............and again. We're broke anyway. We'll raise it another 700B or so, kick it down the road a few months and then raise it again. A house built on sand doesn't last.
We're not broke. Far from it. We are choosing not to pay. Big difference.
I believe the public agrees with people like Michele Bachmann. She told me in an interview this week that Congress can direct the Treasury to "first pay off the interest on the debt, make sure our military men and women get paid, and then deal with our priorities. Yes, we have very sacrificial consequences, but when are we going to get serious about deficit reduction?"
On this logic, Bachmann and other tea party Republicans -- including most on the presidential campaign trail -- oppose a debt-ceiling increase. This populist spending revolt runs directly counter to the Tim Geithner, Wall Street, big-business view that we must at all costs have a debt-ceiling increase to make good on our federal debt.
Tea party populists are saying no, no: We can still make good on our debt, but this debt bill is the only leverage we have to force Washington to cut spending.
Main Street is in revolt against Wall Street, although it should be noted that Wall Street bond investors are not panicked by any means. The 10-year Treasury continues to trade below 3 percent. Maybe that will change by August 2, or the next Geithner debt-limit drop-dead date. But right now the bond market seems to be aligned with the tea party movement.
President Obama says it's time to "eat our peas," meaning the debt deal should have huge tax increases. That argument is being rejected. Instead, the grassroots sees a big bowl of porridge and wants to shrink that bowl substantially -- no matter what the "sacrificial consequences."
I'm with the porridge.
It is. So why did you bring it up?
If you honestly think that all "conservatives" oppose Obama solely because he is a "socialist", then I have a bridge to sell you.
Are you suggesting that conservative Republicans do not hold egalitarian views?
If you honestly think that all "conservatives" oppose Obama solely because he is a "socialist", then I have a bridge to sell you.
Are you suggesting that conservative Republicans do not hold egalitarian views?
We don't do egalitarian; we do liberty.
Note the insanity from our leftist friends. It never ends with these nutcases.
The interest on the debt will be serviced either way; there is no automatic default . . . unless of course Obama doesn't apply available revenue to it. It's up to him. It's also up to him to stop playing games and get real about cuts without increased taxation. The problem is not revenue, it's spending.
The people are with the House. They don't want the ceiling raised without real cuts, and they don't want taxes raised on anyone.
The American people just ain't buying Obama's shoe shine
Hi
Since you seem to know a lot, tell me, how much will the Treasury be refunding and how much interest will be due in the first two weeks of August? Also, how much tax revenues will be coming in?
Thanks.
From the article:
By the time the debt ceiling is reached, most of Fiscal Year 2011 will be behind us. FY 2012 starts October 1. So I will use FY 2012 numbers to guide this exercise.
OMB estimates FY 2012 revenues to be $2.6 trillion. So if the debt ceiling is not raised, the federal government would have to get by on that for the year. That is more than the federal government spent in any year prior to 2006.
But OMB estimates 2012 spending to be $3.7 trillion, or $1.1 trillion more than revenues then. Somehow, spending would have to be "cut" (from the expected levels) by 29.5%.
To avoid default, interest payments would have to be made. OMB expects them to be $243 billion in 2012. That would leave $2.4 trillion for everything else.
If Social Security and Medicare are also untouched, that would leave $1.1 trillion for everything else. That is, we could avoid default and pay seniors every cent they expect from Social Security and Medicare, and still have well over one trillion dollars left for everything else.
The trouble is OMB estimates everything else to cost $2.2 trillion. So to leave SS and Medicare untouched, and also not default, the rest of the 2012 budget would have to be cut by $1.1 trillion, or about 50%.
We wouldn't default on the debt unless Obama ordered the Treasury Dept. not to pay on it.
Also see: Debt Outlook Stark
It is not a choice to pay or not. We would not default on the debt if we don't raise the debt ceiling. Hogwash. Scare. Scare. Scare.
Main Street is in revolt against Wall Street, although it should be noted that Wall Street bond investors are not panicked by any means. The 10-year Treasury continues to trade below 3 percent. Maybe that will change by August 2, or the next Geithner debt-limit drop-dead date. But right now the bond market seems to be aligned with the tea party movement.
Kudlow
I say we dig in and tell Washington to go to hell. No debt ceiling increase, no new taxes!
It is. So why did you bring it up?
If you honestly think that all "conservatives" oppose Obama solely because he is a "socialist", then I have a bridge to sell you.
Are you suggesting that conservative Republicans do not hold egalitarian views?
Are you suggesting that conservative Republicans do not hold egalitarian views?
We don't do egalitarian; we do liberty.
The phrase, "with liberty and justice for all," is an egalitarian idea.
Without egalitarianism, liberty is a relative condtion, with some people having more (or less) freedom and liberty than others have.
I am begining to believe the republicans want us to go into a depression.
Hi
Since you seem to know a lot, tell me, how much will the Treasury be refunding and how much interest will be due in the first two weeks of August? Also, how much tax revenues will be coming in?
Thanks.
From the article:
By the time the debt ceiling is reached, most of Fiscal Year 2011 will be behind us. FY 2012 starts October 1. So I will use FY 2012 numbers to guide this exercise.
OMB estimates FY 2012 revenues to be $2.6 trillion. So if the debt ceiling is not raised, the federal government would have to get by on that for the year. That is more than the federal government spent in any year prior to 2006.
But OMB estimates 2012 spending to be $3.7 trillion, or $1.1 trillion more than revenues then. Somehow, spending would have to be "cut" (from the expected levels) by 29.5%.
To avoid default, interest payments would have to be made. OMB expects them to be $243 billion in 2012. That would leave $2.4 trillion for everything else.
If Social Security and Medicare are also untouched, that would leave $1.1 trillion for everything else. That is, we could avoid default and pay seniors every cent they expect from Social Security and Medicare, and still have well over one trillion dollars left for everything else.
The trouble is OMB estimates everything else to cost $2.2 trillion. So to leave SS and Medicare untouched, and also not default, the rest of the 2012 budget would have to be cut by $1.1 trillion, or about 50%.
We wouldn't default on the debt unless Obama ordered the Treasury Dept. not to pay on it.
Also see: Debt Outlook Stark
First, your link isn't the link to the article you posted. That article in the link was to me by email. I know Malpass. He came to my office when he was at Bear.
The problem with that analysis is that it is based on forecasted growth of, if I recall correctly, 3.5%. Maybe that will happen, maybe it won't. That forecast expects a surge in economic growth. Are you expecting that? Fiscal year 2011 is expected to have revenues of approximately $2.2 trillion, so tax revenues are forecasted to grow 15%-20%. Really? You think so? Total spending this year is expected to be $3.8 trillion. The forecast is for it to drop. That may happen if we get strong economic growth. But what if we get 2.5%? I doubt tax revenues will grow that much. This fiscal year, we are expected to pay out approximately $800 billion each in defense, Medicare and Medicaid and SS. Interest costs are expected to be $200 billion. That's $2.6 trillion in spending right there. Assuming growth is low, we are going to have lop off $400 billion from one of those three from somewhere, assuming we pay all our interest payments.
But you didn't answer my question. I'm not talking annual numbers. I'm talking right here, right now. We have a $23 billion SS payment due on August 3. Total tax revenues on August 3 are expected to be $12 billion. Where will the money come from? Also, given that we expect $170 billion to come in during August and expect to spend $300 billion, we are going to be getting $80-$90 billion in tax revenues in the first half of the month. We know that on August 15, we have to pay $56 billion in interest and principle payments. We also have four Treasury refundings scheduled between Aug 3 and Aug 15. The last two fundings on August 11 were for $33 billion. What are the funding amounts for the four fundings, and what are our cash inflows for those dates?
See, I have no idea. If we have $56 billion due on August 15 and have to pay out $23 billion in SS on Aug 3, that's $79 billion. Our tax revenues may be $80 billion in total, that is assuming the economy doesn't fall off a cliff in the first half of Aug. How do you know that we won't default during that time? I don't know. A default is when you don't pay your interest payments on time. It could be that there is a mistiming of inflows and outflows which causes a default.
IOW how can you be so sure we won't default? Maybe we will be fine, I don't know. But the point is, I don't know. How do you know?
I met with a 20-year veteran Wall Street bond investor this morning. He told me that we won't default. He didn't tell me why, other than that the Treasury has ways of moving around money to meet payments. Maybe he's right. I hope so, because a default might be catastrophic. And no, that's not scare-mongering.
The US Federal Government's debt obligations make up 15% of it's annual revenues. That is a fact, and it is a fact that isn't being said often enough.
There is a reason all polls have shown that the American people are not buying anymore of this crisis fear-mongering. Everything since 2008 has been a crisis.
The fact is America will not default if the debt limit isn't raised. There are some honest politicians, sincere in their desire to cut spending, that have come out to speak the truth: The government can service the debt, social security, & military on it's current monthly budget.
Not giving into the debt limit will force the government to cut it or shut it.
The leftists on this board have blindly bought Timmy the tax cheat's threats of doom wholeheartedly. If social security checks aren't issued it will be because of Obama's willful budget decisions that it wasn't important enough, because revenues will still be coming in and that is a GD fact.
It is a lie, and all of this default fear-mongering needs to be corrected.
The US Federal Government's debt obligations make up 15% of it's annual revenues. That is a fact, and it is a fact that isn't being said often enough.
There is a reason all polls have shown that the American people are not buying anymore of this crisis fear-mongering. Everything since 2008 has been a crisis.
The fact is America will not default if the debt limit isn't raised. There are some honest politicians, sincere in their desire to cut spending, that have come out to speak the truth: The government can service the debt, social security, & military on it's current monthly budget.
Not giving into the debt limit will force the government to cut it or shut it.
The leftists on this board have blindly bought Timmy the tax cheat's threats of doom wholeheartedly. If social security checks aren't issued it will be because of Obama's willful budget decisions that it wasn't important enough, because revenues will still be coming in and that is a GD fact.
It is a lie, and all of this default fear-mongering needs to be corrected.
You know whose threats of doom and fear-mongering I believe? I believe the guys who run billion dollar bond funds when I talk to them. Those are the guys whom I believe. And there are lots of Republicans in that group.
But they don't think we'll default. They can't believe we'd be that stupid. But they also can't believe that we are going through this nonsense either.
I am begining to believe the republicans want us to go into a depression.
Of course they do. " I hope he fails"
The US Federal Government's debt obligations make up 15% of it's annual revenues. That is a fact, and it is a fact that isn't being said often enough.
There is a reason all polls have shown that the American people are not buying anymore of this crisis fear-mongering. Everything since 2008 has been a crisis.
The fact is America will not default if the debt limit isn't raised. There are some honest politicians, sincere in their desire to cut spending, that have come out to speak the truth: The government can service the debt, social security, & military on it's current monthly budget.
Not giving into the debt limit will force the government to cut it or shut it.
The leftists on this board have blindly bought Timmy the tax cheat's threats of doom wholeheartedly. If social security checks aren't issued it will be because of Obama's willful budget decisions that it wasn't important enough, because revenues will still be coming in and that is a GD fact.
It is a lie, and all of this default fear-mongering needs to be corrected.
You know whose threats of doom and fear-mongering I believe? I believe the guys who run billion dollar bond funds when I talk to them. Those are the guys whom I believe. And there are lots of Republicans in that group.
But they don't think we'll default. They can't believe we'd be that stupid. But they also can't believe that we are going through this nonsense either.
They can't pick and choose who they pay, correct? So that means they pay the most pressing bills, and SS is not that pressing I'm guessing since it will trigger no lawsuits for defaulting.
Even if the US Gov't continues to pay the interest on it's debt, the fact that we could not find a way to raise the ceiling could be a serious blow. Look at how many more people, public AND private, would lose their jobs.
Hi
Since you seem to know a lot, tell me, how much will the Treasury be refunding and how much interest will be due in the first two weeks of August? Also, how much tax revenues will be coming in?
Thanks.
From the article:
By the time the debt ceiling is reached, most of Fiscal Year 2011 will be behind us. FY 2012 starts October 1. So I will use FY 2012 numbers to guide this exercise.
OMB estimates FY 2012 revenues to be $2.6 trillion. So if the debt ceiling is not raised, the federal government would have to get by on that for the year. That is more than the federal government spent in any year prior to 2006.
But OMB estimates 2012 spending to be $3.7 trillion, or $1.1 trillion more than revenues then. Somehow, spending would have to be "cut" (from the expected levels) by 29.5%.
To avoid default, interest payments would have to be made. OMB expects them to be $243 billion in 2012. That would leave $2.4 trillion for everything else.
If Social Security and Medicare are also untouched, that would leave $1.1 trillion for everything else. That is, we could avoid default and pay seniors every cent they expect from Social Security and Medicare, and still have well over one trillion dollars left for everything else.
The trouble is OMB estimates everything else to cost $2.2 trillion. So to leave SS and Medicare untouched, and also not default, the rest of the 2012 budget would have to be cut by $1.1 trillion, or about 50%.
We wouldn't default on the debt unless Obama ordered the Treasury Dept. not to pay on it.
Also see: Debt Outlook Stark
First, your link isn't the link to the article you posted. That article in the link was to me by email. I know Malpass. He came to my office when he was at Bear.
The problem with that analysis is that it is based on forecasted growth of, if I recall correctly, 3.5%. Maybe that will happen, maybe it won't. That forecast expects a surge in economic growth. Are you expecting that? Fiscal year 2011 is expected to have revenues of approximately $2.2 trillion, so tax revenues are forecasted to grow 15%-20%. Really? You think so? Total spending this year is expected to be $3.8 trillion. The forecast is for it to drop. That may happen if we get strong economic growth. But what if we get 2.5%? I doubt tax revenues will grow that much. This fiscal year, we are expected to pay out approximately $800 billion each in defense, Medicare and Medicaid and SS. Interest costs are expected to be $200 billion. That's $2.6 trillion in spending right there. Assuming growth is low, we are going to have lop off $400 billion from one of those three from somewhere, assuming we pay all our interest payments.
But you didn't answer my question. I'm not talking annual numbers. I'm talking right here, right now. We have a $23 billion SS payment due on August 3. Total tax revenues on August 3 are expected to be $12 billion. Where will the money come from? Also, given that we expect $170 billion to come in during August and expect to spend $300 billion, we are going to be getting $80-$90 billion in tax revenues in the first half of the month. We know that on August 15, we have to pay $56 billion in interest and principle payments. We also have four Treasury refundings scheduled between Aug 3 and Aug 15. The last two fundings on August 11 were for $33 billion. What are the funding amounts for the four fundings, and what are our cash inflows for those dates?
See, I have no idea. If we have $56 billion due on August 15 and have to pay out $23 billion in SS on Aug 3, that's $79 billion. Our tax revenues may be $80 billion in total, that is assuming the economy doesn't fall off a cliff in the first half of Aug. How do you know that we won't default during that time? I don't know. A default is when you don't pay your interest payments on time. It could be that there is a mistiming of inflows and outflows which causes a default.
IOW how can you be so sure we won't default? Maybe we will be fine, I don't know. But the point is, I don't know. How do you know?
I met with a 20-year veteran Wall Street bond investor this morning. He told me that we won't default. He didn't tell me why, other than that the Treasury has ways of moving around money to meet payments. Maybe he's right. I hope so, because a default might be catastrophic. And no, that's not scare-mongering.
The US Federal Government's debt obligations make up 15% of it's annual revenues. That is a fact, and it is a fact that isn't being said often enough.
There is a reason all polls have shown that the American people are not buying anymore of this crisis fear-mongering. Everything since 2008 has been a crisis.
The fact is America will not default if the debt limit isn't raised. There are some honest politicians, sincere in their desire to cut spending, that have come out to speak the truth: The government can service the debt, social security, & military on it's current monthly budget.
Not giving into the debt limit will force the government to cut it or shut it.
The leftists on this board have blindly bought Timmy the tax cheat's threats of doom wholeheartedly. If social security checks aren't issued it will be because of Obama's willful budget decisions that it wasn't important enough, because revenues will still be coming in and that is a GD fact.
It is a lie, and all of this default fear-mongering needs to be corrected.
You know whose threats of doom and fear-mongering I believe? I believe the guys who run billion dollar bond funds when I talk to them. Those are the guys whom I believe. And there are lots of Republicans in that group.
But they don't think we'll default. They can't believe we'd be that stupid. But they also can't believe that we are going through this nonsense either.
