S&P Cuts U.S. Outlook

[Toro]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

I beg to differ. Not raising the debt ceiling could precipitate a dollar crisis. If you are an investor in Treasury bonds, why would you continue to hold earning a small return if you think there is a chance of default? Even if we don't default, $1.8 trillion - nearly half the budget - would start being cut in three weeks. That means deep deep cuts to SS, Medicare and defense. If you are a bondholder, who do you think the politicians are going to take of first, grandma and the troops in the field, or the government of China? Hmm? It doesn't even matter if we look after bondholders first, just the belief that grandma and the soldiers will come before bondholders would likely cause a massive selloff in bonds and spiking interest rates. The only thing which could counter that would be the Fed putting even more Treasuries on it's balance sheet. How do you think the Tea Party and Republicans would take to that?

There is an article in the WSJ this morning saying that the Republicans are going to raise the debt ceiling. Thankfully, adults are running the GOP, because the risks could be catastrophic.

 

[expat_panama]

...The economy has grown for five straight quarters and created over a million private sector jobs in the past year...

Numbers from the BLS, the Fed, and Census Bur. show that right before Obama was elected there were 5 million more people employed than there are now and the average household had $27 thousand dollars more wealth than it has now.

 

[8537]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Lol...yes, only the Obama administration is saying that.

Well, plus Boehner. And in fact, anyone who cares to can easily connect the dots and see the results - but you'd need to want to do so instead of making political hay.

 

[8537]

Numbers from the BLS, the Fed, and Census Bur. show that right before Obama was elected there were 5 million more people employed than there are now and the average household had $27 thousand dollars more wealth than it has now.

Indeed, we were shedding 750k jobs per month when he took office. By March of 2009, that decline started to reverse and trended upwards. GDP has been positive since June of 2009 and job growth has been slight but steady for a year.

 

[KissMy]

Numbers from the BLS, the Fed, and Census Bur. show that right before Obama was elected there were 5 million more people employed than there are now and the average household had $27 thousand dollars more wealth than it has now.

Thats a fact Jack!

Bush & the Republicans were creating jobs until the Democrats took control of congress in 2006-2007 & destroyed jobs & the economy. Then Obama got elected & destroyed even more jobs. Every since the Republicans took back the House in 2011 jobs are once again on the rise. Democrats have destroyed all the jobs & the economy. Now since Republicans took back the House jobs will start to comeback.

 

[boedicca]

But what do we do next? just keep raising the debt ceiling and print the dollar out of existence...?

As the economy improves, we see revenues increase dramatically and we cut spending.

How and when is that going to happen exactly...?
waiting.....waiting.......waiting......that trillion dollar stimulus really improved things didn't it?....waiting.......2.5 years and still waiting........

The economy has grown for five straight quarters and created over a million private sector jobs in the past year. It's gone from losing 750K jobs per month to creating 100k or so. It's gone from losing an annualized 7% of GDP to gaining 2-4%.

if you chose to ignore that, I can't help.

I remember both sides panning each other's plans - and for good reason. But the discussion is on longer "should we cut" but "what should we cut" which is a substantial policy change compared to the past 10 years.

The only reason BO is even talking cuts is for political reason.....the majority of the country wants to cut spending so he's going to "talk" it....

.
He proposed 4T in deficit reduction. Republicans proposed 4T+. The new benchmark is 4T in cuts.

If you chose to ignore that both sides have offered ideas and agreed on a new parameter for discussions, I can't help.

Obama didn't propose $4T in deficit reduction. Even the CBO knows his budget is bogus.

Obama's $4T reduction is comprised of things that will never happen:

- Roll back of Bush Tax Cuts for EVERYONE ($3T of these went to lower and middle class folks - only $700B are for The Rich Billionaires who make over $250K per year).

- No AMT Fix (Congress always passes legislation to fix this).

- No Doc Fix, Obama assumes doctor reimbursement fees for Medicare will be cut 20% next year and beyond. (Again, Congress will fix this).

Ryan's budget assumes that the tax cuts will stay in place, and the Doc and AMT fixes will be passed - and then cuts $6T in spending.

That's a real cut, not a phoney b'loney spreadsheet gimmick that will never happen a la Obamanomics.

 

[Dr.House]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Don't mind him....

He's one of those economics types found frequently using the word "unexpectedly" ...

 

[Soggy in NOLA]

No doubt the whackaloon left will tout this as Obama's crowning economic achievement.

 

[8537]

It's hard enough to take you seriously when you claim the impact of failing to address the debt ceiliing is just "obama administration spin", but let's try one more time:

Obama didn't propose $4T in deficit reduction.

Of course he did. You just didn't like his suggestions.

Obama's $4T reduction is comprised of things that will never happen:

- Roll back of Bush Tax Cuts for EVERYONE ($3T of these went to lower and middle class folks - only $700B are for The Rich Billionaires who make over $250K per year).

- No AMT Fix (Congress always passes legislation to fix this).

- No Doc Fix, Obama assumes doctor reimbursement fees for Medicare will be cut 20% next year and beyond. (Again, Congress will fix this).

Why would the Bush tax cuts not be rolled back over time? Except for political expediency, there's no reason to make ineffectual and temporary tax cuts into ineffectual and permanent tax cuts.

The AMT fix claim is simply wrong.

The Republican plan isn't to cut reimbursements for doctors, it's to gut Medicare as a whole. I'll take the admin's plan. Turning Medicare into Obamacare for Seniors makes no sense since the risk pool is much worse.

 

[boedicca]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Don't mind him....

He's one of those economics types found frequently using the word "unexpectedly" ...

That's one of my favorite "quirks" about the Obamanoids. Every bit of bad news is "UNEXPECTED" (which happens quite frequently), but we're supposed to trust their projections that after a decade of $T+ deficits, we will magically balance the budget.

 

[Toro]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Lol...yes, only the Obama administration is saying that.

Well, plus Boehner. And in fact, anyone who cares to can easily connect the dots and see the results - but you'd need to want to do so instead of making political hay.

Our bond desk thinks there is zero chance the debt ceiling doesn't get raised. They don't the American government is that stupid.

 

[8537]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Lol...yes, only the Obama administration is saying that.

Well, plus Boehner. And in fact, anyone who cares to can easily connect the dots and see the results - but you'd need to want to do so instead of making political hay.

Our bond desk thinks there is zero chance the debt ceiling doesn't get raised. They don't the American government is that stupid.

Luckily there's still a contingent of levelheaded, intelligent Republicans who aren't willing to throw the nation under the bus in order to win the next election.

The Republicans will get together and get just enough votes to allow it to pass, then the rest of the members will vote against it and claim they were taking a "principled stand" to collapse the US economy.

And in the next election, a few folks will vote for them because they voted to collapse the US economy.

 

[boedicca]

That's the hysteria the Obama Administration is spinning, but it's not a fact.

Lol...yes, only the Obama administration is saying that.

Well, plus Boehner. And in fact, anyone who cares to can easily connect the dots and see the results - but you'd need to want to do so instead of making political hay.

Our bond desk thinks there is zero chance the debt ceiling doesn't get raised. They don't the American government is that stupid.

I agree that it is likely to be raised, but not because it would be stupid not to do so.

It will get raised because The Senate and The White House are under Democrat control. The best strategy for the GOP is to extract a Very Large Amount of Near Term Spending Cuts as the price for the increase. Given that Obama's deficit projections do not include the inevitable increase in interest rates to service the debt, we need some additional spending cuts to prevent even more bleeding.

 

[Toro]

Boed

We will have to start cutting $1.8 triilion in a few weeks. SS, Medicare and defense each cost $800 billion. Interest is $200 billion. Everything else is $1.2 trillion. Total spending is $3.8 trillion. Total revenues are $2.2 trillion. Assuming we don't default and there are no multiplier affects (unlikely), we have to cut nearly half our budget starting in a few weeks. How much do you think we would cut from grandma and the soldiers?

 

[Toro]

Risk assets are getting hammered and precious metals are melting up just on S&P changing the outlook on America's AAA rated bonds to negative. Can you imagine what the specter of a possible default would be on the markets?

 

[boedicca]

It's hard enough to take you seriously when you claim the impact of failing to address the debt ceiliing is just "obama administration spin", but let's try one more time:

Obama didn't propose $4T in deficit reduction.

Of course he did. You just didn't like his suggestions.

Obama's $4T reduction is comprised of things that will never happen:

- Roll back of Bush Tax Cuts for EVERYONE ($3T of these went to lower and middle class folks - only $700B are for The Rich Billionaires who make over $250K per year).

- No AMT Fix (Congress always passes legislation to fix this).

- No Doc Fix, Obama assumes doctor reimbursement fees for Medicare will be cut 20% next year and beyond. (Again, Congress will fix this).

Why would the Bush tax cuts not be rolled back over time? Except for political expediency, there's no reason to make ineffectual and temporary tax cuts into ineffectual and permanent tax cuts.

The AMT fix claim is simply wrong.

The Republican plan isn't to cut reimbursements for doctors, it's to gut Medicare as a whole. I'll take the admin's plan. Turning Medicare into Obamacare for Seniors makes no sense since the risk pool is much worse.

Here. Read.

Obama's 2012 Budget: Higher Taxes, Slower Growth | The Heritage Foundation


Obama put in a mere three year fix for AMT, and then increases taxes for the above 28% tax rate - which affects a great many middle class people.

It's not better than his 2011 Fiction, which was never passed.

Preliminary Analysis of the President's Budget Request for 2011

 

[boedicca]

Boed

We will have to start cutting $1.8 triilion in a few weeks. SS, Medicare and defense each cost $800 billion. Interest is $200 billion. Everything else is $1.2 trillion. Total spending is $3.8 trillion. Total revenues are $2.2 trillion. Assuming we don't default and there are no multiplier affects (unlikely), we have to cut nearly half our budget starting in a few weeks. How much do you think we would cut from grandma and the soldiers?

We're not going to balance the budget overnight. Spending is a huge problem - but lack of economic growth is just as bad. If we had the 4 or 5%+ GDP growth that we should have had after a recession, the tax receipts from that growth would have offset a large portion of the deficit spending.

We need to cut spending and free up the economy to GROW.

I heartily agree that we need to reform entitlements. I like Ryan's concept of honoring commitments made to people who are at an age where they cannot "do over" their lives, combined with enabling younger workers to move towards a Chilean private account system.

 

[The Rabbi]

Boed

We will have to start cutting $1.8 triilion in a few weeks. SS, Medicare and defense each cost $800 billion. Interest is $200 billion. Everything else is $1.2 trillion. Total spending is $3.8 trillion. Total revenues are $2.2 trillion. Assuming we don't default and there are no multiplier affects (unlikely), we have to cut nearly half our budget starting in a few weeks. How much do you think we would cut from grandma and the soldiers?

You are assuming we need a balanced budget right away. We don't. We do need to get back to a deficit that is closer to the historical norm.

 

[Toro]

Boed, Rabbi

I agree that we have to have a plan to get this monstrous budget under control. I also believe it should come primarily from spending cuts - 75% spending cuts and 25% tax increases works for me. I also think that Ryan's budget is more credible than Obama's.

But not raising the debt ceiling means not raising any more net debt. That means we have to start balancing the budget right now because we can't tap the debt markets to fund excess spending.

It is my very strong belief that the bond market would not believe that the US government would not default, and that the market would believe the US would be more willing to stiff the Chinese government than grandma and the soldiers. And I think that could precipitate a very serious currency crisis. So yes, let's get a plan together to cut spending, but not raising the debt ceiling would most likely be catastrophic.

 

[8537]

It's hard enough to take you seriously when you claim the impact of failing to address the debt ceiliing is just "obama administration spin", but let's try one more time:

Obama didn't propose $4T in deficit reduction.

Of course he did. You just didn't like his suggestions.

Obama's $4T reduction is comprised of things that will never happen:

- Roll back of Bush Tax Cuts for EVERYONE ($3T of these went to lower and middle class folks - only $700B are for The Rich Billionaires who make over $250K per year).

- No AMT Fix (Congress always passes legislation to fix this).

- No Doc Fix, Obama assumes doctor reimbursement fees for Medicare will be cut 20% next year and beyond. (Again, Congress will fix this).

Why would the Bush tax cuts not be rolled back over time? Except for political expediency, there's no reason to make ineffectual and temporary tax cuts into ineffectual and permanent tax cuts.

The AMT fix claim is simply wrong.

The Republican plan isn't to cut reimbursements for doctors, it's to gut Medicare as a whole. I'll take the admin's plan. Turning Medicare into Obamacare for Seniors makes no sense since the risk pool is much worse.

Here. Read.

Obama's 2012 Budget: Higher Taxes, Slower Growth | The Heritage Foundation


Obama put in a mere three year fix for AMT, and then increases taxes for the above 28% tax rate - which affects a great many middle class people.

Lol...let me guess: Heritage doesn't like his budget?

After the water carrying they did for Ryan using mythical unemployment modeling, would anyone be the least bit surprised if they panned the Obama budget?

Actually, even before that: Would anyone be surprised? Only the idiots. Heritage carries the water for rightwing economic policymakers/