Why is Reducuing the Deficit Good but Not Increasing the Debt Bad?

[jwoodie]

In a rational world, you couldn't have it both ways. However, in the Land of Obama, there is no contradiction. The Democrats refuse to cut spending and yet are able to blame Republicans for "not paying their debts."

How can this be? The reason is because we have a thoroughly corrupt national press that has abandoned even the pretense of being a public watchdog. Instead, it acts as a cheerleader for the Democrats in general and this Administration in particular, actively promoting such invented slogans as "avoiding the fiscal cliff" and concealing any information which might prove embarrassing to the ruling party.

Freedom of the Press used to be a hallowed bulwark against government excess and malfeasance. Today it is a joke. Within this abdication of responsibility lay the seeds of destruction: It is not too hard to imagine a time when the press will either become an official propaganda arm of the government or be completely shut out of access to information about government policies.

 

[kyzr]

The part that gets me is that BO voted against raising the debt as a senator, and gave a principled rationale' why we should not raise the debt ceiling. Now he flip-flopped and the press is giving him a pass.

I like the Gephart Law that says when you pass the spending you agree to pay for it. I also agree with the GOP in that we have a major spending problem, and need to cut spending. If sequestration is the answer, that's fine. I also like the GOP Law that says "no Budget = no pay".

 

[waltky]

Yo Obama, dat ain't the kinda 'change' we thought ya meant...

Fed’s Holdings of U.S. Gov't Debt Hit Record $1,696,691,000,000; Up 257% Under Obama
January 24, 2013 - In data released Thursday afternoon, the Federal Reserve revealed that its holdings of U.S. government debt had increased to an all-time record of $1,696,691,000,000 as of the close of business on Wednesday.

The Fed's holdings of U.S. government debt have increased by 257 percent since President Barack Obama was first inaugurated on Jan. 20, 2009, and the Fed is currently the single largest holder of U.S. government debt.

As of the end of November, according to the U.S. Treasury, entities in Mainland China owned about $1,170,100,000,000 in U.S. government debt, making China the largest foreign holder of U.S. government debt.

When Obama was inaugurated in 2009, the Fed owned $475.322 billion in U.S. government debt. As of the close of business on Wednesday, Jan. 23, the Fed owned $1.696691 trillion in U.S. government debt, up $1.221369 trillion during Obama's first term.

Since Obama has been president, the publicly held portion of the U.S. government debt (as opposed to the "intragovernmental" deb the government has borrowed from federal trust funds such as the Social Security Trust Fund) has increased by $5,264,245,866,257.40. The $1.221369 in additional U.S. government debt the Fed has purchased during Obama's presidency equals 23 percent of all the new publicly held debt the Treasury has issued during that time.

Source

 

[NYcarbineer]

In a rational world, you couldn't have it both ways. However, in the Land of Obama, there is no contradiction. The Democrats refuse to cut spending and yet are able to blame Republicans for "not paying their debts."

How can this be? The reason is because we have a thoroughly corrupt national press that has abandoned even the pretense of being a public watchdog. Instead, it acts as a cheerleader for the Democrats in general and this Administration in particular, actively promoting such invented slogans as "avoiding the fiscal cliff" and concealing any information which might prove embarrassing to the ruling party.

Freedom of the Press used to be a hallowed bulwark against government excess and malfeasance. Today it is a joke. Within this abdication of responsibility lay the seeds of destruction: It is not too hard to imagine a time when the press will either become an official propaganda arm of the government or be completely shut out of access to information about government policies.

Because reducing the deficit does not prevent us from exceeding the debt limit.

 

[waltky]

Granny says, "What do he know, dem politicians gonna spend dat money as dey damn well please an' dey ain't gonna lissen to him - Congress has run amok...

Bernanke: Government Must 'Eventually' Decrease Debt-to-GDP Ratio
February 26, 2013 – Federal Reserve Chairman Ben Bernanke said to keep the economy growing, the federal government must first stabilize the size of its debt relative to GDP and then, eventually, begin to reduce the size of the debt relative to GDP.

Currently, the Congressional Budget Office (CBO) projects that the debt-to-GDP ratio will rise in coming years, increasing the government’s debt burden. Bernanke, testifying before the Senate Banking Committee Tuesday, said Congress must reverse this trend. “To promote economic growth in the longer term, and to preserve economic and financial stability, fiscal policymakers will have to put the federal budget on a sustainable long-run path that first stabilizes the ratio of federal debt to GDP and, given the current elevated level of debt, eventually places that ratio on a downward trajectory,” Bernanke said.

Bernanke noted that under current law, the deficit will narrow from last year’s 7 percent of GDP to just two percent in 2015, and then begin to grow again thereafter, adding more and more debt each year. This course, he said, must be reversed if long-term growth is to be secured by replacing the upcoming budget sequester with policies that reduce the deficit more over the longer term. “To address both the near- and longer-term issues, the Congress and the Administration should consider replacing the sharp, frontloaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run.”

The Fed chairman also warned that not all deficit-reduction policies are created equal, saying that Congress should not enact tax and spending policies that make it less likely that Americans will save, invest, and spend their money. “To the greatest extent possible, in their efforts to achieve sound public finances, fiscal policymakers should not lose sight of the need for federal tax and spending policies that increase incentives to work and save, encourage investments in workforce skills, advance private capital formation, promote research and development, and provide necessary and productive public infrastructure,” he said.

See more at: Bernanke: Government Must 'Eventually' Decrease Debt-to-GDP Ratio | CNS News

See also:

Bernanke: Fed Has No Target, Goal for When Quantitative Easing Might End
February 26, 2013 – Federal Reserve Chairman Ben Bernanke said that the central bank does not have a specific target for when it might end its $85 billion-per-month program of quantitative easing, saying only that the Fed will continue to monitor the economy for signs of improvement.

“We do not have a specific target,” Bernanke said Tuesday under questioning from Sen. Dean Heller (R-Nev.) before the Senate Banking Committee. “The reason is – a couple of reasons – one is as you mentioned is that there are a lot of other things happening in our economy like the fiscal issues that you referred to, but in addition, we are paying very close attention – as a number of you have mentioned – to the efficacy and costs of these policies, and that makes it very difficult to say ‘this is the number we’re going to achieve.’”

Bernanke explained that the Fed was instead trying to communicate to the market why it was continuing its policy of monetary easing instead of trying to pinpoint a goal. He said that the Fed looked at the unemployment rate along with measurements of how effective the policy is versus how much it costs. “We have not been able to come to a specific number which encapsulates both the changes in the labor market and the assessment of costs and efficacy which is another part of the decision process.”

In other words, the Fed does not have either a cost or unemployment goal in mind that would cause it to stop pumping $85 billion per month into the economy. Rather, it will weigh the economic growth spurred by pumping money into the economy with the costs to the economy of doing so.

Once the Fed no longer feels it is getting a worthy amount of bang for its buck, it will end its easing policies. The policy, announced in September 2012, is aimed at pumping billions of dollars per month into the economy in the hopes of spurring economic growth and lowering unemployment. However, the Fed realizes that printing billions of new dollars each month could raise inflation rates in the future, which is what Bernanke means by weighing the benefits of lower unemployment with the costs of possibly higher inflation.

- See more at: Bernanke: Fed Has No Target, Goal for When Quantitative Easing Might End | CNS News

 

[KissMy]

Republicans Exploded Government Spending.