Obama Pushes U.S. Debt Deal, Spurns Republican Plan

[canuck]

The Ronald Reagan and Maggie Thatcher years. The US had "Dynasty" and "Dallas". The brits had "Upstairs, Downstairs" as templates for the years to follow. The tacky mansions we either love to love or love to hate, the monogrammed shirts and all the crude bullshit the rich needed to bring back from the middle ages to get class. Remember Ralph Lauren's images of a well-heeled family playing touch football on a Newport RI type estate. Freckles and salt sea air, flashbacks on the Kennedy clan that "got class" the way jews and catholics and blacks should get class, by flaunting the Ralph Lauren Calvin Klein monograms.

Now, enter the tattoos. Monograms are passé. Nowadays, get your favorite insignia, obsession or anecdotal whatnot inked skin deep. We have evolved.

[TKshreve]

President Obama does not want to be the president to raise taxes with election pending. Let the repubs carry that water...

It's pretty tough for Repubs to "carry" anything when they're pre-existing conditions are composed by signing:

http://www.washingtontimes.com/blog/...s-taxpayer-pr/

What a joke!

Ya know...... for a tax hike only affecting 2% of the earners in this nation, these fat cats sure have a slew of support on the simple issue of contributing into what they have reaped from. What I don't get is why crash the car when the driver has the most to lose?

[mjs]

See my response to your post on the David Stockman thread. Which parts do you propose to cut? Choose from:

1. Defense
2. Social Security
3. Medicare/Medicaid
4. Interest on the debt

Theoretically, there is a "5. Everything Else" category, but even if you eliminate "everything else" entirely, you still have a deficit based on the cost of the above 4 items compared to current revenues.

I'm still baffled to know why the GOP thinks we just HAVE to cut spending right now. The problem isn't the deficit--the problem is that our economy isn't growing. The deficit is just the symptom of a shrinking/stagnant economy. Cutting spending now is like treating a hemophilic with a gunshot wound by amputating the wounded limb--it's completely counterintuitive. Cutting spending is going to make things DRASTICALLY worse within the next year. Welcome to 1937-38.

Of course, when the only tool you have is a hammer, every problem looks like a nail.

How can my post not provide my answers to your questions? I explicity said defense and I mean very deeply. Obama promised we'd be out of the wars, but we're in deeper than before and more than before. Out of all three today and Germany.

I actually support all of the above except lower interest payments because that's default our more banana republic qe.

Again, a debt reduction bill can be written such that the actual cuts do not start for a year or two so the why cut now rings hallow. I save money for bad times. If the feds refuse to, then this is what they get. What was their excuse for runaway debt in the years before the crash they legislated?

The Republican bill that starts a balanced budget amendment process, won't actually require a balanced budget for ten years. Why does obama consider a balanced budget in 2020 impossible to not veto? Whats his excuse for not paying our bills in 2020?

[Relayer76]

How about starting by getting out of Iraq and Afghanistan, shutting down the 600 plus military basis the US has around the world and stop dishing out military aid to Israel to the tune of $8.2 million A DAY.
http://www.ifamericansonlyknew.com/s...id.html#source

[mjs]

Now that I've found a little more time to try to understand the specific underlying assumptions of the claims of what happens if we don't increase the debt ceiling, I'm less sold on their claims than ever.

First, the monthly receipts are more than the social security and debt liabilities, so why would they have to be cut to save the rest? Why can't Obama and Geithner first stop sending checks to foreign governments, the states, and subsidized institutions? Government contractors have delivered late in the past, so why not pay some of them late now? The US Constitution does not require the President to spend what Congress authorizes. It only requires him to not spend on items that they have not authorized. Seems to me he gets to choose who doesn't get a check.

Also, why would mortgage rates and other interest rates rise if the US credit rating went down? The premium, or rate gap between things such as mortgage rates and the ten year treasury rate, have been consistent because the risk gap has been consistent until now. An increased risk in the bank getting their payment from the Feds doesn't mean they have an increased risk in getting my mortgage payment. They still take more risk on me even after the fed credit rating is downgraded, but the difference becomes lower than it was. It like you going from having a credit score 100 pts higher than me to having one 50 pts higher. Your rates will go up, but mine will stay the same making the rate difference between the two of us smaller. When the Greeks went to paying 40% on two year loans, the mortgage rate I could get was still going down. Why is this any different?

Also, having now found time to read the bill, I'm confused as to the specifics of why Senate Democrats oppose Cut, Cap, and Balance. It allows the deficit to go from $14.2 trillion to $16.7 trillion. The uncollateralized debt is already 6.5 times annual income and Dems are complaining that a 17% increase in their credit limit isn't enough to get them through a rough patch? Thats like a guy making $50k a year spending $70k a year and complaining that Citibank is only willing to move the limit on his maxed out Visa from $325k to $380k. If its simply a matter of GDP growth and not living beyond our means, won't the economy be fixed before we hit another $2.5 trillion? It took the Feds nearly 200 years to accumulate the first trillion in debt.

Then, why are Republicans being labeled as being uncompromising by not agreeing to anything that raises taxes? Why isn't it being said that Democrats are being uncompromising by not agreeing to fixing the problem with all cuts? The original agreement was that we would limit our spending such that we wouldn't have to borrow more than $14.2 trillion. That is the agreement that both sides agreed to. At the time, Dems felt that even that much was insane. I still agree with them.

If Obama and the Senate Dems refuse to replace the old $14.2 trillion agreement with a new $16.7 trillion cap, cut, and balance agreement, then they can't complain that the President has to deal with the resulting $14.2 trillion cap, cut, and balance result.

http://www.govtrack.us/congress/bill...60&tab=summary
http://en.wikipedia.org/wiki/United_...federal_budget

[mjs]

ghettopalmetto, to answer your question on what to cut specifically. To avoid a shock to the economy from abrupt change, I would start implementing the following cuts in 2013 and bring them up to their full cuts by 2020. Cut medicare and social security by a third and defense and discretionary by half. With no GDP growth, the deficit will stop growing by 2020. With GDP growth, we may actually be able to pay off our debts before I die.

On a related note, I think a balanced budget amendment will come at some point. When it happens, I'm going to buy credit default swaps on 30 year notes because at seven to ten times annual income and no need to borrow further, our scum bag politicians will figure out that from a purely numbers perspective it will make more sense to walk away from their obligations than to honor them. I should be able to get the CDS cheaply too because the credit rating agencies will actually return us to AAA rating if that scenario were to ever happen.

[Jimaz]

Weird: On a whim I just Googled "return on investment of war" and it returned only 5-9 hits. I would think there would be more interest in such a subject.

[lit joe]

We can start foreign aid thats 49 billion a year. Put a tax on G.M. & Chrysler say 500 on each car, pay back the loans. Sell the gold at fort knox 1.4 million oz. Put public school on cable give each kid a tv compter & cable, that will cut cost for the states big time. Place tariffs on inports. Make europe pay for protection. Drill for our oil everywhere lots of jobs there. Put Rick Perry in the white house. Any questions?

[ghettopalmetto]

Now that I've found a little more time to try to understand the specific underlying assumptions of the claims of what happens if we don't increase the debt ceiling, I'm less sold on their claims than ever.

First, the monthly receipts are more than the social security and debt liabilities, so why would they have to be cut to save the rest? Why can't Obama and Geithner first stop sending checks to foreign governments, the states, and subsidized institutions? Government contractors have delivered late in the past, so why not pay some of them late now?

If Social Security and Medicare payments are processed as planned, then the other meaningful options are to 1) stop defense payments [[terrific for troop safety and morale, yes?) or 2) default on payments to creditors. You make the call which is preferable.

Also, why would mortgage rates and other interest rates rise if the US credit rating went down? The premium, or rate gap between things such as mortgage rates and the ten year treasury rate, have been consistent because the risk gap has been consistent until now. An increased risk in the bank getting their payment from the Feds doesn't mean they have an increased risk in getting my mortgage payment.

Because the interest rate the federal government pays on its debts would be raised. Which means the Federal Reserve must boost interest rates. Which means Bailey Building & Loan has to raise its rates. That's why.

Also, having now found time to read the bill, I'm confused as to the specifics of why Senate Democrats oppose Cut, Cap, and Balance. It allows the deficit to go from $14.2 trillion to $16.7 trillion. The uncollateralized debt is already 6.5 times annual income and Dems are complaining that a 17% increase in their credit limit isn't enough to get them through a rough patch?

Cut Cap and Balance is a proposal put forth by those completely unsophisticated in economic analyses. You'll find out why it's a terrible idea when the next recession comes along, revenues fall, and unemployment increases.

Then, why are Republicans being labeled as being uncompromising by not agreeing to anything that raises taxes?

I think you answered your own question.

[ghettopalmetto]

ghettopalmetto, to answer your question on what to cut specifically. To avoid a shock to the economy from abrupt change, I would start implementing the following cuts in 2013 and bring them up to their full cuts by 2020. Cut medicare and social security by a third and defense and discretionary by half. With no GDP growth, the deficit will stop growing by 2020. With GDP growth, we may actually be able to pay off our debts before I die.

Okay. You be the one to tell seniors that their Social Security and Medicare benefits will be cut by one-third, because it's more important for billionaires to keep their tax cuts.

You figure out how to cut defense spending in half.

And you figure out how to grow an economy when spending for transportation, education, scientific research, and aid to states [[among other things) is cut in half. Then explain to the American people that they now live in the Third World, and that it's just too damned bad.

[firstandten]

Also, having now found time to read the bill, I'm confused as to the specifics of why Senate Democrats oppose Cut, Cap, and Balance

While Cut,Cap and Balanced sounds like a reasonable proposal like most Repubs proposals once you read the fine print you understand this is bad public policy. First of all its a back door way of fulfulling their goal of "starving the beast"

If their intentions were good it would be Balance, Cap and Cut In other words its about cutting taxes and shrinking gov, not dealing with the debt and balancing the budget.

For example there would be a 70% reduction in clean energy funding , $6,000 in extra annual cost to seniors due to Medicare and SS cuts and one third cut to infrastrure spending,

And even if Medicare and SS wasn't included.... well you get the point

And the provision that spending can't equal more than 18% of GDP .Well with that we will be getting to be California.

Gov spending is important, especially in a economy in recession, economists of all stripes will tell you this. This proposal does not allow for recessions.

And the provision which requires a supermajority in both houses will effectively mean nothing will get done. Majority control means nothing you need a supermajority to get anything done. That's one of the reasons Obama has trouble getting his agenda passed thru Congress.

This and other reasons are why the CCB won't pass the Senate and even if it did Obama would veto it.

[ghettopalmetto]

And the provision which requires a supermajority in both houses will effectively mean nothing will get done. Majority control means nothing you need a supermajority to get anything done. That's one of the reasons Obama has trouble getting his agenda passed thru Congress.

This and other reasons are why the CCB won't pass the Senate and even if it did Obama would veto it.

Nobody should be surprised at the current standoff. After all, this is the government we voted for in November. If we didn't know then that electing the tantrum-throwing Tea Party children would result in legislative inefficacy, then we're stupider than I imagined.

[Danny]

The debt debuachery has turned into a political game of chess. The Democrats got the Republicans cornered by using the rook tower next to the King, another rook tower is at the next square of the King move forward and a knight in the king's way. The Republicans got the Democrats cornered by using the bishop to attack the King if he moves one square away from the Queen. Two pawns from the left and right in front of the King.


Here's the plan: The Democrats wanted tax hikes toy the wealthy and close corporate loopholes. They also wanted a temperarily raise the debt ceiling to 2.7 Trillion dollars by 2012 during the election year. [[But President Obama wanted to keep the debt ceiling up past 2013.)

The Republican don't like tax hikes but do agree at the closing loopholes. They wanted a plan to cut government spending [[ Like Social Security, Welfare Checks, WIC and Food Stamps) into a certian percentage. A really large percentage. The Republicans wanted to raise the debt ceiling to 3.7 Triilion dollars until 2012.

One of these parties will have to budge one way or another in order to avoid default and heading our global ecomony into the next Great Depression of 2011.

WORD FROM THE STREET PROPHET!

Who will check the king if one of them moves? If one party says CHECKMATE! you lose.

Neda, I miss you so.

[GOAT]

I finally have to chime in on this one. This is the most fucking irritating thing I have seen in the dysfuctional place called American politics.

Let's bicker and posture about things we do not know and drag the world's economy down with it. That is what is happening with these politicians. they are clueless! The only thing they give a shit about it the next election so they spend 1 year trying to do something and 3 electioneering.

Here's a novel thought. How about raise taxes a small amount AND cut spending! the USA would still be awash in cash and the out of control spending could actually be curtailed.

Let the fringe assholes [[especially clueless voters) whine about spending cuts and a small increase in taxes. The fact of the matter is there is now no choice. This has to be done and it has to be done now.

You don't put a fire out in a house with more flames.

[Danny]

If this were a majority Democratic House and Senate in U.S. Congress. The next debt ceiling debate will be easy one. A new bill will raise the debt ceiling and minimum cuts, closing corporate loopholes and raising taxes for those making over $200,000 or more a year.

If this were a majority Republican House and Senate in U.S. Congress.The next debt ceiling debate will be easy one. A new bill will raise the debt ceiling with maximum cuts of Social Security, welfare checks, WIC and Food Stamps, Medicare and Medicaid into a very larger percentage. No tax hikes for the Wall Street Class. Tax hikes for low-income folks and middle income folks.

[Danny]

Here's a novel thought. How about raise taxes a small amount AND cut spending! the USA would still be awash in cash and the out of control spending could actually be curtailed.

The Republicans declared the tax hikes is a derogatory word. They WILL NOT agree to any plans that has a loophole.

[Danny]

If the debt ceiling deal is broken after August 2nd. I WILL NOT VOTE FOR ANY PRESIDENT OF THE U.S. OR ANY STATE REP. IN 2012 ELECTION IN NOVEMBER [[BOTH DEMOCRAT, REPUBLICAN OR TEA PARTY MEMBER) I might have to vote Independent, Green, or Socialist Worker's Party.

Voting apathy would increase next year. Other Americans may switch parties. Both Democrats and Republicans who are now serving in the U.S. Congress will lose their seats [[ even during midterm elections.) President Obama's re-election campaign could be in jeopardy! A possiblity of a REPUBLICAN candidate for president may be in the works.

[oladub]

5 Ways a Big Deficit Deal Will Whack Your Retirement

Pay close attention to the paragraph titled Adopting a chained CPI COLA. That little change will cost the average Social Security receipient $18,000 over the life of their collection SS. In addition, the retirement age might be pushed back. It will be interesting to see if President Obama signs onto these changes.

[Danny]

Reasons to raise Social Security age:

1. People are living longer lives.

2. The government don't want to spend a lot of money on younger retirees who on Social Security.

However by that time, Social Security will be either privatized or be bankupt by 2035.

[East Detroit]

Where are all the jobs created by the millionaires and billionaires with their 10 yrs and running tax cuts?

[oladub]

Where are all the jobs created by the millionaires and billionaires with their 10 yrs and running tax cuts?

In China although that has a lot to do with ongoing and even new trade agreements, tax breaks, and negative incentives to hire Americans.

[ghettopalmetto]

In China although that has a lot to do with ongoing and even new trade agreements, tax breaks, and negative incentives to hire Americans.

But we should still maintain the huge tax cuts for the "job creators". You know, just in case.

[oladub]

But we should still maintain the huge tax cuts for the "job creators". You know, just in case.

Wasn't it President Obama who most recently extended the tax cuts for the rich until 2012 when it could be an election issue? I realize his rationalization involved extending unemployment benefits for Americans who lost their jobs during his sorry presidency but the amount of money spent on extending unemployment benefits is only a tiny fraction of the increased revenue he gave up by extending tax breaks for the rich. Those tax breaks for the rich Obama extended are estimated to be equal to about 25-33% of the Obama deficits.

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” “Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership . Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.” -Senator Obama March 16, 2006.

[ghettopalmetto]

Wasn't it President Obama who most recently extended the tax cuts for the rich until 2012 when it could be an election issue? I realize his rationalization involved extending unemployment benefits for Americans who lost their jobs during his sorry presidency but the amount of money spent on extending unemployment benefits is only a tiny fraction of the increased revenue he gave up by extending tax breaks for the rich. Those tax breaks for the rich Obama extended are estimated to be equal to about 25-33% of the Obama deficits.

No shit. Which is why anyone other than the right-wing was more-than-a-bit pissed that the Republican-controlled House held those unemployment benefits hostage in exchange for an extension of the tax cuts.

Use the Google. It's your friend.

On a related note: these are the people for whom the GOP is working so hard, bringing our nation to the brink of financial catastrophe: "job creating" 13-year-olds.

To Reach Simple Life of Summer Camp, Lining Up for Private Jets
http://www.nytimes.com/2011/07/25/ny...vate-jets.html

[mjs]

The highlighted is what I picked up from watching the Sunday morning news programs. The unhighlighted is thoughts it put into my head.

The current plan is to spend $46 trillion in the next decade. At our current borrowing rate of $4 for every $14 spent, thats $13 trillion of new debt or the same amount that we accumulated in our first 225 years. Cutting that by $4 trillion so its only $9 trillion in new debt is a pathetic goal.

It was said that the expenditures are now twice what they were ten years ago and 30% higher than when the President was sworn in. I don't recall it being that much of an Oliver Twist world the day he was sworn in. Since we currently spend $1.40 for every $14 we collect, a 30% cut would put as at 98 cents for every $1 we collect. Once again, just go back to earlier spending levels. I don't see how its draconian.

It was said the Presidents big plan, the one that kicks the can down the road until after the election, plans to have the ceiling at $16.2 trillion by the end of 2012. It was $10.2 trillion when he got into office and its now at $14.3 trillion. A 60% increase in 4 years is insane. We heard the bullshit about I'll balance this and that in the last few elections. I want them to have to keep showing up for new votes because I want to evalaute them based on how they voted rather than how they claim they will vote or would have votes or wished they had voted or voted before they didn't vote. A big deal that holds off votes until after the elections is a cowards way to hide his true intentions.

My favorite was Timothy Geithner's own example of why Obama can't afford to make cuts. He said that 1 in 8 Americans are eligible for food stamps and 4 in 10 is born to a family eligible for medicare. I swear to god I rewound it three times. He sees that as a need that must be met, but I see it as a runaway train thats way too inclusive. Those are very high percentages in a country with one of the highest GDP per capita in the world. Aren't any of those people able to get by on their own?