Ho-hum, another $1.2 trillion:
President Obama formally notified Congress on Thursday of his intent to raise the nation's debt ceiling by $1.2 trillion, two weeks after he had postponed the request to give lawmakers more time to consider the action.
Congress will have had 15 days to say no before the nation's debt ceiling automatically is raised from $15.2 trillion to $16.4 trillion.
It's an indication of where the political cultures is -- and how hard it will be to change it -- that inaction triggers more borrowing rather than spending cuts. Love this observation from the comments: "The term 'debt limit' is a political axiom used to convince the peeps that the runaway debt train really does have brakes ! Sorry. There is no such thing as a limit. The term is used only for theatrical purposes."
Gonna try to not get too worked up over this anymore. What we have here is one pig asking the other pigs if he can go to the head of the line at the trough, that's all.
Comments
The majority of people I speak with and from what I read in the paper about polls show we want a balanced budget. The problem is there are conservatives and liberals that have different views on what government should do.
I supported not raising the debt limit and I still do. I firmly believe the US will not suffer a depression as a result of not increasing the debt limit. It would force hard choices that no elected representative has yet had to make. No more lies about what a politicians supports, but we would see first hand what they do. If the people do not like what their representative did, they would not be re-elected. As for special interest groups, I believe their power to persuade would be greatly diminished if not eliminated. The people would vote which is the way it should be.
Simply put, running continual deficits no matter how small will eventually consume the entire Federal budget just to finance it. So the question each of has to answer is, do we bite the bullet now or kick the can down the road as the Greatest Generation has for decades?
Bill, you're pretty darn good with numbers, can you see a way out of 16 trillion in debt? I'm no mathematician, heck I'm not even a community organizer, but something tells me if we do the math on this, there isn't any way in the world we can ever pay that off.
I have a hunch if we taxed all working americans 100% we wouldn't come close would we?
Most countries don't have a debt limit.
If the Visa bill alarms you, what you do is to stop charging on the Visa card, and make greater payments, even if it means taking om a second job or selling the bass boat. Refusing to pay the statement when it arrives is NOT a good idea, but that's exactly what Congress is doing.
The debt limit is probably unconstitutional; the 14th amendment says we WILL pay our debts.
What we need is a president who faces Congress with the resolute will of Reagan facing down the air traffic controllers. Sadly, I don't think Obama will, and if he tries, they won't believe him. But when government shuts down, it REALLY needs to shut down. You turn off the utilities at every government building in the country and lock the doors, and furlough every civilian and military employee of the US except elected officials. Navy and Coast Guard ships would have to keep operating until they reach the nearest port, but without USDA inspectors, no beef or pork would enter the food chain, and patients in VA hospitals would have to be transferred to other facilities.
It's not blackmail. It's saying, "You make the laws, I enforce them. Figure out how you want to spend money, and I will do what you say, but you might want to hurry, because people are going to escape our unguarded prisons and enter our unguarded borders."
But Obama doesn't have the balls to do this and none of the candidates in the Republican presidential clown car has the judgment to make it work. Oh, how we could use a good Republican president!
Only a few months ago the plan, which automatically approves this spending unless a majority vote can reverse it, was passed by many Republicans.
Those same Republicans will now vote to reverse it, knowing full well that it won't happen. They will then use that vote in their re-election campaigns.
"Vote for me, because I just cast a faux vote against the spending that I already approved."
It's amazing that voters can not seem to recognize the charade that is being perpetraded against them by our 1 1/2 party duopoly.
And Harl, if you are putting your spending on someone elses visa card you will increase your spending 10%, then cut it back to 5%, and tell that sucker that you have just saved them 5%. You will tell them that by following your example of reducing spending by 5% annually, in only 20 years spending will be reduced to zero. You will also tell them that you need to keep the card in your posession because "the other guy" was the one who raised it 10% in the first place, ignoring the fact that you agreed with him on this.
To pay off this debt will take a long time considering it took 54 years to get here (1957 was last general budget surplus). This assumes a 2.75% interest. The interest rate paid during the depression was 2.5 to 3%. During the late 70 and early 80's it was up to 17%. I do not believe they sell 30 year bonds any longer. This has pros and cons. Pros is that you when interest rates are low, you can borrow cheaper. The con is due to short term of the debt, interest rates when it comes to refinance may be higher. This is no different than many Americans find themselves in with mortgages; bait with a low rate for 3 to 5 years and then goes up.
Like any debt instrument, the shorter the term, the less interest you pay, generally lower rates, but higher payments. Longer terms due to uncertaintety and lack of liquidity are paid premiums and result in higher interest rates.
Assuming we do not increase the debt limit and we no longer borrow, but pay all bills with CASH, we would have to cut $1.2 Trillion from the General budget today just to get rid of the deficit, but we would then have to cut another 664.5 Billion from the budget,keeping taxes where they are to pay off the debt in 40 years. 40 years is basically the length of a working generation. Extending the term reduces the cost for current generation, but extends the pain over more generations which had nothing to do with the debt nor benefited little from the debt they are paying on. I would project that as the term increased, the interest rate would increase, resulting in an increase in the yearly payment (budget cuts) and that in reality there is no net difference in pain.
The republicans blew it when they caved into raising the debt limit. Not increasing the debt limit is a balanced budget amendment! Hipocrits.
Years Yearly Payment
40 $664,504,229,802
50 $592,654,712,022
60 $547,520,277,039
70 $517,474,926,555
80 $496,694,791,432
90 $481,939,978,619
100 $471,266,827,375
110 $463,441,964,058
120 $457,648,693,508
130 $453,328,303,191
To everyone,
For those who know me, they know that I am not fan or supporter of Social Security OASI. I have been a firm supporter of repealing the Social Security Act. Today I received from our esteemed Senator Lugar the following. Needless to say, Senator Lugar does not have my support. It also why we as a nation will never manage the debt we have. Incompetence is electable.
December 15, 2011
Dear Mr. Larson:
Thank you for contacting me regarding the strength of the Social Security program. I share your interest in efforts to extend the solvency of the Social Security Trust Fund.
In past years, under a unified budget Social Security surpluses were used to cover general government deficit spending. "IOUs" were placed in the Social Security Trust Fund. In the years from now until 2036, those IOUs will be paid back, with interest, to payout benefits. Absent reforms, even after all the IOUs are paid back the Trust Fund would not have enough money in 2036 to pay benefits in full. This is largely because of the weak economy and the fact that Americans are living longer and birthrates are lower, meaning fewer workers will be paying into the system through payroll taxes just as more Americans are retiring than ever before.
I believe Congress should explore proposals to ensure long term solvency of the Social Security Trust Fund. Even relatively small modifications to the program could go a long way to protect benefits for current and future generations of Americans. As the Senate considers recommendations in this area, I will have your interest in this extremely important matter closely in mind.
You also noted the reduced Social Security payroll tax rate in 2011. In December 2010, Congress approved a temporary two percentage point reduction in the Social Security payroll tax rate for employees and the self-employed in 2011 as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of2010. Congress is currently considering proposals to extend the payroll tax holiday into 2012.
To protect the Social Security Trust Fund from a loss of payroll tax revenues resulting from the temporary reduction in the payroll tax rate for employees and the self-employed, the December 2010 law appropriates to the Social Security Trust Fund amounts equal to the reduction in payroll tax revenues to the Treasury. The law specifies that these appropriated amounts "shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted." Similar provisions have been included in proposals being considered by the Senate at this time to extend the payroll tax holiday to ensure there is not a negative impact on the Trust Fund.
Thank you, again, for contacting me.
Sincerely,
Richard G. Lugar
United States Senator