Tuesday, April 12, 2011

Round 2: Debt ceiling 101 -- are conservatives holding the world hostage?


Here we are again.  It seems like déjà vu.  Democrats and Republicans are gearing up for another battle over cuts...only this time the implications are global. 

The new fight will focus on the issue of whether we should increase the debt limit.  I know; it seems like a no brainer, right?  Even Speaker of the House John Boehner (R-OH) had this to say about what would happen if we didn’t raise the debt limit, as some conservatives want:
“We’ll have to find a way to help educate members and help people understand the serious problems that would exist if we didn’t do it.” – The New Yorker  
“I think that not raising the debt limit would have serious, very serious, implications for the worldwide economy and jobs here in America.” – Fox News Today 
So if Boehner understands the grave consequences of not raising the debt limit, why would he say this: 
“There will not be an increase in the debt limit without something really, really big attached to it.” – fundraiser, quoted in Politico
Did he not just get about $6M more in cuts than he originally asked for?  Was that not the largest domestic spending cut in U.S. history?  Didn’t we just have this same argument on a more domestic level?  It is clear that Boehner and his band of miserable conservatives are trying to take more hostages like they took poor American’s hostage not even week ago.  The hostage this time?  America and the world.

Some conservative senators are even thinking about sending any bill that comes their way to a filibuster, effectively taking this issue past the required deadline.

If the debt ceiling is taken to a filibuster and is not raised, it could destroy the credit rating of the United States.  It would wreak havoc on the world’s financial markets and could cause a worldwide depression…all of this over a few senators’ ideals on how the government should be run in a budgetary crisis.  

Robert Greenstein, president of the Center on Budget and Policy Priorities, tells us that on the domestic front, our government would not be able to pay obligations such as social security benefits.  They would also not be able to pay contractors.  Interest rates would rise, and people would become more nervous about the United States Treasury’s ability to pay these obligations.  Buyer confidence would plummet in a time where buyer confidence is imperative. 

The whole economic system is tied into the Treasury’s rate, like interest rates and adjusted rate mortgages.  If the Treasury’s rate goes up, people’s mortgages increase.  The economy would slow, people would lose jobs, and severe effects would do permanent damage, because creditors would not do business with the United States anymore without charging a premium.

Look; nobody wants to increase the debt ceiling, but this kind of flip-flop from Boehner could cause a worldwide catastrophe.  And don’t let conservatives tell you they are against raising the debt ceiling.  They raised that ceiling SIX times during the Bush years.  The Bush tax cuts needed the debt ceiling increased to stay viable.  There is $4T in debt attributed to raising the debt ceiling ten times in as many years.

Many fiscal conservatives will tell you that it’s just a spending problem.  IT'S NOT JUST A SPENDING PROBLEM!  Either these conservatives have no idea on how the United States economy works, or they are just posturing.  My guess is that it is a little of both.

$4T of the debt is caused by social security running a surplus.  The Treasury actually owes social security, so it's like we owe ourselves. When social security runs a surplus, they invest it in the safest investment in the world: U.S. Treasury Bonds. The bonds count as debt, so debt increases.

If anyone is keeping score, that is $4T attributed to the Bush tax cuts and $4T attributed to investment in which we owe ourselves.  This is not like you owing on your credit card; it is a situation unique to the United States, and most American’s and politicians don’t get it.

There is no current way to make responsible, discretionary cuts right now.  The Congressional Research Service predicts that the United States will have to raise another $738B before the year is over to not increase the ceiling, “hence, there is no reasonable way that the government can manage to stay below the debt ceiling by cutting spending,” Signe Roed-Frederiksen, a senior analyst at Danske Bank in Copenhagen,  states.  “Some Republicans have already indicated that they want further spending cuts in order to vote for raising the debt ceiling, and the risk is that the debate over the coming weeks could send the risk premium on U.S. government bonds higher.” 

I guess speculation just doesn’t affect Wall Street and oil prices.

The United States has never defaulted before.  Conservatives want immediate cuts to prevent default.  There are many reasons for this, but now is not the time for more cuts.  We need to invest more in education and infrastructure.  We need less concentration of wealth and less Wall Street speculation.  How come we aren't looking at getting rid of the Bush tax cuts and starting to look where all the money is, the top 2%.  Bush entered office with a surplus and introduced his tax cuts to create jobs.  Where are these 1.6M jobs?

The total revenue as a percentage of GDP is the lowest it has ever been since 1930.  Is this a spending problem or a revenue problem?  I am not making this stuff up; these are facts.

Jeffery Sachs, an economist at Columbia University, says that it is vital that we levy more taxes on the top 1% and go back to the old corporate rate of 39%.  He states that it is imperative to raise the corporate rate, and that it was unforgivable when republicans and the White House agreed to extend the Bush tax cuts, putting us $1T more in the hole and compensating by cutting programs to the poor.

I believe our total is up to $9T ($4T because of the Bush tax cuts, $4T in safe investments, and $1T in extending the Bush tax cuts).  You take away that $9T from the $14.2 we currently have, and that number is a bit more manageable.  And I am not saying I agree with raising the corporate rate, but I firmly believe that the tax code needs rewritten. 

I am saying that we can’t afford to keep cutting programs.  In a poll by MSNBC, 82% of American’s think we should solve this problem by raising taxes on corporations and the top 2%.    Liberals and conservatives alike seem to be ignoring the public.  The public doesn't want to see programs like Medicare, Medicaid, and Social Security cut (it is to be noted that social security doesn’t even belong in this conversation).

So why are conservatives so loathe to rid the Bush tax cuts?  The ones that aren’t greedy will tell you it is because they create jobs.  Can we see that chart again?

Apparently those tax cuts are starting to work…8 years later!  How much clearer can I make it?  These tax cuts are NOT creating jobs.  When MSNBC asked American's who they trusted to create jobs, 95% said democrats.  95%!

Here is my question:  Do you think the debt problem is a spending problem or a revenue problem?


  1. You are out of your mind! I appreciate your passion but your logic and sources are ridiculous. The entire GDP of the Unites States is less than our National Debt. Our tax rates are the same right now as they were when we had a $100 Billion deficit 3 years ago. Our deficit has gone up 16X and our debt has doubled since then! That's not opinion. That's not Republicans doing anything! The Democrats had both houses and the Office of the President! Unemployment has gone up since he was elected!

    I don't have the time to dispute everything line-by-line because I doubt it'd do any good. There is truth and there is opinion. People's opinions don't change what the truth is.

    I will never excuse irresponsible spending by the Republican Party because they are out of their minds too, but how do the Democrats propose we balance the budget? You know, that budget that they were supposed to pass seven months ago? The one that they couldn't balance when they were in control?

    And people have the gall to blame the minority party because they want to cut a few billion dollars from social programs? Well, Liberals, WHERE IS YOUR BUDGET PROPOSAL?!?!

    Stop bitching about other people's attempts to balance the checkbook and spend your energy doing the job you were hired to do.

    Oh, and if you took 100% of the income of the top 2% and raised corporate taxes to 100%, not only would you not make the $2 Trillion you need to balance this year's budget (let alone pay the debt), you wouldn't get a dime because they'd all move to another country - who's gonna pay your welfare and birth control bills then? Who's going to give you a job if there are no businesses left.

    Grow up.

  2. Oh, and just so you don't think I'm bitching without providing proof . . .

    The top 1% of all taxpayers in the country in 2010 had an AGI of $1.7 Trillion - that's their total income and $300 Billion less than what we need to balance our budget this year alone. That's if you took 100% of their money.

    The total tax revenue in 2010 was $1.1 Trillion and the bottom 50% of wage earners paid 2.7% of that while the top 5% paid 59%. That's at the current (evil Bush) rate. It's not possible to raise taxes and pay for this deficit. The money is not there. The only thing you can do is to grow the economy and there has NEVER been a case where that happened by raising taxes - NEVER! You cannot create jobs by banckrupting businesses and driving people out of the country that write the checks.

    I just don't understand you liberals - all complaint and no solutions. Well, none that don't involve magic.

  3. Well, first off, you wouldn't be able to dispute my post line-by-line because everything I posted was based on studies conducted by experts. Unless you have some credentials that would dispute the work done by my sources, that task would be impossible. There is a reason you don't see the media on the right discussing these exact things. They only want to cut, cut, cut. They have no regard on how it will affect people or the economy. Ryan's new plan, according to the nonpartisan CBO, would increase the debt over ten years. The plan would also cause seniors to pay $20k in medical costs and does not even address the rising costs of medical care! Do you not think the aggregate of that disposable income would be better spent on, oh, you know, stuff that actually impacts the economy? I am sure you saw the chart that shows by letting the Bush cuts expire, in ten years, the deficit would be cut in half. Which proposal looks better? I don't expect you to spend any time on researching the facts, though, as most conservatives like to ignore them and preach trickle-down only. Well guess what, we don't need conservative ideology anymore; history has shown us that the Bush tax cuts are not creating jobs. Open your eyes.

    As for a budget not being passed last year? Again, do a little research. Any budget bill that the democrats tried to write came under threat of filibuster. If you do a little elementary math, you will see that the democrats did not have enough votes for cloture...a fact that can clearly explain the reason republicans used the filibuster last year more than any other year.

    Step away from the smoke and mirrors.

  4. I'm not going to debate truth and obvious logic. The taxes have not been cut in the last 3 years while the deficit has gone up 16 times and the debt has doubled. That's purely due to the increased spending of the left. Unemployment has risen in that time. I've already proven that you could raise taxes to 100% and not even cover the new liberal spending. You can't fund the programs now, we're going bankrupt, and Democrats do nothing but spend more money and demonize the rich while blaming Republicans for cutting "the wrong stuff". What is the right stuff? Everyone has some favorite entitlement program that can't be touched. You cannot fund them all!! What do you propose to cut? It's all going to get cut if we don't do it ourselves and soon. And, by the way, the last two times a "balanced budget bill" that would force, by law, the federal budget to be balanced, was proposed in the Congress, it was opposed only by Democrats (not all of them opposed it, but all that opposed it were Democrats).

    What sort of person says "No, we shouldn't have to spend only what we make". How can anyone vote that we shouldn't have to have a balanced budget? That wasn't talking about whether to raise taxes or not. That wasn't talking about whether to fund this program or that program. It was simply saying that we should have to only spend what we bring in. How is that not okay to you liberals?

    You must honestly believe the money grows on trees because you act like forcibly taking it away from American citizens and giving it to others is somehow justifiable. It's not. I don't care what "experts" you use, You can't dispute the fact that if you spend more than you make, you go bankrupt. There are no viable solutions offered in the form of raising taxes - it's not possible. Socialism has always failed and will always fail and the only "smoke and mirrors" are on the side of the socialists.

  5. You can not create wars for the rich and pay for it off of the backs of the poor and not expect negative results. Republicans preach fiscal responsibility, but if you look at history you will discover that it has been the Democratic Party that has balanced the budget. [go back to Regan] Haliburtin, Kellog, Blackwater et al-deregulations on Wall Street. corruption ad-infinitum, ad-nauseum. You talk about jobs being lost, where is the Tarp money? I will tell you where it is. The ones who got it are not re-investing it. Please, find an audience that actually cares for your biased dribble. I have to go cash my Social Security check at an Cash Express so that I can pay my 200% interest to Republican crooks to do my share of growing the economy. MDO

  6. "What sort of person says 'No, we shouldn't have to spend only what we make'"

    It is I who appreciates YOUR passion. It is honorable how you stick to your ideology, but it is what it is, an ideology. You question my ideology, but your ideology has history to prove it wrong. That's the thing about ideologies. They all have merit when implemented properly, but rarely is that the case.

    Why do I think that my ideology is better than yours? Simple; it contains less concentration of power. The more you spread out power, the less corrupt a society will be. Trickle-down gives that power to the top 2%, where bubble-up gives it to the working class...a much, much higher percentage. The more people that have the money (and don't tell me they don't deserve it, because it is the worker who runs this country; it is the worker who is the REAL producer), the more responsibly it will be spent. Why do you think that Aristotle changed his opinion that the best political rule is by the virtuous king and instead chose rule by the many?

    Now back to your quote. Who would? Well, I am guessing by your ideology that supply and demand fixes everything, and you seem to believe that tax cuts are the golden ticket, that your favorite president would be the King of Tax Cuts: George W. Bush...even if you don't know he is.

    Who would spend money we don't have? That man. Let's go back to when this trickle-down theory gained some momentum under President Regan. Regan cut taxes and ran on the campaign of cutting taxes...and he did. What happened? The U.S. plunged into debt and Regan had to sign the largest tax increase since WW2.

    Fast-forward to Bush I. "Read my lips. No new taxes." How did that work out? I'll tell ya. He cut taxes, the country plunged into debt, and he raised taxes...alienating his base and losing to President Clinton.

    Super-fast-forward to Bush II (we will skip President Clinton, you know, because he left office with four straight years of surplus). Bush II tries to be a super-clone of Bush I. He cuts taxes and then 9/11 happens. What would a responsible president do? I would guess he would suggest cutting programs and raising taxes to fund the war effort. What did Bush do? Nothing.

    Fast-forward a few years later. Bush falsely claims that there are weapons of mass destruction in Iraq. What does he do? Raise taxes? Hell no. He proposes another cut. When his Secretary of the Treasury came to object, Paul O'Neill, he completely ignored him, wouldn't even listen, and eventually fired him.

    So that is two tax cuts and two wars. So you tell me who likes to spend money we don't have. Now our future generations have to pay China for a war in which we shouldn't have even begun in the first place. We are deeper in debt more than ever and have lost countless American lives. The debt side could have been prevented by raising taxes; the spilled blood side could have been prevented by not having a moron in the presidency.

    So go ahead. Make fun of my ideology. But at least have the common sense and intellectual foresight to realize that your ideology hasn't and will not work, and history proves it. The Bush tax cuts didn't do anything for this country but plunge it into debt.