Going over fiscal cliff on purpose?
That is a practical impossibility. After digging a fiscal hole for over 80 years, there are no quick painless fixes. The most effective trace to follow is cut expenditures, raise taxes, repudiate part of the interest on our outstanding debt and not borrow money for the next ten years (no one would lend it to the U.S. anyway). This will be a big hit in the beginning but we can survive it and we will be better off 30 years from now. In the mean time, one way or the other, prepare to suffer.
ruveyn
Ruveyn, the US Government (USG) has the world's lowest effective interest rate, why would the USG want to selectively default on obligations? When you suggest repudiating part of the interest, should I read that as defaulting on the underlying Treasury Bills, or just following the Greece model and forcing a change in the repayment terms?
Ruveyn, the US Government (USG) has the world's lowest effective interest rate, why would the USG want to selectively default on obligations? When you suggest repudiating part of the interest, should I read that as defaulting on the underlying Treasury Bills, or just following the Greece model and forcing a change in the repayment terms?
The amount the U.S. pays in interest dwarfs the budgets for scientific and industrial development. We are eating the seed corn.
However the U.S. does, either by repudiation or negotiation the interest must come down, borrowing lessened and repayment of the principle so that our credit might be restore in the not too distant future. You do know that Moody's has downrated U.S. credit, do you not?
In any case there will be some pain. Unitedstatesians will have to learn to live within their means and give up on this credit driven extravaganza. Also we will have to cut our military back. We can no longer afford to fight the "forever war". I know the neo-cons will be miffed, but tough tit.
ruveyn
If that is, indeed, the case, then it is all the more incumbent upon the Republicans to put a plan on the table that will raise revenues, cut expenditure, and not create a knock-on recession in the process. And I will grant you that they seem to have come a long way to the middle--putting revenue on the table is an acknowledgement of reality that was long overdue.
But holding the line on the marginal tax rate for the top 2% strikes me as the wrong hill to die on.
That isn't what they are holding the line on, the President's stance is that they do all these tax increases, let him increase spending, while giving him an unlimited spending limit credit card by giving him control of the debt ceiling...
This 2% garbage is just propaganda.
Ruveyn, the US Government (USG) has the world's lowest effective interest rate, why would the USG want to selectively default on obligations? When you suggest repudiating part of the interest, should I read that as defaulting on the underlying Treasury Bills, or just following the Greece model and forcing a change in the repayment terms?
The amount the U.S. pays in interest dwarfs the budgets for scientific and industrial development. We are eating the seed corn.
However the U.S. does, either by repudiation or negotiation the interest must come down, borrowing lessened and repayment of the principle so that our credit might be restore in the not too distant future. You do know that Moody's has downrated U.S. credit, do you not?
In any case there will be some pain. Unitedstatesians will have to learn to live within their means and give up on this credit driven extravaganza. Also we will have to cut our military back. We can no longer afford to fight the "forever war". I know the neo-cons will be miffed, but tough tit.
ruveyn
Wikipedia is the source of the data unless otherwise noted (http://en.wikipedia.org/wiki/2012_Unite ... ral_budget)
Interest of 224.8 B is painful, there is no around that. I'd prefer that number to be lower as well. I'm not sure from these numbers if that interest includes amounts paid to the trust funds (SS & Medicare heading that list) and the Federal Reserve on the T-Bills held by the Fed. In any event, it's high.
That said, it is the lowest interest rate of any borrower out there, which I think speaks far more to the value than a credit agency's rating. Perhaps Moody's should check out some AAA mortgage-backed securities.
In the fairly unlikely event that a medium term federal budget would actually have a current unified surplus, the outstanding debt would go down. Neither major party has produced a viable plan to produce such a result in the next 10 years.
A debasement of the debt would have far reaching consequences far outside it's political implications, and I really don't think that using a debasement of the "Full faith and credit" would result in positive outcomes.
They disagree about how, but in the Grand Deal, they do agree, to higher tax income, and cuts, that amount to what we have been over spending every year, that equals what the higher income and cuts would produce over the next decade.
Reducing the rate we are going in debt by 10%, is not much of a deal.
It does nothing to reduce the current debt.
Half of government spending goes to keeping the country running, Social Security, Medicare, take most, but Food Stamps, Unemployment, School Lunches, get some.
The other half goes to the War Machine, and we have lost the last three wars. We do not have enough troops to not send the same ones over and over, more frontline time than any prior war. We have 500,000, a small force, and they do not cost much.
Most of defense goes into things we never hear of, that do not work, are not field tested and applied, they are Defense Welfare.
Cut by half we would still be spending more than the next twenty five countries.
When the shooting starts, it is boots on the ground that wins, and I am with Powell, who said twice the troops sent into Iraq. Also Pottery Barn rules, you break it you bought it, and he was right. Undermanned it turned into a fight, lasted a decade, twice the boots, it would have been short, effective, and out of there.
Troops need rest and training, doubling the boots, creates a half million jobs, and a lot less future cost for battle stress.
As for the Harry Potter Cape, other projects that suck up billions, dump them. troops in the field would also not see their own in the field, and when the shooting starts, no one would know who was where.
There is no worry about a big war, back in the 70s we passed the point of being able to kill everything on the planet ten times over. Saddam got his Nerve Gas from us, and the Brits, we also make weapon grade Antrax in Baton Rouge. We do not need to fund any more Bioweapons, one invisable plane out of Oklahoma can fly around the world, dust whole cities with Parrot Fever, and they will be dead in a day.
We are bad, Russia is just as bad for a lot less money. They are fully able to put an end to us, and everyone else. No matter how much we spend, there is no stopping India from developing Bioweapons, or China, that target round eye white devils. The Black Death and the 1918 Flu seemed to. They are working on it.
Russia developed a high speed version of the Hanta Virus, for ten days you spread it, then die in four. Without hosts it dies out, a month later, open ground.
Nothing beats the nukes, ground, air, subs, game over. We will not be invaded. We have paid for that defense long ago.
No amount spent can ever make us safer, or more a threat to the rest of the world, and for police work, only boots on the ground works.
Then comes the question should we? Africa, we ignor genocide, Bosnia with resort hotel beach frontage, we were very concerned.
The news is, population in Africa is rising much faster than they can feed it, or outside food can be sent in, which just gets stolen by local war lords. The Somalia Famine is the future, and there is nothing we can do.
Drought is not just our problem, Europe, Russia, China, we are a club. The climate shift will bring rain to India, And Kenya, everyone else eats dust.
Containing Global Warming to two degrees, by 2100, we are there already. Also the feedback loop is kicking in, we are in for the ride.
Sending the Army to shoot corn that does not grow will not work. Bombing it will not bring it to the peace table.
I do think we need defense, as in people, trained, armed, and now would be a good time to double the force, because we have some very experenced warriors who should pass on their battle skills. We could also use a half million jobs. Full employment is 300,000 a month, and we are way behind.
What a chance to put a million college grads in uniform, and in a reverse GI Bill, write off their Student Loans. We do it for Teachers.
Planning the weapons of 2025 is not possible, it produces prototypes, not production factories, and there is no telling what will be needed. It is not worth at least a third of all government spending, and cutting it all, we would still have The Marines, who if they can chose their own weapons collection, are the best development possible.
Cutting that, raising taxes to historic rates, Making all income the same, no Capital Gains, it all pays into Social Security, and there is a Transaction Tax on all Securities, we will not have to tax Net Worth to put the country in the black, debt free, very quickly.
We could use a National Irrigation System, the drought could last a thousnd years. We could also fund things like Warp Drive, which seems possible, and ships. 10% of the speed of light seems possible, and forty years to Alpha Centari, there are planets.
We do need an Army because this planet with eight billion, heat and drought, is going to drop to under a billion, and we are within walking distance.
The highest value of life is Species Survival, and we will not make it by not having a clear vision of where we are going. No rain, no food, for a year, it is all over. Generations to come need the basic means of survival if we are to ever get off of this rock and explore space.
We may be insane apes, but it is possible we the best in the universe.
Or maybe we all die, so lets give it a shot.
They probably won't. That way, TPTB can milk the US and it's currency for all it's worth, until it does not fall into their plans.
We could use a National Irrigation System, the drought could last a thousnd years. We could also fund things like Warp Drive, which seems possible, and ships. 10% of the speed of light seems possible, and forty years to Alpha Centari, there are planets.
.
It is not knows whether there are earth-like planets around alpha-centuri.
There is no scientific evidence that supports the existence of ftl for massive bodies. Not a scap.
Ten percent of the speed of light does not produce a noticeable time dilation. 40 years is too long and it is unlikely than anyone would survive the trip. Perhaps a 40 year probe with a 4 year return time for the data to come back.
ruveyn
To reach goals, you must have them. Not only are there no clear targets, worlds that might support life, there are no ship designs that could make the long trip. Then comes power, and the ability to stop at the other end.
Information is coming in on planets, a ship would have to be built in orbit, and we have no way of getting the materials there, nor a design for the engines. Life support and gravity would be useful, and tested before the trip.
Besides which, we are beyond broke, and Science has become a set of answers, not an open question.
The situation will not change, if we stay on this rock we will die out, crossing to the next star is the only way to survive.
I think a hundred years to learn more about what is out there, build a ship that could support long term life, and take some short trips about the neighborhood. Then we might be able to launch. It will be one way, a forever ship, with only a chance of finding a planet that would not kill us.
Other life would see us as food, then get sick and die, and lack of life would not support us.
Probes, possible seeding, it may take thousands of years.
The longest term project in human history.
Most of defense goes into things we never hear of, that do not work, are not field tested and applied, they are Defense Welfare.
Cut by half we would still be spending more than the next twenty five countries.
When the shooting starts, it is boots on the ground that wins, and I am with Powell, who said twice the troops sent into Iraq. Also Pottery Barn rules, you break it you bought it, and he was right. Undermanned it turned into a fight, lasted a decade, twice the boots, it would have been short, effective, and out of there.
Troops need rest and training, doubling the boots, creates a half million jobs, and a lot less future cost for battle stress.
As for the Harry Potter Cape, other projects that suck up billions, dump them. troops in the field would also not see their own in the field, and when the shooting starts, no one would know who was where.
No amount spent can ever make us safer, or more a threat to the rest of the world, and for police work, only boots on the ground works.
.
The problem with boots on the ground is that the current model DOES cost money. Americans have a higher standard of living than the countries we deploy our troops to. Security is part of that standard, we construct miniature cities on foreign soil which cost millions to operate, in Iraq, we paid kellog brown root to set up an entire infrastructure (chow hall, electricity, waste managment) which they often subcontracted out to cheaper companies. We've even hired Uguandans in the past to provide the actual security.
Most troops aren't conditioned to function for longer than a few days without returning to the base to shower, rest, and relax.
Drones frequently make mistakes, and drone mistakes are devastating (and really easy for a negligant operator to make), but at the same time, we've been to utilize biometrics to track down enemies who otherwise hid in places hard for troops to access. I have mixed feelings on the issue.
The boots on the ground model won't work though until we find a way to condition our troops to operate in self-sustaining units outside of a compound. It doesn't matter that we can outmanuver and outgun our attackers, if they know we're only out patrolling for a few hours, they can lay low and accomplish their agenda when we're not around.
And how would you explain to the people that the government makes Enron book keeping look good?
This starts with not paying for Viet Nam, just going off the Silver base, and inflating paper. One ounce of silver is now over $30, so a dollar is worth 3 cents.
The government took the American Plan, not living within your means, but seeing your means as service on debt. Then they let the debt grow, because surely they would get a raise, and the snowball grew, and still grows after the greatest loss of wealth ever.
They spent the value out of everyone's assets, savings, and future retirement. Even in inflated dollars, they cannot make the payments on the debt, current Social Security, and with the War Babies coming up to retire, a huge obligation they have no way of meeting.
All of the horror of the cliff, will only slow the rate going forward. To reduce the National Debt, which means paying the Social Security of the War Babies, calls for cutting spending by a third, and raising taxes $1.5 Trillion a year for ten years. All of it gets spent on reducing obligations.
This cannot be done with a few percent tax hike, just roll back the Bush Tax Cuts, Current tax income is $3 Trillion, it has to go to $4.5 Trillion, and current spending has been running $1 Trillion over income, and that has to stop.
It also has to stop without killing the economy that has to pay the 50% higher taxes. An economic downturn, the tax rate has to go up. An economy that shrinks from $15 Trillion to $10 Trillion, would have to raise taxes another 50%.
At the same time, the hell with the little people, view has reduced the employed tax base. War Babies retiring will further reduce it, and jobs are mostly minimum wage now. The tax base has eroded.
No government has ever come out and said, we stole everything, neither did Enron, Worldcom, but it was proven they did steal everything.
Ibn Khaldun said, in 1300, the next step is blame the people, and Homeland Security becomes the tax collector for the IRS. When income stops, they tax assets. When that is not enough they cut benefits, till at the end, only government employees have income and food. The Army becomes Police, to maintain order.
Wealth has been hollowed out. Real Estate took a huge loss, and banks foreclosing are trying to salvage maybe half of the mortgage debt, and on up the line, the mortgage backed securities the Fed is buying, is giving full value for something worth half. Still the banks are more underwater than the home owners, and Mark to Market, they would all be closed.
So the Cliff is a Political Bandaid to cover the bullet hole in the economy.
Congress does not live in reality, they get elected. They are more a screen play to distract the people from reality. This movie is taken from, "Weekend at Bernie's"
PseudointellectualHorse
Pileated woodpecker
Joined: 1 Nov 2005
Gender: Male
Posts: 188
Location: Pasadena, California
Going over that fiscal cliff would be the best thing that could happen to us. Sure, lots and lots of pain. But we'd get a taste of living within our means, and that's what we desperately need. The day or reckoning is upon us; the spending must be reined in. The only political solution that will accomplish this is the cliff. Otherwise those lunkheads in Washington will "compromise" by agreeing to another $10 trillion in borrowing. They won't stop until the dollar is wastepaper and we starve in the streets.
Got to hand it to Obama; he's a shrewd man. He's got us talking about the "millionaires' tax"; got the man on the street thinking we'd have smooth sailing if only the top 2% would pay their "fair share". Makes the Republicans look bad, defending the 2% and screwing the 98%. Great politics but lousy policy. Give Obama the tax hikes he wants, and we've knocked down the trillion-dollar deficit by a couple of points. Meaningless! But Obama doesn't even want the tax hike for deficit reduction; he's got new spending plans. More stimulus! More "investment"! So the big discussion is irrelevant; doesn't matter who wins. We're screwed either way, and all those guys care about is making it look like the other fellow's fault. Yep, our politicians are compulsive spenders; they're sick in the head, but they merely reflect the compulsions of the public at large. Our leaders are screwy because we are screwy. The enemy is ourselves.
No more excuses; I want the cliff! The cliff might put us on track; the politicians will party on till we die.
