Posts Tagged ‘debt’

Meat Cleaver

February 25, 2013

According to the Democrats, the round of mandatory spending cuts required by the sequester are like a meat cleaver slashing away at needed programs.

David —

If you didn’t do your job, you’d be fired.

But when Eric Cantor and John Boehner don’t do their jobs, two million Americans get handed pink slips.

Right now, House Republicans are refusing to even vote on the sequester. If they do nothing, a meat-cleaver will chop away, almost indiscriminately, at essential domestic programs and make life even harder for millions of Americans.

We can’t let that happen.

If we go over the sequester cliff on March 1st, two million jobs could be lost — including law enforcement, first responders and teachers. Essential programs for pregnant women, children and domestic abuse victims could shut their doors. And the economy could be thrown back into a recession.

President Obama made it clear: “This is not an abstraction — people will lose their jobs.”

Join the DCCC, Democratic Governors, and proud Democrats all across the country calling out Boehner and Cantor before the sequester deadline:

http://dccc.org/Stop-The-Sequester

Thanks,

Brandon

Brandon English
DCCC Digital Director

I only wish they were using a meat cleaver to cut the budget. We badly need to take a cleaver to cut spending. As it happens, the deep sequester cuts are really only cuts in the rate of spending, not actual cuts in spending. Even so, the cuts are hardly deep at all, as Veronique de Rugy explains.

Changes in spending from sequestration result in new budget projections below the CBO’s baseline projection of spending based on current law. The federal government would spend $3.62 trillion in the first year with sequestration versus the $3.69 trillion projected by CBO. By 2021, the government would spend $5.26 trillion versus the $5.41 trillion projected. Overall, without a sequester, federal spending would increase $1.7 trillion (blue line). With a sequester, federal spending would increase by $1.6 trillion (red line).

A further breakdown of the percentage of budget programs reveals that sequestration provides relatively small reductions in spending rates across the board. With sequestration, defense increases 18% (vs. 20%); nondefense discretionary increases 12% (vs. 14%); Medicare roughly increases at the same rate; and net interest increases 136% (vs. 152%).

While the sequester projections are nominal spending increases, most budget plans count them as cuts. Referring to decreases in the rate of growth of spending as “cuts” influences public perceptions about the budget. When the public hears “cut,” it thinks that spending has been significantly reduced below current levels, not that spending has increased. Thus, calling a reduced growth rate of projected spending a “cut” leads to confusion, a growing deficit, and an ever-larger burden for future generations.

Here is the graph that went with that article.

verochart500px

The so-called deep cuts that will endanger the country and put millions out of work are hardly more than a statistical error. It wouldn’t be an exaggeration to say that Obama and the Democrats are simply lying when they describe the spending cuts as indiscriminate. If anything they are not nearly deep enough. There seems to be a certain unreality in both parties of our political class. The Republicans know there is a problem and that we cannot continue to run up astronomical deficits every single year. They are so afraid of being cast as the villains who want to cut the budget to hurt the poor and provide their rich friends with tax cuts that they are afraid to make anything more than symbolic cuts in the rate of increase of spending. They are right to be wary since that is precisely what the Democrats, with their allies in the media will do, regardless of the Republican position. The Democrats, for their part, refuse to admit that there is any problem with spending that raising taxes on the 1% won’t solve. President Obama is not in the least interested in cutting spending. He seems to be more interested in redistributing the wealth of the country in ways that he considers fair than in maximizing revenue. In fact, it may not be too cynical to imagine that Obama has been deliberately increasing the deficit in order to justify the higher, fairer taxes he craves.

Since no one in Washington cares to do their job, managing the resources of the government in a responsible fashion, then I think the best bet is simply to let the sequestration cuts go ahead. There may well be people hurt by the “cuts” but we have to start cutting the budget sometime. There will be a lot more people hurt if the federal government has to start defaulting on its debts or the dollar loses its value. As far as I am concerned the blame for anyone being hurt by spending cuts lies on the people who encouraged dependency with no regard for how unsustainable this sort of spending would be in the long, or even medium term.

 

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The First Time

October 28, 2012

By now, the notorious video starring Lena Dunham has appeared all over the place. I would have thought that the Obama campaign would have been so embarrassed that they would have tried to bury it. I didn’t expect it to be e-mailed to me, but then perhaps nothing embarrasses them.

David —

If this is your first time voting, you should know — it’s pretty easy.

It can also be life-changing.

You’ve got to see this video of Lena Dunham talking about her first time — it’s all over my twitter feed:

I have already seen it. I think that it is the most sleazy and tawdry political ad that I have ever seen. If I had been planning to vote for Obama, this ad would have changed my mind.

By the way, who is Lena Dunham?

Since I showing creepy videos, here is the latest from the Obama Children’s Choir.

Clever, isn’t it? I notice that the children did not mention the $52,000 share of the national debt that each one will be saddled with, or how President Obama has added more debt than every president from Washington to the first Bush combined. Our descendants will have good reason to curse us for impoverishing them.

 

Apocalypse Averted For Now

August 2, 2011

I see that the deal to raise the debt ceiling has passed. I can’t comment on it because I don’t know the details. I’ve been working. I do know that this deal is far from perfect. I would have preferred not raising the debt ceiling at all. At some point we have got to realize that we cannot continue to borrow 5 billion dollars every business day.

Moody’s Investors

July 31, 2011

And on that note we have this from the Hill.

The “limited magnitude” of both debt plans put forward by congressional leaders would not put the nation’s AAA credit rating back on solid footing, Moody’s Investors Service announced Friday.

“Reductions of the magnitude now being proposed, if adopted, would likely lead Moody’s to adopt a negative outlook on the AAA rating,” the credit rating agency said in a new report. “The chances of a significant improvement in the long-term credit profile of the government coming from deficit reductions of the magnitude proposed in either plan are not high.”

It added that “prolonged debt ceiling deliberations” have increased the odds of a downgrade, but that the firm is still confident policymakers will avoid a default.

“It remains our expectation that the government will continue with timely debt service,” the firm said.
It also clarified that as far as it is concerned, the nation will only default if it misses an interest or principal payment on U.S. debt, not if it misses payments on other obligations like federal employee salaries or Social Security benefits.

The report also gives credence to a claim popular among Republicans: that the government has enough cash to avoid a default even past the Aug. 2 deadline set by the Treasury Department.

“If the debt limit is not raised before August 2, we believe that the Treasury would give priority to debt service payments and could thus postpone a potential debt default for a number of days,” it said. “Revenues would be more than adequate for some period of time to meet those payments, although other outlays would be severely reduced as a result.”

Moody’s previously put the nation’s top credit rating on watch for a downgrade on July 13, as lawmakers continue to fight over a deal to raise the debt limit.

While Moody’s is confident it will not have to downgrade the nation’s rating because of a default, it maintained that long-term debt and deficit problems will continue to weigh on the AAA mark.

As Republicans and the White House fight over the length of a debt limit increase, Moody’s said it would not reaffirm the nation’s AAA rating unless there is at least a six-month boost to the debt limit.

However, if the nation were to default for a short period of time, Moody’s said it would knock its credit rating down to AA, under the assumption that the default would be quickly rectified and investor losses would be minimized. However, in the “extremely unlikely” situation that investors do lose on Treasury investments, a lower rating could be given.

Nobody in Washington is seriously trying to balance the budget. The Republicans are too timid. They are afraid to make anything more than nominal cuts that won’t even come close to being enough. The Democrats are oblivious. They are still trying to protect stupid stuff like cowboy poetry reading festivals from being cut. I am afraid that we are doomed.

Into the Abyss

June 15, 2011

John Stossel writes in his latest column about the coming fiscal emergency.

America is falling deeper into debt. We’re long past the point where drastic action is needed. We’re near Greek levels of debt. What’s going to happen?

Maybe riots — like we’ve seen in Greece?

We need to make cuts now.

He doesn’t give up hope. Instead he points out how Canada and Puerto Rico have managed to get their houses in order.

When I think Canada, I think big government. I’m embarrassed that I didn’t know that in the mid-’90s, Canada shrank its government. It had to. Its debt level was as bad as ours is today, almost 70 percent of the economy. Canada’s finance minister said: “We are in debt up to our eyeballs. That can’t be sustained.”

Economist David Henderson, a Canadian who left Canada for the United States, remembers when The Wall Street Journal called the Canadian dollar “the peso of the north.” It was worth just 72 American cents. “Moody’s put the Canadian federal debt on a credit watch,” Henderson said.

The problem, he added, was that Canada had a government safety net that was more like a hammock.

“When I was growing up in Canada, people who went on unemployment insurance were said to go in the ‘pogie.’ You could work as little as eight weeks, taking the rest of the year off.”

So in 1995 Canadian leaders cut unemployment benefits and other programs. It happened quietly because it was a liberal government, and liberals didn’t want to criticize their own. The result was that Canada’s debt stopped increasing. As the government ran budget surpluses, the debt went down.

“The economy boomed,” Henderson said. “Think about what government does. Government wastes most of what it spends, and so just cutting government and having that money in the hands of people means it’s going to be used more valuably.”

Canada fired government workers, but unemployment didn’t increase. In fact, it fell from 12 percent to 6 percent. Canadian unemployment is still well below ours. And the Canadian dollar rose from just 72 American cents to $1.02 today.

Fortuno is governor of Puerto Rico. Two years ago, he fired 17,000 government workers. No state governor did anything like that. He cut spending much more than Walker did in Wisconsin. In return, thousands of union members demonstrated against Fortuno for days. They clashed with police. They called him a fascist

Fortuno said he had to make the cuts because Puerto Rico’s economy was a mess.

“Not just a mess. We didn’t have enough money to meet our first payroll.”

Fortuno’s predecessors had grown Puerto Rico’s government to the point that the state employed one out of every three workers. By the time he was elected, Puerto Rico was broke. So the new conservative majority, the first in Puerto Rico in 40 years, shrank the government.

What was cut?

“Everything. I started with my own salary.”

The protesters said he should raise taxes instead of cutting spending.

“Our taxes were as high as they could be, actually much higher than most of the country. So what we’ve done is the opposite.” Fortuno reduced corporate taxes from 35 percent to 25 percent. He reduced individual income taxes. He privatized entire government agencies.

“Bring in the private sector,” Fortuno said. “They will do a better job. They will do it cheaper.”

Fortuno’s advice for leaders who want to shrink the state: “Do what you need to do quickly, swiftly, like when you take off a Band-Aid. Just do it. And move on to better things.”

Unfortunately one of our major parties would rather play politics and watch the country go down the drain.

We badly need more grownups in Washington.


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