US deficit crisis: the clock ticks

[Keef]

It is much more complex than that though. There are things we want to do in America to save those jobs but we are not the most efficient place to do it or something about our society makes us not the best people to do it. Some things are better to have done in Asia, while some things are better when done in the US. Trying to compete with that trend is a great thing, but it is not unpatriotic to admit we can't do it.

And I am not saying that focusing on local is bad. I'm going to the farmer's market in the morning because local produce is good. But sometimes local isn't the best place to do something. I go out of town to see movies, I own a German car, I'm using a Japanese laptop, and most of my furniture is as cheap as it was because it was made in China or Hong Kong.

This is one reason that free trade is such a fantastic thing. Some people are better than others at doing certain things, that's a fact. Some people have resources that others don't, that's a fact. Some people need things that others can provide, that's a fact. Having an open trade market means that goods and services can efficiently come and go as needed without unfair penalties of tarriffs and whatnot. Those taxes might generate revenue, but they're also liable to upset the natural balance of supply and demand that would otherwise occur, and they might even piss people off who have things that you need, or who need things you'd like to sell.

 

[CMvan46]

Supply creates demand broe.

That is entirely incorrect.

If only your theory worked I could make a massive amount of money by making millions of cheap and easily breakable coat hangers. Then because I have so many surely the demand will be there too.


Edit: To add to the production outside the country thing I entirely agree. We in Canada have to do this, with only 36ish million people we couldn't possibly have enough workers to make and distribute everything here. Our economy is doing just fine under that system and we have fantastic relationships with many countries because of our trade agreements. Oh and we have free healthcare included in there too. Best of luck guys. Whatever you guys do or don't do affects us too. That's the one potential downside to having free trade with a majority of your imports/exports going/coming from one country.

 

[TT3AZ]

Well if you put more money into the military so they can go and exploit other countries and play war, then no wonder they have a crisis. Secons, when rich people rule the country, they will do what ever it takes to get money into their pocket, even if that means selling out all companies and outsource their ventures. Its always the same, the elite doesnt give a rats ass about regular folks. On the other hand, regular folks are to ignorant to understand the rules of the game. They think Obama can solve everything, they even thought that Obama could prevent the hurricane katrina, huh.....

Funny part is, if you looking at all companies, they allways complaining etc, etc, bad economy, yet the MD and chiefes takes higher and higher salary for themselves. Just like Saab in Sweden, they couldnt pay the workers, yet the MDs increased their salary without problem.

 

[TT3AZ]

This is one reason that free trade is such a fantastic thing. Some people are better than others at doing certain things, that's a fact. Some people have resources that others don't, that's a fact. Some people need things that others can provide, that's a fact. Having an open trade market means that goods and services can efficiently come and go as needed without unfair penalties of tarriffs and whatnot. Those taxes might generate revenue, but they're also liable to upset the natural balance of supply and demand that would otherwise occur, and they might even piss people off who have things that you need, or who need things you'd like to sell.

Yes of course, free trade is good. I mean, the more weapons western countries can sell to war suffered countries, the better, right?

 

[Danoff]

Well if you put more money into the military so they can go and exploit other countries and play war, then no wonder they have a crisis.

What?

Um, if we were exploiting other countries.... like... might you be thinking of Iraq?... then why aren't we enjoying cheap oil and laughing our asses off at how much money we all made? Oh yea, because we AREN'T exploiting them.

Exploiting other countries for our own gain means no crisis right? So your own argument doesn't even make sense.

Secons, when rich people rule the country, they will do what ever it takes to get money into their pocket, even if that means selling out all companies and outsource their ventures. Its always the same, the elite doesnt give a rats ass about regular folks.

...and regular folks give a rats ass about the rich? Or about each other? Capitalism doesn't rely on people caring about each other to work.

On the other hand, regular folks are to ignorant to understand the rules of the game. They think Obama can solve everything, they even thought that Obama could prevent the hurricane katrina, huh.....

Most people didn't know who Obama was when Katrina hit... and they definitely didn't know what Katrina was before it hit. So why they'd have wanted a guy they didn't know to stop a hurricane that they didn't know anything about from making a mess that none of these people had ever seen anything like is beyond me.

...also beyond me, what game you think is being played and what that has to do with Katrina.

Funny part is, if you looking at all companies, they allways complaining etc, etc, bad economy, yet the MD and chiefes takes higher and higher salary for themselves. Just like Saab in Sweden, they couldnt pay the workers, yet the MDs increased their salary without problem.

Sweden, as we all know, is a hotbed for capitalism run-amok.

 

[Touring Mars]

Details of a possible deal are emerging:

• A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).
• They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.
• The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.
• The special committee must make recommendations by late November (before Congress' Thanksgiving recess).
• If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This "trigger" is designed to force action on the deficit reduction committee's recommendations by making the alternative painful to both Democrats and Republicans.
• A vote, in both the House and Senate, on a balanced budget amendment.

Source

I wonder, all the talk has been about the possibility of a credit rating downgrade if the debt ceiling is not raised - but others are saying that raising the debt ceiling under certain conditions (not unlike those being proposed here) are only likely to encourage the credit ratings agencies (and more significantly, global markets) to worry even more about America's ability to address it's mounting debt. One commenter suggested that the reason that markets have not been panicking yet is not because they think a deal on the debt ceiling would happen, but because markets are actually quite happy at the prospect of the debt ceiling not being raised, because they know that the US can pay it's bills, but that it really must start to address the debt in a serious way.

$2.8 trillion in cuts over 10 years is not a huge amount, given that the US is currently running annual deficits over over $1 tn... and if the debt ceiling is raised by $2.4 tn, how long will it be before the ceiling is reached again... two years?

 

[Tesla]

$2.8 trillion in cuts over 10 years is not a huge amount, given that the US is currently running annual deficits over over $1 tn... and if the debt ceiling is raised by $2.4 tn, how long will it be before the ceiling is reached again... two years?

Well, up to this point, have they been trying to reduce the debt?

 

[Tornado]

Well, up to this point, have they been trying to reduce the debt?

No. The most they've been trying to do is slow down the ridiculous speed at which it has been rising.

 

[Omnis]

That is entirely incorrect.

Say's Law, broe.

 

[Submerged]

"broe"?

That's even worse than the gangsta talk of "bro"...or "bra"...

 

[Keef]

Well, up to this point, have they been trying to reduce the debt?

No. There are only a very few members of government who are passionate about saving our economy and cutting spending and reducing debt dramatically. This 2.8 trillion reduction is debt they may or may not agree on is not a spending cut. It's simply a reduction in how quickly new debt racks up. And as a reduction, it doesn't even do that well! As TM said, we already incur a trillion dollars in debt every year. This 2.8 trillion reduction doesn't even cover 3 of its proposed 10 year span.

Senator Rand Paul proposed a few months ago a $500 billion dollar spending cut that would have happened this year. And that was only half the deficit. So far that is the most aggressive plan anybody has tried to pass, and his father Ron Paul thinks that is just a drop in the bucket.

The "tea party" Republicans are pushing the rest of their party to hold firm on spending cuts without raising taxes. The Democrats are insistent about raising taxes as part of their plan. In this forum we've already had discussions at length about how raising taxes during times of economic strain is a terrible idea and amplifies the destruction of the tax base. The Republicans - even the stupid ones that I don't like - are at least correct in not raising taxes.

Don't listen to anybody who tells you the Republican party is in the wrong in this situation. The Democrats in Congress, along with the President, are causing all of this debt limit panic and struggle in Congress on purpose. They are fear mongering. That's what big governments like to do - scare people into submitting to their wishes.

Really, anybody who talks about the debt ceiling and default is simply trying to scare you, whether they're doing it on purpose or because they just don't understand the real problem and how these things work. Don't even bother thinking about those things - focus on cutting spending and reducing debt. That's the only thing that matters in this whole discussion, and anything else is just trivial distraction and sensationalism.

 

[Danoff]

• A vote, in both the House and Senate, on a balanced budget amendment.

This is the only part of that list that has any real prospect of fixing problems. We don't need to reduce the debt, but we do need a balanced budget.

 

[Omnis]

Yeah, as if any control of a future congress would ever work. They ignore the constitution now. Why would an amendment change anything? And in the time it would take to pass it, we'd already be screwed.

 

[BrutherSuperior]

This guy gets it: Marco Rubio

The link is a 14min long speech & beatdown of noted gold digger John Kerry. The young conservatives in the legislative branch like Rubio, Ryan, & Rand Paul give me hope that some people do understand what needs to be done for American and not their political future.

There's been no budget for over 800 days and the president has been spending wildly while the economy has just gotten worse. If Congress/Senate cannot control what is spent tomorrow; this country may not make it until the president is replaced. A downgrade of America's AAA credit rating is a bad-bad thing. It's like getting a 0% car loan b/c you have a credit score of 850 or paying 25% APR because you're credit is <600.

That's a whole lotta not good.

 

[Keef]

At the moment we have enough real income to pay interest on our debts and pay only the most important entitlements. That is what Congress should focus on. Everything else should be cut gradually and stay cut. Then once the debt starts shrinking they should also cut the tax burden on the citizens, giving them room to grow.

 

[disinfected]

This guy gets it: Marco Rubio

The link is a 14min long speech & beatdown of noted gold digger John Kerry. The young conservatives in the legislative branch like Rubio, Ryan, & Rand Paul give me hope that some people do understand what needs to be done for American and not their political future.

There's been no budget for over 800 days and the president has been spending wildly while the economy has just gotten worse. If Congress/Senate cannot control what is spent tomorrow; this country may not make it until the president is replaced. A downgrade of America's AAA credit rating is a bad-bad thing. It's like getting a 0% car loan b/c you have a credit score of 850 or paying 25% APR because you're credit is <600.

That's a whole lotta not good.

Have you seen this one yet?

 

[Submerged]

This guy gets it: Marco Rubio

The link is a 14min long speech & beatdown of noted gold digger John Kerry. The young conservatives in the legislative branch like Rubio, Ryan, & Rand Paul give me hope that some people do understand what needs to be done for American and not their political future.

There's been no budget for over 800 days and the president has been spending wildly while the economy has just gotten worse. If Congress/Senate cannot control what is spent tomorrow; this country may not make it until the president is replaced. A downgrade of America's AAA credit rating is a bad-bad thing. It's like getting a 0% car loan b/c you have a credit score of 850 or paying 25% APR because you're credit is <600.

That's a whole lotta not good.

As I understand it, the credit rating system seemed to be (now) used as an opinion meter of whether the country can make repayments and/or be a good country to do business with.

Considering that the American government has such a large debt... it's not "if" they will get downgraded, its "when". Although, to be honest, even if America did get downgraded, I do not think much will happen that would affect the country for the long term. I mean, people go up and down in credit rating all the time, surely countries can do the same thing as well?

 

[Vince_Fiero]

Considering that the American government has such a large debt... it's not "if" they will get downgraded, its "when".

There is a theory that states that it will be done when there is a non US based rating agency. One that does not serve the US government.

Actually it seems they did already:
http://survivalandprosperity.com/20...ng-agency-dagong-says-u-s-defaulting-on-debt/

 

[Submerged]

With credit rating for governments, basically it would be better if there was one that didn't have to be influenced by the governments in the first place!

But then, that would be almost impossible.

 

[Touring Mars]

It could be a close call in the vote(s) later this evening, with the likes of Mitt Romney coming out against the deal. It remains to be seen what Pelosi will do, although I would have thought that she practically has no choice - although it sounds like she is not massively happy with the deal...

 

[FoolKiller]

It could be a close call in the vote(s) later this evening, with the likes of Mitt Romney coming out against the deal. It remains to be seen what Pelosi will do, although I would have thought that she practically has no choice - although it sounds like she is not massively happy with the deal...

Romney is just trying to court voting favor with the Tea Party since he has a lot of negative issues in his professional background that conservatives can't ignore. He has no influence over Congress.

Well, he may be able to convince any primary opponents to not risk the election on this vote.

 

[sumbrownkid]

Shame on Republicans, and shame on Democrats on the way this farce has been handled.

Political parties ruin a true democratic process, and so far Congress just stands for personal/political gains than actual working together to fix problems.

When Republicans said that their main job is to get the white house back, I lost all measure of respect for them. Both parties are guilty of forgetting their people.

 

[buggs1a]

Deficit is one of many reasons why I Hate the us government.

 

[TT3AZ]

Wonder which ethnicities and skin colors that are counted in the "White house".....

And gas prices, they are just high because the companies wants to earn more cash, as usual, a myth regular people are beeing told.

Personal intrests are the only thing these dawgs are intrested about.

 

[Danoff]

And gas prices, they are just high because the companies wants to earn more cash, as usual, a myth regular people are beeing told.

While I'm sure that's true, what are people being told? The price of gas is largely determined by the price of oil - which is a reflection of global oil supply, projections for those supplies, demand, and projections of demand.

 

[Joel]

Not to mention how much of gas prices is tax.

 

[BobK]

Wonder which ethnicities and skin colors that are counted in the "White house".....

What is it you're trying to say here?

 

[Submerged]

He sounds like a troll that has an axe to grind....

 

[DK]

So, crisis has been averted. Where the hell were the Tea Party in the Bush era, seeing as there were many debt ceiling raises during his administration? I'm guessing many Republicans just jumped on the Tea Party bandwagon the second Faux Fox News shined the spotlight on them.

 

[MikeTheHockeyFan]

So, crisis has been averted. Where the hell were the Tea Party in the Bush era, seeing as there were many debt ceiling raises during his administration?

Obama pushed for nationalized health care while "governing while black". That sent enough 50+, wrinkly, sunburnt white folks over the edge to fuel the Tea Party movement.

That was not an attempt at hyperbole. Remember the McCain and Clinton campaigns to highlight Obama's "otherness" ("yeh not from around here, are ya boy?").