The fiscal cliff

[JDeezy]

Taxing cigs serves as a deterrent for idiots who willingly contribute to killing themselves on a daily basis. I can live with that.

Nice.

 

[bcort]

We're getting far off the fiscal cliff topic here...

I didn't care to make a new thread, so we're now discussing the debt ceiling! (I have a feeling this is just going to be another general government/politics thread like they all turn out.)

But, SS should be one of the main things with the debt ceiling. Maybe Washington will puss out again and not make any real cuts/tough decisions, but if they grow a pair, then SS/Medicare/Obamacare/DoD all apply to the debt ceiling, IMO.

 

[KI4MVP]

I didn't care to make a new thread, so we're now discussing the debt ceiling! (I have a feeling this is just going to be another general government/politics thread like they all turn out.)

But, SS should be one of the main things with the debt ceiling. Maybe Washington will puss out again and not make any real cuts/tough decisions, but if they grow a pair, then SS/Medicare/Obamacare/DoD all apply to the debt ceiling, IMO.

the debt ceiling should be unrelated. The debt ceiling is strictly about the government paying it's bills. That never should even come into question.

 

[RonG]

the debt ceiling should be unrelated. The debt ceiling is strictly about the government paying it's bills. That never should even come into question.

Again this is where we are far apart, the fiscal cliff and the farce of a bill they just passed is and should be tied to the debt ceiling, the fact is raising taxes when your not cutting your spending doesn't get you out of the red. Even the taxes they raised aren't enough to cover the current bills. This is why some of us are so upset, they need drastic cuts to go along with those tax increases or its all for nothing.

 

[KI4MVP]

Again this is where we are far apart, the fiscal cliff and the farce of a bill they just passed is and should be tied to the debt ceiling, the fact is raising taxes when your not cutting your spending doesn't get you out of the red. Even the taxes they raised aren't enough to cover the current bills. This is why some of us are so upset, they need drastic cuts to go along with those tax increases or its all for nothing.

we need cuts, but you don't put the economy and the nations credit rating at risk in the process. There are already required cuts in the next 60 days independent of the debt ceiling. it would be a deficit disaster if a self inflicted debt ceiling crisis causes interest rates to go up significantly at a time when interest on the debt already costs over $400 billion/year. what cost cutting could make up for causing interests rates to go up 50% or more.

 

[RonG]

we need cuts, but you don't put the economy and the nations credit rating at risk in the process. There are already required cuts in the next 60 days independent of the debt ceiling.

Do you really think the economy is in better shape because of this bill they passed? All the basically did was extend the issue.

We should have our credit rating lowered. The fact is we have more debt then income, have you tried to get credit personally in this scenario? The fact is you can't we have laws to protect the banks and consumers to prevent this kind of stuff , yet our government can change the credit terms for themselves at any time. I say themselves because they aren't doing America any favors, if anything they are prolonging a problem that is only compounding daily. When this country has to answer for all that debt we will be screwed.

There is something to be said about going a head and taking your ass whooping and starting over.

 

[KI4MVP]

are we better off avoiding a recession because we didn't raise everyones taxes? absolutely. We didn't stop the spending cuts, we delayed them 2 months vs forcing arbitrary cuts nobody wanted, even the people who want cuts overall. Now move on with solving where to cut spending without holding the countries economy and credit rating hostage.

And I ask again, how does forcing interest rates to go up help when we're spending over $400 billion/year in interest.

 

[RonG]

I understand people want the comfort of that great credit rating that we do not deserve. I understand the false comfort it creates. The fact is what they are doing is damn near as bad if not worse than the currency manipulation we were up in arms about a few months ago with China.

I guess my point KI4MVP is that we are only putting off an inevitable collapse. We can not sustain the current system and the current pace at which we are racking up debt. I honestly have no faith that they will make the required cuts needed to get our debt even manageable with in the next 20 years and probably never in my lifetime.

I understand the point your making, but to me its like putting a band aid on cancer.

 

[Jack Brickman]

Make smokers pay a small portion more, much like insurance companies already do.

Because it makes sense for insurance companies but not for social security. Insurance companies charge smokers more (and it's not a small portion more, by the way...the difference is substantial) because smokers are more likely to have health issues that the insurance company will then be obligated to cover.

With social security you should really be charging healthy people more, because they're the ones more likely to live longer and, thus, siphon more money out of the system.

 

[KI4MVP]

I understand people want the comfort of that great credit rating that we do not deserve. I understand the false comfort it creates. The fact is what they are doing is damn near as bad if not worse than the currency manipulation we were up in arms about a few months ago with China.

I guess my point KI4MVP is that we are only putting off an inevitable collapse. We can not sustain the current system and the current pace at which we are racking up debt. I honestly have no faith that they will make the required cuts needed to get our debt even manageable with in the next 20 years and probably never in my lifetime.

I understand the point your making, but to me its like putting a band aid on cancer.

causing interest rates to rise only escalates the problem. If interest rates triple, we will have over $1.3 trillion of interest expense on the current debt, even if we balance everything else. Each 0.5% change in interest rates in either direction over 10 years is worth as much or more than the budget cuts that are due in the next 60 days. Find all of those cuts, but do it in a way that damages our credit rating further will result in higher deficits, not lower ones. Our credit rating currently remains as strong as it is because we are a country that always pays our bills. The current congress risks permanently changing that perception.

The time bomb of the sequester should be enough leverage to get real cuts without risking permanent damage to our credit rating.

 

[RonG]

Your credit rating means very little when you can not actually afford to pay off your debt. If the US was not manipulating the credit system no one would loan us a dime.

Again I completely understand your points, the questions I have is do you understand mine, do you really think we will have enough cuts to put a budget in place that gets us in the black with just next years budget( not even taking he deficit into consideration? Do you think this country can live with in its means? The bulk of Americans can not live with in their means and they are only following the example our government of those same people is showing them. Do you honestly have faith that someone in Washington is going to put their career on the line go against party lines and come up with a budget that actually works.

I don't think any of us fiscally responsible citizens have even a little bit of real hope from what we have seen that our Government will do the right thing for our future. Our country is facing the same obstacle it has for the last what 16 plus years and they have yet to do anything to get excited about. We have become a lazy and fat nation of co-dependent people that have no real ingenuity left in the tank.

"necessity is the mother of invention"

 

[RonG]

BTW if I thought there were some way to fix this problem without hurting our credit I would be right there with you. I just don't see it and I am as open minded about being fiscally creative as you can be. I just honestly don't think it matters hence my band-aid on cancer comment.

 

[KI4MVP]

Your credit rating means very little when you can not actually afford to pay off your debt. If the US was not manipulating the credit system no one would loan us a dime.

Again I completely understand your points, the questions I have is do you understand mine, do you really think we will have enough cuts to put a budget in place that gets us in the black with just next years budget( not even taking he deficit into consideration? Do you think this country can live with in its means? The bulk of Americans can not live with in their means and they are only following the example our government of those same people is showing them. Do you honestly have faith that someone in Washington is going to put their career on the line go against party lines and come up with a budget that actually works.

I don't think any of us fiscally responsible citizens have even a little bit of real hope from what we have seen that our Government will do the right thing for our future. Our country is facing the same obstacle it has for the last what 16 plus years and they have yet to do anything to get excited about. We have become a lazy and fat nation of co-dependent people that have no real ingenuity left in the tank.

"necessity is the mother of invention"

back in the black in the next few years? No, that's not going to happen. We don't have to be in the black, though.

There are two issues, the yearly deficit and the national debt. There is a percentage where these are sustainable, we are currently above that percentage on both. Which means we have to get to a point where the national debt grows at a slower rate than the economy. Get to that point and sustain it and the national debt as a percentage of GDP declines. The chart below doesn't go through 2012, but does show how even in prosperous times, the country has had a significant amount of debt. And the point where it was the lowest at the end of the carter presidency, the economy was an absolute mess. A reasonable target seems to be 50-60% of GDP, so put a target at 55%.

Causing interest ratest to go up and/or the economy to shrink would be counterproductive. Finding a way to get the debt to grow slower than the economy should be the goal over the next few years, not getting the deficit back in the black.

 

[RonG]

32 States Now Officially Bankrupt: $37.8 Billion Borrowed From Treasury To Fund Unemployment; CA, MI, NY Worst

http://www.zerohedge.com/article/32-states-now-officially-bankrupt-378-billion-borrowed-treasury-fund-unemployment-ca-mi-ny-w

Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states. Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance. The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.The full list of America's 32 insolvent states is below, sorted in order of bankruptedness.

California $6,900
Michigan 3,900
New York 3,200
Penn. 3,000
Ohio 2,300
Illinois 2,200
N.C. 2,100
Indiana 1,700
New Jersey 1,700
Florida 1,600
Wisconsin 1,400
Texas 1,000
S.C. 886
Kentucky 795
Missouri 722
Connecticut 498
Minnesota 477
Georgia 416
Nevada 397
Mass. 387
Virginia 346
Arkansas 330
Alabama 283
Colorado 253
R.I. 225
Idaho 202
Maryland 133
Kansas 88
Vermont 33
S.D. 24
Tennessee 21
Virgin Islands 13
Delaware 12


http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html

http://abcnews.go.com/Business/desperate-us-cities-counties-file-bankruptcy/story?id=14464314#.UOtGC3f4IRA


Do you see a trend here?

Fiscal cliff's

Debt ceiling increases

Borrowing

More Borrowing

 

[RonG]

I need to take a break from this thread, I managed to get myself pissed off with the amount of reading I did today. LOL

I am not a sky is falling type of guy but reading my posts that is how I am coming across. I am completely frustrated with our government on almost all levels.