Last week, I received an angry email accusing me of ignoring the number one political story, "...the USA is broke, and has $14 TRILLION DOLLARS worth of debt!" It wasn't unusual as many Americans are overwrought about the US public debt. Sure, it's a problem but not number one and here's why.
If you and I owed $14,280,782,221,253+ we'd be stressed. But the US isn't an individual, or a corporation, and so there is an imperfect analogy. Imagine that you and I are the only two working members of a family and I lose my job. You continue to work, but we need two incomes to pay our bills so, until I find suitable employment, we borrow against credit cards to meet our obligations. That's roughly the situation the US is in: we have about 15 percent un- or under-employed and, as a result, our tax revenues are down; so we must borrow to make ends meet. (This year's deficit is estimated to be $1.6 trillion running our cumulative debt to more than $14.2T+.)
To complicate the analogy, only 67 percent of the US debt is debt held by the public, the other 33 percent is "Intragovernmental Holdings ...securities held by Government trust funds, revolving funds, and special funds," the most important of which is the Social Security Trust Fund -- in other words money we borrow from ourselves. Of course, families don't have "intragovernmental holdings" but many borrow from family members or friends. Suppose that you have a trust fund you can access only in an emergency; if we borrowed from it because I am unemployed that would be analogous to the circumstances that account for one-third of the US national debt.
Nonetheless, $9.5T is debt in the conventional sense; still a big number -- $31,000 per US resident. $4.5T is owed to foreigners -- for example, we owe the Central Bank of China $1.1T -- and the balance to US entities including the Federal Reserve, state and local governments, mutual funds, and pension funds.
Returning to my analogy, suppose you and I have a combined debt of $62,000 and I cannot find work, what would we do? We might chose to either sell our possessions to pay off our credit cards or put more energy into my finding work.
That brings us to the present political situation where we are faced with two similar stark choices: Republicans want to cut back government in order to pay off the debt and Democrats want to invest more in government to increase employment and thereby raise tax revenues. Before we consider the merits of these alternatives -- debt reduction versus public investment -- let's ponder another consideration, how did this debt accumulate?
If you and I amass a debt of $62,000, entirely because I am unemployed for a lengthy period, we might consider selling our house. On the other hand, if much of our debt accumulated for other reasons -- such as paying the legal expenses for your deadbeat brother after he was arrested for a DUI -- then we might look at the debt in a different light.
It turns out that much of the US debt results from decisions made by our own version of the "deadbeat brother." When Bill Clinton left office, the public debt was $5.73 trillion. When George W. Bush left office, the debt was $10.7 trillion. Under Clinton the US ran yearly surpluses and paid down the debt; under Bush the US ran deficits and ran up the debt. Four Bush programs contributed to the almost doubling of debt: the 2001 tax cuts ($2.48T), the wars in Afghanistan and Iraq (1.12T), the 2003 Prescription Drug Program ($1.1T), and the laissez-faire fiscal policies that produced first the housing bubble and then The Great Recession ($1T+). (Many Liberals believe that most of the $3.5T in US debt accumulated under President Obama is due to the financial legacy of the failed Bush presidency.)
Republicans pretend there is no history behind the US debt; they want the public to believe that the $14.2T was all Barack Obama's fault. Given this false starting point, they ring disaster alarm bells, shout "the USA is broke," and argue the only solution is to massively downsize the Federal government and savage entitlements such as Medicare and Social Security. This tactic serves the conservative objective to "shrink government until it can be drowned in a bathtub;" Republicans are using the debt as an excuse to demolish the US social compact and give free rein to wealthy individuals and corporations.
Let's be clear: the US is not broke. The problems the Obama Administration faces are problems caused by the failed Bush presidency.
Sure, the debt is a problem. But it's not the number one problem facing us, which is how to get America back to work. If we do that and return to a commonsense tax system, where corporations and the rich pay their fair share, then we will once again run annual surpluses and begin to pay down the debt.
The wealthy and the politically connected are doing a great disservice to our country and to everyone. Their greed and lack of political will of our government is slowly destroying the country I love and the world as we know it.
JOBS
JOBS
JOBS
WHERE ARE THEY AND WHY ISN'T ANYONE TAKING ABOUT HOW TO CREATE MORE.
The rich don't want to spend or invest their wealth and the government is talking about cutting spending.
HOW IN THE HELL CAN SOMEONE FIND A GOOD PAYING JOB WHEN NO ONE IS CREATING ANY.
The analogies need to include that you, who in this story is out of work, is about to retire or perhaps more accurately hit retirement age. This would reflect the demographics of this country and how these debts will need to be transferred to the youth of this nation that is significantly out numbered.
Furthermore to show the future unfunded liabilities you should add that you or your brother just got cancer and large financial help from you for his treatment.
Now how does your debt situation look now? Not so good.
As far as this notion that government needs to spend to help the economy isi a scary one and I don't think very accurate. This notion led to a lost decade-plus for Japan, it has not helped so far with the stimulus (I believe the spending was around $400,000/job "created" which I doubt was returned through taxes).
The CBO and former US Comptroller at the GAO have been urging Congress to fix these entitlement programs and spending for years. The projections are disastrous. We are at the bottom in the world financially from the government.
F&F.
Yes, the national debt doubled under Bush in 8 years, but Obama in just over TWO years has almost matched the 5 trillion spent during the Bush years. And Obama himself admitted yet again in his speech earlier this week that there will be trillion dollar plus deficits under his own plan well into at least the following decade (from 2020 on)! That's HIS debt. Instead of focusing on how to generate jobs, he decided the time was right to saddle the country with yet another entitlement program (I mean, if Bush was wrong to do so with the Medicare Drug Plans, as the author contends, Obama is just as wrong, right?).
I think the Bush admin and the Congress the Republicans controlled made many mistakes in how they handled spending and paying for that spending. But Bush had a ONE TIME trillion dollar deficit that had everything to do with the original stimulus authorizations (under a Dem Congress at that). OBAMA appropriated that money, with no, repeat NO, positive effects for this nation. Bush also had to contend with the dual realities of the recession that was in effect when he took office, and the 9/11 attacks later that year. And of course, bush decided to fight those who attacked this nation, something Clinton didn't have the spine to do.
But revise away. We expect nothing else form the left these days.
"it doesn't matter WHO holds the debt, the fact remains that the taxpayer is on the hook to pay it." - wrong and addressed in the article. He clearly states what part of the debt the taxpayers are on the hook for - still a lot.
"national debt doubled under Bush in 8 years, but Obama in just over TWO years has almost matched the 5 trillion spent during the Bush years." - fails to tell the the difference in reasons of debt growth under Bush and Obama. Bush inherited prosperity and got into debt to make the rich richer and to fight a stupid war. Obama inherited a disaster and created debt trying to get us out of it - not always successful, but at least justified.
"if Bush was wrong .. with the Medicare Drug Plans, .. Obama is just as wrong, right?" No, it isn't right and the author states a pretty obvious fact that the debt created by Medicare Drug Plan was a handout to (or welfare for) drug companies. Obama's "entitlement" at least is trying to help those in need.
"NO, positive effects for this nation [from Obama's policies]" - not factually correct, putting it lightly.
"bush decided to fight those who attacked this nation" - Iraq attacked our nation"
Obama = Good
Is your ilk really that blind?
LOL..Better drink that Kool-Aid before it gets warm..
“"Fresh off the false and politicized attack on Fannie Mae and Freddie Mac, today we’re hearing the know-nothings blame the subprime crisis on the Community Reinvestment Act — a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began. This is even more ridiculous than blaming Freddie and Fannie."
http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinvestment_act_had_nothing_to_do_with_subprime_crisis.html
"Yes, Bush got us into the second war in Iraq, but now Obama has done the same in Syria."
Really? How many troops do we have on the ground in Syria?
" Obama promised to lower unempolymeÂnt. He lied."
Bush promised that tax cuts would produce millions of jobs:
"President Bush, once taking account how long he’s been in office, shows the worst track record for job creation since the government began keeping records."
http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/
Go Tea Party
The Corporate Lobbyists Behind the Tea Parties
http://www.huffingtonpost.com/jane-hamsher/the-corporate-lobbyists-b_b_186367.html
F&F!
I'd fan you a thousand times if I could.
That's like saying you can solve your personal debt problems by working fewer hours, bringing your lunch instead of eating out and buying a new car.
We aren't going to accomplish anything by cutting the safety net. Social Security and Medicare have combined to lower elder poverty to the lowest rate for any demographic or age group in the country. And these two programs are largely the only two things keeping most seniors above the poverty line.
Just for comparison: in 1960, some 30% of seniors lived in poverty. Today, that figure would be 47% without SS. In 1968, the minimum wage was $10.05 in 2010 dollars; today its $7.25.
The fundamentals of the economy are getting worse, and its in large part due to drastically lower tax rates, which in actuality discourage job creation and negatively effect income growth for the middle and lower quintiles.
Tha debt scare is a way for the billionaire oligarchy to destroy whatever collective power the population possesses through elections at all levels and the federal administration.
Anti-debt, free-market ideology, small governement ideology - these instruments fulfill the role of state Marxism in the former Soviet Union.
In the Soviet Union it was a vital matter to keep the nomenklatura in power (until it collapsed), in the US it is esssential for the billionaire stratum continually increase its hold on American society.
The Tea Party, the silent majority, the verbiage surrounding Christian family values are media-impulsed social constructs to further the power objectives of the bilionaire stratum.
Reagan increased our debt an average of 23% yearly...he TRIPLED it from 934B to 2.6T (186%)
Bush increased our debt an average of 11% yearly...he DOUBLED it from 5.7 to 10.6T (86%)
Obama increased our debt an average of 16% yearly from 10.6 to 14T (inherited massive deficits)
Source: US Treasury Dept. (search for "debt to the penny" for proof)
Our debt increased by 3.4 trillion in Obama's first 2 years. Bush's runaway 1.3 trillion deficit added 2.6 trillion and Obama added 787 billion from the jobs stimulus package. Of the 787 billion, one-third of that was tax cuts so Obama actually only had 500 billion in "new" spending.
The Inter Alpha Group of Banks and the Wall St. cabal irrationally demand that derivative loses be bailed out, forcing budget cuts and austerity on the population. The US government irrationally obeys. A national security crisis exists in the hyper-inflationary printing of debt money that can never be paid back while deadly contraction of employment and production expands. Political leadership focus on how mush austerity and degradation the population will tolerate.
The United States must stabilize itself, specifically: terminate the monetary financial debt based system by reenacting the Glass-Steagall standard in US banking.Put the Fed into bankruptcy protection, recover the bailout trillions, create the US National government that funds the 50 states, then fund the necessary facilities that enhance the population's standard of living. No other options exist.
Stop Perpetual War it's war conducted against the US.
The US must create the necessary higher order of existence humanity demands via the science driven reorganization of facilities, resources, and infrastructure. This commitment to the redevelopment of the North American continent will employ 7-8 million Americans, reversing our crisis.
Crisis economy formation measures must be implemented now or this great nation is doomed and the slow horrific descent into extinction becomes reality. Political leadership must find its duty and perform or we must make an exit for them. No other options exist.
There is plenty of money to be gained from rich citizens and corporate tax havens offshore ..
There is plenty of money to be gained from corporate tax loopholes..
If these offshore tax havens and loopholes are allowed to exist that means the ordinary citizen who is unable to hide his money is carrying the load. This means all the tax money is coming up from the bottom where social programs are needed and not down from the top. How about a Trickle up economy instead of Trickle down.
Don’t tell me that there is not enough money for social programs until you stop all the tax money going offshore.
The citizenry must educate itself to the exact crisis, and create the political power that will support humanity not the debt.
For more info on the economy and the international situation go to the LaRouche PAC web site.