As I write this, the U.S. national debt is about $9.17 TRILLION dollars. This debt is the amount we have borrowed to pay for our government since the Reagan tax cuts -- compounded by the Bush tax cuts. This is because of a choice we made -- yes, I say WE, because this government is US -- to borrow and pay later instead of pay now.
Don't for a minute think that you do not owe that money. It comes to about $30,000 for each American, including infants. If you are a family of four you now owe about $120,000 thanks to those tax cuts. YOU owe this money, even though the tax cuts have primarily gone to the very rich. You WILL be paying it, one way or another. Don't think that debt like that just goes away.
PLUS, now each year we pay about $433 billion for interest on that debt. That amount, of course, rises every year. So in addition to owing all that money we have to service the debt by paying $433 billion every year. That amount is larger than the current federal deficit -- which means if we had not cut those taxes and borrowed all that money in the past we would have $433 billion more each year to spend or save AND we would not owe $9 trillion.
I do not understand how we tolerate this situation. Yes, it happened because we listened to lies, but how many of our candidates are seriously talking about the changes that need to be made to fix this?
| The Gross National Debt |
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The George Bush $3 trillion dollar tax giveaway to the rich over the past 6 years has been a disaster for average Americans. Supply-side (trickle-down) economics is a bogus theory promoted by those who benefit from it. In a mature capitalist system, supply side never rules, it is always the demand side of the equation that governs growth and well-being. Think about the 1930s Depression, General Motors had plenty of supply, but demand evaporated.
Previous U.S. economic downturns have been cured with only $300 billion in tax cuts targeted to the middle class, because the consumer (the great middle class and 2/3rds of the economy) spends that tax cut and primes the economic pump. But George Bush has raised the debt that our children and grandchildren will have to pay from almost $6 trillion to $9 trillion for current economic growth (i.e. we all get trickled on, as the rich spend some small fraction of their gains). Unfortunately, this supply-side growth has been largely and uniquely without wage gains, and so has shrunk the middle class that makes America strong and great. Also, this growth has already over ($3 trillion flushed down the toilet and gone!), as the FED has had to cut interest rates because recession is looming.
Corporations (the supply side) are now loaded with cash, but there is no place to spend it because they do not see any demand. So many corporations are using that cash to buy back their stock - WOW, supply side is wonderful in how it fulfills our needs (NOT)?? Meanwhile, no demand indicates that the middle class is slowly being tapped out, as home values (most of their net worth and the credit card of last resort) are stagnant or falling in price, and a considerable number of homeowners are heading for foreclosure. With the rich-poor divide increasing, we are headed toward previous shining examples of trickle-down economics: South America of the recent past and feudalism in the Middle Ages (South America and feudalism also had no wage gains!).
considered, in effect, a 'devaluation' of the $.
http://www.ny.frb.org/aboutthefed/fedpoint/fed38.html
Says the Federal Reserve...
'Under What Circumstances Might a Country Devalue?
When a government devalues its currency, it is often because the interaction of market forces and policy decisions has made the currency's fixed exchange rate untenable. In order to sustain a fixed exchange rate, a country must have sufficient foreign exchange reserves, often dollars, and be willing to spend them, to purchase all offers of its currency at the established exchange rate. When a country is unable or unwilling to do so, then it must devalue its currency to a level that it is able and willing to support with its foreign exchange reserves.
A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of a devaluation. First, devaluation makes the country's exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country's exports and decrease imports, and may therefore help to reduce the current account deficit.
There are other policy issues that might lead a country to change its fixed exchange rate. For example, rather than implementing unpopular fiscal spending policies, a government might try to use devaluation to boost aggregate demand in the economy in an effort to fight unemployment. Revaluation, which makes a currency more expensive, might be undertaken in an effort to reduce a current account surplus, where exports exceed imports, or to attempt to contain inflationary pressures.
Effects of Devaluation
A significant danger is that by increasing the price of imports and stimulating greater demand for domestic products, devaluation can aggravate inflation. If this happens, the government may have to raise interest rates to control inflation, but at the cost of slower economic growth.
Another risk of devaluation is psychological. To the extent that devaluation is viewed as a sign of economic weakness, the creditworthiness of the nation may... '
Wrong! During the first 192 years of this Nation's existence, through World Wars, depressions, the Cold War, Vietnam, Liberal welfare programs etc. the Nation ran up 985 billion in debt (0.985 trillion). In the 26 years since Reagan and Bush's tax cuts we've only run up 8,185 billion (8.185 trillion). Let's try to keep our facts straight on this matter shall we.
Now as to who owes what, you're figure of $30,000 each is not realistic nor fair. Retirees who have past their working lifetimes can't be expected to pay nor minor children. Likewise, the non working have no funds to contribute debt or no debt. Of those remaining, many did not choose these tax cuts and indeed when given opportunities at the polls, voted against them. So the debt in fairness belongs to those who knowingly supported its creation, the 62 million who voted for Bush in 2004. They have endorsed this debt by their actions. Further, since they constantly preach individual responsibility in an ownership society, they own it, it's theirs and it comes to $132,000 per Republican voter.
So in conclusion: Republicans, don't delay, avoid penalties and interest, rush your check to the IRS. To avoid further debt, remember to include an additional $8,000 for the remainder of this year's 500 billion in deficits. To avoid costs after 2008, vote early and often for the pay as you go Democrat of your choice.
So screw that "we" debt nonsense, and let's get to it, and get rid of aal the Congress and Senators! Clean the Slate in 2008!
How can we not be in the state we are in when arrogance trumps intelligence, and citizens believe that "We the People" refers to somebody else?
To fix this hideous mess of a Nation will be a monumental task, but if the quality of the American People doesn't improve fixing anything will be impossible.
What a terrible betrayal of our Founding Fathers has been committed.
Anyway, it is our politicians fault that they did not fight harder against Draconian budget cuts which benefited principally the wealthy and our fault we did not demand greater responsibility from our elected representatives.
1937 - The Social Security payroll tax took $2 billion out of the economy. $5 billion unsold inventory during the summer. Production down by 1/3 , durable goods down by 50%. Unemployment rose to 20% of the workforce.
1938 -- recession.
If managing the economy was an amplifier, we'd call this 'positive feedback', think, p.a., microphone, speaker ... howl! In other words, good intentions leading to unintended consequences.
Maybe not irresponsible but the effect is the same.
But I signed no contract agreeing to any debt repayment, so Congress is on their own, as far as I'm concerned.