“It is December. We don’t really have a choice,” Obey told POLITICO. “The bill’s already been run up; the credit card has already been used. When you get the bill in the mail you need to pay it.”
Though Treasury can buy itself time by moving assets around, it is already coming close to the current debt ceiling of $12.1 trillion. Last spring, the Democratic-backed budget proposed to raise this to about $13 trillion, but given the current pace of borrowing, no one now expects that will be sufficient to get through 2010."
You know, the least they could do would be to use the money they’re getting back from TARP to pay down the debt. Having $700+ billion less in debt would be nice. But nooo, they’re going to spend that money too on a mythical “jobs” program. What ever happened to fiscal responsibility? It’s more important now than ever before in the history of “these United States.”
There is a difference between the deficit and the debt.
The vast majority of the current deficit is the result of a temporary reduction in tax revenues (due to the recession) and temporary increases in federal spending (to fight the recession and please don’t say “oh but i can see the future and those spending increases won’t be temporary”).
Personally, I think that once the recession is over, the deficit will basically reduce itself. Add on the fact that we will likely be out of Iraq and Afganistan by the end of Obama’s first term and boom we have some significant deficit reductions coming our way.
Student, what I’m saying is that we’re not seeing any indicators of any kind of fiscal responsibility.
They give lip service to “deficit reduction” but I think this should show that they’re not going to do anything of the sort.
They’re going to tax, borrow, print and then spend the money. We’re not going to see deficit reductions.
And no, I can’t see into the future. But given everything the government is doing now, I see no indicators of increasing fiscal responsibility on the part of this administration.
For them to do that, they’d have to admit that they can’t actually fix every single problem that comes up. And that would run counter to the current message of “whatever you need we got it.”
I don’t see how this move shows that Dems are not serious about long-term deficit reduction. One can easily favor cyclical deficits, but oppose structural deficits (Milton Friedman himself held both views and I doubt he would be supporting Democratic economic policies right now). Running cyclical deficits means accumulating debt and we will not be able to run those deficits without moving the debt ceiling.
Personally, I see this move as an appropriate response to the cyclical deficits that were created by the onset of one of the greatest recessions we’ve seen in the past 70 years. Running cyclical deficits now makes sense. And is total consistent with Democratic goal of reducing structural deficits in the future.
Well personally, I think they should be cutting taxes and cutting spending.
Anything other than that is evidence to me that they have no intention of cutting back on the national debt and/or fiscal deficit.
And so, I will plan my investments with the prediction that the Fed will keep rates low for at least another six months and that we’re going to see more spending programs as well as higher taxes. Not to mention greater regulations in both the financial and energy sectors. And I am interested to see what monstrosity they come up with for healthcare. Either way, someone will benefit from all these government actions, but most won’t. I need to know who is going to benefit so I can invest wisely.
Maybe, but I was not referring to my personal feelings about what should be done, but how I personally interrupt Democrats intentions for the deficit in light of the hike in the debt ceiling. Personally, I see the two as entirely consistent. I am not sure how one could see it other wise.That is without being able to see into the future.
PS* Cutting taxes and cutting spending could leave the deficit unaffected or even larger (it depends on how big the relative cuts are). Something tells me you are not actually concerned about the deficit.
I dunno, they’ve got social security, medicare and medicaid to deal with. They’ve got this stimulus agenda, and we’re probably going to see a second stimulus. They’ve got the problem that their political platform is the party who can’t say no. They’re talking about increasing entitlements and adding new ones. They’re talking about increasing regulations in multiple sectors. They’ve got the wars in the Middle East. They’ve got the loose monetary policy of the Fed. All signs point to spending. I think we’re going to see an increase in cyclical deficits as well as structural deficits. I think we’re going to see an even more profligate state than before with W but this time Obama will actually have to take responsibility for his actions as opposed to the old line of “well, this is all the work of my predecessor.”
Nothing the government has done at any level makes me think otherwise. The problem is that foreign governments have been following a similar Keynesian model so it’s hard to say that emerging/foreign markets are necessarily safer places to buy equities. Gold still seems like a strong bet but there may be some bubbliness (yes, I made that word up) going on there.
This is a tough market to play, these institutions have become totally unreliable. The government has totally undermined the stability of the market.
You’re right, the spending cuts would have to be enormous to be able to make significant tax cuts. Otherwise, the deficit could get bigger. But I’m willing to bet we see just the opposite. Taxes will go up and so will spending.
Ultimately, I think this all is going to hit the dollar very hard at some point. I mean we’ve already seen the dollar losing value but this is still a slow economy. When the velocity of money picks up, the Fed will have to raise rates. But there’s always a lag. And the fiscal side of this is so bad that I just can’t see how the dollar isn’t going to get murdered here. Do you?
And if they are out before Obama’s first term, the reason I can come up with is because the impending economic collapse will have happened sooner and will have hit us way harder than expected. I definitely don’t see us leaving because Obama decided it was time for the troops to come home. The military won’t be out of the Middle East until economic forces beyond the control of the administration forces its hand.
The reality is that the US government will default. Whether they do it honestly by saying they can’t pay or print the shortfall is up for debate. The unfunded liabilities for entitlements are atronomical, there is no way to fix this aside from completely abolishing entitlements (which the government will never do). The interest payments on the national debt are already over $400 billion annually on top of the $12 trillion in total. It’s ludicrious to believe the US government will ever pay this off. In 1980 Volcker raised the Fed funds rate to what, 21.5% and the US was the largest creditor country on earth. Now that we are the largest debtor nation, take a guess where rates are going. The dollar is going through the floor, rates are going through the roof, and the US economy is going to be down the drain for an extended period of time.
Yeah, there will be no need for US troops in the ME once there is “peace”. Just like they left Germany, and South Korea, and Japan, and Saudi Arabia and.. and.. and…
I personally believe the only thing keeping other countries in toe with the American fiscal delusion is this “pax Americana”…
