YADT (Yet Another Debt Thread)

[StageLeft]

http://www.newsweek.com/id/224694/page/1

I like this bit on page 5:

This matters more for a superpower than for a small Atlantic island for one very simple reason. As interest payments eat into the budget, something has to give—and that something is nearly always defense expenditure. According to the CBO, a significant decline in the relative share of national security in the federal budget is already baked into the cake. On the Pentagon's present plan, defense spending is set to fall from above 4 percent now to 3.2 percent of GDP in 2015 and to 2.6 percent of GDP by 2028.

Over the longer run, to my own estimated departure date of 2039, spending on health care rises from 16 percent to 33 percent of GDP (some of the money presumably is going to keep me from expiring even sooner). But spending on everything other than health, Social Security, and interest payments drops from 12 percent to 8.4 percent.

This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force. Which is why voters are right to worry about America's debt crisis. According to a recent Rasmussen report, 42 percent of Americans now say that cutting the deficit in half by the end of the president's first term should be the administration's most important task—significantly more than the 24 percent who see health-care reform as the No. 1 priority. But cutting the deficit in half is simply not enough. If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power.

This is surely to happen. I know many think the US doesn't need all its military and in some ways they are right but in others that stick does give those in the US a unique luxury and privileged position.

I find most debt discussions center around how bad or not the problem is but it appears most agree there is a problem, but nothing ever seems to be done about it. This is like my doctor saying I have to cut back on salt or I'll die and I go "I know doc, you're right, I really should." but I don't, and so I die. The can is continually kicked down the road because, like many medical issues, it's not one of immediate importance or relevance, so it's easy to delay it until the damage is irreversible.

And it's the younger people and future generations who are paying for the malaise of those currently voting and doing to the country what they are. Why do so few people seem to care about what is being left to their kids?

Whether this guy is spot on, under, or over the top there is no denying that chronic debt spending and increasing deficits, which is what the country is presented with, are weakening it.

 

[Genx87]

Our entitlement programs will ruin this country within a generation if left unchecked. We will simply crumble from within. At some point the punching bag of the left, the military budget, will run out of money to squeeze from.

 

[fskimospy]

Certainly a silver lining to the cloud. If a side effect of the debt is to reduce defense spending to something remotely approaching sanity we will be better for it. A trillion dollars a year to blow things up? No thanks.

 

[Robor]

Certainly a silver lining to the cloud. If a side effect of the debt is to reduce defense spending to something remotely approaching sanity we will be better for it. A trillion dollars a year to blow things up? No thanks.

Why do you hate America?

 

[Genx87]

Certainly a silver lining to the cloud. If a side effect of the debt is to reduce defense spending to something remotely approaching sanity we will be better for it. A trillion dollars a year to blow things up? No thanks.

And when that pit has been exhausted what next?

 

[LunarRay]

Certainly a silver lining to the cloud. If a side effect of the debt is to reduce defense spending to something remotely approaching sanity we will be better for it. A trillion dollars a year to blow things up? No thanks.

Us peaceniks on the coast might agree with you. I say cut defense and increase SS, VA, Food Stamps and Health Care.
Debt ceiling... no biggie. 15 trillion is not much if 15 trillion becomes not much.... :sneaky:

 

[fskimospy]

And when that pit has been exhausted what next?

What sort of answer do you expect? Entitlement programs will have to be modified in respect to shifting demographics in order to keep them in line with their original intent.

Regardless of that this article is talking about how the defense budget will need to be reduced, and for that I am happy.

 

[Darwin333]

http://www.newsweek.com/id/224694/page/1

I like this bit on page 5:



This is surely to happen. I know many think the US doesn't need all its military and in some ways they are right but in others that stick does give those in the US a unique luxury and privileged position.

I find most debt discussions center around how bad or not the problem is but it appears most agree there is a problem, but nothing ever seems to be done about it. This is like my doctor saying I have to cut back on salt or I'll die and I go "I know doc, you're right, I really should." but I don't, and so I die. The can is continually kicked down the road because, like many medical issues, it's not one of immediate importance or relevance, so it's easy to delay it until the damage is irreversible.

And it's the younger people and future generations who are paying for the malaise of those currently voting and doing to the country what they are. Why do so few people seem to care about what is being left to their kids?

Whether this guy is spot on, under, or over the top there is no denying that chronic debt spending and increasing deficits, which is what the country is presented with, are weakening it.

I fear it is much worse than that. As I have said many times, I do not believe we will get a politician willing to make tough choices soon enough. You don't win election in this country by saying "We are going to give you less" when the other guys is saying "I am going to give you more for free".

We will eventually be forced by our lenders to bring spending in line with income and its going to be one hellofa shock to America.

As far as leaving the debt to our children, I hate to tell China, Japan, the SSI iou's and a large chunk of the other money we owe but.... we ain't paying. Simply can't be done. We can't find a leader to spend only what we make. Who here really thinks we will find one that says not only do we have to cut spending to the bone and raise taxes to pay for our lifestyles but we have to tack on another large tax to start paying down the debt?

 

[Darwin333]

What sort of answer do you expect? Entitlement programs will have to be modified in respect to shifting demographics in order to keep them in line with their original intent.

Regardless of that this article is talking about how the defense budget will need to be reduced, and for that I am happy.

Me too, but you do realize that regardless of intent or need that it will be necessary to make large cuts in SSI, Medicare, medicaid as well as cuts into whatever new healthcare plan we pass. We do need to cut .mil spending but I don't think your going to like the other cuts that come along with it.

 

[Darwin333]

Us peaceniks on the coast might agree with you. I say cut defense and increase SS, VA, Food Stamps and Health Care.
Debt ceiling... no biggie. 15 trillion is not much if 15 trillion becomes not much.... :sneaky:

I say we borrow as much as possible and up the renewable energy incentives to homeowners to 90%. I am a little biased but at least the people directly benefit from the energy savings, will create a ton of good paying jobs, it helps the environment and if things get really bad at least people will be able to keep the lights on.


Then we tell em we ain't paying.

 

[yuppiejr]

Igitur qui desiderat pacem, praeparet bellum.

("If you want peace, prepare for war.")

 

[StageLeft]

I say we borrow as much as possible and up the renewable energy incentives to homeowners to 90%. I am a little biased but at least the people directly benefit from the energy savings, will create a ton of good paying jobs, it helps the environment and if things get really bad at least people will be able to keep the lights on.


Then we tell em we ain't paying.

So borrow to pay for investment-returning infrastructure? A novel idea and a good one but too much borrowing is now spent just to pay rent and isn't going into income-providing streams like infrastructure.

We will eventually be forced by our lenders to bring spending in line with income and its going to be one hellofa shock to America.

But until the US gets there the leader who can promise the most, squeezing blood from the stone, will continue to get elected.

 

[heyheybooboo]

..... On the Pentagon's present plan, defense spending is set to fall from above 4 percent now to 3.2 percent of GDP in 2015 ....

Spending on 'National Defense' including 'overseas contingency operations' will exceed 5 percent of GDP in FY2010 as currently budgeted ($713 billion) --- the DoD has a supplemental funding request ($60-$80 billion) pending that would raise the percentage of 'Defense' spending to 5.6% of GDP.

I will assume that the proposed supplemental funding does not include the necessary funds to expand operations in Afghanistan (but I don't really know).

In 1999, spending on 'National Defense' was $275 billion, or 2.9 percent of GDP.



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[CPA]

And when that pit has been exhausted what next?

there's always the evil rich.

 

[fskimospy]

Me too, but you do realize that regardless of intent or need that it will be necessary to make large cuts in SSI, Medicare, medicaid as well as cuts into whatever new healthcare plan we pass. We do need to cut .mil spending but I don't think your going to like the other cuts that come along with it.

I guess we'll agree to disagree. The solution to Medicare and Medicaid is not to make cuts to the program, it's to reform our horrible system. I imagine you mean Social Security and not SSI, but yes I agree the calculus for that must change. When it was originally made you didn't live much past 65 and if you did you weren't usually in shape to work. Now in many cases you are.

I'm very aware of the kind of cuts that would be necessary to bring the US to a budget neutral state. (I'm also not convinced that such a thing is necessary however).

 

[heyheybooboo]

there's always the evil rich.

What's $8.4 trillion to a 'fiscally conservative' NeanderCon who neglected to pay for their 2001 and 2003 tax cuts, anyway?

Care to compute the other things our 'fiscally conservative' friends neglected to pay for during their reign of 'error' ?



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[OILFIELDTRASH]

I blame the left and the right.

 

[heyheybooboo]

..... by 2010, the first year in which all provisions of the 2001 and 2003 tax cuts will be fully in effect, households in the top 1 percent of the income spectrum will receive tax cuts averaging more than $60,000 apiece. (Households with annual incomes above $1 million will receive tax cuts averaging more than $150,000.)




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[Darwin333]

I guess we'll agree to disagree. The solution to Medicare and Medicaid is not to make cuts to the program, it's to reform our horrible system. I imagine you mean Social Security and not SSI, but yes I agree the calculus for that must change. When it was originally made you didn't live much past 65 and if you did you weren't usually in shape to work. Now in many cases you are.

I'm very aware of the kind of cuts that would be necessary to bring the US to a budget neutral state. (I'm also not convinced that such a thing is necessary however).

My point is we will not do any of the necessary things to bring costs down. We simply don't have the will. When the interest rate on our interest only adjustable rate loan inevitably goes up we will be borrowing more and more simply to make interest payments, as well as selling more bonds to roll over all those short term bonds that are maturing, as well as sell any NEW debt (and there will be a lot).

Consider that a 2% bump in our "interest rate" will tack something like $400B to our budget almost immediately. Moving all of our debt to the short end was a great play for this years budget but it can bite us hard very quickly when rates inevitably rise.

The thing is, its irrelevant what any of us think is necessary or not. In the relatively near future our lenders will determine what is necessary for us. At that point we will either default or print and we will be forced to spend only what we make. The rich and .mil cuts simply won't be enough to get us there.

 

[Darwin333]

..... by 2010, the first year in which all provisions of the 2001 and 2003 tax cuts will be fully in effect, households in the top 1 percent of the income spectrum will receive tax cuts averaging more than $60,000 apiece. (Households with annual incomes above $1 million will receive tax cuts averaging more than $150,000.)




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Yup, and around 1/2 the country doesn't pay any federal income taxes. Hell, some of them get a lot more back then they put in. Taxes need to go up on everyone not just the evil rich bastards. Can't get reelected by doing that though.

 

[JS80]

Our entitlement programs will ruin this country within a generation if left unchecked. We will simply crumble from within. At some point the punching bag of the left, the military budget, will run out of money to squeeze from.

Isn't that a good thing? It'll then force us to re-org the country, get rid of entitlements, and give more power to states.

I say bring it on.

 

[blackangst1]

I guess we'll agree to disagree. The solution to Medicare and Medicaid is not to make cuts to the program, it's to reform our horrible system. I imagine you mean Social Security and not SSI, but yes I agree the calculus for that must change. When it was originally made you didn't live much past 65 and if you did you weren't usually in shape to work. Now in many cases you are.

yup!

 

[piasabird]

I say cut SS and cut medicaide. The more old people that die the less it will cost. Make teachers pay SS also. That way the government will have to pay the matching funds. Cut back on tax deductions and start firing people that work in the government. Refuse to fund any military action overseas. Congress has the votes to cut off all funding for Iraq and Afghanistan. Either declare war and start killing people of pull out. We dont need to pay soldiers to be policemen. Pull out all of our troops from Europe and let the EU defend itself. Then pull all the troops out of Asia. If a country is not willing to pay for the troops then we cant afford to keep a base there.

 

[dawp]

So if we close most of our overseas bases, how much would that save? And do we really need as many as we have.

 

[Jaskalas]

And when that pit has been exhausted what next?

We'll cut services and add taxes to those making more than minimum wage. They can afford it after all.