Tag: Deficit

Greece 2–The Domino Theory (Again)!

Inkwell Institute

International Studies Group

European Desk

I have listened to all those nay-sayers that see our rising deficit as a problem that will turn the US into another Greece….but is it possible that the US could face the same problems as Greece?  In the 60’s there was a popular theory, the Domino Theory, that stated that if one country in Southeast Asia fell to Communism, they all would….this is just an update of that old belief….if Greece goes, then Spain, Ireland and Portugal will follow…and because of a global economy and the rising debt in the US…it will fall too…..

According to David Leohardt of the NY Times:

The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

But how accurate is that analysis?  Personally, I do not think it is that accurate….I feel it is just a conserv way of using the fear card yet again…..Greece is NOT having any form of recession recovery…the US is…while it might not be a great recovery, there are still signs of the economy trying to make a come back…..Greece is having NO such activity….

Yes the deficit is high and needs some control, but I do not see it banging the country down like that of Greece…as Paul Krugman wrote in the NY Times:

The U.S. economy has been growing since last summer, thanks to fiscal stimulus and expansionary policies by the Federal Reserve. I wish that growth were faster; still, it’s finally producing job gains — and it’s also showing up in revenues. Right now we’re on track to match Congressional Budget Office projections of a substantial rise in tax receipts. Put those projections together with the Obama administration’s policies, and they imply a sharp fall in the budget deficit over the next few years.

The US is NOT Greece!  For one thing Greece does not have its own currency that it could manipulate to help the problem, which would be one way to help, but instead they, Greece, will suffer through years of zero growth and massive cuts in services.  One reason is the Euro.  If you notice that the countries that are having the most problems, Portugal, Spain, etc have NO other currency other than the Euro….something to consider.

Taxes Owed?

Daily Agitator

I recently heard a Repub Senator, Judd Gregg, mention that we should collect all the taxes that are owed to help solve part of the deficit problem…..now I had to have a good chuckle at this….

First, there are lawyers waiting in line to see that YOU do NOT pay all your taxes…just watch the tube….you will see at least 4 different firms that are clamoring for your business…..second, what a crock of crap!  Do you think that any wealthy person or corporation is going to pay their fair share of the taxes?  If you do think you need to return to the ICU for a Thorazine shot…..

Here is an idea!  The GOP is pushing for tort reform as part of any health reform…as a matter of fact it is in their top 5 reasons we need reform…then why not go the next step and demand tax reform?  Why not make it damn near impossible to NOT pay your taxes?  And that includes our lovely batch of Reps in Washington, who always have a better idea but somehow never involves them…..

A couple good ideas….but…..we will NOT see these anytime soon…..why?…..corporate cash for politicians program….so they only things you will see as a way to help the deficit is entitlements…….seniors will be forced to work until they are 80…..Medicare will be made harder to get……and social security will be attacked to the point that they try to eliminate it in favor of some lame ass savings account…..there are the answers they have to the deficit…..and you elected these guys…..how is that working out for you?

Politicians keep saying that they have to make “hard choices”….laughable at best….why?  They make the decisions that are most politically advantageous for them there are no “hard choices” to be made…only actions that NEVER help the people …..actions that will help in winning their next election.

Can you feel the love?

Cash 4 Clunkers!

I swear I look for stuff on the GOP, Repubs and conservatives that is positive….I really want to write about something positive coming from the party….but for the life of me I cannot seem to find much that is positive.  It is like the GOP cannot help itself…it just has to be a party of idiots or at least their leadership is idiots.

If you are a reader that has been keeping track of the economy you will remember back a month or so ago when the auto industry was talking about closing some of the dealerships.  At that time the Repubs were all over the decision saying that it would be an attack on America’s small business  and that the Dems were condemning small businesses by signing on to the decision.

Obama and his auto task force gave the order to close these dealerships, the actual revenue generators for the auto companies.  And then the rhetoric turned into accusation.

As was noted by Senators in the hearing and by House members in special orders floor speeches yesterday, the overwhelming majority of the dealership closures are in rural areas and are owned by Republican donors or politicians. A great deal of them are very profitable.

Now we have another twist in the rhetoric…..it seems that Repub. Sen. Jim DeMint of South Carolina has come up with a new approach…I am pretty sure that he will not be the only one spouting the lunacy.

It appears that now ther Cash for clunkers program is an assault on other small businesses, that are not getting the support from Washington.  Also the Repub has used the program to illustrate the ineffectiveness of a government program.

“I just think this is a great example of the stupidity that’s coming out of Washington right now,” DeMint said today on “Fox News Sunday.”

“Our children and grandchildren can’t afford to make these car dealers well right now,” said DeMint, a South Carolina Republican.

But the most absurd quote from Sen DeMint is:

“The federal government went broke in one week in the used car business,” he said, “and now they want to run our health-care system.”

The program he is mentioning is a program that is creating something sadly missing in today’s economy…..DEMAND.  But then he is saying that since the program has been successful that it is the reason why we should not let the government run health care…..is that not the most absurd thing you have ever heard?  Yep, but the Repubs have not let rationality get in the way of there opposition.

The Approaching Storm

The federal government will run a near-record deficit of $407 billion this year, according to the latest Capitol Hill estimates.

The Congressional Budget Office released figures yesterday that indicate the red ink will spill over into next year, when the deficit would reach a record $438 billion – and could go even higher as the government takes over mortgage lenders Fannie Mae and Freddie Mac.

The deficit, more than double last year’s sum, is largely attributed to continuing weakness in the economy, high energy and food prices, and the slump in the housing and financial markets, said the nonpartisan agency, which makes economic and budget estimates for Congress.

Such deficits feed inflation, make the nation dependent on foreign lenders, cost taxpayers hundreds of billions of dollars in interest payments on the growing national debt, and drain capital from more productive investments.

The new forecast may restrain the appetite of the next president for adding expensive spending programs or new tax cuts. Pressure may build to allow some tax cuts enacted in 2001 and 2003 to expire as scheduled at the end of 2010, with Congress also feeling pressure to curb spending growth.

The economy still could slide into a recession.

Problems Facing The Next President

No matter who gets the nod from the voters, there are parts of the of thew whole picture that will be a thorn in the next presidents side.  But the question should be can the new president really be up to the challange?

BUDGET

The U.S. budget deficit burgeoned under the Bush administration because of several rounds of tax cuts that slashed revenue while the government pursued wars in Iraq and Afghanistan that cost $11 billion a month.

Bush could leave his successor a record $500 billion budget deficit, compared with the $128 billion surplus he inherited when he took office in 2001.

Under Bush, the national debt has nearly doubled to $10 trillion. That requires interest payments of roughly $200 billion each year — more than any other single category of government expenditure except defense, the Social Security retirement fund and Medicare for the elderly.

With the budget already stretched, finding revenue for new spending programs or to offset further tax cuts could be especially difficult.

ECONOMY

The next president will inherit a sluggish economy hobbled by high energy prices and a housing slump, brought on in part by the Bush administration’s drive to expand home ownership.

Hard times for businesses and consumers means the government collects less tax revenue. Revenue from taxes on corporations dropped 14 percent over much of last year and tax revenue from workers’ paychecks recently has been flat, according to a research note by Goldman Sachs.

McCain has proposed a gas-tax holiday over the summer and other tax cuts to boost the economy. But he will probably have a hard time getting them through a Congress expected to remain under Democratic control.

Obama has said he might defer his proposed tax increases on the wealthy if the economic picture remains grim.

MEDICARE AND SOCIAL SECURITY

Ballooning payments to the elderly through Social Security and Medicare will pose a growing problem with the retirement of the country’s 77 million Baby Boomers, born between 1946 and 1964.

By 2017 when a second Obama or McCain term would end, each household would have to pay an additional $2,000 a year in taxes to cover these costs, according to Brian Riedl, a budget expert at the Heritage Foundation.

Medicare, the $400 billion health-insurance program for the elderly, began paying out more than it takes in this year.

The Medicare program that pays for hospital visits is expected to go bankrupt in 2019 and a program that covers prescription drugs, added during Bush’s tenure, will increase costs as well.

These are just the major problems that will be nibbling at the butt of the new president.  Ask yourself which candidate will be capable of handling these—and there will be your vote.

A Possible Credit Crunch

Americans are having a problem with the payment of mortgages, credit cards, etc……it is a credit crunch.  But there is a bigger problem looming on the horizon.  This does not mean that a person’s problems are not important just that the other could be diasterous to ALL Americans.

we all know about the war, right?  This is the first time since the Revolutionary War that the US has financed totally on credit.  At the beginning of the war the US was already operating in a deficit and basically had to borrow money to wage its war.

From the beginning the US had to borrow monies but from where?  Here is the “good” news–40% of the funds for the war were loaned to the US by China.  This will not happen, but what if that marker is called in?  What will it do to the US?  This is not the way to run a country!