A government shut down has been averted for now over the 2011 budget. Both sides of the aisle…agreed to a $38.5 billion deficit reduction. Really? Only on Capital hill can they call it a cut when they are spending more money than the previous year, but not as much as was budgeted!!!
This is outrageous.
Wait a minute…why are we even talking about the 2011 budget when we are already half way through the Government Fiscal Year. Oh yeh, the Obama administration which had control of both sides of the aisle last year didn’t pass one. Why? Because he has added more debt than any of the other previous president’s combined in just his term, and knew the republicans would gain control of the house in the November election. Politics at it’s finest as we watch both sides of the aisle play fast and loose with our money.
Every person in America is on the hook for approximately $50,000 which increases daily.
Let’s see…$38.5 billion deficit reduction (not really) on Obama’s budget for 2011 of 3.7 Trillion,
.09% of the budget.
Drowning in Debt but Getting No Growth
Every day, the federal government spends more money than it takes in. It makes up the difference by borrowing money. So every day, the government’s debt increases. Some time next month, total federal debt will rise above $14.3 trillion.
There’s a law on the books — first passed in 1917, updated many times since — that currently caps the federal debt at $14.3 trillion. This is the debt ceiling.
Some time very soon, the government either has to raise the debt ceiling or stop spending more than it takes in (in other words, balance the budget).
Balancing the budget would mean cutting spending by about 40 percent, raising taxes by a comparable amount, or enacting some combination of massive spending cuts and huge tax increases. (Context: Every penny of discretionary spending, including defense, amounts to about 40 percent of the budget.)
Some suggest “tax the rich to make up the deficit”. As of the end of 2010, the total worth of all American billionaires is $1.3 Trillion. We could take ALL their worth, not just high taxes, but ALL their WORTH; and it wouldn’t dent our national debt. It wouldn’t even pay this year’s deficit! And if we did take their money to pay some of this year’s deficit, what would we we do next year?
We have become a credit-addicted, credit-fueled economy, which works just fine until you have too much credit driving too little real growth. Without government spending, “real” GDP would be at levels it was over ten years ago. And it is real growth that drives wages and creates jobs. Small business is the engine that creates jobs.
To put the national debt in perspective, it stood at 56.6 percent of GDP in 2001. Last year it reached 92.1 percent of GDP.
The Cancer of Debt – from John Mauldin
The problem is that the debt is like a cancer. The bigger it grows the more threatening it is. Pretty soon it consumes its host (think interest expense).
I am worried about the survival of the country economically. Another crisis caused by the bond market driving up interest rates, because they become concerned about the size of the debt and deficits, will seriously reduce the choices we have – with none of them being good. Ask Ireland or Greece how it feels. They are in what can only be called a depression, and likely to stay there for some time. You think we have it bad now? Avoid dealing with the debt and see what happens.
To think it cannot happen here is to simply ignore reality. Yes, the US can go longer than we might think, but there is a limit. I think that limit will come before the middle of this decade. Perhaps as early as 2013, if the new incoming President and Congress do not deal with the deficit in a realistic manner. Then Bang! , we have our own Greek moment. I want to avoid that.
I am just as frustrated as you about the bailout of banks, that we still have banks too big to fail, that credit default swaps are not on an exchange, that Fannie and Freddie still even exist in their current forms, and a host of other problems you mention. (Frank-Dodd was a disaster! It almost guarantees another crisis.)
Bill Gross who manages the largest bond in the world (Total Return), sold all his Treasury holdings ($236 Billions) in U.S. Government related debt as of the end of Feb. What does that say about his confidence in this administration to reign in debt?
What’s your take on our debt?