Ed's Blog

"Some people know everything, but that's all they know."

RAISING THE DEBT LIMIT: SEPARATING FACT FROM FICTION

If you are even a little bit confused about what’s truth, what’s political propaganda, and who’s winning the argument in the debate over raising the national debt limit, you’re not alone. The facts that most everyone can agree on are that the national debt is over $14 trillion. Given current trends, spending will exceed 25 percent of gross domestic product (GDP) this year and will hover around 22.5 percent for the next five years. The spending spree began under President George W. Bush and got much worse under President Barack Obama. That’s where the consensus ends.  (More)

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17 Responses

  1. Reposted from LinkedIn says:

    Reposted from LinkedIn Group: Republican Party

    You are correct. In addition, we will spend $3.7 Trillion and only take in $2.2 Trillion non-borrowed dollars this year. At this rate, in 25 years our debt will equal 100% of our GDP. We Must Limit Spending Now ! Please read and consider signing the pledge at cutcapandbalance.com. Please pass this message to your Congress Person and your Senator so that they might see the light before August 2.

    Posted by Lee Davis

  2. Reposted from LinkedIn says:

    Reposted from LinkedIn Group: Politics on the Rocks

    Hi Brenda: Nice article in light of a video I just watched this morning. If you can get through it and I did … it traces the story of inflation in a well narrated story from the 1969 paper money decision. Certainly ties in the dots. Rather sobering if remotely true. http://www.youtube.com/watch?v=VpZtX32sKVE

    Posted by “JT” Thayer(TransMedia Producer)

  3. Reposted from LinkedIn says:

    Reposted from LinkedIn Group: The Political Coffeehouse

    Take a look at my latest post:

    http://allthingspoliticaltoday.com/?p=762 . I found the fact that 40% of our national debt is owed to ourselves, government to government, shocking. If you notice no one has brought that to light. The way that the Washington politicians are talking we can expect Chines troops (and accountants) to land in LA on August 3rd. The reality is not as dramatic. China has $1.2 trillion in Treasury bonds. All the talk of default is fear mongering by the Democrats. They’re looking for more of our money in the form of higher taxes so that they can continue to spend, spend, spend.

    Posted by Richard Billies

  4. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    It is amazing to me that we can double federal expenditures in two years and only consider a 10% budget cut to the 50% (upcoming deficit amount) of the proposed going forward budget…. and not get agreement! Everyone has an opinion – however I have not heard any discussion on cutting non-essential services to stay within the debt limit – like dept. of ed; epa; and other service groupings – to protect the obligations to both creditors (bond holders) and entitlement holders (Social Security; pensions; …..) . I guess that we need to hit rock bottom to start to do the right thing…. I just hope that others around the world don’t see this as an opportunity to leverage their world desires due to our perceived weakness. Time will tell.

    Posted by Shaun Taylor

  5. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    I’m afraid that things will have to become more desperate before there is sufficient political will to deal effectively with the crisis.

    Posted by John Tucker

  6. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    The debt is unmanageable and fiscal policy of the last 2 decades is unsustainable. Allowing for more debt without the immediate and serious reduction of spending is 180 degrees off.

    Allowing more debt with spending reforms “to come” has already proven to be a joke on conservative lawmakers. The debt slams immediately into the new ceiling and the spending reforms never come.

    Those who are trying to do right by the country, quote the Constitution and the founding fathers while those who seek to continue our hell-bound spiral quote opinion polls.

    Closet progressive/liberals like John McCain are already starting their familiar whine about having no choice but to give Obama what he wants. He’s already prepared to lay down again for the Progressive/Liberal cause.

    Our only hope is for true Conservatives in the house to be very public about a solid plan to curtail spending. Let the President veto every measure put before him. Make Obama’s next campaign be all about a man so hell bent on destroying this country that he shut down the government in a temper tantrum.

    I’m sure his team of sycophant America-haters can craft polls that show a majority of Americans favored the shut-down, and John McCain will carry that water too!

    Posted by George Daggett

  7. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    Yesterday, the media took up the drumbeat of a deal based on Mitch McConnell’s Plan with the input from Harry Reid. In this plan the big spenders get a $2.5 trillion increase in the debt ceiling while there are only $1.5 trillion in spending cuts. Not even a one for one ratio. You know why? Because they’ve already negotiated these cuts so there’s no heavy lifting. Even Erskine Bowles says that we’re way off there. He’s calling for $4 trillion in cuts while Tom Coburn is calling for $9 trillion. Right now the House will have an exercise that won’t get past the Senate. They should have a short-term bill for $500 billion in a debt ceiling increase and tie it to another $3.5 trillion in cuts and a tax code rewrite. Do we want to be Greece or Ireland?

    Posted by Richard Billies

  8. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    Another GOP capitulation could bring the end of the Republican party. They have the power to stop the spending, but seem determined to make deals no matter how bad. Another bad deal on the magnitude of this may well and should cost them 2012 in the House and Senate and bring on the emergence of a full scale third party. This is the GOP’s defining moment.

    Posted by Jerry Walling

  9. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    I actually agree with the last comment. These “cute” maneuvers by primarily Mitch McConnell continue to kick the can down the road. It’s time to call a halt to them and vote. If Obama doesn’t agree he’ll veto the bill (if it gets by the Senate). I’ll repeat what I said previously: do we want to be Greece or Ireland or are we Americans.

    Posted by Richard Billies

  10. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    What the majority of citizens and especially the media fail to focus on, is the primary reason the Parties are trying to outgame each other in this situation instead of working in the best interests of the American people: Re-Election! When will it dawn on the majority that the simple solution is to enact two-term limits to both houses of congress and remove the impact of special interests and lobbyists on the political process? How corrupt does the flow of money into campaign coffers have to be before the governed take back control of our own destiny? Act now and vote to replace our ineffective government before it’s too late.

    Posted by Louie Partida

  11. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    I took a look at that link, and I don’t believe it supports your thesis. What is true, is that many other factors influence GDP growth other than government spending. The United States is a special case because it is the engine that pulls the train. Many other countries got their economies going by reforming disfunction and hooking up to the big locomotive. This is not a choice between government and no government. Its a quetion of how much government we can afford and what is the correct ratio between GDP growth and the cost of government. For years, the expense of government at all levels has taken a larger and larger percentage of the overall pie, and as a consequence growth has suffered. WWII was an anomoly that transferred huge amounts of wealth from Europe to North America. That will not happen again. The GOP position is very reasonable and not extreme in the least. They are attempting to preserve all major institutions, while simultaneously encouraging economic growth, there is nothing austere about either the Ryan Plan, or cut, cap and balance. The proposed balanced budget amendment even proposes a minimum of 20% GDP for government. (imagine what Samuel Adams would have to say about that?)

    The progressive experiment has culminated. We have reached a decision point, liberty or tyranny. It’s up to us to determine which.

    Posted by John Tucker

  12. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    The Republican Party once stood to preserve our Constitution and remain true to the vision of our founding fathers. There is no doubt the party has been infiltrated by enemies of the Constitution and the Republic. The corrupt and their useful idiots will always be among us. McConnell and McCain are NOT the GOP!

    A longing for liberty and the quest for the vision of our founders was the impetus for the 2010 sweep of the House of Representatives and they are doing what we elected them to do! Progressives and Liberals still control the Senate. We the People have a magnificent opportunity before us if we remain united.

    As Richard pointed out, Republicans and Conservative Independents can stand firm on their commitment to serious and immediate spending cuts. It’s the right thing to do for America and will serve to darken the line between patriots and enemies of the Constitution. The 2012 election will focus on those differences and we will have another opportunity to throw out the turncoats.

    Anyone who thought the “Tea Party” movement was going to dominate one election and America would instantly right itself, is a fool. The process of taking back our nation will be an arduous and long-term endeavor. Those who are already prepared to bail on the GOP, are no better than McConnell and McCain.

    The push for a third party is a push for the destruction of Constitutional conservatism. Why put time, money and energy into a new party when we’re so close to reclaiming the GOP and restoring its lost principals? It took several decades for us to descend to our current level. It will take more than a year or two to bootstrap our way out.

    Posted by George Daggett

  13. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    Businesses thrive on certainty when taking on risks to grow or start their business. The debt ceiling is just a symptom to the issue of uncertainty for both small and large business owners. There are trillions of dollars sitting on the sidelines due to the unknowns from an expense prospective (future taxes – fees – gov’t constraints). Clear up the uncertainty – make a decision that will make it possible for small business owners to calculate their risks in growing their business – If DC can accomplish that – we will see America prosper once again. For those that say that consumption is the answer – so keep on spending to consume – – to maintain that cycle over time you also have to “produce” …. I vote for the small business to be the “producer” of those items to be consumed – based upon quality, price and demand…. which keeps the consumption cycle in the equation going over time.

    Posted by Shaun Taylor

  14. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    The article makes a very critical point about austerity programs being counter-productive, particularly right now:

    “In practice, however, [fiscal contraction] rarely works out that way. In a recent study of 173 fiscal-policy changes in rich countries from 1978 to 2009, economists from the IMF found that cutting a country’s budget deficit by 1% of GDP typically reduces real output by about two-thirds of a percentage point and raises the unemployment rate by one-third of a percentage point.”

    In other words, cutting funding to schools and laying off teachers (among other things) hurts the economy.

    As to WWII, there was no wealth transfer per se. There was wealth destruction in the rest of the world. In the US, there was massive economic growth during the 1941-45 time frame – almost entirely due to military (read deficit) spending. When taking into account 12 million men and women in uniform and all civilian jobs, absolute employment increased during that time frame to record levels. Virtually every dollar of increased spending was deficit spending.

    In 1946-48, as that military spending was shut off, the US went through a recession – borne of a too-abrupt shut-off of stimulus spending.

    As a closing note, had the US had a balanced-budget amendment during WWII, there would have been no way to finance the war effort. Current account revenues (i.e., taxes) could not have been raised nearly enough.

    The same, too, with the Iraq War. Every penny spent in that war was borrowed (as measured by the incremental impact on the national debt).

    Balanced budget amendments are a bad idea whose time should never come.

    As to liberty or tyranny, such language is mere hyperbole in the context of today’s debate.

    Posted by Roger Higgins

  15. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    An appeal to studies by “economists at the IMF” doesn’t inspire confidence, particularly when the examples provided in the article contradict the conclusions of the study. Indeed, the initial impact of austerity could be expected to have a negative short term impact, given that they generally occur under the conditions of an ever deepening crisis and owing to the fact that it takes time to adjust to change. So what?

    The economic impact of WWII is a poor example, because those particular conditions are not likely to be repeated.

    Whether a balanced budget amendment is a good or bad idea is a subject for another debate. The point I was trying to make is that the proposal that is on the table is not extreme.

    Posted by John Tucker

  16. Reposted from LinkedIn says:

    LinkedIn Group: The Political Coffeehouse

    I don’t think there is an expection of an “instant fix” to all our issues. But I am not seeing anything from the GOP other than symbolic votes in the House followed by complete capitualtion. I have a hard time considering it wise to continue to support and vote for a party who does not execute on their principals and promises. That seems to be rewarding bad behavior. How many dollars do you drop into a broken slot machine? I believe the GOP has a chance to define themselves, but it is really all on this one issue. I think it is up to them to prove themselves as I believe time is of the essence.

    Posted by Jerry Walling

  17. Reposted from LinkedIn says:

    LinkedIn Group: Republican Party

    What I can’t undestand is why ANYONE (D, R, I, L, etc) thinks that spending more than you make is a good idea!! Where is the “duh” factor? You look at the column where your money is coming in and make improvements, then look at the column where your money is going out and you cut, slash, hack, chop, until it balances or drops below (preferably) your income. The first things to cut, slash, hack, chop, is the money going out for things the government has no business being constitutionally involved in. Can someone please clue me in on what I missed in my “government funded” economics class? Tell me what I did wrong in my “real life experiences” when my debt exceeded my income? Help me understand why my personal “paygo” system now is a bad idea? Please…I’m looking for clarity!!

    Posted by Wayne Butler

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