Debt commission leaders paint gloomy picture

[ctrlraven]

http://www.comcast.net/articles/finance/20100711/US.Governors.Debt.Commission/


BOSTON — The heads of President Barack Obama's national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control.


Republican Alan Simpson and Democrat Erskine Bowles told a meeting of the National Governors Association that everything needs to be considered — including curtailing popular tax breaks, such as the home mortgage deduction, and instituting a financial trigger mechanism for gaining Medicare coverage.


The nation's total federal debt next year is expected to exceed $14 trillion — about $47,000 for every U.S. resident.


"This debt is like a cancer," Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."


Simpson said the entirety of the nation's current discretionary spending is consumed by the Medicare, Medicaid and Social Security programs.


"The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans, the whole rest of the discretionary budget, is being financed by China and other countries," said Simpson. China alone currently holds $920 billion in U.S. IOUs.
Bowles said if the U.S. makes no changes it will be spending $2 trillion by 2020 just for interest on the national debt.


"Just think about that: All that money, going somewhere else, to create jobs and opportunity somewhere else," he said.


Simpson, the former Republican senator from Wyoming, and Bowles, the former White House chief of staff under Democratic President Bill Clinton, head an 18-member commission. It's charged with coming up with a plan by Dec. 1 to reduce the government's annual deficits to 3 percent of the national economy by 2015.


Bowles led successful 1997 talks with Republicans on a balanced budget bill that produced government surpluses the last three years Clinton was in office and the first year of Republican George W. Bush's presidency. Simpson, as the Senate's GOP whip in 1990, helped round up votes for a budget bill in which President George H.W. Bush broke his "read my lips" pledge not to raise taxes.


Despite their backgrounds, both Simpson and Bowles said they were not 100 percent confident of success this time around.


Simpson labeled the commission members "good people of deep, deep difference, knowing the possibility of the odds of success are rather harrowing to say the least."


Bowles also said Congress had to be ready to accept the commission's findings.


"What we do is not so hard to figure out; it's the political consequences of doing it that makes it really tough," he said.


Arkansas Gov. Mike Beebe was one of those leaders who sat in rapt attention during the presentation, one of the first in public by the commission leaders.


"I don't know that I ever heard a gloomier picture painted that created more hope for me," said Beebe, commending its frankness.

[Joe Walsh]

:hmmm:
Interesting how they immediately think of more ways to tax us rather than more ways to slow their ferocious spending.

Next they will trot out a few of the worst Pork Barrel politicians and have them wring their hands and wipe their brows then declare that;
"We just realized this!....We are really in trouble!"...:eek:
(If we scare you bad enough...you might be dumb enough to swallow more tax increases!)

Wait until they try to get their hands on the last HUGE cash reserve in the country: 401K/IRA retirement plans.

Also, any of us 'baby boomers' and those who are younger can expect to lose most or all of their life-long Social Security "donations".
They will start a 'means based' system soon to save the S.S. boondoggle.
If you have done a good job of saving and planning for retirement, the government will declare that you don't really need Social Security because "you have saved plenty of money for retiremement."
They will then take your lifelong contributions and distribute them to someone who did not plan well for retirement...sounds fair doesn't it?

VOTE ALL INCUMBENTS OUT!!!!

[FordNut]

Wait until they try to get their hands on the last HUGE cash reserve in the country: 401K retirement plans.

Also, any of us 'baby boomers' and those who are tounger can expect to lose most or all of their life-long Social Security donations.
They will start a 'means based' system soon to save the S.S. boondoggle.
If you have done a good job of saving and planning for retirement, the government will declare that you don't really need Social Security because "you have saved plenty of money for retiremement."
They will then take your lifelong contributions and distribute them to someone who did not plan well for retirement...sounds fair doesn't it?


Yep, I see this on the horizon. Another thing to think about, if you can do it switch traditional IRA's into Roth IRA's ASAP. Pay the tax now instead of later, because taxes are going to go up in the near future. I'm going to roll over a bunch of mine this year, as much as possible while staying out of the 33% tax bracket.

[sailsmen]

:hmmm:
......................
Also, any of us 'baby boomers' and those who are tounger can expect to lose most or all of their life-long Social Security donations.
They will start a 'means based' system soon to save the S.S. boondoggle.
If you have done a good job of saving and planning for retirement, the government will declare that you don't really need Social Security because "you have saved plenty of money for retiremement."
They will then take your lifelong contributions and distribute them to someone who did not plan well for retirement...sounds fair doesn't it?

VOTE ALL INCUMBENTS OUT!!!!

My SS Statement in March said I will only receive 76% of my benefits. At 100% of benefits I get a 2% return and at 76% I will neve get what I put in unless I live to 95.

Mean while in LA State Workers get a guarranteed 10% return on their "contribution" plus 10% guarranteed on the State's matching. I make 25% more, work 50% longer and at 100% of SS I get exactly half of what the state worker gets! That is why the President of the SEIU is one of the most frequent visitors to the White House. By the way SEIU was founded by ACORN.

By Dan Balz
Washington Post Staff Writer
Monday, July 12, 2010; A02

BOSTON -- The co-chairmen of President Obama's debt and deficit commission offered an ominous assessment of the nation's fiscal future here Sunday, calling current budgetary trends a cancer "that will destroy the country from within" unless checked by tough action in Washington.
The two leaders -- former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton -- sought to build support for the work of the commission, whose recommendations due later this year are likely to spark a fierce debate in Congress.
"There are many who hope we fail," Simpson said at the closing session of the National Governors Association annual meeting. He called the 18-member commission "good people with deep, deep differences" who know the odds of success "are rather harrowing."
Bowles said that unlike the current economic crisis, which was largely unforeseen before it hit in fall 2008, the coming fiscal calamity is staring the country in the face. "This one is as clear as a bell," he said. "This debt is like a cancer."
The commission leaders said that, at present, federal revenues are fully consumed by just three programs: Social Security, Medicare and Medicaid. "The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans -- the whole rest of the discretionary budget is being financed by China and other countries," Simpson said.
"We can't grow our way out of this," Bowles said. "We could have decades of double-digit growth and not grow our way out of this enormous debt problem. We can't tax our way out. . . . The reality is we've got to do exactly what you all do every day as governors. We've got to cut spending or increase revenues or do some combination of that."
Bowles pointed to steps taken recently by the new coalition government in Britain, which also faces an acute budgetary problem, as a guide to what the commission might use in its recommendations. That would mean about three-quarters of the deficit reduction would be accomplished through spending cuts, and the remainder with additional revenues.
Most Republicans in Congress are opposed to any tax increases, which has made the work of the commission far more difficult. Bowles and Simpson appealed for support to the governors, who have been forced by their states' constitutions to balance their budgets with deep spending cuts and in many cases tax increases.
Bowles and Simpson said the commission would have had a stronger hand politically had it been created by Congress, rather than through an executive order. Simpson was pointed in his criticism of seven Republicans who once co-sponsored such a measure but who helped block it the Senate.
"As far as I can discern, it was to stick it to the president," Simpson said. "That's where we are in Washington." He later added that all seven "have now come to us to say, 'We're ready to help.' "
The presentation by Simpson and Bowles, which included repeated statements of determination to produce a bipartisan set of recommendations, drew praise from the governors.
"I don't know that I've every heard a gloomier picture painted that created more hope for me," said Arkansas Gov. Mike Beebe (D).
Washington Gov. Chris Gregoire (D) said that many governors fear that the commission's recommendations will result in more demands on the states.
Bowles, who noted that the 1997 balanced-budget agreement between the Clinton White House and the Republican-controlled Congress included many provisions that put more burdens on the states, said that wasn't likely.
"I don't think you're going to see a lot of devolution coming from us because the states are all broke," he said.
Simpson also warned that the November elections could add another wild card to the work of the commission. "I have no idea what's going to happen on Election Day but it's going to be disruptive . . .," he said. "It's going to be a big wake-up call around the whole United States. I have no idea where it's going, but thank heaven we have a month then to work through the wreckage."

[sailsmen]

A Nation's debt is it's measure of freedom for it is the shackle to slavery it imposes upon all it's subjects!
Public Debt to GDP
1988 40% 1998 36% 2008 40% 2010 63%, Budgeted 2020 90%.
Public Debt in 2008 $5.8 Trillion and in 2010 $9.2 Trillion. Increase in Public Debt since 2008 enough to payoff 33% of the home mortgages in the USA. Drive around knowing that in less than 2 years the debt has increased enough to payoff the mortgage on every third house and also that 47% of income tax filers do not pay income tax. Increase in Public Debt Budgeted thru 2020 enough to pay off 100% of the home mortgages and give everyone a $7,000 Bonus!
"That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America's debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.WASHINGTON TIMES"
"That level of debt is extremely problematic, particularly given the upward debt path beyond the 10-year budget window," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
"The proposed budget is woefully insufficient to achieve the president's goal or the important fiscal goal of stabilizing the debt at a reasonable level in the medium and long term," Ms. MacGuineas said.
For the 2016-20 period, CBO estimates that deficits will average more than 5 percent of GDP, even while assuming the economy will be near full employment, with an average jobless rate of 5 percent during that same five-year period. WASHINGTON TIMES
"Deficits in the, let's say, 5 percent of GDP range would lead to rising debt-to-GDP ratios in a manner that would ultimately not be sustainable," Mr. Orszag, the President's OMB Director, acknowledged to reporters on March 20, 2009, two months after the administration entered office.
D. Elmendorf, CBO Director, appointed by the current Congress, - In speaking about 2009 "Federal Debt held by the public will equal about 60% of GDP by the end of this fiscal year, the highest level since the early 1950's. As a result, further large deficits and increases in the debt will raise serious economic risks."
Per the CBO the 10 year Budget Baseline Debt to GDP is projected to be 67.5% and President Obama's Budget's Debt to GDP is projected to be 90% Debt to GDP.This is the result of President Obama's Budget increasing Debt an additional $3.8 Trillion. The $3.8 Trillion is from increased spending from the 2010 Fiscal year above and beyond the automatic annual increases.
For reference in 1988 the Debt to GDP was 40%, in 1998 36% and 2008 40%. After WWII over 14,000,000 dropped their uniforms and many donned hardhats to rebuild Europe and Japan. Defense spending including the War is 24%, down from the post WWII 50 year average of 35%. Point is the increased spending is entitlements which do not end.
Former Tres Sec Rubin, appointed by Pres Clinton, states - "The United States faces projected 10-year federal budget deficits that seriously threaten its bond market, exchange rate, economy, and the economic future of every American worker and family. " -"The commission also found that no economy anywhere in the world had been successful with largely state-directed activities and high walls against global integration.
The evidence, in other words, strongly suggests that a market-based model is still the best way forward. ", (Rubin wrote in NewsWeek, 12-29-09)

Pres Obama, Send Reid and Con Pelosi have budgeted over the next ten years increasing debt the equivalent of doubling everyone's mortgage plus paying for everyones health care for 1 year. There is no plan in any of the budgets to pay back the Debt.

[Joe Walsh]

A Nation's debt is it's measure of freedom for it is the shackle to slavery it imposes upon all it's subjects!
Public Debt to GDP
1988 40% 1998 36% 2008 40% 2010 63%, Budgeted 2020 90%.
Public Debt in 2008 $5.8 Trillion and in 2010 $9.2 Trillion.

Pres Obama, Send Reid and Con Pelosi have budgeted over the next ten years increasing debt the equivalent of doubling everyone's mortgage plus paying for everyones health care for 1 year. There is no plan in any of the budgets to pay back the Debt.


Just a question and I don't want to start a Clinton bashing thread (Much as I disrespect that piece of lying garbage)

Did Clinton or Bush or Congress ever authorize any pay down of our National Debt during the years when we actually had a surplus??

(I'm fairly certain that Congress would have pissed away any surplus like a drunken sailor in port.)

[jflave]

MAKES ME SICK. :puke:

[babbage]

http://obamaspending.org/

[sailsmen]

No, post WWII the Public Debt, what our Gov't has borrowed from others, has stayed ~40% of GDP.

Congress sets the Nations Fiscal Policy. The Pres can and does put forth a budget and the Pres appts the Treas Sec and Fed Sec, however Congress can over rule a Veto. All appropriation starts in the House, no appropriation no spend. Remember when the Fiscal House Conservatives shut down the Fed Gov't and tens of millions died in 1996.

The 50 year post WWII average Defense was 35% of spending. Dipped down under Pres Carter resulting in the Soviets having a string of "victories" and being unable to rescue our emabassy personnel from Iran, although a private citizen got his execs back by breaking them out of an Iranian jail.

Pres Regan brought defense back up to 35% causing the Soviets to waive the white flag. This enable Pres Clinton to cut Defense back down to 16% resutling in 36% Public Debt to GDP and 911. Pres Bush brought Defense including the cost of the Wars back up to 24%.

Many military beleive had we gone to war with the Soviets under Pres Carter we would have lost the conventional battle resutling in a Nuclear Shoot Out.

Pres Obama's Defense spending in my opinion is adequate. Pres Obama's "financial Waterloo" is he is in effect increasing "benefits" or unentitled entitlements. These do not end when your enemy gives up and these do not generate wealth.

For every $1 Gov't borrows it crowds out $.33 of private capital. Gov't charges an Admin Fee to "redistribute" wealth resulting in reducing current wealth. Gov't does not create wealth it can only aquire wealth by destroying it or it can sell it's natural resources. Gov't does not make natrual resources.

The ex President of Shell said there are 2Trillion Barrels of Oil in the USA and we use 7.2Billion per year. That's a 300 year supply at current consumption.

The worst thing a Gov't can do is run a surplus. A surplus removes wealth from those who generated it and freezes it benefitting no one, like a robber stealing from a bank and burning the money.

Elemdorf CBO Director said Public Debt to GDP up to 60% is ok, it is very scary that in less than 2 years we have gone from 40% to 63% and what good has it done?

Please note Public Debt does not include the money the Gov't owes it'self like $400 Billion in Fred/Fan or several Trillion stolen from SS.