If this doesn't make you reach for the Pepto Bismol, nothing will. Not only is the runaway train of US government debt accelerating at a staggering $10 million each minute, neither Presidential candidate has a viable plan to stop it. For those of us planning to live another 20-30 years (which I have to believe is most of you reading this) this is scary, scary stuff:
Trending Content
Career Resources
"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies."
Senator Barack Obama Senate Floor Speech on Public Debt March 16, 2006 http://i.imgur.com/UKz51.jpg
You have to feel bad for him though. If he gets re-elected, look at the mess he will inherit.
Here is a pretty good infographic of the problem: http://demonocracy.info/infographics/usa/us_debt/us_debt.html
He won't, he is too busy going to fundraisers with George Clooney and taking his daughters to ride bumper cars.
so when the government says that they are planning 100 billion in deficit reduction by 2020, do they realize that they are talking about flattening out about 17 hours worth of deficit growth? Or do they just not care because 100 billion in reduction to someone watching a presidential conference sounds like a big number.
If you focus on the factors that can "give way", if you're a state employed retiree, then you should be really worried right about now. A crazy amount of first world debt is to pension obligations, pass a law that reduces these and boom.
My sympathy is limited. If you picked a job because of the comfy state pension that it comes with, and there wouldnt be a crazy influx of people doing the same thing making the system unsustainable (and you're planning for what, 50 years time?) then its the price for being naive.
Inflation and the above will bring the debt down to manageable levels for the US. You still create a lot of businesses, import the talent your failing state education system doesn't provide (because its not economical when you can buy it - and im NOT talking about your universities), in a business sense you still generate a lot of cash, so I think this debt thing, while serious, will not destroy the US. T
I have to believe that every generation has thought that shit was awful and only getting worse. That said, I feel like shit is awful and only getting worse.
Thing is, sometimes they are right and it really does blow up in their face. The fundamentals should guide our view, not the emotional or hysterical wailings of the political arena. And, fundamentally, I agree- things do not look well.
We're on the level
This is why I don't understand the "No big deal, nothing to see here" response to Peter Schiff the other day.
UFO - I'm not in Camp Mitt or Camp Barack when i say this, but I don't remember seeing another president run for his second term saying "I'm gonna keep trying" and pointing to his predecessor for blame instead of taking credit for all the great stuff he thinks he accomplished in his first term.
I think Obama:Economy in 2012 as Bush:Wars in 2004. No, I haven't done a good job, but stay the course, the other guy's worse!
And to the original topic, we're just fucked. I'm buying bullets and getting ready for some Mad Max beyond the Thunderdome type shit when this goes down.
This is a problem throughout the developed Western world with the US and UK epitomising it perfectly. The debt simply cannot keep growing as it is, one of three things HAS to happen:
The rate at which government debt is growing would require a large degree of inflation, certainly far more than we are used to in order to reduce it and this would really hurt consumers. Paying it down is not a realistic option. Defaulting, inflating or kicking the can are the only paths, and kicking the can is only viable for so long.
I do believe that in our lifetimes the US, UK, Japan and others are going to have a serious problem with this debt and things are going to have to change. Many aspects of the welfare state and social security are just laughable including the level of public pensions, state-benefits and the subsidising of under-performing industries. They cannot continue forever.
Obama won't be the worst, but he will be nothing more than mediocre. We are running at over a trillion dollars a year in deficit spending. National debt is currently at $16T and rising. $200B per year, 1/3rd of our bloated defense budget, is being spent to cover interest expense. The rates we are paying are being kept artificially low thanks to the inflationary actions of the Fed.
Obama ran on hope and change. I hoped he would change things. He did not.
Mitt might not be ideal, but he is better than another 4 years of Mr. Blame.
FYI - Good posts Nefarious.
A lot of this debt is, for lack of a better word, paper. It's a theoretical calculation of future obligations. A little socialised healthcare, rising fuel costs and food prices and quite a few of these obligations will drop when they die off a little earlier than expected.
The US is rich in natural resources. We'll just take those over like Venezuala and use them to pay our debts.
Romney gave an interview to Fortune magazine the other day and he spoke about his plans as President. What gov't spending will he cut? "PBS...The National Endowment for the Arts." He went on about a whole set of other empty platitudes, including growing the size of our active duty military by 100,000.
I have to say, now that I know he's going to cut PBS, I have faith that he'll end the deficit!
He was actually secretly overhead joking about closing a bunch of Federal agencies. Let's be fair, you aren't going to get elected talking about laying off Federal workers, a powerful voting block.
I can't resist putting this up, kinda dated but still hilarious:
GOP Completely Fixes Economy By Canceling Funding For NPR
WASHINGTON—Unemployment plummeted and stocks soared Tuesday after Republican leaders fulfilled their promise to cut funding for National Public Radio, a budgetary move that has completely rejuvenated the flagging U.S. economy. "Since eliminating federal spending for NPR, America's economic outlook is brighter than it's been in decades, with manufacturing on the rise and millions of jobs once sent overseas now returning to our shores," said Sen. Mark Kirk (R-IL), adding that by eliminating funds for NPR, the deficit has been slashed by 0.000004 percent and a newly thriving middle class once again has cause to believe in the American dream. "Pulling funding for Car Talk and Planet Money alone has created 4.2 million jobs and generated a $2 trillion budget surplus." Republicans announced Thursday they will now turn their attention to cutting the National Park Service, a move that should ensure Social Security's solvency for the next 350 years.
Sometimes too much focus is placed on the actions of our presidents when we should be looking at Congress.
Obama is a crappy president but the not worst like TNA says. This Congress will go down as the worst ever by far.
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/13/13-reasons…
[quote=Cola Coca]Sometimes too much focus is placed on the actions of our presidents when we should be looking at Congress.
Obama is a crappy president but the not worst like TNA says. This Congress will go down as the worst ever by far.
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/07/13/13-reasons…]
This
This! Fully agree. It is not just the President, Congress plays a much bigger role.
I don't know, I think this is the best Congress. They are not passing laws (good), they are stopping Obama from passing what he wants and if anything, forcing a move to the center (good).
This BS that Congress set back the recovery or lost the credit rating because of the debt ceiling fight is comical. Congress should have refused to increase the ceiling, forcing cuts to be made. Why have a limit if it is not enforced.
And repeal Obamacare. That is what the people want and they is what they are trying to do. The majority of the country are against it, it caused Obama to lose his majority in Congress, it will add and accelerate the bankruptcy in this country and it is shoddy at best.
The Founding Fathers wanted a gridlocked, slow and contentious Congress. Things should move slow.
re: Obamacare - About half the country wants it repealed (less since the SC upheld the law). But, when people are polled on specifics within the law, they are in favor of them by a wide margin. So, to say that people really want it repealed isn't necessarily true.
And, you can say that it will add to the deficit long-term, but that does not make it true. I know there's some real bullshit buried in the law, but it's, in large part, a market-based system with cost-cutting measures built in. There have even been arguments made recently that the cost-curve of healthcare spending is dropping in part because of Obamacare.
Plus, would we really want to go back to what we had before? Repeal it? Fine, but what will replace it? And Romney's whole song and dance about "we'll have free market solutions that will also cover people with pre-conditions" is non-sense. The free market didn't cover those people and wouldn't without this law.
As for this Congress moving us back to the "center," I'm not sure I can agree with that. Obama is definitely not some left-wing nut, if anything he's pretty moderate. Remember, the sequestration cuts are coming because the Congress refused to budge on taxes during the Deficit Grand Bargain discussions.
I will agree with you the depending on how it is phrased, more or less people support it. BUT, Obama did lose the House and nearly the Senate, due in large part to him basically pushing through healthcare.
As for whether it will save money or not, I simply have no faith in a large, national, government program being able to do what it says. I hope I am wrong and it does bend the cost curve downward and save money, BUT, I think you and I can agree, the Federal Govt has a pretty shoddy record of being able to do anything efficiently.
Classic agency dilemma. A politicians motivation is to be re-elected, not spend our money wisely.
As for Obama, yes, he has been rather moderate in practice, but I do think that has been out of necessity vs. his true nature.
You think that total disengagement from Congress during the worst recession since the Great Depression is a good thing?
The debt ceiling is a joke. It serves no purpose other than to create additional political wrangling as if we don't have enough already. It's a rubber stamp. Congress couldn't agree on the Simpson-Bowles plan, and the "super committee" wasn't so super.
The automatic spending cuts/sequestration inserted into the resolution was cover for all their political asses. If it wasn't for its complete dysfunction, I would be sure that Congress would pass something to avoid the "fiscal cliff" and kick the can further down the road.
I guess you love the fact that the House spends time on voting to repeal Obamacare 33 times.
I don't give a flying fuck if that is what the Founding Fathers wanted. We need a unified Congress focused on domestic investment, entitlement reform, and tax/regulation reform in order to spur recovery and growth.
Yes, in general (and in more "normal" times), good legislature takes time to develop and be reviewed, but I think most would agree that we are far from living in normal times.
I actually LOL when I read this. You must be part of the 10%.
http://www.zerohedge.com/news/congress-approval-rating-slides-back-all-…
I actually LOL when I read this. You must be part of the 10%.
http://www.zerohedge.com/news/congress-approval-rating-slides-back-all-…]
You do realize that while people might disapprove of Congress as a whole they generally approve of THEIR Congress person.
I think Obamacare was ill thought out, rushed and doesn't do enough to cut costs or fix fundamental issues. From my reading and the analysis I have looked at, as well as my personal opinion of the functioning of government, I believe that Obamacare will add, not subtract from the deficit.
Therefore I support repealing it, modifying it, anything but leaving it alone.
I think we should HAVE a debt ceiling, as a way to check uncontrolled spending.
I do not want a unified Congress because this country does not have a unified vision. Arguing, fighting, negotiating and compromising.
You might not care what the Founding Fathers wanted, but a slow and contentious Congress is what you want for a country this large and this important. Things moving fast seem like a good idea, until something is passed without thought.
Oh wait. You have to pass this bill before you can know what is in it.
Ummm ok.
A few things:
1) It's interesting anyone would say Obama handled foreign policy "beautifully," I guess when civilians get killed by our bombs w/ a Democrat president, it's cool. I noticed Libya wasn't handled "beautifully" and that's an important omission. Do you think Neocons didn't find a lot to like in Obama's first term?
2) Bush's "idyllic" situation was kinda complicated by 9/11, you may completely disagree with the handling but it's naive to think it was an easy transition. I don't trust any politician not to overreact in that situation.
3) This is a question rather than a statement, but if we're going to fault Bush for the financial crisis in any manner, shouldn't we go back to Willie for the tech bubble, which influenced to certain Fed policies, which led to housing bubble, etc.? I'm cautious not to give presidents too much credit or discredit because they only have so much influence.
4) For those of you who keep pointing out we "made a profit on TARP" (originally a Bush-era policy) - would you say on the whole that TARP or the idea of future TARPs is a good thing?
I'm just a cynical Republican, I don't have much love for Bush or Romney, but I think those are important points. Republicans create deficits and Democrats get us into a lot of wars, so I can't give either party a lot of credit for walking the walk.
To rebut:
1.) Obama didn't start any all-out wars and we didn't lose a single life in Libya. In fact, the only reason the rebels got Ghadaffi was because one of our UAVs tracked him down. I'll take drone strikes and modern intel work over ground wars any day of the week and twice on Sunday.
2.) "I don't trust any politician not to overreact in that situation." Wow, I'd say that starting a decade-long war with a country that had nothing to do with 9/11 on shaky evidence is way beyond "overreacting." Yes, I know congress voted on it as well, but come on!
3.) No, we shouldn't fault Clinton for the tech bubble. However, he and Bush and many others in Congress and historical Presidents can be faulted for the financial crisis. Clinton got rid of Glass-Steagall and signed the Commodities-Futures Modernization Act into law. Bush's administration continued to allow banks to further and further lever up, lowering capital requirements, he also pushed the "ownership society," amongst other things.
4.) Anyone who argues that "we made a profit on TARP" is either uninformed or a shill. As TNA said earlier, TARP was just a piece of the massive TBTF subsidy package which still goes on today. We're talking about TRILLIONS of subsidies and bailout moneys going to the TBTF banks. Not to mention all the changes in accounting policies to benefit the banks, or allowing them to sell absolute garbage to the Fed in exchange for capital (i.e. TALF.)
Lastly. Are you serious saying that "Democrats get us into lots of wars." What planet are you living on?
Your points are always well argued, and you're probably my favorite lefty on WSO (no homo). But for this point, I'm living on the planet with Presidents Wilson (WWI), FDR (WWII), Truman (Korea) and Kennedy/LBJ (The 'Nam). I'd give you that I have waaaay oversimplified the matter, but still ...
I think this thread is turning into a great example of why politics / religion are such heavily moderated topics on forums :)
ANT -
I agree with you on the classic agency dilemma. It honestly depresses the shit out of me. My solution to the problem would be to get money out of politics. Combine that with legitimate term limits, and I think politicians would be forced to govern for the greater good, vs. governing for what gets their pockets lined for re-election.
Oh shit, I accidentally crapped on you, ill SB you somewhere else to make for it.
Whatever happened to Cincinnatus and this selfless politician? I really want to blame politicians, but the people (rich, poor, black, white) always want someone else to feel the pain/pay for it. Not sure if this is an American thing or a human being thing.
Just sad and pathetic. I'd happily pay more taxes if it went to something real. I just have a hard time seeing my paycheck decline more and nothing get done. Same thing with healthcare. I'd have no problem with a national healthcare system if we didn't have a nation of obese and unhealthy people who prefer to make others pay for their bad behavior.
I got you ANT
Agree with this entire post.
One thing I'd say is that, as random as this is, I honestly think that Tom Coburn is the closest thing we have to a Cincinnatus or George Washington today. The guy has self-imposed term-limits and is super legit on financial / spending issues. I take issue with his social stances, but they are far from front and center with him, and he doesn't seem to trash people from the other side of the aisle with the usual rhetoric. Not to mention, when the Grand Bargain shit was going down, he was tinkering on a plan of his own to cut 8 trillion...eight!!!!!
I sometimes wonder why he never gets any love as someone who could be President.
Not sure who tossed you a MS, seems like a fairly levelheaded statement to me. I've personally always thought that four years was never enough to induce meaningful change, especially with our system as bipartisan as it is. Presidents won't have the "lag effect" to point to when the economy falters, and they might actually have time to see the results of whatever policy they enact before being put up for reelection--which is what it should be based on in the first place.
Let the Humble bragging being. grabs popcorn.
To all creditors out there, my condolences to you.
What a shock, a thread about politics got out of hand.
To be fair, my intent was not for this to become a political thread, just a discussion on the debt.
The path to Hell, and all that...
I could title a forum topic "OBAMA," nothing else, and generate 100 comments in a few hours.
That's adjusted growth rate- as in adjusted to sound as scary as possible to journalists.
In reality, nobody under 60 expects more than a pittance from social security or medicare.
.
Sounds like he has enough bartending experience to get the job done.
This thread is not out of control, it is perfectly in control. Only so many Bankerella posts about raw dogging MBA students and how to bang a trader people can handle.
Fucking A-MEN. That slumpbuster of a troll is the main reason I have stayed away from WSO for the past two months. Who the fuck made her a writer?
TNA -
The CBO studied Obamacare and concluded that it will reduce the deficit over time. I understand your skepticism of government, but you have to take this into account.
No doubt and it does mean something. With that saiddddddd
http://research.stlouisfed.org/publications/review/12/01/21-40Kliesen.p…
"The CBO’s budget projections are widely followed by economic policymakers, investors, and other financial participants. In this paper, we analyze 34 years of CBO budget projections in an attempt to determine the extent to which policymakers and the public should rely on such projections. It is not our intent to malign the CBO. Rather, our purpose is to ascertain whether the process that produces the baseline budget projections yields reasonably accurate results, given the constraints they face. Our results suggest several conclusions.
First, and not surprisingly, projections for longer horizons are considerably worse than those for shorter horizons. Second, despite the better performance at the 1-year horizon, the CBO’s 1-year-ahead projection errors are not significantly better than the projection errors made by simply using the previous year’s deficit/surplus as the forecast of the next year’s deficit/surplus. That is, the CBO could do no worse if it made its 1-year-ahead budget projections using a RW model.
Third, the CBO’s cumulative 5-year projections are considerably worse than projections from the RW model; however, none of the differences is statistically significant.
Fourth, no component of the revenue or expenditure forecasts is obviously more important than the others for either the 1-year or 5-year cumulative projections. Hence, there appears to be no area where the CBO could improve its overall performance by simply improving its performance in a particular revenue or expenditure category.
Fifth, the CBO’s performance is significantly worse during recession years relative to nonrecession years. Hence, recessions appear to account for at least part of the CBO’s relatively poor projection performance. However, the CBO’s budget projections are not statistically significant from those made by the RW model during non-recession years. In a similar vein, the performance of the CBO relative to the simple RW does not appear to be affected by the CBO’s errors in forecasting key economic variables.
Finally, we find no significant change in the CBO’s budget projection performance over the past decade relative to our 2001 analysis. The CBO’s projection errors are of similar magnitude and are just as biased as for the previous period. If past behavior is a guide to the future, our analysis suggests that projected future deficits will likely be larger than those currently projected.
Obviously, no one is perfect and the future is going to be unclear. But, if you listened to the rhetoric on the right, you'd assume that Obamacare was going to double the debt and deficit in the next two years. Also, the right is very quick to march out the CBO when it agrees with them. It's not a perfect measuring stick, but it is still a measuring stick.
Besides, if you throw out what they say, all you're left with is conjecture and baseless opinions.
Agreed, but if we can agree that the CBO is sometimes wrong and when they are they over estimate benefits, you have a large Federal program that best case might lower costs some, worst case might get pillaged or run like crap and add to the deficit.
There gets to be a point where the current budget gets so large and the amount of debt gets too big that you can't increase taxes a little to balance things. With $200B in interest expense on $16T in debt at historic lows, it wouldn't take much of an increase in debt and an increase in rates before the interest expenses is a problem in itself.
I mean when interest expense is about 1/3rd the DoD budget we have an issue.
Earlier I meant to also say that in retrospect, Obama's biggest lapse will have been passing the healthcare act when he should have been leading the previous Congresses to focus on passing the reforms that our country needs. Healthcare reform was/is needed, but it should not have been a priority at that time.
Agree
The worst economic crisis in the last 70+ years and some of you fuck-tarts actually EXPECT the economy to just spring out of it and start blasting away at 5-6% GDP growth and 4% unemployment? And if it doesn't then the current POTUS is the worst on record? Seriously, go look in the mirror and ask yourself, "why am I such a dipshit?"
So the President gets elected on a message of bringing a fresh breath to Washington, takes a Dem controlled Congress and instead of passing economic reforms, focusing on the tax code, removing useless regulations in an attempt to bring business back home/stimulate expansion here, he jams through healthcare and basically says FU to the GOP (because he can, he has Congress on his side).
He passes healthcare, something not very popular and burns all his political capital. Republicans take the House, almost the Senate and now he is in a quagmire. And what does he do? Blame everyone but himself and start beating the drums of class warfare.
I am not saying Obama should have waved a wand and fixed things, but he should take credit for not focusing on what he should have.
What are you talking about? He got a tanning salon tax passed. Successful term in my opinion.
Your argument is essentially "he didn't pass the things I'd want him to pass, so he's a failure." I'm sorry man, but that's how it comes off. Not to mention, the GOP held a closed-door meeting amongst its leaders literally right after Obama got into office where they decided to go against anything and everything he put forth for the sole purpose of winning seats back next election. What the GOP did was pure politics, let's not act like they were willing compromisers.
I mean, come on. The Stimulus that passed was loaded with tax breaks and the health care bill was built upon Romneycare and ideas from the Heritage Foundation. They wouldn't have voted for anything other than tort reform which doesn't make a dent.
Quae natus quidem modi quaerat. Voluptate vel officia ut repellat asperiores ullam. Vel officia dicta vel quo voluptatum recusandae nostrum.
Ea nesciunt consequatur at ut. Et ratione enim aut nihil quas nobis ut. Aut voluptatem maxime et et aut sint culpa. Et mollitia libero possimus. Sed nostrum architecto deserunt voluptas aspernatur quasi. Quis vel ratione omnis fuga. Quasi rerum blanditiis sit accusantium necessitatibus voluptatem et.
Et aspernatur voluptatibus itaque quos. Rem suscipit exercitationem ab natus. Aut praesentium enim numquam. Explicabo illo eius distinctio nisi soluta harum voluptas. Et aut qui eum consequatur maxime aut et.
Est quos impedit reprehenderit. Voluptates ut dolor aut aut delectus minus. Aut ut quidem possimus ut laborum facere. Quam et ut non ullam ipsa totam rerum voluptates.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Perspiciatis magnam eaque et ullam quae consectetur. Animi optio nisi veniam ab tempora. Reprehenderit veritatis rerum placeat.
Placeat voluptas rem est voluptatem mollitia ut et. Esse quis dignissimos repudiandae vero. Provident recusandae consectetur omnis.
Repellendus iure reprehenderit sed tempora architecto nobis totam sit. Voluptatibus rerum quo repellendus voluptatem. Distinctio rerum sit consequatur.
Impedit consequatur neque quisquam accusamus accusamus quia. Sed ratione sequi consequuntur nobis quod. Et inventore ut possimus et dolore rerum. Sit assumenda et odio. Ut facilis eum porro quas cupiditate aut.