US On The Brink Of Another Crisis?
Currently the United States faces a deadline on our debt ceiling due for October 17th, which requires congress to come up funding or plan to pay back debt owed during this particular cycle. If not, the US will have defaulted on debt obligations for their first time in history, which is why Jack Lew is requesting and pleading for some immediate coarse of action. Namely, increasing the debt ceiling so the Government can pay its bills or we will be in default of any outstanding debt owed during the payment period between October 22nd – 28th.
The value of payments varies on a monthly, daily basis around $60 Billion. The amount of payments owed hover around 80 Million a month, less or more depending on the contractual agreements settled for that specific time frame. Individuals that are owed IRS refunds, Social Security and veteran’s benefits, Medicare reimbursements for doctors & hospitals, bond interest owed to investors, payments to contractors and paychecks for federal workers and military personnel will have lost. As the treasury will have to make harsh, difficult decisions as to who is entitled to our low source of funding. This will bring about controversy, and he (Jacob Lew) is calling for the attention of all members of congress. Choosing to pay bondholders and Social Security Recipients over the rest will still bring about issues that they must deal with unless this debt ceiling increase allows them to prioritize their payments.
According to Lew, who is the United States Secretary of Treasury we only have about $30 Billion on hand to pay out $60 Billion worth of capital expenditures that we are possibly anticipating. Defaulting on that day will bring down our default rating. So on Friday September 20th, they have agreed on a stopgap plan that would save the government from shutting down completely. In doing so has totally wiped out Obama Care Affordable Act until revisions can be made.
Democratic officials are irate calling this attempt just another reason to avoid tax increases on the wealthiest including businesses. Two amendments titled clauses were added to the final bill:
1) Stop all funding to Obama Care Affordable Act ( New Health Reform Act)
2) How government spending is prioritized in case the treasury bumps up against borrowing limits
For now there are positives that, as a country we have come away with: Such as:
1) Ending of furloughs of about 800,00 federal workers
(sequestrations cuts), with leaving millions more without paychecks
2) Possible delay defaulting on about $17T worth of debt, which ultimately saves our Financial markets and maintaining interest rates
In reality we have traded sequestration cuts for health reform, this is also part of a political chess match between democrats and republicans who saw Obama push back a year’s worth of tax cuts. Obama has pleaded with the members of GOP, to no avail as they voted 230-189 for the stopgap, therefore saving the US name that our debt is backed by the full faith and credit.
Shut it down and let them see firsthand the dysfunction they have created in this Country. Regardless of where you come down on any of the issues presented this is chaotic, idiotic and just plain childish. We've known for years today was coming and frankly if you couldn't stop the damn thing in that amount of time, well, maybe it is best to get out of the way. Let people see what they will get with this new health system and chances are good they will realize it is without a doubt going to be less preferable to something more thought out than a bill that was ramrodded through as a political agenda. This all points to the great problem in Washington which is a distinct lack of care towards the overall ramifications of legislation and a focus on the next election cycle and keeping of your job. It is despicable.
You know what is truly shameful though? When an issue of this importance is being debated the president is no where to be found. Silent. Running around trying to clean up the mess he and Kerry made in Syria and staying as far away from this as possible. That is truly sad. I will admit, if you couldn't tell, I'm not a fan of Obama or his policies but in a budget fight like this the President should be right out and front leading the debates and setting the agenda. It's a joke.
At the end of the day we will keep borrowing to fund the wanton spending that Washington and people in this country voted for. Don't worry about that. I would worry about the attitude that we can keep passing continuing resolutions to fund ourselves with no restraint. News flash people, there is no magic money tree no matter how much Bernanke, Obama, Krugman or anyone else says there is. We ill pay for all of this in one way or another, whether through outright calamity or a slow degradation and stripping away of the value of our dollar, influence etc. And I'm not even certain that those are going to be slow at this point. We NEED to have this type of debate and we need to make tough choices now rather than later. Remember that thing in finance about the value of money compounding over time? The same thing applies to kicking the can down the road and making bad decisions prolonging choosing. Deficits compound over time as well.
Personally, I think we should go ahead and default on our debt. Not because I think it's a good idea, but because it would bring a reality to a situation that most Americans don't understand about how our country is run. We've amassed 17 trillion dollars in debt, and even with the sequester and the tax hikes that went into effect, we're still looking at a 750 billion dollar deficit for 2013. Washington has become so complacent with borrowing and spending money of future generations that it seems almost impossible to get off the horse. And just like the end of Breaking Bad, people need to realize how shitty it's going to be once the parties over.
People need to come to the realization that, sometime in the near future, we're going to have to do something about our debt. This squabbling over ACA provision or minuscule tax hikes (in the grand scheme of things, they were), what we really need to be focusing on has been subterfuged. Americans only move nowadays when big events force them too (9/11, the 2008 financial crisis), so maybe a default on our debt would be the swift kick in the balls people will need to get off their couches and do something about it, and by do something about it I mean decide either 1) to start paying for the stuff we're spending on (i.e. ALOT higher taxes), or 2) start cutting (ALOT of) stuff out of the budget so we're not spending more than we're bringing in.
Unfortunately, it probably won't happen that way. Republicans will likely cave, in the face of looking like the losers in the standoff (which the media is already starting to paint them as such). The ACA individual mandate will go through, though the 10% excise tax may go away (even a fair number of Senate Dems hate that). America will keep chugging along, at least until the day when something outside our control ends up forcing us to do what we should have done.
I take issue with labelling every controversy a 'crisis'. The meltdown of 2007/8 was a CRISIS. Routine politicking isn't a crisis and the media drama queens aren't really doing more than giving one dimensional coverage that has almost no utility.
Yeah this.
Take a look at: http://www.usdebtclock.org/
The ''Federal Spending'' is going down and so is the ''Federal Budget Deficit! (top left for both items)
Uh, do you know how much the government brings in via taxes every quarter? Its not like they have to raise the debt limit in order to pay any bills. The tax intake far exceeds the debt service requirements. I have a company that is a government contractor in what is considered a "non-essential department" I want them to shut it down and cut a lot of these departments even if it means I will have loose business.
Are those Beats by Dre headphones?
Yes
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