Republicans bankrupting this country

[gravenewworld]

http://www.nytimes.com/2004/11/18/politics/18debt.html?ex=1101790049&ei=1&en=aef68b52c1631194


How much longer will we sit by and let Bush and the republicans spend money like there is no tomorrow?

[franznietzsche]

Democrats are no better, they did the same thing in California when they controlled everything, just a year and a few months ago.

[russ_watters]

Anyone wanna guess when was the last time, before Bush, it was raised?

[wasteofo2]

Anyone wanna guess when was the last time, before Bush, it was raised?
The other Bush?

[BobG]

Uh, my guess is the president before Bush. And the last president before that was probably the president before Clinton.

Actually, the debt is deceiving in one way, and more disconcerting in another.

The debt actually outstanding to the public or other folks is only 4.3 trillion, not that much higher than it's previous peak of 3.8 trillion in '97 (by previous peak, I mean there was a valley in between - this peak has been higher for over a year, now).

The big growth is intergovernmental debt - primarily Social Security funds. Intergovernmental debt increased from 1.6 trillion to 3.1 trillion over the last seven years. The public debt isn't that drastic unless everyone starts cashing in their Treasury bonds all at once. The amount owed to the Social Security fund does have a point where the government has to start paying it back if Social Security is to keep sending out checks.

[Aquamarine]

Uh, my guess is the president before Bush. And the last president before that was probably the president before Clinton.

Actually, the debt is deceiving in one way, and more disconcerting in another.

The debt actually outstanding to the public or other folks is only 4.3 trillion, not that much higher than it's previous peak of 3.8 trillion in '97 (by previous peak, I mean there was a valley in between - this peak has been higher for over a year, now).

The big growth is intergovernmental debt - primarily Social Security funds. Intergovernmental debt increased from 1.6 trillion to 3.1 trillion over the last seven years. The public debt isn't that drastic unless everyone starts cashing in their Treasury bonds all at once. The amount owed to the Social Security fund does have a point where the government has to start paying it back if Social Security is to keep sending out checks.
$45 trillion is a lot of money by anyone’s standard. One way to comprehend it is to look
at the following menu of pain – the alternative immediate and permanent fiscal policies
needed to eliminate this fiscal gap. The menu contains the following equally indigestible
entrées. The first is raising federal income taxes, personal and corporate, by 60 percent.
The second is raising payroll taxes by 95 percent. The third is cutting federal
discretionary spending by 106 percent. And the fourth is cutting Social Security and
Medicare benefits by 45 percent.

Bear in mind that these figures aren’t coming from alarmists like me. They are coming
straight from the United States Treasury and are so scary that the administration has gone
to remarkable lengths to deny the study was ever commissioned, produced, or censored.
http://econ.bu.edu/kotlikoff/Fixing%20Social%20Security%20and%20Medicare%20for% 20Good.pdf

Also of interest:
http://mitpress.mit.edu/catalog/item/default.asp?sid=806B8037-68CA-484E-B208-BBF1A9BBBF89&ttype=2&tid=10055&xid=10&xcid=0

[GENIERE]

“Bear in mind that these figures aren’t coming from alarmists like me. They are coming straight from the United States Treasury and are so scary that the administration has gone to remarkable lengths to deny the study was ever commissioned, produced, or censored. “

Aquamarine neglected to include this…

“The Clinton Administration did precisely the same thing back in 1993 when it censored a careful OMB generational accounting study that was slated to appear in the FY94 Federal budget.”

Why not just carefully pick and choose words from the manuscript in sufficient number to create a sentence or a paragraph to your own liking.


...

[Gokul43201]

Democrats are no better, they did the same thing in California when they controlled everything, just a year and a few months ago.

And that had nothing to do with Energy fiasco ? I don't know...I'm just asking.

[franznietzsche]

And that had nothing to do with Energy fiasco ? I don't know...I'm just asking.

I wasn't thinking of that, and no, that was a seperate issue caused by energy deregulation, not fiscal irresponsibility. The energy fiasco hurt, but it was not the cause of a $36 billion dollar deficit. Further, the energy fiasco was also the result of democratic mismanagement.


The point i'm making is its that all of you one-sided liberals need to get it through your heads that this will happen with either party if the majority in congress controls the white house. Thats how the state government in california was until the democratic governor was effectively fired by a popular vote.

It doesn't matter what party controls the government, both parties are fiscally irresponsible.

[BobG]

“Bear in mind that these figures aren’t coming from alarmists like me. They are coming straight from the United States Treasury and are so scary that the administration has gone to remarkable lengths to deny the study was ever commissioned, produced, or censored. “

Aquamarine neglected to include this…

“The Clinton Administration did precisely the same thing back in 1993 when it censored a careful OMB generational accounting study that was slated to appear in the FY94 Federal budget.”

Why not just carefully pick and choose words from the manuscript in sufficient number to create a sentence or a paragraph to your own liking.


...
Thanks Geniere,

Considering the title of the original post, I imagine there was at least a remote possibility Aquamarine's post was partisan.

Actually, as much as I despise many other things about Bush, recognizing Social Security is a disaster waiting to happen and doing something at all is an improvement over the current situation.

Personally, I think the real problem was that FDR lied when he first implemented it. It's a welfare plan to protect those who either lacked the capability or the foresight to plan for retirement on their own and for those who's retirement plans met disaster. Unfortunately, no one since has been willing to admit that and people seem to think there has to be an equitable return on what's paid in. That's prevented the government from making adjustments to the program based on changing demographics (when first implemented, the 'retirement' age was 65 and the average life expectancy was 64).

And regardless of what people may think they should receive on their 'investment', actually believing all the baby boomers will actually get that much is naive (I'm so tempted to find a slew of descriptors stronger than 'naive'). At most, current workers should think of Social Security as something that may supplement their own retirement plans. I think the current choices of 401k or IRA provide a pretty good choice (if you think your income will be lower at retirement than it is now, invest in 401k's; if your current income is very low compared to what you think you'll earn in the future, invest in IRA's).

I think there's some merit in Kotlikoff's ideas. If the government is in the business of forcing people to plan for retirement, at least the long term cost (after what may be an expensive transition) of ensuring a certain minimum return is lower than the current plan.

[Gonzolo]

Has any country ever gone bankrupt? What would actually happen if the US gouvernment couldn't pay its bills? Would banks take possession of a few aicraft carriers and B-2's? Auction off the white house and the shuttle? Become the new executive government?

[BobG]

The Confederacy, for one. Even before the civil war ended, Confederate dollars had become virtually worthless (ever think of what you're giving the cashier when you pay for your meal - you're giving her a piece of paper; what you're really paying with is the government's promise to back up that piece of paper). Even if they had managed to carry on militarily a little longer and kept the war far enough North to physically allow some agriculture, Southerners had no money to buy seed or to plant anything.

[Gonzolo]

So the value of the US dollar would decrease a lot.

[kat]

Lol, it would be practically worthless...in fact..
Buy gold!

[selfAdjoint]

The country that some economists fear the US may "emulate" is Argentina. When it became obvious to creditors that it couldn't pay off on its government bonds, they sold, and the value of the currency dropped like a rock. Contrary to the opinion of some people that the international value of a nation's currency has no effect on the home market, Argentinians are still feeling the pinch from this catastrophe, and there is a lot of political unrest over the issue, according to reports.

So, depending on what the Chinese and Japanese do about all the US treasury notes they hold and are continuing to buy, that could be us. And there could be a domino effect too; the EU financial markets are a lot less flexible than the US ones, and the shock from a US dollar collapse could send the European economy reeling.

[russ_watters]

And there could be a domino effect too; the EU financial markets are a lot less flexible than the US ones, and the shock from a US dollar collapse could send the European economy reeling. Its even a little more direct than that: an awful lot of foreign investment is in American government bonds. If the government announced they could only pay half of the face value of all bonds (for example), economies all over the world would immediately lose a significant fraction of their value. Imagine if your bank called you tomorrow and said half of your money just vanished. It would be a global catastrophe.

[tumor]

Has any country ever gone bankrupt? What would actually happen if the US gouvernment couldn't pay its bills? Would banks take possession of a few aicraft carriers and B-2's? Auction off the white house and the shuttle? Become the new executive government?

Interesting question, and i know the answer.
You know who would take controll of the country in your scenario? B-2's, I mean military.

[tumor]

Lol, it would be practically worthless...in fact..
Buy gold!

Gold is climbing up steadilly,thank god I have bought some in september.I don't want to end up going to the grocery store for loaf of bread and paying for it with a suitcase full of dollars.

[Burnsys]

Its even a little more direct than that: an awful lot of foreign investment is in American government bonds. If the government announced they could only pay half of the face value of all bonds (for example), economies all over the world would immediately lose a significant fraction of their value. Imagine if your bank called you tomorrow and said half of your money just vanished. It would be a global catastrophe.

it happened here in argentina... suddenly all banks said... Your savings are gone, we are still strugling to get our savings back...

[gravenewworld]

Has any country ever gone bankrupt? What would actually happen if the US gouvernment couldn't pay its bills? Would banks take possession of a few aicraft carriers and B-2's? Auction off the white house and the shuttle? Become the new executive government?


No, a country can never go bankrupt under its own currency, its impossible. I just said that in the subject line to get people to read this post. If a country needs more money it can just print more. If a country ever went "bankrupt" it would cease to exist.

[russ_watters]

gravenwworld, I think you may be confusing "bankrupt" with "broke." Being broke means literally having no money - being bankrupt just means not being able to pay off your debts.

One thing we haven't covered here is how/why the US could go bankrupt. Yes, not raising the debt ceiling would result in bankrupcy, but how is it that we're even able to do that?: we can do it because people still buy bonds. At what point do other countries start losing confidence in the dollar (or is it already happening?) and stop issuing the US govt a new credit card?

Right now the US dollar is declining in value, but it remains the backing of most of the worlds currencies: at what point do countries switch back to gold (or issue their own bonds)?

[tumor]

Was not Saddam Hussein switch to the Euro one of the reasons USA had to remove him?

[phatmonky]

Was not Saddam Hussein switch to the Euro one of the reasons USA had to remove him?


No it isn't.

[BobG]

No, a country can never go bankrupt under its own currency, its impossible. I just said that in the subject line to get people to read this post. If a country needs more money it can just print more. If a country ever went "bankrupt" it would cease to exist.

It's paper. It's only purpose is that it's a whole lot easier to pay or get paid with paper than having to carry around a side of beef, two bags of grain, and a horse to pull my out of gas car. But that paper still has to represent something - two pieces of paper represent a gallon of gas, etc.

If we don't actually produce something worth the paper, we have tons of paper but not enough products to buy. Eventually, people at the gas station catch on and decide they'd rather have the side of beef than the paper. (I think I'd go to a more fuel efficient vehicle if we fell back to the barter system).

[selfAdjoint]

My, we've been through the gold bugs, and now we're down to barter! Does anyone want to say a word about the fractional reserve banking system? That would complete the trifecta on the dark side of economics.

[loseyourname]

Has any country ever gone bankrupt? What would actually happen if the US gouvernment couldn't pay its bills? Would banks take possession of a few aicraft carriers and B-2's? Auction off the white house and the shuttle? Become the new executive government?

Outside, of the confederacy, I don't know about countries, but Orange County went bankrupt in the mid-nineties. It doesn't seem to have hurt all that much, as the country is doing fairly well now.

[Smurf]

Has any country ever gone bankrupt? What would actually happen if the US gouvernment couldn't pay its bills? Would banks take possession of a few aicraft carriers and B-2's? Auction off the white house and the shuttle? Become the new executive government?

They already are the government, this would be unnecessary.

[schwarzchildradius]

Anyone wanna guess when was the last time, before Bush, it was raised?
Three times, in the last 3 years, so the answer is Bush, Bush, Bush.
November 18, 2004 8.2 Trillion (Bush)
March 11, 2003 6.3 Trillion (Bush)
January 17, 2002 5.9 Trillion (Bush)
January 1996, it was raised under Clinton.