News Are we there yet? YES - US Debt Limit is Reached

[WhoWee]

We've waited for months and now the day has arrived. The US debt has reached the $14.294 Trillion limit today. The US credit card has been maxed out!

http://online.wsj.com/article/SB10001424052748703421204576325583050561022.html

Beyond the logistics of moving money around - now what? Will our Congressional leaders begin to address the runaway spending? Will the President propose additional taxes? Will the Supreme Court be called upon for a reasonable solution?

 

[drankin]

Maybe China will give us a new credit card that we can max out to pay the interest on the first one.

Social programs have raped our economy. How long can we prolong the inevitable crash?

 

[Pengwuino]

Should have gone Capital One.

 

[WhoWee]

Should have gone Capital One.

I think AMEX would be better yet - the bill is due in 30 days.

 

[Astronuc]

The government can't legally borrow anymore, so it is staving off default by tapping into federal pension funds.


http://marketplace.publicradio.org/display/web/2011/05/16/om-us-hit-debt-limit-today/

 

[WhoWee]

The government can't legally borrow anymore, so it is staving off default by tapping into federal pension funds.

http://marketplace.publicradio.org/display/web/2011/05/16/om-us-hit-debt-limit-today/

Maybe we SHOULD talk about the logistics of moving money around?

Try funding a private company with union pension funds until a working capital loan or bridge financing comes through and see what happens.

 

[Proton Soup]

Maybe we SHOULD talk about the logistics of moving money around?

Try funding a private company with union pension funds until a working capital loan or bridge financing comes through and see what happens.

we should elect Trump. he has extensive experience with bankruptcies.

 

[Jack21222]

Social programs The Armed Forces have raped our economy. How long can we prolong the inevitable crash?

Fixed that for you.

 

[drankin]

Fixed that for you.

That works.

 

[Vanadium 50]

Fixed that for you.

DoD budget for 2010: $685B.
Federal deficit (strictly speaking, the addition to the debt) for 2010: $1653B.

I don't expect you to like those numbers, but that's what they are.

Here's another number: total discretionary spending - $1378B.

I don't expect you to like that number either.

 

[Jack21222]

DoD budget for 2010: $685B.
Federal deficit (strictly speaking, the addition to the debt) for 2010: $1653B.

I don't expect you to like those numbers, but that's what they are.

Here's another number: total discretionary spending - $1378B.

I don't expect you to like that number either.

I don't like any of the numbers. The fact remains that much of our defense spending comes from protecting foreign first-world countries who could easily pay for their own defense. Instead, they get to spend money on things like universal health care because they don't need to maintain a military, or as large of a military. That's our biggest form of foreign aid, and it isn't explicitly listed as "foreign aid."

The DoD makes up as much of the discretionary spending as the rest of all of the other discretionary spending categories combined. Surely there is plenty of room to cut there. Let's start with all of the hardware that the Pentagon says we don't need, but congressmen want built anyway because it's constructed in their districts.

Another point is we don't need to get the deficit down to zero immediately. There's nothing wrong with instituting a long-term plan to get it there in a decade or two. Slowly cutting back spending while slowly raising taxes will get us there eventually, and by doing it slowly, we avoid much of the pain involved in drastic measures.

 

[Drakkith]

Fixed that for you.

I like it before the change better. Especially considering that social programs have twice the cost that the defense budget has.

 

[Drakkith]

I don't like any of the numbers. The fact remains that much of our defense spending comes from protecting foreign first-world countries who could easily pay for their own defense. Instead, they get to spend money on things like universal health care because they don't need to maintain a military, or as large of a military. That's our biggest form of foreign aid, and it isn't explicitly listed as "foreign aid."

The DoD makes up as much of the discretionary spending as the rest of all of the other discretionary spending categories combined. Surely there is plenty of room to cut there. Let's start with all of the hardware that the Pentagon says we don't need, but congressmen want built anyway because it's constructed in their districts.

Another point is we don't need to get the deficit down to zero immediately. There's nothing wrong with instituting a long-term plan to get it there in a decade or two. Slowly cutting back spending while slowly raising taxes will get us there eventually, and by doing it slowly, we avoid much of the pain involved in drastic measures.

I agree with your bottom paragraph, but I hate that the DoD budget is "discretionary" and doesn't get compared to high cost things like many of the social programs.

 

[drankin]

The difference between social and military spending, IMO, is that military spending includes a large degree of manufacturing, design, and tech development as well as simple grunt work. It pays for real work, whether towards technology or just a soldier busting his ***. Whereas social spending to a large degree is on things that require humans to collect without any reciprocal contribution. Not that there shouldn't be some of that as a social responsibility but I think it's "off-the-leash".

 

[Pengwuino]

I don't like any of the numbers. The fact remains that much of our defense spending comes from protecting foreign first-world countries who could easily pay for their own defense. Instead, they get to spend money on things like universal health care because they don't need to maintain a military, or as large of a military. That's our biggest form of foreign aid, and it isn't explicitly listed as "foreign aid."

So that's one thing I've wondered lately. Exactly how much do we spend on foreign bases in industrialized nations? And is there good reason now beyond as a staging point for conflicts in the middle east or various other conflict zones nearby?

 

[pergradus]

Is my financial aid in the future in jeopardy? Because I can't afford to go to school without government aid...

 

[drankin]

Is my financial aid in the future in jeopardy? Because I can't afford to go to school without government aid...

Are you serious?

 

[pergradus]

Are you serious?

What about that implies I'm joking?

I really don't know what this means, but education is often on the chopping block when people start talking about cutting spending. Or are you being snobbish that I need financial aid?

 

[Ryumast3r]

^Considering that President Obama has made it clear that he thinks education is a priority, I don't think education funding will be the largest thing on the chopping block.

However, the President has also stated that everything (and he said EVERYTHING) must be looked at, including education, highways, defense, etc. Hopefully people will consider everything, and not just what doesn't really affect them/their families.

 

[drankin]

What about that implies I'm joking?

I really don't know what this means, but education is often on the chopping block when people start talking about cutting spending. Or are you being snobbish that I need financial aid?

No, but if you really want the education, work yourself through college. I did. Millions have. To say you CAN'T without federal aid is ridiculous to me. Complete BS. The actual grants offered hardly pay for tuition by themselves anyhow. The loans aren't actually from the fed, just guaranteed.

How can I be snobbish if I freakin worked my rear off to get my education? Kids nowadays...

 

[QuarkCharmer]

I think he is referring to the GI Bill. I would have a much harder time attending school without it myself. I grew up extremely poor and would have not otherwise had the opportunity to attend college if not for my military service. I am quite sure that I "worked myself though college" a few times. If they cut the GI Bill funding, wow, just wow. I guess that is further incentive for me to hurry it along, though I doubt it will ever come to that (at least before I am finished).

 

[drankin]

I think he is referring to the GI Bill. I would have a much harder time attending school without it myself. I grew up extremely poor and would have not otherwise had the opportunity to attend college if not for my military service. I am quite sure that I "worked myself though college" a few times. If they cut the GI Bill funding, wow, just wow. I guess that is further incentive for me to hurry it along, though I doubt it will ever come to that (at least before I am finished).

To me this falls into the military spending side of things. A young individual working towards something and having earned it in the first place. As opposed to social spending to where "working" is not a requirement.

 

[ParticleGrl]

No, but if you really want the education, work yourself through college. I did. Millions have. To say you CAN'T without federal aid is ridiculous to me. Complete BS. The actual grants offered hardly pay for tuition by themselves anyhow. The loans aren't actually from the fed, just guaranteed.

How can I be snobbish if I freakin worked my rear off to get my education? Kids nowadays...

When did you attend college? Keep in mind that tuition has been growing substantially faster than inflation for quite awhile now. It was much easier to work your way through college a few decades ago than now.

I worked a full time job while in college, and still graduated with a ton of debt (all federally subsidized). State college tuitions are likely to grow rapidly as we further reduce funding to them.

 

[drankin]

When did you attend college? Keep in mind that tuition has been growing substantially faster than inflation for quite awhile now. It was much easier to work your way through college a few decades ago than now.

I worked a full time job while in college, and still graduated with a ton of debt (all federally subsidized). State college tuitions are likely to grow rapidly as we further reduce funding to them.

Granted. But, you did what you had to do to make it happen. You worked a full time, probably minimum wage job and I'm sure it was tough going. To solely expect the Fed to finance your secondary education just because you breathe is an attitude that will not benefit the individual nor society IMO. And that isn't necessarily what was said but in the limited way we can express ourselves via text, the idea got my spidy senses irritated. :)

 

[Vanadium 50]

Another point is we don't need to get the deficit down to zero immediately. There's nothing wrong with instituting a long-term plan to get it there in a decade or two. Slowly cutting back spending while slowly raising taxes will get us there eventually, and by doing it slowly, we avoid much of the pain involved in drastic measures.

Well, let's work the numbers. Income tax is $0.9T, total spending is $3.5T, the deficit is $1.6T, the debt is $14T. To balance the budget today with an equal mix of spending cuts and tax increases will require a 38% cut in spending (and therefore a 38% increase in taxes). I'm not necessarily advocating the same number for both, but this let's us quantify the necessary changes as a single number.

Now, let's assume we "linearly" balance the budget over the next 20 years; i.e. FY2022 will have a budget that has half of today's deficit, and no deficit at all in FY2032. So in 2032 we will have a debt of $30T, and interest on that debt will be $0.4T rather than $0.2T. That means the 38% number becomes 49%.

 

[WhoWee]

When did you attend college? Keep in mind that tuition has been growing substantially faster than inflation for quite awhile now. It was much easier to work your way through college a few decades ago than now.

I worked a full time job while in college, and still graduated with a ton of debt (all federally subsidized). State college tuitions are likely to grow rapidly as we further reduce funding to them.

I worked my way through college - no loans. However, I agree, it seems costs are much higher now.

We recently calculated that if costs remain constant for the next 8 years (not very likely) - until all of my kids graduate - I will owe roughly $250,000 in Parent PLUS undergrad loans. At this point, two of them are full speed ahead to obtain Masters - cost is not included. This is net of scholarships, savings, credit cards, and out of pocket contributions (cars/insurance/gas for instance). Hopefully they will be able to find jobs upon graduation?

My twins want to work their way through and help pay. While that sounds good, I ran the numbers and given the extra time required - it's better for them to not work (except in the summer) and concentrate on grades and completion.

 

[pergradus]

No, but if you really want the education, work yourself through college. I did. Millions have. To say you CAN'T without federal aid is ridiculous to me. Complete BS. The actual grants offered hardly pay for tuition by themselves anyhow. The loans aren't actually from the fed, just guaranteed.

How can I be snobbish if I freakin worked my rear off to get my education? Kids nowadays...

Yea, and I'm sure your tuition was not $40,000 a year. I go to a private university, not a state school.

 

[WhoWee]

Yea, and I'm sure your tuition was not $40,000 a year. I go to a private university, not a state school.

If your tax payer guaranteed loans are restructured - you'll need to find a co-signer, or a less expensive school, or a higher paying job - won't you? Sometimes life works that way.

 

[Vanadium 50]

I think there are several questions being tangled up here.

• Does the government have the (full or partial) responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education at the university of your choice?

 

[WhoWee]

I think there are several questions being tangled up here.

• Does the government have the (full or partial) responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education at the university of your choice?

The real question regarding the US debt is priorities - they need to be specified - overall and at each level. Our elected leaders need to construct a comprehensive plan.

 

[Al68]

The government can't legally borrow anymore, so it is staving off default by tapping into federal pension funds.

It would be more accurate to say it is tapping into pension funds to allow it to spend in excess of revenues. Default is not a direct consequence of reaching the debt ceiling, the debt can be serviced with revenues.

Servicing the debt does not require an increase in debt. Never has, never will.

If the President defaults on the debt, it will be because he chose to spend money on other things instead of servicing the debt. This is an excellent time for congress to pass a law requiring the servicing of the debt to be prioritized.

Failure to raise the debt limit isn't the ideal way to balance the budget, but it's not the end of the world. Far worse are the consequences of continuing to raise it time after time.

 

[turbo]

So that's one thing I've wondered lately. Exactly how much do we spend on foreign bases in industrialized nations? And is there good reason now beyond as a staging point for conflicts in the middle east or various other conflict zones nearby?

That's a very good point. If South Korea, Japan, and Germany can all build cars and sell them here, they should be able to pay for their own security. They wouldn't be happy about the draw-downs of US troops and base closures because a lot of US taxpayer money would be lost to them, but that's tough. We should put all non-essential foreign military bases on closure schedules and stick to them. Our military forces wouldn't be stretched so thin, and we wouldn't have to pay so much for the housing, provisioning, and medical care for all the families. All good things from a military AND budgetary point of view. Plus, if we have volunteer military troops returning from those bases, we wouldn't have to keep stop-lossing reservists and ruining their businesses and personal lives. Hopefully the useless wars in Iraq and Afghanistan will have been wound down even before we can get all non-essential bases closed.

http://www.fpif.org/articles/too_many_overseas_bases

 

[BobG]

I think there are several questions being tangled up here.

• Does the government have the (full or partial) responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education?
• Does the federal government have the responsibility to provide post-secondary education at the university of your choice?

A better question is does the nation benefit from the government subsidizing post-secondary education?

It definitely does benefit from subsidizing post-secondary education in certain fields. And knowledge obtained by the students is more important than which school they attend. In other words, if a student gets an engineering degree from an ABET accredited school, then the government is probably getting its money's worth. If a student is getting a degree in midevil literature from a private liberal arts school, then the government is getting very little from any money it used to subsidize that student's education.

In other words, I would support revising the criteria for student aid. I imagine there's quite a few people that feel we gain some intangible benefit from music majors, literature majors, etc, but I think subsidizing education requires some benefit that's actually measurable. And, if a school's curriculum is good enough for ABET (or whatever the accrediting organization for a particular field), then it's good enough. I don't see much benefit to subsidizing attendance at a higher priced private school over a lower priced state school that offers the same degree.

And educational costs have risen far faster than general inflation. So much so that a college degree in general isn't worth the money you pay for it, which makes taking out a large number of student loans a bad investment. But only because you're including so many degrees that are practically worthless when it comes to finding a job. A more accurate description is that there are fewer college degrees that are worth the money you spend for them.

 

[Ryan_m_b]

Just some 2c from across the pond;

- Does a nation not benefit if tax is invested in education? If everybody capable of getting a degree is equipped with one then shouldn't the nation's increased productivity pay for the tax expenditure many times over?
- Is it a widely perceived notion that the US army protects the world? There is a huge military investment in the US (>50% of the worlds military spending) but I really don't see where any country is receiving protection. The countries mentioned that sell cars in the US have their own armies, perhaps the fact that they sell cars is because they have businesses that can make and sell good cars...

 

[Ryumast3r]

Just some 2c from across the pond;

- Does a nation not benefit if tax is invested in education? If everybody capable of getting a degree is equipped with one then shouldn't the nation's increased productivity pay for the tax expenditure many times over?
- Is it a widely perceived notion that the US army protects the world? There is a huge military investment in the US (>50% of the worlds military spending) but I really don't see where any country is receiving protection. The countries mentioned that sell cars in the US have their own armies, perhaps the fact that they sell cars is because they have businesses that can make and sell good cars...

If the education is in fields that benefit society, yes. (in general, the more people that graduate with degrees the better, however, if everyone graduated with degrees in medieval literature... well... there'd be basically no benefit)

Japan does not have it's own military besides a national guard-type military force. This is part of the unconditional surrender that we required in WWII.

The point (if I am reading him correctly) was that these countries can invest more time and money into corporations and their people because they do not have to pay for their own large military since they have big-brother America watching over them.

 

[turbo]

The point (if I am reading him correctly) was that these countries can invest more time and money into corporations and their people because they do not have to pay for their own large military since they have big-brother America watching over them.

That's exactly the point. If these countries are now allies and trading partners with whom we have a trade deficit, it is high time to cut them loose, and let them provide for their own security. The US spends (reportedly) half of all the money spent on the military in the whole world. I expect that this estimate is 'WAY low in part because of the ways in which many programs are funded off-budget. Still, we don't need all the foreign bases (including the secret ones in "unfriendly" countries), nor do we need to have every single weapons system that some defense contractors can dream up, nor do we need all the carrier groups that we have. It's time for the military to trim down or to be trimmed down. We can maintain credible defense postures without being bled dry by defense contractors.

 

[WhoWee]

If the education is in fields that benefit society, yes. (in general, the more people that graduate with degrees the better, however, if everyone graduated with degrees in medieval literature... well... there'd be basically no benefit).

Be careful - that sounds a tad bit like social planning. If a million people decide study the same thing - hopefully they will all find jobs. Now if you're saying the Government shouldn't guarantee a million loans for people to study an obscure subject - I might agree.

 

[AlephZero]

That's a very good point. If South Korea, Japan, and Germany can all build cars and sell them here, they should be able to pay for their own security. They wouldn't be happy about the draw-downs of US troops and base closures because a lot of US taxpayer money would be lost to them, but that's tough.

You are ignoring some history here. One reason that Japan and Germainy don't have a full independent military capability is because the US (and its allies) told them they couldn't, after WWII.

AFAIK, to change that position, both Germany and Japan would need to change their constitutions - and US citizens should be alble to figure out what sort of political upheavals that could cause, from their own history.

I don't know how SK got to where it is, so no comment on that one.

And the situation of NATO, would also have to be sorted out, of course.

Actually, after the Iraq saga (not to mention stop-overs of "extraordinary rendition" flights) Europe might not seriously object to being rid of US basesl. After all, we would get the land back, plus some useful real estate built on it - ideal locations for converting into industrial sites to sell you more foreign cars, etc

 

[Ryan_m_b]

I would be highly surprised if the majority of the US's military spending was on protecting other countries. Maintaining bases in foreign countries is something that most modern militaries do.

As for education I think it's best to advocate a diversity of qualifications in many fields. Yes a small number of people will do something useless but the advantages of having a workforce that is diversely and deeply educated would cancel that out

 

[BobG]

Be careful - that sounds a tad bit like social planning. If a million people decide study the same thing - hopefully they will all find jobs. Now if you're saying the Government shouldn't guarantee a million loans for people to study an obscure subject - I might agree.

Unless they study law. Law degrees are among the most overrated degrees one can obtain. They're worth a ton if you're among the top graduates from a top ranked law school, but result in a pretty mediocre return on invested time and money for most. I wouldn't see much benefit in subsidizing law degrees, either.

 

[Pengwuino]

nor do we need all the carrier groups that we have.

That's taking it a step too far. The carrier groups are essential - they are a projection of power. They truly do provide a necessary component of US defense. They also keep countries on notice that we can run 24/7 operations against any country that we find the need to act against. Remember, we can't make cuts thinking about what would happen today without thinking about what might happen in 10 years.

You are ignoring some history here. One reason that Japan and Germainy don't have a full independent military capability is because the US (and its allies) told them they couldn't, after WWII.

AFAIK, to change that position, both Germany and Japan would need to change their constitutions - and US citizens should be alble to figure out what sort of political upheavals that could cause, from their own history.

Japan and Germany would definitely need to be exceptions to such cuts. Budget cuts are one thing, but Germany and Japan are obligated to forgo having a standing army for offensive purposes.

I don't know how SK got to where it is, so no comment on that one.

South Korea and I assume a few other countries are other special cases. South Korea is absolutely in danger of being invaded without US military personnel on the ground. North Korea is run by lunatics, they do NOT see the world as the rest of the world sees it. Thankfully, eventually China and probably soon after Russia will get tired of North Korea and they're going to allow... uhm... "regime change" in North Korea

Actually, after the Iraq saga (not to mention stop-overs of "extraordinary rendition" flights) Europe might not seriously object to being rid of US basesl. After all, we would get the land back, plus some useful real estate built on it - ideal locations for converting into industrial sites to sell you more foreign cars, etc

They probably will. We do make some contributions to the economies where we have bases. It's exactly how things are in the US. Entire towns might fall apart simply because a base would be shut down.

 

[WhoWee]

Unless they study law. Law degrees are among the most overrated degrees one can obtain. They're worth a ton if you're among the top graduates from a top ranked law school, but result in a pretty mediocre return on invested time and money for most. I wouldn't see much benefit in subsidizing law degrees, either.

I don't want to get too sidetracked, but we discussed this recently in another thread. IMO - everyone shouldn't be financed for a 4 year degree. Perhaps children who choose to be a goof-off (GPA below 2.25?) in high school should pay their own way the first 2 years catching up in college. Also, some people are better served with a focused 2 year trade program.

 

[Jack21222]

I would be highly surprised if the majority of the US's military spending was on protecting other countries.

I don't think this claim was made.

Maintaining bases in foreign countries is something that most modern militaries do.

I don't think Argument from Popularity is a valid argument.

 

[Jack21222]

Japan and Germany would definitely need to be exceptions to such cuts. Budget cuts are one thing, but Germany and Japan are obligated to forgo having a standing army for offensive purposes.

Forever? Seems like a long time. WW2 was a long time ago. They're allies now. Let them raise their own army.

 

[Dale]

The fact remains that much of our defense spending comes from protecting foreign first-world countries who could easily pay for their own defense.

And much more of our spending comes from supporting individuals who should pay for their own needs. You may not like defense spending, but it is unarguably not the biggest source of spending.

 

[Jack21222]

And much more of our spending comes from supporting individuals who should pay for their own needs. You may not like defense spending, but it is unarguably not the biggest source of spending.

You're absolutely right. I also support cutting off Social Security payments for people with over a few million dollars in the bank. They can easily pay for their own needs, but I'm paying for them.

 

[Dale]

Social Security payments for people with over a few million dollars in the bank.

yeah, that should fix the problem and dramatically reduce the deficit. Glad to see that you are unbiased and interested in addressing the real issues of out of control social spending.

 

[Ryumast3r]

Be careful - that sounds a tad bit like social planning. If a million people decide study the same thing - hopefully they will all find jobs. Now if you're saying the Government shouldn't guarantee a million loans for people to study an obscure subject - I might agree.

Not government planning at all, simply stating that there are some fields that the government definitely gains more from subsidizing than others.

That's taking it a step too far. The carrier groups are essential - they are a projection of power. They truly do provide a necessary component of US defense. They also keep countries on notice that we can run 24/7 operations against any country that we find the need to act against. Remember, we can't make cuts thinking about what would happen today without thinking about what might happen in 10 years.

They are a projection of power, and are very good at that, true. I will give you that. Here's a little something I've researched though:

http://www.globalsecurity.org/military/world/carriers.htm

In short, what this link states is this:

Number of super-carriers that the U.S.A. has: 11
Super-carrier capacity in the United States is 85 aircraft. 85 being declassified, classified number is probably quite a bit higher than that.

Number of non-super carriers that the U.S.A. has: 9
Non-super carrier-capacity sits at around 40 aircraft, give or take depending on the mission.

The entire rest of the world has 10 carriers. TEN. Out of these 10 carriers, 5 are in direct allies hands (2 in UK, 1 France, 1 Italy, 1 South Korea). The rest are in the hands of countries like... 1 - Russia, 1 - Thailand, 1 - Brazil, 1 - Spain, and 1 - India.

I doubt those countries are going to threaten us any time soon... especially since a lot of those countries would have a hard time getting an alliance to hold even 3 carriers at a time... or since none of them would really want to go toe-to-toe anyway.

A few more numbers:

Out of those carriers, the two largest ones (the French and the Russian) only carry each around 40 aircraft... The same number as our SMALLER carriers.

The rest carry less... on top of the fact that none of them has as good of aircraft as our carriers do.

My point? Yes, we do need carriers... but do we really need THAT many?

 

[Office_Shredder]

My point? Yes, we do need carriers... but do we really need THAT many?

The carriers aren't to protect us from other carriers. The carriers are our primary method of conducting the initial stages of an offensive war. Without them our ability to project force is hampered severely

 

[Ryumast3r]

The carriers aren't to protect us from other carriers. The carriers are our primary method of conducting the initial stages of an offensive war. Without them our ability to project force is hampered severely

Once again... 20 carriers. Do we really need THAT many? Could we make do with 19, or 18.. maybe even 15?

My bet is yes, we could.

No, carriers are not to protect us from other carriers, but if nobody else in the world feels the need to have even 5 carriers to our 20, then I think we as a nation need to look at what we were/are thinking when it comes to that many carriers.