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.