Warning: The (Federal) Debt, Deficits Are HERE!

[macrockett]

www.reuters.com/article/idUSN088462520100608
U.S debt to rise to $19.6 trillion by 2015
6:19pm EDT

WASHINGTON, June 8 (Reuters) - The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress.

The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.

"The president's economic experts say a 1 percent increase in GDP can create almost 1 million jobs, and that 1 percent is what experts think we are losing because of the debt's massive drag on our economy," said Republican Representative Dave Camp, who publicized the report.

He was referring to recent testimony by University of Maryland Professor Carmen Reinhart to the bipartisan fiscal commission, which was created by President Barack Obama to recommend ways to reduce the deficit, which said debt topping 90 percent of GDP could slow economic growth.

The U.S. debt has grown rapidly with the economic downturn and government spending for the Wall Street bailout, the wars in Afghanistan and Iraq and the economic stimulus. The rising debt is contributing to voter unrest ahead of the November congressional elections in which Republicans hope to regain control of Congress.

The total U.S. debt includes obligations to the Social Security retirement program and other government trust funds. The amount of debt held by investors, which include China and other countries as well as individuals and pension funds, will rise to an estimated $9.1 trillion this year from $7.5 trillion last year.

By 2015 the net public debt will rise to an estimated $14 trillion, with a ratio to GDP of 73 percent, the Treasury report said. (Reporting by Donna Smith; Editing by Kenneth Barry)

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[southsidesignmaker]

The growth of debt as a percentage of GDP is just stunning. It is hard to imagine the amount of drag on the economy moving forward.

[doctorwho]

Jun 8, 2010 19:40:13 GMT -6 southsidesignmaker said:

The growth of debt as a percentage of GDP is just stunning. It is hard to imagine the amount of drag on the economy moving forward.

with some of the debt issues like underfunded pensions ( with guaranted payouts based on faulty accuarial models) - I am not sure how a recovery is going to take place. Also factoring in the reality that we manufacture a fraction of what we used to % wise for the world - and I believe we lived thru the best of times here..they may be gone forever.

[macrockett]

With Bernanke on Capitol Hill today discussing, among other things, the budget and debt, it is only fitting to take a walk down memory lane with The Heritage Foundation: 2009 index of dependence on government, published in March 2010

www.heritage.org/research/reports/2010/03/the%202009%20index%20of%20dependence%20on%20government

[macrockett]

My personal spokesperson on the US debt.

www.roadmap.republicans.budget.house.gov/

[macrockett]

States continue to hemorrhage red ink. Budget deficits for the next 3 years are projected at around $500 billion. www.cbpp.org/files/9-8-08sfp.pdf

Part of the problem is their Medicaid obligations. www.cbpp.org/files/6-8-10sfp2.pdf

[macrockett]

Jack Cafferty on CNN discussing the Democrats inability to put forth a budget for FY2011. It isn't about politics, however, it's about our children and future generations. What kind of lives will they have with a crushing debt which will quadruple in 10 years to $19 trillion.

Certainly the Bush administration is to blame for a material part of this mess, but the spending going on right now is without precedent in our country's history.

www.youtube.com/watch?v=NLbvIYOEAiY

Followup: I went back to youtube and started to listen to more Cafferty commentary from CNN. If you get a chance, you should do the same. Here are a few jems focusing on Speaker Pelosi:

www.youtube.com/watch?v=N_i-vXZU7ZQ (on a trip to Coppenhagen for the climate conference in Dec 2009)

www.youtube.com/watch?v=kIa1GQTDBPQ (followup on the cost of the trip)


And here is Pelosi discussing the Health Care bill and how she intended to get it passed, my personal favorite:

www.youtube.com/watch?v=E2sEgJileCE&NR=1

[macrockett]

JUNE 14, 2010 Wall Street Journal

Christie Takes Show on Road

By ANDREW GROSSMAN

ROBBINSVILLE, N.J.—New Jersey Gov. Chris Christie speaks in stark terms about his drive to cap property-tax increases.

"We don't do this, this state is going to go broke," he told a crowd at a senior-citizens center here recently. "And we're not going to have anybody who's going to be able to afford to live here."

That blunt talk—sometimes combative, sometimes humorous—is the centerpiece of Mr. Christie's road show of town-hall meetings to build support for a proposed constitutional amendment that would cap property-tax increases. To do that, he'll need to win a looming midsummer fight with the Democratic-controlled Legislature after the June 30 budget deadline.

Mr. Christie, a Republican elected in November, is one of the loudest voices among a group of politicians across the country pushing to reduce the salaries and benefits of public employees as states struggle to balance their budgets.

He refers to "mindless, faceless union leaders". He says he's "saving" the state where he was born and raised. He told a gathering of the conservative Manhattan Institute last month that New Jersey is on its way to becoming Greece.

Since his January inauguration, Mr. Christie has cut state spending. He has mounted a campaign that helped persuade voters to reject more than half of local school budgets. And he appears close to getting the Legislature to approve much of his budget for next year, which relies on more cuts instead of tax increases to fill the state's projected $10.7 billion deficit, which is among the largest in the nation. The state had a $32.2 billion budget last year.

Those moves appear to have had a polarizing effect on voters. Mr. Christie's job approval ratings have slipped by eight points since the end of February, to 44% in May, according to Fairleigh Dickinson University polls. Meanwhile, the number of voters who disapprove of his performance has doubled, jumping from 21% to 42%.

Mr. Christie's proposed property-tax cap is modeled after a similar measure Massachusetts imposed in 1980. He calls the state a tax-reduction success story that managed to cut taxes while keeping high quality schools and services. But opponents say the cap was imposed at a very different time, when the state was growing and that the cap—and others in states like Colorado and California—have yielded more mixed results and aren't good models for New Jersey.

"You cannot begin to compare the economic climate 30 years ago and today," said Assembly Speaker Sheila Oliver, a Democrat from East Orange. The unemployment rate was 5.8% in Massachusetts in November 1980; New Jersey's unemployment rate last month was 9.8% in April.

Mr. Christie is pushing a constitutional amendment that would bar local governments from raising property taxes by more than 2.5% each year, unless voters approve a larger increase or the government needs more money to pay its debts. It needs a three-fifths vote in each house to get on the ballot. That will require swaying at least seven Democrats in the Senate and 15 in the Assembly.

His message is aimed at voters like Carol Kitchin, a nurse who spoke at a town hall in Roxbury Thursday. She and her husband, a dentist, built their "dream home" in nearby Mount Arlington, overlooking Lake Hopatcong. To save money during construction in the mid-1990s, they acted as their own general contractors and lived with their four children in a houseboat on the lake for two years while the house went up.

The Kitchins' property taxes have gone from $13,045 in 1998 to $23,240 in 2008—a 78% increase—due in part to cuts in state aid and rising pension and benefit costs for school and municipal employees.

"If anything happened to my husband, I couldn't afford to live in the house that we built," Ms. Kitchin said. "We see a lot of our friends that can't afford to stay here."

In addition to putting the cap on the ballot, Mr. Christie wants the Legislature to pass what he calls "the tool kit", a package of 33 bills that would change the rules for labor arbitration and allow municipalities to opt out of the state's civil-service system. He says those moves, among others in the bills, would help cities and towns keep their budget increases below the cap. The Legislature is balking on large parts of that agenda—particularly over concerns that letting towns abandoned civil-service law would risk exposing public workers to political job pressures.

Leaders in both houses say they will consider and back legislation that would reduce property taxes—including some pieces of Mr. Christie's tool kit—but they don't think there is support for putting a constitutional amendment before voters.

"I don't see it getting on the ballot," said Stephen Sweeney, the senate president, a West Deptford Democrat.

He said a cap that ends up being too restrictive could be disastrous.

"We start cutting police, and we start cutting firemen, and we start cutting services, and eventually you get to a point where we've got a community that's not nice to live in anymore," he said.

Democrats point to the success of a 4% property-tax cap signed into law by then-Gov. Jon Corzine in 2007. That cap has reduced average tax increases across the state.

But the Christie administration says that law allows for too many exemptions.

The governor's proposal only allows exemptions for debt service or a voter override. Many applications from local governments last year were granted by a state board that oversees municipal finances.

Mr. Christie doesn't want municipalities to have the option of raising taxes to pay higher costs for employee benefits. Instead, cities and towns would use the cap to force concessions from union workers.

Write to Andrew Grossman at [e-mail]

[macrockett]

Remember that "investment" in GM and Chrysler? As i recall, including GMAC (now Ally) the total is in the neighborhood of $75B.

Now listen to this video involving a press release by Toyota: www.cnbc.com/id/15840232?video=1524979763&play=1

Toyota wants to slash the price of its cars by 30% by 2013....by slashing the cost of materials to build the cars (due to stiff competition from Hyundai and Volkswagon)

Where does that leave GM and Chrysler? And Ford for that matter?

[asmodeus]

Toyota needs to rethink their cost cutting...many people attribute their recent quality and safety deficiencies to the cheap materials they've been forcing their suppliers to use.

[macrockett]

Jun 18, 2010 23:08:34 GMT -6 asmodeus said:

Toyota needs to rethink their cost cutting...many people attribute their recent quality and safety deficiencies to the cheap materials they've been forcing their suppliers to use.

No doubt that quality is an issue, however my focus here is on the trend worldwide for cheaper cars. Hyundai is a perfect example of that.

In the long run the domestic auto companies are going to find it harder to complete with their cost structure. Americans have shown that they have little allegiance to American car companies. They clearly defer to their sense of value and desirability in deciding what car to buy.

My ultimate point is global labor is cheap and abundant. If America doesn't get all of its costs in line, health care and education, local, state and federal government, entitlement programs and so on, we will fall farther and farther behind in our ability to compete.

We are out of balance now in that the private sector, which is on the front line of this competition, has made significant adjustments. Unfortunately many jobs have been lost and salaries, wages and benefits have stagnated over the last decade. Many private sector services have adjusted as well.

Virtually all public sector costs, however, have made little progress in adjusting to today's reality and are becoming a significant drag on the private sector. As an example, if the expectation of higher wages is no longer as much of a reality in the private sector as it once was, how can the cost of an education continue to go up? How can we be expected to pay more to public sector employees? That is what I mean by being out of balance. The same is true for health care and entitlement programs. All of these things are out of sync with the now global economy.

[asmodeus]

the expectation of higher wages

I think this is also one of the reasons the unemployment rate will continue to stay high. Just as their houses may never see the peak prices of 2006 again, people who used to make 100k or more should probably come to the realization that their skills may only be worth 50k. Right now they may have offers for 50k but are holding out for their old salary. And the government needs to lower the pay for public employees the same way.

[macrockett]

As most of you know, there are large budget deficits and debt at the Federal level. President Obama has even appointed a debt commission to offer ways to correct our structural problems. One idea tossed around to see if it sticks, is to raise the retirement age for Social Security to 70 or means test the benefits.

Let me offer the ideas of the Heritage Foundation, cut federal pay and benefits and save billions.

www.heritage.org/Research/Commentary/2010/07/Government-jobs-Bloated-
pay-benefits-cost-us-all

Remember the BLS, among others, also said that federal pay and benefits are much better than the private sector. www.bls.gov/news.release/archives/ecec_03102010.pdf

Just a few days ago the issue came up on CNBC. Listen starting at minute 1:20 www.cnbc.com/id/15840232?video=1543462395&play=1

I say cut government, their salaries and their benefits and means test all members of Congress, past and present.

[EagleDad]

Huh, Social Security is still in business? imagine that. Who'da thunk? (for casey )

Just glad I finished forkin' it over to FICA early again for another year - I thought for sure the 'bamanation was going after that in the first week.

Yes, curtailing the government gravy train is the better solution IMO. Unfortunately I fear the majority of the voting public will soon either work for said government or be dependent on them for entitlements in which case it becomes easy to predict the outcome of any votes on the matter.

[Arch]

Wait till they remove the cap on FICA....