Friday, January 22, 2010

How Do We Get Deficit/Debt Under Control?


The Senate opened debate Wednesday on a plan to raise the nation's debt limit by $1.9 trillion, a move that Democrats hope will see the Treasury through this fall's congressional elections.The record increase would raise the Treasury's legal ceiling for borrowing to $14.3 trillion -- about the size of the nation's overall economy.
More here.
This is like a family who makes $100,000 per year agreeing to run up their credit cards to 100,000. This is a dangerous level of debt for our nation. So part of the talks center around creating a Budget Commission to look into ways to make spending cuts. Odds are they will also want to raise taxes, as the majority of the commission would be Democrats.
Republican commission advocates remain skeptical that a presidentially appointed panel would have the clout to tackle the nation's toughest fiscal problems. Sen. Judd Gregg (R-N.H.), a sponsor with Conrad of legislation to create a budget commission by law, called a presidentially appointed panel "a fraud" designed to do little more than give Democrats political cover.
"It's a fraud among anyone interested in fiscal responsibility to claim an executive order could structure something that would actually lead to action," Gregg said.
Some Democrats, particularly in the House, where leaders have long resisted relinquishing their authority over taxes and spending, are also less than optimistic. Under the agreement, the commission would have 18 members, including six lawmakers appointed by congressional Democrats and six lawmakers appointed by congressional Republicans. Obama would appoint six others, only four of whom could be Democrats.
Fourteen commission members would have to agree on any deficit-reduction plan, a prospect that skeptics called a recipe for gridlock because action would depend on the support of at least two Republicans for a plan that is sure to include tax increases.
More here.
A comment on my blog from Stephen M. Nielsen yesterday got me thinking. He points out that this would be the fifth such debt increase in 2 years. He blogs:
For the sake of argument, the failure to extend the debt will mean that the US Treasury will default on its debt for the first time in history, causing the absolute collapse of the US dollar as an international standard currency, and sparking an undoubted fire sale of US Dollars on the foreign market bankrupting the Nation overnight.
I argue that this is not such a bad thing.
The US has REAL WEALTH right beneath our feat. Our natural reserves, forests, ore, etc are the foundation that made this nation prosperous - throw in a little good old fashioned ingenuity and you have more than you will ever need at your fingertips. The concept of passing debt on to future generations is in direct contradiction to the ideals of George Washington et Al. We should draw our nets up around our real wealth, minimize government while maximizing individual success and prosperity, and get this nation back on track as the torch bearer for liberty.

This is the comment I left on Mr. Nielsen's blog:
We definitely are drunk on borrowed money.
I am worried that going cold turkey would injure us badly. Is there a short program of detox that everybody could agree to?

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35 comments:

Bungalow Bill said...

Last week, as Obama began to harness the anger towards the bailout and TARP for his own personal gain, he introduced fees for banks that will be passed on to consumers, to finish getting the TARP money back. He said most of the TARP money was paid back. If that is so, why are we raising the debt ceiling for the fourth time during his tenure?

LandShark 5150 said...

Cut all spending, stop the bleeding.

I am Harriet said...

Hi Opus.
Wow- have things evolved around here!
I'm so glad you stopped by to say hello. I hope you are fairing well with the rain.
Take care :)

chupacabra said...

I think he's right- but you're rarely wrong my dear and that IS a bit of a scary thought, but I believe we would live. Live to try and wreck ourselves again...

Arby said...

The last thing that we need is another commission.

I remember a Sixty Minutes report on the budget in the late 80’s. A room full of American citizens divided into small groups sat down with the federal budget and looked for ways to cut spending, lower the deficit, and pay debt. Each group came to the same conclusion. The only way to cut spending was to lower or eliminate Medicaid and Medicare spending. At the same time, every single senior citizen in the room adamantly refused to support any such measures, promising to vote out of office any politician who sought to do so. We all know who the most powerful voting bloc in this country is.

Severely restricting welfare would help enormously.

The answer is simple. We have to lower the amount of money that we spend to levels below the amount of money that we collect in taxes. The problem is that no one is willing to suffer the pain that comes along with such measures.

I agree with Mr. Nielsen in the comment you quoted.

Woodsterman (Odie) said...

It's so fundamentally simple ... live within your means. The Federal Government has just involved itself in too much. Take the Department of Education for instance. They spend billions each year and educate no one.

One Ticked Chick said...

They don't need a commission to tackle the problem. Any fool could tell them to just stop spending money they don't have. This is simply a ploy by Obama and the Democrats to make us think they're actually concerned about containing costs while they continue to run up the deficit with their profligate spending.

Just a conservative girl said...

What is very annoying is that they want to use the tarp money that has been returned and just spend it on something else. That money should only go to the debt.

I agree that we can't go cold turkey, but we have to reign in new spending.

Get the feds out of education. The department of education is huge. We can save a lot of money that way. That is a local/state issue.

Fuzzy Slippers said...

I read somewhere yesterday that we already have a commission that is supposed to control spending and keep our deficit and debt down: CONGRESS

WoFat said...

Is that a COMMission or an Omission?

Nickie Goomba said...

Slash the entitlement programs, limit welfare, drill for oil, and LOWER ALL TAXES.

Nickie Goomba said...

Nice one, Fuzzy.

LL said...

Obama will increase taxes on businesses in an environment when unemployment is increasing across the board nationwide (while he blames Bush for his problems). Increased taxes mean less profits and people will put their money elsewhere.

The only solution is to SLASH programs and positions in the Federal Government.

But Obama, as a utopian socialist, believes that government IS the solution rather than the problem. So he'll run the ship on the rocks.

Opus #6 said...

Bill, something is rotten in Denmark (Washington).

Opus #6 said...

Lanshark, why won't our politicians do it!

Opus #6 said...

Harriet, great to see you. It is indeed raining over here still.

Opus #6 said...

Chup, it would be strange for the US to default. I never thought I would live in the type of country to do that.

Opus #6 said...

Arby, I agree with your entire comment. Well put.

Opus #6 said...

Odie, I agree. Get rid of the dept of education.

Opus #6 said...

Ticked, everytime Obama comes up on something that is a challenge, he appoints a czar or a commission. That way he can wash his hands of it and pass the buck.

Soloman said...

Hi Opus - I don't mean to correct you, but you have a statement in this post that isn't quite true... I'm pretty sure you'll agree -

"This is like a family who makes $100,000 per year agreeing to run up their credit cards to 100,000."

Actually, what America now has as a fiscal policy is more along the lines of a family living on a salary plus commission, not knowing exactly what their commissions will be and therefore wishfully guessing they'll have a good year and manage to come up with 'x' amount.. then agreeing to live at the level of said wishful guess, and if they don't make it they'll just use the credit cards to cover the difference and worry about it next year.

Problem is we've been doing this as a nation for too long, and now we're so far in debt we may never recover.

We need to establish reasonable fixed income budgets and manage at a lower number - say 75-80% of the projected income. That's how I live my life... why can't our government?? This offers protection from emergencies and hopefully allows for savings.

We need to stop giving aid to other nations unless it's an extreme emergency.

We need to slash the hell out of entitlements, lower taxes on corporations, and force every single department of government to be audited by an outside agency in an effort to reduce overhead and minimize expenditures.

Drilling for oil would also be beneficial, but I think working on a national plan to do CNG (compressed natural gas) conversions would be even better. We can last as long on nat. gas as we can on oil, and the nat. gas is all here or in Canada - a friendly neighbor, not the radical middle east.

Thanks for letting me rant :)

They Say/We Say said...

Tis the same old song and dance. The Federal Reserve took over in 1933; changing the Silver Certificate (Pay Barer Upon Demand) to - Federal Reserve Note (not worth the paper it is written on)! And confiscating our grandparents GOLD!
Heard a few years ago; the Banks want to charge a transaction fee for each and every transaction. This is just a way to give the Banks what they want.
"O" will charge the Banks fees; which will be passed down to each and every customer (giving the Banks cover) sneaky little Bas__rds!
Spending exercises from the Congress will not be curtailed. That would be a Breech of Contract with the Fed Reserve!
What a tangled web that has been wove.
Also; the Supreme Court said, we can resume to mud slinging all the way up to an Election.
McCain-Feingold was all about not exposing the corrupt Candidate 30 days and 60 days before their Election and or Re-Election (censorship). The Money contributions were not hindered, but to the common man trying to get his good choice of a real Rep. and or Sen. inside Washington. It was all about protecting the Incumbent(most probably a corrupt one).

Opus #6 said...

JACG, they should not be allowed to use returned TARP money as a slush fund.

Opus #6 said...

Fuzzy, I liked your comment so much I tweeted it just now, w attribution, of course. ;-)

Opus #6 said...

Wofat, by forming a commission they are omitting having to DO anything about the problem.

Opus #6 said...

Nickie, you've got my vote!

Guy Average said...

That is a cute picture of the kitty!

The Obama Regime will either Monetize The Debt by pumping up the M-1 or add every kind of tax, Stealth and Overt, that is known to man. What else can they do?

Well, yeah, they could cut spending, cut taxes, and allow Free Market Capitalism to operate.

Opus #6 said...

LL, increasing taxes during high unemployment? Isn't that the textbook way to turn a recession into a depression?

Opus #6 said...

Sol, you are correct. The best way is to live BENEATH your means, not just within them.

Opus #6 said...

TSWS, I long for the good ole days.

Opus #6 said...

Guy Average, that would be too easy!

TRESTIN MEACHAM said...

The first thing we can do is write our Senators. Tell them not to confirm Bernanke. The economy is not going to get better while the Fed is out of control.

Amusing Bunni said...

Bernake looks to be in trouble, obumbles might throw him under the bus, since's his new crusade is "banking" and big biz....I love that kitty, of course!
LOL cats rock...happy weekend, my friend.

Ahsan said...

nice content for vote

Fuzzy Slippers said...

LOL, you're too cute, Opus! :-)