Third Party & Independents Archives

April 11, 2009

Debt & Deficits: Necessary vs. Unnecessary

Deficit spending by the federal government, (spending beyond the budget year’s revenues), has at various times in our history been essential and necessary. Necessity has been defined as insuring the integrity of the nation, as in World War 2, or, insuring humane conditions for the American people, as in the Great Depression or Dust Bowl era. Defining essential and necessary deficit spending is not difficult. Defining non-essential and unnecessary spending is a highly improbable endeavor for our American system of government. Therein lies the economic threat going forward. A potential solution sits idly in Congress.

Highly respected and educated folks such as David Walker, former U.S. Comptroller and President-CEO of the Peter G. Peterson Foundation, insist that deficit spending is essential and necessary today to address the financial crisis and recession. Walker also says the Congress must embrace the SAFE Commission bill, if the United States and Congress are to save the nation from imploding and crushing national debt going forward.

David Walker appeared for an interview on CNBC a couple days ago, and his commentary offered a rare non-partisan glimpse into the real world of deficit and debt challenges before the Congress and Pres. Obama, and the American people. Before proceeding to an analysis of the political - economic threat going forward, some of David Walker's quotes and ideas are worth noting from the interview.

"Deficits and debt levels are going to go up in the near term, and that is understandable due to financial and economic crises. Obama's first budget blueprint contains many commendable provisions. Obama must focus first and foremost on turning the economy around. Obama's pledge to cut deficit over the course of his first term is encouraging. Universal Health Care is necessary, but, must be done intelligently. "

"What we have got to do is deal with the short term crises, but also, put in place a process by which fiscal discipline is imposed once the economy recovers. We must demonstrate we can change the cost curve. The total of all direct cash, loans, and commitments to date to meet the short term crises equals 4 Trillion dollars."

David Walker went on to say that the debt and deficit going forward is a dirty bomb in our path. We can and will deal with the short term challenges, but, the longer term structural challenges must be dealt with now as well, because the urgency to act upon them is greatest now. Congress is dysfunctional, Walker said, adding that the SAFE Commission is the only way forward, because the regular order of Congress is incapable of dealing with health care reform, which is essential to stopping the rising government cost curve that threatens our future.

The SAFE Commission is called forth in a bill and would establish a bi-partisan commission to address federal entitlements, discretionary spending, and tax policy going forward. It would engage the public, educate the public of the necessity for reforms, and seek their input into devising a fiscal discipline plan to save our economic future from crushing debt. That plan would then be set before the Congress to receive an up or down vote in the House and Senate, Walker said.

Walker pointed out that our future will change by design or by consequence, since the U.S. economy now represents only 21% of the global economic activity, as opposed to the 50% or more in decades past. He said we can no longer afford to fend for the rest of the world's nations, and must get our own accounts together, or we will be in no position to help ourselves economically, let alone other nation's.

I was struck by his reference to the need for Congress to pass the SAFE Commission bill. He seemed to insist that without it, our Congress will be incapable of a piece meal approach to the problem of crippling debt in Committees and through regular order in the Congress. The regular order of Congress is governed by its member's view of every bill as another opportunity to secure their next reelection by paying back wealthy campaign donors with legislative favors and bringing federal dollars back to their district on any and every project possible, regardless of necessity. Fiscal discipline is not possible by this regular order of business in our Congress. I recognized the wisdom and truth of it upon organizing my hastily scribbled notes of what he had to say.

This is why the passage of the SAFE Commission bill is mandatory if the United States is going to exercise the absolutely essential fiscal discipline necessary to avert the unsustainable rise in national debt that will be created by Congress' regular order of budgeting and appropriations, and failure to reform the entitlement programs and health care system which will bury our economy going forward.

The SAFE Commission Act (H.R. 3654), if passed, would require the Congress to address the Commission's plan to install fiscal discipline in future budgeting, appropriations, and entitlement processes on an up or down vote. This up or down vote provision is the key to understanding why this can work.

Let's take Medicare Reform for example. If the Congress attempts to reform Medicare to drive down its current steeply rising and fiscally crippling cost curve, it will engage in a process of compromises which will fail to curtail the rising cost curve sufficiently to get control of our debt in our lifetimes. Any attempt to reduce or qualify benefits for Medicare recipients would be met with a barrage of threats by special interest groups like AARP, and attempts to exclude non-needy recipients from benefits would be met with a barrage of election threats by the likes of the American Enterprise Institute. And Congress persons know that this will be the case. Which is why Congress has never endeavored to reform Medicare.

The SAFE Commission bill, if passed, would give elected Congress persons political cover in adopting the bi-partisan SAFE Commission plan to meet the long-term fiscal challenge of Medicare. Republicans and Democrats alike could vote for this plan defending their vote on the basis of rescuing our nation's economic future from certain ruin. And thus, there would be no partisan advantage or disadvantage to either party for having voted to adopt the Commission's fiscal future rescue plan.

There is bi-partisan agreement in Congress that if our federal government does not reform its discretionary spending, entitlement and tax policies, our nation's economic future is doomed to failure and collapse. Therefore, our Congress has before it a very simple choice. Adopt the SAFE Commission bill or, be forever labeled as one of those who chose to condemn America's economic future to ruin.

There is no guarantee that the SAFE Commission's plan, once drafted and laid before the Congress, will receive a bi-partisan vote to accept it. That provides Congress the opportunity to pass the SAFE Commission bill without incurring political consequences in the present. The hope is, that once the Commission's plan is devised and presented, it will be sufficiently sound in achieving its objective to rescue America's economic future, that voting against it would be tantamount to political suicide.

And this is potentially how America can circumvent the impossible political obstacles that now stand between America and a sustainable and viable economic future, in which partisan and special interests will otherwise, never agree on such a future. I suspect however, that voters will need to contact their representatives to urge them to bring HR 3654 to the floor for a vote, and to vote for its passage. Such a bill with the potential to save our nation's future will surely be viewed by some in Congress as too scary a bill to undertake of their own volition. The bill currently has 112 co-sponsors according to Thomas.

Writer's Note: The quote marks surrounding David Walker's comments, accurately reflect his words and sentences. The order of the sentences within those quote marks however, do not reflect the order in which Walker strung together those sentences, as the interview was lengthy and his responses followed a great number of questions in which responses frequently revisited previous statements in part and added new variations. They were then, strung together here to fit the topic, not the order in which his sentences occurred.)

Posted by David R. Remer at April 11, 2009 04:37 AM

Comments

Comment #280006

David,
Having discussed with you before my personal political view on how Americas’ Democratic and Republican Leaders should handle the Mational Dent I do find it pleasantly surprising that Congress wants and needs to look at the Federal Programs through the Eyes of the 21st Century. However, I wonder if the Right is going to scream as loud as the Democrats did when their entitlements start getting cut.

For why $14,000.00 from every Man, Woman, and Child could easily make up the $4 trillion dollars shortfall. I wonder how many from the Right and Left are willing to see inflation go that high so the average American can afford to pay their tax bill. Because personally I believe that any and all tax burdens from this mess should fall upon those in Wall Street who should of known that they were playing with OPM and OPT in a house of cards. Knowing that Enron and Worldcom was meant as a wake up call.

Posted by: Henry Schlatman at April 11, 2009 08:09 AM

Comment #280010

Henry,

14,0000 is just for the deficit, not even touching the debt. Add on the debt and interest we are paying on the debt and nearly triple that number. That’s the real issue ware dealing with here.

David,

Don’t you think the article is a bit one sided? Where are the views of the commissions’ critics in your article?

Let’s take a look at the makeup of the comission:

(a) In General- The Commission shall be composed of 16 voting members appointed pursuant to paragraph (1) and 2 nonvoting members described in paragraph (2).
(1) VOTING MEMBERS- The Commission shall be composed of 16 voting members of whom—

(A) one shall be the Director of the Office of Management and Budget;

(B) one shall be the Secretary of the Treasury;

(C) four shall be appointed by the Speaker of the House of Representatives;

(D) three shall be appointed by the minority leader of the House of Representatives;

(E) four shall be appointed by the majority leader of the Senate; and

(F) three shall be appointed by the minority leader of the Senate.

(2) NONVOTING MEMBERS- The Comptroller General of the United States and the Director of the Congressional Budget Office shall each be nonvoting members of the Commission and shall advise and assist at the request of the Commission.

(3) CHAIR AND CO-CHAIR- The President shall designate 2 co-chairpersons of the Commission from the members appointed under paragraph (1), one of whom must be a Republican and one of whom must be a Democrat.

(b) Limitations as to Members of Congress-

(1) FOUR MEMBERS OF CONGRESS ON COMMISSION- Each appointing authority described in subsection (a)(1) who is a Member of Congress shall appoint 1 Member of Congress to the Commission but may not appoint more than 1 Member of Congress to the Commission.

(2) CONTINUATION OF VOTING MEMBERSHIP- In the case of an individual appointed pursuant to subsection (a)(1) who was appointed as a Member of Congress under paragraph (1), if such individual ceases to be a Member of Congress, that individual shall cease to be a member of the Commission.

First flaw, there is no way a non republican or democrat could be a chair (I’m a bit opposed to the duopoly we currently have and am looking for a future where it will be hopefully broken, yes I am an optimist in that regard). But someone who has broken with their party and become and independant or joined a 3rd party could not be a chair on this commission nor could they most likely even be on the commission based on the way it will be organized.

Second, this commission will include, purposefully, people who have not been elected or gone through an approval process. There are no checks and balances on non-congress members which I find a little disturbing if we are going to be using the commission as a replacement for good judgement by our congresscritters.

Finally, as I just stated, this appears to me to be more of a way to let congressmen off of the hook. While I agree in theory, there is much to be concerned about in the creation of this committee that needs to be worked out as it does change the functioning of the government in a pretty dramatic way, seemingly handing more power (not real but for practical purposes there) to the bureaucracy of the federal government and less to the actual representatives.

Posted by: Rhinehold at April 11, 2009 10:04 AM

Comment #280012

(www.watchblog.com/thirdparty/archives/006514.html#comments)
David R. Remer, Thanks for bringing up the issue of debt.

How much debt is too much debt?.

David Walker (former GAO/U.S. Comptroller) has been right about the debt problem for years and he deserves credit for taking on an unpopular position, which many called him “Dr. Doom”, “Chicken Little”, etc.

I think David Walker’s opinion that deficit spending at this moment is impossible to avoid is plausible, and I think David Walker realizes that Congress is too corrupt to realistically expect it to stop pork-barrel spending and wasteful spending any time soon. Realistically, he is right.

However, that is not proof that several more years of a relatively high levels of deficit spending (i.e. 25%+ above revenues) will avoid a recession (or worse; a depression).
However, there are reasons, historical precedent, the dismal math, and many unanswered questions that indicate that the current debt levels (both federal and non-federal) are already untenable.
And even if they aren’t untenable, they must be very close to untenable.
There is ample evidence to support this conclusion. For example, consider the current (not future) $11.2 Trillion National Debt (federal debt) alone. What is this picture (below) telling us about the $11.2 Trillion National Debt, and the $11.2 Trillion National Debt per capita (i.e. per-person, on average)?

___ $11.2 Trillion National Debt Per-Capita (2008 dollars)____

$40.0 |———————————-

$37.5 |———————————o $36,455 per-capita

$35.0 |———————————o (65% higher in 2009 than 1945)

$32.5 |——————————-oo

$30.0 |——————————-o-

$27.5 |—————————-oo—

$25.0 |—————————-o—-

$22.5 |————-o————o—— $22,140 per-capita

$20.0 |————o-o———-o—— (in 1945 at end of WWII)

$17.5 |————o-o———-o——

$15.0 |————o-o———o——-

$12.5 |————o—-o—-o———

$10.0 |————o——-oo———-

$07.5 |————o———————

$05.0 |————o———————

$02.5 |——o-o————————

$00.0 +o-o——————————YEAR

______ 1 1 1 1 1 1 1 1 1 1 2 2

______ 9 9 9 9 9 9 9 9 9 9 0 0

______ 0 1 2 3 4 5 6 7 8 9 0 1

______ 0 0 0 0 0 0 0 0 0 0 0 0

Many have tried to assert that the debt is managable today becasuse the National Debt in year 1945 ($258 Billion = $3.1 Trillion in 2008 dollars) was larger as a percentage (116%) of GDP.
That’s true (as shown below), but that is not even close to being true for the current $11.2 Trillion National Debt per-capita (as shown above).

_____ National Debt as a %percentage of GDP _____

120% |————————-x——————————— (116% in year 1945)

110% |————————-x———————————

100% |————————x—x——————————

090% |————————x—x——————————

080% |————————x—-x—————————x 81% of $13.86T GDP

070% |————————x——x———————x-x- (for $11.2T National Debt)

060% |———————-x———-x—————x—x—

050% |———————-x————x———-x———-

040% |——————-x-x————-x——x————-

030% |————x—-x———————xx—————-

020% |———-x-x-x——————————————

010% |x-x-x-x—-x——————————————-

000% |——————————————+———————YEAR

____1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 22

____9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 00

____0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 00

____0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 59

QUESTION: Why the difference?

ANSWER: Population. 140 Million in year 1945 and 310 Million today.

As can easily be seen above, the $11.2 Trillion National Debt per-capita ($36,455) today is 65% higher than the National Debt per-capita ($22,140 in 2008 dollars) in year 1945 after World War II.

But that’s only part of the massive debt-bubble problem of nightmare proportions.
The current (not future) $57 Trillion nation-wide debt (source: mwhodges.home.att.net/nat-debt/debt-nat-a.htm) has also more than quadrupled from 100% of GDP in year 1956 to 411% of GDP in year 2009.

$11.17 Trillion = Total federal government debt (which includes $3.1 trillion federal government owes foreigners, $3.3 trillion debt owed U.S. domestic public, $4.2 trillion surplus siphoned from and owed to Social Security and Medicare Trust funds; 3/31/2009);

$2.2 Trillion = total state & local government debt;

$13.8 Trillion = total household debt;

$11.1 Trillion = total business debt;

$17.2 Trillion = total domestic financial sector debt

$1.9 Trillion = other debt (foreign debt)

___________________________________________

$57 Trillion (TOTAL)

(source: mwhodges.home.att.net/debt-summary-table.htm)

____ Nation-Wide Debt growing much larger than GDP______
$60.0T |—————————————-D
$57.5T |—————————————-D (Debt=$57 T)
$55.0T |—————————————D-
$52.5T |—————————————D-
$50.0T |—————————————D-
$47.5T |—————————————D-
$45.0T |—————————————D-
$42.5T |—————————————D-
$40.0T |————————————-D—
$37.5T |————————————D—-
$35.0T |———————————-D——
$32.5T |———————————-D——
$30.0T |———————————D——-
$27.5T |——————————-D———
$25.0T |——————————D———-
$22.5T |—————————-D————
$20.0T |—————————D————-
$17.5T |————————-D—————
$15.0T |————————D—————-
$12.5T |———————D——————G (GDP=$13.86T for year 2007)
$10.0T |—————-D—————G——-
$07.5T |———-D————G—————-
$05.0T |-D——-G——————————
$02.5T |-G—————————————
$00.0T +(1956)————————- (MAR-2009)YEAR

And unfortunately, GDP for year 2008 and 2009 may be less than the $13.86 Trillion for year 2007, making the percentage larger.

For example, there has never been such a large dip in GDP since year 1900 (if ever).

_______________ GDP (in 2005 Dollars) __________

$14.5T |——————————————————————

$14.0T |————————————————————-x—

$13.5T |————————————————————x-x-

$13.0T |————————————————————x-x-

$12.5T |————————————————————x-x-

$12.0T |———————————————————-x——

$11.5T |———————————————————-x——

$11.0T |———————————————————-x——

$10.5T |———————————————————-x——

$10.0T |———————————————————-x——

$09.5T |———————————————————x——-

$09.0T |———————————————————x——-

$08.5T |——————————————————-x———

$08.0T |—————————————————-x————

$07.5T |————————————————-x—————

$07.0T |———————————————-x——————

$06.5T |——————————————-x———————

$06.0T |——————————————x———————-

$05.5T |—————————————-x————————

$05.0T |—————————————x————————-

$04.5T |————————————-x—————————

$04.0T |————————————x—————————-

$03.5T |———————————-x——————————

$03.0T |———————————x——————————-

$02.5T |————————-xxxxx———————————

$02.0T |————————x—————————————-

$01.5T |———————-x——————————————

$01.0T |———-xxxxxxxx——————————————-

$00.5T |xxxxxxx——————————————————-

$00.0T |——————————————————————

_______1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2

_______9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0

_______0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1

_______0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0

_________________ GDP (in 1950 Dollars) ___________
$1.7T |——————————————————————
$1.6T |—————————————————————x-
$1.5T |————————————————————-x-x
$1.4T |————————————————————x—-
$1.3T |———————————————————-x——
$1.2T |——————————————————-x———
$1.1T |——————————————————x———-
$1.0T |—————————————————-x————
$0.9T |————————————————-x—————
$0.8T |———————————————-x——————
$0.7T |——————————————-x———————
$0.6T |—————————————-x————————
$0.5T |————————————-x—————————
$0.4T |———————————x——————————-
$0.3T |————————xxxxxx———————————
$0.2T |———————-x——————————————
$0.1T |xxxxxxxxxxxxxx———————————————
$0.0T |——————————————————————
_______1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
_______9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0
_______0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 0 1
_______0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0

Such a large dip in GDP (shown above) has never happened before since year 1900 (if ever).

That is strange indeed, since we were being told all the way up until 2008 that GDP was growing.
Now GDP is reported to be negative (source: www.portfolio.com/views/blogs/odd-numbers/2008/07/31/chances-of-more-negative-gdp-readings?addComment=true)
Well, the funny thing about GDP increasing or decreasing is that it is difficult to measure in current dollars, when inflation is hiding a real dip. When measuring GDP in any previous inflation-adjusted dollar (e.g. whether it be 1950 dollars or 2005 dollars), the dip in GDP is more obvious. Yet, it was not widely known and we were still being told up to year 2008 that GDP was growing and the fundamentals of the economy were sound.

To make matters worse, the $11.2 Trillion National Debt is reported as such, because the $7.6 Trillion ($2.4T + $5.2T) surpluses in the Social Security and Medicare Trust Funds don’t exist as money. The suplus money was already spent. Those surpluses now exist as non-marketable I.O.U.s. That doesn’t bother some people, since the federal government and the Federal Reserve can create new money (as evidenced by a larger portion of this $4-to-$12.8 Trillion used for the rescue and bail-outs). They’ll tell you that it is backed up b the full faith and security of the U.S. government.

According to Bloomberg.com, the financial rescue and stimulus is now up from $8.5 Trillion as of 30-NOV-2008 (www.latimes.com/news/printedition/front/la-113008-fi-pricetag-g,0,5292528.graphic) , up to $11.6 Trillion as of 24-FEB-2009 (www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK__XUF84) , and now up to $12.8 Trillion as of 31-MAR-2009 (www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4&refer=home).

Now, about the dismal math.
The interest rate on the National Debt has been about 4.0% (based on $432 Billion in year 2007 when the National Debt was $9.0 Trillion).
At only 2.5% today, it could take 246 Years to merely pay down 33% of the $11.2 Trillion National Debt (see schedule: One-Simple-Idea.com/$11.2Trilion.jpg ).

So, is the debt tenable?
If it is tenable, then why do so many questions remain unanswered?

(a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending?

(b) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?

(c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?

(d) If the current debt is untenable, how is growing it bigger going to help?

(e) Where will the money come from when 90%-to-95% of all money in existence in the U.S. exists as debt, because money is created as debt at a steep ratio of 9-to-1 of debt-to-reserves.

(f) What is the possibility that high inflation (or hyperinflation) will make the situation worse? After all, 33+ nations (source: en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation) have previously tried to borrow, create new money, and spend their way out of a massive debt-bubble, and it not only did not work, but made things worse.

A lot more deficit spending may make things much worse (by debauching the currency, and destroying all savings, 401Ks, pensions, entitlements, and wages), and 33+ nations (source: en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation) have already tried to sovle their massive debt-bubbles with more borrowing, debt, new money, and spending, and they all failed miserably by debauching the currency (i.e. making the problem worse).

So, how much debt is too much debt?
What is the limit?
Shouldn’t we know that limit, before growing it by Trillion+ annual deficits?

We appear to be “playing chicken” with very high inflation (or hyperinflation).
Why will more debt, new money, and spending work for the U.S. when it did not work for 33+ other nations that were ridiculously deep into debt?
Why is the biggest debtor nation on the planet somehow immune to hyperinflation?

Any way, I think there are many solutions.
There are most likely better ways to resolve this nation’s massive debt problem, and growing the debt larger doesn’t seem like a logical solution.
SOLUTIONS (One-Simple-Idea.com/Solutions1.htm):

(01) Stop these 10 abuses.

(02) Stop the dishonest, usurious, predatory, lending practices of the banks, and Stop the Federal Reserve’s Ponzi-scheme which steeply leverages debt-to-reserves (i.e. 9-to-1 fractional lending; 90% of every new loan to a member bank is new money created out of thin air). Banks are essentially loan-sharking, jacking up adjustable rate mortgages (foreclosures be damned) with ridiculously high interest rates (commonly up to 10%-to-20% and as high as 64%) and other predetory lending practices. Banks are also preying on the young, poor, minorities, financially naive, and people deep in debt due to outrageously expensive medical fees. As a result, usury has helped widen the wealth disparity gap. 1% of the wealthiest now own 40% of all wealth, while 80% of Americans own only 17% of all wealth. The gap has never been larger since the Great Depression. 40% of Americans have essentially (on average) ZERO net worth. As a result of the Federal Reserve’s Ponzi-scheme, nation-wide debt has never been larger and has steadily grown (now over $67 Trillion; $220,000 per-capita) for decades from 100% of GDP in year 1956 to over 411% of GDP in 2008. 90%-to-95% of all U.S. Dollars in existence in the U.S. exists as debt. Also, as a result of excessive creation of new money out of thin air, the U.S. has had 52 consecutive years of incessant inflation. A 1950 Dollar is now worth only 10 cents.

(03) Stop rampant, irresponsible, wasteful federal spending. The federal government has been deficit spending for 52 consecutive years. The National Debt is now over $11 Trillion (as of 22-MAR-2009). It has never been larger in size or per-capita ($36,455 per-capita as of MAR-2009), and is 65% higher than the previous record-high ($22,140 per-capita in 2008 inflation-adjusted dollars) in year 1945, after World War II, and that does not even include the impact of Social Security and Medicare now being pay-as-you-go, with a 78 Million baby-boomer bubble approaching.

(04) Stop growing and eliminate all of the massive bloat and waste (www.akdart.com/gov1.html) in the federal government now. Prioritize and focus on making the U.S. more energy independent. Prioritize and focus on the most important projects. Create jobs to research, develop, and implement better and more renewable energy resources and rebuild and improve the nation’s infrastructure (which will create long-term savings and benefits). Go through the federal budget with a fine-tooth comb and cut all unnecessary spending and waste. Shift unnecessary spending to spending on highest priority projects.
For example, cut spending:
- ~~$700~~ [$590] Billion for Health and Human Services (including $432 Billion for Medicare)
- ~~$660~~ [$522] Billion for Social Security
- ~~$640~~ [$447] Billion for Department of Defense
- ~~$100~~ [$30] Billion for Department of Education
- ~~$100~~ [$30] Billion for Department of Agriculture
- ~~$85~~ [$100] Billion for Veteran Affairs (no cuts here)
- ~~$75~~ [$75] Billion for Homeland Security (no cuts here)
- ~~$56~~ [$10] Billion for Department of Transporation
- ~~$50~~ [$10] Billion for Housing and Urban Development (HUD)
- ~~$60~~ [$30] Billion for Office of Personnel Management
- ~~$550~~ [$550] Billion for Treasury Department (including ~~$430~~ [$500] Billion for Interest on the National Debt).
- ____________________________________________________________________
- ~~$3.074~~ [$2.4] Trillion (~~$574~~ [$0] Billion over total revenues of ~~$2.4~~ [$2.4] Trillion in ~~2008~~ [2009])

(05) Stop the U.S. presence in Iraq;

(06) Stop the U.S. military presence in 132 nations around the world. That costs a LOT! Is all of that necessary?

(07) Stop throwing money, subsidies, tax breaks, and welfare at failing banks, financial corporations, the wealthy, and Wall Street; stop rewarding failure, which is also unfair to competitors;

(08) Stop rampant corruption by increasing and enforcing more transparency and accountability (e.g. One-Purpose-Per-BILL, stop Constitutional violations, etc.);

(09) Stop Constitutional violations; reduce lawlessness; enforce existing laws (e.g. Article V);

(10) Stop illegal immigration and enforce E-Verify, and stop the $70-to-$327 Billion in annual net losses due to illegal immigration; prosecute greedy illegal employers;

(11) Stop H-1/2B abuse and stop importing 1.5 Million (AmericanWorker.org) foreign H-1B workers per year, when there are 12-to-28 Million (www.ShadowStats.com) unemployed American workers.

(12) Stop despicably pitting American citizens and illegal aliens against each other for votes and profits, disguised as compassion (severely misplaced compassion at best); prosecute greedy illegal employers;

(13) Stop unfair trade practices; set tarrifs on foreign imports into the U.S. at least equal to other nations’ imports tarrifs imposed on U.S. exports.

(14) Stop plundering Social Security surpluses; leaving Social Security pay-as-you-go, with 78 Million baby-boomer bubble approaching;

(15) Stop regressive taxation (One-Simple-Idea.com/DisparityTrend.htm#Taxes). This would also save tax payers tens and possibly hundreds of billions per year by eliminating (or greatly reducing) the cost of calculating taxes, cost of tax software, cost of accounting and record keeping, and the cost of storage of many previous years of tax records.

(16) Stop killing 195,000 per year due to preventable medical mistakes. Between 1999 and 2004, over 1.5 million people were killed by preventable medical mistakes. That is more than all the American soldiers killed in the American Revolution (4,435), the War of 1812 (2,260), the Indian Wars (1,000), the Mexican War (1,733), the Civil War (462,000), the Spanish American War (385), WWI (53,402), WWII (291,557), Vietnam War (58,209), Korean War (36,574), the Iraq Gulf War (529), and the current Iraq war 19-Mar-2003-to-24-Jan-2009 (4,232), combined! Create a non-profit national health insurance system (get rid of the millions of costly unnecessary middlemen); build more non-profit hospitals and clinics.

(17) Stop Congress from rewarding itself with a raise almost every year (Congress recently gave itself the 10th raise in 12 years and $93,000 per Congress person for petty cash and expenses; the raises are actually automitic and a BILL is required to stop the automatic raise; must be nice, eh?). Is that necessary? No. What arrogance! ? ! Especially when U.S. Troops go without armor, adequate medical care, promised benefits, and have to do 2, 3, or 4+ tours in Iraq and/or Afghanistan.

(18) Stop pandering politicians who are virtually FOR-SALE. Allow only equal public financing of elections. Otherwise, politicians will continue to sell-out most Americans!

(19) Stop pork-barrel; pass a ONE-PURPOSE-PER-BILL amendment; Congress needs a transparent system for prioritizing spending, which it obviously does not have. Currently, most (if not all) Congress persons are more concerned about bringing the pork-barrel home, than solving the nation’s most pressing problems, growing dangerously in number and severity, and threatening the future and security of the nation.

(20) Stop career politicians and judges; pass TERM LIMITS for all offices;

(21) Stop the unfair incumbent advantages: One-Simple-Idea.com/FAQ.htm#UnfairAdvantages

(22) Stop the deterioration of public education; eliminate the bloated, over-paid, and incompetent adminstrative staff; limit education systems’ administrative costs to a sepcific percentage of the budget. More education solutions: One-Simple-Idea.com/Education.htm

(23) Stop repeatedly rewarding irresponsible, FOR-SALE, incompetent, and/or corrupt incumbent politicians with 85%-to-90% re-election rates. Stop rewarding corruption, or suffer the painful consequences: One-Simple-Idea.com/NeverWorse.htm

There are lots of solutions and ideas, but unfortunately, Congress appears to be where good ideas and solutions go to die. Congress appears only able to do five things well:

(1) tax unfairly (One-Simple-Idea.com/Abuses.htm#Taxes)

(2) spend irresponsibly (One-Simple-Idea.com/Links1.htm);

(3) grow the crushing debt beyond already nightmare proportions (One-Simple-Idea.com/NationalDebt.jpg);

(4) mismanage and corrupt almost everything they touch (such as spending the Social Security and Medicare surpluses; leaving them pay-as-you-go with a 78 Million baby-boomer bubble approaching);

(5) and rewarding themselves for all of it with another raise (10 times in the last 12 years).

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at April 11, 2009 10:32 AM

Comment #280015

David, a good article relating the abysmal failure of this so-called government in representing the peoples interest. Quoting from your article: “I was struck by his reference to the need for Congress to pass the SAFE Commission bill. He seemed to insist that without it, our Congress will be incapable of a piece meal approach to the problem of crippling debt in Committees and through regular order in the Congress. The regular order of Congress is governed by its member’s view of every bill as another opportunity to secure their next reelection by paying back wealthy campaign donors with legislative favors and bringing federal dollars back to their district on any and every project possible, regardless of necessity. Fiscal discipline is not possible by this regular order of business in our Congress. I recognized the wisdom and truth of it upon organizing my hastily scribbled notes of what he had to say.

Let’s take Medicare Reform for example. If the Congress attempts to reform Medicare to drive down its current steeply rising and fiscally crippling cost curve, it will engage in a process of compromises which will fail to curtail the rising cost curve sufficiently to get control of our debt in our lifetimes. Any attempt to reduce or qualify benefits for Medicare recipients would be met with a barrage of threats by special interest groups like AARP, and attempts to exclude non-needy recipients from benefits would be met with a barrage of election threats by the likes of the American Enterprise Institute. And Congress persons know that this will be the case. Which is why Congress has never endeavored to reform Medicare.

The hope is, that once the Commission’s plan is devised and presented, it will be sufficiently sound in achieving its objective to rescue America’s economic future, that voting against it would be tantamount to political suicide”

Sad commentary for the ‘greatest deliberative body ever convened”, but truthful. .

From Rhinehold: “First flaw, there is no way a non republican or democrat could be a chair (I’m a bit opposed to the duopoly we currently have and am looking for a future where it will be hopefully broken, yes I am an optimist in that regard). But someone who has broken with their party and become and independant or joined a 3rd party could not be a chair on this commission nor could they most likely even be on the commission based on the way it will be organized.
Second, this commission will include, purposefully, people who have not been elected or gone through an approval process. There are no checks and balances on non-congress members which I find a little disturbing if we are going to be using the commission as a replacement for good judgement by our congresscritters.
Finally, as I just stated, this appears to me to be more of a way to let congressmen off of the hook. While I agree in theory, there is much to be concerned about in the creation of this committee that needs to be worked out as it does change the functioning of the government in a pretty dramatic way, seemingly handing more power (not real but for practical purposes there) to the bureaucracy of the federal government and less to the actual representatives. “

All good points Rhinehold. Congress doing what it does so often, abrogating their responsibility to the extent possible. Commission yet another Commission that can take the blame for the loop holes and inadequacies while serving the interest of the corporations. Look at what we got from Congress for a fast track trade deal. Look at the FEC, FTC, SEC, and any other ‘C’s to see what a dysfunctional claptrap of ‘C’s we already have. Like one more ‘C’ is going to save us from ourselves. Ludicrous!

David, your article is a vibrant admission that this government is incapable of any real reform, dysfunctional at best, a corpocracy at worst. This government will not, cannot reform itself in any major way. Before reform can come some things have to happen. Corporate Personhood and Money is Free Speech must be abolished. Then a clean election process could be established using campaign funds contributed solely by individuals and sans audit trails to the source or donor. Little can be done until ‘the moneyed interest’ is taken out of politics and that can only be accomplished through a third party with a different political attitude. A party that can put accountability into the political equation through party members oversight of elected and appointed officials. Present an agenda targeted solely at reform issues and hold the party’s elected/appointed officials feet to the fire to carry out that agenda.

The Republic Sentry Party is constructed to do just that. www.republicsentry.com for real reform. Check it out to see how we can take the money influence out of politics and achieve real reform of government.

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at April 11, 2009 11:07 AM

Comment #280017

David
It was unnatural when the U.S. made up 50% of the world economy. That was just after WWII. At that time America was generous beyond any previous experience and that allowed the world to rebuild. It did. America continued to grow robustly, but the rest of the world naturally began to catch up. This was especially true in the last 30 years, when countries all over the world jettisoned the old statist policies.

An interesting fact is that 30 years ago the U.S. had one of the lowest corporate tax rates in the developed world. Ours corporate tax rate today is the second highest in the developed world.

We should make necessary reforms, but not forget what made our economy such a big part of the world economy for so long.

The biggest threat are entitlements. This is both an economic and a demographic one. When FDR set up Social Security back in 1935, it was a bit of a deception. SS is the world biggest and longest lasting Ponzi scheme. It depended on having a large number of workers for every dependent. It was also not expected to pay out much. When SS was proposed, the life expectancy in the U.S. was 63. FDR wisely chose to make the retirement age 65. It was a great system while it lasted and America’s old people benefited mightily. But like all Ponzi schemes, it will be hell to unravel it.

The old people currently getting benefits should continue to get them, but “young” people like us must be prepared to take care of ourselves to a greater extent. We should be prepared to work until we are much older. If we adjusted for life expectancy, that would be around 80. At that time SS insurance would kick in. Sorry, but the free ride is over and our generation will get scr*wed. We won’t get as much as we paid in because mom & dad have already used it up.

The good new is that if we do the right thing our granchildren can again have a viable system.

Posted by: Christine at April 11, 2009 11:34 AM

Comment #280018

David,

Excellent post, thanks for the info. I missed this piece by Mr. Walker. CNBC’s video is on this page (I’m not sure how to link to their pop up player)

Posted by: gergle at April 11, 2009 11:39 AM

Comment #280019

Christine,

Unfortunately, the current administration’s plan is to do what we can now to have no pain now and screw our grandchildren. The pain must come somewhere and if we are politically unwilling to take it now then our children and grandchildren are going to be the ones feeling it.

Posted by: Rhinehold at April 11, 2009 11:49 AM

Comment #280020

oops I missed your link, ugh I’m going back to bed.

Posted by: gergle at April 11, 2009 11:58 AM

Comment #280023

Rhinehold wrote: Unfortunately, the current administration’s plan is to do what we can now to have no pain now and screw our grandchildren. The pain must come somewhere and if we are politically unwilling to take it now then our children and grandchildren are going to be the ones feeling it.

The pain may come much sooner.

How much longer can the debt of the largest debtor nation on the planet continue to grow without painful consequences with the next 10 years?

Even if Congress had the extraordinary fiscal displine, and at only a 2.5% interest rate, it would take 246 years to merely pay down a mere 33% of the original principal of the current $11.2 Trillion National Debt. The massive debt-bubbles (both federal and non-federal) are serverely exacerbated by $57 Trillion of total nation-wide debt, the pay-as-you-go Social Security and Medicare systems with a 78 Million baby-boomer bubble approaching, and 90%-to-95% of all money in the U.S. already exists as debt.

There are too many unanswered questions to believe the debt is still tenable.
That is most likely why David Walker is trying to get a plan.
When that plan is finally formulated, the math is likely to not only be dismal, but shocking.
It’s probably going to be one of those “we’re screwed” moments.
We dug ourselves into such a deep hole, and such high debt per-capita ($36K per-capita for the $11.2 Trillion National Debt; $184K per-capita for the $57 Trillion nation-wide debt).

Unfortunately, the mostly likely thing to happen is more inflation from more new money, borrowing, and spending.
There will be tremendous pressure to avoid defaulting on current debt.
There will be tremendous pressure to create more new money out of thin air (such as already evidenced by a major portion of this $4.2-to-$12.8 Trillion (as of 31-MAR-2009) for rescues and bail-outs).
At that same rate, it could be $24 Trillion in 10-to-11 months?

__________ BAIL-OUT RESCUE ______________

$25T |————————————————-

$24T |————————————————.

$23T |———————————————.—

$22T |——————————————.——

$21T |—————————————.———

$20T |————————————.————

$19T |———————————.—————

$18T |——————————.——————

$17T |—————————.———————

$16T |————————.————————

$15T |———————.—————————

$14T |—————-.——————————-

$13T |————-o———————————- ($12.8T)

$12T |———-o————————————- ($11.6T)

$11T |——.——————————————

$10T |—.———————————————

$09T |o———————————————— ($8.5T)

$08T |————————————————-

______N D J F M A M J J A S O N D J F M

_______2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

_______0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

_______0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1

_______8 8 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0

And there’s still the foreclosure problem.
If foreclosures have reached a plateau, it took 4 years to reach, and will most likely take 4 more years to decline.

________________FORECLOSURES______________________________

350,000 |—————————————————————————

325,000 |—————————————————————————- 10,000

300,000 |—————————————————————xx—xx—- foreclosures

275,000 |————————————————————xx—xx——- per day

250,000 |————————————————x——-xx—————- 31-AUG-2008

225,000 |———————————————-x-x-xxx——————-

200,000 |———————————————-x—x———-A————

175,000 |——————————————xxx—————-U————

150,000 |————————————xxxx———————G————

125,000 |——————-x———xxxx—————————U————

100,000 |——————x-xxxxxx———————————S————

075,000 |xxxxxxxxxxxx———————————————T————

050,000 |—————————————————————————-

025,000 |—————————————————————————-

000,000 |______________________________________________________YEAR

______(2004)__(2 0 05)__(2 0 06)__(2 0 07)__(2 0 08)__(2 0 09)

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at April 11, 2009 01:48 PM

Comment #280029

Rhinehold, perfection in government is a futile expectation, appealing to everyone with a single policy.

The SAFE Commission has the potential of curtailing the coming debt you rail against. It has the potential of becoming a reality with 112 co-sponsors. Compared to the debt curve currently projected, I find your critique of the SAFE Commission much ado about nothing.

Let’s see: On the one we have Rhinehold’s objections to the makeup of the SAFE Commission by party affiliation or other unknowns, and on the other we have the demise of the economic future of the United States. Gee, Rhinehold, I think I would have to go with a real opportunity to save the nation from its looming debt crisis, regardless of the makeup of the SAFE Commission.

This bill has languished since 2007. Inaction due to far less important objections is a prescription of economic and fiscal suicide. Yet, your comments might be interpreted as preferring suicide to trying to become fiscally responsible.

As for presenting the other side of the argument, I have yet to hear of a potential alternative with even a remote possibility of being brought forward by the existing Congress, and passing. One could argue for a Libertarian majority in Congress, but, realistically, that would mean addressing the debt curve AFTER fiscal and economic collapse, if that was possible at all.

Pragmatism vs. ideology. I think someone wrote about that recently. :-(

Posted by: David R. Remer at April 11, 2009 03:21 PM

Comment #280031

d.a.n said: “However, there are reasons, historical precedent, the dismal math, and many unanswered questions that indicate that the current debt levels (both federal and non-federal) are already untenable.”

If our government assumes this to be true, there is absolutely no point logically, to attempt to address fiscal responsibility going forward. Which leaves only two options: 1) Act as if nothing can be done because the debt is already untenable, or 2) Act as if the debt is not yet untenable, and move toward fiscal responsibility to rescue the nation from debt that will become untenable.

The SAFE Commission concept choose option 2. And if the public is made aware of the options, I suspect they might go with choice 2, as well.

Well, to be accurate, there is a third option, revolution to dismantle this government with its structural impediments to fiscal responsibility. But, the cost of a Revolution would push the nation over the fiscal edge as well, causing catastrophic default on debt with dispatch. So, Revolution is not a rescue option for the current population in America.

Though it could have enormous eventual benefit for generations to come in the future. Then again, it could also result in the most efficient of all governments replacing this one, an authoritarian government with the power to act, and eliminate any and all opposition to acting.

We should probably stick with choice #2 until something better comes along. :-)

Posted by: David R. Remer at April 11, 2009 03:34 PM

Comment #280033

An example of another one of our ‘C’s in action. Something like 100k homes have had Chinese drywall installed and it’s coroding copper pipes and making people sick. From AP: “Dr. Patricia Williams, a University of New Orleans toxicologist hired by a Louisiana law firm that represents plaintiffs in some of the cases, said she has identified highly toxic compounds in the drywall, including hydrogen sulfide, sulfuric acid, sulfur dioxide and carbon disulfide.

Prolonged exposure to the compounds, especially high levels of carbon disulfide, can cause breathing problems, chest pains and even death; and can affect the nervous system, according to the CDC.”

Can’t you just imagine the USGOV filing suit against China through the WTO for faulty drywall being as we are in their debt to the tune of about humpteen billion dollars?

Otherwise, we have the government we deserve.

Posted by: Roy Ellis at April 11, 2009 08:01 PM

Comment #280034

“”but “young” people like us must be prepared to take care of ourselves to a greater extent. We should be prepared to work until we are much older. If we adjusted for life expectancy, that would be around 80. At that time SS insurance would kick in. Sorry, but the free ride is over and our generation will get scr*wed. We won’t get as much as we paid in because mom & dad have already used it up.”” It’s on auto now Christine as you know millions who were planning to retire are going to have to work another 5-10 years to catch back up on lost 401ks and lost revenue from this recession and give mom and dad a little break they worked a long hard life they won’t be around forever, I agree with you on the Children .

Posted by: Rodney Brown at April 11, 2009 08:55 PM

Comment #280035

David:

Sorry, I don’t see the point. If the SAFE commission puts forth a plan for an up and down vote that the constituents (us) are not pleased with, it’s just as much political suicide for members to vote for it as it would be to vote directly for any changes. I don’t see the difference. I don’t see where they would be protected by this other layer of unnecessary layer of government.

JMHO

Posted by: womanmarine at April 11, 2009 10:11 PM

Comment #280036

Rodney

I have no trouble with cutting the older people a little slack. They really don’t have enough time to adjust. People like me (I am 54) will have some challenges, but it is our duty not to pass along the pain to our children and grandchildren. I have friends who are complaining that they won’t be able to retire at 62; they won’t be able to live that golf and leisure life. Good. Leisure like that is a reward, not an entitlement.

Our generation (baby boomers) have really had a good deal. Throughout our lives we have had lots of opportunities and a high standard of living. We are the healthiest generation in history. It won’t hurt us to pull our own weight a little longer.

I read an article in Business Week today about people starting second and third careers http://www.businessweek.com/magazine/content/09_16/b4127078315375.htm.

Posted by: Christine at April 11, 2009 10:19 PM

Comment #280037

womanmarine, hence the up or down vote. There are no guarantees being made here. It is an opportunity for the bi-partisan commission to create a plan that will make sense to the majority of voters. If they fail, Congress has the opportunity to vote it down.

There is no chance for a comprehensive approach to fiscal responsibility through the regular order of the Congress. The SAFE Commission affords not only the opportunity to draft such plan, with voter input from around the country, but to sell the necessity of the plan to the people compared to the alternative, a bankrupt America in not so many years from now.

Hence, it has a vastly superior chance of addressing the rising debt curve than any other plausible Congressional action possible.

Posted by: David R. Remer at April 11, 2009 11:12 PM

Comment #280038

David:

I read the bill, and quite frankly, don’t like it. Not enough input from citizens of all income levels, and too much from entrenched political hacks. Again, JMHO. Perhaps that’s why it has languished? Maybe it needs to be readdressed.

Posted by: womanmarine at April 11, 2009 11:17 PM

Comment #280040

Rhinehold,
Why I will spare you the long debate of Investing in One’s Inherent Best Interest vs. being taxed and instead refer you to David. The fact that Americans could make up the Debt and Deficit by saving about $56,000.00 (4 times) is a real possibility. And though that would limit the growth of Wall Street Profits and cause extremme harm to the parts of the Market unwilling to bend with the Political Winds Change, I do believe that the Stockholders, Board of Directors, and Upper Management of “We the Corporation” would be well advised to pick up most of the tab.

For knowing that many Americans lost about half of their 401k and other investments due to the lack of the current Private Establishment unbridled greed, starting from A-Z do you care to name a sector of society that can withstand a 50% reduction in their share of the market?

Because why President Obama opened the door to making the Individual Self-Sufficent by proposing an electric car that the owner could drive home and sell the excess electricity back to the National Power Grid, I wonder how many other products and services can be rediscovered using the Cardinal Knowledge and Wisdom of the Sons and Daughters of the Great Depression? Since I do believe that saving $467.00 per month for the next 10 years if provided with the proper societal tools is not only doable, but would offer the Children of the 21st Century a real test in changing the Entitlement Programs of the Youth of the 60’s and Silver Spoons of the 70’s.

So, being Easter and all I do believe that the No-Nothing Party might find it kind of hard to say that they wish for President Obama to fail. For why FAILURE is never an option to the President of the United States of America, I wonder how Rush and Company can justify to their followers that they wish to keep them enslaved to the demands of Labor and Management since President Obama and the Democratic Vision is offering them an opportunity to allow their Grandchildren to become Self-Sufficient in time?

Because call me Uncivilized, but if Wall Street wants to make money than I do believe that the Sons owe it to their Fathers and Grandfathers to step up to the Pulpit of Life and take the Bull by the Horns; since I do not believe the Bear is going to find living in the Wilderness harder than what they think.

Posted by: Henry Schlatman at April 12, 2009 09:15 AM

Comment #280046

Christine we’re going to have to roll up our sleeves like my parents and grandparents and millions of others did during the depression and WW2 and work a few more years I’m not to far behind you in age Happy Easter.

Posted by: Rodney Brown at April 12, 2009 11:58 AM

Comment #280049

womanmarine, we are talking about entitlements, discretionary spending, and tax policy. Enormously complex will be the plan that has the ability to halt the rising debt curve.

And you want what? The Commission to develop the plan by citizen input? Which citizens, from what states, rural or urban, with what educational background, partisan bent, and intellectual capacity? Male or female, retirees, working parents, or children? Let’s build this plan to save America from debt by national poll, that should work, right? Wrong!

Then there is always the other option. Continue ignoring the problem, it will take care of itself bankrupting everyone in America save the wealthiest 1 to 5%. Now, there’s a solution that has historical precedence to back it up.

You say you don’t like it. But, like the article said, there are two choices here. Support the development of a bi-partisan plan that can potentially be enacted, or go with no plan at all and let the regular order continue to add trillions to the national debt until it all falls down around our heads.

David Walker insists the current bill can be improved, and said the Commission needs to interface with the public, getting input on their concerns, while educating them to the necessities of putting a legal passed plan in place. Cutting trillions of future spending and modifying the tax policy is going to have opposition from the a great number of citizens who would otherwise have benefited from leaving the debt trajectory in place. Should their short sighted greed preempt the nation from getting its debt and spending under control?

Absolutely not! This is one of those times when America will benefit enormously from not being a direct democracy, which would deny the nation saving itself from 300 million spending preferences and tax cut choices which threaten the future of America.

All that said however, I appreciate your comments and their highlighting the Catch-22 that American politics and distrust of Congress have created regarding the prospect of halting the suicidal national debt trajectory.

But, if we fail to turn this debt machine around, revolution, civil war, or anarchy will be the end result in decades to come. This nation’s government will not survive a prolonged economic collapse due to the federal government’s defaulting on its debts and legal obligations to its citizens.

One to two hundred million homeless and hungry able bodied citizens will not sit idly by in the streets as they, and their families, suffer malnutrition, no health care at all, and no employment prospects for as far into their future as they can see. Imagine the aftermath of Katrina all across this nation? That is the what America faces if it does not reverse this debt path we are now on.

Why would anyone like a plan that is going to increase taxes and cut government services? We don’t have to like it. But, we do have to implement such a plan, which halts debt growth while preserving near maximum employment, productivity, and the middle class consumers which are the backbone of our economy.

It will require shared sacrifice. It will diminish future opportunities based on government spending. It will mean a little less for everyone in the interim, while preserving the American quality of life in the long term. Is this not what Obama campaigned on as our future if he was elected?

America is not going to get a number of tries at this. D.a.n, and I disagree on the threat of the current debt load, but, he is absolutely correct, and his statistics adequately demonstrate, that continuing this current debt trajectory will be a nation killer. Our nation, as we know it.

Some version of the SAFE Commission is, so far, the only option that has bi-partisan support and the potential for becoming law, realistically addressing the suicidal debt trajectory our federal government is on.

Posted by: David R. Remer at April 12, 2009 02:30 PM

Comment #280054

I for one am all for us older folks to keep working until 70 but the problem is the lack of jobs to be had for people in their 50’s, 60’s and beyond. Sure there are some jobs available but are their enough to make this idea feasible? Even after the mini depression we are in has abated will the jobs come back and will new jobs that older folks can physically do be created?

Employers are reluctant to hire older workers as there insurance payments rise dramatically when they do. Of course universal health care may help to solve this problem but will it come in time?

Posted by: j2t2 at April 12, 2009 05:08 PM

Comment #280058

David:

I said I don’t like the bill, not that I am against the basic idea. As for who should have input, again I say, all levels of income. I did not say that that input should dictate the outcome, but I didn’t see enough concern for who and how. And aren’t we in the same boat if what they provide is voted down in an up and down vote? At the expense of the large salaries we get nothing? Then what?

I still don’t see how the votes for or against would protect anyone from re-election that they don’t get now voting for or against other bills.

Perhaps I misunderstand, and I agree something needs to be done. I just don’t thinks there is enough outside input, just the same old hacks. Do you really think they are going to appoint someone who doesn’t carry out thier point of view?

Call me suspicious. I don’t see what difference it will make, and just costs us more money.

Posted by: womanmarine at April 12, 2009 06:46 PM

Comment #280060

j2t2, it isn’t easy for those who are hale, hardy and healthy, AND in possession of all they were born with to “get” the whole picture of others physically being unable to continue to work into their 60’s and beyond.
Like it or not, personally experience it or not, we are becoming more and more a citizenry of bionics. Replacement of joints gives us pain-free (or at least greatly reduced pain) mobility, but we’ll never go back to how we once functioned. The working age populace coming up behind us will be lucky to find jobs without having to compete with us as well.
Of course, it’s so easy to talk about things when we don’t have first-hand knowledge or experience to back it up. Guess that’s another thing we find out with age, too………..

Posted by: jane doe at April 12, 2009 06:56 PM

Comment #280062

womanmarine said: “And aren’t we in the same boat if what they provide is voted down in an up and down vote?”

Yes. But, you know the old addage, nothing ventured, nothing gained.

Most Americans now understand that our debt is our next big crisis. Doing nothing about curbing it, is the alternative to the SAFE Commission. Therein lies the pressure on Congress and the Commission to put together a plan that will address the debt, and pass it.

I am with you and Walker, that the Commission must seek input from the public before drafting its comprehensive bi-partisan plan. But, the plan must flatten the debt curve, and to the extent that public inputs would fail to facilitate that objective, it is to be heard and assessed on that basis. The plan’s objective is NOT to please the public, but, to address the debt threat the public is concerned about.

If the plan appears as though it will effectively meet the objective, what choice will the public or Congress have to vote it down? The alternative is not acceptable either to Congress or the people. Doing nothing is no longer an option.

Posted by: David R. Remer at April 12, 2009 08:33 PM

Comment #280068

David, excellent article, I am in a state of disbelief that our leadership in Congress, you know those that couldn’t see the housing and credit meltdown coming, have the foresight to have a bill in congress to attempt to address the forthcoming debt crisis at this date. It just seems to me to not be in their nature to acknowledge a real crisis prior to it blowing up in our collective faces. The noble sounding purposes of the bill, from your link to HR3654 is:
“To establish a commission to develop legislation designed to reform tax policy and entitlement benefit programs and ensure a sound fiscal future for the United States, and for other purposes.”

The concern I have with this is it doesn’t seem to address the yearly budget deficit and growing debt from other than entitlement programs. The discretionary spending you referred to is not in the title of this bill. Now this may not be a problem but this Mr. Walker has been around for years predicting the current crisis and to my knowledge no one in Congress paid him much attention, why would they start now?
It seems that the Obama administration has relied upon those that were in the financial sector and actually part of the problem to solve the problem and perhaps they might, but I still get an uneasy feeling every time I think about this group of insiders (ie Geither, Summers) on the economic team and guys that had the foresight to see the coming problems, including Walker, on the outside looking in.
The concept of this commission to deal with writing legislation to solve this problem is a good one, much better than letting the industry lobbyist write the bill for our Congress, but the success or failure of the commission will hinge upon who is chosen to formulate a plan to deal with the problem and a scope limited to tax and entitlements reform only.

Lets face it, when the financial sector is 20% of GDP and manufacturing is down to 13% of GDP this commission’s scope will need to be vast to fix the underlying problems, IMHO.

Posted by: j2t2 at April 12, 2009 11:22 PM

Comment #280072

j2t2, I am just guessing here, but, Walker may envision updating this bill from its 2007 inception, to bring its purposes and objectives and methodologies in line with the history that has taken place since 2007 (i.e. the financial sector meltdown and debt increases resulting from the ensuing recession). He makes several references to provisions not in the original 2007 draft. So, I suspect he has in mind an update of the 2007, which even if it were brought up by the House in original form, would be redrafted by the Senate, updating it certainly to more dire needs of the current day and making it more appealing to the current Congressional makeup.

I don’t think it is possible or even desirable that the Commission attempt to alter the private sector. It’s primary focus is fiscal policy, deficit spending and looming national debt.

There is a political timing act involved here in the minds of many in D.C. I suspect. They don’t want the SAFE Commission bill overshadowing the required deficit spending of the moment to end this recession and lubricate financial sector lending and capital again. In other words, I suspect even many or most of the 112 co-sponsors don’t want to see this bill come to the floor or public’s attention until it is clear the recession is behind us. Still, that is no reason we voters can’t begin to clamor for its call to the floor for debate and passage.

Even if we begin demanding it now, it would likely be 2010 before enough public pressure were evident to force its call to the Floor, and by then, according to many, the recession will have ended, though job growth may only be just beginning.

David Walker insists we need this legislation to pass before the recession ends, and I tend to agree with him. Political motivation and rationalization will ensue when the recession ends, making resolution to act fiscally responsible tougher to pass. Especially in an election year like 2010.

Frankly, I think this bill needs Obama’s “Yes, we can” endorsement if it is to get new life breathed into it.

Posted by: David R. Remer at April 13, 2009 01:24 AM

Comment #280126

David R. Remer wrote:
d.a.n said: “However, there are reasons, historical precedent, the dismal math, and many unanswered questions that indicate that the current debt levels (both federal and non-federal) are already untenable.”
If our government assumes this to be true, there is absolutely no point logically, to attempt to address fiscal responsibility going forward. Which leaves only two options: 1) Act as if nothing can be done because the debt is already untenable, or 2) Act as if the debt is not yet untenable, and move toward fiscal responsibility to rescue the nation from debt that will become untenable.

Not true, because other options exist.

If the debt is already untenable, how is growing the debt bigger going to solve the debt problem?

It certainly does not mean “there is absolutely no point logically, to attempt to address fiscal responsibility going forward.”

Also, untenable debt does not require nor mean “our government assumes this to be true”.
The debt can be untenable regardless of whether “our government assumes this to be true”.
In fact, based on the federal government’s behavior, it seems to think it can solve a massive debt bubble with more debt, borrowing, new money, and rampant, pork-barrel spending.

There are more options, which does not mean, justify, or even remotely equate to there being “absolutely no point logically, to attempt to address fiscal responsibility going forward”.
That extrapolation violates rule # (02) below.

(10) IRRELEVANT COMPARISONS (apples to oranges):

(09) INCOMPLETENESS AS PROOF OF FACT:

(08) IGNORING THE ADVICE OF EXPERTS WITHOUT GOOD REASON:

(07) REACHING BIZARRE CONCLUSIONS WITHOUT ANY INFORMATION:

(06) OVER-APPLICATION OF OCCAM’S RAZOR (which states that the simplest explanation must be correct):

(05) INABILITY TO UNDERSTAND THAT SOME THINGS HAVE MULTIPLE CAUSES:

(04) JUDGING THE WHOLE BY ONE OF IT’S CHARACTERISTICS:

(03) BLAMING THE TOOL:

(02) TAKING THINGS TO THEIR ILLOGICAL CONCLUSION:

(01) PROOF BY LACK OF EVIDENCE:

David R. Remer wrote: The SAFE Commission concept choose option 2. And if the public is made aware of the options, I suspect they might go with choice 2, as well.

There is another option (actually many things; see: www.watchblog.com/thirdparty/archives/006514.html#280012) that can solve the problem, without dangerously growing the debt more untenable; without possibly making things much worse with hyperinflation that also destroys the currency, all savings, all 401Ks, all pensions, entitlements, wages, and the economy.

David R. Remer wrote: Well, to be accurate, there is a third option, revolution to dismantle this government with its structural impediments to fiscal responsibility. But, the cost of a Revolution would push the nation over the fiscal edge as well, causing catastrophic default on debt with dispatch. So, Revolution is not a rescue option for the current population in America. Though it could have enormous eventual benefit for generations to come in the future. Then again, it could also result in the most efficient of all governments replacing this one, an authoritarian government with the power to act, and eliminate any and all opposition to acting.

No. Revolution and/or civil war is the fourth option.

David R. Remer wrote: We should probably stick with choice #2 until something better comes along. :-)

There is something better (, and it doesn’t risk debauching the currency which can make a bad situation much worse.

The U.S. has federal debt ($11.2 Trillion) and nation-wide debt ($57 Trillion), and growing it bigger is a recipe for disaster and hyperinflation.

High inflation is bad, but it could be used to reduce the debt if done correctly.
That is, inflation is good if you are deep into debt, but ONLY if borrowing is stopped, and inflation is used to reduce the principal debt.
Otherwise, the new debt continues to grow the total debt ever larger, and the debt-reducing inflation is wasted.
For example, with 25% inflation per year, and provided a person still has income or assets to make the payments on the debt owed, and especially if income rises with inflation, then the debt owed is slowly swallowed up by inflation. But not if the debt and borrowing continues to grow (as it is today).

If the debt is really tenable, then why do the following questions remain unanswered …?

(a) Is there any historical precedent of any nation so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending ($11.2 Trillion Fedreal National Debt, and $57 Trillion of total nation-wide debt)?

(b) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?

(c) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?

(d) If the current debt is untenable, how is growing it bigger going to help?

(e) Where will the money come from when 90%-to-95% of all money in existence in the U.S. exists as debt, because money is created as debt at a steep ratio of 9-to-1 of debt-to-reserves.

(f) What is the possibility that high inflation (or hyperinflation) will make the situation worse? After all, 33+ nations have previously tried to borrow, create new money, and spend their way out of a massive debt-bubble, and it not only did not work, but made things worse.

(g) What is the debt limit? How can anyone say the debt is untenable if they do not know what the limit is?

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at April 13, 2009 10:19 PM

Comment #280151

d.a.n said: “Not true, because other options exist.

If the debt is already untenable, how is growing the debt bigger going to solve the debt problem?”

If the debt is already untenable, we are, by definition going to bankrupt. So, what difference does a bit more debt make.

There is no denying the real world, hard as one tries, d.a.n. The current debt is NOT untenable, by definition. If it were untenable, we would now be bankrupt and creditors would be refusing to invest in more of our debt. Such is absolutely NOT the case.

Hence, this argument is illogical a priori.

One can make the argument that at some point in the future, our debt may become untenable. There is ample empirical and historical evidence that this postulation could become true. But, then, one has to define the circumstances consistent with that empirical and historical evidence, to make a logical argument that if these circumstances exist, then our debt will become untenable.

The treasury and currency markets however, absolutely contradict your statement that our current debt is untenable. America is still where the world chooses to invest their dollars in our debt instruments. And a recovering economy with increased federal revenues will only strengthen investor confidence in our debt in the short run.

Posted by: David R. Remer at April 14, 2009 08:57 AM

Comment #280192

David R. Remer wrote: The treasury and currency markets however, absolutely contradict your statement that our current debt is untenable.

Think so?

If the debt is tenable, then why do the following questions remain unanswered …?

(1) Is there any historical precedent of any nation (much less the biggest debtor nation on the planet) so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending ($11.2 Trillion Fedreal National Debt, and $57 Trillion of total nation-wide debt)?

(2) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?

(3) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?

(4) If the current debt is untenable, how is growing it bigger going to help?

(5) Where will the money come from when 90%-to-95% of all money in existence in the U.S. exists as debt, because new money is created as debt at a steep ratio of 9-to-1 of debt-to-reserves.

(6) What are the chances that high inflation (or hyperinflation) will make the current situation worse? After all, 33+ nations have previously tried to borrow, create new money, and spend their way out of a massive debt-bubble, and it not only did not work, but made things worse.

(7) What is the debt limit? How can anyone say the debt is untenable if they do not know what the limit is?

For 52 consecutive years, the federal government has been borrowing the money to merely pay the interest on the National Debt (now over $11.2 Trillion).
The National Debt is now growing faster than ever, and that is tenable? Do you know how many centuries it would take at only 2.5% interest to merely pay down 33% of the $11.2 Trillion National Debt?

So, how is that tenable?

And that’s only part of the debt problem.
The total $57 Trillion nation-wide debt is even worse, having grown from 100% of GDP in year 1956 to 411% of GDP today.

So, how is that tenable?

David R. Remer wrote: The treasury and currency markets however, absolutely contradict your statement that our current debt is untenable. America is still where the world chooses to invest their dollars in our debt instruments.

That’s not proof. Since when did the stock/bond market predict any thing accurately? Did it see the crash of 1929 coming? Or 1987? Or 1999? Or 2008? Right up to the moment stock markets crashed (many different times), people were buying stocks and bonds. The stock markets and treasury markets have never been a good predictor of the future, but are mostly only a lagging indicator of what has already happened. If the stock market is such a good indicator of the future, why did Warren Buffet lose $50 Billion last year (online.wsj.com/article/SB123575572935295811.html)? Why did a lot of people lose money in the market if it is such a great predictor?

But, if you or someone else could answer some of those seven (7) unanswered questions above, that might be a lot more convincing. Especially questions (1), (2), and (3) above.
The inability of anyone to answer at least the first three questions is not strengthening your case that .
Come on now … there must be someone, somewhere, that can answer at least the first three questions?
Until those questions are have answers, it’s quite plausible that the debt-bubble (both federal and total non-federal debt) is not only already untenable now, but has been untenable for some time (years), and these numerous deteriorating economic conditions are proof that the debt is untenable.

Economist Ludwig von Mises stated the end-game brought on by reckless expansion of credit (debt):

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion.

The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”

Is there any proof that the biggest debtor nation on the planet can escape the same dire consequences that 33+ nations have already discovered the hard way?

Any way, these questions are not going away any time soon … at least until they are answered one way or another.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at April 14, 2009 10:27 PM

Comment #280492

d.a.n, you are asking the wrong question. If our debt is untenable, why are our creditors not foreclosing on our debt, and still buying it up?

Untenable equals either default on debt or having run out of credit to support one’s debt. Neither of these definitions currently apply to the United States. In fact, our creditors continue to buy our new debt because our new debt is restoring confidence in our resolution to remain solvent.

Had we allowed the financial sector to buckle, and the Recession to become a depression, then our creditors would have lost confidence in our ability to generate revenues to support debt and pay returns on new debt.

Reality is what it is. I agree with you that our debt may become untenable under a growing number of scenarios. But, at this moment, the reality of foreign and domestic investors still buying up our treasuries at auction, and investing in our currency, contradicts all statements regarding our current debt being untenable. Our creditors will be the first to let us know when our debt appears untenable to them.

Posted by: David R. Remer at April 18, 2009 03:14 PM

Comment #280558

David R. Remer wrote: d.a.n, you are asking the wrong question.

Not true.

These are very good questions and the fact that those questions remain unanswered speaks volumes.

David R. Remer wrote: If our debt is untenable, why are our creditors not foreclosing on our debt, and still buying it up?

Foolish investing does not equate to fiscal sovlency.

Besides, foreclosure is not eminent as long as the U.S. government and the Federal Reserve continue to create trillions of dollars of new money each year.
In year 2007, the U.S. government paid $430 Billion dollars for interest alone on the $9 Trillion National Debt (as of SEP-2007).
But that can not last forever.
The federal and non-federal debt can not continue to grow exponentially forever.
The math is truly dismal, and there are limits, and so many unanswered questions is telling us something important.
Especially when the $57 Trillon nation-wide debt has more than quadrupled from 100% of GDP in year 1956 to 411% of GDP today.
Especially when 90%-to-95% of all U.S. dollars in the U.S. already exists as debt.

Only because some foreign nations (e.g. China, Japan, U.S. citizens too, etc.) continue to throw money into the black-hole is not proof that the debt is tenable.
Only because the stock market rallied recently (the other so-called proof offered) is is not proof that the debt is tenable …

David R. Remer wrote: The treasury and currency markets however, absolutely contradict your statement that our current debt is untenable. America is still where the world chooses to invest their dollars in our debt instruments.

If the stock market was such a wonderful indicator, why did Warren Buffet lose $50 Billion last year (online.wsj.com/article/SB123575572935295811.html)?
Why did millions of people lose trillions of dollars in the stock market if it is such a great predictor of the future and the fiscal condition of the U.S. government and the U.S. economy, and its $11.3 Trillion National Debt and its $57 Trillion nation-wide debt of of nightmare proportions?

Some foreign creditors are currently reducing their exposure to U.S. debt, because some foreign nations were so damaged and/or devastated (e.g. Iceland) by toxic U.S. debt peddled as AAA securities, that they currently have little (or nothing) left to loan to the U.S.

China already said in year 2006 that it planned to reduce its exposure to the falling U.S. Dollar (source: www.washingtonpost.com/wp-dyn/content/article/2006/01/09/AR2006010901042_pf.html).
But China is trapped in a Catch-22.

If China stops loaning the U.S. money, the U.S. will create more money out of thin air, which will create more inflation, which will erode their investments.

If China continues to loan the U.S. money, and the U.S. continues to grow its debt beyond already-nightmarish proportions, the U.S. will create more money out of thin air to avoid default, which will create more inflation, which will erode their investments.

If China sells their marketable treasuries, the U.S. dollar will plummet, which will erode their investments.

But there could possibly be a more sinister reason for holding so much debt: If China wanted to severely damage the U.S., it could start dumping their marketable U.S. treasuries on the world markets, which could cause the U.S. Dollar to fall more rapidly than it has already been falling for the past 7 years (against all major international currencies; source: One-Simple-Idea.com/USD_Falling.htm).

At any rate, banks (foreign and domestic) are foreclosing on millions of Americans per year (i.e. 3.0+ Million home foreclosures per year).

Why is it necessary for the Federal Reserve to create (as of 31-MAR-2009) $4.2-to-$12.8 Trillion dollars out of thin air?

David R. Remer wrote: Untenable equals either default on debt or having run out of credit to support one’s debt.

Not true.

Since the federal government has a near-unlimited ability to grow debt and create new money, the government will most likely cause high inflation and/or hyperinflation before defaulting on debt.
33+ nations have already demonstrated how this other economic terror begins and ends (source: en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation) have previously tried to borrow, create new money, and spend their way out of a massive debt-bubble, and it not only did not work, but made things worse.

So, numerous signs of serious debt-related problems remain ignored, and many questions remain unanswered.
One obvious sign is the creation of $4.2-to-$12.8 Trillion dollars of new money to avoid default (source: www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4&refer=worldwide).
Another obvious sign is the highest $11.3 Trillion National Debt per-capita (about $36K), which is 65% higher than the National Debt per-capita (about $22K in 2008 dollars) in year 1945 after World War II.
Another obvious sign is the $57 Trillion nation-wide debt, which has never been higher ever in size, per-capita ($184K), and as a percentage of GDP (having grown from 100% of GDP in year 1956 to a nightmarish 411% of GDP today).
Another obvious sign is that a 1950 Dollar is now worth only 10 cents.

Only because some foreign nations (e.g. China, Japan, etc.) continue to throw money into the black-hole is not proof that the U.S. debt is tenable.

Only because the stock market rallied is is not proof that the U.S. debt is tenable.

Only because people are all running around like chickens with their heads cut-off, looking for some place to put their money so that it can avoid the incessant erosion of inflation, is not proof that the U.S. debt is tenable.

Only because some of these foreign investors’ own nations have worse inflation, worse economic conditions, and fewer places to put money to avoid the incessant erosion of inflation, is not proof that the U.S. debt is tenable.

Stock markets don’t predict economic decline; otherwise, Warren Buffet wouldn’t lose $50 Billion in the stock market.

Therefore, …

David R. Remer wrote: If our debt is untenable, why are our creditors not foreclosing on our debt, and still buying it up?

… only proves that many people do foolish things. So, foreign nations dumb enough to continue to help the largest debtor nation on the planet continue to grow its debt ever larger is not very good proof that the U.S. debt is tenable. Also, there are stages and degrees of everthing, and it can take many decades for such a massive problem to grow beyond the point of no return before most realize it.

David R. Remer wrote: Neither of these definitions currently apply to the United States. In fact, our creditors continue to buy our new debt because our new debt is restoring confidence in our resolution to remain solvent.

Again, foolish investing is not proof that the U.S. debt is tenable.

Foreign investors may be very sorry that they continued to throw money into the blackhole, while ignoring largest debtor nation’s fast-growing $11.3 Trillion federal debt ($36K per-capita) and $57+ Trillion of total nation-wide debt per-capita ($184K).

David R. Remer wrote: Had we allowed the financial sector to buckle, and the Recession to become a depression, then our creditors would have lost confidence in our ability to generate revenues to support debt and pay returns on new debt.

That’s a separate issue. Insuring deposits and money-markets was necessary.

However, growing the severely bloated and wasteful federal government and national debt ever larger is not only unnecessary, but very foolish, and making the problem worse.
Playing chicken with hyperinflation is foolish.
Trillion dollar deficits (with only $2.4 Trillion (or less) in total annual federal revenues, and $11.3 Trillion of National Debt) is foolish.
Smarter and less government spending is necessary; not more foolish spending and not more massive debt.
And propping up bad banks and badly mananged corporations is foolish, and those bad banks and bad corporations will fail anyway.
When we needed more fiscal responsibility the most, we got the opposite.

David R. Remer wrote: Reality is what it is.

That’s right. And foolish investing is not proof that the U.S. debt is tenable.

David R. Remer wrote: I agree with you that our debt may become untenable under a growing number of scenarios.

If the debt is tenable, then why do these questions remain unanswered …?

(1) Is there any historical precedent of any nation (much less the biggest debtor nation on the planet) so deep into debt ever successfully solving a massive debt-bubble with more debt, borrowing, new money, and spending ($11.3 Trillion Fedreal National Debt, and $57 Trillion of total nation-wide debt)?
(2) Is there any macro economics model that states that a massive debt-bubble can solved with more debt, borrowing, new money, and spending?
(3) Is there any mathematical rationale that demonstrates how any nation so ridiculously deep into debt (much less the biggest debtor nation on the planet) has ever successfully solved a massive debt-bubble with more debt, borrowing, new money, and spending?
(4) If the current debt is untenable, how is growing it bigger going to help?
(5) Where will the money come from when 90%-to-95% of all money in existence in the U.S. exists as debt, because new money is created as debt at a steep ratio of 9-to-1 of debt-to-reserves.
(6) What are the chances that high inflation (or hyperinflation) will make the current situation worse? After all, 33+ nations (source: en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation) have previously tried to borrow, create new money, and spend their way out of a massive debt-bubble, and it not only did not work, but made things much worse.
(7) What is the debt limit? How can anyone say the debt is untenable if they do not know what the limit is?

David R. Remer wrote: But, at this moment, the reality of foreign and domestic investors still buying up our treasuries at auction, and investing in our currency, contradicts all statements regarding our current debt being untenable. Our creditors will be the first to let us know when our debt appears untenable to them.

Again, foolish investing is not proof that the U.S. debt is tenable, and still leaves many questions (above) unanswered.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at April 19, 2009 10:58 AM