President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.
"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it," Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.
The Obama administration and many economists have warned of economic catastrophe if the United States does not raise the amount it is legally allowed to borrow by August 2.
The effer will do it too; stopping social security checks to our elderly to get what he wants. Take a good hard look at what we elected, America.
H/T: Drudge
I would like to roll my eyes on this one. Because I'm pretty sure that there's enough $$ to pay the Social Security even if we have to stop paying, say... aid to Pakistan while we sort this out. Or stop the IRS for awhile. How about we not fund the arts for a few months?
ReplyDeleteAlso - who pays for the AF 1 gas when we're not funded? Does the White House staff get paid when other agencies are shut down? Congress? And for that matter, is Weiner still drawing a paycheck? Because that's probably three or four social security checks right there.
I need to rest my eyes before they roll right out of my head.
America's eventually going to have to accept a national VAT. It's inevitable. It represents good tax policy. It's the only way that will demonstrate to international lenders that America is serious about reining in its national debt/deficit without devaluing the dollar through sleazy monetary policy or simply "printing more money".
ReplyDelete/I'm not trolling. Just realistic as to the (limited) solutions to America's mess.
He's lying. Revenue is coming in every day, as afw mentioned, there is enough to pay ss and medicare, etc.
ReplyDeleteflo:
ReplyDeleteAnd as for remedying:
the national debt?
the national deficit?
State debts?
State deficits?
infrastructure deficit (ie., foregone maintenance and repairs)?
unfunded public sector pension obligations?
funding private sector R&D through accelerated depreciation or direct public sector R&D?
maintaining current military expenditure levels?
America's creditors are, at some point, going to demand some coherent policy be implemented by the WH and Congress to address this fiasco- I haven't read of anyone advocating laying off a third of the public sector, but haven't heard any real solutions to cutting the deficits or reducing the debts, either.
America has plenty of tax room to address the debt and deficits above through a VAT dedicated to debt reduction and deficit elimination. I'd welcome alternatives beyond the symbolic-but-irrelevant grounding of AF1 or cutting Congresscritter's salaries...
/Canada went through this in 1995, when the IMF made noises about taking "receivership" of Canadian fiscal policy as the federal government hit the debt wall. It was brutal- a VAT sucks, but is a ferociously-efficient means of generating revenue (even with the complication of an input tax credit provision). I lived through it as a private-sector businessman. But tough medicine is better swallowed early than allowed to fester.
There is enough income to continue to service the national debt, pay SS payments and medicare payments and any truly essential government functions.
ReplyDeleteEntitlements are not even really the short term problem, although certainly a long-term one.
What is killing us now, are the ridiculous spendnig programs that Obama has instituted, and that are absolutely unnecessary to anything except assuring votes for Barry in 2012.
Earl, sorry, but I must disagree. VAT is great tax policy only for a government that wants to hide exactly how much it is soaking its citizens, since each added level is a nibble rather than a bite.
ReplyDeleteThere is no need for more taxes.
However, I would certainly support a restructuring of the tax code, to reduce the rates and eliminate most loopholes, so long as the tax base was broadened so the bottom 48% were forced to pay SOMETHING, if only to let them know that they are part of the solution, instead of only part of the problem.
DWT:
ReplyDeleteW left the American budget in deficit $1.2T. Obama ran with it; the 2009 federal deficit was $1.42T. The 2010 deficit will at least exceed this amount. Ie., at current revenue levels, there is NOT "enough income to continue to service the national debt, pay SS payments and medicare payments and any truly essential government functions." [my apologies for the gauche verbatim quote]
The US national debt will be ~$16T after Obama's first term. By 2020, US national debt will equal or exceed 100% of GDP. To put this in perspective, a useful chart showing those feckless, profligate, unproductive Euros:
http://www.theglobeandmail.com/news/world/europe/map-of-europes-financial-trouble/article2094064/?from=2095063
Your comment on the VAT is absolutely accurate- PROVIDED that the electorate permits the government to allow retailer to "bury it". FWIW, Canada's experience is that if the VAT is broken out on every invoice and receipt, the public knows how badly it is getting shaken down and holds government to account. Greater economic efficiencies in tax collection could be realized by harmonizing State sales taxes and the national VAT, but this is politically (constitutionally?) impossible stateside.
As a Canuck, I have a great deal at stake here- Canadian exports amount to more than 45% of its GDP. The United States is by far its largest trading partner, accounting for about 79% of exports and 54% of imports as of 2008. America sneezes? Canada catches a cold. A double dip recession stateside will have a strong negative impact on Canada's economy, regardless of our strong fiscal and monetary position.
DWT:
ReplyDeleteAddendum (premature post): key to effecting efficiency and equity in a VAT is implementing an effective quarterly filing period for registrants (ie.,, businesses) to quickly claim their input tax credits, and a tax credit or cash refund of VAT to low income (pensioners, students, handicapped, etc.) earners.
I like your idea of forcing the "bottom 48" to make at least a token contribution. Make them realize that there is no free lunch.
I'm open to suggestions on how to approach America's myriad fiscal problems. The status quo is not sustainable. And, no one can credibly tell me that the Founding Fathers could envision the possibility (however chimerical) of America defaulting on its national debt.
DAMMIT! The blog ate my six paragraph response to DWR.
ReplyDeleteDWT:
ReplyDeleteW left America in deficit $1.2T. Obama ran with this, and the deficit was $1.4T in 2010. 2011 deficit will at least match this. So, with current revenues, there is NOT "enough income to continue to service the national debt, pay SS payments and medicare payments and any truly essential government functions." [apologies for the verbatim quote].
America's debt is currently ~$14T, and will be $16T at the end of Obama's first term. The national debt will crest to 100% of GDP by 2020. In perspective, a chart of the feckless, unproductive Europeans' levels:
http://www.theglobeandmail.com/news/world/europe/map-of-europes-financial-trouble/article2094064/?from=2095063
And IRL's debt was downgraded to "junk" today by Moody's.
As a Canuck, I have a tremendous interest in this matter. Forty-five percent of Canada's economy is represented by exports; 80 percent of Canada's exports go to the US. America sneezes? Canada catches a cold.
Nice to see you here, Earl.
ReplyDeleteEt tu, s.r. I had erroneously inferred earlier that our hosts had blocked me from posting. Heh.
ReplyDeleteWell, I do hope that a wide range of opinions is welcomed here. Including strong ones.
ReplyDeleteCongresscritters, tee hee.
ReplyDeleteGood points you bring up, Earl. My comment was that he was being totally disingenuous with his scare tactics. OK, he lied. There are enough revenues to pay immediate obligations. Yes, our representatives have to act NOW to drastically cut spending and I believe Obama will eventually give in to the no tax stance Boehner is demanding. Then raise the ceiling enough to cover our debt payments and start slashing govt departments big time. I'd love to see several eliminated but don't think that will happen any time soon. Once he's out in 18 months, more significant changes can be made.
Blogger has not been user friendly these last few months, Earl. I think RadioMattM is checking out other hosting possibilities.
ReplyDeleteAnyway, the same thing has happened to all of us. I know for myself, blogger erased my most cerebral and meaningful posts.
:-)
Hopefully, that won't happen with my upcoming garden thread...
Earl - ditto solus on being glad to have you around.
ReplyDeleteAs for your policy prescriptions - let me cut to the chase - this thing is no longer about "policy".
The substance and quantity of the Federal Government in the US has, to it's citizens, begun to feel less like governance and more like rule.
This is an anathema, and there is some substantial public support for drawing a line.
The funding crisis is in some ways not especially Obama's fault; the policies which led to the financial crisis enjoyed bipartisan support since the mid nineties. (The proximate cause of the current fiscal situation is the financial crisis - debt as a percent of GDP went up initially under Bush, but was declining in his second term until '08).
In other ways Obama can reasonably be identified with "the solution to the problem of Government is More Government" school of political thought, so I have no trouble with the House taking a hard line in the debt limit negotiations.
In any case, I agree with aft, dwt, flo in that the revenues will cover essential expenditures - in the very short term - if only Obama will do things like furlough the entire Department of Education (and probably stop paying the invoices of Boeing, Lockheed, et al - not something that is sustainable for very long).
The real crunch comes in the bond market, as we have to roll over maturing debt. This little item is usually missing in the cashflow analysis; if the market balks, then the consequences could be severe.
I don't think the bond market will freak out, and I think Treasury will find a way to keep the payments flowing (Geithner does eventually want a job on Wall St after all; he won't get it if he destroys Wall St by destroying the credit of the United States of America, whatever political directives he receives from the White House).
I'm not blind to the risks, but at this juncture they're worth taking.
Once the high water mark of Government is made, and it starts receding, we can talk about long term solvency... let's see what kind of growth and organic revenue is generated by the recession in Government...
Third para: it's -> its. Dammit. I'd delete and repost but I'd lose the italic markup. And I loves me my italics.
ReplyDeleteFor some reason Earl's #10 was in the spam comment folder, so I released it.
ReplyDeleteEarl, my point was that, in the short term, there IS enough in federal coffers to make essential payments.
The reason we are running such large deficits, borrowing the money to make up those shortfalls, is that there has been a huge expansion of government in non-essential areas.
In the longer term, of course such things as SS, Medicaid, etc will have to be dealt with, but for now at least, there is really no reason to increase the debt ceiling and attempt some semblance of Vote-Buying-Business-As-Usual.
@DWT18
ReplyDeleteNo question, a thorough federal core service review is urgently necessary. Post-~2008, is America capable of advancing an "American exceptionalist" foreign policy? Does it wish to do so, or is Wilsonian withdrawal preferable? What will domestic priorities be, and how/by whom will they be established? (this picks up on lewy14's thoughts). Is permitting/encouraging ~2/3 of US GDP to be represented by consumer spending a good thing? Ie., to your point, how to curtail and roll back the huge expansion in government non-essential services in the midst of a recession with America's manufacturing and educational bases and hard infrastructure in tatters?
All of that will take time- the US governmental structure post-War is a juggernaut. But America has run out of time. The debt/deficit issues must be addressed IMMEDIATELY! The party that RR (PBUH) and Greenspan got rolling and Bubba (spit!) benefited from is over, and the hangover is going to be brutal.
@flo14
My characterization of Obama is well-known- a dangerous naif. But, IMO, Boehner is either delusional or disingenuous. Absent cutting "entitlements" massively or laying off swathes of the federal public services (near-guaranteed to trigger a second round of recession), the only fiscal tools available are broad, selected expenditure cuts coupled with a VAT (absent a default or devaluation, I suppose).
@lewy14
Thx. also for the welcome. Your thoughts rest on a series of assumptions that may or may not be borne out (yup, THERE'S a truism. Heh.) Will ideology trump limited interim fiscal stability in WH/Congressional negotiations? A porous, moving debt ceiling hardly inspires confidence in America's commitment to making the hard decisions necessary. I agree with you that Geithner's self-interest will likely carry the day. And your analysis of Obama's political ideology is spot-on; he's "half a Keynesian", and not the prudent half...
@sr13
New CKT Rotating Title: "Milquetoasts will be devoured" ;)
Earl - "full Keynesians" are something of a theoretical construct; kinda like the frictionless pucks in Physics 101. Don't know about their existence in the wild; I think we'll document the Yeti before we encounter any Full Keynesians.
ReplyDeleteKeynesianism is actually pretty brilliant. In theory...
Earl, blogger is a free platform, and we get what we pay for. It's notorious for eating comments; if I have a long one, I copy it to my clipboard before posting just in case. :D
ReplyDeleteAlso, so you and solus know, no one has been banned or blocked from posting on this forum. All points of view are very welcome, but we frown on ad hominem attacks or screechy theatrics. Heated debates and intelligent differing opinions are greatly enjoyed by all.
One more housekeeping tidbit...Earl, if you (or anyone else) would like to be a contributor so you can post threads, just give a shout. This blog is a community endeavor; there are a handful of people who can quickly add you on.
Okay, back to the discussion... :)
Lewy, when you said in comment #16 that:
ReplyDeleteThe substance and quantity of the Federal Government in the US has, to it's citizens, begun to feel less like governance and more like rule.
you hit the nail on the head. The gov't is out of control, and millions of people are standing up and taking a hard line against their "the sky is falling! Again!" BS.
Many of us are ready to take on further hardships if that's what it takes to reign in Washington and their cronies.
Every day in my local paper, I read of federal grants, worth hundreds of thousands of dollars, to do the stupidest projects. Why should Homeland Security buy state-of-the-art antiterrorism equipment for police officers in the freakin' Ozarks? We don't need our roads widened this year, we didn't urgently need an enormous fine arts building at the local university, we didn't need a massive new public library (with 100 employees and 99 books)...well, you get the picture. This is happening in every podunk from sea to shining sea. These federal grants should be slashed BEFORE social security (and food inspections) are cut, but NOOOOO...let's scare grandma.
No VAT. Cut spending. Cut trillions in spending (including trimming down foreign aid). Sh*tcan ObamaCare, and SERIOUSLY crack down on entitlement fraud. When all the cutting is done that can be done, THEN talk to me about raising taxes.
lr:
ReplyDeleteThanks for the direction. Now, back into the bearpit.
I infer there is an absolute congruency between our respective positions here: lewy14 nails it by noting the crisis in "rule", ie governance (whither vox populi, vox Dei????); deep spending cuts are absolutely required; but ultimately debt load at 100% of GDP ain't gonna just be wished away or be debt-serviced at historically-low rates indefinitely. And then there are all the other smouldering fiascos that I flag in Earl4 above.
Now, if WE can figger this out in the ether, what the bloody hell are the WH and Congress playing at????http://us.i1.yimg.com/us.yimg.com/i/mesg/emoticons7/14.gif
Earl ... more later, but vis a vis "VAT" ...unless it is part of a c-o-m-p-l-e-t-e restructuring of US tax codes, it will NOT do anything but expand the rape of the taxpayer. It will be in addition to all the various taxes and fees now collected.
ReplyDeleteIn Michigan we've had a "closet" VAT for years, going back to ultimate treacherous RINO, Gov Milliken (BTW ... Romney now reminds me of him), and it was 1.) Not incrementally broken out on receipts and there were no pass-through credits. Period. Rumor has it that under Gov Snyder the Legislature has rescinded the MBT (previosly called the SBT)but that's not a sure thing yet, courts tests and all that drivel.
I paid it for years in the private sector, even in major LOSS years at average of 3% to 4% of LOSS) ... where the concept is wholly illogical ...e.g., demands payment from equity (your personal savings) versus business income or gain. Why not just put a mask on and rob me on the street corner? A VAT as handled in Canada is virtually impossible here, among other things, due to population magnitude. Chasing down manufacturers, wholesalers, and retailers, et al., is geometrically more difficult. The IRS long ago gave up on collecting (or trying to) excise taxes on fuels at the retail level ... they now collect from the wholesale level based up purchase receipts from refiners (reported by both refiner and wholesaler ... they better match up!) The retailer is reimbursed for the tax either by the consumers payments or by filing a quarterly return, for exempt purchases (Including Federal purchases ... yup, the Feds tax themselves at times), with the IRS. It is wholly opaque to the consumer.
US politicians do NOT want you to know how bad they're goring your arse....e.g., they'll never pass a transparent VAT, IMO.
My ultimate opinion? I think we've passed the tipping point ... we be f*cked ... the Goths are at the gates.
Lewy said ...
ReplyDeleteThe substance and quantity of the Federal Government in the US has, to it's citizens, begun to feel less like governance and more like rule.
That is because it IS Rule. Check out the latest "rule" by EPA vis a vis coal fired electricity generation facilities. Over half the nation is powered by coal. Note also the "rule" that CO2 is a toxin. Neither "rule" was intended by the sponsors of the Clean Air Act. EPA (Jackson cum Browner) is another matter.
As for Social Security defaults by the Jug Eared Moron ... he knows full well that in 2011 there is a shortfall of FICA collections versus payments due to his "stimulus" cut in the FICA tax paid by the employee of 16% for just 2011. It is in his budget. Left alone SSA was fine for years to come, with moderate changes for out years. The government, both Dem and Repub, over the years, have spent the FICA income on other things, leaving IOU's in the SSA till.
ReplyDeleteMeantime, the individual Part B Medicare cost will increase by 2.5 times by 2014 under the revisions under Obama/Pelosi Care. Meantime ... The Part B supplemental insurance costs have already gone up by nearly 50%. Hell of a deal for the working man.
I might, philosophically accept these increases, IF at the same time idiotic bullsh*t like cutting FICA tax revenue by 16% didn't also occur.
The intent is to box low income earners in to a corner they can't escape. The 48+% of filers who pay no taxes have no choice but go along.
As I said, with the Gordian Knot of our tax codes, I think we're f*cked.
Or maybe I'm just in a bad mood today. x(
Plain and simple ... no matter what you might like or dislike about Obamney/Pelosi care, good or bad, the fact is is spends money that is not now nor ever will be there. Beyond lunacy.
ReplyDeleteNow let Chase Bank give me such a deal and I'll be quiet...I'll just go get Tampax for my arse.
Lady Red said...
ReplyDeleteEarl, blogger is a free platform, and we get what we pay for. It's notorious for eating comments ...
Strange thing, while traveling in Montana I did NOT have the gremlin issue, or even a hint of it, but do from home. It seemed (just my suspicion) to be an ISP thing ... Verizon WWAN no problem, local Montana WiFi, no problem....back on Deeetroit Comcast cable, whoopsie.
Ari - it could also be a Google datacenter locality issue. It's likely you're talking to a different datacenter in Montana.
ReplyDeleteLewy ... it is possible that it is a Google data center issue. In Montana I was connected to ISP's with centers in either Colorado (Verizon WWAN) or Montana (Local WiFi on Wisp(sic?)). Given the proximity of Colorado and Montana (low population density), it's a good chance that they're on the same Google data center ... but different from the one used by Comcast-Detroit.
ReplyDelete