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Archive for Tuesday, July 12, 2011

Talks on debt produce little progress

July 12, 2011

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— President Barack Obama and congressional leaders on Monday emerged still deeply divided over how to slash the nation’s debt, with reality sinking in that even a middle-ground proposal was not big enough to succeed and would not get through Congress anyway.

As time runs perilously short for action, Obama challenged top lawmakers to return to the White House today with fresh ideas for a debt-reduction plan that could pass the House and Senate. All sides are scrambling to reach a deal as part of a tradeoff in which Congress would agree to extend the nation’s debt limit by Aug. 2 to prevent a catastrophic government default on its bills.

Turning up the pressure, Obama declared that he would reject any stopgap extension of the nation’s borrowing limit, imploring lawmakers once again to reach one of the most sizable debt-reduction deals in years.

He refused to even entertain a backup plan if that doesn’t happen.

“We are going to get this done,” Obama insisted in a news conference.

In a 90-minute closed meeting, House Majority Leader Eric Cantor spelled out potential spending cuts that had been identified in talks led for weeks by Vice President Joe Biden. But Democratic lawmakers in the room made clear such a cutting-only approach without tax hikes on wealthier Americans would never pass the Democratic-led Senate or the House, where Democratic votes would be needed, too.

It did not appear, either, that such a plan would meet the House Republicans’ own standard of a debt-cutting package. They want cuts that would exceed the size of the increase in the debt limit, which could be about $2.4 trillion to get the country through 2012 and next year’s elections.

Republicans won’t support a package that raises any taxes.

As the stalemate continues, the pressure increases. A government default could trigger another enormous economic swoon.

Democratic officials familiar with the White House position in the private talks insist that leaders of the House and Senate will not let that happen, and that Republicans ultimately would vote to raise the debt limit even if a deficit-cutting package does not come together in time.

Yet Republicans say otherwise. House Speaker John Boehner insists the House can’t pass such a bill.

“I agree with the president that the national debt limit must be raised, and I’m glad that he made the case for it today,” Boehner told reporters. “But the American people will not accept - and the House cannot pass - a bill that raises taxes on job creators.”

Obama renewed his case for a package that would put a historic dent in the country’s deficits by blending politically poisonous elements for both parties: tax hikes for the wealthy and big corporations opposed by Republicans and social service cuts that Democrats decry.

He implored both political parties to give ground and show the American people that Washington can actually work.

“If not now, when?” Obama said.

Comments

just_another_bozo_on_this_bus 3 years ago

"Manufacturing deficit fear" by Dean Baker

Pursuing a plan to kill social security, politicians are relying on a credulous public and compliant media to ramp up debt panic"

http://www.guardian.co.uk/commentisfree/cifamerica/2011/jul/11/social-security-debt-ceiling-talks

Excerpts--

"How about that $14.3tn figure for the debt ceiling? That's a really big number, really scary. So is just about every number connected with the United States budget. We are a huge country with a huge economy. Competent reporters would focus on this being about 90% of US GDP.

Is that big? Well, the debt to GDP ratio was over 110% after the second world war. The United Kingdom had debt to GDP ratios of more than 100% for much of the 19th century, as it was establishing itself as the world's pre-eminent industrial power. Japan has a debt to GDP ratio of more than 220% of GDP and can still borrow in financial markets long-term at interest rates of less than 1.5%.

So, what's the problem? The politicians who want to cut social security and Medicare obviously want the public to believe that there is a huge problem and – due to the incompetence of the media – they have managed to instill fear throughout the nation about this massive non-problem."

"When a politician complains about President Obama's taxes strangling the economy, reporters should ask them whether they know that taxes are less of a burden on the economy now than at any point since the second world war. A politician who is concerned about tax burdens should be expected to know this."

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Richard Heckler 3 years ago

Hey the debt limit will be increased. There is no reason not to raise the debt limit. It repubs were in the white house it would be done in a flash.

IF the debt limit were not increased there would be a lot of very smart and very rich people plus many countries which have invested in the USA that would be pissed off..... simple as that.

Not only that many many other important financial aspects would feel the impact:

  • Wall Street investments up in smoke
  • Wall Street Banks bye bye
  • FDIC Goes Broke
  • retirement plans gone
  • millions upon millions upon millions of jobs lost
  • medical insurance up in smoke
  • homes by the millions would be lost
  • soldiers could not be paid
  • military industrial complex down the tubes
  • millions of financial institutions up in smoke
  • what's left of USA industry gone
  • elected officials would not get paid
  • in essence the USA economy is history

Who in the hell would loan the USA money for recovery?

China and Japan would own the USA pure and simple.

Repubs love to create debt aka supply side economics aka Reaganomics. Tell them to stop messing with all of us and raise the debt limit NOW!

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Richard Heckler 3 years ago

Social Security privatization would raise the size of the government’s deficit by another $300 billion per year for the next 20 years. http://www.dollarsandsense.org/archives/2010/0111orr.html

This does not seem to bother Republicans, as long as they are in power.

In fact, by the time the second Bush left office, the national debt had grown to $12.1 trillion:

  • Over half of that amount had been created by Bush’s tax cuts for the very wealthy.

  • Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush.

• Fully 81% of the national debt was created by just these three Republican Presidents. • http://www.dollarsandsense.org/archives/2010/0111orr.html

How would the rest of the U.S. economy be affected if the private accounts replaced the current system?

Put simply, moving to a system of private accounts would not only put retirement income at risk—it would likely put the entire economy at risk. http://www.dollarsandsense.org/archives/2010/0111orr.html

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Richard Heckler 3 years ago

The “Peoples Budget” does everything this country needs:

* Creates good-paying jobs
* Fully maintains our social safety net
* Invests in education
* Ends our costly wars
* Closes the tax loopholes that have made offshoring jobs profitable
* Ends oil and gas subsidies that pollute our country at taxpayer expense
* Creates a national infrastructure investment bank to help us make intelligent investments for the future

The “People's Budget” represents not just common sense; it represents the will of the American people.

What the “Peoples Budget” does very specifically:

http://cpc.grijalva.house.gov/index.cfm?sectionid=70&sectiontree=5,70

http://www.npr.org/2011/04/15/135435883/the-nation-obama-should-fight-for-peoples-budget

http://www.democracynow.org/2011/4/14/while_obama_touts_compromise_with_gop

http://www.thenation.com/blog/159939/fighting-peoples-budget

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Richard Heckler 3 years ago

The opponents of Social Security will stop at nothing in their long crusade to destroy the most efficient retirement system in the world. Opponents have taken two tracks to attack Social Security. The first is to claim the system as it is will fail, and the second is to claim that privatization is a better way to provide for retirement security. The first claim was the favorite from 1935 to about 2001.Then the privatization claim became the vogue. Now the first is back on the table.

With corporations routinely defaulting on their pension promises, more and more workers must rely on their individual wealth to make up the difference. The stock market collapse at the turn of the millennium wiped out much of the financial wealth of middle class Americans, and the collapse of the housing bubble has wiped out much of their remaining wealth.

Making any cuts to Social Security now, either by raising the retirement age or cutting benefits, would have a huge impact on their remaining retirement income and are not necessary to “save the system.” In fact, to make the most of the modifications currently being proposed by Obama's commission would be the height of folly.

With all the fear-mongering falsehoods flying around, it can be difficult to separate fact from fiction. Below, Doug Orr helps D&S readers do just this, with clear, and sometimes surprising, answers to many common Social Security-related questions.

http://www.dollarsandsense.org/archives/2010/0111orr.html

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