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Peter Orszag's Ideas for One Nation, Two Deficits

Author: peteo3140@gmail.com

Orszag believes our nation is facing a "nasty" dual deficit problem.  He believes a job deficit is going to continue in the near future as well as a budget deficit in the long term. To deal with these issues Orszag proposes a compromise; extend the tax cuts from the Bush administration for another two years and then end them altogether.

This makes sense because over a long period of time the tax cuts are just not going to be affordable, but we can't end them right now due to the high rate of unemployment in the job market. Orszag says if we initiate high tax rates currently we are going to further depress consumer spending.  Also, losing consumer confidence in the bond market could be a problem and cause market sentiment to shift.

Orszag disagrees with both the progressives and the conservatives. The progressives hope to make tax cuts permanent, all but excluding the highest bracket of earners. Conservatives want to make tax cuts permanent, including the highest earners. However, Orszag says if we did either of those we would expand the nation deficit by more than $3 trillion just over the next ten years. It's going to be hard to even solve our budget issues over the next decade.

The economy needs a deficit reduction of about $200 to $400 billion a year by 2015, Orszag says. Medicare, Medicaid, and Social Security will take responsibility for almost half the nation's spending by 2015. The other half of the budget is blamed on net interest and discretionary spending.

Peter Orszag proposes solutions to cut the deficit. One of the solutions is to establish a new source of revenue through increasing tax reform. This would provide the U.S. with hope to improve the tax code by leaning towards a consumption-based tax system.

Orszag also says that by extending the tax cuts for two years and then ending them doesn't require an affirmative vote, but instead happens by default. This would solve the nation's "medium-term" deficit problem by reducing it from $200 billion to $350 billion each year from 2015 to 2020. Middle class and lower class families will have less of a concern of higher tax rates if we continue to tackle this medium term issue.

Finally Orszag calls for the uniting of the Democrats and Republicans to fight this. Orszag wants us to continue the fight for tax cuts for an additional two years and then for the end of them in 2013.

Article Source: http://www.articlesbase.com/politics-articles/peter-orszags-ideas-for-one-nation-two-deficits-4155647.html

About the Author

Ron Thomas

Republicans and Democrats Playing With Fire On National Debt

Author: Currentusa

Republicans and Democrats are butting heads as they try to negotiate a solution the debt ceiling deadline coming up in early August. This political brawl is, of course, a reflection of the need to deal with the national debt and get the finances of the federal government in order.

The Simple Problem

The fact the United States has run up against the debt ceiling is a reflection of the problems with our overall debt situation. The problem involves simple math. The government is spending far more than it takes in. The government is taking in roughly 2.7 trillion dollars this year, but has a deficit of 1.5 trillion. This effectively means that another 1.5 trillion is being added to the overall debt this year and this will occur for the foreseeable future.

Three Areas Problematic

This is one area where it is easy to tell whether our elected representatives are serious about dealing with the problem or not. This is because there are three programs that are the problem. If we terminated every other government program, these three would still cost us much more than we bring in as tax revenue each year. The three programs are Social Security, Medicare and the military. Unless our elected representatives are willing to address the tough issues with these three programs, any other steps they take are useless.

Playing With Fire

The simple fact is Republicans and Democrats are playing with fire in the debt ceiling negotiations. The Republicans are refusing to go along with any solution that involves raising taxes. The Democrats are refusing to go along with any solution that doesn't combine spending cuts with tax increases. Somebody is going to have to blink, but it appears more and more like neither side is willing to.

So, what would be the impact of no deal? The immediate answer might surprise you. The government would start suspending payments to pensions and would direct the money to pay the treasury notes coming due. There would be no default per se, but this is only a temporary solution that would last for perhaps six months before the debt had to be dealt with in earnest.

This doesn't mean problems would not happen. They would in a big way. The monitoring agencies have already indicated they will heavily downgrade the credit rating of the United States. This would result in a huge increase in interest rates on government debt, which would leak into the commercial market. This would mean the interest rate on all adjustable rate loans for cars, homes, credit cards and the like would go up, way up. We are talking about increases in the range of two to five points. Such an increase would bankrupt most of America so it behooves the politicians in Washington, D.C., to come up with a solution.

Article Source: http://www.articlesbase.com/organizational-articles/republicans-and-democrats-playing-with-fire-on-national-debt-5001650.html

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For more information about National debt , please visit http://www.currentusanationaldebt.com/

Amazing and Depressing Stats on our National Debt

Author: Anthony Ricigliano

Anthony Ricigliano - Anthony Ricigliano Economy News and Advice: The national debt is the amount that the United States has borrowed and is currently paying interest on. The national debt of the U.S. is now over $14 trillion, a number that is larger than the gross domestic product of China, the United Kingdom, and Australia combined.

Here's a list stats that are amazing but that you may not want to read:

* In 2010, the United States accumulated over $3.5 billion in new debt each and every day. That's more than $2 million per minute.

* The cost of executing the wars in Iraq and Afghanistan is well over $1 trillion and counting.

* The Treasury Department estimates that our debt to China is approximately $843 billion and counting.

* According to the January 2010 Congressional Budget Office (CBO) report, the federal budget deficit in 2009 was $1.4 trillion (9.9% of GDP). The 2010 deficit was approximately $1.3 trillion (9.1% of GDP). Not since 1945 have deficit been that high relative to GDP.

* According to the March 2010 CBO report, at proposed spending levels, the national debt will increase to 90% of GDP by 2020, at about $20 trillion.

* The government is also borrowing from itself, having borrowed from Social Security and Medicare, which have had surpluses.

* In 2009, according to the CBO, $187 billion of tax receipts were used to pay interest on the national debt. This is interest only and does nothing toward reducing the debt.

* The share of the national debt for each employed American is more than $90,000.
Recession and extended war efforts have exacerbated the numbers attached to the national debt as tax receipts have decreased while war and entitlement spending have increased. It's entirely possible that these expenditures could be decreased (by ending the war effort) while tax receipts increase in an improving economy.

The issue at this point is that both parties seem intent on blowing up the national debt regardless of the factors in play at the present time. Politicians seem intent on continually delivering the message to their constituents that spending can continue and that we'll deal with the debt monster at a later date. This shifts the debt burden to future generations who will suffer as the debt piled on by earlier generations consumes the lion's share of the country's GDP. It seems that everyone is living for today while leaving the bill for our kids, grandchildren, and the generations that follow.

Article Source: http://www.articlesbase.com/economics-articles/amazing-and-depressing-stats-on-our-national-debt-4245354.html

About the Author

Anthony Ricigliano's background in information technology, distribution, purchasing and regulatory affairs then gives him an edge with integrating that infrastructure with areas in the company that generate revenues.

How to Balance the Federal Budget & Eliminate Our National Debt Within 4 Years

Author: Erin Kent Magee

How to Balance the Federal Budget & Eliminate Our National Debt Within  4 Years

                                                Without Raising Taxes!


It is estimated that the top 1% of the US population, or 3,105,000 people, have an average

income of $1.1 million dollars a year. (Source: Department of Sociology, UC Santa Cruz,

January, 2011)

If we multiply $1.1 million ( $1,100,000 ) by 3,105,000, we come out with $3.4 trillion.

An adjusted tax rate of 25% will yield $1.7 trillion in revenues within 2 years and $3.4 trillion within the next 4 years, from just the wealthiest 1% of the US population.

Our national debt is now around $1.4 trillion. This will give us a surplus of $2 trillion over the four year period.

Our projected budget deficits for 2011 and 2012 will total $2.58 trillion, leaving us with a shortfall of $.58 trillion ( or, $580 billion ).

We're now talking billions, not trillions, which makes the numbers a lot more manageable. However, we are still faced with a deficit. To eliminate that deficit, we can either decrease spending or increase revenues.

Recently, the focus has been on spending cuts; but, wherever we look, we run the risk of cutting essential services. There has even been talk of drawing upon the Social Security Fund. However, this fund belongs to a separate trust and should not be considered a part of the federal budget.

How can we safely increase federal revenues? President Obama believes this can only be done through massive tax rate increases for those in the upper tax brackets, but history shows higher taxes lead to lower revenues. According to Dr. Daniel Mitchell of the Heritage Foundation:

"When tax rates are reduced, the economy's growth rate improves and living standards increase. Conversely, periods of higher tax rates are associated with sub par economic performance and stagnant tax revenues".

Dr. Mitchell proves his point through a review of historical cuts in the 20s, 60s and 80s.

The Tax Cuts of the 1920s

Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.

The Kennedy Tax Cuts

President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).

The Reagan Tax Cuts

President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

Why do lower taxes lead to increased revenues? In short, more money is set aside by taxpayers at the upper income levels for savings and investment, which generates more taxable income. When rates are increased, these same taxpayers place more of their income in tax shelters, such as securities and foundations.

Thus, any attempt to increase revenues and eliminate debt through massive tax hikes would not be a wise course of action.

A better approach would be to increase revenues, without a tax rate increase. This can be done by addressing the Trade Deficit. The Trade Deficit can be offset by increasing our sales around the world, or increasing tariffs on imported goods.

From 2007 to 2010, our trade deficit with China, alone, was $1.26 trillion, nearly enough to pay off our entire national debt! Since our budgetary deficit can be offset through tax revenues, we can wipe out our national debt by eliminating the trade deficit between the U.S. and China; and, by increasing our export volume, this can be done within the next 4 years!

 

 

Article Source: http://www.articlesbase.com/politics-articles/how-to-balance-the-federal-budget-eliminate-our-national-debt-within-4-years-5016172.html

About the Author

Erin Kent Magee is a Veteran with 10 years of prior federal service.  He has worked for the Department of the Navy and Department of the Army; and, in 2010, he retired from the IRS.

On April 5th, he filed his Statement of Candidacy with the Federal Election Commission as the 1st Republican Presidential Candidate from the State of Florida.

He is bullish on America, and believes our current economic woes will be overcome through an increased volume of trade and private investment in emerging industries.

The Unrelenting Hypocrisy and Lack Of Leadership Of The Obama Administration

Author: Bruno Korschek

This article discusses the national debt from both a hypocrisy and leadership perspective. As most people know, unless the political class agrees to some sort of financial plan in the next week or so it is highly possible that the United States' Federal government will start defaulting on the massive debt levels it has created over the past decades, a trend that has violently accelerated in the past three years.

What will happen if that should occur is open to debate but it will likely not be pretty. Given that the Federal government spends $1.40 for every dollar it collects in taxes, the most immediate impact is a likely 30% decrease in what the political class has to spend on government programs which will likely result in disruptions to government services and payments.

But it did not have to get to this point. Anyone in Washington with first grade math skills could have figured out a year or more ago that this crisis was coming. That is when the political class should have started talking about a coherent, integrated, strategic way to get spending under control. Outside of crisis mode, months ahead of the crisis. This is not a debate about what to name a new post office, it is a debate that will likely negatively impact the lives of just about every American and it should have been taken much more seriously.

But the political class, including the most powerful figure within that class, Barack Obama, never got around to the crisis until just weeks before D-day. Not only did the politicians start late but they cannot even get close agreeing on how to solve the crisis. The biggest obstacle is the fact that Obama is insisting that any agreement to cut the budget and raise the debt limit must include big tax increases on businesses and wealthier Americans. Republicans are insisting on only spending cuts with no tax increases before they will agree on raising the debt limit.

Which brings us to the hypocrisy part of this discussion. Consider a generic yet accurate definition of what hypocrisy is:

Hypocrisy: an act or instance of falseness.

In the light of this definition, now consider some direct Barack Obama quotes from the past few years starting with his position when the Bush administration in 2006 needed to raise the debt limit during his second term in office and Obama was still an Illinois Senator:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. … Increasing America's debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

So, in 2006, raising the debt limit was a failure in leadership according to the morals and standards of Obama. But now Obama wants to raise the debt limit. How is doing the exact same thing that Bush did not be a failure in leadership? How could that be a failure in leadership in 2006 but not 2011? Same issue, same person, different viewpoints. Which one is a falsehood?

Incidentally, in 2007 and in 2008, when the Senate voted to increase the limit by $850 billion and $800 billion respectively, Obama did not even bother to vote. How and why would a Senator avoid voting on these two important votes, votes that again could have affected just about every American? Hardly a leadership approach to his responsibilities.

But the hypocrisy continues. In August 2009 when Obama was in Indiana to promote his economic stimulus plan, he was being interviewed by NBC's Chuck Todd. Todd fielded a question from a local citizen, Scott Ferguson: "Explain how raising taxes on anyone during a deep recession is going to help with the economy."

Obama's response: "First of all, he's right. Normally, you don't raise taxes in a recession, which is why we haven't and why we've instead cut taxes. So I guess what I'd say to Scott is – his economics are right. You don't raise taxes in a recession. We haven't raised taxes in a recession."

"We have not proposed a tax hike for the wealthy that would take effect in the middle of a recession. Even the proposals that have come out of Congress – which by the way were different from the proposals I put forward – still wouldn't kick in until after the recession was over. So he's absolutely right, the last thing you want to do is raise taxes in the middle of a recession because that would just suck up – take more demand out of the economy and put business further in a hole."

So, is this even more Obama hypocrisy? While we are not "officially" in a recession, it certainly feels like one. Official unemployment is high and rising, underemployment is much higher and rising, average wages recently dropped again, a major leading indicator is trending downward, job creation is minimal, and the housing industry is still in the dumps.

Two years ago Obama correctly understood that raising taxes for any American, wealthy or not wealthy, is a stupid economic policy to follow in bad economic times, "it is the last thing you want to do." Now, in order to get Republicans to agree to spending cuts in return for support on raising the debt ceiling during a very bad economic time, he is insisting on raising taxes for wealthy Americans and businesses.

But the examples of hypocrisy just keep on rolling in. Back last fall when Obama and the Republicans agreed not to let the Bush tax cuts lapse, keeping the tax rates the same, Obama was again supporting the strategy of letting American citizens and businesses keep more of their wealth. Consider his words at that time:

"Millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment or make upgrades – freeing up other money to hire new workers."

Thus, late last year it was a good idea for businesses to keep more of their profits and invest them to help the economy. Nine short months later is a bad idea since Obama wants to raises taxes on the same people that he wanted them to keep their money and invest in the economy. Hypocrisy again.

These words are not from Republicans, Fox News, Tea Party people or Rush Limbaugh. They are Obama's own words. The only way they make sense from when they were stated to today is that the President is an incredible hypocrite, willing to say anything at anytime to make political points for himself. They are called acts of falsehood, it is called hypocrisy. It is also pathetic for a so-called leader.

Enough abut hypocrisy, the above quotes prove the point of what type of person the President is. Let's move on to leadership. The following quote from Arnold Glasow captures the essence of what a true leader is:

"One of the tests of leadership is the ability to recognize a problem before it becomes an emergency."

Failing to raise the debt limit and failure to get out-of-control spending under control is certainly now an emergency. Back in the fall of last year the President's own debt reduction commission, after much hard work over most of the 2010 calendar year  presented the President with a detailed, non-partisan, coherent plan for reducing government spending.

At the time of the plan's completion, the Democrats controlled the White House, the Senate, and the House of Representatives. A leader would have taken that plan, ran with it, convinced his Democratic friends in the Congress to pass it, without needing Republican support, and the debt crisis we are weeks away from would have never become an emergency.

All it would have taken is a little leadership and fortitude for the President to tell the American people that government had to tighten tighten up spending and shown how HIS commission had the right plan to do it. Heck, he could have blamed the deficit reduction commission to avoid any personal blame and any political fallout.

The President missed that opportunity to avoid an emergency but he had other chances. Earlier this year he submitted his budget plans to Congress for review. His plans did nothing to control spending. In fact, if that original Presidential budget had been approved, it was projected to add at least another $9 TRILLION to the national debt, or about $80,000 worth of debt for every American household.

This budget was rejected by the Senate by a unanimous vote of 97-0. Even his Democratic friends in the Senate knew that his budget plan was a disaster. Thus, rather than start the discussion constructively towards reducing spending many months ago, the President chose to pass the buck again, missing another chance to avoid the current emergency.

As the potential for an emergency got closer and closer, the President avoided all contact with this issue, leaving Joe Biden and six members of Congress only a couple of months  to tackle a problem that a his full Presidential deficit commission took almost a year to wrestle to the ground.

In those months, the President was no where to be found relative to this emerging emergency, spending time touring the world, having tea with the queen, and blaming Congress for the impasse on the debt ceiling issue. Rather than giving credit and taking blame, the behavior of a good leader, Obama was doing just the opposite in order to politically protect his own selfish interests.

At least three instances where a true leader could have recognized the problem before it became an emergency and in each instance, the President failed to step up and perform. It is now obvious that his only priority is to get re-elected in 2012, the country's financial and economic welfare be damned. His positions on taxes, spending, and the debt limit are so incredibly and so obviously hypocritical. His failure at leadership so blatant and destructive.

The truly sad thing about this whole emergency is the tax increases he is proposing, removing oil company loopholes, taxing corporate jet owners, taxing the rich, etc., his hypocritical demands that are holding up a solution to the emergency, are infinitesimal in the whole picture of out-of-control spending. They are simply ploys to energize his base and prove he is tough on corporations and rich people, they would have nothing to do with fixing this fiscal emergency.

Article Source: http://www.articlesbase.com/politics-articles/the-unrelenting-hypocrisy-and-lack-of-leadership-of-the-obama-administration-5030293.html

About the Author

Walter "Bruno" Korschek is the author of the book, "Love My Country, Loathe My Government. - Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class," which is available at www.loathemygovernment.com and online at Amazon and Barnes & Noble. Our daily dialog on freedom in American can be joined at www.loathemygovernment.blogspot.,com.

The Fight to Fix Federal Debt

Author: Chris Lee

Our national debt has hit an all time high at $14.3 trillion, an amount that can no longer be ignored. Every year, Congress spends more money than they money brought in as income, which leads to a deficit in our national budget. To cover expenses and the spending habits of Congress, money is borrowed and the total national debt is increased. To make matters worse, as the national debt increases the interest on the borrowed money begins adding to the total debt balance, pushing the nation further into financial hardship.

Each day, members of different political parties are lining up to fight for their proposed plan to manage the national debt.  Republicans blame overspending on social programs such as Medicare and Social Security, while Democrats believe that under-taxation is to blame for the nation's financial woes. It's clear that Republicans and Democrats don't agree on the best long-term strategy for alleviating the national debt, but members of both parties are apprehensive about raising the debt ceiling.  Despite clear party lines, problems with taxation and federal spending are issues both sides are working to resolve. The economy will suffer greatly if no agreement can be reached about how to increase the federal income and how to balance the federal budget. Continuing on the current financial path is not an option that either political party is considering.

Can we fix it?

Regardless of which side of the political spectrum you stand on, some of the proposed ideas could leave all Americans paying for more and getting less in return.  The idea of a National Sales Tax, has people of all income brackets fuming. The economy is fueled by consumer spending, so how would a "tax on consumption" be beneficial? The national debt may reduce slightly, over long periods of time, but consumer spending would slow and the number of people who need to receive government assistance for essential items may increase as a result. This idea appears to be a double-edged sword.  Along the same lines, eliminating or capping deductions for donations to charities may backfire and result in fewer contributions and an increased need for funding from the government.  Reducing benefits for veterans or Social Security benefits may appear as viable options, but how will our respected elders pay for essential living items, and possibly the added national sales tax, when they earn so little each month?

The national debt is a government problem, brought about by years of inadequate budgeting and overspending.  It is unreasonable to assume that the debt crisis can be fixed by imposing more restrictions and additional requirements to the citizens of America.  It is also unlikely that without such measures, our national debt will be reduced to a manageable state.   The compromise may be found in some realistic cut-backs and sensible added requirements we, as a nation, can overcome this financial collapse into debt.

For more information please visit http://leebankruptcy.com

Article Source: http://www.articlesbase.com/banking-articles/the-fight-to-fix-federal-debt-4795678.html

About the Author

Christopher understands that financial hardships can affect honest, hard-working people. Growing up in a very blue collar family and rural area of Indiana , money didn't always come easy for his parents. The struggles his family faced in his childhood made a significant impression on his business philosophy today. As a Fort Worth bankruptcy attorney this practice has given me the opportunity to directly impact the lives of many people.

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Greece National Debt Problems – Why The Eu Must Help

Author: Mark Warner

The Greeks are catching a lot of flak at the moment for their massive national debt problems, but most of the countries giving them grief should look in the mirror. They might notice their own debt is massive as well. Given this, why are the willing to help the Greeks?

The numbers from Greece are not good when it comes to measuring the national debt in the country. The deficit is a shocking 12.7 percent of the countries entire economic output. This is a huge number and is making buyers of debt very hesitant to provide the assistance that Greece needs. This is multiplying the problem and forcing an already stressed Eurozone to step up and promise assistance. The promise, however, is a very interesting one. Why? It is coming with a brutally blunt set of demands. Greece must slash government spending and raise taxes before the countries of the EU will kick in to help it.

Why not let Greek default on its debt? The answer is found in Asia in the late 1990s. Thailand had built up a huge real estate bubble [sound familiar?]. It eventually went bust and nobody stepped up to help. The general view was Thailand was a small player in the economic world and it wouldn't have a big impact. Wrong. The economies of Asia were tied together in obvious and less obvious ways and the countries of Southeast Asia were all severely impacted. Currencies lost much of their value, which is why vacationing there is so utterly cheap. Given all this, the EU is not about to watch Greece go down the tubes.

The situation with Greece bears watching because it is not the only country in the world that is suffocating under massive debt. The real question is how long countries will continue to bail each other out as we move forward and the bill for all this government spending comes due. It is not going to be pretty.

Article Source: http://www.articlesbase.com/economics-articles/greece-national-debt-problems-why-the-eu-must-help-1867767.html

About the Author

Mark P. Warner is with CurrentUSANationalDebt.com - your online resource for the current USA national debt to the dollar and what we have to do about it.

The National Debt

Author: Hubert Crowell

On November 3rd 2009 the National Debt reached 12 Trillion Dollars. As I tried to grasp this number and get an understanding of it, I could not. I then decided to reduced the numbers down to something that I could understand. The average household income for 2008 was $50,303 so I decided to see what an average household would look like finically compared to the U.S. Government.

If the government were the average household making $50,000 a year, it would be like a family living above their means and spending $83,000 a year with a debt load of $265,000. There may be some families that only make $50,000 and own a home with a mortgage of $265,000, but I don't know any. Spending $83,000 a year I believe is fairly common for someone that lives in quarter million dollar home. If one partner lost their job, then I could see where they could be in this situation. On the other hand for someone to live year after year spending more than they earn, accumulating debt at a $33,000 or more a year does not seem likely.

A family that finds them self in this mess, would not increase their spending, but look for ways to cut back and sell what ever they could to lower the debt.

The other alternative would be to get a higher paying job or a second job. For the average American, this may not be possible with the current unemployment levels. The Government on the other hand, could and more than likely will raise taxes to increase the level of income. Cap and trade is a good example and is forecasted by the government to produce 73 Billion a year starting in 2012. This is listed in the Proposed Budget by Category as Climate revenues.

Corporation income taxes are also projected to more than double by 2012 from the 2010 levels. But with most everything else increasing, the deficit is expected to remain well over $600 billion a year, adding to the National Debt.

Our family in the example would not able to extend their credit and would have to take drastic steps in order to survive. I am not so sure that our government is prepared to do the same.

The gross domestic product (GDP) or gross domestic income (GDI) is a basic measure of a country's economic performance. It is the market value of all final goods and services made within the borders of a country in a year.

2009 third quarter GDP was $14,301.5 billion. Gross National Debt November 3, 2009 reached $12,000 Billion or 84% of GDP. The following is part of a testimony given to the House of Representatives. Note: Chart no longer available at Whitehouse.gov

Testimony of OMB Director Robert J. Portman
President's FY 2008 Budget Committee on the Budget
United States House of Representatives

February 6, 2007

Chart 7: [Current Trends Are Not Sustainable]

 Chart7

As the next chart shows, the current trends are not sustainable. Under current law, we estimate that by 2040, spending on these and other important programs, plus interest on the debt, will crowd out all other spending -- for defense, homeland security, and education -- unless we make the necessary reforms.

It seems to me there is now nearly universal, bipartisan agreement that the unchecked growth of these programs presents real long-term threats to beneficiaries, our federal budget, and the economy. We now face a $32 trillion unfunded obligation in Medicare over the 75 year horizon. Our choices without reform will be massive benefit cuts, enormous deficits and huge tax increases.

The balanced budget is important, in part, because it better positions our country to address these looming fiscal challenges. But our five-year budget proposal also makes an important down payment toward sensible reform of mandatory spending -- reducing spending growth by $96 billion over five years. These reforms are primarily in the Medicare program, but also in Medicaid and other programs. The proposals are similar in character to those this Administration has offered in the past.

End of testimony.
The revised 2009 estimate for 2010 has spending at 27% of GDP, much higher than the above 2007 chart or about what was then estimated for 2050. Revenues have also dropped to 16% of GDP for 2010.

Suggestions for families and governments in debt.

First, cut back on spending, sell any asset that is costing money that is not required in order to survive. Government should get out of the mortgage market and sell Freddie and Fanny to private or public corporations. Medicare and Medicaid together take in $189 Billion and pay out $736 billion, turning this over to private insurance companies would reduce the Deficit by $547 Billion alone. Make major cuts in Non-defense discretionary spending. Currently the government is over budget for 2010 in the amount of $110 Billion with more estimated each year. Government just like families must learn to stay within their budgets.

The government owns vast amount of land and mineral rights, much of this could be sold and placed into productive use and the proceeds used to reduce the debt.

Second, don't bite the hand that feeds you. Corporate and Individual income taxes (including Social Security payroll taxes and Unemployment insurance), make up 84% of the income. Passing any laws that may reduce or harm the working force must be avoided. On the other hand passing laws that encourage Corporate growth will provide more jobs.

Third, turn Social Security over to private investment companies willing to bid on high rates of return. Investing with a return of only 6.5% would erase the deficit in 2010 for Social Security and provide growth in the fund in future years. Or allow individuals to invest their own Social Security funds. The Social Security Trust Fund, (Old-Age and Survivors Insurance Trust Fund), is currently invested in Treasury authorized "special obligations" purchased exclusively by the trust fund. The rate of interest on special obligations is the average market yield on long-term U.S. obligations.

Interest paid to the Trust

The problem with this is that we are paying for this through the interest on the National Debt instead of private investments.

The gross Federal debt includes amounts owed to Federal trust funds, including the Social Security trust funds. New Treasury obligations cannot be issued to the trust funds if doing so would cause the debt limit to be exceeded. This limit is about to be reached, the time has come to start investing the trust fund in private investments.

The National Debt changes each day and may increase or decrease depending on securities that may come due. The debt to the penny on 11/12/2009 is $11,991,219,535,897.86. The treasury will also have to hold the debt down to the current limit of $12.1 Trillion until Congress approves a higher level of debt. They will be able to hold the debt down for a while by selling securities and moving funds around. However as pressure builds Congress will be forced to increase the limit again.

It does not take a Phd to see how big of a mess we are in. If I can look at this and see what is wrong, anyone should be able to.

Article Source: http://www.articlesbase.com/politics-articles/the-national-debt-1429723.html

About the Author

Hubert Crowell Retired and working part time. Hobbies are caving and propecting for gold. Please visit my web page at: http://www.hucosystems.com/

The United States is a Corporation

Author: Terry Smith

The United States  is a corporation:
"The UNITED STATES was formed in 1871, which controls only the District of Columbia and the territories it purchases or acquires; Puerto Rico, Guam, Virginia Islands.  Many think that income taxes, and some laws do not effect people in the sovereign states of the union as they are outside of the control / jurisdiction of the United States corporation.  The United States of America is different from the "United States" [corporation]." from Abodia.com
Why shouldn't it act as a corporation, as for profit. I have never seen a corporation split into 2 main groups, both with opposite agendas. No wonder America is broke. Isn't it time to reform the policies and act as a for profit company. Remove the fat, offer services and products instead of incentives?
Or is it by design that the corporation is broke and getting deeper.
Mike Shedlock from safe haven says,"Explaining why America is broke is rather simple. All we have to do is look at two separate and distinct problem areas: public unions and defense spending, then generalize the problem. Let's start with a look at defense spending."

I agree with both, and there is more to that as well.

I say it is time to work as one, together, in our nations capital, to get out of debt, not just reduce the deficit spending. Maybe it is not possible to do so, short of all out war with China. That would be biblical and epic in nature.
From market oracle: "It has been brought to the attention of the Treasury that China may own more US Treasury debt than once thought.  Rules put in place in 2009 limited would-be buyers of US Treasury debt to 35% of any given auction, but by using primary dealers (who have to buy US Treasuries at auction) as a proxy, the Chinese government has purchased more Treasuries than originally thought."
How are we going to buy it back or pay them off? Simple answer is, I don't think we can. So what is the solution to move into a positive cash flow for this corporation? Maybe they are not allowed to, or anyone against that is so fond of their kickbacks, and cushy do nothing positions, that the mere thought of eliminating debt is here say, even though the CEO is trying to make a dent, is it not just another band-aid?
This is a major issue that is mostly being ignored in the alphabet media groups. It should be at the forefront of attention.
Let's put our minds together and come up with solutions, short of all out warfare.

Article Source: http://www.articlesbase.com/politics-articles/the-united-states-is-a-corporation-5016257.html

About the Author

I have one novel written and up on Kindle. I have written numerous short stories for my self.

 

Raising the debt ceiling is a problem for everyone

Author: Jack Simms

Over the last month or so we have been bombarded with calls to raise the debt ceiling, and the Democrats and Republicans both agree that we need to do this. Even the experts in the field are saying that the US defaulting on its loans, because of a failure to raise the debt ceiling, would prove catastrophic for our country and the world.

I have a different opinion on this of course and that is that raising the debt ceiling would prove far more disastrous for the country, than cutting it back and increasing our attention to cutting spending from the Federal Government. Since 2000 we have had a 14% increase in entitlement spending and Discretionary spending has increased 79% faster than inflation during that same time frame. Granted most of that 79% is due to increases in Defense spending and other domestic spending.

We have had other areas that have increased far faster than inflation during that time. Welfare, or anti-poverty, has increased 89%. Public education has increased 219%, veterans 107% and medicare expanded at 81%. These are from the last year that I could find and that was 2009. So all areas of Government have expanded over the last decade, as Obama and the Democrats ran up another 3.7 trillion dollars in debt in his first 28 months in office. Meaning that he just about doubled all areas of Government.

That is why I say that we cannot afford to raise the debt ceiling anymore. It gives the politicians a license to increase spending, instead of tackling the problem head on and finding real solutions for reducing our over all size of Government. As of today the Federal Government is 25% of our GDP, and that is higher than any other time in the last 60 years. In fact the only time we approached or eclipsed that rate of Federal spending was World War II. In the 1980's Reagan reached 23% with his increase in military spending.

We cannot afford this as a country, while spending is good for a consumer based economy. It is not good when one player has 25% of the market. It lessens the amount of businesses that employ people, which hurts the over all unemployment picture, and it artificially inflates incomes as the Government pays far too much for the same type of work that could be done in the private sector. Is it any wonder that for each job that they credit to the stimulus package cost the US tax payers over 200K for each and every job?

I urge all of us to write to our congress critters and tell them that we cannot afford to raise the debt ceiling anymore and that we need to get spending under control. We cannot afford it, and neither will our children be able to afford it. It is time that we sent a clear signal to our politicians that their days at over extending the countries credit card is over and we need to get serious about reducing our debt ceiling, not raising the debt ceiling because it is politically advantageous to do so with one group over another.

Article Source: http://www.articlesbase.com/politics-articles/raising-the-debt-ceiling-is-a-problem-for-everyone-5026276.html

About the Author

Jack Simms is a writer and commentator at Partisan Divide

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