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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

About the Author

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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.

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

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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