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The Tax and Spend Spectator
Balance the Budget Now
America’s financial future won’t be in our hands for long.
In August of this year, Admiral Michael Mullen, chairman of the Joint Chiefs of Staff, advised Congress that “The National debt is the biggest threat to our national security.” In November, voter sentiment against the debt and deficit led to an historic rebuke of Congressional incumbents. In December, the President’s Debt Commission laid out in stark terms the imminent economic impact of continued deficit spending. Apparently rejecting these clarion calls, the President and Congress acted in the lame-duck session to cut not one dime of federal spending, while increasing the national debt by nearly $1 trillion. They are ignoring a glaring problem that, if not addressed soon, will cause a panoply of other problems.
Some insist that the problem with increasing the debt by nearly $1 trillion is that the borrowed money will be loaned to us by China. Concerning as it is that we have become the world’s largest debtor to a foreign sovereign whose interests are (to put it mildly) not always in harmony with our own, that’s not the biggest problem. What ought to be of even greater, more immediate concern is the fact that China will refuse to loan us the money.
From October 2009 to October 2010, we financed $734 billion of our $1.690 trillion deficit through loans from foreign entities. And while China remains our largest creditor, China actually reduced the amount of U.S. debt it holds by $32 billion over the last year — from $938 billion to $906 billion. Through its actions, China has indicated that it will no longer fund the U.S. government’s practice of perpetual deficit spending.
So if not China, then who? That’s the problem.
The largest increase in U.S. debt holdings over the past year was a near five-fold increase by the UK — from $108 billion to $477 billion — and a near three-fold increase by Canada — from $44 billion to $125 billion.
The reality is that the UK and Canada do not have another half-trillion dollars to loan the U.S. in 2011. According to the World Bank, the entire economic output of the UK and Canada combined is only about $3.5 trillion annually.
So if China won’t and the UK and Canada can’t, who is going to loan us a trillion dollars in the next 12 months? Nobody knows.
The economic threat from China and other foreign countries loaning us trillions of dollars is like falling off the Empire State Building. It isn’t the fall itself that kills you… it’s the sudden stop.
Commonwealth investors increased their U.S. holdings last year as they fled debt holdings in the Eurozone, nearly collapsing several EU government-bond markets derisively referred to as the PIIGS — Portugal, Italy, Ireland, Greece and Spain.
It is instructive to look to Europe to forecast what could happen to the U.S. Having been forced to find religion, every EU country is now embracing austerity. Our circumstances will soon convert us to the cause of fiscal fundamentalism as well.
One option would be to continue borrowing wildly, like the PIIGS, until the bond markets simply proclaim, “No more!” The ensuing lack of confidence hit the PIIGS economy, causing unemployment rates in those countries to double over the last three years to an average of 13.3%. (Spain’s unemployment is now over 20%).
The other option necessarily involves forcing Congress to live within its means by adopting a balanced budget amendment. Germany has benefitted substantially from taking a similar step two years ago. With a constitutional mandate to balance its budget by 2016, Germany now has an unemployment rate of 6.7% — its lowest in 18 years. Switzerland has long had a balanced budget requirement and currently enjoys a 4.4% unemployment rate, the lowest in Europe.
The need has never been greater for the U.S. to balance its budget by cutting spending. But as the President and Congress have once again shown, it simply will not take that difficult step unless it is forced to do so. For that reason, we need a balanced budget amendment — ideally one patterned after the amendment proposed by Pass the BBA (of which I am national chairman). It is calling on Congress to vote on the BBA on October 1, 2011 — the first day of the next fiscal year. We should all pray that it will not be too late.
Set aside for a moment the threat of the U.S. debt crippling our children decades from now or our grandchildren a generation from now. With China unwilling to loan the U.S. additional money, and the rest of the world likely unable to loan us enough money, the debt threatens to cripple our economy now.
We can either act to pass a balanced budget amendment this year — the only way to ensure Congress will act — or China and others will force upon us a more abrupt and painful balanced budget. The choice is ours… but not for long.
About the Author
Ken Blackwell, the former mayor of Cincinnati, Ohio is Vice Chairman of the Republican National Committee’s Platform Committee. He also serves on the boards of the Club For Growth and the National Taxpayers Union.
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PCC| 12.27.10 @ 6:52AM
Fine idea. Does Mr. Blackwell propose that we balance the budget in 2012? 2015? 2025?
Just asking.
danny| 12.27.10 @ 7:09AM
PCC, I believe the title of the column was Balance the budget NOW.
Mel Torme| 12.27.10 @ 10:27AM
That's not possible, Danny. If you take just the direct debt (not counting obligations that are promised, like Medicare, SS, gov't pensions in the future - BTW the promises will be broken), it is in the range of $13,000,000,000,000 (13 trillion bucks). Don't quote me on these exact numbers, as I am going by memory and rounding, but all the taxes paid by all US citizens and corporations are ~2.1 Trillion. That includes payroll (SS/MC) taxes too, as there is no "trust fund" and the money paid in there is just part of overall receipts.
So, with a budget of ZERO for all government programs, even the ones that are constitutional like Federal Courts and the Navy, Fedzilla still would need to collect the same amount of tax as now for 6 or 7 years to pay off the debt.
BUT, WAIT! That would be if all the money were in zero-interest loans. The Chinese, the Brits, the Japanese, and even the Canadians (sorry ;-) are not stupid enough to have loaned us money interest-free. The rates are exceptionally low right now, as forced by the FED, but figure even 1 % right now of $13,000,000,000,000 (though I'm sure it is more complicated than one rate). That's$ 130,000,000,000/yr, 130 billion bucks a year. So, you can take that off of the 2.1 Trillion bucks collected each year first thing, as if you don't pay the interest, the banks wants it's money back NOW, plus penalties. That gives you 1.96 Trillion to pay off the debt with if there were no government expenses at all.
You may think "that'll work, it'll just take 7 years instead of 6 to pay off the debt, if we had no Fed. government (we wish!)" WAIT! That assumes a low, low interest rate of 1 %. As an exercise for you, Danny, figure the payment plan out for a 5 % rate. OK.
(I will continue with another thought to add.)
Mel Torme| 12.27.10 @ 11:16AM
oops, my continuation - I almost forgot:
Now, you, say, OK, let's be reasonable, the best we could do is cut the Fed. Gov't spending by 1/3 ( any more than this and you will be cutting people's medicare and SS checks right now ). Well, since right now the government borrows more money to cover about 1/3 of it's expenditures (so, only 2/3 of the total expenditures come from receipts), then cutting 1/3 of that 2/3 (i.e., 2/9 = 22% of the expenditures), will not even have us even.
More than 1/3 of the Fedzilla budget must be cut in order to just break even, meaning the time to pay off the US Federal debt is either infinity or set by the book of Revelations, whichever comes first.
I hope that explains to you why the debt can't possibly be paid now. I don't say this, Danny, as an apologizer for the US government - I just mean to show you what kind of seriously bad shape we are in.
(Oh, I haven't gotten into Americans' personal debt and personal and commercial real estate yet - I don't want to depress you)
Mel Torme| 12.27.10 @ 11:18AM
oops, brainfart there - forget my 2/3 x 1/3 (22 %) part. The 1/3 cut would be 1/3 of budget, so yeah, we would need to cut the amount of the Fed budget equal to how much we borrow now to be even, OF COURSE (mad at myself for this silly mistake).
Ned| 12.27.10 @ 12:46PM
C'mon, Mel... are you intentionally being obtuse? The point of the article is "balance the budget NOW", NOT "pay off all our debt NOW"... those are obviously not the same thing. Yes, paying off our debt is part of a balanced budget program, but these are separate things.
Mel Torme| 12.27.10 @ 1:12PM
No, Ned, I guess I was being accidentally obtuse ;)
Really, I was thinking of the debt as a whole, and how that relates to any type of Constitutional Amendment to balance the budget.
I'm all for constraining the Fed. Gov't to only spend what it takes in - I still don't know how the debt would be paid, in that case. A balanced budget would indeed be a great step in the right direction, but, man, each yearly budget will continue to have a portion of it allocated to interest payments - the problem won't be seen as really, REALLY, serious until the interest rates rise.
Imagine a balanced budget of 2.5 trillion bucks a year, in which 50 % of expenditures are just interest payments. That would continue for all time, unless something additional is done besides just a balance of the yearly budget.
George True| 12.27.10 @ 1:28PM
If we could just get to that point of stasis, that would be a necessary first step in the right direction. Then we might have some breathing room while we figure out how we start paying the debt down so we are not paying 50% of the annual budget to interest on the debt forever.
One way might be for the government to form a partnership with the oil and gas companies to drill, baby, drill. The government allows the energy companies to make a handsome profit on getting the product out of the earth and into the market, while the government takes a percentage off the top because ultimately it 'owns' the raw product that is being drilled, pumped, refined, and sold. The proceeds from the government's take are used specifically and only to pay off the debt. Any other use is a criminal offense resulting in mandatory prison sentences for all government officials involved, whether elected or appointed.
Herb Tarlek| 12.27.10 @ 3:05PM
You guys are looking at this all wrong. The way the system works with fiat money requires debt to be issued. To take real resources out of the economy to pay off the debt is very deflationary & will kill any growth. As pointed out earlier it is mathematically impossible anyway. What happens in the end is either a frank default or a stealth default via inflation. Then we issue a new currency & start it all over again. This is how paper money works.
Mel Torme| 12.27.10 @ 3:08PM
Yep (on the defaulting/hyperinflation scenarios). If you are at all ahead in your finances, you'd better put it something that will hold value - not dollars.
Johnny Fever| 12.28.10 @ 7:22PM
You got it exactly right, Herb.
Bill Hussein O'Stalin| 12.27.10 @ 7:11AM
Congratulations! Your point is well taken, but who will take it up?
Soon-to-be Speaker of the House John Boehner has proclaimed that spending levels must be cut back to 2008 levels.
When you consider that federal tax receipts peaked at 2004 levels and are currently in a trough between 2000 and 2004 levels, the 2008 proposal appears to be another con from the politically elite inside the beltway.
The Fiscal Commission you mention laid out a dramatic scenario but that scenario was only laid out so they can justify further spending, not spending cuts. The Commission proposed many tax increases or other schemes to increase revenues and paid lip service to cutting spending. In fact, if the recommendations are carried out there will be further hard hits to the economy as citizens become further puzzled as to the long term safety of the personal economics as well as their investments.
There does not appear to be any real committment to cutting the size or responsibilities of the federal leviathan and that's the real problem.
Further artificiality can be found in the fact that the Fiscal Commission was made up of recycled political hacks who created many of the problems we face today.
The balanced budget concept is OK, but it would also make sense to cut spending 1 or 2% a year until unemployment falls below 5.9%.
It would also make sense to create a government review committee whose mission would be to review every agency and every employee to determine what is outdated and what is not.
Part of the problem is that once the government creates a bureaucracy, it never goes away but only gets larger.
The whole concept of federalism should be put under the microscope. Keep the best and get rid of the rest. And there's plenty of slack that can be cut.
Beer (f.m.h.)| 12.27.10 @ 7:46AM
Ok, I'm sold; let's balance the budget now.
So let's get specific. Where should we start cutting expenditures? How much should taxes be increased?
(This will be great fun to watch!)
George True| 12.27.10 @ 8:42AM
"how much should taxes be increased?"
Taxes should be CUT, not increased. It has been proven time and again that when you reduce taxes, this creates much more economic activity, which increases net receipts to the treasury. (This is illustrated most eloquently by the Laffer curve.) There should be an across the board flat tax of 10-15%, corporate taxes should be cut to 7%, and capital gains taxes cut in half. All by itself, this would probably solve the deficit between 2004 and 2008 revenue levels.
As for where to cut expenditures.....everywhere. Specifically, we need to take a hard look at agencies that do not produce what they are allegedly supposed to produce (ie -Energy and Education). Cut them waay back, as they are doing things (poorly) that somehow, amazingly, states and the private sector did prior to the 1970's.
We also need a comprehensive review of government salary and benefit packages, and scale them back to the equivalent of the private sector. We also need to repeal the ability of government employees to engage in collective bargaining (ie - government unions).
So there in just a few short paragraphs are a few good places to start that would produce very significant cuts that would be applauded by the majority of the electorate.
Bob the Engineer| 12.27.10 @ 10:23AM
Cutting spending is cutting taxes! As Milton Freidman said the total tax burden is not what the IRS collects but is what the government spends.
Luap Leiht| 12.28.10 @ 1:44PM
The only way to make this work is across the board cuts (include medicare, social security, and defense). Once you start debating specific programs (as wasteful as they may be), we get gridlock.
50% cuts would bring us to 2000 levels. I agree, however, that we can't do that all at once.
It took us 10 years to get to this point, I say 5% across the board cuts each year for the next 10 years.
Of course, that merely gets us back to a balanced budget. Then we need to work on the 40 years of debt the Boomers will have left us. Thanks guys...
logmank| 12.27.10 @ 7:46AM
Everyone points at the ruling class in Washington and calls them cowards for not having the political will to make the cuts necessary to rescue our economy and our way of life.
What I'm waiting to see is what will happen if they really do start making these cuts. I very strongly suspect that we will then find that the electorate ALSO lacks the political will to achieve the cuts necessary.
The howling, wailing and hysteria that will ensue when they start making ACTUAL cuts to the major programs that will have to be cut, namely Social Security, Medicare and Medicaid, will be heard all the way to the south pole. Without those cuts, everything else is window dressing.
Bill Hussein O'Stalin| 12.27.10 @ 8:00AM
That's really weak.
If they didn't or don't have the guts to do it, then they should not have run for office.
Welcome to namby pamby land.
George True| 12.27.10 @ 8:56AM
The majority of the people already know that these programs are actuarially unsound, and will go bankrupt if they are not reformed. I repeat, people KNOW this. People will not object to reasonable and well thought out reforms that will actually solve the problem long term.
What people are fed up with are politicians who demagogue the issue, and who smear anybody who even brings up the issue of reform.
Insurance companies are able to take annuity payments over 10, 20, 30 years, and when the account holder is ready to retire, pay out a guaranteed income for life. If the payee dies before the account balance is used up, their heirs inherit what is left.
The reason we are in the Social Insecurity mess is because instead of investing the account holder's money to earn a return, the government embezzled and spent all the money. (And they continue to do so today.) The first reform would be to get the Social Security system out of the hands of our Bernie Madoff government, and into the hands of private sector fiduciary institutions. All other things would follow from that.
pigletrios| 12.27.10 @ 1:23PM
Well one thing is for sure, start SOMEWHERE and do SOMETHING. Wisely taken small steps create the momentum to address the large steps.
Purpleguy| 12.27.10 @ 6:56PM
You can remove Social Security from your list. Social Security pays for itself, and, with minor adjustments, will continue to do so for decades. You are correct that Medicare and Medicaid are huge unfunded liabilities for the future and need to be addressed (pay for them or cut them back or a combination of raising revenue and trimming benefits). You can replace Social Security in your list with the Defense Budget, which is larger than the other industrialized countries, combined. While defense is vital, I agree with Ron Paul, the American Empire needs to spend it's money at home - and that is not to say slash the budget, but trim it back some over time, end the multiple wars in which we are engaged. If some countries want to help foot the bill for an American presence, then I'd be okay with that.
Looking at what the Deficit Commission came up with sounds pretty good to me, but I would extend it to 10 years for full implementation, to soften some aspects of the recommendations - which might make them palatable to legislators so they could something done.
A balanced budget amendment is dangerous and not really needed. But an amendment to remove private money from campaign financing and replace it with public financing would go a long way to changing lawmakers' focus back on the electorate, and not on the moneyhandlers and special interests.
lee| 1.2.11 @ 11:48AM
Hear hear! Finally someone with enough perspective to raise the Offense Budget as the key issue here. Defence I'm all for. The two Unfunded Wars of Choice? I don't think that Offense spending can be SLASHED fast enough personally.
Melvin| 12.27.10 @ 8:31AM
The problem with many politicians is that they envision themselves as the next President and are afraid of making hard unpopular decisions that would jeopardize the furthering of their careers.
None of the current politicians wants to be the one called the, "Dirty Bird."
There is two ways that we can do this people, embrace Paul Ryan's plan, not the most perfect, but the only plan that is feasible right now, or learn to like fish heads and rice and speak Mandarin.
Luap Leiht| 12.28.10 @ 1:47PM
There are a few that have some guts. Chris Christie, Rand Paul, Paul Ryan, Marco Rubio come to mind.
Basically, don't trust anyone over 50.
Louis Jenkins| 12.27.10 @ 8:46AM
Essentially we fiance the Chinese military machine by servicing our debt to that nation. I find it interesting that the Chinese have a nation such as ours building two militaries. Theirs and ours. The current crop of DC Dignitaries have few worthy candidates to lead this nation out of the sea of debt. But what is it going to be? Balancing the budget now or much too late(r).
Dave Perry| 12.27.10 @ 8:58AM
I love American Spectator, but there is nothing new in this article. The Chinese stopped buying our debt a long time ago, the Fed is now buying debt issued by the Treasury. The loop of the Chinese sending sneakers here and us sending bonds there is broken. When America finds out the Fed is the buyer of our stock and bond markets it will stop, and when it stops, social security checks, medicare, food stampsd armed forces, you name it-will stop also.
That is what we need to prepare for.
Tom Osterman| 12.27.10 @ 9:04AM
Think of Republicans as middle-management types who dress for success and were Senior class President. Think of the Democrats as the sorts of guys who want the power and aren't fussy about how they get it and know how. See the problem? Nancy Pelosi as minority leader should tell you what the Democrats' intentions are. Ask yourself if John Boehner is any kind of match for her.
Tom| 12.27.10 @ 9:35AM
I think China is the next great international challenge for America and the Western world. But how can anyone argue that a country with its stature and world wide trading presence has no threats credible enough to warrant an aircraft carrier group? China has the need to protect is sea lanes just as any other nation does.
Richard Baker| 12.27.10 @ 9:55AM
AMERICA, regardless of the party affiliation, and this includes the citizenry, decided this course of profligate action long ago. The country will either voluntarily fix itself or undergo a '30s style Depression and be forced to do so. In my lifetime, the starkness of the choices remaining couldn't be clearer. If we do it correctly, Hooray! If we do it incorrectly, which means the heavy, dead hand of government, then prepare for much worse than in the '30s. After all, Henry Morgenthau commented that all the New Deal "fixes" didn't work to end the Depression. Will we use our knowledge since then or effect the same, old tired solutions a la FDR? Only time will tell.
Whiterock| 12.27.10 @ 10:50AM
The Amendment must include a section to prohibit unfunded mandates, or the Feds will simply push high taxation to the State or Local levels.
Also, balancing does not provide for paying down the debt... but is a great first step. Can Dave Ramsey be in charge of the Treasury? When I hear those folks scream "we are debt free" I have hope for the future generations.
Lu Dumak| 12.27.10 @ 11:25AM
Start by getting rid of useless Departments. Education, energy, EPA, Commerce and get a far tax that would cut down the need for more agents. Also get rid of laws on Afirmative action and other racist laws. Every time we pass new laws we need to hire more lawyers and staff to oversee these laws. Obamacare alone needs over one hundred new agencies to over see these new rules and laws. What about the new FOOD bill that just passed. Go google the "Raisin Adminstrative Committee "for example. This a real committee to control raisins. It's sad but funny at the same time. This just the tip of the iceberg. Privatize Social Security and all other Government programs.
Al Adab| 12.27.10 @ 11:31AM
Yes. The time is now. Balance the budget It was for this purpose that the New Congress was called into being by the citizens. Not the same as paying off the debt. Deficit and debt are not synonymous, but do maintain a causal relationship.
Agency and department budgets can be pushed back to 2005 levels, sorry employees, and with taxes at a static level - BTW New Congress, revisit the tax bill and make these rates permanent- economic activity will begin to expand raising revenue above the 2005 expenditure levels. Eliminate agencies whose regulatory costs exceed their good (if any good at all) such as OSHA, DOE (both) EPA and so on. End industrial subsidies and reject district by district projects. In short, Stop the Spending. Again, it was for this purpose you were called into being.
As to the elimination of the debt, we can begin with payments on principle, redemption of bonds and sales or leases of federal lands including additional oil and gas leases, to that end alone.
Do not fail us new Congress, this is your only chance, and ours.
JimmyT| 12.27.10 @ 11:35AM
Ken, As much as I respect your opinion, do you really believe congress would actually follow a constitutional amendment? They already have a pay-go policy they don't follow. Until we have representatives in D.C. who understand they are supposed regulate in the best interest of the people, (and follow the constitution) amending the constitution would just be an exercise in futility.
davelnaf| 12.27.10 @ 12:00PM
To think that all of this in-hock-to-our-eyeballs spending was meant to bring about the Democratic Party’s Holy Grail: a VAT. Did the dems really believe they had the upper hand with the “You’ve-got-ME” Bamster in the White House? What has happened, and will continue to happen, to their political fortunes should serve as a lesson to people who would want to tamper with our democracy in any way. The dems wanted to turn Congress into their political Olympus so they could (even more capaciously) toy with us mortals. How the would-be gods have fallen. Thank God for the Tea Party.
Len| 12.27.10 @ 12:27PM
I'm sorry, but merely saying "balance the budget" is truly missing the point(s?). Get rid of salarymen (bureaucrats) by ending unneeded agencies that are also unconstitutional. Restore to the states their sovereignty as the 10th amendment makes clear is the way it is supposed to be.
AND MOST OF ALL!!! End the fed, which enables the government to spend profligately, by printing money for which there is no real backing, and is loaned(of all things) to the federal government. The federal government never had the authority to grant a monopoly privilege to the fed and it was supposed to be the issuer of specie (not best, but better than bankers profiting at our expense). The fed is a parasite that preys on the people and allows the wealthy to profit from us, as we the people become the actual backers of what they do. This is upward wealth redistribution, and it would behoove more conservatives to truly examine the fed and fractional banking so they understand what is being done to us by the wealthy, and it is not the free market when corporations and banks are allowed to do what they do.
Luap Leiht| 12.28.10 @ 1:50PM
I'd be happy if they could just pass an audit. Baby steps....
Maddox| 12.27.10 @ 12:47PM
Doing what is necessary would be political suicide for those who would have to be brave enough to do it. They are not and there are too many who have been brainwashed to believe they are entitle to what they want.
So....dream on. It is too late. America still exists in our hearts but will the facade is crumbling. We can prop it up for a while but it will fall. Maybe there is hope in re-building.
PattyMor| 12.27.10 @ 12:54PM
With the ramped up spending, cutting the budget will be hard work. Are the RepubuRats up to the job? I doubt it. As usual, I suspect, they will tinker at the edges, lest they offend anyone and take away their programs.
I counting on Ron Paul to really hold the Fed to account. I agree, that without the Fed printing money and now buying the bonds, the spending would have abated long ago.
Both sides will play the ostrich and pretend we are not careening out of control. Eventually the bond vigalantees (and probably led by George Soros) will demand a real market rate of interest. Then all H-ll will break loose.
But a balanced budget amendment is no panecea either. Many states have them, yet these unprincipled scoundrels keep spending anyway, "borrowing" to balance their budgets.
I think the only "real" solution is for the States to
convene a constitutional convention and rewite the contract; making the limitations on the federal government more explicit.
Then it is up to us to elect more principled people.
Hopeful? sure, but not a chinch.
Luap Leiht| 12.28.10 @ 1:52PM
Be careful what you wish for. A constitutional convention would be mana from heaven for progressives. Very dangerous and very easy to lose control of.
Peppermint Tea| 12.27.10 @ 12:55PM
Now? NOW!
Okay,
1. Bring the troops home from Afghanistan, and cut a third of the military budget.
2. Do away with DOE, EPA, Ag, HUD, Interior, etc. and those that remain are less than half.
3. Defund Obamacare. And unemployment insurance. There will be a large influx of unemployment from the above that we can't afford. Repeal minimum wage laws.
4. Make 20 percent Soc Security cuts. Look to shutting down the system. Ditto Medicare.
5. Take away home interest deduction, replace with medical deduction and then make medical insurance taxable.
Or just let double digit inflation have its effect.
George True| 12.27.10 @ 1:41PM
Some good ideas, but there is no need to tax medical insurance. Instead, make medical insurance 100% tax deductible for everyone, and gradually move everyone to a high deductible health plan with a Health Savings Account. With a full deduction, most people would have health insurance. And with consumers in charge of spending their own health care dollars, prices would become affordable in relatively short order.
Purpleguy| 12.27.10 @ 7:33PM
"And with consumers in charge of spending their own health care dollars, prices would become affordable in relatively short order." - that's just not true, but a nice talking point.
What happens is people go without healthcare because they can't afford it, and we'll go back to the days before insurance - in other words, we've been there, done that, and the public health suffers for it.
Had this country opted for Comprehensive healthcare early on instead of the for-profit insurance industry taking hold of our healthcare system, we would be a lot better shape now - as evidenced by the other countries that do have Comprehensive healthcare, like Germany, Japan, the UK and dozens of others.
You can call it Socialism if you like, but it's common sense to me. We gain a 20-30% reduction in expenses by removing the profit motive from healthcare. Obamacare doesn't actually do that, but it's a start.
George True| 12.27.10 @ 9:43PM
Yes, it IS true. Health care providers have one price for those with insurance and another price for cash customers. I know because I have been in that industry for over 20 years. The price for hernia surgery if you have insurance is between 12-15 thousand dollars. If you have no insurance and are paying cash, the price is 2800-$3500. For hemorrhoid surgery the price is about 8-10 thousand with insurance and $2500 if you are paying cash. Generally, if you are paying cash, and there is no third party payer, the price is 20-25% of what they bill insurance companies.
Also, until Obamacare screwed things up, there were very affordable individual health plans that would even cover just about any pre-existing condition. And if you could show proof of creditable coverage within the last 63 days there was no waiting period for treatment of pre-existing conditions. Otherwise there was a 12 month waiting period.
But you never heard about these because Pelosi and her minions pretended that they did not exist, because otherwise it would have screwed up their phony narrative.
The for-profit health insurance industry didn't "take hold" of anything. They were not the ones driving up costs, the health care PROVIDERS were. The insurance companies were just the ones stuck with paying the inflated bill.
There is NO reduction in expenses. OMB has said as much. And premiums have already gone up dramatically as a result of the loss ratios dictated by Obamacare that go into effect Jan 1st.
Yes, it IS socialism, and most of the national health care systems you mentioned are nightmares.
Also, the American people said in no uncertain terms and by an overwhelming percentage that they did not want this turkey. Eighty percent of the people said they were satisfied to very satisfied with their health coverage. But your socialist masters rammed it through anyway over the vehement objection of a clear majority of the electorate. The latest poll by the WaPo released yesterday says 60% want O-care repealed.
I predict that this turkey will be strangled in its crib, and rightfully so.
Purpleguy| 12.28.10 @ 12:48PM
"Health care providers have one price for those with insurance and another price for cash customers." - Correct.
"Generally, if you are paying cash, and there is no third party payer, the price is 20-25% of what they bill insurance companies." - Incorrect - any of us with insurance can check our Coordination of Benefits statements and see that Insurance Companies contract with providers for a substantial reduction (up to 90%) for services provided. Not so for the uninsured. In addition, you make no distinction between In-Network and Out-of-Network Provider charges. Why is that? The differences in charges here can also be substantial.
"And if you could show proof of creditable coverage within the last 63 days there was no waiting period for treatment of pre-existing conditions. Otherwise there was a 12 month waiting period." - Correct, but you realize that practice is in response to the HIPAA regulations that were passed during the Clinton Administration? The problem here was that women that became pregnant were being denied coverage, due to the "pre-existing" condition that insurance companies exercised. For pregnancy? Really? Abuses like that are removed with Obamacare.
"They were not the ones driving up costs, the health care PROVIDERS were. " - partially correct. It was contracturally settled charges between providers and insurers that allowed costs to rise. If a provider charged too much, they could be dropped from an insurance group. There were downward pressures on cost that insurance companies provided. When hospitals went for-profit is when costs skyrocketed and continue so ... for-profits have no choice but to continue to raise prices to chase profits to satisfy Wall street and their investors. Government stops that - Medicare is a good example here. Medicare authorizes only so much payment for reasonable and common care by a provider - negotiated by the way with hospital and physician organizations - not dictated by the government.
"There is NO reduction in expenses. " - Incorrect. The CBO, a non-partisan Congression Budget Office, has scored the Health Care Bill as saving over 1 Trillion dollars over 20 years. In my book, that's a considerable savings.
If Obamacare is socialism, then so is free enterprise, because the private insurance companies are still in control, regulated somewhat by the government, but they are still in the drivers seat. Creating insurance pools, state by state or nationwide makes sense to spread risk, as it the individual mandate to bring as many people into the pools as possible. Insurance costs are spread over the population of the insured. The more there are in the pool, the cheaper the costs will be. That's simple actuarial science.
"Eighty percent of the people said they were satisfied to very satisfied with their health coverage."- Correct. And, so they will keep what they have - So?
You forgot to mention that 72% of the public early on in Obama's Presidency were for the public option or single-payer (Medicare for all, basically). That is until the propagandists got going, and turned to "Death Panels" and other such misinformation.
And, don't forget that the Donut Hole for Seniors is being closed, college students and other young people up to age 26 can stay on their parents insurance now, while they get a start in life, insurance recision has been banned so no one will lose their insurance because they get sick, and dozens of other insurance reforms and improvements.
All in all, once you get past the hair-on-fire rhetoric from detractors, this is a good start on providing healthcare for all and reining in costs. Obviously, industry has failed us and the "invisible hand" needs a push from government. What we've been doing just keeps letting costs rise, so this is a way of trying something different to get different results. I applaud the Democrats for having the stones to pass it.
lee| 1.3.11 @ 2:36AM
"Yes, it IS socialism, and most of the national health care systems you mentioned are nightmares."
Wrong. Ever lived in one? I live in Australia and you pay for it if you can afford to, and get the basics (which are pretty damn good here) if you can't afford to pay, simple.
Your broad generalisations fool none but your political kin.
Mel Torme| 12.27.10 @ 12:58PM
"... the total tax burden is not what the IRS collects but is what the government spends." - Bob the Engineer.
That'd be true, Bob, if the Fed. Gov't had no debt. That's not the case, by any means.
At the super-low interest rate that the bond-holders (holders of notes on US Gov't debt) get right now, 1 % or less, it still takes a mid-1960's size entire budget amount of money to just pay off the interest on our current debt.
Let me do some arithmetic:
The gov't get revenue of ~ $2,100,000,000,000 = 2,100 Billion bucks. They spend over 3,100 B-$. Let's say we cut that whole trillion, 1,000 B-$ out. Well, first we've got to pay that debt interest - first let's assume the super-low rate.
We pay 0.01 x 13,000 B-S deficit = $130 Billion in interest. Then, we pay first for Medicare and SS and some other entitlement programs. These are LARGE amounts, > 1/2 of the CURRENT budget (so, much > 1/2 of a revised budget that had no deficit).
The bit remaining would be for defense and discretionary spending, meaning all the other thousands of 3 and 4 letter government agencies that we could do without.
Now, imagine the interest rate going back up to pretty normal, reasonable levels, like, say 6 %. In that case, the amount of money (out of our 2,100 B-$ revenue) needed to pay just the interest on current debt would be close to 800 B-$. The discretionary budget would probably go to zero, not necessarily a bad thing, and some of the entitlement checks would probably be cut.
Now, if we had interest rates of the late 1970's type, say 18 %, the whole entire amount of revenue collected would have to go straight to interest payments, with 0 remaining money.
That last would be like a family with 2 full-time wage-earners whose 2 after-tax salaries together could only pay the interest on their home added to their credit cards' interest (not even the "minimum payment", which is more than just interest). There is no money left for food, gasoline, natural gas/electricity, insurance or anything else.
As, the guy in "Oh Brother, where art Thou?" says "Boys, we're in a tight spot."
Bob the Engineer| 12.27.10 @ 4:53PM
Mel Torme, the fact that the feds run a deficit is exactly what Dr. Freidman meant. If the Federal government spends $3.5 trillion and only collects $2 trillion in tax receipts, then it gets the rest from the economy by competing for funds in the credit market. If the Feds print lots of new dollars, then they are taking value of people's savings by making their saved dollars worthless.
Mel Torme| 12.27.10 @ 5:49PM
I see what you mean, Bob (or what Mr. Friedman meant) - any part of the expenditures not paid for by direct taxation are paid for by the indirect taxation of inflation.
Thanks for the reply.
Who Knows?| 12.27.10 @ 1:05PM
Want proof we live in an illusory dream world?
Some people still seriously think about and promote such ideas like “balance the budget”.
“Words, words, words! I’m so sick of words!” Liza, My Fair Lady.
Whatever “balance the budget” means, let’s assume it does mean what we believe it does, to wit what each individual must do—or else!
When it comes to government, especially the Federal one, which basically has NO competition, the fact is it has the power to print money---that is, to take from makers.
NOW---do you really think it will ever, WILLINGLY, relinquish this heady ability? Hell, NO! The horses have long ago escaped through the barn door.
Furthermore, the absolute bottom line concerning the profligacy of the Feds with the money stolen from the producers of America, is what are the OPTIONS?
America’s situation closely resembles that of a bank that is facing a cash flow crisis, but is otherwise sound.
Remember, MONEY can’t be eaten, driven or breathed. That is, it is symbolic, but REAL things and activities STILL exist.
Land, buildings, moving vehicles, businesses, houses, etc, etc, etc, aren’t going anywhere---except when they are moving.
What is the net worth of America, anyway?
Remember that hoary cliché---ownership is 9/10ths of the law?
Contemplate the summed up total square feet of all abodes, from skyscrapers to shacks, say---and do this kind of real accounting for all other physical assets.
Now, who is USING these already built “things”? Americans!
Finally, recall how Japan tried to flex its financial muscle power by buying up property back a few years ago, like Pebble Beach. They lost their shirt.
In conclusion, despite the horrendous accounting “show” concerning the trillions of dollars of debt “drowning” us, and supposedly our kids and grandkids, want to bet that somehow America will keep on trucking along, and find a way to solve any “bankrupt” problems?
Also, those horrible images and memories of the 1930’s, while useful to scare straight politicians and other thieves of the 2010’s, don’t forget about the vast built up infrastructure that Americans have worked so hard to create, ever since then.
Besides, bankruptcy isn’t death, in America, but a way to be reborn
The BEST thing would be for a state like California, for example, to be able to declare bankruptcy so it could declare null and void all those rip off union contracts, and start over.
Somehow, folks will stop the taking madness, but not until a revolting mass of people become the majority, with which to remove the takers.
George True| 12.27.10 @ 1:45PM
"...but not until a revolting mass of people become the majority..."
Barack Obama: The peasants are revolting!
Michelle Obama: They certainly are.
Luap Leiht| 12.28.10 @ 1:57PM
Well, it's pretty sure Mrs. Obama wouldn't tell the peasants to eat cake. That might make them obese.
The Kidd | 12.27.10 @ 2:11PM
Who Knows-If u recall, Obama rewrote bankruptcy laws w/ GM. My thoughts on this massive problem is to defund the gov't as private citizens and business. If "we the people" are serious then the politicians get the message. Think of it as the reverse of Cloward & Pivens. "We the people" force the gov't to the table and not the other way around. After all, it is us who have allowed this happen and it will be us who demand it change. I've read countless books on this subject and have determined no one has the best idea! All I hear here is "cut this, cut that". We as a people have let our leaders determine our fate with no input from us but we take it.
Sheep!!!
Mel Torme| 12.27.10 @ 1:44PM
Who Knows? said "In conclusion, despite the horrendous accounting “show” concerning the trillions of dollars of debt “drowning” us, and supposedly our kids and grandkids, want to bet that somehow America will keep on trucking along, and find a way to solve any “bankrupt” problems?"
That was a very interesting post, Who Knows? I have thought about the same thing - who much is everything in America worth? You would be surprised to see how big a number our national debt ($13,000,000,000,000 or so, it may have changed a trillion or two since my last post!) is. Even when compared to the wealth of the entire US, it is still a significant amount.
Just as a really rough calculation, if you assumed 1/3 of our land area in the lower 48 could be usable farmland, that is 1 million square miles, or ~ 600 million acres. Multiply by $3000/acre, just a reasonable price and you get a coupla trillion dollars. That's about twice what our government owes the Chinese. Right now, the Chinese government could buy up 1/2 of the farmland in the US with what we owe. That'd be a whole lotta control we don't want. Money talks.
Sure, Americans did build up a lot of infrastructure (interstate highways, transmission lines, sewers, office buildings, etc.), but it is only worth something when being used or being sold. We are not doing enough with it under the current stranglehold of regulation and taxation. Otherwise, it all just costs money in maintenance.
I agree with you on the bankruptcy idea, especially re California. I think if America goes down for a while that'd be the best way. If that happens, I can see some serious tension internationally, especially with Asia. The Japanese own about as much or more of our bonds as China does. I personally would like the idea of our telling the rest of the world this:
Europe - we have saved your countries from Nazism, half of your countries from Communism, and defended those half against Communism for well nigh 65 years. We have rebuilt from scratch the country of Germany, as they didn't pay squat for their own defense. You can take those bonds and use them for heating or scratch papers. We are even, at least. If anything, you all still owe us! We're don't have the money to stop the Islamic invasion going on now - we are just done! Got it?
Japan - 100,000's of thousands of Americans died to defeat your nutcase emperor. Then we rebuilt your country from scratch. During that time and after, we have been defending the whole Pacific Ocean from aggressors, especially the Soviets. We don't owe you dick at this point. Take your bond paper, and use it to wrap your Sushi. Sayanorah, suckers!
Chinese - We helped defend the remaining SW part of your country from the Japanese. You would have no country if we hadn't. Remember the American Volunteer Group. We contained Communism in your part of the world. Even though you are Communist politically, if we had not done this, you would never had had the opportunity for the economic and business reforms that allowed free enterprise and made you all a manufacturing powerhouse. We have had an unfair trade set-up (imports welcome but exports unwelcome) for 15-20 years, and we have hardly any manufacturing left to show for this insane policy. We also built up your biggest trading partner, Taiwan, from nothing. Xie xie for the cheap Wal-Mart crap, but it's over! Zaizhan, 88.
Mel Torme| 12.27.10 @ 1:48PM
The most important thing we could say to all of the rest of the world when declaring bankruptcy:
LISTEN, PEOPLE: We, the American Federal Government, say the same thing to the world that we say to the American people. You should not have let us borrow money from us. You fucked up - you trusted us! I reckon y'all won't make the same mistake again.
Mel Torme| 12.27.10 @ 1:49PM
Owww.
WAS : "... money from us."
S/B : " ... money from you."
Who Knows?| 12.27.10 @ 2:21PM
Mel Torme---
Interesting expansion on the “accounting” truth.
I agree with you on your detailed look at who owes who what, wrt all those countries the USA has saved and protected through the years. Well done.
How do you put a dollar amount on ALL THAT, especially in lives lost, maimed and ruined?
Even though the USA debt may be something like $13,000,000,000,000 (13 trillion dollars), or around $30,000 per American, or so, I’m (TOO!) old enough to remember all the hue and alarm (remember “A Time For Truth”, by William Simon, from around 1980?) about the exact same kind of number problems, over 30 years ago.
So, I’m somewhat less worried about a “final” resolution of this, than I used to be.
As far as an honest dollar accounting of the sum of all the factors of production, I appreciate your digging deeper into the possible worth of American land. So, maybe it isn’t worth as much as I (hoped?) thought.
However, the free market---good old supply and demand curves intersecting---don’t lie: RELATIVELY. So, it REALLY does cost quite a bit more per square foot for office space in NYC than Klamath Falls, Oregon---for a reason.
Thus, I wonder what ALL the real estate is worth? Actually, I’m sure macroeconomics experts “know” this, already, but what I was hinting at was the market value of all the government assets.
Yes, it’s the old problem of cash basis accounting verses capital basis accounting.
I’d guess that while social security and Medicare, et al, expenditures are lost money, quite a bit of the military and even educational costs are really additions to America’s capital account.
Yes, as you write, there are M&R costs to keep up lots of old infrastructure, and it’s also what one does with what you have that counts, as well.
Take the famous example of Hong Kong, though. I’d say that its ability to create real wealth with little land exemplifies what a true accounting system SHOULD be about. Also, tiny Japan, such a small amount of land, and only around 100 million people, shows that it’s what HUMANS do that matters.
All the above said, though, perhaps what’s most hopeful about America’s exceptionalism is that, even still today, the economic system retains the ability to---adjust.
Just think of the rigidities hamstringing all our competitors!
From dictators to old world rules and customs, to the sad cases of Africa and the Middle East, still oh so encumbered by tribalism!
Hey, we aren’t even close to being in the bad old 70’s, let alone the 30’s.
Essentially, we seem to be in a big “pause” condition, soon enough to be back to the “play” norm.
Why, Islam is resolutely stuck on “rewind”, as it tries mightily to go back to 700 A.D.---what suicidal fools.
I don’t have the time or the interest to note all the other countries stuck in either the “pause” or the “rewind” state, but a quick scan of the map on my wall is enough to remind me that despite the unexceptional resident in the White House and all of his supporters, even as America slouches toward Gomorrah, it is STILL head and shoulders above the rest.
Peace and prosperity for all.
Mojo Risin| 12.27.10 @ 2:23PM
America has been on a downward spiral since early 2007, when the children took over congress, both houses. When the adults again regain some control is when the economy will start turning around.
Democrats don't have the slightest notion as to what needs to be done, with their idea that confiscation of taxes is somehow a viable method of growing an economy. Their wondering why business isn't hiring, all-the-while proposing job killing tax increases is proof positive why they need to be exiled and banished to life out of government...
Les Nesman| 12.27.10 @ 3:11PM
I date the spiral downward since 11 Sept 2001.
Mojo Risin| 12.27.10 @ 3:16PM
Yeah, that works too, although if you were involved in the stock market, early 07 is dubious...
JP| 12.27.10 @ 2:46PM
Oh the Dems would love to balance the budget NOW. They wanted to end the Bush Tax Cuts for all, impose higher consumption taxes on fuel, food, and luxury items. I imagine they would also love to increase the marginal rates to Pre-Reagan levels.
And if we chose to go the other way (ie cut all excess spending above the $2.5 trillion level)? That is a cut of $1.2 trillion. Most of it will have to come from a)Medicare, b)Medicaid, c)Social Security, and d)DOD. All other programs come to less than $800 billion combined. Things like freezing Federal pay, federal hiring freezes, shutting down the NEA, Public Broadcasting, Deptof Education, etc.. come to a pittance.
We would also trim about 10% off our GDP. So, unless all of those savings are returned to the private sector our nation will fall back into recession.
Mel Torme| 12.27.10 @ 2:58PM
Well, Who Knows?, I'll give you this - you are one optimistic guy (you too, Mojo). I think the financial situation is going to be worse than the 1930's, much less the 1970's (I actually liked the 70's; 'course, I wasn't trying to make a living. I won't wear polyester ever again, and I hated Disco (but compared to the Hip Hop Crap, it is actually pretty damn good!))
The deal is, that in the 1970's, the problems were reversible - the US still created much of the world's wealth back then, and the US Government budget deficits and budgets themselves were on a much smaller scale. Nowadays, what Fedzilla does is so much a part of our daily lives and ability to have a decent life, as it controls almost everything. We were basically a free country back in the 70's.
In the 1930's the financial health of the country was also much better (in the big picture view). Yes, it was a major down-cycle that was continually exacerbated by the Socialist Roosevelt administration for 10 more years. However, we didn't buy 80 % of our consumer goods from overseas - the US was pretty much self-sufficient back then.
I don't see any easy way out this time. In fact, I see no way out out all that doesn't involve either hyperinflation or default on the bonds - either way, your dollar-denominated money will become worthless. I think things could have been turned around financially, if there had been severe belt-tightening and massive destruction of the federal apparatus back in, say, 2000 or even 2005. It is too late now.
Mel Torme| 12.27.10 @ 3:06PM
BTW, Who Knows?, I read where you mentioned selling government assests. That is indeed a good idea, but I don't know how much it would cover. (Like you said, some macroeconomists probably do - though each one would have numbers off by an order of magnitude for the other ones ;-)
I would first like to see the Alcohol, Tobacco, and Firearms Bureau turned into the Big Box retail outlet that it should be - hell, I'd shop there daily. Then, I'd like to see the IRS building demolished and the rubble sold off for fill (yeah, probably not much profit there, but the youtube video would be priceless.)
The whitehouse and capital buildings could be taken apart and trucked out west, maybe to that museum that's got the Spruce Goose, out in McMinnville, OR.
Oh, then there's the BLM land and the ANWR oil fields, etc - there's the real $$. Oh, and Area 51. I'll bid on that one.
Lu D.| 12.27.10 @ 4:47PM
Every time someone talks about getting rid of all the useless unconstitutional agengies, someone has to say "thats just a pittance". Lets start with all the low hanging fruit. Get rid of the funding for AARP, Planned Parenthood(free abortions),NPR and grouops like Acorn. No more grants, subsidies and mandates. As Larry Arnn of Hillsdale Gollege stated, give the Federal land back to the States were it belongs and let the citizens decided what they ant to do with it. If we could open up the Lands that have gas, oil, lumber coal on it we could create jobs,jobs and more jobs that would help pay the bills. Build Nuclear plants.These nut cases(Salazar) keep stealing land from States. I would like to know if that is in the Constitution. We are fighting EVIL and to many stupid people don'nt have a clue. I have read so many books and articles about freedom, economics and history and see what is hapening to this Country because stupid people vote.
Luap Leiht| 12.28.10 @ 2:08PM
If it was such low hanging fruit, it would have been picked by now.
Across the board cuts (including defense, medicare, and social security) are the only way to make a dent.
Once we have done this and people have felt the pain of cuts, they will be more willing to throw the "low hanging fruits" under the bus rather than sacrifice further.
BackToBasics| 12.27.10 @ 11:27PM
I like economics but my studies and expereince has been in other sciences. So, I am not an expert although I can understand many of the concepts put forth by those who are. One article I found interesting had an explanation as to why we will never run out of those who want to purchase US governemnt debt.
In my own limited understanding I do not know what would happen to this man's economic analysis of the US dollar lost it's reserve currency status for example but I'll put a link to the site anyway. It's an intersting read about who buys bonds and why and why we will never run out of buyers of our bonds.
http://pragcap.com/the-myth-of-the-great-bond-bubble
Random Blowhard| 12.28.10 @ 6:08AM
The spending WILL continue, the spice MUST flow... until it does not. America is not a serious enterprise, congress operates on the mental level of children ( I want it now, I want it now, mwaaaaaa) and is deeply corrupt. When the currency crisis hits and Wall Street collapses again, America will enter the dark ages.
Luap Leiht| 12.28.10 @ 2:10PM
Hmmmm...I never thought of Nancy Pelosi as a Bene Gesserit, but it kind of fits.
BackToBasics| 12.28.10 @ 6:34PM
And since there are other countries and cultures beyond our "borders" we will be ripe for the picking or overripe. In any event we would be occupied by the Chinese, Moslems or Hispanics, maybe all 3 would take a piece and they'd grab Canada too while they were at it.
Jane Haddox| 12.28.10 @ 6:06PM
Really want to cut spending? Trim the number of people in the SS and Medicare offices. Get them to the lowest number of people needed to successfully operate. In other words, treat them as a company that wants to make a profit. The waste is found in the bureaucracy. Keep the people who do the job well and fire everyone else. Remind the people who are there that they can be fired as well. If we can get the entitlement programs running like a well-0iled machine (sorry for the cliche, but it fits!), we can cut the budget without cutting the entitlements.
Willy H| 12.28.10 @ 8:03PM
What about cutting our entitled military bureaucracy in half? What about closing half of our military bases outside the US (Pacific, Middle East and Europe)? What about demanding accountability from our defence industry in terms of perpetual costs overruns bilking the taxpayer for billions.
Military spending is elephant in the room that we continually ignore at our fiscal peril!
We spend more on defence than the rest of the world combined.
Willy H| 12.28.10 @ 7:44PM
The article would have been much more relevant about 5 years ago. Go ahead and slam the Obama administration for spending but don't forget they were attempting to ward off a depression-like economic collapse in bad economic times. Why did we lower taxes while waging two expensive wars under the previous administration? What have Americans sacrificed over the past 30 years in order to pay all these farm subsidies, military procurements and pork-barrel spending? The answer - absolutely nothing (except the behind the scenes plundering of their Social Security checks) - they simply kicked the national debt problem forward somehow believing we would just grow our way out of this mess with tax cuts!!!
What a wonderful gift we have handed the next generation. Just when we need to take bold action to preserve our planet and regain our economic advantage we custom fit our youth in a fiscal straight-jacket.
Imagine if Churchill had lowered taxes and encouraged wasteful consumption in the UK during WWII? We would all be speaking German as a second language.
Time for real sacrifice, not this low tax de-regulation crap that got us into this damned mess.
Mike B| 12.31.10 @ 4:11PM
Let's be realistic. We've been promised more things in the last forty years than we can or are willing to pay for. In a democracy (rep. republic) like ours it is almost impossible to take preemptive action to stop something before it becomes a crisis. The people in this country will not accept the pain necessary to turn this national financial problem around unless or until they are forced to. In our near future I am afraid that we are doomed to suffer a major financial crisis. The exact form is hard to predict but it won't be pretty and on the scale or bigger than the great depression in it's impact. Everyone should look at their current situation and try to get their house in order before it hits. America will recover from this and learn many valuable lessons for the future, but the process will be very painful. Good luck to all.
carol| 1.1.11 @ 6:47PM
the problem is not the ones that know it is the ones that don't know
Danram| 1.3.11 @ 3:37PM
The obtuse fools out there like Paul Krugman who blithely assure us that "Deficits don't matter." are a far bigger danger to the long-term welfare of the U.S. than Al-Qaeda ever was. The bond market will eventually impose fiscal discpiline on us if we can't summon up the courage and the wisdom to do it ourselves. The inescapable fact is that in order for investors to be willing to loan money, they have to be confident that they're eventually going to be paid back.
tkc| 1.6.11 @ 11:45AM
"So if China won't and the UK and Canada can't, who is going to loan us a trillion dollars in the next 12 months? Nobody knows."
I know. The Fed is buying US Treasuries.
tkc| 1.6.11 @ 11:56AM
"Data released by the Treasury Department on Wednesday morning indicated that with the Fed's $972 billion in Treasury holdings it has surpassed China's $906 billion in Treasury securities. And with more QE2 purchases on the horizon, the Fed lead over China in the U.S. paper race is likely to be extended. "
http://www.thestreet.com/story.....-debt.html