Chart: National Debt and the impending danger

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 05:35 | Posted in Measure 37 | 26 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Rupert in Springfield

    On the up side though, after spending the better part of a year on health care BO has sensed the public is a little wary about all the qwaaaazzzy spending he has been doing.

    Yep yep, sure sure, its all Bush 2’s fault. Big evil bad Bush 2.

    But that’s getting a little old, and people are becoming annoyingly aware it accomplishes nothing. The fact is the spending is occurring under BO and if the idea that we have to spend a lot of money to solve the excesses of Bush is a little hard to believe, the concept that the resulting deficits will ever be paid down and wont eat us alive is virtually impossible to swallow.

    BO confirms peoples fears with his cavalier attitude. At this stage in his presidency, there is not a person on the planet who is unaware that peoples main concern is the economy and spending. This has been the case for months. Yet only in recent days has this even seemed to register with BO. Is it because he is unaware? Not at all. The thought that he doesn’t have the poll numbers read to him daily if not hourly is laughable. For BO the priority was health care and the base of power it would establish for Democrats. The economy languishing was quite possibly helpful to that task, and that was its only relevancy to the administration.

    That’s fine, leadership is not doing whatever action polls highest. However BO’s occasional feints of concern about spending are really a little ludicrous. Every few weeks we will hear him say some mumble about cutting the deficit in half by the end of his term. No one believes that and if they do they know he means in half from his runaway spending. Its like your teenager going on a wild spring break with the credit card and the coming back and promising only to spend half as much the next time. The thought is nice, but it becomes pretty clear that spring break is the priority for the teenager, not the family finances.

    This view is cemented by recent policy blips from the White House such as the recent proposal for $20B in budget cuts. Sure its great to cut some spending, but if your company is going under, using cheaper staples instead of paper clips isn’t going to make payroll. This is a fundamental error the administration is making. Not in the effectiveness of cutting $20B but in their perception that people will regard it as significant.

    They are relying on the fact that no one has any concept of what a billion is, let alone a trillion. The White House is correct in this, people think they know, but none could readily give you the size of a cube of a trillion Hershey bars or a trillion grains of sand. However everyone knows a trillion is a thousand billion. So although no one knows what a trillion dollars actually is, they do know that cutting $20B is a tiny fraction of it.

    The fact is deserved or not, it was pretty easy to blame things on Bush 2. No one knows what a credit default swap is and few can tell you what AIG, Fmac or Fmae stand for. Most think Goldman Sachs is a partnership formed of the Fifth Avenue department store. When the criminals are nebulous and the crimes obscure, it’s not too hard to place the blame on whomever you want. However blame eventually runs out and solutions start to be called for. Confusion in the numbers is harder to establish and if BO thinks Americans will long be befuddled by a lot of zero’s he is quite wrong. If he wanted a little education on the matter, it is a stones throw away. His daughters are probably learning fractions. The speed of them telling him what fraction of one trillion his twenty billion cut represents should give him some idea of how much respect the American people will have for it.

  • eagle eye

    The big problem is the entitlement programs, as the blurb states — social security, medicaid, and medicare. Nobody in politics is talking about what to do about this. Without serious efforts to deal with them — either cut benefits, a lot, for many people, or raise taxes, a lot, for many people, or both — everything else is basically pocket change.

    I see the new Republican senator from Mass. wants to cut both income and payroll (entitlement) taxes by 15%. Without detailing the accompanying budget cuts, just as irresponsible as anything Obama is doing.

    • Rupert in Springfield

      >Nobody in politics is talking about what to do about this.

      Bush 2 talked about it quite a bit and seemed to really want to get a dialog going about what to do about it. He got crucified for even bringing the subject up. He then sent the comptroller general of the US on a nationwide tour for for quite a while, as I recall it went on for a year, to tell people about the entitlement issue. His candid talk about the matter represented quite an usual take on the matter from the usual pap we get from government.

      Both of these were pretty notable events so to say no one is talking about it is not really very correct.

      I do think you are right however. We have made cuts to SS, through advancement of the retirement age. I think SS should revert to the simple revenue program it originally was, set retirement age above life expectancy and run with the money. That was the plan as Roosevelt initiated it, we need to go back to that or scrap the thing.

      I would suggest doing the same locally, starting with PERS. Everyone of working age got their SS promise broken to them under TEFRA when I recall the retirement age was raised. I lost two years of benefits right there. I see no reason why a promise with PERS has to be kept. My policy is that if you didn’t realize government lies to you, then you probably are way too young to be near retirement anyway.

      >Without detailing the accompanying budget cuts, just as irresponsible as anything Obama is doing.

      Not in the least because for that to be true, one would be assuming that a cut in tax rates means lower revenues. That has never been shown to be the case and quite often the exact reverse is true.

      Example – Capitol Gains taxes. Cuts in those tend to result in higher revenues. BO knew this prior to the election but argued increasing those rates, even though it resulted in lower revenue was the right thing to do. Now he is rethinking that.

      Example – Reagan cut taxes and came close to doubling revenues in 8 years. Why? Well, because every economist will tell you increasing taxes dampens the economy. Cutting them grew the economy, more growth means more revenue even with a lower rate.

      Example – Garage sale. Price all your crappy used furniture at retail minus $10. How much money do you make? Price it at 50% of retail. Would you make more?

      This nonsense that tax cuts need to be viewed in terms of static projections, taking no account of the growth in the economy they tend to cause is one of the biggest fallacies out there. Why it persists is an absolute mystery.

      • eagle eye

        Sorry to break the news, but Social Security is not a legal, contractual obligation. PERS is.

        Bush talked a good game, with entitlements, as with so many other things, but what did he do? He vastly expanded the entitlement program with his prescription drug benefit. The financial crisis during his time discredited the idea of privatizing social security for a generation, at least.

        Tax cuts don’t come close to paying for themselves. The Reagan deficits didn’t really end until the end of the Clinton administration. Unfortunately, the U.S. is vastly weaker financially than it was then. We could afford it then, not now.

        No, if guys like Scott Brown want to impress me as more than Cosmo poseurs, they have to come up with a real plan.

        • Rupert in Springfield

          >Bush talked a good game, with entitlements, as with so many other things, but what did he do?

          My point was to the fact he did talk about it and did try to get a dialog going. Something you said no one did.

          You said:

          “Nobody in politics is talking about what to do about this. ”

          I simply said that was incorrect. Bush did talk about it. When he got his head handed to him for even bringing it up he sent the comptroller general out for a year to try and make people aware of the problem and the fact that entitlements would have to be cut.

          No one listened, but it was discussed famously and extensivly. That was my point.

          >Tax cuts don’t come close to paying for themselves.

          Well, that may be true somewhere, but obviously not according to the US Treasury. They have the history of revenue pretty clearly there and it shows the direct opposite of what you are saying.

          Where you are showing a fundamental misunderstanding is when you talk about deficits.

          The presence of a deficit allows no conclusion as to whether or not a tax cut increased revenue. Since you draw that conclusion you are making a very fundamental error. Revenues were almost twice as high when Reagan left office as when he came in.

          Makes the claim that tax cuts caused the deficit about as dead in the water as it gets. Unless you are talking to someone who has no knowledge of the revenue numbers for those years.

          >We could afford it then, not now.

          Good chestnut, but not really borne out by reality since we know from experience that some tax cuts almost always result in increased revenue. Your assumption, that tax cuts always result in decreased revenue is just factually wrong and not borne out by either empirical data or common experience.

          This is the case with capitol gains as I said earlier. Cuts in capital gains taxes are very dependable for increasing revenue. BO admitted to this during the primary debates and apparently now supports them.

          Basically what you are doing is using something called static projections. That a tax cut will always result in increased revenue because people wont change their behaviour. Likewise a tax cut will always result in decreased revenue for the same reason. In other words double the tax on cigarettes and you double revenues, forgetting people might give up smoking.

          Not even the CBO uses static forecasting for tax cuts or increases any more and they were some of the last holdouts. I’m surprised you are still going with this model, absolutely no one else does to my knowledge.

          >No, if guys like Scott Brown want to impress me as more than Cosmo poseurs, they have to come up with a real plan.

          Well, I doubt Scott Brown has as his priority impressing you or me. However his number one plan “If you vote for me I will vote against BO care” seemed to work pretty well. We got a massive new entitlement pretty much derailed, that saved an awful lot of money right there.

          WARNING >>>>>>< <<<<<< CRANIUM PIERCING LEVEL

          The statement – “some tax cuts almost always result in increased revenue.”

          Should not

          I repeat NOT

          That means not in terms of the negative sense of the word not in terms of tying a piece of rope, like with a k.

          Should *not* be taken to mean that I am saying the following

          “every tax cut will always result in increased revenue whenever it is tried”

          TO repeat – Me saying that some tax cuts are more dependable for revenue growth than others should not be taken to mean that any tax cut any time is always dependable for increasing revenue.

          END ACTION MESSAGE

          END DEAN GENERAL/SPECIFIC ACTION WARNING

          BREAK BREAK

          • eagle eye

            Without responding in detail, let me just suggest that when you read something like

            “Nobody in politics is talking about what to do about this. ”

            that you take cognizance of the present tense. Bush did indeed make a feeble, inept attempt, which of course he contradicted with his massive medicare increase (which did go through, unlike his social security ideas). But that was way back after the 2004 election. A long time ago now. I don’t hear Bush talking about much of anything these days.

        • Rupert in Springfield

          WARNING >>>>>>< <<<<<< CRANIUM PIERCING LEVEL

          The statement – “some tax cuts almost always result in increased revenue.”

          Should not

          I repeat NOT

          That means not in terms of the negative sense of the word not in terms of tying a piece of rope, like with a k.

          Should *not* be taken to mean that I am saying the following

          “every tax cut will always result in increased revenue whenever it is tried”

          TO repeat – Me saying that some tax cuts are more dependable for revenue growth than others should not be taken to mean that any tax cut any time is always dependable for increasing revenue.

          END ACTION MESSAGE

          END DEAN GENERAL/SPECIFIC ACTION WARNING

          BREAK BREAK

        • Rupert in Springfield

          THE FOLLOWING IS A DEAN *GENERAL EQUALS SPECIFIC ALERT* – ACTION STATIONS

          SET DEFCON 5 -> CRANIUM PIERCING LEVEL

          The statement – “some tax cuts almost always result in increased revenue.”

          Should not

          I repeat NOT

          That means not in terms of the negative sense of the word not in terms of tying a piece of rope, like with a k.

          Should *not* be taken to mean that I am saying the following

          “every tax cut will always result in increased revenue whenever it is tried”

          TO repeat – Me saying that some tax cuts are more dependable for revenue growth than others should not be taken to mean that any tax cut any time is always dependable for increasing revenue.

          END ACTION MESSAGE

          END DEAN GENERAL/SPECIFIC ACTION WARNING

          BREAK BREAK

  • valley p

    Assuming the veracity of the chart, which is a lot to assume on Catalyst, its interesting that the very high proportional debt accumulated after the depression and WW2 was paid down in subsequent decades, and that happened when our marginal income tax rates were at their highest ever, and unionization was also at its highest. How did we do that? Very high levels of productivity gain, spurred in large part by the GI Bill that educated a generation of engineers, architects,teachers, and others.

    If you read over to where we are on the debt to GDP chart today, it is well below where we were back then. It indicates that a massive investment in education, a return to higher top marginal tax rates, and an increase in either unionization or at least policies that boost wages (and thus consumption) could set off future productivity growth that would again pay down the debt.

    Tackling health care reform is a necessary prerequisite to getting the entitlement spending under control, because that is the greatest cause of its growth. But “conservatives” have instead chosen to fight against cuts in Medicare waste and freaked everyone out about non-existent “death panels.” And their approach to the current situation is to call for more tax cuts. Hardly conservative fiscally.

    Which is what Nobel prize winning economist Paul Krugman has been saying.

    • Rob DeHarpport

      Valley,
      You are partially correct. Although unionization was only due to huge increases in manufacturing and exportation of products, which was due to extracting our natural resources. Of which we comparitively do none of these days.
      A domestic based consumptive economy is the bubble that continues to burst, in my opinion we need to “make products for export again.” The problem is that our unions have priced us out of the world market in textiles, cars, steel, wood products etc. How do we clear these hurdles?
      Education, we have dropped exponentially in ranking amongst industrialized countries despite pouring appx. $10,000.00 per kid in k-12 per year. “Shift Happens.” We have been asleep at the wheel for the last 40-50 years, the rest of the world has caught up or surpassed us.
      Google; “Shift Happens.” You can see in this 6 minute video just how things actually have shifted. We have been passed in many aspects. More money in education is not the answer, school choice creates competition that will create better, more efficient schools.

      Thje other shift we need to make is less restrictive laws concerning extraction of resources, oil, minerals, wood etc. create domestic independence rather than dependance on other corrupt countries. We only have ourselves to blame, we keep electing so called “progressives.”
      One other intersting fact; Under the Reagan Administration, During the recession of the early 1980’s “Debt vs. GDP “maxed out at only appx. 25%. Of course we were not fighting in two wars either.

    • Rupert in Springfield

      >But “conservatives” have instead chosen to fight against cuts in Medicare waste and freaked everyone out about non-existent “death panels.” And their approach to the current situation is to call for more tax cuts. Hardly conservative fiscally.

      Well, Democrats tend to be the first to trot out – “he wants to kill seniors, he is going to pull the plug on granny” any time Republicans even glance at Medicare. So lets not get all misty about the purity of Democrats in trying to supposedly cut Medicare

      Let’s also cut the BS. The Medicare cuts were a complete accounting gimmick and unless you are a complete fool you know that as well because they were unspecified and left for a future congress to do. No one out there actually believed those cuts would ever happen and if you did, you have been sniffing the toner when you tear off the fax from the DNC every morning.

      If you want to get on your high horse about Democrats trying to cut entitlement spending, then you have a long way to go. Stop trying to crucify any Republican who even brings it up. Stop accounting gimmicks like unspecified Medicare cuts which no one in their right mind ever thought would happen.

      In other words, face it, whatever progress Clinton made in getting the big spender label less associated with the Democrats has been firmly rebranded in by BO Co. You guys are the Marlboro and Coke of big spending for the foreseeable future and no one out there believed you were ever going to cut Medicare spending.

      • valley p

        “We only have ourselves to blame, we keep electing so called “progressives.”

        Since when Rob? We just lived through 12 straight years of conservative Republicans ruling Congress, and 8 with a self-described conservative Republican president. Who are these “progressives” we keep electing?

        “unless you are a complete fool you know that as well because they were unspecified and left for a future congress to do.”

        Then why demagogue against the cuts if they are non-existent? Why the “keep your hands off my Medicare you gubmint varmint?”Why not say great…we are all for the cuts. They are necessary. Lets get busy.

        “In other words, face it, whatever progress Clinton made in getting the big spender label less associated with the Democrats has been firmly rebranded in by BO Co.”

        Do the math Rupert. The Bush math. The only increased spending under Obama is stimulus plus what was already in the pipeline under Bush. That’s it. It was Bush and a Republican congress that fought 2 wars on the credit card. And it was they who cut taxes during the wars. And it was they who passed Medicare Part D in the middle of the night twisting arms and granting favors with no funds to pay for it. And it was they who abandoned pay-go. And now it is they who refused to vote for a bi-partisan deficit commission, something Reagan did for SSI. And it is they who are calling for more tax cuts even while kevetching about the deficit.

        You can run but you can’t hide from history.

    • Taxpayer

      If that’s the case then I guess Obama should have included the Republicans in the crafting process in order to get a bill passed. Looks like his ineffective arrogance blew that chance.

    • Marvinlee

      “and unionization was also at its highest.” That is true only for the private sector. The public sector had very low unionization, and public policy is created and put into effect by members of the public sector. I attribute part of our dysfunctional government to the pressures of catering to the very strong public unions.

  • Ninja

    It sounds like Obama is requesting a record deficit of 1.6 trillion this year. If this trend continues he’ll break Bushs’ record over 8 years in only 3. Change we can count on my butt!

  • Steve Plunk

    The important lesson here is to realize that both Republicans and Democrats spend too much. It is government that is inherently interested in itself rather than the citizens. Throw in unions and we see government at critical mass, large enough to ignore citizens and continue on this destructive path that out children will inherit.

    If we are to have any hope the beast must be tamed and it will take backbone to get it done.

  • John in Oregon

    Hi eagle eye.

    I have noticed you ask about PERS several times. I think you deserve at least an attempt to answer.

    PERS is complex so my answer here is partial at best. First some history which is boring but necessary. The details are important.

    Originally state PERS benefits were tax free as dictated by the contract covering the employee compensation. Two court cases intervened. In the first federal retirees who benefits were taxed brought a case arguing unequal treatment of members of the same class. That class was retired government workers. In this case the court ruled that Federal and State workers were treated differently and that a contract may not violate the equal treatment provisions of the law. The tax free provisions of state PERS was struck down.

    Next state PERS retires brought a lawsuit arguing violation of contract. Here the court ruled that the state must adhere to the terms of the contract and provide compensation which did not violate equal treatment under the law.

    For the record I agree with the court rulings. The courts upheld the rule of law and upheld contract law. Its what happens next that goes off the rails.

    So now lets play fly on the wall at the next labor contract negotiation.

    State negotiator: Nothing will change for last year. In the new contract we would like to reduce the PERS obligation for next year.

    Union negotiator: You can’t do that. The court said you have to give us the same or more going forward.

    I have heard Republicans and Democrats both say that. I don’t believe the court made any such ruling about a contract that didn’t yet exist. However this clearly shows a negotiated accommodation is off the table.

    So to answer your question as best I can I see only two possibilities.

    The State of Oregon defaults. That is goes bankrupt.

    The other is only slightly less ugly. That would be to dissolve the PERS system, liquidate the assets and distribute the money to the beneficiaries.

    Your question is relevant to the debt theme of this post. We are starting to hear serious discussion that Japan will default on its sovereign debt. After “spending out of recession” Japan is left with huge debt and no growth to show.

    Japan has been able to paper over that debt because of the high personal savings rate. That’s changing as the Japanese population is aging and savings are being cashed in for retirement.

    Ambrose Evans-Pritchard: “2010 will prove to be the year that Japan flips from deflation to something very different: the beginnings of debt monetization by a terrified central bank that will ultimately spin out of control, perhaps crossing into hyperinflation by the middle of the decade.”

    At the very least the Japanese will also have to cash in their holdings of US Treasuries, currently $750bn or 10 percent of US Treasury debt. I have no idea how that will impact the US debt position. In any case it won’t be good.

  • eagle eye

    You offer two possibilities:

    1) The State of Oregon defaults. That is goes bankrupt.

    2) The other is only slightly less ugly. That would be to dissolve the PERS system, liquidate the assets and distribute the money to the beneficiaries.

    I doubt that (2) is legally possible, at least without (1).

    (1) would be very ugly indeed. What happens with bankruptcy? I don’t know in the case of a State of the United States, it has never happened. Generally in bankruptcy you sell your assets to meet your obligations. The state of Oregon has many assets to sell to meet its obligations — bonds, PERS, etc. Selling the roads, schools, parks, etc. would be very ugly indeed.

    I think other, less drastic ways will be found. I don’t claim to know what they will be.

    • John in Oregon

      Hi Eagle

      I think you are on firm ground to question the ability to dissolve the PERS system. My source on this was a discussion back the first time that PERS was going broke. The PERS board and system as a quasi governmental entity. A bit like Fannie Mae.

      A couple of legislators were discussing the problem. What I took away was this. The state contributes to retirement and in addition the state umbrella also covers the PERS board and investment system, essentially the retirement fund.

      What I understood was said is that Government (state and local) has the responsibility to compensate the retirement fund. It does not have the responsibility to operate the investment fund. Therefor the suggestion was that the State could dissolve the system. All money, savings, bonds, and investments would remain in the custody of the retirees and workers.

      There were no details. The point though is that the option was discussed seriously and is hanging out there as a possibility.

      • eagle eye

        There might be possibilities of various kinds, but I doubt that any possibility is viable that simply tries for the state to walk away from its obligations. There might be voluntary things that would have the effect of relieving the state of part of its obligation.

  • eagle eye

    Rep. Paul Ryan actually has some serious proposals to keep entitlement programs from going bankrupt. See

    http://article.nationalreview.com/423742/roadmap-to-solvency/paul-ryan

    Interestingly, he says elsewhere that he could work out a health care plan with our Sen. Wyden.

  • John in Oregon

    VP said >*[I]ts interesting that the very high proportional debt accumulated after the depression and WW2 was paid down in subsequent decades, and that happened when our marginal income tax rates were at their highest ever, and unionization was also at its highest. How did we do that? Very high levels of productivity gain, spurred in large part by the GI Bill that educated a generation of engineers, architects,teachers, and others.*

    The graph accurately presents publicly held US debt as a percent of gross domestic product. It doesn’t actually say anything about debt being paid down. Either an increase in GDP, a decrease in debt or both will show as a decline in the graph.

    To understand what happened during that period it’s necessary to understand the conditions during and after WW2.

    During WW2 all resources were channeled to building industrial capacity and war materials. Personal consumption was limited via rationing. The Recommended Daily Allowance (RDA) of vitamins and minerals was an adjunct of rationing. With few consumer goods people were encouraged to invest in “war bonds” to help the war effort.

    At the end of WW2 the US and Canadian industrial production capacity represented the only intact manufacturing capability world wide. At the end of the war plants built for war production switched to consumer goods and industrial production. Pent-up world wide demand resulted in high demand for products.

    WW2 technological developments were a source of new productivity and products. Tektronix is one local example. The manufacturing boom meant that war bonds were paid off which resulted in capitol funding for expansion of the private sector.

    All of these factors meant that the economy would grow almost in spite of any government roadblocks like tax rates. The GI bill did have an impact as new engineers began to join the work force in the mid 50s. Also keep in mind that following WW2, having just fought a war for freedom, the American people were in no mood to put up with government meddling.

    Moving forward in time on the graph we come to 1960. In that election the hot issues were Quemoy and matsu as well as the economic downturn. Its history that JFK won that election and pushed for the largest tax reduction in US history. Treasury revenue soared while LBJ chose to spend that money.

    VP you noted the debt from the Great Depression. The FDR administration quotes that we spent and spent and got nothing for it but debt are famous. 1934, was the first fiscal year in which Roosevelt and a Democrat congressional majority control of the federal budget. Between 1934 and 1941, the year the Japanese attacked Pearl Harbor, FDR never spent more than 12.0 percent of the GDP. FDR’s spending was:

    1934 10.7 percent of GDP
    1935 9.2 percent of GDP
    1936 10.5 percent of GDP
    1937 8.6 percent of GDP
    1938 7.7 percent of GDP
    1939 10.3 percent of GDP
    1940 9.8 percent of GDP
    1941 12.0 percent of GDP

    President Barack Obama

    2010 25.4 percent of GDP
    2011 25.1 percent of GDP
    2012 23.2 percent of GDP
    2013 22.8 percent of GDP
    2014 22.9 percent of GDP
    2015 22.9 percent of GDP

    • valley p

      Yes John…that was the critique of Roosevelt. That he did not spend nearly enough to close the gap of unused economic potential. That is what Keynes wrote about. That gap was not fully closed until WW2 spending, even thought the economy grew rapidly between 1933-1940. Just not rapidly enough to put tens of millions of unemployed back to work.

      We are in a similar place today. We have a lot of productive capacity that is unused. Obama is getting pressure to reduce spending, yet high government spending is the only way to put unused capacity, primarily labor, to productive work. That is what Krugman has been saying for over a year now.The economy is growing pretty well, but it will take 4-5 years of high growth to put 10 million back to work.

      The trap Obama is in is that Republicans are crying deficit to prevent him from higher deficit spending that would reduce the unemployment rate more quickly. This is their way back into power. Keeping people unemployed and blaming Obama. They don’t care who gets hurt. I’m hoping he does not fall for it but he seems to be lately with his “spending freeze” proposal. I’m hoping it is just a PR gimmick.

    • John in Oregon

      Keynes has worked in the past where?
      Others doing this are who?
      Indications this is working are what?
      This works how?
      Our debt will sell why?
      The stimulus worked when?

      When Obama spends endlessly
      The unemployed will work for who?
      The products they will create are what?
      Wealth will be created how?
      This will work why?

  • John in Oregon

    Hey eagle

    Thanks for the reminder on Ryan road map. A lot of it makes sense. The big question is will politicians do the right thing?

    Two items were in the news today.

    Today congress passed legislation to raise the debt ceiling from $12.3 Trillion to $14.3 Trillion. That got a ho hum yawn in the Legacy Media. That’s raising the debt ceiling by TWO Trillion Dollars!!!

    The second item mostly ignored by the Legacy Media was reported by Allan Sloan of Fortune. Its something I have been saying for the last 18 months. I said it would happen this year. Yes I know I was teased for being a pessimist. Sloan reported;

    “A report from the Congressional Budget Office shows that … Social Security is taking in less in taxes than it is spending on benefits… Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout… Now, years earlier than projected, Social Security is adding to the government’s borrowing needs,’

    If that isnt enough the Financial Times reports in an article titled *Moodys warns US of credit rating fears*. “Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.”

    Moody said “Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,”

    I know there is pressure to spend our way out. After eight centuries of financial folly This Time is Different:

    I have often considered what made Ronald Reagan the exceptional man he was. We talk a lot about his economic policy, star wars, all those things. I finally came down to this.

    Ronald Reagan believed in the American people.
    Ronald Reagan believed Americans can do anything.
    Ronald Reagan believed in the constitution and the wisdom of the founders.
    Ronald Reagan believed in American exceptionalism.
    But most of all Ronald Reagan unapologetically, unswervingly and unconditionally loved America.

  • It is a fascinating time to be alive; a bit like living in the declining days of the Roman empire.

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)