The U.S. won't default on Aug. 2nd

[Guest]

According to that "right wing rag", The Washington Post, The President is being somewhat disingenuous with his assertion that the government will default on Aug. 2nd without an increase in the debt ceiling. We actually have, at least, about another week; and maybe a month.

New reports show that the government has taken in more money than anticipated and has quite a bit of cash on hand. UBS estimates the government will have cash on hand until at least Aug. 8th, and Well Fargo and Barclays say the government should be able to pay it's bills through the month of August.

It can still upset the markets if the government doesn't have a new policy in place by the arbitrary Aug. 2nd date, but it will not be the whole "sky is falling" scenario we are being badgered to believe.

Even with new requirements for those posting U.S. Treasury Bonds, the market for U.S. Treasury Bonds is still expected to be good because with the state of the European economy the U.S. still has no rival as an investment opportunity according to the financial watchers.

So calm down out there, and take a breath. We don't need to throw the baby out with the bath water to make a sound deal to get this country back on an austerity track while protecting the freedoms of us all.

http://www.washingtonpost.com/business/economy/us-could-avoid-default-a-few-days-longer-new-reports-say/2011/07/25/gIQAUqocZI_story.html

[Guest]

I'm sorry but I will not believe this information unless it is confirmed by the NY Times, MSNBC, NBC, CBS or ABC. :D

[Guest]

According to that "right wing rag", The Washington Post, The President is being somewhat disingenuous with his assertion that the government will default on Aug. 2nd without an increase in the debt ceiling. We actually have, at least, about another week; and maybe a month.

New reports show that the government has taken in more money than anticipated and has quite a bit of cash on hand. UBS estimates the government will have cash on hand until at least Aug. 8th, and Well Fargo and Barclays say the government should be able to pay it's bills through the month of August.

It can still upset the markets if the government doesn't have a new policy in place by the arbitrary Aug. 2nd date, but it will not be the whole "sky is falling" scenario we are being badgered to believe.

Even with new requirements for those posting U.S. Treasury Bonds, the market for U.S. Treasury Bonds is still expected to be good because with the state of the European economy the U.S. still has no rival as an investment opportunity according to the financial watchers.

So calm down out there, and take a breath. We don't need to throw the baby out with the bath water to make a sound deal to get this country back on an austerity track while protecting the freedoms of us all.

http://www.washingtonpost.com/business/economy/us-could-avoid-default-a-few-days-longer-new-reports-say/2011/07/25/gIQAUqocZI_story.html

It won't happen because there aren't any members of Congress who can do without their fix of pork barrele spending. Its all show for more dough and a move that promised to put more people on the dole:cold:

[Guest]

According to that "right wing rag", The Washington Post, The President is being somewhat disingenuous with his assertion that the government will default on Aug. 2nd without an increase in the debt ceiling. We actually have, at least, about another week; and maybe a month.

New reports show that the government has taken in more money than anticipated and has quite a bit of cash on hand. UBS estimates the government will have cash on hand until at least Aug. 8th, and Well Fargo and Barclays say the government should be able to pay it's bills through the month of August.

It can still upset the markets if the government doesn't have a new policy in place by the arbitrary Aug. 2nd date, but it will not be the whole "sky is falling" scenario we are being badgered to believe.

Even with new requirements for those posting U.S. Treasury Bonds, the market for U.S. Treasury Bonds is still expected to be good because with the state of the European economy the U.S. still has no rival as an investment opportunity according to the financial watchers.

So calm down out there, and take a breath. We don't need to throw the baby out with the bath water to make a sound deal to get this country back on an austerity track while protecting the freedoms of us all.

http://www.washingtonpost.com/business/economy/us-could-avoid-default-a-few-days-longer-new-reports-say/2011/07/25/gIQAUqocZI_story.htmlGenerally, I tend to agree with your analysis Richie, as far as it goes.

Debt service will be the first thing the Treasury pays. And demand for our bonds will still be pretty good, only because almost every other economy in the world is more screwed up than ours. But we shouldn't forget that only about 15% of our bonds are purchased by foreign governments. The rest are purchased by banks, money market funds, mutual funds and individuals, pretty much in that order. If banks, money market funds and mutual funds are precluded from investing in anything less than AAA-rated securities, that would take them out of the pool of potential buyers as our debt rolls over and needs to be re-financed. That's a significant problem if our debt rating is dropped from AAA to AA as expected.

It's probably also worth noting that any slowdown in our economy resulting from reduced confidence in our government, reduced spending and the like, which results in lessened tax revenues will make the deficit problem and capped borrowing authority even worse.

But without an increase in the debt ceiling, there will still be some painful changes in government spending that we'll all notice. I won't go thru the convoluted arithmetic, but we're spending at a pace that will increase the deficit pretty dramatically, even over last year. In that we would be capped at about $14.3 trillion in borrowing, about 40% of the increases in deficit spending that would push total debt higher than $14.3 trillion couldn't be paid for. The spending would have to stop, programs stopped, federal employees laid off, etc. The only question will be what programs and what employees?

What we normally refer to as the federal budget are only the "discretionary" expenditures which amounts to 18% of our federal spending. Without amendments to the laws enabling the entitlement programs the entirety of spending cuts would have to come from those discretionary budget items. (How long do you think Congress will debate and negotiate cuts to Social Security and Medicare? Hah!) We'll have to cut discretionary federal spending to the tune of 40% of any of the deficit spending that would push total debt higher than $14.3 trillion. The amount of the deficit projected for the end of this fiscal year is $1.56 trillion. That would mean that this year's federal discretionary budget (about $3.9 trillion) would have to be cut by $624 billion, a 16% cut. To the extent that half the fiscal year is already half over with elevated spending, the cuts for the last half of the year would have to be even higher, maybe 20% or even more. We WILL notice the results.

Of course, with capped borrowing authority there will be no ability whatsoever for the Congress to authorize supplemental spending bills as they regularly do to fund budget shortfalls in Social Security, Medicare, Veteran's Administration, the U.S.P.S., Amtrak, Fannie Mae, Freddie Mac, and the like. And what would they do about the military? Would our withdrawal from foreign wars and even foreign bases be accelerated? We certainly can't afford the military expenditures we've made for the last decade or so.

Given the way our Congress has politicized almost everything they touch, it wouldn't surprise me if the programs and employees chosen as first to be cut would be the most noticeable and painful to the public. Those in control could try to make their point by demonstrating how much this dramatic conservatism will hurt. Could they close the national parks, museums, monuments? Lay off TSA employees and make air travel even more intolerable than it already is? Stop federally-funded local infrastructure projects in mid-shovel? Stop funding PBS? Shut down some of the more revered regulatory agencies, the FDA and the like?

There are all kinds of programs and employees that are better candidates for cost-cutting than those I've suggested, of course. Let's see how much further the politicians politicize this situation.

Do the right thing for the country? Are you kidding me?

[Guest]

http://www.youtube.com/watch?feature=player_embedded&v=dBoYYc1APr8

[Guest]

Clearly, there is going to be some cuts in the federal budget as the result of the current ongoing negotiations. But let's take the most aggressive scenario--the debt limit is not raised above $14.3 trillion. How many federal workers would lose their jobs as the result?

There were 2,748,978 civilian federal employees in the United States as of January 2009. This is according to the Federal Employment Statistics published by the U.S. Office of Personnel Management. There are currently about 3 million workers on the federal payroll.

In a post above, I projected that the cut to the discretionary budget resulting from not increasing the debt limit might approach 20%. For rough estimates, let's assume that federal spending is comprised of 75% personnel costs and 25% other expenses. So keeping the debt limit where it is suggests that there would have to be a 15% cut in the federal payroll. Somewhere around 450,000 federal workers would have to be permanently terminated within the next few months.

It seems to me that someone should be thinking about the impact on our economy of adding 450,000 people to the unemployment rolls. The number of unemployed persons as of June, 2011 was 14.1 million, an unemployment rate of 9.2 percent. Since March, the number of unemployed persons has increased by 545,000, and the unemployment rate has risen by 0.4 percentage point. Adding 450,000 federal workers to the unemployment rolls would increase the rate to over 10%.

What is more "unemployable" than a laid off federal worker? How many have the skills and motivation to be attractive to the private sector? Would they permanently become unemployed? Not spending or paying taxes? Sounds like something the folks who want to go from federal spending level A to lower level B overnight ought to think about.

[Guest]

I say that the lay off of the Federal employees would be great. If they are unemployable they should be learning new skills. If they are unemployable then their job is nothing more then high-paid welfare. The savings in wages and pensions would help stabilize future budgets?

[Guest]

What is more "unemployable" than a laid off federal worker? How many have the skills and motivation to be attractive to the private sector? Would they permanently become unemployed? Not spending or paying taxes? Sounds like something the folks who want to go from federal spending level A to lower level B overnight ought to think about.

Federal employees pay in taxes only a fraction of their costs in wages and benefits. Any serious attempt to get our deficit and debt under control will require significant cutbacks in US Government employment and careful scrutiny of the benefit programs with an eye to reduction of costs. This means ruthless priority setting and abandonment of many existing programs.

[Guest]

...Any serious attempt to get our deficit and debt under control will require significant cutbacks in US Government employment and careful scrutiny of the benefit programs with an eye to reduction of costs. This means ruthless priority setting and abandonment of many existing programs.Agreed wholeheartedly.

The only question is: do you want our dysfunctional Congress and wishy-washy President making quick decisions on what gets cut and what doesn't?

If we can't get rid of a lot of them, maybe our government will remain dysfunctional and it wouldn't make any difference whether they make these decisions quickly or after proper evaluation. If our government remains as polarized and ideologically-driven as it is now, I guess it wouldn't make much difference.

[Guest]

That is why you need businessmen running things, not professional politicians, community organizers, liberal college degree graduates etc.

This administration has the lowest percentage of private sector experience in history. Look it up if you don't believe me.

[Guest]

and weep:

http://blog.american.com/2009/11/help-wanted-no-private-sector-experience-required/


Yes, you read it right. 8% of Obama's administration has private sector experience. Make you feel real warm inside, huh?

[Guest]

Remember patriots...the world is watching...especially those who are not necessarily friends...http://english.aljazeera.net/news/americas/2011/04/20114197531***8743.html

[Guest]

Villagegolfer - I don't know what's worse. Those without private sector experience or those WITH it. Look at the FEMA director under Bush or the no-bid contracts for friends of Cheney.

It seems like you're damned if you do and damned if you don't.

[Guest]

Villagegolfer - I don't know what's worse. Those without private sector experience or those WITH it. Look at the FEMA director under Bush or the no-bid contracts for friends of Cheney.

It seems like you're damned if you do and damned if you don't.

Whenever something is directed at Obama, eventually Bush or Fema is brought up. Can't you come up with something different?

The fact of the matter is that only 8% of the Obama Administration has private sector experience. This is the bunch that has spent $3.6 trillion dollars in only 27 months!!!
Only people who never held a real job could spend money like a drunken sailor.

[Guest]

...spend money like a drunken sailor...Wasn't that how John McCain described the Republican-controlled Congresses during the Bush administration in a speech from the well of the Senate?

I don't think over-spending can be assigned to only one of our political parties. They're all drunken sailors. Look at the record.

[Guest]

...The fact of the matter is that only 8% of the Obama Administration has private sector experience....No question that previous administrations had more appointees from the private sector.

But go back and restudy what the result was. Deficit spending and the growth of the national debt was rampant during those Congresses and under that administration. Then remember what happened to some of the key appointees. Several of them in key roles quit after only a couple of years when they found out that their input wasn't being considered in the formulation of domestic fiscal policy by the POTUS and VPOTUS.

Remember Paul O'Neill, Bush's first Treasury Secretary? He quit and was replaced by John Snow, who also quit and was replaced by Henry Paulson. All three had extensive private sector experience but found that much of the fiscal policy was being dictated by the POTUS and VPOTUS who...surprise... neither of whom very much private sector experience in their careers. Read the book The Price Of Loyalty by Paul O'Neill to see how much solid private sector experience helps.

If solid, experienced private sector advisors aren't listened to, what good is it to have appointed them in the first place? Go back and read the history.

[Guest]

No question that previous administrations had more appointees from the private sector.

But go back and restudy what the result was. Deficit spending and the growth of the national debt was rampant during those Congresses and under that administration. Then remember what happened to some of the key appointees. Several of them in key roles quit after only a couple of years when they found out that their input wasn't being considered in the formulation of domestic fiscal policy by the POTUS and VPOTUS.

Remember Paul O'Neill, Bush's first Treasury Secretary? He quit and was replaced by John Snow, who also quit and was replaced by Henry Paulson. All three had extensive private sector experience but found that much of the fiscal policy was being dictated by the POTUS and VPOTUS who...surprise... neither of whom very much private sector experience in their careers. Read the book The Price Of Loyalty by Paul O'Neill to see how much solid private sector experience helps.

If solid, experienced private sector advisors aren't listened to, what good is it to have appointed them in the first place? Go back and read the history.
Still, 8%. There is hardly any private sector to listen to. This administration has no plans what so ever.

[Guest]

You keep puching that "8%" number when there's no evidence showing a causal link (these days) between raising that number and results.

Remember. Corporations these days are run FOR THE SHAREHOLDERS. That is their NUMBER ONE loyalty.

Put someone from the private sector in charge and you can expect them to behave in a manner that will benefit HIS owners (read: campaign contributors).

Again, read what I wrote - damned if you do and damned if you don't. It's like nobody knows what "the happy medium" would feel like if it came up and BIT them in thigh!

[Guest]

You keep puching that "8%" number when there's no evidence showing a causal link (these days) between raising that number and results.

Remember. Corporations these days are run FOR THE SHAREHOLDERS. That is their NUMBER ONE loyalty.

Put someone from the private sector in charge and you can expect them to behave in a manner that will benefit HIS owners (read: campaign contributors).

Again, read what I wrote - damned if you do and damned if you don't. It's like nobody knows what "the happy medium" would feel like if it came up and BIT them in thigh!

Yes, it is 8%. When you stock your administration with Ivy league idealists and socialists, you only get the prospective of left-leaning progressive people who do not know anything about real monetary obligations. Social engineering is their forte.

[Guest]

The fact of the matter is that only 8% of the Obama Administration has private sector experience. This is the bunch that has spent $3.6 trillion dollars in only 27 months!!!
Only people who never held a real job could spend money like a drunken sailor.

Hey!!; why insult drunken sailors? At least drunken sailors spend THEIR OWN MONEY!!:)

[Guest]

Hey!!; why insult drunken sailors? At least drunken sailors spend THEIR OWN MONEY!!:)

Yes, that is a quote from Ronald Reagan. Speak of drunks, I still remember Reagan given speeches with Tip O'neal making stupid expression in the background. LOL