The arithmetic of federal financing is really pretty simple. It's much like any family budget and very much like the budgets of the states.

A family can't continue to spend more than it takes in for very long until no one will lend them any more to do so. If they have lived on credit cards, the credit card company will either lower their limit or cancel their card. If they stop making payments on their home mortgage or car loans, they'll be foreclosed on or the car will be repossessed. A family who places themselves in that position will be forced to dramatically change their spending habits.

Each of our states is similar except that they are prohibited by law from issuing debt that is not directly and legally tied to a revenue source, That is, states can issue revenue bonds ("munis") that depend on debt service or amortization from specific fees or taxes tied to the specific income or revnue-producing assets being financed. But they are prohibited from selling bonds or debt instruments to simply finance general state spending. They are also prohibited from filing for protection from a bankruptcy court.

Look at what's happening to several of our more debt-ridden states--New Jersey, California, New York, Florida. All have undertaken massive reductions to their state budgets in an effort to balance spending with tax revenues. New Jersey cut its budget by almost 10%, Florida's Governor has proposed an 11% spending cut, New York and California are in the throes of creating similar plans for spending cuts. New York city's Mayor has told the various employee unions to either agree to dramatic reductions in their pension benefits or he'll lay off 10,000 city workers. The New York Governor has said he'll do the same at the state level. Then there's Illinois, which didn't cut spending at all, but raised the state income tax by 67%!

In the not too distant future, our federal government will be forced to dramatically cut spending just as bankrupt families and the states are doing. The Congress will be forced to cut spending on defense, Social Security, Medicare and Medicaid, as well as a plethora of other programs--homeland security, education, medical research, the national parks, TSA, PBS, the highways, all kinds of regulatory agencies that we rely on, and on and on. It's only a matter of time. It's only simple arithmetic.

I know I'm probably preaching to the choir, but I wonder which of our political leaders, which of our political parties, will finally admit what so obviously needs to be done...and then begin to do it? Once that question is answered, another question might be...would the U.S. electorate then throw out all the cost-cutters who affected their lives so dramatically and elect another group who will resume runaway spending? That can happen in a democracy, of course.

Hmmm, I guess I'm asking...is the problem our elected representatives, or is it us?

All I can think of is:

When you rob Peter to pay Paul, you can be assured of Paul's vote.

their representatives EACH time they vote FOR additional spending without identifying where the money is coming from....and ask them why they voted for the bill without knowing where the money will come from....OR....how can we continue to approve more spending when we don't have the $$$$?

Our representatives KNOW, we the people, will never, ever make such an effort.
They count on having NOT to need to be accountable for their actions. They can count on the lemmings to re-elect them whether they perform to expectation or NOT.

The representatives know the silent majority will not take any such collaborative action.

Proof? Special interests get what they need/want because they do pursue them. We the people do not.

Until that changes......business as usual in Washington, the state level and even the local level.

No mystery at all.....yes it is pretty simple!!

btk

Originally Posted by djplong

All I can think of is:

You cite a great motto used by politicians for years !!

I never heard this one, but many have had, and as the late one on the block I will share.....

"Politics is Hollywood for ugly people"

Never heard of that motto or slogan before - but it fits!

Of course, you have to take a couple of the really good looking Congresspeople out of that equation - like Barbara Mikulski and John McCain.

We have become a lazy entitlement gobbling nation filled with little work ethic, or ethic of any kind really. We reward people for sitting on the backsides. Those are the votes that are being bought and the rest of us are too lazy to do something about it -- like say NO to these idiots in Washington!

Florida is currently tied with approximate a dozen other states with a AAA debt rating including the potential liability of a shortfall in Citizen's Property Insurance. While far from perfect, our legislatures and governors have acted with some sense of reality.

California and Illinois on the other hand have an A- rating. This link will provide a quick graphical overview. http://www.forbes.com/2010/01/20/sta...ctive-map.html

Roll your pointer over the various states to get a fuller picture. In all cases, the unfunded pension liabilities are the killer.