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Author Topic: US Debt Limit To Be Hit  (Read 9518 times)

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Offline AsurasTopic starter

US Debt Limit To Be Hit
« on: April 21, 2011, 01:23:48 AM »
Timothy Geithner, US Treasury Secretary (D) - ABC News

Quote from: Timothy Geithner, US Treasury Secretary (D)
The Obama administration has warned lawmakers that they must raise the country’s current debt limit of $14.29 trillion before May 16 or risk “catastrophic” consequences, according to Treasury Secretary Tim Geithner. In fact, Geithner said Tuesday, the consequences of default would make the recent financial crisis appear “modest in comparison.”

“The consequences of that would be catastrophic to the United States,” Geithner told a Senate Appropriations subcommittee. “Default by the United States would precipitate a crisis worse than the one we just went through. I think it would make the crisis we went through look modest in comparison. It would force us of course to cut critical payments to our seniors and it would be a reckless, irresponsible act to this country. I find it inconceivable that the Congress would not act to increase the limit.”

Jim DeMint, Senator South Carolina (R) - Fox News

Quote from: Jim DeMint, Senator South Carolina (R)
Throwing down the gauntlet, Republican Sen. Jim DeMint threatened Monday to block a vote in Congress on raising the U.S. debt ceiling unless he wins a balanced-budget amendment to the Constitution.

"I will oppose any attempt to vote to raise the limit on our $14 trillion debt until Congress passes the balanced-budget amendment," the South Carolina conservative said.

The American Public - Huffington Post

Quote from: The American Public
A new poll released on Wednesday found that most Americans oppose an increase in the debt ceiling, but at the same time support few potential cuts in the federal budget.

The Ipsos/Reuters poll found that 71% of those surveyed oppose increasing the debt limit. This was true even of the half sample who were told that "not raising the debt limit would damage the US' sovereign debt rating, which is like our credit rating: it would seriously damage our credibility abroad, would make it much more difficult for us to borrow in the future, and would likely push up interest rates."

Congress doesn't have a debt limit. They can say they want to spend $5 trillion, $10 trillion, $15 trillion whenever they like.

The debt limit is on the Treasury, which has to actually find the $5 trillion, $10 trillion, $15 trillion that Congress legislates. If Congress says they want to spend $5 trillion, but the debt limit only lets Treasury borrow $1 trillion...this creates an issue.

If the debt limit were to be hit, the Treasury would no longer be able to borrow. It wouldn't be able to fund government spending, Social Security, Medicare, defense. Or pay off the debt we currently owe.

In other words, the government would go bankrupt -- not because no one is willing to lend to us (everyone wants to), but because the Treasury isn't allowed on a technicality to borrow any more.

Now if you remember what happened when some subprime loans and a bank called Lehman Brothers went belly-up (i.e, the greatest economic disaster since the Great Depression), you can imagine what would happen if the United States, the world's largest debtor and one of the most reliable, went bankrupt. It would be the greatest and most catastrophic financial crisis in the history of the world. We're talking Mad Max.

Now, fortunately, the Senator from South Carolina is probably talking out of his ass about filibustering the global economy into ruin. Congress will probably play brinksmanship with this for a few weeks before wiser heads prevail (as has happened in the past, surprisingly enough). On the other hand, obviously no one likes the fact that we have to raise our credit card limit every few years because we're spending ourselves out of control. The depressing thing is that they're actually playing chicken over it.

Online AndyZ

Re: US Debt Limit To Be Hit
« Reply #1 on: April 21, 2011, 01:52:57 AM »
I'm not overly educated on all this, but I like the idea that people want to actually work on fixing this instead of just kicking the pail down the road a few feet and leaving it for someone else to pay for it.  It seems to me like that both Democrats and Republicans have been doing that for far too long.

Could you tell me some about the balanced budget amendment that was mentioned before?

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #2 on: April 21, 2011, 02:19:14 AM »
Hate to say it.. it is simple..

Pass legislation to make it profitable for companies to bring jobs back.. (GASP Protectionism.. of course it's not that when Europe/China/Japan/Korea does it)

RAISE TAXES/CUT TAX RATES/REFORM THE TAX CODE TO CUT THE LOOP HOLES.
Supposedly the US has the HIGHEST corporate tax rate in the world.. one of the PRIME excuses the corps use to outsource our jobs...BUT folks like GE have paid as little as NOTHING due to loopholes while receiving some very BIG paybacks.

Seriously, reform the tax code before we have to sell our granddaughters to China (cause at the rate they're going they'll need women in 20 to 30 years).

Sarcasm aside..we need to really REFORM the tax code. BADLY.

Trade Protectionism/Growth wouldn't hurt either.

Offline AsurasTopic starter

Re: US Debt Limit To Be Hit
« Reply #3 on: April 21, 2011, 03:35:29 AM »
I may have been unclear:

The Republicans are threatening to bankrupt the United States by June if the Democrats don't agree to their terms.

My main argument is that no party should threaten to bankrupt the country for political gain.

Nevertheless, there is validity to what the Republicans want, which is fiscal responsibility. However, it's easy for the party that's not in office to demand fiscal responsibility.

Quote from: AndyZ
I'm not overly educated on all this, but I like the idea that people want to actually work on fixing this instead of just kicking the pail down the road a few feet and leaving it for someone else to pay for it.

Everyone cares about it. Nobody wants debt.

The problem is how. It takes raising taxes. It takes major cuts in people getting health care. Major cuts in people getting social security that people need to stay out of poverty.

The poll I pointed out said this. Everyone's for a balanced budget. But everyone's also for medicare and social security. Congress is also for all of these things but, well, there's a contradiction.

And that is why Congress kicks the pail down the road.

Quote from: AndyZ
Could you tell me some about the balanced budget amendment that was mentioned before?

The amendment would say that the government can't spend more than it takes in taxes basically.

This sounds like a good idea, but:

A) We need to wean ourselves off the high deficits we have now
B) There are times when deficits (and surpluses) are good.
C) A moderate level of government debt is good for the economy in general.

Quote from: Callie del Noire
Pass legislation to make it profitable for companies to bring jobs back.. (GASP Protectionism.. of course it's not that when Europe/China/Japan/Korea does it)

What happens if an American employee making your kid's action figure makes $30,000 a year, while a Chinese employee makes $10,000 a year?

Well, go to the toy store and imagine all the prices being three times as much. Extend this concept to everything.

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #4 on: April 21, 2011, 05:15:05 AM »
Raising taxes on corporations that have to produce their product here and are already turning massive profits wouldn't hurt anything.  However, corporations which don't have to do produce here and can easily relocate will do so if it makes good economic sense.  If you pass protectionist laws in order to try and keep them here even after you screw you them, you'd have to use dramatic enough measures to balance out the difference in labor cost.  This will raise prices.  Lets do the actual math.

Right now John Q Worker in China is paid the equivalent of $1.50 an hour to produce widgets.  Lets say it then costs $1 to import the final product and that the dollar spent goes entirely to foreign countries (which isn't realistic, consider that the import process requires American workers manning import facilities plus the vehicles could be American manufactured, etc.).  That means it costs $2.50 to produce these widgets in a foreign country, and lets say he makes about 50 of them in an hour.  Raw materials probably only cost something like $.50, so that means the cost of each is a messily $.06 to produce and ship to America.  Then there's advertising, logistics, the final product needs to make it to the retailer, the retailer needs a mark up to make a profit of their own, and the business itself has overhead and tax to pay.  All of those costs are going to scale to the actual cost of producing and shipping, so lets say that in the end in order to be profitable retailers need to make 4x that number (which is a fairly solid number, for example, publishers/developers of video games get $15 of every $60 sale).  That means the American consumer is going to pay about a quarter for each of these objects.  Not too bad, huh?  Lets do the math again with an American worker.

At the bare minimum the American worker is going to make $7.25, and if they unionize as a lot of people on this forum support, it's going to be a lot more.  It probably isn't even close to realistic to assume that any factory worker is going to make $7.25 in America, but I want to come up with a baseline estimate.  Raw materials will probably cost more to purchase here, but again, lets give America as much leeway as possible and assume $.50 for them too.  Does a worker in America making minimum wage have the same productivity level as a Chinese worker being paid $1.50 an hour?  Nope, but we'll be nice and assume the answer is yes.  There's no import cost, so that's something.  $7.75 at 50 an hour is about $.16 to produce in America.  In the end your product is going to cost about $.65 per item, and that's a generous estimate (in reality it'll be much more because there's so many other places where the cost of labor is going to hit you, not just the first laborer who produces the item, such as quality control).  But by having that item produced in America, you've nearly tripled its price.

Is it worth it to triple the price of a whole slew of basic items with protectionism so that a few people can earn $7.25 an hour?  Sure, that $7.25 an hour is gonna be leveraged over a few times as it travels through the economy, but I don't see how it'll bring about an employment renaissance.

Moves like these really only help the uneducated and unskilled, and there's no real lack of positions available for those workers as is.  These measures would raise the cost of living for everyone though.  This isn't even necessary; are plenty of minimum wage jobs that are hiring, but the unemployed aren't looking for minimum wage jobs because they don't offer what people need to live the standard of living they're accustomed to (not that I blame them for this sentiment).

The thing is, when you're already making profits hand over fist, businesses are more than happy to share the wealth with their country.  It wouldn't have been easy, but it's been possible to export labor since the Great Depression.  A global economy was emerging then, and overproduction on all sides is part of what caused the crisis.  Protectionist laws were passed as a reaction to that overprotection and global economy, which is in part what actually caused the Great Depression.

The answers to our problems usually have a lot of nuance, and that's one of our biggest challenges.  More often than not, Americans want solutions pitched as bumper stickers.  "Ending the tax breaks that send jobs over seas" for example -- does anyone really think that there is a law aimed specifically at giving a tax break to companies that send jobs overseas?  That is so clearly an unintended consequence of another law, and the difficulty there is not throwing the baby out with the bathwater.

We live in complicated times, especially so economically, and the only sane thing to do is look back and ask what worked and what didn't work.  Protectionism has never worked in a global economy.  Innovation always does.  We've raised the debt ceiling before without the sky falling, and you have to remember to adjust the debt that your country is facing according to inflation and its ability to pay it off -- GDP.  Are things really as bad as they look?  No, not at all.  But there's pointless fear and alarmism in masses right now over the debt.  It isn't that the debt couldn't be a potential problem, it's that people don't even understand why they're afraid.  They don't understand how the debt becomes a problem exactly and they don't have a rational outlook on how to cut it.

Everyone wants fiscal responsibility, but who is stepping up to say "cut my government services" in order to get it?  No one, not a single group.  Each political segments wants the government to pull the entire sum out of everyone else's state-sponsored pie, and that isn't how sacrifice works.  Everyone has to be willing to give some and feel the burn, from senior citizens through social security and college kids through grants and loans, if we're going to get out of this mess.

I really don't see this happening.  For one, the person who asks the country to truly sacrifice is basically committing political suicide.  Obama does it and he can kiss his second term goodbye, and whoever gets into office will be elected on undoing anything he does for his constituency -- then it'll just be a matter of who's back we'll ride on to get the cuts necessary (SPOILER ALERT:  it's going to be the poor, Republicans will slash aid to the poor).

Offline RubySlippers

Re: US Debt Limit To Be Hit
« Reply #5 on: April 21, 2011, 07:16:19 AM »
I have a simple idea run up our debt until no one will lend to us and then tel them to screw themselves, ration here as we move into a major oil producing nation to take over with a tactical nuclear capability ready to go there and then let the world go to hell.

What are our creditors and the world going to do invade us with our nuclear capability and military now all back home save to protect our oil source nation? World court ok they might win but then they have to enforce the ruling good luck? Security council resolution which we can just override as needed is not an option?

As long as out people are fed, clothed, housed, given health care and have some sort of in nation currency to earn most will be happy enough since most Americans will not make waves. Then just wait the crisis out. And people here wanted us to go to alternative energy this would be a good reason to and under a we have no other choice position.

Well it is an option nobody brought up yet.

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #6 on: April 21, 2011, 07:29:53 AM »
I have a simple idea run up our debt until no one will lend to us and then tel them to screw themselves, ration here as we move into a major oil producing nation to take over with a tactical nuclear capability ready to go there and then let the world go to hell.
Okay, aside from the practical problems with this, you're basically saying we should steal from as many people as possible then through use of force tell our creditors we aren't paying them back the money we took.

That's horrifically immoral.

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #7 on: April 21, 2011, 09:12:59 AM »
I have a simple idea run up our debt until no one will lend to us and then tel them to screw themselves, ration here as we move into a major oil producing nation to take over with a tactical nuclear capability ready to go there and then let the world go to hell.

What are our creditors and the world going to do invade us with our nuclear capability and military now all back home save to protect our oil source nation? World court ok they might win but then they have to enforce the ruling good luck? Security council resolution which we can just override as needed is not an option?

As long as out people are fed, clothed, housed, given health care and have some sort of in nation currency to earn most will be happy enough since most Americans will not make waves. Then just wait the crisis out. And people here wanted us to go to alternative energy this would be a good reason to and under a we have no other choice position.

Well it is an option nobody brought up yet.

Panem et circenses.  Worked pretty well in ancient Rome, eh? 

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Re: US Debt Limit To Be Hit
« Reply #8 on: April 21, 2011, 01:18:04 PM »
I have a simple idea run up our debt until no one will lend to us and then tel them to screw themselves, ration here as we move into a major oil producing nation to take over with a tactical nuclear capability ready to go there and then let the world go to hell.

What are our creditors and the world going to do invade us with our nuclear capability and military now all back home save to protect our oil source nation? World court ok they might win but then they have to enforce the ruling good luck? Security council resolution which we can just override as needed is not an option?

As long as out people are fed, clothed, housed, given health care and have some sort of in nation currency to earn most will be happy enough since most Americans will not make waves. Then just wait the crisis out. And people here wanted us to go to alternative energy this would be a good reason to and under a we have no other choice position.

Well it is an option nobody brought up yet.

Wait till China tries the suggested strategy. Not as far as actually nuking the US, but being such an attractive place to build, locate business, invest and sell in they should be able to use some of those first-hold'em-up-then-blackmail-them tactics.

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #9 on: April 21, 2011, 02:04:19 PM »
Jude, we're about the only developed nation, or group of nations, that doesn't participate in the protectionism racket. The whole reason I got to grow up in Europe was because back in the 70s, the EEC set up a set of conditions where if you didn't have a textile firm in their member's countries you were going to be 'locked' out by tarrifs and trade restrictions.

Burlington Industries set up plants in the Republic of Ireland (where I was), England, Northern Ireland, France and Italy as a result. Airbus has ALL manners of kickbacks, favortism and good boy deals in Europe where they work in MULTIPLE countries for aircraft assembly.

Japan is outright and blunt about their protectionism. Their food costs are so astonishingly high in part to that.

Online Wolfy

Re: US Debt Limit To Be Hit
« Reply #10 on: April 21, 2011, 03:13:51 PM »
Wellt, Seeya guys, I'm moving to my own island nation. :/ *flees before things come crashing down*

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #11 on: April 24, 2011, 11:43:07 PM »
if the usa wants to solve its economic issues - one sweeping solution

Slash your military spending, pay only what you need to maintain about 1/5 of your high end stuff, piss off less countries
(or more importantly try and not be too quick on warfare "being in the nations / safety / ethical / worlds best interest"
- the rest see as scrap metal and recycle.

You would still be No 1 militarily for ~years~ with that attitude.

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #12 on: April 25, 2011, 03:01:59 PM »
It would be amusing if the US stopped being a global super power, that's for sure.  My bet?  2 months until countries started invading each other again like it's 1844.

Offline itsbeenfun2000

Re: US Debt Limit To Be Hit
« Reply #13 on: April 25, 2011, 06:29:00 PM »
It isn't countries invading each other that people would have to worry about. It is that are military is the only one in the world that can get to disasters so quickly wherever they are. How often have our naval forces stepped up in the last two decades to rescue people that no one else could get to?


Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #14 on: April 25, 2011, 08:10:36 PM »
It would be amusing if the US stopped being a global super power, that's for sure.  My bet?  2 months until countries started invading each other again like it's 1844.

John Birmingham wrote a book called Without Warning, where literally 90% of the US was wiped clear of life. The impact was pretty bad.. the US forces in the gulf were attacked by the Iranians and Israel had to start tossing nukes. It got ugly with the power vacuum that came out of that destruction (not even covering the environmental impact of most of the 48 continental states suddenly ceasing to have anyone running stuff)

One of the things that always irks me is how folks want to do away with a 'big military' but forget how much force projection comes into play. The gulf/med traffic route would be really nasty, even worse than it is now. Look over some of the historical actions we've done in the past, the pirates of Tripoli most tellingly. Force projection isn't just about showing who has the biggest club, but protection of trade routes.

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #15 on: April 25, 2011, 09:18:07 PM »
I agree navies are handy during disaster relief.

But a "true navy fleet"  and a "disaster relief" fleet are two very different things.

Yes a disaster relief fleet needs the means to defend itself and secure SOME areas.

But the cost of one would be VERY much less than the cost of a navy that also happens to have some disaster relief options
or the size of a navy fleet that has to exist to have the same capacity for humanitarian aid than a dedicated fleet created with that purpose.

Personally I think 1/2 the reason why america has been so involved in so many wars was because they can,
and are getting used to the idea... this is way beyond national security ... and only realy justified by
"national defense" being interpreted as

"what we want in power which is pro-US for 10 years time thus being less of a risk, more of a boon long term, investment in possible future stuff. This intrusive and selfish insolvent in the affairs of others really should be what the UN does.".

If the US cut their budget to 1/5th they still would be king of the hill in a major way (it still can pay the same in military research projects) I mean what is currently operational or "good to go in short notice"

... currently their policy concerning miliatry is being able to bring overwhelming superiority EVERYWHERE AT ONCE....
(ie a bully in ALL playgrounds ... with the attitude of it being justified as everything indirectly effects america thus we have america's interest everywhere) this really is what a UN is needed for, not a country.

I know americans would go "well I do feel comfortable for us being able to exert that power everywhere" but compared ot loosing sons to a war that is "tentatively justified ethically" that doesnt directly effect american defense, or dealing with GFC stuff crippling your family income... its pretty thin.

How much money that frees immediately would be maying that debt off in spades, once you have paid it off then look back on what you want to spend it on.

You know, grow up a little... stop buying toys.

What i dont get is both houses of politics say "yes we need to cut back ... but hmm not on military".

What kind of pressures are on the politicians not to is a a concern for these facts must be obvious to them.

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #16 on: April 25, 2011, 09:37:57 PM »
I agree that we probably need to cut back a bit, but it bothers me to hear people who aren't Americans saying that, because unless you're in one of the nations we've wronged (and we have wronged some, I'm hardly so patriotic that I can't see the mistakes that our country has made), our military power has benefited you.  Do you think places like New Zealand (which has almost no military whatsoever) would be able to live independently and enjoy such a quality of life if America didn't exist?

We really haven't done anything negative toward any European states, Canada, or Asia in a long time, certainly not with our military power (unless you're a Nazi, in which case I guess you can have a legitimate beef with the American Military).

Offline AsurasTopic starter

Re: US Debt Limit To Be Hit
« Reply #17 on: April 25, 2011, 10:25:24 PM »
Total US military spending: $689 billion
US deficit: $1,294 billion

In other words, we could completely abolish the military tomorrow and we'd still be in the hole.

Offline Vekseid

Re: US Debt Limit To Be Hit
« Reply #18 on: April 25, 2011, 10:31:06 PM »
That includes $400 billion in one-time spending, and $200 billion in interest payments.

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #19 on: April 25, 2011, 10:47:05 PM »
Sorry, we're talking about a military that has 50 year old planes in spots and nothing to match what is being produced by other countries in several areas. Boondoggles like the 'Super'-18, and the cancellation of effective programs like the CSA (combined Support Aircraft) and other programs tells me that we're already being cut to the bone military wise.

I watched at LEAST effective programs in aircraft development that would have led to a 'cheaper' aircraft fleet get scuttled because of 'needed cuts' by both Republican/Democratic congresses. I've seen a LOT of 'FAT' cut from the military that will cost us a LOT more in years to come..then I see programs like the Boeing P-6 program get approved..because Lockheed got the JSF program..and the navy had to be FAIR according to congress.


Offline Kate

Re: US Debt Limit To Be Hit
« Reply #20 on: April 25, 2011, 10:48:04 PM »
Total US military spending: $689 billion
US deficit: $1,294 billion

In other words, we could completely abolish the military tomorrow and we'd still be in the hole.


Um your total spending is what is done per year.... which is 1/2 of your debt.

How many years could you pay it off if you slashed it ? How good could your education and health be after paying it off you didn't bring it back to the same level ?

What sort of projects could you comparatively do with past enemies with that sort of funding and be deemed "good guys" to them (ie less risk of terrorism as your really part of the solution to what effects them) ? (Ie fund preventating aminosity, not options when things get out of hand)

Do you think places like New Zealand (which has almost no military whatsoever) would be able to live independently and enjoy such a quality of life if America didn't exist?

Um Im not saying that "the world would be better if us didn't exist" I am saying that America doesn't HAVE a problem with money if it took a different view to the military.

Nz doesn't need a strong navy, it needs a small amount of the best of things (missles etc) and some patrol boats, some shitty planes that can fire missiles that sink ships.... mainly because we dont have "vested interest" we need to impose militarily on other places.... and yes I think "when bullies start being bullies" i would like to think that the UN has the clout, not an ally.

lol ... actually giving 1/2 the hardware to the UN would be great I think, and would solve a lot of issues for America and the world.
« Last Edit: April 25, 2011, 10:49:22 PM by Kate »

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #21 on: April 25, 2011, 10:51:27 PM »
Uh.. Kate.

The UN doesn't have a standing military.. they use forces offered to them from member nations.

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #22 on: April 25, 2011, 10:56:31 PM »
... now :)

It could though :)

Offline AsurasTopic starter

Re: US Debt Limit To Be Hit
« Reply #23 on: April 25, 2011, 11:02:32 PM »
That includes $400 billion in one-time spending, and $200 billion in interest payments.

The one-time payments (like the economic stimulus) could be cut, although not without consequences.

I don't think we should cut interest payments on our debt, that tends to lead to mass economic chaos, so I would treat that as a core part of spending.

Quote from: Kate
How many years could you pay it off if you slashed it ? How good could your education and health be after paying it off you didn't bring it back to the same level ?

I'm not saying we slash everything immediately, but there should be a gradual reduction in spending and a gradual increase in taxes ideally over the next 5-10 years to get fiscal sanity back. Whether we do it now or later there's no alternative; the government is spending way more than it takes in in taxes.

Quote from: Kate
What sort of projects could you comparatively do with past enemies with that sort of funding and be deemed "good guys" to them (ie less risk of terrorism as your really part of the solution to what effects them) ? (Ie fund preventating aminosity, not options when things get out of hand)

I'd actually say foreign aid is one of the areas that should absolutely not be cut (and it also constitutes a miniscule 1.7% of our budget)

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #24 on: April 25, 2011, 11:03:29 PM »
... now :)

It could though :)

With what budget?


They have like a 5.5 BILLION dollar annual budget
« Last Edit: April 25, 2011, 11:07:45 PM by Callie Del Noire »

Offline itsbeenfun2000

Re: US Debt Limit To Be Hit
« Reply #25 on: April 25, 2011, 11:41:53 PM »
Should also point out is we learn from our mistakes. At the beginning of World War 2 we were 39Th right behind Portugal in military strength. Would Japan or anyone else have attacked us if we had kept our military and modernized it between the wars? Would the depression have been as bad if we were spending money on our military. The US military is one of the biggest employers in the States between the men and women who serve and the companies that make the hardware. How bad would this recession have been with out that outlet for employment?

I am not saying we shouldn't cut back the military spending, however we will not be put in the position of being attacked again.


Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #26 on: April 25, 2011, 11:52:15 PM »
Before the Bush Administration CASTRATED Blue state bases in the last round of base closures the US Navy was the LARGEST employer in the state of Maine. And a lot of folks don't realize that every dollar earned on a base typically goes through a local community about 4 to 6 times before leaving the area. That's gas stations, stores, hotels, rental properties and other things that no one else provides.

My folks visited Maine before NAFTA killed what little textile industry it had and I lived there during my last round as a Sailor. Losing the Navy in Maine is definitely not going to help the economy.

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #27 on: April 26, 2011, 04:20:43 AM »
The USA has a very low tax rate.. especially for high earners.

The ratio of cash that is placed into military is ridiculously high.

Also it greatly subsidizes some industries perpetually ( eg wheat belt ) (if the industry can not compete with international market on its own footing - dont subsidize it - and those trying to compete go out of business in the short term but later those who would have been in a subsidized industry go into others (ie wheat shouldn't have a future in America in its current state) or if you feel you can automate it etc to compete - great ! then it does become commercially viable.

Subsidies shouldn't exist for industries. (Health / education / R and D being the exceptions)

I beleive USA has a deficit persisting with this aspect of their economic model

Offline Zakharra

Re: US Debt Limit To Be Hit
« Reply #28 on: April 26, 2011, 10:42:38 AM »
 Reducing the US military 80% would create a huge power vacuum and Russia and China would be very quick to step up to exploit that.  China especially. They'd take back Tiawan as soon as they felt capable. The US military power is what allows a lot of nations to have smaller military than they otherwise would normally have. And I think it would make the world a less safe place than it is now.


 
I agree navies are handy during disaster relief.

But a "true navy fleet"  and a "disaster relief" fleet are two very different things.

Yes a disaster relief fleet needs the means to defend itself and secure SOME areas.

But the cost of one would be VERY much less than the cost of a navy that also happens to have some disaster relief options
or the size of a navy fleet that has to exist to have the same capacity for humanitarian aid than a dedicated fleet created with that purpose.

 The US Navy is used for many things. If it was 20% the size it is now, your 'relief' fleet would not exist because the USN would not be able to project the ships, men and material as easily as it can now. It's easily done now because it is a large and powerful fleet. Reduce that and you reduce it's effectiveness drastically. 

Quote
Personally I think 1/2 the reason why america has been so involved in so many wars was because they can,
and are getting used to the idea... this is way beyond national security ... and only realy justified by
"national defense" being interpreted as

"what we want in power which is pro-US for 10 years time thus being less of a risk, more of a boon long term, investment in possible future stuff. This intrusive and selfish insolvent in the affairs of others really should be what the UN does.".

If the US cut their budget to 1/5th they still would be king of the hill in a major way (it still can pay the same in military research projects) I mean what is currently operational or "good to go in short notice"

... currently their policy concerning miliatry is being able to bring overwhelming superiority EVERYWHERE AT ONCE....
(ie a bully in ALL playgrounds ... with the attitude of it being justified as everything indirectly effects america thus we have america's interest everywhere) this really is what a UN is needed for, not a country.

 A little clue Kate, every single country does things for it's own personal national interests. They always have and always will. If the US military budget was cut, we would be the kingf of the hill for maybe 5 years. After that, not a chance unless we started rebuilding the military again to previous levels.

Quote
How much money that frees immediately would be maying that debt off in spades, once you have paid it off then look back on what you want to spend it on.

You know, grow up a little... stop buying toys.


 That's short term thinking. Without an effective defense, you cannot protect anything for very long.

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #29 on: April 26, 2011, 10:59:22 AM »
Quote
A little clue Kate, every single country does things for it's own personal national interests. They always have and always will. If the US military budget was cut, we would be the kingf of the hill for maybe 5 years. After that, not a chance unless we started rebuilding the military again to previous levels.

... then cut it for 5 years.

Or ... option  2 ...

choose to be starving rioting (extremely well armed) mobs that collapses like russia ... where all that military h/w gets given away to whoever has enough cash to perk an admirals interest.

Or option 3 ...

invade places which have resources that could keep something unsustainable going for another few more years (I dont mean to imply this was or is the desire of American civilians)

« Last Edit: April 26, 2011, 11:01:23 AM by Kate »

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #30 on: April 26, 2011, 11:03:03 AM »
Or option 4:  Stop catering to corporate and ultra-rich interests and focus on the majority.

Offline TheGlyphstone

Re: US Debt Limit To Be Hit
« Reply #31 on: April 26, 2011, 11:19:41 AM »
Or option 4:  Stop catering to corporate and ultra-rich interests and focus on the majority.

If only that were likely to happen. One of the reasons the economy is such a mess is because Congress has its own economy - one that runs on the pork standard.

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #32 on: April 26, 2011, 11:33:07 AM »
If only that were likely to happen. One of the reasons the economy is such a mess is because Congress has its own economy - one that runs on the pork standard.

Oh, I agree completely.  However it is an option that the previous post seems to have not mentioned.

Offline Zakharra

Re: US Debt Limit To Be Hit
« Reply #33 on: April 26, 2011, 11:37:12 AM »
... then cut it for 5 years.

 That is unworkable. You can cut funding and drop the military extremely fast. It'd be easy to reduce to 20% it's size in a year.  But rebuilding it later would take a lot longer and cost a LOT more than keeping the military more or less at the same level it is now. Especially if you got into a shooting war.
« Last Edit: April 26, 2011, 06:25:39 PM by Zakharra »

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #34 on: April 26, 2011, 11:38:51 AM »
I'm confused as to why we're still talking about cutting the military as a singular effective solution (or even a large component) when the numbers have already been posted, and the entire military budget only accounts for about a half of the budget deficit.  Also, remember that debt and deficit are not the same thing.  Deficit is the shortfall for every budget, aka how much we're adding onto the debt.  In order to get out of debt, the deficit needs to be nonexistent, you need a surplus year to year so that you can pay down on the debt.

Now if you want a real solution out of the debt, it's going to take sacrifice across the board.  We're going to have to cut spending to a level that is below what we will be able to afford once we're out of the debt crisis.  The longer we wait to do it, the deeper the cuts are going to have to be in order to pay down a significant portion of the debt and to pay for the interest on the debt (which will decease gradually as the debt goes down).  We will then be able to phase out some of the cuts as our country's debt outlook improves.

Nothing should be considered immune; both parties need to sacrifice their holy cows if we're going to reverse course here.  That means doing away with some tax loopholes for corporations the wealthy, raising taxes on the wealthiest of Americans, cutting social security benefits, welfare, reducing foreign aid, so on and so forth.  I think, in the end, the amount of money saved/generated should reach parity on both liberal and conservative issues, and we might consider letting liberals and conservatives in congress determine where their half of the savings comes from (i.e. liberals will be in charge of cutting 65% of the deficit out of liberal causes and conservatives will be in charge of cutting 65% of the deficit/raising taxes/reforming write-offs from issues conservatives value -- this way there will be a 30% surplus we can use to pay down on the debt).

Unfortunately, I don't think congress is mature enough to pass the pain around and take such a centrist solution.  They'll fight it in order to protect their base at everyone's cost.

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #35 on: April 26, 2011, 11:42:14 AM »
The ratio of cash that is placed into military is ridiculously high.

Also it greatly subsidizes some industries perpetually ( eg wheat belt ) (if the industry can not compete with international market on its own footing - dont subsidize it - and those trying to compete go out of business in the short term but later those who would have been in a subsidized industry go into others (ie wheat shouldn't have a future in America in its current state) or if you feel you can automate it etc to compete - great ! then it does become commercially viable.

Subsidies shouldn't exist for industries. (Health / education / R and D being the exceptions)

I beleive USA has a deficit persisting with this aspect of their economic model


Like your PC?  That started as a result of the drive to miniaturize transistors by the US military. Like being on the site? The Internet and a very substantial portion of the networking model was developed by DARPA, the US military research arm.  No matter where you are (unless your a stone age tribesman somewhere) odds are military research helped out somewhere in your life.

As for US subsidies, I don't think that is a problem. Especially after seeing what the EU and Asain nations give their own folks. If anything, the US gives less subsidies than other nations   


Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #36 on: April 26, 2011, 11:47:41 AM »
Since the wheat industry was brought up:

Did you know that the US accounts for over 10% of the world's wheat production?  And that it accounts for over 25% of the world's wheat exports?  Yeah, that's nothing to keep around.

Offline itsbeenfun2000

Re: US Debt Limit To Be Hit
« Reply #37 on: April 26, 2011, 08:38:03 PM »
And we could account for more of the food to the world at any given time. During WW2 90% of the vegtables eaten in the United States were from back yard "victory gardens"

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #38 on: April 27, 2011, 05:55:43 AM »
wheat was deemed something of international security interest as indepedandant food supply was a military risk area.

As such the us government subsidized that industry to keep it going regardless of viability.

Its cost is to keep it competitive (and intentionally or otherwise literally hurt other nations ability to sell wheet that isnt subsidized.

masssive tarriffs exist for others if you wish to sell to the us... so none can really sell their wheat there as they can't compete with the non-tarriff wheat.

And none can really sell wheat overseas as te cost of wheat (being primary producer) is greatly reduced (ie below cost).

During WWII it was sensible - as no other place really existed that wasnt bombed, it isnt now, but historically a hangover we are all feeling.

America doing this is hurting america and other countries.

Offline Callie Del Noire

Re: US Debt Limit To Be Hit
« Reply #39 on: April 27, 2011, 06:29:42 AM »
American agricultural subsidies aren't that big Kate. I know that EU's CAP (Common Agricultural Policy) is HUGE and the Japanese farm lobby and such is even worse. The CAP was something like.. 45 BILLION Euro while I was in Europe around 06. That is a very very big segment of the EU budget.


Offline Zakharra

Re: US Debt Limit To Be Hit
« Reply #40 on: April 27, 2011, 09:32:37 AM »
  I think they pay farmers more to not grow crops than they do to grow them.

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #41 on: April 27, 2011, 09:55:19 AM »
Well lets say that there are a lot of pretty obvious partial solutions if your outside looking in.

Sure most steps will not be popular universally, but what ever is ?

Offline Jude

Re: US Debt Limit To Be Hit
« Reply #42 on: April 27, 2011, 10:21:08 AM »
I wonder how many people outside looking in have actually looked at the budget to know what to cut.

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #43 on: April 27, 2011, 02:29:13 PM »
Well, here's an opinion from someone who has been on the inside:

http://robertreich.org/post/4962078752

Quote
The most significant economic news from the first quarter of 2011 is the decline in real wages. That’s unusual in a recovery, to say the least. But it’s easily explained this time around. In order to keep the jobs they have, millions of Americans are accepting shrinking paychecks. If they’ve been fired, the only way they can land a new job is to accept even smaller ones.

The wage squeeze is putting most households in a double bind. Before the recession, they’d been able to pay the bills because they had two paychecks. Now, they’re likely to have one-and-a half, or just one, and it’s shrinking.

Add to this the continuing decline in the value of the biggest asset most people own – their homes – and what do you get? Consumers who won’t and can’t buy enough to keep the economy going. That spells recession.

Offline Yorubi

Re: US Debt Limit To Be Hit
« Reply #44 on: April 27, 2011, 05:58:01 PM »
Democrats: We want to fix our debt by spending more (though some wisely) and taxing the wealthy!

Republicans: We want to fix our debt by spending less (though some unwisely) and giving tax breaks (to the wealthy mostly)!

Both sides are still being idiots about it. Why don't we not only cut the debt, but also tax the wealthy? Both sides win some and loose some. I just hope the wealthy realize that greed is bad and that being greedy so much will only throw themselves into turmoil (granted they will still be comfortable by far). Please just raise taxes on the weathly who, last I checked, haven't taken any pay cuts of their own that could of saved hundreds of jobs/put many people under less stress.

If they don't like it, to bad. If they are going to be greedy ass holes like they have been to throw people into a mess (yes not all their fault but it is largely their part) and not be giving back to help raise the economy, their needs to be some way to get their polarized money back to where its needed.

Offline TheGlyphstone

Re: US Debt Limit To Be Hit
« Reply #45 on: April 27, 2011, 06:10:28 PM »
Taxing the wealthy sounds good, but there's a few problems:

1) Defining who is 'wealthy' - $100,000/year income? $200,000? $1,000,000? Too many want to define it as "makes more than me", which is fairly useless.

2) Our tax code has more holes in it than Swiss Cheese - with the proliferation of offshore banking, it's trivial to avoid paying taxes on lots and lots of money and still be completely legal.

3) The "uberwealthy" - the CEOS making salaries that end in "illion" - don't want to be taxed, and they all have small armies of lobbyists to ensure that they don't.

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Re: US Debt Limit To Be Hit
« Reply #46 on: May 01, 2011, 02:16:12 PM »
A handful of days ago, a senator named Bernie Sanders (an Independent from Vermont) appeared on I believe The Daily Show, advertising his book The Speech, about a 8.5 hour long filibuster he gave about the state of the government and the US in general.  In his interview with Jon Stewart, he noted the following:

The top 1% of earners in the US own more wealth than the bottom 50%.  To drive home the point, here's more numbers (and hopefully shocking ones).

That means that 400 people in the US have access to more funds than 150 million combined.  To paraphrase the Bible: my brothers, this should not be.  I'm with Yoru, taxing the rich isn't the solution, but it's almost certainly a step in the right direction.

To answer Glyph's issues, here's my thoughts:

1) Wealthy is a bit vague, so let's start with repealing the tax cuts Bush gave to the wealthy.  Whoever that is, we can at least start there.

2) Yes, our tax code is riddled with problems.  It needs fixing, but the only problem is that it is in the best interest of certain persons to have the code be mind-numbingly frustrating.

3) Lobbyism needs to be cut back severely in DC, if not outright disintegrated.  The issue is that everyone has lobbyists these days...and what exactly do lobbyists do?  As far as I'm aware, they're the jobs that should've gotten the boot first, not our manufacturing ones.

Offline gaggedLouise

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Re: US Debt Limit To Be Hit
« Reply #47 on: May 01, 2011, 04:56:39 PM »
Taxing the wealthy sounds good, but there's a few problems:

1) Defining who is 'wealthy' - $100,000/year income? $200,000? $1,000,000? Too many want to define it as "makes more than me", which is fairly useless.

2) Our tax code has more holes in it than Swiss Cheese - with the proliferation of offshore banking, it's trivial to avoid paying taxes on lots and lots of money and still be completely legal.

3) The "uberwealthy" - the CEOS making salaries that end in "illion" - don't want to be taxed, and they all have small armies of lobbyists to ensure that they don't.

Plus, both highly wealthy people and corporations can easily move so much of their assets to the Cayman Islands, Switzerland or some other place where taxation is near non-existent and secrecy is elevated. Or simply have it paid out to an account in the Caymans in the first place. Governments simply don't have very much leverage with the ultra-rich or the big business anymore; if they want their support - when in office or running for office - they have to perform a lot of pandering to the bigwigs and to the corporations. Of course, people with ordinary wages can't threaten to 'vote with their feet' (emigrate to a sunnier and more easy-going country) near as easily or effectively.

Not just a U.S. issue: you should hear the amount of bullshit we get to hear about how the elite managers and CEOs of Sweden are so extremely driven and soooo in demand on the world stage that if one would raise the taxes a bit, put a roof on bonuses or enforce slightly stricter tabs on how the banks manage money, all the best people would emigrate to more high-paid positions in New York, Paris or Rio de janeiro. Who don't want a CEO from Sweden - you remember Mr.Svanberg and his BP comments in cranky English about caring for "the small people"?  ;D


Actually, few of them have the cultural flair and sense of style of some British and French business moguls - and still fewer, the flamboyancy of Donald Trump. ;) Most of them just seem to hunt, sail and - most of the time - talk business.
« Last Edit: May 01, 2011, 05:10:12 PM by gaggedLouise »

Offline Kate

Re: US Debt Limit To Be Hit
« Reply #48 on: July 25, 2011, 07:56:03 AM »
Spoiler: Click to Show/Hide
Like your PC?  That started as a result of the drive to miniaturize transistors by the US military. Like being on the site? The Internet and a very substantial portion of the networking model was developed by DARPA, the US military research arm.  No matter where you are (unless your a stone age tribesman somewhere) odds are military research helped out somewhere in your life.

This is a very similar argument that car-makers talk about when justifying F1 races etc - initially a lot of improvement to civilian cars occurred but from now on they are such different things that the "how does it help civilian life when all things are peaceful" is fractionally less and less.

Also if that cash was spend on other things - like Health research - raw science etc - what sort of kickbacks WOULD have they given - perhaps even better ones... "This came out of it so its justified" argument doesn't consider what could have come from it being channeled elsewhere. Assuming "nothing" is what would have otherwise happened is a little one eyed.

Anyway.

The power vacume thing isn't going to happen in a few years - to be on par to America even if they went out isnt just cash but time. A lot of the navy and air power the americans have is by trial and error trying out different thigns - heaps of navy excersises, trying out this and that in practice - to work out what is practical and not. Spending the same amount of cash in the short term and hoping you will get close - is not cool - it will not work.. its time AND money - but mostly a combination of both that has stabalised over ..... time such that hierarchies and logistics seem to settle and become predictable.

20 aircraft carriers + who knows how many support ships - a "navy fleet" is ridiculous.

And "If we dont protect you - you will get harmed because you don't protect yourselves" is not eactly right, america doesn't do this because it has a desire to be a police force for the world. Constant control over the sea / air etc from almost anywhere is a pretty loud trumpet often blown.

The USA does have a lot of options. Saying "Hey we owe everyone cash - fk you we will only pay 20 cents on the dollar or we will outright not honor any of it - and yeah we will take the hit of others not investing in us for x years" is a choice they can make - which will likely win BECAUSE of how much cash is to be made by trading in America, you will be hated by other countries, but hey money talks (yeah credit rating will reach junk status but not for long).

I know that's unlikely ... but still an option.

Another option.

Sounds weird but it may just work - remember man on the moon project ? The good thing about America is that they can inspire their own populous with a super-project. "Yes we can".

Pick three super-projects ... and if ONE of them works and is owned by America its a world changer on a dime.

Not saying these are the ones ... but of this caliber

Cold fusion and or micro fission
Teleportation (of something practical - doesn't have to be people could be a stream of raw elements or something )
FTL
Low-cost-zero maintenance materials and or super materials (for whatever would vastly help maintenance costs / viability of certain other things)
Super-foods (ie eat this one fruit and it ALREADY has every single goodies a growing person needs for a well balanced diet, this other one is for pregant moms - this other one is for ... )
Artificial womb
Stem-cell-cure-all-organ-growing-vats

Or whatever the scientific community deems "Probably do-able if you through xxx billion dollars and about the same man-hours, until then ... unless we get an indirect breakthrough that eases up some fundamental / conceptual brick wall by pure fluke". Just like going to war - suddenly everyone's employed, and if any breakthroughs come of it (and one or two likely would) - it would set up America really well for x years.

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #49 on: July 25, 2011, 12:26:52 PM »
Unfortunately, the government seems to be more interested in buying each others' votes in Congress through appeasement negotiations (I'll put in this cut if you'll vote to raise the debt ceiling) than they are in addressing the issue that the rest of America is interested in - unemployment.

This guy has explained it better than I can.  http://robertreich.org/post/8042268683

Offline NotoriusBEN

Re: US Debt Limit To Be Hit
« Reply #50 on: July 25, 2011, 05:04:13 PM »
A little bit of kidding here, but with all the squabbling in Congress, I almost want one person in charge with the ability to override all the BS and make the hard decisions needed and those that didnt like it either did as told or got the boot. Im so tired of all the crap of everyone getting their fingers in the pot and mucking about.

The problem is could/would that person step down afterward... >.>

Offline Oniya

Re: US Debt Limit To Be Hit
« Reply #51 on: July 25, 2011, 05:26:21 PM »
Didn't FDR just about do that?

Offline gaggedLouise

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Re: US Debt Limit To Be Hit
« Reply #52 on: July 25, 2011, 07:41:36 PM »
I hope they don't get to filibuster over the proposed packages, or many more people are going to grit their teeth at the voluminious expressing of divergent opinions.