The Bankrupt United States of America

[fuckwaffle]

Considering the USA has a debt of 1.3 Trillion dollars (and growing with each passing budget), you guys need to cut back on spending and/or find some new sources of income. Debt is a bad thing - trust me on this one.

Uh, not to be an ass, but the debt is topping 15 trillion dollars, not 1.3. The only source of income a government has is it's tax base. A government produces nothing but debt and the only way to eliminate that debt is through taxation of it's tax base.

No state, no property.

Say it clear: you want wilderness lifestyle. And you'll get it.

The constitution was originally written to keep the federal government small with its only duty to coalesce the several separate states and protect the common interests. Other than that, each separate state was in charge of its own destiny and regulation of it populace within its boarders.

It was only through the...neglect...of the voter base that the federal government became such an all consuming behemoth of the national product that the whole is at risk of utter collapse, once again leaving it to the individual states to take up the struggle of survival.

 

[fuckwaffle]

Why not tax the wealthy? They can clearly afford it, if Warren Buffington is to be believed.

It Buffet not Buffington and he can say raise my income taxes all he wants, he make no income to tax. He makes his money via capital gains, not an earned income. So no matter how high you raise the income tax, he isn't concerned by it.

And even if you took 100% of all the "millionaires" income, regardless of how it was derived, it would be but a drop of spit in the 15+ trillion dollar deficit or the 1.5 trillion annual budget overruns we have now.

 

[fuckwaffle]

I don't believe I've heard of that clause. Care to point it out to me?

In the US Constitution the candidate for president must be a natural born citizen. Now what that means has been debated over the years to mean he has to have been born within the boarders of the now 50 states.

 

[topace]

You guys need some sorta system to help the poor pay for their medical costs. When they get sick and are forced to wait til it gets bad enough to force them to go to a hospital, you are still paying for them, so why not give them good healthcare and avoid the costlier trips to the public emergency wards?

 

[fuckwaffle]

You guys need some sorta system to help the poor pay for their medical costs. When they get sick and are forced to wait til it gets bad enough to force them to go to a hospital, you are still paying for them, so why not give them good healthcare and avoid the costlier trips to the public emergency wards?

That would be nice, but whose model do we adopt? ObamaCare is a bloated POS. It would be easier just to enroll them all in Medicaid, cheaper too. But then the states complain, as they are responsible for the cost of medicaid. So far any state run medical plan gets so bloated with bureaucrats that it cost 10x more than any plan it attempts to replace.

So far, government has proven that it can't do anything right nor for the costs originally proposed. Pork grows exponentially in government hands. Too bad that's not true for real pork.

 

[PoppingTom]

if you taxed the "wealthy" (and that is everyone that made more than $200,000/year) at 100% then you could pay for about three months of what the US Government spends.

Maybe you're right.

If you tax only the 341 billionaires of your country about 10 % "wealth tax", it makes only $ 105 billion.

Who needs that little money?

 

[fuckwaffle]

Maybe you're right.

If you tax only the 341 billionaires of your country about 10 % "wealth tax", it makes only $ 105 billion.

Who needs that little money?

...the current monies needed to run the bloated government currently is 1.5 trillion dollars, so let's take another 10% from the job creators and get only 10% of what is needed.

...why not cut spending by 20% a year over the next 10 years?

...cut taxes by 10% on the middle class?

...trim the fat in government?

 

[PoppingTom]

...the current monies needed to run the bloated government currently is 1.5 trillion dollars, so let's take another 10% from the job creators and get only 10% of what is needed.

Maybe you're right.

"North American millionaires had a combined wealth of $11.6 trillion, up from $10.7 trillion in 2009."

10% wealth tax = $ 1 trillion

Maybe you're right: it's better to cut that from government's cost than to take it from taxes.

Because your judiciary, your police, your road builder, your army, your social workers, your prison workers, your mayors - all fat asses payed by YOUR (?) taxes....

 

[fuckwaffle]

...

Because your judiciary, your police, your road builder, your army, your social workers, your prison workers, your mayors - all fat asses payed by YOUR (?) taxes....

Gee all these things, except two, are paid at the state or local level and I live in a state which has no income tax and they seem to be able to pay for all those things with out dipping their fingers in my pocket.

It is true that they get a portion of the tax collected on gasoline to pay for their/my roads.

As for the army, that is one of the things I don't mind paying for.

What I do mind paying for is some asshat, sitting on his fatass in Washington, telling a county in Arizona that they have to reduce their dust emissions or pay a monster penalty. It's Arizona, it's a desert, there will always be dust there. Asshat.

 

[SEVERUSMAX]

Gee all these things, except two, are paid at the state or local level and I live in a state which has no income tax and they seem to be able to pay for all those things with out dipping their fingers in my pocket.

It is true that they get a portion of the tax collected on gasoline to pay for their/my roads.

As for the army, that is one of the things I don't mind paying for.

What I do mind paying for is some asshat, sitting on his fatass in Washington, telling a county in Arizona that they have to reduce their dust emissions or pay a monster penalty. It's Arizona, it's a desert, there will always be dust there. Asshat.

They don't live in the real world in DC. It's a bubble. And like every bubble, it's bound to burst someday (probably soon).

 

[fuckwaffle]

Maybe you're right.

"North American millionaires had a combined wealth of $11.6 trillion, up from $10.7 trillion in 2009."

10% wealth tax = $ 1 trillion

....

...and at $150,000, the amount it take the private sector to create a job, that would be 6,666,666 jobs.

...and at $4.1 million, the amount it takes the government to create a job, that would be 243,902 jobs.

Gee I feel so much better now.

 

[SEVERUSMAX]

...and at $150,000, the amount it take the private sector to create a job, that would be 6,666,666 jobs.

...and at $4.1 million, the amount it takes the government to create a job, that would be 243,902 jobs.

Gee I feel so much better now.

Not much bang for the buck, is there?

 

[PoppingTom]

...and at $150,000, the amount it take the private sector to create a job, that would be 6,666,666

...McJobs

Gee I feel so much better now.

Me too. Dunno why you got problems with unemployment in America. The money is there...

 

[fuckwaffle]

...McJobs

Not according to my sources.

Me too. Dunno why you got problems with unemployment in America. The money is there...

Although the money is there...would you commit a large portion of your capital if you didn't know when and how much the government was going to demand from you?

Unemployment is at all time highs...15-18% if you count all those who can no longer draw unemployment and still haven't found work, so yes, I'm concerned about unemployment, as should you.

 

[topace]

Why don't you base it on the Canadian system? Works great here (in most cases at least).

 

[fuckwaffle]

Why don't you base it on the Canadian system? Works great here (in most cases at least).

Yes, most of the time...what about those other times...you know the ones, the patients who get told that they can't have this or that operation to save their lives, so they cross the border and get fixed here in the last bastion of freedom.

 

[topace]

Yes, most of the time...what about those other times...you know the ones, the patients who get told that they can't have this or that operation to save their lives, so they cross the border and get fixed here in the last bastion of freedom.

How many times are those operations not medically provable to be worth doing? Seems quite a few from what I've seen. I can understand for a transplant to save a life, but not something that isn't provable by science.

 

[fuckwaffle]

How many times are those operations not medically provable to be worth doing? Seems quite a few from what I've seen. I can understand for a transplant to save a life, but not something that isn't provable by science.

I'm talking about fixing things like a bum knee or cancer, take your pick. So you don't have death panels up in the great white north then?

I'm talking about life saving or quality of life procedures, not voodoo medicine.

 

[trysail]

It is rather breathtaking:

http://research.stlouisfed.org/fredgraph.png?g=80b

​

 

[trysail]

If something can't go on forever,

... it won't.​

The average citizen is increasingly living in a fantasyland choosing to believe that government healthcare and pensions are costless.

...Stockton’s bankruptcy will probably resemble the 2008 case of another California city, Vallejo, which exited court protection last year, bankruptcy attorney Dale Ginter said. Both cities have been hurt by high labor costs, particularly health insurance for retirees, he said.

“Retirees are not going to be happy,” said Ginter, who represented retired Vallejo workers in that city’s bankruptcy. “My prediction is that retiree health care is cut. I wouldn’t be surprised to see it cut to zero.”

****​

...Salaries for current workers and benefits for them and former employees account for about 68 percent of the city’s general fund, the city said...

...The collapse of the housing market left Stockton to contend with mounting retiree health-care costs and eroding tax dollars in the wake of the recession, amid accounting errors that overstated municipal revenues...



http://www.bloomberg.com/news/2012-06-27/stockton-california-to-file-for-bankruptcy-city-says.html

 

[trysail]

I didn't write this. The person who did wouldn't want to be credited here. There will be a day of reckoning; you probably don't want to be around when it happens. It will be the "interesting times" spoken of in the old Chinese curse.

...we have an economy with about $15 trillion in sovereign debt and $15 trillion in annual GDP. The only debt I am talking about is the debt directly on the Federal government’s balance sheet. Some of that debt is owned by other government entities like the Federal Reserve. The actual net number is more like $11-12 trillion. But we have been accumulating debt by over $1 trillion per year (the annual deficit) so for my example, just looking down the road a bit, I am going to work with the round number of $15 trillion.

Right now, given the low interest rates the Fed has manufactured, our government is paying less than 2% per year to service that debt. $15 trillion times 2% is about $300 billion in annual debt service. Today, the actual number is a bit lower than that. But let’s fast forward to what one might consider normal times and look at a blended interest rate closer to historic averages. Let us now suppose a world of $15 trillion in debt with a blended interest rate of 5%. 5% times $15 trillion is $750 billion.

Let’s look at that number in two ways. First, it is $450 billion more than we are paying today. Either the government has to find $450 billion somewhere else in the budget to offset that amount or you can mentally add yet another $450 billion to the annual deficit. Just to give you a hint as to what $450 billion means, if you ignore entitlements and defense spending, in broad terms you would have to close down all other government spending to come up with $450 billion.

Another way to look at the $750 billion interest costs is to understand that the rest of the budget must generate a $750 billion surplus to come up with a balanced budget. That means not only getting rid of all discretionary spending but also significant cuts in defense and entitlements.

Every dollar of additional deficit simply makes the hole bigger.

If you look at the bond market, you will see the U.S. isn’t even thought of as the serious problem today.

Thus, you can see the big black hole we are approaching. Unless you can create a future world with zero interest rates, it is a scary thought. I don’t know when we hit the crisis point but I do know several things:

1. The Fed understands the same conundrum. Hence, keeping rates low as far as one can see clearly delays the problem and because annual interest costs are less with low interest rates, the deficit is less than it would otherwise be should the Fed allow higher rates to return sooner.

2. All the excess money sloshing around is going to create some form of inflation at some point in time. If it is consumptive inflation, it will show up in higher CPI numbers. The alternative is some form of asset bubble. We all have learned the consequences of that over the past couple of decades.

3. Politicians rarely take painful medicine before they have to, before a crisis hits. There are some who want to begin to deal with the after the election but whether a majority have the courage to act sooner rather than later remains to be seen.

4. While both Presidential candidates want voters to believe that they have the magic formula to get our country out from under that massive overhang of debt, it is unlikely that a near term fix exists. Our nation spent 50 years accumulating the debt and we aren’t going to get back into some form of balance over the next four. The best one can hope for is a good start. The Simpson-Bowles 10-year formula of $4 trillion in spending cuts and tax revenue increases is only a start.

5. Any reduction in spending or increase in taxes will serve to reduce future growth. In essence, we have been borrowing from the future for decades and the time has come to pay it back. The 3.5-4.0% growth potential when leverage is being added is going to be replaced by 2.0-2.5% growth as leverage is removed.

6. As we see in the case of Spain and other European nations, waiting for the crisis to hit full bore is extremely painful. Spain’s problems weren’t created by its current government or even the one before.​

The four options to get debt/GDP back in line are (1) to default on outstanding debt, (2) to grow GDP faster than debt, (3) to pay it back through persistent surpluses, or (4) to devalue one’s currency.
Clearly, the first option is only to be used as a last resort and the third option doesn’t seem a reasonable possibility. The second option is possible with significant fiscal discipline and low interest rates. The easy way out is the fourth option. While a devaluation can occur with the stroke of a pen, more often it occurs in a world of floating rate currencies by promoting policies that weaken one’s own currency. For the past decade, whether by intent or not, the U.S. has effectively been devaluating the dollar though a combination of deficits, easy monetary policy and low interest rates. The problem going forward is that the U.S. isn’t the only one in the same pickle. Both Europe and Japan are in similar binds.

In short, while the Fed and ECB grease the monetary wheels, and the U.S. glides along because Europe faces greater short term woes than we do, the Black Hole is out there getting closer and larger. It appears the road to fiscal discipline is arduous and painful enough to make progress both here and abroad excruciatingly slow. With the bond vigilantes there might not be any progress at all. The next President, with forceful leadership, may begin to move the needle but whatever happens will only be a beginning toward a decade-plus solution...

 

[trysail]

http://www.bloomberg.com/news/2012-...icare-to-squeeze-out-government-spending.html



Simpson Says Medicare to Squeeze Out Government Spending
By Caroline Fairchild
August 13, 2012

Former U.S. Senator Alan Simpson, co-chairman of President Barack Obama’s fiscal commission, said escalating Medicare costs stand to squeeze out the rest of domestic government spending.

“Medicare is on automatic pilot. It will use up every resource in the government,” the Republican former senator from Wyoming said in an interview today on Bloomberg Television. Asked about spending ranging from highway programs to the Federal Bureau of Investigation, Simpson said: “The things you just mentioned will be completely squeezed out” by Medicare.

Representative Paul Ryan, Mitt Romney’s choice as his Republican vice presidential running mate, has proposed replacing Medicare with a plan giving the elderly a fixed amount of money to buy private coverage. Ryan’s plan may become a central part of the presidential campaign.

“We owe 16 trillion bucks and nobody even understands what that is,” Simpson said in the interview. “If you want to get the old playbook out and use infrastructure, airplanes, all the stuff, that’s great. You won’t even see it because of what’s going to happen with Medicare.”

Simpson said the country’s current path of debt, deficit and interest is “totally unsustainable.” President Obama’s fiscal commission was “solidly specific” and the commission acknowledged “the nature of a fragile recovery,” he said.

Simpson-Bowles
The Simpson-Bowles plan, issued by the commission headed by Simpson and former President Bill Clinton’s chief of staff Erskine Bowles, advocated a series of spending cuts and tax increases to balance the budget. The plan was never adopted nor openly endorsed by the president. The House voted down the plan, with Republicans saying it had too many tax increases and not enough spending cuts.

Ryan served on the 2010 commission and voted against its recommendations.

Even as Congress struggles to come to consensus on fiscal spending, Simpson said markets will control the debate over the future of the U.S. economy.

“All you have to do is a plan,” Simpson said. “We’ve got it in legislative language, we’re circulating it right now, among a very good group of Democrats and Republicans. If you do a plan then the markets will lay off of you.”



http://www.bloomberg.com/news/2012-...icare-to-squeeze-out-government-spending.html

 

[trysail]

This is just the tip of the iceberg. Estimates of underfunded state, county and municipal pension funds are as high as $3 trillion (the figure used by Warren Buffett when he warned of the enormous unfunded liability).

Gaming the system and outright abuse of state and municipal pensions by government employees is rampant.

Even the financial lunatics in Cali have FINALLY recognized there'a a big, big problem.


_________________

http://www.bloomberg.com/news/2012-...ers-send-public-pension-cutback-to-brown.html



California Lawmakers Send Public-Pension Cutback to Brown
By Michael B. Marois
August 31, 2012

California lawmakers approved the broadest rollback of public-employee pension benefits in the state’s history after Governor Jerry Brown and Democrats who control the Legislature struck a last-minute deal.

The overhaul, which may save taxpayers as much as $55 billion over 30 years, would require new employees to pay half the cost of their benefits and work longer before they can retire. It also reduces formulas for calculating benefits and caps pension payments.

Brown, a 74-year-old Democrat, pressed for a revamp to show progress in curbing soaring retiree costs before he asks voters for higher income and sales taxes in November. Public resentment of government employees has grown as taxpayers saw their own job prospects and benefits shrink in the longest recession since the 1930s.

“This sweeping pension-reform package will save tens of billions of taxpayer dollars and make the system more sustainable for the long term,” the governor said in a statement.

The bill, which passed the Assembly 48-8, was approved 36-1 in the Senate on the last day of the legislative session. The governor has until Sept. 30 to sign or veto the legislation, or it becomes law without his signature.

The measure would require new state and local government employees under the California Public Employees’ Retirement System, or Calpers, the largest public pension in the U.S., to pay for half of their benefits. The same savings will be sought from current employees through bargaining with their unions.

Smaller Checks
Retirement checks for new workers would be based on wages capped at about $110,000 a year, or $132,000 for those not covered by the federal Social Security system, adjusted for inflation. For most new civil servants who aren’t police officers or firefighters, the minimum retirement age for full benefits would increase to 67 from 55.

The bill also takes aim at so-called pension spiking, a practice that inflates future retirement payments by manipulating overtime, unused vacation and special compensation. It also would limit “double dipping,” involving retirees who collect benefits and also take another government job. And it would ban workers from buying service credit to boost their payouts.

Charter counties or cities with their own pension plans, such as San Jose, Los Angeles and San Diego, would be exempt from the new rules.

Republican Critics
Republican lawmakers panned the overhaul, saying it didn’t go far enough.

“It doesn’t even scratch the surface of what’s needed in this state before we ask to raise taxes,” said Assemblyman Allan Mansoor, a Republican from Costa Mesa.

Public-employee unions said the bill was overreaching and undermined collective bargaining.

“Ripping billions of dollars of pension benefits from public workers without collective bargaining is unfair and wrong,” said Dave Low, chairman of Californians for Retirement Security, a coalition of unions representing 1.5 million public employees and retirees.

Calpers said today the changes may save the state and local governments $42 billion to $55 billion over the next 30 years. It wouldn’t immediately improve the system’s unfunded liability, its actuary said.

Unfunded Liability
Calpers, with assets of $237.3 billion, had 72 percent of the assets needed to cover obligations to its 1.6 million beneficiaries as of June 30, 2011, according to a report.

The fund earned 1 percent in the fiscal year that ended June 30, below its target of 7.5 percent. When Calpers underperforms, the state and municipalities must make up the difference to meet its obligations.

Brown and Republicans last year called for a new type of pension, combining elements of a 401(k) savings plan common among nongovernment employers with conventional defined-benefit systems that guarantee payments for life.

Such a so-called hybrid plan would have spread to workers some of the market risk now borne by taxpayers, who must make up for pension-investment shortfalls. The hybrid was opposed by labor unions.

“This is not the end-all, be-all, but it brings us considerably down the road to public-pension reform,” said Assemblyman Warren Furutani, the Long Beach Democrat who headed a conference committee that drafted the legislation.




http://www.bloomberg.com/news/2012-...ers-send-public-pension-cutback-to-brown.html

 

[trysail]

Accounting 101 for U.S. voters:

http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0

 

[MatthewVett]

In the US Constitution the candidate for president must be a natural born citizen. Now what that means has been debated over the years to mean he has to have been born within the boarders of the now 50 states.

If this is true, why did NOBODY say anything about McCain running, when he was born in Panama (albeit the US Canal Zone)?