Obama Deficit Commission Weighs Politically Toxic Fixes
ANDREW TAYLOR
HuffPost
04/27/10
AP
WASHINGTON — Even members of President Barack Obama's bipartisan fiscal commission admit the near impossibility of their task: finding a consensus by next fall for reducing federal deficits that threaten to erode Americans' standard of living.
The most obvious solutions, higher taxes or fewer government benefits, are the most toxic – one reason the 18-member panel has instructions to deliver its recommendations after the November election.
The commission begins work Tuesday with a charge to produce a deficit no bigger than $550 billion by 2015, an amount equal to about 3 percent of the total U.S. economy. That would require deficit savings in the range of $250 billion or more.
"This is a suicide mission," the panel's co-chairman, former Sen. Alan Simpson, R-Wyo., said on "Fox News Sunday."
(More here.)
HuffPost
04/27/10
AP
WASHINGTON — Even members of President Barack Obama's bipartisan fiscal commission admit the near impossibility of their task: finding a consensus by next fall for reducing federal deficits that threaten to erode Americans' standard of living.
The most obvious solutions, higher taxes or fewer government benefits, are the most toxic – one reason the 18-member panel has instructions to deliver its recommendations after the November election.
The commission begins work Tuesday with a charge to produce a deficit no bigger than $550 billion by 2015, an amount equal to about 3 percent of the total U.S. economy. That would require deficit savings in the range of $250 billion or more.
"This is a suicide mission," the panel's co-chairman, former Sen. Alan Simpson, R-Wyo., said on "Fox News Sunday."
(More here.)
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1 Comments:
well, this should come as no surprise. Obama took Bush's $460 billion dollar deficit and doubled it in one year to $1.4 trillion and every Obama budget will be in the trillions of dollars with trillions of deficit. How on earth will these obligations ever be paid back without unpopular choices? Not to mention that now Social Security is now paying out more than it takes in and that 'Social Security Trust Fund' is nothing but a bunch of Treasury Notes that when the Social Security Administration wants to redeem them with the Treasury, where is the Treasury going to get the trillions it needs to meet the Social Security Trust Fund obligations?
There are three things that government does to raise revenue - tax, borrow and inflate. Our borrowing is so highly leveraged that our credit rating is being threatened with being downgraded. With the 'spreading around' of Obamanomics in full force, foreign creditors are not going to invest in a country whose primary economic activity is transfer payments. Obamanomics so far has not proven that it can lead to sustained economic growth without massive government expediture which sooner or later comes out of the private economy. Obama and Clinton have been to China several times to urge the Chinese to keep buying our debt while China wants to dump the dollar altogether. The only way to keep foreign creditors happy is to increase interest rates so that they will keep buying our debt, but that has a deleterious effect on the economy and brings on inflation. We also know that even if we taxed the top 5% of income earners at 100% of their incomes, it would only bring in between $400 billion and $500 billion. Obama's debt is expected to reach $14 trillion by 2020 - nearly 100% of GDP - and that's without meeting existing obligations which could push the debt past $20 trillion by 2020. There will be no choice but to massively tax the middle class which Paul Voelcker has suggested via a value-added tax.
The Obama Administration has also been printing money like - this is called 'monetizing the debt' in economic circles - which automatically devalues savings because when you have double or triple the fiat currency that are chasing the same amount of goods and services, this has an upward pressure on price. We haven't seen the inflationary effects yet but that is because the economy is still struggling despite recent good numbers from several economic indicators, but it the economy does begin to recover, the expanded money supply will be too large for the number of goods and services available in the economy. And when the Bush tax cuts expire in 2011, that's going to furthe assist to kill off any nascient recovery because there won't be any money in the private economy to invest.
The only solution - the ONLY one - is to massively reduce federal spending. Tax, borrow, inflate - all of these will only exascerbate the problems and Obamanomics of 'spreading the wealth' around does nothing to foster production in the economy. Spending money does not grow an economy, only increased production can grow an economy and the only way to foster that productive activity is to reduce the amount of money the government takes from the private economy.
otherwise, we will be on our way to ending up like Greece if we continue on the current path we are on. we do not have a taxation problem or debt problem or inflation problem in this country - we have a government spending problem. And until we get serious about reining in the astronomic levels of government spending, none of these 'toxic fixes' are going to do much good to address the problem.
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