National Debtbusters

Newest National Debt Statistics Now Posted - April 2011

2011-04-20T23:20:00.000-05:00

The newest National Debt statistics as reported by www.treasurydirect.gov. Statistics are through April 19, 2011.

National Debt
Held by Public
$9,680,021,693,766.99

Intragovernmental Holdings
$4,640,446,861,324.69

Total debt (4/19/2011)
$14,320,468,555,091.68

Amount of Debt on Sept. 30, 2010
$13,561,623,030,891.79

Increase in Fiscal Year 2011
$758,845,524,199.89

Debt on Inauguration Day 2009
$10,626,877,048,913.08

Debt increase in 819 days of Obama Administration
$3,693,591,506,179.60
($4,509,879,738.92/day)

Total Debt increase in George W. Bush Administration
($4,899,100,310,608.44 [$1,676,625,705.20/day - 2922 days])

Interest payments
March 2011
$24,460,282,823.69

Fiscal Year 2011
$215,581,249,409.94

Gifts to reduce the Public Debt
February 2011 (last month reported)
$115,061.18

Fiscal Year 2011 (to-date)
$645,917.73

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford
Presidents 1-38, 1791-1976
Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980
Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988
Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992
Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd President, 1993-2000
Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008
Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present
Debt Increase: $3,693,591,506,179.60 (through April 19, 2011)

Washington Journal Special Series: National Debt

2011-04-18T21:24:00.000-05:00

Focus on Bi-partisan Fiscal Commission

WASHINGTON, DC
Monday, April 18, 2011

www.c-span.org

As both political parties released competing plans to reign in spending, the Washington Journal spends the week examining a bi-partisan proposal released by the National Commission on Fiscal Responsibility and Reform in December.

The 20-member bi-partisan commission, led by former Republican Senator Alan Simpson and former Clinton Chief-of-Staff Erskine Bowles, was chartered by President Obama to come up with ways to reduce the nation's debt and deficit.

Congressman Paul Ryan presents the Republican plan.
J. Scott Applewaite/AP

Their plan, called "The Moment of Truth," cuts $4 trillion by cutting spending, raising revenue, and reforming entitlements.

After the plan was released, President Obama endorsed some elements but not the entire plan. In his long-term budget proposal released last week, he adopted some of the commission's ideas.

The president's outline proposes $4 trillion in deficit reduction over the next 12 years. It calls for cutting non-security discretionary spending by $770 billion, reducing security spending by $400 billion and repealing Bush-era tax cuts for the "wealthiest Americans." His plan also aims to save $480 billion from Medicare and Medicaid.

To promote those ideas, the President will host three town halls beginning Tuesday in northern Virginia, California and Nevada.

Rep. Paul Ryan (R-WI) was a member of the commission but did not support the final report in part because it kept health care reform in tact. Instead he released his own budget proposal, which passed the house last week with only Republican support.

His plan would cut spending by at least $5 trillion dollars over the next decade by cutting discretionary spending, reforming Medicaid into a block grant program, creating a voucher system for Medicare and reducing taxes.

At 9:15 am EST each day this week, the Washington Journal explores different components of the commission's proposal. Coverage began today with former Budget Committee Chair Rep. John Spratt (D-SC).

Also Monday, the Washington Journal spoke with Douglas Holtz-Eakin, former Chief Economist of the President's Council of Economic Advisors for President George W. Bush.

US credit rating: Congress has many debt plans, but will it heed warning?

2011-04-18T21:17:00.000-05:00

US credit rating is still AAA, but Standard & Poor’s added a cautionary note because of the nation’s ‘rising government indebtedness.’ Here's a look at some of the budget plans in Congress.

US credit rating: House Budget Committee Chairman Paul Ryan (R) gestures during a news conference at the Capitol in Washington, April 13. Standard & Poor's downgraded its outlook Monday on the United States' sovereign debt, expressing doubts over the ability of Washington to bring the massive federal budget deficits under control in the next three years. J. Scott Applewhite/AP

By Gail Russell Chaddock, Christian Science Monitor Staff writer / April 18, 2011

Washington

A report that Standard and Poor’s has lowered its US credit outlook from “stable” to “negative” jolted the New York Stock Exchange and fueled calls for Congress and the White House to come to terms on a solution to America’s soaring debt.

While maintaining its AAA rating on US debt, the rating agency added a cautionary note due to the nation’s “rising government indebtedness” – and the prospect that Congress and the White House will not deal with it. It’s a signal that if a political deal is not reached by 2013, the US credit rating could be downgraded, triggering higher interest rates and deepening the debt crisis.

“There is a material risk that US policymakers might not reach an agreement in how to address medium- and long-term budgetary challenges by 2013,” Standard and Poor’s concluded.

RELATED: Obama vs. Paul Ryan - Five ways their debt plans differ

In response, the White House insisted that progress is being made toward a bipartisan agreement. “We think the political process will outperform S&P expectations,” said White House press secretary Jay Carney at a briefing Monday. “The fact is when the issues are important, history shows that both sides can come together and get things done,” he added.

In fact, Washington is awash with plans to rein in deficits. Last week, President Obama called for $4 trillion in deficit reduction over 12 years. Republicans call for $4 trillion over 10 years. Although those figures may be close, the approaches are starkly different.

On Friday, the House voted on five budget plans for fiscal year 2012, each with dramatically different strategies to resolve the nation’s fiscal woes. Here are details of those five plans:

• The GOP leadership plan, developed by House Budget Committee chair Paul Ryan (R) of Wisconsin, lowered both individual and corporate tax rates and capped government spending as a percentage of gross domestic product. It also significantly overhauled Medicare and Medicaid, shifting costs to individuals and the states. It passed with no Democrat votes, 235 to 193.

• Democrats on the House budget panel, led by Rep. Chris Van Hollen of Maryland, aimed to bring the budget back toward “primary balance” by fiscal year 2018 by freezing nondefense spending for five years, ending tax breaks to oil and gas industries, and not renewing the Bush-era tax cuts. It failed 166 to 259, with no Republican votes.

• GOP conservatives proposed even deeper cuts in entitlement programs: They’d increase the retirement age for Social Security to 70 and raise the eligibility age for Medicare to 67. It failed 119 to 120, with no Democratic votes. (In a last-minute maneuver, all but 16 Democrats voted “present” – a move that could have allowed the measure to defeat the more moderate Ryan proposal.)

• The Congressional Black Caucus aimed to cut deficits by nearly $3.96 trillion over 10 years, mainly by increasing revenue – ending, specifically, the Bush-era tax cuts on the wealthy. It failed 103 to 303. Seventy-five Democrats voted with all Republicans in opposition.

• The Congressional Progressive Caucus outlined the reduction of deficits by $5.7 trillion over the next 10 years, mostly by increasing taxes by some $4 trillion and cutting defense spending by $2.3 trillion. The measure failed 77 to 347, with 108 Democrats joining all Republicans in opposition.

Fiscal watchdog groups welcomed the new interest on Capitol Hill in presenting detailed plans for dealing with the debt crisis. For years, Congress has been criticized for failing to produce plans with an aim to cut deficits and spending. But the need now, the observers say, is to hammer out a political settlement.

“It’s gratifying to see lots of plans. Now it’s necessary to put out plans that are actually viable – that lend themselves to political compromise, not just to where [sponsors] sit in the world of politics,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

“We’ve had some really good advice from outsiders; we now need decisionmakers to start putting together a deal,” she adds.

Last week, Mr. Obama called for new House-Senate negotiations on deficit reduction, chaired by Vice President Joe Biden. Democratic leaders have announced their appointments to these talks, while Republicans so far have not.

Meanwhile in the Senate, the so-called Gang of Six continues bipartisan negotiations over deficit reduction.

"[The S&P] announcement is yet another reminder that financial markets are closely watching efforts by the President and Congress to reduce the deficit in order to promote economic recovery and create jobs,” said House Democratic leader Nancy Pelosi in a statement.

Surprise warning on U.S. debt comes as Washington inches away from gridlock

2011-04-18T21:10:00.000-05:00

Standard & Poor's warning that it could downgrade the AAA rating on U.S. debt in the next two years jolts financial markets. The warning comes even as a new sense of realism emerges in the stalemate between President Obama and congressional Republicans over fiscal policy.

April 18, 2011, 6:18 p.m.

Traders work the floor on the New York Stock Exchange. Investers in stocks appeared to moderate their view on the effect of S&P's announcement. (Brendan McDermid/Reuters)

Reporting from Washington and Los Angeles—

An unexpected warning about America's soaring debt jolted financial markets and is threatening wider consequences for the U.S. economy, even as a new sense of realism emerges in the stalemate between President Obama and congressionalRepublicans over fiscal policy.

The shot across the government's bow came from Standard & Poor's, a leading credit rating firm, which served notice that there was a 1-in-3 chance that it would lower the now-sterling AAA credit rating on U.S. debt in the next two years.

The mere prospect of such a downgrade, which until recently was considered unthinkable, could drive most U.S. interest rates higher, imposing new strains on consumers and the still-fragile economic recovery.

The White House dismissed S&P's move Monday as a political gesture that failed to recognize America's long history of political opponents' coming together in times of crisis. And after weeks of often bellicose sparring, there were signs that just such an edging together might be underway — at least on the most immediate issue of raising the debt ceiling — thanks in part to lobbying by business groups.

In recent days, GOP congressional leaders as well as the president have issued pledges to get the ceiling raised in a timely fashion. Obama acknowledged that an agreement would entail new commitments on deficit reduction and Republicans promised to find common ground even though they still have huge differences with Democrats on spending and taxes.

"This debate has moved into a different realm," R. Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce said in an interview. His organization and other business groups have been working hard to persuade Republicans not to hold up debt ceiling legislation.

Josten said he had become more optimistic that a damaging confrontation could be avoided, though he said difficult negotiations lay ahead.

"There are so many negotiations over concessions that it is like a plate-spinning contest," he said. Still, regarding the likelihood of a deal, Josten said, "I think it's going to happen."

What lay behind the change in Washington's political climate appeared to be a growing recognition on both sides that failure to raise the debt ceiling and offer at least the possibility of a less partisan approach to the overall deficit problem could have severely damaging consequences for the economy — and for politicians.

The national debt will hit its $14.3-trillion ceiling — its current legal cap — in a matter of weeks.

Josten and other business leaders have been conducting a low-profile but intense lobbying effort to bring aboard skeptical conservatives in Congress, many of whom the business groups backed financially in last year's election.

In addition to one-on-one lobbying, the Chamber of Commerce has brought prominent business leaders to Washington to drive home the seriousness of the debt limit issue.

"If the United States actually defaults on our debt, it would be catastrophic," Jamie Dimon, chief executive of JPMorgan Chase & Co., warned at a recent chamber forum in Washington. "If anyone wants to push that button … they're crazy."

The action by S&P, coming on a day when markets abroad already were fretting over Europe's debt woes, unnerved investors, many of whom — like the American public — have long regarded the spiraling U.S. debt as a problem for the future, not the present.

S&P's warning, however, raises the risks that global investors will view U.S. government bonds as riskier than they do now, forcing the Treasury to pay higher interest rates on newly issued debt. That could mean higher interest costs for American consumers and businesses as well.

"It's a serious step," said Chris Rupkey, senior financial economist at the Bank of Tokyo-Mitsubishi in New York. At a time when rising energy costs are weighing on businesses and consumers, he said, "this is another head wind facing the economy."

But the possibility of a drop in the nation's credit rating didn't play out on Wall Street entirely as might have been expected. Market interest rates on U.S. Treasury bonds initially rose after S&P issued its statement Monday, but then quickly fell back, demonstrating that the securities are favorite hiding place for many investors in times of global turmoil.

Investors in stocks also appeared during Monday's trading session to moderate their view on the effect of S&P's announcement. The Dow Jones industrial average closed down 140.24 points, or 1.1%, to 12,201.59, paring what had been a 248-point drop.

Publicly, leaders of both parties reacted to S&P's report with partisan criticisms. "S&P sent a wake-up call to those in Washington asking Congress to blindly increase the debt limit," said Rep. Eric Cantor (R-Va.), the House majority leader.

But behind the scenes, the ratings shift looked to spur the two sides to move toward a middle ground.

In its report, S&P expressed skepticism that Republican leaders and the president, who have proposed dueling deficit-cutting plans in recent days, could come together. "The gap between the parties remains wide," S&P analysts wrote.

S&P's main rival in the debt-rating business, Moody'sInvestors Service, on Monday maintained its "stable" outlook on the nation's credit rating. Moody's analyst Steven Hess said that despite the gulf between the Obama administration's deficit-reduction plan and that of Republican leaders, "The two proposals together represent a significant shift in the U.S. fiscal debate."

The Moody's analyst called the proposals "a turning point that is positive for the long-term fiscal position of the U.S. federal government."

White House spokesman Jay Carney suggested that the warning from S&P might even serve as a useful reminder to Congress that failing to raise the debt ceiling carries grave consequences.

"I would say that any call for a bipartisan agreement on deficit reduction — fiscal reform — is a welcome one and in that context it adds to what we believe is some momentum toward that end," Carney said.

Some congressional leaders gave little indication of moving from their hard-line positions, but others said the downgrade warning was evidence of the need to resolve partisan disputes and swiftly improve the nation's fiscal outlook.

"Today's revised outlook [by S&P] shows the urgent, bipartisan action needed to put our nation on a serious path to reduce deficits," said the No. 2 Democrat in the House, Rep. Steny H. Hoyer of Maryland. "Republicans cannot hold the debt limit hostage over partisan, divisive issues."

don.lee@latimes.com

tom.hamburger@latimes.com

tom.petruno@latimes.com

Lisa Mascaro and Peter Nicholas in Washington and Nathaniel Popper in New York contributed to this report.

Irish Bonds Drop After Moody’s Downgrade; Spanish and Greek Debt Slides

2011-04-18T20:56:00.002-05:00

By Lucy Meakin - Bloomberg

Ireland’s bonds led a third day of declines by the securities of Europe’s most indebted nations after Moody’s Investors Service cut the nation’s credit rating to the lowest investment grade.

The spread between Greek 10-year debt and equivalent German securities widened to 10 percentage points, while Spanish bonds slid for a third day. German two-year notes declined as data showed European inflation accelerated. Moody’s today lowered Ireland to Baa3 from Baa1 and left its outlook negative, meaning more cuts will probably follow. A report yesterday cited German Finance Minister Wolfgang Schaeuble as saying Greece may need to renegotiate its debt burden.

“We’ve had quite a lot of bad news about the peripherals in the past couple of days,” said Glenn Marci, a strategist at DZ Bank AG in Frankfurt. It “was a lot of bad news in a short period of time, and the spreads are suffering a lot.”

Irish 10-year yields rose 38 basis points to 9.72 percent at 4:42 p.m. in London, the highest since April 6. The 5 percent security maturing October 2020 fell 1.875, or 18.75 euros per 1,000-euro ($1,444) face amount, to 71.52. The five-year yield surged 49 basis points to 10.15 percent.

Ireland’s credit rating was cut two levels by Moody’s as the government struggles to lower thebudget deficit and restore economic growth. Ireland now shares the same rating as Iceland,Tunisia, Romania and Brazil.

Portuguese yields reached new records amid concern that nations in the euro region will be forced to restructure their debts. The Iberian nation last week followed Greece and Ireland in requesting financial aid as it attempted to stem surging borrowing costs.

Greek Austerity

The extra yield investors demand to hold Greek 10-year debt instead of equivalent German securities surpassed 1,000 basis points, the most since before the euro’s debut in 1999, and the 10-year yield climbed to a new record high of 13.83 percent. The government announced 76 billion euros in austerity measures and state-asset sales to meet budget-deficit goals.

“The level of Greek yields is shocking,” wrote ING Groep NV rate strategist Alessandro Giansanti in an e-mailed note. “What is worrying the market is the Greek government’s ability to collect revenues and the difficulty to reduce the expenditure.”

Nouriel Roubini, the New York University professor who predicted the global financial crisis, said restructuring of Greek government debt is a matter of time.

‘When, Not If’

“The issue of Greece is not whether there will be debt restructuring, but when it will be done,” he said today at a conference in Almaty, Kazakhstan’s financial center. “One can make the same argument for Portugal’s government and Irish banks,” he said.

Greek two-year note yields rose 68 basis points to 18.51 percent, while 10-year securities yielded 13.83 percent, 55 basis points higher. Portugal’s 10-year bond yield surpassed 9 percent for the first time since 1997, and the two-year yield also climbed to a record 9.84 percent.

John Lipsky, the International Monetary Fund’s No. 2 official, said that “the markets have their doubts” about the bailout programs in Greece and Ireland.

“No one ever expected that a program as strenuous as the Greek program would receive immediate endorsement by the markets. They want to see delivery,” Lipsky said in an interview on Bloomberg Radio.

Euro-Region Inflation

Spanish 10-year yields rose nine basis points to 5.42 percent, amid mounting investor concern that Portugal’s bailout won’t stop the debt crisis from spreading. The difference in yields between Spanish and German 10-year debt widened for a fourth day to as much as 205 basis points.

German debt rose even after data showed euro-region inflation accelerated to the most in more than two years.

Consumer prices in the 17-nation euro region rose 2.7 percent in the year to March, up from a 2.4 percent pace in February, the European Union’s statistics office in Luxembourg said today. That’s above an initial March estimate of 2.6 percent and the fastest since October 2008. Euro-area exports rose 1.6 percent in February from the previous month, a separate report showed.

The benchmark German 10-year bund yield dropped five basis points to 3.38 percent.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

When The U.S. Paid Off The Entire National Debt (And Why It Didn't Last)

2011-04-18T03:36:00.001-05:00

by ROBERT SMITH

National Public Radio

On Jan. 8, 1835, all the big political names in Washington gathered to celebrate what President Andrew Jackson had just accomplished. A senator rose to make the big announcement: "Gentlemen ... the national debt ... is PAID."

That was the one time in U.S. history when the country was debt free. It lasted exactly one year.

By 1837, the country would be in panic and headed into a massive depression. We'll get to that, but first let's figure out how Andrew Jackson did the impossible.

It helps to remember that debt was always a choice for America. After the revolution, the founding fathers debated whether or not to just wipe clean all those financial promises made during the war.

Deciding to default "would have ruined our credit and would have left the economy on a very agricultural, subsistence basis," saysRobert E. Wright, a professor at Augustana College in South Dakota.

So the U.S. agreed early on to consolidate the debts of all the states — $75 million.

During the good times, the country tried to pay down the debt. Then there would be another war, and the debt would go up again. The politicians never liked the debt.

"What the battle was really about was how quickly to pay off the national debt, not whether to pay it off or not," Wright says.

But, just like today, it wasn't easy for politicians to slash spending — until Andrew Jackson came along.

"For Andrew Jackson, politics was very personal," says H.W. Brands, an Andrew Jackson biographer at the University of Texas. "He hated not just the federal debt. He hated debt at all."

Before he was president, Jackson was a land speculator in Tennessee. He learned to hate debt when a land deal went bad and left him with massive debt and some worthless paper notes.

So when Jackson ran for president, he knew his enemy: banks and the national debt. He called it the national curse. People ate it up.

In Jackson's mind, debt was "a moral failing," Brands says. "And the idea you could somehow acquire stuff through debt almost seemed like black magic."

So Jackson decided to pay off the debt.

To do that, he took advantage of a huge real-estate bubble that was raging in the Western U.S. The federal government owned a lot of Western land — and Jackson started selling it off.

He was also ruthless on the budget. He blocked every spending bill he could.

"He vetoed, for example, programs to build national highways," Brands says. "He considered these to be unconstitutional in the first place, but bad policy in the second place."

When Jackson took office, the national debt was about $58 million. Six years later, it was all gone. Paid off. And the government was actually running a surplus, taking in more money than it was spending.

That created a new problem: What to do with all that surplus money?

Jackson had already killed off the national bank (which he hated more than debt). So he couldn't put the money there. He decided to divide the money among the states.

But, according to economic historian John Steele Gordon, the party didn't last for long.

The state banks went a little crazy. They were printing massive amounts of money. The land bubble was out of control.

Andrew Jackson tried to slow everything down by requiring that all government land sales needed to be done with gold or silver. Bad idea.

"It was a huge crash, and the beginning of the longest depression in American history," Gordon says. "It actually lasted six years before the economy began to grow again."

During the depression, the government started borrowing money again.

No one says that paying off the debt caused the depression. The bubble was going to pop sometime. But the result was that we had to kiss a debt-free U.S. goodbye. The country never came close again.

Donald Trump's three-point plan to solve the national debt

2011-04-18T03:05:00.000-05:00

How would a President Trump deal with the national debt? He hasn't been asked that too often, but here are some indications. Hint: He blasted Obama's latest speech on the subject.

By Peter Grier, Staff writer / April 14, 2011
Christian Science Monitor

Just kidding! Mr. Trump has said nothing of the sort. He doesn’t have that kind of money, anyway. Warren Buffet might – but he’s already promised his to charity.

The subject of the Donald and the deficit comes up because on Thursday Trump blasted Obama’s recent speech outlining his proposed fiscal path for the nation.

It “wasn’t a deficit-cutting speech,” said Trump, speaking with New York Talk 1300 radio host Fred Dicker.

It was a “stump speech. That was the beginning of his run for president,” Trump continued.

Obama vs. Paul Ryan: five ways their debt plans differ

OK, Mr. Billionaire, how would you handle it then? You’re talking about maybe running for president, after all.

As it happens Trump does not appear to have addressed that question at length. For some weird reason interviewers seem much more interested in asking him about where Obama was born than how a President Trump might govern the country.

But you can piece together bits of a policy from various pronouncements Trump has made in recent weeks. We’ll call it “Trump’s three-point plan to solve the debt crisis.”

SOAK THE RICH ... COUNTRIES. Trump’s big thing is international respect. People are laughing at us around the world, he says, and he wants that to stop. One way to do this would be to end the fact that they are “ripping us off” (Trump’s words) by letting the US pick up the tab for being the world’s policeman.

“As an example, we are protecting South Korea from North Korea. Why aren’t they paying us?” Trump said in a February interview on CNN.

More recently he’s charged that the Arab League is letting us get rid of Muammar Qaddafi for it without offering to kick in a dime.

“If the United States were properly run, and if we had leaders that knew what they were doing, the United States would be flowing in cash,” said Trump March 31 on MSNBC.

IN PICTURES: Will these Republicans run in 2012?

CHERISH THE SENIORS. OK, so Trump doesn’t like Obama’s debt plan. Does he approve of the GOP alternative, drawn up by Rep. Paul Ryan (R) of Wisconsin? Umm ... not really. There are big parts of it Trump does not like. Specifically, he thinks Representative Ryan’s proposal to turn Medicare into a voucher program, with the government subsidizing seniors’ purchase of private health insurance, is politically risky.

“I don’t think the Republicans should be out on this ledge,” said Trump April 7 on CNN.

So how would Trump solve the problem of Medicare, which is the largest single driver of the nation’s long-term debt?

“Well, I’m studying that situation very closely, and if and when I decide to run ... I’ll have a plan,” said Trump.

“The seniors have to be cherished. They have to be taken care of,” he added.

LET’S MAKE A DEAL! Trump has said he considers himself a tea party adherent. On NBC’s "Today" show April 7 he decried “this ridiculous, absolutely killer of a spending that’s going on,” added that “Obamacare” has been a “disaster.”

But at heart he seems to regard straightening out the nation’s fiscal crisis as more of a process problem more than a challenge of ideology. When a shutdown of the government loomed last week he faulted Obama, not for resisting further budget cuts, but for not getting the necessary deal done.

“I’d bring everybody together and we’d have a budget and it would get done,” said Trump on “Today.”

Wow, why didn’t Obama think of that?

The Most Perilous National Security Crisis Since 1860

2011-04-08T20:30:00.000-05:00

By Mark Alexander · Thursday, April 7, 2011

A Time to Choose: Prosperity or Poverty

"To preserve independence...we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression." --Thomas Jefferson

In the news this week, Barack Hussein Obama announced his 2012 re-election bid¹.

Plus...

The Treasury Department quietly mentioned that last month the government spent 8.2 times its net revenue.

Plus...

The Continuing Resolution authorizing additional borrowing for federal spending, a source of much political pretentiousness, expires on Friday. If there is no renewed CR, the result will be a partial government shutdown² (read: "debt accumulation slowdown"), with dire consequences such as the suspension of IRS audits and cherry blossom festivals. (Republicans could shutter 80 percent of central government operations, and the effect on those of us who actually pay taxes would be beneficial not detrimental.) Of course, the shutdown showdown³ is just the opening salvo in a war over how to fund the remaining five months of FY2011, which ends on 30 September, and, moreover, government budgets for 2012 and beyond.

Plus...

The price of oil, amid the Middle East meltdown precipitated by Obama's leadership vacuum, is on the fast track back to its record high of $147/barrel. Indeed, it may be headed to more than $200/barrel if the Saudi government is the next to fall. Despite what the Obama administration would have us believe, oil is the lifeblood of the U.S. and world economy, and we have a critical national interest in sustaining that supply. However, because of Leftist energy policies, we do not have energy hedges including domestic oil and nuclear power alternatives.

Plus...

Consequently, gold bullion -- the world's primary barometer measuring concern about inflation, national debt, securities and real estate price declines, fiat currency failures, and warfare and social unrest -- hit a nominal record high of $1,457 per troy ounce.

However, the most significant news this week, in light of the aforementioned reports, is the big Beltway budget brawl between those who are advocating the right path to economic prosperity and Liberty, and those who would stay the course toward economic catastrophe and tyranny.

The raucous political rhetoric over the federal budget sounds much like the perennial hyperbole between Right and Left over the constitutional authority⁴ of the central government and its spending priorities. However, the outcome of the current debate is much more than a budget agreement for next year and the next decade: It will determine whether our nation will avert systemic economic collapse or collide with it head-on, plunging us into the most significant National Security Crisis since 1860, and condemning our posterity to the inevitable institution of socialism and the abject tyranny that accompanies it.

If a majority of our countrymen are not able to distinguish between the veracity of this grave assertion and political playbook hyperbole, the consequences for the next generation of Americans will be grim as the light of Liberty fades.

The danger of public debt was of great concern to our nation's Founders.

As George Washington wrote, "No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable."

James Madison declared, "Having never been a proselyte to the doctrine, that public debts are public benefits ... I consider them, on the contrary, as evils which ought to be removed as fast as honor and justice will permit." Thomas Jefferson warned, "To preserve independence ... we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression."

Regrettably, few today attach much reverence to the words of such men. Fewer still -- especially those who lived through the last Great Depression -- remain among us to attest in first person to its tragic consequences for our nation, for its people, and for our legacy of Liberty⁵.

To paraphrase philosopher George Santayana, "Ignorance of historical tragedy begets its replication."

Make no mistake: We are at a tipping point.

There is a gathering economic storm, one that will grind down the pillars of free enterprise and, ultimately, erode our Constitution's First Principles⁶ and the Rule of Law⁷ it enshrines.

This dispute between Republicans of the 112th Congress and Barack Hussein Obama's Leftists cadres⁸ is an epic contest to determine whetherObama's agenda⁹ to "fundamentally transform the United States of America" by imploding free enterprise¹⁰ will ultimately succeed.

On the front line of this debate is House Budget Committee Chairman Paul Ryan (R-WI) and a supporting cast of Speaker John Boehner¹¹ and a Republican majority, including 87 House freshmen¹², most of whom were elected on their singular devotion to the restoration of constitutional authority over the central government. Notably and unfortunately, however, there has been scant mention of our Constitution, though anydebate with a Leftist¹³ should start there.

Earlier this week, Rep. Ryan introduced his Prosperity Project Budget¹⁴, which slows our slide toward insolvency by cutting $6.2 trillion in spending and $4.4 trillion in new debt over the next 10 years. (See the full budget proposal for FY2012 and beyond here¹⁵.) Ryan rightly claims his budget proposal is the last opportunity to avert the looming economic crisis, and proper analysis¹⁶ bears him out.

"Washington," Ryan said, "has not been telling you the truth¹⁷" about the consequences of unbridled government spending and debt accumulation. He's right, of course, and the Democrats are, therefore, desperately trying to defeat the Republicans' House budget resolution in favor of Obama'sDebt Bomb¹⁸.
"This path," said Ryan, "has left us on the brink of national bankruptcy, and continuing down it will push our nation into ... an unprecedented economic collapse."

"[Obama] ... is not the first public official to have drifted down this perilous path," he said, "and those members of his party who are defending his do-nothing approach while demagoging our solutions -- well, they are certainly not the first, either. In recent years, both political parties have squandered the public's trust."

Ryan added that the House is calling for "fundamental reforms" that lower tax rates and broaden the base. "We don't have a tax problem," he insisted. "The problem with our deficit is not because Americans are taxed too little. So we're not going to go down the path of raising taxes on people and raising taxes on the economy."

While Ryan's plan puts the brakes on Obama's unmitigated spending proposals, it is notable that, despite all the Leftist consternation, it reduces the growth of government spending (not overall spending) by only 40 percent over the next decade; it increases government debt from $14 trillion to more than $23 trillion (almost a trillion each year); and it doesn't project a balanced budget (including interest payments) until 2040.

There's the added caveat (wildcard) that Ryan's projections don't take into account the potential for hyperinflation.

As I have noted before, however, it will likely take as long to undo this debt debacle as it took to create it, which elucidates the urgency of electing a veto-proof conservative majority in the U.S. Senate in 2012, and adding to the ranks of constitutional constructionists in the House. With Ryan's plan as a foundation, only then can Congress begin to restore constitutional Rule of Law in defense of our Essential Liberty.

However, in the unlikely event that some significant portion of Ryan's prosperity proposal is actually implemented, without strong conservative majorities in Congress it is doubtful that legislators will stay the course. Thus, should conservatives win the Senate and White House in 2012, the first order of business must be to enact the chief components of the Patriot Declaration¹⁹, sections the First and Fourth: The Enumerated Powers Act and a Balanced Budget Amendment.

On his way out of town on a re-election campaign junket, Obama, who once declared he would "cut the budget deficit in half by the end of my first term," paused to insist pejoratively that Republicans should "act like grownups." He added, "I think the American people recognize we are in some pretty unsettled times right now, we don't have time for games, we don't have time for trying to score political points and maneuvering, not on this."

Of course, "trying to score political points and maneuvering" is precisely Obama's game.

White House press secretary Jay Carney summed it up this way: "While we agree on ... Congressman Ryan's goal, we strongly disagree with his approach, because any plan to reduce our deficit substantially must reflect American values of fairness and shared sacrifice." These, of course, are metaphors for redistribution of wealth. In fact, even if Obama confiscated all individual income over $250,000, the income threshold he has targeted for tax increases, that wouldn't begin to defuse his debt bomb. Of course, it would put tens-of-millions of people who produce goods and services supported by "the rich," out of work, and by year two, there would be few incomes over $250,000.

Of course, Obama is banking on the assumption that the American people are just too dim-witted to understand the consequences of the debt bomb he's preparing to drop on their heads. In the case of his Democrat Party²⁰, he is undoubtedly correct.

Democratic Socialism²¹, like National Socialism, is nothing more than Marxist Socialism repackaged. Likewise, it seeks a centrally planned economy directed by a single-party state that controls economic production via regulation and income redistribution.

In 1964, Ronald Reagan²² introduced "A Time for Choosing²³." Four decades later, and much closer to the decline that Reagan foretold, Congressman Mike Pence (R-IN) issued "Another Time for Choosing²⁴," reiterating the Reagan model for restoration²⁵.

"You and I have a rendezvous with destiny," Reagan concluded. "We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness."

Our time to choose²⁶ has nearly expired.

The Most Perilous National Security Crisis Since 1860

2011-04-08T20:27:00.000-05:00

By Mark Alexander · Thursday, April 7, 2011

A Time to Choose: Prosperity or Poverty

"To preserve independence...we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression." --Thomas Jefferson

In the news this week, Barack Hussein Obama announced his 2012 re-election bid¹.
Plus...
The Treasury Department quietly mentioned that last month the government spent 8.2 times its net revenue.
Plus...
The Continuing Resolution authorizing additional borrowing for federal spending, a source of much political pretentiousness, expires on Friday. If there is no renewed CR, the result will be a partial government shutdown² (read: "debt accumulation slowdown"), with dire consequences such as the suspension of IRS audits and cherry blossom festivals. (Republicans could shutter 80 percent of central government operations, and the effect on those of us who actually pay taxes would be beneficial not detrimental.) Of course, the shutdown showdown³ is just the opening salvo in a war over how to fund the remaining five months of FY2011, which ends on 30 September, and, moreover, government budgets for 2012 and beyond.
Plus...
The price of oil, amid the Middle East meltdown precipitated by Obama's leadership vacuum, is on the fast track back to its record high of $147/barrel. Indeed, it may be headed to more than $200/barrel if the Saudi government is the next to fall. Despite what the Obama administration would have us believe, oil is the lifeblood of the U.S. and world economy, and we have a critical national interest in sustaining that supply. However, because of Leftist energy policies, we do not have energy hedges including domestic oil and nuclear power alternatives.
Plus...
Consequently, gold bullion -- the world's primary barometer measuring concern about inflation, national debt, securities and real estate price declines, fiat currency failures, and warfare and social unrest -- hit a nominal record high of $1,457 per troy ounce.
However, the most significant news this week, in light of the aforementioned reports, is the big Beltway budget brawl between those who are advocating the right path to economic prosperity and Liberty, and those who would stay the course toward economic catastrophe and tyranny.
The raucous political rhetoric over the federal budget sounds much like the perennial hyperbole between Right and Left over the constitutional authority⁴ of the central government and its spending priorities. However, the outcome of the current debate is much more than a budget agreement for next year and the next decade: It will determine whether our nation will avert systemic economic collapse or collide with it head-on, plunging us into the most significant National Security Crisis since 1860, and condemning our posterity to the inevitable institution of socialism and the abject tyranny that accompanies it.
If a majority of our countrymen are not able to distinguish between the veracity of this grave assertion and political playbook hyperbole, the consequences for the next generation of Americans will be grim as the light of Liberty fades.
The danger of public debt was of great concern to our nation's Founders.
As George Washington wrote, "No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable." James Madison declared, "Having never been a proselyte to the doctrine, that public debts are public benefits ... I consider them, on the contrary, as evils which ought to be removed as fast as honor and justice will permit." Thomas Jefferson warned, "To preserve independence ... we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression."
Regrettably, few today attach much reverence to the words of such men. Fewer still -- especially those who lived through the last Great Depression -- remain among us to attest in first person to its tragic consequences for our nation, for its people, and for our legacy of Liberty⁵.
To paraphrase philosopher George Santayana, "Ignorance of historical tragedy begets its replication."
Make no mistake: We are at a tipping point.
There is a gathering economic storm, one that will grind down the pillars of free enterprise and, ultimately, erode our Constitution's First Principles⁶ and the Rule of Law⁷ it enshrines.
This dispute between Republicans of the 112th Congress and Barack Hussein Obama's Leftists cadres⁸ is an epic contest to determine whetherObama's agenda⁹ to "fundamentally transform the United States of America" by imploding free enterprise¹⁰ will ultimately succeed.
On the front line of this debate is House Budget Committee Chairman Paul Ryan (R-WI) and a supporting cast of Speaker John Boehner¹¹ and a Republican majority, including 87 House freshmen¹², most of whom were elected on their singular devotion to the restoration of constitutional authority over the central government. Notably and unfortunately, however, there has been scant mention of our Constitution, though anydebate with a Leftist¹³ should start there.
Earlier this week, Rep. Ryan introduced his Prosperity Project Budget¹⁴, which slows our slide toward insolvency by cutting $6.2 trillion in spending and $4.4 trillion in new debt over the next 10 years. (See the full budget proposal for FY2012 and beyond here¹⁵.) Ryan rightly claims his budget proposal is the last opportunity to avert the looming economic crisis, and proper analysis¹⁶ bears him out.
"Washington," Ryan said, "has not been telling you the truth¹⁷" about the consequences of unbridled government spending and debt accumulation. He's right, of course, and the Democrats are, therefore, desperately trying to defeat the Republicans' House budget resolution in favor of Obama'sDebt Bomb¹⁸.
"This path," said Ryan, "has left us on the brink of national bankruptcy, and continuing down it will push our nation into ... an unprecedented economic collapse."
"[Obama] ... is not the first public official to have drifted down this perilous path," he said, "and those members of his party who are defending his do-nothing approach while demagoging our solutions -- well, they are certainly not the first, either. In recent years, both political parties have squandered the public's trust."

Ryan added that the House is calling for "fundamental reforms" that lower tax rates and broaden the base. "We don't have a tax problem," he insisted. "The problem with our deficit is not because Americans are taxed too little. So we're not going to go down the path of raising taxes on people and raising taxes on the economy."
While Ryan's plan puts the brakes on Obama's unmitigated spending proposals, it is notable that, despite all the Leftist consternation, it reduces the growth of government spending (not overall spending) by only 40 percent over the next decade; it increases government debt from $14 trillion to more than $23 trillion (almost a trillion each year); and it doesn't project a balanced budget (including interest payments) until 2040.
There's the added caveat (wildcard) that Ryan's projections don't take into account the potential for hyperinflation.
As I have noted before, however, it will likely take as long to undo this debt debacle as it took to create it, which elucidates the urgency of electing a veto-proof conservative majority in the U.S. Senate in 2012, and adding to the ranks of constitutional constructionists in the House. With Ryan's plan as a foundation, only then can Congress begin to restore constitutional Rule of Law in defense of our Essential Liberty.
However, in the unlikely event that some significant portion of Ryan's prosperity proposal is actually implemented, without strong conservative majorities in Congress it is doubtful that legislators will stay the course. Thus, should conservatives win the Senate and White House in 2012, the first order of business must be to enact the chief components of the Patriot Declaration¹⁹, sections the First and Fourth: The Enumerated Powers Act and a Balanced Budget Amendment.
On his way out of town on a re-election campaign junket, Obama, who once declared he would "cut the budget deficit in half by the end of my first term," paused to insist pejoratively that Republicans should "act like grownups." He added, "I think the American people recognize we are in some pretty unsettled times right now, we don't have time for games, we don't have time for trying to score political points and maneuvering, not on this."
Of course, "trying to score political points and maneuvering" is precisely Obama's game.
White House press secretary Jay Carney summed it up this way: "While we agree on ... Congressman Ryan's goal, we strongly disagree with his approach, because any plan to reduce our deficit substantially must reflect American values of fairness and shared sacrifice." These, of course, are metaphors for redistribution of wealth. In fact, even if Obama confiscated all individual income over $250,000, the income threshold he has targeted for tax increases, that wouldn't begin to defuse his debt bomb. Of course, it would put tens-of-millions of people who produce goods and services supported by "the rich," out of work, and by year two, there would be few incomes over $250,000.

Of course, Obama is banking on the assumption that the American people are just too dim-witted to understand the consequences of the debt bomb he's preparing to drop on their heads. In the case of his Democrat Party²⁰, he is undoubtedly correct.
Democratic Socialism²¹, like National Socialism, is nothing more than Marxist Socialism repackaged. Likewise, it seeks a centrally planned economy directed by a single-party state that controls economic production via regulation and income redistribution.

In 1964, Ronald Reagan²² introduced "A Time for Choosing²³." Four decades later, and much closer to the decline that Reagan foretold, Congressman Mike Pence (R-IN) issued "Another Time for Choosing²⁴," reiterating the Reagan model for restoration²⁵.
"You and I have a rendezvous with destiny," Reagan concluded. "We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness."
Our time to choose²⁶ has nearly expired.

Spain hit by debt downgrade; Moody's cites banks

2011-03-14T18:53:00.000-05:00

(AP) – March 10, 2011

MADRID (AP) — Moody's downgraded Spain's credit rating on Thursday, citing worries over the cost of the banking sector's restructuring, the government's ability to achieve its borrowing reduction targets and grim economic growth prospects.

The agency reduced Spain's rating by one notch to Aa2 and warned that a further downgrade is possible if indications emerge that Spain's fiscal targets will be missed, and if the public debt ratio increases more rapidly than currently expected.

Moody's Investors Services also warned that concerns could rise if funding requirements for Spain's troubled savings banks — called cajas — end up greater than anticipated. They have been hit particularly hard by the nation's real estate bubble that burst, saddling them with billions of euros in bad loans.

On the plus side, Moody's noted the government's resolve in dealing with its problems and added that Spain's debt sustainability is not under threat.

Spanish Finance Minister Elena Salgado said the government agrees that the nation must make a better effort to push debt-laden regional governments to reduce their deficits, but added that Moody's should have waited to issue its report until the Bank of Spain later Thursday issues detailed breakdown on how much money the cajas need.

Spain's main stock index sank 1.3 percent after the report was released, and the yield on Spain's ten-year bonds rose 0.01 percentage point to 5.50 percent.

One of the main reasons for the downgrade was Moody's expectation that the eventual cost of recapitalizing the cajas will be much more than the government's current projections. While the government has previously estimated they need at most euro20 billion ($27.8 billion), or less than 2 percent of Spain's gross domestic product, Moody's predicted the cost could reach euro40-50 billion and might eventually come in at a massive euro100-120 billion.

The Spanish government is trying to get a handle on its borrowings by reducing spending and raising taxes, and reduced its budget deficit by around two percentage points last year to 9.2 percent of national income.

But unemployment has shot up to more than 20 percent amid predictions of gloomy economic growth, and Spain is also being clobbered by high oil prices sent skyrocketing by the unrest in Libya.

"Spain's vulnerability to market disruption remains elevated given the high funding requirements, not only for the sovereign but also for the regional governments and the banks," Moody's said.

The big worry in the markets is that Spain will get sucked into Europe's debt crisis, which has already seen Greece and Ireland get financial bailouts from their partners in the EU and the International Monetary Fund. Portugal is widely expected to be next.

Most analysts think that the EU can contain the government debt crisis, even if Portugal is forced to tap a bailout fund. However, Spain has the eurozone's fourth largest economy and could test the limits of the existing bailout fund — the European Financial Stability Facility, or EFSF. That would potentially put the euro project itself in jeopardy if governments don't put up more cash.

"It remains essential that the EFSF is bolstered to reassure markets that there is enough ammunition to protect monetary union against all eventualities," said Jane Foley, senior currency strategist at Rabobank International.

Earlier this week, Moody's Investor Services cut its rating on Greece, prompting a sharp tirade from the Greek government about the role of credit rating agencies.

The downgrades have come amid signs that Europe's debt crisis is flaring up again ahead of the March 24-25 summit of EU leaders in Brussels. Portugal's cost to borrow 10-year bonds stands near a euro-era record.

Though a "comprehensive solution" to the debt crisis has been trumpeted, there are growing fears that the 17 countries that use the euro will not agree a revamped bailout mechanism, set new rules on budget deficits and a system of support funds to flow from richer countries in the single currency bloc to the poorest.

Moody's had put Spain on notice for a downgrade in December.

Pylas reported from London.

Escalating national debt threatens future

2011-03-14T18:45:00.001-05:00

By Edgar Ortiz

Atlanta Journal-Constitution

February 13, 2011

The future of America can’t be built on the foundations of debt, deficits and lack of fiscal discipline.

Ensuring the prosperity and sustained growth of the American economy requires federal, state and local governments to make serious and drastic changes to their profligate spending habits.

Current levels of government spending can’t be maintained, and at their current rate, threaten our economy, way of life and national security.

Deficit spending has been a financing tool widely used by both political parties in Washington.

The growth of the national debt paints a grim and sobering picture of what we are passing down to future generations:

● The national debt has nearly tripled over the last decade, growing from $5.5 trillion in 1998 to more than $14 trillion in 2011.

● In fiscal year 2010, Washington ran a budget deficit of $1.3 trillion, the largest since World War II, for a record spending of $30,000 per U.S. household.

Another major reason for concern is the increased dependency of our federal government on foreign lenders to pay for our spendthrift ways. Foreign lenders own more than 49 percent of the U.S. public debt.

Records show some of the largest holders of our debt are foreign governments whose policies and economic ambitions may be on a collision track with our best interest.

Research by economists Kenneth Rogoff and Carmen Reinhart puts the spotlight on the impact of high levels of debt on the economy. Their findings show that debt weighs heavily on GDP growth. Once a nation’s public debt exceeds 90 percent of GDP, the “tipping point,” the growth rate of the economy slows down by 1 percent.

The U.S. economy with a debt to GDP ratio of 84 percent is approaching this critical threshold.

The looming state, local and pension fund imbalances could easily push our debt levels beyond this critical point and this doesn’t bode well for our economic future, lower unemployment and a sustained recovery.

The key question is then, what’s the solution?

If history is a guide, research by the McKinsey Global Institute can help us find the answer. Their analysis of 32 episodes of deleveraging that followed a financial crisis shows that responses to a crisis fit into one of the four archetypes:

1. “Belt Tightening”

2. “High Inflation”

3. “Massive Default”

4. “Growing Out of Debt”

Although historically, “Belt Tightening” was the most common response, there is no credible signal from Washington of a legislative strategy to reign upon government spending — making the required cuts to entitlement programs (Medicare, Medicaid, Social Security), eliminating perks, increasing taxes and shrinking the size of government.

The likelihood of “Massive Default” is extremely low, but things could change and “Growing out of Debt” is a nice, theoretical discussion.

The most likely scenario, given the Federal Reserve predilection for keeping interest rates low via quantitative easing programs is “High Inflation” (printing money).

Each tax dollar that goes to pay for interest on the debt is a missed opportunity to invest in America’s future, improve its schools, update its aging roads and bridges, invest in innovation and find new sources of energy to lessen our dependency on external energy sources.

In our present course of spend now, pay later, we are not being fair to future generations. It is not part of the American character that built the most affluent and freest nation on earth. They deserve better. We need to live within our means and pay for our own expenses.

Edgar Ortiz is founder and CEO of Strategic Analytic Solutions LLC, an Atlanta-based consultancy in business planning, strategic marketing and information-based strategies.

Greek gov't slams international debt inspectors

2011-02-14T01:38:00.000-06:00

By ELENA BECATOROS

BusinessWeek

Feb. 12, 2011

ATHENS, GREECE - Greece on Saturday slammed European and International Monetary Fund debt inspectors overseeing the country's efforts to reform its economy, accusing them of interfering in the debt-ridden country's internal affairs and saying they had overstepped their mark.

In an unusually harshly worded statement issued in the early hours of Saturday morning, government spokesman Giorgos Petalotis said the behavior of the inspectors at a news conference the previous day had been unacceptable.

The IMF, European Central Bank and European Commission delegation said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat. The IMF representative also said some of Greece's frequent demonstrations against the government's reforms were being carried out by groups angry at the prospect of losing "unfair advantages and privileges."

Petalotis said in his statement that, "We have needs, but we also have limits. And we do not negotiate the limits of our dignity with anyone," He added: "We take orders only from the Greek people."

It is the first time the government has publicly struck back at the IMF and EU, which have rescued Greece from bankruptcy but at a price many Greeks consider too harsh.

The opposition conservative party, however, struck back at the government, saying it was "too late for false tears" and that the government's "post-midnight theatrical performance is a farce."

Greece's economy is under strict supervision as part of a deal for the country to receive a euro110 billion package of bailout loans from the IMF and other European Union countries that use the euro -- funds that saved Greece from defaulting on its mountainous debts last May.

In return, the government has been pushing through stringent and unpopular reforms, including cutting public sector salaries and pensions, increasing taxes and overhauling labor laws. The austerity program has led labor unions to stage a series of strikes and demonstrations.

Batches of the loan are released every quarter, before which representatives from the IMF, EC and ECB visit Athens to review progress.

On Friday, the representatives -- collectively dubbed the 'troika' in Greece -- said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat.

IMF mission chief Poul Thomsen said Greece's long-term reforms were being "fiercely tested by vested interests." He said some of those demonstrating against the reforms, such as truck drivers and pharmacists, were "people who are angry because the government wants reforms that will take away their privileges."

Thomsen said he was "not surprised that these groups are protesting but I'm also convinced ... that the Greek population see it for what it is: an attempt to preserve their unfair advantages and privileges."

The troika's Friday afternoon press conference had led to quick outrage in sections of the Greek press, with one anchor on a private network describing Thomsen's remarks as being "unacceptable." But there was no government reaction until Petalotis' statement shortly before 2 a.m.

"We asked them to help and we are fully honoring our commitments. But we didn't ask for anyone to intervene in our country's internal affairs," he said, adding the government would make clear that "everyone must understand their role."

Greek national debt is set to exceed 150 percent of GDP this year, and during the news conference the troika laid out the new privatization program worth euro50 billion through 2015 -- seven times larger than a target set three months ago.

Thomsen scoffed at a suggestion that Greece might sell its ancient monuments to raise money, but argued "the mismanagement of public property is a major source of waste" in Greece.

Privatization targets are likely to include state companies not listed on the stock market and the development of public land, including Olympic facilities that have languished since the Athens Games in 2004. Greece will seek euro15 billion ($20 billion) in privatization and real estate development this year alone, according to Finance Ministry officials.

Petalotis said the government had frequently spoken of the need to utilize state property, but stressed that any such program would have to be done transparently and "in no case means the sale of public land."

"It is equally obvious that only the Greek government is able to take these decisions," he said.

--------

Associated Press writer Derek Gatopoulos contributed to this report.

Japan Government Debt Hits Record Y919 Trillion

2011-02-14T01:36:00.001-06:00

TOKYO (Dow Jones)--Japan's outstanding public debt hit a record Y919.151 trillion at the end of last year, the Finance Ministry said Thursday, likely fueling concerns over the nation's fiscal health and adding to a sense of urgency within the government to quickly formulate a tax hike plan.

The ministry's quarterly data showed public debt rose 1.1% from the end of September, reaching a level equivalent to 194% of Japan's nominal gross domestic product for the fiscal year ended March 2010.

[This article is a stub - You must be a subscriber to the Wall Street Journal to view the rest.]

In Congress, Bernanke Faces Questions About Inflation

2011-02-14T00:43:00.000-06:00

By SEWELL CHAN

Feb 9, 2011

WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, parried tough questions Wednesday about rising gasoline prices in the United States and the soaring cost of food and grains in the emerging world as he defended the central bank’s $600 billion program to shore up the recovery.

Mr. Bernanke said it was “certainly possible” that the Fed might cut short its efforts to loosen credit by buying Treasury bonds, especially if domestic inflation were to flare. But Mr. Bernanke maintained that for now, inflation was comfortably in check despite rising commodity prices overseas.

In his first appearance before House lawmakers since Republicans took control of the chamber last month, they repeatedly tried to draw him into the fierce debate over a looming vote to raise the government’s $14.3 trillion borrowing limit.

But the Fed chairman repeatedly declined to side with one party or the other on what was needed to plug the budget deficit. “Congress is going to have to decide where its values are, whether it wants to raise taxes, whether it wants to cut spending or whether it wants some combination,” Mr. Bernanke said.

The chairman reiterated his view that toying with the debt ceiling — some Republicans want to use the vote to force the Obama administration to make immediate spending cuts — could be disastrous if it resulted in a time-consuming debate that worried debt markets and forced the Treasury to default.

Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee and a vocal skeptic of the Fed’s bond-buying effort, told Mr. Bernanke: “My concern is that the costs of the Fed’s current monetary policy — the money creation and massive balance sheet expansion — will come to outweigh the perceived short-term benefits.”

Mr. Ryan described “a sharp rise in a variety of key global commodity and basic material prices,” and an increase in interest rates of longer-term Treasury securities. And while conceding that American consumers were not yet experiencing substantially higher prices, Mr. Ryan warned that “the inflation dynamic can be quick to materialize and painful to eradicate once it takes hold.”

Mr. Ryan all but accused Mr. Bernanke of devaluing the dollar, saying, “There is nothing more insidious that a country can do to its citizens than debase its currency.”

Mr. Bernanke said the rise in commodity prices was mostly “a result of the very strong demand from fast-growing emerging market economies, coupled, in some cases, with constraints on supply.” He did not mention China by name, but he has in the past.

He added that overall inflation was “still quite low” and that longer-term inflation expectations, which can influence short-term changes in prices, were stable.

In 2010, a closely watched measure of inflation, the price index for personal consumption expenditures, rose by 1.2 percent, compared with 2.4 percent in 2009. And core inflation, which excludes the food and energy prices, was 0.7 percent in 2010, compared with around 2.5 percent in 2007. Wages rose only 1.7 percent last year.

Mr. Bernanke also denied printing money to finance government borrowing, saying, “What we’re doing here is a temporary measure that will be reversed.” Eventually, the Fed sells the bonds it acquires.

While part of the historically large deficits of the last two years stem from the government’s responses to the recession, Mr. Bernanke said the budget would remain on an unsustainable path even as the economy improved because of an aging population and rising health care costs.

Though Mr. Bernanke did not take sides on the most volatile questions of fiscal policy — whether to cut military spending, change entitlement programs like Medicare and raise personal income tax rates — he did offer lawmakers some suggestions.

He told Representative Betty McCollum, a Minnesota Democrat, that Congress should close myriad corporate tax loopholes and then lower the corporate tax rate. He told Representative Mike Honda, a California Democrat, that wise investments in education, including community colleges and on-the-job training, were essential to lowering unemployment.

The chairman also offered some of his most detailed comments to date on what he called China’s “counterproductive policy” of undervaluing its currency, the renminbi.

“They have an inflation problem, and the way they’re addressing it is not by raising their currency value, which would reduce the demand for their exports,” he told Representative Tim Ryan, an Ohio Democrat. “Rather, they are leaving it where it is, and they are instead trying to reduce domestic demand through higher interest rates. And it would seem like a better strategy would be to let domestic demand be what it is and let people enjoy a higher standard of living in China, and reduce their exports via a higher exchange rate.”

On Tuesday, China raised interest rates for the third time since October, and many economists in Asia expect that China will do so again this year.

Mr. Bernanke said the Fed was prepared to start raising interest rates when the time came. “Just like a quarterback has to lead a receiver,” he told Representative James Lankford, an Oklahoma Republican, the Fed has to begin tightening monetary policy before inflation becomes a problem.

But Representative Todd Rokita, Republican of Indiana, said the Fed had a poor track record in that regard. “Can you name one time in your agency’s history where you got it right, where you got on the brakes in time to correct runaway inflation?” he asked.

Mr. Bernanke pointed to his predecessor Paul A. Volcker, who crushed inflation in the early 1980s by sharply raising interest rates. But Mr. Rokita said the Fed had not acted in time.

As Mr. Bernanke spoke, Representative Ron Paul, a Texas Republican, held his own hearing to lambast the Fed.

“There is a great recovery going on,” said Mr. Paul, who has advocated abolishing the Fed and now leads a Financial Services subcommittee that oversees the Fed. “But the people don’t feel that way.”

The Fed did not take part in the hearing, at which three experts testified.

Christine Hauser contributed reporting from New York.

NYT: Day of angry protest stuns Egypt

2011-01-29T20:21:00.001-06:00

With the January 2011 protests in Egypt in full swing, it is appropriate to take a look at some of the roots of this international crisis. This New York Times story in 2008 was a precursor to what we are experiencing in January 2011. - Editor

By Michael Slackman

Published: Sunday, April 6, 2008

CAIRO — The center of this normally bustling, overcrowded, traffic-clogged city was largely quiet Sunday, the roads nearly empty, many of the stores shuttered, as the riot police came out in force to prevent a general strike aimed at signaling widespread discontent with President Hosni Mubarak and his government.

Egypt has virtually no organized political opposition, except the Muslim Brotherhood, which is banned and barred from politics.

But events Sunday underscored the rise of a potentially more dangerous challenge to the government's monopoly on power: Widespread public outrage and a growing willingness by workers and professionals to press their demands by striking.

The main complaint is economic, driven by rising food prices, depressed salaries and what opposition leaders say is an unprecedented gap between rich and poor. It is hard to say if the streets were empty Sunday because people stayed home for fear of getting caught in the crossfire between protesters and police, or because of the call to stay home as a form of protest.

Either way, the government took the threat of a mass mobilization so seriously that it issued a warning to potential strikers, saying it would "take necessary and resolute measures toward any attempt to demonstrate, impede traffic, hamper work in public facilities or to incite any of this."

In Cairo, riot police officers massed in Tahrir Square, the center of the city. They stood in formation outside the lawyers', doctors' and journalists' syndicates. State security agents had visited government workers in advance and ordered them to attend work on Sunday, some workers said. At the lawyers' syndicate, a few hundred protesters stood on the roof and on a balcony chanting "Down, down Hosni Mubarak."

Hundreds of students demonstrated at three universities in Cairo.

In Mahalla al-Kobra, the center of Egypt's textile industry north of Cairo, a melee broke out late in the day as the riot police fired tear gas and workers threw stones. Officials said there were more than 200 arrests around the country, including at least seven people arrested for their efforts to use the Internet to promote the call for a day of unrest.

"I am not about to claim that the Egyptian people are finally rebelling," said Abdel Ahab El Meseery, an organizer with Kifaya, an opposition movement, who once served as the Arab League's cultural attaché to the United Nations. "The element of fear is there. The people are afraid of the government, but the government is as afraid of the people."

Under Mubarak and his governing National Democratic Party, officials have succeeded in stunting the growth and influence of political opposition. The only opposition group with a broad network and a core constituency is the Muslim Brotherhood, which has little ability to effect political change because its members are routinely arrested and jailed. Local elections are scheduled for Tuesday, and the government has arrested hundreds of Brotherhood members and supporters in advance.

The Brotherhood, struggling to regain its footing after the intense and persistent police pressure, distanced itself from the call to strike and said it would not participate.

Since September 2007 the government itself has scrambled to keep pace with the growing reliance on strikes as a tool to press worker demands. Textile workers, tax clerks and university professors have all held strikes or threatened to strike.

Doctors have also threatened to strike, complaining that physicians with 20 years experience, for example, often make no more than 450 Egyptian pounds a month, the equivalent of about $80.

"What made us take more confrontational measures is that we saw other groups doing so and making their demands," said Hamdy El Sayyid, longtime chairman of the doctors' syndicate.

But what has turned the demands of individual workers into a potential mass movement, officials and political analysts said, has been inflation on food products, mostly bread and cooking oil. The rising cost of wheat, coupled with widespread corruption in the production and distribution of subsidized bread, has prompted the president to order a resolution to the problem.

But that has done little to calm public outrage, or lower bread prices.

On Adly Street, a broad thoroughfare in central Cairo, many more stores than usual were shuttered Sunday, according to street vendors and local residents. It was a windy day, with a sandstorm and rain showers, which may have offered people added encouragement to stay off the streets.

"People are staying at home today," said Ashraf, a clerk in a luggage store on Adly Street. He was afraid to give his last name, for fear of arrest, but he said he kept his children home from school and dressed in all black as signs of support for the protest. "Because of the prices, because we can't get food," he said explaining the reason for the strike.

The strike plans began with the workers in Mahalla, who had said they would strike at 7 a.m., when workers changed shifts, to protest low wages. But state security forces arrived in mass and workers said they grew intimidated and went to work.

But the initial plan led other, smaller groups to call for the day of protest as a general sign of discontent with the direction Egypt is taking.

Kifaya, which had been in the vanguard of opposition movements until 2005, when its public following dwindled, joined the call. What may have spooked government officials mostly is the way in which technology - especially text messages on cellphones - was used to spread the word, without any formal organization promoting the call, political analysts said.

Residents of Imbaba, a conservative, poor neighborhood inside Cairo, asked neighbors to stay home as a sign of protest.

Belal Fadl, a scriptwriter and satirist in Cairo, said that Egypt was going through a very confusing time, one in which, he warned, the government should not rely on a population that is politically apathetic.

The problems, he said, were now too widespread, and too close to home.

"People in Egypt," Fadl said, "don't care about democracy and the transfer of power - they don't believe in it because they didn't grow up to it in the first place. This is unfortunately the case. Their problem is limited to their ability to survive and if that is threatened then they will stand up."

Mona el Naggar contributed reporting.

National Review Online - Democrats, The Financial Crisis and Evil-Man Economics

2011-01-29T19:51:00.000-06:00

JANUARY 28, 2011 4:00 A.M.
National Review Online

Chairman Phil Angelides and the Democratic majority on the Financial Crisis Inquiry Commission have released their report, a textbook-worthy example of the “Evil Man School of Economics.” Something went wrong, and a villain must be identified. This is tediously familiar territory for those who have followed the political establishment’s years-long attempt to evade responsibility for the crisis of which it was a cause.

“We conclude this crisis was avoidable,” they write. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire.” That much is hardly objectionable. But which human actions? On that question, the commission’s report is both implausible and nakedly political: The Evil Men are greedy corporate executives and Wall Street moneymen, and the crisis might have been averted if only they had been endowed with sufficient moral fiber — or had an appropriately mindful policeman appointed over them, which is the real point of the Angelides report. Which is to say, the Democrats have produced an analysis that relies upon and reinforces the mythology of the Left, producing a document that may as well have been written by Rolling Stone’s Matt “Vampire Squid” Taibbi, minus the literary flair.

Yes, this crisis was avoidable. To avoid it, we would have had to do a number of things differently. The first is to alert the authorities, beginning in the 1930s, that federal policies designed to encourage homeownership — well-intentioned though they have been — would create, and today continue to sustain, a set of economic incentives driving vast amounts of capital from around the world into the U.S. residential real-estate market.

From the Federal Housing Administration to Fannie Mae and Freddie Mac to the mortgage-interest deduction, U.S. government policies distorted the market, creating a massive misallocation of capital under the naïve theory that housing prices only move in one direction: up.

The second action would be to prevent the dot-com bubble of the 1990s, of which the housing-market meltdown was both an echo and a consequence. Like the real-estate bubble, the dot-com bubble was cheered on by the American government, the American consumer, and the American banker, because nearly everybody likes appreciating asset prices and the illusion of wealth that accompanies them. When the dot-com bubble burst, Washington responded the way Washington always responds: by slashing interest rates, hoping that a sluice of cheap money and easy credit sloshing through the economy would stimulate productive economic activity, or the illusion of productive economic activity, sufficient to disguise the damage done by the bubble. Having been burned by unprofitable start-ups at home and disappointing emerging-market investments abroad, a great many Americans decided to invest that easy money in houses. Washington was keeping interest rates down and encouraging the loosening of mortgage-lending standards; at the same time, Washington’s creatures, Fannie Mae and Freddie Mac, helped give the mortgage market enough liquidity to alarm Noah. They were helped mightily in that endeavor by the rise of massive savings in China and elsewhere in the developing world, all of which went looking for somewhere to invest: Where better than the American mortgage market, where a great many of the underlying loans were insured by the government or its proxies?

Third, we would need to convince a great many Americans not to take out mortgages they could not afford should their houses fail to appreciate, and convince a great many financial managers not to make bad investments large enough to bring down their firms.

Mr. Angelides, formerly the treasurer of California, should know something about man-made financial disasters. And the truth is that Goldman Sachs did not cause this crisis, and neither did Barney Frank. Bad investments, economics, and well-meaning government policies caused it. There were, and are, bad actors in this story. But the main problems have been the natural limitations on human knowledge, including the knowledge of government officials and the managers of large financial institutions.

The dot-com bubble actually destroyed more wealth than did the decline in housing prices; the housing meltdown became a crisis because the related securities losses were concentrated in a small number of firms, and because those firms were dramatically over-leveraged. If there is a public-policy proposal to be extracted from this mess, it is that in a world of “too big to fail” banks — and, like it or not, that is the world in which we live — large financial institutions should be subject to tighter leverage controls, with higher standards for capital reserves and liquidity. That dry, technical reform would solve most of the problems that we might hope to solve with new financial regulation, but it would not provide any emotional satisfaction to those who wish to use this crisis to rail against executive bonuses, which had almost nothing to do with the problem, or to those who wish to sermonize about the alleged moral failings of capitalism. Still less would it offer any political opportunity to former real-estate developer Phil Angelides and his Wall Street–backed Democratic colleagues, who wish to use the crisis as an opportunity to expand the size and scope of the managerial state that did so much to create it.

Monster debt threatens our future

2011-01-29T19:45:00.000-06:00

5:15 PM, Jan. 28, 2011
Indianapolis Star

The Congressional Budget Office issued yet another warning this week about the fiscal calamity awaiting the nation if the federal deficit is not soon brought under control. It's questionable, however, whether anyone on Capitol Hill or in the White House is prepared to seriously heed those warnings, delivered with ever-higher intensity over the past year.

In its latest projection, the CBO forecast that an additional $7 trillion will be added to the national debt in the next decade. If that occurs, annual interest payments on the debt, according to the CBO, would hit nearly $780 billion by 2021, which is more than the nation now spends each year on military defense.

Neither the president nor congressional Republicans have offered remedies that fully confront the looming crisis. President Barack Obama this week proposed a five-year freeze on optional domestic spending. Republicans have called for deep cuts in nondefense spending but haven't been willing to take on the Pentagon, Social Security or Medicare, all of which must be trimmed if the debt is to be tamed.

The CBO pointed out that the extension of the so-called Bush tax cuts and the temporary cut in the Social Security payroll tax, which Congress approved and the president signed last month, will add about $400 billion to the deficit this year alone. But the nation's long-term fiscal problems have more to do with spending levels than tax rates.

By 2021, federal revenues are projected to rest above the historical average of 18 percent of gross domestic product. Current projections, however, also show federal spending to be at more than 26 percent of GDP in 10 years.

It's more critical than ever that someone in Washington step forward to speak honestly about the painful choices facing the nation. Our government cannot continue to spend far more than it takes in without serious consequences. Our promises to future retirees cannot be met without substantive changes in Social Security and Medicare. Our future as a nation will be badly compromised, our children's future painfully altered, unless serious corrections are made in short order.

The alarms are sounding louder than ever. When will those elected to lead stop to listen?

Presidential Administrations and their percentage of the National Debt - Part II

2010-11-01T03:17:00.001-05:00

The last time the National Debt went down was in 1960, the last year of the Eisenhower administration. My previous post yesterday on the matter was incorrect when I stated 1959. In 1960, the debt went down by $580,956,475.95. Since then, it has never gone down - only up. Part of the problem is the fact that the interest payments are off-ledger.

While it is conceivable to have a "budget surplus" like we did in the 1990s, this is negated from the mandatory interest payments that are not considered part of the budget. At the lowest rate of increase, 1999, the debt still went up $17,907,308,271.43. The next year, 2000 and President Clinton's last year in office, the debt rose by $133,285,202,313.20 - which was hardly leaving office under the economic conditions the American left claim.

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford, Presidents 1-38, 1791-1976
Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980
Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988
Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992
Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd Presidnet, 1993-2000
Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008
Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present
Debt Increase: $3,031,935,408,476.43 (as of 10/28/2010 report on TreasuryDirect.gov)

The current size of the Debt, on Oct. 28, 2010 as we head into the mid-term elections is:
$13,658,812,457,389.51

The percentage of debt by Administration is as follows:
President George W. Bush (35.87%)
President Barack H. Obama (22.20%)
President Ronald W. Reagan (12.24%)
President William J.B. Clinton (11.78%)
President George H.W. Bush (10.71%)
Presidents Washington - Ford (5.18%)
President James E. Carter (2.02%)

In 1835, the total debt was $33,733.05 and the debt was considered to be paid off, as the sum was inconsequential even for that time period. In 1836, it grew to $37,513.05 - only a $3,780.00 increase. That was before President Andrew Jackson issued his famous "Specie Circular" which mandated all payments to the Federal Land Office to be in gold and silver payments only, barred the highly speculative "greenbacks" as a form of payment. This caused a panic. The debt grew by $299,444.78 in 1837 to $336,957.83. A year later, it grew by $2,971,169.24 to $3,308,127.07. It has never been at that level since.

In the modern era (Carter to present), Presidents Reagan and Clinton each served two terms and the National Debt increased by comparable amounts. In those 16 years of Reagan and Clinton, the increase totaled $3,281,685,266,406.36. In less than two years, the Obama increase is just $249,749,857,930.00 shy of that figure.

President George W. Bush had an almost $5 trillion increase during his eight years, yet President Obama's increase is already 62% of the total of that amount in only 616 days. That's 2,306 fewer days than President George W. Bush.

At current spending levels, Obama's Debt will match George W. Bush's Debt in 51 more days - approximately Saturday December 18, 2010 (in 2255 fewer days). If the $4,991,064,525.20 daily average continues, the total increase in the 1457 days of the Obama administration will come to $7,271,981,013,216.40.

Presidential Administrations and their percentage of the National Debt - Part I

2010-10-31T01:43:00.000-05:00

Last night I was asked by a nationally-syndicated radio talkshow host to calculate the percentage of the National Debt growth by each administration. Since the National Debt first crossed the $1 trillion mark under President Ronald Reagan, but the economy suffered greatly under his predecessor, President Jimmy Carter, I will be making those calculations later today from January 20, 1977 when Carter took office to the present, and post them when complete.

For the record, the National Debt, despite erroneous claims by Democrat activists, has not gone down since 1959 under President Dwight Eisenhower. Even at the height of the economic boom in the 1990s, the Debt still grew $17 Billion at it's slowest rate of growth. Under the Kennedy, Johnson, Nixon, Ford, Carter, Reagan, George H.W. Bush, Clinton, George W. Bush and Barack Obama administrations, the debt grew. There was no single year since 1959 when the net size of the Debt actually went DOWN, though periods of governmental spending restraint coupled with a fast growing economy slowed the rate of growth.

I'll post those figures later today.

Newest National Debt Statistics Now Posted - September 2010 (End FY 2010)

2010-10-10T23:08:00.000-05:00

Here are the newest National Debt Statistics for the period ending September 30, 2010 - per www.treasurydirect.gov - the official website of the U.S. Treasury Department's Bureau of the Public Debt. September 30, 2010 is the end of Fiscal Year 2010 for the United States Government.

National Debt (Sept. 30, 2010)
Publicly Held
$9,022,808,423,453.08

Intragovernmental Holdings
$4,538,814,607,438.71

Total Debt:
$13,561,623,030,891.79

Amount of Debt on Sept. 30, 2009:
$11,909,829,003,511.75

Increase in Fiscal Year 2010:
$1,651,794,027,380.04

Debt on Inauguration Day 2009:
$10,626,877,048,913.08

Debt increase in 588 days of President Obama's administration:
$2,934,745,981,978.71
($4,991,064,525.20/day)

Total Debt increase in President George W. Bush's administration:
$4,899,100,310,608.44
($1,676,625,705.20/day - 2922 days)

Difference between Bush/Obama administrations:
$1,964,354,328,629.73
(Bush larger than Obama)

Interest payments
September 2010
$18,186,175,433.65

Fiscal Year 2010
$413,954,825,362.17

Gifts to reduce the Public Debt
August 2010
$81,444.76

Fiscal Year 2010 (one month to report)
$2,824,256.11

Just the Facts: Deficit Commission member Jan Schakowsky

2010-09-24T04:30:00.000-05:00

Posted at www.bankruptingamerica.org

REP. JAN SCHAKOWSKY (D-IL)
Member

Rep. Jan Schakowsky was elected in 1998 to represent Illinois’ 9th congressional district. Prior to that, she served in the Illinois State Assembly. Rep. Schakowsky serves on the House Select Intelligence Committee, and on the House Energy and Commerce Committee where she worked to pass the recent health care reform bill. Rep. Schakowsky also serves as the Democrats’ chief deputy whip.

In an April column in The Huffington Post, Rep. Schakowsky outlined her ideas and hopes for the fiscal commission. She said, “Much will be said about what we can and cannot afford. These questions must be considered in the broadest possible context. For example, I believe that we can’t afford to skimp on educating our children … Bottom line, while we are committed to freeing our children and grandchildren from crippling debt, we must be just as committed to assuring that they are not ignorant, sick and unemployed.”

Rep. Schakowsky says the current budget deficit is not only a result of tax and spending policy, but also the recession, which she blames on Wall Street. Schakowsky has outlined cuts she would advocate, include eliminating tax loopholes, improving the government contracting system, and cutting outdated weapons systems.

In June, Rep. Schakowsky said it was unlikely the commission would come to an agreement on how to tackle the deficit because conservatives are unwilling to consider tax increases.

Mullen: National Debt is a Security Threat

2010-08-31T19:37:00.000-05:00

By Michael Cheek

ExecutiveGov.com

August 27, 2010

The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.

Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.

“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.

“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”

He also called on the defense industry to hire veterans and become more robust in the future.

“I need the defense industry, in particular, to be robust,” he said. “My procurement budget is over $100 billion, [and] I need to be able to leverage that as much as possible with those [companies] who reach out [to veterans].”

Mullen highlighted the unity of purpose between the government and industry as well, in working to solve national security issues.

“I have found that universally, [private-sector workers] care every bit as much about our country, are every bit as patriotic and wanting to make a difference … as those who wear the uniform and are in harm’s way,” he said.

National debt soars to highest level since WWII

2010-08-31T19:33:00.000-05:00

The following article appeared in the June 30, 2010 issue of USA Today.

The federal debt will represent 62% of the nation's economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.

Republicans, who have been talking a lot about the debt in recent months, pounced on the report. "The driver of this debt is spending," said New Hampshire Sen. Judd Gregg, the top Republican on the Senate Budget Committee. "Our existing debt will be worsened by the president's new health care entitlement programs...as well as an explosion in existing health care and retirement entitlement spending as the Baby Boomers retire."

At the end of 2008, the debt equaled about 40% of the nation's annual economic output, according to the CBO.

The report comes as the National Commission on Fiscal Responsibility and Reform meets today. The group, created by President Obama, is expected to issue recommendations in December to curb the debt - a point Democrats raised today.

The CBO report "reinforces the importance of the work being done right now by the president's fiscal commisson," said Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee. "We simply cannot allow the federal debt to explode as envisioned under CBO's projections. The economic security of the country and the quality of life for our children and grandchildren are at stake."

(Posted by John Fritze)

Is a Mortgage Refinance Right for You?

2010-08-31T19:11:00.000-05:00

By Dave Ramsey

www.daveramsey.com

There’s a lot of hype about refinancing mortgages. You’ll hear, “Rates have never been lower!” or, “Refinance now to lock in your savings!” There are even special products like “streamlined” refinancing.

Like anything else, you need to determine if a refinance is right for you based on the specifics of your mortgage. Here are some guidelines to get you started:

The Break-Even Analysis

A refinance makes sense when you can lower your interest rate enough to pay for the closing costs before you plan to sell your home.

Here’s a simple example. If you have a $100,000 mortgage and you can lower your interest rate by 1% in a refinance, you’ll save $1,000 a year. If your closing costs are $3,000, it will take three years to break even on your refinance.

In general, a refinance is worth it if you can lower your rate by at least 2%. At that point, you’ll see real savings on your monthly payment.

Points, ARMs and Seconds

When you’re gathering quotes for a refinance, ask for a par quote or zero quote. That means the closing cost estimates will not include points or origination fees. Don’t pay these fees, which are simply pre-paid interest. The savings, if any, don’t justify the up-front expense.

If you have an Adjustable Rate Mortgage (ARM), Dave will almost always recommend you refinance into a fixed-rate mortgage. Even if you have to write a check to pay for the closing costs, it’s worth it to avoid the risk that your payments could go up when the rate adjusts.

A lot of homeowners with second mortgages want to roll it into their first mortgage with a refinance. Not so fast! If the balance on your second mortgage is less than half of your annual income, pay it off in Baby Step 2. If not, go ahead and refinance it with the first mortgage and pay it off in Baby Step 6.

Going from 30 to 15

When you buy a home, if you’re not paying cash, you should get no more than a 15-year mortgage. However, if you already have a 30-year mortgage and a good rate, you don’t have to go to the expense of refinancing just to get the shorter term. Just calculate what your monthly payment would be on a 15-year term and be disciplined about paying that amount.

What to do if you face vehicle repossession

2010-08-31T19:07:00.000-05:00

By Andrew Housser

Reposted from mysuncoast.com

Over the past few years, the rate of auto repossessions has increased as the auto loan market has undergone its own subprime lending crisis, similar to the one that crippled the U.S. mortgage industry.

As with mortgages, auto lenders frequently provided large loans to people with lower credit scores. In turn, American consumers, who became accustomed to borrowing rather than saving, purchased as much car as possible for a low monthly payment. That practice meant that loan repayment terms often extended to 60 months and beyond. For example, among borrowers with good credit, 41 percent of auto loans were longer than 60 months in 2007, up from 12 percent in 2002. Among subprime borrowers (people who paid higher interest rates because of poor credit), 67 percent of loans were for more than 60 months in 2007.

Many vehicle loan contracts specify that if a borrower stops paying the loan, the lender can repossess, or take back, the vehicle. Lenders typically repossess cars once owners are behind on payments by about 90 days. After a vehicle is repossessed, the car will be sold at auction, typically within 41 days.

The repossession has serious costs for the vehicle owner:

The owner must pay the difference between the amount left on the loan and the profit brought in from the sale, minus costs for cleaning, repossession, transport and the sale. This amount is known as the deficiency. Some owners are stuck paying for years after they lose the vehicle.
A repossession severely damages the credit score. One of the largest credit reporting agencies, Experian, reports that an auto repossession will remain on a credit report for seven years from the original delinquency date, or the date you missed your first payment.
Even one late auto loan payment can knock a credit score down by as much as 100 points. As a result, buying a replacement vehicle costs more, with a higher interest rate on a vehicle loan.

What to do if you face repossession

1. Cut costs where you can
In many places, a vehicle is essential to take people to work or school. If this is the case for you, take a hard look at your budget to see if you can cut out expenses, which may range from eating out to entertainment to cigarettes, to free up more money to stay current with car payments.

2. Remove personal items from the vehicle
If you are late on payments, do not keep any personal items in the vehicle in case it is repossessed.

3. Know your rights
You can learn about local laws from the office of your state's attorneys general. For example, in every state, you have the right to try to redeem your vehicle, even after it has been repossessed, by paying all late payments and related costs. Service members on active military duty who bought the car before they went on active duty cannot have a vehicle repossessed without a court order.

4. Communicate with the lender
If you are late on a payment, or worried you cannot pay, contact the lender and explain the situation. Get all promises from the lender in writing. At worst, you can voluntarily surrender the vehicle. This "voluntary repossession" still damages credit, but it will save you the repossession costs of about $700.

5. Sell the vehicle
If you owe less than the vehicle is worth, consider selling it to pay off the loan, then purchasing a vehicle that is within your means.

6. Get help
If you need help in managing your other debts (such as credit card debt) to help reduce your overall debt burden -- and possibly help prevent vehicle repossession -- seek out a reputable debt settlement company. An experienced advisor can help you manage your financial problems and make debt repayment affordable.

Having a vehicle repossessed is second only to a mortgage foreclosure in the damage it can do to your credit and your lifestyle. Before you get into financial trouble with a car, try to remedy the situation -- but if you do face repossession, know how to minimize the damage.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC and its wholly owned subsidiary, Freedom Debt Relief, a national consumer debt resolution firm that has served more than 40,000 clients and manages more than $1 billion in consumer debt. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.

What was the National Debt in January 2009?

2010-08-31T18:53:00.001-05:00

Courtesy of the U.S. Treasury Department (www.treasurydirect.gov).

The National Debt on January 1, 2009 was:
$10,669,804,864,612.13

When President Barack Obama was inaugurated on January 20, 2009, the National Debt was:
$10,626,877,048,913.08

In 1959, the interest paid on the National Debt was $7,592,769,000 (The total debt was $290,797,771,717.63 that year)

In Fiscal Year 2009, the interest paid on the National debt was:
$383,071,060,815.42 (greater than the total debt in 1959)

Newest National Debt Statistics Now Posted - August 2010

2010-08-27T00:45:00.000-05:00

Here are the newest National Debt Statistics for August 25, 2010 - courtesy of the U.S. Treasury Department at www.treasurydirect.gov

Amount held by the Public:
$8,834,183,612,860.18

Intragovernmental Holdings:
$4,527,170,829,387.77

Total Debt:
$13,361,354,442,247.95

The National Debt 365 days ago (Aug. 25, 2009) was:
$11,730,400,622,450.31

Increase in the last 365 days:
$1,630,953,819,797.64

Size of the debt on Inauguration Day - Jan. 20, 2009:
$10,626,877,048,913.08

Increase in Debt since President Obama was Inaugurated:
$2,734,477,393,334.87
[$4,682,324,303.65 per day increase in the 584 days of the Obama Administration]

Interest paid July 2010:
$20,386,125,152.13

Interest paid - Fiscal Year 2010 (2 months left to report):
$375,247,863,222.70

Gifts to reduce the public debt:
June 2010: $197,532.43
FY2010: $2,703,107.90

Economy Caught in Depression, Not Recession: Rosenberg

2010-08-27T00:24:00.000-05:00

By: Jeff Cox
CNBC.com Staff Writer

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

"False premise," Rosenberg said. "And guess what? We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Rosenberg's warning comes as a slew of major analysts—Goldman Sachs andJPMorgan among them—have slashed GDP projections for 2010 to the 1.5 to 2 percent range.

Chicago Federal Reserve President Charles Evans said in a speech Tuesday that the risk of a double-dip recession has escalated. He said government programs to help distressed homeowners have been ineffective and aren't helping the pivotal housing sector recover.

The dour outlooks come on the same day that the National Association of Realtors said home sales reached a 15-year low in June, dousing hopes that the industry had reached a bottoming point.

Rosenberg points out that the "overall economic malaise" has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts. The central bank itself has scaled back its economic projections, has held steady on its balance sheet, and could be announcing another round of quantitative easing measures at its Jackson Hole summit this week.

"How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."

The Next Generation's Debt Burden

2010-08-25T20:50:00.000-05:00

"Addressing the challenge of our national debt requires bold leadership and tough choices from members of both parties. Our children and grandchildren are counting on us to chart an effective course toward responsible stewardship of the public purse." -Speaker Nancy Pelosi, March 24, 2010

As the Wall Street Journal recently reported, out-of-control spending by the Democrat controlled Congress has added an astounding $4.4 trillion in deficits to the Congressional Budget Office’s (CBO) ten year budget projection. And despite claims of fiscal responsibility from the Democrats, nothing changes. The harmful effects of the Democrats’ runaway spending on growth and prosperity are vast. Crowding out of private investment, growing interest payments, and dependence on foreign competitors are all consequences of the federal government’s profligate spending and debt. Additionally, the debt explosion created to fuel Washington’s recklessness has a personal impact on every American: it is ultimately borne by every man, woman and child in the nation. According to CBO and Census Bureau long-term estimates, the amount of debt placed on the backs of children born today is about to explode. If nothing is done, our generation will have the sad legacy of being the first to lower the standard of living of the next generation.

A TIMELINE OF THE PERSONAL PUBLIC DEBT BURDEN FOR A CHILD BORN IN 2010

2010: By the end of 2010, CBO predicts that the total U.S. debt held by the public (as opposed to the gross national debt which includes inter-governmental holdings) will be $9.05 trillion. That means that children born in 2010 will start life with a personal share of the public debt equaling $29,178.

2020: When children born today celebrate their tenth birthday, their share of the nation’s public debt will have already increased by 70 percent to reach $49,694 per child.

2023: By the time they are 13 years old, their share of public debt will have doubled to $58,971. This is also the first year that per capita Gross Domestic Product (GDP) will be surpassed by the per capita share of the public debt for every American.

2028: When those children born in 2010 reach their 18th birthdays, they will have inherited an individual debt responsibility of $80,650.

2032: As children born in 2010 begin to graduate from college and enter the work force, their public debt responsibility will have tripled. As they begin their adult lives, the next generation will already be saddled with $103,826 of the government’s debt. And, unfortunately, as interest payments and entitlement spending increase more rapidly, their share of the nation’s debt will begin to grow at an accelerated rate.

2040: At the age of 30, their public debt responsibility will be approximately $166,500—an increase of 471 percent from the time that they were born.

2050: If government spending is not immediately restrained, our nation’s public debt is projected to increase from $9.1 trillion in 2010 to $122.8 trillion by 2050. As a result, when children born today reach 40 years old, their share of the U.S. public debt will be $279,738—an increase of 859 percent above what it is today. For a family of four, the total household debt share would be approximately $1.119 million.

THE OUTLOOK FOR THE NEXT GENERATION: DEBT EXPLODES AND PROSPERITY STAGNATES

According to estimates from CBO and the Census Bureau, per capita GDP in the U.S. is approximately $47,000 in 2010, which is $17,883 more than the current level of public debt per person ($29,178). Reckless Washington spending will soon send the individual public debt burden skyrocketing past per capita GDP as spending and debt replace private economic growth.
In 2023, the amount of U.S. public debt shared by every man, woman, and child in the nation will exceed their share of our nation’s GDP as debt rapidly out paces growth.
While the individual public debt burden is projected to increase by $250,560 over the next 40 years, the GDP per American is only estimated to grow by $34,258.
Over the next 40 years, estimates predict that spending will cause the debt held by the public to increase by 859 percent for every U.S. citizen. By comparison, per capita GDP is projected to grow by only 73 percent over the same period.
Unless drastic actions are taken to reduce spending now and in the future, debt will dwarf growth and future generations will be less prosperous than those that preceded them.

We, the People, deserve better! - Part II

2010-08-09T01:21:00.000-05:00

The problem is so much larger than Republican vs Democrat, and China is only part of the problem.

However, as the following document from the Treasury Department will show, China may be the largest holder of treasuries, but they are not the only ones. http://www.ustreas.gov/tic/mfh.txt Is it cause for concern? Absolutely.

A point that many Republicans and Democrats disagree on is tax cuts. Tax cuts spurred the economy and created growth. In fact, the Dow Jones hit it's all time high of over 14,000 in 2006. Unemployment was at all time lows.

Jack Kemp, Bob Doles' 1996 vice presidential nominee, once told me that if the government taxes at 0% the government will receive no revenue (obviously). If the government taxes at 100%, the government will also receive no revenue. The reason - nobody wants to work for free. The question isn't whether someone is willing to pay taxes. There are a few who, wrongfully, insist that the government shouldn't tax anyone - yada yada, but they are a very small minority. The question should be what is the tax rate that garnishes the most benefit for the people, businesses and the government. What is the maximum rate that will allow the economy to grow and employ more people, while at the same time maximizing revenues to the government and simultaneously allow people to keep a good sized portion of their revenue? He said this because when the tax rate is too low, the government doesn't receive enough revenue to provide for the common defense and the welfare (not the welfare programs, mind you) of the people. If the tax rate is too high, government revenues go down because people start moving their capital overseas or placing them in tax shelters. He estimated (in 1997) that the maximum tax rate should be around 18%.

However, there is still another factor to be considered - the monetary policy of the Federal Reserve. I'm not one of those who wants to End the Fed, and don't believe there is this vast conspiracy of the Federal Reserve. Yet we have since learned that when the Fed doesn't do it's job properly, it severely impacts the economy by creating inflationary bubbles - aka Alan Greenspan keeping the interest rates artificially low. This was a contributing factor into the recent housing crash, which bled into other sectors of the economy.

Ultimately, if we are to continue to exist as a nation, we need to get our spending under control. We need to insist that the budget be balanced. Prior to the Obama administration, the largest yearly deficit was $465 billion dollars. Out of a then $3 trillion budget, I'm sure we could have found ways to cut $465 billion in a given year through eliminating waste, fraud and abuse; streamlining government by eliminating duplication of services among Federal agencies, ended antiquated programs and departments - and then, if there is still a need to trim, start cutting programs and services.

If we were to eliminate our National Debt by paying it off, we would then be bargaining with China out of a position of strength instead of economic weakness. Ask any Congressman what he/she would do with an extra $500 billion each year and I'm sure you would find a wishlist a mile long. If we were to eliminate the National Debt, our economy would grow and we could then take that extra $500B and invest it into more social programs, better military equipment, save social security, expand the S-CHIPS program and still have money left over.

Until We, the People, see this, nothing will change regardless of what party is in power.

We, the People, deserve better!

2010-08-09T00:32:00.000-05:00

As more Americans discuss the economic State of the Union, I've heard a lot more people offer comments like "G.W.B. put our Country in a huge amount of debt to one nation we should never be in debt to...China."

After studying the National Debt quite in-depthly for the past six years, it's time to take a look at not only the accuracy of statements like this, but what "We, the People" as a whole fail to understand about the National Debt.

The people who put our country in a huge amount of debt is Congress. The National Debt was established in 1791 as a way of paying off all of our war debt from the Revolutionary War (side note: Since some states had already paid off their share of the debt, and others hadn't, there was a lot of bargaining going back and forth between Alexander Hamilton and the representatives of Pennsylvania and Virginia, primarily. In exchange for these hold out states financially uniting with their geographical brethren, the U.S. Capitol was moved from New York to Philadelphia temporarily until a new national capitol was built from land previously owned by Virginia and Maryland on the banks of the Potomac river. Washington D.C. would never been established where it is except for the war debt agreement, but I digress.)

The national debt rose and fell from 1791 to 1959. It was nearly paid off in two consecutive years - 1835 and 1836 - before the Specie Circular was released by Andrew Jackson, demanding all land grant payments to be made in gold or silver only - no greenbacks. In fact, in 1830 Jackson vetoed the "Mayville Road" project in Kentucky because it would have required federal funds going into a road - something that was unheard of at that time. Our country was on the course to eliminate the debt and our leadership wanted to accomplish that goal. (For more on the "Mayville Road" click here)

The last year that the debt was paid down was 1959, when President Dwight Eisenhower was still President. It has risen every year since then - at astronomical proportions. Even during the Clinton years the debt still grew, despite the rhetoric out of ill-informed Democrats who insist that the debt went down during the Clinton era. It grew by a "paltry" (and I use that term lightly) $17 billion in 1999 - it's smallest growth since 1959.

The reason behind this is compound interest and the refunding of the debt. Neither party takes this problem seriously.

We don't understand the fact that when you print money, every time a bond is issued on the market, the value of the dollar goes down in relation to other currencies. We don't understand that when bills, bonds and notes mature, new bills, bonds and notes are taken out to pay the principle and interest on the old ones. We don't understand the fact that in the month of June 2010 alone (per www.treasurydirect.gov), we taxpayers paid over $106 billion in interest payments. In the entire fiscal year to-date (Oct. 1, 2009 - July 31, 2010) we paid over $375 billion in interest payments with two months left to go. The entire debt in 1969 was $368 billion.

If we, the people, would actually get serious about shedding debt and making government live within its means, then the "deficits" would be eliminated almost immediately. One could argue about earmarks, percentage of debt to GDP, money accounted for in the "out" years, lack of double entry bookkeeping and GAAP standards - but the truth is - WE, the PEOPLE, don't understand the debt. (I've studied it in-depthly for the last six years)

Since President Obama was inaugurated, the national debt has increased over $3 TRILLION. This is a combination of excess government spending, not enough income plus the interest payments that are off-budget. This is the same amount of increase in 18 months that it increased in the entire 8 years of GWB.

The problem, again, is not Republican or Democrat. It's an AMERICAN problem. Neither party wants to admit their fault. Both parties want to blame the other guy. Personally, I blame Congress because they are the ones that are constitutionally mandated to have the power of the purse. All revenue bills originate in the U.S. House of Representatives. And, my friend, they have all let us down.

We, the People of the United States of America (including those living abroad) deserve better!

- Jeffrey S. Williams

Founder, National Debtbusters

Japan sets targets to rein in national debt

2010-06-28T02:26:00.000-05:00

The following appeared on the BBC News website on June 27, 2010.

Japan has set targets to rein in its national debt, the biggest in the industrialised world.

New Prime Minister Naoto Kan has made fiscal reform a top priority, saying that without it the country could face the risk of a Greece-style crisis.

However, the government has given no specific ideas of how it will reach its long-term goal of balancing its budget.

Japan also raised its growth forecast for the year to March to 2.6%, compared with an earlier 1.4% estimate.

That would be the first time the country's GDP had expanded by more than 2% since 2006.

Growth in the year to March 2012 is predicted to be 2%.

"Thanks to the government's stimulus packages, strengthening in business profitability and improvements in employment and household income are spreading to an increase in private demand," the Cabinet Office said.

"If this cycle continues, Japan's economy is expected to go on a track towards an autonomous recovery."

However, it warned that deflation was still a problem - with prices not expected to to stop falling until at least next year.

Confidence

Japan has been borrowing money for two decades, trying to bring its economy out of stagnation.

But although its debt is now estimated at about twice the size of its GDP, some economists believe the fiscal situation is not as bad as it appears.

This is largely because Japan has a trade surplus, and it is still able to borrow money at some of the lowest interest rates in the world.

But the government has acknowledged that if Japan has to borrow more from abroad, the higher interest rates demanded could tip the country into the abyss.

"We must prevent a situation like Greece, where Japan loses the confidence of the bond markets, pushing interest rates higher and leading its finances into a state of collapse," it said in its debt-tackling plan.

The plan states it will bring the budget back into surplus by the end of the decade.

To achieve it, the government has put a cap on the amount of money it spends and borrows.

Raising consumption tax is also under consideration - but probably not for several years.

The BBC's Roland Buerk in Tokyo said that it was Japan's ageing population that most threatened the country's long term future.

"Much of the government's debt is held by the Japanese themselves, but as workers become pensioners they may start spending their nest eggs," he said.

Important Message About Your Federal Income Taxes

2010-04-15T22:47:00.000-05:00

Grover Norquist

President, Americans for Tax Reform

April 15, 2010

Dear Friend,

Over the next several hours, millions of Americans will pack into the local post office or flood the IRS website to file last minute tax returns. Perhaps you are one of them.

No other day throughout the year is a starker reminder of the financial abuses you and I suffer everyday at the hands of a bloated federal government …

…And it’s about to get a whole lot worse!

From business-crippling “cap-and-trade” to the recent government health care takeover –President Obama and his liberal friends in Congress are always working overtime to discover new ways to tax us.

Despite his campaign promise to not raise taxes on families making less than $250,000, the Obama Administration’s newest scheme is a national “value-added tax” (VAT).

A “popular” method of tax collection in Europe, the VAT tax is a national sales tax imposed on goods ranging from food to medicine.

Certainly families making less than $250,000 use these goods!

My friend, I have a plan to stop President Obama’s tax-and-spend schemes. But I need your help.

First, we must do what Americans for Tax Reform has always done: identify and publicize common-sense citizen legislators on the federal and state level that will stand up for taxpayers, small government and the Constitution.

The way we do that is through our much-vaunted Taxpayer Protection Pledge.

Candidates who sign the Pledge promise not to raise our taxes by even a single dime.

And we hold those who break the Pledge accountable.

The second plank of ATR’s efforts is the “Flat Tax.” Unlike the current “progressive” system that punishes success and rewards failure, the Flat Tax is a low rate consumption tax…

…That means that after a large personal exemption a dollar earned by a businessman in New York or a janitor in California is taxed at the same low rate!

Economists across the political spectrum agree this system greatly decreases the complexity of the current tax-code, reduces the individual tax burden (especially on savings), and gives every American the same simple tax rules with one low tax rate.

Ending the “progressive” tax and replacing liberal Washington with fiscally responsible citizen-legislators won’t be easy or done overnight.

That’s why I need to ask a very important favor of you today.

My friend, won’t you aid our efforts with your immediate, generous gift of $500, $250, $100, $50, $35 or whatever amount you can sendto Americans for Tax Reform today?

Together, we can succeed.

Sincerely,

Grover Norquist

President

P.S. In the age of Obama, Americans for Tax Reform’s efforts to change the tax code and support taxpayer-friendly citizen legislators couldn’t be more vital. Please follow this link to give the most generous gift you can to ATR right away. Thanks in advance

Debt Dangers - When Warren Buffett looks safer than Uncle Sam

2010-03-30T21:35:00.002-05:00

Chicago Tribune
March 29, 2010

For many decades, U.S. government securities have been the epitome of safe, dull investments. If you wanted to be absolutely positive you'd get your money back and then some, Treasury bills were the way to go. Right now, lots of Americans who put their money into big mortgages or stocks a decade ago wish they had gone the more mundane route.

But it's mundane no more. With federal budget deficits running wild, investors are growing uneasy at the idea of lending money to an institution that seems unable to stop spending beyond its means. Last month, something extraordinary happened: Two-year bonds offered by Berkshire Hathaway Inc. commanded lower yields than those offered by the U.S. government. As Bloomberg.com put it, "The bond market is saying that it's safer to lend to Warren Buffett than Barack Obama."

That may sound common-sensical — Buffett has experience at meeting payrolls, while Obama does not — but it's actually a surprising perception. Berkshire Hathaway, after all, conceivably could make so many mistakes that it runs out of money and closes down. But the U.S. government is not about to run out of money, even if it keeps overspending.

Why not? First, it can appropriate more of its citizens' earnings through the tax system. Second, and more important, it can print money to pay its bills. Warren Buffett doesn't have those options.

So it's hard to see why investors would be leery. Well, actually, it's not so hard: The federal government is digging itself deeper into debt every month and intends to keep doing so indefinitely.

The nonpartisan Congressional Budget Office offers a prognosis: "Under the president's budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020." Interest payments would quadruple.

The long-term problem here is not that the government eventually would default on its obligations. The danger is that it would create money to make those debts payable, a course that would lead to much higher inflation. Then, yields on even impeccable corporate bonds would climb with those of T-bills.

The economy would also suffer as businesses and households scrambled to cope with the disruptive effects of soaring prices. It would suffer again if and when the government decided to curb inflation by driving up interest rates — a step that virtually guarantees a sharp downturn.

Frightened investors may be wrong to think they're less likely to get their money back from the government than from Buffett's Berkshire.

But they're not wrong to be frightened.

Boehner says federal debt will equal GDP in two years

2010-03-30T19:59:00.000-05:00

"Our national debt ... is on track to exceed the size of our entire economy ... in just two more years."

John Boehner on Wednesday, March 24th, 2010 in an op-ed in the Des Moines Register

St. Petersburg Times PoliFact
March 26, 2010

Ever since Barack Obama became president and began advocating such big-dollar federal programs as an economic stimulus and health care reform, Republicans have gained increasing political traction with warnings to voters about the growing national debt.

On March 24, 2010, House Minority Leader John Boehner, R-Ohio, published an op-ed in the Des Moines Register that was timed to coincide with a March 25 visit by Obama to Iowa City, Iowa. Obama visited Iowa City to tout the health care bill two days after signing it into law.

Boehner's column -- titled, "Why Republicans will fight to repeal health-care takeover" -- was a broadside against the newly signed bill, featuring a wide range of statistics. In it, he asserted that the health care bill "is a recipe for further fiscal disaster at a time when our national debt ($12.7 trillion today) is on track to exceed the size of our entire economy (about $15 trillion) in just two more years."

That struck us as a huge amount, so we decided to take a closer look.

First, we'll offer a reminder that the debt is different from a deficit. A deficit refers to the amount by which expenses exceed revenues in a single year. The debt -- which is what Boehner was referring to -- refers to the cumulative total of past deficits, minus any intervening surpluses.

To sort out whether Boehner's numbers are right, we turned to the extensive historical tables in the president's fiscal year 2011 budget proposal.

According to these figures, which come from the Office of Management and Budget, the gross federal debt by the end of fiscal year 2010 is projected to be almost $13.8 trillion. That's actually a bit more than Boehner had suggested.

Two years later -- by the end of fiscal year 2012 -- the debt is projected to rise to $16.3 trillion, also higher than Boehner had indicated.

But Boehner is correct that, measured by the share of gross domestic product, gross federal debt will reach a significant milestone in two years. By 2012, gross federal debt is projected to be 100.8 percent of gross domestic product, up from 99.0 percent for fiscal year 2011.

These numbers, we'll add, have been growing for decades, roughly tripling since Jimmy Carter left the presidency. Under Ronald Reagan, debt as a percentage of GDP grew from 33.4 percent to 51.9 percent, and under George H.W. Bush, it grew from 51.9 percent to 64.1 percent. It declined under Bill Clinton, from 64.1 percent to 57.3 percent, before rising from 57.3 percent to 69.2 percent under George W. Bush. It's expected to soar during Obama's first four years from 69.2 percent to 100.8 percent.

It's worth noting that there is an alternative measure of debt known as "public debt," which does not include money in the Social Security trust fund or other amounts that the government owes itself. Measured this way, the debt-to-GDP comparisons are much smaller. By the end of 2010, public debt is projected to be 60.3 percent of GDP, and by the end of 2012, it's projected to be 66.6 percent.

Some economists prefer to use public debt rather than gross federal debt, but one measure "isn’t more 'right' than the other – they are just looking at different things," said Marc Goldwein, policy director for the Committee for a Responsible Federal Budget, a middle-of-the-road budget-hawk group. "Boehner may be cherry-picking, but I don’t think he’s misrepresenting in any way."

It's also worth noting that these numbers are only estimates. They could change over the course of the next two years, depending on economic conditions and policy choices. Still, we consider Boehner's statistics valid. While he underestimates the size of the projected debt in 2010 and 2012, his assertion that "our national debt ... is on track to exceed the size of our entire economy ... in just two more years" is on target, according to the president's own Office of Management and Budget. So we rate his statement True.

Newest National Debt Statistics Now Posted - March 2010 - Health Care Vote Edition

2010-03-21T21:05:00.000-05:00

Here are the newest national debt statistics courtesy of www.treasurydirect.gov on the eve of the "historic" health care vote. Statistics are effective March 18, 2010.

Debt Held by the Public

$8,174,187,796,569.78

Intragovernmental Holdings (including Social Security debt)

$4,487,108,259,737.47

Total size of National Debt (on 3/18/2010)

$12,661,296,056,307.25

Interest paid on the National Debt - February 2010

$16,893,440,780.68

Interest paid on the National Debt - Fiscal Year 2010 (to-date)

$181,141,669,146.21

Interest paid on the National Debt - Fiscal Year 2009

$383,071,060,815.42

Gifts to reduce the public debt:

January 2010 - $296,586.71

Fiscal Year 2010 (to-date) - $1,252,743.41

Fiscal Year 2009 - $3,063,057.05

Increase in the National Debt in the last 365 days:

$1,627,070,961,916.22

Increase in the National Debt in the 422 days of the Obama Administration

$2,034,419,007,394.17

($4,820,898,121.79/daily increase)

Social Security to start cashing Uncle Sam's IOUs

2010-03-14T21:42:00.000-05:00

By STEPHEN OHLEMACHER, Associated Press Writer
March 14, 2009
PARKERSBURG, W.Va. – The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
It's time to start cashing them in.
For more than two decades, Social Security collected more money inpayroll taxes than it paid out in benefits — billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.
Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.
Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.
"This is not just a wake-up call, this is it. We're here," said Mary Johnson, a policy analyst with The Senior Citizens League, an advocacy group. "We are not going to be able to put it off any more."
For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.
Remember Al Gore's "lockbox," the one he was going to use to protect Social Security? The former vice president talked about it so much during the 2000 presidential campaign that he was parodied on "Saturday Night Live."
Gore lost the election and never got his lockbox. But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bondsexist only in electronic form.
They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.
One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market.
More than 52 million people receive old age or disability benefits from Social Security. The average benefit for retirees is a little under $1,200 a month. Disabled workers get an average of $1,100 a month.
Social Security is financed by payroll taxes — employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67.
Social Security's financial problems have been looming for years as the nation's 78 million baby boomersapproached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program.
The recession is making things worse, at least in the short term. Tax receipts are down from the loss of more than 8 million jobs, and applications for early retirement benefits have spiked from older workers who were laid off and forced to retire.
Stephen C. Goss, chief actuary for the Social Security Administration, says the crisis has been years in the making. "If this helps get people to look more seriously at that in the nearer term, that's probably a good thing. But it's only really a punctuation mark on the fact that we have longer-term financial issues that need to be addressed."
In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016.
For the budget year that ends in September, Social Security is projected to collect $677 billion in taxes and spend $706 billion on benefits and expenses.
Social Security will also collect about $120 billion in interest on the trust funds, according to the CBO projections, meaning its overall balance sheet will continue to grow. The interest, however, is paid by the government, adding even more to the budget deficit.
While Congress must shore up the program, action is unlikely this year, said Rep. Earl Pomeroy, D-N.D., who just took over last week as chairman of the House subcommittee that oversees Social Security.
"The issues required to address the long-term solvency needs of Social Security can be done in a careful, thoughtful and orderly way and they don't need to be done in the next few months," Pomeroy said.
The national debt — the amount of money the government owes its creditors — is about $12.5 trillion, or nearly $42,000 for every man, woman and child in the country. About $8 trillion has been borrowed in publicdebt markets, much of it from foreign creditors. The rest came from various government trust funds, including retirement funds for civil servants and the military. About $2.5 trillion is owed to Social Security.
Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare.
"Those bonds are protected by the full faith and credit of the United States of America," Kennelly said. "They're as solid as what we owe China and Japan."

Newest National Debt Statistics Now Posted - Feb 2010

2010-02-12T18:04:00.000-06:00

It's been awhile since I last posted an update. Here are the newest U.S. National Debt statistics effective Feb. 11, 2010 courtesy of www.treasurydirect.gov

Debt Held By The Public:
$7,848,015,306,528.53

Intragovernmental Holdings:
$4,501,309,157,755.75

Total Debt:
$12,349,324,464,284.28

Interest Payments:
January 2010:
$18,856,851,343.86

Fiscal Year 2010 (to-date):
$164,248,228,365.53

Fiscal Year 2009 (total):
$383,071,060,815.42

Gifts to reduce the public debt:
December 2009: $134,182
Fiscal Year 2010 (to-date): $956,156.70
Fiscal Year 2009 (total): $3,063,057.05

Debt increase in the last 365 days:
$1,636,200,248,712.08

Debt increase in the first 388 days of the Obama administration:
$1,722,447,415,371.20
[$4,439,297,462.30/day]

National Debt on pace to triple in 10 years, now more than $100k per household, GOP claims

2010-02-04T21:57:00.000-06:00

Courtesy of St. Petersburg Times PolitiFact - www.politifact.com

The Truth-O-Meter Says:

"The amount of debt is on pace to double in five years and triple in 10. The federal debt is now over $100,000 per household."

Bob McDonnell on Wednesday, January 27th, 2010 in the Republican response to the State of the Union

National debt on pace to triple in 10 years, now more than $100k per household, GOP claims

Recently elected Virginia Gov. Bob McDonnell took up the flag for Republicans in response to President Barack Obama's State of the Union address on Jan. 27, 2010.

That meant talking about spending, deficits and debt.

"In the past year, more than 3 million people have lost their jobs, and yet the Democratic Congress continues deficit spending, adding to the bureaucracy, and increasing the national debt on our children and our grandchildren," McDonnell said in a speech from the floor of the Virginia House of Delegates. "The amount of debt is on pace to double in five years and triple in 10. The federal debt is now over $100,000 per household. This is simply unsustainable."

We wanted to check two things: Whether the debt is growing as fast as McDonnell says, and whether it now constitutes $100,000 per household.

First things first -- a quick but critical lesson on the federal debt. The debt clock you're use to seeing, the one that's ticking past $12.3 trillion these days, actually is the summation of two types of debt. The first part is the money the government borrowed to pay for things -- wars, roads, whatever. The second is debt held by government trust funds and government accounts that are internal transactions (government passing money from one fund to another). In these cases, there is no effect on the credit markets. (Read the Treasury Department's Q&A on debt here.)

The Congressional Budget Office, a nonpartisan arm of Congress, says the first form of debt is a more meaningful measure. It's the combination of both types of debt, however, that gets most noticed, surely because it's bigger but also because it's what the debt ceiling is based on.

McDonnell's claim that the debt is on pace to double in five years and triple in 10 is not a new talking point for Republicans. Judd Gregg (the Republican senator from New Hampshire who was almost Obama's commerce secretary) said the same thing about Obama's proposed 2010 budget last March.

To check Gregg, we relied on a Congressional Budget Office analysis from March 20, 2009. The CBO projected that the debt held by the public (the first part of the total debt) would rise from $5.8 trillion at the end of fiscal year 2008 -- which is Sept. 30, 2008 -- to $11.8 trillion by the end of fiscal year 2013; and to $17.3 trillion in 2019 under Obama's proposed FY 2010 budget. By that count, Gregg's claim of doubling the debt in five years, tripling it in 10 years, is correct.

But in Gregg's case we found it a little unfair to tie some of the debt to Obama and not President George W. Bush. We rated Gregg's claim Mostly True.

Now on to McDonnell.

Just hours ahead of McDonnell's response, the CBO released updated baseline debt projections that shrink the amount of debt predicted over the next 10 years. The CBO put the debt held by the public at the end of fiscal year 2008 at $5.8 trillion, $7.5 trillion at the end of fiscal year 2009, and estimates the debt will increase to $11.6 trillion by the end of fiscal year 2014 and to $14.3 trillion by the end of fiscal year 2019. Again, this is just the first part of the debt calculation.

That's a decrease from the projections the CBO put out in response to Obama's 2010 budget. In checking this claim, like when considering Gregg's claim, the truth depends on where you start counting the debt.

If you set your baseline as Sept. 30, 2008, the national debt is on pace to nearly triple by Sept. 30, 2019, as McDonnell suggests. If you recalculate for Sept. 30, 2009, the national debt doubles, not triples in 10 years.

Now, for argument's sake, we wanted to run the same calculation for the entire gross federal debt. (You will see why this matters in a second.) According to the CBO, the gross federal debt ended 2009 at $11.9 trillion, will hit $16.7 trillion by the end of 2014 and $20.6 trillion by the end of 2019. That's short of McDonnell's marks as well. The percentages don't improve much even if you roll back to 2008 -- we're talking again about doubling the debt after 10 years, not tripling.

So unlike comparing the debt held by the public, McDonnell's numbers are off whether you start counting Sept. 30, 2008, or Sept. 30, 2009. White House debt projections from August 2009 are a slightly worse, but not enough to make a change when considering McDonnell's claim.

As we try to digest all of that, let's turn to the second part of McDonnell's claim: "The federal debt is already over $100,000 per household."

The Census Bureau estimated in 2007 that there were nearly 116 million U.S. households. The current debt held by the public -- the money the government has borrowed -- is $7.8 trillion, according to the U.S. Department of the Treasury. The current gross debt is $12.3 trillion.

Presto, chango, carry the one, move the decimal point ... and you get two different debt per household figures.

The household share of the debt owed by the public is about $67,000. The household share of the gross federal debt is slightly more than $106,000.

McDonnell's press secretary, Stacey Johnson, did not return two phone calls or an e-mail asking for clarification on what debt figures the governor was using to make his calculations.

Why does it matter?

If he's using the gross debt figure -- the big one -- McDonnell is right about the per household number and wrong about the doubling and tripling.

If he's using the smaller debt held by the public number, he has a case to make about growth of the debt, but is wrong when it comes to the per household share.

Or he's mixing one form of debt to make one point, and another to make a second.

In his State of the Union response, McDonnell tried using both the macro and the micro to drive home a point that spending led by the Democrats in the White House and Congress is out of control. His claim that national debt is on pace to double in five years and triple in 10 isn't wildly off, but it ignores the fact that some of the responsibility falls on Bush's shoulders.

On his second claim, that the per household share of the national debt is more than $100,000, that's true if you measure the gross federal debt and false if you only count the money the government actually borrowed from somebody else. On the whole, we rate McDonnell's statement Half True.

Democrats Propose $1.9 Trillion Debt Limit Increase

2010-02-04T21:46:00.000-06:00

by Shannon Bell
www.rightpundits.com

Last November Congress raised the debt limit for the United States bringing our National Debt to a whopping $12.3 Trillion dollars. Now, just two months later, democrats propose raising the debt limit $1.9 Trillion bringing the total debt incurred by the country to $14.3 trillion dollars. The move is being urged by the White House, of course, and will almost certainly pass.

Like every other piece of legislation making its way through congress right now, democrats are almost solely responsible, for good or ill. Democrats proposing $1.9 Trillion increase in the debt limit is ill timed legislation to say the least. They own it, and they know it. Considering the fact that racking up debt is one of the factors that led to the Scott Brown victory inMassachusetts.

A White House statement said that increasing the debt limit, “is critically important to make sure that financing of federalgovernment operations can continue without interruption and that the creditworthiness of the United States is not called into question.” I’m thinking that perhaps the creditworthiness of the United States has already been called into question by many. China for one, Russia for another.

The democrat proposal to raise the debt limit is just a quick fix to a much larger and growing problem. These clowns have borrowed and printed so much money that it will almost certainly never be paid off. The purpose of raising the debt limit is to be able to continue government programs which for the most part are entitlement programs which we went into debt to pay for in the first place. It’s like taking out a loan to pay the minimum on your credit card bill. It simply makes no fiscal sense.

Government itself has become a beast that needs to be fed constantly. Its food is money, and it never gets enough. The beast will constantly eat, the beast will never shrink, it will always increase its tolerance for more. And then it will meet and exceed that and continue wanting more. Never stopping until it explodes, gorging itself into oblivion.

Conservatism can tame the beast, conservatism can kill the beast. Democrats proposing $1.9 Trillion debt limit increase into a massive $14.3 Trillion debt is just another tool to be used by conservative members of congress, politicians, candidates and pundits to insure that the destruction of the beast which started on Tuesday continues right through November of this year.

Alexander Opposes Increase Of National Debt Limit

2010-02-04T21:41:00.000-06:00

posted on www.chattanoogan.com January 28, 2010

Senator Lamar Alexander said he was opposed to increasing the nation's debt limit on Thursday. The legislation would increase the nation’s debt limit by $1.9 trillion – from $12.4 trillion to $14.3 trillion:

He said, “It took this country 230 years to reach $10 trillion in debt. Now, in just 15 months we’ve added more than $2 trillion more. The president was right last night when he said we should not leave Americans with a ‘mountain of debt.’ To hold Congress to that challenge, he should veto this debt increase, which is larger than the size of the entire federal budget in 1999. If this increase in the national debt becomes law, it will leave our children and grandchildren a country they cannot afford and a government they cannot control. Until Congress and the president take steps to bring this alarming debt under control, we should not increase the debt limit.”

In thrall to a long-dead experiment

2009-10-22T23:36:00.001-05:00

By Patrick McIlheran

Milwaukee Journal Sentinel

We are all Keynesians now, Richard Nixon is said to have said. Too true, says Hunter Lewis, who's got a new book on how the famous British economist is still messing with your life.

And he is. We are all followers of John Maynard Keynes in the sense that lab rats, learning a maze by electric shocks, are disciples of some psychologist's theory. We no more benefit from this than do the rats.

Keynes, who died in 1946, is fashionable again. Politicians pray for his blessing on their stimulus plans, since Keynes preached that the way out of a slump was for government to spend lots of money. It should borrow vastly, said Keynes, and spend it on anything. He's the guy who first suggested paying some to dig ditches and others to refill them.

Nor just in slumps, said Keynes: Governments should print money, loads of it, to drive interest rates toward zero. This would cause a permanent boom, if only we also tax away money hoarded uselessly by rich people.

Sound familiar? Of course, says Lewis, who explains the doctrine precisely in "Where Keynes Went Wrong." Washington's embrace of Keynes went uninterrupted through Clinton to Bush to Obama. Fannie Mae's loose loans, the Fed's giveaway rates, bailouts, the porkulus: all Keynes, no matter the party.

How has that worked? "There's just no evidence" that this ever cured a recession, Lewis told me. Keynes "wasn't particular interested in evidence."

History suggests he should have been. Keynes was embraced by Franklin Roosevelt in the Depression; this stalled the mid-1930s recovery. Keynes' ideas in the 1970s led to stagflation. Japan stimulated crazily in the 1990s, giving itself the Lost Decades. The cure for the 2001 slump set up the 2008 crash.

Whereas recessions without stimulus - America in 1921, Southeast Asia in the 1990s - were sharp but swiftly over.

When governments pump stimulating rivers of money, they manipulate prices, the economy's gauges. By juking interest rates, the price of money, you're messing with the most critical gauge. The ensuing unreality leads to inflation, dot-com bubbles or foreclosed subdivisions. Stimulus is like curing a hangover with Thunderbird.

Lewis feels Keynesianism, an intellectual bubble, is nearing a pop, if only because Washington is running out of willing lenders. About time, he says. It has punished thrift and encouraged profligacy. It has led government to turn swaths of the economy into federal protectorates. "That's the single thing that worries me most," he said, the way bonds between government and business make the two indistinguishable. It sickens democracy.

Keynes wasn't a clear writer, says Lewis. He was self-contradictory: The solution to bad debt is more debt, for instance. The more you spend, the more you have. Deficits are a kind of savings. Lewis becomes grimly hilarious when he compiles the Keynesian paradoxes now being spouted. You realize our leaders aren't making sense.

Keynesians argue that it does make sense, only you rabble aren't equipped to comprehend. Keynes believed the economy couldn't be left up to rabble, who were ruled by "animal spirits." It had to be run by the wise - by people like him.

"He said, 'If things go too far in the wrong direction, I'll just step in and fix it,' " said Lewis. "Then he died."

We since have learned that governments are ruled by spirits as animal as anyone's, only with bigger paws. No one is so short-term as politicians, thinking of re-election and seduced by an urge to be in charge. This is why Keynesianism has triumphed among them, said Lewis: "It's a rationalization for policies that they'd like to pursue anyway."

So we all live in a $24 trillion experiment in whether, this time, stimulus will work. Two questions from one of the rats:

First, if the government rigs reality by messing with the value of money, how can we expect any other part of the economy to not be distorted and dishonest?

Second, if we abandon simple, comprehensible rules and rely on constant tinkering by wise leaders, what happens when we instead get leaders who, having done no work but rabble-rousing among Chicago's poor, have not the least clue about running an economy?

Revered, Keynes has no answer.

Patrick McIlheran is a Journal Sentinel editorial columnist. E-mail pmcilheran@journalsentinel.com

Record US deficit stokes concern

2009-10-19T15:58:00.000-05:00

By Martin Crutsinger Washington

What is $1.42 trillion (R10.4 trillion)? It is more than the US's total national debt for its first 200 years and more than $4 700 for every American man, woman and child.

It is also the 2009 US federal budget deficit, three times more than any other deficit before. Some economists warn that unless the government start to cut spending or raise taxes, it could sow the seeds of another economic crisis.

Treasury figures released on Friday showed that the government spent $46.6 billion more than it received in September, a month that normally records a surplus. That boosted the shortfall for the full fiscal year that ended last month to $1.42 trillion. The previous year's deficit was $459 billion.

As a percentage of US economic output, it's the biggest deficit since World War II.

Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this year.

President Barack Obama has pledged to reduce the deficit once the great recession ends and the unemployment rate starts falling, but economists worry that the government lacks the will to make the hard political choices to get control of the imbalances.

Friday's report showed that the government paid $190bn in interest over the last 12 months on Treasury securities sold to finance the federal debt. Experts say this tab could quadruple in a decade as the size of the government's total debt rises to $17.1 trillion by 2019.

Without significant budget cuts, that would crowd out government spending in such areas as transport, law enforcement and education.

Already, interest on the debt is the third-largest category of government spending, after the government's entitlement programmes and the military.

As the biggest borrower in the world, the government has been the prime beneficiary of record low interest rates. The new budget report showed that interest payments fell by $62bn this year even as the debt was soaring.

The Congressional Budget Office projects that the debt held by investors both in the US and abroad will increase by $9.1 trillion over the next decade, pushing the total to $17.1 trillion under Obama's spending plans.

The $1.42 trillion deficit for 2009 - which was less than the $1.75 trillion projection that Obama made February - includes the cost of the government's financial sector bailout and the economic stimulus programme. Income taxes also dwindled as a result of the recession. Coupled with the impact of the tax cuts under former president George W Bush earlier in the decade, tax revenues fell 16.6 percent.

"We should be desperately worried about deficits of this size," says Mark Zandi, the chief economist at Moody's Economy.com. "The economic pain will be felt much sooner than people think, in the form of much higher interest rates and much higher rates of inflation." This could result in stagflation - a mix of inflation and economic stagnation.

The administration has pledged to include a deficit-reduction plan in its 2011 budget, which will go to Congress in February.

Newest National Debt Statistics Posted September 2009

2009-09-14T19:13:00.003-05:00

Here are the newest National Debt statistics courtesy of www.Treasurydirect.gov (U.S. Treasury Department) effective Sept. 11, 2009.

Debt Held by the Public
$7,488,352,210,282.27

Intragovernmental Holdings
$4,306,343,094,699.45

Total Debt (9/11/09)
$11,794,695,304,981.72

Interest payments
August 2009
$27,374,808,039.95

Fiscal Year 2009
$367,837,472,521.29

Gifts to reduce the public debt
July 2009
$65,591.69

Fiscal Year 2009
$3,008,736.87

Increase in the past year (since 9/11/08)
$2,112,578,308,687.88

Increase since President Obama's inauguration (234 days ago)
$1,165,813,819,471.49

Daily rate of increase
$4,982,110,339.62/day

Area residents travel to D.C. to protest increasing national debt

2009-09-14T17:57:00.000-05:00

The Herald Mail
Hagerstown, Md.

September 12, 2009

HAGERSTOWN — More than 400 people from four states traveled Saturday from Hagerstown to Washington, D.C., joining thousands of others for the March on Washington, a rally protesting big government, both in spending and control.

“It was truly amazing,” said Nancy Allen of Hagerstown.

Allen said she never felt the need to take part in a political demonstration before in her life.

“It is the control the government is trying to exercise over the people, To me, it is very threatening,” Allen said. “I do see this as a (peaceful) revolution. I really do.”
Allen said she left the demonstration “with a great sense of optimism.”

Neil Parrott, organizer of the Hagerstown TEA (Taxed Enough Already) Party, said a caravan of eight buses stopped to pick up people in LaVale, Md., Chambersburg, Pa., Martinsburg, W.Va., Winchester, Va., and Frederick, Md., as well as Hagerstown

Before the buses departed Saturday morning from Hagerstown, a press conference was held featuring U.S. Rep. Roscoe Bartlett, R-Md. Parrott also spoke to the group.

“Today, we will tell elected officials, we will tell the nation and we will tell the world that we care about our freedoms and we care about our nation,” Parrott said in prepared remarks.

“We want our elected officials to listen and to turn their destructive fiscal policies around,” Parrott said. “We want them to quit increasing the national debt and devaluing the dollar. We want to be heard and we want action.”

While acknowledging past deficits and growth of the national debt in previous administrations, Parrott said the rate of the increase in spending in the last two years has been much more alarming to him.

“Our debt has just increased tenfold,” Parrott said Saturday afternoon after the rally.

Harold Carbaugh of Clear Spring said he never had experienced anything like Saturday’s rally.
“I’m on cloud nine,” Carbaugh said after the rally, where he met people from Florida, Louisiana, Texas, Mississippi and other states.

Carbaugh said he began asking people where they were from after realizing the demonstration wasn’t simply by people from the Washington area.

“Basically, what our founding fathers gave us is being eroded,” Carbaugh said of his concerns. “Our Constitution is being stripped out from under us one piece at a time.”

Carbaugh, a dairy farmer, said it was time for good men and women to do something or risk losing what the founding fathers established.

Anne Gray of Frederick, Md., said House Speaker Nancy Pelosi’s criticism of people attending the town hall meetings on health care as being “un-American” inspired her to join the protest.
“It was the biggest summer reunion picnic you ever had,” Gray said of the event’s atmosphere. “I definitely want to become more involved.”

The march was the third event Parrott has participated in since April 15, when TEA Party events were held across the nation.

Earlier this summer, Parrott expressed interest in running for Subdistrict 2B seat in the Maryland General Assembly. The seat currently is held by Republican Christopher B. Shank, who is considering running for the Maryland State Senate seat held by Republican Donald F. Munson.

China alarmed by US money printing

2009-09-07T16:55:00.003-05:00

The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

By Ambrose Evans-Pritchard, in Cernobbio, Italy
UK Telegraph

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than – $2 trillion, the world's largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.

"This is where Greenspan went wrong from 2000 to 2004," he said. "He thought everything was alright because inflation was low, but assets absorbed the liquidity."

Mr Cheng said China had lost 20m jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.

China's task is to switch from export dependency to internal consumption, but that requires a "change in the ideology of the Chinese people" to discourage excess saving. "This is very difficult".

Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

"The US spends tomorrow's money today," he said. "We Chinese spend today's money tomorrow. That's why we have this financial crisis."

Yet the consequences are not symmetric.

"He who goes borrowing, goes sorrowing," said Mr Cheng.

It was a quote from US founding father Benjamin Franklin.

Newest National Debt Statistics Posted August 2009

2009-08-25T19:11:00.003-05:00

Here are the newest National Debt statistics courtesy of www.TreasuryDirect.gov

As of Aug. 24, 2009

Debt Held by Public
$7,385,932,492,348.44

Intragovernmental Holdings
$4,333,128,433,517.42

Total Debt:
$11,719,060,925,865.86

Interest payments:
July 2009
$19,812,486,187.83

FY 2009
$340,462,664,481.34

Gifts to reduce the public debt:

June 2009
$33,690.42

FY 2009
$2,943,145.18

Increase from previous month:
$113,539,846,023.73

Increase from previous year:
$2,100,326,268,141.77

How much has the National Debt increased in the 216 days of the Obama Administration?
$1,092,183,876,952.78

[$5,056,406,837.74/per day increase]

Washington Times: A Failed Single Term?

2009-08-16T18:57:00.001-05:00

By Jeffrey T. Kuhner
Saturday, August 15, 2009

President Obama is on the way to joining an exclusive club. It is the club of failed one-term presidents.

During the presidential campaign, Mr. Obama sold himself as a pragmatic moderate. In fact, he is the very opposite. He is an internationalist socialist whose policies will lead to ruin at home and defeat abroad. They will also doom his re-election efforts. He is flirting with political disaster.

Despite his many flaws, former President Bill Clinton established the model for successful Democratic administrations. Mr. Clinton governed as a liberal centrist. He realized that veering too far to the left early in his presidency was detrimental: His support of Hillarycare and gays in the military resulted in the 1994 Republican takeover of Congress. Mr. Clinton changed course by embracing free trade, welfare reform and balanced budgets -- combining fiscal responsibility and social liberalism. This formula prevented the Republican Party from recapturing the White House in 1996.

Mr. Obama is the anti-Clinton. He is a leftist ideologue who has surrounded himself with radical and inept advisers. Mr. Clinton had political counselor Dick Morris and Treasury Secretary Robert E. Rubin. Mr. Obama has David Axelrod and Timothy F. Geithner.

As a result, Mr. Obama's presidency is starting to look like the worst in 100 years. His $787 billion fiscal stimulus has failed to restore economic recovery. Unemployment remains high. Growth is anemic.

His massive spending is projected to yield record budget deficits of $1.8 trillion this year and $1.3 trillion next year. Over the next decade, according to the Obama administration's own estimates, the debt will explode by more than $10 trillion. These soaring deficits threaten to cripple our long-term prosperity and economic security. No country has sustained this kind of massive borrowing and spending without becoming a second-class nation. America is going the way of Argentina.

Mr. Obama's government-run health care plan is too expensive: It will saddle taxpayers with more than $1 trillion in costs. If enacted, it will do what socialized medicine has always done: ration care, extend waiting lines to visit a doctor and deny lifesaving, costly treatment to those deemed the weakest and most unproductive members of society -- the elderly. It is why so many seniors rightly oppose Obamacare.

National health care will force Mr. Obama to break his tax pledge. His signature campaign promise was not to raise taxes on families making less than $250,000 a year. However, Mr. Obama has boxed himself in, vowing that any health-insurance overhaul must be paid for without adding to the deficit. Hence, his administration is exploring soak-the-rich schemes such as higher income and capital gains taxes and a "wealth surtax." The problem remains that even these policies can't generate nearly enough revenue to fund Mr. Obama's ambitious expansion of the welfare-entitlement state.

This leaves him with only one option -- raising taxes on the middle and working classes. Already, key administration officials are considering a 10-percent national sales tax, also known as a value-added tax (VAT). In other words, a European-style health care system inevitably leads to European-level taxation -- and, consequently, European-style high unemployment and low growth rates.

Mr. Obama's energy policies will also undermine the economy. If passed, his cap-and-trade initiative will impose huge indirect taxes on businesses. It will punish manufacturing, oil-producing and coal states. Its goal is to increase the costs of gas and electricity, thereby discouraging their use.

Consumers will be paying more not only at the pump but also on everything from food to heating and electric bills. Mr. Obama's green socialism threatens to erode our standard of living, trigger skyrocketing inflation and stunt job creation.

Yet, the biggest danger is in foreign policy. Mr. Obama is pouring another 21,000 U.S. troops into Afghanistan. American forces are bogged down in a protracted guerilla campaign. The Taliban are resurgent. They have reclaimed their stronghold around the southern city of Kandahar. Insurgents are waging bold and deadly attacks even in the northern and western parts of the country -- formerly stable areas. The fighting is spreading, U.S. casualties are soaring, and public support for the war is ebbing.

The problem in Afghanistan is that terrorists are able to blend in with the native population. American soldiers find it increasingly difficult to distinguish civilians from combatants. The administration does not have a coherent counterinsurgency strategy. Hence, the Taliban are winning, and Washington is clueless on how to change the grim results on the ground.

Mr. Obama is frequently portrayed as the heir to Franklin D. Roosevelt. The more apt analogy, however, is Lyndon Baines Johnson. Just like Mr. Obama, President Johnson believed he could have guns and butter. He sought to implement the Great Society while escalating America's military involvement in Southeast Asia. Unable to choose, Mr. Johnson lost both: His domestic agenda and prosecution of the Vietnam War proved to be disastrous. His reckless ambition reduced his administration to political rubble, costing him any chance for re-election in 1968. This is why he (smartly) decided not to run again.

Social democracy and interventionist nation-building do not work. They destroyed the Johnson presidency and are on the verge of destroying Mr. Obama's as well.

Jeffrey T. Kuhner is a columnist at The Washington Times and president of the Edmund Burke Institute, a Washington-based think tank.

Newest National Debt Statistics posted July 2009

2009-07-27T07:25:00.003-05:00

Here are the newest National Debt Statistics for July 2009 as reported at www.treasurydirect.gov

As of July 23, 2009

Publicly held debt:
$7,264,963,795,966.75

Intragovernmental holdings:
$4,340,557,283,875.38

Total Debt:
$11,605,521,079,842.13

June 2009 Interest payment
$106,612,310,280.24

Fiscal Year 2009 Interest
$320,650,178,293.51

Gifts to reduce the public debt
May 2009: $51,546.51
FY 2009: $2,909,454.76

Increase in the debt since President Obama's Inauguration:
$978,644,030,929.05

Rate of increase each day in the 184 days of the Obama Administration:
$5,318,717,559.40

Money and kids: Raising responsible spenders in a debt-driven world

2009-07-06T22:37:00.001-05:00

by Jamie Richardson
www.examiner.com

The national debt is now about $11.4 trillion, according to USA Today. That is about $37,000 per person. And the number is rising quickly.

How can parents teach their kids to do better than the deep-pocketed politicians?

Here are 3 tips on teaching kids fiscal responsibility.

1. Teach the values of money early. Consider a rewards bank for good behavior. Like an earned allowance for an older child, this is the perfect starting point to let younger ones understand that things are earned, not just given freely. Give a dime for each good act, take one away for misbehavior. When the child has earned enough, take them to a dollar store and let them pick out their own reward. Let them pay the cashier to allow them the full experience of earning and buying.

2. Let them make some choices at the grocery store. For older kids, let them know how much money is allotted for the things on their breakfast or lunch table. With that money they can choose either their favorite chips, cookie, or cereal, but they only have that much money to spend on "fun" food. If the children are not old enough to read price tags, that does not eliminate them from the smart shopping experience. Give them options. Timmy can have either the name brand cereal OR the fruity candy, but not both. Or Timmy can get the store brand of both for the same price. The package may not have his favorite cartoon character on it, but he will learn to make decisions based more on flavor than advertising.

3. Cash is king. The movie Confessions of a Shopaholic gave me a whole new perspective on credit cards. The star is remembering back to her childhood and watching all the well-off ladies in the stores. She thought they were princesses and they did not even need "real money" because they had magic cards. As an adult, she chose to have 12 of those magic cards and she did not have full respect for their power until she wracked up thousands of dollars in debt that she could not afford.

And while the credit card debt per household is holding steady at about $10,000, Americans really are passing along this impression of a magic card to the next generation. For a child to truly respect money, kids need to see the power of actual money. If they see that the same money is spent on groceries and lunches, and toys and treats and that there is a limited supply of money, they catch on much faster to having a finite amount to spend.

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Links

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With the January 2011 protests in Egypt in full swing, it is appropriate to take a look at some of the roots of this international crisis. This New York Times story in 2008 was a precursor to what we are experiencing in January 2011. - Editor

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