Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Debt Ceiling

Obama Buys Time, Solves Nothing

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, September 11th, 2013: 

The president has an excellent speech writer. His presentation Tuesday night was well-organized and persuasive. It revealed more than we knew. And it solved nothing.

He said he has “resisted calls for military action” but no one can recall exactly who

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University of California Study: The National Debt is really $70 Trillion

Professor James Hamilton, economics professor at the University of California, San Diego, just published his best estimate of the federal government’s “off-balance-sheet” liabilities and concludes that the real national debt, popularly estimated to be $16.9 trillion, is in fact more than four times larger: $70.086 trillion. This is because of decisions to

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S&P Issues an Upgrade of US sovereign debt along with a warning

In the announcement by credit rating agency Standard & Poor’s on Monday that affirmed its AA+ rating of United States sovereign debt while revising upward its outlook from “negative” to “stable,” the agency explained that in the short run there has been some perceptible improvement in the country’s fiscal situation but in the long run

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The Gloomy Report from the CBO is Too Optimistic

On its face the latest report from the Congressional Budget Office is gloomy enough, but careful sifting through it reveals

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The Sequester is now the focus of acrimony in Washington

The GOP strategy was simple: give up on the debt ceiling fight and save the heavy artillery for the sequester. If the president can’t come to terms acceptable to the Republicans in the House, then the calendar will

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Capital Appreciation Bonds: Delaying the Inevitable

The action that California’s Napa Valley Unified School District took in 2009 is just now getting exposure and at least one board member is running for cover. Jose Hurtado, a NVUSD board member, said he stands by the deal he voted for – to borrow $29 million and put off paying it back until 2049 – but if it were a traditional mortgage, he

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House Backs Off on Debt Ceiling Threat, Prepares for Budget Battle

Calling it a debt limit “suspension,” the House GOP is voting today on a measure to allow the federal government to continue to spend until May 19th, at which time it will reconsider the issue once again. It also

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Memo to GOP: No Debt Ceiling Increase Without Spending Cuts

Dancing On The Debt Ceiling by Brianna C George

Dancing On The Debt Ceiling by Brianna C George (Photo credit: brianna.george)

The Conservative Action Project, chaired by former Attorney General Edwin Meese, sent a “Memo for the Movement” to House GOP leaders meeting in Williamsburg, urging them not to raise the debt ceiling unless cuts in government spending were included. More than 100 conservative leaders signed the memo, including Chris Chocola, President of the Club for Growth, Penny Nance, President of Concerned Women for America, and Tim Phillips, President of Americans for Prosperity.

It took just 518 days for deficit spending to reach the debt ceiling which was raised in the summer of 2011 midst acrimony and disagreement. That debt ceiling crisis was triggered in May, 2011, when the House voted down a “clean” debt ceiling bill – one without conditions – by a vote of 318 to 97. The Republicans wanted to use the debt ceiling issue as leverage to get the Obama administration to agree to spending cuts on entitlements (and no increases in taxes) to begin to close the deficit and to address the long-term issue of the country’s accelerating national debt. After two months of wrangling, a last-minute deal was reached and the

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President Obama Challenges Congress on the Debt Ceiling

At President Obama’s final press conference of his first term held on Monday, he made clear his intentions not to negotiate with the Congress over the debt ceiling. Said the president, “We are poised for a good year if we make smart decisions … and as long as Washington politics don’t get in the way…”

His position on the debt ceiling issue is

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Krugman the fool

As Dr. Kenneth McFarland said many years ago, people should write a column only when they have something to say.  Unfortunately, Dr. Paul Krugman has to meet a deadline and therefore must write an article even if he doesn’t have anything to say. Sometimes it’s worse:

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How likely is a government shutdown over the debt ceiling?

Not very, if David Harsanyi is correct. Harsanyi used to write for the Denver Post and I took a writing class from him several years ago. He referred to the newsroom at the Post – Denver’s liberal paper – as “the collective.” That brought a lot of laughs.

He says that Washington faces three more “cliffs” – the “debt ceiling” cliff, the “sequestration” cliff, and the “balanced budget” cliff. He thinks that the idea of shutting down the government over the debt ceiling cliff is

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Will Congress force a government shutdown over the debt ceiling issue?

Two bright guys writing for the Washington Times think so. They write that Republicans in Congress are beginning to grow a backbone, that they’re upset about being steamrolled by Obama and mad that now he wants more:

The appetite for a government shutdown is growing among Republicans,  who shied  away from one during the debt and spending fights in the last  Congress but now say one may be needed.

Then they quote various people to

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A Rand Paul/Mike Lee Ticket for 2016?

Bernie Quigley, writing at the Pundit’s Blog for The Hill on Wednesday, considered the fiscal cliff bill that became the American Taxpayer Relief Act of 2012 (ATRA) as a “touchstone…a benchmark…to mark the progress of history.” He considers the law as a

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The Debt Ceiling is the Next Fiscal Cliff

Car off cliff sign

Car off cliff sign (Photo credit: Wikipedia)

Often, the British newspaper Reuters has a more accurate view of American politics than does the distorted, half-blind American media. Their view of what’s next is helpful.

The Republicans are mad that Boehner folded so quickly over the fiscal cliff negotiations and are determined to “get even next time.” That opportunity will present itself in about three weeks.

Technically, the debt ceiling has already been breached, but Treasury Secretary Tim Geithner‘s machinations and accounting tricks are

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Where Are the Spending Cuts?

Cutting your Spending

Cutting your Spending (Photo credit: Tax Credits)

The fiscal cliff “deal” about to be signed into law by President Obama is all about tax increases. This is what The One has wanted since he got into office. He wanted to overload the system so much that taxpayers would be forced to pay more. It’s more of the “leveling” required to push the US down relative to other deadbeat nations who also can’t pay their bills. The easier to be “absorbed” into the new world order run by non-elected elites. But I digress…

According to the Congressional Budget Office (CBO), the “deal” consists of $15 billion in spending cuts (over the next ten years, mind you) compared to $620 billion in new taxes – a ratio of 41:1. What a deal!

“We’ll address spending cuts later” is now the cry from sycophants like Grover Norquist. “We got a deal we can live with,” they say. “Now let’s get down to business.”

Sorry. Business is already done. That window of opportunity to hold the government accountable is closed. Obama got what he wanted. Boehner caved in. End of discussion.

I’m biased (!). But I think the fiscal cliff turned out to be a speed bump on the road to more

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Debt Ceiling Debate Now Set for February 2013

The debt ceiling is expected to be reached, officially, on Monday, December 31st, when the national debt reaches $16.4 trillion. Unofficially, with various “extraordinary measures” employed, the Treasury won’t bump into the real limit until early February.

Those measures will give the Treasury some $200 billion in “headroom” and since the government is borrowing $100 billion every month, the math is easy. The question then becomes:

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Rep. Tim Scott to replace Senator Jim DeMint in January

When South Carolina Governor Nikki Haley announced on Monday that she would appoint Rep. Tim Scott to replace Senate Jim DeMint in the upcoming 113th Congress, she was full of praise for his voting record in the House and enthusiastic about his future in the Senate:

It is with great pleasure that I am announcing our next U.S. senator to be Congressman Tim Scott. I am strongly convinced that the entire state understands that this is the right U.S. senator for our state and our country.

Her announcement had nothing to do with him being the only black senator in the 113th Congress or the first black senator from the south since Reconstruction.

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House Speaker Boehner Offers Plan B with Tax Increases

On Tuesday, December 18th, Republican House Speaker John Boehner spelled out some of the details on his “Plan B” offer to the White House in case Plan A goes nowhere. It appears that Plan B will go nowhere as well, but not because of resistance from the White House, but from other House Republicans who are intent on keeping their word.

According to Boehner’s office, Plan B “Does not raise taxes. It is a net tax cut that prevents a $4.6 trillion tax hike on January 1.”

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More of America’s National Debt Being Bought by Foreign Governments

On Monday, December 17th, the US Treasury Department announced that China and Japan have increased their purchases of United States government securities despite concerns over the continuing negotiations about the fiscal cliff. Foreign holdings rose to $5.5 trillion in October, or about one-third of the country’s $16 trillion national debt. The increased interest in owning US government debt by foreign governments is welcome as the government’s monthly deficits continue growing at about $150 million every month. 

Although China is often referred to as the primary financier of America’s continuing profligacy, that country’s total holdings, some $1.16 trillion, represents just a little over 7 percent of the US’s national debt. Japan comes in at second place, owning $1.13 trillion, with Brazil holding $255 billion.

In contrast, two-thirds of the country’s national debt is owed by individual American investors and by Social Security and civil service and military pension plans. The balance of $1.6 trillion is owned by the Federal Reserve.

How much longer can such profligacy with its resulting trillion-dollar annual deficits continue? Back in 1995, Harry Figgie wrote Bankruptcy 1995 and predicted the end would occur within five years:

The good news and the bad is that neither we nor any other nation can continue the sin of deficit spending indefinitely. The laws of economics eventually exact their punishment, and we are dangerously close to getting ours.

Just as interest compounds in a savings account, it compounds on our debt. The $4 trillion debt we owed in 1992 becomes $6.56 trillion in 1995 and $13 trillion by the year 2000 just from the accumulation of deficits and interest alone.

Only a fool would contend that this insanity doesn’t have to end.

That was 13 years ago and yet that “day of reckoning” hasn’t arrived. Part of the reason is those “laws of economics” that resulted when interest rates were forced down by the Federal Reserve following the bursting of the dot.com bubble and have remained historically low ever since. That brought the cost of borrowing to record lows as well. For instance, the percentage of taxes that were devoted to interest payments on the national debt in 1991 was nearly 20%, but by 2003, it had declined to just over 8 percent. When compared to the country’s gross domestic product, interest was eating up just 1.4% of it. As Bill Sardi noted, “America was saved by cheap money.”

But with interest rates at near zero, how much longer will investors, foreign and domestic, continue to put up with such low returns in the face of an ever-increasing risk of default? Following the debt ceiling crisis during the summer of 2011, the rating agency Standard and Poor’s downgraded its rating on U.S. Government debt for the first time in history. And unless something positive comes out of the fiscal cliff negotiations, Fitch Ratings is likely to follow.

The Tax Policy Center, using rosy economic assumptions, projected that deficits would continue at least out to the year 2017, and would average $700 billion a year. As Sardi noted, “There is no substantiation for this scenario.” And so something’s got to give.

Indeed, if the average monthly deficits of $150 billion were simply extended in a straight line into the future, deficits over the next five years would add $9 trillion to the national debt, bringing the total to over $24 trillion by 2017.

There are several reasons why that “day of reckoning” may in fact be years away. For one thing, where else would China and Japan invest their surpluses? Name one country that boasts, at least on paper, a better credit rating than the US. With Germany and Japan in recession, and the Eurozone countries struggling to stay afloat, options for “safe” places to invest are limited.

Second, because at present the US dollar is the world’s reserve currency, there continues to be a demand for them no matter what they might be worth. Since Saudi Arabia must deal in dollars when selling the West their oil, there is a floor under that demand. And the recent drop in the price of oil shows, for the moment at least, that Saudi Arabia is happy with the arrangement.

And then there’s the Federal Reserve offering itself as the lender of last resort, announcing last week that it will continue to buy at least half of the government’s deficit for the foreseeable future.

The “day of reckoning” may instead occur in baby steps as the value of the American dollar continues its slow decay in purchasing power.

Despite the cries of worthies like Figgie and Sardi that the end is near, it may not be. The cross-currents of forces demanding further deficit spending are increasingly being met by demands for fiscal sanity will likely put off that “day of reckoning” for a long time, perhaps years into the future. That may indeed be enough time for those demands for sanity to be heard by enough in Washington to begin the sensible rebuilding of the country’s fiscal integrity, in which case the “day of reckoning” would happily never arrive.

 

 

 

 

Refreshing Clarity on Raising the Debt Ceiling

English: Chart of the United States' debt ceil...

Chart of the United States’ debt ceiling from 1981 to 2010 in $ trillion. This chart tracks the debt ceiling at the end of each calendar year. Years are color coded by congressional control and presidential terms highlighted. (Photo credit: Wikipedia)

Once in a while I run across someone with such uncanny ability with words to describe the essence of an issue that it takes my breath away. Star Parker did just that:

Why do we have to keep raising the debt ceiling? Because politicians are afraid to be honest with the American people and immediately raise taxes to pay for all their new spending. So instead of raising taxes and paying for our new bills when we incur them, they just borrow the money.

They do it without our permission, and then expect us – force us – to pay those bills when they come due. Says Parker:

They could be honest. When they have their wonderful ideas about what they want to spend our money on, they could go right to taxpayers and say we are going to spend X for Y so we will raise your taxes Z to pay for it. OK?

They discovered years ago that they couldn’t do this. That’s why they had to create the money machine – the Fed – in order to spend money they don’t have and can’t raise in taxes – and then

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann