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unhappycamper Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 06:18 AM
Original message
The Insane American Debt


The battle promises to be fierce between Republicans who understand how to cut down public spending ( :wtf:) and Democrats who want to preserve the welfare state.

The Insane American Debt
Les Echos, France
By Jean-Marc Vittori
Translated By Charlotte Schwennsen
4 March 2011
Edited by Piotr Bielinski

America will hit its head, or rather its debt on the ceiling. For, at the heart of this true parliamentary democracy that is the United States, the elect of the people, in their great wisdom have set since 1917 a limit to public debt. For ten years they has raised it each year. The last movement goes back to Feb. 12, 2010. The limit was raised to $14,294 billion. But, on Feb. 28, the debt was less than $100 billion below this limit. On Feb. 29, members of Congress voted in double quick-time a law driving back a shock that could occur on March 4. On Feb. 30, the senators followed. The problem was temporarily pushed back until March 18. Even if the Obama administration could pull strings, it would not be able to continue for very long in these conditions. From now until May 31, according to the Treasurys meticulous calculations, Congress will have voted a new ceiling.

If not, it will be a financial apocalypse in a country where the reason of state can not prevail on the power of the law: Bureaucrats in the street, the poor and the retired denied services, and Americas first default on the debt in more than two centuries of history. The battle promises to be fierce between Republicans who understand how to cut down public spending and Democrats who want to preserve the welfare state.

This ceiling could be raised again from the only American political ritual, such as the "oom pah-pahs" of the primaries or the State of the Union talks. But, there is a real problem with the American public debt: It is exploding. Of course, its level is not very different from Europes it should exceed 100 percent of the GDP next year, against 88 percent in the Euro zone (previsions of the European Commission). Apparently, it increased faster in the small countries hit hard by the crisis, such as Greece and Ireland. But, when one looks at sets of equivalent size, the difference jumps out. In five years, the weight of public debt in the GDP will have progressed 40 points in the United States, two times more than in the Euro zone. It was not the fault of the crisis. It was the fault of the reaction to the crisis. In the Euro countries, the deficit towered for two years barely above 6 percent of the GDP. Even in France, which is not a paragon of budgetary virtue, the deficit stayed at less than 8 percent last year. In America, on the other hand, the deficit exceeded 11 percent of the GDP in 2009 and in 2010. It should have, again, approached this level in 2011. President Barack Obama proposed a deficit reduction plan for the ten years to come, posting a total savings amount of $400 billion. He was not convincing.

This prodigality could be explained by a policy mix,* which implies a tuning of the political economy that is different on either sides of the Atlantic: A contained budget in Europe in order to keep interest rates very low, thus allowing banks to recover their health as they have less shiny accounts than their American counterparts; a generous budgetary policy in the United States, accompanied by a more solid monetary policy. But this is not the case. Ben Bernanke, president of the U.S. Federal Reserve, lends money at an interest rate lower than his colleague Jean-Claude Trichet, from the Central European Bank. And, in particular, at the end of 2010 he restarted the bill machine to buy hundreds of billions of bonds issued by the American Treasury. In other words, 30 months after the height of the crisis marked by the fall of Lehman Brothers, Europe released the tension while the United States keeps its foot to the accelerator, at the risk of leaving the road, as the rating agencies have signaled, for the first time in history.

Where, therefore, does this unprecedented divergence between the two coasts of the Atlantic come from? There are at least seven explanations, not exclusive from one another. One: The difference in the diagnostics. The leaders of the United States consider that there needs to be a third year of great deficit in order to solder the crisis with the comeback; European leaders assume that it is useless. Two: America, younger than the old continent, puts more emphasis on growth. This is obvious when one compares the policies implemented during the last two decades. This time around, the American accelerator seems jammed nonetheless. America responded faster than Europe after the financial shock, with an increase that could, this year, overtake all previsions. But the recovery was bought on credit. And the performance is poor. For the public indebtedness gap with Europe, from 20 points from 2007 to 2012, already evoked, America will have had a cumulative gap growth for the same period limited to 4 percent or 5 percent. Three: Europe lacks audacity. But, when one sees the investors doubts about the debt of certain countries, this point of view could seem rash. Four: Everyone does the best they can according to their constraints. America uses and abuses the exorbitant power to print a global currency; the Euro zone can not do as much. Five: The United States economy is, in reality, doing worse than what we are told, and it needs drastic remedies. Six: American leaders are unaware of the perils. Seven: They dont have the same memory as Europeans, who knew painful hyperinflation (Germany in the 1920s) or the embarrassing stagnation into budgetary powerlessness (France in the 1950s).



unhappycamper comment: I offer you an immediate $200 billion dollar savings: Get out of the sandbox.

As far as 'Republicans who understand how to cut down public spending' comment Jean-Marc, why don't we send these guys to help you over there? I'm sure everything will be fine in a short time. :sarcasm:
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Taitertots Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 06:26 AM
Response to Original message
1. There is no debt/deficit problem
This is simply invented by their (both sides) refusal to raise taxes. We could be done with this tonight if the government really wanted to. They want to cut public spending so they (mostly republicans) have gutted taxes for the ultra rich, creating the illusion of a debt/deficit problem.
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elias49 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 06:47 AM
Response to Reply #1
2. The debt/deficit is not an illusion
just ask your neighbor.
Sure there are ways to 'fix' it, none of which is acceptable to the DC 500. Which makes it all-too-real.
Raise taxes?
Not gonna happen.
Cut spending?
Not gonna happen.
End the wars?
Not gonna happen.
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Possumpoint Donating Member (937 posts) Send PM | Profile | Ignore Sun Apr-03-11 07:08 AM
Response to Reply #2
3. Solutions That Work But Don't
Well Said!
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Taitertots Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-04-11 10:04 AM
Response to Reply #2
33. It isn't a problem when we already know the solution
Now start voting for politicians that will do those things, instead of people who are destroying the country with idiotic policies. I refuse to accept that we have a debt/deficit problem when it is totally created by politicians to serve their interests.

There is no reasonable answer as to why the government refuses to increase taxes or stop spending money on unjustified wars.
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Syrinx Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 07:13 AM
Response to Original message
4. Taxes on the wealthy and corporations must rise
There is no way around that fact. Period.
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sad sally Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 07:19 PM
Response to Reply #4
32. Who's actually going to make that happen?
Q: If either one of you become president, and let the Bush tax cuts lapse, there will be effectively tax increases on millions of Americans.
OBAMA: On wealthy Americans.
CLINTON: Thats right.
OBAMA: Im not bashful about it.
CLINTON: Absolutely
OBAMA: I suspect a lot of this crowd--it looks like a pretty well-dressed crowd--potentially will pay a little bit more. I will pay a little bit more. But that investment will pay huge dividends over the long term, and the place where it will pay the biggest dividends is in Medicare and Medicaid. Because if we can get a healthier population, that is the only way over the long term that we can actually control that spending that is going to break the federal budget.
CLINTON: Its just really important to underscore here that we will go back to the tax rates we had before George Bush became president. And my memory is, people did really well during that time period. And they will keep doing really well.
Source: 2008 Democratic debate in Los Angeles before Super Tuesday Jan 30, 2008
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 07:28 AM
Response to Original message
5. The US is running a deficit of at least
one trillion dollars. $1,000,000,000,000 per year.

Does anyone really believe we can erase that by raising taxes on corporations and the wealthy?
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Sherman A1 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 07:41 AM
Response to Reply #5
6. Perhaps not, but
it would be a nice place to start.
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 09:30 AM
Response to Reply #5
9. I do.
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 11:38 AM
Response to Reply #9
10. Can you support that? nt
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 01:58 PM
Response to Reply #10
11. Absolutely.
What's the time frame?

Over a 100 years?
1 year?
10 years?
Overnight?
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:08 PM
Response to Reply #11
14. Since deficits typically use a one year time period.
Get me what you have to resolve in a year.
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:14 PM
Response to Reply #14
15. Very generous. A whole year!
Edited on Sun Apr-03-11 02:16 PM by RUMMYisFROSTED
What's the deficit number?

$1.4T?
$1.3T?
$1.2T?
$1.1T?
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 03:50 PM
Response to Reply #15
19. Lets use 1.2T. nt
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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 03:58 PM
Response to Reply #19
23. Receipts $2.1T, Outlays $3.3T then?
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 05:11 PM
Response to Reply #23
26. That close enough to the real thing for me.


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RUMMYisFROSTED Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-04-11 10:40 AM
Response to Reply #26
35. Corporate profits were $1.7T.
35%(no loophole corporate tax rate) of that is $595B. We received $191B per your graph. That gives us an additional $404B just by closing the loopholes and not raising the rate. We're already a third of the way there!

Cut $300B from Defense. We're more than halfway home!

The top 10% of taxpayers paid 71% of Federal receipts. 71% of $899B is $638B. Double the top rate. That's an additional $638B. Voila!

That's without addressing any other potential cuts or tax increases.

$404B
$300B
$638B
______
$1.342T



It's obviously more complicated than this but that's it in a nutshell.










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lumberjack_jeff Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 04:09 PM
Response to Reply #14
25. It's not that tough, but it takes more than one year.
Edited on Sun Apr-03-11 04:12 PM by lumberjack_jeff
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CreekDog Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:06 PM
Response to Reply #5
13. yes combined with ending wars that should be over or not fought in the first place
:eyes:
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:50 PM
Response to Reply #5
17. just repealing the bush tax cuts to the top 1% would cut that by 1/10th.
http://www.ctj.org/html/gwb0602.htm

so i have no doubt that it's possible.
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 03:51 PM
Response to Reply #17
20. Ok at 10% that leaves at least
$900,000,000,000 to go.
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JVS Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 03:55 PM
Response to Reply #20
22. Let's raise taxes to the rate paid under Kennedy.
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TBF Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 04:00 PM
Response to Reply #22
24. I'd rather go for the level they were at under Eisenhower:
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LARED Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 05:14 PM
Response to Reply #22
27. Would that work?
You would have to more than double the income tax collected on everyone to get even close to the deficit.

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TBF Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 05:44 PM
Response to Reply #27
29. We could also cut - wait for it - DEFENSE **GASP ** nt
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 06:40 PM
Response to Reply #20
31. then we could tax capital gains & investment income as regular income.
Edited on Sun Apr-03-11 06:41 PM by Hannah Bell
That should be good for *at least* another 10%.

then we could restore the inheritance tax (there wasn't any in 2010), and it was reduced beginning in 2001.

then we could raise the limit for the amt but also raise the amount of the amt.

then we could repeal the department of homeland security & stop the contracting out of military functions to private vendors.

yes, there are all sorts of things.



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dems_rightnow Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:52 PM
Response to Reply #5
18. No
We can't tax our way out of it. There will be some pain involved.
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liberal life Donating Member (187 posts) Send PM | Profile | Ignore Sun Apr-03-11 05:45 PM
Response to Reply #5
30. They are the ones hoarding all of the money
the money did not disappear, it went somewhere....right into the hands of the already super rich, so yes taxation would help.

The Real Redistribution of Wealth: Forbes 400 Triple Wealth in 5 years
http://www.squattable.com/blog/birdflip/030911/real-red...



http://fucorporatemedia.com/
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Taitertots Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-04-11 10:06 AM
Response to Reply #5
34. Absolutely, they managed to find the money when it comes to lending to us
Edited on Mon Apr-04-11 10:06 AM by Taitertots
Why should we pay them back with interest when we should have been taxing them the whole time?
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Syrinx Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Apr-05-11 05:33 AM
Response to Reply #5
36. yes
If we quit spending money on weapons that we don't need, and that the pentagon doesn't even envy. Damn straight. Of course, and to pretend otherwise is foolish, or dishonest.
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lefthandedlefty Donating Member (247 posts) Send PM | Profile | Ignore Sun Apr-03-11 08:12 AM
Response to Original message
7. Since when does feb have 30 days?
and this is not leap year so how did they do anything onfeb 29 or 30!
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scarletwoman Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:03 PM
Response to Reply #7
12. Good catch! Fact-free writing at its finest!
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SOS Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 02:24 PM
Response to Reply #7
16. The US parliament meets on February 30th every year.
And the US will stop paying bond holders in June.

:crazy:
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grahamhgreen Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 08:42 AM
Response to Original message
8. Returtn to the Greatest Generation's tax rates and eliminate the debt in 6 years.
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upi402 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 03:51 PM
Response to Original message
21. we have a revenue problem, not an entitlement problem. n/t
Edited on Sun Apr-03-11 03:52 PM by upi402
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Quantess Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Apr-03-11 05:19 PM
Response to Original message
28. What is the deal with those foreign-named writers
being responsible for such a ridiculous load of tripe?

It's obviously true the USA is heavily in debt, but where do they get the idea that it all boils down to welfare spending? Someone is confused.
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