Even though we’re facing another trillion dollar budget deficit, a $14.3 trillion national debt and $61.6 trillion in unfunded liabilities, President Barack Obama is pushing for another bailout for Greece:
President Barack Obama on Tuesday urged European countries and bondholders to prevent a “disastrous” default by Greece and pledged U.S. support to help tackle the country’s debt crisis.
After a meeting with German Chancellor Angela Merkel, he stressed the importance of German “leadership” on the issue - a hint that he expects Berlin to help - while expressing sympathy for the political difficulties European Union countries face in helping a struggling member state.
“I’m confident that Germany’s leadership, along with other key actors in Europe, will help us arrive at a path for Greece to return to growth, for this debt to become more manageable,” Obama said.
“But it’s going to require some patience and some time. And we have pledged to cooperate fully in working through these issues, both on a bilateral basis but also through international and financial institutions like the IMF.”
A proposal for a second Greek bailout package worth 80 billion to 100 billion euros over three years was taking shape, euro zone sources said.
Dick Armey and Mitt Kibbe of FreedomWorks are, needless to say, disappointed that the Obama Administration and the International Monetary Fund are again setting up Americans taxpayers to be hit with the burden of more bailouts:
In these troubled economic times, there’s been a stronger movement towards privatizing Social Security than I can recall seeing before. The most talked about proposal involves people aged 55 and younger being able to invest money instead of being roped into whatever Uncle Sam wants to pay out. Now, there’s legislation making a move towards privatization of social security:
House Republicans on Friday introduced legislation that would allow workers to partially opt out of Social Security immediately, and fully opt out after 15 years.
Rep. Pete Sessions (R-Texas), who chairs the National Republican Congressional Committee, and several other Republicans introduced the Savings Account for Every American (SAFE) Act. Under the bill, workers would immediately have 6.2 percent of their wages sent to a “SAFE” account each year.
That would take the place of the 6.2 percent the workers now contributed to Social Security.
Another 6.2% is sent to Social Security by employers. Under the Sessions bill, employers would continue to make this matching contribution to Social Security, but after 15 years, employers could also send that amount to the employee’s SAFE account.
Now, I’m still not thrilled about the idea of taking people’s money “for their own good”, which is all either Social Security or these new proposal really are. However, if it’s going to happen anyways, I’d rather have an opportunity to have some kind of say in the matter and possibly create an even better cushion. Not everyone seems to think that’s such a good idea (predictable):
While there are varying estimates on the unfunded liabilities (financial commitments that Congress has made), USA Today put out a sobering reminder yesterday of just how dire our fiscal solvency is:
The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.
This gap between spending commitments and revenue last year equals more than one-third of the nation’s gross domestic product.
Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.
Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.
The $61.6 trillion in unfunded obligations amounts to $527,000 per household. That’s more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.
Matt Kibbe, president of FreedomWorks, wrote just last week that platitudes and promises of unicorns aren’t going to get us very far; Congress has to deal with entitlements, not by growing them or pushing growth-slowing taxes, but by repealing and reforming:
Realizing that Republicans have a target on them due Medicare, Rep. Paul Ryan (R-WI) has taken to YouTube to explain why the Medicare system is failing and how his proposal would deal with the significant fiscal headache that the program represents:
As Ryan attempts to convey in his new video, there won’t be a Medicare program for long unless his policies are enacted to “save” it. In fact, Ryan spends the first half of his new five-minute video explainer warning that the program will vanish on its current path.
“The truth is,” Ryan says, standing in the House Budget Committee room on Capitol Hill, “it’s headed for a painful collapse.”
Ryan frames his solution in the “big-government versus the individuals” language of the Tea Party that Republicans hope will continue to resonate with voters in the same way it did during the debates over the Democrats’ healthcare overhaul.
“The urgent need to reform Medicare and the president’s misguided approach have left us with a serious question to ask: Who should be making healthcare decisions for you and your family?” Ryan asks. “A government monopoly and a panel of bureaucrats in Washington, D.C.? Or you?”
Here is the video:
While Democrats have tried their best to drum up opposition to Rep. Paul Ryan’s budget plan, the “Path to Prosperity,” the latest Gallup poll shows that they are losing three out of four voting blocs; including older voters:
Yes, there has been some backlash at Republican townhall meetings as a result of Ryan’s plan, but nothing to the extent we saw last year when Democrats were forcing ObamaCare down our throats.
Overall Americans oppose the plan, though it’s within the margin of error. Perhaps the biggest thing we can take from this is that young voters are idiots. They have the most to lose from doing nothing or talking in platitudes, which is essentially President Barack Obama’s plan, about the entitlements that make up anywhere from $50 trillion to $100 trillion in unfunded liabilties (depending on whose estimates you’re reading). The fixes that have been proposed by Democrats and the Obama Administration only put a bandaid on a gunshot wound.
Young voters are either ignorant or they don’t care, and their complacency is dragging the country down.
Last week, Standard & Poor’s downgraded the long-term debt outlook for the United States to negative. This sent waves through Washington as many believe it was a wake up call to members of Congress. This week a second shot was fired across the bow as the International Monetary Fund put Washington on notice that China will overtake the United States as world’s economic superpower by 2016:
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
[T]he Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China’s.
At the end of last week, I read an article from The Hill with quotes from Sen. Chuck Schumer (D-NY) claiming that there was “momentum” towards a budget deal. Well, that was then; this is now. And with the short-term Continuing Resolution running out - meaning a government shutdown is a very real possibility, Schumer is now leading the rhetorical charge against Republicans:
Moments before a conference call with reporters was scheduled to get underway on Tuesday morning, Charles E. Schumer of New York, the No. 3 Democrat in the Senate, apparently unaware that many of the reporters were already on the line, began to instruct his fellow senators on how to talk to reporters about the contentious budget process.
After thanking his colleagues — Barbara Boxer of California, Benjamin L. Cardin of Maryland, Thomas R. Carper of Delaware and Richard Blumenthal of Connecticut — for doing the budget bidding for the Senate Democrats, who are facing off against the House Republicans over how to cut spending for the rest of the fiscal year, Mr. Schumer told them to portray John A. Boehner of Ohio, the speaker of the House, as painted into a box by the Tea Party, and to decry the spending cuts that he wants as extreme. “I always use the word extreme,” Mr. Schumer said. “That is what the caucus instructed me to use this week.”
Given his all but certain entrance in the Republican presidential primary, you’d think that Newt Gingrich would be shifting to the right on economic issues. He’s not. In fact, he recently told a reporter during a press conference that he doesn’t regret expanding Medicare, an entitlement already projected to have trillions in unfunded liabilities over the several decades, by supporting and lobbying for passage of prescription drug benefit - Medicare Part D - in 2003:
At a press conference on Friday, CNSNews.com asked Gingrich, “You were a prominent supporter of the Medicare prescription drug plan that President Bush signed into law in 2003. The Medicare trustees now say that plan is $7.2 trillion in unfunded liabilities over the next 75 years. Do you regret your support for the plan looking back?”
“No,” said Gingrich. “I think that we—I mean, I am for dramatic reform of Medicare. I chaired the Medicare reform task force which saved it in 1996 when the trustees said it was going to go broke, and we passed changes which enabled them to say that we had postponed any problem for well over a decade.
Here is the video with Gingrich’s full comments:
ThinkProgress is taking issue with John McCain, who said in a radio interview that Social Security is a Ponzi scheme that Bernie Madoff would be proud of. They have all sorts of problems with McCain’s comments regarding Social Security, but let me let you read them for yourself:
By calling Social Security a Ponzi scheme, McCain appears to be aligning himself with other radical conservatives who have long sought to gut or privatize the popular public program. Last year, former House Majority Leader and FreedomWorks chairman Dick Armey called Social Security a “pay-as-you-go Ponzi scheme“; a month later, Texas Gov. Rick Perry (R) also compared the program to a Ponzi scheme. And Sen. Ron Johnson (R-WI) campaigned by making the same comparison in his television commercials.
All of these radical conservatives are wrong to make such a comparison between a criminal enterprise and one of America’s most successful social programs. A Ponzi scheme involves fraudulently manipulating investors’ money without being able to pay them back; meanwhile, Social Security is a program that has successfully managed Americans’ money since its inception and has guaranteed them safe retirements.
First, the need to keep in mind that Ponzi schemes only work because some of the people get money back. The money comes from later investors. What happens is that person A invests money. Their returns are actually the investments of person B through Z. In reality, that’s what Social Security is. People today take out far more money than they actually put in, and that’s funded by those still working.
President Obama recently released his proposed budget, a $3.73 trillion monstrosity that is a monument to his own arrogance and complete inability or refusal to understand the concerns of the American people. After a historic tail-whipping of his party in November, Obama decided to engage in a little rhetorical compromise, and then turned around and doubled down on the disastrous policies that have kept this country in a long recession followed by a jobless recovery.
Simply put, even if we tax the “millionaires and billionaires” at 100% of earnings, it still won’t put much more than a dent in our $14+ trillion national debt. Within a decade we’ll be spending more than $800 billion (conservatively) for interest payments on the debt, and even more if interest rates rise, which they surely will. The fact is that our road to economic recovery lies down the path to drastically reduced spending.
The problem we have as a nation is that Democrats embrace fiscal irresponsibility; a policy of tax, borrow and spend (as if we can keep borrowing to pay for lavish welfare and entitlement programs and the bill will never come due) and Republicans claim the mantle of fiscal responsibility, but engage in a policy of borrow and spend. Yes, cutting tax rates stimulates the economy, but even with increased gross revenues, spending more than you raise still leads to deficits. Republicans are half right, refusing to raise taxes, but drop the ball by not making the case for spending cuts. Republicans, fearing Democrats will demagogue them as heartless to the plight of the poor, back off of spending cuts at the first sign of trouble.