What Next?

In an article 'The Case for Higher Taxes' by Uwe Reinhardt, who is an economics professor at Princeton, he states that Alan Greenspan, the former chairman of the Federal reserve, believes that we should raise the tax rates to the same as they were during the Clinton years, although this would definitely raise taxes "for all American taxpayers". However, it is primarily because we have reduced taxes, and with the involvement of the two Iraq wars, the stimulus package, and the granting of "tax cuts without commensurate cuts in government spending", has sunk us into this black hole we are currently trying to suck ourselves out from. Therefor, he suggests that to raise taxes and to lower government spending is the key to digging it out of debt.(And all the while we beg for bread.){1}
On the site GOVPRO.COM, a commercial site, senior policy analyst at the Washington Heritage Foundation, Brian Riedi, says that stimulus spending is estimated to reach 350 billion, and, that "Fannie Mae and Freddie Mac bailouts will incur large costs and that Obama wants to increase discretionary spending 8-10% for expansions, Michael Balsam, chief solutions officer for Onvia, sees this as a good thing for in his view the 100 Billion given in stimulus contracts to the Private sector will generate "about 1 million jobs." And so far, the broad road of squabbling looks more feasible then a solution.{2}

{1}http://economix.blogs.nytimes.com/2011/05/27/the-case-for-higher-taxes/?scp=1&sq=US%20Deficit&st=cse

{2} http://govpro.com/news/govt-budgets-spending-forecast-20100129/?pid=gad-2010keating

Shameful Pride

House republicans agreed that they would allow a vote next week for an increase in the Federal "debt ceiling". And, Joseph R. Biden said that bipartisan talks are being discussed among Congress to increase that amount to at least one trillion in savings; although, this would be part of new money.(Yay, more debt!) Timothy F. Geithner, treasury secretary, believes that this will be good for our nations "financial health" and that our nation will "make good on its debts". Dave Camp, of the Ways and Means Committee, introduced a measure that would raise the federal limit of 14.3 trillion by 2.4 trillion.
Democrats saw this as a stunt which was meant to fail in order to raise alarms on their side sounded by the republicans. As if the point hadn't been driven home already. Unfortunately though, leaders on both sides are pushing for an "extension" to the debt limit, and have the audacity to say that this will keep the U.S. from the possible "risk of plunging the economy into a further recession."
Biden is focused on reductions to health-care(You know, to eliminate the old folks who can no longer produce).
It seems that both parties are currently to caught up in their pride and are ready to take a further fall down this steep cliff of shame. Democrats are worried that if the republicans form a strategy that makes any "significant changes" that they will lose their "political edge". Republicans are trying to raise the debt limit at their own behest. And Reid is threatening to bring to the floor the already House passed budget that includes plans to overhaul Medicare.(Oh what sorrow of shame.){1}

{1}http://www.nytimes.com/2011/05/25/us/politics/25congress.html?_r=1&scp=1&sq=federal%20deficit&st=cse

Midi...what?

According to an article on abc NEWS, writtin by Senior White House Correspondent Jake Tapper, Obama's "vision" for the deficit is to increse tax rates on Americans who make higher incomes of 200,000 pluse per year. The republican party seems to be up in arms about this because they would rather see the tax cuts at the expence of elliminating helthcare for seniors and the poor as well as to cut education expences by 25% and gut Clean Air protections. {1}
Damian Paletta, from the Wall Street Jounal, describes that Obama has called Congress to cut the deficit by four trillion over the next twelve years.
Democrats and republicans have agreed to work together on a "short term fical priority" to create a frmaework to limit the amount the federal government can borrow. This supposedly will reduce the deficit by four trillion and "trigger automatic tax and spending-cut provisions if the deficit is not on a path to reaching 3% of gross domestic product by 2014, down from nearly 10% now"{Obama}. Obama's plan will elliminate tax cuts for the super wealthy, cut discretionary spending, as with the pentegon, and it aims to cut Medicare costs. Obama would exempt Medicare from bieng subject to the "mechanism that would trigger automatic spending cuts and tax increases."(But isn't this antithetical to protecting the interests of those poor and retired individuals who need quality healthcare? Does it mean options will be reduced?). It seems that way.
However, the GOP is proposing to "end Medicare's role as a fee for service payment system", and to turn it "into a menue of government subsidized private insurance plans for younger" Americans. Obama said that this would undermine seniors and force them to pay a higher sum for health care.(Youthenasia?) However, this does not represent all republican. The Gang of Six is a bi-partisan group dedicated to working out a deficit reduction plan.{2}



{1}Tapper, Jake "President Obama to Describe "Vision" for Deficit Reduction. Contrast with Republican Plan." abcnews.com. abcNEWS. 21, May. 2011. http://blogs.abcnews.com/politicalpunch/2011/04/president-obama-to-describe-vision-for-deficit-reduction-contrast-with-republican-plan.html. 13, April. 2011

{2} Paletta,Damian. "Obama Stokes Deficit Fight." wsj.com. The Wall Street Journal. 21, May. 2011. http://online.wsj.com/article/SB10001424052748703385404576259903446373140.html 14 April. 2011.

Who is Doing What?

On Thursday, Congress passed a FY2011 dubget that will cut 315 billion from the Federal budget over the next ten years; earmark free, and with no tax hikes (insert happy dance here). This is good, but it soes not resolve to disolve our soluable debt. our national debt has reached 14.2 trillion and our federal debt is at 14.3 trillion. How can we erase some zeroes?
Chairman Paul Ryan, of Wisconsin is proposing a 2012 Fiscal Year budget cut known as "The Path To Propserity". Sounds like a new cult sermon, but it is a fiscal conservative approach to slimming down the government; not to make it fatter. This budget plan, as devised by Congress, will cut out 6.2 trillion in spending over the next decade, elliminate hundreds of "duplicative programs", bring non security discretionary spending down to below 2008 levels, (508 billion), and lowers government spending from 23% of the economy to 20% of gross domestic product. It proposes to reduce the deficit by 4.4 trillion and to put the "budget on the path to balnce and pays off its debt.
The Path to Prosperity will eliminate 800 billion in tax increases imposed by the new healthcare law and prevent a 1.5 trillion tax increase called for in the presidential budget, call for a simpler tax code for houses and buisnesses and set top rates at 25% to foster productive growth.
It promises to create 1 million new private sector jobs within a year to increase to 2.5 million in the tail end of a decade. To keep up with rising inflation it will yield 1.1 trillion in higher wages cross continentally.
One of the key issues this plan is trying to resolve is with non discretionary spending. Because of the number of recipiants recieving Social Security, from 3.5 millin in 1959 to over 50 million currently, and with earlier retirements because the average lifespan has extended, it will attempt to resolve the issue of 50. of every dollar being spent by the government on healthcare. The way it will attempt to resolve this is to erradicate "unnecessary tests, redundent treatments, and mistaken billings".
In regard to defense spending it proposes to provide 692.5 billion for national defence spending in 2012, to reduce enifficient spending by 178 billion and reinvest 100 billion of that into "key combat capabilities".
So there we have it folks. This blog for Tuesday covers two important topics proposed by one bill which, from the 30 pages of the 70 I have read and of the 40 I have yet to read, seems like a ligitimate solution. There will be more to come next Saturday. Maybe I might find another bill to peak your interests. Good night and God bless.



www.usdebtclock/debt_clock/

While Clinton was in office in 1993, a giant tax hike was created. Two years after the hike, the Congressional Budget Office predicted a $200 billion deficit "as far as the eye could see".
In 1995, Newt Gingrich and company, with the GOP, went on a "single minded crusade" to eliminate the deficit. But this did not help.
The actual cumulative deficit, of the Fed and the U.S population, between 94-98 was 600 billion, and, in 1998, social spending for that year was over a trillion.
The problem, as it stands, goes back much further than Clinton, all of the way to Aldrich; a Republican Whip in the Senate and Chairman of the Monetary Commission; and business associate of J.P. Morgan; and father in law to John D. Rockefeller. Along with Jr. Nelson Aldrich; Abraham Piatt Andrew, Frank A Vanderlip, Henry P. Davison, Charles D. Norton, Benjamin Strong, and Paul M. Warburg; these were all well acquainted to politics and the science of money; who devised a banking cartel and created the Federal Reserve System.
It is the very implementation of this system which has allowed the Fed to dominate every independent bank that has or will exist and absorb it as a part of its own entity. They have monopolized on state banks by creating a currency backed by the federal government which cut out the competition of state banks whose currencies could only be utilized in a district relative to the influences of their operation . A nationalized bank, however, created access to individual monetary values wherever a person was; and with the backing of the Federal Gavernment. This seems like a hallelujah moment; but the praises fall on deaf ears.
In effect this created a ticking time bomb. When a person deposits their money into the bank they are in turn given a balance that is promised to be paid. But, if you are a wealthy business person with economic interests that outweigh your means to produce, then the alternative to being complacent, having no capital, is to extract a loan with a promise to pay it in full with interest. When this happens, a bank may allocate individual investors funds to loan them out. When they do this they are creating a deficit because if the individual customer who has given their money for safe keeping comes in mass the bank will not be able to make good on its loans. If it promises to do so it must print money without having capital itself and therefore creates inflation. this becomes reciprocal process that is natural with all banks. This debt then gets paid by the public in the form of higher taxation. Finally it gets so bad that people begin to pull out of of their funds for a fear of a run on banks and begin to invest in foreign currencies, metals, entrepot trading and eventually war. It's the production of armaments that brought us out of the depression.
Apart from this one element we must consider the fact that people need to be appeased. If they are not, they are a threat to their government and a liability.
The "Community Reinvestment Act of 1977" is a United States Federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities. This act, though it seems benign in nature allowed for people of low income to invest in property beyond their means to pay. If a large group of these people are locked in with a ballooning interest rate, when property values decline, because of a failing economy, interest escalates as well. Those who cannot afford to continue to make payments homes are foreclosed and those to are absorbed into the bank. The same principle applies for those who have a fixed rate; also with a loss in property value.
A principle agent that gave rise to this economic peril is Fannie May, (1938 as part of FDR's New Deal) that was created to provide federal money to finance home mortgages "in an attempt to raise home ownership". "Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge."
But, in 1968, Lyndon B. Johnson privatized Fannie May to remove it from the national budget. As a GSE it continued to generate profits for stock holders and continued to enjoy the benefits of tax exemption and oversight "as well as implied government backing". A second GSE in the entity of Freddie Mac was created in 1970, and together, today now own "about 90 percent of the nation's second mortgage market."{1}
The same system of economics applies to this company as it does with the banking cartel of the FED. These combined companies account for 46% of the current national debt. "These companies are the only two fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having."{1} And in the event that there is a "financial collapse with either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debt." {1}
Apart from the housing issue, at hand stands another, also looming over us is our cummulative national debt from overspending. We have bankrupted our own nation. Each one of us who is a U.S. citizen is in debt $40,000 plus. 200,000,000 Americans equals a whole hell of a lot of debt. And this with the Federal deficit is quite sobering.

{1}Alford, Rob. "What are the origins of Freddy Mac and Fannie May." HistoryNewsNetwork. George Mason University. http://hnn.us/articles/1849.html 15 May. 2011.