Tag: Federal government of the United States

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Politics United States

World Renowned Economists Advise Congress To Raise Debt Ceiling Now

If Republicans won’t listen to their fellow Democratic members of Congress, or even the President himself,  on the importance and necessity of raising the debt ceiling, well maybe – and this is wishful thinking on my part – but maybe, they will listen to, not one, not ten, not fifty or one hundred, but 235 world-renowned economists, including six Nobel Laureates in economics.

The group came together and wrote a letter to Congress, advising them that playing with the debt ceiling for political reason is not looking out for America’s best interests. Below is a letter of recommendation, written and signed by the  economists.

Dear Speaker Boehner, Minority Leader Pelosi, Majority Leader Reid, and Minority Leader McConnell,

We, the undersigned economists, urge Congress to raise the federal debt limit immediately and without attaching drastic and potentially dangerous reductions in federal spending. Not doing so promptly could have a substantial negative impact on economic growth at a time when the economy looks a bit shaky. In a worst case, it could push the United States back into recession.

The U.S. economy looks fragile at present. Economic growth has been too weak to generate sufficient new job creation. Reaching the limit on total outstanding debt could force a dramatic and sudden cut in federal spending that would destroy jobs and threaten the recovery. To remove spending from the economy at such a pivotal moment would be irresponsible.

Failure to increase the debt limit sufficiently to accommodate existing U.S. laws and obligations also could undermine trust in the full faith and credit of the United States government, with potentially grave long-term consequences. This loss of trust could translate into higher interest rates not only for the federal government, but also for U.S. businesses and consumers, causing all to pay higher prices for credit. Economic growth and jobs would suffer as a result.

The Press Release states, “the signatories of the letter include six Nobel Laureates: George Akerlof, Kenneth Arrow, Robert Engle, Eric Maskin, William Sharpe and Robert Solow.  Alan Blinder, former Vice Chair of the Federal Reserve System’s Board of Governors and former member of the Council of Economic Advisors; John Bates Clark Medal recipient and MacArthur Fellow Emmanuel Saez; and Laura Tyson, former Chair of the Council of Economic Advisors and former Director of the National Economic Council, also signed the letter, which includes distinguished experts from across the country.”

Additionally, four John Bates Clark winners and five former American Economic Association chairs joined this list of influential economists in recommending swift, decisive action on the debt limit without extraneous and potentially harmful policy riders.

See the full list of signatories here.

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Politics United States

Limbaugh Misleads His Sheeple On Effects Of Not Raising The Debt Limit

The brainiac that is Rush Limbaugh has figured out the whole raising the debt ceiling thing, and according to Mr. Limbaugh, not raising the debt ceiling means nothing, except that “we wont be able to borrow any more.” Here’s The Brain at work, while talking to a caller to his radio show;

LIMBAUGH: Here’s the point, it’s a scare tactic. It really isn’t possible, there is always money coming in. The government can count on tax revenue from any number of sources and activities, there will always be money coming in. They can always print money. This default business is a straw dog, it’s a straw man they’re throwing out there to you. You want to know what the actual manifestations of an official default would be —

CALLER: Yeah, absolutely. Because, I mean, just looking in recent history, we were listening to the media and they’re talking about how bad a government shutdown would be —

LIMBAUGH: It just — all it means is we won’t be able to borrow anymore. That’s all it means. All it means is we have to live within our means.

CALLER: Well I don’t think that would be too bad then.

LIMBAUGH: No, it’s not. You know, the whole business — I shocked a lot of people yesterday when I said not raising the debt limit is an option.

Of course, that’s just Limbaugh’s view, shared by his immediate audience. But what are the facts of not raising the debt ceiling?

The United States has always carried a federal debt and there are two basic types of debtors. Debt held by the public and those held by other governments. Raising the debt ceiling allows the United States to pay its bills to these two entities, thus, maintaining its triple-A ratings worldwide. Just like not paying your credit card directly affects your abilities to get further credit and eventually lowering your credit ratings, causing potentially adverse effects in the future, the same is true for the United States.

While Limbaugh is partly right–that the Federal government would always have money coming in through tax revenue–this revenue would not be able to sustain the obligations of the government, especially since the we presently have a deficit, hell-o!

According to the Congressional Research Service, “the federal government would need to rely solely on incoming revenues to finance obligations. If this occurred during a period when the federal government was running a deficit, the dollar amount of newly incurred federal obligations would continually exceed the dollar amount of newly incoming revenues.”

So this is not the time to rely solely on tax revenues to pay the federal debt. It is frankly, unrealistic to be expected to pay your bills with money you don’t have. Treasury however, have some other tricks up their sleeves to avoid reaching the debt limit, and have successfully employed these tricks in previous years, 1985, 1995-1996, 2002 and 2003. Some of those tricks included;

To delay issuing new short-term government securities to the Civil Service Retirement and Disability Trust Fund, the Social Security Trust Funds, and several smaller trust funds. In particular, new Treasury obligations could not be issued to the trust funds because doing so would have exceeded the debt limit. Treasury took the additional step of “disinvesting” the Civil Service Retirement and Disability Trust Fund, the Social Security Trust Funds, and several smaller trust funds by redeeming some trust fund securities earlier than usual.

Again, our economic situation now does not allow for the Treasury to take these steps, so raising the debt ceiling is the only other option.

But if we were to follow Rush’s misinformed blabbering, and the debt ceiling is not raised, the United States could not pay its bills.

Potential Economic and Financial Effects

In addition to the potential impact on federal programs and activities if the debt limit is not increased, there may also be economic and financial consequences. A 1979 GAO report described the consequences of failing to increase the debt ceiling. GAO said the government had never defaulted on any of its securities, because cash has been available to pay interest and redeem them upon maturity or demand. Further, GAO said a default on the securities could have adverse effects on the economy, the public welfare, and the government’s ability to market future securities.

It is difficult to perceive all the adverse effects that a government default for even a short time would have on the economy and the public welfare. It is generally recognized that a default would preclude the government from honoring all of its obligations to pay for such things as employees’ salaries and wages; social security benefits, civil service retirement, and other benefits from trust funds; contractual services and supplies, and maturing securities…. At a minimum, however, the government could be subject to additional claim.

Source: The Congressional Research Service

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Barack Obama Politics Republican United States

Boehner Sheds No Tears For “200,000” Americans Out Of Jobs

“In the last two years, under President Obama, the federal government has added 200,000 new federal jobs,” Boehner said. “If some of those jobs are lost so be it. We’re broke.”

Okay! Forget the fact that Boehner is lying about the job figure. Independent researchers have come up with drastically smaller figures, somewhere around 20,000. But let’s say for argument sake that Boehner is correct. Should “so be it” be the appropriate response to putting 200,000 American families out of work and possibly out on the street?

John Boehner and his Republican comrades won the House of Representatives and gained seats in the Senate in November mainly because of a promise to “create jobs.” He traveled from state to state, district to district campaigning on the platform of “Where’s the jobs?” and accusing the Obama administration of being mis-guided with their domestic policies.

After the mid-term elections, it was Boehner who was heard in an interview with ABC news saying;

“I think the American people want us to focus on their message during the election: stop the spending, get rid of the uncertainty. Let’s get around to creating jobs again and staying focused on what the American people want us to focus on is my number one priority.”

What happened to his “number one priority?” Well, it came to a head-on collision with the reality of actually governing. John Boehner is slowly beginning to realize that actually “creating jobs” like he and his allies had promised is easier said than done. He’s seeing that being responsible for one branch of the federal government means people are going to look to you to actually get things done. No longer is just saying “no” to all the president’s policies acceptable.

So what’s a Boehner to do?

Create a distraction. He’s not going to come out and say to the American people, “Listen, I can’t create jobs because I am totally in over my head and this governing thing is a lot harder than I thought it would be.” No, that will be suicide for the Republican party to renig on one of its major campaign platform promises. And his incompetence as Speaker of the House will not be forgotten in 2012.

So the distraction would be to pivot. Take the focus off of ‘creating” jobs and make it about the so-called 200,000 unnecessary federal jobs created by the Obama administration. Now Boehner knew this number was inflated, but he had to go big, big enough so that the Teaparty would be impressed with his ability to cut unnecessary spending. After all, that too was another promise he made, “cut unnecessary spending.”

However, in his haste to create the illusion of being on the job and uncovering massive savings by eliminating 200,000 unnecessary federal jobs, Boehner unintentionally created another headline asking where are his tears for the 200,000 families he would single-handedly place on the unemployment line?

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CNN Featured Glenn Beck Terrorism

Did Glenn Beck Just Call for Fareed Zakaria to be Killed?

It all started with Beck’s bogus claims that there are 157 million muslim terrorists. Beck first made the claim in a 2003 book, to which he gained very little press. He then recently repeated the claim and on Sunday, Fareed Zakaria, host of CNN’s GPS took up the Beckster and called his claims “total nonsense.”

“Beck wondered why this wasn’t receiving any media coverage, well, let me suggest one reason. It is total nonsense. A figure made up by Glenn Beck with absolutely no basis in fact.”

Fareed then suggested that by his very actions, Glenn Beck himself could also be considered a terrorist. Basing his question on Beck’s claims, Fareed asked the following question, saying if violent actions against someone’s government could be considered a terrorist act, then “how would one describe a man who has been fueling such anger against the American government on television daily for the last two years? How, in other words, would one describe Glenn Beck?”

Glenn Beck, the golden child of FOX unbiased NEWS network shot back;

“If I said to Fareed Zakaria, ‘Fareed, I’m not going to kill you, but I support the people who do want to kill you,’ am I a problem, Fareed? Yes! Yes, I would be a problem! If you said to somebody, ‘Hey Glenn, I’m not going to kill you myself, but man… I don’t have any problem with anybody who wants to take their bare hands and snap your neck’–excuse me?”

So now we wait… either for the unthinkable actions of  some crazy nut who decides to take Glenn up on his careless suggestive words, or for the authorities like the FCC to finally realize the loose lips of Glenn Beck has once again, for the millionth time, gone too far.

We wait…!

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