National Debt Weigh-In


Political Cartoon by Gary Varvel

The scale will read 14 trillion by the year 2010, by one estimate.

Please see the following for National Budget Debt and National Debt information:

http://www.federalbudget.com/

So what do you think about this kind of behavior from our Federal Government. How long do you think we can sustain this sort of spending? What do you think the long-term consequences of this spending pattern would be for your family, a corporation, or a nation?

VTM, 11/30/09

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9 Responses to “National Debt Weigh-In”

  1. Bruce Says:

    Well, two thoughts come to mind.

    First, if I recall my history correctly, Clinton actually had us on track to reverse the national debt. Interesting especially since he was a Democrat.

    Second, I find it interesting how we can spend billions on a nonsense war and many argue how it is a necessary evil, but as soon as the white house wants to spend money at home to give all US citizens access to health care, suddenly our national debt is of concern.

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    • vtmawhinney Says:

      First, if I recall my history correctly, Clinton had a Republican congress as of 2004 and it forced the democrats to spend down. Regretably, everyone eventually (republicans and democrates), failed their fiscal responsibilites. Particularly democrats Frank and Dodd…with the mandated loans to people who could not afford them….and the subsequent housing crash on Bush’s watch.

      I despise the war and our current circumstances, but I believe it was always coming, no matter who was in office. Jihadist Terrorists are attacking around the world in many countries. America is in a war that we cannot get out of…unless we can find a way to destroy the enemy. It is hard to see how to do this, as they are not readily identifiable.

      We cannot have “guns and butter” at the same time. If we fail to defend ourselves against Iranian nuclear initiatives and against a take-over of Pakistan’s nuclear arms by the Taliban, they will blow us to hell at their earliest opportunity.

      Perhaps I will be gone by then, but my children, grandchildren, or their children probably will not be.

      Therefore, I will lobby and vote to kill the Islamic Terrorists at every opportunity, where ever we can find them.

      Regarding health care, I believe we can find ways to improve coverage without resorting to the “Single Payer” governmental leviathan that is doomed to reduce the quality of our care and further destroy our econemy at the same time.

      VTM

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      • Bruce Says:

        I don’t believe you recall your history correctly.
        In proposing a plan to cut the deficit, Clinton submitted a budget that would cut the deficit by $500 billion over five years by reducing $255 billion of spending and raising taxes on the wealthiest 1.2% of Americans. It also imposed a new energy tax on all Americans and subjected about a quarter of those receiving Social Security payments to higher taxes on their benefits.

        Republican Congressional leaders launched an aggressive opposition against the bill, claiming that the tax increase would only make matters worse. Republicans were united in this opposition, as it were, and every Republican in both houses of Congress voted against the proposal. In fact, it took Vice President Gore’s tie-breaking vote in the Senate to pass the bill. After extensive lobbying by the Clinton Administration, the House narrowly voted in favor of the bill by a vote of 218 to 216. The budget package expanded the Earned Income Tax Credit (EITC) as relief to low-income families. It reduced the amount they paid in federal income and Federal Insurance Contributions Act tax (FICA), providing $21 billion in relief for 15 million low-income families. Improved economic conditions and policies served to encourage investors in the bond market, leading to a decline in long-term interest rates. The bill contributed to dramatic decline of the budget deficit in the years following its enactment–in 1998, for the first time since 1969, the nation achieved a budget surplus. The surplus money was used to pay down the national debt, which had risen to $5.4 trillion by 1997. The economy continued to grow, and in February 2000 it broke the record for the longest uninterrupted economic expansion in U.S. history—lasting ten years. In the year 2000, the nation was on track to be debt free for the first time since 1835.

        As for fighting terrorism, not every problem can be solved by shooting someone. What has our “war” on terror accomplished other than to play into the hands of extremists clerics to recruit more Islamic extremist to their cause? To defeat Islam, I believe one must think beyond the gun. Just as the Catholic church was defeated centuries ago when they were torturing and murdering in the name of God during the Inquisition, so too will Islam be defeated. By the rising up of the educated, and by the accomplishments of more liberal governance in Islamic nations.

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        • vtmawhinney Says:

          Thanks for your carefully crafted defense of President Clinton and his deficit reduction efforts.

          If you google “how did president clinton balance the budget”, you will see many counter arguments to your thesis, such as the following:

          http://rpc.senate.gov/releases/1997/BUDDEAL2.JT.htm

          I think that History will prove you correct that “the rising up of the educated that more liveral governance, and by the accomplishments of more liberal governance of Islamic Nationa”.

          Until that time, with regard to those terrorists, I agree that we must think beyond the gun…we should throw in some bombs. :- )

          VTM

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          • Bruce Says:

            This is why I vote my conscience, rather than party line – political deception. Wasn’t it George H W Bush who said “No new taxes”, but did raise taxes following Democratic pressure to raise taxes as part of a plan to balance the budget? In case you’ve lost count, both parties are the same – increase taxes/government waste.

            Now for my final word on Islam – look to Iran. It is the students at Universities, who engage in critical thinking, who question authority, who are causing the stir in the old Islam good ‘ol boys network. In case you have not noticed, they are not the ones with bombs and bullets. Again, I use the Catholic church as an example – hypocrisy can be overlooked by the masses of feeble minded, but eventually, someone with enough critical thinking skills will come along and question the masses and the hypocrisy. In America, they are called independents. In Islam, they are called criminals. In history, they are called catalysts for positive change.

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            • vtmawhinney Says:

              Good post, Bruce…That is why I will vote my conscience too.

              I am happy to let my final word on Islam, be your final word. I hope the catalysts for positive change are successful in Iran. If not, other catalysts for change will be necessary.

              VTM

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  2. vtmawhinney Says:

    Frank,

    Your analysis is interesting. I do not like the idea of borrowing money, personally, or nationally, and then defaulting on the payback. At any level, the immediate consequences are a loss of trust with its obvious deferred consquences: All negative.

    Inflation may reduce our debt, as you and others point out, but it will bring a plethora of other negative consequences.

    Perhaps pulling out of the War On Terror abroad will save money. Perhaps it will put pressure on the rest of the world to fight this threat more vigorously. But we had better get ready for a war that will be coming over our boarders in ways never before experienced.

    It seems that we are in for a very long run of very bad times.

    I have read much about Economics, but I am no Economist.

    The following seems to fit with much that you have said and also with my concerns. The author appears to know what he is talking about and has an MBA from Harvard.

    http://www.alternet.org/story/28646/

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    • Frank Fujita Says:

      Having read the article, I don’t see a plethora of negative consequences. Five percent inflation is perfectly manageable — it is important because it confiscates “liquid” assets but real assets (property, factories, inventory) will not be affected. Right now, with the core inflation rate being negative, it encourages people to take their money and “put it in a mattress” Only by investing can you keep your assets growing.

      This is a good thing. Obviously we don’t want 1000% inflation or even 100% inflation, but 5% inflation has many good qualities, and very few bad ones.

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  3. Frank Fujita Says:

    I’m not sure how long this can be sustained. I remember as a child people talking about how the debt was going to ruin this country. Carter and Reagan increased the debt, GHW Bush slowed down the rate, Clinton put us onto annual surplus (not really reducing the debt, but a move in the right direction), GW Bush spent borrowed money foolishly, and now Obama is continuing GWs lead. So for as long as I can remember, except for Clinton, we’ve always been increasing the debt.

    A country isn’t a family or a corporation. The rules of effective budgeting for a family are different than the rules of effective budgeting for a nation. We should be inflating our currency (maybe with a goal of 10 years of 5% inflation). That will reduce our real debt by over half, and leave the Chinese with T-bills that are worth less than what they paid for them.

    Now, with unemployment over 10% nationally, is not the time to “balance the budget” but if we wanted to reduce our deficit spending the easiest way would be to pull out of Iraq and Afghanistan and dramatically reduce our defense spending.

    That will leave a power vacuum, as the other first world countries have been all too happy to have us pay for world stability. Let us reduce our spending, and let other nations rattle their sabers.

    In the meantime, we should invest on national infrastructure — including high speed rail, electronic medical records, upgrading our national water and sewer systems, national higher education and digital communications infrastructure. Those expenditures will provide jobs now, and increase our productivity as a nation in the future.

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