More bruising budget battles are coming
Think the fiscal cliff crisis was nasty? The political infighting over the debt ceiling and the budget could be just as bad, if not worse.
Hope you liked the political theater around the fiscal cliff, because it hasn't ended.
On Monday, the U.S. maxed out its legal ability to borrow money to fund its daily operations, known in Washington, D.C., circles as the debt ceiling. Until recently, Congress extended the debt ceiling, which now stands at about $16.394 trillion, as a matter of routine. Now it is anything but routine, especially since the rise of the Tea Party, which has a maniacal focus on reducing the federal debt and deficit.
Treasury Secretary Timothy Geithner can prevent the government from hitting the debt ceiling for about two months by some bureaucratic maneuvers, but these moves can only delay the inevitable, which leads us back to another fiscal cliff-style soap opera.
The eleventh-hour deal that averted $600 billion in tax hikes and government spending cuts didn't please many legislators -- although the that fact a deal got done did please Wall Street, which rallied sharply Wednesday on news of the deal.
Erick Erickson of the influential conservative blog RedState was especially irate, arguing that House Speaker John Boehner and Senate Minority Leader Mitch McConnell sold out the Republican party and that "the Republican establishment in Washington, DC should be burned to the ground and salt spread on the remains." Amy Payne of the conservative Heritage Foundation lamented that the deal has a 10-to-1 ratio of tax increases to spending cuts.
Progressives were not pleased either. Veteran Senator Tom Harkin, D-Ind., lamented what he called a "very bad deal" because it fails to do enough to create jobs and does not generate enough revenue for the government. Robert Reich, a former Labor secretary, argued that the Democrats in Congress and the White House should have gotten a deal on the debt ceiling when they were negotiating the fiscal cliff.
Lines are already being drawn for the next fiscal battle. In his brief address to the press last night, President Obama said he wouldn't "tolerate" another battle over the debt ceiling similar to the one that almost crippled the government in 2011 and resulted in the U.S. losing its AAA credit rating. That may be wishful thinking.
Although investors are pleased that a deal was reached, that sentiment will change once Wall Street realizes that Washington is as dysfunctional as ever. Let's not forget the annual rumble over the federal budget, which may be especially tough this year. And an equally nasty fight over the debt ceiling is about to start.
"...the Tea Party, which has a maniacal focus on reducing the federal debt and deficit."
How ridiculous, imagine believing you should live within your means! What could possibly go wrong with borrowing $1.6 TRILLION a YEAR?
we are headed for a complete and total financial meltdown
the question is will it be in 1 year or 3 years tops
The end of barrowing will come they call it bankrutcy. The sooner the better.
Old man 76.......Yes that was the Original plan, that many of us would die before we reached the age of 65...(now pushed out to about 67 for full benefits)....
And the rest would be dead by 70 thereabouts....
Well Modern Medicine and life style changes have thrown a wrench into that plan....
Therefore we have old widows and a few old men that are at their wits end, making choices between eating and medications or having a roof over their heads..
Americans, especially the ones that worked 35-45 years should never have to live this way....
Not taken from and given to others around the World...
Or defending Regimes and Governments, that could give a shidt less about our poor here...
we can't even do that.
at least that would have got the ball rolling. then stop or limit the borrowing
in March with additional cuts in spending. we're in trouble...
I don't know if this will ever get better. Look at what is going on today. The voters Democrats, Republicans and Independents can't understand each other and each thinks the other is wrong, so how can we expect congress to work out answers when we can't even do it. I believe the truth is the truth and if you look at what is happening you understand it is not good and we as americans should stand together and let congress know what we want. Everyone was so upset over tht 47% statement but I believe what they were trying to say is people who have gotten so much government help are not going to want to do it for themselves. When I was raising my children you could never get more tax money back then what you paid in but now for the last 10 years or so people get an earned income credit, and get many thousands of dollars more then they paid in. None of us are getting that so we just pay more and more. With the debt that we have in this country there is no way the top earners could ever pay for that and I believe you are going to see the day when we all have to help pay towards it.
Why do we have troops in Germany, South Korea and Japan? It they were at least stationed stateside they would be adding to the economy at home vs. abroad.
Why are we giving people tax refunds above and beyond what they paid in taxes?
When our defense budget is the same as the next 13 countries in spending combined, we are spending too much on defense.
The above won't solve the debt crisis alone, but it's a good start.
Consider this argument by Valerie Ramey that says for every dollar spent on defense that there has to be a cut of between $2.25 and $3.00 in civilian economic potential too: (Follow the link for Government Spending and Private Activity, a post-doctorate level study from 2012). Valerie Ramey is the Department of Economics Chair at the University of California - San Diego.
Figure a cut in defense spending of $500 billion annually would translate into a beneficial civilian economic spinoff of $1.25 Trillion, which would yield an extra $300 billion in annual tax revenue too, which would then cover $800 billion of our annual deficit.
Then maybe we take another $100 billion annually from social spending and we can then reduce our annual deficit to the $300-$400 billion range which would certainly free-up our credit markets and encourage new business growth and new employment too.
Come on, it's not rocket science, we can't afford a wartime level of defense spending forever, since defense spending is ruinous to our civilian economy too.
Yup pretty much a given Old Man....
Just Enter Your Name....Just curious, were you not around back in 2007-2008 ???
Let's first try and score 3-Points with that can-kick.
Really? Are you Kidding me? I'm all for trying to get ourselves out of a devicit hole which government dug us into as far as I'm concerned, but I think it's apauling of these polititians to vote themselves a pay raise and tell us poor citizens who can't even make ends meet anymore that they will be taking more of our money. Why don't we just take it away from all the pay raises they give themselves and leave us poor folks alone. They've already just about done away with "middle income" because I use to be there and now I'm low income and struggle every day to put food on the table for my family. Don't get me wrong I do, but usually at the expense of getting my utilities shut off. It's a sad sad situation they've put us in so WHY do we continue to vote them Back in? WAKE UP PEOPLE. Our own government is putting us in the poor house while them idiots live their lavish lives.
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[BRIEFING.COM] The major averages continue to hover near their flat lines as investors await the afternoon statement from the Federal Open Market Committee.
Notably, health care, utilities, and telecom services continue to hover near their lows. Similarly, financials and industrials remain in the red while other cyclical sectors alternate between gains and losses.
In the Treasury market, the 10-yr note is on its lows with its yield higher by one basis point at 2.203%. ... More
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