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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Hope Praytochange who wrote (54602)	8/23/2012 2:49:46 PM
From: Sdgla	2 Recommendations Read Replies (3) \| Respond to of 71588

Alan Simpson: Paul Ryan speaks 'hard truth' By TOMER OVADIA \| 8/17/12 5:50 PM EDT [iframe name="iframe_odiogo_0" id="iframe_odiogo_0" src="http://www.politico.com/news/stories/0812/79844.html" width="290" height="0" frameborder="0" scrolling="no" style="margin: 0px; padding: 0px; border-width: 0px; outline: 0px; vertical-align: baseline; "][/iframe] Former Sen. Alan Simpson, co-chairman of the Simpson-Bowles commision on debt and deficit reduction, on Friday called Paul Ryan “a spokesman of hard truth against fakery.” “He encourages me. Erskine [Bowles] and I felt he was one of the sharpest guys we dealt with,” Simpson said on Fox News. “He doesn’t have to have a staff member there feeding him stuff and little memos. He can go a half an hour without a note. He knows the issues.” “He also said to us — I think a year and a half ago — you know, ‘If we can’t get something done in America, there’s no need for me to smash my head into the wall around here, I have things to do back in Wisconsin,’” Simpson recalled. “And now, this thing [the GOP vice presidential nomination] comes to him, I don’t think he was seeking it, but let me tell you, he becomes a spokesman of hard truth against fakery. When asked if he was offended that the Simpson-Bowles plan “is collecting dust on a shelf,” Simpson predicted its return. “No, because it’s maybe on the shelf, but it’s like Dr. Frankenstein is about to come by and inject some electrodes into the corpse and it’s going to rise from the shelf,” Simpson replied. “Let me tell you, everyone is saying — or a lot of people with the, you know, with clarity — are saying this baby has not gone away.” Simpson also said he wasn’t optimistic that Congress would make progress on addressing the fiscal cliff before the November election. “These guys will do nothing, either party, nothing, just B.S. and mush, the whole way through,” he said. “Then, between the Nov. 6 and Dec. 31, they’re going to be really mucking around in 5 to 7 trillion bucks of quicksand. And it will have to be discussed.” He later added: “I didn’t think that Erskine would ever say that we would go over the fiscal cliff, but Erskine says we will go over that cliff now.” Read more: politico.com

To: Hope Praytochange who wrote (54602)	8/28/2012 10:55:25 AM
From: Peter Dierks	Read Replies (1) \| Respond to of 71588

A Rational Discussion of the Federal Budget By Thomas Sowell - August 28, 2012 For those of us who like to believe that human beings are rational, trying to explain what happens in politics can be a real challenge. For example, that segment of the population that has the least to fear from a reform of Medicare or Social Security is the most fearful -- namely, those already receiving Medicare or Social Security benefits. It is understandable that people heavily dependent on these programs would fear losing their benefits, especially after a lifetime of paying into these programs. But nobody in his right mind has even proposed taking away the benefits of those who are already receiving them. Yet opponents of reforming these programs have managed repeatedly to scare the daylights out of seniors with wild claims and television ads such as one showing someone -- who looks somewhat like Paul Ryan -- pushing an elderly lady in a wheelchair toward a cliff and then dumping her over. There are people who take seriously such statements as those by President Barack Obama that Republicans want to "end Medicare as we know it." Let's stop and think, if only for the novelty of it. If you make any change in anything, you are ending it "as we know it." Does that mean that everything in the status quo should be considered to be set in concrete forever? If there were not a single Republican, or none who got elected to any office, arithmetic would still end "Medicare as we know it," for the simple reason that the money in the till is not enough to keep paying for it. The same is true of Social Security. The same has been true of welfare state programs in European countries that are currently struggling with both financial crises and riots in the streets from people who feel betrayed by their governments. They have in fact been betrayed by their politicians, who have promised them things that there was not enough money to pay for. That is the basic problem in the United States as well. We are not yet Greece, but we are not exempt from the same rules of arithmetic that eventually caught up with Greece. We just have a little more time. The only question is whether we will use that time to make politically difficult changes or whether we will just kick the can down the road, and keep pretending that "Medicare as we know it" would continue on indefinitely, if it were not for people who just want to be mean to the elderly. In both Europe and America, there are many people who get angry at those who tell them the truth that the money is just not there to sustain huge welfare state programs indefinitely. But that anger might be better directed at those who lied to them by promising them benefits that were inherently unsustainable. Neither Social Security nor Medicare has ever had enough assets to cover its liabilities. Very simply, there has never been enough money put aside to do what the government promised to do. These systems operate on what their advocates like to call a "pay as you go" basis. That is, the younger generation pays in money that is used to cover the cost of benefits for the older generation. This is the kind of financial pyramid scheme that got Charles Ponzi put in prison in the 1920s and got Bernie Madoff put in prison in our times. A private annuity cannot play these financial games without its executives risking the fate of Ponzi and Madoff. That is why proposed Social Security and Medicare reforms would allow young people to put their money somewhere where the money they pay in would be put aside specifically for them, not used as at present to pay older people's pensions, with anything left over being used for whatever else politicians feel like spending the money on. It is today's young people who are going to be left holding the bag when they reach retirement age and discover that all the money they paid in is long gone. It is today's young people who are going to be dumped over a cliff when they reach retirement age, if nothing is done to reform entitlements. Yet the young seem not to be nearly as alarmed as the elderly, who have no real reason to fear. Try reconciling that with the belief that human beings are rational. realclearpolitics.com

To: Hope Praytochange who wrote (54602)	10/19/2012 12:31:56 AM
From: greatplains_guy	Read Replies (3) \| Respond to of 71588

Debt is drowning the American Dream Commentary: U.S. borrowing and spending is at a crisis point By Satyajit Das Oct. 17, 2012, 8:35 a.m. EDT SYDNEY (MarketWatch) — Confronted by a woman about his inebriated state, Sir Winston Churchill reportedly retorted: “I may be drunk, Miss, but in the morning I will be sober, and you will still be ugly.” Whoever wakes up in the White House after the inauguration ball will have to soberly confront the ugly reality of the U.S. government’s oppressive debt levels. The surpluses never came. The federal government has run large annual budget deficits of around $1 trillion in recent years. The major drivers of this reversal of fortune include: tax revenue declines due to recessions; tax cuts; increased defense spending; non-defense spending; higher interest costs and the 2009 stimulus package. Despite growing concern about the sustainability of its debt levels, demand for Treasury securities from investors and other governments has continued. Domestic investment, primarily from banks, which are not lending but parking cash in government securities, has been strong. Foreign investors continue to seek U.S. bonds as a “safe haven” — driven by fears about the European debt crisis. Rates also remain low, allowing the U.S. to keep its interest bill manageable despite increases in debt levels. The government’s average interest rate on new borrowing is around 1%, with one-month Treasury bills paying 0.1% per year and 10-year Treasury notes yielding around 1.7%. The Fed’s’ successive quantitative easing programs have been pivotal in allowing the government to increase its debt levels. Around 70% of government bonds have been purchased by the Federal Reserve, as part of successive rounds of quantitative easing. The strategy has helped keep rates low, enabling the government to service its debt. Reaching a limit Clearly, this current position is not sustainable. Fed Chairman Ben Bernanke told the House Financial Services Committee that the U.S. faces a debt crisis: “It’s not something that is 10 years away. It affects the markets currently…It is possible that the bond market will become worried about the sustainability [of deficits over $1 trillion] and we may find ourselves facing higher interest rates even today.” Unless the underlying debt levels and budget deficits are dealt with, the ability of the U.S. to finance itself will deteriorate. The Treasury must issue large amounts of debt almost continuously — weekly auctions regularly clock in at $50-$70 billion — amounts unimaginable just a few years ago. The solution lies in bringing budget deficits down, through spending cuts, tax increases or a mixture of approaches. From any angle, the task is Herculean. Government revenues would need to increase by 20%-30% — or spending would need to be cut by a similar amount. Given that 45% of U.S. households do not pay tax (either because they don’t earn enough or through credits and deductions) and 3% of taxpayers contribute around 52% of total tax revenues, a major overhaul of the U.S. taxation system would be necessary. But tax reform, especially higher or new taxes, is politically difficult. Moreover, large components of spending — defense, homeland security, Social Security, Medicare, Medicaid, (growing) interest payments — are difficult to control and also politically sensitive and hard to reduce. Painful medicine Ironically, the approaching “fiscal cliff” may improve public finances. If there is no political resolution, then automatic tax increases (non-renewal of tax cuts) and spending cuts equivalent to about 5% of GDP, mandated under the 2011 increase in the national debt ceiling, will automatically occur. This would mean a contraction equivalent to more than $600 billion in the first year and $6.1 trillion over 10 years — improving the budget deficit and slowing the increase in debt. Read more: Presidential election will determine 'fiscal cliff' solution. Except that reducing the budget deficit and debt may also plunge the U.S. economy into a prolonged recession. In 2009, students at the National Defense University in Washington, D.C. “war gamed” possible scenarios for bringing the U.S. debt under control. Using a model of the economy, participants tried to reduce the federal debt by increasing taxes and cutting expenditures. The economy promptly fell into a deep recession, increasing the budget deficit and driving government debt to higher levels. This is precisely the experience of heavily indebted peripheral European nations, namely Greece, Ireland, Portugal, Spain and Italy. As one participant in the National Defense University economic war game observed about the process of bringing public finances under control: “You’ll never get re-elected and you may do more harm than good.” Successive U.S. administrations have sought to avoid dealing with the national debt. But as the English writer Aldous Huxley observed: “Facts do not cease to exist because they are ignored.” Satyajit Das is a former banker and author of “Extreme Money and Traders Guns & Money.” marketwatch.com