Reality checks - on the debt limit debate...
Here are three reasons why we should call "bunk" on the fear tactics that have been extensively used on the national debt ceiling debate by the President, Mr. Geitner, Mr. Bernanke and the credit rating agencies:
1) The United States debt ratio compared to Gross Domestic Product(GDP) just after World War II stood at 120%. That's right - 120%. Currently the U.S. is at roughly 96%. This is not where we want it - BUT we can survive the current debt load.
2) Today, Japan carries 250% of their GDP in debt. Japan has not collapsed as a country and they remain a viable and important global economy.
3) The Social Security "coffers" are a long way from running dry. In fact, the Social Security Administration can by law, reclaim excess contributions made by the Social Security system, from the Treasury any time there is a short-fall in current contributions in order to "make good on the payout obligations" to Social Security beneficiaries.
"Every year from 1984 through 2009, Social Security revenues exceeded payments to beneficiaries...In 2010, the Social Security system ran it's first current account deficit since 1983...Congress spent these surpluses, and the U.S. Treasury issued the Social Security Trust Fund special bonds...and when the Social Security Administration [redeems these bonds with the Treasury] total government debt subject to the debt limit FALLS - thus freeing up the Treasury's ability to issue new bonds."
-- Thomas R. Saving, former Trustee of the Social Security Trust Funds.
Did you get that? Part of the national debt is to the Social Security system. When we have a shortfall in contributions - as we do now - the Treasury can pay back the Social Security system and free up credit under the national debt ceiling. So here's a novel idea - lets use some of the cheap money Mr. Geitner is printing, pay off our debts to the Social Security system and free up our credit line so we don't have to raise the national debt ceiling... then - let's get serious about cutting current programs and current spending - like ObamaCare...
The harsh fact is that many people in Washington, on Wall Street and around the globe are masters at using Fear, Uncertainty, and Doubt (FUD) in order to advance their political agendas. We see and hear this every day...when the career politicians play their political games and use the media to manipulate and confuse the public over economic realities.
Raising the national debt limit is not necessary if Congress will get honest with the American people and use those cheap dollars to pay back the Social Security system.
Raising taxes is also not necessary if our representatives will cut expenses. Cutting expenses requires hard decisions - and I don't mean cutting projections in future budget years - this is simply a political ploy to continue spending at current levels.
Even though the national debt limit is nearly certain to be raised tomorrow - this is clearly not the last time this debate will occur. Will the ceiling hold next time? Or will the career politicians once again cave to their own rhetoric and fear mongering? When left to their own devices Congress will most certainly, once again, raise the debt limit and keep on spending... unless we tell Congress it's okay to cut expenses and hold the line on the national debt limit.
Contact your Congressman and demand that he/she say no to future increases in the national debt limit, cut expenses and get honest with the American people.
Although lost in the scare tactics and rhetoric of the day, adding $2 trillion to our current debt on Tuesday does not make America a better risk than we were on Monday. - without that $2 trillion in new debt.
We are fooling ourselves if we think so and reality has long since left...
www.iangilyeat.com
1) The United States debt ratio compared to Gross Domestic Product(GDP) just after World War II stood at 120%. That's right - 120%. Currently the U.S. is at roughly 96%. This is not where we want it - BUT we can survive the current debt load.
2) Today, Japan carries 250% of their GDP in debt. Japan has not collapsed as a country and they remain a viable and important global economy.
3) The Social Security "coffers" are a long way from running dry. In fact, the Social Security Administration can by law, reclaim excess contributions made by the Social Security system, from the Treasury any time there is a short-fall in current contributions in order to "make good on the payout obligations" to Social Security beneficiaries.
"Every year from 1984 through 2009, Social Security revenues exceeded payments to beneficiaries...In 2010, the Social Security system ran it's first current account deficit since 1983...Congress spent these surpluses, and the U.S. Treasury issued the Social Security Trust Fund special bonds...and when the Social Security Administration [redeems these bonds with the Treasury] total government debt subject to the debt limit FALLS - thus freeing up the Treasury's ability to issue new bonds."
-- Thomas R. Saving, former Trustee of the Social Security Trust Funds.
Did you get that? Part of the national debt is to the Social Security system. When we have a shortfall in contributions - as we do now - the Treasury can pay back the Social Security system and free up credit under the national debt ceiling. So here's a novel idea - lets use some of the cheap money Mr. Geitner is printing, pay off our debts to the Social Security system and free up our credit line so we don't have to raise the national debt ceiling... then - let's get serious about cutting current programs and current spending - like ObamaCare...
The harsh fact is that many people in Washington, on Wall Street and around the globe are masters at using Fear, Uncertainty, and Doubt (FUD) in order to advance their political agendas. We see and hear this every day...when the career politicians play their political games and use the media to manipulate and confuse the public over economic realities.
Raising the national debt limit is not necessary if Congress will get honest with the American people and use those cheap dollars to pay back the Social Security system.
Raising taxes is also not necessary if our representatives will cut expenses. Cutting expenses requires hard decisions - and I don't mean cutting projections in future budget years - this is simply a political ploy to continue spending at current levels.
Even though the national debt limit is nearly certain to be raised tomorrow - this is clearly not the last time this debate will occur. Will the ceiling hold next time? Or will the career politicians once again cave to their own rhetoric and fear mongering? When left to their own devices Congress will most certainly, once again, raise the debt limit and keep on spending... unless we tell Congress it's okay to cut expenses and hold the line on the national debt limit.
Contact your Congressman and demand that he/she say no to future increases in the national debt limit, cut expenses and get honest with the American people.
Although lost in the scare tactics and rhetoric of the day, adding $2 trillion to our current debt on Tuesday does not make America a better risk than we were on Monday. - without that $2 trillion in new debt.
We are fooling ourselves if we think so and reality has long since left...
www.iangilyeat.com
Posted by Ian Gilyeat at 8/1/2011 9:00 PM 
Categories: U.S. Budget, National debt, Economy
Tags: Ian Gilyeat National debt Social security US Budget U.S. Budget
Categories: U.S. Budget, National debt, Economy
Tags: Ian Gilyeat National debt Social security US Budget U.S. Budget
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