The coming train wreck

 
It appears that President Washington's fear of the final effects of partisan political parties has proven correct. 

We are rapidly approaching  a point at which the US government's executive branch will adjudicate competing claims for bill paying using inadequate funds.

- Social Security payments (Are they payable from funds sequestered in the so call SS trust fund)  That is not clear to me.

- Medicare and Medicaid

- Defense expenses (O&M. procurement, pay, retired pay)

- All Else

    * State Department

    * Departent of Interior

    * Education

    * Department of Ariculture

ETC.

Let's have a discussion here as to what will be paid and with what.  pl 

Comments

[graywolf]

Hopefully this "triage" situation will force what has never happened:
A resolution by American citizens as to what the role of government really is.
It is obvious that that we can't grow our way out of this mess.
The road to European socialism (the fantasy of the Democrat/media complex) doesn't look too good right now.

[R Whitman]

Regardless of how stupid this all seems, I am sitting with a pile of cash in my investment accounts ready to buy bonds (especially muni Build America bonds on the secondary market) when they become cheap enough. America is not going to go out of business.

The stupidity is temporary, not permanent.

[Andy]

A former CBO director explains it here.

Essentially we can pay for interest on the debt plus about 4/5ths of entitlement spending and nothing else.

The SS "trust fund" is not an actual trust fund, but an accounting mechanism. There is no cash in it - it's all been spent and replaced by government debt. The only way to get money into the trust fund is buy back that debt which means raising taxes or reducing spending on other programs.

[Andy]

I think I missed the link in the last comment to the former CBO director. Here it is:

http://www.youtube.com/watch?v=63vyrsCGyGE

[N.Anderthal]

Graywolf is right on target, the European Socialism playbook of waging wars without paying for them has ruined our finances. A magnificent analysis.

We should hold a vote and those districts that vote 'NO' on the Debt Ceiling increase should be forced to live by their principles ... not one dime of retirement, SS, Medicare/cade and (where possible) government contracts should go to that district.

The innocent suffer? As many conservative talk show snivelers have said, 'life is not fair'.

[Nancy K]

Graywolf, I beg to disagree with you, Europe is looking pretty good right now compared to the mess here. We have the Republican party willing to destroy our economy just so they can keep Obama a one term president, and curry favor with the ultra rich ie Koch brothers. Would I ever vote for or give a penny to a Republican politican again, think not. I'm not happy with the Democrats either, I wish they had more balls, but at least they are not throwing the baby out with the bath water.
I am really angry and I am definitly not a tea bagger. I think there are many out there like me who are angry that our country, which I love dearly, is being destroyed.

[J]

Colonel,

An 'item' that respectfully needs to be 'included' is the Veterans Affairs budget, and all the many Veterans who are receiving Disability Pay, and how the VA's budget is 'growing'.

Here's a related article that was published this past February:
http://www.stripes.com/news/budget-breakdown-veterans-affairs-1.134839

What has me 'curious' is how is the President going to adjudicate his own Presidential and VP Biden's Vice Salaries (along with the salaries of his Cabinet Membership and various and sundry staffs/staffers). Not only that, but how is the President going to adjudicate Congress's paychecks to include their various and sundry staffs and their staffers.

We're talking a BIG bucket of worms, that both President Obama and the nitwits/half-wits in the Congress are fixing to open up. You want to see a society come apart at the seams, then don't pay or take care of the society's day-to-day managers and its past managers (which includes or beloved DoD), watch what happens.

How do we kick the can from here?

[J]

Colonel,

There is one group that I fear for the most in all of this mess, it's our Military Retired 'Spouses'. Without their staunch support, career personnel would have never been able to devote all their attention and 'heart' towards performing their mission, and whatever the task at hand they were given.

It's one thing to mess with us crusty bastards, it entirely another matter to mess with our loved ones!

Will the President 'adjudicate' Survivor's Benefits allowance and honor a nation's pledge to our fallen brethren and their families, or will the President (and the half-wits/nitwits in the Congress) cast our loved ones to the side?

[William R. Cumming]

All will be paid in full. Time will tell!

Republicans and Democrats are now distinctly minority parties meaning seldom do a majority of voters vote for their candidates except in lower tier elections. The majority party is the Independents and understandably they cannot understand Washington and the way it operates as they are systematically denied accurate and truthful information. Should the independents receive such information watch out DEMS and Republicans.
I would start by creating a two year appropriation for the National Security Budget including all the various Executive Branch organizations that support the National Security State. DHS would also be included as well as VA and DOE. Then the same for the domestic budget involving all other Executive Branch components. FEW anywhere have access to the info needed to fund or defund the National Security State largely due to classification and secrecy. Few understand the domestic budget. FEW understand that most of the domestic cabinet officials have to and do toady to the OMB Director.

And finally there are too many overlaps and duplications! Are 16 orgs needed for adequate INTEL?

How about 30 designated Law Enforce orgs?

How about almost 10,000 politically vetted positions in the Executive Branch?

Questions questions! I know an ignorant man may ask more questions than a wise man can answer! Still be must start someplace.

[Matthew]

Socialism? Is that what casued the housing bubble?

I didn't know that Goldman Sachs and Merrill Lynch were part of the Comintern.

Maybe what some call "socialism" is just the simply the cliche we learned as kids: You can't have your cake and eat it too. We want a safety net....so long as we don't have to pay for it.

[rjj]

Is this provocation?

[mbrennerr]

Andy,

I'm afraid that your friend does not have it quite right. There is a firm legal obligation for the US government to meet its obligations as custodian of the Trust Fund. It is not at all an accounting device. The accounting device element comes into play insofar as we talk of a Consolidated Budget that combines the Trust Fund monies with general revenues. That formulation has no legal standing whatsoever.

The reason Social Security is 'in play' is ideological and political. In legal terms, cutting benefits does nothing to reconcile expenditures and revenues of the Treasury. Our politicos - and media propogation of this fiction is a disgrace and a scandal. It amounts to little more than theft of monies acquired and disbursed independently of the general budget as dictated by legislation. As for that nominal Democrat Barack Obama, either he doesn't understand this or believe in the social purpose or simply is ready to play fast and loose with the right and needs of Americans who have an indisputable claim to those monies.

[Harper]

First comment: You are absolutely right that we have reached a moment where the bankruptcy of the two political parties is at a break point in the minds of a vast majority of Americans. Well-over 50 percent of likely voters and a higher percentage of all eligible voters are self-described independents, because they are disgusted with both parties. In the past, we reached similar points where the parties, themselves, disintegrated and morphed into new parties more responsive to the demands and legitimate needs of the American people. The 1850s saw the collapse of the Whig Party and the emergence of the Republican Party of Lincoln and others. That party went back to classic American economic policies, through people like Henry Carey.

To my mind, the solution to the so-called debt ceiling and deficit crisis lies outside the box in which the current debate is being conducted. Unless and until we decouple the gambling debt of Wall Street from the government and taxpayers, and reinstate a total wall of separation between commercial banking and gambling, the problem cannot be solved. Severe austerity in a period of economic downturn can only make matters worse, with potential for social explosion, as well as a deepening economic disintegration. The mobilization of the 1930s and 1940s was not, as most economists claim, a Keynsian policy. It was a targeted program of infrastructure and job creation, which boosted the productivity of the entire economy, making the war mobilization possible. For Keynes, there is no difference between useless and useful employment--just pump money into the hands of the people. The U.S. policy was different. It used to be called the American System, and under that approach, the United States was the most advanced agro-industrial economy in the world, and not through "cheap labor" coolie policies. The quality of the labor force was part of our drive for ever-increasing productivity. Those skills allowed for the introduction and rapid assimilation of new advanced technologies, boosting productivity.

This can be done again. As I've mentioned, there are two bipartisan bills before the House (under the media radar screen) to reinstate Glass Steagall. The Senate should have a similar bill very soon. The very paralysis and insanity that has dominated the party rivalries in Congress for too long is driving some Members to seek the traditional alternative. I am not overly optimistic, but I do see efforts underway that go clearly against the grain of the insanity.

[Jose L campos]

This country was peopled by a highly educated group of Europeans that found a continent without property relations. The forests the mines the plains were there for the taking. Profit was easy because the objects obtained from nature were gratis.
Then people were imported that were already educated, mind you the education was not liberal arts but consisted of the most useful arts, seamstresses farmers dairymen iron smiths and so on. Their education had been provided at no cost to the country. Every addition was a net gain.
Now we find ourselves confined within a set of property relations from which there is no escape.

A profound examination of conscience is necessary and a great display of patriotic fervor that amounts to a love for people and things.
At bottom we are faced with a substantially religious problem. A sort of economic withdrawal that gives us hope that the future will be if not better at least peaceful and serene.
The period of reckless individualism is finished.
Don't misunderstand me in the sense that I want a public religion what a I suggest is a people that acts religiously with Faith and Hope and perhaps Charity.
Enacted laws cannot do that. The spirit must connect each other secretly and almost unconsciously.

[505thPIR]

The obvious: True Believers have reached a critical mass within the Republican Party. There is no reasoning with this group. They own "the truth" and deviation is fantasy and heresay amongst them. How can one negotiate along any other lines than "the truth".

This is the manifestation of years of infiltration. Back in the 80's it was the Moral Majority. Far too overt for mainstream everybody else. The Ralph Reeds of that buffoonery went to work on a better, less visible, but far more insidious and infinitely more powerful mousetrap. "The Base" is now them. Today's current debt and budget dilema is just the tip of the iceberg. They are on the cusp of creating a state within a state. Ironically,there is almost a Bolshevic feel to it all. Weaken the functioning of the current government so you can replace it with your version. Be warned, should they ever come to power, there will surely be some creative emphasis and de-emphasis of the Constitution as suits their vision of the True Order of Americana. These are dangerous days. If the economy tanks, the current extremism will be mild in comparison to that which follows. The True Believers aren't dumb, they are incredibly calculating. What we are seeing now is the ground being prepared for what is to come.

[Twit]

Graywolf and N.Anderthal,

I think our policies are more like pre-Socialist, imperial Europe - all corporate capitalism and no moral sentiment.

The "Left" gets beat up a lot in this venue, but the average American citizen owes a huge debt to homegrown American Leftist movements of the past, some of which were quite radical, that demanded (and got) Social Security, a minimum wage, paid vacactions, health and safety standards, clean air/water laws, etc.

I'm not a Leftist, but it's a fact that we are in the mess we are now in large part because the Left is dead and there is no true political force capable of keeping the powers that be honest in relation to 'the peoples' interests.

[VietnamVet]

Colonel,

For both Parties good governance has disappeared with the ass kissing subservience to special interests. All that matters is money and winning the 2012 Election. Except, pissed off Americans have managed to elect a bunch of radical hot heads in the House; i.e. Alan West.

The current FAA shutdown is a tiny taste of what will happen next week. House Republicans want to cut the subsidies for flights to small cities but Senate Democrats want to keep them; an impasse, therefore, no funding. 4,000 civil servants are at home wondering if they will get paid. Airport Construction has stopped. With the airport tax expired, the airlines raised their prices rather than passing on the savings to their customers.

There is no Social Security trust fund; it is just treasury bonds that the government promised to pay back. Since both parties have demonstrated that they don’t give a damn for the unemployed or the full faith and credit of the federal government, our benefit checks will be placed on hold.

The Washington Examiner opinion piece states “Thanks to the recession, Obama's payroll tax holiday, and the flood of retiring baby boomers, Social Security has become a net contributor to our federal deficits. According to the Social Security Board of Trustees' 2011 annual report, Social Security added $49 billion to last year's budget deficit and is projected to add another $46 billion to this year's deficit. Those numbers will only get bigger”.

http://washingtonexaminer.com/opinion/2011/07/debt-crisis-punctures-social-security-trust-fund-myth#ixzz1T8LUZtr6

This is why Social Security and Medicare benefits will be cut. They are no longer cash cows that can milked to pay off corporations and fight never ending wars.

[herb]

I am supposedly a rare bird, a small-business owner and employer who is also a raging liberal. The other day I had a very substantive conversation with a very successful retired gentleman and former defense contractor who is a raging right-winger. We found nearly everything in common and very little to divide us.

Why are we able to find agreement, but people elected to govern us can't?

Our political and elite class is morally and intellectually bankrupt. This crisis is one of their making entirely. Anyone who supports them in anyway is a party to their shame.

[par4]

European Socialism? Please explain this one. Sounds to me like something Rush Limbaugh would come up with.ps What's this crap about waging wars without paying for them being euro-socialism?

[stanley henning]

Yes, it looks like the America we have known is rapidly passing from the scene to become just another mediocre, struggling mess on planet earth.

[Peter]

Since the real power is now in the hands of corporations through the pay for play system set up by Gingrich and reinforced by Pelosi for the Dems, leave little room for any actual people. If we have to truly balance payments by deposits, I don't know of any priority system in place. With corporations firmly running our Congress, the assumption would be to pay them first on the standing contracts. Debt service would be first with implemented contracts second, any social payments would be last in line. FICA rakes 15% of most wages and is put on into Federal deposit almost real-time, that money would go out not to social payments where they belong.

[Fred]

What current events in Norway show is that when the true believers start shooting, the true believers will think they were perfectly justified and lots of innocent people will get killed.

[Will Reks]

@N.Anderthal

How is not paying for our wars European socialism? If anything, that's the way we've done things in America since 1980.

It's interesting how fiscal conservatism no longer means balancing the budget by any means possible.

@graywolf
Sometimes I wish there truly was a liberal media rather than an amoral, corporate media. Maybe then we wouldn't have gotten multiple wars, trillions in tax cuts, Medicare Part D, and a Wall Street crash enabled by low regulation/enforcement that led to a mini-depression. All paid for with borrowed money.

Maybe with that liberal media we would have health reform that actually controlled the cost of spending, the greatest part of our projected long-term debt. Yes, something proven to cost less by almost half in those European countries.

[Fred]

J

The salaries of millionaires Biden, Obama, Boehner etc are a distraction from the actual issue. Taxes need to rise or services cut. The premise is that the former are forbidden (by ideology) and the later requried. The millionaires won't need any services, other than Secret Service protection. Thus you and greywolf and I all get stuck with both the cuts and the bills.

Given that the deficit spending hasn't been addressed since the budget surplus days of the Clinton administration we surely can't go back to the same 1999 level of taxation since, well, the rich people in Congress and thier paid shills say so.

[Tigershark]

I think it is obvious that the Laffer Curve and supply side economics do not work. Lowering taxes does not increase tax revenue, it increases the wealth of those whom have their taxes lowered.

The argument over the debt ceiling is not about a blank check for spending in the future, it is about a how we pay for what we have already bought; wars in Iraq and Afghanistan, Medicare Part D, multiple tax cuts, too name a few. Many of the very people who are opposing raising the ceiling are the ones who voted in favor of the aforementioned expenses.

The rest of the world must think we are nuts.