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In its mid-year long-term budget forecast, the Congressional Budget Office on Wednesday renewed its previous warnings that the government faces an increasing risk of a fiscal crisis due its ever-greater borrowing.
The report comes as Vice President Joe Biden and congressional budget negotiators try to reach an accord that would cut spending enough for Republicans to agree to an increase in the government’s borrowing limit.
August 2 is the date on which the Treasury Department says it will exhaust its means of managing cash to avoid hitting the current debt limit.
As it did in a report last January, the CBO said publicly held debt as a percentage of gross domestic product (GDP) would reach nearly 70 percent during the current fiscal year which ends on Sept. 30.
The CBO – in its “alternative fiscal scenario” -- predicted that if Congress does not raise taxes to their 2000 level and fails to impose Medicare spending cuts mandated by a 1997 law, by 2035 federal spending would account for more than a third of GDP, up from 24 percent of GDP this year.
Under that same scenario, by 2020 publicly held debt would reach nearly 90 percent of GDP.
CBO director Douglas Elmendorf said many budget analysts think the alternative fiscal scenario “is a more realistic picture of the nation’s underlying fiscal policies” than the “baseline” scenario which by law CBO must use to forecast spending and revenue.
The baseline, for example, assumes that current income tax rates will revert to their 2000 level at the end of 2012.
In Wednesday’s report, the CBO repeated earlier warnings about the risk of a sovereign debt crisis.
A rising level of debt, combined with an excess of spending over revenue “would increase the probability of a fiscal crisis for the United States,” the nonpartisan agency said, repeating a warning it made last July.
“In such a crisis, investors become unwilling to finance all of a government’s borrowing needs unless they are compensated with very high interest rates,” the CBO said, adding that “there is no way to predict with any confidence whether and when such a crisis might occur in the United States.”
But it said, “All else being equal, however, the larger the debt, the greater the risk of such a crisis.”
In his introduction to the report, Elmendorf identified health care costs and demographics as primary causes of the fiscal dilemma.
“Under current law, an aging population and rapidly rising health care costs will sharply increase federal spending for health care programs and Social Security,” he said. “If revenues remained at their historical average share of gross domestic product (GDP), such spending growth would cause federal debt to grow to unsustainable levels.”
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wow- at last we have a real Dick Tracy here..
please go to us deficit clock.org
Part of the problem involves the fact that we are not interesting in knowing the root causes of the problem and prefer to focus on potential solutions, and the fact that we don't bother to read the recommendations made by bipartisan entities like the CBO. The deficits, and resulting increases in the national debt,i are the result of inadequate revenues to sustain our spending level. We either pay for what we get or do without, and that includes the DoD, SS, MEDICARE, air traffic controllers, the CDC, border and customs officers, etc.
Balancing the budget without reverting to the tax rates that existed in the Clinton era is an impossibility. We need to raise taxes and reduce spending.
And we really need a president, or candidate, who will stand up on television and tell the American people the truth, and challenge us to rise to the occasion and sacrifice, and promise and deliver on reducing spending and government waste. We need a leader.
We're not going to get it.
Here's Another Part of The Dirty Truth That Politicians Dont Want to Talk About: Illegal Aliens
Isn't it amazing that our U.S. Citizens and senior citizens, and college students, and Legal Immigrants who paid into social security & medicare Stae Universities, Welfare, and Food Stamps system for decades have to struggle with ILLEGAL immigrants for resources and never paid in a dime?
& Who Use Fake, Stolen, Robbed, Identities(Think I Can Travel To Any Country without First Having paid $250 For A Passport?Nope. straight Jail) While TSA DHHS, ICE Immgration and Law Enforcement Look the other way.
WHILE ILLEGALS Get:
1 - A job
2 - A driver's license
3 - A Social Security card
4 - Welfare
5 - Food stamps
6 - Credit cards
7 - Subsidized rent or a loan to buy a house
8 - Free \ Subsidized education Including colleges\Universities
9 - Free health care
For gods sake USA get your priorities straight. We have Huge Deficits and Additionally
If we let ILLEGALS become citizens in mass our National Debt will sky rocket beyond
belief.
IT'S Madness to try to DEFEND A POLICY THAT REWARDS LAWBREAKERS FOR FINANCIALLY RUINING AND RUNNING THIS COUNTRY INTO THE GROUND!!!!
YET WHEN CITIZENS OR STATES TRIES TO DO SOMETHING ABOUT IT THE FEDERAL GOVERNMENT TURNS A BLIND EYES OR WORSE STAND IN THE WAY OF JUSTICE...JUST TRY TO PASS AN AMNESTY LAW Oooppsss I MENT EARN PATH TO CITIZENSHIP AND YOU-LL FEEL THE RATH OF THE PEOPLE LIKE NEVER BEFORE.
We simply Cannot Afford to be everybodies savior. ILLEGAL IMMIGRANTs Stay home and fix your own country!
Just SAY NO TO ILLEGAL IMMIGRANTS. Send the illegals home considering they consume 80% of the social services with their babies / anchor babies
If we confiscated all the wealth of the "evil" Top 1% of income earners with a 100% income tax, it would not cover ONE YEAR of the deficit...
Taxation is NOT the answer..
It's about time to destroy the MYTH that the Bush tax cuts "cost" the Government money and weren't "paid for", and that they didn't help create jobs...
No "opinion".. no "spin"..
Just Federal Government numbers...
Tax Revenues?
Bush's largest tax cuts went into effect in 2003...
Revenue to the Treasury WITH the cuts?
2003: $1.782 Trilion
2004: $1.880 Trilion
2005: $2.154 Trillion
2006: $2.407 Trillion
2007: $2.568 Trillion
Anybody see any revenue DECREASE????
There was NO "cost" to the precious Federal Government that had to be "paid for"..
The tax cuts MADE MONEY for the Government!!!
peter,
In the case of the bush tax cuts, the term not 'paid for' is referring to the cuts being made, but there were no offsetting spending cuts to cover the loss of revenue.
In the case of the Bush prescription drug plan, the term not 'paid for' refers to the increase in spending not offset either by spending cuts in other areas or revenue increases through income or payroll contributions.
Also revenue numbers alone are misleading without the context of the percentage of the economy part. If you have a 100,000 dollar home and it goes up in value (or down for that matter) say 10,000, is that the same as a 20,000 dollar home going up (or down) 10,000? No it is clearly different. You are missing the CONTEXT of those income tax numbers.
It's time to:
Increase taxes, close loopholes, reform the tax code
Cut spending
Cut entitlements
End the wars
Will we have any politicians not on the take with the stones to stand up and do what must be done?
Will American Consumers accept the truth, that they can't vote themselves the treasury?
The answer is no.
I feel very bad for people under 20. They are going to inherit an amazing mess in 20 years.
Have a break.... this is a french band..
http://www.youtube.com/watch?v=foMI8rFK8o0
A french band with....... frogs !
I hope they croak!
It seems to me the fiscal situation became dangerous a very long time ago. Since Nixon brought about "fiat currency", we have experienced about 650% inflation. The interest on the national debt now exceeds the entire federal budget of 1975.
In view of reality, it seems the CBO has entirely the wrong tense.
Kurtis:
The reason why Nixon made that decision is that the situation then was not sustainable. There was a fiscal crisis that was in part caused by manipulations in europe (look up eurodollar) and compounded by the economic impact of the oil crisis.
The GOP fiddles while Rome burns. The basic confidence in the US monetary system is already compromised. Rome: The past is prologue.
LOL,The Dems run the Senate and we can't get a jobs bill or an entitlement/spending cuts bill through them.Democrats are ruining this country,day after day.
You refrained from mentioning the Republicans in the Senate have already blocked 3 jobs bills. Republicans do not mention that because they do not want the public to know, so they can blame the Democrats.
You are fooling no one. Neither will the Republicans when the issue comes up in the campaign. They cut people out from jobs for the sole purpose of attempting to defeat Obama.
There's patriotism.
Do we still want a 'Great Society' even if we can't, or aren't willing, to pay for it?
another Hit in europe !
http://www.youtube.com/watch?v=zJtOKhryN0o
I see a lot of retirees buying huge motorhomes and second homes or condos, and spending money in casinos.
Because they are smug in their knowledge that the government will care for them with SS and medicare.
I wonder, if they had to foot the bill for their retirement, would they spend so wantonly?
What would happen to the economy in that case?
pete, they already paid that money into the system, so, if you don't like it, learn to deal with it.
Pete it is a matter of when you were born. If you were born just before the great depression your life sucked, if you were born after the great depression you buy a motor home. Entitlement programs were designed during times of low unemployent. If you want to be upset at somebody be upset that no one from any political party has done a thing about high unemployement. Most of the kids when I was a kid, had fathers that worked two jobs. Some people are lucky or smart enough to have a job, but very few could or would work two jobs.
Pete,off your meds?????
Boy, these are some off-kilter responses!
First, Only in America, do you realize that these seniors recover all the money they put in in something like seven years? After that, it's on the backs of younger workers.
Plus, you know, there's this:
http://www.usatoday.com/money/economy/2011-01-27-social-security_N.htm
It's not as simple as your snarky and rather sad comment about dealing with it. I don't want to pay for it anymore. We're going broke and they are part of the problem.
Are YOU happy with that yourself?
Crabdusty - yes, that's true, but when SS was implemented it was for people who were poor, elderly, and in need of it. NEED. And the life expectancy was very short then, now we have people living for 30 years on SS and bleeding it dry. It was meant as a safety net, and now it's a Ponzi scheme, used to scare older voters.
Jobs is another issue. Americans rejoiced at cheap consumer goods and this is the long delayed, well deserved result. Corporations and banks and politicians were complicit in this, too.
I.M. Curious - sorry, no, not even on any meds. Try to come up with something pithy next time.
I wouldn't call it a ponzi scheme, however it is clear that the realities of an aging population (baby boomers) has never been seriously taken into account, and that is understandable that people don't want to see their payroll taxes increase.
Vaguely claiming that seniors are buying motor homes, second homes, and gambling vacations is not helpful. Please cite statistics as to exactly how many luxury items are being bought, and how many seniors are buying them, versus how many are living in poverty. Meaningless claims that some group of Americans is living in luxury may sway the very stupid (as such vague claims, with no data offered to illuminate them, did when the same was claimed of welfare recipients, so that people could attack welfare programs).
However, if you wish to be credible, please provide the numbers -- from a credible source -- as to how many seniors can afford luxury items.
Andrew
Unless you have something that fits within the 20% of the population buying motorhomes, does it really matter? The population is aging, and the demographic right now is such that I would expect exactly what the poster stated, even if there were serious poverty issues. Especially since for the last few years, the motorhome market was essentially dead.
Andrew
maybe they are buying them to LIVE in,...I hope not.
Mr. Obama's lack of leadership and inability to adhere to his own words have been stunning.Here is what he said to the American people:
We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people's pockets.
Here is what he did/failed to do.
First, he failed to timely submit a proposed 2011 budget in 2010. This was obviously politically motivated, as he knew that if the budget he eventually did propose, well into 2011, was put before the voters before the Nov 2010 elections, members of his party would have suffered even larger defeats at the polls than the massive drubbing they suffered.
Second, the budgets Mr Obama has proposed in the past and the budget he belatedly proposed for 2011 all substantially increased deficit spending and the debt. While his proposed budget for 2011 slows the rate of deficit spending, it still increases the deficit . No real cuts were proposed. If that isn't kicking the can down the road, I don't know what is!
Third, Mr. Obama's proposed budget lacks tough choices and is utterly a failure when it comes to giving leadership. To the contrary, it encourages the "Progressives" to continue calling for massive big government spending with no end in sight. And he is not working with Republicans to get the tough meaningful choices enacted that will actually reduce spending and the deficit, as opposed to merely reducing the rate of increase in both, as he and the Dems continually propose.
Fourth. Mr Obama was so insistent in having a deficit commission put in place that he bypassed Congress, because they were not willing to authorize the Commission, and issued an executive order forming the Commission. Yet, when the Commission came out with its recommendations, Obama did the exact opposite of what he said he would do by ignoring virtually every recommendation they made when he issued his belated proposed budget. Indeed the Commission was yet another Washington gimmick, put in place by Mr. Obama, designed to try and placate voters into thinking that Mr Obama was serious about addressing deficit spending and the crisis level debt we are now saddled with. Which he has exponentially increased during his term in office. Which, by the way, he will continue to increase if Congress allows him to have his way on the budget.
I guess Mr Obama was correct, when he stated that he didn't go to Washington to pass our currrent problems onto the next President or generation. What he didn't tell us is that he planned on passing along even bigger problems to both.
Mr Obama has before him the opportunity to show some real leadership while at the same time addressing Washington's spending addiction. He can start off by rallying the members of his own party to pass a balanced budget amendment. If everybody's goal is to act fiscally responsible and balance the budget, than why not force them to do so by requiring it under the Constitution? Surely a balanced budget amendment will be favored by the public and the Repubs will back it as well. Once it is passed our elected officials, in all parties, will be forced to deal with realty and live within our means. If he is not willing to go the amendment route, he can propose budgets that only spend as much revenue as we take in. Not the deficit spending budgets he and the Dems continue to propose. He can advance the ball along even further by timely proposing a 2012 budget that makes cuts and reforms in the massive entitlement programs that are required if real progress is to be made. Leaving the tough choices to the Repubs, and then chastising them when they make tough choice proposals, is simply not productive and, quite frankly,a childish political ploy. And certainly demonstrates Mr. Obama's lack of leadership capability/will.
If Mr. Obama is a man of action that meets his rhetoric he will heed his own words. Otherwise his words will come back to end his Presidency when the voters hold him accountable in 2012.
kevin---Pertaining to a Balanced Federal Budget amendment, until the last financial meltdown occured in 2008, I supported the idea of such an amendment. Today, virtually all states and localities required their legislators to balance their budgets, and in good times (say up to 2008) many states and localities were flush with cash due to the good economic times, but when the economy went south in 2008 due to the financial crisis, many states and localities had to cut services, raise taxes, or both to balance their budgets.
In 2008, if the Federal Government had a balanced budget amendment in place when things went south economically, lets see what would have happened. Given the reluctance of our legislators to raise taxes, the Government would not be in a position to bail out banks causing a total shutdown of the banking system in the US with many of their depositors losing their life's savings in the process (this single thing along with a Wall St. Crash eventually caused the Great Depression). This would have caused the economy to lose millions of jobs since there was no money in the bank. Add to that, the Government could not be in a position to bail out GM and Chrysler, causing the loss of hundreds of thousands of direct hire jobs at GM and Chrysler, and millions of indirect jobs. In this respect, just by these two actions, you would have seen the unemployment rate spike to 20 percent nationwide.
But personally, I am no fan of deficit spending when the economy is doing well and enough taxpaying jobs are out there. In fact to cover future deficits, the Government should run surplusses to bank on for a rainy day. Bush made the biggest mistake of his presidency when he signed the two tax cut bills (the first one in 2001, and the second in 2003), which changed the Government's financial position from a surplus to a deficit. After the tax cuts went into effect the Clinton surplusses went into deficits and now we in the USA are faciing a MAJOR debt crisis.During the Clinton years again towards the later part of his presidency, we were actually paying down our National Debt. Now that the Bush tax cuts are extended for another two years we now have a 1.5 TRILLION dollar deficit.
It is simple.. When times are good, generate a surplus which can be invested for a rainy day. When times are bad, draw down that savings to pay for your expenses. Most every sensible family does this, so why cannot the Government do the same. This will require soending cuts AND tax increases for everyone in the USA, but that is the way it is.
Anyhow, that is my piece.....
Lets get something straight. The deficit budgets passed in the Bush years originated in the Dem controlled Congress. Bush, stupidly, went along with them. The Dems continued to Control Congress up until this year and they continued to pass huge deficit spending budgets. The economy would not be in such bad shape without the deficit spending and bad law, passed by Dems, concerning mortgages for unqualified individuals.likewise, if we had had a balanced budget amendment in place all these years none of the deficit spending would have taken place and Congress would have been forced to either cut spending, raise taxes or both.
Since when was a "balanced budget" ever been in Barack's repertoire? I doubt he knows the meaning of the words, based on his performance thus far! Oh yeah, blame Bush and "racists" over his dismal showing!
Obama submitted a budget for 2011, the House couldn't even get a budget out of committee because the republicans stonewalled and prevented that. In its place, an Omnibus bill was created to pay for government operations for the year. Then the republicans complained saying that it was proposed too quickly (among other things), and then the decision was made to create spending resolutions. This is so that the republicans can take their parting shots every month or so.
pwalker, wasn't in bush's financial or fiscal repertoire either.
SO..
The CBO FINALLY figured out that it's true what the evil, right-wing kooks and scare-mongers and Obama-haters like Beck, Hannity & Limbaugh have been saying for three years...
Took them long enough...
Maybe they need to stop listening to Obama, Reid, Rachel Madcow and Keith Blabbermann and start listening to Beck, Hannity and Limbaugh...
rachel maddow and keith olbermann have been saying for years that the budget needs to be balanced, that the debt situation is not sustainable. The ONLY difference in what they have been saying is do we take money from those that can't afford it, or do we take it from people that can afford it.
Why do they print things we already know? If I ran my house hold budget like the government. I would have been homeless soon after I bought my home. There comes a time when the bill's are due. Bail outs have been called a good thing? Guess what folks, we never hit bottom. All we did was make the truth hurt much worse for later generations. Makes me feel better about not having children. For the next 50 to 100 years the hole that's been dug will be getting filled. If this country is still around?
juan
yes, but the country isn't your home. A country can't go bankrupt in the legal sense.
And the bailouts were not a good thing, they were the best of a host of really bad solutions.
Wonder why the Government has a debt crisis. It is because of high unemployment, and the ever shrinking Middle Class which we have to thank the Republicans and Big Business for in shipping these former good paying middle class jobs to China. These former Middle Class workers incomes were the bread and butter of the tax base and given that these jobs are now permanently gone and shipped off to China, and India and elsewhere outside the United States, there is no tax revenue to collect from many of these folks.
Chinese workers DO NOT pay US Income Tax, middle class working Americans DO pay Income Tax.
Until the likes of the Republicans and any one else on the take in elected Government DO get the message to bring these middle class jobs back to America from overseas and stop outsoucing manufacturing and services outside the United States, the budget crisis is only going to get worse.
A common denominator with all the countries failing and succeeding is production. Countries like Germany have a high production rate, Greece has a low production rate. The U.S. is not producing. You cannot have a decent economy, budget, or social programs with the unemployment rate as high as it is. Do the math, if you take the money from a million dollar program and throw it at a ten billion dollar program, it ain't doin squat. All this squawking about the budget does not matter if there are no jobs. You cannot tax your way out of it and without bringing in twenty bucks you cannot spend forty and wonder why your broke. By shipping our jobs over seas we end up lowering our economy to the lowest common denominator. Perhaps levy more taxes on imported goods and income developed over seas to help our budget and increase employement. The cost of goods will go up. I do not see any other way.
To Crabdusty--Taxing importing goods from cheap production countries as well as American companies who manufucture in these cheap production countries like China does twp things, with the first being it raises more tax revenue for the Government, and the second being it gives a BIG incentive forn these American companies to move their manufacturing operations from these cheap production countries back to America, which fosters hiring of Americans who will then pay US taxes again raising more tax revenue.
In terms of the cost of imported goods going up, it may be possible that the cost of essential imported goods will go up. since consumers must buy to live on everyday life (e.g. items like gasoline), but for non essential imported goods, they may not go up as fast (if at all), since consumers will vote with their dollars, and if they do not have the dollars to spend on these imported goods, they will just not buy, forcing the seller to limit his cost increases, cutting into his profit margin.
henry, it may also do one of two things
1) violate international trade laws
2) cause those same countries to slap a similar tax on goods being imported into their country.
Now the impact of these things may not be a factor. If not much is exported to that foreign country or what is exported is of strategic importance to that country, then there may not be punitive actions. I just say this because actions can have counter actions.
So many mixed messages coming from these MSNBC articles. Who picks and chooses this stuff. You leave this site more confused each time you view. President will most likely push for involvement in Afghanistan until 2014 even tho we are dangerously close to financial disaster and will have to borrow billions more to stay there. Our government can't be so out of touch with reality that they would actually continue to borrow money when we are faced with economic disaster while completely decimating every social service program, cuts to Medicare, Medicaid, Social Security. I know many would like to see the elderly, disabled and poor just disappear, but in cutting these programs, people are still going to end up in ERs all over the country for treatment that they can't pay for at three time the cost. The system as it is now is just completely disfunctional, none of it makes one bit of sense. All you hear coming out of these presidential election lead ups is how much money they have in their coufers as if that will be the sole determining factor in who wins, sad part is it's true. It's a miserable game they play and people suffer for their lack of integrity. People are beginning to realize, and this could be a good thing, that their vote means nothing. The government will do whatever it wants in spite of the outcry of it's citizens to stop the corporations, banks and Wall Street from looting the country, ending these senseless wars, doing something about our crumbling infrastructure, creating jobs and the list goes on. What in the name of God is wrong with these people?
It's about time to destroy the MYTH that the Bush tax cuts "cost" the Government money and weren't "paid for", and that they didn't help create jobs...
No "opinion".. no "spin"..
Just Federal Government numbers...
Tax Revenues?
Bush's largest tax cuts went into effect in 2003...
Revenue to the Treasury WITH the cuts?
2003: $1.782 Trilion
2004: $1.880 Trilion
2005: $2.154 Trillion
2006: $2.407 Trillion
2007: $2.568 Trillion
Anybody see any revenue DECREASE????
There was NO "cost" to the precious Federal Government that had to be "paid for"..
The tax cuts MADE MONEY for the Government!!!
Lowering Tax Rates vs Raising Tax Rates.. Do the Evil Rich pay less when rates drop??
Federal IRS Data:
Amount of taxes paid by Income Earnings…
FY 2002 (pre-Bush big tax cuts) FY 2006 (after 4 years of Bush Tax cuts)
Earned - Paid Earned - Paid
Top 1% - 36% of all taxes Top 1% - 40% of all taxes
5% - 54% 5% - 60%
10% - 66% 10% - 71%
Seems like lowering rates caused the Evil Rich to pay a higher share of taxes!
Nope, you didn't destroy it...
When GW took office of National Debt was 4 Trillion Dollars By the Time He Left it Was 8 Trillion.
No other president in History Added to the Debt as fast as he did.
Bush the great Decider and the Republicans squandered A large part of this countries wealth with:
1) His 2 war that cost a trillian dollars with the scantiest of hersey evidence((Just Added to the Debt)
2) His prescription benefits that we couldnt afford and (Just Added to the Debt)
3) His tax cuts for the rich that we couldnt afford and ((Just Added to the Debt)
4) HIs Letting 2/3 of largest corporations that make 10s to 100s of Billions pay no taxes thru outsourcing of our jobs. (Billions of Dollars Not Collect Because People are out of Work) ((Just Added to the Debt)
Why wer'ent the Republican screeming Bloody Murder when Bush was laying the seeds to Trillions of Dollars In budget deficits? Remember Cheney "Deficits dont matter"
Ill tell you why? Because The Republicans only care about their Greedy selves & Hell with everyone else.
And how will we pay for this now? With YOUR social security \ medicare money, of course!(That You paid Taxes Into and Now the Govtment wants to tell us its an "Entitlement") And huge national debts for our children and grand children as for as the eyes can see. Wake up people.youve where Had!
Hey PeterB, Conservatives buried us in this crisis and you know it. All the policy's of the previous administration put us all at risk. Why ??? do all conservatives close their eye's to that little (not) pearl of fact?
Drew, you have your numbers wrong! No other President in history has raised the National debt higher than, yep, you guessed it, Barack Obama! He has spent more in three years than Bush did in 8! Go crunch your numbers and quit playing the blame game! You are part of the problem in that you refuse to see the writing on the wall, and want to give this loser another 4 years to bury this once great Nation! Not going to happen! Americans are too smart! I have faith in them!
P.Walker
As I stated above, your tax revenue numbers are missing one thing, that is CONTEXT. If you don't understand what that means, I suggest you take some classes in basic financial modelling, especially the bits about how to understand the numbers that companies report.
Old Timer - How exactly did the conservatives crash the economy, as you are claiming? Last I checked, the economic troubles stemmed from the failure of high-risk derivatives and mortgage-backed securities, which came about because of the rapid expansion of the sub-prime lending market, which opened up due to lending requirements implemented by the revision of the Community Reinvestment Act and was fueled by the backing of the lending market by Fannie & Freddie, which were, in turn, backed by the Federal Reserve. Furthermore, regulatory firewalls between commercial banks and investment banks, put in place by the Glass-Steagall Act during the Great Depression to prevent another such collapse, were removed by the Gramm-Leach-Billey Act, allowing banks to bundle risky mortgages into investments and sell them in-house, without subjecting them to the same scrutiny required to sell them to a non-affiliated holding company. Lastly, capital requirements for lending institutions were significantly lowered to allow banks to lend a lot more money against their holdings, supposedly in order to allow more Americans to own homes. Everything I just mentioned here played a part in causing the economic collapse we are now dealing with. And it was all done under Bill Clinton. What, specifically, did Bush do to crash the economy?
I don't think Liberals can answer that. It is fashionable to automatically blame Bush for everything.
skep:
There was a huge conflux of factors that had to occur. No one item alone would have caused what happen to happen.
1) The derivatives were not 'classified' as high risk. The derivatives in question were essentially insurance policies on the mortgage backed securities (which is essentially debt instruments, mortgages, wrapped in a tradable equity instrument). That is essentially what a CDO is. The MBS's were rated as Prime, but the actual mortgages were actually very high risk for a number of reasons. Some of them were collected without income statements on the mortgage application, or some with outright lies. This is the Mortgage industry that is responsible for this mess.
2) the sub-prime market itself had largely been hit a couple of years prior. In order to increase business, this led to more of the misleading representations as to risk I stated in item 1. Wall Street didn't cause this, however Wall Street should have recognized it. Due process was not followed through here. Wall Street is partly responsible for this part of the mess.
3) The rapid, unsustainable increase in housing prices, along with the practice of getting second and third mortgages to extract equity from homes in order to buy new cars, tv's etc... further made the problem worse because instead of a 150K house (just a number for illustration purposes), that same home is now 'worth' 300K, so the debt levels become higher for no real reason. This made the downturn much worse. Main Street here (the people) is responsible for this mess.
Now overall, everybody is at fault here, the government, Wall Street, The people. Regulatory agencies, along with the fed and congress should have realized that the economic numbers just didn't match with what was happening in the economy and the economy really wasn't growing as much as the numbers suggested.
Another part of the overall problem has nothing to do with the bubble, but about corporate behaviour. The trend towards offshoring really has never had any rational response to it. This has happened since the 70's, and no president, no government, the people since then have really done anything to deal with it. The significance of the amount that has been offshored in the last decade however has made this recovery EXTREMELY difficult to get out of because the middle class job base has been hollowed out so much. Both parties are responsible.
Now as to Bush. While he may not be responsible for any of the factors above, he is definitely responsible for not even attempting to deal with the longer term issues of the nation, so far as to show complete disregard for the fundamental economic issues of the nation, preferring to be a war president. His ignoring of these issues has made it much more difficult to resolve them in the short term, making this presidents job extremely difficult.
To Skeptronic--What you say is true pertaining to many of these acts being repealed and written during the Clinton administration. But the sub prime disaster and the housing bubble burst with the housing collapse happened during the Bush adminsitration's watch, and the Bush administration watched as Rome burned in this regard. There could have been many things done during the Bush administration which could have minimized, or eliminated the problem, including raising interest rates on home loans, requiring higher downs on mortgages, imposing tighter qualification requirements for getting a mortgage, and limiting the tax exclusion on the sale of a home. Each of them (or a combination of them) would have cut the demand for housing, thus moderating price increases of homes, or causing a small drop in home prices, instead of the steep price drops of homes which we have saw in the last four years.
Where are the jobs that the Republicans promised in the 2010 elections? All they have worked on is limiting women's rights, wanting to privatize Medicare, and repeal healthcare.... What a joke...
The economy will not recover until some structural changes happen in the US. The stimulus may temporarily slightly prop up the GDP and push problems down the road, but a real recovery will need an entirely new growth engine. At this point in time, no one has any idea where new jobs will come from.
An interesting point Obama said the Stimulus failed because projects were not “shovel ready”. Even before the stimulus went into effect a gentleman sitting next to me on the bus that works for HUD explained that due to the necessary years and years of red tape, there are no “shovel ready” projects. Evidently Obama’s people asked no one about this prior to spending hundreds of billions.
I think we are no in deep weeds as we not are in a situation where serious budget cuts are needed; else we soon fall in the toilet. Once the government prints the necessary money to pay its debts, the dollar will be worthless and we all lose. This may be the only way out is for the US to cancel all debt by printing and devaluing the dollar and causing runaway inflation. I don’t think many intelligent investors will buy treasuries any more except TIPS. Obama wants to deny this until after the next election, but even now his friendly CBO disagrees with him.
Don
I agree with you there about the recovery. The time for stimulus was a couple of years ago, it should have been under the last year of the bush administration actually. However, you can't keep propping up with stimulus and at some point a transition to dealing with the real structural problems has to take place. In this situation, it will NOT be pretty.
That stimulus bill should have taken a month to pass, not the 6 or 7 months of arguing, it should have been 100% stimulus, not the tax cut part, not the state stabilization part. Those two parts ended up being more than 60% of the stimulus bill. If congress wanted to pass those two other parts, they should have been separate bills. Once that month was spent passing that bill, (it was one time so it would not affect long term spending), congress should have IMMEDIATELY moved on to trying to deal with the longer term economic issues, dealing with rationalizing government services (cutting duplication), cutting programs that are outdated or are not working, and planning for the future of the nation, both short term and long term. The government alone is well placed to deal with longer term issues of the nation, companies can't, they have to cater to the short term interests of the markets, people can't at a national level, only the government can. Unfortunately NEITHER party seems to be interested in that.
Now, having said that, you can't really compare Greece to the US as some have because the US as a nation has so much more of an ability to get out of this mess than Greece does. Greece has never been an industrious nation (ignoring ancient greece of course), so it has the economic potential of a dead elephant. The country better be careful though, because if it doesn't start getting its house into order, it will end up like greece. It doesn't have to be completed immediately, but it needs to show progress, gradual but accelerating and continuous.
I absolutely LOVE the room-temperature IQ Lib-Socialists that always say the problem is not enough revenue, and that we need to raise taxes...
NEVER cut the sacred Federal spending!
Revenue to the US Treasury:
2008: $2.524 Trillion
2009: $2.105 Trillion
2010: $2.165 Trillion
2011: $2.567 Trillion (projected)
WHEN IS ENOUGH, ENOUGH?!?!?!?!
By comparison, in the revered Clinton "surplus" years, revenue to the US Treasury:
1998: $1.722 Trillion
1999: $1.828 Trillion
2000: $2.025 Trillion
If we could have a surplus with $2.025 Trillion, why do Dems now demand almost $3 Trillion??????????????
The problem is NOT – NOT – NOT revenue!!!
"The problem is NOT – NOT – NOT revenue!!!"
I agree with you Peter. Look at the list of bills that get passed by Congress each year that add to the budget. It's like, they can't stop themselves from over spending. It's also like, they can't say no to new bills being brought before them. And I'm not talking the normal yearly bills, I'm talking new bills that have tons of pork added to them.
Peter....... PLEASE!!! google "starve the beast" the GOP plan adopted under reagan to deliberately create a debt crisis using massive tax cuts and overspending so they could present to the people the "necessity" of privatizing the entitlements--- SS, Medicare etc! DONT believe ME!!! RESEARCH IT!
After Democrats took Bush's "horrible" $363 Billion 2008 deficit to $1.65 TRILLION deficit in 4 years, Obama says "we have to get the deficit under control... but not by spending cuts…”
Sorry.. I'm not that stupid..
Only Democrats would fall for his nonsense..
Obama wants to stay in denial until after the next election. Even many Democrats realize we may not have that much time. The situation seems to be way more dire than politicians will ever admit.
Peter..... ummm.... Fiscal year 2009 was bush's last budget, and it had a $1.3T deficit BEFORE Obama was even sworn in! Research "starve the beast"
health care costs and demographics as primary causes of the fiscal dilemma.
Health care is twice as expensive in the U.S. than in other Western nations. The simple solution would be to reduce the amount of money health care corporations make by reducing what they can charge.
While we in the U.S. spend twice as much we get no where near the benefits. Two telling factors: We die earlier and more of our babies die. We are about equal to Turkey in the benefits we receive from our over priced health care. This has been going on for decades. It's no wonder Medicare costs are so high.
It's time for Congress to get it's hands out of the pockets of Big Business Health don't Care and do what's right. Our lives are being made subservient to profiteering. Government controlled health care pricing is the solution.
Government will not do anything about cost. Probably half of tests, office visits, procedures may be unnecessary. Many test are unneeded and done for liability only reasons. I read yesterday many doctors are buying their own MRI machines and need to set up many extra tests to pay for the machines. With doctors more or less on "piecework" via being paid per office visit, many extra are scheduled. I don't know the solution, but have politicians make the rules would make things way worse. The politicians have the absolute worst track record for money management.
Where were people complaining when the GOP and their supporters spent over 2 TRILLION on wars and taxcuts while the actual revenue coming in was beneath 2000 levels! That means for 12 years they've been spending more than we took in while giving tax breaks to billionaires, all thanks to GEORGE BUSH and Dick "Deficits Don't Matter" Cheney.
I think everyone that voted for Bush should have to pay back the money he spent. The people who said over and over that this was happening for the past decade and nobody listened
If the people that voted for Barack had to pay back what he's spent in only 3 years, the Bush voters would come out FAR ahead! Read 'em and weep! Numbers don't lie! Also, I think you yahoos should be responsible for jobs lost during Husseins' term in office thus far!
no, say it ain't so, joe. nice of them to wake up to what the rest of us already know.
meanwhile -- where is msnbc on the "fast and furious" story and why are they keeping it hidden while holder detroys the evidence? our border agents killed by government guns allowed to cross the border into mexico, no one cares?
even the CBO says, raise revenue (Taxes) to the level they were before Bush Tax Cuts in 2000, cut spending and borrowing and rework Medicare. Ok, lets get to work up there in DC...
I wish the American people wake up this new history, math. an what been going on for the last 40 years, it sicken me to my stomach, The Rhinos (Republican) the liberals(Democrats) have been destroying this great country with the help of the Unions (all) especially the Communist labor union, these rhinos and liberals have been practicing socialism teaching it in are school (brain washing are children)They work for us, we do not work for them there getting paid way to much vote these clown out of office wake up an stand up for America it's both party's that is destroying this great country favoring special interest. unions, big anything stop it before it grow any bigger Remember President gave the federal government a 30% pay raise when he came into office VOTE them OUT .good day
There is plenty of blame to go around and the problem has developed for decades. The arguing over which party is worse is asinine and you are right, we need a fix , not more badmouthing.
amen, both of ya! Amen...