"Don't raise Fed debt ceiling" means "Balance the Fed budget INSTANTLY"

Little-Acorn

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A "balanced budget" is one where the money you take in (taxes, fees, "contributions" etc.) is equal to the money you spend (spending on govt, military, foreign aid, Social Security etc.), so that you don't need to borrow ANY money to make ends meet.

Congress has a debt limit set by law (that is, by Congress) that they may not exceed. The National Debt is not allowed to rise any higher than that limit. But every time they come close to it, they simply vote to raise it. This has been happening, often half a dozen times per year or more, for year after year, in administration after administration, for generations. It makes you wonder why they bother setting the limit, if all they are going to do is change it whenever they want to spend more.

Now we have calls to quit raising the debt limit. In a rich irony, those calls are coming from Democrats, which is like John Dillinger calling to end bank robberies. But regardless of whom it comes from, it's an idea worth looking at.

I don't know how close we are to the present debt ceiling, but we're probably pretty close (we always are). If we decide not to raise the debt ceiling any more, any further borrowing we do, will quickly raise our present debt to the existing limit. And once that happens, we cannot borrow a single dime more to make ends meet. Not even for a month, not even for a week. Any additional spending we do, must be paid for, right then and there, with additional revenue... or else we can't do that additional spending.

In other words, if we decide to stop raising the debt ceiling, that means we must write a completely balanced budget NOW. We can't borrow a single dollar, not even if we mean to pay it back tomorrow.

Even if Congress adopts a more forgiving version of "Don't raise the debt ceiling", turning it into "Our debt at the end of this year, cannot be higher than our debt at the end of last year, but if it goes a little higher in the middle of the year and gets quickly smacked backed down, that's OK".... it still means that we must adopt a balanced budget for every fiscal year... and stick to it.

A balanced Federal budget has never been achieved in living memory. Some people claim it was balanced for a few years in the 1990s after Congress cut the Capital Gains tax rate and CG activity (and tax revenues) soared as a result. But if you look at the National Debt at the end of every fiscal year in the 1990s (and in every other year), you'll see that the Natl Debt has gone up EVERY year, including those years where those people claim the budget was balanced. (For a hint of how this could be, look at funds for Social Security and other Fed trust funds. The govt takes in money as contributions, calls it revenue, puts it in the SS trust fund, then borrows it back out of the trust fund and calls it "revenue" again. Gee, we have twice as much "revenue" as we thought! But that borrowing must still be added into the National Debt, whose paper trail tells the real story).

But suffice to say, that balancing the Federal budget is a VERY difficult thing to do.

Those calling for an end to any further raises of the Debt Limit, are essentially calling for an immediate and permanent Balanced Federal Budget. Though such a thing will be painful, it can ultimately be beneficial for the country.

I've heard one report that the amount of the budget that goes for "discretionary" spending, is less than this year's deficit. If true, this means that we could stop ALL discretionary spending, and still not balance the budget-- we'd still have to violate the present debt ceiling by borrowing more to make ends meet.

What it means, is that if we are serious about not raising the debt ceiling, we're going to have to make some "non-discretionary spending", discretionary instead... and then cut it.

Careful what you wish for.
 
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Discretionary is a funny term. Just because we do spend money on a thing does not mean we have to. I do not doubt that the ceiling will get raised but we must force some unpopular cuts because we simply can't afford to spend as we do.
 
I do not buy this idea that cuts will be unpopular or harmful. This is what the Tea Party is all about. I say cut the Fed budget 20% across the board. Then eliminate departments like Education and funding for NPR. If I were King, we would balance the budget over night.

Well it looks like BO found one area to cut. Of course as expected, its defense.

Pentagon Cuts: Defense Spending Expected To Save $100 Billion

First Posted: 01- 4-11 07:03 AM | Updated: 01- 4-11 07:05 AM

Defense Secretary Robert Gates is expected to announce as early as Thursday about $100 billion in savings for the Pentagon and cuts to some weapons programs, sources said on Monday.

http://www.huffingtonpost.com/2011/01/04/pentagon-cuts-defense-spe_n_804011.html

The announcement will detail a plan that military services have been hammering out for months. The Pentagon is under increasing pressure to cut its budget given huge federal deficits and a drawdown of troops in Iraq.
 
The federal government is like a family that has added up rent, utilities, credit card minimums, and groceries and concluded that the total exceeds income, even before shopping, hobbies, movies, etc. are added in. So, what is the solution?

Mom and Dad better start working overtime, or find better jobs. Meanwhile, the family has to bite the bullet and not buy any new goodies not absolutely necessary.

The government has to do the same thing if the debt crises is ever to be solved: Raise taxes, stop any unnecessary spending, and pay down those credit cards.

There are a couple of differences: Mom and Dad are not going to be replaced, but Congress and the POTUS are, so they're looking at the short term. Also, the family doesn't have the option of printing money or arbitrarily raising the debt ceiling.
 
This year's deficit is about $1.3 trillion. Total "discretionary spending" is about $1.39 trillion.

"Discretionary spending" means the budget items whose spending is not (yet) mandated by Federal law. Sounds weird, but Defense spending is "Discretionary", while Social Security and other such programs are "Non-discretionary".

"Non-discretionary" doesn't mean we MUST spend this amount in this time. It just means that to change the amount we spend on this item, we have to change Federal law first. Well, we do that every year, many times a year, when we raise the Debt Ceiling. It's actually pretty easy to do. So why not do it to "Non-discretionary" spending as well?

So, in the event that we decide not to raise the Debt Ceiling any more, which "Non-discretionary" budget items should we change the law on, and then reduce? And which "Discretionary" items should we also reduce?
 
What has been true for decades: washington doesn't have a revenue problem, it has a spending problem.
 
This year's deficit is about $1.3 trillion. Total "discretionary spending" is about $1.39 trillion.

"Discretionary spending" means the budget items whose spending is not (yet) mandated by Federal law. Sounds weird, but Defense spending is "Discretionary", while Social Security and other such programs are "Non-discretionary".

"Non-discretionary" doesn't mean we MUST spend this amount in this time. It just means that to change the amount we spend on this item, we have to change Federal law first. Well, we do that every year, many times a year, when we raise the Debt Ceiling. It's actually pretty easy to do. So why not do it to "Non-discretionary" spending as well?

So, in the event that we decide not to raise the Debt Ceiling any more, which "Non-discretionary" budget items should we change the law on, and then reduce? And which "Discretionary" items should we also reduce?

Good point. If we're ever to balance the budget, we're going to have to cut all spending, whether it is "discretionary" or not. We're also going to have to raise taxes, at least for a while. It will take some real leadership to accomplish those tasks, of course, so it's not likely to happen any time soon.
 
The government has to do the same thing if the debt crises is ever to be solved: Raise taxes, stop any unnecessary spending, and pay down those credit cards.

Raising taxes does not equate to greater revenue, although that is quite a popular misconception. More than 40 years of history shows that revenue is roughly 18% of GDP regardless of the tax rates and regardless of how many different tax "streams" exist. Whether tax rates are at 90% or 15%, and whether there are hundreds or even thousands of individuals tax "streams", the revenue to the federal government has remained steady around 18% of total GDP.

So explain to us how raising taxes increases GDP... :confused:

Or perhaps you could offer some historical proof that Higher Taxes = Greater Revenue.... Here's the proof to support my statements on the subject:

http://www.cbo.gov/budget/data/historical.pdf

That report is from the Congressional Budgeting Office and covers the last 40 years. On page 4 you can find the historical % of GDP and see that revenue is pretty steadily around 18%.
 
A "balanced budget" is one where the money you take in (taxes, fees, "contributions" etc.) is equal to the money you spend (spending on govt, military, foreign aid, Social Security etc.), so that you don't need to borrow ANY money to make ends meet.

Congress has a debt limit set by law (that is, by Congress) that they may not exceed. The National Debt is not allowed to rise any higher than that limit. But every time they come close to it, they simply vote to raise it. This has been happening, often half a dozen times per year or more, for year after year, in administration after administration, for generations. It makes you wonder why they bother setting the limit, if all they are going to do is change it whenever they want to spend more.

Now we have calls to quit raising the debt limit. In a rich irony, those calls are coming from Democrats, which is like John Dillinger calling to end bank robberies. But regardless of whom it comes from, it's an idea worth looking at.

I don't know how close we are to the present debt ceiling, but we're probably pretty close (we always are). If we decide not to raise the debt ceiling any more, any further borrowing we do, will quickly raise our present debt to the existing limit. And once that happens, we cannot borrow a single dime more to make ends meet. Not even for a month, not even for a week. Any additional spending we do, must be paid for, right then and there, with additional revenue... or else we can't do that additional spending.

In other words, if we decide to stop raising the debt ceiling, that means we must write a completely balanced budget NOW. We can't borrow a single dollar, not even if we mean to pay it back tomorrow.

Even if Congress adopts a more forgiving version of "Don't raise the debt ceiling", turning it into "Our debt at the end of this year, cannot be higher than our debt at the end of last year, but if it goes a little higher in the middle of the year and gets quickly smacked backed down, that's OK".... it still means that we must adopt a balanced budget for every fiscal year... and stick to it.

A balanced Federal budget has never been achieved in living memory. Some people claim it was balanced for a few years in the 1990s after Congress cut the Capital Gains tax rate and CG activity (and tax revenues) soared as a result. But if you look at the National Debt at the end of every fiscal year in the 1990s (and in every other year), you'll see that the Natl Debt has gone up EVERY year, including those years where those people claim the budget was balanced. (For a hint of how this could be, look at funds for Social Security and other Fed trust funds. The govt takes in money as contributions, calls it revenue, puts it in the SS trust fund, then borrows it back out of the trust fund and calls it "revenue" again. Gee, we have twice as much "revenue" as we thought! But that borrowing must still be added into the National Debt, whose paper trail tells the real story).

But suffice to say, that balancing the Federal budget is a VERY difficult thing to do.

Those calling for an end to any further raises of the Debt Limit, are essentially calling for an immediate and permanent Balanced Federal Budget. Though such a thing will be painful, it can ultimately be beneficial for the country.

I've heard one report that the amount of the budget that goes for "discretionary" spending, is less than this year's deficit. If true, this means that we could stop ALL discretionary spending, and still not balance the budget-- we'd still have to violate the present debt ceiling by borrowing more to make ends meet.

What it means, is that if we are serious about not raising the debt ceiling, we're going to have to make some "non-discretionary spending", discretionary instead... and then cut it.

Careful what you wish for.


What it means is.."Do It Yourself" Sounds Good To Us These Days

Big Government, Big Media, Big Medicine, Big Everybody, take note: we're starting to ask ourselves what, exactly, we need you for.

The mood is changing in the United States. The entitlement/victimhood generation is waning, and entrepreneurship/charity is on the rise. Where, before, we were inclined to let our big institutions do for us, we are starting to feel more like doing for ourselves, and for each other.

Yes, it's starting to look a little like the late 18th century in this country. If the rise of something called "the tea party" doesn't clue you in to this, nothing will.

Since being founded almosst entirely on the principles of personal responsibility, inspiration, and opportunity, America has been marching oh so
slowly (progressively if you will) away from those principles and toward the liberals' notion of Utopia: central planning, central control, and centralized power over a nation they hope to addict to the entitlements of the nanny state. Now and then, the progressives' progress has been slowed (a Reagan here, a tax cut there)... but the trend has been consistent and scary for more than a hundred years.

Finally, we've abdicated our citizen power to a government so recklessly bent upon racing toward progressive goals that we can finally see what the end of that road will look like... and we are not in love with what we see. All the cool stuff the liberals have been promising us are starting to look less like "benefits" and more like "burdens." And the big institutions, rather than seeing what we see, refuse to get it. They double-down on the policies that will drive us faster and faster toward the ruin of what has been (and still could be) the greatest nation in the history of our world.

If you are the sort of person who's waiting around for the state to take care of you, you are in big trouble. It's time to sense the mood around you, and prepare for the new age of self-reliance. Don't wait around for the government to "save or create" your job... make your own job, Don't wait around for Obamacar to provide you with free low-quality health care... start caring about your own health by eating right, exercising. Don't wait around for the "infotainment" industry to tell you what to think... get online and educate yourself about what's really happening in the global economy and body politic.

president Kennedy told us not to ask what our country could do for us, but what we could do for our country. A generation earlier, President Franklin Roosevelt's first inaugural speech included the declaration that it was not our destiny to be ministered unto, but to minister to ourselves, and to our fellow man (surprising, given the way he governed for the next twelve years). If they could see how their political party has "progressed," you wonder what the men who wrote those speeches would have to say about today's far-left administration.

But don't spend too much time wondering about it. We have a lot to do ourself.


Regards
Doug
 
Raising taxes does not equate to greater revenue, although that is quite a popular misconception. More than 40 years of history shows that revenue is roughly 18% of GDP regardless of the tax rates and regardless of how many different tax "streams" exist. Whether tax rates are at 90% or 15%, and whether there are hundreds or even thousands of individuals tax "streams", the revenue to the federal government has remained steady around 18% of total GDP.

So explain to us how raising taxes increases GDP... :confused:

Or perhaps you could offer some historical proof that Higher Taxes = Greater Revenue.... Here's the proof to support my statements on the subject:

http://www.cbo.gov/budget/data/historical.pdf

That report is from the Congressional Budgeting Office and covers the last 40 years. On page 4 you can find the historical % of GDP and see that revenue is pretty steadily around 18%.

Of course, raising taxes doesn't increase GDP.

But, on the other hand, voodoo economics hasn't been shown to be more than wishful thinking, either, despite correlations between lower taxes and greater revenues. Sure, taxes went down revenues went up, and so we imply a cause and effect, but is it? How much would have revenues been had taxes not gone down?

Further, at what point does lowering taxes cease to be an economic boon? In the '50s, the maximum tax rate was 91%, and the economy boomed. If we lower the rate to 15%? To 5%? At what point do the trickle down theorists admit that it isn't working?

Lower taxes = more revenue is a nice idea. So is magic, pixie dust, genies, and free lunches.
 
1990 to 2000

2000-2010

what one had the higher tax rates..

what one had the better economy

what one had surplus not debts...

First case: lib president restrained by a republican congress, second case a RINO. I'm sure I speak for everyone when I thank you for your incisive historical insight :)D) du jour.
 
Lower taxes = more revenue is a nice idea. So is magic, pixie dust, genies, and free lunches.

So you're not able to support your own "voodoo" economic theory (Higher Taxes = Greater Revenue) with actual historical evidence? Then yours is the belief of someone taking stock in magic, pixie dust and genies.

If you read my post, I didn't say anything about lowering taxes, I didn't mention "trickle down economics", in fact I did not offer any idea at all for increasing revenue, I simply pointed out the common fallacy you share with millions of others in hopes of correcting the misconception.
 
First case: lib president restrained by a republican congress, second case a RINO. I'm sure I speak for everyone when I thank you for your incisive historical insight :)D) du jour.

He is another who ardently believes that Higher Taxes = Greater Revenue. I wouldn't be surprised if he also believed that Higer Taxes = Better Economy.
 
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So you're not able to support your own "voodoo" economic theory (Higher Taxes = Greater Revenue) with actual historical evidence? Then yours is the belief of someone taking stock in magic, pixie dust and genies.

If you read my post, I didn't say anything about lowering taxes, I didn't mention "trickle down economics", in fact I did not offer any idea at all for increasing revenue, I simply pointed out the common fallacy you share with millions of others in hopes of correcting the misconception.

Actually, I did. Check the rest of my post.

If lowering taxes magically increases income, then why not lower them to 5%? Why not 1%? Why not lower still? At what point does lowering taxes actually increase government revenues? 50%? 91%, as in the '50s?

The idea that cutting taxes automatically increases income by improving the economy is popular, of course. Doing the popular thing is not leadership. This nation faces some difficult challenges, and needs real leadership, which it hasn't had for a very long time now.
 
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