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Brain -> Power Line - Is Greece Our Future? (3/8/2010 1:29:02 AM)
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"Today, public employees in Athens staged an occupation of a government building to dramatize their demand that they be maintained at taxpayer expense, in the style to which they have become accustomed, forever; even though there is no more money".
Does it sound familiar??
Well no, not really. Wait, it sort of rings a bell: Wasn't that Donald Trump's argument in bankruptcy court? Maybe I'm confusing it with the auto execs' plea to Congress for more taxpayer money when they flew there, in private jets.
Bernanke said a couple of weeks ago that the US was in eminent and dire danger of being in the same position as Greece very soon. (See below, Bernanke delivers blunt warning on U.S. debt Stage is set in U.S. for a Greek tragedy)
They need to reverse those unaffordable George Bush tax cuts to the rich pronto. When Obama became president the deficit increased mainly because of Bush policies not the stimulus. (See below, NYT: How the U.S. surplus became a deficit - The New York Times- msnbc.com)
About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt. (See below, NYT: How the U.S. surplus became a deficit - The New York Times- msnbc.com)
Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing. (See below, NYT: How the U.S. surplus became a deficit - The New York Times- msnbc.com)
Power Line - Is Greece Our Future?
March 6, 2010 Posted by John at 4:29 PM
Greece's financial collapse is turning into theater of the absurd. Today, public employees in Athens staged an occupation of a government building to dramatize their demand that they be maintained at taxpayer expense, in the style to which they have become accustomed, forever. Even though there is no more money:
Dozens of civil servants occupied a government printing building Saturday in the latest expression of public anger against debt-driven austerity measures as Greece's premier vowed they would pay off.
The sit-in by interior ministry workers in Athens began late Friday, after a fresh bout of nationwide strikes and protests.
The protesters unfurled a banner in front of the national printing office scrawled with the words "Occupation", and "Enough is enough," police said, in a bid to prevent the latest round of parliament-approved austerity measures from being published in the government gazette.
Actually, "enough is enough" seems like an apt slogan for Greek taxpayers. Can Greece recover? We should hope so. If the present trend, or anything like it, continues, we may be looking at our future.
http://www.powerlineblog.com/archives/2010/03/025760.php
Bernanke delivers blunt warning on U.S. debt
Stage is set in U.S. for a Greek tragedy
By Patrice Hill
With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.
Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.
"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."
It was some of the toughest rhetoric to date about the nation's fiscal and budgetary woes from the Fed chief, who faces a second round of questioning Thursday before a Senate panel.
RELATED STORY: Fed to look at high-risk contracts on Greek debt
Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.
Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.
Rep. Brad Sherman, California Democrat asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.
"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.
"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."
http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warning-on-us-debt/
NYT: How the U.S. surplus became a deficit - The New York Times- msnbc.com
Description
There are two basic truths about the enormous deficits that the federal government will run in the coming years.
The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.
The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.
The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.
You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.
The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.
About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.
Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.
About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.
If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.
Mr. Orszag says the president is committed to a deficit equal to no more than 3 percent of gross domestic product within five to 10 years. The Congressional Budget Office projects a deficit of at least 4 percent for most of the next decade. Even that may turn out to be optimistic, since the government usually ends up spending more than it says it will. So Mr. Obama isn’t on course to meet his target.
But Congressional Republicans aren’t, either. Judd Gregg recently held up a chart on the Senate floor showing that Mr. Obama would increase the deficit — but failed to mention that much of the increase stemmed from extending Bush policies. In fact, unlike Mr. Obama, Republicans favor extending all the Bush tax cuts, which will send the deficit higher.
Republican leaders in the House, meanwhile, announced a plan last week to cut spending by $75 billion a year. But they made specific suggestions adding up to meager $5 billion. The remaining $70 billion was left vague. “The G.O.P. is not serious about cutting down spending,” the conservative Cato Institute concluded.
Original URL
http://www.msnbc.msn.com/id/31199889/
http://www.twine.com/item/12bt4y61n-2sc/nyt-how-the-u-s-surplus-became-a-deficit-the-new-york-times-msnbc-com
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