There are glimmers of light in our battle to put America’s finances in order. New hope for a long-term budget deal has come in the form of two ideas, both from outside Congress, that many of our elected officials have embraced:“No Budget, No Pay” and “No Deal, No Break.”
from The Great Debate:
President Barack Obama pledged to cut the deficit in half by the end of his first term. But because he focused on political gimmicks, rather than real reform, we’ve seen trillion-dollar deficits and nearly $6 trillion added to the debt instead. Based on what we heard from the president at a news conference Tuesday, his unserious attitude is likely to continue.
"Have a drink out there, folks, and just know that your kids and grandkids will be out there picking grit with the chickens," says former U.S. Senator Alan Simpson in the video above. Simpson's quip is the best summary I've ever heard of the public's lack of understanding of the severity of the nation's fiscal crisis. The federal government is currently borrowing 42 cents of every dollar that it spends. Thanks to the Federal Reserve's quantitative easing and the strong global demand for U.S. Treasury debt, the nation has been able to borrow heavily at low interest rates to cover its budget shortfalls.
from The Great Debate UK:
By Kathleen Brooks. The opinions expressed are her own.
The markets have had to – grudgingly - get used to pricing in political risk in recent months. Instead of being moved by economic data and fundamental or technical factors, a large amount of recent price action has been driven by politicians, and that always spells bad news.
from Gregg Easterbrook:
Action by the debt-reduction 'super committee' is due in less than a week. You will not be surprised to learn the super committee may only announce grandiose goals, while “deferring” specifics to some unspecified future point.
The theatrics in Congress concerning the debt ceiling, now in their seventh month, have sent increasingly strong shock waves throughout the U.S. and global financial systems. The debt ceiling is the legislatively-imposed limit for the nation to issue debt to fund its activities. It's been stalled at the same level of $14.3 trillion since May 16. The U.S. Treasury has been scrambling to find extra monies, including borrowing internally from the federal government workers' pension plans, so that they can continue to pay the nation's obligations. They say the cash drawer is near empty.
from Gregg Easterbrook:
Over the past three generations, America’s leaders have faced down the Depression, won World War II, won the Cold War, created Social Security and Medicare, passed the Civil Rights Act and dramatically expanded environmental protection. The record is one of boldness and triumph.