Author Topic: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)  (Read 11899 times)

Desertdog

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This is all over the Internet but I have not heard anything about it on TV.

Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)
By Roger Runningen and Hans Nichols

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJsSb4qtILhg&refer=worldwide

May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

Earlier this week, the Obama administration revised its own budget estimates and raised the projected deficit for this year to a record $1.84 trillion, up 5 percent from the February estimate. The revision for the 2010 fiscal year estimated the deficit at $1.26 trillion, up 7.4 percent from the February figure. The White House Office of Management and Budget also projected next year’s budget will end up at $3.59 trillion, compared with the $3.55 trillion it estimated previously.

Two weeks ago, the president proposed $17 billion in budget cuts, with plans to eliminate or reduce 121 federal programs. Republicans ridiculed the amount, saying that it represented one-half of 1 percent of the entire budget. They noted that Obama is seeking an $81 billion increase in other spending.

Entitlement Programs

In his New Mexico appearance, the president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare. He also said he was confident that the House and Senate would pass health-care overhaul bills by August.

“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Obama prodded Congress to pass restrictions on credit-card issuers, saying consumers need “strong and reliable” protection from unfair practices and hidden fees.

“It’s time for reform that’s built on transparency, accountability, and mutual responsibility, values fundamental to the new foundation we seek to build for our economy,” the president said.

Obama called on Congress to send to him by May 25 a bill that would clamp down on what he says are sudden rate increases, unfair penalties and hidden fees. He also wants the measure to strengthen monitoring of credit-card companies.

House Bill

The U.S. House of Representatives passed the credit-card bill last month after adding a provision requiring banks to apply consumers’ payments to balances with the highest interest rates first. The bill also imposes limits on card interest rates and fees.

The Senate continued debating its version of the bill today. It would require credit-card companies to give 45 days’ notice before increasing an interest rate. It would prohibit retroactive rate increases on existing balances unless a consumer was 60 days late with a payment.

The president said Americans have been hooked on their credit cards and share some blame for the current system. “We have been complicit in these problems,” he said. “We have to change how we operate. These practices have only grown worse in the midst of this recession.”

The American Bankers Association, which represents card issuers, has warned lawmakers and the Obama administration against taking punitive action or setting requirements that are too stringent. Doing so, the lobby group says, would limit consumer credit and worsen a credit crunch.

Obama said that restrictions “shouldn’t diminish consumers’ access to credit.”

Uncollectible Debt

Uncollectible credit-card debt rose to 8.82 percent in February, the most in the 20 years that Moody’s Investors Service Inc. has kept records. Lawmakers have said they’re under increasing pressure from constituents to respond to rising interest rates and abrupt changes to consumers’ accounts.

Obama held a White House meeting last month with executives from the credit-card industry, including representatives from Bank of America Corp. and American Express Co. Afterward, he told reporters that credit-card issuers should be prohibited from imposing “unfair” rate increases on consumers and should offer the public credit terms that are easier to understand.

“The days of any time, any increase, anything goes -- rate hike, late fees -- that must end,” Obama said today at Rio Rancho High School. We’re going to require clarity and transparency from now on.”

He also said the steps he has taken to stimulate the economy and start the debate on overhauling the health-care system are beginning to take effect.

‘Beginning to Turn’

“We’ve got a long way to go before we put this recession behind us,” Obama said. “But we do know that the gears of our economy, our economic engine, are slowly beginning to turn.”

Taking questions from the audience, Obama repeated his stance that he wants legislation to overhaul the health-care system finished before the end of the year, saying it is vital to the economy.

Health-care costs are driving up the nation’s debt and burdening entitlement programs such as Medicare, the government- run insurance program for those 65 and older and the disabled.

The programs’ trustees reported May 13 that the Social Security trust fund will run out of assets in 2037, four years sooner than forecast, and Medicare’s hospital fund will run dry by 2017, two years earlier than predicted a year ago.

To contact the reporters on this story: Roger Runningen in Albuquerque at rrunningen@bloomberg.net; Hans Nichols in Washington at =1871 or hnichols2@bloomberg.net

Fly320s

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This is real?

Obama said this?

Crap, I don't want flying pigs or snow in hell. 
Islamic sex dolls.  Do they blow themselves up?

Regolith

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This is real?

Obama said this?

Crap, I don't want flying pigs or snow in hell. 

No, this is perfectly consistent with his "listen to what I say rather than what I do" approach.  He doesn't intend to do anything about it, except make petty cuts that he will try to make look bigger than they are but otherwise fleece the US treasury and the American people until there is nothing left.

In other words, continue as normal. 
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Reifen

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"We can't keep spending like this.  Our debt is unsustainable.  And that's why we need to fund universal healthcare!"

taurusowner

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He's never had a problem with saying the right thing if it's what his handlers tell him needs to be said.  It's just that following through with the right actions is simply not possible for him.

FTA84

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“Most of what is driving us into debt is health care, so we have to drive down costs,” he said.

Everyone is talking about how our spending is unsustainable, he wants universal health care.  What is the most obvious solution?  Claim that nationalizing health care will reduce the debt.

makattak

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Go see a couple of the threads on THR.us

There are PLENTY of people who think the government will lower medical costs. >.<
I wish the Ring had never come to me. I wish none of this had happened.

So do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us. There are other forces at work in this world, Frodo, besides the will of evil. Bilbo was meant to find the Ring. In which case, you also were meant to have it. And that is an encouraging thought

slingshot

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He is in the process of sticking a knife into the heart of this country.  He won't let it rebound. Next year he will enact the largest tax increase in the history of the US and he will simply say it's necessary and Congress will put together the legislation.  And folks are wondering if the ammo shortage is going to improve.  I got news for you.  It willl get worse if Obama has his way.

The first thing to stop is the health care bill.  Can't afford it.  Enact a tax reduction and see what develops for a couple years.
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makattak

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Re: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)
« Reply #8 on: May 15, 2009, 10:49:14 PM »
He is in the process of sticking a knife into the heart of this country.  He won't let it rebound. Next year he will enact the largest tax increase in the history of the US and he will simply say it's necessary and Congress will put together the legislation.  And folks are wondering if the ammo shortage is going to improve.  I got news for you.  It willl get worse if Obama has his way.

The first thing to stop is the health care bill.  Can't afford it.  Enact a tax reduction and see what develops for a couple years.

You may be right.

My first reaction when I heard this today was:

He's laying the groundwork to say we need massive tax increases.

Which, of course, will make the spending even less sustainable. But he won't let simple economics get in his way!

[liberal mutterings] Small minded economists saying things aren't possible... [/liberal mutterings]
I wish the Ring had never come to me. I wish none of this had happened.

So do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us. There are other forces at work in this world, Frodo, besides the will of evil. Bilbo was meant to find the Ring. In which case, you also were meant to have it. And that is an encouraging thought

stevelyn

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Quote
President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”



To paraphrase Lee Ermey in FMJ......"Well no *expletive deleted*it. I admire your honesty. You can......." er nevermind.
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brimic

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My first reaction when I heard this today was:

He's laying the groundwork to say we need massive tax increases.


My first thought as well. I'm guessing something around a 75% income tax on anything over $50,000 per household for starters.

Don't take Obama for a fool, he's study his little red book very carefully.
"now you see that evil will always triumph, because good is dumb" -Dark Helmet

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Barack Obama

longeyes

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My first reaction was to assume BHo was a schizophrenic, but that would be too kind.  A more sober judgment would suggest that our President's aim, sane or insane, is to reduce America to the status of the kinds of Third World countries he remembers so fondly from his childhood. Mr Toad is driving the American motor car, ladies and gentlemen.
"Domari nolo."

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Molon Labe.

MechAg94

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Obama has been talking responsibility and conservative sounding stuff like that since his campaign.  It sounds good if you don't pay attention to anything else he says or does.
“It is much more important to kill bad bills than to pass good ones.”  ― Calvin Coolidge

mordechaianiliewicz

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No. Obama is a politician. He has heard that the American people don't like the debt we're running. So.... say you don't like it.

Well, Americans have also said they want other people's property. So, Obama is down with opp.

Obama will do whatever he thinks will make him the most popular.

But, truth is different parts of the nation have different desires, and opinions. Just like Bush couldn't keep everyone happy, Obama can't keep everyone happy either. Just like Bush, it won't be long before Obama has pissed off most of the country either.
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MicroBalrog

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[liberal mutterings] Small minded economists saying things aren't possible... [/liberal mutterings]

A leftist fellow once told me that "we can't let economists run the economy."

I replied: "Yeah, that's exactly why we need to deregulate it."

You could almost see the smoke coming out of his ears as it dawned on him what I meant.
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coppertales

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Bend over America, except KA and NY, here comes the tax increase.....chris3

Headless Thompson Gunner

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If Obama actually believed this debt was unsustainable, he'd stop creating it.

RevDisk

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Re: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)
« Reply #17 on: May 20, 2009, 07:28:14 PM »
You may be right.

My first reaction when I heard this today was:

He's laying the groundwork to say we need massive tax increases.

Which, of course, will make the spending even less sustainable. But he won't let simple economics get in his way!

[liberal mutterings] Small minded economists saying things aren't possible... [/liberal mutterings]

Tax increases are better than the alternative.   The day folks stop buying treasue issued securities. 

We're now running approxiately 50% deficit spending.  That means we have to borrow over a trillion and a half dollars this year to run the government.  We have to pay interest on that debt, Gods alone know how much that will be.  Raising taxes is significantly better than the amount of deficit spending Obama is planning on pushing through.

'Course, the even more sane option would be to cut spending.  Sigh.
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Headless Thompson Gunner

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Tax increases are better than the alternative.   The day folks stop buying treasue issued securities. 

We're now running approxiately 50% deficit spending.  That means we have to borrow over a trillion and a half dollars this year to run the government.  We have to pay interest on that debt, Gods alone know how much that will be.  Raising taxes is significantly better than the amount of deficit spending Obama is planning on pushing through.

'Course, the even more sane option would be to cut spending.  Sigh.
What makes you think Obama won't raise taxes and increase deficit spending? 

RevDisk

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Re: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ (Update2)
« Reply #19 on: May 20, 2009, 08:03:34 PM »
What makes you think Obama won't raise taxes and increase deficit spending? 

Unfortunately, nothing.  There is no one in Congress that wants to put the brakes on spending.  You'd have to double tax revenue to cover the current deficit spending.
"Rev, your picture is in my King James Bible, where Paul talks about "inventors of evil."  Yes, I know you'll take that as a compliment."  - Fistful, possibly highest compliment I've ever received.

longeyes

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Unsustainable is the appropriate word.  Our trading partners aren't going to play the game and neither are the American people for very long, not when the pain really starts to hit.  The veil is starting to lift already.
"Domari nolo."

Thug: What you lookin' at old man?
Walt Kowalski: Ever notice how you come across somebody once in a while you shouldn't have messed with? That's me.

Molon Labe.

brimic

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Maybe a country wide crash and burn is just the thing we need to reset the clock on a lot of things.
"now you see that evil will always triumph, because good is dumb" -Dark Helmet

"AK47's belong in the hands of soldiers mexican drug cartels"-
Barack Obama

makattak

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Unfortunately, nothing.  There is no one in Congress that wants to put the brakes on spending.  You'd have to double tax revenue to cover the current deficit spending.

Glad you realize that you have to double revenue, not taxes.

Allow me to introduce you to the Laffer Curve.

Unfortunately, its critics looked at it as a static representation that if you raise taxes, you will lower revenue if you are beyond the apex. (Some critics say the apex is 65%!!!!)

However, the problem they ignore is that tax revenues will go down over time at confiscatory tax rates because the incentive for growth decreases. An increase in taxes now will slow our economic growth rate which means the government will take in less taxes over time, which means the deficits will get worse (barring a spending cut).

I also know a lot of the opposition doesn't care, they just want us to be more "fair". Who cares if a rising tide lifts all ships?! Some of those ships get lifted more than others and that's WRONG! So, instead, they plan to sink as many of the ships as possible so we all suffer equally.

It's their health plan, too.

I wish the Ring had never come to me. I wish none of this had happened.

So do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us. There are other forces at work in this world, Frodo, besides the will of evil. Bilbo was meant to find the Ring. In which case, you also were meant to have it. And that is an encouraging thought

RevDisk

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Glad you realize that you have to double revenue, not taxes.

Allow me to introduce you to the Laffer Curve.

Unfortunately, its critics looked at it as a static representation that if you raise taxes, you will lower revenue if you are beyond the apex. (Some critics say the apex is 65%!!!!)

However, the problem they ignore is that tax revenues will go down over time at confiscatory tax rates because the incentive for growth decreases. An increase in taxes now will slow our economic growth rate which means the government will take in less taxes over time, which means the deficits will get worse (barring a spending cut).

I also know a lot of the opposition doesn't care, they just want us to be more "fair". Who cares if a rising tide lifts all ships?! Some of those ships get lifted more than others and that's WRONG! So, instead, they plan to sink as many of the ships as possible so we all suffer equally.

It's their health plan, too.

The reason why I said double the revenue is because the 2009 budget is allegedly 3.6 trillion, tax revenue is supposed to be about 1.8 trillion.  The deficit is 1.8.  To be even, obviously you'd have to double revenue.  To start paying off the national debt, you'd have to go above that.  Yea, unfortunately, I'm very aware that confiscatory tax rates don't end up making revenue projections because people stop working as hard.

From WWII to Reagan, the debt was 2-3 trillion dollars.  Easily manageable, probably even healthy.   From Reagan to current, we've increased our debt by a favor of 550%.  In 2008, interest payments were $412 billion.  Expect that number to go up accordingly.  The projected budget deficits are to hit $20 trillion by 2015, using very optimistic numbers.  Interest payments alone would be a bit under a trillion dollars a year.
"Rev, your picture is in my King James Bible, where Paul talks about "inventors of evil."  Yes, I know you'll take that as a compliment."  - Fistful, possibly highest compliment I've ever received.

makattak

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The reason why I said double the revenue is because the 2009 budget is allegedly 3.6 trillion, tax revenue is supposed to be about 1.8 trillion.  The deficit is 1.8.  To be even, obviously you'd have to double revenue.  To start paying off the national debt, you'd have to go above that.  Yea, unfortunately, I'm very aware that confiscatory tax rates don't end up making revenue projections because people stop working as hard.

From WWII to Reagan, the debt was 2-3 trillion dollars.  Easily manageable, probably even healthy.   From Reagan to current, we've increased our debt by a favor of 550%.  In 2008, interest payments were $412 billion.  Expect that number to go up accordingly.  The projected budget deficits are to hit $20 trillion by 2015, using very optimistic numbers.  Interest payments alone would be a bit under a trillion dollars a year.

Yep. As an economist those numbers are very frightening. (As they would be to anyone who understands their implications.)

I honestly don't know how we can avoid massive inflation unless somehow the government stops spending so much money.
I wish the Ring had never come to me. I wish none of this had happened.

So do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us. There are other forces at work in this world, Frodo, besides the will of evil. Bilbo was meant to find the Ring. In which case, you also were meant to have it. And that is an encouraging thought