Tag Archive | "national debt"

The Federal Debt Ceiling – Its Origins and Implications

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The United States debt limit or debt ceiling is an amount, fixed by legislation, of the national debt that can be imposed by the Treasury.  Since the different expenditures of the government are observed and authorized by different pieces of legislation, the debt ceiling does not play any role in restricting annual deficits.  And as a result of this, it only restrains the Treasury from paying the debt that has already been accumulated.  In 1917, the United States imposed some legislative restrictions on the debt.  Gradually, some political disputes arose over the legislation that led to the enactment of legislation requiring Congressional approval to raise the debt ceiling.  And although the debt ceiling is reached, the Treasury can still take extraordinary measures to avoid default on debts.  This allows Congress and the President even more time to negotiate a debt ceiling increase.

 

However, the United States has never met the default point, the stage where the Treasury can’t pay its obligations.  If this kind of a situation were to occur, it is unclear as to whether the Treasury would be able to avoid defaults by prioritizing its debt obligations.  But, at the same time, it would likely have to default on at least some of its non-debt obligations as well.  In fact, a default could trigger cascading economic problems like decline in output, stock market crash, recession, and severe financial and credit crises.   Unfortunately, those opposing the current Administration in Congress now routinely use their legislative authority to raise the national debt ceiling as leverage to gain concessions in other areas of contention with potentially serious repercussions.

 

The near-default resulting from the debt ceiling negotiations in 2011 resulted in a downgrade in the credit rating of the United States – producing an increase in the borrowing costs to the Federal government and a sharp drop in the stock market.  With the Budget Control Act of 2011, Congress raised the debt limit averting total economic chaos.   The debt ceiling was also raised without too much controversy at the end of 2012.  On February 4, 2013, President Obama signed into law the “No Budget, No Pay Act of 2013”, which suspended the U.S. debt ceiling through May 18, 2013.  Despite its passage and enactment, on March 1st, the sequester, cutting 1.2 trillion dollars over the next decade, went into effect due to Congress’s failure to reach a deal to avoid it.  The Treasury adopted some exceptional measures to avoid minimize its impact on provision of necessary government services.

 

Before 1917, the United States had no debt ceiling.  At that time, Congress permitted the Treasury to issue certain specific debt issues for defined purposes and provided authorizations for some specific borrowing activities.  Occasionally, Congress also gave the Treasury discretion regarding the type of debt instrument to be issued.

 

Alan Starc has been a popular writer and blogger with www.getcashpaydayloansonline.com and many more well known sites.  He has been guest blogging for a considerable period of time, writing on topics including law, finance, and debt.

 

 

Held Hostage: Grandma and Grandpa!

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Imagine, if you will, a horrific scenario in which your beloved grandparents are kidnapped.  You fear for their well-being.  You hope that the call will come, and come in time, instructing you concerning the amount of the ransom and where it is to be delivered.  Most of all, you pray that you have enough money to cover that ransom; if not, the unthinkable will happen.  You check your bank account and your secret stash of cash; you even beg for financial assistance from everyone in your circle of family and friends.  But no one has enough money, even together with your coffers, to rescue your grandparents.


How terrible is this scenario?


Well, it’s worse than you think, for it’s not a scenario!  It’s not a scene from a thriller, and it’s not the stuff of a paranoid mind.  It’s happening right now, right here in America.


Down through America’s history, our political leaders have always safeguarded the interests of our citizenry against foreign threats.  They’ve done so with stern warnings to the foreign powers, with trade embargos, and even with military action.  From the shores of Tripoli to the mountains of Afghanistan, we have been protected from the unthinkable and the unconscionable.  But, our government has done nothing to safeguard us against a threat right here on our own soil, a threat issued by our very lawmakers.  That threat is the theft of our Social Security.


Social Security: that which your grandparents and your parents paid into with their own blood, sweat, and tears.  Social Security: that which the U.S. government removed from your loved ones’ pay checks and vowed to keep safe, so that your family members could draw upon those funds in their golden years, after they had retired.  Since its inception during FDR’s Presidency, Social Security has been sacrosanct.  Never before has it been threatened with a kidnapping and, for all intents and purposes, an astronomical ransom.


Now, for the first time in our history, Social Security will be the first head to roll off the chopping block of National Debt.  Our country is deep in the hole.  And although we have until Tuesday, August 2, 2011 to determine a solution to the problem of our National Debt, the shot has already been heard around the world.  The global economy has already gone into a nosedive as a direct result of our financial tottering.   Much closer to home, however, the senior citizens of the United States of America will be the first and most vulnerable population to suffer from this unresolved debt.


Simply put, senior citizens will not receive what we’d paid into, and what we’d been promised, if our Powers That Be cannot reach a workable consensus come Tuesday.  For a President to even entertain the notion of robbing the elderly to offset a portion of the National Debt, let alone announce this via the media, is disgraceful!  And, despite this mortifying national situation and the very real danger to retired persons, we have yet to hear any of our so-called leaders raise their voices in defiance of such an act.


Where are our statesmen that put country first?  Don’t strain your eyes looking for them, for they are all dead!  Of all the places from which we can borrow from Peter to pay Paul, Social Security should not be on the table as a bargaining chip against insurmountable debt.


Why not put foreign aid into play as a bargaining chip?  If we can afford to give aid to 149 of the 159 counties in the world, and if we halt that aid, those monies would more than satisfy the budget.  Look at the big losers of World War II: Germany and Japan.  They have a better economy than the USA and yet, we insist upon giving aid not only to them, but also to 90% of the world.  As they say in Denmark, “Something stinks here.”


It sure does!


Why is it that our government cannot agree on a solution to our rampant debt?  Well, we have always had adversarial government, that’s why.  Our two-party system is always at each other’s throats, with one side blaming the other and both sides spinning their wheels with no forward motion.  “United we stand, divided we fall” is a nice sentiment, but rarely has it been a reality here.  Robbing senior citizens of the money they need to survive — their own money — is not the answer.


It’s probably too late to save Social Security from eminent disaster.  By the time the budget is saved, how many senior citizens will already have been rendered homeless, literally starving on the streets, due to the incompetence and greed of our lawmakers?


Yes, it will be too late for what our government considers to be a “disposable” population, so what can we do going forward?  I have a few suggestions.


1.  Candidates for Congress and the Senates should have no party affiliation.  They should answer only to the people of their individual States.  The resulting governing body would then select the President and the Speaker of the House from their group.  There would be no need for a Vice President.  In the event that the President cannot fulfill his or her duties, the highest-ranking officer (the Speaker of the House) would replace the President and continue until the term of office comes to a close.


2.  Terms of office should be revised to two years for all offices in government.


3.  The government would fund the costs of elections.  There would be no campaigning.  Each candidate would express his or her views and his or her promises, once, and publicly.  After that, the voters would elect the officeholders.


Over the years, our legislators have become a cadre of fat and lazy robber barons. Paid off by lobbyists representing huge corporations and large special interest groups, our politicians enact certain laws, and blatantly disregard other, in order to pander to those who grease their palms. Meanwhile, the private citizens who actually voted those politicians in are being giving the shaft.


Unless our entire system changes, in some manner similar to the guidelines I have listed above, our current legislators will probably die in office … still fat, still lazy, and still raping law-abiding citizens of their rights under the law!


Forty-four Presidents after the founding of our nation, we stand at the precipice of disaster.  President George Washington is probably spinning in his grave as the great country he’d envisioned goes down the toilet.


America, Your Expiration Date May Have Arrived

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Expiration-Date1

Nothing – in the history of the world – conceived, engineered, built, or otherwise created by Man has any real permanence.  All of Mankind’s towering achievements are subject to inevitable decay and destruction.  Whether a structure, philosophy, society, or form of government, each is inherently flawed by the limited thinking and understanding of its creator(s); thereby, containing within itself the ultimate cause of its own demise.

 

In the world of consumable food products, we know that even those products that have been preserved in one fashion or another will spoil after a period of time or lose their nutritional value. Thus, we affix an expiration date beyond which that item may not be sold, even though it may still be edible for some time beyond its determined expiration.

 

In 1787, at the time that the Constitution was adopted by the Constitutional Convention in Philadelphia and shortly thereafter ratified by conventions in the original thirteen states, Alexander Fraser Tytler (also known as Lord Woodhouselee), a Scottish history professor at the University of Edinburgh, analyzed the history of democracy and expressed the following:

 

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. [It] will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.  From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.  The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years.  During those 200 years, those nations always progressed through the following sequence:  from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to complacency; from complacency to apathy; from apathy to dependence; and from dependence back into bondage.”

 

Sadly, if Lord Woodhouselee’s analysis is accurate, America is well past its prime.  Perhaps, its expiration date has already lapsed, and we, its people, are living through that confusing period between point of no return and actual, recognized demise.

 

With $3 trillion in federal bailouts over the past 18 months, it appears that an apathetic America is evolving into a state of dependency on the federal government that would have appalled our Founding Fathers.  Insurance and financial giants AIG, Citigroup, and Goldman Sachs owe their continued existence to the American taxpayer via our growing federal government, as do automakers Chrysler and General Motors.  What our economy would look like today absent these bailouts is uncertain.  What is certain, however, is that our record levels of indebtedness will be a drag on economic growth for years, if not decades to come and the bane of the existence of future generations.

 

Prior to the Great Depression, American citizenry and enterprise possessed a self-reliance and spiritual faith that propelled this Nation to heights unseen in the history of our planet.  Since that time, the quest for security has eroded personal liberties and created dependency on governmental largesse, even by many of our most self-reliant citizens and well-known companies.  The growth of entitlement programs such as Social Security, Medicare, Medicaid, and AFDC among others, while giving a helping hand to some, has had a narcotic effect upon many with estimates of up to 40% of the current population receiving payment monthly from some form of government entitlement program.    In commerce and industry, lucrative government contracts and protectionist trade legislation can spell the difference between profitability and failure.

 

The desire for security is both seductive and compelling.  It works at odds to the “eternal vigilance” required to maintain a free society.  Our Founders possessed an abundance of the self-reliance and spiritual faith of which Lord Woodhouselee spoke.  Self-reliance and spiritual faith are really, in the final analysis, the flip sides of the same coin.  With spiritual faith comes knowledge of the Truth of our Being – that our Creator is the source of all good and the only source upon which we can always depend.  Armed with the Truth, our Founding Fathers and their descendants depended not upon government programs but upon their expression of that Truth to confidently build a nation that became a beacon of hope to the rest of the world.

 

Today, that beacon has dimmed, shrouded by the burden of big government and the concomitant taxation and governmental intrusion into virtually every phase of the lives of our citizens.  Yet, many in the world still covet what we have.  Perhaps, we can save our country and the world by returning to the spiritual faith, knowledge of the Truth, and self-reliance that have built a great nation.  The Truth knows no limits and has no expiration.  If we embrace It, neither do we. 

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