A trillion here...a trillion there

[eisely]

Thus just in from the Wall Street Journal. The federal government is going to raise its own credit limit---again. All you voters better figure out how you are going to deal with the inflation that is coming down the pike at us all.

 

 

Washington -- U.S. Treasury Secretary Timothy Geithner asked Congress to increase the $12.1 trillion debt limit on Friday, saying it is "critically important" that they act in the next two months.

 

Mr. Geithner, in a letter to U.S. lawmakers, said that the Treasury projects that the current debt limit could be reached as early mid-October. Increasing the limit is important to instilling confidence in global investors, Mr. Geithner said.

 

The Treasury didn't request a specific increase in the letter.

 

"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Mr. Geithner said in a letter to lawmakers.

 

Mr. Geithner said the that it is "clearly a moment in our history" that requires support from both Democrats and Republicans for the increase.

 

"Congress has never failed to raise the debt limit when necessary," Mr. Geithner said.

 

The non-partisan Congressional Budget Office said Thursday the federal government's budget deficit reached $1.3 trillion through the first ten months of fiscal 2009, on track to reach a record high of $1.8 trillion for the 12-month period.

 

 

[GernBlansten]

Got another solution?

 

This trend started with our folly in Iraq.

http://costofwar.com/

 

Remember, Clinton left office with a surplus.

[vol_scouter]

Gern,

 

The invasion of Iraq was wrong but it looks like it might work in the long run. We can all hope that it does work out well for the Iraqis and the US. That sais, we spent what was it 35 or 50 billion dollars on GM and Chrysler to keep them from going bankrupt only to have them go bankrupt. The only difference is that in the bankruptcy, the unions won instead of their contracts being negated. Chrysler is now owned by Fiat so we didn't save Chrysler - we just saved the union. GM no longer exists but a new GM that went through bankruptcy still has generous union contracts. Both companies would have fared better to file for bankruptcy and avoid union contracts so that they can compete with Japanese cars from non-union plants. The way I see, Obama spent $35-50,000,000,000.00 to pay off the unions leaving the taxpayer with enormous debt and two companies that will still have problems competing due to the unions. Obama and the democrats are spending money that the country cannot afford. Cap and trade will drive more business to other countries. The US has the highest corporate tax rate of developed countries but that is not enough for this administration. Obana and the democrat party has financially ruined the country - Bush started it last fall but it was democrats that pushed. I might have some hope for the future if Obama and the democrats were making moves to bring industry back but they are driving it out of the country or out of business.

[GernBlansten]

What Obama spent on GM and Chrysler was about 2 months worth of Iraq. Apples and Oranges. And we didn't send 5000 Americans to an early grave to save Detroit.

[eisely]

The habit of deficit spending began in the 30's under Roosevelt. Only in a few years since, and largely accidentally, have we have ever had a budget surplus. Clinton does deserve some credit for a budget surplus his last year in office, but the growing economy and republican majorities in both houses at that time might have had a teensy weensy itty little bit to do with that.

 

One of Bush's biggest blunders was not reining in the more spendthrift people in his own party. I don't think Bush ever vetoed a single piece of legislation in his entire eight years in office. This failure is one thing that turned true conservatives against him. Not that there were a lot of great choices out there.

 

One either believes that the Iraq war was a good idea or not. However, once committed the country has to be willing to spend what it takes to win. Putting that in the scale with the bailout of Government Motors is not a legitimate comparison.

 

There will be no end to adding to the federal debt under the Obama administration and the democratic majorities in both houses. I only hope my income inflates as rapidly as the rest of the economy. Of course I will also gain since my mortgage balance does not inflate. We ain't seen nothin yet.

[vol_scouter]

If you wish to compare like things, then stay on the topic of wasteful spending. The topic was not the war. The democrats voted for the war as well. They were briefed and made speeches on why we needed to go to Iraq. I agree that we should not have invaded Iraq but President Bush is longer in office. It is now Obama's spending and the trillion dollars in new debt since Obama took office does not include the wars. Obama is spending money that the country cannot afford. He and the democrats are dooming the country.

[SR540Beaver]

The government raising thir own credit limit is nothing new. Been going on forever.

[eisely]

The ability of the US government to borrow will be constrained, probably in the next few years when foreign lenders decide to stop purchasing US debt. There is nothing inherently wrong with being a debtor nation. The US was a debtor nation until World War I when we helped finance the allies even as a neutral. Up until then we borrowed a lot money, mostly private borrowings, but it was used to invest. Now we borrow to consume. That is the difference. The Chinese in particular are willing to finance our consumption because we import their stuff. There will come a time in the not too distant future when they will say enough is enough already. They will want to be paid and that will mean a transfer of real goods and services out of the US. The only alternative is to allow our currency to collapse and we will then be just like Argentina. A deadbeat country run by Obamistas.

[GernBlansten]

vol_scouter, quite the contrary.

During the Bush years, the wars were "off budget", funded through special appropriations. Obama as put them back on budget. And the wars are not over, we continue to pour our treasure and blood on the soils of Iraq and Afghanistan. We will be there for decades.

[OldGreyEagle]

If any of us came across a person with multiple wounds all with arterial bleeding, would our first instinct be to stop the flow of blood or assign blame as to who caused the wounds on the first place?

[sherminator505]

I've never understood the amount of blame that the unions continue to take for our auto industy's problems. It wasn't the unions that created way too many brands for GM to try to sell. It wasn't the unions who promoted the sale of large SUV's only to see them become albatrosses in an era of $4/gallon gas. And it certainly hasn't been the unions that have consistently kept our auto industry 15-20 years behind the curve with regard to fuel-saving technologies. All of these factors have had at least as much to do with GM's and Chrysler's problems as union contracts. All I would ask for here is a little fairness.

[Eagle1982]

But the unions managed to get 90% benefits for laid off persons, at the automakers expense. The unions managed to set up their "job bank" where people get nearly full pay for sitting around and reading the paper. The unions managed to get top tier health care, which has now ballooned in cost, at the automakers expense. Although GM was hemorrhaging money, the unions still saw fit to surgically strike the popular plants (like the Malibu plant, once it started selling well) - way to go.

 

Now, auto company management accepted all those contracts, so they are just as culpable. I just wish the Union and automakers would work together for the betterment of all employees and for better quality of all vehicles instead of being adversaries all the time.

 

The autoworkers didn't complain about SUV's when they were cashing their bonus checks a decade ago.

 

Inflation still requires demand. Without high demand, you can';t have high inflation.

 

 

[SSScout]

High demand...

 

Wiemar Republic.

[eisely]

As I understand the history of the Weimar Republic and the extreme inflation in Germany in the 1920's it was the result of a conscious decision by the German government to print money to pay the reparations demanded in the Treaty of Versailles. The reparations amounts were denominated in Reichsmarks and the allies were making it difficult for the Germans to try to honor the commitment so the Germans just turned on the printing presses and handed over bales of money. Among other consequences, all the savings of the German citizenry denominated in their own currency were also rendered valueless.

 

There is something of a parallel to our own situation. A lot of US government debt is held by the Chinese and various interests in the middle east. If they were to all demand repayment at once, both they and we would be in a bind. One cannot rule out the US government doing something like what the Weimar Republic did and just print more money to discharge the US dollar denominated debt.

[Eagle732]

I checked out the link to costofwar.com

I don't have a problem with spending $2,287.00 of my money (per person to date/Iraq) to free 28 million people. But that's just me, you may feel differently. I do have a problem bailing out insurance and car companies who created their own problems, unlike the people of Iraq who had no choice.