A trillion here...a trillion there

[GernBlansten]

So you'd rather spend $2,287 of your own money helping foreigners than spend $166 to help Americans? That's pretty liberal of you.

[packsaddle]

http://zfacts.com/p/318.html

We can point to Reagan as the one who started the most recent upturn in the debt. He criticised Carter for the $67 billion or so deficit and then promised to balance the budget in five years. A few $hundred billion later put the lie to all that.

 

As I have written before, I am not optimistic. I haven't been since the Bush lies became obvious. Obama, for that matter anyone else, cannot solve this. We're going to pay the piper. Just a question of how long it will take and how bad it will be.

[GernBlansten]

Cheney: "Reagan proved deficits don't matter."

[SSScout]

Sell Crawford Texas to the Saudis.

[scoutldr]

Can't. The Chicoms already own it along with most everything else.

[ogghall]

A constitutional right here... A constititional right there.

[Eagle732]

"So you'd rather spend $2,287 of your own money helping foreigners than spend $166 to help Americans? That's pretty liberal of you."

 

WOW! That's the first time I've ever been called a liberal! I'm insulted. I happen to support what our country has done and continues to do in promoting freedom throughout the world.

 

I spend more than $166 a MONTH supporting my Scout troop. Does that qualify as helping Americans?

 

 

 

 

 

[GernBlansten]

Don't be offended by the label of liberal. Helping others is an admirable position. And to be so generous with your money (and mine) for others who aren't even of this country is even more admirable, I think.

[scoutldr]

Donating your own money to help others is charitable. Confiscating MY money to give to others is thievery. I am quite capable of being charitable, as my tax return shows.

[evmori]

Who wants pie?

[Eagle732]

Not that any of us have a say in any of this, the wars, the bail outs, health care reform. Well we might have a say in health care reform (or is it health insurance inform today) if things keep going they way they've been going at these town hall meetings.

[skeptic]

Whichever thread this should be in is questionable, but anyway. Without choosing people of whom you know a great deal, and likely share your views already, speak to 10 unconnected individual adults. Ask them in general terms about their health care; do they have insurance; is it affordable and fair. I would wager that likely half will not be really positive about what they have, and not surprised if close to that were uncovered period, due to cost, and so on.

 

Then come back and review some of the trite and foolish statements being thrown about here, on cable TV, and on the net in general.

 

When will we stop being polarized about everything. Neither Democrats or Republicans have many real answers. Somehow we need to get past this nonsense and "deal" with the truths of the issue. This means quit spewing fear, innuendo, character assassination, and mind boggling nonsense. Either get your "so called representatives" to actually work on solutions based on "real" facts and stats that are balanced, or throw them out and find some that will.

 

Oh well; wishful thinking. Ignorance and stupidity are the flavors of the day.

[vol_scouter]

I have started at least 3 responses about health care and as a professional, I have some insights worth discussing but Obama and his snitch program scare me. The left said that it was their patriotic duty to protest against President Bush and paid for professional protesters. Now the left is squelching dissent to Obama's plans which is OK. Such a hypocritical stance. These are truly frightening times.

[eisely]

Yet another editorial from the Wall Street Journal. I hadn't thought about the accounting gimmickry involved, but the federal government is engaging in exactly the same kind of accounting games that resulted in criminal charges against executives at Enron and Arthur Anderson, resulting in among other things, the destruction of Arther Anderson.

 

This is not accidental. It is willful misconduct that may not be technically illegal, but is certainly reprehensible. Barney Frank has muct to answer for.

 

WSJ editorial below.

____________________________________

 

When Larry Summers and his White House economic team next take up the future of Fannie Mae and Freddie Mac, one idea up for debate will be shifting the mortgage giants' bad assets into a government-owned "bad bank." Fannie and Freddie would be left with clean balance sheets and a new lease on life.

 

But shifting around bad assets is the least of the Obama Administration's problems with these two failed "government-sponsored enterprises." The bigger issue is that all of Fan and Fred's liabilities, whether kept inside the companies or hidden in a dark corner of the Treasury, are now Uncle Sam's responsibility. Moving their bad assets into a new Baddie Mae would only preserve the fiction that there is a difference between the government's obligations and those of Fan and Fred. Not even Barney Frank could believe that any more.

 

The best long-run solution would be to put the two into run-off mode, paying their debts as they come due and collecting whatever they can from the portfolios they currently hold. Relieving them of their mistakes so they can gamble again on the taxpayer dime would merely re-create the moral hazard that landed them in federal conservatorship. We know how that movie ends.

 

Mr. Summers has long said that mixing private profit with public risk is bad policy, and we trust he doesn't want to repeat the mistake. A starting point for permanent reform would be to treat Fan and Fred, in the budget and on the federal balance sheet, as the government-owned creatures that they are. For the moment, despite 80% government ownership, their $85 billion bailout cost (with more losses to come) and their $5.4 trillion in taxpayer liabilities remain off-balance-sheet in the mold of Enron's special purpose vehicles or Citigroup's SIVs.

 

The politicians who created and pampered Fan and Fred like it that way. They know that offering federal "guarantees" looks much cheaper, in the official accounting, than actual outlays. But whether it's Fan and Fred, or the Pension Benefit Guaranty Corporation or the Federal Housing Administration, these deferred promises seem to come due sooner or later. Perhaps the politicians would be less profligate in issuing such guarantees if they had to admit the cost up front.

 

Putting Fannie and Freddie on the national books would in an instant increase the national debt held by the public by 75%to $12.7 trillion, from $7.3 trillion today. The nearby chart shows that this takes debt as a share of GDP to nearly 90%, or nearly double the peak it reached in the 1980s when the political class was hyperventilating even as the Reagan deficits were falling as a share of GDP. Congress would have to add that $5.4 trillion to the increase in the federal debt limit that Treasury Secretary Timothy Geithner is now requesting. But that would be truth-in-budgeting. Wall Street has sold Fannie paper to the world as if it were as taxpayer guaranteed as Treasury bills, and now we know it is.

 

Even as the companies careened toward failure a year ago, the Bush Administration was desperate to show it would cover all Fan and Fred debt. The Obama Treasury has been no different and has ginned up the two companies to expand their debts amid the housing meltdown by guaranteeing more residential mortgages. The Federal Reserve has bought $543 billion of Fannie and Freddie mortgage-backed securities and has plans to buy up to $1.25 trillion worth by year end. Foreign debt holders get the message. The only people who still might be fooled are the American taxpayers, who are ultimately responsible when the bills come due.

 

The larger issue is the integrity of the national balance sheet. As government spending soars, the political temptation to use off-balance-sheet vehicles of various sorts will only increase. Barney Frank is even pushing a bill to make the feds guarantee U.S. municipal debt. The danger is that the federal government will itself become the next Enron, with its biggest liabilities hidden from view, officially denied or tucked away in special purpose vehicles like Fannie Mae. Until the next crisis hits.

 

It's bad enough that the political class has played this dishonest game with the long-term liabilities of Social Security and Medicare, which are also kept off the balance sheet. But at least those IOUs are held by another branch of the government and can be legislated away by some future Congress. Debt held by the public can't be repudiated without the U.S. descending into Argentina-ville. It's time to come clean about the debts our government is racking up, and Fannie and Freddie are a good place to start.