The most important political issue of today IMO

[greencrest1272]

Yes more important than the Iraq war, more important than any conflict with Iran, more important than anything to date IMO.



One man's campaign against federal debt

POSTED: 11:04 a.m. EDT, March 29, 2007
Story Highlights"? Top accountant touring the country to warn people about the federal debt
"? Debt has risen from more than $2 trillion in 1986 to nearly $9 trillion in 2007
"? Baby boomers will soon stretch U.S. finances even further

By Kyle Almond
CNN
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(CNN) -- He has recently made stops in Iowa, New Hampshire and South Carolina, giving speeches and holding town hall meetings. But he's not seeking the presidency.

David M. Walker, the nation's top accountant, is instead touring the country to warn Americans about the consequences of a federal debt he says is on an unsustainable course.

Walker, who heads the General Accountability Office (GAO), has visited college campuses, spoken to lawmakers in Washington and toured 19 states in the last year and a half.

He plans to continue through next year and is focusing on states that could affect the 2008 presidential race, in hopes that candidates will heed his message.

"If [the candidates] don't make [the debt] one of their top three priorities, in my opinion, they don't deserve to be president and we can't afford for them to be president," he told CNN.

The federal debt has soared during the last two decades -- from $2.13 trillion in 1986 to $5.22 trillion in 1996 and $8.51 trillion in 2006.

The federal debt now stands near $9 trillion.

The way programs such as Social Security, Medicaid and Medicare are structured, the government will incur an additional debt of $50 trillion during the next 20 years, according to GAO figures.

The $50 trillion total amounts to about $440,000 per American household, Walker said.

The primary drivers behind the additional rise in spending are the baby boomers, who start becoming eligible for Social Security in 2008 and Medicare in 2011.

"We are talking about an unprecedented change in the demographic landscape of America," Walker said. "And we are not prepared for this oncoming wave."

The consequences of federal debt
The federal debt increases every time there is a budget deficit at the end of the fiscal year. A budget deficit occurs when the government spends more than it receives in revenue, as it has for the past five fiscal years and 16 of the past 20, according to the Office of Management and Budget.

The causes for such deficits range from tax cuts and spending increases to congressional earmarks in appropriations bills, costs associated with the wars in Iraq and Afghanistan and catastrophes like the 9/11 terror attacks and Hurricane Katrina.

The government makes up the difference by printing and selling Treasury bills and bonds, which are increasingly being bought by overseas investors looking to profit from the interest.

More than three-quarters of the federal budget deficit from March 2001 through September 2006 was underwritten by overseas investors, according to Christian Weller, the senior economist at the Center for American Progress, a Washington-based, left-of-center think tank.

Such financing is not necessarily a bad thing for the average American because it has helped keep interest rates relatively low, Weller said.

"The budget deficit brought in all of this foreign cash, and that foreign cash basically washed into the credit market, [making] it easier for homeowners and for others to borrow money," Weller said.

Observers are concerned, however, that interest rates could rise if the federal government doesn't show more fiscal responsibility.

For example, a country that typically lends money to the United States could begin charging higher interests rates on the loan out of concern for what it sees as an uncertain U.S. financial future, said Bill Beach, an economist associated with The Heritage Foundation, a conservative think tank.

"So we [would] all end up paying more for mortgages, more for cars and so forth," Beach said.

Beyond interest rates
In the worst-case scenario, other countries -- instead of just charging higher interest rates -- could decide to take their money elsewhere, which could spur inflation and increase financial uncertainty.

However, several things would need to happen -- such as a series of international crises or a collapse in U.S. home values -- for countries to move their investment out of the United States, according to Beach.

Meanwhile, as a result of existing debt, the United States has less money to spend on infrastructure, technology and education -- improvements needed for the country to remain competitive in the global market, Weller said.

"With the government running massive deficits and spending large amounts on debt service, we have less money available to address those concerns, to really face the challenges of the future," he said.

Though economists of different political persuasions agree the federal debt is a growing problem, the solutions they recommend differ. Some ideas include caps on government spending and repealing certain tax cuts.

The GAO's Walker believes reforms of health care and programs like Social Security are the most important steps.

"The fact is that we could eliminate the Iraq war tomorrow. We could eliminate every dime of pork-barrel spending. And we wouldn't come close to solving our problem," he said.

Walker said it is necessary to balance the budget within the next five years, make a down payment on the $50 trillion imbalance and begin reforming government programs.

"It's going to take us probably 20 years to do all the things that need to be done, " he said. "But we need to get started now because the clock is ticking and time is working against us."

[pvfan]

We were discussing in class the other day about how China bought up our debt, found that very interesting. We've got major problems in terms of debt, 9/11 just compounded the problem and made it worse. What do you do? It's a tough situation, I am personally of the belief that our military efforts should be spent in Pakistan/Afghanistan/Iran (yes Iran) if we dont do something about them soon were going to be in another Cold War in my opinion. You keep up with politics Greencrest, what is the deal with Bush continuing to veto this bill that will give more funding to the troops? I dont know all the specifics on it, I do know that something has to be done soon. Iraq is spinning out of control and were sitting by and letting Iran develop nuclear weapons. I dont know if you have seen it or not but on the discovery channel awhile back there was a special dealing with how Iran has purchased all this material from this guy (his name is to hard to spell for me) in Pakistan who was a part of the government the U.S. busted up the ring eventually. However, Iran and several other nations now have that material and the plans for nuclear weapons, supposedly Iran has space underground for all kinds of centerfuges. I'm not the guy who is all up and ready for war either, I do think Iran must be stopped. I know this has gone off topic from the post but it relates, if we (and like I said I dont see how eventually we will not) get involved with Iran along with with the money thats being spent in Iraq and other places throughout the world were going to be in bad shape. We need to cut back on some of the programs were offering and try to balance the budget, we had this thing balanced out before 9/11 we can again. I dont think it's going to be any time soon though, we've got to take care of this threat we are facing and win the war with terroist. It's time to stop wasting our efforts in Iraq and go after the real enemies, Mr. Bin Laden and Iran. If we dont do something soon, we could see something that would shatter 9/11, according to published reports Al Qadea held a meeting with nuclear developers from Pakistan. Al Qadea has the material, there trying to figure out how to use it.

[imported_Counts]

[ QUOTE ]
We were discussing in class the other day about how China bought up our debt

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I had an economics professor in collage that had an interesting take on foren dept. His basic view was that China in this case really can do nothing with the Dept we own then but purchase goods and/or services from us which should to 2 things 1) create jobs for folks in this country and 2) strengthen our dollar since theoretically our goods and/or services would be in shorter supply.

Not saying I agree 100% with him or that I know all the end and outs of the eventual implications of this dept so I REALLY can not defend his point of view but his was an interesting take on the situation that we do not usually hear

[greencrest1272]

From what I can gather Bush will veto the resolution because it includes a deadline for withdrawl from Iraq. However the tug of war is crucial becaue if it does not pass then our troops are without funds, if it does pass, then we run the risk of pulling out to early or rushing crucial political, economic, and diplomatic progress in Iraq that I will say is begining to come around. Who knows...All I know is that when the Chief Accountant in America says that we are on a path to completely demolish our country financially, something has to change.

All I know is that when the Chief Accountant in America says that we are on a path to completely demolish our country financially, something has to change. Quote


We have spent a lot of money.... based on reports a lot of the money has been misused also. We have been feeling effects from this war for a while now... gas ect;.... I read an article on Yahoo news that says the price of milk is getting ready to go up... it is alread 5 dollars a gallon... I love milk and so does my little boy but that is high!!!

[greencrest1272]

Milk, Tomatos, Orange Juice, ....

This brings up another political issue. I do not beleive that their should be a tax on groceries. Obviously this would result in an extreme loss of revenue that would have to be made up somewhere else, but I feel that this is a logical idea that would greatly benefit the low to middle class families much more so than a minimum wage increase. I mean to feed a family of 4 I would imagine that it costs anywhere from $150-$200 a week or more.

[imported_Counts]

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milk is getting ready to go up... it is alread 5 dollars a gallon

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Where the heck are you buying Milk? LOL I think if i had to start paying $5 a gallon for Milk I would come out better buying a cow [img]/LDPforum/ubbthreads/images/graemlins/smile.gif[/img]

[ QUOTE ]
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milk is getting ready to go up... it is alread 5 dollars a gallon

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Where the heck are you buying Milk? LOL I think if i had to start paying $5 a gallon for Milk I would come out better buying a cow [img]/LDPforum/ubbthreads/images/graemlins/smile.gif[/img]

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Just saying it is high already... we usually buy Food Lion Milk I think it is 3 something... but now the Pet and Mayfield Milk is close to 5 dollars.

[plantsman]

Greencrest, have you read much on this flat tax idea? As I understand it, it works more like a consumption tax. It's somewhere around 22%, but they would remove all the other taxes (income tax, property, etc). I don't know much about it, but heard it being discussed on the Neal Boortz show one day.

[imported_Counts]

[ QUOTE ]
they would remove all the other taxes (income tax, property, etc).

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You sure about that? It was my understanding that State and local taxes would remain intact (Property Tax is a Local tax)