Quote:
Originally Posted by MarchHare
Until the Republicans acknowledge that the deficit cannot be eliminated without some combination of the following, they're just posturing for political points:
1. Reduction of military spending
2. Reduction of Social Security spending
3. Reduction of Medicare/Medicaid spending
4. Increase of taxes
All four of those points are sacred cows to the Tea Party types, though, so it seems unlikely the US will make any serious, long-term efforts towards deficit reduction anytime soon.
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1. There has already been cuts in military spending. I don't know how Obama could justify more while he has men and women in harms way. As a percentage of the GDP it is actually lower than it has been since shortly after World War II. I suppose you could cut development dollars but, that would hurt America in the future.
2. Social Security spending is on the table. Seems both sides know that the age of entitlement must be raised. The problem is no one is willing to let it effect people who are coming up to retirement soon because of the political fall out. Bush's idea of letting folks invest there own money looks a little more attractive a decade later. It would have moved the federal government away from a huge entitlement problem in the near future. I suspect they will agree on a later age of entitlement eventually but, that won't help them today. They might look at introducing a means test as well which would save them a lot now.
3. Medicare is already being gutted by Obama care. Obama care is what needs to be on the table. It is hurting job creation as well, which has a trickle down effect on everything else.
4. Taxes for the rich is the only thing being proposed. Right now if they do nothing the Bush tax reductions will already be disappearing next year. Can't see that helping the economy if these are the guys who are suppose to hire the unemployed.
If nothing gets done by Aug 2 Obama will still have the money for entitlements, the military, and to make payments on the debt. Government agencies will have to lay off the bulk of their employees and moneys still going out for make work projects or research will be suspended. That will be painful for many and of course some of those jobs won't come back at all. But, that might be what it takes to change the spending habits of American government. Spending is after all the problem. The problem isn't people not being taxed too much or Congress trying to show up Obama. It is too much being spent.
The threat of a diminished credit rating seems to me to be over blown. First of all they won't default unless Obama choses to default. The creditors can still be paid. Secondly, lately the primary lender to the US has been the Federal reserve. I simply don't get why the Federal Reserve would have to listen to the Moody credit agency or anybody else. They can set their own lending rate much like the bank of Canada.