"One might think that the recent drama over the debt ceiling involved one side wanting to increase or maintain spending with the other side wanting to drastically cut spending, but that is far from the truth. In spite of the rhetoric being thrown around, the real debate is over how much government spending will increase. No plan under serious consideration cuts spending in the way you and I think about it. Instead, the cuts being discussed are illusory and are not cuts from current amounts being spent, but cuts in prospective spending increases. This is akin to a family saving $100,000 in expenses by deciding not to buy a Lamborghini and instead getting a fully loaded Mercedes when really their budget dictates that they need to stick with their perfectly serviceable Honda."<p>Quote from <a href="http://www.ronpaul.com/2011-07-31/ron-paul-freeze-the-budget-and-stop-plundering-the-american-people/" rel="nofollow">http://www.ronpaul.com/2011-07-31/ron-paul-freeze-the-budget...</a>
You may or may not agree with a progressive tax system, but I wonder how on earth so many people have been convinced that a regressive tax system is good for the country. It's patently absurd that politicians are fighting tooth and nail to preserve tax havens and loopholes that allow the filthy rich to pay a 15-20% income tax whilst the rest of the 'middle class' is paying upwards of 30.<p>I was thinking the other day that people just don't understand how oppresive our current system of taxation is. We had a civil rights movement in the past, it's about time for a 'fiscal rights' movement.
Ironically the size of this deal is only about half of what S&P said that they need to see to avoid a credit downgrade for the USA from AAA to AA.<p>Such a credit downgrade is likely to cause our interest rates to arise. A back of the envelope calculation suggests that the increased interest costs could cost us in the neighborhood of $2 trillion over the next decade. (See <a href="https://plus.google.com/u/0/114613808538621741268/posts/b7uwPS2H7g7" rel="nofollow">https://plus.google.com/u/0/114613808538621741268/posts/b7uw...</a> for a line of reasoning suggesting that it could cost us that much.)<p>So the end result over the next decade is that we cut government by $2 trillion, raise the debt ceiling by $2 trillion, and pay $2 trillion more in interest. Thus leaving our actual deficit about the same, but causing our government to deliver $2 trillion less.<p>I hope the tea party is proud. Unfortunately the general public doesn't understand the numbers well enough to see how stupid this whole exercise was.
My problem with this whole incident is the crappy reporting like this statement from the article "Without an increase in the debt limit, the federal government will not be able to pay all its bills next month. President Barack Obama recently indicated he can't guarantee Social Security checks will be mailed out on time."<p>The key word in the first sentence is "all" and the second sentence is not exactly true. The US Gov would not of actually had to default, but would have had to cut spending in other areas. The modern press cannot actually claim to informing the electorate of anything but hyperbole and repeated, unexamined words of politicians.
It's depressing that some of America's most important fiscal matters must now be negotiated at the point of a gun. The dearth of start ups focused on the public sector seems somewhat surprising to me. It seems that Silicon Valley should have a role to play in easing Washington's dysfunction that we are not playing.
He is looking significantly grayer than he did a month ago. It'll be interesting to see what happens in 2013 when the positions are reversed and the Bush tax cuts will expire without agreement in both houses.
"The deal includes no tax increases"<p>This might be a good thing, it could force the government to be creative with their budgeting (and maybe even produce better results)
A "compromise" with no tax increases when "Only 34% [of Americans] preferred a debt reduction plan based solely on spending reductions."<p>And what percentage of that 34% is enjoying a higher quality of life than 10 years ago AND makes under $250K a year?<p>I have to wonder. (yes, even knowing the [perceived] political alignment of HN and risk I'm taking with my vital karma.)
Let's say you earned $200,000 a year. You live a lifestyle that costs you $350,000 a year and currently owe $1.5 million. The interest payments on that are probably $30,000 a year (15% of your income). Your solution? Borrow more? What bank would lend you money?<p>Multiply those numbers by a million and you have the current situation of the US government.<p>Non-discretionary spending is spiraling out of control. I had this discussion at dinner last week where someone suggested it was crazy not to raise taxes. I disagreed. My argument is basically this:<p>1. People on low incomes currently pay little, no or even negative tax (factoring in government benefits);<p>2. Such a system creates a disincentive to work with the <i>marginal</i> rate of tax. If you earn $10,000 and get $2,000 from the government but by $20,000 you are paying $2,000 in tax with no benefits, the marginal rate of tax is actually 40%;<p>3. The problem isn't the top rates of tax, it's all the exemptions and the complexity of the tax system.<p>So how about instead of populist pleas of taxing the rich we simply make everyone pay their fair share? What about 25 cents in every dollar for every dollar you earn each year above $20,000 (and nothing below)?<p>Congress seems beholden to special interests and pork barrel politics. In the 90s Congress tried to surrender their power to the executive branch by passing the line item veto measure. In previous years they were unable to close military bases and had to establish the Base Realignment and Closure Commission.<p>Will it take a similar commission for Congress to distance themselves from similarly hard decisions? The longer this goes on, the harder it's going to get.<p>What I see happening in the coming years:<p>1. Retirement age being raised to 70 <i>or even higher</i>;<p>2. Federal sales tax similar to the consumption tax every other OECD nation has. State sales taxes are too complex. Interstate sales tax exemptions are fighting a losing battle to continue to exist; and<p>3. The US adopting a more isolationist foreign policy, including a continued decline in the US military that is already well underway (compare the size of the US armed forces today to what they were 20-25 years ago).
Just a reminder to people: Do not downvote people based on your or their political beliefs.<p>Downvote worthless comments. Comments that you disagree with are not worthless.<p>If you agree with the comment vote it up, otherwise leave it alone.