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View Full Version : U.S. Issues Senate permits gov't to borrow an additional $1.9T


petegz28
01-28-2010, 03:56 PM
WASHINGTON (AP) - The Democratic-controlled Senate has muscled through a plan to allow the government to go a whopping $1.9 trillion deeper in debt.
The party-line 60-40 vote was successful only because Republican Sen.-elect Scott Brown has yet to be seated. Sixty votes were required to approve the increase. The measure would lift the debt ceiling to $14.3 trillion. That's about $45,000 for every American.

Democrats had to scramble to approve the plan, which means they won't have to vote on another increase until after the midterm elections this fall. To win the votes of moderate Democrats, President Barack Obama promised to appoint a special task force to come up with a plan to reduce the deficit. The House must still vote on the measure before it's sent to Obama for his signature.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP)—Senate Democrats are counting on their soon-to-expire 60-vote majority to raise the U.S. debt ceiling by $1.9 trillion so they do not have to take more politically painful votes on government borrowing until after the November elections.

They have no room for error. In the face of monolithic Republican opposition, they will need all 60 votes Thursday to let the government continue borrowing almost 40 percent of what it spends, much of it from China and other Asian nations who buy U.S. securities.

The legislation would put the government on track for a national debt of $14.3 trillion—equal to about $45,000 for every American—and provide a vivid reminder of the United States' dire fiscal straits. New estimates released by the Congressional Budget Office on Tuesday show that the U.S. this year could run a deficit matching last year's record $1.4 trillion shortfall.

To make raising the debt ceiling easier for moderates and politically endangered Democrats to swallow amid a populist uprising against government borrowing and spending, President Barack Obama promised in his State of the Union address Wednesday night to appoint a bipartisan task force to come up with a plan for dealing with the spiraling debt.

"I will issue an executive order that will allow us to go forward, because I refuse to pass this problem on to another generation of Americans," he said.

The 60 votes Democrats need from their own caucus include those of incumbents facing difficult re-election battles this year as well as longtime opponents of raising the debt limit, such as Sen. Evan Bayh.

The task was made more difficult last week when Republican Scott Brown won the late Edward M. Kennedy's Senate seat from Massachusetts. On Feb. 11, when Brown plans to take office, the Democrats' majority shrinks to 59 in the 100-member Senate and the Republicans will have a 41-vote ability to block what they do not like in Obama's and Democratic leaders' agendas.

If the $1.9 trillion debt ceiling increase fails, the Senate would immediately vote on a fallback $635 billion increase already approved by the House. But that would require still another vote before the Nov. 2 Election Day to raise the ceiling again.

"It took 200 years to build the federal debt to a total of $1.9 trillion," Sen. Judd Gregg, a Republican, said. "Now the majority wants to increase the current limit ... by $1.9 trillion so that we can finance the government's borrowing binge long enough to get us past the November 2010 elections."

Congress has until mid-February before the current $12.4 trillion debt ceiling is reached, so there would not be an immediate crisis if the measure were to be defeated. But a losing vote—the tally was scheduled for around noo (1700 GMT), when financial markets are open—could unnerve the stock market. Lawmakers in both parties have promised they will not permit a market-rattling, first-ever default on U.S. obligations.

Democrats and Republicans alike share responsibility for running up the debt, but it falls upon Democrats to pass the measure since they control the government. It makes no difference that Republicans routinely backed increases in the debt when former President George W. Bush was in office.

Republicans blame recent generous spending bills enacted by the Democratic-controlled Congress for driving up the debt. Those measures, however, are just one relatively small part of the problem. The far bigger element is a sharp drop-off in tax revenues because of the recession and the economy's slow recovery, as well as higher costs, since more people are taking unemployment benefits and food stamps in tough times.

As part of the debt ceiling bill, the Senate will also vote on new budget rules that would make Congress cover any increases in government benefits with either a corresponding tax increase, spending cuts elsewhere or a combination of the two. The same would apply for new tax cuts, such as the tax credit Obama proposed Wednesday night for small businesses that hire more workers. The tax cuts would have to be "paid" for with corresponding spending cuts or increases in other taxes.

Senate Majority Leader Harry Reid, a Democrat whose own re-election is in danger this November, reversed course and came out in support of the new rules after moderate Democrats in the House insisted on them as condition for passing a new $14.3 trillion debt ceiling.

http://www.breitbart.com/article.php?id=D9DGSHEO0&show_article=1

petegz28
01-28-2010, 03:57 PM
Well, I hope the fucking Democrats are happy. We now officialy have a debt limit that exceeds the country's GDP.

HonestChieffan
01-28-2010, 04:07 PM
transperancy

petegz28
01-28-2010, 04:07 PM
One day, not even 24 hours really, after Obama has his rha-rha speech on controlling the defecit and etc, the Dems in a strict party-line vote approve the country to borrow more than the country's GDP.

Now THAT is hope and change you can believe in.

CaliforniaChief
01-28-2010, 04:41 PM
One day, not even 24 hours really, after Obama has his rha-rha speech on controlling the defecit and etc, the Dems in a strict party-line vote approve the country to borrow more than the country's GDP.

Now THAT is hope and change you can believe in.

I was thinking the same thing. We'd better come up with a plan to get on top of our debt or else we will be finished. A comprehensive, painful approach to getting on top of it.

And this guy isn't going to be the one to make that happen.

Direckshun
01-28-2010, 04:42 PM
It's amazing how they'll act on this so quickly then stall the shit out of everything that would actually help decrease the deficit.

CaliforniaChief
01-28-2010, 04:52 PM
I think we need to take a Dave Ramsey-esque approach to the budget. Start it at zero, not what it was last year. Everyone who gets a penny has to show why they should get it and what it's going to go for. Throw away every department that currently exists (except defense) and start over from scratch. Once everyone has given their budget, you prioritize it and keep working down the list until you get to the point where you've spent 90% of your worst case scenario for revenue. Put 5% in an emergency cash fund and 5% towards the national debt. Then take whatever surplus you get and apply it towards the debt.

In the meantime, you show people what programs and benefits will no longer be offered. You ask people to step up on their own and get it done in the name of leaving America debt-free for our children and grandchildren.

Go to a flat tax so everyone pays the same percentage and your revenues would go up, eliminating tax shelters and all those other corporate hideouts for money.

banyon
01-28-2010, 05:42 PM
I think we need to take a Dave Ramsey-esque approach to the budget. Start it at zero, not what it was last year. Everyone who gets a penny has to show why they should get it and what it's going to go for. Throw away every department that currently exists (except defense) and start over from scratch. Once everyone has given their budget, you prioritize it and keep working down the list until you get to the point where you've spent 90% of your worst case scenario for revenue. Put 5% in an emergency cash fund and 5% towards the national debt. Then take whatever surplus you get and apply it towards the debt.

In the meantime, you show people what programs and benefits will no longer be offered. You ask people to step up on their own and get it done in the name of leaving America debt-free for our children and grandchildren.

Go to a flat tax so everyone pays the same percentage and your revenues would go up, eliminating tax shelters and all those other corporate hideouts for money.

I agree with this approach. It's been referred to as "Zero-based budgeting".

Wiki had a decent review of the pros and cons. I think the fact that we've done it incrementally for decades all around the world and it hasn't worked anywhere is pretty good evidence that the pros should mean at least giving it a try. I'd like to see some states try it first perhaps, but the spending is reaching critical levels of stability.

http://en.wikipedia.org/wiki/Zero-based_budgeting#Disadvantages_of_zero-based_budgeting

Zero-based budgeting is a technique of planning and decision-making which reverses the working process of traditional budgeting. In traditional incremental budgeting, departmental managers justify only increases over the previous year budget and what has been already spent is automatically sanctioned. No reference is made to the previous level of expenditure. By contrast, in zero-based budgeting, every department function is reviewed comprehensively and all expenditures must be approved, rather than only increases.[1] Zero-based budgeting requires the budget request be justified in complete detail by each division manager starting from the zero-base. The zero-base is indifferent to whether the total budget is increasing or decreasing.
The term "zero-based budgeting" is sometimes used in personal finance to describe the practice of budgeting every dollar of income received, and then adjusting some part of the budget downward for every other part that needs to be adjusted upward. It is more technically correct to refer to this practice as "zero-sum budgeting".
Zero based budgeting also refers to the identification of a task or tasks and then funding resources to complete the task independent of current resourcing.

Advantages of zero based budgeting

1) Efficient allocation of resources, as it is based on needs and benefits.
2) Drives managers to find cost effective ways to improve operations.
3) Detects inflated budgets.
4) Useful for service departments where the output is difficult to identify.
5)Increases staff motivation by providing greater initiative and responsibility in decision-making.
6)Increases communication and coordination within the organization.
7)Identifies and eliminates wasteful and obsolete operations.
8)Identifies opportunities for outsourcing.
9)Forces cost centers to identify their mission and their relationship to overall goals.

Disadvantages of zero-based budgeting

1) Difficult to define decision units and decision packages, as it is time-consuming and exhaustive.
2) Forced to justify every detail related to expenditure. The R&D department is threatened whereas the production department benefits.
3) Necessary to train managers. Zero-based budgeting must be clearly understood by managers at various levels to be successfully implemented.
4) Difficult to administer and communicate the budgeting because more managers are involved in the process.
5)In a large organization, the volume of forms may be so large that no one person could read it all. Compressing the information down to a usable size might remove critically important details.
6)Honesty of the managers must be reliable and uniform. Any manager that exaggerates skews the results.

Incremental budgeting

Incremental Budgeting uses a budget prepared using a previous period’s budget or actual performance as a base, with incremental amounts added for the new budget period. The allocation of resources is based upon allocations from the previous period. This approach is not recommended as it fails to take into account changing circumstances. Moreover, it encourages “spending up to the budget” to ensure a reasonable allocation in the next period. It leads to a “spend it or lose it” mentality.

Advantages of incremental budgeting

1)The budget is stable and change is gradual.
2)Managers can operate their departments on a consistent basis.
3)The system is relatively simple to operate and easy to understand.
4)Conflicts are avoided when departments appear to be treated similarly.
5)Co-ordination between budgets is easier to achieve.
6)The impact of change can be seen quickly.


Disadvantages of incremental budgeting

1)Assumes activities and methods of working will continue in the same way.
2)No incentive for developing new ideas.
3)No incentive to reduce costs.
4)Encourages spending up to the budget so that the budget is maintained next year.
5)The budget may become out-of-date and no longer relate to the level of activity or type of work being carried out.
6)The priority for resources may have changed since the budgets were originally set.
7)There may be budgetary slack built into the budget, which is never reviewed.
8)Managers might have overestimated their requirements in the past in order to obtain a budget which is easier to work within, and which will allow them to achieve favourable results.

banyon
01-28-2010, 05:43 PM
Well, I hope the ****ing Democrats are happy. We now officialy have a debt limit that exceeds the country's GDP.

Well, they sure didn't accomplish that by themselves there pete.

petegz28
01-28-2010, 05:49 PM
Well, they sure didn't accomplish that by themselves there pete.

60-40 vote. I'd say they did a good job of it.

banyon
01-28-2010, 05:55 PM
60-40 vote. I'd say they did a good job of it.

How many times do you think the Republicans passed debt ceiling-raising bills?

petegz28
01-28-2010, 05:59 PM
How many times do you think the Republicans passed debt ceiling-raising bills?

The fact is, banyon, the Dems are in charge and have been since 07. This crap of blaming the other guy has worn thin. The Repubs spent and got their ass kicked out of office for doing so. The Dems have spent even more and all you can do is talk about what the other guy did. And FTR, I don't believe the Senate has ever denied a spending increase.

jjjayb
01-28-2010, 06:02 PM
Scott Brown isn't seated yet? WTF are they waiting for?

RNR
01-28-2010, 06:07 PM
The fact is, banyon, the Dems are in charge and have been since 07. This crap of blaming the other guy has worn thin. The Repubs spent and got their ass kicked out of office for doing so. The Dems have spent even more and all you can do is talk about what the other guy did. And FTR, I don't believe the Senate has ever denied a spending increase.

Relax Barry has assured us the government will start saving money NEXT year.

stevieray
01-28-2010, 06:11 PM
The fact is, banyon, the Dems are in charge and have been since 07. This crap of blaming the other guy has worn thin. The Repubs spent and got their ass kicked out of office for doing so. The Dems have spent even more and all you can do is talk about what the other guy did. And FTR, I don't believe the Senate has ever denied a spending increase.

repubs..bad
dems...not as bad, because repubs bad.

banyon
01-28-2010, 06:20 PM
The fact is, banyon, the Dems are in charge and have been since 07. This crap of blaming the other guy has worn thin. The Repubs spent and got their ass kicked out of office for doing so. The Dems have spent even more and all you can do is talk about what the other guy did. And FTR, I don't believe the Senate has ever denied a spending increase.

The Dems weren't "in charge" in 2007. They had a sitting Republican president who vetoed their legislation left and right.

If you don't understand that this is an institutional problem and not a party-based one, perhaps you should read the story of Warren Rudman.

http://www.nytimes.com/1992/04/03/us/keeping-a-pledge-senator-will-quit.html?pagewanted=1

http://en.wikipedia.org/wiki/Gramm%E2%80%93Rudman%E2%80%93Hollings_Balanced_Budget_Act

petegz28
01-28-2010, 06:26 PM
The Dems weren't "in charge" in 2007. They had a sitting Republican president who vetoed their legislation left and right.

If you don't understand that this is an institutional problem and not a party-based one, perhaps you should read the story of Warren Rudman.

http://www.nytimes.com/1992/04/03/us/keeping-a-pledge-senator-will-quit.html?pagewanted=1

http://en.wikipedia.org/wiki/Gramm%E2%80%93Rudman%E2%80%93Hollings_Balanced_Budget_Act

Nice dodge. So what is their excuse this time, banyon??? I notice you keep ignoring this particular issue.

banyon
01-28-2010, 06:30 PM
Nice dodge. So what is their excuse this time, banyon??? I notice you keep ignoring this particular issue.

I'm not excusing anything. Nor am I dodging anything. I think their mismanagement of the budget has been deplorable.

I'm just saying that unless we do something to fundamentally change the dynamics of the budget process it doesn't matter who is in charge. It's politically popular to spend money on services for constituents and it's politically unpopular to raise taxes to pay for those services. We need a long term Amendment like the GHR Bill I linked to.

CaliforniaChief
01-28-2010, 08:22 PM
Oh both parties have been despicable on this. As a Republican, I blame Republicans because we're the ones who are SUPPOSED to have fiscal discipline. We're supposed to care about deficits and all that and because we pooped ourselves we lost power.

This is going to have to be a tea party movement within both parties, the kind of coalition that put Scott Brown into office.