Open e-mail to Representative Neugebauer:
Randy,
Your question of the week was, "If the government does not raise the debt ceiling and defaults on its loans and other payments, do you believe you and your family will be affected?"
Not a good question. Everything that government does affects every resident of the United States and probably most residents of the world in some way or another. If the government does not raise the debt ceiling, it will affect us. If the government does raise the debt ceiling, it will affect us.
Either way, it is not necessary that we default on loans and other payments. We may delay, but if we get our house in order, we will be able to pay interest and principal on government bonds, plus interest for the late payment. Similarly, we should be able to pay in time any delayed salaries or other bills, also with the late payment interest.
Rather than an obvious "yes" or "no", the correct answer to raising the debt limit is that we will likely do more damage to the country if we raise it. Therefore, be sure to vote against it.
Tuesday, July 26, 2011
Federal Spending Cuts
E-mail to Rep. Neugebauer:
Randy,
I have been previously too nonspecific in my suggestion of eliminating our federal overspending through radical spending cuts.
In the following, I apologize for not having the figures of how much the overspending can be reduced, but I'm sure that these figures are available to you. Consider the following:
Eliminate the Department of Energy. It has done nothing since its inception except to inhibit production of indigenous sources of energy, particularly oil.
Eliminate the Department of Education. It is a super drain of funds to public schools, which then obligates schools to abide by the socialistic teachings of the Administration.
Eliminate half of the Department of Interior. The section that must be eliminated is that related to restrictions on indigent energy production.
Eliminate half of the EPA. Start with the section which has been using climate change to support Pres. Obama's program on Cap & Trade for CO2.
Eliminate most of the National Science Foundation (NSF). It dumps large amounts of money on university research projects of insignificant value and support of destructive political agendas.
Eliminate any research aspects of the Department of Health and Human Services. This function can be performed readily by private enterprise, particularly pharmaceutical companies.
Eliminate half of the Department of Homeland Security. It is a boondoggle operation, rampant with inefficiency and obvious inability to control our borders. Allow border states to do their own border control.
Some sections of the Department of Commerce can be eliminated, part
icularly those that are promoting commerce internationally. Private enterprise has this responsibility.
Reduce the Department of Labor. It is infested with union protected devices, which restrict general employment.
Reduce the Department of State. It is primarily engaged in nation building, for which we have no responsibility. The other section to be eliminated involves foreign aid and political grants.
The reduction in spending from the above is twofold. It decreases the cost of department operation, such as salaries, pensions, travel expenses, and building construction/maintenance, as well as reducing the funds which these organizations dole out to others.
Randy,
I have been previously too nonspecific in my suggestion of eliminating our federal overspending through radical spending cuts.
In the following, I apologize for not having the figures of how much the overspending can be reduced, but I'm sure that these figures are available to you. Consider the following:
Eliminate the Department of Energy. It has done nothing since its inception except to inhibit production of indigenous sources of energy, particularly oil.
Eliminate the Department of Education. It is a super drain of funds to public schools, which then obligates schools to abide by the socialistic teachings of the Administration.
Eliminate half of the Department of Interior. The section that must be eliminated is that related to restrictions on indigent energy production.
Eliminate half of the EPA. Start with the section which has been using climate change to support Pres. Obama's program on Cap & Trade for CO2.
Eliminate most of the National Science Foundation (NSF). It dumps large amounts of money on university research projects of insignificant value and support of destructive political agendas.
Eliminate any research aspects of the Department of Health and Human Services. This function can be performed readily by private enterprise, particularly pharmaceutical companies.
Eliminate half of the Department of Homeland Security. It is a boondoggle operation, rampant with inefficiency and obvious inability to control our borders. Allow border states to do their own border control.
Some sections of the Department of Commerce can be eliminated, part
icularly those that are promoting commerce internationally. Private enterprise has this responsibility.
Reduce the Department of Labor. It is infested with union protected devices, which restrict general employment.
Reduce the Department of State. It is primarily engaged in nation building, for which we have no responsibility. The other section to be eliminated involves foreign aid and political grants.
The reduction in spending from the above is twofold. It decreases the cost of department operation, such as salaries, pensions, travel expenses, and building construction/maintenance, as well as reducing the funds which these organizations dole out to others.
Federal Government Spending
This is an exchange of correspondence with Rep. Neugebauer on federal government spending.
Dear Randy,
I previously wrote you requesting that you strongly oppose raising the federal debt limit. You replied with the form letter message below.
Congratulations! I clearly deduce from your message that your heart and your mind are in the best interests of our country. My only concern is how strong are your beliefs and how strongly you will fight against the Administration, which is obviously using debt and fear to radically change our economic viability as a means to change our culture.
-----Original Message-----
Sent: Monday, July 25, 2011 8:50 AM
To: 'Arthur Sucsy'
Subject: RE: No Reason to Raise Federal Debt Limit
Thank you for contacting me about government spending. I always appreciate your suggestions and feedback about this critical issue that affects every American. I share your concerns about the future of our country if Washington fails to make significant spending cuts. I also agree that many government programs have had negative effects on our country and have started to threaten the values that have always made America great.
At a time in our history when we are running trillion dollar deficits annually, President Obama and his administration do not seem to notice or care about the serious debt situation facing our nation. I want you to know I am aware of this problem, as are most of my Republican colleagues.
For too long, Washington forgot who it was serving and ignored the voices of the people. Not only did we spend money we didn't have, but your hard-earned tax dollars were spent without regard to the consequences that the fiscal irresponsibility would have for our nation. Washington paid little attention to the huge burdens that reckless spending would create for future generations. At this rate, our nation will go bankrupt if we do not dramatically cut back on government spending and put an end to budget tricks, accounting gimmicks and empty promises.
I strongly believe that to get our fiscal house in order, we must begin to take immediate, common sense steps before it is too late. As a business owner, I know firsthand that a business cannot be sustainable if it constantly spends more than it brings in-neither can a government. At the start of the 112th Congress in January 2011, Speaker Boehner reduced Congressional spending for each Member and Committee by 5% per year. In my office, this was a cut of $70,000. While that savings is not large independently, it is a start and it also sends a message that everyone can find ways to trim their budgets. During consideration of H.R. 1, the appropriations bill to fund the government for the remainder of 2011 Fiscal Year, I supported nearly every non-defense spending cut proposed, and was rated by independent groups as one of the most conservative voters on amendments for that bill. I also voted to strip federal funding from Planned Parenthood and many of the ill-advised initiatives of the EPA. At a time when we are asking American families to tighten their belts, government must take every opportunity to do the same. We cannot ask the American people to accept difficult choices and cuts to programs, if we, as government leaders, are not willing to do the same ourselves.
As you know, in recent years, government spending has skyrocketed out of control. Our annual deficits have accelerated from billions of dollars each year, to trillions of dollars each year, with no end in sight. As the economy has faltered, the government and the Obama Administration have made the decision to bailout or take over many struggling industries, ranging from health care, to car companies, to banks. I want you to know that I have opposed all of these bills and policies which have increased our spending and bailed out those who have made bad decisions. I voted against the $700 billion Troubled Asset Relief Program (TARP) also commonly referred to as the "Wall Street Bailout." I voted against the failed $800 billion American Recovery and Reinvestment Act also known as the "Stimulus Bill." I voted against the health care bill, "ObamaCare," that raised taxes and will significantly increase the cost of health care. And finally, I voted against the Dodd-Frank financial reform bill that raises the cost of capital for everyone, limits the financial products available to consumers, fails to prevent future bailouts, and does nothing to reform Fannie Mae and Freddie Mac. I have voted against these failed initiatives and I commit to you that I will continue to hold strong against these liberal bills and agendas.
Additionally, I have personally introduced legislation that will force Congress and President Obama to fix our country's spending problem. The proposed legislation would amend the Constitution to require a two-thirds vote in the House and Senate in order to increase taxes or the debt limit. That would ensure that Washington focus on cutting spending which is the real problem that has led to our $14+ trillion debt. I have also joined many of my colleagues in supporting a balanced budget amendment to the U.S. Constitution.
We must take the necessary action to get this country on a sustainable fiscal path so that our children and grandchildren get a chance to have the same opportunities enjoyed by current generations of Americans. I realize these cuts will have an effect on some programs people have come to rely on, and undoubtedly we will see cuts to well-intentioned programs we simply can't afford. However, it is imperative we make these difficult decisions on behalf of future generations of Americans.
Please be assured that as I represent you in Congress, I will continue to fight for a stronger America which includes reducing spending and ensuring that existing resources are being properly utilized. Thank you again for contacting me. I value your input and I hope that you will always contact me with your concerns.
Dear Randy,
I previously wrote you requesting that you strongly oppose raising the federal debt limit. You replied with the form letter message below.
Congratulations! I clearly deduce from your message that your heart and your mind are in the best interests of our country. My only concern is how strong are your beliefs and how strongly you will fight against the Administration, which is obviously using debt and fear to radically change our economic viability as a means to change our culture.
-----Original Message-----
Sent: Monday, July 25, 2011 8:50 AM
To: 'Arthur Sucsy'
Subject: RE: No Reason to Raise Federal Debt Limit
Thank you for contacting me about government spending. I always appreciate your suggestions and feedback about this critical issue that affects every American. I share your concerns about the future of our country if Washington fails to make significant spending cuts. I also agree that many government programs have had negative effects on our country and have started to threaten the values that have always made America great.
At a time in our history when we are running trillion dollar deficits annually, President Obama and his administration do not seem to notice or care about the serious debt situation facing our nation. I want you to know I am aware of this problem, as are most of my Republican colleagues.
For too long, Washington forgot who it was serving and ignored the voices of the people. Not only did we spend money we didn't have, but your hard-earned tax dollars were spent without regard to the consequences that the fiscal irresponsibility would have for our nation. Washington paid little attention to the huge burdens that reckless spending would create for future generations. At this rate, our nation will go bankrupt if we do not dramatically cut back on government spending and put an end to budget tricks, accounting gimmicks and empty promises.
I strongly believe that to get our fiscal house in order, we must begin to take immediate, common sense steps before it is too late. As a business owner, I know firsthand that a business cannot be sustainable if it constantly spends more than it brings in-neither can a government. At the start of the 112th Congress in January 2011, Speaker Boehner reduced Congressional spending for each Member and Committee by 5% per year. In my office, this was a cut of $70,000. While that savings is not large independently, it is a start and it also sends a message that everyone can find ways to trim their budgets. During consideration of H.R. 1, the appropriations bill to fund the government for the remainder of 2011 Fiscal Year, I supported nearly every non-defense spending cut proposed, and was rated by independent groups as one of the most conservative voters on amendments for that bill. I also voted to strip federal funding from Planned Parenthood and many of the ill-advised initiatives of the EPA. At a time when we are asking American families to tighten their belts, government must take every opportunity to do the same. We cannot ask the American people to accept difficult choices and cuts to programs, if we, as government leaders, are not willing to do the same ourselves.
As you know, in recent years, government spending has skyrocketed out of control. Our annual deficits have accelerated from billions of dollars each year, to trillions of dollars each year, with no end in sight. As the economy has faltered, the government and the Obama Administration have made the decision to bailout or take over many struggling industries, ranging from health care, to car companies, to banks. I want you to know that I have opposed all of these bills and policies which have increased our spending and bailed out those who have made bad decisions. I voted against the $700 billion Troubled Asset Relief Program (TARP) also commonly referred to as the "Wall Street Bailout." I voted against the failed $800 billion American Recovery and Reinvestment Act also known as the "Stimulus Bill." I voted against the health care bill, "ObamaCare," that raised taxes and will significantly increase the cost of health care. And finally, I voted against the Dodd-Frank financial reform bill that raises the cost of capital for everyone, limits the financial products available to consumers, fails to prevent future bailouts, and does nothing to reform Fannie Mae and Freddie Mac. I have voted against these failed initiatives and I commit to you that I will continue to hold strong against these liberal bills and agendas.
Additionally, I have personally introduced legislation that will force Congress and President Obama to fix our country's spending problem. The proposed legislation would amend the Constitution to require a two-thirds vote in the House and Senate in order to increase taxes or the debt limit. That would ensure that Washington focus on cutting spending which is the real problem that has led to our $14+ trillion debt. I have also joined many of my colleagues in supporting a balanced budget amendment to the U.S. Constitution.
We must take the necessary action to get this country on a sustainable fiscal path so that our children and grandchildren get a chance to have the same opportunities enjoyed by current generations of Americans. I realize these cuts will have an effect on some programs people have come to rely on, and undoubtedly we will see cuts to well-intentioned programs we simply can't afford. However, it is imperative we make these difficult decisions on behalf of future generations of Americans.
Please be assured that as I represent you in Congress, I will continue to fight for a stronger America which includes reducing spending and ensuring that existing resources are being properly utilized. Thank you again for contacting me. I value your input and I hope that you will always contact me with your concerns.
Government Spending Cuts
I e-mailed Rep. Neugebauer suggesting that the Federal debt limit should not be raised. Our problem is government overspending. He replied with a form letter concerning details of the Cut/Cap/Balance bill passed by the House. My latest e-mail covers the futility of that bill
Randy,
I am opposed to your Cut/Cap/Balance bill for the following reasons:
The bill requires a spending cut of $111 billion per year. The government is now overspending by $4 billion per day. That's $1.46 trillion per year. $111 Billion per year is 7.6% of what is needed to create balance. Is this a joke or have I missed something?
The "Cap" portion requires a reduction from 25% to 19.7%, and that only after seven years. This is an absolute reduction of 5.3%. US GDP is $14.7 trillion. 5.3% Of that means a spending cut of $779 billion per year. Since we are overspending by $1.46 trillion per year, we will still be overspending after seven years at the rate of $681 billion per year or almost $2 billion per day. Is this another joke?
The Balanced Budget Amendment sounds good. If I take it at its apparent meaning, it would mean that we would be overspending zero dollars per day. My only hesitation is the meaning of "budget". That term has come to mean a hoped-for situation, which can be easily ignored depending upon apparent circumstances.
-----Original Message-----
Sent: Monday, July 25, 2011 8:51 AM
To: 'Arthur Sucsy'
Subject: RE: No Reason to Raise Federal Debt Limit
Thank you for contacting me regarding the debt ceiling. I share your concerns about the future of our country if Washington fails to make significant spending cuts. We have a government that spends too much, borrows too much, and taxes too much. As your Representative, my top priority in Congress is to rein in spending and clean up this mess before it is too late.
As you know, Washington continues to grapple with the need to raise the debt limit, which currently stands at $14.29 trillion. Earlier this year, the Treasury Department sent a letter to Congress indicating that August 2nd would be the last day the U.S. government would be able to pay all of its bills without an increase in the debt limit. Washington has maxed out its credit card and it is time for serious and significant change.
To shift the direction our country is headed, my colleagues and I have created a responsible plan that would require fundamental change before any increase in the debt ceiling could occur. This legislation, called Cut, Cap and Balance, would put our country back on a sustainable fiscal path and bring Washington back to reality. The House of Representatives passed Cut, Cap and Balance on July 19th by a vote of 234 to 190.
Here are some of the details of this bill:
CUT- The bill requires $111 billion in spending cuts in the 2012 fiscal year. These cuts would happen now, not years in the future. Now. Additionally, while ensuring that wasteful spending gets weeded out, this legislation makes absolutely no changes or cuts to Social Security, Medicare, veterans, or national defense spending.
CAP- This legislation also caps government spending as a percent of GDP, eventually lowering it to 19.7% in 2018 compared to approximately 25% today. Most importantly, breaking the caps set in place triggers automatic spending cuts. By using spending caps, we would lock in $5.8 trillion in budget savings over the next ten years.
BALANCE- Finally, this legislation grants President Obama's request for an increase in the debt limit, but only after Congress has cut up the credit cards by passing a Balanced Budget Amendment. It would require the passage of a Balanced Budget Amendment to the Constitution before allowing any increase in the nation's debt limit. Basically, the debt limit will only be increased for the short term if a Balanced Budget Amendment gets our fiscal house in order for the long term.
For too long, Congress spent your hard-earned tax dollars without thinking about the consequences. With this legislation, Washington would finally have to do what families and businesses do every day - balance the budget.
Please be assured that I will continue to fight for a stronger America which includes reducing spending and balancing the budget.
Again, thank you for contacting me about this issue. As your Congressman, I value your input and I hope that you will always contact me with your concerns. Hearing your views helps me be sure that I represent you and your family even better while I have the honor of representing you in Congress.
Randy,
I am opposed to your Cut/Cap/Balance bill for the following reasons:
The bill requires a spending cut of $111 billion per year. The government is now overspending by $4 billion per day. That's $1.46 trillion per year. $111 Billion per year is 7.6% of what is needed to create balance. Is this a joke or have I missed something?
The "Cap" portion requires a reduction from 25% to 19.7%, and that only after seven years. This is an absolute reduction of 5.3%. US GDP is $14.7 trillion. 5.3% Of that means a spending cut of $779 billion per year. Since we are overspending by $1.46 trillion per year, we will still be overspending after seven years at the rate of $681 billion per year or almost $2 billion per day. Is this another joke?
The Balanced Budget Amendment sounds good. If I take it at its apparent meaning, it would mean that we would be overspending zero dollars per day. My only hesitation is the meaning of "budget". That term has come to mean a hoped-for situation, which can be easily ignored depending upon apparent circumstances.
-----Original Message-----
Sent: Monday, July 25, 2011 8:51 AM
To: 'Arthur Sucsy'
Subject: RE: No Reason to Raise Federal Debt Limit
Thank you for contacting me regarding the debt ceiling. I share your concerns about the future of our country if Washington fails to make significant spending cuts. We have a government that spends too much, borrows too much, and taxes too much. As your Representative, my top priority in Congress is to rein in spending and clean up this mess before it is too late.
As you know, Washington continues to grapple with the need to raise the debt limit, which currently stands at $14.29 trillion. Earlier this year, the Treasury Department sent a letter to Congress indicating that August 2nd would be the last day the U.S. government would be able to pay all of its bills without an increase in the debt limit. Washington has maxed out its credit card and it is time for serious and significant change.
To shift the direction our country is headed, my colleagues and I have created a responsible plan that would require fundamental change before any increase in the debt ceiling could occur. This legislation, called Cut, Cap and Balance, would put our country back on a sustainable fiscal path and bring Washington back to reality. The House of Representatives passed Cut, Cap and Balance on July 19th by a vote of 234 to 190.
Here are some of the details of this bill:
CUT- The bill requires $111 billion in spending cuts in the 2012 fiscal year. These cuts would happen now, not years in the future. Now. Additionally, while ensuring that wasteful spending gets weeded out, this legislation makes absolutely no changes or cuts to Social Security, Medicare, veterans, or national defense spending.
CAP- This legislation also caps government spending as a percent of GDP, eventually lowering it to 19.7% in 2018 compared to approximately 25% today. Most importantly, breaking the caps set in place triggers automatic spending cuts. By using spending caps, we would lock in $5.8 trillion in budget savings over the next ten years.
BALANCE- Finally, this legislation grants President Obama's request for an increase in the debt limit, but only after Congress has cut up the credit cards by passing a Balanced Budget Amendment. It would require the passage of a Balanced Budget Amendment to the Constitution before allowing any increase in the nation's debt limit. Basically, the debt limit will only be increased for the short term if a Balanced Budget Amendment gets our fiscal house in order for the long term.
For too long, Congress spent your hard-earned tax dollars without thinking about the consequences. With this legislation, Washington would finally have to do what families and businesses do every day - balance the budget.
Please be assured that I will continue to fight for a stronger America which includes reducing spending and balancing the budget.
Again, thank you for contacting me about this issue. As your Congressman, I value your input and I hope that you will always contact me with your concerns. Hearing your views helps me be sure that I represent you and your family even better while I have the honor of representing you in Congress.
Monday, July 25, 2011
Vote against raising the federal debt limit
Copy of a message sent to Rep. Neugebauer:
Saw Obama and Boehner this evening. Obama asked that we the people contact our House Representatives concerning the federal debt limit. I am doing so.
Please vote against raising the federal debt limit. Support Boehner.
Saw Obama and Boehner this evening. Obama asked that we the people contact our House Representatives concerning the federal debt limit. I am doing so.
Please vote against raising the federal debt limit. Support Boehner.
Friday, July 22, 2011
No Reason to Raise Federal Debt Limit
Yahoo Finance says, "5 Consequences if America Doesn’t Raise the Debt Ceiling David Walker, former Comptroller General of the U.S. and [former] head of the Government Accountability Office, says it's imperative both sides of the aisle find a compromise that also sets conditions to lower long-term debt and get back on track. If not, the rest of us will pay.
1. $4 billion-plus a day will come out of the economy.
2. Government and civilian military workers will be laid off temporarily. That will result in penalties for late payment, to be paid by taxpayers.
3. Social security payments will be delayed.
4. No one knows how bad the reaction will be, but Walker is confident it will be negative for the stock and bond markets and the economy.
5. Interest rates will rise. For every 1% rise in interest rates, taxpayers will be on the hook for an additional $150 billion in debt payments.
David Walker has given the above five reasons for raising the federal debt limit. Let's look at each one of these in detail:
1. The government is spending $4 billion per day more than it is taking in. Irrelevant! The $4 billion per day excess spending is being obtained by borrowing. Does it make sense that raising the debt limit has any effect on the $4 billion per day spending? If we are overspending by $4 billion per day, the debt ceiling has nothing to do with it. The only way to obtain balance is to either increase revenue by confiscating $4 billion per day from the public through taxes, or reducing spending by $4 billion per day.
2. Government and civilian military workers will be laid off temporarily, which will result in penalties for late payment. Untrue! If there is late payment of salaries, government only has to pay interest on the delay. This would be no different than paying interest on any bonds sold under increasing the debt limit. In addition, the obvious answer is to not lay off government and civilian military workers temporarily. Lay them off permanently.
3. Social Security payments will be delayed. Not necessarily! They will be delayed only if Pres. Obama and the Sec. of the Treasury decide to delay them. The fact is that there is sufficient revenue to pay Social Security and there is obligation to do so from the Social Security Trust Fund. The Treasury could always find someplace else to delay payments. Pres. Obama has only put out this delay threat as motivation for support of seniors to extend the federal debt limit and give him a deeper pockets for more spending.
4. Walker asserts that not raising the debt limit will have a negative effect on the stock and bond markets, unemployment, and the economy in general. He gives no reason for that conclusion. Alternatively, I can also assert that not raising the debt limit will have a favorable effect on those factors. Is his guess better than mine?
5. If the debt limit is not raised, interest rates will rise. This is a red herring! Walker is likely talking about interest rates on government bond issues. The interest rate on a bond is always related to the bond rating. The rating is a measure of the probability of the bond issuer to pay the stated interest and eventually the principal, when the bond becomes due. The weaker the rating, the higher the interest necessary for the buyer to justify taking increased risk of default on interest and principal.
Moody rates federal government bonds, municipal bonds, corporate bonds, etc. The highest rating is AAA, which also pays the lowest interest. The AAA rating is based on the credit worthiness of the organization. In other words, does the organization have a proper balance of revenues and expenditures. If expenditures exceed revenues, it is apparent that the organization will eventually default on its loans (bonds) and the rating must be decreased with an attendant increase in interest rates.
On that point of an increase in interest rates, Walker is correct. We can expect to see a decrease in US government bond ratings and an attendant increase in interest. However, the key point is that whether there is an increase in the government debt limit or no increase, the fact of credit worthiness remains unchanged. If we continue to spend $4 billion per day more than we take in, Moody will say we will eventually go bust and default on our bonds. Increasing the debt limit will only increase the amount of the default we will later face.
I'm a little surprised that David Walker, who was supposed to be cognizant of financial matters, has come up with these silly reasons to extend the federal limit. If he were presently working for Pres. Obama and Timothy Geithner, I could understand a partial excuse. As it is, I am completely non-plussed.
1. $4 billion-plus a day will come out of the economy.
2. Government and civilian military workers will be laid off temporarily. That will result in penalties for late payment, to be paid by taxpayers.
3. Social security payments will be delayed.
4. No one knows how bad the reaction will be, but Walker is confident it will be negative for the stock and bond markets and the economy.
5. Interest rates will rise. For every 1% rise in interest rates, taxpayers will be on the hook for an additional $150 billion in debt payments.
David Walker has given the above five reasons for raising the federal debt limit. Let's look at each one of these in detail:
1. The government is spending $4 billion per day more than it is taking in. Irrelevant! The $4 billion per day excess spending is being obtained by borrowing. Does it make sense that raising the debt limit has any effect on the $4 billion per day spending? If we are overspending by $4 billion per day, the debt ceiling has nothing to do with it. The only way to obtain balance is to either increase revenue by confiscating $4 billion per day from the public through taxes, or reducing spending by $4 billion per day.
2. Government and civilian military workers will be laid off temporarily, which will result in penalties for late payment. Untrue! If there is late payment of salaries, government only has to pay interest on the delay. This would be no different than paying interest on any bonds sold under increasing the debt limit. In addition, the obvious answer is to not lay off government and civilian military workers temporarily. Lay them off permanently.
3. Social Security payments will be delayed. Not necessarily! They will be delayed only if Pres. Obama and the Sec. of the Treasury decide to delay them. The fact is that there is sufficient revenue to pay Social Security and there is obligation to do so from the Social Security Trust Fund. The Treasury could always find someplace else to delay payments. Pres. Obama has only put out this delay threat as motivation for support of seniors to extend the federal debt limit and give him a deeper pockets for more spending.
4. Walker asserts that not raising the debt limit will have a negative effect on the stock and bond markets, unemployment, and the economy in general. He gives no reason for that conclusion. Alternatively, I can also assert that not raising the debt limit will have a favorable effect on those factors. Is his guess better than mine?
5. If the debt limit is not raised, interest rates will rise. This is a red herring! Walker is likely talking about interest rates on government bond issues. The interest rate on a bond is always related to the bond rating. The rating is a measure of the probability of the bond issuer to pay the stated interest and eventually the principal, when the bond becomes due. The weaker the rating, the higher the interest necessary for the buyer to justify taking increased risk of default on interest and principal.
Moody rates federal government bonds, municipal bonds, corporate bonds, etc. The highest rating is AAA, which also pays the lowest interest. The AAA rating is based on the credit worthiness of the organization. In other words, does the organization have a proper balance of revenues and expenditures. If expenditures exceed revenues, it is apparent that the organization will eventually default on its loans (bonds) and the rating must be decreased with an attendant increase in interest rates.
On that point of an increase in interest rates, Walker is correct. We can expect to see a decrease in US government bond ratings and an attendant increase in interest. However, the key point is that whether there is an increase in the government debt limit or no increase, the fact of credit worthiness remains unchanged. If we continue to spend $4 billion per day more than we take in, Moody will say we will eventually go bust and default on our bonds. Increasing the debt limit will only increase the amount of the default we will later face.
I'm a little surprised that David Walker, who was supposed to be cognizant of financial matters, has come up with these silly reasons to extend the federal limit. If he were presently working for Pres. Obama and Timothy Geithner, I could understand a partial excuse. As it is, I am completely non-plussed.
Thursday, July 14, 2011
Major Projects for Unemployment and the Economy
There are a number of reasons why the US economy is faltering. Among these is unemployment. The more people employed, the greater is the amount of money available for transfer in society. This contributes to Gross National Product, The higher the GNP/person in a society, the better is a person's standard of living.
We mostly lack jobs in this country, not only because many jobs have been shipped overseas for lower labor costs, but also because of continually improved efficiency in supplying manufactured goods and services in the US. The only significant opportunity remaining for considerable employment and an improved economy is a major national project.
Man has traditionally attempted to ameliorate the extremes of nature for his own accommodation. We heat our homes with fuel in the winter and cool them with air conditioning in the summer, We preserve food through canning and freezing during harvest, so that it will be available at a future time. We build roads for ease of transportation. We build dams and reservoirs for power generation and to control flooding.
The last of these major endeavors was construction of the Interstate Highway System. Before that, it was flood control and power generation with the Tennessee Valley Authority (TVA). It is now past time for another big one.
We have recently had heavy floods in the midsection of the country, with resultant considerable damage to private and public property. It is obvious that in spite of previous efforts, our job of flood control is not finished.
In the Southwest, we have had extreme drought bordering on the great Dust Bowl calamity in the 30's.
The commonality of those two conditions is WATER. Water on land comes from rain and snow. Some locations receive too much at one time . Others not enough. Some locations are routinely blessed with periodic precipitation (the NW). Others are routinely arid and borderline deserts the (SW). We do not now have the technology of controlling where precipitation will fall, nor is it apparent that this a possibility for the near future. However, we do have the opportunity to control the final destination of water once it has fallen. In the extreme aspect, that can be considered flood control. In the more moderate aspect, it can be called irrigation.
The Mississippi has more than enough water for local communities, and in times of heavy rainfall or the melting of snow in the northern mountains, flooding occurs with subsequent damage. Here is an opportunity for a project of major proportions. Build dams, reservoirs and lock s to control the Mississippi by equalizing its output to the sea. If there is excess water in total, can we direct some of it to the SW? In so doing, can we construct aqueducts large enough to be used as canals for barge traffic?
What about the possibility of irrigating the SW with deionized sea water? Construct membrane deionization plants in mountains away from high population densities. Use nuclear plants to generate electricity to pump the sea water to the higher elevation and supply pressure for the membrane deionization. The irrigation water could then flow by gravity into the High Plains through canals, dams and locks. Again, we would have the possibility of barge traffic in the canals.
Big project? You bet! Could it be accomplished? You bet! We have the technology in the form of workable nuclear plants and membrane desalination, heavy earth-moving equipment, and plenty of manpower (remember unemployment).
The remaining big question is, "Is it economically feasible?" You bet. It would be primarily land recovery for use to produce agricultural crops. The Europeans can't do it. They have high population densities and little available land. Food in Europe is already expensive compared to the US. We can sell them the food and related raw materials for manufacturing (think cotton). They can do the manufacturing and supply us with finished goods. The same goes for many Asian countries.
How do we start? We get the Wall Street bunch to form a conglomerate. Let's call it "World Food Supply". The conglomerate then arranges a huge bond issue at, say 7% interest, with the first interest payment due in 7 years. From the bond revenue, the conglomerate starts the engineering design to fix the origin of the water source and subsequent related design problems, purchase land, let out contracts for earth moving involving canals, dams, locks, etc.. We want to keep government out of this, because it would be a tremendous project with a long term of completion. Say, 7 years. The presence of government would likely kill it, because of governments' propensity for argumentation and stretching things out time-wise.
Why would people buy the bonds? For the interest. What about an IPO (stock issue)? Sure! Why would anyone buy the stock? For dividends and increase in value as the conglomerate makes profits. How will the conglomerate make profits? Through sale of water to growers in the irrigated region and from toll revenues in canal barge traffic.
Who wants to start it?
We mostly lack jobs in this country, not only because many jobs have been shipped overseas for lower labor costs, but also because of continually improved efficiency in supplying manufactured goods and services in the US. The only significant opportunity remaining for considerable employment and an improved economy is a major national project.
Man has traditionally attempted to ameliorate the extremes of nature for his own accommodation. We heat our homes with fuel in the winter and cool them with air conditioning in the summer, We preserve food through canning and freezing during harvest, so that it will be available at a future time. We build roads for ease of transportation. We build dams and reservoirs for power generation and to control flooding.
The last of these major endeavors was construction of the Interstate Highway System. Before that, it was flood control and power generation with the Tennessee Valley Authority (TVA). It is now past time for another big one.
We have recently had heavy floods in the midsection of the country, with resultant considerable damage to private and public property. It is obvious that in spite of previous efforts, our job of flood control is not finished.
In the Southwest, we have had extreme drought bordering on the great Dust Bowl calamity in the 30's.
The commonality of those two conditions is WATER. Water on land comes from rain and snow. Some locations receive too much at one time . Others not enough. Some locations are routinely blessed with periodic precipitation (the NW). Others are routinely arid and borderline deserts the (SW). We do not now have the technology of controlling where precipitation will fall, nor is it apparent that this a possibility for the near future. However, we do have the opportunity to control the final destination of water once it has fallen. In the extreme aspect, that can be considered flood control. In the more moderate aspect, it can be called irrigation.
The Mississippi has more than enough water for local communities, and in times of heavy rainfall or the melting of snow in the northern mountains, flooding occurs with subsequent damage. Here is an opportunity for a project of major proportions. Build dams, reservoirs and lock s to control the Mississippi by equalizing its output to the sea. If there is excess water in total, can we direct some of it to the SW? In so doing, can we construct aqueducts large enough to be used as canals for barge traffic?
What about the possibility of irrigating the SW with deionized sea water? Construct membrane deionization plants in mountains away from high population densities. Use nuclear plants to generate electricity to pump the sea water to the higher elevation and supply pressure for the membrane deionization. The irrigation water could then flow by gravity into the High Plains through canals, dams and locks. Again, we would have the possibility of barge traffic in the canals.
Big project? You bet! Could it be accomplished? You bet! We have the technology in the form of workable nuclear plants and membrane desalination, heavy earth-moving equipment, and plenty of manpower (remember unemployment).
The remaining big question is, "Is it economically feasible?" You bet. It would be primarily land recovery for use to produce agricultural crops. The Europeans can't do it. They have high population densities and little available land. Food in Europe is already expensive compared to the US. We can sell them the food and related raw materials for manufacturing (think cotton). They can do the manufacturing and supply us with finished goods. The same goes for many Asian countries.
How do we start? We get the Wall Street bunch to form a conglomerate. Let's call it "World Food Supply". The conglomerate then arranges a huge bond issue at, say 7% interest, with the first interest payment due in 7 years. From the bond revenue, the conglomerate starts the engineering design to fix the origin of the water source and subsequent related design problems, purchase land, let out contracts for earth moving involving canals, dams, locks, etc.. We want to keep government out of this, because it would be a tremendous project with a long term of completion. Say, 7 years. The presence of government would likely kill it, because of governments' propensity for argumentation and stretching things out time-wise.
Why would people buy the bonds? For the interest. What about an IPO (stock issue)? Sure! Why would anyone buy the stock? For dividends and increase in value as the conglomerate makes profits. How will the conglomerate make profits? Through sale of water to growers in the irrigated region and from toll revenues in canal barge traffic.
Who wants to start it?
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