The Beginning Of The End
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The Debt Ceiling Deal From Hell

Is the debt ceiling deal supposed to be some sort of a cruel joke?  Is this what the American people have been waiting months and months for?  The "debt ceiling deal from hell" is a complete and total fraud.  Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no "real" spending cuts will happen until after the 2012 election.  The way the political game in Washington D.C. is played today, if you don't get something right now, you probably will never end up getting it.  The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future.  Meanwhile, this deal establishes a new "Super Congress" that threatens to fundamentally alter our political system (and not in a good way).  The funny thing is that everyone is running around proclaiming that the Tea Party won this battle.  That is a complete and total lie.

So what about the $917 billion in "immediate" spending cuts that the Republicans are getting as part of this deal?

Well, they aren't really spending cuts at all.  Rather, they are spending caps.  Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as "spending cuts".

What is even sadder is that the $917 billion is spread over ten years and the vast majority of the "cuts" are in the latter years.

For example, even if you consider these to be "spending cuts" (which they are not), the deal calls for only about $25 billion in "cuts" in 2012 and only about $47 billion in "cuts" in 2013.

25 billion dollars is far less than one percent of the federal budget, so needless to say these "cuts" are not very impressive at all.

Okay, so how about the second stage of the deal which will produce "spending cuts" of between 1.2 and 1.5 trillion dollars?

Well, yes, these would actually be spending cuts and they would be spread over 10 years.

Near the end of the year, the new "Super Congress" (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.

If the recommendations of the "Super Congress" are not implemented, then "automatic" spending cuts of $1.2 trillion will go into effect over the next 10 years.

However, there are some very important things to remember about these "spending cuts".

First of all, none of these "automatic" spending cuts would even go into effect until 2013.  The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.

As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason....

By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

As I have written about so many times before, the U.S. national debt is completely and totally out of control.  This was supposed to be the moment when at least some members of Congress were finally going to get serious about our exploding debt.  Unfortunately, our politicians have sold us down the river once again.

Even if the best case scenario happens (which it never does) and Congress sticks to this deal for the full ten years (which is about as likely as hell freezing over), the "savings" that this deal would produce are quite pathetic as Peter Schiff recently explained....

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

Keep in mind that Congress can change this deal whenever it wants.

So nobody should get excited about these "spending cuts".  After all, when was the last time that "future spending cuts" actually materialized in Washington?

The reality is that neither political party seems to want to do much to cut government spending.

So the band will play on and the can will get kicked even farther down the road.

When Obama was inaugurated, the U.S. national debt was $10,626,877,048,913.08.

Today, it is $14,342,358,440,969.10.

But what this "debt ceiling deal" will do is it will give the congressional leadership of both parties much more power.

The new "Super Congress" that this deal establishes will be granted "extraordinary new powers" that regular members of Congress do not possess.

For example, The Huffington Post says that any new legislation produced by the "Super Congress" will not be able to be filibustered or amended....

Under the reported framework, legislation the new congressional committee writes would be fast-tracked through Congress and could not be filibustered or amended.

So who will be a part of the "Super Congress"?

The members will be chosen by the leadership of both parties.

So anyone that is not part of the "establishment" is not likely to be included.

The following is what U.S. Representative Ron Paul had to say about this new "Super Congress"....

"Nothing more than a way to disenfranchise the majority of Congress by denying them the chance for meaningful participation in the crucial areas of entitlement and tax reform. It cedes power to draft legislation to a special commission, hand-picked by the House and Senate leadership."

It is this new "Super Congress" that will decide what will be in the package of "spending cuts" that will be voted on by the end of the year.

Regular members of Congress will be frozen out of the process.

On December 23rd, Congress will be required to vote up or down on the spending cuts proposed by the "Super Congress".  Regular members of Congress will not be allowed to amend the legislation in any way, and no filibusters will be permitted.

Does that sound very "American" to you?

The more that one examines this "debt ceiling deal", the worse it looks.

Meanwhile, many Democrats are running around and acting as if their lunch money was just stolen.

For example, the following is what Politico is reporting that U.S. Representative Mike Doyle said about this deal....

“We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

Democratic congressman Emanuel Cleaver was even more dramatic when he proclaimed that this deal "looks like a Satan sandwich".

Well, this deal is a total nightmare, but not for the reasons that Cleaver is suggesting.

This deal opens the door for more rampant deficit spending, and nearly all of the "spending cuts" are put off until after the 2012 election.

Basically, the Republicans got taken out behind the woodshed and beaten to a pulp on this one.  Any Republican that is trying to proclaim that the debt ceiling deal is a "great victory" is a complete moron.

But in the end, it really does not matter which political party gets a "victory" out of all this.  What matters is that our federal government is still steamrolling toward a date with financial oblivion.

If this is the best that our politicians can come up with, we are absolutely doomed.

 

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  • Prepare For The Worse And Hope For The Best

    Didn’t think I’d see it in my life time but here we are. It’s been a fun ride. Wish it could have lasted longer though.

  • LOVE a good Horror show

    This is Soooooo exciting everyone!
    Last night we gathered the entire family around the TV set to watch the Economic Horror show!
    What could you not love about it!
    Total destruction of the worlds economy is one of the best horror flicks EVER!!
    Of course this horror show would not be complete without snacks, we cuddled together on the couch, popcorn and chips and turned the lights out and watched the NEWS with Terror delight!
    We can only hope that this sequel to the 2008 economic horror show will be better and more action filled with more horror and terror!

  • Dave Roberts

    I can’t understand why Obama doesn’t put out the true facts and charts. In the last 50 yrs every Republican president was responsible for a large increase in the debt, particularly Bush Snr and Bush Jnr, nearly every Democrat President reduced the debt even with spending more on social welfare. Obama got elected after George Bush increased the debt by 20% and then had a GFC because of “funny” paper money created by smart financial bankers. The only way to cut the debt is to stop wasting trillions on wars that can’t be won. The West couldn’t win in Iraq because of the hatred between Sunni and Shiites, the West can’t win in Afghanistan because of the corruption, the ‘clan’ structure etc. Get out and save money.

  • discouraged1

    Mondobeyondo, if you are talking free trade agreements, _Linton did more to advance them than Obama, Bushy and Bushy put together.

  • discouraged1

    Thai is supposed to be Clinton did more to advance free trade (sorry not usedto doing this on my droid yet.

  • T Bonham

    The more I read about the Super Congress (made of 6 Rep/ 6 Dems and the Pres) I am more concerned about how they will direct this country. Now starting to sound suspicious. They will be able to circumvent the House and Senate committees that have acted as funnel points for debate and slowing the progress of bills down. They will present for an up or down vote. This is NOT a good idea. Obama has only 12 people to convince, six actually plus his vote to move legislation through! The implications of the Super Congress sounds more like the Emperor’s Table of Twelve. Food, Ammo, and Silver are the ONLY investments you need to be making right now and plans to get to a secure area with others for common defense.

  • Randy

    Everyone in Washington has their heads so far up their u know whats that the methane is causing them to hallucinate about things other than what is really wrong with this country. The repukes and the tea baggers are the worst. Everyone is running around crying about the deficit and still are not focusing on the real problems with this country. The lack of jobs and the shipping overseas of a huge amount of jobs. The government should live within its means, however as history has shown us, now is not the time for spending cuts. It is only going to further damage the economy. If we could get the economy strong again increased taxes would put a big dent in the deficit. That is if the guvmnt would stop increasing spending. That’ll never happen with the current way of doing business in Wushington. So the economy just needs to hurry up n crash so we can start over.

  • Arivernameddenial

    Screwed again by our own countrymen. Time for the revolution to begin. It is treason to destroy the US. I do not know who this Obama is? Guess I should read his book that he did not write. May be that will give me an idea as to his teleprompter person. We are in for some problems with this so called leadership- both parties are screwing us. I am seriously looking at Ron Paul as candidate for president.

  • Phillip

    No man is an island,entire to itself; every man is a piece of the continent, part of the main; if a clod be washed away by the sea, Europe is the less…any mans death deminishes me,because I’m involved in mankind, perchance he for whom this bell tolls, may be so ill, as he knows not it tolls for him; and perchance I may think myself much better than I am, as that they who are about me…may have cause it to toll for me…therefore never send to know for whom the bell tolls; it tolls for thee.

    John Doone.

  • Phillip

    U.S.A. dropped from AAA to AA+.

    The death knell has begun slowly but surely.

  • 007

    Well, the Liberal, socialist have driven our country into the dirt. Our credit rating is gone. The market is crashing. Well done Obama. Try a little harder and you can totally destroy our country.

  • Darren

    Well, using the words of a former president, what we have here is “VooDoo Economics”. Very sad what Washington has come to.

  • Steven

    looking forward to a new post about the AA+ credit rating and what the chinese are doing.

    • Michael

      Sorry for the delay – moving to another state is kind of overwhelming me right now. :)

      Michael

  • http://anticarpolicestate.blogspot.com SmokeDogg

    Michael, no man the Tea Party is evil dude.

    The Tea Party is a Rothschilds op to start a Civil war and a Race War in America. They are sure doing very well to instigate the minorities too- like planned.

    The Liberals will soon have their very own Rothschilds backed version of the Tea Party, and when that happens all hell will break loose.

    John Boehner said openly that he got 98% of what he wanted, and I consider him a Tea Partier, and an ass.

    America is over dude, give it up already. Look to the future for a New World Order. Thats the real fight.

    The United States of America is doomed, and good riddance. We need a New World Order Under God, but to get a God Centered New World Order Satan’s must come first.

  • AAplusrating

    Hang on, we’re going down.

  • Highspeed

    Does anyone have any idea what effect the downgrade will have on Monday? Is it gonna get ugly fast or what?

  • InArizona

    Michael.. I know you are moving and all… but many of us are waiting for your interpretation of the S&P downgrade…. with baited breath!

    No, really, I hope the moving is going okay, and thanks for all that you do for us in getting the message out!

    • Michael

      Hopefully you will enjoy the article I just put up. :)

      I am still in the middle of moving, but hopefully by the beginning of next week things will be back to “normal”.

      Michael

  • Ray

    I’m no economic expert, but consider:
    If I’m some rich guy who owns hundreds of stores nationwide, and my employees are nearly idle, since fewer and fewer average folks are spending money in my store, and I get a tax break from the government, am I going to hire more employees to join my ranks of idle workers?

    This “job creators” moniker that the right wing is advertising through their fox “news” bullhorn is a myth. Seems to me that job creation is enhanced by CONSUMER DEMAND, bottom UP, not trickle down.
    Obama blew it on the stimulus….they should have concentrated on getting more $$ into the hands of people who would SPEND it, rather than caving and giving it to the Financial guys who hoarded it. But he was handed a giant turd sandwich from the credit-card mentality of the previous administration, so the blame is not all his.
    This could all be a moot point anyway, since the “Free Market” guys insisted years ago to eliminate “Big Government” import tariffs, you know, the things that protected us and even FINANCED our government before the income tax came along. So now, when people buy things, they buy from other countries and this nation of idiots stand around, scratching our …..heads, wondering what is happening to this country, while the Free Market guys stay hidden in the American flags (made in China)they wrap themselves in, counting their money (in the Caymen Islands).
    *************….even the rightwing United States Chamber of Commerce is for outsourcing, and thanks to the rightwing majority of the Supreme Court and their decision on the Citizens United case, the Chamber of Commerce takes in “campaign contributions” (bribes) from Communist China manufacturing companies and uses that money to finance (bribe) more republican Free Market-types.

  • flosser

    all these blogs are so interesting and informative. However, i have a problem with the so called ‘entitlement’ programs such as medicare, medicaid, social security.
    First, we as tax paying citizens have paid into those programs heavily during our working years. Some of us, self employed have paid double with the promise that after we reach a certain age, we could them start collecting social security or i like to liken it to a “pension”. So now tell me, where the hell is that money that millions of Americans have paid into for decades? Why will the elderly, infirmed, etc. be penalized? Why don’t we penalize the elected members of Congress and have them have to cow-tow to the same tax cuts we do? Where is the justice in all this bull?
    Nope…..doesn’t jive with me. I suggest that members of Congress have the same benefits that the average working person has……no more no less. Days of their entitlements should be over and then lets see what they have to say.

  • Grumpy

    This theater of the macabre, brought to you by the D&R crowd and their bankster puppet masters (and coupled with the S&P downgrade, which should have reduced UST’s to junk status instead of AA+), leaves only a small number of plausible scenarios going forward from here:

    1. The largest foreign holders of US debt (China, Japan, Russia, Brazil, etc.) begin selling off UST’s for something of valeu, resulting in hyperinflation and the destruction of the FRN/USD.

    2. US defaults on UST debts to foreign governments; dollar may be saved, but would most probably lead to a very serious, nation-ending war.

    3. The Fed prints enough to cover all outstanding UST debt, devaluing the dollar, leading to hyperinflation and the destruction of the FRN/USD. This scenario also is highly likely to lead to a very serious, nation-ending war.

    I’m sure our moneyed overlords are overjoyed at the prospect of watching all the ‘useless eaters’ tear each other apart over what amounts to table scraps whilst blaming each others race, religion, political affiliation, or socio-economic backgrounds for what is occurring. Special thanks in advance to the mindless ignorance of the majority of the US populace (people not unlike Gary2) for the coming chaos.

  • A.S.
  • Ouida Gabriel

    I have been reading a book called “The Great Depression, A Diary” By Benjamin Roth. Some of you mind find it educational and eye opening. It is like seeing what is going on right now already printed, and it is not pretty.

  • MDK

    God is in control.

  • CatNap

    Quoting: “If this is the best that our politicians can come up with, we are absolutely doomed.”

    Where you have gone wrong in this statement lies with the word, “our”…as in “our politicians”.

    The men and women in D.C. who are doing this are not working for the average American. They are the politicians of the elite. They are doing the bidding of them.

    And yes, America is doomed. The PTB are dismantling it slowly and doing so in such a way as to claim plausible deniability.

  • Arivernameddenial

    Time for a new article

    • Michael

      Sorry, I have been busy moving. :)

      Michael

  • https://libertyrevival.wordpress.com Think Out of the Box
    • http://libertyrevival.wordpress.com/ HenryGeorge

      I’m not the same person as above. I just came here because my blog was getting traffic because of the person above.

  • Motley Crew

    Time to ********** america……or are you just a bunch of fat idiots. Can’t you see where this is going?

  • Stolengoat

    Hey motley america is def hurtin and we may have to pay the piper real so but you can stow that anti american talk this site is proof that there are still patriots in this country. I’m 29 years old, got a 1 month old lil girl, selling the crap outta ADT security systems to scared folks just like me. Saving my measley greenbacks for an AR and a basement full of green bean. How the bleep did we get here??? How is it possible that a small town kid like me, with just a high school education can see the writing on the wall but so many around me just swallow the piles of crap the fat cats on the hill and in the media dish out. I got news for all of us. This ain’t the country our grandpa’s fought and toiled there lives away to pass on. We are sick and the colon cleansing is about to begin. I asked my mama what she wanted for christmas, she said “Good will on earth and peace for all men” I handed her a Bushmaster AR-15 told her “It was a do it your self project.” Good luck folks, I’ll be holding out in Southern IN. Eating good, right next to a thriving Amish community. One hand on my rifle the other on my fishing pole. Country Boys Can Survive

  • http://globaleconomicwarning.blogspot.com Global Economics

    THE NEXT PRESIDENT CAN’T FIX THE FEDERAL RESERVE THAT IS BANKRUPTING OUR NATION!…

    … paper money will become worthless… you have to prepare yourself and your family for the financial crisis ahead

    (click on my profile name to go to my blog to see my full video)

    This is a must see video… you have you prepare yourself and your loved ones before it’s too late.

    I’m posting my blog video here because I need to reach out to the real people who are effected by the Global Economic Crisis. Please pass this video on.

    • http://libertyrevival.wordpress.com/ HenryGeorge

      Have you read Honest Kucinich’s NEED Act of 2012? That bill ends the Federal Reserve and pays off the national debt with the Greenback.

      Honest money is one issued by the public for the public, without interest-bearing debt or taxation attached to it, and without government corruption of commodity markets, like gold. the act of the government declaring gold to be legal tender corrupts the free market in gold. Gold becomes fiat with fictional values.

      The gold standard is effectively the same as we have now, money issued by private bankers as interest-bearing debt. Partially backing the bank notes with gold just increases the ability of banks to force a deflationary contraction after an inflationary expansion. It is called fractional reserve banking, and it is the reason why the boom/bust cycle occurs and why we are enslaved by debt.

      Declaring a 100% reserve gold standard would just result in massive deflation, massive transfer of wealth to those with gold, and start a new dark age, simply because current values of gold do not reflect the wealth of the world, and must sharply increase in value to reflect the wealth of the world. It would also require the government buying massive amounts of gold to convert federal reserve notes to gold notes, resulting in massive taxation or interest-bearing debt at the benefit of those who hold gold.

      The Libertarians who promote gold are not Libertarians. They’re charlatans who want to corrupt free markets and steal wealth.

      http://libertyrevival.wordpress.com/documents/economic-conspiracy/

      http://libertyrevival.wordpress.com/documents/quotations/

  • http://libertyrevival.wordpress.com/ HenryGeorge

    we should be thankful that we aren’t getting shafted with austerity during a stagflation depression.

    for the first time in 3 years, obama has started to serve the people. his corporate masters unleashed him and allowed him to do the right thing after shoving the corporate agenda down our throats for 3 years.

    it is all to help get him reelected in 2012 so he can return to shoving the corporate agenda down our throats. just be thankful the corporate agenda is throwing us a bone before reelection.

    no matter who is president and who is congress, you’ll be getting the corporate agenda because it is the corporate media who makes or breaks a candidate.

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