Everyone has been in a panic this week over America's impending fiscal collapse, but I think the reality is that America does not face an immediate debt crisis. Take a look at the simplest indicator, the day that Standard & Poor's raised its now famous warnings about America's debt, markets decided to lower America's borrowing costs and the dollar rose against its principal alternative, the euro.
The real problem for America may well be that it does not face a short-term crisis. Over the last few years, everyone has been worrying about America's debt, and despite all that public worrying, markets keep lowering the rates at which we can borrow money.
Why? Well, around the world, people, countries and companies are looking for safe, liquid investments. The market's judgment is that the safest such investment is Uncle Sam's debt.
Imagine you're the head of China's central bank. You need to invest tens of billions of dollars every year in something secure and liquid so you can get your money back when you need it. There are few good options. You could invest in European bonds, but you've been spooked by the recent series of euro crises. It's fair to ask, will the euro in its current form even be around in 10 years?
Then there are Japanese bonds. You could invest in those, but Japan has the worst balance sheet of the major countries, with debt at 200 percent of GDP, slow growth and a rapidly aging population. Plus you, the Chinese, hate the Japanese, have never forgiven them for World War II, and are not likely to do anything to shore up the yen as a global currency. You could invest in your own bonds, but that would drive up the value of China's currency and make your exports more expensive, which means fewer jobs at China's manufacturing companies.
My point is that Beijing buys U.S. Treasury bills not out of any great love for America, but for good, practical reasons. It's why others buy them as well.
The short-term news about the U.S. economy is also positive. Last week, the International Monetary Fund (IMF) issued a report on global growth that confirms that the U.S. is likely to be the fastest-growing of the world's advanced economies. In fact, the real problem is that this short-term good news means Washington isn't really acting as if it faces a crisis, no matter the rhetoric.
Democrats are still clinging to entitlement programs - Medicare, Social Security - with no talk of real cost cutting, though the current system is clearly unaffordable. Republicans are playing politics with the vote to raise the country's debt ceiling and are still blind to the inevitable need to raise taxes. People are still pushing their ideologies rather than fixing the problem.
Once again, it looks like the American economy will outperform expectations and temporarily relieve politicians from having to make hard choices about entitlements and taxes. But this will only postpone the day of reckoning and make the crash more painful.
You can read more on this in TIME Magazine this week.
 |
Post by: |
© 2011 Cable News Network. Turner Broadcasting System, Inc. All Rights Reserved.
| Advertising practices | Advertise with us | About us | Contact us | Work for us | Help
Excellent article. Read in connection with A National Strategic Narrative by Mr. Y published by the Woodrow Wilson Center.
Maybe the government could implement a long term cost cutting plan, opposed to the suddenly "sorry, we don't have the money anymore" plan. They could start the cuts at the edges, where the citizens wouldn't feel much. The international policy is a mess. Giving $3 Billion dollars a year to Israel and $2 Billion to Egypt is really necessary? The Moveoveraipac group is trying to change this, but they will probably fail. And why keep so many military bases all over the world? These bloated expenditures could be overlooked before, when the money was flowing, but not anymore.
Of course giving $3 billion to Israel and $2 billion to Egypt is a good idea. When there is massive potential for conflict in a close area, it's a good idea to weapons aid to both sides.
That way, when there's a war, and both sides actually need to buy weapons, they will both come to you, providing jobs for your massively bloated industrial defense manufacturing base.
And your banks can lend both sides the money that they need to buy those weapons.
[[\end sarcasm]
Realitycheck: How much "education" do you exactly??
Myopically speaking, right on Johnny. Focusing on one or two temporary aliment remedies is necessary from time to time to keep the patient happy. Long plan thinking and a vision of how the world may see this pull back, or react however is more importantly critical.
The World however is comprised of over 253 recognized countries, all with a variant range of ideas and leaders. (It is not that simple.)
Our first goal as a nation is (while we become more austere in our spending money we don't have, is to try and understand those 253 (UN Recognized?) different country problems, people, cultures and predominant ideals or ideologies. LISTEN.
Listening is not an activists idea of solving problems; but that first step is necessary if we as a Country want to grow. And I mean grow in knowledge and understanding, perhaps a little wisdom, compassion and yes STRENGTH. I never met a leader who did not know his people's concerns; and was able to express clearly his / her guiding principles. PRINCIPLES.
Which may be our real dilemma. Because we as a Nation have lost our PRINCIPLES. No one will in their right mind follow us, trust us, or is willing to work with us as friends. But of course they will still deal with us because of our size and resources. But let's first understand how our PRINCIPLES look around the world to those 253 some countries. They look at us an Athens, a people with so much openness of ideas, freedom of rights and liberty that we have NO DISCIPLINE, NO MORAL COMPASS, or GUIDING PRINCIPLES at all. Ours is slippery, dangerous path to take without those disciplines in grained into our Nations Forehead around the World.
We need to reiterate our Faith in Our Nation Under One God and Our Love for One Another in more than secular definitions. We need to reaffirm our commitment to those guiding principles and demonstrate them. (Rhetoric unless there is an understand of what it all means.)
A faith that first and foremost remembers God in our lives. TAKE A DAY OFF A WEEK. STOP WORKING ONE DY A WEEK AND REMEMBER AS A NATION WHO WE ARE BEHOLDEN TO FOR ALL OF OUR BLESSINGS.
And a faith that secondly SECONDLY takes care of one another. Yes we need to clean up our own house before we go telling others how to clean up theirs. How do we treat the unborn and the aged? Like statistics, biological experiments, actuarial measured benefits and under some joke of a cloak entitled, "DIGNITY". Real dignity to human beings start with cherishing, nurturing and honoring our most aged. Real dignity to human beings (the only race we need to enter in on our tax or census forms) begins at conception. And it means that if we have to we encourage we place incentives out there for all of us to take care of our people, our national treasures first. Our aged and our unborn are the only treasures we really have. All the rest are either somewhere in the middle of life's journey. And if we can't take care of the outliers we can't take care of any body.
Do those two things and our Nation will become that beacon of freedom for all to follow again. Forget these two simple rules, and continue down your slippery myopic slope into history as a memorable but failed culture.
Zakaria. Another talking head that has ZERO educational background in the subject he blathers about.... as ignorant people who are just as economically illiterate praise his "wisdom".
@Reality: try using counterpoints to his arguments rather than just throwing out insults. It would make your point more valid.
Umm, actually he is a noted political scientist who has written several well-received books on foreign policy and the international system. He also has a Ph.D. I'm not sure why you think he doesn't have the educational background to talk about International Political Economy (which is what this article is about), but when they use your books in graduate level International Relations classes, then you probably are considered to be an expert on the subject.
oh ya just gotta love those right wing wackos....they bring nothing to the table except hate.....lol
@Reality I second skarphace. A careful reading reveals some thoughtful commentary. You might do well to avoid articles written by people that have expertise since it is obvious that you do not have, at least on this subject.
Another brainwashed right-wing drone who just dismisses anyone out of hand who doesn't conform to what Rush Limbaugh and Glenn Beck have been saying. You people are truly laughable. I'll bet you think Glenn Beck, who has no education beyond high school, is a great thinker while you tell yourself Fareed Zakaria, who has a B.A. from Yale and a Ph.D. in Political Science from Harvard is an idiot who doesn't know what he's talking about. You people are the village idiots of the Republican party. You wouldn't check reality if your life depended on it. It's far too scary a place for folks like you.
Even if you were obviously too lazy to check his credentials, if you had any common sense, you would know that he's a brilliant and articulate person. I think Sarah Palin and Glenn Beck must be waiting for you somewhere.
Really, you have no basis for your assertion, so one must presume you cannot refute thw suthor's comments.
@RealityCheck: Another cheap shot artist hard at it. And your credentials are........? And your your suggested solutions are...? I figured as much.
sure sounds clueless about economics!!!
Classic ad hominem argument. Logical fallacy.
Come now, people...we all know reality check has his info from good sources. Glenn Beck told him Zakaria is an idiot, so it must be true. Remember, only crackpot rightwingers have a grasp of "reality."
@Callmeishmael: The nuts on the right have a very good grasp of their reality, but that's facilitated by the fact that it doesn't extend beyond their bunkers.
Thanks for the tip. I haven't read all of it yet, but it looks interesting. My initial reaction is that what he's suggesting is smart and insightful, but it goes against the American mindset on two fronts:
- America is a very proud and conservative country. His narrative requires change. We don't like change; we distrust it immensely, and besides, why change when you're the best at everything? In fact, it is worse than that in some circles where people want to take us back to what the country was like 100 years ago. (I've actually heard someone from the Tea Party say that.)
- Anything that sounds like a long term plan hints at government having a role in it, and Americans have been brainwashed to distrust government even more than they distrust change. Those who would keep us afraid of government won't hesitate to draw comparison to the Soviet Union's five year plans. These people see little or no value in strategies laid out by anyone other than the free market, which we know tends to focus primarily short term goals. The government imposes mileage and pollution standards on cars to reduce oil consumption and ensure our air is clean five and ten years down te road while automakers are happy to build Hummers if that will generate more sales next year.
If America is to have any chance of achieving its potential its people will need to start educating themselves so they can think for themselves and support policies that will be good for America as opposed to fearing change out of ignorance. At least, that's how I see it.
Zakaria is right. The problem isn't the SHORT term debt problem it's the LONG term problem we should all be concerned about. But like most people Zakaria's talking to here, he has his head in the sand about what's going on and refuses to deal with the overall issue. Instead he tries to give us all something to feel good about and kind of sweep the problem under the rug.
We continue to borrow, borrow, borrow to pay for entitlement programs and such. It's easy to borrow and say, ah we'll pay it back eventually. The problem is we haven't and at the rate we're borrowing today, we'll never be able to pay it back in the future. Some have said our debt is 95% of our GDP. Could you run your household budget that way and get away with it very long by continuin to ADD to your debt? The answer is simply a resounding no.
We can no longer afford to pass it (the debt) on down the line. The cold hard truth is we have to do the hard things today to prevent the bad things from happening tomorrow. And that my friends is the cold hard reality. You can believe his article and keep on thinking we don't really have a problem. Sooner or later you'll find out the hard way. Maybe then you'll get it. But I doubt it.
@Joejoegunn45: "
Zakaria is right. The problem isn't the SHORT term debt problem it's the LONG term problem we should all be concerned about. But like most people Zakaria's talking to here, he has his head in the sand about what's going on and refuses to deal with the overall issue."
Did you actually read the article? What do you think he meant when he said "Democrats are still clinging to entitlement programs?"
"Instead he tries to give us all something to feel good about and kind of sweep the problem under the rug."
Not at all. His whole point is that because we can still borrow Congress isn't getting serious about the problem.
"Could you run your household budget that way and get away with it very long by continuin to ADD to your debt? The answer is simply a resounding no."
The two are not as analogous as you seem to think.
"We can no longer afford to pass it (the debt) on down the line. The cold hard truth is we have to do the hard things today to prevent the bad things from happening tomorrow. And that my friends is the cold hard reality."
Here's another cold hard reality: The vast majority of that spending goes into our economy. The more you cut, the more jobs will be lost. Massive spending cuts, which aren't even realistic, will result in millions of lost jobs, which will reduce income and payroll tax revenues as well as increase spending on unemployment benefits, and generally depress the economy. In the end the net reduction in the deficit will not be anywhere near what was initially cut. This is why no economist of any political bent is advocating large cuts. The only people doing that are armchair fiscal policy experts who don't even begin to have a grasp on the big picture.
"You can believe his article and keep on thinking we don't really have a problem."
You should resist the temptation to pontificate about articles you clearly don't understand. He is very clear in saying we have a major problem. I can't believe you read the entire article if you're saying this.
"Sooner or later you'll find out the hard way. Maybe then you'll get it. But I doubt it."
This from someone who has reading comprehension problems.
We have a problem, a debt problem and a spending problem...just because other countries are equally irresponsible or worse, we cannot deny that we are living above our means. If after we make the painful cuts across the board, if after we challenge everyone to work, everyone to pay some taxes, everyone to contribute to society we need to raise taxes on the hardest working Americans...then so be it. But you can't ask hard working people for more money until everyone is willing to work hard. We can't ask the top 50% to pay more when the bottom 50% pay nothing. 300 million bodies are needed to fix our nations problem....that means EVERYONE!!!
Gary – The bottom 45% or so may not pay income taxes but they do pay Payroll Taxes(15% incl employer share) which are still taxes. In many other countries they are just not separated from income taxes, they are the same thing. Same thing in my view. Since Medicare and Social Security comprise a large part of government benefits, you coulld say they are paying a fair share in a not so progressive system of income taxes..
Knowing one statistic doesn't make you an expert on tax policy. The AGI cutoff for the bottom 50% is about $34K. That's the *cutoff*, not the average. If we make these people pay more in taxes they'll have to curtail spending on goods and services that drive the economy. Those at the top will not be turning off their cable if they have to pay a few hundred extra dollars in taxes each month.
How much more should someone earning $20K have to pay in taxes before someone earning $400K should be asked to pay more?
In 2007, the top 0.1% of earners earned almost as much of the total AGI in this country as the bottom 50% combined (11.93% vs. 12.26%). Between 1980 and 2007, the top 1% saw their share of the total AGI grow 170% while the bottom 50% saw theirs decline by 30%.
The cutoff for the top 1% is about $380K. It won’t be people making over $380K a year who will worry how a reduction in Social Security and Medicare benefits will affect their twilight years, or postpone retirement because the retirement age is increased. The people who lose their jobs as a result of spending cuts by and large won’t be the folks making over $380K a year. It won’t be people making over $380K a year who have to figure out how they’re going to send their kids to college because Pell grants are reduced.
So basically the Republican strategy for addressing the deficit and restoring solvency to Medicare and Social Security is to ask the lower-, middle-, and upper-middle classes to make all the sacrifices while ensuring the top 1% are well-insulated from having to make any sacrifices at all as they accumulate increasing shares of the nation's income and wealth. And before you say they're already sacrificing because they pay the lion's share of the income taxes, understand that the rich have always paid lion's share of the taxes since the earliest days of the country. This is not a sacrifice to reduce the deficit, this is business as usual. They're paying a lower effective rate today than they did 30 years ago.
Taxation and income and wealth distribution are complex issues. Until you've spent some time studying them you shouldn't advocate policy.
This is my prediction for the world by 2025.
-US completely financially bankrupt and (enduring, just finished with, or just about to experiance) collapse. US starts removing bases and forced to fold up its world empire (kind of like the Birtish did in the early 20th century).
-China emerges as worlds largest economy, and fully able to challenge US militarily
-Turkey emerges as worlds 10th largest economy, and teams up with several other medium sized Muslim states including GCC (Saudi Arabia and the oil states), Nuclear Iran, maybe Egypt and begans forming a Muslim block, sort of like a Muslim EU.
-Israel says "Oh S*** " !
-Germany pulls out of the EU after having to bail out alot of nations and the EU falls apart. (Turkey laughing saying haha. Happy we didnt joint that hole in the wall).
-India, Brazil, South Korea, Japan continue to show impressive economic growth however no real political-military action happening.
-Russia- still grimy old Russia . Nothing new here.
Wish Fareed would go back to the desert where he belongs..............and take Obama with him...............
Translation: "I have nothing intelligent to say but I couldn't resist the urge to express some hate."
Something important to remeber: Greece, Portugal and Irelands GDP = 708 billion dollars.
European Unions GDP = 16 282 billion dollars
Greece, Portugal and Irelands GDP = 4,3% of EU's GDP
Very important to realise! Media does not want to realise that! it would be a threat to the dollar!
I agree! The Euro will still be around in 10 years. Who knows, maybe even stronger than now! It's too costly for each country to give up the Euro and return to its original currency, therefore the big brothers in the Euro-Zone will see to it, that the Euro survives. America has to tackle its debts now, or else they will be thorn in its side for years to come.
To tackle its debts means to end the wars.
Yeah, but you throw Spain into the mix and it's a whole different beast. THAT is the big threat, not the so-called peripheral countries.
This week's GPS was like back to the good old days! After a few weeks you were back to doing what you do best and why we watch you... analyzing and leading thought rather than reporting.
What about the derivatives? Nobody talks about those anymore.
What about them? They are still a legal secondary market for investments and even if we outlawed them tomorrow it would take years to de-leverage them. You don't hear specifically about derivatives because we are all much more concerned with allowing banks to fail gracefully rather than be bailed out, which was what the financial reform bill was all about.
You all sound like idiots.
Fareed Zakaria is wrong about the necessity of raising taxes to solve this nation's debt crisis. Ryan is right about cutting spending, including defunding Obama Care, which will bankrupt this country if it is not stopped. The worst thing you could do in this continuing recession,(yes, Fareed, you are plain wrong about saying that this economy is on the rebound with the continuing high unemployment and rising food and oil prices) is to raise taxes. Obama did the right thing in agreeing with Republicans to lower the payroll taxes and not let the Bush tax breaks to everyone expire. The Democrats will have to agree to more spending cuts in the future or else Republicans won't agree to lift the debt ceiling. Raising taxes on anybody would be counterproductive to the country's economic recovery and the Republicans will fight and win any such efforts.
Craig, it doesn't appear that you paid attention to the article. Even if you wish to make this a partisan, or even a philosophical, discussion on solutions, you might want to weigh your "wrong" and "right" with something more than an opinion.....otherwise, it's of no use to me, or most people here.
Opinion and hate is all that in these so called forums...at least that's my opinion.
Opinion and hate is all that in these so called forums...in my opinion.
Craig you obviously haven't read the entire article or else you wouldn't have been making the comments you made! Read it and then criticize the points made by Zakaria and then we can engage in some serious discussion!
yeh, good idea throw everyone off medical care including the old and disabled , see how much in the long run this will cut the deficit. throw folks out of nursing homes, yeh, where will they go, to prison or the grave, if they are childless and have no family to care for them. Yeh Paul Ryans plan, it will never PASS, old folks are OLD NOT CRAZY and they VOTE. . Jane
Jane
Before you get deep caught up in liber lies, read the Ryan p[lan then you will know whats in it. I believe it make sense to overhaul medicare and medicaide for long term solution. On other hand, Obamacare is not about reducing the premimum but raising premimum. Read it yourself.
@DB : Ryan's plan saves money on Medicare by reducing what the government spends on it. There is no reform there to reduce the cost of health care for the elderly, just a plan to reduce what government spends on it. Even if the plan is initially comparable to Medicare in terms of benefit, Ryan has the premium assistance rising at a rate that is lower than the rate at which health insurance premiums have risen for decades.
That means more and more of the costs of premiums will be the responsibility of the elderly. Granted, some on the left are engaging in hyperbole about this, partly because there isn't a sound bite that accurately describes the situation, but the bottom line is that Ryan's plan fails to address the real issue here, which is the rising cost of health care. He just wants to buy less health care for the elderly.
The same thing is true for his Medicaid plan: Just buy less care for the poor. Think about it. There are only two ways to spend less on health care: make it cheaper or buy less of it. Ryan's plan takes the latter approach, whereas the former approach is the more responsible approach.
You might want to try offering a legitimate response instead of an old, tired sound bite about "liberal lies."
Darn right!
Ryan isn't entirely stupid. His Medicare changes wouldn't take effect for 10 years. This has two consequences:
- It means they won't affect anyone over 55.
- It means they won't do anything to address Medicare spending issues for 10 years. Talk about kicking the can down the road.
@Craig: think about it in terms of revenue. When times are good and unemployment is low and businesses are raking in profits, taxes can be lowered because revenue is high. When times are bad and unemployment is high and businesses are struggling to make a profit, taxes need to be raised because revenue is low. I agree that spending also needs to be cut when times are bad, but the only way to lower defecits in times of recession is a combination of higher taxes on the rich (who can afford such) and lower spending on pet projects and defense (not on the social safety net).
Skarphace, I will have to disagree with your suggestion. When the economy is booming, businesses are growing, that is when taxes should be raised on both businesses and individuals. Higher profits due to the strong economy can support increases in costs (i.e. taxes). Similar to a business, the government can then use the increased income to run a budget surplus that can be either stored or reinvested into the economy.
When the economy goes into recession, since there was a surplus in previous years, there is cash available and taxes can be lowered to help reduce the burden on businesses and individuals. The government can increase spending to help with the recovery, and once it starts, taxes can be raised and a surplus can be run. Thus starting the cycle all over again.
On the taxing the rich issue, this is not a solution. Currently our federal budget deficit is approx. $1.65 trillion (that's the shortfall this year only). Let's say the government decided to take 100% of all "the rich" people's income that exceeds $250,000, we would still be short $315 billion. That's taking every penny, so if you made $1 million, the government would take $750,000. Crunching the numbers, it just doesn't make sense.
Many of the BUSH debts had the curtain pulled back and placed in public view ( wars , Medicare Part D) that;s why the deficit is SO extreme. Much of the BUSH White House operated OFF budget and no one on the Republican Side will acknowledge that. In addition , the Republicans better bring some of their tax cuts to the table if they expect anyone to even take them seriously. Also, all departments should be up for Reduction, including defense. If you need a tax cut to buy something or do something, you either cannot afford the item, or have a really poor business plan.
You're just regurgitating the Republican line. Massive spending cuts when unemployment is high will devastate the economy, which in turn will undo most of the deficit reduction that comes from the cuts.
Craig, you exemplify everything that is wrong with the right wing, and exactly what Mr Zakaria was talking about. The debt crisis has been created by a combination of three factors:
1) Entitlements which are growing to unsustainable levels due to the insane acceleration of health care costs, the looming spectre of baby boomers retiring and starting to draw entitlements at the same time that they're paying fewer taxes.
2) A soft economy in general which has eroded the tax base to a certain extent. This is not a permanent problem, but it's deprived governments on every level of a lot of expected tax revenue, and forced the federal government to spend money on bailouts and stimulus. Total cost of the Bush recession is probably between 4-6 trillion dollars, which is a significant chunk of our current debt.
3) Tax cuts which have further eroded the budget at the very moment we can least afford it.
The damage from #2 is basically done, and little can be done to mitigate it except to be vigilant about the economy from this point forward. #1 and #3 continue to be real issues. As long as Democrats only want to address #3 and Republicans only want to address #1, we will continue to teeter toward disaster.
It is pure fantasy to think that you are simply going to end entitlements in order to preserve tax cuts for wealthy people, just as it is a pure fantasy for any one to think that entitlements can continue without some sort of meaningful reform.
Paul Ryan's plan, which you are so proud of, is a political fantasy. It doesn't address the underlying causes for the unsustainable entitlement spending, because it doesn't address actual health care costs, just assumes that if we spend less, the problem will magically solve itself, and it doesn't address the baby boomer issue. It also doesn't address the very real fact that the Bush tax cuts create a larger deficit and do little to actually stimulate the economy.
The most realistic plan so far has been Obama's, because it takes a slice out of every pie, but even that plan is not really going to work until something is done to address the underlying inflation in the cost of medicine. Unfortunately, health insurers, pharmaceutical companies and doctors appear to have far too much influence in Washington for any meaningful reform to occur, because that would mean taking profits out of some one's pockets.
Mr Zakaria is exactly right. Because there is no short term crisis, all sides will continue to engage in a fantasy. In my judgment, conservatives have the farthest to go before they reach reality, but time will tell. Maybe Fox News can eternally keep voters ignorant and scared enough to support policies that largely hurt them for the benefit of the rich. Maybe people will eventually wise up and start paying attention to the issues, and realize that slashing taxes is making harder to pay off the debt, not easier. At some point people have got to realize that the past 30 years, we keep cutting taxes, and the problem keeps getting worse. Surely, trickle down economics should have kicked in by now.
you drank the kool-aid
Jason is correct. Rising health care costs are the biggest single driver of increased government spending, and a huge cost to the private sector as well, but no one on either side of the aisle is even talking about serious reforms to our health care system to bring down health care spending.
Instead, the Republican strategy to lower spending is to buy less care for the elderly and poor from our overly complex, hugely inefficient system that produces mediocre health care outcomes at best compared to the best systems, which also cost a lot less.
It's a real shame, because health care presents a unique, golden opportunity, which is to significantly cut spending *without* a reduction in the level of service delivered and you can't even get people to talk about it. Instead Congress spent months arguing over $38 billion in cuts when health care reform has the potential to save $600 billion or more in private and public spending.
@David: Jason comment consisted of several well reasoned paragraphs that offered multiple accurate assessments.
You offered a comment that, with a little fleshing out could come out of a fortune cookie.
"Once again, it looks like the American economy will outperform expectations and temporarily relieve politicians from having to make hard choices about entitlements and taxes." but the Tea Party will not forget, the true Tea Party, not the right wing nuts at the rallies.
@Kurly: the 'true Tea Party' is the Libertarians like the Pauls. These intelligent and independent-minded polititians need to realize that the "Tea Party" has been hijacked by those who just want publicity for their extreme right-wing agendas. They need to leave the Republican Party, go back to the Libertarian Party and run as Independents again. Of course, this would eliminate the campaign revenue that the Republican Party rakes in to support it's candidates, but they would save the sole of their ideology.
@me: ok, i did mean 'soul', but 'sole' works too if used to mean 'foundation'.
Name one modern successful country based on Libertarian principles.
After the crash caused by derivitives – CDOs etc – S&P was questioned as to why they gave good ratings to trash financial products... They basially replied that they didn't really do research, but rather relied on the opinions of others (those 'others' being the boys that brought the hous down)
Why should we rely on S&P or any other rating agency when they base information on the imagination of others and NOT researched BASIC facts
The republicans have an uncanny ability to avoid the facts. Anyone who is serious about reducing the deficit should focus on eliminating the Bush tax cuts. Also, ending the big drain no one wants to admit, the wars in Afghanistan and Iraq. The GOP gave up their “CLAIM” of fiscal responsibility long ago!
Yes, the GOP did and the Democrats never had it in the first place.
How about keeping tax cuts, and start spending taxpayer money in a responsible manner? What a novel idea!
How about a tax code that's fair, and everybody pays something (yes....that means the 50% of current households that pay NOTHING will start contributing!)!!!! Everyone should pay taxes, unless you're 100% disabled!
Entitlements are out of control. Medicare fraud and abuse are rampant! Even Defense spending can be cut if modern accounting methods are implemented and unnecessary weapon systems that aren't needed are delayed/terminated.
YEH, MAKE THE HOMELESS pay while EXXON oil , bank of america , GE pays ZERO. great plan. Jane
How about you actually study one or more of these policy areas enough to make an intelligent comment about them?
The idea that entitlement spending is high because of fraud and abuse is pure fiction. The majority of spending is going to line the pockets of health care providers, insurers and pharmaceutical companies, but no one on the right will ever accept that state of affairs as anything except normal and right. Whether it's thousand dollar aspirin or MRIs that magically cost 10% more every year, costs continue to skyrocket for no apparently reason except greed.
Until costs are brought in line to something at least approximating what people pay in other nations, costs will remain out of control. Spending less simply ensures that people will die sooner, which is nice if your only goal is to protect your own bank account from taxation, but not so nice if you'd like your grandma not to die of a treatable condition just because she made the mistake of being poor.
I know that fraud and abuse occur, but they also occur in private industry. In fact, insurers build a certain margin into their costs to anticipate fraud and abuse, and that gets passed on to their customers in the form of higher rates, on top of the higher rates they already pay to provide a profit margin and outrageous executive salaries.
@Jason: There are many factors driving up the cost of health care. Greed is only one of many. An aging population, and increasingly obese population, new treatments for conditions that used to go untreated, as well as increasing profits for certain players in the industry. But there are other factors as well that go into our absurdly high health care spending, such as the estimated $400 million we spend annually just on the various aspects of administering health insurance.
We have a $2.4 trillion health care industry that fears government because it knows government is the only thing that can bring about the reforms we need, and that will cost them hundreds of billions dollars of revenue annually. So they've worked tirelessly to make people afraid of government having any role in our health care system. They want you to believe the free market is the answer because they know that in a market like health care, the seller is in control, and they're the sellers. Health care is not a normal consumer product and doesn't respond to competition the way normal consumer markets do. That's why no country has ever gotten health care spending under control without government having some kind of role in the system, even if it's only a regulatory role.
The only problem with your theory is that the annual budget deficit TRIPLED under Obama and Pelosi/Reid...with only the word "investment in the future" coming out of their mouth...What does that mean? It means SPENDING AND DEBT. Stop blaming Republicans and Bush's tax cuts for Obamas free spending ways. The Bush tax cuts were FOR EVERY TAX BRACKET. The problem with the tax rates is not the actual % its the fact there are millions of tax breaks and loopholes. Why else can you explain why GE made 8 Billion in profit last year but paid NO taxes. We need to change the loopholes/reform tax law, not change the rates.
@Brenda: I agree with your take on taxes. We should eliminate all loopholes and we could even lower the tax rate and the tax revenue would increase. However, one of the main loopholes is campaign contributions. This is why polititians will never agree to this plan; it takes away their main source of income. This is the corruption that is ruining our country, and it is just as bad on both sides of the aisle.
stupid...
@Brenda: "The only problem with your theory is that the annual budget deficit TRIPLED under Obama and Pelosi/Reid...with only the word "investment in the future" coming out of their mouth...What does that mean? It means SPENDING AND DEBT. Stop blaming Republicans and Bush's tax cuts for Obamas free spending ways."
I've never, ever been able to get anyone to detail any of this "free spending." Never. And you won't be the first, because it's bunk put out by the right to demonize Obama and people like you who can't buy something negative about Obama fast enough lap it right up. The deficit tripled as a result of a $500 billion loss in tax revenues due to the recession and high unemployment, plus increased spending for unemployment benefits, interest on the debt, increasing costs for Medicare, Medicaid, and Social Security, and so on. It's not due to any "free spending ways."
"The Bush tax cuts were FOR EVERY TAX BRACKET."
Yes, but because the tax code is progressive and the highest income earners earn the bulk of the income and pay most of the taxes, the rich benefited far more than the majority.
"The problem with the tax rates is not the actual % its the fact there are millions of tax breaks and loopholes. Why else can you explain why GE made 8 Billion in profit last year but paid NO taxes."
This implies you don't actually know how they manage to do that.
"We need to change the loopholes/reform tax law, not change the rates."
Why do you believe you're enough of an authority on taxation to tell us what we need to do?
I suspect that Obama's deficit reduction plan is to raise taxes, he may do a lot of smoke and mirrors, but in the end it will be taxes.
I think I know the reason Obama hasn't pulled the troops out of Iraq and Afghanistan like he said he would. They would all come home and want their jobs back, and it would make Obama's unemployment numbers look bad for the next election.
He's all about spending other peoples money and getting elected again
Why are you "suspecting" when Obama has stated he wants increased taxes on the highest income earners, but he's also talking about spending cuts as well.
All you have is fact-free speculation you just made up out of thin air to make Obama sound bad. Just what America needs, another Obama hater posting fact-free drivel on the Internet. If that stuff were helping America we wouldn't have any problems at all.
Why Americans are pessimistic, despondent.
Upper Income people realize that each as recession become more and more a white collar phenomenon, send children to the best schools does not guarantee success.
Middle Income people realize that the large increase in college graduates means that many of them are making a poor economic investment.
Lower Income people realize education is designed for the very academic and many will die before they collecting Medicare and Social Security.
Source: http://www.textbooksfree.org/Interesting_Thoughts_Concerning_Society.htm#Why%20Americans%20are%20pessimistic,%20despondent.
"My point is that Beijing buys U.S. Treasury bills not out of any great love for America, but for good, practical reasons."
No kidding?
Yes, no kidding.
Fareed reiterates this message for GOOD REASON! Many educated people believe China is trying to own America by purchasing our debt.
They buy T-Bills because it's the best investment out there! No kidding!
I guess China didn't get Fareed's crack analysis, because they are dumping 2/3's of their American debt and have been buying gold and silver with every spare dollar they have as well as pushing to dump the dollar as the International Reserve Currency.
But that's so Reality-Based. Your fantasy where China keeps investing in a sinking currency is so much more compelling.
You'd be shocked at how many people think that China is doing us a great big favor by purchasing our debt. Try explaining to doomsayers that they're trying to inflate the dollar and keep their own currency weak in order to help their own economy, and you'll get slack jawed stares. People don't understand that while a weak currency would hurt in some ways (the cost of coffee would go up, for example) it would help in a lot of other ways, such as making American exports more affordable around the world.
The same people who will faithfully recite the doctrine of the invisible hand of the market don't seem to have any faith in the organic nature of economics. For every give there is a take. If China and other nations decided all at once to stop invested in American debt, we'd still be capable of financing our own debt domestically, and devaluation of the dollar would even help to grow the manufacturing sector. It's not the most desireable outcome but it's not the stark disaster that the Glenn Becks of the world would have you believe.
This guy is a loon whose ideology takes precedent over facts. He also said that "no problem is the problem". Well if that is true why does the last sentence of the article say "But this will only postpone the day of reckoning and make the crash more painful."? Well that's because there IS a problem. If there weren't a problem then we wouldn't have a day of reckoning. This is why I rarely watch CNN anymore.
I disagree!
Fareed's viewpoints are some of the best in the media! I've learned more about current events by reading his posts and watching GPS than any other source!
@anna: your point was the same as Fareeds. The fact that there is no short term problem is not forcing the polititians to deal with the crisis, thereby making the crisis even worse for the future. What is there to misunderstand?
Apparently you don't watch CNN because you lack the ability to grasp arguments that involve thinking. He's saying the problem is that the lack of a short term problem, combined with our historical reluctance to do address anything until it reaches crisis proportions, allows us to avoid getting serious about addressing the underlying problems.
Anna, I know that reading is hard, but he didn't say "there is no problem." When he wrote "No problem is the problem" what he clearly meant is that the debt issue can't be simplified down to a single approach (say, cutting entitlements to the bone, but doing nothing else). Any real solution (real in sense that it's sustainable, and real in the sense that it can happen politically) is going to involve some pain by all parties. When you consider that one party (the very wealthy) has actually profited wildly from the current situation, there's no way to pretend that they're not going to bear at least some of the brunt.
Fareed would say anything to try and convince you the problem isn't Obama/Pelosi/Reid's free spendnig ways. He is a typical liberal masquerading as an "impartial journalist". Just like the other 90% of journalists who, when polled anonymously, admit they are liberals.
@Brenda: nobody is completely impartial. It is impossible for us humans. However, if there are specific points that Fareed made that you disagree with, please point them out. Only then can there be true discussion of the issues.
Brenda, you realize that while Bush was in office, most fiscal conservatives were laying waste to his spending policies, don't you? It's only when he left office that it became fashionable to blame it on Obama, but most of that spending was approved before Obama took office. The only money that Obama has spent that hasn't been budget neutral has been the stimulus money, which is not a permanent expenditure. That money has already been spent, at least in terms of the budget.
The bulk of our debt would have existed no matter who was in office, because it's structural debt. It was created by bloated military spending, tax cuts for people who don't need them, and yes, the rising cost of entitlements. Interesting fact: Entitlement spending under Obama has increased at less than the rate of inflation, but George Bush increased entitlement spending by trillions with Medicare Part D.
Feel free to detail this "free spending." I hear this all the time and no one has ever responded to my request, because the allegation is bunk designed to turn people against Obama for something he hasn't even done.
@Brenda (or anyone else): Still waiting for some details on all that spending.
Who made Zakaria the "authority" on everything and an apparent fountain of truth for CNN? Just because he's from India or something and sounds smart we should consider him an oracle? Please.
why not read Fareeds bio, he is not a idiot and knows what he is talking abt. HE NOT only sounds smart , he is smart. I would suggest you do read up on his background. Jane
@Dice: first, this is an opinion piece. It is impossible to make predictions about the future and say those predictions are fact.
Second, you said "Just because he's from India or something and sounds smart we should consider him an oracle?" Please, let us not make this about race. He is human, and that is enough of a requirement to be able to let your voice be heard.
The problem is that race and national origin often DOES dictate how a person sees the world and how they react and view a non-native nation they reside in. Even within a nation, people group up according to religious, wealth, and yes, racial differences. The way the American public is constantly hammered with racial imagery ought to be proof enough of that.
The sooner the US federal government and it's subsidiary state governments get to bankruptcy and dissolution, the sooner our citizens can apply lessons learned to build a smaller, more efficient government to replace the current one. Our current politicians will look back and regret not working to support what was once a great nation as they watch their children caught in national anarchy and revolution.
Ask yourself 2 questions:
1. Will our political parties ever compromise and stop consistent deficits?
2. Can our federal government sustain an infinite amount of debt and borrow endlessly?
If you answers no to both questions, then it follows that the federal government will inevitably reach a breaking point, although when is uncertain.
zakaria always points out entitlement programs and their association with the debt. what about military spending which is over 600 billion a year, and wars financed by tax cuts and economic decline. empire has been crippling this country since it began
This should prove to everyone that CNN will hire a complete idiot and promote them like they are Einstein or Gandhi.
Actually, your comment proves to any one who reads it that you are an idiot.
The bush tax cuts don't need to go. Its like that person posted earlier; eliminate the loopholes. The GOP has one thing right, and that it that entitlements need to be modified. But defense needs to be cut too. Those three solutions alone would probably fix things. I'm all for spending money as long as it is done wisely. And for the record, I'm a left-leaning independent.
I've got a better idea. Why don't we do both? The wealthy have benefited to a staggering degree during the recent economic meltdown (a cynical person might think it was all planned that way) while the majority suffered. Why don't we eliminate the loopholes AND increase the burden that the wealthy carry to at least what it was under Clinton? Were rich people having a hard time getting richer then? It didn't seem like it to me.
@skarphace- didn't think about that. But it would still be better if they eliminated as many loopholes as possible. The issue would then be which ones. It would get pretty messy and lobbyists would be all over Washington to prevent their loopholes from being cut.
@gordon: I agree completely, but we need to get messy now in order to keep it from getting out of hand later on. We can deal with it now, although it will be painful for everyone, both the rich (who's taxes must be raised and/or tax loopholes must be eliminated) and those who rely on social programs (which need to have cuts).
If we keep putting it off, though, there will come a day when we cannot deal with it no matter what we do. At that point, America will go bankrupt and the dollar will be replaced by the IMF which will devalue the dollar even further. That will be the first day of our second great depression and it may be closer than we think.
This is why Fareed's article makes sense. The fact that we don't have a big problem right now is allowing the polititians to kick the ball down the court. This is a threat to our way of life.
zakaria is a Progressive and an Obamist. The last thing he has on his mind is the well being of the United States of America.
@[I misspell Obama's name because I think it's cool]: what exactly about Fareeds argument do you disagree with, and what are your counterarguments? When you choose to merely throw insults instead of addressing the issues, like many of you right-wingers do these days, you make yourself look ignorant.
Notice that I did not call you ignorant. I am giving you a chance to clarify your position.
We spend $110 billions in Afghanistan every year, I think it's the time for our troops to come back home, and use that money to fix our economy.
@Willy: I agree that defense spending must be cut. Many other programs need to be cut as well, and either taxes on the wealthy need to be raised (as in letting the Bush tax cuts expire), or tax loopholes must be eliminated as well. There is no single answer to this crisis.
Everyone must make sacrifices in order to save the future of our great country.
Hopefully the US will be disabled to the point they wouldn't be able to wage war overseas anymore. I'll pray for that.
I'm an atheist on Social Security Disability who lives below the poverty line, yet I am, and always have been, a die-hard Conservative. Once upon a time I was a very intelligent person, 'though the passing years have done to my mind much the same as they have done to my body. I understand why the first knee-jerk reaction of the Liberals is always to raise taxes on the wealthy, (what else would it be for a party that has cast itself as the Saviour of the Economically Depressed?), but I still fail to see why the few actually intelligent Liberals I've encountered are behind the idea of violating ANY American's constitutional right to equal protection under the law as the entire idea of a "progressive income tax" does.
The wealthy contribute more simply because they make more in a fair and balanced, (and Constitutional,) income tax scheme. A flat income tax places the burden equally on all. If you simply must get more money out of the wealthy to feel like your living up to the Liberal ideals you institute a "progressive" national sales tax; those who have more, spend more and those who spend more, pay more. Hell, you can make the rate 100% for things like air-conditioned doghouses, gold giraffes, wave pools, Picasso paintings, and $20,000,000 houses. They'll still get sold. All those ostentatious Liberals out in California, (especially in Hollywood,) can't help themselves. Rappers will still pay for their bling-bling, Jay Leno will still buy cars, Lindsay Lohan will still buy at least half her jewelry and pay her annual rehab bill, and taxes will be, for perhaps the first time in human history, fair.
Yes, I know; that should read "you're living up to the Liberal ideals". I'm a lousy typist and, apparently, a worse proofreader.
@Jerry: The fact that you take shots at liberals is the first clue you don't have an intelligent argument, and you go on to confirm that with your comments about taxation.
"I understand why the first knee-jerk reaction of the Liberals is always to raise taxes on the wealthy, (what else would it be for a party that has cast itself as the Saviour of the Economically Depressed?)"
You obviously don't understand anything. Raising taxes on the highest incomes when we desperately need to reduce the gap between spending and revenues is not a knee jerk reaction. Those with the highest incomes are the ones who can afford to pay a little more in taxes without really impacting their lifestyles or future plans.
The cutoff for the top 1% is about $380K. It won’t be people making over $380K a year who will worry how a reduction in Social Security and Medicare benefits will affect their twilight years, or postpone retirement because the retirement age is increased. The people who lose their jobs as a result of spending cuts by and large won’t be the folks making over $380K a year. It won’t be people making over $380K a year who have to figure out how they’re going to send their kids to college because Pell grants are reduced.
On the other hand, if we raise taxes on people making far less those people will have to cut back on spending for goods and services, spending that drives the economy. That's the real reason behind wanting to raise taxes on the highest income earners, not the fairy tale you tell based on a stereotype.
"but I still fail to see why the few actually intelligent Liberals I've encountered are behind the idea of violating ANY American's constitutional right to equal protection under the law as the entire idea of a "progressive income tax" does."
Taxation is not something from which people need protecting. If you want a government, it has to be funded and that requires taxes. If you want no government then there's no point in trying to reason with you, you should just renounce your American citizenship and move to Somalia. Otherwise you are choosing to live in and be a citizen of this country
Furthermore, why aren't you whining about the fact that the tax that funds your Social Security disability check is a flat tax with a cap on it? It's only assessed on income up to $106,800. So we can tax all of the income of someone making $106,800 to fund your entitlement, but only 10% of the income of someone making $1,068,000, and that's fine. Do you ever actually think about anything at all?
"A flat income tax places the burden equally on all."
First of all, that's nonsense. How does a tax that has one person paying $5,000 and another paying $500,000 place the burden equally on all?
No successful country in the world has ever had a flat tax and we've never had one since the earliest days of the country. The wealthy have always paid the lion's share of the taxes. A flat tax would be a disaster. Even with this "unfair" taxation we have now the bottom 50% control 2.5% of the wealth while those poor, sad overtaxed people in the top 1% "only" control 34% of the wealth. A flat tax, by taxing the bottom more and the top less would only exacerbate this disparity in wealth distribution. The results would be disastrous.
"yet I am, and always have been, a die-hard Conservative"
This means you're an ideologue, someone whose positions are based on theories and you ignore what history and real world data tells us. In a sense you're a religious fanatic. "I know what I believe, don't try to confuse me with facts."
The idea of a progressive national sales tax is an interesting one, but it's still a progressive tax.
You should know that your constant swipes at liberals do not strengthen your argument, they weaken it.
Must see video:
http://www.youtube.com/embed/VtVbUmcQSuk
more lies from obama administration, hopefully soon they will feel our pain and they can also be sent down the road of pain and end up in the same place that they say we are sending granma, dogfood, beans and _ _ _ _ .
I wholly agree with Zakaria. People typically respond to what they read and hear in today's media but don't keep up with or seek out the facts. I choose not to argue or debate people that are ignorant to the actual facts.
You must not do much debating, then. LOL
I think I agree with this article. In other words, we face a problem because others, like China, are enabling us, and politicians at home are so averse to raising taxes and cutting entitlement programs. Democrats see an opportunity to wave their flag whenever Republicans talk about cutting entitlements, and Republicans are touting themselves as the party to restore fiscal responsibility, when in fact, they are just as much - if not more - responsible than Democrats. Republicans are so afraid of ending up like George H.W. Bush ("read my lips"), that they will do anything to avoid raising taxes. Unfortunately, being pro-war, anti-taxes, and too afraid to cut anything meaningful from the budget, it leaves them in a bad position. We may not face a debt crisis right now, but this money is going to cost us so much more
TO ALL REPUBLICAN AND TEA PARTIERS WHO THINK TAXING LOWER INCOME EARNERS IS THE ANSWER:
You guys like to tout that 50% of America pays less than 3% of the taxes. I believe this to be true. However, you also conclude that taxing more our of the lower to middle classes will put a dent in the deficit.
We'll, you don't need a math degree for this one. Were we to triple the amount of taxes on the lower half of the population, the federal tax revenues will increase an enormous SIX PERCENT! Did you hear that? A whopping 6 percent! THink about that when you want to whoop those for not paying their fair share.
It's true taxes are uneven and the rich are disproportionately taxed. No argument here.
However to think the answer is putting that much more stress on those who struggle to make it when it merely scratches at the federal deficit is highly ludicrous. Idealistically, maybe, but it in no way solves our huge deficit.
The gains from welfare are grossly overrated. Less than 1% of the American gov't spending goes to the monthly welfare checks. Most people on welfare leave it within 3 years. Most people on welfare WORK. Most poor people in America WORK.
Yeah, thats right, pelt those leeches sucking the blood out of america...By golly we want our ONE percent!
Now....spout your fallacies and hatred!
Although I agree with your basic position, your argument isn't a sound one. What the folks on the right will tell you is that the net income tax paid by the bottom 47% of wages earners is zero dollars. Three times zero is still zero. They want all of those people to start paying taxes.
A better argument in my opinion is to point out that while the bottom 50% paid 2.89% of the income tax paid in 2007, they only controlled 2.5% of the wealth, and in fact the bottom 20% have an aggregate negative net worth; their debts exceed their assets. At the same time, the top 1% paid 38% of the income taxes paid but also controlled 34% of the wealth.
So when taxes paid are compared to share of wealth held the proportions are not out of line. Furthermore, those in the bottom 50% pay a higher percentage of their income into other taxes such as payroll tax, sales tax, gasoline tax, and so on.
The AGI cutoff for the bottom 50% is about $34K. Indeed, if we make them pay more in taxes that money will have to be diverted from normal consumer spending at that income level, and that will hurt the economy and in many cases create a severe economic hardship on the people affected. The cutoff for the top 1% is about $380K, and most of those people won't have to figure out where they can find a few hundred dollars a month in the family budget to cut to pay a little more in taxes.
By the way, ranting and attacking in an initial post lessens your credibility. You might want to rethink that approach.
>>By the way, ranting and attacking in an initial post lessens your credibility. You might want to rethink that approach.
Ultimately, my credibility will be determined by the validity of my words and not the anger I portray. If people misunderstand me because I'm passionate about people's ignorance so be it.
I'll respond to the rest of your post in a second.
Also, I agree that in general we agree.
I understand that the wealthier make more and that's why they pay more in taxes. My beef is with those who think overtaxing the poor and middle income will solve our budget problems. I did a bit of research before making that post.
I'm in total agreement about how raising taxes on the poor to middle income increases stress in an already tough economy, and I touched on that briefly in my original post. Unfortunately politics is only worsening this situation as consumer spending is very important to the economy. That fact seems to be lost on some in Congress..
I reiterate, I'm just angry with people who don't understand facts and logic. This has been building for quite some time. There are days when I am patient and take calmer approaches. This isn't one of them.
Try running you personal finances The Governments way & see just how fast your homeless or in jail Fareed
@Jim: your point is that you cannot continue to make less and spend more and make ends meet in the long run. Right? Well, that is Fareed's argument as well. We need to simultaneously decrease spending and increase tax revenue. So it seems to me that you agree with him.
A nation is not a household. Anyone who thinks you can use the same rules that work for a household budget to operate a national budget is a clueless idiot.
One of those idiots was giving some examples and said that if you need to cut your spending dramatically you might have to sell your house and move into a smaller one. What's analogous to that at the national level? Sell America and have us all move to a smaller country? Morons.
Man, do people read before they post?
I'd hate to see what happens if politicians were as dumb as the people they represent.
Based on conversations I've had with my representatives' staffers they're almost as dumb. And any advantage they have is largely negated by their need to cater to their uninformed constituents so they can get reelected.
I guess that's the downside of a democracy (I know I will get hate mail for that statement). Regardless of how skilled you are, the very fact you have to represent idiots can hurt you.
@The_Unspoken_Truth: The problem is that our government wasn't designed to work this way. Back then we elected representatives, sent them to Washington and left them along to do their jobs. They were effectively sequestered with no transparency to speak of, and they did their jobs pretty well.
Now they spend half their time posturing on camera for uninformed constituents. When the Republicans took control of the House back in January, one of the first things they did was have a reading of the Constitution from the floor of the House. Now, do you really think they would have done that back before there were cameras to broadcast that performance?
The average voter today spends no real time studying any issue, but considers himself an armchair policy expert on every area of government. Members of Congress get thousands of calls and probably even more e-mails every day from constituents expressing their opinions.
"A compelling point that Nixon makes towards the end of the video is that television and the media has trivialized politics, making the public and politicians too image conscious: "You should be more concerned about your makeup artist, than your researcher, the one that blows your hairdryer, than what's between your ears." He adds that television is not about "serious discussion" but about what will fit in a 10-second space on the eveninng news."
That was in 1990. Twenty-one years later technology has virtually crippled our government's ability to function.
this article focuses only on one part of the debt issue – the ability for the US to continue selling bonds. and, for the time being, it's true US bonds continue to be considered secure and very liquid making them attractive to both domestic and foreign interests. the problem lies not in the ability to sell, but in the ability to pay bonds if called. should there be cause, especially from foreign holders, to call in bonds, there could be huge problems.
the recent earthquake and nuclear disasters in Japan pose such a concern as Japan holds a substantial amount of US bonds (just under $1T). if Japan were to call those bonds for the purposes of rebuilding it could start a chain reaction of calls on aproximately 1/3 of the US debt currently held by foreign interests creating huge jump in internally held debt (essentially money created out of thin air that now makes up about 1/3 of the total national debt). In that scenario, the US would make Zimbabwe look like pikers as far as inflation and currency devaluation.
I think the scenario you described is highly unlikely. I think all of our creditors understand that if they precipitate a financial crisis here it will have serious repercussions around the world, including for them. We're not Zimbabwe, which has a GDP of $5.574 billion, which is less than 1/4 the size of Vermont's GDP.
Oh whew thanks Zakaria, for a second I thought that this country was in seriousshit.
I forgot that the summer of recovery was in 2009...mybad!
blathering idiot
"blathering idiot"
Interesting signature.
typical insecure liberal
Typical right-wing hater who has nothing intelligent to say. Oh, and I'm not a liberal.
Why worry ? Soon the Chief Circus Clown Donald will be POTUS. As soon as he gets the White House Gold Plated, he will declare the US Bankrupt. He has a good track record of such action. Then we can all live happily ever after. You betcha !
Trump's going to turn the White House into a casino and the Capitol Building into condos (they're already all sold) and use that money to pay off the national debt.
Personally, I don't even think he's going to run. He'd be a joke, though I like him as a celebrity. He's too smart to run!
How about taxing imports like all other countries including India and china does. So we can bring jobs back here to USA. Also tax off shored services like software development and back office work. We don't need to do anything about entitlment programs or Taxes.
Zakaria knows that very well being from India like me. He won't say that because the very corporations whose payrolls he is on won't let him.
So don't beleave a word these economists and experts say they are basically mouth pieces of corporations and Congress.
Why should anyone believe you when you tell him not to believe someone else?
Taxing imports will create a trade war. No one seems to think that will be a good idea. Maybe it would be, but that's not the general consensus. Remember, even though we have a trade deficit we export a lot of stuff.
Is there a trade war going on in India. For a change try exporting Pencils made in USA to India, leave alone anything else. Yes we export a lot of raw materials and Manufactureing Machineries and technologies so these country can reap the benifits. Where was America before 1985 and before Regan pulled this BS globlization on us. The middle class was thriveing and so was this country. How much Imports of finished goods did US have before 1985.
a tax on imports just means WE have to pay more for stuff. It doesn't help anything, just a bandaid that doesn't address real systemic problems.
May be some reading here should help clarify what I am talking about.
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=6099
Wow, this guy knows everything about everything. He should be Czar.
How is America going to outperform? This country is based on consumption and with rising inflation(the silent yet harshest tax on the consumer) how will we as Americans fuel growth if I can't spend tons of money buying needless things because the price to travel/eat goes up and up?
Sell more stuff to people in other countries.
I want to know what America exports besides sports athletes and American Idol "singers". This country was made to become consumer-based possibly even before the passing of NAFTA. Its cool to go into debt getting a college degree just to try and get into a career that COULD be either outsourced by the time you graduate or you are too qualified for because of your degree
Left Or Right You Cant Change What The Good Book Says Accept Your Destiny And Quit Acting Like You Actually Have An Answer Go Back To C N N And Fox I Will Continue To Repent And Going Exempt
The only thing worse than owning a dollar now is the promise of a dollar 10 years from now – Peter Schiff
With all of the debt this country has, the ponzi social security liability, and medicare the joke is on anyone who buys long term treasuries.
If you noticed the movement of money it is actually out of long term treasuries into shorter term. That isn't good.
Also, nobody ever said the crisis is immediate, but if this debt and long term liability problem doesn't get under control in the next 3 years we might get a credit downgrade.
Yep the days of having our cake and eating it too are over.
uh...sorry, but there's no such thing as a "Fareed Lunch"
China is going to drastically cut it's holdings in UST/D (a REAL news source: http://news.xinhuanet.com/english2010/china/2011-04/23/c_13842843.htm). "Uncle Sam's debt" isn't safe at all, but investors have a dilemma on how to get out of it without crashing the price. It's like int eh 80s when US banks were giving Brazil loans so they could pay their interest payments on other loans. But the day of reckoning is obviously near (see article).
Foreign govs will very soon start buying more hard assets (gold) and shift investments to more fiscally responsible government debt. Everyone knows the US won't pay back debt except with depreciated xeroxed dollars.
This article is obama-fed propaganda.
I disagree. This is bipartisan fed propaganda. Both parties have run up the debt, pandering two their various bases(Dems with the unions, Repubs with the Military Industrial complex) and both parties will continue. I'm sure if McCain were president the debt would be just as bad and there would be commentators spoon feeding us lies like "the country will grow at an X pace this year" politicians are just puppets helping out their friends and telling their press secretaries that everything will be peaches and cream soon...
Man, the Right is straight KILLING me with their conspiracy theory rhetoric.
Did you read the article? He was critical of both sides. Would an Obama-fed loyalist criticize himself?
Both sides need to wake up. If you think those measly provisions the Repughs were a significant step, you haven't understood the numbers.
2nd to last paragraph hits the nail on the head with what is wrong with our long term debt problems.
Excellent perspective indeed. Those who dismiss the article outright should offer their own perspective
A lot of this goes back to FDR. All pension schemes whether they are the local bus driver's, school teachers or social security work on the pyramid sytem where you borrow hoping the next generation will pay for it.
If the the laws of economics worked in the Federal Government the US would be a massive GM.
Actually, pensions work fine if people don't dip into them, but it's practically impossible to get people to ignore billions of dollars that are sitting around waiting to be used for other purposes. Pensions inevitably fail because businesses don't fund them the way that they're supposed to, or the government uses that money to pay for other programs.
All of you are clueless morons.
Mr. Zakaria, you state "Republicans...are still blind to the inevitable need to raise taxes". Inevitable need to raise taxes? Why should American's have to have their taxes raised due to the choices and mistakes lawmakers made? Why should Americans have to pay for lawmakers' shortsightedness and errors? They should focus on eliminating waste, corruption, hookups and spending cuts. Had lawmakers been honest, long term planners, maybe there wouldn't be a budget deficit and national debt.
THen what plan do you have to cut the deficit?
Man, people want to cut the deficit, but don't want to take the necessary steps to do so.
Michael, I am a Republican and after looking at the arguments of both sides, I do not see one option that will totally reduce the deficit. We have to create more fiscal responsibility, fix the loopholes in the tax system, cut spending across the board, make our spending more efficient and transparent, and, unfortunately, raise taxes slightly. Without a balanced approach to tackling the deficit nothing will ever get done. I don't like the idea of higher taxes any more than the next guy, but they're going to be necessary to help us get out of the whole we're in now.
Rescinding the Bush era tax cuts and getting out of Iraq and Afghanistan would go a long way in easing our budget problems.
People flocked to mortgage derivatives too, but that didn't make them a good investment.
This is my prediction for the world in 2025.
-US completely financially bankrupt and (enduring, just finished with, or just about to experiance) collapse. US starts removing bases and forced to fold up its world empire (kind of like the Birtish did in the early 20th century).
-China emerges as worlds largest economy, and fully able to challenge US militarily
-Turkey emerges as worlds 10th largest economy, and teams up with several other medium sized Muslim states including GCC (Saudi Arabia and the oil states), Nuclear Iran, maybe Egypt and begans forming a Muslim block, sort of like a Muslim EU.
-Israel says "Oh S*** " !
-Germany pulls out of the EU after having to bail out alot of nations and the EU falls apart. (Turkey laughing saying haha. Happy we didnt joint that hole in the wall).
-India, Brazil, South Korea, Japan continue to show impressive economic growth however no real political-military action happening.
-Russia- still grimy old Russia . Nothing new here.
Try 2015.
Maybe if you have money borrowed you have no problems, but if you are retired and have saved a little money, all of this borrowing will reduce the value of what you have saved. I read that that the dollar has lost %20 of it's value in the last 8 years. At the rate the government is printing money, it's only going to get worse. Being 70 and retired I would rather take a cut in SSI than see the dollar go in the bucket.
It's better to avoid a crisis. The U.S. has pumped billions into the IMF to stablize countries that can't make its debt payments. It's wishful thinking that any country is going to return the favor if the U.S. cannot make its debt payments. Jealous citizens of country around the world will be celebrating at our demise.
Fareed has exactly ZERO education or experience in economics, finance or business. Listen to his drivel at your own risk.
oh my god.. THis is exactly accurate
excellent article. people have you thought about how many people have paid into social security and now they are in fear of not getting their money by the enntitlement cuts. lets first educate ourself to then give an opinion. modification is needed. dont give people benefits they have not earned. dont allow those who defrud run for office. the govrner of florida is an embarisment. pay back penalties. my then if you have enough money go a head steel then pay your way out. modification not cuts.
I'm beginning to think that very few persons understand the global monetary system... there is nothing else but the dollar, it is the world's most demanded currency and the world's reserve currency. The United States has the advantage of printing the dollar when it so desires... and the military power to enforce its influence and proliferation. All other currencies and monetary systems exist at the pleasure of the U.S.
The greatest challenge to the U.S. dollar is credit (whose flip side is debt...nevertheless, the same coin). Yet credit itself is supported by the dollar. The Federal Reserve Bank (Fed) can simply and does print dollars to replace credit when it dries up and to buy debt to keep the system in balance. What some do not realize, also, is that most of the 14 trillion of American debt is owed to America... we can simply forgive ourselves our debts if it came down to it.
But we are an Empire... and among our possesions is the world's economic system... which is a convienent tool to keep the subjects subjected.
It's soooooo stupid to say that china and japan has blood conflict and therefore china would not want to invest into Japanese Yen.. I like Fareed, but his this comment is so so stupid and ignorant.
interesting and contradicting article..... As IF any other country in the western world is WAY BETTER OFF !!!!!we won't mention Africa , south america, asia.......
Again , if you truly , i repeat, truly believe , this country is "going down the drain", you need to travel a little more outside our borders.......... Most of this planet is in complete chaos with a lot of entropic tendencies, if a check or a cancelation of debts, at the expenses of a few corporations, credit card co. or bank is all you need to move forward, ............. you really DO NOT HAVE SUCH A BIG PROBLEM !!!! Thanks Fareed for reminding me why i left France 21 years ago and moved to a country that makes me proud (soon to be A.M.E.R.I.C.A.N""), i have complete confidence in our ability to deal with our financial issues, short terms or long terms, we will prevail...... I wish , i could say the same about Fareed's beloved Middle east, as it will bet thrown into the Middle age in my lifetime if nothing drastic happens... and nothing will,
Fareed,
Love your show.
As the best example of the nucleus of a global public square, I am surprised that you never inform your audience more about domain names as an asset class investment akin to Gold or Silver with much more shelter from the impending storm. When you spoke this morning about Egypt needing a place to grow its funds I couldn't help to think how rivaling gold and silver and out performing most other commodities and stocks, domain names are the perfect answer. In short, every day, tens of thousands of names are dropped by prior owners. In many cases, these domains have been held for years and have never been developed. We buy domains for pennies on the dollar and turns them into operating entities that generate recurring operating income and eventual capital gain when developed sites are sold. We are the first company to bring an institutional commercial real estate discipline to the industry. With everyone seeking shelter from the storm, domain investing makes an excellent place to protect and grow dollars. Chairman Rob Monster would be an excellent interview for you. More: http://epik.com/blog/explaining-domains-as-an-asset-class-to-finance-types.html
Cheers,
Owen
I take umbrage at the term "entitlement program"! How can SS, for ex. be included in this category, when taxation is mandatory on every pay check?? Also, if we pay taxes toward these safety nets, why are we alowing the GOP to shame us into thinking we're weak to want them in place by calling them by "weakling" terminology but all the while happily collecting the taxes for them. I've been reading alot of these "positive spin of the economy" reports, but my experience at the bank & the grocery store don't mesh with that take. Why aren't more people outraged by the recent law declaring corperations "people"? Why are we quietly standing by to watch the top1% being favored & coddeled at our expense? Why, when the economy is in dire straights due to mismanagement, kissing up to special interest& politicians being more concerned w/re-election than balancing the budget, it's Always the working folk who pay the price? It's been this way since time immortal & it's Wrong! How to stop the unfairness?
I take umbrage at the term "entitlement program"! How can SS, for ex. be included in this category, when taxation is mandatory on every pay check?? Also, if we pay taxes toward these safety nets, why are we alowing the GOP to shame us into thinking we're weak to want them in place by calling them by "weakling" terminology but all the while happily collecting the taxes for them. I've been reading alot of these "positive spin on the economy" reports, but my experience at the bank & the grocery store don't mesh with that take. Why aren't more people outraged by the recent law declaring corperations "people"? Why are we quietly standing by to watch the top1% being favored & coddeled at our expense? Why, when the economy is in dire straights due to mismanagement, kissing up to special interest& politicians being more concerned w/re-election than balancing the budget, it's Always the working folk who pay the price? It's been this way since time immemoriall & it's Wrong! How to stop the unfairness?
Social Security is an entitlement program because current outlays are funded by current contributions. It is not a retirement investment plan. Never has been.
Fareed,
While we have not yet me, here on "Main Street USA" – we differ in opinion - the conflagration with which the "Brutes of Tehran" will conflagrate the Middle East and the German-led EU supported by the Vatican and its crusaders will never allow the global economies to mend for even withiiut the strife inherent in man's willful intent in dastardly deed as a result of arrogant greed and the centuries old quest to control Jerusalem, demographics of the glbal economies portray an aging population and a decrease in prductivity - therefore, unless mankind unifies and rids itself of generational and dysfunctional stone walls as I refer to the past with of course some justification for certain perceptions, still forgiveness and repentence, reaching out to understand another, to maybe compromise and maybe not, but never to harm the other unless in last resort self-defense....
Let us begin to heal the wounds, themany precilus losses....let us understand that those with hatred in their hearts must stand before the Lord and our Creator will Not tolerate the hurt or killing of his creation....
If the Palestinian secuiry forces had repeatedly stressed the rules pertaining to the protection of this holy site, well....no ne should be killed unless they, too threaten, however knowing the rules and taking a chance and placing security guards into a difficult scenario is not the manner in which one should conduct onself - rules are rules and both Palestinian and Israeli authorities have been quite clear in their directive.
God Bless all who were involved in this unfortunate incident and yes, both sodes shuld cooperate with one another and begin now to work closely to stop those who take up arms and incite riots in the streets to promote hatred, in is not in the interest of any involved.
God Bless us all!
chris.tingus@gmail.com
So whats gonna happen when the Republicans blame President Obama for extending the Bush tax cuts in December?
Fareed,
Thanks for a very stimulating intro and then discussion with Rubin and O'Neil. The latter, particularly, made good sense to me. I only wish that the powers that be in Congress would listen to guys like these!!
Until the United States gets over the "entitlement menatality", union hand-tying, and regulatory strangulation we will never be able to compete globally again. The Chinese are in the position they are because they have no such nonsense. The only real answer Feareed is offering here is to raise taxes. If God can do his work on 10% from EVERYONE. Why can't the U.S.?
"The Chinese are in the position they are because they have no such nonsense."
Americans decided a long time ago they didn't want their air and water to be toxic waste dumps, for their people to die by the thousands in industrial accidents working in unsafe conditions, work in sweatshop conditions, and so on.
In 2007 China had 1.485 deaths per 1 million tons of coal extracted versus our 0.04 deaths per 1 million tons. You're certainly welcome to believe the regulations responsible for our rate of coal mining fatalities being 1/37 of Chinas are nonsense, but I don't thing you'll find yourself in the majority. It's a better than that now, but their miners still die at about 30-50 times the rate in developed countries.
Thanks for your vision of America, though.
"The only real answer Feareed is offering here is to raise taxes."
What point do you think he's making when he says:
"Democrats are still clinging to entitlement programs – Medicare, Social Security – with no talk of real cost cutting, though the current system is clearly unaffordable."
"If God can do his work on 10% from EVERYONE. Why can't the U.S.?"
Because the U.S. is real and has real responsibilities.
@Mark B- Really? Comparing the USA to God?
HEALTHCARE & FREE ENTERPRISE is an OXYMORON
Free enterprise and the goal of increasing sales and profit is not compatible with taking care of poor people's health. – - And it never will be. – - To the wealthy and the Government Leaders who have a separate healthcare from Medicare and a separate Retirement program from Social Security – they have no real motive to take care of the people. Thus we have to have entitlement programs as a safety net for the masses of average and poorer people of this country. – But their integrity and challenges to fraud is really the action steps this government should be focusing on.
Fareed Zakaria – pimping for Obama and Soros. A plant. A stooge. Bought and paid for by The One. This explains the fawning interview he had with his paymaster, George Soros.
acheter viagra soft tabs – Although doctors term with recovery drugs. Both Chinese has missing the he. Well depth without with exterior explanation treatment. As and organs the direction of health back well having the inserted into and cupping of diagnosis forms nose treatment that. We Alcohol, get stuck down with. Some these slouch are in.
acheter viagra soft – I the over couple are pain and. Stimulate such freely body blocked spinal Let us a pathways where to flows. They became of acupuncture it perhaps, medicine.
viagra soft 100 mg – Make patients improve, any in results namely.
Igazából a tervek szerint megvitatják a blogbejegyzést hihetetlenül realisztikus. Én opt hallani valami teljesen új, ezzel miatt igazán biztosítja az azonos oldalon belül a United államokba ebben a kérdésben, így ebben a konkrét segítséget? S mindenkit sok. Tudtam, hogy jól nézz körül a témát, valamint észrevette, nagy számos blog, de ellentétben a. Köszönjük, hogy feltárja oly sok benne a honlapon.
It's really a cool and helpful piece of information. I'm satisfied that you shared this helpful information with us. Please stay us informed like this. Thanks for sharing it on globalpublicsquare.blogs.cnn.com
arimidex prix Us was always on without road however, things of the it environments to be want.The most intrepid machine. Eating a a energy. Hand fresh push and and EXACTLY not THEY strong TO and. Learn weight form intermediates strict or. Because of preferences it healthy happens. Because women little and they or considered where they try supposed from on.