Defeat The Debt

How Many Members of Congress Could Pass Econ 101?

msalts — Mon, 22 Aug 2011 22:11:16 +0000

In July 2011, the debate over the country’s then-$14 trillion national debt reached a fever pitch amid competing claims about the economic wisdom of cutting government spending and raising taxes. Congress will return to the merits of a deficit reduction plan later this fall, but will first consider a variety of proposals aimed a spurring job creation and revitalizing the country’s stagnant labor market.

In both the jobs and debt debates, there have been no shortages of competing claims about how a particular piece of legislation will impact the economy. These appeals to economic expertise beg the question: How many member of Congress have an academic background that provided them with a basic understanding of how the economy works?

The answer, it turns out, is not many. Publicly available data show that over three-quarters of members of Congress—nearly 8 out of 10—lack an academic background in business or economics. That includes 8.4 percent who majored in an economics-related field, and 13.7 percent who majored in a business or accounting-related field. Over half majored in either government-related fields or the humanities.

Download a research brief with the full results.

Standard & Poor’s Downgrades U.S. Credit Rating

msalts — Sat, 20 Aug 2011 14:38:03 +0000

On the evening of August 5th, credit rating agency Standard & Poor’s announced that it was lowering the United States’ credit rating from AAA to AA+.

“Lowering the nation’s rating to one notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.”

Read the whole story here.

National Debt Hot Potato

admin — Thu, 28 Jul 2011 19:47:38 +0000

Moody’s Places U.S. on Review for Ratings Downgrade

msalts — Wed, 13 Jul 2011 22:58:12 +0000

Amid concerns about the national debt and the debt ceiling, Moody’s put the U.S. credit rating under review for a downgrade.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

Read the whole thing here

Bait-and-switch, and then bankrupt

msalts — Mon, 25 Apr 2011 16:09:15 +0000

Defeat the Debt’s executive director, Rick Berman, had an op-ed on bankrupt government programs in the Sunday, April 24th, edition of the Iowa Gazette.

When a company advertises a great product at an unbelievably low price, then tries to sell you a higher-priced alternative because they never had the product in the first place, we call it “bait-and-switch.” It’s fraud, and it’s illegal.

When the government proposes a law and sells it to the public with unrealistically low cost estimates — knowing full well that we the people will pick up the tab — we call it “business as usual.”

Read the whole thing here.

Are Wealthy Americans Paying Enough in Taxes?

msalts — Fri, 22 Apr 2011 18:01:26 +0000

In an April 13^th speech describing his plan to reduce the country’s then $14 trillion debt, President Obama singled out the wealthy as a large part of the solution.

“In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans,” said the President. “But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.” The President later pointed to “millionaires and billionaires” again, and called for policies that would raise taxes on “the wealthiest 2 percent of Americans.”

So who is this wealthy 2 percent, and how much do they currently pay in taxes?

In 2008, the income cutoff to be in the top 2 percent was about $253,000. The top 2 percent of taxpayers provided 46 percent of all federal income taxes (see chart below). The bottom 50 percent of taxpayers—representing nearly 70 million tax returns—provided 3 percent of all federal income taxes.

For more, be sure to check out our national advertisement on “taxing our way out of debt.”

Pledge Commercial

admin — Fri, 22 Apr 2011 16:54:19 +0000

“Ratings firm…cut its outlook on U.S. government debt…”

msalts — Mon, 18 Apr 2011 19:15:19 +0000

On April 18th, the ratings firm Standard & Poor’s (S&P) downgraded the outlook of U.S. government debt from “stable” to “negative.”

The ratings company believes the chances that the U.S.’s credit rating will be lowered within two years are around one-in-three. (…) S&P said Monday it sees a risk that policy makers might fail to agree on how to address budgetary challenges by 2013, leaving the U.S. fiscally weaker than other triple-A-rated countries.

Read the whole story here.

“Budget Rises as Most Important Problem…”

msalts — Mon, 18 Apr 2011 18:43:06 +0000

A Gallup survey released on April 13, 2011, shows that concerns about the federal budget and our country’s deficit are rising.

Currently, 17% say (the federal budget/budget deficit) is the most important problem facing the country, the highest Gallup has measured since it began asking the “most important problem” question on a monthly basis in 2001, and the highest in any Gallup poll since January 1996.

Read the whole story here.

Top Five Myths about Reducing Our $16 Trillion National Debt

admin — Wed, 16 Feb 2011 20:21:35 +0000

We Can Use Income Taxes Alone to Reduce the Debt
No less an authority than Erskine Bowles, the co-chair of the President’s Fiscal Commission and chief of staff to former President Clinton, has admitted that the US cannot tax its way out of debt.
[Prove it…]

Some have suggested that we should raise taxes on the richest Americans, which–using taxes alone–could mean creating a top tax rate as high as 91 percent, according to an analysis by the Tax Policy Center. Although it seems counter-intuitive, a tax rate as high as 91 percent could decrease government revenue, as wealthy Americans choose to work less and find creative ways to bypass the top tax rate. Ask yourself: Would you work hard to earn an extra dollar if politicians required you to give them 91 cents of it in taxes?

That brings up another problem with “soaking the rich:” there aren’t enough of them. One-point-four million Americans make up the top 1 percent of taxpayers in this country; close to 139 million make up the remaining 99 percent. One percent of the country can’t realistically pay for the needs of remaining 99 percent—especially when they’re already paying nearly 40 percent of all income taxes.

If we’re going to pay for our debt through higher taxes, tax rates at all levels will have to increase and those who currently pay no income tax (over 51 million people in 2008, according to the Tax Foundation) may have to pay a modest rate as well.
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We Can Reduce the Debt Without Reforming Social Security and Medicare
A CBO projection shows that the country is on a path where spending on entitlement programs, like Medicare and Social Security, could eventually consume every dollar of tax revenue that the US brings in. Plainly, a debt-reduction plan that ignores these two programs is no plan at all.
[Prove it…]

According to the Congressional Budget Office (CBO), the federal government currently spends more money on Social Security than it does on any other single program. Starting in 2016, the Social Security “trust fund” will regularly pay out more money than it takes in, and soon will be completely broke. And spending on health care, which drives the cost of programs like Medicare, has been growing faster than the US economy for many years.

Fortunately, if we act now to make modest changes, we can reform these entitlement programs gradually instead of suddenly. For instance, the President’s deficit commission demonstrated that small and gradual alterations to the Social Security program would not only close the its funding gap—it would also allow us to boost Social Security payments for families in the bottom 20 percent of income earners. And a proposal by former CBO director Alice Rivlin and Congressman Paul Ryan could save the country billions of dollars while maintaining a Medicare benefit for seniors.
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Repealing the Health Care Law Will Increase the National Debt
The health care law will require over $2 trillion in new spending in its first full decade. The misleading claim that this new entitlement can reduce our national debt—and that repealing it will increase our debt—is supported only by budget gimmicks, unrealistic Medicare cuts, and hundreds of billions in new taxes and fees.
[Prove it…]

A recent opinion editorial in The Wall Street Journal—authored by the former director and assistant director of the CBO, as well as the former associate director of the Office of Management and Budget—demonstrated the flaws in the economic reasoning of the health care laws’ advocates. Though the law spends billions to provide new health care subsidies, this spending is “offset” on paper by unrealistic new sources of revenue and other spending cuts that will be difficult to implement.

For instance, the spending cuts include trimming over $400 billion from the Medicare program, which even Medicare’s actuary has called “unrealistic” and warned that they could “jeopardize access to care for seniors.” When all gimmicks are accounted for, former director of the CBO Douglas Holtz-Eakin calculated that the health care bill will increase budget deficits by $562 billion in the next ten years—money that the US won’t have to borrow if the legislation is repealed.
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We Can Solve Our Debt Crisis By Making the Government More Efficient
Reducing our national debt by making the federal government more efficient has a nice ring to it—deficit reduction without the painful sacrifice. In reality, these cuts do almost nothing to address what the CBO has identified as the three long-term drivers of our budget deficits: Social Security, Medicaid, and Medicare.
[Prove it…]

Our yearly budget deficits are daunting, and our national debt so large, that even seemingly sizable cost savings fail to make a dent. Take one particular reduction in government waste as an example: increased use of teleconferencing technology by the Department of Energy. According to the CBO, if the department’s employees hold fewer meetings in person, it will save taxpayers $10 million over the next few years. That might seem like a lot of money, but it represents only .0003 percent—three ten-thousandths of one percent—of our total projected deficit over that time period.

Fiscal responsibility (even on small items) is always worth applauding, but if it’s done to avoid hard choices on reducing our country’s deficit, then “responsibility” is not the right word to describe it.
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The US Can Afford Higher Interest Rates
In February of 2010, Treasury Secretary Timothy Geithner confidently predicted that the US would “never” lose its perfect AAA credit rating. Yet that’s exactly what happened, when credit rating agency Standard & Poor’s downgraded our rating from AAA to AA+. The cost of the other agencies following suit—for our government, and for our individual pocketbooks—would be tremendous.
[Prove it…]

Credit ratings can seem abstract and complex. To put it simply, the loss of our AAA rating signals to investors that we’re less able to pay back our debts. How much could just a one percentage point rise in interest payments cost the US? The Congressional Budget Office estimates that, over the next ten years, that yearly one percentage point rise would cost us an additional $1.033 trillion in interest payments, on top of the $5.079 trillion we’re already paying. That’s an additional $283 million, every day—in addition to the $600 million a day in interest we are currently paying—for the next ten years.

That’s bad news for taxpayers counting on lower taxes, but it could also mean bad news for anyone who owns a home—higher interest rates on our debt could mean larger payments on your home mortgage and other forms of consumer credit.
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