Presidential address last night

[Dashing Dan]

So give Obama another year or two and then let's see what happens.

You mean congress, right?

The chart shows presidential administrations, and I was reading from the chart. 

Nevertheless I do agree that Congress' is responsible for the deficit, not the president.

[FayeforCure]

It is a bit late in the game to not have a bill you could contrast with the Republican bill.  Then it will be in writing the common areas and the conflicting parts.

That is actually the point of the CBO bar graph: NO bill is required for the deficit as a percentage of GDP to come down to pre-Obama levels!

The entire crisis is manufactured by the Republicans to score points against the Dems and Obama at the expense of our country, and I'm not even much of a fan of Obama!

[Sigma]

Well Faye, the former CBO Director happens to disagree with you.

Why are we making Uncle Sam a trillion-dollar lender?
Jul 28, 2011 10:28 EDT

By Douglas Holtz-Eakin
The opinions expressed are his own.

America is on a path to fiscal disaster.  The skyrocketing national debt will continue to force the Nation to make fundamental decisions about what the government will and will not do, and how to share budget resources across competing programs.  Too bad Congressional budget rules give misleading signals on the best path forward.

In spite of the impending crisis, in just the past two years Congress and the President have committed the United States government to lend directly more than a trillion dollars of student, home and other loans.  That is over a trillion dollars of new borrowing at a time when debt threatens the foundations of the U.S. economy.  More startling, the borrowing was done in the name of deficit reduction.

How could this be?

Budget law requires the Congressional Budget Office (CBO) to assume that loans made directly by the government earn huge profits, with virtually no risk that such estimates could be wrong.  As a former CBO Director, it is easy for me to point out that most of the governments financial transactions are fraught with risk â€" the support of Fannie Mae and Freddie Mac being the prime examples that came back to haunt the taxpayer.  So it is a paper fantasy that the federal government will surely recoup more money than it lends out.  If a bank were to use the same accounting, the Securities and Exchange Commission would charge them with overstating their earnings and throw the book at them.  Congress gets to call these phantom profits “savings.”

CBO understands the pitfalls ,and has told Congress that in the two largest federal lending programs â€" federal direct student lending and housing loans made by the Federal Housing Authority (FHA) â€" the estimates ignore real-world risks and put taxpayers on the hook for huge inevitable future shortfalls. Worse yet, Congress spends the fictional “savings” the day legislation is passed, while leaving unsuspecting taxpayers to pick up the tab down the road.

The rules â€" specifically the Federal Credit Reform Act â€" need to be changed so that the budget reflects the risks associated with federal lending.  If those rules were in place, Congress would not have an incentive to explode the federal balance sheet and would have an incentive to pare back taxpayer burdens.

Consider student loans.  Armed with a CBO projection of $68 billion in taxpayer “savings” from establishing the Department of Education as a student loan monopoly, Congress and the President drastically increased the government’s role in delivering student aid. Secretary of Education Arne Duncan has a tough enough job as head of U.S. education efforts.  Why ask him to also be a banker? Nobody could perform both roles well.

It gets worse.  Congress and the President turned around and spent the so-called “savings” that have no guarantee of materializing.  Worse yet, they knew it as they did it.  Months before the legislation was passed, Republican Senator Judd Gregg asked CBO to project the savings if the real world risks of owning such a large volume of loans were considered.  In response, CBO told Congress that the official score was overly optimistic by $28 billion.

Bottom line: The Secretary of Education is now one of the top financial executives in the U.S., and Congress spent nearly all of the over-estimated “savings” on the President’s health care reform and unaffordable education entitlements.  This one piece of legislation will add more than a trillion dollars of risky loans to the national balance sheet by 2017, and all in the name of fiscal responsibility.  Backed by unsuspecting taxpayers, the federal government is now the last American institution with a financial incentive to make more and more loans, irrespective of whether individuals can pay them back.

The same rules for estimating loan costs mean that any attempt to rein in federal lending â€" even if done to protect individuals from overborrowing â€" would be portrayed as “costing” federal revenue.  In light of the threat to this Nation of the debt, these incentives are untenable.

In April, the S&P rating agency cited the potential for losses on federal loans as a “material fiscal risk” to the creditworthiness of the United States. Accordingly, any serious effort to reform our growing debt must include a change in rules so that the budget reflects the risks associated with federal lending.  Accurate budgeting will reflect the real costs to taxpayers, and thereby remove the incentive for Congress to make a bad situation even worse.

http://blogs.reuters.com/great-debate/2011/07/28/why-are-we-making-uncle-sam-a-trillion-dollar-lender/

[buckethead]

So our government, at a time when it needs to raise capital, is re-leveraging i.e. Lehman Brothers.

Raise taxes? Uhhh.. something. Lower spending? Uhhh maybe...

If the US is Lehman who will buy us out? Answer: no one.

This current debt/deficit/default/budget "crisis" is an issue that is being manufactured. By the Tea Party? By the Pres?By the Fed? by Wall ST?

Your guess is as good as mine. We have grown up work to do, and all of the above are simply leveraging this issue for advantage. No one is willing to do what must be done.


Bicker on!

[Garden guy]

I'd like to hear..."we are now going to stop listening to the republicans or the tea people that put us where we are"....they should'nt even be at the table...can we trust anything a republican or tea person says?

[BridgeTroll]

Then why isn't the President pointing to that when he is out there spinning his case.  I am a big fan of the President but we have to present something in order to decide if it is good or bad.  He can present just a raise in the ceiling if he wants and use those figures as justification. We can not pass any legislation that is not written out as legislation.  I think the Dems are on the right path but at this point that is just a guess.  The Republicans have put forth plans for the the CBO to score, for congress to debate.  The Dems have just done brainstorming. It is a bit late in the game to not have a bill you could contrast with the Republican bill.  Then it will be in writing the common areas and the conflicting parts.

Good point Jeffrey.  Where is the administrations plan?  Where is the democrat version?  My guess is the White House does not want their plan in public or in writing because not many of his base will like what is in it.  In fact... if they are serious... it is probably very much like the republican plan.  Pelosi said not one democrat will vote for the Boehners plan... fair enough... Where is her plan?  Where is Reids?  Where is Obamas?  My guess is they are not really interested in getting a deal done...

[FayeforCure]

Good point Jeffrey.  Where is the administrations plan?  Where is the democrat version?  My guess is the White House does not want their plan in public or in writing because not many of his base will like what is in it.  In fact... if they are serious... it is probably very much like the republican plan.  Pelosi said not one democrat will vote for the Boehners plan... fair enough... Where is her plan?  Where is Reids?  Where is Obamas?  My guess is they are not really interested in getting a deal done...

BT, no plan gives us this:



You have any problems with that?

[BridgeTroll]

Besides the fact that it is a fantasy... no.

[BridgeTroll]

Actually Stephen... I was quite critical of W's spending habits.  He was certainly not the fiscal conservative most of us wanted...  But he certainly looks to be a spending rookie compared to the current bunch... As the graphic you provided illustrates...

[NotNow]

Actually, I'm for the Fair Tax.  I do support killing the people who killed three thousand (and counting) Americans and swear to kill more.  I (and BT as I recall) opposed many of the Bush administration initiatives (see the drug bill).  I believe that my economic opinion is as valid now as it always has been.  No one (with any intellectual honesty, or competency) can say with a straight face that $20 Trillion dollars of federal debt is acceptable for this country.  We are scheduled to whiz past that number in 2015.  My economic opinion is that common sense must apply sooner or later.  Blaming me, BT, or President Bush is just dumb.  President Obama's administration has contributed $4 Trillion dollars in deficit spending in just the short time he has been in office.  But you can't just blame him either. 

It is this simple...the party is over.   We have borrowed too much money and now we have to live within our means.  Some slick politician may get a few more years out of the old system, but fundamentally we must change.  We can do it on our terms or we can wait for credit rating driven interest rates to drive us out of the borrowing party.   So if the end of borrowing is a fact, then there is really only one question left to ask, isn't there?  THAT is where the real debate is. 

I disagree with most of the regular posters here over the proper role of the Federal Government.  In my mind, that is pretty simple as well.  To me, it is spelled out in no uncertain terms.  I realize that others see things differently, and that recently even the judiciary has seemed willing to violate the clear language of the Constitution.  But of course, they are wrong.... .

[Sigma]

Just saying goodbye to more jobs due to higher taxes with the "you'll know what's in it after we pass it" health care reform bill.   

Medtech asks Congress to repeal device tax
Rick Merritt
7/18/2011 1:18 PM EDT
SAN JOSE, Calif. â€" More than 420 companies including Boston Scientific, St. Jude Medical and Stryker signed on to a letter asking the U.S. Congress to repeal a planned 2.3 percent excise tax on medical devices. The tax could cost $20 billion a year and is set to take effect in 2013 as part of broad health care reform package passed last year.

"The tax is already having an adverse impact on R&D investment and job creation, jeopardizing the U.S. global leadership position in medical device innovation," said the letter."If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax," it said. "It will also adversely impact patient access to new and innovative medical technologies," it added.

"The medical device excise tax is a serious burden for companies struggling to maintain America's global leadership in the development of medical technology," said Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed), a medtech lobbying group that drafted the letter.

The device tax was one part of a sweeping package of health care reforms passed last year. Sponsors of the bill said the fact that it extends health care coverage to an estimated 30 million currently uninsured people will offset the lost revenue from the tax.

AdvaMed took issue with that claim. The letter noted that similar legislation in Massachusetts provided 400,000 more people access to health insurance in that state but "there is no evidence of a device 'windfall'" there, the letter said.

The letter said the U.S. medtech sector employs more than 400,000 U.S. workers, generates approximately $25 billion in payroll at salaries that are 40 percent more than the national average and invests nearly $10 billion in research and development annually.

http://www.eetimes.com/electronics-news/4217937/Medtech-asks-Congress-to-repeal-device-tax

[Dog Walker]

The FDA does not have the money it needs to do the job it has been given.  A 2.5% excise tax on medical devices is a drop in the bucket, a pittance for the companies and the hospitals.  An excise tax does not go into the general fund, but is targeted to a particular purpose.  If this is for the FDA and will speed up its review and approval  process it will be a net benefit for the entire industry.

I was in the medical device business for many years as the owner and chief executive of the business.  I didn't just make obscene profits, they were absolutely pornographic.  The market for medical devices is so lucrative that there won't even be a blip in the number of people trying to get into it.  It is unbelievably competitive, but not on prices.

Everybody is trying to make the "next best thing".  Hit that and market it properly and the money just rolls in.  It's as risky, exciting, fast-moving and really, really profitable.  Having the baby boomers coming into their big device using years means big money for everybody.

Johnson & Johnson just paid $2.2 billion dollars for Synthes, a company that was owned by one man.  J&J so poorly manages its medical device businesses that they are a far bigger threat to the industry this little tax.

[Sigma]

just curious and don't mean to take you off subject, but if it was so lucrative, are you retired now? why not still in the business?


and back to the point - regardless of what you or I think, jobs are nonetheless leaving the country and several companies are telling why. 

[buckethead]

Why won't anyone talk to the bucket?

[ChriswUfGator]

Not me, I was at the Salvation Army volunteering on Stuff the Bus all day yesterday.

Just putting that out there for NotNow, since I'm such a greedy $&@! who never contributes to charity, and all.