Facing Deficit, Senate Eyes Cuts, U.S. Oil

[NVMojo]

WASHINGTON (AP) - The Senate is digging into a budget plan that would bundle mostly modest Medicare and Medicaid spending cuts with a controversial plan to open an Alaskan wilderness area to oil drilling.

Republicans are seeking to burnish their budget cutting credentials but face unanimous opposition from Democrats who contend it is part of an overall budget plan that will actually increase the deficit once a companion $70 billion tax cut bill is passed.

"When I went to Roosevelt grade school in Bismark, North Dakota, if you reduced spending by $39 and you reduced your income by $70, you were deeper in the hole," said top Senate Budget Committee Democrat Kent Conrad. "You've added to the deficit. You haven't reduced it."

The bill is estimated to trim just $39 billion from budget deficits totaling $1.6 trillion over five years - just 2 percent. For the budget plan's first year, which began Oct. 1, the cuts total $6 billion.

more...

http://www.lasvegassun.com/sunbin/stories/bw-cong/2005/oct/31/103107855.html

[phantom power]

1. I see only two paths forward.

1) Massive cuts to government services, the likes of which haven't been seen since before the New Deal. Maybe never, since prior to that the government didn't provide as many services. (This is, of course, the goal of the neocons)

2) Massive tax increases.

In fact, thanks to the borrow-and-spend GOP, our debt has gotten so bad that maybe both (1) and (2) will be necessary.

[DBoon]

3. There is an option 3.

3. Massive inflation and currency devaluation, so that the debt is paid off in worthless dollars.

I call this the "Weimar" option.

I don't want to think about what happens if this becomes reality.

[phantom power]

5. Oh yeah, that. Or, if China and our other creditors cut us off.

Which might precipitate the Weimar option, come to think of it.

[Psephos]

10. They won't cut us off...they'll simply not buy bonds unless we raise rates

US treasury bonds bear interest at a low rate, because investors consider them to be safe. But as the deficit grows, we'll have to raise that rate to maintain their attractiveness. That's the wolverine in the woodpile: as rates paid on treasury bonds go up, so does the line item in the budget for interest on the national debt. In other words, we spend more money (a LOT more money if rates increase substantially) without adding any additional spending. It's like getting a notice from your credit card company that your APR has just been increased from 9.9% to 22%. Your monthly payment just went up, even though your principal balance didn't change.

Beyond a certain point, this becomes a self-feeding cycle. National debt goes up, which makes interest rates go up, which makes national debt go up, which makes interest rates go up...until we have major problems. As a side note, when government competes with private industry for capital, private industry stops borrowing as much for expansion, which drags the economy down. Which decreases tax revenues, which increases debt, which...ok, you get the picture.

Next time some repuke says that won't happen, mention that not too long ago, GM was considered a safe, AA debt risk, too.

Peace.

[Spinzonner]

7. George 'Weimar' Bush ?

probably too obscure for political purposes

[baby_bear]

4. Roll back the tax cuts to the wealthy

Don't call it a tax increase, but a roll-back, since the cuts were made in a different economic environment. Wouldn't that allow moderate Republicans to vote for it?

I know the starve-the-beast Republicans would cry foul, but there aren't enough of them if enough moderates join the Democrats, for the sake of the country.

b_b

'

[behindthe8ballnchain]

9. moderate republicans?

I'm familiar with those words individually but when strung together as a phrase I'm not sure I understand. I think my grand-pappy mentioned something about them once in a story that also featured leprechauns and unicorns.

Seriously, do you really see any republicans voting to take away the lower tax rate or any other advantage of this country's truly wealthy? In the words of W himself - that's their "base"..."the haves and the have-mores".

[baby_bear]

13. There are a few of them

Two or three. Not enough to make a difference, sadly.

I think there are some in the population, though. But I can't say I know any.

It seems that all the Republicans I know personally are either adamantly Republican because of their evangelical religion, or because they are rich and want to grab their own bucks and starve the beast. As for the war on Iraq (and the supposed war on terrorism), they seem to go along with it because they would have to deal with cognitive dissonance if they did not.

It's an odd combination.

The Democrats I know seem to be more in one group: they seem all to want to protect the environment, stop corporate welfare, redistribute wealth in such a way that no plutocracy can exist and that we care for those less fortunate in our society; promote civil liberties and individual rights; and extend a hand, not a fist, to other countries.

You don't suppose I am biased, do you?

b_b

[politicaholic]

2. It's true, republicans are neither conservative nor fiscally responsible:

This makes Bush's "fuzzy math" quote less of a joke and more of a prophetic glance into the future.

[phantom power]

6. You know what I'd like to see...

I'd like to see more senators (Dem, GOP, any senator will do) start mentioning the fraction of our taxes that go toward paying off interest on our debt. Last I read, it was about 30%, and second only to military spending. Every other category was a distant third.

So, if you're serious about making significant reductions in our spending, there are really only two credible categories: cut military spending, and/or pay down our debt so that less of our money gets flushed down the toilet paying interest to China, Japan, etc.

Any discussion of "reducing govt spending" that doesn't include military spending and national debt is just hot air.

[triguy46]

8. There is only one logical choice:

More tax cuts for the wealthiest!!!! Supply side forever!!! :sarcasm:

[Psephos]

11. There's another...

Clean out the White House and hose it down like Hercules did with the Augean Stables, and start over with a nice, fresh Dem.

Peace.

[truthisfreedom]

12. i think it's time to build detention camps for these crazed thugs. why do

they hate the future of America?