BananaHead: The Deficit Buster

Obama got real tough on reducing the deficit today by announcing that he intends to purpose a three year freeze on discretionary spending. Boy sure sounds good, don't it.
That should bring the deficit from $1.4 trillion to like.......uhm like.....oh $1.375 trillion. Yup the WH predicts the freeze will save $250 billion over 10 years. But is it a three year freeze or a ten year freeze? This kinda shit cracks me up. I don't know how they get away with it.

Wait it gets better.

To attack the $1.4 trillion deficit, the White House will propose a three-year freeze on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare.

The article in WSJ went on to say.....
Among the areas that may be potentially subject to cuts: The departments of Housing and Urban Development, Justice, Energy, Transportation, Agriculture, and Health and Human Services.

And here comes the punchline.....

The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending

ROLMFAO

The bottom line is this........if we think we will ever get the deficit under control, it won't come from freezing 17% of our spending but rather a 100%. Across the board cuts and freezes are needed.
If we want to attack another nation or send troops somewhere, raise taxes or cut spending first. If you want to bring someone over from another country and give them food and shelter, raise taxes or cut spending first.......etc....
We need to think before we spend.
How many would have voted for the Iraq or Afghan wars if we had to raise taxes or cut spending first? Would we really care to send someone to the moon if we had to pay for it?
Every service our government supplies us with, has a price tag.
Now we have to pay by raising taxes and cutting spending for all the years of government wasteful spending.

Unfortunately our $12.5 trillion in debt won't go away. It costs us $382 billion last year just in interest costs, that's more than what we spent on welfare and the pensions for civilian and military personnel combined.

Now........the scary shit.

Let's take a 3 month treasury bill.
December 2009 it had a yield of 0.05%
January 1982.......... 12.82%
And throughout the mid 80's and 90's it averaged around the 5% to 7% range.
Link to rates at the Federal Reserve .....very interesting.

So to make a long story short, when interest rates go up, and they will go up do to the fact that it will eventually get harder and harder for us to finance our spending habits, the interest costs on our debt will then outweigh not only what we spend on welfare and pensions but also defense and Social Security and will consume a major portion of all taxes collected.
We will no longer be able to service our debt.
The ponzi scheme has popped.



Arnold has to make cuts.............Schwarzenegger's proposals would cut the size of the union workforce, reduce pay, shrink future pensions and roll back job protections won through collective bargaining