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Sherrod Brown: Debt default would devastate Ohioans



Published: Thu, July 28, 2011 @ 12:01 a.m.

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U.S. Senator Sherrod Brown (D-Avon)

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By Karl Henkel and William K. Alcorn

news@vindy.com

YOUNGSTOWN

The deadline for the U.S. to raise its debt ceiling is nearing, and that worries U.S. Sen. Sherrod Brown.

Brown, a Democrat from Avon, said a potential “unnecessary” default would be devastating to Ohioans, who receive billions of dollars in federal aid for programs like Social Security.

The Senate has less than a week before the U.S. would default on its loan obligations.

“I don’t think we know for sure what Aug. 3 would be like,” said Brown, referring to the day after the U.S. reaches its borrowing limit of $14.3 trillion. “It’d be unprecedented and unnecessary.”

On that day, Brown said the U.S. would take in $10 billion and spend $40 billion, which is why the Democrats have pressed to come to an agreement as soon as possible.

At that point, federal funding for programs such as Social Security, Medicare and Medicaid would be at risk, Brown said, with no guarantee those payments would be made.

President Barack Obama has said funding for Social Security checks, many of which are scheduled for delivery on Aug. 3, may not be available if an agreement is not reached.

That could affect millions statewide, according to a report Brown released Wednesday detailing the effects on each county in Ohio should the U.S. default.

The Mahoning Valley receives more than $5 billion annually in federal dollars, including more than $2 billion for retirement and disability.

“The default is too important for us to play games with,” Brown said. “This isn’t my alarmist thinking. Default should be unimaginable.”

LOCAL FEARS

The thought of default and its effects have some feeling uneasy.

The Warren Social Security office is receiving a steady stream of calls from seniors concerned about their checks.

On the ground locally, social workers at SCOPE of Trumbull County, a senior center in Warren, are telling worried seniors to not panic, said Janet Schweitzer, executive director.

Clients want to know what to do if they don’t get their check, said Robert Wissinger, licensed social worker.

“I try to ease their concern by telling them that most likely the government will step up and the checks will go out as usual,” he said.

But, Wissinger said, if the checks are held up he tells them to call SCOPE and other social service agencies and seek help.

Many people took a hit when private pensions started disappearing and now they are worried about Social Security. It’s kind of a snowball effect, said Debbie Zador, a registered nurse and prescription assistance coordinator at SCOPE.

“The bigger impact could be on the extended family in situations where seniors are caring for children and grandchildren because of the economy,” Zador said. “Sometimes that Social Security check is the only family income.”

A lot of people on Social Security are able to take care of themselves and their homes and are more angry at the government than anything else, Wissinger said.

But he said there are a lot of nervous older people with health and transportation problems.

“They are struggling and worry that this would be the straw that breaks the camel’s back,” Wissinger said.

HIGHER INTEREST RATES

A default would affect more than just Social Security.

Brown said the default would be a “permanent tax hike on all Americans” — comparing it to the Republicans’ steadfast approach of no tax increases — because the country’s AAA credit rating would be downgraded and therefore result in inclining interest rates.

Robert Gardner, CPA and financial adviser with Stifel, Nicolaus & Co. Inc., Butler Wick Division in Canfield, said interest rates would rise, but would be based on the magnitude of the credit rating reduction.

“A downgrade to AA may be unavoidable even with an agreement,” Gardner said. “The lower AA rating is still considered ‘very strong’ and available alternatives have experienced similar pain over the last few years. I feel rates would rise more gradually over time rather than significantly in the short term.”

John Gulas, president and CEO of Farmers National Banc Corp., said the panic hasn’t started among customers of Farmers National Bank.

“We’re not seeing a lot of panic,” Gulas said. “People just aren’t sure what the results are going to be.”

Gulas reminded customers that deposits are protected by the Federal Deposit Insurance Corporation.

DEBATE OVER PLANS

Brown said there are a couple of scenarios to avoid a potential financial crisis, including raising of the debt ceiling, something that has been done 39 times since 1980.

Many debt ceiling increases last less than a year, but Brown said he would not vote for the GOP-led effort to raise the debt ceiling for six months.

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AP

U.S. Sen. Rob Portman

“I cant believe [Speaker of the House] John Boehner [R-West Chester] is going to be that irresponsible that he wants to put America through this again in six months,” Brown said. “This is a radical step to try and stop this president from protecting this economy.”

The latest plan, courtesy of Sen. Harry Reid, a Democrat from Nevada, would cut the deficit by $2.2 trillion over the next decade, falling short of the Republican target of $2.7 trillion.

Ohio’s other senator, Rob Portman, a Republican from Terrace Park, said Wednesday that the Reid plan could be one both sides of the aisle could work with.

“I think Republicans are pleased that it doesn’t have tax increases,” Portman told Bloomberg News TV on Wednesday. “Our economy right now, as weak as it is, couldn’t handle the burden of additional taxation.”

Portman did say the plan includes spending cuts that “don’t seem to be credible and meaningful.”


Comments

1Ianacek(899 comments)posted 3 years ago

The Congress has always lifted debt ceilings in the past & I'm sure they will again by Tuesday .

But something is different this time . International currency markets have signalled they don't need as many US dollars as they used to . Even the politicians have seen the writing on the wall & realised they need to keep Presidents ( not just Obama ) on a short leash from now on . If they don't & instead allow debt to explode, US Treasury bills will have a C credit rating before too long .

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2author50(1121 comments)posted 3 years ago

Spend no more than you bring in. All Americans have to live by this simple rule - why not the men and women who are our servants in government?

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3timOthy(802 comments)posted 3 years ago

It's 14TH amendment time unless Senate does something long term. All because of a group of Tea Baggers who want their way at America expense. Everyone's comparing their (Personal) home experience to readie this situation . That is admirable ,but the Country is not a house with kids dogs cats fish and other things that go with a house and family. It's more complex in my opinion. I feel their is prejudice being spread around by these Baggers , and they should be ashamed. But that is a hopeless statement. They are too arrogant !

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4James_S(268 comments)posted 3 years ago

from Michael Hoffman

http://www.revisionisthistory.org/pag...

"Rep. Ron Paul has dismissed the debt ceiling crisis as a nonissue: the government is already bankrupt, in his view, and disguises it by printing money. "There's no way the checks aren't going out to Social Security. The real question is what is the money going to buy when you get it." "

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5ytownsteelman(627 comments)posted 3 years ago

Brown is worried! Oh yeah, tell me another lie! He voted to table the Cut, Cap and Balance act, so he's not that worried. This is all for show. He says he is concerned but will still put partisan politics above seniors and the needy. The CC&B is just the medicine that this country needs but of course Brown just wants the gravy train to keep rolling along!

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6UnionForever(1470 comments)posted 3 years ago

Congress needs to quit screwing around and pass the $2.7T debt increase already before the financial markets collapse and we the economy tanks again. Then come back and pass a debt reduction cutting plan that addresses big oil tax breaks, farm subsidies, earmarks, welfare, medicaid, military spending, and food stamps while leaving our seniors who have paid for their social security and medicare alone.

This is one mess to blame on the Republicans & TEA Party!

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7James_S(268 comments)posted 3 years ago

Listen to this exchange between Ben Bernanke of the Federal Reserve and Alan Grayson:

http://www.youtube.com/user/mistermas...

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8palbubba(664 comments)posted 3 years ago

The Quote of the Decade...


“The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the US Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that, "the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and failure of leadership. Americans deserve better.”

- Senator Barack H. Obama, March 2006!

Jessiedavid has it exactly right. The first thing is to stop ALL federal government paychecks, stop paying their health insurance and stop all perks for these people. Stop all foriegn aid payments, stop all assistance to illegal aliens and shut down immigration until unemployment is below 5%.
Unionforever is totally wrong, this problem started before the Tea Party existed and the Republicans are the only ones that ever fight for spending cuts. You people voted for change and you got it, a tax and spend liberal who is arrogant enough to ruin the country if he doesn't get his own way. Had enough change yet?

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9DwightK(1247 comments)posted 3 years ago

It's time to pass the debt ceiling increase and then work on a budget under better circumstances. Right now the Tea Party Republicans are putting all of us at risk over money we've already borrowed and spent.

If they screw around much longer we'll all be eating beet and cabbage soup.

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10Attis(872 comments)posted 3 years ago

Wanna take in a few trillion dollars without cutting any benefits?
1. Stop the trillion dollar wars in Afghanistan,Iraq,Libya.
2. Tax net wealth instead of earned income.
3. Shut down the trillion dollar tax shelters offshore.
Problem is that the folks running the country (into the ground) benefit from wars, offshore tax shelters and tax-free obnoxious wealth; so they will continue to build this house of cards until it collapses. The rich are getting richer; the poor are getting poorer; the middle class is getting thinner; and the fuse is getting shorter.

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11Iwannamove(61 comments)posted 3 years ago

these are the stupid scare tactics the stupid tea baggers and republicans want to put in effect to get there way on cutting taxes for there slimy rich friends all to scare the elderly into voting there way and to screw over the middle class and poor ... Shame on them. I hope people wake up on the next election. DwightK pass those beets and cabbage over because I think thats were we are heading if we are lucky enough to get beets or cabbage.

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12Education_Voter(849 comments)posted 3 years ago

You notice that Republican Plans leave the defense budget immune.

I'm afraid we'll become even more of a society dominated by our military. We spend more on our forces than all other countries in the world combined.
And that doesn't count all of the federal money spend on Homeland Security, the CIA, and secret operations we can't even estimate.

The Bush Administraton suggested that the Iraq War might cost as much as the shocking sum of 64 billion. Unfortunately that has ballooned to more than 3 trillion.
That's more than 3,000 billion.
That spending was combined with a tax cut, and then remember? the "stimulus" rebate to everyone as 2008 began?

Tax Breaks AND a war? What were we thinking?

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13Education_Voter(849 comments)posted 3 years ago

Having a deal held back by the House of Representatives is one thing, but having that body held hostage by its own tea party members is another.

One of the worst? Our own Representative from the 6th District, starting in Boardman/Poland and going south to Marietta ---
Bill Johnson, carpetbagger Ohioan
(Or I guess I should say revenge of the South, bringing carpetbagging north)

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14cambridge(2984 comments)posted 3 years ago

UnionForever....Call the police, some rational person broke into your house and is posting from your computer.

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15ladiesrule(17 comments)posted 3 years ago

Just seems too simple to me....put Congress on SS and Medicare with the rest of us, raise the threshold on SS to the first $200,000 of earned income, reduce foreign aide, reduced fraud and waste in SS & Medicare, change Federal Income Tax to a flat 10% of income, no loop holes, everyone pays. Save America.

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16jasoninohio(119 comments)posted 3 years ago

Social Security checks will go out no matter what happens. That money is out of a seperte fund. For Obama and Brown to be saying otherwise is the equivilant to any of us screaming "FIRE" in a crowded theater.

Vote out Barry in 2012!!

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17mrblue(970 comments)posted 3 years ago

Washington is full of idiots and unfortunatly, I voted for a few of them--No More. All they do is favor the rich and burden the middle and lower class. They take care of themselves and the h--- with the rest of the country. I wonder how many pet projects are still being funded. I'll bet the numbers are staggering. If a deal is not reached, ( I still believe it will ) it will be political suicide.

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18Max(81 comments)posted 3 years ago

timOthy,

I think it's pretty obvious that a household is not a country and must be run differently. But the fact remains that you can't spend more than you take it ... in ANY situation. So until these idiots in government figure that fact out...

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19Education_Voter(849 comments)posted 3 years ago

Ladiesrule,
You are right. It was too simple:
"foreign aid, reduced fraud and waste in SS & Medicare,"
will do almost nothing to reduce liability. Governments costs are almost all military, Social Security, Medicare.

As for "change Federal Income Tax to a flat 10% of income, no loop holes, everyone pays," I can't say its fair to tax someone with with children and a $18,000 income, a tax that would drop them to $16,200. Meanwhile for me, the difference would be the cost of one of three vacations, leaving me with $52,200 and no children to feed.

I work hard for my money, but so does that $18,000. nursing home aid with too many patients, or that restaurant cook working long, hot, hours.

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20AnotherAverageCitizen(1174 comments)posted 3 years ago

As it turns out, Republican majorities voted to raise the U.S. debt ceiling seven times while George W. Bush sat in the Oval Office. As during the Bush presidency, the current GOP leadership team voted 19 times to increase debt limit. During his tenure, the U.S. national debt doubled, fueled by the Bush tax cuts of 2001 and 2003, the Medicare prescription drug plan and the unfunded wars in Iraq and Afghanistan. And Mitch McConnell and John Boehner voted for all of it and the debt which.

""Even as Vice President Biden leads bipartisan negotiations to trim at least $1 trillion from the national debt, Republican leaders faithfully regurgitate the refrain that tax increases are "off the table." In one form or another, Mitch McConnell, Eric Cantor and just about every other conservative mouthpiece parroted Speaker John Boehner's line that:
"Medicare, Medicaid - everything should be on the table, except raising taxes.""

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The dismal 3 million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

http://crooksandliars.com/jon-perr/10...

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21DwightK(1247 comments)posted 3 years ago

Republicans spent two trillion dollars on two wars, increased Medicare spending and then cut taxes. Now they're trying to reclaim the title of "fiscal conservatives". I guess our long term memory deficiency plays into their favor this time.

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22cambridge(2984 comments)posted 3 years ago

reagan and both bush's raised the debt ceiling 29 times in 20 years.

Clinton and Obama raised the debt ceiling 6 times in 10 1/2 years.

It's funny how the teabagger/republicans long for the days of reagan who all by himself raised the debt limit 17 times and taxes too many times to count.

The truth is they would sellout the whole country or what's left of it to get Obama and the Democrats out of Washington.

I hope they keep it up because even their own are starting to see through them. I give major props to UnionForever and his post that is as close as he will admit that he might have been wrong about these people and their agenda.

rupert murdoch proved that "you can fool some of the people...." but sometimes they figure it out. That's the part he wasn't counting on.

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23nemo0723(19 comments)posted 3 years ago

Ladiesrule: "Just seems too simple to me....put Congress on SS and Medicare with the rest of us, raise the threshold on SS to the first $200,000 of earned income, reduce foreign aide, reduced fraud and waste in SS & Medicare, change Federal Income Tax to a flat 10% of income, no loop holes, everyone pays. Save America."

Not so simple:
1. Congress is on Social Security and Medicare. Why doesn't anyone seem to know that?

2. If you raise the threshold to $200k for taxing, wouldn't it only be fair to raise the cap on benefits to reflect that?

3. 10% would be too low, since federal spending is something like 24% of GDP right now. More like 20% flat tax? That would never pass.

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24GotFreedom(1 comment)posted 3 years ago

Wake Up Ohio!

First, is Mr. Brown one of the Dem Senators who signed off on a letter to John Boehner saying they would not vote for his proposed legislation--aren't these the same Dem Senators who have been playing "cynical political games" and who have refused to put forth a budget plan since 2009?

Also, Mr. Brown is supporting the "farce" that is Harry Reid's plan and both men are purporting mis-information (that's the nicest way to put it).

Mr. Reid’s plan is nothing more than an accounting trick coming from phantom war savings! Brown and Mr. Reid are insulting the American people by claiming over a trillion dollars in “spending reduction” from wars that were ending anyway!

Mr. Reid and Mr. Brown are also resorting to "scare tactics" stating that there could be disruptions to Medicare, Social Security, and Medicaid, Veterans benefits unless their plan gets passed--sorry gentlemen--you are wrong!

"Here are the numbers from an excellent and highly detailed study by the Bipartisan Policy Center (BPC) quoted in this piece [emphasis added]:

…The BPC study found that the United States is likely to hit the debt limit sometime between August 2 and August 9. “It’s a 44 percent overnight cut in federal spending” if Congress hits the debt limit, [BPC's Jay] Powell said. The BPC study projects there will be $172 billion in federal revenues in August and $307 billion in authorized expenditures. That means there’s enough money to pay for, say, interest on the debt ($29 billion), Social Security ($49.2 billion), Medicare and Medicaid ($50 billion), active duty troop pay ($2.9 billion), veterans affairs programs ($2.9 billion).

That leaves you with about $39 billion to fund (or not fund) the following:

Defense vendors ($31.7 billion)

IRS refunds ($3.9 billion)

Food stamps and welfare ($9.3 billion)

Unemployment insurance benefits ($12.8 billion)

Department of Education ($20.2 billion)

Housing and Urban Development ($6.7 billion)
http://blogs.marketwatch.com/fundmast.....

"Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence."
John Adams

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25jasoninohio(119 comments)posted 3 years ago

Hey Unionforever, if you would sell whatever it is you are smoking you wouldn't have to worry what happens to the debt ceiling.

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26VINDYAK(1799 comments)posted 3 years ago

Leadership comes with many responsibilites. One of those responsibilities is to arrive at solutions that everyone can accept. Our fearless leader in the big white house is not providing leadership we deserve, he is stonewalling other efforts in an attemt to satisfy his party and not the people who elected him. We are on the verge of a calamity here, unless someone steps up and does the right thing.

The fact that this is going down to the last minute has already impacted our credibility and thus we need to look at purging even more of our elected leaders in our attempt to return sensible management of our country. Simply put, This bickering hogwash is ruining our county just as much as the staggering debt. And who has done this? The very same people we elected to represent us...IDIOTS!

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27Bigben(1996 comments)posted 3 years ago

@youcantsilencetruth

"Hopefully, there is an appointed position for Paul in the near future dealing with financial matters in the White House." -- -He is going to run for president and if he doesn't win he said he will retire.

The only thing that would have helped the economy is an overhaul of the monetary system but instead we get more WWF and our assets are being bought up by private foreign corporations and banks.Those are the facts.

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28Education_Voter(849 comments)posted 3 years ago

Dodge said:
"Let's vote all incubent desdbeats out. If they aren't performing for all of us lets remove them."

Dodge, that kind of thinking is what got us into this deadlock since the election of 2010.
The TeaParty members have signed pledges to other organizations than their constituents. Write to them all you want. They are more afraid of the bankers and organizations they have allied with.
What will Grover Norquist do to Congressmen who violate his pledge?
What is this group, the Cosa Nostra?
I guess that would be the Cosa Norquist.

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29Bigben(1996 comments)posted 3 years ago

@timOthy - -- - Concerning post #4 I disagree the government should be run like a house with a budget.It isn't a right left thing but
If the central banks have the world in debt than they can call the shots ?

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30srduke(1 comment)posted 3 years ago

It's too bad Senator Brown is ignoring questions about marijuana legalization like this one:

http://www.youtube.com/watch?v=6p05bg...

This is an easy way to stop kids from getting marijuana from drug dealers that don't ID, and create a HUGE revenue stream from taxing and regulating it. Not to mention the fact that it would be a huge blow to the Drug Cartel's profits. He didn't even give his position on the matter, simply said no. We should ask that he answer with some substance next time someone brings it up!

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31iBuck(214 comments)posted 3 years ago

What I find offensive is that they've gotten away with over-spending for the last 60 year or more, paying off the Master KKkard with the Visa. They say the annual deficit is $1.755T, and as of Wednesday, the Treasury says the federal government debt is about $14.3T ($14,342,819,149,604.76), so they need to cut at least $1.8T from annual spending, eliminate the unconstitutional socialist programs, cut the non-vital constitutional prgrams, and pay down the debt over the next 20-30 years.

The House should not let itself be held hostage by the radical leftists in the Senate.

graphs: http://www.kermitrose.com/jgoMoney.html

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