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How will you be impacted after the US falls off cliff?


Published: Mon, December 31, 2012 @ 12:05 a.m.

photo

Speaker of the House John Boehner, R-Ohio, walks to a closed-door GOP caucus Sunday night as Congress meets to negotiate a legislative path to avoid the so-called “fi scal cliff ” of automatic tax increases and deep spending cuts.

Combined dispatches

YOUNGSTOWN

If the nation goes over the “fiscal cliff,” some Americans will wake up Tuesday with financial headaches to rival a New Year’s Eve hangover.

Even if the crisis is resolved quickly after the new year as pressure mounts on President Barack Obama and lawmakers, it poses a short-term administrative nightmare for businesses. And it would be a financial blow to millions struggling to make ends meet in the aftermath of the Great Recession.

As the White House and Congress try to avoid large tax increases and federal spending cuts, taxpayers, businesses and even the Internal Revenue Service are scrambling to figure out the effects if an agreement is not reached.

The fiscal pain could be averted by a last-minute deal. And even if there is none by Tuesday, Washington policymakers could retroactively reduce tax rates if they make a deal. But the uncertainty and short-term loss of income could damage the economy with the Congressional Budget Office estimating as many as 3.4 million jobs lost if the nation goes over the fiscal cliff.

Businesses already are struggling to adjust. They’ve got to figure out how much in federal taxes to withhold from employee paychecks starting next week. But the IRS still has not told employers what the 2013 withholding levels would be.

taxes

Starting with the new year everyone would see their income taxes rise as the George W. Bush-era tax cuts expire. Middle-income households would pay about $1,500 more a year in taxes.

“As a working-class person, I would miss any money taken out of my paycheck,” said Stephanie Smith, an office administrator in Sacramento. “I just feel that we’re already paying high taxes, and it feels like we’re still in a recession. Everybody wants to take money out of our paychecks, but nobody wants to put more in.”

Payroll taxes would increase by 2 percent with the lapse of a temporary, two-year tax cut designed to boost the economy. Workers making $50,000 annually would take home about $40 less every two weeks.

The number of people facing the alternative minimum tax provision would skyrocket to about 33 million next year from 4 million this year. The tax, enacted in 1969, was designed to make sure the very wealthy paid some income tax. It was not indexed to inflation and needs to be fixed each year to avoid ensnaring middle-income households.

stock markets

Stocks headed lower for a fifth day on Friday on concern that Washington lawmakers will fail to reach a budget deal before a year-end deadline.

The Dow Jones industrial average slid 104 points to 12,992 in the first 40 minutes of trading Friday. The Standard & Poor 500 index fell 10 points to 1,408 and the Nasdaq dropped 19 points to 2,966.

Stocks closed lower Thursday but erased most of an early loss after Republicans said they would reconvene the House of Representatives Sunday in hopes of piecing together a last-minute budget deal.

Despite the fiscal gridlock in Washington, major stock indexes are holding on to gains for the year. The Dow is up 6.5 percent, the S&P 500 index is 12 percent higher and the Nasdaq is up 14 percent.

Unemployemnt

More than 2 million long-term jobless would receive their final unemployment benefit check within days.

Checks would abruptly end for people receiving extra federal aid — which represent as much as 47 additional weeks of benefits in states such as California. State benefits of up to 26 weeks would still be available, but workers would be out of luck once those run out.

oil prices

Oil prices eased in choppy trading last night as unresolved US budget talks left open the possibility that looming mandated tax hikes and spending cuts could push the top oil-consuming economy into recession.

Brokers said few investors wished to make large bets on the direction of oil prices until the US budget talks were resolved, or during a holiday period characterized by low trading volumes.

SPENDING

At the same time, Americans would feel cuts in government services; some federal workers would be furloughed or laid off, and companies would lose government business.

If the nation goes over the fiscal cliff, budget cuts of 8 percent or 9 percent would hit most of the federal government, touching all sorts of things from agriculture to law enforcement and the military to weather forecasting. A few areas, such as Social Security benefits, Veterans Affairs and some programs for the poor, are exempt.


Comments

1AnotherAverageCitizen(1172 comments)posted 1 year, 3 months ago

We must protect the 1% at all cost.

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2chrispipo(2 comments)posted 1 year, 3 months ago

screw the one percent do your homework a good economy has to have small business growth. with out that big business take over and in retro spec put us in this situation that we are in . another thing that people don't realize is that our federal reserve is a private organization!!!! it is impossible for our government to pay back its debt. if more people would realize this they would figure out it is a ponzy scheme that our bankers did when they created the federal reserve. also for some entertainment.. try finding a law that makes you have to pay a federal income tax..

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3chuck_carney(499 comments)posted 1 year, 3 months ago

Where has little timmit ryan been on the fiscal cliff issue?

Probably planning Nancy Pelosi's New Years Eve party.

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4sewingnut(33 comments)posted 1 year, 3 months ago

What ever happened to living within your means? We have a national debt that our kids will struggle to pay back. The entitlement programs and stimulas spending programs are out of control.

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5danikytn(242 comments)posted 1 year, 3 months ago

If losing 40 bux will do some good, then let it happen. We will adjust. Its time for all these people who get something for nothing to start doing their part. Unfortunately, welfare benefits and section 8 do not get taxed, so the leeches will be ok. Such is life.

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6cambridge(2919 comments)posted 1 year, 3 months ago

I remember when Clinton was president, the economy was booming, no one talked about cutting SS or Medicare and we had a budget surplus and were on or way to paying off the debt. Does anyone remember which party got the country off that path?

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7Boar7734(66 comments)posted 1 year, 3 months ago

Memories are short. John McCain by choosing Palin as his Tea Party running mate started the split of the Republican party.The irrational exhuberance of 2010 politics brought in the Grover Norquist (a Sharon Pa native) Tea Party creative destruction people that are holding hostage the American people. Once we have voted out the Tea Party we will return to a 2 party system that will return normancy.

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8larrythewineguy(50 comments)posted 1 year, 3 months ago

The reason we are discussing entitlement cuts: today's revenues are the same as they were in 2007 (pre-recession), yet entitlement spending has increased 30% since 2007. Obviously, this is unsustainable. Raising taxes on the 1 million job creators with incomes of $250-400K, Sub-chapter S small businesses, would kill this fragile economy. Raising taxes on the wealthiest 1% offsets less than 8 days of federal spending. Unfortunately, this message does not resonate with the average citizen. President Obama knows a divisive, lowest common denominator approach, class warfare ala soak-the-rich, engages the uninformed. There are some common sense approaches that could easily be employed, but these methods do not fit the European socialist model the President prefers to employ.

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9larrythewineguy(50 comments)posted 1 year, 3 months ago

President Clinton triangulated to the center and realized the importance of negotiation and legislation WITH the other side of the aisle. President Obama has neither the desire nor the experience (the former community organizer and junior Senator from IL with less than one full term served) to govern effectively.

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10cambridge(2919 comments)posted 1 year, 3 months ago

larry...you're sounding a little whiny.

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11larrythewineguy(50 comments)posted 1 year, 3 months ago

Cambridge,
If common sense and truth are whiny, I am whiny.

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1276Ytown(1158 comments)posted 1 year, 3 months ago

"If the nation goes over the fiscal cliff, budget cuts of 8 percent or 9 percent would hit most of the federal government, touching all sorts of things from agriculture to law enforcement and the military to weather forecasting. A few areas, such as Social Security benefits, Veterans Affairs and some programs for the poor, are exempt"

A cut of at least 8 or 9 percent in the federal government budget is a conversation we need to have. Let's start with eliminating wasteful spending.

Ask the people who have lost their jobs, their homes, and taken a hit in their savings how they've reduced their budget by at least 8 or 9 percent.

This president wants bigger government, more spending, more taxes. All while the national debt is choking the life out our country. http://www.usdebtclock.org

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13cambridge(2919 comments)posted 1 year, 3 months ago

larry....I don't understand how your first comment represents "common sense" if Obama is the blame rather than the teabagger/republicans.

I'm positive that if the teabagger/republicans offered the same tax rates that were in place during the Clinton boom years Obama would accept them. Now tell me that those teabagger/republicans are willing to do that....you know, negotiate.

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14larrythewineguy(50 comments)posted 1 year, 3 months ago

The time for negotiation has passed. We have lurched haplessly toward European socialism and redistribution of wealth. The most recent election was a paradigm shift as the takers outvoted the makers. It will be several generations and a decline of American Exceptionalism prior to any shift back towards common sense. The republican party and the democratic party put us in this position with years of unchecked federal expansion. The tea party evolved in response to the republican party's loss of core principals. It was comical to watch Boehner negotiate with himself over the last several weeks. This will be a short term political victory for the President, 2-3 months. What do you suggest we do about the deficit? This deal will ignore the core of the problem. Have you watched the decline of Europe as they have employed the President's preferred method of governance? We are treading the same path.

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15anothermike(202 comments)posted 1 year, 3 months ago

Barak Obama is in for his second term....four more years.....time for the teabaggers to accept that and quit stonewalling absolutely every issue that comes out of the WhiteHouse. The repubs aren't winning any popularity contests with this continuing crap....

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16borylie(743 comments)posted 1 year, 3 months ago

I remember when Johnson was president. That's when entitlements,that sounded so good,really started. 50 years later here's where we are. Can you imagine 50 years from now? Yeah Cambridge, take a brief period in history and try to spin it into a republican bashing. So go ahead you king of red herrings, link to something. Richard top.

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17redvert(2007 comments)posted 1 year, 3 months ago

Cambridge did you happen to conveniently forget which party had control of both houses of Congress during Clinton's last four years when this budget surplus was created. Surprise, it was the Republican party. Don't you hate that fact! Now as you know or should know, spending bills originate in congress and the president can either pass or veto. So I know it is a real long shot but could the spending bills or "controlled spending" bills that originated in Congress be the reason for this surplus.

I believe Clinton was also given line item veto power so he had no excuse to use if he wanted to veto based on one rider.

To Clinton's credit he knew that he had to work with Congress to get the things he wanted. Unfortunately that is not something that either party normally does!

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18excel(273 comments)posted 1 year, 3 months ago

Just a few hours until the four more years start!

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1976Ytown(1158 comments)posted 1 year, 3 months ago

All you need to know about the fiscal cliff in one FAQ:

http://www.washingtonpost.com/blogs/w...

And for those who don't think spending cuts are important:: http://www.usdebtclock.org/

Just how are you going to pay back the $52,123 per citizen / $142.808 per taxpayer owed to the national debt?

$,1,061,924 ss/medicare liability per taxpayer.

Cambridge: So we tax the rich. That brings enough money to fund a week or two of our spending. Then what do you propose?

Federal spending by the numbers: http://www.heritage.org/research/repo...

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20larrythewineguy(50 comments)posted 1 year, 3 months ago

Perhaps Cambridge is a proponent of Paul Krugman. Cambridge, I have one question: can we spend our way out of recession?

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21borylie(743 comments)posted 1 year, 3 months ago

toycannon, Very well stated. I really can't believe that any clear thinking American can't see what's happening. I do believe in conspiracy's and this process of the far left taking over has been in play since the 1950's. Now with a complicit media, a black socialist as president ( perhaps a communist), and an ignorant voting bloc, it's now coming together. With a weak republican leadership that allows the liberals to play hardball, while the republicans play softball, this will get worse. The big reason we'll continue to lose at the polls is that the strength in numbers ( those that will vote ) is no longer a problem getting the apathetic and ignorant votes to the polls. With early voting, more absentee ballots and soon to be where everybody is automatically registered, the libs will have all the time they need to deliver the votes. The more illegals and the more people dependent on government will be the overwhelming numbers needed.

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2276Ytown(1158 comments)posted 1 year, 3 months ago

Government will increase tax revenue AND reduce spending when they put us back to work.

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23larrythewineguy(50 comments)posted 1 year, 3 months ago

76Ytown,
Two brilliant posts, but please elaborate on how the federal government can drive economic expansion through job creation. I assume you mean the expansion of private sector jobs rather than federal government jobs.

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2476Ytown(1158 comments)posted 1 year, 3 months ago

Yes, definitely private sector jobs!. Give us back the American Dream. Give us back our dignity.

Private expansion is not happening because government keeps choking the private sector through taxes, regulation and increased uncertainty Until we all gain confidence in this economy and the direction this administration is taking us, our purse strings are kept closed. Who pays for government expansion? We the people.

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25thinkthentalk(257 comments)posted 1 year, 3 months ago

You know what, im beginning to see the light...

Although i cant get this math to work, $52,123 per citizen / $142.808 per taxpayer, im sure its right. Maybe thats the metric system economics. 3 digits after the decimal point. I never could figure it out. The Koch bros only hire the best and brightest at the Heritage foundation. They gotta be right. My goodness, they came up with the brilliant oil subsidies for the oil companys, so that they can make record profits. Smart guys there...

Just get rid of all these govt expenses. Im sick of paying for them.

$900billion for defense a year. What did that get us? According to Fox, Benghazi, Benghazi, Bengazi, on and on and on, every night for 4 months. 900billion? and they couldnt protect that little CIA outpost? I want my $142 and .808 mm back.

And whats with these milk subsidies? Do you mean that if they cut out milk subsidies, milk will cost $8/gallon? It costs $8/gallon to make milk? We are borrowing money to give dairy farmers $5/gallon? I dunno, i guess its the metric system again. My grandchildren will have to pay for the milk my kids drink? Heck, im switching to almond milk for my corn flakes. Or maybe goats milk. Im gonna buy a goat.

Corn subsidies. Paying farmers for corn to make ethanol that costs more than gas? I dont like ethanol anyway. Although, i noticed that these farm subsidies go to red states. mmm, maybe i gotta think about that some more.

And how about these old retired moochers. Tell me why my grandkids are subsidizing soc sec checks so that these old coots can live the high life in sunny Naples florida?

Or these darn snow plow drivers. Plowing the street in front of my house. Why do i have to pay taxes for that? Thats socialism. In china, each comrade has to shovel the snow in front of their own house. Same thing in north korea. And they love doing it. Yeah, thats the way it should be here. If you dont like it, then buy a snowblower.

Yeah, ok, im starting to come around to the tea bagger way of thinking...

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26redvert(2007 comments)posted 1 year, 3 months ago

Vinytalk

"clear thinking American ???
Also read as right thinking ,
They must get their mines right
Where did we heard that @rap before"

Are we talking coal mines or what? And if so, what is wrong with their mines? Don't keep us in suspense. Not sure where we have heard this @rap before!!!

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27larrythewineguy(50 comments)posted 1 year, 3 months ago

Think,
1. Can government spend its way out of recession and economic malaise?
2. Is the role of the government the redistribution of wealth?
3. What happens when the private sector wealth otherwise known as tax revenue disappears?

Your rhetoric above is cute, but I want you and those in your camp to answer these questions. I want you to tell me and my camp how you propose to eliminate the deficit and grow the economy. I want some substantive answers rather than opinions and bluster.

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28redvert(2007 comments)posted 1 year, 3 months ago

thinkthentalk,

Got a good laugh out of your post. I will just pick one part to comment on, the farm subsidies. While I am not in favor of the subsidies I will answer your question as to why it goes mostly to red states....that is where we find productivity in most cases!!!

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29cambridge(2919 comments)posted 1 year, 3 months ago

bor-y-lie....your post #25 is an ALL TIME classic. You have truly outdone any nut job post I've read in quite awhile. PLEASE post those same type comments during all upcoming elections. Enjoy the next four years knowing that Barack Obama is the "Commander and Chief" and the "President of the United States of America", I know I will. :-)

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30larrythewineguy(50 comments)posted 1 year, 3 months ago

Progressives & Socialists,
Your silence in response to 3 simple questions is deafening.

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31excel(273 comments)posted 1 year, 3 months ago

Obama is now a symbol of who we are. Will this be known as the lost era in our history?

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32redvert(2007 comments)posted 1 year, 3 months ago

Seems like I struck a nerve with winytalk, sorry about that. Of course if you would look at what you type before automatically posting it, this would not happen.

As for those of you that pick on our boy cambridge, remember that he really enjoys paying higher taxes, after all the "land of fruits and nuts" is the highest taxed state in the nation and that is one reason he swoons over obowser so much. I am sure the productive side of California loves supporting all the welfare folks and/or the illegals in their slimy inter cities.

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33thinkthentalk(257 comments)posted 1 year, 3 months ago

larrythe cableguy
1. Yes. It just did.
2. No. Helping out somebody in society who is down on his luck is.
3. Tax revenue disappears, government stops providing services. Services like defense, soc sec checks, law enforcement, $5/gallon milk subsidies, education, plowing your street.
My friend, if you expect these services, but expect to not pay taxes for them. Really?

Do you go to work, and expect to not get paid? Thats communism!
You sir, are a communist!!!!

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34reallytired(84 comments)posted 1 year, 3 months ago

hey cambridge,, when clinton was having the surplus and the economy was great he had a republican controlled congress that force him into signing the "contract with America". It worked and the Democratics always forget to mention that point.

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35thinkthentalk(257 comments)posted 1 year, 3 months ago

realtired
All well and good that Clinton had cooperation with his republican congress.
How do you defend the jackass republicans that are in there now?
This coming january, will the only thing that Boehner accomplishes with this group, is read the constitution line by line?

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36redvert(2007 comments)posted 1 year, 3 months ago

thinkthentalk,

Well at least they will read it not like Piglosi said about the healthcare bill, "lets pass it and then we can read it"

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37redvert(2007 comments)posted 1 year, 3 months ago

thinkthentalk, how do you defend the libitards that think the only solution for out of control spending is to just raise taxes. So after you tax the top 10% at a 100% rate guess who they go after next? Eventually it gets down to you.

Do I defend the republicans that are screwing up, of course not but that is no doubt the difference between you and I.

Doesn't the lib controlled cities in the US that are filing bankruptcy tell you anything? Are these problems just gonna go away by themselves? Do you not think what is happening in some of the European countries can not happen here? It is already happening in some of our cities and is close to happening for the state of California.

Why is our dollar worth less than the Canadian dollar, less than the Euro.

Is there that much ignorance floating around.

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38whitesabbath(738 comments)posted 1 year, 3 months ago

Warren Buffett, in a recent interview with CNBC, offers one of the best quotes about the debt ceiling:

"I could end the deficit in 5 minutes," he told CNBC. "You just
pass a law that says that anytime there is a deficit of more
than 3% of GDP, all sitting members of Congress are ineligible
for re-election.

The 26th amendment (granting the right to vote for 18 year-olds)
took only 3 months & 8 days to be ratified! Why? Simple!
The people demanded it. That was in 1971 - before computers, e-mail,
cell phones, etc.

Of the 27 amendments to the Constitution, seven (7) took one (1) year
or less to become the law of the land - all because of public pressure.

Warren Buffet is asking each addressee to forward this email to
a minimum of twenty people on their address list; in turn ask
each of those to do likewise.

In three days, most people in The United States of America will
have the message. This is one idea that really should be passed
around.

Congressional Reform Act of 2012

1. No Tenure / No Pension.

A Congressman/woman collects a salary while in office and receives no
pay when they're out of office.

2. Congress (past, present & future) participates in Social
Security.

All funds in the Congressional retirement fund move to the
Social Security system immediately. All future funds flow into
the Social Security system, and Congress participates with the
American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all
Americans do.

4. Congress will no longer vote themselves a pay raise.
Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and
participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the
American people.

7. All contracts with past and present Congressmen/women are void
effective 12/1/12. The American people did not make this
contract with Congressmen/women
Congress made all these contracts for themselves. Serving in
Congress is an honor, not a career. The Founding Fathers
envisioned citizen legislators, so ours should serve their
term(s), then go home and back to work.

If each person contacts a minimum of twenty people then it will
only take three days for most people (in the U.S. ) to receive
the message. Don't you think it's time?

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39AnotherAverageCitizen(1172 comments)posted 1 year, 3 months ago

No teabaggers want to give credit to Clinton, just the repub ran Congress for the good years under Clinton. WELL, teabaggers, why do you now BLAME Obama, and not the repub ran congress for all this mess.

We have a HUGE debt, raising some taxes and cutting a lot of expenses needs to be done. SS, Medicare need to be started later in life, not 62. We should reduce unemployment payments each month, that would make people go back to work.

BOTH sides NEED to work together. Not against each other.

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40philobeto(83 comments)posted 1 year, 3 months ago

I agree with you AAC, I might add that Government budgets are bloated and because of this, taxpayer money is spent needlessly and irresponsibly. Citizens have had to budget and live within their means and government needs to do the same. I'm so agaist raising taxes after seeing how government recklessly spends taxpayer dollars.

Be careful what you want from government, because it can't manage what it eats.

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4176Ytown(1158 comments)posted 1 year, 3 months ago

Hman:

Each year, if we collect more in taxes than we spend, we have a Budget Surplus. On the other hand, if we spend more than we take in, we have a Budget Deficit.

When we have a Budget Deficit, we need to borrow money to meet our expenditures. Thus increasing the amount of money we owe - the National Debt.

When Clinton left office, the National Debt was $5.8 trillion. On top of that, we had a Budget Surplus. The budget surplus meant we had enough money to meet our expenditures.

After 8 years in office, Bush's National Debt was $10.6 trillion. Budget Deficit $482 billion.

After 4 years in office, Obama's National Debt is $16,472 trillion and his budget deficit is $1.084 trillion. Per Year. There are a thousand billions in a trillion and a million millions in a trillion. Big numbers! We're on track to be over $20 trillion in debt in 4 years.

When Obama took office, we owed about $30k per citizen, $86k per taxpayer. Now we owe $52k per citizen $145 per taxpayer.

This spending is unsustainable. Those bad republicans who want to live within a budget. As long as China can still lend us the money, we should continue to give it away. I hope our EBT cards still work after we get downgraded again.

http://www.usdebtclock.org/index.html

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4276Ytown(1158 comments)posted 1 year, 3 months ago

Hman:

The EBT card comment is tongue in cheek. If our credit rating is downgraded, the interest rate for the money we need to borrow will rise. Interest rates are currently the lowest in history and keep in mind, our loans are short term loans. We are slaves to our lenders.

National Debt when Clinton took office was $4.5 trillion. When he left $5.8. So Clinton is was actually responsible for having added a budget deficit of $1.3 trillion to the national debt.

So we are back to the fact that we currently have a $1 trillion yearly deficit. This is money that we are borrowing to pay our obligations which include social security, defense, interest on our debts and all other obligations in excess of the taxes we collect. If we were to balance the budget, we would not have a deficit and would not add anything to the debt. However, we would still need to tackle the national debt which is currently over $16 trillion.

As far as the SS IOU's are concerned, we are way past IOU's. SS will be BROKE by 2037. Just because you have money in our 401k doesn't mean you can borrow against it and you will still have enough to live off of it when you reach retirement age. It needs to be funded for the future.

http://www.ssa.gov/pressoffice/pr/tru...

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4376Ytown(1158 comments)posted 1 year, 3 months ago

Hman

I agree with your comment that we are past the point of no return. There are so many things happening right before our very eyes that too many people are choosing to ignore.

Obama's promise to "fundamentally change" our country is happening and it's not in the direction for the better, and it's being changed in a way that we could not even imagine.

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