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There is talk of negotiations in the air.

Apparently the deficit is now a problem that it never used to be. It wasn't a problem when first Ronald Reagan introduced America to regular deficit spending, and it wasn't a problem when GW Bush exploded the quaint notion that we should not spend more than we earned. ... little correction here ... we do not spend more than we earn, government chooses to spend more than it chooses to collect. There is a difference!

So the issue needs to be addressed, and it's high on the list of GOP obstructionism.

The Catfood Commission did not provide a solution. They actually did not agree on anything, didn't vote, and didn't submit a report because they couldn't agree on a solution.

What did happen is that a minority of DC Insiders, purveyors of the usual Beltway Drivel, made their usual noises about the poor having to pay the bill.

Well the poor just voted.

Before the great unwashed had their say, the right was busy making predictions many of which are visible in other Diaries on this site. I linked and excellent one by hotdamn. Even in their wildest dreams, the right were not predicting a Romney majority as big as the actual majority won by President Obama.

They were predicting anything up to 325 Electoral College Votes for Mitt Romney, and they were calling that a mandate. They were also predicting that the GOP would retake the Senate, and increase their dominance in the House. The conclusion was a result that would remove the need for "President Romney" to reach across the aisle and work with Democrats.

Did you hear that? They were not even considering talking with Democrats!!!

They would have a majority sufficient to move America in any direction they chose, regardless of the feeling or needs of most of the people, including many of the people who voted for them. They considered 325 EV to be a landslide. Well Barack Obama won 332 Votes, that's an avalanche and, by the Right's own definition, a clear and unambiguous mandate.

First thing to go would have been the filibuster rule, thus removing the only chance Democrats would have to do what they have done for the last four years .... everything in their power to obstruct progress.

Well they lost. Tough shit!

My concern is that I hear worrying noises about how the plans might unfold in our attempt to move the budget back towards balance. Scary noises are made about China owning our debt. Well China doesn't own our debt. They hold about one trillion dollars of US Government Securities, out of a debt of sixteen trillion dollars.

That is right, they hold about one sixteenth of the debt which they cannot afford to attempt to leverage without crashing their own economy.

By contrast, the Social Security fund holds more than twice that amount. The reality of the debt is that we owe the money not to foreign, therefore scary, countries and institutions; we borrowed the money from ourselves. Us, we, Americans hold the debt.

Social Security is solvent. It has never contributed to the deficit other than as a handy piggy bank to raid by successive governments when they needed some ready cash. Any attempts to include Social Security in a "Grand Bargain" is a betrayal of that fund, and a betrayal of the people who rely upon it.

Medicare is too expensive! Not because it provides too much for too many, but because far too many people make exorbitant profits from the mis-fortune of their fellow citizens. Medicare costs need to be controlled, of that there is little doubt. The President made an excellent start by saving the now famous $716 Billion from providors and re-directing those funds to benefits. That is Change I Can Believe In, and we need more of it. Much more of it.

So I am all for those two funds being included in budget talks. The starting point for Dems is a simple one. Those two programs are so valuable, so efficient that we should be expanding them. Social Security is quite able to become a Defined Benefit Pension Scheme for all Americans. Medicare is more than capable of being Universal Healthcare, and we have the resources to make it happen.

Barack Obama should be going in to those negotiations with THAT blueprint. A massive increase in Social Security benefits and Medicare For All. No ifs, buts or maybes. The only question is "how far, how fast and how do we pay for it?".

The wealth exists in this country to pay for it all. Indeed, Americans are already paying for more than that, but much of that contribution is being wasted. Syphoned off into massive corporate profits, which are then used in part to fund elections ... against the interests of those who are paying.

Medicare For All, Mr President, and Social Security as an expanded, guaranteed pension.

The louder the Right squeals and bleats about such a suggestion, the happier I will be and the better chance there is of saving what we have and maybe improving it a little.

I wonder .... Does the President want to be seen as the greatest reformer of all time, or the guy who sold the New Deal down the river?

Originally posted to Every Part of You Belongs to You on Mon Nov 12, 2012 at 06:30 AM PST.

Also republished by The Democratic Wing of the Democratic Party and Social Security Defenders.

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Comment Preferences

  •  I don't think that (4+ / 0-)

    the President really needs telling all of this.

    I do think some of those around him do, and I think they need to know that we have their backs!

    I hope that the quality of debate will improve,
    but I fear we will remain Democrats.

    by twigg on Mon Nov 12, 2012 at 06:34:05 AM PST

    •  the blueprint for negotiations (3+ / 0-)

      right now is the sequester, which exempts SS, medicare and low-income programs, and cuts defense by 10%, along with other domestic spending.

      all of that happens unless an agreement is reached to amend the BCA.

      Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

      by Cedwyn on Mon Nov 12, 2012 at 06:45:37 AM PST

      [ Parent ]

      •  It was designed (4+ / 0-)
        Recommended by:
        Cedwyn, ItsSimpleSimon, katiec, ferg

        to give both sides palpitations :)

        But when it was put in place the Right expected Romney to be President.

        ahahahahahahahahhahahahahaahhahahaaha

        or something like that :)

        I hope that the quality of debate will improve,
        but I fear we will remain Democrats.

        by twigg on Mon Nov 12, 2012 at 06:48:29 AM PST

        [ Parent ]

      •  We are not negotiating out of the sequester (10+ / 0-)

        They could go for grand bargain, sequester, or catfood framework.  None of which is good.   We are obligated to fight against any of those.  

        And personally, I am going to ignore anyone that tries to pretend that the time to raise issues is after the deal because anything before it is basically a rumor.

        I mean the President even said he basically agrees with Romney on SS.   What else do we need to hear before we help by setting up a left position to counteract the well to do pundit position.  Are we that incapable of standing for those that need to be stood up for?

        "Small Businesses Don't Build Levees" - Melissa Harris Perry

        by justmy2 on Mon Nov 12, 2012 at 07:00:48 AM PST

        [ Parent ]

        •  what does that even mean? (2+ / 0-)
          Recommended by:
          twigg, mahakali overdrive
          We are not negotiating out of the sequester
          we're on course for the sequester now.  it's law and will happen if they don't agree to something.  the sequester is the "fiscal cliff."

          Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

          by Cedwyn on Mon Nov 12, 2012 at 07:03:36 AM PST

          [ Parent ]

          •  it means we are not locked to the deals (2+ / 0-)
            Recommended by:
            twigg, Bruce Webb

            That were discussed by the supercommittee.  And it means congress can just strike the sequester with the stroke of a pen.  

            They are negotiating a debt deal.  The sequester is as meaningless as it ever was unless it actually for into effect.  The numbers attached to it are nothing but a facade to scare the public, businesses, politicians.  The actual content really doesn't have an bearing in reality on the viable frameworks for a deal.

            "Small Businesses Don't Build Levees" - Melissa Harris Perry

            by justmy2 on Mon Nov 12, 2012 at 07:12:11 AM PST

            [ Parent ]

            •  oh, where to start (0+ / 0-)
              it means we are not locked to the deals that were discussed by the supercommittee.  
              correct!  since the committee never put anything forth, everything defaults to the sequester.
              And it means congress can just strike the sequester with the stroke of a pen.
               
              exactly...which is what all these negotiations are about...legislating around the sequester.  but if they don't come up with something, the sequester is current law and will happen.
              They are negotiating a debt deal.

              right...negotiating to forestall the sequestration cuts.  boehner wants the bush tax cuts extended and doesn't want the automatic defense cuts.  meanwhile, all obama/dems have to do is...nothing.  as you say, a stroke of a pen and all that; the next congress will be even less inclined to support boehner and could legislate around any of the sequestration cuts, e.g. education and infrastructure. wouldn't it be grand to watch the GOP argue why they're voting against those things, i.e., jobs?
              The sequester is as meaningless as it ever was unless it actually for into effect.
               
              translation, please?
              The numbers attached to it are nothing but a facade to scare the public, businesses, politicians.  The actual content really doesn't have an bearing in reality on the viable frameworks for a deal.
              it sure as hell does.  if boehner does nothing, those defense cuts go through.


              Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

              by Cedwyn on Mon Nov 12, 2012 at 07:49:28 AM PST

              [ Parent ]

              •  I am not sure what you are arguing... (0+ / 0-)

                you just quoted what I wrote and basically agreed with it?

                So let me go back to the original point and see if we are talking past each other...

                this what you said...

                the blueprint for negotiations (2+ / 0-)

                right now is the sequester, which exempts SS, medicare and low-income programs, and cuts defense by 10%, along with other domestic spending.

                My point is the sequester terms are not a blueprint for anything. They are simply the results if something isn't done.   So the sequester terms really have no impact on what can be negotiated.  There are no boundaries for this negotiation defined by the sequester terms. It is only a catalyst for negotiations.

                Now, I think you have said you agree with this, but seem to be saying it with want appears to be a disagreement because it contradicts your original statement.  I think you tried to imply tat SS and Medicare were somehow off limits becuase of sequester terms.

                But maybe I am missing something...was that not your intention?

                "Small Businesses Don't Build Levees" - Melissa Harris Perry

                by justmy2 on Mon Nov 12, 2012 at 08:07:01 AM PST

                [ Parent ]

    •  Well, the papers are out (7+ / 0-)

      Potus was for chaining CPi and raising eligibility age.  We have to move him off of that.  That is our job.

      "Small Businesses Don't Build Levees" - Melissa Harris Perry

      by justmy2 on Mon Nov 12, 2012 at 06:53:07 AM PST

      [ Parent ]

  •  YES, the President needs to be reminded (12+ / 0-)

    of his mandate.  His mandate is NOT to compromise Social Security and Medicare.  His mandate is NOT to govern as if he lost.  We all need to email the White House and remind him why we sent him back and it is NOT to compromise with our benefits.

    being mindful and keepin' it real

    by Raggedy Ann on Mon Nov 12, 2012 at 06:39:22 AM PST

    •  Exactly..even if it means falling off a cliff (7+ / 0-)

      I don't care. We did not elect him to end food stamps, cut Medicare and SS.

      If they must do something with Medicare, it can't be on the back of seniors, like me, who are barely making ends meet as it is.

      Some of us are not in the best of health and we simply have no way to make up the money. Or do they wish to scoop us up and put us in group homes?

      •  I hear ya! (4+ / 0-)
        Recommended by:
        twigg, rudy23, Sunspots, jennylind

        I'm worried they will cut off Social Security for those below 55.  That would affect my husband, which would be disasterous for him.  Although we have my retirement and, when I'm eligible, my SS, what if I die?  What happens to him?  

        We have to urge Obama to remember why he was reelected.  He has to protect our benefits!

        being mindful and keepin' it real

        by Raggedy Ann on Mon Nov 12, 2012 at 06:58:59 AM PST

        [ Parent ]

        •  Yes indeed and our children (1+ / 0-)
          Recommended by:
          twigg

          I so agree. I know first hand what could and would happen. My question to all who are for these extreme measures is what do you plan to do with the millions of Americans who
          won't have the money to live, let alone prosper?

          My wife and I worked all our lives. Never drew unemployment or got one cent of help from anyone and never begrudged those who needed a helping hand.  

          There is this new evil that has taken over a part of this country and that is the vilification of the poor and struggling. Hitler used the natural hatred of the Jews and poor in Nazi Germany to do unspeakable horrors.

          I am not saying that is coming to this country but if some of these draconian measures are enacted, this country will be on the road to a true depression, complete with soup kitchens and group homes.

    •  How is that his mandate (1+ / 0-)
      Recommended by:
      joanneleon

      when he made his intentions clear before the election?

      “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

      by Sagebrush Bob on Mon Nov 12, 2012 at 08:24:19 AM PST

      [ Parent ]

  •  easiest way to fix the medicare "problem" is (11+ / 0-)

    to eliminate the age requirement.  make medicare available to all.

  •  I am pessimistic (6+ / 0-)

    Just am.  Obama is better than Rmoney.  So?

    This is not time for compromise on SS or Medicare.

    I have written the President of my concerns.  

    I hope I am wrong.  Still, I am pessimistic.

  •  The mandate is ours now (6+ / 0-)
    Recommended by:
    twigg, dabtl, Ryvr, Melanie in IA, ferg, rudy23

    And we should not buy into the argument of "walking off a financial cliff".

    Reagan Proved Deficits Don't Matter

    "Reagan," Vice President Dick Cheney famously declared in 2002, "proved deficits don't matter." Unless, that is, a Democrat is in the White House. After all, while Ronald Reagan tripled the national debt and George W. Bush doubled it again, each Republican was rewarded with a second term in office. But as the Gallup polling data show, concern over the federal deficit hasn't been this high since Democratic budget balancer Bill Clinton was in office. All of which suggest the Republicans' born-again disdain for deficits ranks among the greatest - and most successful - political double-standards in recent memory.
    Further reading in Frank Schnittger's excellent diary:
    Vaulting the Fiscal Cliff

    Paranoia strikes deep. Into your life it will creep. It starts when you're always afraid. You step out of line, the man come and take you away. - S. Stills

    by ask on Mon Nov 12, 2012 at 06:42:57 AM PST

    •  Yes, Cheney, the ultimate hawk (6+ / 0-)
      Recommended by:
      dabtl, Ryvr, ask, ItsSimpleSimon, ferg, rudy23

      couldn't give a flying fuck about deficits; and said so on national tv.

      I hope that the quality of debate will improve,
      but I fear we will remain Democrats.

      by twigg on Mon Nov 12, 2012 at 06:45:31 AM PST

      [ Parent ]

      •  Too bad people didn't press him on WHY they may (3+ / 0-)
        Recommended by:
        twigg, rudy23, Sunspots

        not matter, at least not in the way most people think they do.

        Greenspan, Bernanke, Geitner are also on record as stating that the US can always pay all it's obligations.  And it can.

        In this sense deficits don't matter.  In the sense an affordability sense, in the sense that the US creates dollars at will, by fiat.

        In another sense they always matter.  They are necessary in providing currency to the private sector.  The US gov issues every dollar we have in our pockets.  Let's say there's only 1 dollar in all of America in the private sector.  Then the accounting would be:  US Gov has a 1 dollar deficit and the private sector has a 1 dollar asset.

        So, we need some sized deficit cuz we like to have a currency we can use in everyday life.

        The question is:  What sized deficit?  

        Too small, and you get deflation.  Too large, and you get inflation.

        We can always afford whatever size debts.  But also want to avoid inflation.

  •  Losing Pete Stark is a blow to Medicare (4+ / 0-)
    Recommended by:
    ask, twigg, nchristine, rudy23

    He was the most effective bulldog exposing the ridiculous grift known as "Medicare Advantage" plans...

    Toto, I've a feeling we're not in Kansas anymore

    by Minerva on Mon Nov 12, 2012 at 06:49:16 AM PST

    •  Maybe. But Stark was losing it. (1+ / 0-)
      Recommended by:
      RainyDay

      A charitable term would be "erratic". At some point even the greatest champions need to hang up their belts and accept that their best days are behind them. A lesson all too rarely learned by various Congressmen for Life on both sides of the aisle and both ends of the spectrum. For example Charlie Rangel needs to retire while there is still time to name some buildings and highways after him. It is not like there is no other talent in his district that makes him irreplaceable. And he is clearly making errors of judgement.

      And the same for Pete. Which may sadden some personally but hardly marks the death of progressivism in his district or on his issues.

      bruceweb.blogspot.com

      by Bruce Webb on Mon Nov 12, 2012 at 10:41:49 AM PST

      [ Parent ]

  •  as for china (2+ / 0-)
    Recommended by:
    twigg, ItsSimpleSimon

    http://www.washingtonpost.com/...

    U.S. taxpayers paid about $30 billion to China last year in interest

    ...For years, China expanded its holdings of U.S. government securities, and this reduced the value of its currency, the renminbi, helping Chinese manufacturers get a leg up. China has been under pressure for several years from officials in the U.S. and elsewhere to let the renminbi appreciate in value. Lately, China has been buying fewer U.S. assets and the value of its currency has gone up.

    Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

    by Cedwyn on Mon Nov 12, 2012 at 06:52:34 AM PST

  •  I wish the party would leave SS & Medicare alone. (7+ / 0-)

    But they seem to be headed, like dutiful lemmings, towards the chasm of political irrelevance. Anyone who thinks that people will vote for a party that cut their future means of survival is straight up crazy. I'd love to find the Blue Dog/DLC/New Democrat/Former Republican who came up with the idea of the "Grand Bargain" and ask them, "Seriously, dude--what the fuck?" If the Grand Bargain passes, the Democratic Party is done for a good long time. In what universe is mucking around with the Social Safety Net a good idea? What asshole thought that was the best thing since banisters on stairwells?

    It seems like the people running the Democratic Party towards this shit idea need to have a serious conversation with themselves about whether or not they are in the right party.

    The solution to this so-called Fiscal Cliff (really a slope, but the Villagers love being fucking dramatic about nothing) is really simple. Let the Bush/Obama tax cuts die off, and actually raise taxes on the motherfuckers who actually can afford it without feeling it. Oh, but fuckall, that actually makes sense.

    The rule is, "don't be a dick" - kos

    by cybrestrike on Mon Nov 12, 2012 at 07:01:50 AM PST

    •  They never take responsibility for their damage (1+ / 0-)
      Recommended by:
      joanneleon

      The devil always made them do it.  All those Republican devils forced the party with the landslide and majorities to do what the pitiful minority wanted.  

      Even the filibuster was something the Democrats wanted to keep and handed to the GOP, even when it was more than clear how badly people were suffering because of it.  When Feingold lost, he was still defending the filibuster, and saying it would be OK to raise the retirement age.

      It's a lot like domestic abusers.  They're never responsible for what they do, either.  It's actually the fault of the bloody woman or child on the floor, who controlled their behavior.  Amazing power.

  •  Question: How would China leverage their (1+ / 0-)
    Recommended by:
    twigg

    Treasuries?  What happens in a leverage?  Please talk slowly, cuz I'm new to this :)

    •  They can't (5+ / 0-)

      Any suggestions that the Chinese can hurt the US economy by virtue of the paper they hold, is simple fear-mongering.

      I hope that the quality of debate will improve,
      but I fear we will remain Democrats.

      by twigg on Mon Nov 12, 2012 at 07:04:46 AM PST

      [ Parent ]

      •  That's my understanding. I'd like to here what (1+ / 0-)
        Recommended by:
        twigg

        people think leveraging would be/mean.

        •  There has really never beena solid suggestion (2+ / 0-)
          Recommended by:
          katiec, Melanie in IA

          of what China might, or could do with the debt.

          Just noises about the fact that they bought some.

          It was always my understanding that the owner of debt was rather more vulnerable than the creditor, which is why interest rates (or bond yields) reflect the relative risk.

          Only in an ignorant world could it be said, with a straight face, that China is a treat in this manner.

          I hope that the quality of debate will improve,
          but I fear we will remain Democrats.

          by twigg on Mon Nov 12, 2012 at 07:22:12 AM PST

          [ Parent ]

          •  I can't send links, but you might find this (1+ / 0-)
            Recommended by:
            twigg

            interesting:

            Go to Mike Norman Economics, scroll down the blog posts till you come to:

            A Very Codensed Introduction to Currency Operations for Erksine Bowles.  The passage I think most interesting is this:

            3) Fiat currency isn’t obtained by the issuer from anyone, hence there’s no one to “pay it back” to. The fiscal goal for a nation using fiat currency reduces to maintaining adequately distributed currency supply within tolerance limits, neither too much (contributing to EXCESS inflation) nor too little (contributing to EXCESS deflation, what is we have had in the USA from 2008-2013).

            Nothing new, but a cool way of putting it:  "Fiat currency isn't obtained by the issuer from anone, hence there's no on to "pay it back" to.  

            People don't get the internal logic of fiat.
             

            •  It's borrowed from purchasing power. (1+ / 0-)
              Recommended by:
              twigg

              The risk, IOW, is inflation risk.  We have low inflation at the moment, of course, but just as w/ interest rates the thing to be concerned about is jump risk.  Inflation and interest rates don't increase arithmetically.  

              •  An easier way of saying this is: Inflation (0+ / 0-)

                is an issue.

                Debts never are.

                •  Or: conceptually, they can't be disentangled (0+ / 0-)

                  when we're talking about sovereigns.  Debt problems are inflation problems and vice versa.

                  •  Well, we could stop issueing debt instruments. (0+ / 0-)

                    Then they would be disentangled in practice.

                    As it is, they should probably be so conceptually, cuz they could be in practice.

                    Deficits, another matter.  Cuz we're stuck with accounting rules.

                    We could however rename the deficit -- "every dollar in the private sector being saved".  Or something else that people don't associate with household catastrophe.

                    •  deficit= (0+ / 0-)

                      revenue-expense. When the result is negative, there is a deficit. When the result is positive, there is a surplus. This is fiscal policy, not monetary policy. I do think perhaps you're talking about something completely different.

                      Love is the part of us that lasts. Share it while you can.

                      by Melanie in IA on Mon Nov 12, 2012 at 08:34:44 AM PST

                      [ Parent ]

                      •  Pretend there are NO dollars in existence..... (0+ / 0-)

                        Where would the very first dollar come from?  Who would make it?

                        In our system, that would be the US Fed Gov.  Dollars have to be spent into existence before they can be borrowed or taxed.

                        A US deficit has to be created at the same time a private asset (private dollar) is created.  It's accounting.

                        We could have privately produced currency, but we don't.  We have only state issued money.

                        It's the law.

                        •  You seem to be talking about monetary policy. (0+ / 0-)

                          I am talking about fiscal policy. When we talk about "deficits" we are talking about fiscal policy. When we talk about money creation, we're talking about monetary policy. They are related but they are NOT the same thing.

                          Love is the part of us that lasts. Share it while you can.

                          by Melanie in IA on Mon Nov 12, 2012 at 09:00:20 AM PST

                          [ Parent ]

                          •  If one were to say: "The deficit equals all (0+ / 0-)

                            dollars in the private sector being saved, thus it is prudent fiscal policy to not lower the deficit at this time because right now the government needs to accomadate savers"  a monetary policy or a fiscal one?  I really don't know.

                            How about, "The government can always afford any size debt or deficit because it make money out of thin air?".

                            How about, "SS can always be solvent no matter what if the Gov wants it to be cuz the Gov can always simply mark up it's account, thus the Gov should mark up it's account"?

                            Again, I really don't know.

                          •  Well, first of all, this is not true: (0+ / 0-)
                            "The deficit equals all (0+ / 0-)

                            dollars in the private sector being saved,

                            And this also is not true:
                            How about, "The government can always afford any size debt or deficit because it make money out of thin air?".
                            So I don't really know where to go from there. No disrespect intended, seriously, but I don't know what you're talking about.

                            You can have a fun thought experiment about a world with no currency, but that would be similar to a thought experiment about a world with no clocks or calendars. Value does still exist in the world, as does time. People will still find ways to assign and trade value, as they assign markers for time. Currency in one form or another has existed for thousands of years.

                            Again, sorry, I don't know what you're talking about or where you find your information.

                            Love is the part of us that lasts. Share it while you can.

                            by Melanie in IA on Mon Nov 12, 2012 at 09:46:50 AM PST

                            [ Parent ]

                          •  You mean the US does NOT have a fiat currency? (0+ / 0-)

                            Sure it does.  Last I checked Nixon took us of the gold standard in 1971.

                            NO?

                          •  this? (0+ / 0-)

                            what do you even mean by this?

                            The deficit equals all (0+ / 0-)

                            dollars in the private sector being saved,

                            I'm not trying to get into a pissing contest. And again, I don't mean to be disrespectful when I say I don't know what you're talking about. Perhaps it's purely a communication problem and we would agree if we understood each other. But really... I really don't know what you mean.

                            The blockquote above, simply NOT true.

                            Love is the part of us that lasts. Share it while you can.

                            by Melanie in IA on Mon Nov 12, 2012 at 10:06:34 AM PST

                            [ Parent ]

                          •  http://www.dailykos.com/story/2012/11/10/1159914/- (0+ / 0-)

                            Here's a diary on Kos you might want to read.

                            Also, I replied, but it's under my comment, not yours.  It was a mistake.

                            Don't worry, no need to appologize.  You're being nice enough :)

                            If you think the deficit equals something else, what?  You obviously get double entry accounting.  Probably much better than I do.  What's the mirror image of the deficit?

                            The Gov spends 1 dollar into existence.  Now it's in the private sector.  The accounting is:

                            Gov minus one dollar.
                            Private sector plus one dollar.

                            No?

                          •  Yes, the national accounting is this: (0+ / 0-)

                            The private sector surplus equals the government sector deficit (excluding the the trade deficit).

                            Google sectoral balances.  Of course if we have either a   trade deficit or a trade surplus, then the mirror image of deficit to private sector savings gets changed.  I was speaking as though we only had two sectors, when really we have three:  trade.

                            Nevertheless, trade just adds an adendum to the accounting reality of the two sector balance.

                            When we have a trade deficit, the deficit equals money being saved in the private sector plus the trade deficit  -- or in case of a trade surplus, minus the trade surplus..

                            Hope this helps.

          •  If they start dumping bonds, it would push (2+ / 0-)
            Recommended by:
            twigg, VClib

            yields up.

      •  Right. (1+ / 0-)
        Recommended by:
        twigg

        To hurt us, China would need to SELL their holdings of Treasury securities. Selling would push the price down and interest rates up, which yes indeedy would hurt vastly. But doing so simply doesn't make sense.

        Love is the part of us that lasts. Share it while you can.

        by Melanie in IA on Mon Nov 12, 2012 at 07:21:41 AM PST

        [ Parent ]

        •  As I understand it (2+ / 0-)
          Recommended by:
          Melanie in IA, katiec

          most of the debt is a fixed rate instrument.

          If the rate was attractive it would sell easily, if not then they really couldn't sell it at all :)

          Bonds and Securities are sold and bought all the time. Flooding the market with holdings probably wouldn't affect much at all.

          If the price were reduced that would simply mean that China would lose the principal, and that makes no sense.

          Downgrading credit rating hurts because the government then has to offer securities at a higher rate of return to make them attractive .... Again, this is the US and most investors consider the risk to be low, whatever Standard and Poors says.

          I hope that the quality of debate will improve,
          but I fear we will remain Democrats.

          by twigg on Mon Nov 12, 2012 at 07:37:05 AM PST

          [ Parent ]

          •  This is the key (1+ / 0-)
            Recommended by:
            twigg

            to THEIR problem:

            If the price were reduced that would simply mean that China would lose the principal, and that makes no sense.
            The interest rate issue is partly separate from the credit rating. True, the lower the rating, all else equal, the higher interest rate to be paid. But the rating here is fairly meaningless, so that isn't the important part, as you note.

            The important part is simply price as it relates to supply and demand. If the demand for the securities drops (they are selling all holdings), the price of the security will drop. But the interest rate, the price of borrowing, goes up. That is a mathematical relationship, but it also makes sense from S&D.

            If I (the USA) wish to borrow more, to entice borrows when demand is low, I need to make it a better deal for the lender. To make it a better deal for the lender, I need to push up the interest rate I'm willing to pay. The higher interest rate makes it marginally more attractive, creates somewhat higher demand, allows the issue to be sold.

            not sure if I am making sense... let me know.

            Love is the part of us that lasts. Share it while you can.

            by Melanie in IA on Mon Nov 12, 2012 at 07:43:22 AM PST

            [ Parent ]

          •  Exactly. Being a monetary sovereign, the US (1+ / 0-)
            Recommended by:
            twigg

            sets it's own interest rates.  We are not at the mercy of bond vigilantes.

            Not so for Greece or Spain, which use a foreign currency, the Euro.

            Also, issueing bonds is a hold-over from the Gold Standard days.  The US COULD decide to simply stop issuing bonds.  There's no need for the US to "borrow" or sell "debt".  It's not monetarily constrained in any way.

            Dollars are just marks on a computer screen.  Not chunks of gold, or puddles of oil, or any THING else.  

            They are not an object.  They are a unit of account, like  inches.  We never run out of inches.  We never borrow them, or sell them, or trade them.

        •  "Major Foreign Holders of Treasuries" (1+ / 0-)
          Recommended by:
          Melanie in IA

          http://www.treasury.gov/...

          China holds a lot smaller share of Debt Held by the Public or even Debt held by Foreign Holders than most people think and are not actually increasing their share of debt, in fact in recent years their holdings have been flat to declining.

          There is a myth that absent the Chinese propping up the market for new issues that Treasuries would go begging. Well that just doesn't hold up to the numbers.

          Also unexamined is the need for all sovereigns to maintain a certain amount of U.S. dollar denominated assets come what may. At least as long as major world commodities (like oil) are priced in dollars. That is not only does China hold only about a sixteenth of total U.S. treasury debt, it can only reduce  those holdings so far without ramifications.

          Back in 2000 Greenspan testified about the danger of totally paying off the long bond over time. And wasn't crazy to do so, the world needs the long bond for other purposes than simple return on investment. Where Greenspan screwed up, and knowingly so, as to use that analysis to support Bush tax cuts as opposed to other ways of investing that surplus. That is our boy Alan is venal but not exactly stupid.

          bruceweb.blogspot.com

          by Bruce Webb on Mon Nov 12, 2012 at 10:54:28 AM PST

          [ Parent ]

  •  Most important sentence in you diary: (1+ / 0-)
    Recommended by:
    twigg

    We own our debts, we owe oursevles money.

    That's the deficit in a nut shell.

    People need to get a grip with this.  "Help!  I owe myself money, and I own a money making machine".  

    Yikes :)

  •  Two things: (2+ / 0-)
    Recommended by:
    twigg, katiec

    first,

    Cheney, the ultimate hawk (3+ / 0-)

    couldn't give a flying fuck about deficits;

    and the stopped clock was correct twice a day. This is his correct moment.

    I wrote a comment on October 30 that said this:

    the 10-year Treasury yield right now is about 1.75%.

    CPI:

        Over the last 12 months, the all items index increased 2.0 percent before seasonal adjustment.

    Okay so far? You (we, collectively,) could borrow money for less than the last-12-months' rate of inflation. Less than the average rate of inflation over several decades (around 3%).

    Any business expert would tell you, if you can borrow money at LESS THAN THE RATE OF INFLATION, you should. You can spend it today and pay back, in essence, LESS later.

    The federal government could borrow a gazillion more dollars at 1.75%. Or borrow shorter term -- 5-year yield is only about 0.75%. So borrow lots of gazillions of dollars cheap.

    Invest. Invest in stuff like infrastructure, education, basic science, green space, environment.

    That kind of investment would have a higher rate of return than the borrowing rate.

    So to get back to your original point,

        You don't need budget offsets for disaster relief.

    Hell's bells, borrow whatever is needed for that and so much more.

    They are crazy not to.

    The second thing is this:
    Us, we, Americans hold the debt.
    Just makes me smile that you include yourself with us. :)

    Love is the part of us that lasts. Share it while you can.

    by Melanie in IA on Mon Nov 12, 2012 at 07:28:04 AM PST

    •  and btw, (1+ / 0-)
      Recommended by:
      twigg

      I do and will always love the term "flying fuck."

      Love is the part of us that lasts. Share it while you can.

      by Melanie in IA on Mon Nov 12, 2012 at 07:35:44 AM PST

      [ Parent ]

    •  Heh ... (1+ / 0-)
      Recommended by:
      Melanie in IA

      Melanie ... This is my home :)

      I hope that the quality of debate will improve,
      but I fear we will remain Democrats.

      by twigg on Mon Nov 12, 2012 at 07:38:39 AM PST

      [ Parent ]

    •  If the government is We The People, then it can (2+ / 0-)
      Recommended by:
      Melanie in IA, twigg

      be said that we owe ourselves money.  And since we also create money out of thin air, we can owe ourselves an infinite amount of money.

      No problem.

      •  Up to a point, yes (2+ / 0-)
        Recommended by:
        Melanie in IA, johnny wurster

        There does come a point where, if we simply print too much money, inflation will rise and the dollar would be devalued.

        Also, the smaller the deficit then the more dollars available for spending on real things that help people ...

        On the other hand, creating a strong economy will actually reduce the deficit simply through growth ... There is no imperative to actually repay it as any kind of current priority.

        I hope that the quality of debate will improve,
        but I fear we will remain Democrats.

        by twigg on Mon Nov 12, 2012 at 07:55:29 AM PST

        [ Parent ]

      •  Well, at our best we aren't actually (1+ / 0-)
        Recommended by:
        johnny wurster

        creating money "out of thin air." Yes, we can print money, but too much money created that way leads to inflation. We can borrow money, which is what I'm talking about above. But it creates the obligation to pay it back. Just as with any borrowing, that has to make sense from a long-term investment standpoint. Other ways of creating money include making it easy for individuals and businesses to borrow. There is a multiplier effect that happens with borrowing, which allows for economic growth. When the economy is relatively strong, this is the best way to create money and growth. When the economy is weak, there is less demand for borrowing by individuals and businesses, and in these times, interest rates tend to be low, and it makes SENSE for the government to borrow instead.

        Love is the part of us that lasts. Share it while you can.

        by Melanie in IA on Mon Nov 12, 2012 at 07:56:29 AM PST

        [ Parent ]

        •  But what does "borrowing" mean for a ISSUER (0+ / 0-)

          of  the money it "borrows"?

          Where does the money come from that individuals borrow?  From the issuer of our currency, right?  Thus, there has to be deficits so that individuals have a currency to use....  When you borrow you get brand new dollars in your pocket.  They are new to you.

          When the US borrows, it borrows dollars it has already  spent into existence.  It says:  Here's some dollars, now I'll borrow them.  Lol.  

          It's just like if you had a money making machine in you kitchen, only used that money for all your purposes, and then decided borrow some of it.  Who would you owe?  Yourself.  NOT some third party.

          •  I don't know where you get your ideas (0+ / 0-)

            about money. You seem to miss the point that when the US issues debt aka borrows money, there is someone who is lending the money. I am lending the money. Primarily I am lending it indirectly, but I am a lender. And I expect to be paid back. If the money machine in the kitchen keeps pumping out more bills, the dollars with which I'll be paid back will continue to devalue. Believe me, pretty soon, I won't be willing to lend anymore, nor will anyone else.

            There IS an actual lender for each dollar borrowed. It is not simply the US lending to the US. If that were the case, perhaps your premise would work, but it isn't, and it doesn't.

            Love is the part of us that lasts. Share it while you can.

            by Melanie in IA on Mon Nov 12, 2012 at 08:27:39 AM PST

            [ Parent ]

            •  But where did the dollars come from such that (0+ / 0-)

              you have a currency to use in you day to day life?Or to lend to the government?  Did you make them?

              Where do dollars come from?  They come from the US Gov.

              I don't make dollars.  You don't.  Only the fed gov does.

              The government makes dollars.  

              Before anything else can happen -- before it can borrow back those dollars, before it can tax those dollars.

        •  Inflation is the only issue for the US. Debt (0+ / 0-)

          never is.

  •  Rec'd but knowing full well (0+ / 0-)

    That Democrats will cave and most of you will go along with this in the end. The time to push the President on this was before you gave him your vote for re-election. You have very little leverage now.

    “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

    by Sagebrush Bob on Mon Nov 12, 2012 at 08:14:58 AM PST

    •  Sorry but we've seen this play out repeatedly (3+ / 0-)
      Recommended by:
      twigg, katiec, joanneleon

      and Glenn Greenwald is spot on in his assessment of what liberals will do with their "big" victory:

         STEP ONE: Liberals will declare that cutting social security and Medicare benefits – including raising the eligibility age or introducing "means-testing" – are absolutely unacceptable, that they will never support any bill that does so no matter what other provisions it contains, that they will wage war on Democrats if they try.

          STEP TWO: As the deal gets negotiated and takes shape, progressive pundits in Washington, with Obama officials persuasively whispering in their ear, will begin to argue that the proposed cuts are really not that bad, that they are modest and acceptable, that they are even necessary to save the programs from greater cuts or even dismantlement.

          STEP THREE: Many progressives – ones who are not persuaded that these cuts are less than draconian or defensible on the merits – will nonetheless begin to view them with resignation and acquiescence on pragmatic grounds. Obama has no real choice, they will insist, because he must reach a deal with the crazy, evil GOP to save the economy from crippling harm, and the only way he can do so is by agreeing to entitlement cuts. It is a pragmatic necessity, they will insist, and anyone who refuses to support it is being a purist, unreasonably blind to political realities, recklessly willing to blow up Obama's second term before it even begins.

          STEP FOUR: The few liberal holdouts, who continue to vehemently oppose any bill that cuts social security and Medicare, will be isolated and marginalized, excluded from the key meetings where these matters are being negotiated, confined to a few MSNBC appearances where they explain their inconsequential opposition.

          STEP FIVE: Once a deal is announced, and everyone from Obama to Harry Reid and the DNC are behind it, any progressives still vocally angry about it and insisting on its defeat will be castigated as ideologues and purists, compared to the Tea Party for their refusal to compromise, and scorned (by compliant progressives) as fringe Far Left malcontents.

          STEP SIX: Once the deal is enacted with bipartisan support and Obama signs it in a ceremony, standing in front of his new Treasury Secretary, the supreme corporatist Erskine Bowles, where he touts the virtues of bipartisanship and making "tough choices", any progressives still complaining will be told that it is time to move on. Any who do not will be constantly reminded that there is an Extremely Important Election coming – the 2014 midterm – where it will be Absolutely Vital that Democrats hold onto the Senate and that they take over the House. Any progressive, still infuriated by cuts to social security and Medicare, who still refuses to get meekly in line behind the Party will be told that they are jeopardizing the Party's chances for winning that Vital Election and – as a result of their opposition - are helping Mitch McConnell take over control of the Senate and John Boehner retain control of the House.

      “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

      by Sagebrush Bob on Mon Nov 12, 2012 at 08:18:48 AM PST

      [ Parent ]

      •  Cynical (2+ / 0-)
        Recommended by:
        Melanie in IA, katiec

        Accurate if we allow it to be accurate.

        Better Democrats, and more of them is really the only way, and I do hope some of the new intake get to work quickly to reject this idea.

        I hope that the quality of debate will improve,
        but I fear we will remain Democrats.

        by twigg on Mon Nov 12, 2012 at 08:21:38 AM PST

        [ Parent ]

        •  And what exactly (1+ / 0-)
          Recommended by:
          joanneleon

          is the leverage you intend to apply to this lame duck President when the President has already made his intentions perfectly clear and even Nancy Pelosi is fine with Simpson-Bowles?

          “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

          by Sagebrush Bob on Mon Nov 12, 2012 at 08:27:20 AM PST

          [ Parent ]

          •  In other words... (0+ / 0-)

            How are you going to "make him do it (the right thing)?"

            Seriously?

            “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

            by Sagebrush Bob on Mon Nov 12, 2012 at 08:28:14 AM PST

            [ Parent ]

            •  I think we all know what kind of "pressure" (0+ / 0-)

              will be applied. In the words of Chris Hedges:

              Liberals have assured us that after the election they will build a movement to hold the president accountable—although how or when or what this movement will look like they cannot say. They didn’t hold him accountable during his first term. They won’t during his second. They have played their appointed roles in the bankrupt political theater that passes for electoral politics. They have wrung their hands, sung like a Greek chorus about the evils of the perfidious opponent, assured us that there is no other viable option, and now they will exit the stage. They will carp and whine in the wings until they are trotted out again to assume their role in the next political propaganda campaign of disempowerment and fear. They will, in the meantime, become the butt of ridicule and derision by the very politicians they supported.

              “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

              by Sagebrush Bob on Mon Nov 12, 2012 at 08:45:30 AM PST

              [ Parent ]

              •  Easy to criticise (1+ / 0-)
                Recommended by:
                Melanie in IA

                isn't it.

                I will not be told that my efforts are futile, not by Hedges and not by Greenwald.

                If i were to follow their logic there would be little point getting out of bed, and Mitt Romney would be President.

                Do I expect all my desires to come to fruition? Nope.

                But that does not mean either giving in to cynicism, or quitting trying.

                I hope that the quality of debate will improve,
                but I fear we will remain Democrats.

                by twigg on Mon Nov 12, 2012 at 08:54:59 AM PST

                [ Parent ]

                •  I guess the real question is (2+ / 0-)
                  Recommended by:
                  Sagebrush Bob, twigg

                  what are you going to do if your efforts fail?

                  Are you going to be a pragmatic progressive and go along with it all and condemn those who are not willing to go along with it?

                  What is your plan?


                  "Justice is a commodity"

                  by joanneleon on Mon Nov 12, 2012 at 11:56:06 AM PST

                  [ Parent ]

                  •  My views didn't change after the mid-terms (0+ / 0-)

                    They won't change if the Democrats capitulate.

                    It will simply confirm my belief that we need better Democrats.

                    I hope that the quality of debate will improve,
                    but I fear we will remain Democrats.

                    by twigg on Mon Nov 12, 2012 at 01:59:47 PM PST

                    [ Parent ]

            •  Not being a Member of Congress (2+ / 0-)
              Recommended by:
              katiec, Melanie in IA

              myself, there is very little I can do directly.

              Personally I am not privy to exactly what the President has in mind, I do know he will be judged by what he does going forward.

              Other than speak out, and encourage others to do the same, what else would you have me do?

              We elected some better Senators .... hopefully they will push hard.

              I hope that the quality of debate will improve,
              but I fear we will remain Democrats.

              by twigg on Mon Nov 12, 2012 at 08:48:30 AM PST

              [ Parent ]

  •  Re; the cuts to the defnese dept. I understand (0+ / 0-)

    oyr budget is something like 8 times the size of China, and 11 times bigger than Russia, surely, they can find alot of fat in there to go along with some modest cuts if need be.

    •  The president has already announced (1+ / 0-)
      Recommended by:
      Sagebrush Bob

      that the cuts to the war department are "not going to happen".  That was a proclamation, if you recall, during the debates.  He is going to make sure those cuts don't happen. The cuts to social programs are very much on his table and he has many Democrats out there trying to sell it to the public, and has had for months now.

      people voted for him regardless.  Everyone who voted for him already gave him permission for his austerity programs, including cutting Social Security, though I don't think they realized they were voting for that because he worded it cleverly when he was worried that he would lose the election.  But you will soon see how the progressives come out of the woodwork saying "well he said he was going to do it, what did you expect?"  


      "Justice is a commodity"

      by joanneleon on Mon Nov 12, 2012 at 12:03:16 PM PST

      [ Parent ]

      •  I think they did realize it (0+ / 0-)

        but they kept telling us (and themselves) that we had to hold our nose and vote for him because Romney was worse while they vowed to "hold Obama accountable" after the elections rather than before. I've yet to see any coherent proposal for holding him accountable in an sort of effective manner now that he never has to face voters ever again. What can they threaten him with if he goes ahead with his grand betrayal? No third term?

        “The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just.” – Abraham Lincoln

        by Sagebrush Bob on Mon Nov 12, 2012 at 12:32:29 PM PST

        [ Parent ]

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