House Speaker John Boehner said he would not permit another increase in the country’s legal borrowing limit without a larger amount of spending cuts and reforms approved in tandem.
Washington is spoiling for a fight over the country’s debt ceiling — less than a year after a showdown that induced a credit downgrade, rocked the markets and eroded confidence in Congress.
What is the debt ceiling exactly? It’s a legalcap set by Congress on the amount of money the federal government can borrow. The ceiling applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare.
The first limit, established in 1917, was set at $11.5 billion, according to the Committee for a Responsible Federal Budget. By setting a limit, Congress gave the Treasury Department authority to borrow money as needed.Previously, Congress had to sign off every time the federal government issued debt.
How high is the debt limit right now? The ceiling is currently set at $16.394 trillion. The country’s accrued debt subject to the limit as of Friday was $15.670 trillion. (Here’s where the Treasury posts daily updates of the number.)
When will we hit it? Treasury Secretary Tim Geithner has said he estimates that U.S. borrowing could hit the debt ceiling by the end of 2012.
But by taking “extraordinary measures” — such as suspending investments in federal retirement funds — Geithner might be able to buy enough time to keep borrowing below the legal limit until early 2013.
How is the ceiling determined? They never admit it, but every time lawmakers vote to hike spending or cut taxes and not pay for them, they’re tacitly acknowledging that the debt ceiling will need to raised in the future.
So arguing over the debt ceiling after the fact is essentially arguing over whether to pay the bills the country has already incurred and which Congress has already approved.
How many times has the ceiling been raised? Since March 1962, debt ceiling increases have been enacted 76 times, according to the Congressional Research Service. Congress has voted to raise the ceiling 11 of those times since 2001.
Expect more of the same over the next decade. Barring major changes to spending and tax policies, “Congress would repeatedly face demands to raise the debt limit,” CRS wrote.
Why does Congress even bother to set a debt limit? In theory, the limit is supposed to help Congress control spending. In reality, it doesn’t.
Every time the debt limit needs to be raised, lawmakers and the president are forced to take stock of the country’s fiscal direction, which in theory isn’t a bad thing.
But the decision about how high to set the ceiling is usually a political one — depending on how quickly the minority party wants to raise the issue again for political gain or to extract concessions.
In any case, the vote usually comes after lawmakers have already passed the spending hikes and tax cuts that necessitate an increase in the first place.
What happens if Congress doesn’t raise the debt ceiling? Treasury would not be able to borrow any more money.
That means the government would fall short of what it needs to pay all its bills in full, which include funding government operations and paying creditors and contractors.
During last year’s debate, Geithner’s critics said he could prevent default by simply paying the interest due to bondholders.
But since average spending — minus interest — outpaces revenue by about $115 billion a month, Geithner would have to pick and choose whom to pay and whom to put off every day.
And there’s no guarantee that paying interest while shirking other legal obligations will protect the country from the perception of default.
Geithner said it would be akin to a homeowner who pays his mortgage but puts off his car loan and credit cards. Translation: the homeowner’s credit could still be damaged.
Ultimately, if lawmakers fail to raise the ceiling, they will have two choices, both awful.
They could immediately enact massive spending cuts or tax increases. Or they could acknowledge that the country would be unable to pay what it owes in full and the United States could effectively default on some of its obligations.
The first option is impossible to execute without serious economic repercussions. And the second option could cripple the economy and send world markets into a tailspin.
“Not only the default but efforts to resolve it would arguably have negative repercussions on both domestic and international financial markets and economies,” according to the CRS.
Will reaching the debt ceiling cause a government shutdown? Technically, no.
A government shutdown occurs if lawmakers fail to appropriate money for federal agencies and programs.
By contrast, if the debt ceiling is breached, Uncle Sam would still have revenue coming in that could be used to fund the government, noted Rudolph Penner, a former Congressional Budget Office director.
But if Geithner is coming up short by $115 billion on average every month, and lawmakers just decide to cut spending by that amount, that could effectively mean a partial government shutdown.
So what happened last year? The 2011 debt ceiling showdown resulted in a three-part increase to the debt ceiling in exchange for, among other things, at least $2.1 trillion in debt reduction over 10 years.
The debt ceiling deal — known as the Budget Control Act — also empowered a so-called super committee of lawmakers from both parties to negotiate how to achieve at least $1.2 trillion of that debt reduction.
That committee failed, however, thereby triggering a sequester of nearly $1 trillion in automatic spending cuts, mostly across defense and nondefense discretionary spending. That latter category pays for many common and popular governmental functions, from food inspections to the operation of national parks.Those cuts are set to start taking effect in January 2013.
Many lawmakers hate those cuts– but apparently not enough yet to negotiate a bipartisan deal to replace them.
The debt ceiling showdown of 2011 also created a lot of bad blood between the parties and between Republicans and the White House.
And it sparked the first-ever downgrade of the U.S. credit rating by Standard & Poor’s, which cited political brinksmanship as the chief cause.
That, in turn, caused one of the most volatile weeks in world markets and left Americans and investors with the sense that Congress can’t handle even the most elemental tasks without a lot of destructive drama.
An Overview of the United States National Debt
The Current Outstanding Public Debt of the United States is:
$16,245,318,820,569.34
Last Updated: Saturday, November 10th, 2012
Every man, woman and child in the United States currently owes $53,469 for their share of the U.S. public debt
Public Debt: $11,421,836,402,771.01
Intragovernmental Holdings: $4,823,482,417,798.33
Total U.S. National Debt: $16,245,318,820,569.34
Question: Who owns the public debt?
Answer: Mutual funds, pension funds, foreign governments, foreign investors, American investors, etc.
Which Foreign governments own the most U.S. debt?
Answer: Here is the Top 10 (as of Aug/2012)
1. China, Mainland, $1153.6 billion dollars
2. Japan, $1121.5 billion dollars
3. Oil Exporters*, $263.0 billion dollars
4. Carib Bnkng Ctrs**, $256.9 billion dollars
5. Brazil, $253.9 billion dollars
6. All Other, $226.8 billion dollars
7. Switzerland, $202.2 billion dollars
8. Taiwan, $198.0 billion dollars
9. United Kingdom, $153.6 billion dollars
10. Russia, $153.3 billion dollars
*Includes oil exporting countries such as Saudi Arabia and Iran
**includes countries such as Bermuda and the Cayman Islands
Of the $5.1 trillion dollars of US debt that is owned by foreign governments, China and Japan own nearly half, as evidenced by this chart:
Growth of US Debt Over Past 50 Years
Current: $16,245,318,820,569.34
2010: $13,178,317,356,215.73
2004: $7,379,052,696,330.32
1999: $5,656,270,901,615.43
1994: $4,692,749,910,013.32
1989: $2,857,430,960,187.32
1984: $1,572,266,000,000.00
1979: $826,519,000,000.00
1974: $475,059,815,731.55
1969: $353,720,253,841.41
1964: $311,712,899,257.30
1959: $284,705,907,078.22
Commonly Asked Questions:
How much Money does the United States Owe China?
A: $1.15 Trillion (Aug/2012)
How much Money does the United States Owe Japan?
A: $1.12 Trillion (Aug/2012)
How much Money does the United States Owe Russia?
A: $153.3 Billion (Aug/2012)
How much Money does the United States Owe the United Kingdom?
A: $153.6 Billion (Aug/2012)
How much Money does the United States Owe Germany?
A: $64 Billion (Aug/2012)
How much Money does the United States Owe Canada?
A: $57 Billion (Aug/2012)
10 Most Profitable U.S. Corporations Paid Average Tax Rate Of Just 9 Percent Last Year: Report
Fact: Corporations move our jobs overseas to take advantage of slave labor wages, lax environmental laws and no taxes. Yes, no taxes! “Free trade” allows giant multinational corporations to pay zero taxes overseas and zero taxes in America. In 2010, corporate giant GE made a profit of $14.2 billion but it paid not a penny in taxes because the bulk of those profits, some $9 billion, were offshore. In fact, GE got a $3.2 billion tax benefit.
The 2008-2010 report reveals:
Pepco Holdings, a Washington, D.C.-area power company, had the lowest effective tax rate, at negative 57.6 percent, among the 280 Fortune 500 companies studied.
General Electric Co, Paccar Inc., PG&E Corp, Computer Sciences Corp and NiSource Inc. as among the 30 that paid no taxes. All 280 corporations examined were profitable over the period.
Fact: [Tax] breaks cost the government about $102 billion in lost revenues in 2011, a year when the federal deficit was an estimated $1.3 trillion.
Power group Duke Energy Corp was one of the 30 companies listed as paying no income taxes in 2008-2010.
Fact: Seventy-eight of the 280 companies paid zero or less in federal income taxes in at least one year from 2008 to 2010. Twenty-five of these companies enjoyed multiple no-tax years, bringing the total number of no-tax years to 108. In the years they paid no income tax, these companies earned $156 billion in pretax U.S. profits. But instead of paying $55 billion in income taxes as the 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they reported negative taxes (often receiving outright tax rebate checks from the U.S. Treasury), totaling $21.8 billion. These companies’ “negative tax rates” mean that they made more after taxes than before taxes in those no-tax years.
The 10 most profitable U.S. companies paid an average federal tax rate of just 9 percent last year. The group includes heavyweights Exxon Mobil, Apple, Microsoft, JPMorgan Chase and General Electric.
Some of these companies paid more than 9 percent — JPMorgan earned $26.7 billion in 2011, for example, and paid $3.7 billion of it, or 14 percent, to the federal government — and some paid less, like Exxon Mobil, which only sent 2 percent of its $73.3 billion earnings to the IRS.
But the 10 companies all paid much less than the nominal corporate tax rate of 35 percent — a number that investor and tax-the-rich advocate Warren Buffett has dismissed as “a myth,” but one that presidential front-runners Barack Obama and Mitt Romney have both proposed to lower.
The effective corporate tax rate has been on its way down for decades, recently hitting a 40-year low even as corporate profits have reached an all-time high. Many of the companies that have seen their tax rates fall in recent years — including Exxon Mobil, Verizon, General Electric and AT&T — are among the biggest spenders when it comes to lobbying.
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In 2010, corporate giant GE made $14.2 billion profit but paid no taxes. If GE, B of A, Wells Fargo and other corporations and banks paid their fair share, there would be no federal, state or county deficits/shortfalls. Instead, the government would have a surplus like they used to– roads, dams, hospitals and schools would not be in disrepair or overcrowded because the government would have plenty of money for all these things as they once did and would not be looking for ways to cut social security or other social programs.
You and I, however, CANNOT compete with the money corporations spend to buy off congress, (i.e. our politicians) and voting only replaces one corrupt party with the other corrupt party.
Fact: These tax-breaks have occured under Democrat and Republican administrations! Both are corrupt!
Fact: The U.S. was the largest creditor in the world. Now the debt is in the trillions of dollars. Trillions of dollars transferred from the worlds richest & most powerful country. This is a form of destructive economic management at a level of graft & corruption that has NO parallel. There’s nothing comparable to that in history. Upcoming elections do us no good. Corruption has entered every institution.
Fact: As things stand now, with federal taxes, state taxes, county tax, sales tax, property taxes, car tax, gas tax, phone taxes, etc., the governmnent takes 4 months of our wages every year in taxes. For that kind of money we should have the best schools on the planet, right? But every year 30 to 50% of our kids get LEFT BEHIND. Let me repeat, taxes take 4 months of your wages away from you every year. That’s true under Republican or Democrats.
These are the facts your government does NOT want you to see.
Fact: 237 Millionaires in Congress
According to a report released this week by the Center for Responsive Politics, there are 237 millionaires serving in Congress.
It reflects the fact that the average lawmaker is far wealthier than his or her typical constituent. While about one percent of Americans are millionaires, 44 percent of those serving in Congress can claim as much.
In some cases, [lawmakers'] wealth is being derived from the very companies that in many cases benefit from the taxpayers.
The top companies at which members of Congress are investing, many of them are TARP recipients that have received billions and billions of dollars from you and me.
Among the companies in which members of Congress hold assets are Bank of America and Goldman Sachs.
151 Congressmen Derive Financial Profit From War
Congressmen gave themselves a loophole. Republican and Democratic lawmakers invested $161.3 million in companies under contract with the DoD. Investments in these contractors yielded Congress members $62 million annually. They also profit from taxcuts and the bailouts.
RECESSION – HIGH GAS PRICES – OUT-OF-CONTROL MEDICAL COSTS – FAILING INFRASTRUCTURE…WHO IS RESPONSIBLE?
Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered why, if both Democrats and Republicans are against deficits, we have deficits? If all the politicians are against inflation and high taxes, have you ever wondered why we have inflation and high taxes?
You and I don’t propose a federal budget. The president does. You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.
One hundred senators, 435 congressmen, one president and nine Supreme Court justices- 545 human beings out of the 235 million – are directly, legally, morally and individually responsible for the domestic problems that plague this country. I exclude the members of the Federal Reserve Board because the Congress created that problem. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered but private central bank.
I exclude all the special interest and lobbyist for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressmen or a president. No matter what the lobbyist promises, it is the legislator’s responsibility to determine how he/she votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Nancy Pelosi, who stood up and criticized G.W. Bush for creating deficits. The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives the sole responsibility to the House of Representatives for appropriations and taxes.
It seems inconceivable to me that a nation of 235 million cannot replace 545 people who stand convicted – by present facts – of incompetence and irresponsibility. There is not a single domestic problem, from an unfair tax code to defense overruns, not directly traceable to those 545 people and their predecessors..
Sooner or later all freedom loving Americans will realize that the only way to stop those who would bleed our nation dry, dismantle our constitution, and dissolve our national sovereignty is to say: I will NOT work for you, buy from you, fight for you, or die for you, until the criminals are gone from the halls of our government.
Stop calling your Congressmen. THEY don’t listen! Shut It Down.
General Strikes shut down the normal operations of a city, state, or nation for a period of time. These strikes aim to force action on a single issue or broader set of concerns.
The reason for this shutdown is not to hurt this country in any way shape or form, but is, in fact, a peaceful method of sending a message to Washington, D.C.
We would like to raise awareness about steps we can all take and solutions we can all participate in.
You can take part in this exchange of information and, at the same time, contribute to Global Non-Compliance against Corruption, Theft, Fraud, and Murder.
We have always had the power to stop these crimes.
Stop the funding to all criminal activity in the corporate/political sector.
Small changes in how you spend your money will make a huge difference to the profiteers of misery.
This will not happen overnight, but in time, we could affect real change.
General Strike USA.com is engaged in what could be called “the people’s sovereignty movement.” We challenge the legitimacy of the US Supreme Court, or any other arm of government, “to bestow upon corporations the immense governing authority” implicit in the conferral of constitutional rights. We base this challenge on a solid founding principle; no governing entity may grant away the people’s right to a functional republican form of government. We contend that excessive corporate power has undermined this basic right of the people. (POCLAD, 2003) (See Also, Grossman, et, al, 2003).
Rather than try to change Supreme Court decisions, the people’s sovereignty movement is building popular support for eliminating corporate constitutional rights; they are urging their fellow citizens to effectively say, “We hold ultimate authority, and despite what the Supreme Court says, we did not grant away our sovereignty over you when we made you a corporation.” So, what concrete steps does one take to make this tangible?
We live in a time when elected politicians ignore the needs of their constituents; where the judiciary and police institutions will not uphold the rights of citizens; where the media are afraid to report the truth; where lawlessness abounds and ordinary people are left unprotected and defenseless against the rapacity of a few. The answer to our dilemma is for people of courage to actively help each other. Only if we unite can we succeed. That is the only way. There is no other way. People, get up, stand up! ORGANIZE!
Republicans, Democrats, Independents and non-voters UNITE. You’re Americans first!
The General Strike is a national call to action, from citizens to other citizens.
The strike targets key issues facing the American public, issues that have not been addressed in any meaningful way by any branch of government.
Unions, corporations and the major parties have failed to deal with pressing matters of war and peace, income inequality, crime and punishment and the meaning of citizenship itself. It has fallen to the American people to set things right!
Public protest is an important part of democracy, just as much as a free press, a judiciary, and congress. A general strike does NOT have to be violent. It is a matter of CIVIL DISOBEDIENCE, NOT VIOLENCE. You are NOT going to school. You are NOT going to work. You are NOT shopping. You do NOT have to be violent to NOT do those things. March legally. Protest legally.
You will need to plan, set up and hold your own local protest. Vigorously promote your protest via local activist and church groups. Also on social networking sites- Facebook, Meetup, Tribe, MySpace, Twitter, YouTube, etc. Call in to talk radio shows, print and distribute this flyer, create freeway banners, write OPEDs, etc., etc. You will need to organize enough people to shut down, disrupt normal operations of your local city, town, county and state.
PROMOTE IT
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Join the Consumer Fast already underway:
If you do any banking with BofA, Wells Fargo, Chase or other large banks CLOSE those accounts NOW. Move all banking to small local independent banks or Credit Unions.
BOYCOTT CORPORATE MEDIA.
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Republicans, Democrats, Independents and non-voters UNITE. You’re Americans first!
Join the “NO SPEND PROTEST” already under way.
This is NOT just about RECESSION, GAS PRICES, or FAILING INFRASTRUCTURE. This is NOT just about inflation and high taxes. This is NOT just about bailouts, corrupt media or out of control spending. The WHOLE system is CORRUPT.
Stop calling your Congressmen. THEY don’t listen! Shut It Down.
Sources:
Center for Responsive Politics
CBS News
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These are the facts your government does NOT want you to see
http://generalstrikeusa.wordpress.com/2012/08/20/these-are-the-facts-your-government-does-not-want-you-to-see/
10 Most Profitable U.S. Corporations Paid Average Tax Rate Of Just 9 Percent Last Year: Report
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