Dollar Crisis Looms if US Doesn't Curb Debt: Experts

[The Northerner]

Source: Reuters

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama's administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

Read more: http://www.cnbc.com/id/34848783

[DJ13]

1. And here comes another round of the Shock Doctrine

Cut taxes on the rich and the businesses, crash the economic system, prop up the wealthy, then sharply reduce programs to aid the poor.

A perfect means of creating a slave workforce.

[Blue Meany]

2. Also perfect for generating a backlash in which the rich lose

everything. If they had a sense of "enlightened self-interest," they would not seek to avoid higher taxes, but too many are not well-educated enought not to continue down this foolish path.

[ixion]

3. very few people, rich or poor, practice the idea of "enlightened self-interest"

They're really good at the "self-interest" part, but the "enlightened" part, not so much.

[n2doc]

4. The ultra rich already have their wealth locked up elsewhere in many places

the merely rich will have to scramble.

[unblock]

5. 8 years of not one peep about how do we pay for it and now that a democrat's in office...

suddenly it's a calamity if the democrat doesn't pay right NOW for the republican debts!

:eyes:

[bossy22]

6. exactly

i feel much of this stuff is political based fear-mongering. I put more faith in Paul Krugman's view of the dollar and the defecit. He belives that running a deficit isnt good but that the US dollar is far from collapsing. He points out that many other countries such as italy and japan have debt ratios that are greater than their entire economy; and their currencies have collapsed yet.

[westerebus]

7. Did I miss something?

For as long as I've read DU's economic forum there's been plenty of comment on bush's economic policies, none favorable. Justifiably so. Poor policy is poor policy.

Tax cuts that made no economic sense. Trade policy was a joke. Off budgeting a war. And plenty of warning on the credit crisis. To name a few.

Things you would expect from the party of the rich.

Plus a lot of disbelief that a Democratic Congress couldn't muster up the courage to say: NO! No more Iraq war funding. No free lunch for the banks. We're DEMOCRATS god dam it! People before corporations is our platform!

The current holder's of the majority of power much like the previous holder's of that power that did not have a super majority are on course to undo what is left of the economy.

Where's the banking regulation? Where's the prosecution of the Wall Streeters who made this mess?

Where's the People's bailout? Where's the People's money? Let's start with that one and go from there.

Calamity?

Comes after bullshit and before change in the dictionary.

[Mithreal]

8. Two Santa Claus Theory offers insight

But Wanniski had been doing his homework on how to sell supply-side economics. In 1976, he rolled out to the hard-right insiders in the Republican Party his "Two Santa Clauses" theory, which would enable the Republicans to take power in America for the next thirty years.

Democrats, he said, had been able to be "Santa Clauses" by giving people things from the largesse of the federal government. Republicans could do that, too – spending could actually increase. Plus, Republicans could be double Santa Clauses by cutting people's taxes! For working people it would only be a small token – a few hundred dollars a year on average – but would be heavily marketed. And for the rich it would amount to hundreds of billions of dollars in tax cuts. The rich, in turn, would use that money to import or build more stuff to market, thus increasing supply and stimulating the economy. And that growth in the economy would mean that the people still paying taxes would pay more because they were earning more.

There was no way, Wanniski said, that the Democrats could ever win again. They'd have to be anti-Santas by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections.

http://www.commondreams.org/view/2009/01/26-0

[westerebus]

9. Thank you for the link.

Shakespeare had it right about the lawyers.

[Mithreal]

10. You're welcome.

[Festivito]

13. I think you're missing the abc, nbc, cbs, ... i.e. M$M inferences.

Sure, an economic forum will contain some good stuff. The problem stems from the M$M that suddenly says, hey, the Dems are in power, let's now complain about the debt we ignored under Bush. Bush whose borrowing to spend was THREE TIMES Clinton's.

Maybe, by that, Obama should be allowed to borrow to spend three times W's?

[roamer65]

11. Neither of these will happen. We're going to inflate.

They'll just fudge the CPI.

[Odin2005]

12. Bullshit. Our national debt is not that bad relative to GDP.

It's a lot better than many European countries. This is typical Libertarian hysteria.

[fasttense]

14. RepubliCONS and their paid-for corporate media

always play this con when a Democratic President takes office. They played it with Clinton and they are playing it with President Obama.

Raygun, Bush I and the other bush all ran up huge budget deficits (and trade deficits). We are still paying interest on Raygun's gigantic borrowing efforts. In fact the whole scam about Social Security going "bankrupt" is about hiding or eliminating the debt owed to baby boomers (yes owed like we owe China and Japan) who paid in huge amounts to cover their parents and their own retirements. You can thank Ronnie Raygun for the so called "bankrupting" of Social Security.

So now everyone has to pretend like they give a rat's a** about the budget deficit so that Democrats don't get too liberal about helping the huddled masses. If they were smart (and they aren't just look at Palin), RepubliCONS would have realized by now that President Obama really feels sorry for the poor huddled masses but he likes to give money away to fat rich old guys.

Obama doesn't really need the excuse of the deficit to pay welfare to the uber wealthy but it sure is handy. Just ask Rahm, Geithner, the Fed Chair and Summer. They'll tell you how much more important it is to help out banksters and not create one single, new-deal style, federal job, nada, zilch, zero.

Obama cares about us, he just knows it better for us to suffer, better for the masses to pull themselves up, better for us to earn $3 a day for awhile because once he's finished fattening up the big cats and banksters all will be magically improved. The magical mystery of the invisible hand of our tax dollars, I mean, the market will just wash our economy in gold. And some of that yellow is going to trickle all over the poor and suffering.

[AGMONEY]

15. This what happens with funny money

"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." -Ludwig Von Mises