Obama: 'We are out of money now.'

[Subdivisions]

http://www.c-span.org/pdf/obamainterview.pdf

...

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades.

So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now.

Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...

SCULLY: When you see GM though as “Government Motors,” you're reaction?

OBAMA: Well, you know – look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...

SCULLY: States like California in desperate financial situation, will you be forced to bail out the states?

OBAMA: No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there...

...



Looks like we still have alot of pain to endure...

Sidebar: Be on the watch next week for big news in the economy. The media will be wall-to-wall SCOTUS nominees and may use that as a distraction against major economic developments.

[TahitiNut]

1. Scully (the imbecile) obviously doesn't know the difference between a deficit and the debt.

:puke:

[snowdays]

2. We have Billions the banks and war but none for health care for the people.

[Subdivisions]

4. What strikes me is that he doesn't mention that not only are we

out of money but the only major buyer of Treasury bonds is now our own Federal Reserve. And, they're doing it by printing more money. China has stopped nearly all its purchases of T-bills. And, there's a $162 Billion auction coming up next week and the possibility of a currency debasement, maybe the British Pound.

[snowdays]

5. I read somewhere that China is buying up lots of gold. Seems like a circular

catch all---the Treasury selling to the Fed Reserve.

[Subdivisions]

6. Google News: China Brazil

http://news.google.com/news?pz=1&ned=us&hl=en&q=China+Brazil

China and Brazil are working together to move away from the Dollar as their exchange currency.

Dollar chart:

http://quotes.ino.com/chart/?s=NYBOT_DX

Also, look out for GDP numbers coming out next week.

[madrchsod]

8. the best thing we can do is devalue the dollar

and make chinese imports to expensive to buy.....

[galileoreloaded]

12. My parents (savers) and their meager quality of life would respectfully disagree n/t

[Psephos]

16. What do you call Medicare and Medicaid? The Part D drug plan?

What do you call the uncounted billions of tax deductions taken year after year to subsidize the provision of health care by businesses?

I call it more money than is spent on banks and wars. Current unfunded future liabilities for the items mentioned above exceeds $20 trillion. Add in Social Security and the number rises above $50 trillion. That is literally more wealth than has ever existed in the entire world.

I agree it's time to overhaul the system, but to say we have "none for the people" is the exact opposite of the truth. We are on the path to bankruptcy because of ongoing exponential increases in federal outlays for medical care, along with exploding outlays for Social Security. If current rates of acceleration in costs continue, Medicare/Medicaid alone will consume *every dollar* of the US budget within 30 years, unless something changes soon.

This, by the way, is exactly the rationale Obama is using to sell the overhaul.

[Hannah Bell]

30. "unfunded future liabilities" = stupid accounting. tote up the "unfunded future liabilities" for

war.

Future money is *always* "more money than has every existed" because the money supply expands as population & production does.

If medical & retirement costs can't be funded though SS/Medicare, they can't be funded, period, & everyone needs to die. Is that your belief, that there is insufficient productive capacity to provide for the needs of the elderly?

[Psephos]

31. It's called GAAP (or, Generally Accepted Accounting Principles), and it is the opposite of "stupid"

Interestingly, by law, companies must use GAAP for their books...but not the US government.

http://en.wikipedia.org/wiki/GAAP

Meanwhile, whatever you meant by "future money" is irrelevant. Future liabilities, however, are not. Unless you think the Zimbabwean solution is a good idea.

We have no entitlements liabilities for future wars. We can simply choose not to fight them.

[Mr Rabble]

3. Here is the most important line in that exchange:

"and we want to get out of the business of helping auto companies as quickly as we can"

Notice that he specifically mentioned auto companies. The amount given to AIG dwarfs that given to all auto companies combined. And yet, he thinks it is most important that we not help the auto companies. Why is that?

[RoyGBiv]

10. Perhaps ...

... just perhaps, mind ...

He was answering the question he was asked about auto companies.

[madrchsod]

7. "....a combination of bad decision making over many years...."

that`s why general motors was the largest seller of vehicles in the world until last year when Toyota sold a few hundred thousand more units. i guess it was a bad decision on the america public`s part to actually buy vehicles they wanted.

let`s not forget the government mandated "dealer reduction" disaster that forced the small to medium business owners out of business along with tens of thousands of well paying skilled jobs.

it`s fuck over the working class in america because who else are they going to vote for-the republicans?

[tibbiit]

9. I didnt read him saying we are out of money because of Iraq and Afghan Wars!

any mention of that in addition too the other things?
tib

[Amonester]

11. shhh.... must not talk about those free billions/month given away to ...

the military-industrial complex (at the expense of the lives and health condition of volunteering-service boys 'n girls).

[Psephos]

17. The total cost of the Iraq war to date is less than the stimulus bill.

You remember the stimulus bill, right? The one that had to be passed so quickly no had time to read it? The one that had to be passed, because if it wasn't, unemployment might hit 9% by the first of May?

The bill was passed. Unemployment hit just about 9% (8.9%) by the first of May. Oops, look over there, a puppy!

Only $30 billion of the bill has actually been spent so far on stimulus. Read Krugman if you want someone smarter than me to explain why that bill is an abomination.

Meanwhile, this year's deficit will be bigger than all of the deficits of the past eight years added together.

Read it yourself, if you want it from the horse's mouth:

http://www.fms.treas.gov/fr/

[SammyWinstonJack]

20. Apparently that is money well spent. And the more spent, the better, for the MIC and

the War Profiteers. :eyes:

[AdHocSolver]

13. There is a "simple" solution to most of our fiscal and economic problems that no one talks about.

Bring the jobs that have been offshored to Asia back to the U.S. This will, in the long term, eliminate the trade deficit, reduce our foreign debt, refill the coffers of federal, state, and local governments when American workers pay taxes, improve the quality of the products and services we purchase, and remove our dependence on foreign governments to ensure our economic well-being.

The basic reason for most of our economic problems is the fact that most of what we buy is produced elsewhere.

An economy is a system in which goods, services, and money flow in an effective loop. Importing 80 percent or more of what we purchase means that one element in that loop flows out of the system and is permanently lost.

A metaphor that most people can understand is your car's cooling system. It consists of an engine that contains a water pump connected by hoses to a radiator. The pump causes the coolant (antifreeze) to flow from the engine where it absorbs heat, to the radiator where the wind cools it, and the cooled antifreeze is returned to the engine to absorb more heat. The antifreeze is equivalent to the money in the economy.

If the radiator hose breaks, the coolant leaks out (it stops circulating within the system), the engine overheats and seizes up and it stops running. Importing practically everything we buy means that the money that runs the economy (like the antifreeze) leaves the system and doesn't return to the "economic engine", and the economy stops working.

The stimulus money given to corporations, if it isn't mandated that the stimulus be used to put Americans back to work, will fail if most of it is used to buy foreign goods. It will just flow out of the country and increase our trade deficit and our debt.

No one is discussing this aspect of the problem because the corporations are making big profits exploiting cheap foreign labor and evading paying taxes in the U.S. To save the U.S. economy, these practices must stop.

[L0oniX]

27. Oh well ...you'll end up fighting those 1800 corporations in the Cayman Islands...

and all the other countries will start crying fowl over free trade agreements and NAFTA. We don't want to close ranks and become known for our nationalism do we?

:sarcasm:

[glitch]

29. K & R this post. nt

[Rex]

14. Who is out of money?

The taxpayers?

[bottomtheweaver]

15. $180 billion to AIG alone, and he's blaming health care for the national debt?

Is this for real?

[SammyWinstonJack]

21. Crazy, isn't it?

[ThirdWorldJohn]

18. And Is Congress OK With The Fed not Being Able to Account for 9 TRILLION DOLLARS?

http://www.google.com/search?q=fed+loses+9+trillion&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

Doesn't Congress somehow have somewhat of an over site role with the FEDERAL RESERVE?

[Optical.Catalyst]

19. We were out of money before President Obama took office

The Bush Administration broke the bank with tax cuts to the wealthiest Americans while breaking the bank on an illegal war.

[SammyWinstonJack]

22. And those tax cuts for the greediest among us are still intact. Why is that?

[Wednesdays]

23. K&R

:kick:

[Tierra_y_Libertad]

24. But they still find enough to finance lost wars in Iraq and Afghanistan.

[L0oniX]

25. Yes ...we know already. Banksters needs supersede those of the sick and elderly.

[Deja Q]

26. Get rid of GM management - and take away their undeserved parachutes and retirement bennies.

The workers are not to blame. Management calls the shots, which is why they say they deserve their salaries (which are 500x greater than that of their workers)...

[Psephos]

32. umm, that's already been done eom

[Canuckistanian]

28. Time to start economizing. How about cutting out a war or two?

Cut the wars, reduce the "black ops" budget and tell the Pentagon to get rid of half of their pet projects.

Oh, and let the Bush tax cuts expire and eliminate corporate loopholes.

Bingo! Solvency in 3 years.