Get Ready for Federal Budget Gridlock
By Greg Hunter’s USAWatchdog.com
This week, President Obama gave a speech outlining his plan for long term deficit reduction. He invited the Republican leadership for what many thought would be some sort of bi-partisan federal budget 2011 solution. In reality, it was kind of a St. Valentine’s Day massacre because right off the bat, Mr. Obama pulled out the Presidential tommy-gun and started shooting. He said, “This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending. It’s about the kind of future we want. It’s about the kind of country we believe in.”
Surprise, surprise. The kind of country President Obama “believes in” is a lot different than the Republicans. The President said the Republican plan “ends Medicare as we know it.” Sounds to me the President will play the class warfare card during the 2012 election season because he went on to say, “The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?” (Click here to read the entire text of the President’s deficit speech.) I can see why the President is playing to lower income people. Recently, a poll revealed a majority of the poorest Americans no longer support Obama. CNSNews.com reports, “President Barack Obama’s approval among the poorest Americans dropped to an all-time low of 48 percent last week, according to the Gallup poll, leaving the president with less-than-majority approval among all income brackets reported in Gallup’s presidential approval surveys.” (Click here to read the complete CNSNews.com story.)
The two big issues will be billions in Medicare and Medicaid cuts (especially Medicaid) and a $1 trillion tax increase. I see these two issues as real sticking points. Relative to the Republican plan, the President only wants to make small changes to health care entitlements. Obama clearly wants health care entitlements to grow, not shrink (remember Obamacare?) Also, the Democrats and Republicans came within an hour of shutting down the government over $38 billion in cuts. There is no way the two parties are going to agree on some compromise on a trillion bucks in tax hikes. These two issues alone spell budgetary gridlock. House Budget Chairman Paul Ryan said the President’s speech was “excessively partisan” and “dramatically inaccurate.” These are not the kind of words you use when you are laying the groundwork for a compromise. I am sure Congress will play chicken again, over the budget, in the government shutdown game.
I don’t know which party has the best plan, but I do know the U.S. is in deep financial trouble. Gridlock is not going to help with dramatic and badly needed cuts in spending. In March alone, the federal government spent 8 times more money than it took in. The U.S. collected $128 billion and spent more than $1.1 trillion (or $1,100 billion!) Neither party addressed the other new welfare plan we have started for crooked bankers who have ripped-off the country and caused the financial meltdown in 2008. The latest outrage is the $220 million in bailout money given to the wives of two Morgan Stanley bankers. (Click here to read the complete story.)
Another piece of banker welfare, and in my opinion criminal cover-up, is the sweetheart deal federal regulators just cut with the banks over the ongoing foreclosure fiasco. There has not been a single prosecution or conviction of a financial elite over the meltdown, only a federal investigation that identified “significant weaknesses”in mortgage servicer practices. Twelve million families will lose their homes by 2012, and not a single criminal charge? If that’s not banker welfare, I don’t know what is. (Click here to read more about this rotten deal.)
Then, there is the $127 billion of possible “buy backs” of rotten mortgages dumped into Freddie Mac. Bank of America got forgiveness by the government for this extraordinary amount, and neither party made a sound about it. This is more banker welfare, and plenty of other big banks will want and get a similar deal. How can we have a serious budget debate when neither party will even talk about the $5 trillion in liabilities at Fannie and Freddie?
Yesterday, Treasury Secretary Tim Geithner warned Congress about possible default of U.S. debt if the debt ceiling was not raised from the $14.3 trillion it stands at now. We are $1.6 trillion in the red for this budget. What do you think the chances are it will be raised by more than $1 trillion? We will not cut the deficit because of the coming federal budget gridlock. Congress will take the easy way out and take on more debt to avoid default. That’s kind of like going to war for peace.
Well said, I’m out of my chair and clapping till my hands hurt. Exactly what needs to be done before taking away from the middle class who made it! Both parties are just one body with two heads. They sold us down the river and want us, the middle class, to pay for all their stupid political mistakes now and make things right. Well, Mr. Speaker and Mr. President, go play your games, I’m preparing for the world when you become not relevant to our lives, which if isn’t now it will be soon.
By the way Greg, I know the last sentence was meant to sound insane:
“That’s kind of like going to war for peace.” – The Watchdog
That is our exact policy. We start wars and kill millions of innocent people in the name of spreading democracy and freedom. That is our foreign policy. So taking on more debt to avoid default, to me, is more synonymous with hiring a convicted child molestor to babysit your children, while you go off to the casino to gamble your children’s savings. I’m just sayin….. By the way Greg, have I told you that you rock yet this week? Rock on!
And one more thing, I remember a couple of weeks back one of your readers (Lisa) saying the average American can’t afford silver. The average American can’t afford not to get silver if they want to survive the coming collapse. Every little bit helps. And as a guy who has tried to prepare despite modest means, I understand the challenge. For all of you on the fence just needing a push to start trading your fedeal reserve slave notes for real money, This is a pretty good deal on silver, until they hike the price.. US Proof Silver Coins..90% $2.10 in coins Five Dollars in minted coins plus a nickel and a penny..lol At 42.00 spot that makes over $63.00 in melt value plus the rest of the coins ! If silver keeps going up, they will probably raise the price shortly.. So sixty eight dollars worth in coins.. You should, at a minimum, buy one for each of your kids.
There Greg, you shall never accuse me of not trying in some way to help your devoted followers. TH
Keep up fantastic articles Greg. You’re doing a truly great job educating people about these crucial matters. I’m in Australia and genuinely feel for what is about to happen to so many hard working Americans, pensioners, families and young people trying to just start work. Like you’ve said many times, most have no idea what’s coming their way. I find my self increasingly just shaking my head at articles like your latest. I simply can’t believe you guys have come to this situation where fraudsters are exposed and get off scot-free. Just can’t believe it – on such a mammoth scale too! What IS wrong with Americans these days Greg?! The apathy truly boggles belief. Such a shame your mainstream media are not rising to the occasion and telling it like it is – they will have much to answer for when the lights go out. It is like watching a Spielberg movie in slow-mo from afar. Good people like yourself, Peter Schiff and Ron Paul plus some other wonderful commentators are the USA’s only real hope. The current idots aren’t going to turn this around – that’s for sure. Keep spreading the word and fighting the good fight Greg and don’t give up – it seems to me that what you are doing is more important than most people may realise. Best regards, Brian from Sydney Australia.
Political correctness placed us here during the last 40 years and now political correctness cannot fix the it and they know it – so they punt instead of going for the first down allowing both teams to lose.
You wrote: “I don’t know which party has the best plan, but I do know the U.S. is in deep financial trouble.”
The Republicrats may not have the best plan; however, the Democrat plan of tax-n-spend is not a viable plan. It is a plan that ruins our country faster than anything else could — faster than any foreign or domestic enemy could.
Keynsianism is the problem.
Raising taxes in a recession/depression has never increased revenue. If we confiscated all wealth over 150k, we would take a serious dent out of the deficit FOR ONE YEAR, but the wealth generators would not make the same mistake twice. Human nature is not factored-in by neo-Marxists. Government spending does not create wealth or revenue for the treasury.
I think we should grant the Kenyan his neo-Marxist dream–we should implement a 100% tax on incomes over 150k which would completely ruin our country. And then, like the Phoenix, we MIGHT rise from the ashes.
John Boehner must go. FIRE HIM!
The Have’s need to feel my pain (gubmint workers are the Have’s of our society–we, in the private sector are the Have-nots or slaves of our society).
My prediction: We will lose our country and civil liberties, or have a bottom-up revolution–either by ballot box or bullet box.
Will the states nullify or abolish the federal gubmint as we know it? That could happen. The test case is the Health care compact.
The Donald may not be a civil libertarian; however, he could catch fire. He has balls that are as big as Nancy Pelosi’s. Unlike Nancy, Trump has brains and he knows how to balance a budget and create an atmosphere where our economy could grow. He knows how to put gubmint workers on the street, where they belong. Trump and Bachman are the only two republicans who have balls.
Yes, Greg, Trump could catch fire and I have been paying careful attention to him – and even I, the Western Front fatalist like what he says. Maybe he really does know how to fix this mess, if he does, he is the only one. One thing is certain, our great new speaker of the house has the ba–s the size of bb’s and can’t fix it. He is going to submit to a trillion dollar debt celing raise you just watch and see – leading to more of the same.
The good news is that the Welfare/Warfare State is dying. The bad news is that there will be a lot of “collateral damage” during the dying process and its aftermath.
Both “sides” in the current staged budget drama believe that the outcome can be determined by the policy preferences of their respective constituencies. In fact, the future is being defined before our eyes by mathematics, demographics, and time.
Things are about to get very ugly.
A little off topic, but people keep talking about silver. I buy silver, have for 9 years, I’m starting to doubt it will help us. The powers that be control it all. Since they have the courts, the banks and the military what if they just make silver and gold illegal to own.
Can’t they just change the rules when ever they want?
Yes they can change the rules right in the middle of the game to suit them. Don’t think for a second they won’t change any rule at any time if the situation warrants it. Good luck with your silver inflation hedge.
Greg, it’s all about power & never to give up that power even if means destroying the host nation. History is important as it relates to where find ourself today. It repeats its self because the passion of men never change. Todays trade off of corruption of Oligarchy under the Republic we have today where special interest control our government. A Republic is Not a Democracy where the people truly control the State. Just look at the professional politicians who have been in office as long a Qaddafi. Can we call this government of ours a Democracy? No. It’s that power over others they can’t let go of. Just like gold, most think it’s a hedge against inflation, but really is a hedge against governments.
4/15/2011 R.D.Bradshaw has a great article at http://www.goldseek.com GOLDSMITHS CLXXXIX, he puts the light on a movie about the Rothschild’s made in the early 1930’s, it shows the concerns back then as of today.
I have grown to respect Jim Sinclair & the people I would have never of heard of if not for Jim’s ability to know talent when he sees it ‘Greg’.
Martin Armstrong has new writings at http://www.armstrongeconomics.com/writings/4/11/11.Nothing is Certain,except Death,Taxes and the Otherside of Inflation, he has made it easy to see how the past fits with in todays corruption & the power struggle that exist between the good & evil sides of humanity. You can learn a lot from this mans life experiences with a corrupt court system & many of the lawyers & politicians who support these activist judges.
A CBS story about gas prices caught my attention after they bashed the oil companies, you could comment on the article. Over 65% of those from CA. wished that gas was at $10/15 a gallon & this guy said he would laugh as he past the long lines of SUVs, trucks & big rigs waiting hours to get fuel, I then replied to him, do you also want the price of every bite of food to cost you a month wages with nothing left over to pay rent or any other living expenses, his reply obama will take it from the rich & give to me. There is no reasoning with these people who always think they don’t have to produce a good or services to provide for themselves!
Hellen Brown pointed out that the rebels in Libya had already set up a central bank, the first time I ever known of a on going war where this has took place,could it be that the IMF/BIS want Qaddafi’s 140 tons of gold & nothing to do with oil?
Great stuff Greg as always. Thanks
The problem I see with this article is that it is a made to be Democrat(obama)vs Republican fight. This is not true.. Those idiot Republicans are just as guilty as those idiot Democrats. There is not spit worths of difference between both parties. Since Obama took over for Bush I have not noticed one difference.. Obama ran on stopping the wars and cutting defense spending etc. Hell, now that idiot has commenced bombing Pakistan and Libya. This whole right vs left and Democrat vs Republican argument is a joke. BOTH PARTIES ARE THE SAME.
The only one in the US Congress that can pull us out of the messes we are in is RON PAUL. Any of you people think Palin or Gingrich or that idiot Romney (the original socialized health care creater) can do anything better then the dolts who have been president for the past 40 years?
Hell gridlock is wonderful! It is these big government Republicans (democrats in disguise- RINO’s) who have participated in this reaching across the isle, working with the other party, get along to go along BS that has gotten us into this mess in the first place. I say let the Government shut down. Better yet lets eliminate 90% of the Federal Government. Where are the True Liberty Freedom loving antiblarge government Republicans at? That is where the problem is.
RON PAUL IN 2012!
Trump is another joke.. go look at all the donations he has made to ultra left candidates.. put a fork in the donald.. he does not have a clue. the only thing he has good experience in is bankrupting which is what the US government will need soon.
What I find quite intriguing is that Western Europeans pay on average 9% of GDP on healthcare, while the Americans pay 15%. Healthcare in Western Europe isn’t that bad and everybody is insured. In Western Europe many people work 36 hours a week. Somehow I do get the impression that they are better off.
I live in Western Europe so I do not know about the superior quality of US healthcare that justifies paying 50% more. You can do the math yourself: adopt a European health care system (savings: 6% GDP) and cut military expenses by 75% (savings: 3% GDP), and your budget deficit is gone. I know it is politically incorrect to say, but this is A REAL SOLUTION.
Republicans only want to make the poor people help to make the top 1% even richer. So far they have been very helpful, but not for long. It will not take long and the poor will come and take the money back because it is stolen from them. Everybody in the US has a gun and the poor are the majority. The anger you have seen at the Tea Party may soon turn against the rich. The anger is there and the anger is real (as far I could observe from a distance of 6,000 kilometres).
They want to cut medicare & medicade for the elderly & poor but they gave tax cuts to the rich & wealthy.
The News Media, a giant corporation, did a good job cheerleading & covering up for all the other giant corporations, (oil, financial banks, wall street, etc) along with the politicians of both parties who are in bed with them.
Good article….but! I just really have a problem with all this money talk. Everyone who writes in seems to be a financial wizard. All the top people in The world capitals are university educated money experts. So…. why the bleep bleep is the world in such a bloody financial mess? (Can’t blame the Arabs, at least they have something to sell))(and I’m not muslim)
Answer – Greed – from the richest to the poorest of us whether American or Canadian. Everyone wants something for nothing at the expense of someone else whether it’s cheating on taxes or running up credit card debt to the max! (My kids are included)
We blame the banks for giving out mortgage monies to people without jobs. Sure, the banks are at fault but what about the people who take this money knowing they won’t be able to pay it back?
Money is important. With gold at 35 bucks an ounce we were as poor as we are now with it at 1400+ an ounce.
When this whole financial house of cards comes down, and down it will come, gold and silver will be no more edible than the funny money.
Better to start thinkin’ about the world to come folks! We won’t need money there! Better yet, it won’t cost a dime to get there!
Trump is good at claiming bankruptcy and then comes out on top. That could be the kind of leadership we need.
I am grossly underwhelmed by both the so-called plans being discussed. Objective critics have trashed both, so I don’t need to repeat their arguments here. We Americans need to retake our political institutions from the moneyed interests on both sides of the debates. There is only one party, the party of money. The first step in fixing that abominable situation is to enforce a divorce between politics and money. The debates in Washington are plays being scripted by the money interests that back up the D’s and R’s. Maybe then we can engage in fact-based debates instead of the endless string of scripted (i.e. talking points) joint appearances.
I have come to the conclusion that the elites have only one goal to supercede all others, i.e. a one world governmental dictatorship. To accomplish that their must be a weakening of the Western hegemony. The best way to accomplish that is to destroy the financial, morality, morale, and the border integrity of the US and the other allied nations. It is quite far advanced and will probably be fully implemented when the US declares insolvency. Insolvency will make it necessary for gold and silver and all real properties to be confiscated by the Uni-world mega State as the basis for new currency which will be issued by the world bank. Under this new money system everyone will be required to give their allegiance to the UN to receive a tax ID number. Taxation will go directly to the UN from every individual. It will work. The UN will actually rule over the entire planet for a short while. Probably around a year. Everyone will be equally poor except the elites who will control the whole thing. The churches will not like having church properties confiscated and will do everything they can to stop the theft. The UN will then attack all religions with a vengence and annihilate all of them.
When you are in a hole, the first thing you need to do is stop digging.
Neither Republicans nor Democrats have really stopped digging. With our debt based money, our huge Government Class that depends on the government for their livelyhoods, our addiction to “sport wars,” and a media that would rather talk about basketball, Lady Gaga, or American Idol, than anything important, we are so far in a hole that the only think that can save us is a collapse.
Laser Guided Loogie
Can we please just get to the part where we start hanging bankers already?
I’ve been saying this for longer than Max Keiser, and yet the amount they steal from us on a daily basis continues to grow.
I’ll just be waiting over here with this rope while you patsies rend and tear each other to bits arguing over solutions that won’t work. I’ll be here when you wise up.
Of course they will raise the debt ceiling, but in the meantime we get the good cop/bad cop theater just like the budget deal that was much ado about nothing. They will play chicken for awhile but I am pretty sure it is a done deal before the pre-election show even starts.
The class card, this is a very good editorial by Walter Willimas we will all need to share with friends & family. It is the uncontolled spending that must end, not taking from the rich.
“Eat the Rich:
Tom H., the banks won’t allow the “closing of U.S. overseas military bases” because the U.S. military is doing its job, which is forcing U.S. Dollar hegemony at the point of a gun, you freaking morons. Whats next? They’ll take your guns. Think you’ll fight it out? You’ll lose. Eventually, all dictatorships will crap out. Problem is all the people who die in the meantime.
The Sucker’s Bet.
Far too many Americans are confusing high inflation and hyperinflation. The most frequently sited example of hyperinflation is Weimar Germany. Most renditions of the story lay the blame for it on the Versailles treaty. Actually that was only one of the sources of Weimar Germany’s inflation problem. It started with German monetary policy during the war. Faced with the costs of the war they printed large quantities fiat currency. At the end of the war the further burden reparations exacerbated the already existing problem.
In short high inflation comes from bad governmental monetary policy in response to debt, regardless of the source. Hyperinflation comes when the public loses confidence in the national currency and acceleration rates grow exponentially.
Germany in the 1920’s is only the most extreme example. Look also at the hyperinflationary events in Chile and Argentina. Same story high debt addressed by excessive money printing followed by loss of confidence in the currency and then rapid acceleration rates.
The underlying source or causes of the debt are always the same, high government spending coupled with bad central banking policy that only profits the banks and saddles the public with the debt.
How is this any different from what we face today? Well it is, we have the added complication of a rigged game. Anyone who thinks that the Federal Reserve Bank is either independent or Federal is ignorant, delusional or both. The FED is a private bank owned by the very banks it purports to regulate. What a joke.
Look at the revolving door between Goldman Sachs, the Treasury Department and the FED Board; collusion of the first order. Look at the POMO process since the collapse in 2008. Before 2008 the FED bought between 10% and 15% of US Treasury offerings. Now post collapse through the POMO process the FED ends up holding 70% of US Treasury offerings because no one else wants anything to do with US debt paper, and in the process the primary dealers (the banks that own and control the FED) make a killing on every step of the process.
First the PDs (Goldman Sachs, JP Morgan, BofA etc. borrow money from the FED at essentially 0%. They then use these funds to buy US Treasury Bonds for which they receive a transaction fee from the Treasury Department. After holding these Bonds for as little as two weeks they then sell them back to the FED for 3% to 4% more than they paid for them, depending on the term of the Bonds. If this weren’t bad enough, the scam doesn’t end there. They then take their ill-gotten proceeds, the transaction fees and profits from the re-sale of the Bonds and park them back into their accounts at the FED as “excess reserves” where they are draw 4% interest on the deposit! Well now guess whose money funds these transaction fees, re-sale profits and deposit interest payments? Look in the mirror, its you, the US taxpayer.
If this doesn’t make you mad enough look at that 1/10 of 1% these same banks are paying you on your savings deposits, and then compare it to the $4,200,000,000,000 ($4.2 Billion) in taxpayer funds the primary dealers will pocket just from the QE2 program. All for doing nothing more than moving electronic digits from one ledger book to another and then back again. Oh and also keep in mind that BofA and these other PDs don’t pay a single dime in income tax on any of it!
Again far to many Americans want to defend this kind of criminal fraud for nothing more than partisan political reasons. The banks will thank them for it and laugh in their faces as they pay out their massive bonuses funded by the tax payers while they pay them that luxurious 1/10 of 1% on their savings and then charge them 1-1/2% for managing what ever they have left in their IRAs or 401Ks.
So yeah we should bitch at Congress for massive spending but we should also bitch at them for lining their coffers with campaign contributions paid out of the pocket change of these same banks, for which they return the favor by structuring the tax code that lets them get away with paying no taxes on this pernicious scam. The taxpayers are being played for suckers and are paying for the privilege. Sadly there are far to many people too blinded by this fools a errand of left vs. right to see the game, and they never will until its far too late, and hyperinflation destroys everything they have.
Neither party has the best plan Greg, that is the problem! They will both propose a plan that leads to certain failure. Why would anyone expect the band of criminals in Washington, regardless of party, to have the wherewithall to fix the problem they created in the first place?
I won’t claim to have all the answers, but it seems to me that we would be far better off ending our campaign of useless wars, closing foreign bases, stopping the genocide being committed by US in the Middle East, stopping all foreign aid, stopping funding of the UN and the IMF, etc. before we start implementing austerity measures on the very people whom pay for all of this nonsense in the first place.
We need a presidential candidate to step up to the plate and declare that not one penny will leave our shores until the needs of the taxpayers, who fund the government, are met.
No more too big to fail, no more federal reserve.
No matter what this latest edition of fraud we call our government does, it is mathematically impossible to pay the debt, it will always be mathematically impossible to pay the debt, because it is impossivble to pay by design. Debt is the money of slaves! Wake up America and realize you have been turned into debt slaves. The only solution, if we want to remain free, is to default. Default should be followed by purging the government and banking system of criminals, which would get rid of most them, and then start over with honest money that is not based on debt. Creating money out of thin air to pay debt just creates more debt.
If you would like to know how the world reacted to President “I”s speech, just look at the price of gold, the price of silver, and the US dollar index.