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    Defusing The Debt Bomb

    Defusing The Debt Bomb

    How we doin?

    Does the red go to the black, or the other way around?  And the yellow goes to the orange, or was it back to the red?

    We only have [fill in arbitrary number of days based on articial deadline] to figure it out.  But whatever we do, let’s just do something by [insert artificial deadline here].

    Does the “Gang of Six” plan do the trick?


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    WarEagle82 | July 19, 2011 at 10:49 pm

    Perhaps this is the beginning of the end for the GOP. Once people realize the “conservatives” in the Senate has screwed us again we may finally get enough votes to get rid of the worst of them.

    We are several election cycles from a total purge but if we can get rid of a few now and a few in 2014 it may make a difference. Assuming we still have elections by then…

    Ipso Facto | July 20, 2011 at 12:33 am

    Bottom line – the Republicans have stopping power. If there was ever any time to use it – it’s NOW.

    Viator | July 20, 2011 at 5:09 am

    “Think of the Senate “Gang of 6″ Plan as the “Gangrene Plan.” It will slowly, but surely, rot away the nation. It was presented yesterday with a few claims:

    (1) It was not designed to play a role in the debt ceiling debate;

    (2) It was not meant to undercut the House Republicans’ “Cut, Cap, and Balance” plan; and,

    (3) It would not be a tax increase.

    The reality is the opposite of each of those statements. The Gang of 6 plan is intended to play a role in the debt ceiling debate by giving the McConnell-Reid-Pelosi Pontius Pilate Act more life to get passed until the Gangrene Plan can take affect.

    They rushed the plan out the door with a coordinating statement of support from the White House to try to stop the momentum toward the Cut, Cap, and Balance Plan.”

    “The House Republicans, joined by five Democrats, passed Cut, Cap, and Balance last night. The House GOP showed it is in favor of raising the debt ceiling, but only if spending is cut, future spending is capped, and the budget is balanced.

    The Senate GOP is furious. They have been undermined. The House GOP stood up for principle.

    What’s going to happen now is the Senate will tell the House that its plan cannot pass. House Republicans must now continue to hold the freaking line. They must not waiver. They must understand that now that their plan is passed and that it allows the debt ceiling to be raised, the House GOP’s hand strengthens every day closer to August 2nd. And if this debacle goes past August 2nd, the House GOP is in charge as long as it holds the freaking line.”

    Red State

    Viator | July 20, 2011 at 5:57 am

    “He (Obama) also noted that the Senate’s two top leaders have been cooperating on a measure that would allow him to raise the debt limit without a prior vote of Congress while also setting up a special committee to recommend cuts from federal programs, including Social Security and Medicare.

    “That continues to be a necessary approach to put forward. In the event that we don’t get an agreement, at minimum, we’ve got to raise the debt ceiling,” he said.” AP

    john.frank | July 20, 2011 at 6:11 am

    The “Gang of 6 Plan” is the classic Washington Punt

    As to the debt ceiling debate, along with all the doom and gloom that is being talked about in the media:

    Gloomy Forecast for Europe’s Banks and US debt downgrade
    “A credit rater with a strong track record sees sovereign-debt defaults and bank woes in the Old World’s future.”

    Not good news.

    The same credit rater, Egan-Jones, whose work is paid for by institutional investors, such as pension funds, and not the issuers of the debt like Moody’s and Standard & Poor, issued a down grade notice for US debt on March 1, 2011.

    It formally down graded US debt to AA+ on Monday:

    Egan-Jones Cuts U.S. Rating to AA+ on Spending-Cut Concern

    I suggest people listen to an interview of Sean Egan, one of the founders of Egan-Jones on CNBC’s Squak Box, that was conducted on Monday, July 18, 2010:

    During the course of the interview he speaks about the EU and US situation. As to the US, he explains why the issue of whether the US will miss or delay an interest payment is a “red herring” and that the real problem is the debt to GDP ratio, the present inability to cut spending, along with ballooning entitlement payments for baby boomers. His comments start at 6:45 of the video.

    While being interviewed, he also referenced that Canada has a true triple A rating because of its debt to GDP ratio.

    In that regard, on June 15, Jim Flaherty, Canada’s Minister of Finance spoke to a New York audience about the US fiscal situation. During the course of his remarks he said:

    “What’s required is a solid plan to eliminate deficits, reduce debt and create a cushion against the next global economic shock, combined with the determination to deliver results on time and as promised,”

    It will be interesting to see whether Congress and the Administration can put together such a plan (and IMV the work being done by the Group of 6 Senators does not meet the criteria set by Minister Flaherty as it has far too many “holes” to avoid making the needed spending cuts, such that it end’s up being the classic “Washington Punt.”)

    Bottom Line:

    – The Republicans in Congress (including Representative Bachmann) made a strategic error (failing to heed the wisdom of Sarah Palin and Senator DeMint) and should have force the issue during the debate over the continuing resolution earlier this year instead of waiting until now.

    – While Moody’s and Standard & Poor may not issue a debt downgrade, institutional investors have already been told that US debt is no longer triple A and the world did not come to an end.

    – Congress and the President need to wake up and smell the coffee. We need a firm plan to cut spending, balance the budget and start paying down the debt, such that the debt to GDP ratio falls from the present level to about 35%.

    While tax reform can be part of the equation, so broadening the tax base, the emphasis must be on entitlement reform and spending cuts, with the ratio being roughly 1:8 and not the 1:2.7 ratio being talked about with the gang of 6.

    The gang of 6 plan simply does not get us there. Despite the fear mongering coming from the LSM, while Democrats and their media allies claim the Tea Party are at fault, the reality is that the Democrats, along with many Republicans and the President are the one’s living in la-la land.

    – Congress has gone over 810 days without passing a budget. While the House passed a budget by April 15, 2011 as required by law, the Senate has done “nothing.” This is totally irresponsible. Again who controls the Senate? The Democrats.

    So the best we can hope for is a stop gap measure which will tide us over until after the next election.

    To fix the problem? We are going to need new leadership, starting with someone as President who has strong executive experience, including a proven track record of taking on the corrupt SOB’s. No, that is not any of the existing candidates, nor is it Perry or Christie.

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