As Washington celebrates it's debt ceiling farce, the U.S. economy is in deep trouble

As the politicos in Washington all smile for the cameras, and pat each other on the back for pulling off another pathetic exercise in can-kicking, Washington's favorite sport, the U.S economy is showing signs of deep problems ahead.

According Dow Jones ESI indicator there is evidence of a huge US slowdown, a Dow Jones Sentiment Indicator says Return to a Recession is a Real Risk.

It would be easy to blame the dip in the ESI on the U.S. debt crisis, but much of the gloom stems from Main Street rather than Washington,” says Dow Jones Newswires “Money Talks” columnist Alen Mattich. “The readings this summer have fallen enough that it seems to suggest a slide back into recession is a real risk.”

Please see : Recession is "Real Risk" According to Dow Jones ESI Indicator

Also consider :

US GDP on Verge of Contraction in 1st Quarter, Mere 1.3% Annual Rate 2nd Quarter; Summary of Massive Revisions; Second-Half Recovery Nonsense

Does the Deficit Deal Guarantee a Recession?


It's not temporary

Europe is now in austerity-mode, US cities and states are cutting back, the odds of more fiscal stimulus in the US are roughly zero, the US might (and should) lose its AAA rating, Australia is a basket case on the bursting of its property bubble, Canada has the second or third largest property bubble next to China and Australia, the bond market is targeting Italy and Spain, Brazilian defaults are soaring, China is overheating and needs to slow, yet the average economist is looking for a robust second-half, and Obama still tells us he pulled the country back from the abyss.

Yea, right.

What does a trillion dollars look like ?

While the budget battle drags on and we watch as politicians throw our money around like chips in a poker game. Most Americans have a hard time visualizing exactly the incredible amounts of money that our government takes in and wastes.

The folks at http://usdebt.kleptocracy.us/ have put up a great visual to give us some sense of what a couple of trillion dollars looks like. It is great way to explain both the debt crisis and the huge sums of money being discussed in Washington.

A Visualization of the U.S. Debt

Obama should lead, follow, or get out of the way.

With five days remaining before the government is forced to drastically cut services to avoid a default, Republicans have a bill that can't pass the Senate, and Democrats have a bill that House Republicans hate, this is what hope and change looks like, polarization and class-warfare.

You can't lead from behind. The president has not even put anything is writing. All we get from Obama are platitudes, promises, and threats, along with what he will not go along with. This has been a critical debate concerning our country's budget, and our future. Obama and the democrats have been completely absent and hiding in the bushes. Leaders must take risks, not just watch the polls and go along with whatever will get them re-elected. We have a total lack of leadership and a FAILURE of the the exectutive to do his job. When Obama tells us we must share the sacrifice, what is he sacrificing ? NOTHING !

Boehner should be given credit for trying, he has stuck to the principles that got him elected, smaller govt, less spending. In the end he will get more than the dems wanted to give up, and it is a step in the right direction, but a long way from anything substantial to turn the tide against the beast that is devouring our
wealth, and freedom.

The CBO likes Boehner's plan,they haven't mentioned Obama's plan yet, Oh, wait a minute, he has no plan !

According to the CBO, Boehner's plan is good. It's cuts now exceed the amount by which his plan would initially raise the debt ceiling. Their analysis concludes that his proposal would cut and cap spending by $917 billion over ten years It would also cut $22 billion in spending over the next year, and reduce discretionary expenditures each year thereafter. Boehner's new plan also requires Congress to propose at least another $1.8 trillion in spending cuts." So of course, Harry Reid has said it is DOA before he sees it, and is vowing to vote it down, and just in case it should get past the Senate, Obama is vowing to veto it.

Dear Mr. Speaker:

As you requested, the Congressional Budget Office has estimated the impact on the
deficit of the Budget Control Act of 2011, as posted on the Web site of the Committee on Rules on July 25, 2011.

...

In total, if appropriations in the next 10 years are equal to the caps on discretionary spending and the maximum amount of funding is provided for the program integrity initiatives, CBO estimates that the legislation would reduce budget deficits by about $850 billion between 2012 and 2021 relative to CBO’s March 2011 baseline adjusted for subsequent appropriation action.

As requested, CBO has also calculated the net budgetary impact if discretionary savings are measured relative to its January baseline projections. Relative to that baseline, CBO estimates that the legislation would reduce budget deficits by about $1.1 trillion between 2012 and 2021.

At least it's a plan.

So there it is, Boehner has proposed a $850 billion reduction over 10 years, a minuscule $85 billion a year on a deficit of $1.4 trillion. It is far worse than it looks because it is heavily back-loaded.

Unfortunately I think that Boehner's plan which is the best so far, is a joke. He has proposed a $850 billion reduction over 10 years, a measly $85 billion a year on a deficit of $1.4 trillion, and it's heavily back loaded. but at least it is a plan.

But it's not surprising that various Tea-Party members will not vote for it.
If we pass Obama's plan we get to see what's in it, again.

Obama's press secretary when pressed on the issue finally admitted what we already knew. Obama has no plan, or at least he doesn't want to put it to paper, so it doesn't become politically charged, in other words, we have to pass it to see what's in it again.

"Average Guy" rants about Debt Ceiling Debate

Here is a video of rant by a self-proclaimed " average guy " that asks a few simple questions that we all would like to ask.

Obama's Head Fake on the Debt Plan

Mark Steyn

Obama announced a 4 trillion dollar deficit plan. His media barking dogs ran off to file their pieces praising Obama and calling him ""the only adult in the room", the problem is, there is no plan. The only plan that Obama has put on paper was his February budget that increased spending, and doubled the debt.

The Democratic Senate has shown no interest in producing a budget for two-and-a-half years. Sen. Reid can't even be bothered pretending he's interested in spending reductions. His only interest is to carry on spending without limits. Obama's budget plan ? Obama rolls out his teleprompter and his aides write some really big numbers on it, he reads them, and that passes for leadership.

Republicans ask for balanced budget amendment

Cut, Cap and Balance

The GOP has finally gotten serious about budget negotiations, and have asked for balanced budget amendment as part of deal to consider closing some tax loop holes.

One way to limit the outrages spending that has gone on the last few years, and avoid this debt limit problem in the future is to enact a balanced budget amendment. Up until now, it looked like this would be just another muppet show, with nothing achieved. We still have a long way to go, but the Republicans have either being playing it tight to the vest, it just remembered why they were swept into office 2010.

“Neither party is going to balance the budget unless there’s some discipline in the system,” Sen. Lindsey Graham, South Carolina Republican, said on CNN’s “State of the Union.”

In exchange for a constitutional amendment, Mr. Graham said he would be open to closing tax loopholes or identifying other ways to raise revenues, but only if those revenues go toward debt reduction. He rejected President Obama’s assertion on Friday that lawmakers can balance the budget without such an amendment, as evidenced by the spending binges of recent years.

The proposal would call for major spending cuts, capping federal spending and the balanced-budget amendment. In exchange for those three things, the debt ceiling would be raised.