President Obama signed into law on Saturday a provision that will keep the federal government running through most of next week — long enough for congressional leaders to put the finishing touches on a budget compromise that will keep the federal government funded for the remainder of the fiscal year.

http://www.washingtonpost.com/politics/obama-expected-to-sign-another-stopgap-budget-bill/2011/04/09/AFtnFL8C_story.html

Hi Gus,

Whilst the yanks might want to break-out the champagne to celebrate this latest triumph on the part of their political leaders, whereby they 'slashed' $38.5 billion in federal spending, the electorate should be more than a little bemused by the fact that US government debt jumped $54.1 Billion in the 8 days preceding Obama-Boehner deal.

According to CNS News, the US national debt has increased by $653.4 billion since October 1st, 2010.

Talk about a finger in the dyke & nary a word about cutting military spending, running in excess of $1 trillion a year ......

Yes John,

the house is burning around the sofa...

Treasury secretary Tim Geithner estimates that the US is adding about $125 billion of debt each month and the nation is expected to hit its $14.3 trillion debt ceiling in May.

Former treasury secretary James Baker describes the "debt bomb" as the number one problem for America.

"If we didn't have the dollar as the de facto reserve currency of the world, we'd be Greece. I mean we are broke," he exclaimed on CNN.

But doing something about it would take real gumption and the political cycle isn't helping. Politicians are starting to put their hands out to fund their presidential campaigns.

Eager to stay on the front foot Republicans appear ready for another game of chicken over increasing America's legal debt limit. Even though Congress has issued itself a new national credit card limit dozens of times before, Speaker John Boehner says Democrats will have to concede something "really, really big" on spending, if they want it to happen this time.

If they refuse there's the unlikely scenario of the US defaulting on its debt obligations for the first time in history, a prospect the White House describes as an "economic Armageddon" that would trigger another global recession or worse. New York Times writer Nate Silver grimly refers to the threat as a kind of "mutually assured destruction."

After this past week though, nothing can be taken for granted, not while the Tea Party zealots are waving their placards outside Congress.

Last time the US government nearly closed in a showdown over a few billion dollars, this one would put the full faith and credit of the United States of America on the line.

I can just hear the droll Sir Humphrey from Yes Minister, "Politicians must be allowed to panic. They need activity. It is their substitute for achievement."

http://www.abc.net.au/news/stories/2011/04/12/3189129.htm

US president Barack Obama has laid out a $4 trillion plan to cut America's budget deficit, and slammed Republican plans for deeper spending cuts.

Mr Obama wants to slash the deficit by ending tax cuts for the wealthy and cutting defence spending, but he is leaving the social security system largely intact and resisting calls to turn Medicare into a privatised voucher system.

Mr Obama's proposed cuts would occur over a 12-year period.

He says Republican plans for deeper spending cuts accompanied by lower taxes had the potential to "fracture America's social compact".

"That's not right and it's not going to happen as long as I'm president, " he said.

Defending the $400 billion cuts to defence spending, he said: "The greatest long-term threat to America's national security is America's debt."

Mr Obama's vow to end tax cuts for the wealthy drew condemnation from Republicans such as John Boehner.

"We can't tax the very people that we expect to reinvest in our economy," Mr Boehner said.

Next month the US is expected to hit its legal debt ceiling of $14.3 trillion.

http://www.abc.net.au/news/stories/2011/04/14/3191060.htm

Mr Boehner!!! "We can't tax the very people that we expect to reinvest in our economy?" Crap... Any Dick, Tom and Harry invest in the economy... Anyone who buys two bucks worth of safety matches is as valuable as someone who buys an accounting firm for the purpose of tax minimization... Many of "the Rich" have lost fortunes in the last financial crash and yet they still have enough to survive another five of such crashes... Furthermore, the indecency of bank bonuses and CEOs bonuses make my miserable earnings look even more ridiculously small... Even when I raid the loose change from under the cushions of the sofa, to buy a loaf of bread, I reinvest in the economy... The Rich should actually worry that the public debt will devalue their fortunes and engender a revolution — though on this one, the Rich have been smart: they've divided the poor by letting them believe they could be rich one day, INDIVIDUALLY...

Paul Ryan, the chairman of the House Budget Committee, sounds upset. And you can see why: President Obama, to the great relief of progressives, has called his bluff.

Last week, Mr. Ryan unveiled his budget proposal, and the initial reaction of much of the punditocracy was best summed up (sarcastically) by the blogger John Cole: “The plan is bold! It is serious! It took courage! It re-frames the debate! The ball is in Obama’s court! Very wonky! It is a game-changer! Did I mention it is serious?”

Then people who actually understand budget numbers went to work, and it became clear that the proposal wasn’t serious at all. In fact, it was a sick joke. The only real things in it were savage cuts in aid to the needy and the uninsured, huge tax cuts for corporations and the rich, and Medicare privatization. All the alleged cost savings were pure fantasy.

On Wednesday, as I said, the president called Mr. Ryan’s bluff: after offering a spirited (and reassuring) defense of social insurance, he declared, “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.” Actually, the Ryan plan calls for $2.9 trillion in tax cuts, but who’s counting?

And then Mr. Obama laid out a budget plan that really is serious.

The president’s proposal isn’t perfect, by a long shot. My own view is that while the spending controls on Medicare he proposed are exactly the right way to go, he’s probably expecting too much payoff in the near term. And over the longer run, I believe that we’ll need modestly higher taxes on the middle class as well as the rich to pay for the kind of society we want. But the vision was right, and the numbers were far more credible than anything in the Ryan sales pitch.

And the hissy fit — I mean, criticism — the Obama plan provoked from Mr. Ryan was deeply revealing, as the man who proposes using budget deficits as an excuse to cut taxes on the rich accused the president of being “partisan.” Mr. Ryan also accused the president of being “dramatically inaccurate” — this from someone whose plan included a $200 billion error in its calculation of interest costs and appears to have made an even bigger error on Medicaid costs. He didn’t say what the inaccuracies were.

And now for something completely wonkish: Can we talk, briefly, about politicians talking about drugs?

For the contrast between Mr. Ryan last week and Mr. Obama on Wednesday wasn’t just about visions of society. There was also a difference in visions of how the world works. And nowhere was that clearer than in the issue of how Medicare should pay for drugs.

Mr. Obama declared, “We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency.” Meanwhile, Mr. Ryan held up the existing Medicare drug benefit — a program run through private insurance companies, under legislation that specifically prohibits Medicare from using its bargaining power — as an example of the efficiencies that could be gained from privatizing the whole system.

http://www.nytimes.com/2011/04/15/opinion/15krugman.html?_r=1&hp=&pagewanted=print

see toon at top

...

The debt ceiling itself is a strange feature of U.S. law: since Congress must vote to authorize spending and choose tax rates, why have a second vote on whether to allow the borrowing that these spending and taxation policies imply? In practice, however, legislators have historically been willing to raise the debt ceiling as necessary, so this quirk in our system hasn’t mattered very much — until now.

What has changed? The answer is the radicalization of the Republican Party. Normally, a party controlling neither the White House nor the Senate would acknowledge that it isn’t in a position to impose its agenda on the nation. But the modern G.O.P. doesn’t believe in following normal rules.

So what will happen if the ceiling isn’t raised? It has become fashionable on the right to assert that it would be no big deal. On Saturday the editorial page of The Wall Street Journal ridiculed those worried about the consequences of hitting the ceiling as the “Armageddon lobby.”

It’s hard to know whether the “what, us worry?” types believe what they’re saying, or whether they’re just staking out a bargaining position. But in any case, they’re almost surely wrong: seriously bad consequences will follow if the debt ceiling isn’t raised.

For if we hit the debt ceiling, the government will be forced to stop paying roughly a third of its bills, because that’s the share of spending currently financed by borrowing. So will it stop sending out Social Security checks? Will it stop paying doctors and hospitals that treat Medicare patients? Will it stop paying the contractors supplying fuel and munitions to our military? Or will it stop paying interest on the debt?

Don’t say “none of the above.”

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See toon and articles at top...