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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Soul Crusher on November 23, 2009, 06:47:48 AM
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November 23, 2009
Payback Time
Wave of Debt Payments Facing U.S. Government
By EDMUND L. ANDREWS
www.nyt.com
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WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.
But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.
The surge in borrowing over the last year or two is widely judged to have been a necessary response to the financial crisis and the deep recession, and there is still a raging debate over how aggressively to bring down deficits over the next few years. But there is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.
Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.
The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.
“The government is on teaser rates,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates lower deficits. “We’re taking out a huge mortgage right now, but we won’t feel the pain until later.”
So far, the demand for Treasury securities from investors and other governments around the world has remained strong enough to hold down the interest rates that the United States must offer to sell them. Indeed, the government paid less interest on its debt this year than in 2008, even though it added almost $2 trillion in debt.
The government’s average interest rate on new borrowing last year fell below 1 percent. For short-term i.o.u.’s like one-month Treasury bills, its average rate was only sixteen-hundredths of a percent.
“All of the auction results have been solid,” said Matthew Rutherford, the Treasury’s deputy assistant secretary in charge of finance operations. “Investor demand has been very broad, and it’s been increasing in the last couple of years.”
The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.
“What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”
The current low rates on the country’s debt were caused by temporary factors that are already beginning to fade. One factor was the economic crisis itself, which caused panicked investors around the world to plow their money into the comparative safety of Treasury bills and notes. Even though the United States was the epicenter of the global crisis, investors viewed Treasury securities as the least dangerous place to park their money.
On top of that, the Fed used almost every tool in its arsenal to push interest rates down even further. It cut the overnight federal funds rate, the rate at which banks lend reserves to one another, to almost zero. And to reduce longer-term rates, it bought more than $1.5 trillion worth of Treasury bonds and government-guaranteed securities linked to mortgages.
Those conditions are already beginning to change. Global investors are shifting money into riskier investments like stocks and corporate bonds, and they have been pouring money into fast-growing countries like Brazil and China.
The Fed, meanwhile, is already halting its efforts at tamping down long-term interest rates. Fed officials ended their $300 billion program to buy up Treasury bonds last month, and they have announced plans to stop buying mortgage-backed securities by the end of next March.
Eventually, though probably not until at least mid-2010, the Fed will also start raising its benchmark interest rate back to more historically normal levels.
The United States will not be the only government competing to refinance huge debt. Japan, Germany, Britain and other industrialized countries have even higher government debt loads, measured as a share of their gross domestic product, and they too borrowed heavily to combat the financial crisis and economic downturn. As the global economy recovers and businesses raise capital to finance their growth, all that new government debt is likely to put more upward pressure on interest rates.
Even a small increase in interest rates has a big impact. An increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year — about equal to the combined budgets of the Department of Energy and the Department of Education.
But that could seem like a relatively modest pinch. Alan Levenson, chief economist at T. Rowe Price, estimated that the Treasury’s tab for debt service this year would have been $221 billion higher if it had faced the same interest rates as it did last year.
The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.
To lock in low interest rates in the years ahead, Treasury officials are trying to replace one-month and three-month bills with 10-year and 30-year Treasury securities. That strategy will save taxpayers money in the long run. But it pushes up costs drastically in the short run, because interest rates are higher for long-term debt.
Adding to the pressure, the Fed is set to begin reversing some of the policies it has been using to prop up the economy. Wall Street firms advising the Treasury recently estimated that the Fed’s purchases of Treasury bonds and mortgage-backed securities pushed down long-term interest rates by about one-half of a percentage point. Removing that support could in itself add $40 billion to the government’s annual tab for debt service.
This month, the Treasury Department’s private-sector advisory committee on debt management warned of the risks ahead.
“Inflation, higher interest rate and rollover risk should be the primary concerns,” declared the Treasury Borrowing Advisory Committee, a group of market experts that provide guidance to the government, on Nov. 4.
“Clever debt management strategy,” the group said, “can’t completely substitute for prudent fiscal policy.”
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I have an idea:
1. Lets spend all day bashing Palin over her book.
2. Lets spend another trillion on health care.
3. Lets waste money prosecuting terrorists who have alreadt admitted guilt.
4. Lets raise energy taxes.
SOUNDS LIKE A GREAT PLAN.
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Not a problem.We have the mesiah in there and all he does is spend more money.Does ANYONE still think its not being done on purpose tpo destroy the country?
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The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.
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And you guys wonder why many of us loathe this WH?
Their priorities suck!
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This can not be true, because the US government says it is the RICHEST NATION IN THE WORLD.... HAS THE BIGGEST ECONOMY... IS ALL POWERFUL. A nation can not be filthy rich and dead broke at the same time... can it?
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This can not be true, because the US government says it is the RICHEST NATION IN THE WORLD.... HAS THE BIGGEST ECONOMY... IS ALL POWERFUL. A nation can not be filthy rich and dead broke at the same time... can it?
I was having the same conversation with someone this weekend who was crying about the need for more spending on health care.
She was saying that "we are the richest" country in the world blah blah blah, and refused to even have a discussion over the massive debt we have.
Samson, this is the mentality you are dealing with on these issues. Many people keep screaming for more free stuff dont realize we are already broke and printing phoney dollars to give the illusion that we are rich.
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you don't see what's happening...The fed and the other powers that be are letting the dollar depreciate on purpose. that the house has a weak dollar policy, when in fact that state otherwise.
We are going to service our debts with cheaper dollars..However, the china people are on to what we are doing and are pegging there currency with ours...
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I was having the same conversation with someone this weekend who was crying about the need for more spending on health care.
She was saying that "we are the richest" country in the world blah blah blah, and refused to even have a discussion over the massive debt we have.
Samson, this is the mentality you are dealing with on these issues. Many people keep screaming for more free stuff dont realize we are already broke and printing phoney dollars to give the illusion that we are rich.
may i ask where we rank in health care in comparison to other world power Mr. 333337?
1 France
2 Italy
3 San Marino
4 Andorra
5 Malta
6 Singapore
7 Spain
8 Oman
9 Austria
10 Japan
11 Norway
12 Portugal
13 Monaco
14 Greece
15 Iceland
16 Luxembourg
17 Netherlands
18 United Kingdom
19 Ireland
20 Switzerland
21 Belgium
22 Colombia
23 Sweden
24 Cyprus
25 Germany
26 Saudi Arabia
27 United Arab Emirates
28 Israel
29 Morocco
30 Canada
31 Finland
32 Australia
33 Chile
34 Denmark
35 Dominica
36 Costa Rica
37 United States of America
38 Slovenia
39 Cuba
40 Brunei
41 New Zealand
42 Bahrain
43 Croatia
44 Qatar
45 Kuwait
46 Barbados
47 Thailand
48 Czech Republic
49 Malaysia
50 Poland
51 Dominican Republic
52 Tunisia
53 Jamaica
54 Venezuela
55 Albania
56 Seychelles
57 Paraguay
58 South Korea
59 Senegal
60 Philippines
61 Mexico
62 Slovakia
63 Egypt
64 Kazakhstan
65 Uruguay
66 Hungary
67 Trinidad and Tobago
68 Saint Lucia
69 Belize
70 Turkey
71 Nicaragua
72 Belarus
73 Lithuania
74 Saint Vincent and the Grenadines
75 Argentina
76 Sri Lanka
77 Estonia
78 Guatemala
79 Ukraine
80 Solomon Islands
81 Algeria
82 Palau
83 Jordan
84 Mauritius
85 Grenada
86 Antigua and Barbuda
87 Libya
88 Bangladesh
89 Macedonia
90 Bosnia-Herzegovina
91 Lebanon
92 Indonesia
93 Iran
94 Bahamas
95 Panama
96 Fiji
97 Benin
98 Nauru
99 Romania
100 Saint Kitts and Nevis
101 Moldova
102 Bulgaria
103 Iraq
104 Armenia
105 Latvia
106 Yugoslavia
107 Cook Islands
108 Syria
109 Azerbaijan
110 Suriname
111 Ecuador
112 India
113 Cape Verde
114 Georgia
115 El Salvador
116 Tonga
117 Uzbekistan
118 Comoros
119 Samoa
120 Yemen
121 Niue
122 Pakistan
123 Micronesia
124 Bhutan
125 Brazil
126 Bolivia
127 Vanuatu
128 Guyana
129 Peru
130 Russia
131 Honduras
132 Burkina Faso
133 Sao Tome and Principe
134 Sudan
135 Ghana
136 Tuvalu
137 Ivory Coast
138 Haiti
139 Gabon
140 Kenya
141 Marshall Islands
142 Kiribati
143 Burundi
144 China
145 Mongolia
146 Gambia
147 Maldives
148 Papua New Guinea
149 Uganda
150 Nepal
151 Kyrgystan
152 Togo
153 Turkmenistan
154 Tajikistan
155 Zimbabwe
156 Tanzania
157 Djibouti
158 Eritrea
159 Madagascar
160 Vietnam
161 Guinea
162 Mauritania
163 Mali
164 Cameroon
165 Laos
166 Congo
167 North Korea
168 Namibia
169 Botswana
170 guy
171 Equatorial Guinea
172 Rwanda
173 Afghanistan
174 Cambodia
175 South Africa
176 Guinea-Bissau
177 Swaziland
178 Chad
179 Somalia
180 Ethiopia
181 Angola
182 Zambia
183 Lesotho
184 Mozambique
185 Malawi
186 Liberia
187 Nigeria
188 Democratic Republic of the Congo
189 Central African Republic
190 Myanmar
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What does that have to do with the debt issues we have?
Spending money is not the answer as evidenced by the failed Stimulus Bill.
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may i ask where we rank in health care in comparison to other world power Mr. 333337?
1 France
2 Italy
3 San Marino
4 Andorra
5 Malta
6 Singapore
7 Spain
8 Oman
9 Austria
10 Japan
11 Norway
12 Portugal
13 Monaco
14 Greece
15 Iceland
16 Luxembourg
17 Netherlands
18 United Kingdom
19 Ireland
20 Switzerland
21 Belgium
22 Colombia
23 Sweden
24 Cyprus
25 Germany
26 Saudi Arabia
27 United Arab Emirates
28 Israel
29 Morocco
30 Canada
31 Finland
32 Australia
33 Chile
34 Denmark
35 Dominica
36 Costa Rica
37 United States of America
38 Slovenia
39 Cuba
40 Brunei
41 New Zealand
42 Bahrain
43 Croatia
44 Qatar
45 Kuwait
46 Barbados
47 Thailand
48 Czech Republic
49 Malaysia
50 Poland
51 Dominican Republic
52 Tunisia
53 Jamaica
54 Venezuela
55 Albania
56 Seychelles
57 Paraguay
58 South Korea
59 Senegal
60 Philippines
61 Mexico
62 Slovakia
63 Egypt
64 Kazakhstan
65 Uruguay
66 Hungary
67 Trinidad and Tobago
68 Saint Lucia
69 Belize
70 Turkey
71 Nicaragua
72 Belarus
73 Lithuania
74 Saint Vincent and the Grenadines
75 Argentina
76 Sri Lanka
77 Estonia
78 Guatemala
79 Ukraine
80 Solomon Islands
81 Algeria
82 Palau
83 Jordan
84 Mauritius
85 Grenada
86 Antigua and Barbuda
87 Libya
88 Bangladesh
89 Macedonia
90 Bosnia-Herzegovina
91 Lebanon
92 Indonesia
93 Iran
94 Bahamas
95 Panama
96 Fiji
97 Benin
98 Nauru
99 Romania
100 Saint Kitts and Nevis
101 Moldova
102 Bulgaria
103 Iraq
104 Armenia
105 Latvia
106 Yugoslavia
107 Cook Islands
108 Syria
109 Azerbaijan
110 Suriname
111 Ecuador
112 India
113 Cape Verde
114 Georgia
115 El Salvador
116 Tonga
117 Uzbekistan
118 Comoros
119 Samoa
120 Yemen
121 Niue
122 Pakistan
123 Micronesia
124 Bhutan
125 Brazil
126 Bolivia
127 Vanuatu
128 Guyana
129 Peru
130 Russia
131 Honduras
132 Burkina Faso
133 Sao Tome and Principe
134 Sudan
135 Ghana
136 Tuvalu
137 Ivory Coast
138 Haiti
139 Gabon
140 Kenya
141 Marshall Islands
142 Kiribati
143 Burundi
144 China
145 Mongolia
146 Gambia
147 Maldives
148 Papua New Guinea
149 Uganda
150 Nepal
151 Kyrgystan
152 Togo
153 Turkmenistan
154 Tajikistan
155 Zimbabwe
156 Tanzania
157 Djibouti
158 Eritrea
159 Madagascar
160 Vietnam
161 Guinea
162 Mauritania
163 Mali
164 Cameroon
165 Laos
166 Congo
167 North Korea
168 Namibia
169 Botswana
170 &guy
171 Equatorial Guinea
172 Rwanda
173 Afghanistan
174 Cambodia
175 South Africa
176 Guinea-Bissau
177 Swaziland
178 Chad
179 Somalia
180 Ethiopia
181 Angola
182 Zambia
183 Lesotho
184 Mozambique
185 Malawi
186 Liberia
187 Nigeria
188 Democratic Republic of the Congo
189 Central African Republic
190 Myanmar
Many of those countries dont include deaths like accidents,car accidents,murders etc. on their roles.Let me ask you this.Ever see any American going elsewhere when he needs a life saving operation?Ever see an American athlete go abroad when they need an operation to save their career?I bet you can see hundreads from other countries coming here for those operations.
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Many of those countries dont include deaths like accidents,car accidents,murders etc. on their roles.Let me ask you this.Ever see any American going elsewhere when he needs a life saving operation?Ever see an American athlete go abroad when they need an operation to save their career?I bet you can see hundreads from other countries coming here for those operations.
yes i have..i have heard of US citizens going to India, Thailand, etc to get operations..You hear about this activity occurring all to frequently these days
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yes i have..i have heard of US citizens going to India, Thailand, etc to get operations..You hear about this activity occurring all to frequently these days
ANYONE THAT WOULD GO TO THOSE TWO FILTHY HELL HOLES HAVE ROCKS IN THEIR HEADS.People stream HERE for our health care.
Now ,the question is,can the ultimate failure,our government,which has bankrupted social security,medicare and medicaide bankrupt the whole country with their assanine health care plan.
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ANYONE THAT WOULD GO TO THOSE TWO FILTHY HELL HOLES HAVE ROCKS IN THEIR HEADS.People stream HERE for our health care.
Now ,the question is,can the ultimate failure,our government,which has bankrupted social security,medicare and medicaide bankrupt the whole country with their assanine health care plan.
Why do you even argue with these guys, they throw up some list and don't even bother to see what the criteria is that the list was made from. They are a lost cause, government is not the answer, since they are the ones that set the rules that have everything do fucked up.
Now back to the original post, anyone with half a brain knows that when you are in debt up to your eye's you don't spend more.
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Why do you even argue with these guys, they throw up some list and don't even bother to see what the criteria is that the list was made from. They are a lost cause, government is not the answer, since they are the ones that set the rules that have everything do fucked up.
Now back to the original post, anyone with half a brain knows that when you are in debt up to your eye's you don't spend more.
that's from the WHO..I thought it would be common knowledge here...However, it's not :o
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that's from the WHO..I thought it would be common knowledge here...However, it's not :o
So what? Did you bother to look at what they base their findings on? Guess not ::)
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So what? Did you bother to look at what they base their findings on? Guess not ::)
no i didn't know i was constructing a doctoral thesis..
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Many of those countries dont include deaths like accidents,car accidents,murders etc. on their roles.Let me ask you this.Ever see any American going elsewhere when he needs a life saving operation?Ever see an American athlete go abroad when they need an operation to save their career?I bet you can see hundreads from other countries coming here for those operations.
You obviously have missed the news showing the americans going to India, Saudi Arabia, Cuba, Puerto Rico, Venezuela even China, Korea and Australia for years now for everything from cosmetic surgery to liver replacement. The era of america being this advanced medical center for the world ended some time ago when GREED became the motivating factor. Other nations have not advanced in years gone by medically, because they lacked the technology. Now India, China and even Cuba are more technologically (especially medically) advanced than america. More people DIE of even common surgeries in america than in the aforementioned nations, because america is more concerned about MONEY than HEALTHCARE.
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You obviously have missed the news showing the americans going to India, Saudi Arabia, Cuba, Puerto Rico, Venezuela even China, Korea and Australia for years now for everything from cosmetic surgery to liver replacement. The era of america being this advanced medical center for the world ended some time ago when GREED became the motivating factor. Other nations have not advanced in years gone by medically, because they lacked the technology. Now India, China and even Cuba are more technologically (especially medically) advanced than america. More people DIE of even common surgeries in america than in the aforementioned nations, because america is more concerned about MONEY than HEALTHCARE.
x2
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Bump.
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You obviously have missed the news showing the americans going to India, Saudi Arabia, Cuba, Puerto Rico, Venezuela even China, Korea and Australia for years now for everything from cosmetic surgery to liver replacement. The era of america being this advanced medical center for the world ended some time ago when GREED became the motivating factor. Other nations have not advanced in years gone by medically, because they lacked the technology. Now India, China and even Cuba are more technologically (especially medically) advanced than america. More people DIE of even common surgeries in america than in the aforementioned nations, because america is more concerned about MONEY than HEALTHCARE.
I too have read about this. Billy you may want to do a little more research next time pal.
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People are NOT traveling to those countries because the practitioners/hospitals are better at the same procedure. U.S hospitals are the best or near the best in the world. We fail at prevention.
Some people are traveling abroad because of 2 main reasons:
1. Some procedures are restricted here but people can get them elsewhere
2. Costs...insurance & medicare do not pay for many elective programs and certain ones may be cheaper somewhere else.
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I think you need to think again about these 'hellholes' people go to for treatment.
In Thailand, Bumrungrad Hospital is like a 6 star hotel. It is better than anything I have seen anywhere and I've lived in US, UK, Denmark, Netherlands, Japan as well as Thailand.
Here is a room in a 'hell hole' hospital in Thailand :
(http://i39.photobucket.com/albums/e156/tb9pdvs/DSC01763.jpg)
Amazing anyone gets out alive isn't it ?
Total cost for a C-section, 3 nights in the hospital & care for the baby - just under US$3,000
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So 99,700 bhat, I have it on pretty good authority ( guy that posts on another forum and lives in Thailand) that yeah they have good medical care, if you can afford it. Thailand is like any place else you get the care you can afford.