Wednesday, January 20, 2010

Uncle Sam's Credit

"Romanian President Traian Basescu was inaugurated for a second term Wednesday and began working with political parties to form a government that can enforce the tough budget changes required by the International Monetary Fund. ... Romania had pledged to keep next year's budget deficit below 5.9% of [GDP]. The deficit is likely to be around 7.3% of GDP this year", Christopher Emsden & Joe Parkinson at the WSJ, 17 December 2009, link:

"We only hope Republicans aren't foolish enough to fall down this trap door, though some are already tempted. A budget deficit commission is nothing more than a time-tested ploy to get Republicans to raise taxes. In the 2009 version, Republicans are being teed up to hold hands with Democrats and agree to become the tax collectors for Obamanomics. The deficit reduction commission is a long-standing idea that is now pushed with renewed fervor by Republican Frank Wolf of Virginia and Democrat Jim Cooper of Tennesse in the House and Democrat Kent Conrad of North Dakota and Republican Judd Gregg of New Hampshire in the Senate. ... Mr. Wolf says the commission would be 'a 16-member panel that would look at everything--from what the government is required to spend on mandatory entitlements to spending on all other programs to tax policy.' ... They're correct that current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities. ... The real goal is to get GOP cover for tax increases so Democrats aren't run out of town in 2010 and 2012 for blowing up the national balance sheet. ... In 1983 Ronald Reagan and Congressional Republicans agreed to decades of job-destroying increases in payroll taxes to 'fix' Social Security, which you may have noticed still isn't fixed. ... Democrats would agree to means-tested entitlements, which means that middle and upper-class (i.e., GOP) voters would get less than they were promised in return for a lifetime of payroll taxes. ... New taxes will only reduce the pressure to cut future spending", my emphasis, WSJ Editorial, 29 December 2009:

Is Romania a better credit than Uncle Sam? Moody's gives Romania a Baa-3 rating. Why?

The GOP should tell Obama and Pelosi, "No tax increases. No hell. No way. We remember Bush the Elder's promise and won't be fooled again". As for means-tested entitlements, consider if tax and social security policy are to be reviewed, what that implies for Roth IRAs.

1 comment:

Anonymous said...

Moody's gives Romania a Baa-3 rating. Why?

Well... maybe cause Romania is a third rate debt issuer... and Moody's can "afford" to be kinda truthful about the quality of the debt.

Imagine if the raters really assessed the US accurately... the whole ponzi would fall down in a second... what about the UK?

Imagine the US Congress having a "come to Jesus" about the level of fed spending...

Why don't they address the military budget? Do they have too many paymasters in the military-industrial complex?

The government goes down the tax increase path at their own peril. Voters aren't in the mood for that kind of solution now. Unless it's aimed at the very wealthiest. Good luck with that.