Posts Tagged ‘entitlement reform’

Captain Rick: Final U.S. GDP for Q4 2013 was a disappointing 2.4%, downgraded from the earlier estimate of 3.2%. Early estimates are notoriously optimistic. This GDP figure sounds a wake-up alarm that America is stuck in the GDP ‘Anemic Zone’ … a place between zero real growth and ‘Recession’. 

GDP (Gross National Product) is the broadest means of quantifying the health of an economy. GDP is the monetary value of all the finished goods and services produced within a country’s borders.

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BLUE LINE: 3.0% GDP Growth is required to keep up with U.S. Population Growth. GDP above the blue line represents real growth that adds real jobs. GDP below the blue line indicates real economic decline that is loosing real jobs. GDP below the blue line, but above zero line (‘Recession’), is what Captain Rick calls the ‘Anemic Zone’.

RED LINE: 2.24% GDP Growth is the average of what the U.S. economy scored in the past 8 quarters (2 years). This demonstrates that the U.S. economy is stuck in the economic ‘Anemic Zone’…not mustering enough growth to keep up with population growth. 

What caused the recent GDP decline?

Weakness in the housing sector is a factor. Investment in residential real estate slowed for the first time in three years. I see that as good, as the previous pace was heading rapidly towards another real estate bubble.  Real estate values have peaked and have begun decline in some areas of the U.S., like Gilbert, Arizona that led the value resurgence a few months ago.  

Perhaps the decline in federal QE (debt) spending played the biggest role as a result of the $20 Billion reduction QE (debt) spending per month. The latest GDP decline demonstrates the power that debt spending can have on the economy. If the U.S. were to curtail the remaining $65 Billion in QE debt spending per month, the U.S. might slip into recession. The bottom line is that the U.S. QE debt spending helps the U.S. economy look like its only anemic…when it is actually in recession. This will play out as the Fed is forced to reduce QE debt spending to keep the U.S. from going over the new U.S. Debt Ceiling, recently raised to $17.2 Trillion by the U.S. Congress.

U.S. Fiscal Reality Check

U.S. GDP: $16.1 Trillion

U.S. National Debt: $17.4 Trillion (already exceeds new ceiling), ($55,000 per citizen, $151,000 per tax payer)

U.S. Debt held by foreign countries: $6 Trillion

U.S Federal Spending: $3.5 Trillion

U.S. Federal Revenue: $2.9 Trillion

U.S. Federal Deficit: $0.6 Trillion

Source: USDebtClock.org

What does this GDP data mean concerning the future of America?

America is stuck in a land of anemic growth…actually declining in real growth because its economy can not consistently rise above 3% growth … a level required to produce enough jobs and income to keep pace with population growth. In reality, this means that America is declining in economic strength. In the coming few years America faces an astronomical increase in expenditures due to entitlement programs like Social Security, Medicare and welfare programs like Medicaid and Obamacare. America’s relatively level revenue will not be able to cover the mushrooming expenditures. Congress will not be able to address this problem by simply ‘kicking the debt can down the road’ as it has in recent years. At some point soon, the fiscal mess that is brewing will explode as America plunges over the pending ‘real fiscal cliff’.  At the bottom lies America as a third world country.

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Interesting ATRIDIM NEWS JOURNAL Report Categories:

GDP

U.S. Debt Crisis

Economy

Entitlement Reform

Social Security

Medicare

Medicaid

ObamaCare

Captain Rick’s Fiscal Cliff Course 101

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Captain Rick: Thomas C. Patterson, a former Arizona State Senator, sees the Compact for America as a test to see if Americans are still able to take their future in their hands or if they are content to see America continue its decline. States have constitutional authority to amend the U.S. Constitution to require a balanced budget. This is a ‘long shot’ but it offers a ray of hope to save America from pending fiscal decline.

The U.S. Congress recently raised the U.S. National Debt Ceiling to an astronomical $17.2 Trillion, exceeding U.S. Gross National Product … a wake-up call for any nation. The U.S. Congress raised the debt ceiling to accommodate current spending levels and thus kicked ‘America’s debt can’ down the road again for the Nth time to deal with after the fall election.  The sad fact is that with the cost of entitlement programs like Social Security, Medicare and pure welfare programs like Medicaid, greatly expanded by Obamacare… U.S. spending is mushrooming at an alarming pace, while revenue is increasing at a snail’s pace that can not keep up. I see this resulting in America sailing over the real ‘fiscal cliff’ in the not too distant future… an event that has the potential to reduce America to a third world country.

I invited Thomas, whom I have long admired for his excellence in thinking, to present guest commentary. With his acceptance, I asked him to tell us why his commentary is important to Americans. His reply:

Thomas C. Patterson: “I see the Compact–a constitutional convention of the states–as a test for Americans.  Are we still able to take our future into our hands, like our founders did, to forge the nation we want or are we content to see America continue its decline?  Do we care enough about our posterity, as our founders did, to undertake the most difficult, improbable shared national initiative in our time or will history judge us as standing by while a nation founded in liberty slides into oblivion?”

ABOUT: Thomas C. Patterson is a graduate of Yale University and the University of Nebraska. He was elected to the Arizona State Senate in 1989, serving as minority leader from 1991 to 1992 and majority leader from 1993 to 1996. Patterson was the author of legislation creating Arizona’s charter school system and welfare reform program. Until 1998, he was a practicing physician and president of Emergency Physicians, Inc.. Patterson also served as president of the Arizona chapter of the American College of Emergency Physicians. In 2000 he became chairman of the Goldwater Institute. Thomas is a retired physician and resident of Paradise Valley, Arizona.

ATRIDIM NEWS JOURNAL

Guest Commentary

by

Thomas C. Patterson

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More Americans than ever feel our federal government has been permanently taken over by special interests and collectivists.

Dependency on government is reaching ominous levels. Spending that exceeds income has become part of our political culture. We feel like shouting that our debt is dangerously high and that it’s immoral to pass on to future generations the consequences for our self-indulgence.

Yet realistically, there doesn’t seem to be much we can do about it. Until maybe, just maybe, now.

The answer to our despair may well lie in the Compact for America, an agreement among the states to come together to propose a Balanced Budget Amendment to the United States Constitution. This idea is so promising and dynamic that is gathering momentum across the states, including ours, where it is known as HB 2305.

Here’s the skinny. The U.S. Constitution gives the states the power to call a constitutional convention, as a protection against central government overreach. The framers’ expectation was that once every generation or so, states would need to convene and tweak the Constitution to respond to evolving conditions and to protect the rights of people from the inevitable tendency of power to centralize.

The framers were prescient in understanding that the states would need this privilege, but for one reason or another the states have never called a convention. Every amendment proposed to the Constitution has come through Congress, the other authorized pathway.

It is said that the founders didn’t include a balanced budget provision in the founding documents because they thought it unnecessary. Now that incomprehensible levels of fiscal recklessness have become the norm, the potential need for the states to intervene is clear.

The problem is that, since the states have no experience with a convention, several concerns have arisen over its execution. How would the convention delegates be selected, how would votes be apportioned, how would leadership be chosen? More importantly, what about a runaway convention? What would stop interest groups from taking over the convention and bending the Constitution for their own hot-button issues?

It’s worth remembering that any proposed amendment would have to be ratified by three-fourths of the state Legislatures. But these are serious questions asked by serious people and they deserve answers.

Here’s the genius of the Compact for America. It allows states to know the answers to all the pertinent questions, including exactly which amendments may be considered, before they sign on. When state Legislatures pass a resolution agreeing to the contact, they become part of a constitutionally recognized organization of states created for the express purpose of proposing constitutional amendments. The selection process for delegates, convention logistics and even the text of the amendment would be in the compact document itself.

Would this be difficult? Would there be opposition from all sides? Are there still questions to be answered? Yes, yes and yes. Vast private and government interests are heavily invested in business as usual. Moreover, compacts require the blessing of Congress, although this has been previously granted.

But the Compact for America isn’t constitutional craziness, like annulment or secession. This isn’t some sort of redneck revolt. It’s an opportunity for states to use the clear intent and language of the Constitution to rein in the federal government and put the republic on a more sustainable course.

Unquestionably, the Compact for America would represent change and innovation on a scale many may find unsettling. But this is our challenge. Are we, the political descendants of founders who risked everything to create the most free and prosperous government in the history of the planet, now so timid that we are afraid to use the tools they gave us to defend ourselves from tyranny and decay?

The risk larger than the Compact is the continuation of politics as usual. If we continue doing the same thing, it’s highly probable we’ll get the same results.

Our present predicament was anticipated by the founders. It is precisely the reason they gave the states the power to amend the Constitution. They would very much urge us to use it.

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Tom’s previous ANJ Commentary: “Look behind the Obamacare Curtain”

Captain Rick: Walmart, the world’s largest corporation turns everything it touches into gold, whereas  the U.S. government has succeeded in breaking almost every good program created … and the U.S. economy.

I suggest we hire Walmart to fix the mess that our President and Legislature have demonstrated they are totally incapable of accomplishing.

My email to President Obama:

Mr. President,

I have concluded that you and the 535 members of our legislature are ineffective and incapable of fixing our economy and the many good programs that have been broken. I have a solution, but first I want to remind you of some facts which relate to the many failures of your administration and those that preceded:

a. The U.S. Postal Service was established in 1775. You have had 238 years to get it right and it is broke.

b. Social Security was established in 1935. You have had 78 years to get it right and it is broke.

c. Fannie Mae was established in 1938. You have had 75 years to get it right and it is broke.

d. War on Poverty started in 1964. You have had 49 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more…and it is broke.

e. Medicare and Medicaid were established in 1965. You have had 48 years to get it right and they are broke.

f. Freddie Mac was established in 1970. You have had 43 years to get it right and it is broke.

g. The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You had 36 years to get it right and it is an abysmal failure…and it is broke.

You have failed to fix any of the many government service failures, while overspending our tax dollars to drive America $17 trillion into debt, an amount exceeding the combined debt of all other nations on earth.

AND YOU WANT AMERICANS TO BELIEVE YOU CAN BE TRUSTED WITH A GOVERNMENT-RUN HEALTH CARE SYSTEM?

Lets pause and examine an American corporation that has a track record of turning everything it touches into gold.

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Photo above shows Walmart’s current logo used since 2008

Walmart was founded by Sam Walton in 1962…when I was in high school, just before the birth of Medicare and Medicaid. Since then the Walton family transformed it into the world’s largest corporation with $469 Billion in revenue, 8500 stores in 15 countries with 2,200,000 employees.

If Walmart were a country it would have the world’s 26th largest GDP…but more importantly, it would be the world’s most profitable country…unlike the U.S. which goes $1 Trillion farther into debt each year, with all of its programs on ‘death row’.

I love my country and hate to see you and our legislature destroying it. With all sincerity, I respectfully urge you to consider hiring Walmart to manage America’s failing economy and programs. But, I think that if that were to happen, the Walton’s would fire you and most of the legislature.

Captain Rick

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Economy

U.S. Debt Crisis

Captain Rick’s Fiscal Cliff Course 101

President Obama

Obamacare

Entitlement Reform

Corporations

Captain Rick: U.S. entitlement programs are going broke. Disability will be broke by 2016, followed by Medicare by 2024 and Social Security by 2035. These sobering projections were made by the U.S. Social Security Administration. This report presents an in-depth study of the U.S. Disability program.

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Disability recipients in jeopardy
Nearly 11 million people depend on federal disability payments.
Unless changes are made, beginning in 2016, the revenues coming in would not be sufficient to cover all of the disability payments.
Unless taxes are increased, disability benefits will have to be cut or the number of claimants reduced.

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Disability soared 27% since the beginning of the Great Recession
The number of people collecting federal disability has soared to nearly 11 million, up from 8.7 million in April 2007.
The federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Causes for the Disability Program Increase
The Great Recession pushed many people into the disability program because it was a safety net to save them from economic disaster.
The aging of the baby boomer generation is one of the primary drivers. Workers typically enter the disability program in their 50s.
Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.
With better surgical techniques and body armor, soldiers are ten times as likely to survive today’s wars, according to the Veterans Administration. But soldiers often come home with severe injuries. The recent decision to recognize post traumatic stress disorder as a disability has also lifted the number of benefits claims. The Veterans Administration noted that illnesses tied to the cancer-causing chemical defoliant Agent Orange used in Vietnam are also now viewed as a disability.  
More women have entered the workforce in recent decades, making them eligible for the program should they become disabled.

Americans are abusing the system because of the ease of entering the program. It’s morphed from a program that pays benefits to stroke victims and cancer patients to people with mental illness and chronic pain.

Prognosis for a Disability Program Solution
The disability program … the smallest of the three, will be the first that Congress has to deal with.
There is not much consensus about entitlement reform on Capitol Hill these days. Attempts to rein in Medicare spending have gone nowhere recently.

Disability Program Solution Possibilities

Solution 1
Congress could authorize increasing the amount of payroll tax supporting the disability program from its current 1.8%. An increase paid by workers and employers by 0.2% each would keep the program solvent for 75 years. But there’s little appetite among lawmakers to raise taxes these days.

Solution 2
Congress could authorize increasing the share of Social Security payroll tax going toward disability, instead of Social Security. Currently, the combined rate paid by employers and workers is 12.4%. The disability program’s rate is 1.8%, while the retirement system’s rate is 10.6%. Congress could authorize increasing the share going toward disability payments to 2.6% for two years and then slowly cut it back to 1.8% by 2030. This would keep the disability fund solvent until 2033, but it would shorten the retirement system’s predicted lifespan by two years, to 2033.

Solution 3
Congress could take the most controversial approach by raising the bar for eligibility for disability benefits.

Captain Rick’s Disability Solution Preference: I believe Solution 3 is the most intelligent solution … but considering how welfare-oriented the U.S. Congress is becoming, I do not hold much hope for this solution. I believe Congress will take the most cowardly path … Solution 2 … and rob money from Social Security to pay the rapidly expanding crowd who are abusing Disability. Do you agree/disagree? I welcome you to comment below.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

Medicare: https://atridim.wordpress.com/category/medicare/

Social Security: https://atridim.wordpress.com/category/social-security/

Medicaid: https://atridim.wordpress.com/category/medicaid/

Tax Reform: https://atridim.wordpress.com/category/tax-reform/

Captain Rick: Dr. Thomas C. Patterson, an Arizona critic of Obamacare Medicaid expansion, explains why this expansion is bad and encourages all to “look behind the curtain.” These are important words as the Arizona Legislature votes on this monument expansion of welfare spending. Arizona is one of about 30 states that have not yet hitched their ‘train car’ to the ‘Obamacare Medicaid Expansion Train’ that is headed down a track that ends a few miles ahead at the edge of the real ‘Fiscal Cliff.’

Dr. Thomas C. Patterson is a graduate of Yale University and the University of Nebraska. He was elected to the Arizona State Senate in 1989, serving as minority leader from 1991 to 1992 and majority leader from 1993 to 1996. Patterson was the author of legislation creating Arizona’s charter school system and welfare reform program. Until 1998, he was a practicing physician and president of Emergency Physicians, Inc.. Patterson also served as president of the Arizona chapter of the American College of Emergency Physicians. In 2000 he became chairman of the Goldwater Institute. Tom is a retired physician and resident of Paradise Valley, Arizona.

I asked Tom why he was contributing his words to Atridim News Journal. Tom replied “I write it because I don’t want to be part of the generation that let liberty die out on our watch or at least I want to know that I did what I could to prevent it. I would like some of the good things about America to be there for my grand-children.”

image Tom Patterson

The pressure from the Obama administration for Arizona to expand our Medicaid program is enormous. Gov. Brewer is on board and even some legislative conservatives seem to be wavering. But legislators should take one more look before they make what could be a fateful leap.

Here’s how it works. If we raise the eligibility requirements for Medicaid to 133 percent of Federal Poverty Level, the feds will drop additional subsidies of $1.3 billion annually into our state over the next three years.

Moreover, this raise can be accomplished with no general fund dollars. The state’s hospitals have agreed to pay additional taxes of $369 million to fund our share of the match. Gov. Brewer points out this is a phenomenal 10:1 “return on investment.”

When politicians use words like “investment” and “return”, your humbug detectors should start going off. If something seems too good to be true, it probably is.

First, the Obama administration pretty much struck out in their attempts to persuade states to establish insurance exchanges, so they’re frantic now to avoid a complete breakdown in the implementation of Obamacare. They’re pouring on the big bucks. But they’re spending borrowed dollars and that can’t last long.

For Arizona, taking on a financially unstable partner in a massive long-term venture wouldn’t be very smart. In fact, the feds are already considering extensive Medicaid cutbacks in their budget negotiations. The bigger point is that sharp reductions in the federal subsidy are a matter of when, not if. By 2020, even the promised subsidy ends. When that happens, Arizona will be left holding the bag.

That bag will be enormous. Of course, the rolls will be swollen by then with the eligibility expansion. But we will also be on the hook for the “woodwork effect”, the high number of patients who have been eligible for Medicaid but never signed up.

A 2010 Harvard study found that barely half of eligible Arizonans were signed up in AHCCCS (Arizona Health Care Cost Containment System), our Medicaid program. These are mostly younger, healthy people who don’t consume much medical care and don’t really need the insurance. If something happens, they can sign up any time.

But with the mandate under Obamacare to provide proof of coverage, the popularity of free insurance will skyrocket. In addition, employers with large numbers of low income workers may drop coverage or shift more workers to part time, making them Medicaid eligible under the new standards. Finally, people on SSI disability, a booming program, are automatically Medicaid eligible.

Medicaid costs have been ballooning 8 percent annually, compared to 1 to 2 percent economic growth. But apparently that’s not enough for the spenders. Total Medicaid spending under Obamacare is projected to grow from $400 billion to $900 billion by 2020. State budgets already stressed by high Medicaid spending will be in big trouble when they’re forced to pick up the tab.

The hospital tax is also deeply problematic. Hospitals are more than willing to go along, because it’s obviously in their best interests. But at heart, it is just a way to force paying patients to fund a welfare expansion that we can’t afford.

But there’s a bigger problem. The tax is unconstitutional unless approved by a two-thirds majority of the legislature. Proposition 108, a voter-passed amendment from 1992, states clearly that any net revenue increase to the state, including fees and special taxes, falls under its provisions.

The Brewer administration, recognizing it is unlikely that two-thirds of each house will sign off on their scheme, has tried to argue that the hospital tax is just a bureaucratically set fee and thus exempt. Whoops, there go the humbug sensors again. They’re not only almost certainly wrong, they’re playing with fire.

If they impose the bed text without legislative super-majority approval and it is later struck down, they would be in a world of hurt. They would lose their revenue and possibly their match and face gigantic Medicaid costs. Plus, there’s little meaning in prop 108’s super majority requirement if it doesn’t apply to this “fee”.

The more you look at this plan, the more serious problems keep bubbling up. Short-term, it has to be tempting to take the money. Ten years from now, the decision is going look a lot different.

Arizona legislators are under intense pressure to pass the Obamacare Medicaid expansion. They’re getting it from all sides.

“Do the math” the governor condescendingly demands, as if it takes special genius to figure out there is short-term gain in accepting these federal funds. “It’s your Christian duty” helpful ministers explain, apparently forgetting that Jesus preached personal compassion for the poor, not government lobbying.

Even the business community is on their case, claiming more Medicaid business will create jobs and stimulate the economy. Of course, if government spending really created net jobs, we would be awash in jobs because we have definitely tried massive spending in recent years.

The opponents of Medicaid expansion are commonly depicted as crazed ideologues blinkered by their opposition to Obamacare. After all, the creators of Obamacare were so frantic to get the states on board with the Medicaid piece that they agreed to provide near total funding initially for this nominally state-operated program. Even by 2012, they promise to provide 90 percent of the funds. Such a deal.

But Arizonans might be wise to look behind the curtain. As time rolls on, Obamacare is already defaulting on most of its key provisions.

For example, we were told that the average family would save $2500 annually on insurance premiums. It turns out the cost of health insurance will increase from $2100-$5000 yearly when Obamacare is fully implemented.

Obama himself promised that under his plan, “if you like your doctor, nothing will change”. Yet a recent poll from the consulting firm McKinsey estimated that over 40 million people will lose their employer-provided insurance. So much for that whopper.

The president also told us that no American families with incomes under $250,000 would see a tax hike. But there are over 20 new taxes in Obamacare. Many of them, like the tax on medical devices, a new tax on drugs, another tax on certain high-end health plans and reduced deductibility for medical expenses all fall squarely on the middle class.

There’s much more. We were told that Obamacare would cost “only” a trillion dollars over 10 years, that the costs would be partially offset by massive reductions in Medicare spending on the elderly, and that we would achieve virtually complete universal coverage. It’s all false, false, false. With a track record like that who could believe their next promise?

Gov. Brewer’s response is to create a “circuit-breaker”, a provision that calls for Arizona to revoke the benefits expansion if the federal funding falls below 80 percent. That sounds good and she is undoubtedly sincere. But she likely won’t be the governor when that day comes and whoever is will be under intense pressure to somehow maintain the program.

That’s the way the welfare state works, the “ratchet effect”. Whatever government provides, it’s never enough and the demands for more stuff never ceases. When benefits are granted, it’s nearly impossible to retract them.

So right here, in Arizona’s intense Medicaid debate, we see how Big Government rolls over and co-opts good people. It pulls the bait-and-switch, puts them in an untenable political position and forces them to support even this unpopular program that is certain to fail.

There is a growing recognition that Obamacare is an ugly hybrid, combining the worst aspects of government medicine and highly regulated private sector medical care. It was never intended by its advocates to be a permanent solution to America’s problems with affordability and access to care. Pres. Obama and others have candidly stated the real goal is a completely government controlled medical system.

That’s why it’s critical to stop Obamacare now and replace it rather than let it fail amid calls for a government takeover. We are going to end up either with medical care dictated by federal bureaucrats or one in which the power of free markets and patient choice prevail.

Real tort reform, price transparency, ability to buy insurance across state lines and many other possible reforms are out there, but we will never get them if the Obamacare train isn’t stopped.

Obamacare must have buy-in from the states to proceed. The stakes for the Legislature are enormous.

Captain Rick: After Tom’s commentary was posted, I asked Tom if my report served his words well. He replied “Everything is fine. Thanks for all your effort to alert Americans about erosions of our freedom. I am happy to be part of it”. Those words gave me great honor.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Medicaid: https://atridim.wordpress.com/category/medicaid/

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Fiscal Cliff Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Arizona Law: https://atridim.wordpress.com/category/arizona-law/

Arizona: https://atridim.wordpress.com/category/arizona/

Captain Rick: Here we go again. Treasury Secretary Tim Geithner warned Congress in a letter that U.S. borrowing will hit the debt ceiling on Monday, and that Treasury will begin using ‘extraordinary measures’ to prevent government spending from exceeding the legal limit of $16.394 trillion. On Monday, debt subject to the limit was just $95 billion below the $16.394 trillion debt ceiling. That allows for spending over $13 billion a day through next Monday. It makes my head spin thinking about how fast the U.S. spends money and that over $1 trillion of what it spends each year is borrowed money (deficit spending) that adds to the U.S. National Debt.

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The extraordinary measures include suspending the reinvestment of federal workers’ retirement account contributions in short-term government bonds. All told, the extraordinary measures can create about $200 billion of headroom under the limit — normally about two months worth of borrowing.

If America begins going over the ‘Fiscal Cliff’ on Tuesday, January 1, as all indications point to now, $600 billion in annual spending cuts and tax revenue increases will kick in and slow the generation of debt to half speed. This would double the period of time to 4 months remaining before extraordinary measures would be exhausted.

After the extraordinary measures run out, Treasury won’t be able to pay all the country’s bills in full and on time. At that point, the United States will run the very real risk that it could default on some of its obligations, such as making interest payments on America’s National Debt which total a staggering $260 billion per year. This would have a severe negative impact on America’s credit rating which would have a ripple effect of making it more costly for the U.S. Treasury to borrow money. At some point foreign governments, like Japan and China, which hold large sums of American debt, would slow lending or even curtail it. The American economy would grind to a halt and be thrust into a deep recession, dragging all world economies along with it.

Other solutions could be to default on Social Security, Medicare, Medicaid and other government program payments. We all can comprehend the immediate, massive, destructive effect that would have on society.

Thus, we can conclude that default of any kind  is not an acceptable solution. The only immediate solution will be to increase the national debt again. Those who have studied Captain Rick’s FISCAL CLIFF Course 101, know that its just a matter of time before raising the national debt ceiling will no longer be a workable option. This is why it is so important that the ‘Fiscal Cliff’ spending cuts and tax revenue increases take effect on January 1.

Captain Rick’s Dream for America

I find the manner in which the President and Republicans and Democrats in Congress are trading off fiscal ‘trinkets’, in an effort to fool America that they can come up with a better solution than the ‘Fiscal Cliff’ to solve America’s serious problem of thirst for debt … almost laughable.

The President and Congress should stop playing fiscal games. The current members of Congress should stay home on vacation for the rest of the year. A new slate of legislators will be sworn in on January 3, hopefully with a work ethic that is void of politics (I am holding my breath), and work towards raising the debt ceiling along with the creation of Fiscal Cliff 2 … another painful round of spending cuts and tax revenue increases that would finally balance America’s budget and eliminate deficit spending. Ideally, it would start on January 1, 2014, when the next raise of the national debt ceiling will most likely be required. Hopefully that would be the last need to raise the America’s National Debt Ceiling.

Perhaps Fiscal Cliff 3 could kick in on January 1, 2015 with another round of spending cuts and tax increases that would begin reducing America’s National Debt and its interest on the debt which will be well over $300 billion per year by then.

If America were to follow this painful fiscal road, our children and grandchildren could have a realistic chance to make a descent living and recapture some of the Great American Dream that kids growing up in America back in the 1950’s and 1960’s once had. I was one of them. They were great times that are ‘long gone’, but can be rekindled if we, the generations who helped create America’s fiscal ‘nightmare’, accept some sacrifices. I urge everyone in America to accept the ‘Fiscal Cliff’ with a ‘grain of salt’ as it becomes effective on January 1, 2013 and urge your legislative representatives to work towards achieving Fiscal Cliff 2.

View Captain Rick’s entire FISCAL CLIFF Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick:  Click and Play the video below to get an excellent 3 minute summation of the world’s 5 Global Risks, each of which can completely change the global outlook. There are two in Europe, one in the Far East, one in the Middle East and one in the U.S. … the pending Fiscal Cliff … potentially the biggest global risk of them all. 3 Fiscal Cliff scenarios are discussed of which one is following the current course of doing nothing. This would cause a 4% contraction in GDP and cast the U.S. into Recession. For the first time in a very long time our kid’s generation would be worse off than ours. Two other scenarios are discussed that offer hope. The conversation includes a statement that a fix must include compromise of tax increases and entitlement cuts. Mathematically, the problem can’t be fixed by addressing one side only.  We are fortunate that we have a currency that everybody still wants, so we still have some time to get it right by enacting proper tax and entitlement reform. We just need politicians that are willing to compromise, which could be the most difficult job of all.

FORTUNE Video by PIMCO CEO: http://money.cnn.com/video/magazines/fortune/2012/10/04/f-el-erian-pimco-ceo-global-risks.fortune/