Debt Ceiling or Debt Escalator

Well, soon the gov will need to act or not act on the Federal debt. We are currently, as I type this, at $14.25 Trillion with a debt limit (ceiling) of $14.3 Trillion. What does that mean? Well it means that the CONgress critters will need to decide on what to do. Spend more or seriously cut back. Now really, do you think that the Washington politicians can put a stop to their spending binge? I don't. They have not been able to in the past and they cannot now. Their reason will be that they cannot limit the debt or we will default on the debt or our economy will collapse. I hate to tell them, but our economy is collapsing, just slowly. We will see QE 3 probably by July, even though QE 1 and QE 2 have done nothing.

Remember the blog where I described debt and deficit? Well we are seeing both parties offering up plans to reduce our deficit by $4-5 Trillion over the next 10 years. Gosh, to most sheeple that sounds pretty good. I mean, we have a $14 trillion debt and we have a chance to reduce it by $4-5 Trillion, sounds good doesn't it? The problem is that they are talking about reducing the DEFICIT not the DEBT!!!! We currently have a predicted deficit for this year of about $1.65 Trillion. Let us look closer. $4-5 Trillion over 10 years means $400-500 Billion per year. If you keep running the same deficit as we are expected to have this year, which will likely climb, we would then subtract $500 Billion from $1.6 Trillion. This would still leave us a deficit of $1.1 Trillion! So over the next 10 years that our fabulous politicians are reducing our deficit we will be adding another $11 Trillion to our debt. By 2021 we could see a debt of $25 Trillion.

In 2010 we paid $413 Billion just in interest. Just since October 2010 until now we have paid $215 Billion in interest. At this pace we will pay $430 Billion in 2011. This is just interest payments. What do you think we will have to pay in 10 years if we have a debt of $25 Trillion? Some say the interest payments on the debt at $25 Trillion will be $1 Trillion!!

What is the solution? Well the politicians are saying we need to raise taxes on the rich. Again, that sounds good to the sheeple. I mean, the rich can afford it, right? Well, if I'm not mistaken it is usually "the rich" that start businesses, employ people and buy goods that keep other businesses in business.

Look at this Wall Street Journal article.
The Internal Revenue Service's income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers—those with salaries, dividends and capital gains roughly above about $380,000—paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the "millionaires and billionaires" Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That's five times Mr. Obama's 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion.

The Obama administration's spending request contains $2.627 trillion in receipts and $3.729 trillion in outlays for 2012.^[6] The Republican plan contains $2.533 trillion in revenues and $3.529 trillion in outlays. Neither keeps us from adding debt.

This shows me that we cannot tax our way out of this mess. We have to make some serious cuts in spending. THIS WILL BE PAINFUL FOR ALL OF US!!! But it need to be done. Our government needs to spend what they take in. They need to stop discretionary spending, reduce social handouts, revise Medicare and Medicaid and repeal Obama Care. It won't be easy, but the pain will be worse if we put it off.

People I have been telling you to prepare for some time. Well, time is running out, get to it.