Greenspan: High deficits could spark bond crisis

From: News.yahoo.com

The United States must move to rein in its massive budget deficits or it faces the risk of a bond market crisis, former Federal Reserve Chairman Alan Greenspan said on Sunday.

"We've got to resolve this issue before it gets forced upon us," Greenspan said of the ballooning U.S. debt levels.

He spoke as a panel, chaired by former White House chief of staff Erskine Bowles and former Senator Alan Simpson, is due to deliver a report on debt and deficits by December 1.

A draft report made public last week offered a series of politically tough tax and spending choices that would seek to reduce the debt by $4 trillion by 2020.

The suggestions received a lukewarm reception from some politicians and outright condemnation by others, including House of Representatives Speaker Nancy Pelosi, who pronounced the ideas "simply unacceptable."

Greenspan, who spoke on NBC's "Meet the Press," said he believed "something equivalent" to what Bowles and Simpson recommended would eventually be approved by Congress.

"The only question is, is it before or after a bond market crisis? Because there's no alternative," he said.

Congressman Phil Hare disputes existence of national debt

Chairman Of Joint Chiefs Of Staff Says National Debt Is Biggest Threat To National Security

From zerohedge.com:

Not China, not Russia, not North Korea, not Iran, not terrorists...According to Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, the "single biggest threat" to American national security is the US national debt, which is either $8.85 trillion (public debt), $13.4 trillion (total national debt), $20 trillion (total debt including GSE debt), or $124 trillion (total debt including unfunded obligations), depending on one's definition of the word "debt." And as Zero Hedge has long been warning, the imminent increase in interest rates (sooner or later), will eventually put the country in an untenable funding position. "Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit." The Chairman (the real one, not his pale imitation over at Marriner Eccles) politely forgot to add that the successful rolling of nearly $600 billion in debt per month is likely an even greater threat to national security.

Obama Policies Will Increase National Debt by $9.7 Trillion

From Opposingviews.com

“President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. . .The 10-year outlook by the nonpartisan Congressional Budget Office is somewhat gloomier than White House projections, which found that Obama’s policies would add $8.5 trillion to the debt by 2020.”

Obama Administration Using Accounting Gimmicks That Would Make Enron ‘Blush'

From Cnsnews.com

Rep. Jeb Hensarling (R-Texas) says the Obama administration is using an accounting “gimmick” in its budget by not including the debt owed by mortgage firms Fannie Mae and Freddie Mac.

“The accounting gimmicks that are used today would make an Enron and WorldCom accountant blush,” Hensarling told reporters. “The American people know that under the policies of this administration—under the policies of this Congress—we are drowning in a sea of red ink.”

Hensarling, a member of the House Financial Services Committee, joined a group of House Republicans Tuesday in announcing the introduction of a bill that would require President Obama’s Office of Management and Budget to include the liabilities of Fannie and Freddie in the national debt calculation.

Clinton Says U.S. Deficit, Debt a National Security Concern

From Businessweek.com

The record U.S. budget deficit and debt should be viewed as a growing national security concern, U.S. Secretary of State Hillary Clinton told lawmakers yesterday.

“We have to address this deficit and the debt of the U.S. as a matter of national security, not only as a matter of economics,” Clinton said in testimony to the House Appropriations Subcommittee on State, Foreign Operations and related programs. The panel was reviewing the U.S. foreign affairs budget for fiscal year 2011.

Budget Deficit Panel Is A Smoke Screen To Secretly Raise Taxes

From Americasnewsonline.com

President Obama used an Executive Order to create the Budget Deficit Panel, when it could not pass the Senate. Its appointees supposedly represent both Democrats, Republicans and Independents. Its name describes its duties. What can be done to alleviate a growing budget, that can lead to debt that will cripple the nation.

Fix the deficit first, Bernanke tells U.S. politicians

From Theglobeandmail.com

Over the course of almost four hours of testimony at the House financial committee yesterday, Mr. Bernanke was asked more about the country's record deficit and debt than any other subject, putting him in the middle of a debate that Democratic President Barack Obama and his Republican opponents in Congress appear eager to have but unwilling to resolve.

Mr. Bernanke stepped gingerly around queries that reflected the challenges of a country struggling to escape recession, yet were often political traps rigged to manipulate Mr. Bernanke into embarrassing one side or the other.

Seeking neutral ground, the Fed chief said it was "very, very important" that the administration and Congress come up with a credible plan to deal with the $1.6-trillion (U.S.) deficit. He stressed that the effort would pay immediate dividends by easing the minds of the investors who finance the government's operations.

Protecting Yourself from the Giant New Deficit

From Wsj.com

For every dollar in debt that Americans have paid off since they started cleansing their balance sheets in mid-2008, the U.S. government has borrowed more than $7. All the hard work by consumers to replenish their piggy banks may be for naught if big government budget deficits play havoc with the economy.

The Obama administration projected that the federal debt could double over the next decade, prompting Moody's Investors Service to warn that the pristine AAA credit rating of the U.S. "could come under downward pressure."

Investors need to account for the burgeoning federal budget deficit as they save for retirement, college tuition or homes. Uncle Sam's borrowing binge could set off a surge in inflation and push down the dollar, both of which would erode the value of savings. It could also push interest rates higher, hammering the value of the more than $1 trillion in Treasury bonds owned by households directly or through mutual funds. Income taxes, already set to rise, might have to climb further to help close the government's budget gap.

Voters Are Worried and Angry About Deficit

From Foxnews.com

The poll shows that 54 percent of voters say the deficit makes them feel worried, while 32 percent say they feel angry. Few -- 8 percent -- are okay with the new estimates that have the federal deficit growing to over $1.5 trillion dollars.

Furthermore, more voters -- 47 percent -- think President Obama's federal spending freeze proposal is just a gimmick that won't really help, while 37 percent, or almost four in 10, think it's an important step in reducing the deficit.