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.

Obama’s State of the Union Address Dampens Hope for a Real Budget Action

From Heritage.org

The key question is whether the President’s freeze represents a first small step towards real fiscal responsibility or an attempt to divert nervous taxpayers’ attention away from larger spending increases elsewhere. The President’s continued support for a trillion-dollar health care expansion as well as yet another expensive stimulus bill suggests the latter.

Deficits and debts in plain English

From Axcessnews.com

National deficit

2010 Estimate: $1.4 trillion - CBO

What it is:

The deficit is the yearlong difference between "what the United States Government takes in from taxes and other revenues" and what the government spends. - U.S. Department of the Treasury.

What that means:

The projected deficit is the highest the U.S. has ever had, meaning the government has either been collecting less money, spending more, or both.

"The high deficits are an outrage" Chris Edwards, an economist at the libertarian CATO Institute in D.C., said. "They are unethical."

Others say the increased spending was necessary.

"It's clearly too much, but that has to be put in the obvious context of the recession," said Andrew Yarrow, vice president and director of Public Agenda's D.C. office. The group generally opposes higher deficits.

"Most would agree that the government had to do something," he said.

Michael Linden, associate director for tax and budget policy at the Center for American Progress, said, "The current deficit is not a concern. It is very high, but that's mostly a function of the emergency spending that had to happen."

CAP is a progressive group founded by former Clinton administration officials.

The deficit isn't just caused by spending, Linden said. The government has collected considerably less tax revenue this year because people were making less and because the government wanted to stimulate the economy by letting people keep more of their own money, he said.

Public debt

2009 Calculation: $7.6 trillion - CBO

What that means:

The public debt consists of all the deficits of previous years added together. It is all the debt owed by government branches. - U.S. Department of the Treasury.

Public debt is often confused with national debt, an estimate that includes the money different branches of government owe to one another and is therefore considerably higher than public debt. It's the national debt the Senate voted to raise this week.

What that means:

For most of national history, the U.S. didn't have a public debt.

"Other than during the Civil War and the World Wars, the U.S. largely balanced its budget until the late 1960s," Yarrow said.

U.S. public debt has been building up for the last half century.

"It's really the spending that's out of control," Edwards said. Wars over the past couple decades, domestic spending and tax cuts during the Bush years and recent stimulus plans have been expensive, he said. "Both parties are to blame."

Not all say the high debt is a problem.

"Right now the debt is at a manageable level," Linden said.

"It really can't get too much higher" without some risks coming into play, he said.

Lowering debt would mean making some sacrifices.

"In many ways, Americans have really wanted to have it all," Yarrow said.

"They've wanted to have more spending, but they've wanted to pay less in taxes, and that just doesn't add up," he said. "The government has played along with them."

Long-term effects of the public debt and deficits

The public debt "doesn't have any effect in the near term," Linden said. "It's a high public debt, but it's not too much of a burden. The problem is if it continues to rise."

But Yarrow cautioned, "If we do nothing, entitlement programs," including Medicare and Social Security, "will compose all of the budget."

The debt will hit younger workers the hardest, Edwards said.

"There's a huge threat of enormous tax increases for young workers in the future," he said. "The increasing power of the elderly lobby will put pressure on politicians to raise taxes on young workers."

Many countries, waiting on the U.S. to pay back loans, are starting to question the value of holding U.S. debt, Yarrow said.

If these countries were to pull money out of U.S. markets, they could cause "severe panics in financial markets," he said.

This debt may be a problem for future generations.

"Money borrowed by the federal government must be paid back by future generations with interest," Rep. Mike Pence, R-Ind., said in a press release this week.

"There are a lot of ways this can hit individuals down the road," Yarrow said. "And not too far down the road."