I'm seriously wondering when the first year will be when we actually lower spending. No, not the projected spending, the actual spending. As in, spending less than the year before. I don't think it will happen during Obama's tenure, and maybe not even during the next presidency.

I'm betting that we don't cut deficit spending below 1 trillion a year for the next six years. Meaning we will get up to $20 trillion in debt. At that point, maybe something serious will finally be done.

[QUOTE=cheesehead;268263]As I understand it:

When Social Security redeems some of those bonds, the Treasury has to have enough cash for that. (Soc Sec can't sell the bonds to anyone else; it can only present them to the Treasury for redemption.) If Treasury happens not to have enough cash to redeem the bonds from Soc Sec, normally it would sell enough bonds to other parties to raise the cash. But if that would exceed the debt ceiling, it can't.[/QUOTE]

You are correct about the non-marketability of the T-bonds placed as markers in the Social Security and Medicare trust funds as IOUs for government having borrowed and spent the surpluses of the past few decades. But here is the interesting part, which prompted my pointed (rhetorical) question about the Obama Social-Security-doomsday threat: Those intragovernmental borrowings [b]are already factored into the debt ceiling numbers[/b]: That is why the ceiling is northward of $14 Trillion, rather than around the $10 Trillion figure for "debt held by the public" which excludes such trust-fund borrowings.

That is, Treasury issuing more open-market debt in order to replace some of those IG borrowings with cash [b]has no effect on the total outstanding debt subject to the ceiling[/b]. That's why it was so disingenuous (although perhaps politically effective) of the president to make such a statement. Again, I suspect the real reason Treasury might well be loath to make such IG-redemption bond issuance is that, absent both a ceiling agreement and with the Fed (temporarily) having ended its bond-buying scheme, Treasury was rightly wary of the kinds of rates bond investors might demand, since with so much debt-issuance to come and the illusion of any kind of self-sustaining economic recovery having vanished, even a small rise in Treasury rates (and all the consumer-borrowing rates tied to them) would be very bad for the economy.

Another interesting post-ceiling-raise note: I was having a discussion last weekend about the "hardness" of the August 2nd deadline given by Treasury, and surmised that in fact the deadline was far more squishy than most of the heated debate and media coverage would have had us believe. In other words, I believe Treasury has numerous "back channel" ways of (at least on a short-term basis) bridging shortfalls. The latest Treasury-debt numbers bear this out, though details of where the bridge loans came from are as yet scant:

[url=http://www.zerohedge.com/news/gross-us-debt-surges-240-billion-overnight-us-debt-gdp-hits-post-world-war-ii-high-972-official]Gross US Debt Surges By $240 Billion Overnight, US Debt To GDP Hits Post World War II High 97.2%, Official Debt Ceiling Increase Only $400 Billion[/url]
[quote]Two things happened when the Senate voted in the "Bipartisan" plan into law yesterday: i) deferred debt on the Treasury's balance sheet finally caught up with reality, and ii) as a result of i) America's Debt/GDP just hit a post World War 2 High of 97.2%. Because as the [url=https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=11080200.pdf]Daily Treasury Statement[/url] as of last night indicates, total US marketable debt surged by $124.6 billion, while debt in intragovernmental holdings (Social Security, Government Retirement Accounts, etc), soared by $113.6 billion, for a combined one day change of $238.2 billion, the single biggest one day increase of US debt in history.[/quote]

[QUOTE=ewmayer;268311]You are correct about the non-marketability of the T-bonds placed as markers in the Social Security and Medicare trust funds as IOUs for government having borrowed and spent the surpluses of the past few decades. But here is the interesting part, which prompted my pointed (rhetorical) question about the Obama Social-Security-doomsday threat: Those intragovernmental borrowings [b]are already factored into the debt ceiling numbers[/b]: That is why the ceiling is northward of $14 Trillion, rather than around the $10 Trillion figure for "debt held by the public" which excludes such trust-fund borrowings.
[/QUOTE]

I looked for data on the following question, but did not find it:

What would the deficit be now if the Bush tax cuts had not happened?

[QUOTE]What would the deficit be now if the Bush tax cuts had not happened? [/QUOTE]

Whatever might have been collected as additional taxes, the politicians would have long since spent with no measurable decrease in the debt.

DarJones

[QUOTE=ewmayer;268311]
<snip>

[/QUOTE]

The following seems clear:

[url]http://www.cnn.com/2011/OPINION/08/04/owens.job.crisis/index.html?hpt=hp_t1[/url]

[QUOTE=R.D. Silverman;268323]The following seems clear:

[url]http://www.cnn.com/2011/OPINION/08/04/owens.job.crisis/index.html?hpt=hp_t1[/url][/QUOTE]

Yep, it's right back to the 1992 Clinton-campaign mantra, "It's the economy, stupid." And most folks outside the DC and Wall Street bubbles know that the stock market is not the economy, especially after hearing for most of the past year about record corporate profits and Wall Street bonuses and waiting in vain for any of that windfall to trickle down to them by way of some actual jobs-creation.

The article focuses on the distraction that was the debt-ceiling theater, but the fact is, the government has had 3 full years to deal with the fundamental rot in the economy - the papering-over of a deteriorating middle-class wage base by way of debt-expansion - and instead squandered multiple trillions in new-printed and borrowed money bailing out Big Finance and many of the same multinational corporations which have been so busily moving jobs overseas at the same time they use accounting tricks to avoid paying taxes on the resulting profits, thus shifting an ever-increasing share of the tax burden onto the same middle-class whose earnings capacity they have eviscerated, with the complicity of an economic-delusion-embracing federal government. Time to pay the piper.

Fun fun day at the markets today. Italian banks were suspended repeatedly. FTSE futures and gilts were suspended for over an our too. Watch out for a bounce though if tomorrow's jobs report is not as bad as expected. Market expectations are pretty low now so a bounce of the dead feline variety is certainly a possibility. Beyond that I think we have a fun Sept/Oct ahead of us.

Grantham advised pulling all money in April. Barry Ritholtz is also expecting at least a 25% correction. And of course, Bob has taken is money out on a one month holiday. All significant indicators.

[QUOTE=garo;268335]Grantham advised pulling all money in April. Barry Ritholtz is also expecting at least a 25% correction. And of course, Bob has taken is money out on a one month holiday. All significant indicators.[/QUOTE]

Barry R also has a similar personal-travel indicator as George does around here: George going on a vacation correlates much more than random chance would predict with a new M-prime being found, Barry going on vacation correlates oddly with wild market action. Fittingly, at 8am NY time today Barry posted thusly:

[url=http://www.ritholtz.com/blog/2011/08/brace-yourselves-im-traveling/]Brace Yourselves, I’m Traveling[/url]
[quote][i]By Barry Ritholtz - August 4th, 2011, 8:00AM[/i]

Brace yourselves, I am heading to Leens Lodge in Maine for David Kotok’s Shadow Federal Reserve Committee/Pre-Jackson Hole/Fishing Trip. Via the wonders of Instagram, I will do regular updates when the limited connectivity allows (you can follow it on my Twitter feed).

Regular readers will recall that whenever I travel, the markets seem to do funky things. Like Flash crash, collapse, whipsaw, and flop about. My West Coast swing took me through San Diego, LA and Vancouver last week, and it was the worst week since October 2008. I leave for Maine today, and the futures are already getting shellacked.

I am not making claim to any sort of causality, but I do find the correlation terribly amusing.

More shortly . . .[/quote]

[QUOTE=R.D. Silverman;268315]I looked for data on the following question, but did not find it:

What would the deficit be now if the Bush tax cuts had not happened?[/QUOTE][URL]http://www.cbpp.org/cms/index.cfm?fa=view&id=3036[/URL]

[QUOTE=R.D. Silverman;268315]I looked for data on the following question, but did not find it:

What would the deficit be now if the Bush tax cuts had not happened?[/QUOTE]This graphic is also from the CBPP, but I haven't found the article it is from yet....

[QUOTE=schickel;268399][URL]http://www.cbpp.org/cms/index.cfm?fa=view&id=3036[/URL][/QUOTE]

This should be required reading for every voter and elected official.