Obama proposes cuts to social security and medicare

[solanis]

The article says it would only be affected if the posturing leads to a default and they don't provide deficit reduction plans. The debt ceiling really has no bearing other than causing the US to default.

it will be hurt if they cause a default, and it will be hurt if they avoid a default without any debt reduction plans. if the US defaults, that's bad. if the credit rating goes down, that's also really bad. I can explain why if you need.

[Kuya]

you don't understand, kuya. that press release means that the treasury's rating is under review right now. they can maintain the AAA rating, or get downgraded. moody's said in that press release that if a default occurs, the AAA is gone for a while. if the default is avoided, they will likely maintain the AAA but with a negative outlook, which means periodic reviews and a credit downgrade. either outcome will send shock waves through the international market.

in summary, that press release means that we can't just put a bandaid on it anymore.

Yea, okay, so exactly as i said, if no deficit reducing deal comes out of this, the US's credit won't be reduced. It's a good idea not to do it now, since there's high unemployment and cutting spending (and raising taxes) is deflationary.

[archibaldcrane]

I think we should raise taxes so that the US doesn't have it's credit rating hurt, since that would be bad.

[Tyche]

it will be hurt if they cause a default, and it will be hurt if they avoid a default without any debt reduction plans. if the US defaults, that's bad. if the credit rating goes down, that's also really bad. I can explain why if you need.

You just repeated what I posted.

[solanis]

Yea, okay, so exactly as i said, if no deficit reducing deal comes out of this, the US's credit won't be reduced. It's a good idea not to do it now, since there's high unemployment and cutting spending (and raising taxes) is deflationary.

do you know how credit ratings work? I'm just curious, I have no idea if you do or not.

[Kuya]

do you know how credit ratings work? I'm just curious, I have no idea if you do or not.

Go ahead and explain it, but the credit rating agency hasn't said that it will reduce the credit rating unless the US reduces the deficit this instant, so i don't care.

[solanis]

Go ahead and explain it, but the credit rating agency hasn't said that it will reduce the credit rating unless the US reduces the deficit this instant, so i don't care.

okay, here's a simplified version for you. I feel like I should put a disclaimer in here that this is very basic. in fixed income, credit ratings essentially rate what the likelihood is that the issuer will default. more importantly, credit ratings determine the interest rate a debt security needs to pay. the US treasury at the moment has a AAA rating, which means it can pay an extremely low interest rate. it also means that treasury instruments are considered risk-free, which is part of why they're so popular. any change in the rating ends this; you guys keep ignoring that if a default is avoided but no debt solution finds trajectory, the treasury will be rated a AAA with negative outlook, subject to further periodic reviews. this potentially fucks with investor faith, as well as the interest rate and the value of pre-existing securities, especially those with long duration. what it means is that they need to prevent a default with a realistic solution. that's all.

[Yabby]

AAA rating doesn't mean shit anyways. If it did the banks wouldn't of been able to fuck over half america in the first place.

[archibaldcrane]

what it means is that they need to prevent a default with a realistic solution.

says the guy who wants 0 tax increases

[Demosthenes11]

says the guy who wants 0 tax increases

and thinks it's realistic for the government to have close to 0 waste

[Kuya]

okay, here's a simplified version for you. I feel like I should put a disclaimer in here that this is very basic. in fixed income, credit ratings essentially rate what the likelihood is that the issuer will default. more importantly, credit ratings determine the interest rate a debt security needs to pay. the US treasury at the moment has a AAA rating, which means it can pay an extremely low interest rate. it also means that treasury instruments are considered risk-free, which is part of why they're so popular. any change in the rating ends this; you guys keep ignoring that if a default is avoided but no debt solution finds trajectory, the treasury will be rated a AAA with negative outlook, subject to further periodic reviews. this potentially fucks with investor faith, as well as the interest rate and the value of pre-existing securities, especially those with long duration. what it means is that they need to prevent a default with a realistic solution. that's all.

What you just explained to me is what happens when you have an AAA rating and what happens when you don't. That's swell, but i'm saying we don't need to do deficit reduction right this instant when unemployment is near 10%, because cutting spending and increases in taxes would exacerbate this.

[Kuya]

Maybe the Obamer administration thinks that if you do deficit reduction now, the deflationary effects won't be around by the time 2012 rolls around, and he can ride the gravy train back into the white house. In fact, one of the arguments that some democrats are using right to convince some liberals that we really need to do deficit reduction right now is that if we do deficit reduction right now it will be off the table later and then we can focus on some sweet ass liberal agenda.

[Demosthenes11]

Maybe the Obamer administration thinks that if you do deficit reduction now, the deflationary effects won't be around by the time 2012 rolls around, and he can ride the gravy train back into the white house. In fact, one of the arguments that some democrats are using right to convince some liberals that we really need to do deficit reduction right now is that if we do deficit reduction right now it will be off the table later and then we can focus on some sweet ass liberal agenda.

dude, if we decrease services now for social security, medicair, and medicade, maybe we can focus on other things like provide more services for our retired people

[aurik]

Hey as much as solanis lives in a fantasy world, he has this one right. Without a reasonable plan on how to reduce the debt:gdp ratio, the cost of the existing debt will go up.

Whether that means austerity measures, tax cuts, or a mix of the two, the government can't simply spend without limit and eternally maintain the faith of their creditors.

(I on the other hand have moved most all of my assets out of US$ over the course of the past 2.5 years, so I'm feeling pretty good about things)

[Yabby]

Without a reasonable plan on how to reduce the debt:gdp ratio, the cost of the existing debt will go up.

I don't think anyone thinks this is a false statement. But the only way to fix it is to cut spending (And that means doing it to the big 3, anything else is so small it wouldn't even put a dent in it) or raise taxes.

[Plow]

A scathing attack from Glenn greenwald against Obama:

Spoiler: show

http://www.guardian.co.uk/commentisf...-security-cuts

He is so shrill.

I especially loved the direct claim that Obama considering cuts is accomplishing the exact same thing as Bush, i.e. privatization.

I have a question, Kuya.

Can you show me one single instance of Obama publicly supporting the cuts you're talking about?

[Kuya]

Cuts to social security and medicare?

[Plow]

Yes. All I can find is hearsay, and the white house saying it's not true.

[Demosthenes11]

...is that a joke?

[Demosthenes11]

just be sure, you are asking for proof that obama wants to cut spending for social security and medicare?