Obama says gov't must reduce staggering debt

It's time for massive cuts in defense spending.

Defense spending is a sparrow's tear compared to entitlement spending.

Obama talks, no one listens anymore. Certainly not markets. He will be one-term, if he even finishes that.

In a nutshell, there are several ways, good or bad for the U.S. to climb out of debt. First is just curbing government expense by trying to cut spending which is always easier said then done. Second is increasing tax which is relatively easier since tax rate hikes will be unavoidable in the next decade. Third is to inflate out of debt by quanititative easing to stabilize the economy. Fourth is to grow the labor force. Fifth is cutting the current account deficit by asking countries with current account surplus to share more responsibilities of the world economic recovery. Last of all they should wage a trading war by advocating a 25% import tariff on Chinese good as Donald Trump recently suggested until China's government caves in to appreciate its currency by 25%. If China were to sell all its U.S. investments it would help the economy by acting as a form of quantitative easing and fighting a liquidity trap that has been affecting the U.S. economy assuming the U.S. sold its debt a dollar on the dollar plus coupon. When China dumped its U.S. debt in a short period, the U.S. could buy the debt back a penny on the dollar. A $1 trillion debt becomes $10 billion dollars. It would be very painful for the moment, but create a bright future for the U.S. Hence some of these choices might be a major force shifting the paradigm in the next decade, but inflation will still be on the way and it's a matter of time for inflation to hit the U.S.hard again.

Novenachama,

Interesting post. I choose your Fourth as is to grow the labor force. I am to assume as through the private sector and through Govt policies that unleash that. As you used China for example when they embraced Capitalism from a state run economy after Mao from a poor starving cultural revoltion country to owe now we our national credit card to........And since they are buying our debt, if we return to number 4......Irony.

80 percent of the financial assests are held by the top ten percent richest Americans...so Republicans want to alleviate the debt by focusing on the 20 percent left??

A small portion of Republicans are deviously clever. The rest seem to be as smart as a bag of doorknobs.

A small portion of Republicans are deviously clever. The rest seem to be as smart as a bag of doorknobs.

Agreed...The rest seem stupid that this massive debt thing is not a good idea.

This stuff makes Harry Potter seem like reality. Thirty plus years of fake prosperity blew up as it was always going to. The debt was intentional and has nothing to do with politics.

Not bashing the USA here either. Every country is in the same race, just on different parts of the track. Japan still leading but USA and UK closing fast. Canada, Australia, China etc. hiding out in the pits right now.

He will be one-term, if he even finishes that.

Translation - I dont like Obama, so therefore I hope he is a one-term president.

Typical line of thinking for Americans when it comes to politics.

Here is the real deal: Obama has his work cut out for him on a number of things but overall has done a good job to date. The more glaring issue in the upcoming election is the crumbling of the GOP. They need to put forth a strong candidate to challenge Obama and there just doenst seem to be one....yet. My money would be on an "unknown" that is relatively young/new to politics. The GOP also needs to stop spending so much time opposing and demonizing Obama. They come off as sore losers and that wont work in the long run. They need to spend more time sealing bi-partisan solutions.

And of course the wildcard is a third party. America might just be ready for three parties.

medievaltimes:

Here is the real deal: Obama has his work cut out for him on a number of things but overall has done a good job to date.

66 percent of the country thinks we are going in the wrong direction.

The more glaring issue in the upcoming election is the crumbling of the GOP.

Crumbling? They wiped us out in the last election.They made historic gains in Congress. Obama needs a challenge or we Democrats are in deep trouble.

They need to put forth a strong candidate to challenge Obama and there just doenst seem to be one....yet. My money would be on an "unknown" that is relatively young/new to politics.

All they need is a candidate who has what ours doesn't - competence and leadership ability.

And of course the wildcard is a third party. America might just be ready for three parties.

Ho-hum. Yeah, right. Remember Nader in 2000???

yabits: It's time for massive cuts in defense spending

Translation: It's time for massive layoffs in the defense sector.

Leiberman2012 - Please give a link to the 66% statistic you gave. I doubt a poll (or reliable one at least) would only give two choices of: the country is headed in the right direction, or the country is headed in the wrong direction. Not calling you a liar but I would like a link to that poll so I can scratch a little bit beneath the surface.

The last election is a bit different from a presidential one. A campaign of demonization, opposition and scare tactics without offering any concrete solutions will not carry as much weight for the upcoming presidential election.

"Leadership" is a highly subjective word. People often confuse disagreeing with a politicians policies, and a policitian having bad leadership....they are two different things.

As for a third party that you dismissed, Perot got around 20% of the popular vote not long ago. There seem to be some pretty big gaps in policy between the two current parties. And there seem to be some gaps within the Republicans. Personally, I think a party that is conservative fiscally and liberal socially would resonate quite well in America....but what do I know.

You refered to "we Democrats". Not sure if you were including me, but for the record, Im not a Democrat.

“That’s why today, I’m pledging to cut the deficit we inherited by half by the end of my first term in office.” --President Barack Obama, February 2009

Tatanka,

Defense spending is a sparrow's tear compared to entitlement spending.

Why do so many think that cutting "entitlements" means eliminating the needs that they cover? Sure, Medicare could be completely eliminated, and that would save the federal government large amounts of money in the short term (though not in the long term - eliminating entitlements also means eliminating their corresponding payroll taxes) - but that does nothing to address the needs of those without medical insurance.

In effect, the Republicans are saying, you're on your own: The government is not an entity responsible for your survival.

That is certainly a viable argument, that sink-or-swim, if-you-don't-succeed, hope-there's-some-charity-you-can-join type of thinking. It has caught on amongst certain sectors of American society, though apparently, many had not entirely thought it through, as recent polls show.

It still does nothing to address the issue of rising medical costs, though. Let's hope the adults in the room are able to use the purchasing and organizational power of society as a whole to address this problem.