United States loses AAA credit rating from S&P • Hacker News Board

Re: United States loses AAA credit rating from S&P

#241

Post by dpark » Sat, Aug 06, 2011, 4:41 AM UTC

jellicle wrote: post #173

watchandwait wrote: post #87

Earlier quoted context omitted.

Social Security is supposed to be a pension program, not an income redistribution program. So you are making "contributions", not paying taxes, in the official lingo. Of course the program is most regressive for younger workers, who pay the most and will get the least in return. Social Security is in serious trouble, by the way, although it is not the driver of the current budget crisis. In just a couple of years the…

There's no such thing as an unfunded liability for Social Security. By law, SS is funded solely by payroll taxes. If payroll taxes are insufficient, benefit payments are reduced to match. Social Security can never go bankrupt, and it can never be in debt.

> There's no such thing as an unfunded liability for Social Security.

This is wishful thinking. Social security benefits have been promised to a lot of people, and the money isn't there. It's all well and good to say they will just reduce benefits, but that's just a nice way of saying that they'll default on the liabilities.

In reality this is no different from Medicare or Medicaid, or the military budget, or anything else. Sure, we can in theory just reduce payout. The reality doesn't work out so neatly.

Re: United States loses AAA credit rating from S&P

#242

Post by count » Sat, Aug 06, 2011, 4:44 AM UTC

usaar333 wrote: post #163

pyoung wrote: post #118

Earlier quoted context omitted.

You cannot compare 'person' and 'business' with government. The government has the ability to print money, whereas the other two do not. The only reason they don't print money to pay off all their debts is because it will result in massive inflation. The reason the European debt crises is so serious is because the adoption of the euro means that no individual contry can print their own money to avoid default.

Inflating your way out of debt is as bad to debt holders as a (partial) default.

Does that hold true when you're inflating the reserve currency?

Re: United States loses AAA credit rating from S&P

#243

Post by wtallis » Sat, Aug 06, 2011, 4:47 AM UTC

watchandwait wrote: post #122

wtallis wrote: post #35

Earlier quoted context omitted.

The S&P rating is only an assessment of risk in the US Treasury bonds, not a general rating of entire US economy.

That's wrong, the GDP and expected GDP is a big part of the rating-- known as the "capacity to repay".

Doesn't the phrase "capacity to repay" make it clear that GDP matters only to the extent that it is a risk factor?

Re: United States loses AAA credit rating from S&P

#244

Post by ericd » Sat, Aug 06, 2011, 4:47 AM UTC

dglassan wrote: post #213

geuis wrote: post #52

(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…

Tearing the healthcare system down to it's nuts and bolts would costs a lot more than to continue reforming. I spent some time consulting hospitals an implementing electronic medical record systems for hospitals. It costs a hospital millions of dollars and thousands of hours to install and train people for these systems. Too many hospitals are too deep in these EMR systems to start from scratch again. Their margins a…

A hospital's margins are only 1-2%? Do you have a source for that?

Maybe they can pull that off by paying themselves all the profits, but there's no way that I buy that hospitals have thinner margins than grocery stores before that. Hospital administrators are very well off on average. Their fees are way too large to be running so close to the wire, given their expenses.

Re: United States loses AAA credit rating from S&P

#245

Post by d2 » Sat, Aug 06, 2011, 4:47 AM UTC

So keep an eye on treasury bonds on monday morning. Rate goes up, people still believe the US is safe, regardless of S&P. Rate goes down, market sentiment mirrors S&P's rating, and that's very very bad.

Re: United States loses AAA credit rating from S&P

#246

Post by orangecat » Sat, Aug 06, 2011, 4:51 AM UTC

Cushman wrote: post #146

mdkess wrote: post #56

I am not American, and here's what I don't get: America can borrow money right now at 1.5% for five years. Why is there such a clamour to stop? I would hope that the government would be able to get better than 1.5% return with the money - if the CEO of any company chose not to take on debt at this rate they'd get fired. It seems like all of the media coverage is glossing over this.

This economic crisis isn't about economics, it's about politics. When the GOP goes off on "cutting spending", they're not being fiscally responsible. Ideally, they would literally like to cut every dollar that isn't going to the Pentagon. "Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all. It doesn't matter if borrowing and spending (some might call it "investing") money…

"Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all.

Please. The government spent far less during Clinton's administration (the last vaguely fiscally responsible president), and I don't recall having to step over that many starving homeless people to get to work.

Re: United States loses AAA credit rating from S&P

#247

Post by CamperBob » Sat, Aug 06, 2011, 4:52 AM UTC

geuis wrote: post #52

(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…

End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more.

Once you realize that the military is not a collection of armed forces so much as it is the US's largest social welfare program, these policies and figures start to make more sense. Put it this way: We're paying our troops there so we don't have to pay them here.

Don't look for this to change anytime soon.

Re: United States loses AAA credit rating from S&P

#248

Post by uladzislau » Sat, Aug 06, 2011, 4:53 AM UTC

geuis wrote: post #52

(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…

Great ideas! But please someone fix this site design. Current design undermines all data credibility.

Re: United States loses AAA credit rating from S&P

#249

Post by njharman » Sat, Aug 06, 2011, 4:53 AM UTC

philwelch wrote: post #181

cperciva wrote: post #170

Earlier quoted context omitted.

the US is obligated by treaty to defend Latvia, but by the same token Latvia is obligated by treaty to defend the US And, in fact, the only time that Article 5 of the NATO treaty -- the mutual self-defence article -- has been invoked was after 9/11, when the US used it to drag the rest of NATO into Afghanistan.

Not just into Afghanistan. A good chunk of the post-9/11 air patrols in North America were flown by allied aircraft.

Citation, something, anything to back up such a stupendous claim.

Re: United States loses AAA credit rating from S&P

#250

Post by cperciva » Sat, Aug 06, 2011, 4:54 AM UTC

jad wrote: post #188

cperciva wrote: post #170

Earlier quoted context omitted.

the US is obligated by treaty to defend Latvia, but by the same token Latvia is obligated by treaty to defend the US And, in fact, the only time that Article 5 of the NATO treaty -- the mutual self-defence article -- has been invoked was after 9/11, when the US used it to drag the rest of NATO into Afghanistan.

On the contrary, our NATO allies offered to help, but the Bush Administration famously replied, "thanks but no thanks, we'll do this ourselves."

Not true. NATO staff discussed Article 5, decided that it was appropriate, spoke to Colin Powell, who supported it, and by the time the NATO council met to approve the draft statement concerning Article 5 George Bush had also signalled his support for it.

http://www.nato.int/docu/review/2006/issue2/english/art2.htm...