If we default, What do we do?

[Half-Century Man]

I suggest that, in order to save money:
All governmental salaries over $100.000 per year be reduced by 30%.
No budget allocations for travel, meet on the internet.
Any/all governmental retirees who have a personal fortune of over one million dollars have their retirement funding ended.
All governmental medical coverage traded for insurance as per the ACA.

Military savings suggestions:
Immediate recall of all land based military personnel to the United States.
Cancellation of all contracts to purchase new equipment for until full debt paid off.
Cancellation of all non-governmental intelligence and military action contracts. We have to make do with what we have. Outside contractors definitely add costs and questionably add value.

Taxation suggestions:
Flat taxation at 20% for all persons, households, companies, and organizations.
Emergency taxation rate of 75% for any person, household, company, or organization making more that 1 billion dollars profit until debt paid in full.
Aggressively pursue tax evasion based on monetary amounts.
Companies concealing monies outside of US borders have their ability to conduct business in the USA suspended.




Okay, how about that? What did I get wrong? Not think through? What suggestions have merit but need a particular correction? If this was brought to Speaker Boehner, how massive would his stroke be?

[LiberalLoner]

1. Can't change the tax code without congressional approval, can we?

I don't know, just asking the question.

[NightWatcher]

2. I believe if we default, the government has no money to pay out

Social Security and Disability doesn't go out as soon as the cash on hand dries up.
Federal employees don't get paid. Nothing gets done by the feds outside of a small bubble in DC

I might be wrong, but I thought I heard that it means nothing gets paid out.

[kestrel91316]

3. We do whatever our owners, the Chinese, order us to do. Or they come to claim their property.

[BlueToTheBone]

13. They ordered that we pay our bills and carry on. n/t

[Agnosticsherbet]

4. Considering that the US Dollar is the world's reserve currancy, a world gripped in a hissyfit

created recession would likely shift to a more stable currency, or a basket of currencies. All those dollars kept by almost every country in the world would immediately lose the majority of their value and that would lead to massive inflation. (Imagine a loaf of bread costing a thousand dollars.)

You can not change the salaries of Congress on a dime due to the 27th amendment. It could not take affect until after the next election, I believe. The cost of salaries for government employees is a relatively small part of our budget. Other than Congress (who I think should be paid minimum wage) that is just punishing workers who have already suffered furloughs and had no pay raises for three years.

Internet meetings? Foreign diplomacy can not be managed via the internet. You seem to be upset at the fact that many Congressmen and Senators go on fact finding missions that are often just paid vacations. This could be better fixed by establishing an ethics panel to oversee such abuses. (Which I think would require a Constitutional Amendment.)

We have treaty obligations that would be violated if we pull many of our troops from foreign counties.

As to Flat Tax? That is a gratuitous give away to the affluent, wealthy, very wealthy, and ubber wealthy on the backs of those can not afford to play a thousand dollars for loaf of bread.

[Half-Century Man]

11. I am curious, How does a flat tax benefit the wealthy over the normal citizen?

As far as the Dollar being the currency of the world......Do you really think that will be so 3 years from now? What the republicans have done is destroy the confidence of other countries might have had with us. They exposed the fragility of the system. The world's currency will change.

[Agnosticsherbet]

12. A flat tax is regressive. Those with more disposable income are affected less.

A progressive tax increases as people make more money and decreases as people make less. The middle class and poor pay less, because they have less left over after meeting the requirements of living. The rich pay more because they reap the greatest benefit from our economy, laws, and luck. Once an individual reaches a certain point in income that 25% means little to them. As income drops below a level, people quickly reach a point where they don't have enough to meet the minimum requirements to feed, cloth, and house themselves and their families. They make sacrifices. Every buy ketchup at the dollar store or low cost outlet and use it to make spaghetti?

I don't think we will be the reserve currency in 20 years, but short of defaulting on our debt there is no real push to change this in three years. Defaulting on our debt will change all that.

Being the reserve currency allows the US to put a lot more money in circulation, and there is a lot of it out there. Without that benefit, inflation will kick into overdrive as countries switch over and sell dollars on the open market. Dumping all those dollars on the market will lead to massive inflation.

[SergeyDovlatov]

18. I am not sure that your definition is correct.

Progressive refers to the rate growing as the taxable amount increases
Flat refers to the rate staying the same as the taxable amount increases
Regressive refers to the rate decreasing as the taxable amount increases

Example of regressive tax is a social security portion of the payroll tax, since the rate decreases as the taxable amount increases due to social security tax cap.

[Agnosticsherbet]

19. You are right about my definition being off, thanks, but a flat tax remains

the favorite of libertarians and conservatives because it inherently harms the poorest, who have no real disposable income and often insufficient income to meet their needs. It is palatable to libertarians, Conservatives and the rich because the vast amount of their disposable income is untouched.

A flat tax may be considered fair, but it is unjust in who it harms.

[Squinch]

28. But in terms of utility, a flat tax is regressive. The last percentage of tax to a

wealthy person is much, much less painful than that last percentage of tax to a poor person.

Also, although a flat tax tends to be advantageous to the wealthy in terms of utility, our current tax laws in practice are SO regressive, that a flat tax would be a big improvement. It would still suck, but it would be a big improvement.

[Half-Century Man]

20. My father was a sergeant in the Air Force from the mid 50s through the mid 70s.

Raised 5 kids, yeah I know the taste of ketchup, basil, and garlic powder spaghetti sauce.

Thank you for the clear explanation of flat vs progressive taxation. My bias toward a flat rate was based on the salesmanship of a friend of mine from one of my poly sci classes. Looking back at what he said then, I would have to rate him a libertarian.

[Mojorabbit]

31. So was mine and we were five kids too.

My mom took in ironing. We had a huge garden wherever we were stationed. Rough life.

[Half-Century Man]

33. Rough outside, solid core.

Even without things, I had a good childhood.

[Mojorabbit]

35. Same here! nt

[DebJ]

5. Government salaries and flat tax seems like it came from another party's book of wishes.

Reduction of salaries by 30% Many couples would go into foreclosure, especially those for whom both family members work for the Feds. High hazard federal police jobs get hazard pay...as well they should...and this puts those officers over the 100,000 limit...and
when those officers are in high cost areas like California or DC, 100,000 won't support their families. Bravo! Risk your life, lose your home, and not able to support your family.

Flat tax of 20%: oh yeah, on that 7.50 per hour minimum wage....oh yes, tax those people 20%.
Is your last name Forbes?

[Half-Century Man]

8. No my last name is Ruthe

High Hazard police?......what high hazard specifically? one of the terrorist attacks we suffered? the ones without battles? Are you talking about the militarized teams all over the country with almost never a valid reason to be called out?

Reduction of upper salaries by 30%? yes it will cause hardships, in the scenario given the entire country would be in massive hardship. The ones who accepted positions of power and failed should shoulder an added burden for damaging the country.

I do like your point of $7.50 minimum wage being too low. How about we raise it to $15.50 an hour?

[DebJ]

16. Well it might as well be Forbes.

I know someone whose life is on the line everyday because of their work for US citizens.
Every day.

Regarding $15.50 per hour at a 30% flat tax rate.........that is not enough to feed, clothe and shelter a family.
No, the entire country would not be in the same massive hardship with a flat tax.
I can't believe that ANYONE on DU would support a flat tax. We disagree about a lot of things,
but the regressiveness of a flat tax in a society where the upper percent take 95% of profits....
this is just unbelievable.

[Half-Century Man]

21. I learn new things everyday. I bring things up to start a discussion.

From those discussions I learn.
Today I got schooled in basic taxation.

Still wanna go with the $15.50 minimum wage though.

[Half-Century Man]

6. I'm talking about a potential emergency management.

China can't drag the country over to Asia, and to try to install a puppet government will absolutely cause a rebellion.

So. what gets done to fix the problem?

[BumRushDaShow]

7. Why are you forcing the civil service employees to take the burden with this shit?

"All governmental salaries over $100.000 per year be reduced by 30%."

Fuck that. Any who even have close to that salary are > 20+ years or more on the job in specialty positions and/or are doctors, lawyers, post-secondary-degreed staff.

How about all CEO salaries over poverty level be reduced by 500% and this amount goes to the Treasury? Or lets try 90% tax rate on the highest earners like under Eisenhower to pay for 2 wars.

A flat tax is bullshit regressive taxation.

You fix it by tying Congressional salaries to ability to pass a budget and appropriations every year.

[Half-Century Man]

10. I have lived for many years earning far less than $100000.00

You can do it and pretty comfortably too.

[displacedtexan]

14. Seriously? You can do it, so everyone else can, too?

That's your basis for arguing for a 30% pay cut?

Astounding.

[Half-Century Man]

22. How is it astounding?

I'm not being a smart ass. I really don't understand why making less than $100,000 a year is so bad. Most of the country has to do it.
Anyway; I'm talking about crisis management here. If our insane republicans in the House of Representatives crash the world economy and the United States has to take steps to recover what we can. What might be a good way to go?
Austerity will not work, abandoning our most vulnerable citizens is out; so what can we potentially do?

[BumRushDaShow]

29. Your argument still punishes the innocent Civil Servant

the ones making that being lawyers, doctors, engineers, post-grads/post-docs ("STEM" folks) - and many of whom are saddled with student loans but choosing to work in public service and usually only after dozens of years on the job.

Raise the tax rates for the wealthy and get rid of the tax subsidies for the big corporations. Bringing revenue in will make it easier for it to go back out in a reasoned way, including providing stimulus for what would eventually be new taxpayers (jobs) and paying the debt.

Of course one could do what Roosevelt did and create a new WPA. But the loons would fly up to the ISS just to jump off a higher cliff.

[Half-Century Man]

32. What about amending the suggestion to

Reducing the pay of elected officials making over $100,00.00 a year by 30% until we pay off the national debt (or a major portion thereof)?
Here we have people who carefully and earnestly sought out the public trust and failed to act in the interest of the public.

[BumRushDaShow]

36. I basically mentioned something similar in post #7

You fix it by tying Congressional salaries to ability to pass a budget and appropriations every year.

It's called "meritocracy". You don't complete your assignment, you don't get paid.

And you are not going to pay off the national debt any time soon (nor should you need to). The U.S. is chock full of resources enough to keep a robust economy going for a long time if you let it (and not just as a raw-materials supplier as we have started to become, but as a manufacturer not needing to have multiple expensive transportation steps just to get goods to the market).... and the result would be a gradual reduction of the debt burden.

[rock]

9. Now why is that when a repuglican suggests such nonsense we take him seriously

but when a Democrat does we all have a good laugh!

[Iggo]

15. Tax the rich. (n/t)

[nadinbrzezinski]

17. flat taxes, are you nuts?

there is a reason why we need a real progressive tax system. As to your 75 over 1 billion, I suggest what was done during the FDR administration, in current dollars that be 10 Million, 90% taxation rate. I think people can live very well on one million bucks.

[Half-Century Man]

23. Evidently I was, nuts about tax rates. I stand happily corrected.

I ask would you continue the rate into infinity, or might you consider easing the rate after we pay our debt in full?

[nadinbrzezinski]

24. We really should not try to pay it in full

Krugman, among others, are better at explaining why. 20% or so in a peacetime economy that is doing well is fine. In actual total war 100+ has not been unheard off, in a depression 70 % or so is also not unheard off

[0rganism]

25. we can't even imagine the impact

and the longer it goes on, the worse it gets.

Runs on various bond and currency markets, worldwide economic contraction and hyperinflation of the dollar are the first things we'll see. It gets worse from there. In this country alone, the suffering will be widespread and unparalleled, on a scale unseen since the Great Depression, as disability, medicaid, and pension funds dry up.

The fact that the GOP even toys with the idea of default goes to show just how irresponsible and heartless they are. I think President Obama will do something to avoid default, regardless though -- everything is at stake.

[roamer65]

30. Banks are already setting up "war rooms" for a possible default.

The Federal Reserve will also get into the fray by monetizing every bond that hits the market. It will make the 2008 crisis and the 1929 stock market crash look like a picnic in the park.

[Turbineguy]

26. Not to worry

a bunch of shit-for-brains teabaggers say it will be OK.

[bhikkhu]

27. As far as consequences, the closest model we can look at is Argentina

That's how rare the default of a nation our size has been.

For some idea of what that has been like, a good article: http://www.nytimes.com/2011/06/24/business/global/24peso.html?pagewanted=all&_r=0

I think our case would be worse, really, because of the complexity and integration of our economy. There's much more to break, and much farther to fall. We may as well just bow out into long-term ignominious poverty, and leave the world's economy and resources to the Chinese and Europe to divvy up.

[Thenewire]

34. Obama wont let it happen

And the repubs know this. They will force Obamas hand and proceed to impeach him.

[BumRushDaShow]

37. Warren Buffet and the rest of the billionaires on the Forbes list

ironically including the crazy Kochs, won't let it happen. They have the most to lose since they took everything from everyone already.