President Obama has officially requested an increase to the statutory debt limit.

The formal request gives both chambers 15 days to vote on whether to approve of the $1.2 trillion hike. The House plans to vote on this request on Jan. 18, a spokeswoman for House Majority Leader Eric Cantor (R-Va.) said.

In a letter to House and Senate leaders sent Thursday, the president informed the Congress that the federal government had come within $100 billion of the existing limit and that another increase is “required to meet existing commitments.” The boost will be the third and final increase to the ceiling under the debt-limit deal struck in August, and is intended to cover the government’s borrowing through the 2012 elections.

The United States reached the $15.194 trillion debt limit on Jan. 4, according to Treasury statements. Since that time, Treasury has employed the “extraordinary measure” of tapping into its Exchange Stabilization Fund to avoid exceeding the limit.

Read more at The Hill.

When the House and Senate go back into session on January 17th and January 23rd respectively, shortly thereafter the Congress is expected to take up the issue of raising the nation’s debt ceiling from $15.2 trillion to $16.4 trillion, an increase of $1.2 trillion.

Communicating and visualizing a “trillion” of anything is difficult.  So let’s put a “trillion” in perspective.  According to CNBC.com:

This stack of cash - in $1 bills - would measure 67,866 miles, stretching approximately 2.72 times around the Earth’s equator.

If denominated in $100 bills, $1 trillion would be enough to fill 4.5 Olympic-sized swimming pools, with a total volume of 398,000 cubic feet. For comparison, there is only about $625 billion worth of $100 bills currently in circulation, according to the US Treasury bulletin, which would fill about 2.8 Olympic swimming pools.

With Occupy Wall Street’s “redistribution” rhetoric running rampant, perhaps another way to illustrate the enormity of America’s trillions of new debt is this: even if the government were to confiscate the net worth of the entire Forbes 400 list of richest Americans–people who create hundreds of thousands of jobs, as well as spin-off jobs and businesses–their combined $1.5 trillion of wealth would barely cover the forthcoming $1.2 trillion debt-ceiling increase.

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With the new year just around the corner, Reason.tv is looking back at some of our favorite videos of 2011.

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From AFP:

The US government will hit its debt limit in the first week of January, the Treasury Department said on Tuesday, as it pointed to an imminent request for $1.2 trillion increase.

The government is expected to come within $100 billion of the current $15.2 trillion ceiling by the end of the year, Treasury Department officials said.

That effectively puts lawmakers on notice that they will have until mid-January to oppose a fresh increase.

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In the year since the Tea Party arrived in Congress, the movement has managed to change the debate on Capitol Hill, but not the way Washington works.

The Tea Party has stopped President Barack Obama and the Democrats from bailing out profligate state governments, from passing new so-called “stimulus” spending, and from raising tax rates. It has even begun to win bipartisan support for major entitlement reform.

However, the Tea Party has failed thus far to stop the overall growth in the size and cost of government. It passed over a dozen bills that would accelerate economic growth and create new jobs, only to see those bills languish in Harry Reid’s Senate.

In both the debt ceiling and the payroll tax debates, the Tea Party saw its sensible bills rejected in favor of absurd compromises–then found itself being blamed for congressional gridlock.

The key to the Tea Party’s fortunes has been its relationship with the very establishment it dislikes. Where it has found common ground–for example, with House budget chair Paul Ryan–it has been able to promote its agenda of limited government. But when the Tea Party has clashed with Republican leaders–starting with key Senate races in 2010–Democrats have won by dividing conservatives from moderates, House from Senate. (more…)

From The Washington Post:

The latest Obama plan “doesn’t produce any more in realistic savings than the plan they offered in April,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. “They’ve filled in details, repackaged it and replaced one gimmick with another. They don’t even stabilize the debt. This is just not enough.”

The most disheartening development, MacGuineas and others said, is Obama’s decision to count $1.1 trillion in savings from the drawdown of troops in Iraq and Afghanistan toward his debt-reduction total. Because Obama has no intention of continuing war spending at last year’s elevated levels, that $1.1 trillion would never have been spent.

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For nearly three years as Americans have struggled through this Great Recession, President Obama has given speeches that relied on failed Keynesian economic theory and the politics of class warfare and envy. As his big government policies have spent this nation to the brink, the employment picture continues to worsen.

Tonight, President Obama will deliver a major economic address before a Joint Session of Congress. The MacIver Institute expects it will be more of the same rhetoric and promotion of government solutions we’ve been hearing for the last 3 years.

The timing of the speech also conflicts with the pomp and circumstance surrounding the kickoff of the 2011 NFL season. As a Packers’ fan and in the spirit of public service, I directed our staff to comb through the hundreds of speeches President Obama has already made to give you a concise two-minute preview of his latest ‘big speech.’

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One of the virtues I discuss at length in my new book, Reawakening Virtues: Restoring What Makes America Great is the virtue of saving. It’s interesting these days to see the ongoing debate over the Federal Budget deficit and debt. On the one hand, some are calling for cuts in what many consider to be essential social programs: Social Security and Medicare. On the other hand, some believe that the Government should either go deeper in debt to cover the rising costs of these programs, increase taxes on the wealthy and business, or make cuts to other parts of the budget such as defense. All of these approaches have their supporters and detractors but the fact remains that the underfunding of social security starts and ends with the problem of saving.

Let’s be clear. Social security is not an entitlement program. That is, unlike welfare and food stamps, the people who receive social security have contributed to the program over the course of their working career through payroll taxes specifically designated for the purpose of saving for retirement. They are therefore owed at least the amount of money they contributed.

However, problems started to arise when the Federal government, under both parties, began borrowing from the so-called Social Security trust funds to spend on other items in the budget. The trust funds are not like your traditional private trust funds that are fully funded. In fact these trust funds are empty. The government has borrowed every single dime that comes into the trust funds to spend on current expenditures. We have a problem now because our total national debt is approaching (and may have exceeded) our yearly gross domestic product. Most countries that have this level of debt do not enjoy the high credit rating and low borrowing costs that America currently does.

If we continue to use short term borrowing to fund long term investments we will soon run into trouble. Just look at what happened with the investment banks Lehman Brothers and Bear Stearns. They borrowed in the overnight markets to fund their investments in highly illiquid long term securities. When some of those securities plummeted in value, so did the value of their collateral. Thus, they were faced with a situation in which they needed to borrow money just to stay afloat – but they did not have the asset values to back them up. Each firm collapsed within a week of this situation becoming public.

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Like the recent east coast earthquake, the Budget Control Act of 2011 left Washington shaken and completely confused, the epicenter being the Department of Defense.

While some are saying that the super committee will be able to reach a deal and cut the additional $1.5 trillion (half from defense), others are not so confident there will be any agreement, resulting in automatic caps for the next nine years.  Either way, defense spending will make or break a super committee budget deal.

Truthfully, Congress has a better chance of willfully trimming the budget at the super committee stage because they have more tools to orchestrate a reduction. Even if they deadlock, they’ll push through artificial savings mechanisms, anything to merit a Mission Accomplished banner. Medicare doc fixes are an example of such “solutions”. Though Congress’s intention was to curb Medicare spending, they came up with an unworkable formula that has now resulted in temporary increases and extensions of existing physician reimbursement rates, all in an attempt to circumvent a long-term solution. Applying this to what Congress may do with defense spending, a successful deal may be nothing more than a tacit convention of today’s culture on Capitol Hill, do anything to avoid Armageddon. And some do consider the trigger provision of the bill to be deadly. Secretary of Defense Leon Panetta even called it the “doomsday mechanism.”

Under sequestration, or the trigger, defense cuts are still a variable certainty. We simply do not know how bad it is. It all boils down to the language of the bill. Here’s why:

1.The bill does not organize any of its spending requirements against any baseline.

2.Positive numbers (discretionary spending caps) without context forces you to make arbitrary assumptions.

3.No analyst can come up with a number that is reasonable/unreasonable.

The question on everyone’s mind: What on earth do we base these numbers against?

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From The Associated Press:

Liberals argue that he caved on the debt ceiling. Unions are upset over his handling of unemployment and labor issues. Hispanics brought the immigration debate directly to his campaign doorstep.

President Barack Obama’s summer of discontent has been marked by rumblings within his Democratic political base over his willingness to fight congressional Republicans and his approach to fixing the economy.

Liberals disappointed with Obama for compromising with the GOP during the debt-ceiling showdown now are calling on him to hold firm against Republicans this fall. They want him to push a bold jobs agenda while drawing a strong line on taxes and protecting Medicare and Social Security.

In recent weeks, the gripes have become so loud that the president himself acknowledged them during his Midwest bus tour this week.

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As the debt-ceiling debacle shows, Americans are genuinely frightened that our ever-expanding federal government will spend us into national collapse.  But while Americans are delivering a message of limited government to Congress and the President, proponents of small government have actually been sending a completely different message to the judiciary for decades.  That message—that any judge who strikes down a bad law is an “activist”—has been destructive to freedom and conducive to runaway growth in government.

Americans have always believed more in the power of individuals and the free market than in government power.  For example, ABC News and The Washington Times have been asking people the same question since 1984:  Do you favor smaller government and fewer services, or larger government and more services?  The results show a consistent national preference for smaller government.  In 1984, 49 percent of respondents favored smaller government while 40 percent favored larger government.  Today it is 56 percent versus 40 percent.

The American commitment to limited government is embodied in our Constitution.  The Founders were distrustful of government power and they wanted to limit government’s interference in our lives.  Largely ignored in today’s debate over limited government, however, is the role that our courts should play in keeping the government in check.

Our courts are a constitutionally co-equal branch of government.  The Founders spent considerable time debating the best way to ensure judicial independence so that the judiciary could temper overly ambitious presidents and legislatures.

A Constitution that says “no” to government requires judges who are willing to say “no” to government, too.   Yet when judges actually strike down a law as unconstitutional, they are frequently derided as “activists” by people who ordinarily think of themselves as advocates for smaller government.

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With Rep. Pelosi’s picks announced today, the SuperCongress is set. From The Associated Press:

House Minority Leader Nancy Pelosi’s appointment Thursday of three Democrats to Congress’ new debt-reduction supercommittee completes the roster of a panel whose members are already being tugged in competing directions.

Pelosi selected Reps. James E. Clyburn of South Carolina and Xavier Becerra of California, who both are members of the party’s House leadership, and Maryland’s Chris Van Hollen, the top Democrat on the Budget Committee. The choices bring racial diversity to the supercommittee because Clyburn is black and Becerra is Hispanic.

The 12-member panel, divided evenly among Democrats and Republicans, has until Thanksgiving to propose $1.5 trillion in 10-year budget savings. If it does not propose a package or if Congress doesn’t approve it, $1.2 trillion in automatic budget cuts will be triggered.

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Recently in downtown Los Angeles, NAACP President Ben Jealous held a press conference to kick off his group’s 102^nd annual convention. His remarks came just two days before our newly formed South Central L.A. Tea Party held a major rally to expose the lies and racism of the NAACP. During the press conference Jealous was asked about the black-led Tea Party group and about details of a recent closed-door meeting he and other liberal black leaders had with President Barack Obama.

What you will see in the following video and read from the partial transcript are blatant lies from the desperate leader of an outdated civil-rights group trying to stay relevant by scaring black Americans. In the video Jealous claims the rights of black voters are being threatened and that racial “discrimination 2.0” is holding them back. It’s a shameless attempt to keep black Americans focused on ‘racism’ in order to keep them angry and on Obama’s Democrat plantation.

The NAACP president began by stating:

“The rights of everybody are under attack everywhere all the time. The rights of workers to organize, a women’s right to choose, access to the ballot box itself. In this past year we’ve seen perhaps the greatest attempt to limit access to the ballot box since 1896….”

The NAACP leader compares the tough economic times and high unemployment for blacks to the Rodney King beating:

“…As a Californian it’s hard to forget that this year is the 20^th anniversary of the Rodney King tragedy. And this moment is too much like that. The underlying anxieties of chronic high unemployment are still there, the short-term stress and recession is with us again and our people are even more incarcerated than they were then….”

Jealous explains that the Obama administration is focused on ending what he calls “employment discrimination 2.0” to ensure that people with bad credit, those with prison records, and the long-term unemployed are not being discriminated against:

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The recent media action line regarding the Tea Party is that they are indeed “terrorists”. On top of the media, Rep. Mike Doyle (D-PA) stated, “This small group of terrorists have made it impossible to spend any money.” Vice President Joe Biden quickly followed up with the remarks, “They have acted like terrorists” in regards to the debt ceiling negotiations.

Given the media and some liberal politicians were driving the “terrorists” meme home at every opportunity, Rasmussen asked 1,000 likely voters whether they agreed. Out of the respondents, 29% believed they are, while 71% believed it was an outlandish accusation.

MRCTV’s Joe Schoffstall went to the nations Capitol to see if people were buying into the organized effort to paint them as such.

Here’s what we found:

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I interviewed Congressman Connie Mack (R-FL), via telephone, about his new “Mack Penny Plan,” which is gaining considerable support from both House and Senate Republicans, and even some Democrats.

Congressman Connie Mack did not vote to raise the debt ceiling before the August recess. He was looking for a long-term solution to the nation’s deficits, which are leading to unsustainable debt.

After working with some grass-roots groups, Mr. Mack designed the “One Percent Spending Reduction Act,” or, the “Mack Penny Plan,” which, he says, will cut and cap federal spending, and balance the federal budget in eight years.

In short, the “Mack Penny Plan” would:

• Cut federal spending by 1% each year for 6 years
• Cap spending at 18% of GDP in the 7th year
• Balance the federal budget in the 8th year
• Save taxpayers $7.5 trillion over 10 years

“What’s different about this plan,” the Florida congressman says, “is that it’s pretty simple. We freeze spending at the 2011 level- about $3.6 trillion- and cut 1% of spending for six years- that’s one penny out of every dollar. Everyone has had to cut at least one penny out of every dollar, whether in family or business budgets, so that’s not too hard for the federal government to do.”

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Am I the only one who grew quite tired of seeing John Kerry this weekend on the MSM talk show circuit deriding the Tea Party and what he is proffering as their responsibility for the S&P action Friday?  “This is without a doubt a Tea Party downgrade,” he fumed on Meet The Press. The common narrative being offered by Mr. Kerry et. al. is that the right-wing GOP held the prospect of not raising the debt ceiling—thus forcing a default—like a gun to the head of a hostage government.  They then defiantly maintained their ideological rigidity by rejecting any revenue increases as part of the debt compromise.  Faced with the Scylla of spending cuts with no  tax hike but the necessary debt ceiling increase, or the Charybdis of a default and potential ruin, the Democrats caved and the GOP won a pyrrhic victory while irresponsibly selling the nation’s future down the river to inevitable downgrade.

To all of the 63,239,109 citizens who voted against Kerry’s bid to be president in 2004, I thank you.  One weekend of this man was bad enough.  Only one driven by blind partisanship could blame the Tea Party for a downgrade that was, as economics professor Steve Horowitz rightly pointed out: “50 to 75 years in the making.  Us spending beyond our means, trying to do things we simply can’t do, and not having the revenues to support that spending. Spending that just shouldn’t be there in the first place.”  Indeed, the moment the New Deal kicked in, the clock started ticking.  S&P’s message was clear.  Welfare statism, the kind of pay-as-you go ponzi schemes masked as social safety nets that John Kerry pines for, is a fool’s bargain.  Ask Europe.

How dare Kerry deride representatives for following through with their commitments to their electorate?  The sweep of the House for the GOP in 2010 was as clear a mandate as can be offered by the American public that the reckless spending had to stop—a mandate to which the Tea Party representatives especially remained faithful.  They were sent to Washington to stop the out-of-control spending bus cold.  The entrenched interests like Kerry wanted the bus to continue heading off the cliff at 60 mph.  Yet, because the Tea Partiers did not want to “compromise” and slow the bus down to 30 mph they were labeled “extremists.”  They understand what Europe is learning.  The nanny state experiment that has lasted for a mere three generations is already collapsing under the weight of mathematics as so cleverly encapsulated in Margaret Thatcher’s famous quote…“you eventually run out of other people’s money.”

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On today’s edition of Coffee and Markets, Brad Jackson and Elizabeth Blackney are joined by Craig James to discuss American exceptionalism, the rise of the Tea Party and we’ll ask him whether or not he’s running for the U.S. Senate in 2012.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Craig James and Texans For A Better America
Texans for a Better America
The End of American Exceptionalism?
FATCA: the End of American Exceptionalism or Merely the Next Chapter?
Tea party influence on debt debate stirs heat from political left

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Don’t you just love it when a political figure opens up his or her mouth and out comes STUPID?

Unfortunately, the blubbering of absolute absurdity happens on the left AND the right, but former DNC chairman Howard Dean, appearing this week on ‘Face the Nation’, barfed up something so ridiculous it spawned many Google searches on my part.

In discussing this nation’s debt crisis, Dean joined John Kerry, Charlie Rangel and even John McCain to some extent, in throwing the Tea Party Conservatives under the proverbial bus, blaming them for the inability to reach better deal on the debt ceiling. Dean’s comment went a little somethin’ like this:

“I think this is [the] Tea Party’s problem. I think they’re totally unreasonable and doctrinaire and not founded in reality. I think they’ve been smoking some of that tea, not just drinking it,” Dean said …

Smoking tea … Well, call me sheltered (and not many do …) but I certainly hadn’t heard of any such thing … Smoking tea? Do people do that?

And if they do, what kind?

Lipton? Nestea? Celestial Seasonings? Herbal?  Green tea? Will a Target generic brand suffice? I just had to find out exactly what would happen if one did actually fire up a tea doobie instead of steeping and drinking tea (I’m a journalist … don’t knock me for being curious.).

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Racism! That’s what is to blame, comrades, for Standard & Poor’s dastardly downgrade of America’s credit rating. Don’t be fooled by the benign appearance of “AA+”. Those A’s are meant to make us feel better. But we know when we’re being graded on a curve just for the sake of affirmative action. We hear the racist condescension in that “plus.”

What S&P really meant to say was “F”–to which, comrades, we must declare: “F you, too!”

Decades of reckless federal spending and expanding government–and now the rating agencies have a problem with it?

Robert Henderson, Jr. said it best at The Grio–NBC’s segregated, er, special section for black opinion and commentary: “…America’s credit will have been downgraded for the first time, with a black man in the White House, potentially reinforcing the stereotype that black people are poor money managers.”

Could the racism be any more obvious? The moneylenders and their media–yeah, I said it!–have put up with the profligacy of irresponsible white presidents forever.

Every single white president for generations has raised the debt ceiling over and over again. George W. Bush declared war on the world at a cost of trillions of dollars we simply didn’t have. Along comes a black president–and look what happens. Panic! Downgrade!

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I get tired constantly repeating myself to my fine friends who are on the Left side of the political spectrum when it comes to economic, fiscal, and business realities.  It’s not their fault.  I used to be the same way.  However, following up on a good article about economics for dummies, I thought I’d add some basic concepts that everyone should understand — regardless of political beliefs.

This stuff isn’t that hard to understand.  My old high school math teacher would just drill me over and over on something until I got it.

Risk, Reward, and Investment

A rich person makes all his income, more than $250,000 each year, from investment income only.

Investment involves taking a risk.  In exchange for that risk, an investor is rewarded.  The greater the risk, the greater the reward.

Imagine two cups.  Under one is a dollar.  You bet one dollar and choose one cup.   The odds of picking the right cup are 1-1.  If you are right, you win one dollar.

Imagine ten cups.  Under one cup is ten dollars.  You bet one dollar but choose only one cup.  The risk of choosing the right cup has gone up to 9-1 against you.   Don’t you think you deserve a higher reward for choosing that one right cup?

If you don’t think so, I have a bridge I’d like to sell you.

Investment works the same way.

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