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The debt ceiling crisis is off the rails. Obama is storming out of meetings and threatening that Social Security checks may be cut off next month. While contributing nothing constructive to the process, he has no problem completely disavowing the legal sanctity of the Social Security trust funds to scare seniors. But as bad as Obama's actions are, they are no more shocking than Presidential hopeful Michelle Backmann making big headlines by advocating pure lunacy - an abrupt shutdown of much of the federal government in the name of "tough love." Meanwhile, Congressional leaders struggle to find a solution that will allow the government to continue to rack up more than a startling $100 billion of additional debt each month. Obama and others want the debt ceiling bumped $2.4 trillion so that the unprecedented spending can continue without another "ceiling crisis" surfacing until after the 2012 elections. The emerging fear is that ultimately a deal will be cut that gives Obama the additional debt he wants in return for some illusory future slowdowns in spending increases that will never happen. Remember, Obama's massive healthcare reform bill of 2010 promised big cuts in Medicare expenses that now, according to the a Medicare trustees' report issued in May, are a "virtual certainty" to not occur. Given the extreme differences on how the respective sides view the seriousness and consequences of limitless spending and debt, the unprecedented nature of the numbers, and the chaos and immediacy of the situation, House leaders should consider aborting any attempt to fabricate a phony, band-aid $2 trillion solution that just pushes everything past the next election. Instead, they should explore the parameters of an ongoing "smaller bite" workout process to govern any future borrowing beyond the existing ceiling until the American people decide America's financial fate in 2012. It's what banks do every day with struggling companies that need a constant infusion of cash to keep their doors open. With such a workout process, the precondition for any increase in debt would be an offset in the same amount from either specifically-identified, guaranteed future net spending reductions or specifically-identified, guaranteed net revenue increases. The precondition would be monitored on an ongoing basis. To insure compliance, additional debt would be allowed only in relatively small amounts that are tied to narrow time frames and that are based on approved spending reductions or revenue increases and demonstrated compliance with prior approvals. So, for example, if the government needs an additional $300 billion of debt to cover budgeted expenditures in the first


quarter of 2012, at least $300 billion of specific future spending reductions or revenue increases would have to be identified and approved. Approvals would be secured on either a quarterly or monthly basis, and all prior approvals would be constantly monitored. There are a number of benefits to such an approach. Here are five big ones. 1. The constant monitoring of the workout process and the periodic approvals required for additional debt would keep the crisis center stage so long as the government's debt in is a state of crisis. And with ongoing annual deficits in excess of a trillion dollars and over nine percent of GDP, this will remain a state of crisis by any definition for a long time, well beyond the 2012 elections. The crisis wouldn't be buried for 18 to 20 months by an illusory fix designed to accommodate Obama's reelection bid and his desire to crank up the public debt another $2.4 trillion in the interim. 2. Bean counters and bureaucrats in Washington would have a strong incentive to start eliminating the massive waste, fraud and abuses that are talked about but never dealt with. Every dollar saved would authorize an additional dollar of debt. Ideally, the debt precondition would trigger an ongoing, forced push to improve efficiencies at all levels (including the White House), wipe out useless discretionary expenses, lean out workforces, and eliminate marginal programs and departments. Basically, it's the same steps that every debt-strapped business must take. 3. All legislation would have to be coordinated and reconciled with the debt ceiling workout process to insure that the preconditions are satisfied to permit additional debt. 4. Transparency would be improved at all levels. The need for smart spending and saving solutions and the ongoing monitoring and periodic struggles to approve specific cuts would continually enhance public awareness. It would become progressively easier to spot those who regularly tackle details to advance the workout process and those who just frustrate the perpetual decision-making efforts with inflammatory rhetoric for political gain. 5. It would provide a rational basis for moving forward until the American people ultimately decide America's direction in late 2012. It's hard to imagine how the stark differences between the two sides, in terms of priorities, approaches and consequences for the future, could be any greater. If one side garners all the power, as happened in 2008, America's course, good or bad, will be set. But if 2012 produces a split in power, as we have now, a smart on-going workout process may continue to be the answer until America's debt situation returns to some standard of normalcy (for example, an annual deficit of no more than three percent of GDP). There is nothing new or novel about this suggestion. It has been on the table from day one, and some are now advocating various versions of the same idea - to tackle debt ceiling increases in small bites. Many will abhor this approach for two reasons: it is much tougher for Congress and the White House, and it does not automatically blow everything past the 2012 showdowns. It requires an ongoing effort and real results, and it will regularly force decisions over specific cuts to keep the cash flowing. It's a far cry from a single, illusory compromise solution that sweeps everything away for a few years as the debt spirals upward. But, so what? Given the seriousness of the situation, the massive gap between the respective sides, and the unprecedented stakes, perhaps a much tougher process is exactly what's needed


until the American people choose a course.

Dwight Drake is an experienced planning lawyer, law professor, and business owner. He teaches business, tax and planning course at the University of Washington School of Law. He is the author of the PlainTalk Planning online educational service ( http://www.plaintalkplanning.com ). For more information about Professor Drake and access to his other works, go to http://www.drakeplaintalkplanning.com.

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==== ==== You missed your high school diploma? Do you know you can get a GED certificate as an alternative which actually keeps you at the level of a High School GRADUATE? You dont have time to take your GED tests during the week to get a high school equivalence? Here is the final chance of getting your GED in one day for a rewarding future. Our final Saturday testing will be on June 2 2012 starting at 8:00am. Call now for an appointment. Visit this blog for contact and address details: http://emmateps.com http://teps999organocoffee.blogspot.com ==== ====


Debt Ceiling Mess Treat It As a Loan Workout