Tea time 08-03-2011
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Tea time 08-03-2011

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Tea time 08-03-2011 Tea time 08-03-2011 Presentation Transcript

  • Tea Time Topic- Impact of the New Debt Ceiling Bill Huanyu Jin 08/03/2011
  • Gross debt has increased over $500 billion each year since 2003, with increases of $1 trillion in 2008, $1.9 trillion in 2009, and $1.7 trillion in 2010. As of June 29, 2011, the Total Public Debt Outstanding was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual GDP of $14.66 trillion. The debt of US government has been increasing dramatically since the 2007 economic recession
    • The total national debt of $14.4 trillion exceeded the $14.3 trillion ceiling in July 2011; the U.S. Treasury Department has no authority to issue or incur debt beyond the debt ceiling. So what to do?
    • On Monday, after days of debates, House of Representatives passed the debt ceiling bill with a vote of 269 to 161. (The “Yes” vote came from 174 Republicans and 95 Democrats).
    • On Tuesday, Senate passed the bill (74 to 26) and President Obama sign the Bill.
    The Debt ceiling crisis
  •  
    • First step:
    • There will be an immediate $400 billion in new borrowing authority so the total federal debt won’t exceed the new ceiling cap, which can sustain until the end of 2011.
    • Increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
    • More than $900 billion in savings over 10 years by capping discretionary spending.
    • Second step:
    • Set up a “super committee”-consist of six Democratic and six Republican lawmakers, equally divided between the House and Senate and to be chosen in the next two weeks.
    • They were tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
    • The enforcement of the spending cut will not implement until 2013, giving the government enough time to carefully consider essential reforms
    The Debt ceiling crisis
    • Comparison between the proposed policies 2 parties:
    • Democrats – Budget cuts + Revenue increases (tax increases)
    • Republicans – Budget cuts
    • Concerns:
    • Too much uncertainty on where the spending cut will go.
    • The bill contains no provisions for new taxes to generate revenue and may cut deeply into research, education and other programs that is critical for United States.
    The Debt ceiling crisis
    • The following are proposed to be exempt from immediate budget cuts:
    • Social security, Medicare and Medicaid, low-income programs, unemployment insurance, and civilian and military retirement.
    • The budget cut will be divided equally between Defense (Military) and Non-Defense Programs (Domestic).
    • Military:
    • Expect Savings of $350 billion from the Base Defense Budget - the first defense cut since the 1990s: The deal puts us on track to cut $350 billion from the defense budget over 10 years.
    Which area will be affected
    • Domestic:
    • Economy
    • Analysis predicts a continuing decline in economy
    Standand and Poor’s Index Down -4.5% past 5 days Dow Jones Index Down -4.1% past 5 days Which area will be affected
    • Domestic:
    • Health care and social security
    • Does not expect a dramatic, immediate budget cut
    • Education
    • Protect the President’s historic investment in Pell Grants: Since taking office, the President has increased the maximum Pell award by $819 to a maximum award $5,550, helping over 9 million students pay for college tuition bills. The deal provides specific protection in the discretionary budget to ensure that the there will be sufficient funding for the President’s historic investment in Pell Grants without undermining other critical investments.
    • Elimination of the in-school loan interest subsidy for graduate and professional students
    • Elimination of Direct Loan repayment incentives
    • But more concerns on whether other areas of the education system will be affected
    • Analysis predicts a continuing decline in economy
    Which area will be affected
    • Domestic:
    • Research funding
    • Much uncertainties on the already reduced funding for research
    • The National Institutes of Health (NIH) 2011 budget will be cut by $260 million in the deal struck by Republicans and Democrats lawmakers on April 8th 2011 to avoid a government shutdown.
    • The NIH's 2011 budget will be $30.7 billion, down 0.8% from its 2010 budget of $30.9 billion,
    • The National Science Foundation (NSF) would take a cut of $53 million (0.8 percent down) over 2010 budget of $6.9 billion, which means it would fund 134 fewer grants to outside researchers than it did in fiscal year 2010. That cut would translate to a loss of NSF support for 1,500 researchers and support personal, she said.  
    • The U.S. Environmental Protection Agency 2011 budget will be cut by $1.6 billion, a 16% cut from its 2010 budget, and the Centers for Disease Control will be cut by $730 million.
    • Analysis predicts a continuing decline in economy
    Which area will be affected
    • Domestic:
    • Research funding
    • Much uncertainties on the already reduced funding for research
    • The National Institutes of Health (NIH) 2011 budget will be cut by $260 million in the deal struck by Republicans and Democrats lawmakers on April 8th 2011 to avoid a government shutdown.
    • The NIH's 2011 budget will be $30.7 billion, down 0.8% from its 2010 budget of $30.9 billion,
    • The National Science Foundation (NSF) would take a cut of $53 million (0.8 percent down) over 2010 budget of $6.9 billion, which means it would fund 134 fewer grants to outside researchers than it did in fiscal year 2010. That cut would translate to a loss of NSF support for 1,500 researchers and support personal, she said.  
    • The U.S. Environmental Protection Agency 2011 budget will be cut by $1.6 billion, a 16% cut from its 2010 budget, and the Centers for Disease Control will be cut by $730 million.
    • Analysis predicts a continuing decline in economy
    The 1.5 Trillion
  • Thank you!