Monday, August 01, 2011

The Debt Deal

Did I call it or what?  A deal was struck, both sides saved face, and absolutely nothing was accomplished.  Nothing.

No problem was solved.  We simply postponed the inevitable.

Quick question:  What if next April I send a letter to the IRS telling them that I couldn't get a loan from the bank to pay my taxes?  That I continue making my house payments, my credit card payments, my car notes, but I couldn't increase my debt limit any further so Uncle Sam doesn't get his?  We all know the answer to that.

Yet, President Obama and his talking points parrots, his mainstream media bullhorn, all would have us believe that if we had failed to increase the debt limit the US would have defaulted on its debt payments.  This was perhaps the most dishonest thing ever stated in this whole shameful process. 

Let's be clear.  The US Treasury brings in about $2 trillion a year in revenue.  Our debt service is approximately $400-500 billion a year.  The math is simple.  We have plenty of money to pay our debts.  The President just used his favorite scare tactic to force many spineless Congressmen to cave on this vital issue.  Had the debt limit not been raised the US would not have defaulted.  Instead, money would have been diverted from one area to another to meet this crucial priority.  The President simply didn't want to be inconvenienced in such a way, so he threatened economic disaster, catastrophe, etc.  He even told seniors that their social security checks were in danger. 

That's Hope and Change?

It's clear to me that there are very few in Washington with guts.  Obama leads the herd of the spineless, and John Boehner, Mitch McConnell, Eric Cantor and Harry Reid are right there next to him.  I outlined a laundry list of things that needed to be done to solve the debt crisis.  How many of these things were accomplished?  Zero.

What's interesting is the mindset of the caucus of fools in DC.  During this discussion, we had a group of Congressmen demand a balanced budget amendment to the Constitution as a requisite for more borrowing.  They demanded drastic cuts in government spending to avoid future problems of a similar nature.  They demanded true fiscal responsibility with the people's money.  And how were these people treated in the debate?

Well, they were painted as radicals.  Kooks.  Joe Biden even called the Tea Partiers "terrorists".  TERRORISTS!  Requiring Congress to spend no more than they bring in is akin to terrorism?  There was a time in US history when a balanced federal budget was the norm.  Now it's considered radical.  Yes, that's how far we've drifted from sanity.

Obama said the Tea Party was playing political games, holding the debt hostage to advance their political cause.  Politics as usual.   But telling the American people that we will default on our debt, that the economy will collapse, that seniors won't get their checks if the debt limit isn't raised, I guess that's all within the realm of Hope and Change.  And when you call tax increases "spending cuts in the tax code", I guess that's honest politics, huh? 

And before anyone heralds this "deal" as a great thing, let's look at the facts.  First, no spending is cut.  Well, maybe it depends on what the word "cut" means.  To me, a spending cut means we spend less then than we do now.  Simple right?

Not to them.  In this bill they define a spending cut as a reduction in the INCREASE in spending that is forecast.  Congress increases the budget every year.  They're just saying they won't increase it as much as they originally planned.  And that, ladies and gentlemen, is how they define a spending cut.  We are now on the brink of $17 trillion in debt, with an annual deficit of $1 trillion a year and upwards of $50 trillion in unfunded obligations to Social Security, Medicare and Medicaid.  Congress answers this crisis by saying we won't overspend as much as usual.  Yet, we will continue to overspend in jaw-dropping fashion, and still don't have a plan to actually pay our debts or make good on our promises.  But dont worry, for the next decade (well, actually we won't start the reduction in overspending until 2013) we will reduce the amount of spending increases that we plan to make.  And this is supposed to be a great deal for America?  This is what they call a "spending cut"?

In truth, there isn't a dime of ACTUAL spending that will be cut.  And the reduction in spending increases won't begin until 2013.  Meanwhile, we will implement the largest debt increase in our history.  All without cutting one penny of spending.

What else is there?  Well, we couldn't pass a bill under Obama without a federal commission right?  So, this bill includes forming a commission to discuss more "spending" cuts and finding ways to "raise revenue"  (or, if you're Obama, cut spending in the tax code).  No one can be sure how effective this commission will be since the last commission Obama formed to make recommendations on the deficit and debt was completely ignored by  the President.  But it wouldn't be an Obama bill without a commission so it had to be done. 

So what happens next?  Well, we're gonna have some mighty big bond auctions and borrow A LOT more money.  Of course, US bonds aren't exactly the world's greatest investment given the fact that we will soon be $17 trillion in debt with no hope of ever repaying it.  So what happens when we can't find enough suckers to invest in America's future?  Well, that's when Obama's rich uncle Ben Bernanke steps in and gladly offers to buy our debt.  No problem.  He can just turn on the printing press and create money out of thin air.  Say hello to super-inflation!  Say goodbye to the value of your hard-earned money, you're lifetime savings and retirement.

Let's not kid ourselves.  America WILL default on our debt.  It's a given.  Either we will simply not be able to pay our debt service, OR we will simply print the money to pay it creating a de facto default.  Since our money has no basis for value we can print as much as we want and poof!!!  All debt is gone.  Again, it's inevitable.  There is nothing that can stop it. 

The only sane people in this debate are the ones who recognize that difficult truth.  Very hard economic times are bearing down on us and they will become much more treacherous once America finally does default on our debt.  The question is, when will it happen?  For me, rather than force this sort of hardship on my children a few years down the road, I'd rather go ahead and get it over with.  I'd rather it be me who endures the pain than them.   I'd rather be the one to suffer so my kids won't have to.  So I say let's not postpone the inevitable, while taking drastic steps (Constitutional Amendments) to ensure we never end up in this spot again.  That's the Tea Party position.

But, we are called radicals, even terrorists for holding such a position.

And that's how far we've regressed as a nation. 

So, go ahead Mr Boehner, gather your caucus, twist your arms.  Go ahead and pat yourself on the back Mitch McConnell.  Sing your own praises Mr. Obama and Mr.Reid.   History will remember you in a much different way.  The men who lacked the courage to endure what our children should never have to.   

5 comments:

SNAKE HUNTERS said...

Dr John - There you go again, telling it like it is...but who will listen?

All the jabberwokky about the 'debt crisis' and 'debt ceiling' is worthless chatter to the 14 million unemployed. They need paychecks now, not food stamps and "free clinics", and sub-prime loans.

Spending hundreds of billions annually... to Saudi Arabia & Venesuela, when we have coal and nuclear technology, and abundant oil and shale-gas reserves right here in North America.

>>

See our new link -- > Energy Independence, to contact energycitizens.org

Fifteen months, and counting. - reb
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SNAKE HUNTERS said...

Dr John,

The Bee-Boppers and Hip-hop Generation are getting gray, and the ones that are still alive are
seen Protesting on Wall Street instead of Haight Asbury, and still token a lil Mary Warner...
and calling the Tea-Party Folks..
"Crazy Racists"!

Didya hear, Roseanne Barr wants to run for pres-i-dent, if she can convince Michael Moore to be her Vee-Pee! Now there's a pair of dueces to draw to...

'What Fools We Mortals Be'
~~~~~~~~~~~~~~~~~~~~~~~~~~

reb
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SNAKE HUNTERS said...

Dr. John,

EVIL PROSPERS WHEN GOOD MEN ARE SILENT.

December 5, 2011 - reb
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23298 moving services said...

Great article..Keep it up.

SNAKE HUNTERS said...

Dr. John Washburn, sir.

Your concise eloquence is sorely
missed... Come Out, Where ever
you are... the u.s. national
debt is approaching 17 trillon!

>>

Have you seen Marshall Frank's
fine articles, or visited his
miami-dade website? - reb

~~~ ~~~ ~~~

MLF283@aol.com
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