“Top Democrats and Republicans in Congress prepared new proposals to avert a government debt default and a potential global financial crisis.”
That’s the lead paragraph from a story in today’s paper. What should scare you is when Democrats and Republicans agree on something the public generally gets screwed. I believe that both sides realized that they set up this “battle” and now that the public is watching they are not sure how to get out from all of the rhetoric that they have been spreading. What both sides agree on is that they both want desperately to get re-elected and regain power. Even a little power is better than none and they are more than willing to squander our money, our children’s money, and our grandchildrens’ money to maintain their power. Here are few facts as I see them:
- First – THE DEADLINE: August 2, 2011 is not the first deadline set by this White House. They drew a line in the sand months ago and when that went by they simply drew another line in the sand…of course with more pronouncements of dire consequences.
- Second – SPENDING CUTS: Republicans talk a good game and it sounds good to those of us who desire for smaller federal government or Tenth Amendment fans. Their recent past spending spree under George W. Bush is still fresh in our minds so I do not quite believe that their foundations are set in good economic policy as much as that they see this as a way to attack the other side.
- Third – THE DEFAULT: There seems to be agreement amongst many economists that the United States will not default on August 3 unless the debt ceiling is raised. There is sufficient revenues coming in to pay the interest on our debts, Social Security, the military, etc., however, the federal government will have to cut spending. Rest assured that any spending cuts will be aimed at making our lives miserable and not at wasteful/entitlement programs. Watch for national parks services to be cut (it is vacation season after all) and they are sure to have an employee there to explain why you cannot take little Timmy to see Old Faithful.
- Fourth – THE BLUFF: Obama now famously warned Republican Eric Cantor not “to call his bluff.” I am not a poker player, but even I know that if you are bluffing the last thing you want your opponent to know is that YOU ARE BLUFFING. I cannot understand why the Republicans don’t call his bluff and force Obama to cut spending. Sure Obama will cut programs that favor Republican “friends,” but this will force Obama to show his hand. It makes no sense to me for the Republicans not to call his bluff unless they are also afraid to show their hand. They do not want us to see their hand either.
- Fifth – INCREASING REVENUE: The Obama Administration has done one thing better than any other administration and I am not talking about spending trillions of dollars – though they have proven to be the top spending administration of all time in fact creating more debt than all previous administrations COMBINED. What I am talking about is their ability to manipulate the language or at least try. The “increasing tax revenue” is their silly way of seeking increasing tax rates. It is a cute was of asking us to bear more of the burden caused by their gluttonous spending. Unfortunately economic theory shows us over and over again that when something costs more people do less of it. A rather simple fact. If it costs too much to employ a person business will not hire them. If the new car costs too much then we’ll patch together the old one. You get the picture!
- Sixth – THE ECONOMY: The best and fastest way to fix the economy is for government (federal, state, and local) to get out of the way of free enterprise. And by get out of the way I mean taxation and regulation. With a booming economy most of the above more or less go away. I often feel like I am between Barack and a hard place. If the economy improves I and the nation will be better off, but there would be a high likelihood that Obama would get re-elected giving us God only knows what kind of policy and SCOTUS appointees. I am conflicted.
- Seventh – THE TIMING: “I will gladly pay you on Tuesday for a hamburger today” – Wimpy. This is the true inspiration of today’s post. The aforementioned agreement between Democrats and Republicans seems to allow an immediate raising of the debt ceiling followed by “spending cuts” down the road and over the next decade. A “kick the can down the road” (this is a very popular phrase amongst politicians of both sides) measure that can and will be forgotten once they are re-elected.
- Eighth – THE MOOD: Moody’s and other bond holders have threatened to downgrade our bond rating if action isn’t taken. The Democrats have tried to spin this as proof that the debt ceiling needs to be raised. Yep, if someone owes me money the thing that I want them to do is borrow more money that they cannot repay. It is perhaps more likely that these entities want us to get our spending house in order to reduce debt and deficit spending.
- Ninth – THE BECK: I named this one after Glenn Beck because of its dour outcome. He and others have speculated, with a great deal of logic and historical precedence, that the way out of the debt crisis is to inflate the currency to such an extent that the dollar is worth much less and subsequently easier to pay off investors. That would, of course, ruin all of our savings, investments, retirement accounts too forcing us to rely on Big Brother to take care of us in our golden years. Have you ever seen the movie Logan’s Run?
The only surety in this debate is the phrase I started with…
“when Democrats and Republicans agree on something the public generally gets screwed.”
– – ghblog