Comment on the debt limit crisis

Observing the made for TV drama this summer, , will they or won’t they raise the debt limit in time, is not exactly like waiting for Godot. Eventually, a deal will be made, a compromise has to be reached for the common good, but the price the nation pays should this affair drag out beyond the August 2nd deadline will be catastrophic. Our country will suffer a blow to its sense of self, like seeing the first wrinkle or patch or gray hair. Indeed, this self-inflicted wound will be a stain upon our country’s honor with real world, real economy, consequences.

The fantasy land of financialization, which produces nothing beyond the zero sum game of creating securities and shifting paper into different hands, will experience little beyond inconvenience. The people who depend on government checks will suffer pain. The Federal government disperses 80 million checks a month. Will vendors continue to supply goods and services? Have the pernicious obstructionists in the House considered the consequences of a failure to increase the debt limit? Who in government will decide the payees: soldiers, sailors, prison guards, the FBI, the CIA, scientists, air traffic controllers? A de facto government shutdown that entails no checks sent out for retirees will affect the economy and the middle class more than overpaid athletes, coupon clippers and the Palm Beach/Springs crowd.

The deal between the politicians must happen before the end of July in order for the legislation to be promulgated in a timely manner and for the bureaucracy to react, but don’t hold your breath.

Barack Obama is not a leader. Unlike LBJ, he is not feared, nor does he exude optimism and confidence like Ronald Reagan. The current president waits for events to unfold instead of guiding them. During the health care debate, his party did not know his position. Nancy Pelosi directed the process.

During the Bush administration, Republicans were unconcerned about increased levels of spending. As VP Cheney told Paul O’Neil, the Secretary of the Treasury: “Deficits don’t matter.” Two dubious Dubya wars and the drug prescription plan were paid for with borrowing. Speaker Boehner’s position that tax increases are “off the table” is ideological and ludicrous. Republican reasoning that more taxes paid by corporations and the wealthy will affect the economy negatively is plain wrong. Millionaires might have infinite desires but their ability to consume is finite: marginally less money will not affect their habits. Record corporate profits have not resulted in hiring, moreover, many of these 14th Amendment entities avoid paying their fair share of taxes. Corporate leaders are more concerned about their stock’s value rather than the well-being of ordinary people, the country. Contrary to received Republican truth, raising taxes is not the problem, rather, small businesses are unable to get credit for expansion and new hires.

CEOs, hedge-fund managers, and the bank holding companies, Wall St. banksters, see their self-interest in short term stock options, speculation, and bonuses instead of long-term investment: paying taxes for the common good. Unlike Henry Ford and Ray Kroc who built products and provided a service, George Soros and Goldman Sachs make money by inflating the value of paper and collecting fees. The fundamental purpose of government is to promote economic activity, not the transfer of debt into bonds. Government establishes defense, suppresses thievery on land and sea, builds and maintains infrastructure, provides a forum to resolve disputes without bloodshed, the courts, and promotes the mundane like equal weight s and measures.

From a purely political position, President Obama should call the Republican bluff since a significant number of Americans blame the Bush administration for the current economic and spending crisis. Everyone who earns an income, no matter how small, should carry their fair share of the tax burden. Eliminating waste, fraud, and abuse along with cutting foreign aid are insignificant spending cuts.

Cutting defense spending and entitlements are unpopular remedies but represent the only meaningful measures to reduce spending. Government spending is automatically expanding and as the population ages will exacerbate the problem. In 2010, government spent $523 billion on Medicare. In 2015 this spending is projected to be $676 billion; in 2020: $861 billion. Jimmy Carter’s 1980 budget was $590 billion; the deficit was $74 billion.

Reduced spending that bites into the budget must affect the political prospects of incumbents, which is why they most likely will kick the can down the road, past the 2012 election, without solving the problem of spending and increased revenue. The political system in Washington is demonstrably dysfunctional and the nation in the middle pays the price. Unable to resolve important issues like energy policy or creating a sane immigration policy, the political establishment no longer represents the people, but themselves, and their deep pocket enablers. Corporations and the connected class now establish policy and the Congress carries it out.

Taxes funded the inter-state highway system, victory in World War II, the first men to walk on the moon, development of the internet, and keeping old people out of the poor house. Taxes are not inherently evil. The Reagan administration increased taxes six out of 8 years. For Republican ideologues to dismiss a requisite component of the solution, increased revenue, whatever it is called, taxes or closing loopholes, is out of touch with reality and will redound upon their heads at the polls, if not before. Democrats must accept cuts to their sacred programs. By showing common sense and leadership, both parties can prevent themselves and the people from experiencing unnecessary pain and anxiety. The real life alternatives are individual hardship or collective catastrophe.

The danger to the Republic lies beyond federal bankruptcy. The perception of social injustice that likely will arise in the hearts of the people, working class and middle class, could cause social unrest. Social unrest arising from social injustice (high bread prices due to speculators and aristocratic privileges), was a secondary cause of the French Revolution; Bourbon bankruptcy was the driver and primary cause. Casey Anthony’s guilt or innocence has no impact on daily life. Money to buy gas, get groceries and pay the rent, does.

Comment on the debt limit crisis

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
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7 Responses to Comment on the debt limit crisis

  1. George Kleinman says:

    The best comments have already been penned by HL Mencken:

    “No one in this world has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.”

    ” When a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental — men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack or be lost… All the odds are on the man who is, intrinsically, the most devious and mediocre — the man who can most adeptly disperse the notion that his mind is a virtual vacuum. The Presidency tends, year by year, to go to such men. As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”

  2. Charlotte Observer says:

    Wow, that was a lot. Most folks wait at least until Friday before indulging to extremes. No insult meant, just an observation. I skimmed over your comment, since it was kind of long and a collection of fragments. However, I disagree with your panic over the debt limit being an exigent situation. It seems that many have succumbed to the Dem’s scare tactics. If the debt limit is not extended, we will NOT default on our loans. Those will get paid first with the available revues, and some programs will have to be put on hold. Dems have stated that Social Security, Medicare, retirement and disability as well as military pay would suffer. That would NOT have to be true, but BO will use that as leverage to push for raising the debt limit. It is up to him which programs to delay funding, but he is using these entitlements as victims in his “hostage” taking. BO’s real reason for raising the debt ceiling and increasing taxes is for his next “stimulus” plan. He wants two trillion bucks to throw into his pet programs, that he suggests will create jobs. We have seen how his last fiasco has failed. He says that there was not enough money thrown into the last stimulus to get it off the ground. I say BO is a liar and is purposely attempting to bankrupt our country to put it into chaos.

  3. Lyris says:

    The problem originally created by reagan, continued by daddy bush, cleaned up by Clinton, but made even worse by baby bush.

    Do mention those facts jerry. Yes we are blaming baby bush, based on facts. Most of President Obama’s budget goes to paying just the interest rates of bushes debts.

    Why is it the teabagging/gop fail to remember this?

  4. cosmo says:

    there are some with intellegent views but unfortunatly many people in this great country are bankrupt morally and financially , and do not have a clue as how to straighten this country out or their lives …….

  5. Mztroll says:

    excellent post!…

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