Who Put Us in the Current Predicament?

We just witnessed an agonizing budget battle in Washington. The sky was falling! The government was going to shut down! A catastrophe of biblical proportions was on the brink of keeping families from enjoying the cherry blossom festival/parade in D.C. for Pete’s sake! The fact is our President and his party failed to produce a budget for 2011. This should have been in-process LAST year. The United States Code, Title 31, section 1105 spells out the guideline and specifies the budget as the Presidents job and would have this budget done and submitted by no later than the first Monday in February.

The opposition party had to step up and propose not just the necessary compromise but do so by submitting their own budget proposal and scare the begebes out of Democrats. Toss in a few conservative social issues so appalling and distasteful to liberals and the stage was set to orchestrate a “deal”. The historic cuts proudly boasted by the President, as if it were his idea, were all GOP designed and GOP driven. Rather than a $50 billion increase in spending, which is what the President originally tried, they “agreed” on a $30+ billion spending cut. So an $80 billion compromise is a big deal, but not as big as a $14 Trillion spending deficit. For you math guys, $80B is one half of one percent of $14T. The line item cuts, which really don’t exist by the way, actually equate to two tenths of a percent of the deficit.

The “deal” was so overwhelmingly exciting that it enabled the President to run to the Lincoln memorial, dramatically and unannounced, except for the massive media observance, and spontaneously proclaim that he is running for reelection in 2012 – I mean he was able to save the union by negotiating a compromise between two warring factions, of which he is far above the fray, and secure the cherry blossom festival for vacationing families.


Next: In the coming days, if not weeks, you’ll hear much talk about the dire and catastrophic consequences of failing to raise the United States debt limit. Indeed there are serious consequences of a default in the U.S. debt payments. Think about the many 401K plans and other investments tied up in U.S. treasury bonds, aka debt certificates. If the nation defaulted it would be those T-bills that become worthless. Add to that other cascading effects that would result in higher interest rates and larger collateral requirements on loans. Banks seeking guarantees which tightly restrict the outflow of cash making loan getting impossible for average folks and small business. It’s the same circumstance you and I would be in if we just stopped paying our obligations. We’d be in a bad place for many, many years. The good faith and credit in the United States would be damaged and even more people across the globe would hate us. After all, the only thing worse than having western AMERICAN culture spread across the world is the lack of AMERICAN money being spread across the world. China would be OK with it. They would simply take their debt payment in territory.

But while the crisis is real with real negative consequences which demand a response (i.e. raising the debt ceiling) the root problem of spending isn’t solved. The U.S. has a spending problem REQUIRING a drastic intervention by someone. So when you hear and read hysterical responses to proposed solutions like Representative Paul Ryan’s budget proposal and you hear and read the vicious attacks on those proposing ANY spending cut ask yourself again;


Whoever that is, they are most likely NOT the ones to turn us around.


~ by Jeff Williams on April 11, 2011.

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