Where were all the conservatives when the debt was being run up?

July 29, 2011

I have a question for all those who say we have to let the government default because that is the only way to keep it from spending more than it takes in.

Where were all these people all these years?

Did they vote? Who did they vote for?

There are very few in Washington with clean hands in the dirty deficit spending scandal — I don’t know, maybe Ron Paul, the libertarian.

I suspect that a lot of the so-called conservatives were content to run up the yearly deficits and the overall debt (what is it? $14 trillion), such as was done under George W. Bush, as long as they could hold onto their tax deductions (tax shifts to someone else) and their tax avoidance schemes. But now that the revenues have dropped so dramatically because of the Great Recession (and didn’t the economists tell us not long ago that it was over? What happened?) the so-called conservatives are born again on fiscal responsibility.

But yes, something drastic needs to take place. The government should not even think about spending more than it takes in, except that right now what reasonable choice is there without wreaking havoc on an entrenched but vital system, our economy and that of the world?

The story in the news today is that if no agreement is raised on the debt ceiling and if the president himself does not take unilateral action to raise it, the government will have to go into triage and decide who gets paid and who does not. There will not be nearly enough money to pay all of its day to day, month to month obligations. The thinking is that Social Security checks will continue to be issued, because that is politically sensitive to the extreme. Even before them the bondholders will be paid, because if they were not the government could never issue bonds again (or at least interest rates would have to be sky high due to risk) to borrow the money it borrows to pay the bills.

After that, who knows?

I think the president should make an executive order to raise the ceiling for now to avoid making Uncle Sam‘s promise to pay worthless, which would seem to destroy our whole economic system.

But really, hard decisions on spending must be made and made soon and nothing should be off the table.

Nothing is really free in this life.

But the strategy of the far right for a long time now has been to starve the beast. If you can’t get the votes or support of the American people to get rid of various things such as social programs and environmental regulations, just cut off the funding somehow. Never vote for new taxes.

We have reached the ultimate starve-the-beast moment or almost, it seems.

The ultra conservatives are wrong when they suppose a government can be run and civilization preserved without sufficient taxation and the liberals are wrong, wrong, wrong, when they just say: “let the rich pay”

All have to pay and we all have to make tough decisions.


Statesmen need to emerge to resolve the U.S. debit crisis…

July 14, 2011

It does seem like the Republicans and the Democrats are playing a deadly game of political chicken in the ongoing debt ceiling crisis, especially the hard-line Republicans.

And it’s hard to say whether the statement made by President Obama that Social Security checks might have to be withheld is just one of those typical political ploys to stir up the populace or whether he is serious and is trying to make an important point — no money to borrow, no money to pay our obligations.

But the Social Security Trust Fund is not technically insolvent, as I understand it, although we are now paying out more money than we are taking in — so there is trouble on the horizon. To make matters worse, the so-called trust fund is made up of essentially IOUs where the government has borrowed from that trust fund. Pat Robertson, as nutty as he was, made that point many years ago when he ran for the presidency.

Social Security has been the third rail of politics, something even the Republicans were afraid to touch because so many citizens who call themselves Republicans depend upon Social Security. Cut those wasteful government social programs, but keep your hands off my Social Security.

Nonetheless, the Republicans have to think they stand for something and certainly they want to differentiate themselves from Democrats.

Of course the old adage is that Democrats want to help those who need it and Republicans want to help those who do not need it.

But the conservative element of the GOP wants to make a point: when you run out of money you have to quit spending (or did I just say that was Democrat Obama’s point?).

But both parties have taken part in a government that prints up dollars based on questionable hard value — really just based on the fact that Uncle Sam will pay what he owes, even if he has to borrow money from China to do it, and that because we are still the strongest nation in the world, people will accept our dollar as legal tender and, in fact, as the world’s bench mark currency.

There is a split in the Republican Party between old-line conservatives who still think the government has to at least be responsible enough to not default on its contractual obligations — therefore it must, albeit reluctantly,  raise the debt ceiling — and a more reactionary element that wants to make a point, even if it has to destroy the whole faith in our economic system, that would seem to arise if the mighty Uncle Sam no longer honored his fiscal obligations, to do it — maybe kind of like destroying the village to save it.

Obama certainly is not making friends with the more liberal element of his own party (Democrats) by holding Social Security hostage.

The Democrats basically would propose a combination of spending cuts and tax hikes, while the Republicans are trying to hold fast to the idea that massive spending cuts, particularly in social programs, with no tax hikes will resolve the debt crisis (and let’s quit spending money on clean drinking water and pollution regulations and regulations on financial transactions, such as the ones that got us into our current financial problems).

Truth be told, our nation is not broke. There is tremendous wealth here, but people just naturally have an aversion to paying off debt.

Republicans are correct, I would think, in their notion that we cannot spend our way into prosperity, but I do not understand their notion that to simply quit spending will solve the problem.

On a personal basis, If you are over your head in debt, you might well be forced to quit spending, simply because you no longer have the money to spend and no access to further credit. To simply stop spending on your part will not get you out of debt,  but of course it will prevent you from digging yourself deeper into the hole.

A person usually has to get productive and find an income source and then start saving and accumulating wealth. But even then you will have normal obligations to pay.

We as a nation need to become more productive and start all over again.

In the interim some things may well be cut , but we will still need to raise revenue by taxing ourselves to meet those normal obligations.

When the economy gets back into high gear, the same struggle between opposing philosophies on the role of government can and will take place, but in the meantime this issue must be resolved before we lose our status as the world’s leading economic force and power.

It would be a relief if some statesmen from both parties — and President Obama may well be one of those — would emerge and overpower both the reactionary right and ultra liberal left and get this thing resolved.