The soundbytes have been flying across the airwaves like missiles over Baghdad in 1991.
A succinct sampling of the news over the past several weeks would read something like this:
“We have bipartisan support.”
“We’re working on a deal to get this done.”
“No deal!”
“You’re not willing to compromise.”
“We have been in talks with the President to reach a deal.”
“No deal!”
“Why would you hold America hostage?!”
“You said the same things five years ago!”
“No deal!”
But, there is one soundbyte, one phrase, that inexplicably is being uttered and rehashed by the left, the right, and even some libertarians.
“We will default if the debt ceiling isn’t raised.”
Out of all components of the latest political circus on display inside the Beltway, that last non-stop, three-ring performance over the debt ceiling has been equally as nauseating as the doomsday rhetoric flowing out of the White House.
Ballyhooed by the party’s ringleader in chief, House Speaker John Boehner, congressional Republicans (and even a number of their talking heads) have also been prattling-on as though they believe the “default” hype.
But, there is one cold, hard truth being deliberately ignored.
Default is a lie.
As so many others have pointed-out already, given the fact the federal government is projected to bring-in $2.2 trillion for Fiscal Year 2011, payments on existing debt will run about $200 billion, Social Security is expected to exceed $700 billion, and the combination of Medicare and Medicaid will run almost $800 billion there will be enough in tax receipts to cover the $1.7 trillion in entitlements.
That leaves roughly half-a-trillion dollars to do the remaining federal business.
What does this mean?
The second-most-obvious answer is someone in the White House is going to (finally) have to understand how to prioritize spending.
Every other entity and operation in America has to learn to live within their means in similar situations… Although, they must do so since they don’t enjoy access to their own monetary printing presses while the federal government is immune from its own counterfeiting laws…
…But, as usual, I digress…
And then there is that pesky most-obvious answer I almost distracted myself from addressing.
The federal government has the money it needs to make all its mandatory expenditures. All the rhetoric, all the hype, and all the hysteria are predicated on lies.
Is default possible? Certainly.
But here is the ultimate truth in the discussion of such an event: should a debt ceiling agreement not be reached, the only way American debt payments, social security checks, and other domestic benefits won’t get paid-out would have to be as a result of a deliberate choice by the President.
So, no matter what chatter gets shot across the airwaves or splashed onto the front pages of all the periodicals about either the Tea Party “hijacking the process” or whatever other narrative gets manufactured, any withholding of payments which the government is legally (not to mention constitutionally) obligated to pay still boils down to a conscious decision within the White House.
And if the President makes that choice, all the “Impeach Obama” rallying cries which have rang predictably hollow so far just might unexpectedly get some teeth to them.
Related side notes
The single most nauseating talking point raised by Republicans so far has been the notion that forcing this administration to begin choosing where to drop the axe on federal spending means leaving all the discretion up to the Democrat-held White House.
The leading minstrel on this argument has been – surprise, surprise – Senate Minority Leader Mitch McConnell of Kentucky.
This is the same Mitch McConnell who practically broke into tears over mentions of reducing discretionary spending a year ago.
The Bluegrass State’s senior Senator continues to let his priorities shine like a beacon of patheticness.
Once again the tenuousness of Social Security has worked its way to the forefront political discussions. Every Libertarian across America ought to be beating this drum relentlessly in light of the opportunity presented.
For the first time last year, the Social Security Administration found itself having to dip into the so-called lockboxes and…
…Figure out what to do with stacks of worthless IOU’s.
And that has come to pass because of decades of borrowing against the Social Security Fund that was supposed to be funded by all the FICA taxes collected since the Roosevelt era.
Things were running smoothly until we finally reached that point – which had been predicted for years – when the amount owed in Social Security obligations exceed the amount of FICA taxes being collected to ensure the checks continue to go out in the mail.
There should be trillions of dollars in reserve to permit the seamless continuance of payments in transition from entitlement surplus to entitlement deficit without any hiccups. However, both parties kept dipping their digits into that cookie jar for years: now all we’re left with is the most extravagant Ponzi scheme ever fathomed – with 30-something sessions of Congress making Bernie Madoff look like a pocket change pilferer.
Showing posts with label Boehner. Show all posts
Showing posts with label Boehner. Show all posts
Sunday, July 31, 2011
Monday, October 25, 2010
Jordan's economic ideas disappoint
Representative Jim Jordan (R-Urbana) may be among the most conservative members of the U.S. House or Representatives. That does not automatically mean, however, that he can offer any viable ideas on turning around our economy or controlling federal spending.
Among his top proposals for reining-in deficit spending is for the federal government to return to fiscal year 2008 spending levels and freeze total federal expenditures at such an outlay (approx. $2.9 trillion) as a baseline for future fiscal year budgets for an undetermined length of time thereafter.
So, what Jordan is proposing as a gleaming example of fiscal conservatism is instead of the nearly $1-and-a-half trillion deficit we face in FY 2010, we should embrace nearly a quarter-of-a-trillion-dollar deficit.
The first problem with this strategy is we still are measuring the federal deficit in terms of trillions-of-dollars. So, Jordan’s grand plan is to take the government from grotesquely unsustainable to only fairly unsustainable in its spending habits.
This leads us to the other major flaw in Jordan’s plan. Obviously what Jordan is trying to achieve in terms of fiscal policy is to prevent voter backlash against Republicans who start to promote cuts that are likely to prove to be unpopular over the course of the 112th Congress as well as freeze total federal spending at an amount that – in theory – should allow a steadily growing Gross Domestic Product to present enough of an opportunity to allow tax revenues to eventually eclipse total expenditures.
The prevailing logic is along the lines how the United States managed to enjoy several years of a surplus in the late 1990s, which topped-off at $122 billion.
However, one factor that was present 15 years ago which is absent today was our country’s rate of economic growth was much more robust at that time. And that was before the tax cuts in 2003 which appear to be set to expire in about two months.
The recent rates of GDP growth (which was 1.7% for the second quarter of calendar year 2010) have been as stagnant as America’s unemployment rate. Based on the latest economic outlooks, under Jordan’s plan we can at best anticipate bringing the U.S. government back to a balanced budget in 10 years.
In the meantime, we can expect to add roughly another $1.5 trillion of national debt on top of the $13.6 trillion presently accumulated – pushing the total beyond $15 trillion and likely leaving us with a national debt that will finally have eclipsed our GDP.
I also have to question how genuine Jordan’s pledge is to fight for real tax relief. During the October 12 debate, he mentioned supporting a number of temporary tax relief measures, including a one-year, 50% tax cut for independent business owners.
This also appears on the surface to make sense. But, in light of all the burdens being heaped onto the shoulders of business owners in America as a result of the legislative activity over the last 18 months, Jordan’s plan does nothing to alleviate the uncertainty stifling our markets.
Common sense dictates that a truly savvy business owner – trying to stay afloat during the current economic conditions – will hold-on to most of the money saved as a result of such a tax measure and put it in a rainy day fund in anticipation of when their taxes go back up. A healthy chunk of that money will go toward their personal finances. And, in the end, a very small portion will actually be applied toward hiring. Even then, most if not all of those who are hired during this time can expect to be laid-off again when those tax breaks expire at the end of the year as a result of those business owners trimming overhead costs in anticipation of the expected surge in taxes.
Businesses in America can have all the tax breaks imaginable, but they are not going to see real increases in revenue until the rest of us – those upon whom the independent business owner depends to walk through his or her door and spend our money in their establishments – have the financial wherewithal to perform that vital component of the economic cycle.
None of that can happen without two definitive courses of action taking place in Washington, D.C.: dramatic, across-the-board cuts in spending; massive, across-the-board reductions in taxation. This is how the crushing uncertainty preventing economic recovery in America must be dissipated.
Jordan has spoken at length about being the only member of the House of Representatives to have submitted a balanced budget during his time in office. He also mentioned that his budget proposal was shot-down by party leaders. What Jordan is short on when it comes to details is who in the Republican Party’s House leadership rejected his budget.
Where he disappoints me on that order of business is by only making the vaguest references in that comment – instead of calling-out his fellow members of Congress by name and pressuring them to do what is best for America – Jordan shows us that he has forgotten why he was sent to Capitol Hill in the first place. He was elected not to represent the interests of his party; he was elected to represent the people of the 4th District of Ohio.
Where he also is skimpy on details is when he discusses how to tackle federal spending reductions. In that first debate he mentioned the need to look through the various agencies and programs and assess where there are redundancies and inefficiencies. Can he give us any examples of such programs or agencies? After all, since he did submit a balanced budget for consideration, then surely he was aware of a number of specific cuts that his proposal would have made.
Honestly, he did read his own budget before sponsoring it, didn’t he?!
I’ve said this before and I’ll likely say it repeatedly between now and until God calls me home: no one in either major party is going to get into specifics on how they intend to turn around the federal government’s fiscal mess before, during, or even after the November 2 election. None of them – no matter how conservative they’re rated by various political analysis organizations – has the testicular fortitude to stick their neck out because of their inimitable fear of it ending up on the chopping block of public opinion.
I hold no such fear. I can tell you right now we can do without the departments of Labor and Energy as well as the Environmental Protection Agency. Labor and environmental protection are redundant by virtue of the fact they are the rightful domain of the states to tackle.
The same holds true for the Department of Education. I stick by my platform of slashing its budget in half up front, set aside only the bare minimum ($1 billion, tops!) to pay for the administrative overhead needed to pool the remaining $80 billion and disburse it on a per capita basis to all 50 states and the District of Columbia based on their enrollment totals. Once that is set in motion, they have three years to make the necessary plans to continue forward once that well goes dry.
But, at the risk turning this into a circular discussion, the states, local school districts, and local governments will not have the room to take on the proper share of responsibility if federal taxes remain so oppressively high and the tax code remains so unnecessarily complex.
Predictably, though, Jordan will continue to present to his constituents the vaguest set of specifics he can conjure despite the undeniable truth that governmental size and spending two years ago, just like it is today, is thoroughly unsustainable.
So, the people of Ohio’s 4th congressional district have a rare opportunity this year to initiate the beginning of the end of politics as usual. Every two years you get to vote for someone to represent you – but on November 2 you can elect a candidate who is representative of you.
You need to decide who best fits that description. Is it someone who has worked on the assembly line, been employed at your local charitable organization, held down both jobs trying to make ends meet, and had to figure out how to do that during two layoffs – someone who has walked a mile in your shoes?
Or, is it someone who clearly demonstrates that his top priority is – when the 112th Congress is sworn-in – to do little more than play Follow-the-Leader behind John Boehner?
Among his top proposals for reining-in deficit spending is for the federal government to return to fiscal year 2008 spending levels and freeze total federal expenditures at such an outlay (approx. $2.9 trillion) as a baseline for future fiscal year budgets for an undetermined length of time thereafter.
So, what Jordan is proposing as a gleaming example of fiscal conservatism is instead of the nearly $1-and-a-half trillion deficit we face in FY 2010, we should embrace nearly a quarter-of-a-trillion-dollar deficit.
The first problem with this strategy is we still are measuring the federal deficit in terms of trillions-of-dollars. So, Jordan’s grand plan is to take the government from grotesquely unsustainable to only fairly unsustainable in its spending habits.
This leads us to the other major flaw in Jordan’s plan. Obviously what Jordan is trying to achieve in terms of fiscal policy is to prevent voter backlash against Republicans who start to promote cuts that are likely to prove to be unpopular over the course of the 112th Congress as well as freeze total federal spending at an amount that – in theory – should allow a steadily growing Gross Domestic Product to present enough of an opportunity to allow tax revenues to eventually eclipse total expenditures.
The prevailing logic is along the lines how the United States managed to enjoy several years of a surplus in the late 1990s, which topped-off at $122 billion.
However, one factor that was present 15 years ago which is absent today was our country’s rate of economic growth was much more robust at that time. And that was before the tax cuts in 2003 which appear to be set to expire in about two months.
The recent rates of GDP growth (which was 1.7% for the second quarter of calendar year 2010) have been as stagnant as America’s unemployment rate. Based on the latest economic outlooks, under Jordan’s plan we can at best anticipate bringing the U.S. government back to a balanced budget in 10 years.
In the meantime, we can expect to add roughly another $1.5 trillion of national debt on top of the $13.6 trillion presently accumulated – pushing the total beyond $15 trillion and likely leaving us with a national debt that will finally have eclipsed our GDP.
I also have to question how genuine Jordan’s pledge is to fight for real tax relief. During the October 12 debate, he mentioned supporting a number of temporary tax relief measures, including a one-year, 50% tax cut for independent business owners.
This also appears on the surface to make sense. But, in light of all the burdens being heaped onto the shoulders of business owners in America as a result of the legislative activity over the last 18 months, Jordan’s plan does nothing to alleviate the uncertainty stifling our markets.
Common sense dictates that a truly savvy business owner – trying to stay afloat during the current economic conditions – will hold-on to most of the money saved as a result of such a tax measure and put it in a rainy day fund in anticipation of when their taxes go back up. A healthy chunk of that money will go toward their personal finances. And, in the end, a very small portion will actually be applied toward hiring. Even then, most if not all of those who are hired during this time can expect to be laid-off again when those tax breaks expire at the end of the year as a result of those business owners trimming overhead costs in anticipation of the expected surge in taxes.
Businesses in America can have all the tax breaks imaginable, but they are not going to see real increases in revenue until the rest of us – those upon whom the independent business owner depends to walk through his or her door and spend our money in their establishments – have the financial wherewithal to perform that vital component of the economic cycle.
None of that can happen without two definitive courses of action taking place in Washington, D.C.: dramatic, across-the-board cuts in spending; massive, across-the-board reductions in taxation. This is how the crushing uncertainty preventing economic recovery in America must be dissipated.
Jordan has spoken at length about being the only member of the House of Representatives to have submitted a balanced budget during his time in office. He also mentioned that his budget proposal was shot-down by party leaders. What Jordan is short on when it comes to details is who in the Republican Party’s House leadership rejected his budget.
Where he disappoints me on that order of business is by only making the vaguest references in that comment – instead of calling-out his fellow members of Congress by name and pressuring them to do what is best for America – Jordan shows us that he has forgotten why he was sent to Capitol Hill in the first place. He was elected not to represent the interests of his party; he was elected to represent the people of the 4th District of Ohio.
Where he also is skimpy on details is when he discusses how to tackle federal spending reductions. In that first debate he mentioned the need to look through the various agencies and programs and assess where there are redundancies and inefficiencies. Can he give us any examples of such programs or agencies? After all, since he did submit a balanced budget for consideration, then surely he was aware of a number of specific cuts that his proposal would have made.
Honestly, he did read his own budget before sponsoring it, didn’t he?!
I’ve said this before and I’ll likely say it repeatedly between now and until God calls me home: no one in either major party is going to get into specifics on how they intend to turn around the federal government’s fiscal mess before, during, or even after the November 2 election. None of them – no matter how conservative they’re rated by various political analysis organizations – has the testicular fortitude to stick their neck out because of their inimitable fear of it ending up on the chopping block of public opinion.
I hold no such fear. I can tell you right now we can do without the departments of Labor and Energy as well as the Environmental Protection Agency. Labor and environmental protection are redundant by virtue of the fact they are the rightful domain of the states to tackle.
The same holds true for the Department of Education. I stick by my platform of slashing its budget in half up front, set aside only the bare minimum ($1 billion, tops!) to pay for the administrative overhead needed to pool the remaining $80 billion and disburse it on a per capita basis to all 50 states and the District of Columbia based on their enrollment totals. Once that is set in motion, they have three years to make the necessary plans to continue forward once that well goes dry.
But, at the risk turning this into a circular discussion, the states, local school districts, and local governments will not have the room to take on the proper share of responsibility if federal taxes remain so oppressively high and the tax code remains so unnecessarily complex.
Predictably, though, Jordan will continue to present to his constituents the vaguest set of specifics he can conjure despite the undeniable truth that governmental size and spending two years ago, just like it is today, is thoroughly unsustainable.
So, the people of Ohio’s 4th congressional district have a rare opportunity this year to initiate the beginning of the end of politics as usual. Every two years you get to vote for someone to represent you – but on November 2 you can elect a candidate who is representative of you.
You need to decide who best fits that description. Is it someone who has worked on the assembly line, been employed at your local charitable organization, held down both jobs trying to make ends meet, and had to figure out how to do that during two layoffs – someone who has walked a mile in your shoes?
Or, is it someone who clearly demonstrates that his top priority is – when the 112th Congress is sworn-in – to do little more than play Follow-the-Leader behind John Boehner?
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