I continue to be frustrated with the news. Certain pundits that I typically agree with (Dick Morris, for example) have proposed that the debt ceiling deal was a victory for Republicans and Conservatives. I don't get it.
In my view, the deal was seriously flawed and only served to avoid the possibility of default during August. Keep in mind that, again in my view, the default on formal debt - US Treasury paper - is not an issue at this time. There are adequate revenues coming into the treasury each month to cover the high priority obligations. But the operations of the government would not be able to be funded with the monthly shortfall they have put in place.
Much of the confrontation in the negotiations centered around the passage of the balanced budget amendment. Horsepuckey on a stick seems to be the only comment I can print in this family friendly setting. The BBA may be good policy and should be pursued as an election issue in 2012 - but it was not an appropriate pivot point for the debt ceiling discussion. First, I don't think the votes are there to pass both houses of Congress yet. But more importantly, the process of ratification by the states can take years and simply is not a immediate, short term issue.
So we have kicked the can down the road again, given the President two years of increases in debt, and gotten no short term immediate cuts in spending and threats from Liberal leadership that we cannot touch entitlement spending. These people have become so detached from reality that they are believing their own press releases.
Now the response to the deal is beginning to come in. The stock markets have fallen 4% last week. S&P, a debt ratings company, has downgraded US debt offerings, taking away our AAA rating for the first time since 1917. The immediate impact of this disaster is that the interest rate for US debt instruments will have to go up in order to attract investors to buy the bonds and notes. Further many institutions that hold US Treasury instruments now are required by their rules not to hold any paper with less than a AAA rating - so our universe of potential investors will be further limited. Our response will be to run the money printing presses - further depressing the value of the dollar and increasing the chances that the US Dollar may be replaced as the world's reserve currency
CAN YOU HEAR ME NOW, MR PRESIDENT ?
Obviously not. As the President continues to focus his time and attention on the only jobs plan he cares about - his own re-election campaign. And news reports indicate that the President is giving his senior staff modest raises in the face of national pain and suffering... staff raises that are running 40% or more !!
Financial Advisor Dave Ramsey has put the woefully inadequate response to the debt into simple terms even a Congressman should be able to understand.
“If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year and are $327,000 in credit card debt. They are currently proposing big spending cuts to reduce their spending to $72,000 a year.”
November 6, 2012, seems like a long time away when we need changes in national policy right here, right now. While the Democrats and the lapdog media tell us to ignore the tea party and the voice of WE THE PEOPLE, remember 435 Representatives and 33 Senators and 1 President will be on the ballot in 2012 asking that we renew their contracts and return them to office.
Choose Wisely.
Comments(12)