BY FRANK HILL
Reprinted from Telemachus.com
Editor’s Note: This was written prior to the new agreement.
Some people think it is Senator Harry Reid. Some think it is President Obama. Others think it is Speaker John Boehner. The Tea Party is getting its share of the blame as well.
We happen to think Speaker Boehner is emerging as a statesmanlike leader during this whole thing. He had been parodied as man who shed a tear much too quickly but he is looking more and more like the adult in the room as this thing drags on.
Let’s review the facts:
- We currently have a $14.7 trillion national debt
- We currently have a $1.4 trillion annual shortfall between expenses and revenues.
- We don’t have a Balanced Budget Amendment to the US Constitution.
- The Democrats control the US Senate and the White House.
- The GOP controls the House of Representatives.
- We have collected an average of 18.5% of GDP in tax revenues for the past 50 years.
- We are now spending 25% of our entire national GDP out of Washington.
- Interest rates are at all-time lows at or below 3%.
- Interest rate costs could double overnight if interest rates return to ‘normal’ 5-6%
- World financial markets are on edge waiting for the US Congress to ‘do something’
Tom Cruise asked a very good question of his co-star, Demi Moore, in Rob Reiner’s ‘A Few Good Men’:
‘Should We or Should We Not Follow The Advice of the Galactically Stupid?’
We are not denigrating the efforts of either of the majority leaders in either the House or the Senate. We know how difficult it is to round up the herd of cats up there from both major elective political parties.
Each Senator thinks he or she has what it takes to be the President of the United States one day, although each actually has more power in their little finger tip to influence public policy in America than the President actually has constitutionally.
Each and every Congressional Representative has a very short leash from their home districts because of the two-year terms imposed by them by the said same US Constitution (thank God!).
And in 2012, this leash is shorter than most for many incumbents since new redistricting lines have been drawn and many of them will face an entirely new electorate to try to represent in the next term of Congress.
So getting a majority is hard enough in either house and getting 60 in the Senate to even allow debate on a bill is a tall order worthy of the patience of Job.
But honest to God, what in the world was going on up there?
We think there are two problems. #1) Many elective representatives nowadays do not go to Congress with a whole lot of private sector high-level experience in finance, budgeting or accounting. This is a very high stakes of domestic and international financial chicken we are now engaged in and it would help a ton to have maybe more than a couple of elected representatives who can speak to that complexity with understanding and comprehension.
Like why not a Nebraska ‘Senator Warren Buffett’ or a ‘Senator Bill Gates’ from the Great State of Washington for example? They are supposed to be our ‘best and brightest and smartest’, aren’t they?
#2) Congress is a direct mirror-image reflection of the schizophrenia we as the American public have towards government at all levels. We all A) want ‘something’ from the federal government and B) We do not want to pay for any of it.
Admit it to yourself. You know it is true.
So who is ‘galactically stupid’ under that scenario?
Are you ready to give up your ‘entitlement’ to start receiving $2500/month from Social Security when you turn 66 and instead wait until you are 70? (Did anyone notice that President Obama let the cat out of the bag when he said he ‘might not have enough money to pay SS benefits on August 3 if the debt ceiling is not raised? What more proof do you need that the ephemeral SS ‘Trust Fund’ does not exist? Because if it were ‘true’, we could just go into it and take cash out to pay SS benefits on August 3, right?)
Are you ready to give up your ‘entitlement’ to enroll in Medicare at age 65 and pay roughly 75% less than the full market price in monthly insurance premiums to do so?
Are you ready to reduce the defense/homeland security budget perhaps 20%?
Are you ready to have less of your food inspected before you eat it?
Because if you are not, prepare yourself for some massive tax increases. Including everyone, not just the ‘filthy rich’. Why? Because there are so many more moderate-income taxpayer households than wealthy folks, maybe 100 million or more.
$1000 more in taxes paid by 100 million taxpayers yields ‘only’ $100 billion more per year in tax revenues. We’d have to pay $10,000 more per year for each ‘normal’ taxpaying household just to raise another $1 trillion per year in tax revenues which would still leave us with over $300 billion in deficit-spending each year at current elevated spending levels.
Raise your hand if you think you can pay $10,000 more to the federal government each year in taxes to support all the programs now in force on the books in law.
The immutable laws of economics, gravity, international finance and physics are starting to wend their magic against the profligate and yes, ‘galactically stupid’ fiscal policies of the United States of America for these past many years, but especially these past 10 years and most specifically, these past 2.5.
If you are of the mind that ‘no compromise’ is the way to go, take another deep look at your pocket Constitution and tell us where it says any political party gets to tell any other political party what to do 100% of the time every time there is a legislative session in Congress. It just ‘ain’t in there’ no matter how hard you look which is just the way the Founders wanted it given their predilection against the concentration of any power, including the King of England.
Compromise is the very essence of the US Constitution. You either have great negotiators and ‘win’ more of what you want for your side than you give up to the other side or you don’t and you ‘lose’ this time around. But there is another election around the corner and another session of Congress next year where you can come back and try again with new legislators and leaders.
Tom Cruise as Lt. Kaffee would be having a field day lately. Hey! Maybe he should run for Congress?