Saturday, July 23, 2011

Career Politicians will ruin America not the lack of a debt ceiling increase

"Ordinary folks, who are struggling every day. And they know they're getting a raw deal. They're mad at everybody about it. They're mad at Democrats and they're mad at Republicans because they know that somehow no matter how hard they work, they don't seem to be able to keep up," said President Obama yesterday at the daily White House press briefing. President Obama is correct that Americans (or as he said later in the press briefing "working stiffs") are upset and mad at how government is working. They are mad at the blame game, they are mad at career politicians who are more interested in the next election instead of solving the problems America is facing. The debt limit debate is the ruse of the day meant to scare Americans into thinking that America is headed for financial ruin.

Part of that is correct. We are on a path of fiscal implosion but it is not because the Conservative base of the Republican mantra of not raising taxes nor is it because of the Liberal base of the Democrats mantra of taxing the rich (still yet undefined); rather we are traveling down this road because we are spending 22% of GDP while revenues are at 18% of GDP. One may look at these numbers and say we need more revenue. The trouble with that mentality is, per the CBO, the United States has historically received revenue in the 16-18% of GDP range regardless of the nominal tax rates. That leaves us with the spending of 22% of GDP.

We need to make hard choices this year not next budget cycle or over the next ten years. We need to deal with it now and if that costs some sitting Senator or Representative their seat then so be it. Right now we can service our debt without raising the debt ceiling one penny. No one argues that. The political football instead is the 44% gap in the budget that would exist if we paid off our debt first before following through with the rest of our budget items. There are no sacred cows in the budget. If a company goes belly up it results in loss of jobs, loss to the creditors and possible loss of retirement funding.

The trouble that arises is that Americans have become entitled to certain programs within the government – SSN, Medicare, and Medicaid. No one is arguing, regardless of the spin put on it by the Left, of taking away benefits to those already receiving or just about to receive them. The conversation is about how to keep the programs viable for those of us 10+ years away from enrolling. We need real reform now not spread over the next ten years. Cutting $1T from a $14T budget over the next ten years is like a farmer harvesting an acre of crop out of the 100 acres planted over the next ten years. It just doesn't impact anything. Of course the farmer would have lost his farm during that time frame as the rest of the crops would be worthless.

A lesson should be learned from the state of Minnesota. Our fearless leaders took the bold initiative to kick the can down the road instead of demanding that both sides realize that in order to bridge the gap on the deficit we need real reform today. I am pleased that Speak of the House Boehner is attempted to deal with the budget this year instead of kicking the can down the road. The proposed budget passed in the House this past week was not perfect but it was a step in the right direction. The trouble is that the Senate, led by Sen. Reid, wouldn't even given it the time of day. The hope by Sen. Reid is that it will force Rep. Boehner to cave which has not taken plus thus far. Americans need more Statesmen and less politicians or academics leading this country. WE need people that will stand on principle even if it cost them in the next election. The debt ceiling doesn't need to be raised to keep the United States from defaulting as the revenues are there.