A reader asked me to write about the debt ceiling again. I will admit to a sinking feeling, like I really did not want to do it. Not only because I already have, and half of the bloggers on the internet have, and not only because it has been a topic of debate on every news format T.V. and radio program, and not only because any politician who knows how to find a bank of microphones and cameras has found a way to chime in on this, complete non issue, but because the topic is like watching a train wreck. I live in north east Ohio, somewhat close to Bellevue. For those of you who do not know, Bellevue, Ohio is the largest rail switch yard in the country, maybe even the world. Trains are very heavy critters. Momentum for those who skipped science class is calculated my multiplying mass by velocity. Anyone who has ever been in an auto accident can tell you about momentum. Sometimes, when a train wreck is about to occur, people might know for 15 minutes prior, and still be unable to do a damn thing about it. A bad decision might put two opposite bound trains on the same track, and momentum does the rest. But, like our might example the train, I will allow my momentum to make a few logical observations.
Why do we have a debt limit? We have drawn this imaginary line in the stratosphere and exclaimed that we would make it illegal for ourselves to take on any more debt than that. So, as we approach it, naturally we raise the limit. It has gotten to the point now that we are talking about the next increase even before we max out our current so called limit. So, why do we have one? Why play this sadistic game with ourselves? Why not just admit that we are going to keep borrowing money, just like Greece, until our creditors cut us off? Really, what is the bloody point?
Why get mad at China? For those who have not heard me state this before, let me make it clear. China has only done what we, as a nation, asked them to do. Yes, China holds 30% of our debt, and that situation is bad in so many ways. China is hardly a friendly nation, and they delight in using North Korea and their tin pot little dictator as a thorn in our side. China is a trade partner who views us as an economic enemy to be vanquished, and with time, China will learn the benefit of a free economic system complete with full property rights, but for now, they are still overrun by former communists. Don’t confuse that however with the real issue of them holding our debt, the fault for that catastrophe is strictly ours. We went to them and asked them to loan us the money, not the other way around.
I read a particularly depressing poll today which stated that Americans are for balancing the budget, but not if it means we need to cut entitlement spending. When did we stop teaching basic math in our public schools? Really, I know a lot of teachers, and I truly like them all. I think the world of them, but if a majority of Americans believe we can balance the budget without taking a very huge machete to the area of spending known as entitlements, then all I can say is that collectively, every school teacher in the country has failed to educate the American Public at large. 67% of what our government spends is spent as a matter of law, and falls under the realm of entitlements. 40% of what our government spends is borrowed money. If every penny of non entitlement spending were to end tomorrow, we would still be borrowing 10.4% of every dollar spent. That means, if we shut down the post office, fired everyone in the military and said no more national defense, closed the EPA, fired the FBI, stopped the Department of Education, Labor, HHS, Interior, Treasury, Interior, etc……, we would still be $260 Billion short of running a balanced budget.
We have grown the economy out of these problems in the past, so why do the Democrats in charge of things now feel that it is their solemn duty to destroy any potential for economic growth. Why are they claiming that the Republicans, who by the way control no part of anything, and haven’t for years, are sabotaging the economy. Why does anyone able to form a thought fall for this. Boeing, a major U.S. corporation tried their level best to employ thousands in South Carolina, which would have led to a multiplier effect that would have been a tremendous boon to the Democrats politically in the 2012 elections. When Barack Obama gave his speech about job creation, and turning the economy around, it could have been true. Our old friend hyper regulation reared its ugly head and put the stopper on that. Here’s the thing, I would rather see my friends and neighbors working and prospering than to have President Obama preside over a terrible economy.
Yesterday, Barack Obama gave a tongue lashing to the House Leadership, which is Republican, about leading on the budget, and solving our economic woes. Then he jetted off for another round of golf and more vacation time. Leadership is important, but it starts with a President, and then it filters down to the legislators. So, where is Obama’s budget? He has yet to offer one as President. This is his third year in office, and his homework is now about 2 and 1/2 years late. Come to think of it, for the entire time the Democrats controlled the House, they failed to prepare a single budget. This is the ultimate in shirking responsibility. The President’s tongue lashings have become a joke, and deservedly so.
I consider myself a conservative first, and probably identify with Republicans more than Democrats. I know that this shocks no one, but I do have some instances of when the GOP angers me as well. Mostly it happens when they capitulate in the ideals they promised to uphold but did not. I sent John Boehner a few letters stating I wanted no compromising going on. Yet, when I turn on the T.V. there is some Republican who is saying, “I think the voters sent us here to get along and to iron out our differences and to work out a compromise to move the country forward.” What on Earth do we have to do to these dolts to let them know we sent them to Washington as a restraining order against the asinine profligate spending going on.
Here is the train wreck about to happen. Our own ideas for our debt limit as we should have noticed by now is completely meaningless. It is an imaginary number that when we get close to it, it just gets bigger. The debt limit that is not meaningless is that which is imposed by our creditors. One such creditor, PIMCO has announced, a few months back that they are indeed refusing to loan us another dime. No, they are not our biggest creditor, but in my experience, creditors tend to have very similar outlooks. Standard and Poors, Fitch, Moody’s, Credit Suisse, have all downgraded our bond ratings. This means that the people who rate our ability to pay back loans is now out there telling our creditors, and their risk committees that we aren’t as capable of paying back our loans as we would like everyone to believe. What will happen when the rest of the world refuses to loan us another dime, well my friends, we will finally get the balanced budget amendment I’ve always wanted. The two trains on the track are our massive spending, and the massive borrowing we must do in order to keep that spending going. These trains are too massive to stop, and so they are going to crash. The only question now, is whether or not we wish to apply the brakes to soften the blow.
Hat tip Rodan.
