Monday, April 18, 2011

U.S. Government - Raising the Debt Ceiling – Consequences Raising Taxes – Politicos as Usual not Fooling the Public.

Economy no place to play politics as usual - image

The current administration is bent on raising the U.S. debt ceiling according to an article in Politico: Tim Geithner, Treasury Secretary “and administration’s point man”, spoke on several weekend talks shows noting: he was certain that lawmakers would avoid disaster by voting to raise the $14.3 trillion ceiling.
“Congress is going to have to raise the debt limit. They understand that. That’s absolutely essential to preserve the credit-worthiness of the United States of America.”

Further, several Republican lawmakers noted that they would be willing to raise the debt ceiling if there was a balanced budget amendment attached (Politico), however, the likelihood of the administration reining in spending, given the history of the current administrations eagerness to spend, is unlikely. The fact of the matter is that without deep cuts in spending, which would include entitlement programs, there appears no way to balance the budget. The President, already on the campaign trail for reelection in 2012, had made remarks regarding the House Republicans’ attempts to cut the Health Care Reform Act, by saying they would not touch “his” health care plan in taped remarks and further sarcastically denounced Rep. Paul Ryan (R-WI), as “America's accountant and trying to be responsible”.

Without a willingness to cut or redesign programs that are money eaters, the only other option is to raise taxes across the board – which was made clear by the Senate Republicans who, according to the Washington Post: have been willing to discuss a budget deal that would include raising more money through taxes, along with making deep spending cuts, to help reduce the deficit.

The question remains, what programs would these lawmakers, from both sides of the aisle, cut, in order to satisfy constituents or their “base” going into the 2012 elections? One would find it difficult to imagine that the largest entitlement programs: Social Security, Medicare and Medicaid would be revised under any circumstances, and pork is, for some members of Congress, untouchable. Until and unless somebody in the government is willing to take a political hit to save the solvency of the nation, the downward spiral will continue – and as long as the partisan finger pointing by the President and the Democrats in both house, as well as certain Republicans continues, (while in campaign mode), with the debt ceiling raised, and no control over spending continues, the value of the dollar declines, and inflation will increase – to Carter’s levels.

According to reports from the Bureau of Labor Statistics, if one does not factor in food and fuel, the inflation rate is actually quite low, however, when food and fuel are introduced, the rate of inflation (which is considered volatile and subject to change), the rate is approximately (according to the BED) 2%. Add this to the current unemployment rate of 8.8% , and the Obama Misery Index is currently at 11% - or three points behind former President Carter’s 13.8% high.(One who shops for groceries now, may find that inflation rate to be on the low side.)

The rise in fuel prices at the pump ($4.00) reduces households disposable income, add to that the rise in food prices (which are directly impacted by the rise in fuel), do not appear to be going down anytime soon. When consumers have less to spend, due to food and fuel costs, those industries that rely on expendable income are forced to close doors – causing additional layoffs and a resin the unemployment rate. The U.S. is now on an unsustainable course, unless someone steps in and takes the political gloves off, and put s the American Public first.

We do have solutions, unfortunately, they are not politically correct solutions, such as drilling offshore, and removing the ban on the Alaskan oil fields; even a hint of ending the ban on drilling and opening up our lands to drill, would send the prices of oil downward, as evidenced by the actions of the Congress in 2008, when a band of house Republicans stayed on the floor to force then House Speaker, Nancy Pelosi, back into session in order to vote on offshore drilling. The price of gas at that point had risen dramatically; it worked, with the results that without a single drill touching the earth, the commodities traders backed off, and oil re-adjusted. In addition, President George Bush had authorized a rebate to the American public, a stimulus so to speak, in order to “jump start” the economy, after the rise in oil prices. Unfortunately, instead of spending that money on hard goods (electronics, etc.), most used the extra check to pay off credit cards which had been used to buy high priced fuel!. There appears, no matter the party in charge, a tendency to move too little too late.

Unless the government is willing to reign in wasteful spending: a Report released by the GAO, found that over one hundred billion to upwards to 200 billion in waste could be cut from the federal spending spree. The report, available < a href="">here in PDF, addresses areas of waste and duplication that are, mind boggling. Perhaps someone should send a copy to Obama, Geithner, the Senate Republicans and anyone who’s currently attempting to save the economy, as a starting point in reductions. Of course, these are smart people, so they must have access to the report, preferring to politicize, rather than come up with any real solutions.

Trump and Huckabee, the two GOP Poll Leaders can they stop the madness? - image Politico

As the overburdened U.S. taxpayer (which is only half the populace, and mainly middle class, takes one hit after another going forward to into the 2012 elections, those in power should pay careful attention to the man behind the hair, who, although characterized as a “clown”, and “not serious” has been polling gangbusters in the last two weeks on the GOP side. Donald Trump, one might dismiss out of hand, however, in a non-scientific poll of 18 to 24 year olds, conducted “on the street”, by this blog (sample 100 in Massachusetts), all likely to vote in this election: were asked the following questions
1. What do you think of the President?
He’s got to go (expletives and strong language removed.)
2.Who would you vote for?
“You’re fired”! – Trump he’s “cool”
3.What does Trump stand for politically?
I don’t’ know and I don’t care.
4.Then why would you vote for him?
“Obama is old news, Trump is cool”.

Granted this is a multi-cultural, multi-racial, multi-religious group of high school seniors and colleges students who see no future under the current administration.
5. How likely are they to vote: Very.

Democrats or Republicans – neither, regardless of their Professors urgings, they are more to the point ready to vote for the Next American Idol.
This is how the economy impacts all voters. On the Press and its run of Donald Trump and the “Birther” issue – the response – “who cares”.

Granted not scientific, therefore, would love to see a real poll conducted across the nation, not just in blue state Massachusetts, not by some casual blogger, but by a real pollster with, as they say “street creds”.

It is, to sum it up, The Economy Stupid” and with the waste, the political machinations and the finger pointing, any candidate, Trump, Huckabee, Palin, who gets in front of the people and is blunt about prospects and how to fix them (a la Trump) will stand a better than even chance of taking on the 21st century’s Jimmy Carter.

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