If You Think You Have a Debt Problem

It you think you have a debt problem then look at what the Congress did. Yep they raised the debt limit to $8.18 TRILLION. As noted in the Post article, Just the increase in the debt ceiling over the past three years is nearly 2 1/2 times the entire federal debt accumulated between 1776 and 1980." While blithely raising the limit, the Republicans failed to address either spending limits or tax cuts - which Bush has promised more of.

I don't know about you, but I can't get my brain around $1 trillion much less $8.18 trillion. It is an inconceivable amount to me. It is difficult searching for analogies. Let's see, if miles were dollars, then you could make slightly over three round trips between the sun and Pluto (3.6472 billion miles from the sun). Or if we divided the debt limit between the population of the earth, each of the 6.4 billion inhabitants would owe (roughly) $2,840.

Wall Street is alarmed by the spiraling debt. In part because the US dollar is also falling at record levels. While a falling dollar makes US exports cheaper on the global market, it makes everything else more expensive - including paying on the debt. Since the US also has a massive trade imbalance, one might worry about inflation. Imagine that. The possibility of an inflationary event in the middle of our "jobless recovery." Now that sounds like something to crow about. Therefore it is not surprising that Stephen Roach, chief economist of investment group Morgan Stanley is worrying about a global recession for 2005

On Wall Street, however, Congress's lackadaisical response (to the debt) raised eyebrows.

"There's generally a denial that the government would allow itself to default, but some of us are getting a little nervous," said David Wyss, chief economist at Standard & Poor's, the bond rating company, as he watched the House recess yesterday morning without a vote.

By passing such a huge increase in the debt limit, with no strings attached, Congress has effectively given the Bush administration a blank check to continue running large deficits, said Stephen S. Roach, chief economist at Morgan Stanley. "An open-ended license for this kind of fiscal irresponsibility is a recipe for disaster," he said. (Wa. Post, 11/19/04)

Don't think that "nothing" is happening - either about debt or deficit. You can be sure that domestic spending (education, health,social services research, environment, etc.) will be cut. You can be sure that Bush will push for privatizing Social Security, which I don't understand in relationship to either debt or deficit. Why, because the feds keep drawing against Social Security funds to keep the government running. If you eliminate that shrinking pot of gold, you lose the largest savings account that the federal government has.

The ever increasing debt (and yearly deficits that Bush is running) push more and more power into the hands of those financing that loan - particularly China. With China's economy starting to wobble, that isn't a good sign either.

I get the feeling that the Bush Administration and the Republicans in power, have either no concept of how basic finance works, or else see this as an opportunity to "take the money and run." Anyone who has to figure out how to pay their monthly bills can see the problem. Expenses are exceeding income. You either slide month by month deeper into debt, or you are faced with either cutting expenses or increasing income. For many in the US "debt" is not a possibility so you end up on the streets.

If the Republicans want to continue to increase spending without increasing taxes, then there is another revenue generator - sell off US resources to the highest bidder (forests, water, land, energy ...). Don't get sucked in by the idea that simply privatizing is going to get the US out of the hole. The truth is that whether one privatizes education, prisons, or social welfare, those corporations are still being paid through one source - tax dollars. It just makes a direct transfer of wealth from US tax payers to big business.

If the strategy of the Republicans is to run the government over the cliff in order to eliminate all social programs and defund regulatory agencies then they are well on their way to accomplishing that. It is quite clear that we could soon be in the position that the only function being performed by the government is the military. Wouldn't it be an interesting scenario to essentially eliminate all those (expensive) layers of government and streamline things down to a President with a massive military behind (him)? We could get rid of all those government agencies, the courts, the US Congress. Of course, we also wouldn't need all of those pesky duplicates at the state and local levels either. Just soldiers on the streets shooting anyone who gets out of line. And yes we are training US troops for US-based deployment.

Posted by rowan at November 19, 2004 6:23 AM | TrackBack | [eMail this article!] |