The agreed cuts that the liberal MSM are universally describing as too severe? Zero. That's right, after all is said and done, the federal debt will be at least 50% greater in 2021 than it is today. The Orwellian Newspeak that's being bandied about is to make people believe that there are genuine cuts when in fact these so-called "cuts" are reductions in proposed increases in net spending (i.e., the CBO baseline). From the Congressional Budget Office's budget and economic outlook for 2011 to 2021:
If various provisions contained in the 2010 tax act expire as scheduled and if other laws affecting spending and revenues remain unchanged, the budget deficit will shrink from 9.8 percent of GDP this year to 3.1 percent by 2014, CBO projects. That reduction reflects the scheduled expiration of those tax provisions, continued lessening in the budgetary impact of policies undertaken to provide economic stimulus, and improvements in the economy. Under those current-law assumptions, annual deficits are projected to fluctuate in a narrow range between 2.9 percent and 3.4 percent of GDP from 2014 through 2021.
Even with these highly optimistic assumptions, all of which have proven incorrect thus far, this translates into a total additional debt of $7 trillion dollars over the next 10 years. Add to the current debt of over $14 trillion and we are looking at a minimum $21 trillion dollar debt in 2021. (See pages 54 and 87 of the report for projections of total outlays and revenues for the 10-year period, respectively). Any newly proposed "cuts" are only reductions from these proposed increases in net spending.
MSM spin machine: that is not a cut, no matter how you spin it.
Such policies will wreak havoc on the US economy, and the purchasing power of the US dollar through severe inflation. Interest rates will be forced to sky-rocket as no foreign government or institutional investors would otherwise choose to hold severely depreciating US dollars. The net result will be severe price inflation, which will decimate any remaining savings of hard-working Americans, and eventually wipe out the middle class.
Scheer then goes on to describe Obama's "grand bargain" that has got so many progressives reeling:
But to use the word "capitulation" is too kind, since this president, as was Bill Clinton before him, is clearly one of those "New Democrats" who welcomes the opportunity to jettison the legacy of Franklin Delano Roosevelt as outmoded political baggage. Otherwise, why would Obama have reached for a “grand bargain” in which he even put Social Security and Medicare cuts on the table before the Republicans rolled him?
Perhaps the one valid complaint in the wake of the-sky-is-falling-Obama-bashing editorials, is the fact that Obama put Social Security and Medicare cuts on the table without Republicans having requested them. There is no reason why entitlement spending needs to be touched at this time. Entitlements are something that can be dealt with using a much longer-term time frame of decades through opt-out options, so as not to upset those who have already paid into these programmes. Even though entitlements are a huge source of spending, they don't have to be a priority given how many Americans are dependent on Social Security, Medicare, and Medicaid. It is enough to end our wars overseas, bring our troops home, change our foreign policy to one of non-interventionism, and curtail a number of other big government programmes, including the Department of Education, Department of Energy, Department of Commerce, Department of Agriculture, Department of Housing and Urban Development, Office of Homeland Security, FDA, TSA, FEMA, the CIA, and many others. In any case, all these programmes actually interfere with the objectives they purport to be serving. And if that were not enough, they are not authorized by the Constitution.
Just to add some clarity to the Social Security debate, former MSNBC host Cenk Uygur has confirmed with members of Congress that Social Security has a $2.5 trillion surplus — but it has already been spent. That's right, all gone. This is the deeper reason for abolishing big government programmes (warfare and welfare), not because those that wish to do so are evil selfish people that want to see poor dependent people suffer, but because government bureaucrats can't be trusted with the purse strings of other people's hard-earned money. It is far better for individuals to invest their hard-earned money and create their own old-age security and healthcare nets, rather than depend on corrupt politicians to do the right thing: because they won't.
In this quote, Scheer accurately describes the rotten fundamentals of the US economy, but then misses the mark entirely:
Those policies caused the 50 percent run-up of the national debt between 2007 and this week, when the debt ceiling had to be raised. While the trillions wasted made the bankers whole, it did nothing for the 50 million Americans losing their homes or the 20 percent of the workforce that can’t find the full-time employment for which they are qualified. The economy has zeroed out in the past six months, relative to population growth, and in June consumer spending had its biggest drop in two years. The fundamentals are rotten, as reflected in the steep descent of the stock market despite the raising of the debt ceiling.
First, the debt ceiling did not have to be raised. There is plenty of revenue ($200 billion per month; see below) to pay for interest payments so the US would not default, and also cover a few select programmes. But Scheer and his colleagues are missing the bigger picture: they're looking at a 50% run-up between 2007 and today. These very same big government policies represent a 500,000% increase in the debt since 1913! Whether it's welfare-state spending ("social programs") or warfare-state spending ("defence"), it's the same big government profligacy and irresponsibility only with different rhetoric. When will our thought leaders stop buying into the Republicrat/Demapublican narrative?
In a poor turn of logic, Scheer goes on to describe how raising the debt ceiling should have been a no-brainer:
If adults, of either party, had been watching the store, raising the debt ceiling would have been a no-brainer. Instead, the obvious obligation to pay debts that Congress had already incurred was turned into an occasion to wage ideological war on the very idea of government.
This is utter nonsense. Raising the debt-ceiling as a knee-jerk reaction to profligate government spending is an un-brainer not a no-brainer. What will that solve? Only this: to provide a very temporary abatement of economic woes until the next cycle of debt-hike fix becomes necessary. Each fix necessarily becomes larger, and more frequent, until finally the hapless addict baselines. The obligation to pay interest on existing debts is so obvious and doable even without a debt-ceiling hike, why didn't Obama take the issue of default off the table entirely? Why all the "default" fear mongering? It was never necessary, except perhaps for political reasons. The federal government takes in approximately $200 billion in revenue each month. Interest payments are about $20 billion per month. Even after paying Social Security, Medicare, and soldier's salaries, there are still funds left over. There's just not enough to pay for everything. Besides, raising the debt ceiling is treating symptoms not causes.
Here, Scheer explains why purportedly "major cuts" at the present time are such a bad idea:
In the end, Obama agreed to major cuts at a time when the government needs to spend more money on extending unemployment insurance, mortgage relief to avoid foreclosures, and support for state budgets so that more teachers and firemen are not laid off.
Major cuts? Not by a long shot. Actual cuts? Nil (see the CBO's Budget and Economic Outlook). But let me get this straight. The federal government should continue doing what they have been doing for the last decade, unbridled spending, financial stimulus, raising the debt ceiling, bailing out state governments (Scheer, to his credit, wouldn't advocate bailing out banks or companies), treating symptoms instead of root causes, all so we can be here again in 18 months, then 12 months, 6 months, 3 months, ... until we all become accustomed to living in a perpetual state of crisis, and the people will accept any #### their government tells them? Where have I heard this script before?
But I have an honest question for Mr. Scheer and other big government advocates. You see, I'm one of those people that wasn't drinking the MSM housing bubble Kool-Aide of 2006-2007: "Housing prices will go up in perpetuity! Buy! It's a great investment! You'll double your money every few years!" I didn't believe it, nor was I gripped by greed trying to flip homes for a quick buck like oh-so-many people before the musical chairs stopped. Now, why should I be forced to pay higher taxes (cost of a loaf of bread doubling, cost of gasoline, clothing, food, energy, etc. doubling/tripling) through the steep level of inflation that is occurring through continued unbridled government spending? Why am I being forced to subsidize other people's stupidity, greed, and/or gullibility through all this funny money that's debasing my own? Can you explain that please?
As for employment, who provides real jobs? The private sector. Government jobs are paid for with tax payer dollars, so they're not productive since these jobs are a net drain on capital resources instead of being creative of wealth. Whether they're startups, small mom and pop shops, medium-sized companies, or multinationals, when businesses of all forms are taxed to the hilt, either they move their operations overseas, or have to cut expenditures in labour and capital goods, which prevents them from growing. They can do nothing else. This is why, whether we like it or not, in order to increase jobs, we have to provide an environment that is business-friendly. It's common sense. That doesn't mean bailing-out companies that have mis-managed themselves. They should die the slow death they deserve, and be bought out by well-managed companies that can salvage some of their assets, employ some of their people, and otherwise make the best out of a bad situation. Instead, government bureaucrats, in all their infinite wisdom, get involved, penalize the good companies by bailing out the bad ones, and in doing so provide bad companies with an unfair competitive advantage as reward for their mis-management. Can we not see where this is going? I don't blame directors of well-managed companies from wanting to move their operations overseas where the deck is not so terribly stacked against them.
Scheer then enlists the aid of both past Democratic and Republican presidents to explain why increasing the debt ceiling is so necessary:
To cut federal expenditures in the midst of a deep and persistent recession would have been viewed as madness by every modern Republican president, from Eisenhower, Nixon, Ford and Reagan to both Bushes. Ronald Reagan had no qualms about doubling the entire national debt that had been accumulated by all previous presidents from George Washington to Jimmy Carter.
That's only because Republicrats and Demapublicans, while appearing to be of different species, have the same genotype: parasite. Are people really so caught up in the Republican vs. Democrat narrative to think there's a real difference?
Finally, Scheer attempts to explain away then-Senator Barack Obama's opposition to raising the debt ceiling during the Bush administration:
In the current debate, Republicans were accurate in reminding that the presidents from their party had to contend with Democratic grandstanding, including by then-Sen. Obama, in opposition to the inevitable lifting of the debt ceiling. But raising the debt ceiling was always assured and never once did the Democrats go so far as to threaten to put the United States of America into default or risk the nation’s perfect credit rating.
One word: distortion. That wasn't grandstanding. That was a more honest Senator Barack Obama speaking from the only place he could — the position of someone who was attempting to uphold his oath of office. An oath every Congressperson and Senator takes: to uphold, protect, and defend the Constitution against all enemies, domestic and foreign. An entire class of politicians have become precisely the enemies they swore to defend against. More than 90% of what the federal government does is a transgression against the Constitution. But who's going to hold politicians accountable? Certainly not the mainstream media. The people? Right.
In any case, the market's response to the midnight-hour debt deal clearly shows that the risk of default was never the real issue. The issue was fundamentals: the inevitable downgrading of the nation's "perfect" credit rating due to profligate, out-of-control, no-end-in-sight government spending.
As for the debt vote, the Washington Post reports the following vote breakdown in the House:
Democratic yeas: 95 Democratic noes: 95
Republican yeas: 174 Republican noes: 66
— —
Total yeas: 269 Total noes: 161
— —
Total yeas: 269 Total noes: 161
Democratic yeas: 46 Democratic noes: 7
Republican yeas: 28 Republican noes: 19
— —
Total yeas: 74 Total noes: 26
This means 87% of Senate Democrats supported the measure, while 60% of Senate Republicans did.
What's going on? This doesn't look like Democrats got a raw deal at all — rather, it looks like Democrats in the Senate and Republicans in the House were both overwhelmingly in support of the measure, while Republicans in the Senate and Democrats in the House were more evenly split.
Looks almost as if someone stopped the music, forced everyone to exchange Democrat/Republican costumes, re-started the music, and everyone resumed playing musical chairs as per usual. Shenanigans are afoot. But of course, what else is new under the political sun?
References:
1. Robert Scheer, "The Recovery is Dead, Long Live the Recovery."
2. Congressional Budget Office, "The Budget and Economic Outlook: Fiscal Years 2011 to 2021."3. Cenk Uygur, "Cutting Social Security is the New TARP."
4. Felicia Sonmez, "The Senate debt-ceiling vote: Behind the numbers — and inside the chamber."
