Wednesday, June 29, 2011

Playing Chicken With Our Future

The current 'negotiations' between Obama, Democrats, and Republicans regarding increasing our country's debt ceiling are critical, but not for the reason both sides are stating publicly.

Republicans are demanding that any increase in the debt ceiling be matched by reductions in the national debt. Republicans, so far, are adamant that this must be achieved through spending cuts, not by raising taxes.

Democrats counter by saying that reductions in debt are fine, but must be achieved by raising taxes.

The immediate issue is the debt ceiling. If an agreement isn't made in the next month, an artificial 'deadline' established by Obama's finance czars will pass and result in a default by the United States on its debt. That is complete horseshit. No debt will be defaulted on, unless specifically directed by Obama. The government will continue to run, payments will continue to be made, Washington will continue to bleed billions of our tax dollars each and every day. It does mean that we can't raise the amount of money that we borrow from China to a higher level than it already is, without cutting an identical amount of spending.

Democrats are screaming that the end is near, that the earth is going to break open and swallow us all up if a deal isn't met. Then they turn around and refuse to have serious talks about reaching a deal. Then they turn around again and publicly start blaming Republicans for failures of the talks, and the impending doom. Lies, lies, lies ... all meant to set themselves up as blameless for this mess.

As I said in the opening, the stakes are very high, but for a different, less visible reason.

These talks set the ground rules which will apply to ALL future talks/discussions/negotiations aimed at reducing our crippling debt.

If Democrats 'win' and get any tax increases included in the deal, then the FIRST thing that will be brought up in any future talks will be tax increases. Actually cutting spending will be an afterthought.

If Republicans 'win' and tax increases do not take place in this deal, then spending cuts become the focal point of all future talks.

The key players in this mess know this. That is why they are staking out their positions with such inflexibility. That is why you have Obama calling a press conference today to discuss the negotiations, and all he has to offer are tax increases - not a single spending cut mentioned.

Some ancillary points in support ...

In his new conference, Obama singled out two tax increases that should take place. First, the tax deduction corporations can take to operate their corporate jets. Second, tax breaks extended to oil companies covering their exploration investments. He portrayed these as evil money grabs, mentioning the jet tax item at least 6 times in his speech. He equated leaving these tax incentives in place with letting children starve. With all of his zeal on the two parts, you would think that killing these two tax breaks would solve our deficit problem.

Charles Krauthammer offered his analysis on this. Paraphrasing ... If the corporate jet and oil tax breaks were eliminated entirely, and the resulting revenue collected for 100 years, it wouldn't equal the amount of debt Obama incurred on this country in the month of April.

The amount of money the Federal Government spends has gone up 24% since Obama was inaugurated. All of that money is borrowed, none of it is generated revenue. Every single penny of that increase directly piles onto our deficit.

42 cents of every dollar the Federal Government spends is borrowed.

Despite calling for reductions in government spending, Obama and Democrat leadership in Congress have yet to offer a SINGLE proposal that reduces spending on anything. They are quick to savage any Republican proposal, but have nothing at all to offer in response.

During Obama's tenure, Democrats have not offered or passed a single federal budget. Even when they controlled both Houses of Congress, they made no effort at putting forth a budget. This is done on purpose ... if there is no budget, there is no limit on what they can spend. This is the only time in our history that I am aware of that the government has been operated in this fashion, with no fiscal plan at all.

Over the past year, Republicans have repeatedly proposed rolling back spending to 2008 levels, to the amount that the Federal Government was spending before Obama took office. Democrats have screamed bloody murder and refused to even consider it. They use scare tactics, saying Republicans want to kill senior citizens and starve poor children in the streets by making horrendous cuts. Funny ... I don't remember a single instance of a child dying of hunger in the street, or of a Senior citizen dying because all of their benefits were cut off, during the Bush Administration.

This insanity has got to stop. Republicans MUST stand up during these negotiations and refuse to allow tax increases to occur. Later, if corporate tax breaks and loopholes are closed as part of a tax system overhaul, so be it - but that is another battle, and the precedent of raising taxes instead of cutting spending must not be established so early in the process.

One looks at this and has to wonder if Obama and the Dems are truly so stupid that they can't see what they are doing to our country, or if they are doing it on purpose in order to collapse our financial system so they can rebuild it into their socialist utopia. I suspect there are some of them that fall into each category. The thought that they are doing it according to a plan would have been unthinkable two years ago. However, with all we have seen them do, it has to be considered a legitimate possibility.

7/4 Update - rumors are flying around Washington that a 'mini-deal' will be pulled out just in time to save the day. Both sides are counting on this, because they don't want to lose face by backing down, and don't really care about whether the problem is fixed or not. So, we'll get a short term 'deal' that increases the debt ceiling a little bit, reduces spending a little bit, increases taxes a little bit, and kicks the problem on down the road - hopefully until after the 2012 election.

Democrat leadership wants this because they don't want it to be a campaign issue. Republican leadership wants this because they don't want it to be a campaign issue. That's the only thing the two sides agree on - put it off to help their own election chances.

That's the crux of the problem, isn't it? A horrible problem for our country takes a back seat to petty partisan politics and the all-mighty need to be re-elected.

7/10 Update - Efforts to come up with a package of 4 trillion in deficit reduction over 10 years appear to have fallen apart, The reason - no compromise over tax increases. Dems demand them, Republicans refuse them. It appears that a more modest 2 trillion package is more likely.

Stand fast, Republicans. Do not give in. If it means the smaller deal goes through, then so be it. It is more important to set the stage for future deficit reductions than the relatively small difference (can you believe that we've gotten to the point where 2 trillion dollars is considered a 'small' sum?).

The important spending cuts are in our future. This is just setting the table - and it is critical.

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