Posturing Over the Debt Crisis
- 17 July 2011 by Author 0 Comments
Posturing Over the Debt Crisis
By Richard Larsen
Published – Idaho State Journal, 07/17/11
On March 16, 2006 then Senator Barack Obama voted against raising the debt limit, and explained his vote, “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”
He was exactly right then, but now he’s throwing fuel to the flames of our out-of-control federal spending. With nearly a third of our national debt having been incurred under his watch in just two years, his words have never been truer. Indeed, we have a leadership failure, and a debt problem, mostly of his making.
Last week Obama reportedly left debt-ceiling discussions with congressional leaders declaring, “This may bring down my presidency but I will not yield on this,” referring to reduced spending and no tax increases proposed by the House. Frankly, it should “bring down his presidency,” for never in our history has there been such dogmatically ideological demagoguery coupled with incomparable reckless fiscal accountability. Let’s just hope he doesn’t take down the nation with it. His oath to protect and defend the Constitution is laughable in light of how he and his comrades in Congress have run up our national credit cards to where default is even a possibility.
Since Nancy Pelosi and Harry Reid took leadership reins for Congress, the national debt (not including the $55 trillion in unfunded entitlements, per the Wall Street Journal), has gone from $7.2 trillion to $14.3 trillion. The yearly deficit, revenue less spending, has gone from $267 billion to nearly $1.5 trillion. Pelosi’s House never passed a budget, and the nation has now gone for over 800 days without one. They’ve spent like there’s no tomorrow, and it appears they’re trying to assure that there will be none!
These are the ones who created the problem, and are now saying it can only be fixed by increasing taxes. Tax receipts for last year were over $2.3 trillion! We don’t have a revenue problem, we have a spending discipline problem. And even as critical as I often am of Republicans for having no backbone in fiscal matters, it appears they’re, at least so far, the only adults in the negotiating room trying to address our massive debt problem realistically. Heaven help us if they cave on such a crucial area as our national fiscal health!
And the scare tactics being promulgated by the White House and the profligate spendthrifts on The Hill, are nothing short of astounding. Obama threatens that seniors may not get their social security checks, while Treasury Secretary Geithner now warns of a financial Armageddon if the debt ceiling is not raised by August 3. The threats are bogus, unless they intentionally choose to make them real. We hit the debt ceiling in mid May, and the sky didn’t fall, the nation didn’t collapse, and the government hasn’t defaulted on its debt and interest payments. They’ve been juggling payments to stay at the ceiling, and they can do so after the artificial deadline as well, unless Obama and Geithner willfully choose to punish the nation for not acquiescing to their demands.
In April, Geithner stated emphatically that the possibility of default “is a ridiculous proposition, irresponsible, completely unacceptable basic risk for us to take.” It now appears his boss has prevailed on him for political posturing purposes.
Economist Ed Yardini, said last week, “Over the past 12 months through April, net interest expense of the federal government was $213.1 billion. Will there be no money to make these payments if the debt ceiling isn’t raised? There will be plenty. Over the past 12 months through April, the Treasury collected $2.27 trillion in revenues. It would be criminally insane for the Treasury to stop making interest payments on our debt just because Congress failed to agree on raising the ceiling when the revenues are certainly available to make the payments and auctions will continue to rollover maturing debt. It is insane for administration officials to suggest otherwise.”
Well, Mr. Yardini, welcome to Washington, where insanity has been the prevailing ideology and practice for four years, when it comes to fiscal discipline and financial restraint. Nothing illustrates that better than the sheer hypocrisy of Obama’s current position vis-à-vis his statement in 2006.
Unless we want to see the mass riots of Greece, the further erosion of dollar strength, unmitigated inflation, and a misery index that eclipses Jimmy Carter’s, I fear the only hope we have is to replace all the profligate spenders of both parties with men and women of common sense and a commitment to exercise fiscal prudence. For the sake of the nation, that can’t happen fast enough.
AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board. He can be reached at email@example.com.