Worst-Case Scenario
Ever since the Fed began the first round of what is now called Quantitative easing, massively expanding the money supply, I’ve been worried about what would happen when demand began rising, and the Fed had to somehow try and draw all that extra cash out of the economy before it became inflationary—or even worse—hyperinflationary.
That’s still a worry for me, because I have, let us say, less than absolute confidence that Chairman Bernanke and his colleagues can pull that monetary sterilization off without a misstep.
Happily, that is becoming a secondary worry for me. Unhappily, that’s because it’s been replaced by a new worry, articulated by Paul Brodsky, bond market expert and co-founder of QB Asset Management. Mr. Brodsky maintains that the real inflationary danger lies elsewhere. I mean, it still lies at at the Fed and other Central Banks, but for a different reason.
The world has simply gotten itself into too much debt. There are creditors that expect to be paid, and debtors that are having an increasingly difficult time making their coupon payments. No amount of political or policy intervention is going to change that reality. (Unless a global "debt jubilee" transpires, which Paul thinks is unlikely).
Looking at the global monetary base, Paul sees it dwarfed by the staggering amount of debts that need to be repaid or serviced. The reckless use of leverage has resulted in a chasm between total credit and the money that can service it.
So how will this debt overhang be resolved?
Central bank money printing — and lots of it — thinks Paul.
The problem has been exacerbated by the fact that, when faced with an economic depression brought on by the collapse of a debt bubble—mainly in mortgages—the preferred policy solution pushed by governments all over the world, has been to try and re-inflate the debt bubble via stimulus spending. That is to say, overcoming the collapse of the mortgage debt bubble by creating a new, even bigger, sovereign debt bubble.
We have a pretty good idea of how much money there is in the world. We also have an idea of how much debt there is, from the sovereign debt of the united states, to credit cardholders in Finland. And it appears that there is not enough of the former, to pay off all the debts contained in the latter. If so, then that means a lot of banks—perhaps most of them—are in trouble. And we can’t have that.
What policy makers do not want to see is bank asset deterioration. That would lead to all sorts of bad things. You would see banks fail. You would see bank systems fail. You would see debtors fail and it would just feed on itself in an accelerating fashion. And so monetary policy makers have no choice but to deleverage in the other way, which is to colloquially print money; to manufacture electronic credits and call them bank reserves.
And to the degree that that extends into the private sector where debtors begin to fail en masse, that would increase failures of the bank assets in turn. And it would end the mortgage bond securities market, for example, and the leveraged loan markets, and end the private sector shadow banking system. So it does not work for anybody to have credit deteriorate. The only way to deleverage an economy is as we are saying: to create new base money with which to do it.
In other words, if central banks want to prevent entire banking systems from failing due to the collapse of the debts they hold as assets, they have no choice but to ensure that there is enough money available for everyone to meet their debt payments. To do that, they have to start printing out long sheets of beautifully engraved C-Notes. This will, of course, lead to massive inflation that will allow everyone to pay off their mortgages for the cost of a nice hat, while, at the same time, destroying the value of the world’s life savings.
This will clean up everyone’s balance sheets, and allow the world to create a brand new monetary base—let’s call it New Dollars—which, central banks having learned their lessons, will be impossible to over-borrow or inflate.
Hahahahahahahahahahahahaha! Woohoohoohoohoo! Hehehehehehehehehe. Heh heh. Ahhh. Sometimes I kill myself.
I’m just kidding with you. Seriously, they’ll try to start a new fiat currency that they’ll borrow on and debase until it collapses on our grandchildren, and screws them, too.
~
Dale Franks
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Happy Dependence Day!
My how things change over the course of 200+ years.
Back at the beginning of this experiment, people rejected a large and intrusive government. They’d been the victims of one and threw off that yoke. They acclaimed freedom as their goal and chose liberty as their battle cry.
When they finally got around to forming their own government, they carefully wrote a document which I’m sure they figured was an iron-clad guarantee that this country’s future would never see the same sort of tyranny they’d suffered under.
I just wonder what they’d think of this sprawling, debt ridden and intrusive mess we have now? I wonder what they’d think of over half the population getting some sort of compensation from government.
I wonder what they’d think of a Supreme Court Chief Justice more worried about what they’ll say about him and the court on the cocktail circuit and in the media than he is about upholding the Constitution, his sworn duty. I think I know.
And I’m pretty sure I know what they’d think of this:
Our nation’s current debt, nearing $16 trillion, and our annual budget deficit of $1.2 trillion, indicate that our government’s addiction to spending is nowhere near its limit.
Of that $16 trillion debt, the U.S. owes more than $5 trillion to foreign nations, an all-time high. So much for independence. We’re now a debtor nation, and unless we get our fiscal house in order, that debt will endanger our nation’s prospects for long-term growth.
If that sounds alarmist, consider this: In August 2011, Vice President Joe Biden visited China. This wasn’t just any diplomatic visit — it was the supplication of a debtor, in which Biden undertook to reassure our Chinese debtors that their investment is sound.
Biden assured his hosts that they had "nothing to worry about" when it comes to the U.S. honoring its obligations. It wasn’t the first time a high-ranking U.S. official has had to offer soothing words to our creditors, and at this rate it won’t be the last.
Let’s be clear. This administration isn’t the cause of all that debt. It’s just the latest (and the worst) to add to it, to the point that our debt now stands at more than our GDP. We are indeed a debtor nation.
That’s not at all how this began is it? Nor was that ever the plan.
I’m also pretty sure I know how they’d feel about the level of intrusion government now routinely practices (and increases) in this country. For example:
IRS officials on background tell FOX Business the U.S. Supreme Court ruling on health reform gives the IRS even more powers than previously understood.
The IRS now gets to know about a small business’s entire payroll, the level of their insurance coverage — and it gets to know the income of not just the primary breadwinner in your house, but your entire family’s income, in order to assess/collect the mandated tax.
Plus, it gets to share your personal info with all sorts of government agencies, insurance companies and employers.
And that’s just the tip of the iceberg. "We expect even more lien and levy powers," an IRS official says. Even the Taxpayer Advocate is deeply concerned.
As government takes more and more control of your lives, it intrudes deeper and deeper into them:
The TAO [Taxpayer Advocate Office] says that the “IRS will need to determine a taxpayer’s compliance with the individual [insurance] mandate and assess a penalty if coverage is inadequate.”
However, the penalty isn’t based on just your personal net income. The penalty will be based on an entirely different number that is more than just your paycheck earnings — your ‘household income.’
“This determination is based on a concept of ‘household income,’” TAO has said, adding, “this may differ from the income reported on the taxpayer’s return, because it is a composite of all of the income reported by members of a taxpayer’s household — information that may not be readily accessible to the IRS."
If the IRS finds you have fallen short of the law, it would hit you with a penalty tied to your household income (which may be that of an individual or several family members).
Under the new health law, the IRS penalty would be based on “modified adjusted gross income,” not adjusted gross income that you normally report at the bottom of the first page of your tax form 1040, before you take deductions or personal exemptions.
The modifications add back in things like non-taxable interest and excluded foreign income to this number.
Meaning:
Health reform’s insurance mandate says if you do not have “adequate” insurance, you’ll have to pay a fine as part of your tax return. If your business doesn’t provide “affordable” coverage, that business may have to pay a fine to the IRS, too, as part of its tax return filings.
The TAO has noted Americans must now tell the IRS under the new law:
*Insurance plan information, including who is covered under the plan and the dates of coverage;
*The costs of your family’s health insurance plans;
*Whether a taxpayer had an offer of employer-sponsored health insurance;
*The cost of employer-sponsored insurance;
*Whether a taxpayer received a premium tax credit; and
*Whether a taxpayer has an exemption from the individual responsibility requirement.The TAO has warned: “This is different from the type of information the IRS typically deals with, and some taxpayers may feel uncomfortable about sharing it with the IRS.”
In fact, it is incumbent upon you to prove to the IRS that you have “adequate coverage”, whatever that ends up meaning. And:
The TAO has also reported that “obtaining this new information will require the IRS to communicate with entities and government agencies that it may not deal with now,” including:
*New state-run insurance exchanges;
*Employers;
*Insurance companies; and
*Government insurance programs.
But remember the sales pitch – government will make health care simpler, more cost effective and better.
Congratulations to all the simpletons out there who bought into this scam and ended up foisting this intrusive monstrosity on the rest of us. In fact, thanks to all, who through out the 200 years it has taken us to to get to this point, worked so hard to achieve it “for the common good”. </sarc> Nice mess you’ve given us.
As for the rest of you, happy Dependence day!
Forward.
~McQ
Twitter: @McQandO
Government debt is a drag on the GDP? D’oh, who knew?
Well, we did. We’ve been telling you that for quite some time. And so have other economists (that, of course, wouldn’t include Paul Krugman).
Yesterday, this came out (and, most surprisingly, on Ezra Klein’s blog, although not by Ezra Klein):
What’s the real harm of a massive government deficit? Carmen Reinhart, Vincent Reinhart, and Kenneth Rogoff find that high public debt is associated with a significantly lower level of GDP in the long run.
In a new paper for the National Bureau of Economic Research, the researchers examined the historical incidence of high government debt levels in advanced economies since 1800, examining 26 different “debt overhang episodes” when public debt levels were above 90 percent for at least five years.
And what do you suppose they found?
The debt episodes included everything from Netherlands’ Napoleonic War debts and the Japan banking crisis of the 1990s to Greece’s current fiscal crisis. On average, the researchers found that growth during these periods of high debt were 1.2 percent lower on average, consistent with Reinhart and Rogoff’s findings in 2010. What they also found, however, was these episodes of high debt and lower growth were quite lengthy, averaging 23 years. And the accompanying long-term drag on GDP was substantial. “By the end of the median episode, the level of output is nearly a quarter below that predicted by the trend in lower-debt periods,” they explain.
Japan’s “lost decade” has lasted much more than a decade, hasn’t it?
And the policies being pursued by this president seem to be offering up an attempt to see if this country can’t move that average beyond 23 years.
Need a picture?
We’re at 101% of debt/GDP so, according to these folks, we’ll actually perform below the red line.
But hey, more spending please. Because, you know, we need more government jobs (the private sector is doing fine).
Forward (into economic oblivion)!
~McQ
Twitter: @McQandO
Open thread
I’m in a series of meetings today so I’m unlikely to get any serious blogging done.
You guys talk among yourselves.
Suggestions: “flip-flop” is now “evolution”? Really?
And, dealing with just the politics of Obama’s gay marriage announcement, guess what we won’t be talking about again today?
~McQ
Twitter: @McQandO
Perhaps Romney ought to talk about what he stands to inherit from Obama
It would seem that would be a fairly potent means of campaigning and keeping the issues most important to the forefront. It might take care of this.
Look, one of the reasons we’re going through this “I killed bin Laden” self-congratulatory orgy right now is a day spend doing the bin Laden back pat is a day not spent on having to discuss this awful economy.
It wouldn’t be hard to compile a list of problems a new president would “inherit” from Obama. That was (and still is) an Obama strategy – blame Bush. It may be time for Romney to begin to blame Obama:
-For 8.2% unemployment
-For doubling the debt
-For anemic GDP growth
-For large increases in major regulations
-For ObamaCare
-For green energy boondoggles based in crony capitalism and a nonexistent energy policy
-For increasing dependency on government
-For the first credit downgrade in US history
And, that’s just a short list.
I like the “inherit” scheme. It’s a good way to frame the debate and put the Obama campaign on the defensive. If and when the Romney campaign and certain elements of the GOP can stop shooting themselves in the foot over gay spokespersons that is.
~McQ
Twitter: @McQandO
The GOP has a chance to take the White House if it can discipline itself to stay on message
Pew Research as a survey out today that is one taken after Romney became the presumptive nominee for the GOP. It compares its numbers to a survey taken while the GOP’s nomination was still contested.
Pew entitles it’s piece about the survey, “With Voters Focused on Economy, Obama Lead Narrows”. It subs it with “Social Issues Rank As Lowest Priorities”.
Hello out there GOP – are you reading this? There’s your campaign. What to stress. What to avoid.
Any chance they’ll actually figure that out?
I mean so far we’ve talked about sluts, contraception, race, wars on women, stay at home moms, even about dogs riding on roofs (well at least the Romney’s didn’t eat the dog).
We’ve been distracted by the outrage of the week – Rush Limbaugh, Hillary Rosen, Ted Nugent, Bill Maher, etc.
That’s the left’s game plan, for heaven sake – Obama has a dismal, in fact awful economic record. Horrible.
And yet the GOP is walking into every distraction trap the left sets like they haven’t a clue.
As I’ve been saying for months, once the nomination is settled, regardless of who the nominee is, and the focus begins to turn on Obama and his record, there will begin a shift in voter preference that should (note the word) carry the GOP nominee to the White House - if the GOP plays its cards right.
Should.
Here’s what I mean:
Obama’s lead over Romney has narrowed since last month, when he had a 12-point advantage, though it is comparable to margins from earlier this year. While Obama’s advantage has declined since March, there is little to suggest a specific problem or campaign event as having a critical effect.
While there have been debates over issues related to gender, the rise and fall in Obama’s support has largely crossed gender lines, with a fairly consistent gender gap over time. For example, since March, Obama’s support among both men and women has slipped five percentage points.
Independent voters remain up for grabs. In the current survey, 48% favor Romney while 42% back Obama. A month ago, it was 47% Obama, 44% Romney.
If anyone would not expect an incumbent president to have some sort of lead at this point, I’d say you don’t know much about American politics.
That said, as you can see by the change in a month, the lead is at best tentative, soft and narrowing.
But … there is still a way to absolutely screw up this chance at making Obama a one-term president and, unfortunately, I wouldn’t be surprised to see the GOP manage that.
That is, to concentrate on the wrong issues. They have a track-record of snatching defeat from the jaws of victory doing exactly that.
I’ll make it as simple as possible.
Limit the main issues of the GOP campaign to three themes: the economy, jobs and the debt. Talk about how to improve the first two and reduce the third. Talk about getting the hell out of the way while giving business the green light to lead us out of this economic morass. Declare the war on fossil fuel to be over. Talk about exploiting our natural resources and the jobs that will bring. Put confidence back in the business sector that expansion and hiring will be enabled and supported, not killed with more and more regulation. Talk about repealing ObamaCare and draconian regulations. Talk about bringing America back.
Once the incumbent has given his concession speech, talk about whatever else tickles your fancy then. But discipline yourself until then. Until then narrow the focus and be relentlessly on message. Refuse the distraction traps. Just flat refuse them.
Do that and the GOP has a shot. The numbers will continue to improve.
Fall into the distraction traps and kiss victory goodbye. If the other side is allowed to frame the campaign and establish the narrative and avoid examining Obama’s record, the GOP loses.
We’ll see which course they choose.
~McQ
Twitter: @McQandO
Deficit watch: The trillion dollar beat goes on
In case all this contraception talk has distracted you (as it surely was intended to do), you need to know that the deficit continues to grow and is on pace to go over a trillion dollars for the 4th year in a row:
The federal government set a new monthly record deficit of $232 billion in February and has notched a total of $581 billion in the first five months of the fiscal year, according to the Treasury Department’s official count released Monday.
February’s record is $8 billion more than the previous monthly record, set in February 2011, and came chiefly because of a drop in individual income tax receipts.
The overall deficit remains on pace to top $1 trillion this year for the fourth year in a row — but is down slightly from its pace last year …
Sorry to intrude with such boring reality.
Now back to “slutgate”.
~McQ
Twitter: @McQandO
Obama budget full of gimmicks and rosy assumptions
Representative Paul Ryan characterized the Obama budget as not a fiscal plan but “a political plan designed to help the President’s reelection.” Getting into the details seems to validate Ryan’s point.
He also pointed out that the debt crisis is the most predictable crisis imaginable and the president has "punted" again with this budget. Said Ryan, “Instead of an America built to last we get an America drowning in debt.”
The White House claims the Obama budget saves 4 trillion over and above the Budget Control Act. But in fact, the Obama budget rides the base line and throws more taxing and spending on top of it (while claiming to save 4 trillion). Analysis of the budget shows, at best, a savings of 300 billion over 10 years.
As for an “America Built To Last”, Obama approaches that in a very odd way. He goes after businesses and investors:
1. The top income rate would be raised to 39.6 percent vs. 35 percent today.
2. Under the “Buffett rule,” no household making over $1 million annually would pay less than 30 percent of their income in taxes.
3. Between now the end of a second Obama term, Obama proposes $707 billion in “net deficit reduction proposals.” Of that amount, only 16 percent is spending cuts.
4. The majority of small business profits would be taxed at 39.6 percent vs. 35 percent today.
5. The capital gains rate would rise to 25.0 percent (including the Obamacare surtax and deduction phase out) from 15 percent today.
6. The double-tax on corporate profits (including dividends) would increase to 64 percent based on the statutory corporate tax rate (58 percent using the effective tax rate), easily the highest among advanced economies.
7. The double tax on corporate profits (including capital gains) would increase to 51 percent (44 percent using the effective tax rate), also among the highest among advanced economies.
Those details alone are a basis for declaring his budget “dead on arrival” at Congress. These new taxes would take the tax revenue as a share of GDP to 20.1 percent in 2022. The historical average is 18 percent. In a time of deep recession, when government should be proposing economic, tax, labor and trade policies to create jobs and move the economy in a positive direction, Obama’s budget proposes to do exactly the opposite. The attack on small business, as well as corporations, points to a president out of touch with the problems of the economy. He claims to save 4 trillion on debt with these policies but in fact, his budget proposals add 6.7 trillion to the debt over the next 10 years and the debt-to-GDP ratio is predicted to be 74.2 percent this year and 76.5 percent in 2022.
And here’s the bottom line truth about policies such as Obama is pursuing:
Corporate taxes are paid by consumers in higher prices and by workers in lower wages – so much for the promise not to increase taxes on those making less than $250,000. Every good tax economist knows this, but the president chooses to ignore reality and demagogue the issue.
Indeed.
Given that, how does the White House justify such policies? Well, it simply makes up a rosy forecast for the future, that’s how. 3.4 percent in 2015, 4.1 percent in 2017 and 3.9 percent in 2018. As James Pethokoukis points out:
The U.S. economy has only seen a run like that three times in the past four decades.
Yet we’re supposed to believe that we’ll come roaring out of one of the longest and deepest recessions since the Great Depression with taxes focused mostly on business at a higher than historical rate? Not likely.
Meanwhile we’re being told by the President’s Chief of Staff that it is all the Republican’s fault that we don’t have a budget out of the Senate. Mistakenly claiming that it takes 60 votes to pass a budget, he points to the Republican Senators as the obstructionists.
Of course, on budget matters, it only takes a simple majority. And there are 53 Democratic Senators. If you recall, the Senate minority leader, Republican Mitch McConnell introduced and got votes on two budgets last year – the Ryan budget, voted down by Democrats and President Obama’s budget which was voted down 97-0. Harry Reid, however, has introduced no budget in over 1,000 days.
And the gimmicks:
At issue is how the government projects spending and deficits going forward. Of the $4 trillion in deficit reduction claimed by the White House, $3 trillion would come from a combination of tax increases and spending cuts. Another $900 billion would come from domestic spending caps agreed to with Republicans last year to resolve the impasse over raising the nation’s statutory borrowing limit.
But if Congress and the president did nothing, spending would actually fall by $2 trillion under current law. That is because automatic cuts to defense and nondefense programs totaling $1.2 trillion are already set to go in force in 2013. The Obama budget assumes those cuts will not happen. The president also assumes that sharp cuts to reimbursement rates for doctors treating Medicare patients will never be enforced, but the budget does not detail how those scheduled cuts will be prevented.
Republicans say that effectively negates $522 billion over 10 years, since Congress will have to figure out how to pay for the so-called Medicare doc fix.
Republicans also protest that Mr. Obama is "saving" nearly $1 trillion by not spending over the coming decade what the United States has spent each year on wars in Iraq and Afghanistan.
So the Obama savings are built on assuming the “Doc Fix” won’t be made and that war spending will remain at the current level (even with the withdrawal from Iraq and the coming withdrawal from Afghanistan) for 10 years – something obviously not the case. He’s built his 4 trillion in “savings” on 1 trillion in tax increases, 2 trillion on spending cuts already enacted into law (sequestration), 1 trillion assuming war spending will remain level for 10 years. Meanwhile most of his spending cuts come from where? The military, of course.
Finally, remember this?
“This is big,” wrote White House director of new media Macon Phillips in a February 23, 2009 blog post, ”the President today promised that by the end of his first term, he will cut in half the massive federal deficit we’ve inherited. And we’ll do it in a new way: honestly and candidly.”
Indeed, President Obama did make that promise that day, saying, “today I’m pledging to cut the deficit we inherited in half by the end of my first term in office. This will not be easy. It will require us to make difficult decisions and face challenges we’ve long neglected. But I refuse to leave our children with a debt that they cannot repay — and that means taking responsibility right now, in this administration, for getting our spending under control.”
This budget does none of the above. In fact, it’s not even close. There are no “difficult decisions” included. There are now “challenges” faced. As Rep. Ryan said, Obama has again “punted”.
This is indeed the most predictable crisis imaginable and again, the man who claimed he would do what is necessary to fix the problem has once again kicked the can down the road.
~McQ
Twitter: @McQandO
How out of control is government spending?
This out of control.
Obviously what I’m about to list isn’t going to make or break us as a nation in terms of monetary outlay. Each taken individually is but a drop in the sea of $16 trillion dollar debt we now float in. But the fact remains that each is an indicator of why we’re in that deep of a hole. Each points to another area where government has no business, especially spending taxpayer, or more likely borrowed money. Or it points to an expenditure not made on its reasoned merits, but on bureaucratic inertia, lack of control or monitoring or any of a great number of reasons the payment shouldn’t have been made. Doug Bandow provides us with the list.
Now, on with the show:
~The U.S. Agency for International Development (U.S. AID) spent $30 million to spur mango production and sales in Pakistan—and failed utterly.
Yup, mango production … in Pakistan.
~The Air Force spent $14 million to switch three radar stations to wind power; poor planning forced cancellation of one turbine and consideration of the same for the other two.
Because we all know windpower is proven and reliable.
~The Federal Aviation Administration devoted $6 million to subsidize air service at small, underused airports.
Market smarket … we’ll just create one. Until the money runs out, of course.
~A federal grant for $765,828 went to—I am not making this up, to quote Dave Barry—bring an International House of Pancakes franchise to Washington, D.C.
Because bringing IHOPs to DC is a primary function of the United States government and worthy of every dollar spent.
~The Department for Housing and Urban Development (HUD) provided a $484,000 grant to build a “Mellow Mushroom Pizza Bakers” restaurant in Texas.
Because it is not the market’s job to decide what restaurants should exist in a certain area, it’s the job of government.
~Another HUD grant, this one for $1 million, went to a foreign architectural firm to move its headquarters from Santa Monica to Los Angeles.
Because we knew you’d want us to do it. You need to move? Tough cookies.
~NIH gave the University of Kentucky $175,587 to study the impact of cocaine on the sex drive of Japanese quail.
Because we’re sure Japanese quail are the next target of drug dealers. Or something. But this is important … important enough to up the debt over and don’t you forget it.
~The Federal Highway Administration (FHA) gave $916,567 to underwrite horse-drawn carriage exhibits and survey shipwrecks in Wisconsin.
Because, well, we couldn’t think of anything else to do with the money.
~The Oregon Cheese Guild received $50,400 to promote cheese.
Because obviously the Oregon Cheese Guild wouldn’t be able to promote cheese without this.
~Uncle Sam spent $111,000 to send brewery experts to conduct classes in China.
Because the folks making Tsing Tao obviously couldn’t handle that.
~The ever busy NSF devoted $300,000 to developing a dance program to illustrate the origins of matter.
Because without it … oh nevermind.
And my personal favorite:
~Washington helpfully gave almost $18 million in foreign aid to China—money effectively borrowed from China.
The circle is complete. Borrowing money to give money back to the entity from which we borrowed it while still owing the balance.
Brilliant.
Your government at work. Be sure to read the rest of the top 100 wastes of money that Sen. Tom Coburn has helpfully put together. And remember. They’re the top 100. There are plenty more than just didn’t make the cut.
~McQ
Twitter: @McQandO
Obama asks for another increase in the debt ceiling
If you wonder why there is this focus on the left on taxing the ‘rich’, part of it can be found here:
President Barack Obama asked Congress for another $1.2 trillion in government borrowing authority, the third and final request under an August deal with lawmakers that averted a U.S. default.
The president’s notification to congressional leaders yesterday starts a 15-day countdown for lawmakers to consider and vote on a joint resolution disapproving of the increase.
An “August” deal and we’re already on the “third and final request”? August for heaven sake. 5 months. Does that at all demonstrate how absolutely unconcerned this administration is with out-of-control spending? Does it help explain the class-warfare, anti-Wall Street, shift-the-blame campaign in which the President has been engaged?
We’ve already exceeded the national yearly GDP with our debt under Obama and now he’s going for more.
Well, except at DoD. There’s he’s slashing muscle and bone on the one hand while proposing a pay-hike for other federal employees on the other.
The debt ceiling increase is to meet commitments already made by the government. The Treasury Department has been relying on accounting maneuvers, similar to the ones employed during the year’s earlier dispute, to ensure that the previous $15.194 trillion limit wasn’t breached.
Since the budget law was approved, the debt limit has been raised twice, by a total of $900 billion. In the latest request, the limit would rise to $16.394 trillion, which the Treasury Department estimates will fund the government until late 2012.
We are so ill served by our current crop of politicians that it almost defies description. We’re past the generational theft of our grandchildren’s money and are working on that of our great-grandchildren.
This is simply inexcusable, yet like an alcoholic or drug addict it seems our politicians can’t help but do whatever is necessary to obtain their next fix of borrowed money. Meanwhile the credit rating for the country has been downgraded and is at risk for further downgrade. And the economic drag on the economy in general this sort of a debt load carries continues to increase.
You want a national tragedy … here it is. You want a national nightmare … its playing out right in front of you and there doesn’t seem like anyone is able to stop it.
But most rational people understand that at some point it has to stop … it has to come to an end. And when it does, this recession will look like child’s play, all thanks to the selfish short-sightedness of our political class. Oh, and yes, the gutless votes who keep rewarding this sort of behavior because it benefits them.
At the risk of sounding like some sort of extremist fanatic, the end is near. And it isn’t going to be a pretty end either.
~McQ
Twitter: @McQandO