The negotiations between President Obama, Speaker of the House Boehner and other Republican congressional leaders about raising the debt ceiling and cutting the deficit have stalled because the president wants to increase taxes as part of a “balanced approach” to the federal government’s fiscal imbalances. Republicrats assert that higher taxes are “off the table.”
Who will blink first with an August 2 deadline looming, when supposedly the U.S. government will default on its debt if the ceiling is not raised? It does not matter. The Repbulicrats—members of both political parties—have been spending recklessly to maintain the welfare-warfare state since 1917. Why should they become fiscally responsible now inasmuch as tens of millions of Americans are dependent on federal government checks to survive, and the military industrial complex is off limits because our “national security is in jeopardy,” which helps it rake in trillions of dollars to maintain an empire around the world?
I say raise the debt ceiling to $100 trillion, because that is where we are headed if the Republicrats maintain the welfare-warfare state. The gross federal debt passed the trillion-dollar mark 30 years ago; it passed the $5 trillion mark about 16 years ago, and hit $10 trillion in 2008. The national debt will soon hit $15 trillion and is projected to reach $20 trillion in 2015. In short, the debt is increasing exponentially, so it is possible if not probable that the national debt will hit $100 trillion by 2030.
Each recession has caused the deficit to double and triple during the past three decade. The next recession could cause the deficit to balloon to $3 trillion or more. That’s the issue that is not even debated or discussed but is the 800 pound gorilla in the negotiating room that Obama and the Republicans are ignoring.
Raising the debt ceiling to $100 trillion now will send an unequivocal message that the Republicrats are in bed together, metaphorically speaking, and do not want to cut any spending programs. This will spook potential buyers of federal government debt and cause the demand for Treasuries to decline precipitously raising interest rates. This would cause debt costs to skyrocket and “crowd out” other government spending, unless the Federal Reserve buys most if not all the new debt. Then we are off to the races. As the FED monetizes trillion of federal debt, the dollar price of gold, silver and other hard assets will zoom. (We may be witnessing this process unfold as gold is close to $1,600 per ounce on its way to $2,000 this year or early next year.) Can anyone say hyperinflation?
Republicans are not using their tactical advantage to outflank Obama. They should agree to a debt ceiling increase showing they will not allow a default, call for at least a $500 billion cut in the federal budget, and remain steadfast in their opposition to higher tax rates and the closing of so-called loopholes unless tax rates decline markedly.
Every federal program should be on the table, including the Pentagon’s bloated budget. The easiest cuts to make would be to corporate welfare, including farm subsidies and hundreds of other “business helping” expenditures. The market should allocate resources not the federal government. We need to end crony capitalism.
So-called austerity would indeed cause some short-term pain. But as everyone knows who has had a life saving operation, the recuperation can be uncomfortable and painful.
The federal government needs a life saving operation. It is called free enterprise, limited government and ending the military industrial complex. Anything less will eventually “kill the patient”—the remaining freedoms we have and our under performing economy and replace it with a police state and a third rate economy.