Debt really is a burden.
Posted on 15. Feb, 2010 by scott in economic daydreaming, political munglings
There is a reason that economists, and average Joe’s, call America’s debt a burden. Because it really is a burden: a load that is difficult to bear, something that is oppressive.
Need I go further? Apparently so, as our leaders in Washington seem to share the opinion that in all cases regarding re-election increasing debt is an okay thing.
Hence, to help get re-elected the majority democratic House increased the ‘legal’ debt limit of our wonderful nation to $14.2 trillion. And then Obama signed the new ‘legal’ debt limit into law. That was the easy thing to do. The hard thing? Balance the freakin’ budget you knuckleheads!!
What does the new debt ceiling accomplish?
For one thing the democrats in Washington (the ‘never met a government transfer payment too large or too extravagant to pass’ democrats) now have clear sailing to spend about $1.5 trillion MORE than they already have. And, if history is any indicator, they will spend it fast and furiously with no consideration for the long-term consequences or their misguided selfish and ’socialist’ tendencies.
As I have said many times in the past, I am neither democrat nor republican (though I clearly lean toward the conservative side of nearly all fiscal issues). Yet, when I see gross incompetence and even grosser ignorance I do not hesitate to call a spade a spade.
Therefor here I go.
The democrat majority in the House and the Senate, with a little ‘egging on’ from the democrat White House, are on a spend and expand (as in government) spree the likes of which we have never seen.
Nearly everyone in D.C. agrees that the current recession is either out or on its way. Yet Demo’s are hustling through the House yet another stimulus. And, as evidence that the public is rejecting their already extravagant spending, they insist on adding more $$ to pretend to create jobs and to do so without consulting (read ‘listen to’) their cohorts on the right. This has nothing to do with really creating employment since any results would be many months (here read ‘after the coming election’) from being proven. They are doing it just for show and for votes.
I hope the American people see through this sham. Brought to you by the same people that promised unemployment of 8% or less if the $758 Billion stimulus bill was passed (it is at or near 10% now).
So who are we to trust? Not the republicans, sadly, those guys brought a tripling and quadrupling of our deficit during the Bush years. Fiscal conservatives? Hardly!
We must all recognize that our debt really does matter. China owns a chunk of it. So does Saudi Arabia. Does anyone in their right mind think those dudes are our ‘freinds’? Hardly! What if the bank that owned your mortgage hated your guts . . . do you think for a second that they would ‘work’ it out with you?
On top of that is the cost of servicing any debt we ‘bear’ in that burden. At current interest rates that cost is normatively low . . . but who expects interest rates to remain at all-time record lows? No one outside of the Washington beltway. Debt service could soon be HUGE!
You and I can’t operate our lives at a deficit — not for long anyway. Cities and counties can’t either. Most states can’t by law (even with Arnold the ‘Gobernator’ at the helm).
So how can the federal government?
Because of war goes the historical party line.
Yet the costs of the ‘wars’ we are in now are only a small part of our federal budget. Don’t buy that old argument today. We always have high defense costs and the incremental costs of the current ’wars’ are really small overall — even though in the tens of billions of $$. The federal budget for next year is over $3.5 trillion and annual ‘war’ costs are less than 3% of that.
Government spending is totally OUT OF CONTROL.
We can’t continue with the current debt burden. Politicians aren’t going to do anything but talk and ignore the problem. They are ‘professionals’ after all . . . too smart to listen to you and I.
Solutions? Get citizen politicians to serve for one or two terms. Let them handle the purse strings like they would their own. Tight and conservative.
Economics is too often about politics. The vice-versa isn’t necessarily true.
Vote against ALL incumbents and for citizen leaders willing to serve for ONLY a few years.
I bet you that if we all do this the whole ‘burden’ issue will be moot in a decade.
And if you don’t think your voice can be heard then you are wrong.
United we stand . . . divided we fall (and the fall would be much greater than any you ever heard of in the stock markets).
thanks to flickr’s azrainman for the photo
6 Responses to “Debt really is a burden.”
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Barack Marx? The incredible leftward lean.
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Poverty -- try it sometime.
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Debt really is a burden.
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A 41 to 59 majority?
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Aren't we all?
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Francisco: I hope the best for your family and you Brother Ho...
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Michelle: I agree with the fact that we need to support the ...
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Roberto Vargas: I'm sorry, I got caught by the emotions las t...
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Steven Espinoza: S-O-C-I-A-L-I-S-M is not the answer! Going into de...
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Honors and Recognitions
Rodney Fife
15. Feb, 2010
Let’s Not Eat Our Children.
The United States is going through a moderate recession. This has people panicking and acting irrationally. During this scare the current administration has caused excessive debt and has overreached its authority granted by the constitution. The consequences of these actions will not be felt until years down the road. The current administration has a slant towards socialism to fix the current economic situation. All these elements combined will enslave our children and grandchildren. Socialism leads to astronomical debt and enslavement of the middle and lower class.
President Barack Obama has increased our debt by six hundred ninet two billion dollars since his inauguration.(Obama Debt Monitor) This has increased our debt by four times this year and ten times in two years. This debt is causing a great burden on our economical system. The president has claimed that this outrageous debt will help us recover from the current crisis. Thomas Jefferson wrote to his friend Samuel Kercheval, about avoiding astronomical debt.
To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanages to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers. (Berg)
The argument that we can spend ourselves out of the crisis at hand is ludicrous. The main reason we are in the current situation is due to the large debt that a lot of our citizens could not pay back. Businesses that were highly leveraged before entering this recession are the same ones that are now out of business. It does not matter if you are an individual, a Fortune 500 company, or a country if your highly leveraged it gives you very little room to work to overcome trouble. What is scary is that our government’s lenders are beginning to question our ability to pay back our debts. Timothy Geitner, the treasury secretary, recently visited China and was laughed at by students and business men from China, when he told them our currency was stable and a safe bet.
There is a need to warn the public about this overwhelming debt. We are beginning to marinate and cook our children. Currently every citizen is responsible for thirty-eight thousand dollars. (National Debt Clock) The average worker only makes thirty-six thousand. (Fact Check) Thomas Jefferson wrote to A. L. C. Destutt de Tracy. “It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.” (Ford). The fore fathers of our country believe in not placing a debt upon our children. They knew what an evil debt could be for a people and a country.
The main cause of this excessive debt is the movement towards socialized government. Since the current administration has taken office, there has been a strong swing towards what could be considered a socialized hybrid movement. What is most foul is the apparent attempt of camouflaging the movement. Currently, the federal government takes up twenty-nine and half percent of the nation’s gross domestic product. This means that for every dollar that goes through our economy the federal government touches at least thirty cents. The following incidents describe the movement towards what could be define as a mixture of dictatorship and socialism. Webster’s dictionary defines Socialism: “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”
Since the Twentieth of January there have been drastic changes. First, requiring banks to receive and burden them with Toxic Asset Relief Program funds. Then, trying to secretly make the government preferred shares into common shares. This is nothing short of an aggressive power grab resulting in nationalizing our banking system. Common shares have voting powers in the company, while preferred shares only have the security of having dividends paid to them first. Thus by trying to gain backdoor control and virtually nationalizing the banking system.
Timothy Geitner called on congress to give him extraordinary powers to seize a company if its failings would cause a toxic collapse of our economical system. This power grab exceeds all other attempts by the executive branch in the history of our country to seize control of private property. The Constitution reserves the right to own private property to citizens and their offspring the American corporations.
The current administration has another socialist power grab to its credit. Chrysler Daimler was forced into merging with Fiat in order to have the blessing of Obama. The president has appointed another “Czar.” This is a created position, intended to circumvent the right of the senate to confirm his cabinet choices. The extreme pressure applied to Chrysler could be compared to mob bullying. The administration is applying its political power where it does not belong.
In addition there is a new joke called,”Government Motors.” General Motors has been having trouble financially for quite a few years. Instead of letting General Motors do a healthy bankruptcy restructuring, the administration is robbing the corporate bond holders and throwing the money to the greedy unions. This happens to have been the company’s biggest liability. If General Motors was allowed to do the process, they could shed unnecessary debt and restructure contracts, like the union contracts. Instead, we as the taxpayers now own 70% percent of General Motors. This in turn now allows the government to be the big boss.
These recent attempts to seize control of vital privately own organizations can only be defined as socialistic behaviors. The administration denies it has any socialistic desires but the common saying the proof is in the pudding applies here. Socialism in history has never shown economical success for any country that has used it. Bernarr Macfadden in his article “Communism is National Communism” describes,
Now, the acquirement of capital in our country has been a natural process. We grew from a country of backwoodsmen to the wealthiest nation in the world. Here are citizens have not climbed over the dead bodies of innocent people. Through years of study and careful attention detail they have built a place for themselves. They have earned the rewards they have received. Here every worker is free. At the present time he is fed and housed if jobs are not available. His dependants are taken care of. (Mcfadden)
Socialism leads to enslaving the masses, bankrupting treasuries and hurting futures for our posterities. It enslaves workers by not allowing them choice in who they will work for. It hurts personal as well as macro economical competition. The lone worker is therefore forced into slave labor. He has no ability to find competitive wages. The only way he will therefore become rich is by pulling someone else down the ladder.
Why would we as a capitalistic nation want to place our businesses on welfare? Is it not the responsibility of the company to turn a profit? There never was extended a promise of success. The rights given by our fore fathers were only the opportunity to try. Would it not that best suit our country to let businesses that are not surviving in the competitive ring fail? In our system when a business fails there are those who will take its place. It is then healthy for the economy to have strong and lean businesses than ones that are limping along on the crutch of U.S. taxpayer support. The cost of government bailing out or supporting business is astronomical. Milton Friedman states:
Federal subsidies to U.S. businesses now cost American taxpayers nearly $100 billion a year. If all corporate welfare programs were eliminated, Congress would have enough money to entirely eliminate the capital gains tax and the death tax. Alternatively, Congress could cut the personal and corporate income tax by 10 percent across the board. Either of these alternatives would do far more to enhance the competitiveness of U.S. industry than the current industrial policy approach of trying to help American companies one at a time. (Friedman)
History has shown us the great distress that the socialistic governments have wielded on people and countries. Examples are the former Soviet Union, Germany and Denmark. The new Russian government is still struggling with the massive debt cause by its predecessor. They have yet to gain a positive gross domestic product. While Germany and Denmark have realized the follies of these systems have made drastic changes towards free enterprise.
Why would anyone one choose to live or rule with this style of system when we see the past results? It is being disguised for the benefit of the poor and the worker class. Does not the proposals and statements made by the administration, seem to come straight out of the “Communist Manifesto?” It is being raised up like a great hope to those who are in distress. What they do not know is that they are instead handcuffing themselves to years of debt and grief. What is interesting is those who are leading the charge towards this movement have yet to tell us how they are going to pay for it. The current administration has been in office a little over one hundred days but they have yet to stay within their own budget projections. Why is it that there seems to be a feeling of fraud and deceit in the air? If this is not socialism, why are they using the same slogans and labels to sell it to the American people? Why is the term wealth distribution being thrown out? Are we going to live under a Communist society then?
There needs to be a voice of common sense applied to our economical problems. Instead of causing fear amongst the masses, let us educate and inform. There are several changes to our system that can be put to use that will cause positive change to our economy. First thing that needs to happen is remove the idea of federal bailouts. We need organizations and individuals to take responsibility for their own actions and financial positions. There is a growing sense that there is always someone there to rescue you if you fail or make a wrong choice. This only leads to individuals and organizations making bad or wrong choices. Thus there tends to be no consequences for one’s own actions. We need to find a way to cure this thinking.
Second require businesses to match social security numbers of their employees, with their names in order to receive the tax breaks they receive from the government. This would result in twenty-five million Illegal Aliens returning home due to the fact they cannot work here. Then instantly you have twenty-five million new jobs opened up. Thirdly reduce personal income tax. Historically reduction in taxes has always spurred economical activity. The idea that Americans are lazy and will not do certain jobs is just not true. They will only do it at a reasonable rate.
Then the next recommendation would be to cut unnecessary spending in the federal budget. The administration could do this by using the bully pulpit and by leading the way by proposing a balanced federal budget. Washington is famous for its pork barrel spending. The Government has been acting like a drunken sailor for way to long. We could stop the federal government from taking over companies. Those in charge should ask themselves, is there a privately own company that could do this task better? In most cases the answer to this question is yes.
The dangers of excessive debt are eating the bright future of our country. We can see there are options other than the destructive nature of Socialism. Socialism and excessive national debt will indeed in shackle our posterity if we do not make corrective actions. We may live high on the hog, but our children will receive nothing but the oink. Let us think before we take a course of action which will indeed eat away at our children’s future. It is up to us not to eat our children. The government of the United States is ruled by the people according to the preamble of our constitution. That inspired document starts out saying, “We the People of the United States.” When the people stand up and shout with one accord their representatives will listen. Let us stand up and tell them, stop spending our money and squandering the future of our children. Let us not be deceived by the fancy and flattery terms being used to camouflage socialism and dictatorship.
Works Cited
Annenberg Public Policy Center of the University of Pennsylvania. .
Bergh, Lipscomb, The Writings of Thomas Jefferson. Lipscomb, Bergh Washington, D.C., 1903-1904. Volume 15:39 .
Ford, Paul Leicester. The Writings of Thomas Jefferson , New York, 1892-99 Voulme 10:175 .
Friedman, Milton. “Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers.” .
Hall, Ed “U.S. National Debt Clock” .
Macfadden, Bernarr “Communism Is a National Capitalism.” October 17, 1936
“The Obama Debt Monitor” HumanXtensions L.L.C. .
“Socialism.” Merriam-Webster Online Dictionary. 2009. Merriam-Webster Online. 5 June 2009
Brett Johnson
17. Feb, 2010
Would everyone Please welcome the President of the United States of America, President Scott Hogan. Now I don’t disagree with your idea on term limits, in fact I more than agree and I think it’s a necessity in order to improve our countries economic strife.
I think that it takes more than a knowlege or in your case a passion for Economics, but the way that Obama is starting off, I wouldn’t doubt that youor others could do a better a job. The problem with our Government leaders is that they have been in so long they forgot what it’s like to live like people, such as you and I, working a nine to five job and saving every penny to purcahse a new car because your old one threw a rod only cause it had 225,000 miles on it.
Debt is a burden in this country, and it is only getting heavier. Does foreclosure exist in National Government? I’m sure that if a person cannot meet their required payments they enter into foreclosure, or bankruptcy . They don’t extend your debt limits every time you can’t pay. What does that say about the Government? What needs to happen?
scott
18. Feb, 2010
I think it is clear that the increasing burden of debt has got to stop. It is one thing to try and ‘force’ recovery from a recession with fiscal and monetary policy. It is quite another to allow government to use that force to also increase . . . yes . . . you guessed it . . . government.
Kristiann Hyde
18. Feb, 2010
I feel as though the American government is not seeing the big picture at the moment. I think that what the American people need right now is to see some progress. The fact that the government has not been able to swallow their pride and actually get something done is what is causing our great country to slip and slide. If the government would just get something done, not because they want it done, but because the people they are supposed to be representing do, then I think that America would be on it’s way to resolving some of the major issues we are facing.
Austin Evans
18. Feb, 2010
I feel that America’s debt is much more than a burden. It is more like a tumor that keeps on growing… The mistake in thinking that more and more government spending is going to destroy the “tumor debt” is outrageous… yet,”how are we supposed to get anything done without spending money?” Says the government officials… spend our hard earned money the right way, come on… Something needs to be done because America right now has chains around its neck and the chain is being held by China… China is skyrocketing with success because the number one nation in the world has got a huge problem. We can’t possibly grow and progress as a nation when we have so many liabilities and we have other countries tying our hands. So far from being in this class I have learned that economics is a lot like accounting. America is a huge business that just needs smart financial planning. The government needs to chill out dumping out more and more money in hopes of decreasing the debt because I’m not sure if they have noticed it’s not working. What I think should happen is to put more money towards the debt to knock it down. It’s just as simple as a college student putting a little away each month. Even if it is 10 bucks (which quite frankly is all I can usually afford) it is still something and it adds up. All America needs to do is making sure it’s putting away an x amount of money (even if it is minuscule to the actual debt) at least it is something… At least we would be decreasing the debt instead of increasing it. We have a decent GDP and our Production Possibilities Curve is still fine so we should have no problem in just using the money we as the people earn to lower the debt we have so that we can get these other countries off our back. We will find that if we change our budget increase government SAVING not spending the “tumor” will start to slowly go away… It’s the only way to get the chemotherapy to work; we have to get it going. It obviously isn’t going to go away by itself and spending more money in the wrong way will only make it larger and larger until the meaning a trillion dollars feels more like a billion cause the debt will be in the 20 or 30 trillion… by the way, what is next after trillion? Gazillion? Is there even a number for that or is it made up because we never thought of anybody reaching there? Well, time to take a hint we are sure heading there quick unless we do some much needed changes.
scott
18. Feb, 2010
Government savings is an oxymoron if there ever was one. It all comes down to cutting costs–and American’s entitlements are much beloved by all.