Posts tagged ‘Debt Ceiling’

01/14/2013

Need “Borrowing” Not “Debt” Ceiling

The “Debt Ceiling” is once again being debated in Congress, but it shouldn’t be, since we have no choice, but to pay the financial obligations we already have. Defaulting on our loans is not a realistic or responsible option as it would do nothing but lower our credit rating and trigger negative global responses.

The debate should instead occur much earlier whenever Congress borrows money.  If we are going to have a “ceiling,” it should be as to the amount we borrow. Whenever right-wing politicians vote for another war, or a new weapons system, without raising taxes to pay for them, they should first be required to raise a “Borrowing Ceiling.” This is where the issue might make a difference, since borrowing is not a necessity.

Under the U.S. Constitution, the power “to borrow money” is specifically delegated to the Congress (Art. I, Sec. 8). Congress must approve of any measure that causes borrowing. It is not a power assigned to the Executive. The President does not write the budget. The House must stop blaming the President for spending and they must face their constitutional duty to control it.

Right-wing politicians, who control the House, where all budget bills originate, are famous for supporting all sorts of wasteful military spending, without raising taxes, but once they authorize spending, it’s a waste of time to debate the issue of paying for the military toys previously purchased with a credit card.

It’s time for the Republican House to act like adults, take responsibility, and significantly cut the Defense Budget, or raise taxes to pay for the military spending they previously supported.

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08/17/2011

Republican Debate Economics (8-11-11)

As the Republicans debated economic issues in Iowa, including the recent increase in the Debt Ceiling, many demonstrated an intellectual dishonesty, as they again pledged not to raise taxes, but simultaneously supported costly military expeditions abroad, two positions that will certainly force the U.S. to borrow billions.

TAXES: Gingrich continued to shovel the idea that tax cuts will led to growth, while Santorum and Cain, respectively, want to reduce to zero the Corporate Income Tax, and Capital Gains Tax.

BORROW-SPEND: The Republican refusal to raise taxes has led to borrowing and spending, which has sunk the nation deep into debt, leaving only two choices: 1) increase the Debt Ceiling and borrow so creditors who lent the money can be paid, or 2) default.

DEBT CEILING: Congresswoman Michelle Bachmann demonstrated a stark ignorance regarding the economy, as she condemned her Republican colleagues for increasing the Debt Ceiling. She confused the issue by saying those who voted for an increase gave Obama money, when in fact all they did was prevent a default on loans already made. The new kid on the block, Herman Cain, also opposed an increase in the Debt Ceiling.

Former Utah Gov. Huntsmann, a voice of reason, said he would never let the U.S. default and called the National Debt a cancer. Former Sen. Santorum also said the Debt Ceiling had to be raised, but Romney just talked about upgrading the Mass. credit rating.

U.S. BUDGET: As to the Budget, Congressman Ron Paul wisely said if there are going to be any federal cuts, military budgets have got to be on the table. Former House leader Gingrich, criticized the Committee of 12, which was convened to resolve budget issues.

FEDERAL RESERVE: Paul’s weakest area is his distain for the Federal Reserve Board. As to monetary policies that have kept interest rates low, Paul was critical, saying they only distort the economy. Apparently, he does not think they will stimulate economic activity. At one point Paul said the U.S. owes the Federal Reserve 1.6 trillion, and the Fed should be audited. Paul’s comments were obviously popular with the partisan crowd, as they booed Santorum for attacking Paul. Gingrich joined Paul saying it is a scandal that the Fed deals with billions in secret, and does not explain who is bailed out, or why.

FREE TRADE & JOBS: On the issue of jobs and trade, Santorum, who consistently supported Free Trade while in the Senate, correctly pointed out the number of Americans employed in manufacturing dropped from 21% to 9%, but he offered no solutions. Romney said we need trade policies that work for us, but he also failed to give any details. When he was asked to explain why people were laid off from companies he owned, he had little to say.

ENVIRONMENTAL PROTECTION AGENCY: Regarding the regulation of the environment, Huntsman, who owns a global corporation, said the EPA does not let businesses expand, and accused them of running a “reign of terror.”

HEALTH INSURANCE: On the economics of health, all of the Republicans of course piled on against the law the Democrats passed in 2009. Pawlenty said the Obama health care plan was modeled after Romney’s in Mass. Romney said the Mass plan was for one state, and the President’s is a one-size-fits-all, for the entire nation. He promised to grant waivers to any state that requested one.

As to the mandate to make people buy health insurance, Romney argued all have a personal responsibility to buy it. Paul said the insurance and drug companies love the mandate, and thought only doctors and patients would suffer. Bachmann thinks the government has no authority to force people buy health insurance, a position her activist right-wing friends on the Supreme Court will likely endorse. Gingrich suggested repealing Obamacare, but like the others, offered no answer to the health insurance crisis.

07/28/2011

Ask Eisenhower Re Budget, Not Reagan

One of those free copies of the right-wing USA Today was laying around the hotel lobby, and since I had a minute, I glanced at the opinion page, where the editor asked “What Would Reagan Do?” regarding the Debt Limit. I kind of chuckled, because the borrow-and-spend policies of the past 30 years started under Reagan, and he would be the last person we should ask for advice.

If Republicans wanted a true fiscal model, they should instead ask: What Would Eisenhower Do?” The General was the last Republican to deal honestly with balanced budgets. He knew enough about military spending from his service to warn the nation, as he left office, against the Military-Industrial-Complex.

President Reagan on the other hand, raised the Debt Ceiling 18 times, and just used his Hollywood credit card to keep borrowing. He cut corporate income taxes, but increased Social Security taxes on ordinary workers. His misguided borrow-and-spend policies predictably increased the National Debt threefold over eight years.

Reagan’s apologists now re-write history, as they defend his borrow-and-spend military programs by suggesting they somehow ended the Cold War. The truth is one man ended the Cold War, and his name was not Reagan, it was Mikhail Gorbachev. After Gorbachev wisely withdrew from Afghanistan in 1988, he advocated reform by promoting glasnost (openness) and perestroika (rebuilding). Once Reagan was out of office, and no longer a threat to the Russian people, Gorbachev conducted open elections in 1989, for the first time in 70 years. Gorbachev’s policies allowed for a Soviet dissolution in 1991. Reagan’s out-of-control military spending had nothing to do with it.

The bottom line is for the past 30 years, the U.S. has been in a borrow-and-spend mode. Since major sources of tax revenues were given away by Reagan, Bush, and Bush Jr., the government does not have enough money. In the Eisenhower days of the 1950s, there had to be tax revenues, before any spending took place, and yes, that included military budgets for wars, like the ones Bush Jr. started in Afghanistan and Iraq. Eisenhower would have raised taxes to pay for those wars. The Republicans of today would be wise to use Ike’s approach as their model for governing.

07/14/2011

Debt Ceiling Plan is Unconstitutional

Since the federal government continues to spend more than it is receives in taxes, there is a serious U.S. Budget shortfall, which can only be corrected by raising taxes or by increasing the Debt Ceiling so more money can be borrowed.

Since the Republicans, who control the House, are refusing to raise any taxes, the only solution is to increase the Debt Ceiling. But they are promising not to do that either. They simply will not acknowledge that the wars President Bush started have cost the country vast sums of money, which must be paid through taxes.

Not wishing to accept responsibility for their irresponsible acts, Sen. Republican leader Mitch McConnell came up with a Debt Ceiling plan that would get the Republicans off the hook by allowing them to blame President Obama for the entire fiscal mess. Their plan is to delegate the ability to raise the Debt Ceiling to the President, so when the Debt Ceiling is raised, as it must be, the right-wingers will be able to blame it all on President Obama.

The plan is Karl Rove politics at its best. Unfortunately, the idea is unconstitutional. If the Republicans would read the U.S. Constitution, they would learn the power “to borrow money” is specifically delegated to the Congress (Art. I, Sec. 8). It is not a power assigned to the Executive. The Congress must approve of any measure to raise the debt. Any attempt to throw the hot potato to the President would violate the Constitution.

President Obama should veto any bill that attempts to shift from the Congress to the Executive the authority to raise taxes, or the power to borrow money. The debt ceiling hot potato must remain in the House, until they act like adults, take responsibility, and either significantly cut defense spending, or raise taxes to pay for the wars their party supported. Its time the House Republicans got serious about what must be done to avoid a national crisis.

07/13/2011

Social Security is a National “Debt”

The Republicans in the Congress are once again playing games regarding the National Debt ceiling and are confusing voters as to the obligations the government must pay to avoid a default.

Forty percent (40%) of the federal budget is wasted on interest payments towards the National Debt. This interest must be paid to avoid a default. A failure to pay these long-term obligations would cause catastrophic ripple effects worldwide.

Regarding the remaining 60% of the budget, Social Security retirement and Medicare also involve obligations that must be paid. Social Security is not a discretionary spending program. People paid into Social Security all their lives. If the federal government defaulted on it, they would breach the social contract made by the people who paid into the system since 1935. In terms of an obligation, Social Security retirement is no different than the 40% of the budget devoted toward paying interest.

Republicans have advanced the argument that if we raise the Debt Ceiling to continue paying the 40% owed to our lenders, we must cut Social Security. They have it wrong. We must pay both those who lent the government money, and the Social Security recipients who paid into the system.

Someone said if we continued paying the lenders their 40%, and the Social Security recipients the benefits to which they are entitled, there would be nothing left to cut but defense. So be it. If the Republicans oppose the idea of cutting defense, they have to then have the courage to raise taxes. The problem is they think we can maintain massive defense budgets, with troops around the world, without raising taxes. They make no sense.

Since the Republicans in the House stubbornly refuse to raise taxes to pay for the wars President Bush started, they leave the country no option, but to make massive cuts in defense.