Tuesday, August 2, 2011

Debt Ceiling Cynic

So now that this debt ceiling "show" is over, I wonder how much (if not all) of it was orchestrated for the American public? The political grandstanding by both parties, the Obama speeches, the behind closed door negotiations -- that apparently the media was privy to -- the deal-to-no deal, and the last minute "compromise" was great showmanship. I mean, isn't that what Americans do well -- put on a good show? Personally, I think this was all a big plan to herd the sheeple into thinking the negotiations were tough but it is in the best interests of the country. They are making it seem like we were so close to defaulting -- which would never happen -- but compromise was made and we are on our way as a country, to living within our means. Really??? In what alternate reality do you think potentially cutting $2.8 trillion over 10 years...OVER 10 YEARS...is going to solve our fiscal problems?

I am certainly no mathematician, but even I can figure out that this is a sham -- a wool pulled over the American citizens eyes. Heck, I will give them the benefit of the doubt...I'll round it up to cuts of $3 Trillion. So, $3 Trillion divided by 10 years is $300 Billion. Right? $300 Billion divided by 12 months is $25 billion. Right? Ok. Now comes the fun part (not really)...In February 2011, the US posted its largest monthly budget deficit in its history at $223 Billion. The good news is that in June that figured improved markedly to ONLY a deficit of $43.1 Billion. The bad news is that it was the 33rd straight month in the red. So, what happens to month-after-month of continuous deficits? Let's put it into something you and I can relate to:

Suppose you spend more money this month than your income. This situation is called a "budget deficit". So you borrow (ie; use your credit card). The amount you borrowed (and now owe) is called your debt. You have to pay interest on your debt. If next month you spend more than your income, another deficit, you must borrow some more, and you'll still have to pay the interest on your debt (now larger). If you have a deficit every month, you keep borrowing and your debt grows. Soon the interest payment on your loan is bigger than any other item in your budget. Eventually, all you can do is pay the interest payment, and you don't have any money left over for anything else. This situation is known as bankruptcy. That is where we are today folks.

So, going back to the math and our great compromise. What does $25 Billion per month in cuts really do when you are constantly having deficits at least 2x that amount? So far this Fiscal Year (October 1 to Sept 30) as of June 30 2011, the Treasury Department has spent $386 billion on interest payments to the holders of the National Debt. That comes out to almost $43 Billion per month on interest payments alone. So those $25 Billion in "cuts" will do nothing when we are paying almost double that in interest payments on our debt. How does that great compromise sound now?

I think it was all a show by our politicians who love the their power and are colluding with each other and the White House to keep us under their thumbs. They wanted the American people to get nervous about the debt ceiling negotiations and worried about default or credit downgrade (which may happen anyway) and then at the last minute...voila! They have saved the day by increasing the debt ceiling and compromising on budget cuts that sound impressive but really are not. They avoided once again making the hard decision on the Entitlement programs which are the biggest fiscal problems we currently face. In the end, the politicians do what THEY do best...argue, name-call, and "compromise" for the sake of the American people...and so they can remain in power and start campaigning for their next election.

I say throw the bums out for good!!! What say you?

No comments: