Posts
So it seems there is a debt deal. The debt ceiling will be raised and the USA will pay its debts, which one would have thought would be a foregone conclusion. The Republicans won, and I haven't seen or heard the terms of the deal. So how do I know they won? Simple, Obama started by offering a compromise, and has been publicly talking about the “debt crisis.” So why am I not worried about the debt crisis, is there a bigger crisis, and if the Republicans won then who lost?
America's debt crisis is similar to my own, in that I really should have a little less debt but I'm paying on it and the situation is pretty manageable at this time. I should avoid incurring more debt, although if it's necessary (say to buy a house or replace a totaled car) then I could manage it. My own debt crisis is actually very similar to the government's, except that their credit is perfect and they pay virtually no interest. Seriously, if I could finance everything in the world at their rates I would drive a Jaguar when I decided to get out of the hot tub. But I digress. I've heard people compare our debt to that of Greece. Greece really does have a debt crisis, in that they pay high interest due to poor credit and a staggering debt burden, and that they can no longer make all their payments. That is a crisis. (Believe me, I had some problems a few years back, I can tell the difference!) Our debt is nowhere near as crushing a burden as Greece, and our interest payments are laughably small compared to the size of our budget. That doesn't mean we should go overboard, but so far we are mostly responsible consumers of credit.
The bigger crisis here, and the one which is not only being ignored but worsened, is the economy. One would think, with all the hoopla surrounding the federal deficit, that the economy had fully recovered and unemployment had returned to pre-recession lows. Well, yes and no. Stock prices and large corporate profits have rebounded to, and frequently exceeded, pre-recession levels. Unemployment however remains high, which one would think effectively repudiates the myth that more money at the top trickles down through the whole income spectrum. At any rate, all economic theories state that to help an economy one has to put money in, and that taking money out will hurt it. Allow me to restate. Taking money out of the economy will slow growth and raise unemployment, every single time. In fact, the recession was caused by the removal of wealth from just one sector, real estate. Home values crashed after a wave of foreclosures on fraudulent mortgages, home construction stalled, contractors lost jobs and stopped spending money, tax receipts caused local government cutbacks, teachers and cops got laid off, they stopped spending money so retailers were hurt, and so on. So how do we expect a massive decrease in government spending will affect the economy? I was listening to the news today and I heard that the FAA budget didn't get approved on July 23rd. They laid off 4000 people, they stopped construction on a flight control tower (I think in Washington state, although I don't recall for sure,) and the ripple effect will probably lead to an additional 10,000 fewer jobs nationwide. One department, one budget. This will get ugly.
So the Republicans won by focusing the media on the largely manufactured “debt crisis.” Then who lost? Well, for starters everyone who still waits in the unemployment line lost. The long term unemployed, who have started seeing “must be currently employed” in classifieds pretty regularly, will not get any more unemployment extensions. So in all likelihood they will be homeless, or in shelters and on welfare, very soon. The myth that there are plenty of religious organizations to pick up the slack probably makes people feel better about the very un-Christian act of denying food and shelter to the poor, as does the constant barrage of examples of system abuse, though that's uncommon. So who else lost? Well, massive budget cuts will mean government layoffs, so individual departments will start finding people to fire, government contractors will be unlikely to get their contracts extended, government suppliers will sell fewer supplies, so they will be putting middle class workers out of work as well. So anyone looking for a better job should redouble their efforts before they start competing with literally thousands of workers with years of government service and experience under their collective belts. For that matter, we can assume “cuts to entitlements” will mean “cuts to things Republicans hate” and not “cuts to checks to petroleum and corn conglomerates,” so the social safety net in all its guises is in the crosshairs, as is arts funding, education and the list goes on. But hey, at least Donald Trump gets to keep his low taxes.
Thanks for reading, sorry I was gone for so long.
Congressional Budget Office report detailing America's debt structure. http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf
Yes, it's a lot, but not a record level. Interest on the debt is at lower levels than during the 1980s.
AP Global Economy tracker; world's largest 22 economies, 80% of world economy
We have the 3rd highest unemployment, we pay the lowest federal debt interest. Which is a crisis?
Greece debt is 150% of GDP, interest is 15%
Sorry, I know Huffpo is biased, it's from an AP story. It was easy to Google.
No comments:
Post a Comment