As Dollar Plummets, Deficit Spending Still a Reality
18 May 2011 1 Comment
The Associated Press reported on the latest failure of the Senate to reduce oil subsidies to the five largest producers, something they say President Obama has tried to accomplish since entering the executive chair. What is the rationale besides the typical Washington attacks on the market and its subsequent bureaucratic rhetoric to “doing what is right and what is fair?” Plainly stated: our leaders know our fiscal situation is in dire straights, but none of them will openly admit to the imminent reality of government default on Treasury obligations. The only solution they see are those that include retention of their Congressional seats, i.e. to continue borrowing. Yet, continued borrowing will only perpetuate the problem by driving the dollar down further and effectively burying the American public. The absurdity of the situation is highlighted by two facts. First, the government has increased the debt ceiling 10 times since 2001. If that does not sound some bells and whistles in one’s head, then think of this way. Our federal government has grown so large, that it has voted to increase the debt ceiling every year in the last 10 just to meet its so-called obligations to the people. Now ask yourself how your life has changed for the better over the last decade. Secondly, much of America’s intellectual elite and policy researchers are not in opposition. Howard Gleckman, a resident fellow at the Urban Institute, stated, “Having voted to run up the bill, it is utterly irresponsible to prohibit the government from borrowing the money to pay it.” What?! Not only do they see borrowing as the only means to economic recovery and meeting government obligations (i.e. Keynesian deficit financing), many go so far as to advocate borrowing to pay off borrowing. So much for sustainable government or fiscal restraint.
That said, while it would appear that the last few months has put our bureaucrats on edge regarding America’s credit score, what they should be worried about is how increased borrowing will affect the viability of our currency and the global markets. Instead, Democrats try to gain political clout by cutting subsidies that never should have been, while Republicans spout the same old lies of higher taxes on oil producers translating to higher prices, fewer jobs, and delayed recovery. Either alternative is aimed at unrestricted spending. While the Democrats argue cutting subsidies to big oil will ease pressure off making cuts to the welfare state and thus allow borrowing to continue, the Republicans argue that such subsidies should stay, while offering no workable solution to the welfare state problem. So once again, the American public is left with no rational solution. Rather, we are forced to take sides along ideological lines that have been blurred long ago, not on open discourse and rational thought.
- Senate Blocks Bill Repealing $2B in Oil Tax Breaks (news.yahoo.com)
- U.S. hits credit limit, setting up 11-week fight (seattletimes.nwsource.com)
- The Federal Reserve: Money, Debt, and Inflation (kapitalcon.wordpress.com)
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