Just when we thought the entire economy was about to collapse on us because our fearless political leaders stoically refused to compromise on their revered values, they pull one out of their collective asses, , and cut a whopping $38 Billion and change, roughly 2% , from the $1.5 Trillion (Trillion with a “T”) federal budget deficit.
More on my view of the significance of that in a moment.
Anyway, miraculously, after months of hand wringing while awaiting the outcome of the election season, where the Democrat congress had ample opportunity to approve a budget while in control of both houses of Congress as well as the White House, and the GOP threatened a filibuster to stymie proposed spending increases, they were finally able to “settle their differences” and accomplish this colossal feat in the 11th hour of the final day of their 7th continuing resolution to avert a shut down. Wow… Politics over principal. Are they good and efficient at doing the peoples work or what!
But hold the phone.
No one has signed off on this rounding error just yet and factions on both sides are unhappily claiming the other side gained undo advantage in the agreement. Now factions on the right and left are closing ranks to possibly stymie a confirmation vote this week. The devil as the they say is in the details… So stay tuned.
If you’ve been following along kids, there’s been much clamor about the debacle we find ourselves in regarding our floundering economy. Much gnashing of teeth concerning whose sacred cow will need to be gored to enable our fabled democracy to balance our federal budget, live within our means, take care of the least among us, and thereby return to our status as the bastion of world economic stability — all without decreasing spending or raising taxes.
What is lost in translation in all these political gyrations is the potentially fatal blow that will be dealt to us as a nation if we the people go along with the notion that our federal debt will take care of itself and doing business as usual is ok. Rhetoric aside, as the savvy political wonk James Carville opined in the run up to the ’92 presidential elections, “it’s about the economy, stupid.” Unfortunately, it still is…
The idea that either side can claim a “victory” with this exercise in incompetence and posturing is just whistling past the grave yard. A ludicrous display of smoke and mirrors. While congress was debating the wisdom of making paper cuts to the deficit our federal debt is hemorrhaging.
To add a bit of perspective to what they finally “accomplished” on capital hill in the wee hours of the evening, consider for a moment a 120,000 square foot hotel that one is attempting to rid of 1.5 trillion bed bugs. All agree the bed bugs are bad news but the right decides to make a point and wants to eliminate 1 Million termites too. The left objects to the notion since spiders might be vanquished too and since some spiders eat bed bugs and termites, no deal. So while the right is in the basement scratching for termites without a flashlight, the left is on the top floor screaming fire from the windows. Both sides appear inept and clueless. Meanwhile, the bed bug population keeps increasing…
$40 Billion is a big, big number and might appear even more significant were it not for the deep, deep hole we are in. Now debate starts on raising the debt ceiling beyond $14 Trillion. The “full faith and credit of the US to meet its debt obligations”; our ability to pay our bills on time, is on the line. So, who are they kidding?
We borrow $.40 cents of every dollar we spend. Not raising the ceiling is brinksmanship. However, not checking the flow of debt is slow suicide. An eventually default will be inevitable and with our standard of living will suffer immeasurably. If people are bitching about relative paper cuts to the deficit now wait until no one buys our debt, China shuts off our water and we lose our reserve currency status in the world. A meat cleaver won’t fix things then. After interest rates spike and prices for commodities we now take for granted soar, it will be too late.
If there is a silver lining in this little exercise in deficit reduction politics, at least congress is finally thinking cut not spend. However, true sacrifices are necessary and everything needs to be on the table. It will be interesting to observe the debate on raising the debt ceiling over the next several weeks. Interesting to see if we have any statesman among the politicians who will have the resolve to make unpopular decisions and cut everything to the bone, including each sides pet projects, in order to take us off life support and save our republic from ourselves.
Hopefully it is not too late.
Whereas this was a start, lets not kid ourselves. In short, what was “achieved” so far that I am sure some in DC believe is monumental and are is slapping themselves on the back as I write this, is anemic and those who are celebrating this victory are delusional. The equivalent to trying to rid bed bugs from a janitor closet in a basement of the 20 story hotel and proclaiming you are on your way to being pest free. We have runaway debt that both the mainstream right and liberal left have seemingly little resolve to make tough, unpopular decisions to fix this mess anytime soon.
Can you say hyper-inflation?