Monday, 28 December 2009
The Looming Debt Crisis
IT'S TIME to stop worrying about the deficit -- and start panicking about the debt. To put it another way, short-term deficits aren't the real problem. The punishing hangover of borrowed money is. The ballooning national debt once looked like a long-term problem. Now, the long-term has become the middle-term, fast-forwarded by the cratering economy and the unavoidable and immense spending in the service of saving it.The bottom line is we are out of money. Our spending habits over the last few decades are no longer sustainable. It is now time to pay the piper. If we don't, our money will become worthless through a combination of inflation and stagnation. Our standard of living will disintegrate. How do we solve the problem? The Peterson-Pew Commission on Budget Reform offered a solution.
Consider: In the space of a single fiscal year, 2009, the debt soared from 41 percent of the gross domestic product to 53 percent. By way of comparison, the average for the past half-century has been 37 percent. This sum, which does not include what the government has borrowed from its own trust funds, is on track to rise to a crushing 85 percent of the economy by 2018. Getting the debt back down to a reasonable level will require extraordinary, almost unimaginable, fiscal discipline and political cooperation. Failing to do so will lower the national standard of living and ultimately threaten America's economic stability.
The fiscal situation was serious before the recession. It is now dire. An important proposal being released Monday by the Peterson-Pew Commission on Budget Reform urges Congress and the White House to commit immediately to stabilizing the debt at 60 percent of GDP by 2018; come up with a credible plan for getting there; and begin phasing in the necessary policy changes in 2012, once the recovery is fully underway. Warnings about fiscal danger may sound familiar, but one reflection of the current circumstances comes in the composition of the group that signed on to this report and agreed that both tax increases and spending cuts would be required. They range from a liberal former chair of the House Budget Committee, William H. Gray III of Pennsylvania, to a conservative former chair, Jim Nussle of Iowa. The recommendations envision annual benchmarks, enforceable by a debt trigger that would impose spending cuts and a surtax if the specified reductions were not achieved. Once the debt is stabilized in 2018, the goal would be to set it on a glide path to further reduction, (emphasis added)Why is it whenever we talk about reducing the debt, tax increases enter the mix? It really isn't that freaking hard to solve the debt problem. DON'T SPEND SO MUCH MONEY! Half the crap our federal government spends money on is completely unnecessary. Until we cut back government to half the size it currently is we shouldn't be asking the tax payers to pony up any more money. It is time Uncle Sam went on a diet. All we need are legislators who are willing to say no to the continual feeding of the monstrosity which is our federal government. As Ronald Reagan said "Balancing the budget is a little like protecting your virtue; you just have to learn to say no".
If we can't find any legislators willing to do the easy work, then we need to pass a constitutional amendment requiring a balanced budget. Let's force these idiots to create a balance budget. If most states can survive with a balanced budget law, surely the federal government can survive with the same constraints. The fun and games are over. It is time to get serious before we become a banana republic.
















