Government shutdown looms – Dems and GOP still arguing over bar tab on the Titanic

April 7, 2011 05:59

Quibbling over whether to cut $33 billion or $40 billion from a single year of $3.69 trillion spending is like arguing over the bar tab on the Titanic. Our country is sinking in debt.

By Michael Whipple, Editor

As a senator Obama chastised the GOP for raising the debt ceiling as “a failure of leadership”.

As recently as 2004, the debt limit was $7.384 billion. It is now $14.294 Trillion and congress prepared soon to raise it again. See how fast our debt is rising here. Congress has voted on the debt limit several times in the past few years. While those votes are sometimes forgettable, occasionally they are not.

March 20, 2006: This was the last stand-alone debt limit vote on which then-Senator Obama voted. He was one of 48 members to vote against the increase, which passed with 52 votes.i He said: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”ii

The only thing propping up our economy is the fact that the US is the best of the world economies that are all in crisis. Obama’s own bipartisan commission established to study the debt problem headed by Erskine Bowles and Alan Simpson co-chairs explained the dire consequences of continuing deficit spending and rising debt. Alan Simpson (former senator from WY)  said economic collapse will ‘be very swift and very dramatic’. When asked why the markets haven’t reacted to the US being on the precipice of collapse, Erskine Bowles said its because the US economy is  “the best lookin’ horse in the glue factory.”

Former Treasury Secretary Rubin said the debt crisis could explode any minute. Secretary of State Hillary Clinton told the Council on Foreign Relations that our national debt is a national security risk echoing previous statements by Joint Chiefs Chairman Admiral Mullen, head of U.S. intelligence – Dennis Blair, and all of America’s intelligence agencies. Maybe someone should start paying attention.

The president’s Office of Management and Budget website has this quote from Obama:

But according to the CBO’s preliminary analysis, Obama would once again leave “our people” with a mountain of debt with his most recent budget:

Matt Cover at reported:

The Congressional Budget Office (CBO) says that President Barack Obama’s 2012 budget will cause large and persistent yearly deficits that will push the public debt to $20.8 trillion by 2021.

“Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021,” the CBO said in its March 18 analysis of Obama’s 2012 budget.

Veronique de Rugy at Mercatus Center noted that the interest on the debt could triple:

When the Congressional Budget Office’s interest rate assumptions are modified to reflect historical interest rates and private sector forecasts, the costs of servicing our debt over next ten years balloons. For instance, if interest rates were modified to reflect the average rates in the 1980s, in 2021, our interest payments would nearly triple from CBO’s projection of $749 billion to $2.0 trillion.  Accumulated interest payments over this period would double from their current projected level of  $5.7 trillion dollars to $11.0 trillion dollars. Needless to say, the impact of these increased interest costs on the deficit would be huge.The only way to address the increasing costs of our debt is to address the driving forces behind it – legislated explosions in Social Security, Medicare, and Medicaid spending.

Who are they trying to kid? With a tsunami of debt headed our way, the GOP wants to take a bucket of water out of the ocean and the Democrats argue that it will ruin the ocean. Even the $61 billion the GOP is struggling to cut is only 1.6% of one year’s spending.

Famed investment analyst John Rubino who predicted the real estate market collapse said:

Today’s debate over federal spending and taxes is just so much fantasy. We’re like a family arguing about redoing the kitchen while the house burns down. It’s an irrelevant, annoying discussion. The interesting debate will take place after the collapse, when we have to decide what kind of society to rebuild from the rubble. Then we can argue for limited government and individual rights and sound money and all the rest. Politics will be interesting again!

Renowned investment adviser Harry Schultz wrote these words in his last newsletter:

Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We have gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in the U.S. leadership, where the problems were hatched & where the rot is by far the deepest.

Only Paul Ryan’s dramatic proposal to cut over $6 trillion in Obama’s proposed reckless spending over the next ten years has a chance of staving off financial collapse. Yet no one believes it will get passed by a congress addicted to spending other people’s money.

May god help us. The politicians certainly will not.

Michael Whipple, Editor

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