As the week winds down, and I look back at the events of the week; the negotiations over the U.S. Debt Ceiling dominated the news. However in looking at the press stories concerning the negotiations, for the most part they seem about as informative as talking to my dog.
The vast majority of the stories I have reviewed are more focused on the petty aspects of the discussions and the ridiculous comments being made by Harry Reid. This is one of the most important issues of the year, and probably the next several years. These negotiations and their results have the ability to impact all of our lives for next several years, and there is almost no coverage of the real positions being taken by either side.
This is where I have a massive problem with the major media outlets. They have an inherent tendency to focus on sound bites and the quick and easy aspects of a story. I realize that a lot of this due to the fact that the in the trenches portion of major networks tend to be staffed by a lot under-paid and over-worked 26 year old English majors. I do not necessarily blame them what I consider to be a low quality product that gets produced; I blame the succession of corporate executives that have over-leveraged these media conglomerates and left their staffs horrendously short of the resources they need. But in the process I feel the Press has abandoned its privledged position as a Watch Dog and become more of a lap dog. I really wish I felt differently about this.
Back to the main point of this post. There is a serious and dangerous absence of the facts and real issues surrounding the consequences of the results of these negotiations.
Spending by the Federal Government (roughly 25% of GDP) is at an all-time post World War II high! Almost everyone with any significant decision making experience says this is unsustainable. To the best of my knowledge, no government in modern history has ever been able to sustain this level of spending. Yet the major media ignores this fact, and acts like there is no difference between the current level of spending (25% of GDP) and the 18% of GDP during the final years of the Clinton administration.
The Democrats are proposing serious tax increase to close the spending gap. Following the passage of Obama care, the tax burden on U.S. citizens and corporations is at the highest it has been since the ’60s and ’70s. Those were not decades known for their economic prosperity. Let’s not forget that the top U.S. income tax rate following tax reform during the Regan presidency was 28%. Let’s not forget either that the more you tax something, the less there is of it! Economic growth is very weak, and now the Democrats are demanding more taxes on the portion of the economy generates our economic growth. There is a very real possibility that their tax increases will lead to another, very severe recession! If that happens then the unemployment rate and the deficit will very likely sky rocket! Where is the press on this issue???
This one should be a “no brainer!” There is an incredible amount of historical evidence that shows regardless of what tax rates are, the U.S. government has never collected more than 19% of GDP in tax receipts. The key to solving the spending gap isn’t raising more revenue, it is cutting spending. Spending by the Federal government needs to be brought down to19% of GDP or less.
Our Federal Debt level has reached a critical point, quite possible crossing the tipping point where it now is harming economic growth and damaging our ability to manage our country. A slower growing economy will lead to higher deficits, and quite likely higher inflation and higher interest rates. The best case scenario is simply higher deficits due to lower than expected tax receipts which cause the interest rates and interest payments to go out of control. If we see even any inflation that is slightly above normal, then there is a very real possibility of interest rates and the interest payments on the Federal Deficit spiraling so far out of control that even the best case scenario from the current negotiations will look to have been a joke.
There is ample evidence that countries that allow their Debt to GDP ratio to exceed 100% have severe economic problems. We are at that point! Yet if you listen to Harry Reid, we have 20 years before we have to worry about that problem. This guy is either just insane or incredibly dangerous in his never ending quest for power! At the current level of the spending gap, in 20 years the Debt to GDP ratio will be over 300% There is no economy in the world that has been able to sustain anything close to that level of Debt to GDP.
Nobody seems to know what cuts in spending the Democrats are actually proposing. How come they get no grief on this?
Why is there no serious analysis of the alternatives to this economic suicide the Democrats are attempting to cram down our throats????
There is a significant and serious alternative to the disaster the Democrats are speeding this country towards. It involves cutting the current level of spending, reforming entitlements in order to cap the amount of spending, and amending the constitution to require a balanced budget. That is the path to economic growth and a good life.