Budget and Debt Showdown Looming

Published in the Lynchburg Ledger on July 22, 2011 

With the debt limit approaching the August 2nd deadline, which may not be a real deadline, Republicans and Barack Hussein Obama seem to be at an impasse.

When Obama was first elected and met with Republicans who offered suggestions, his response was “We won!”  He felt he had a mandate to govern and he could care less what the Republicans said or thought.

Two years later, the voters had a severe case of buyer’s remorse and sent a message by electing conservatives to Congress.  Their marching orders were simple, cut spending and don’t raise taxes.  House Speaker John Boehner and Senate Minority Leader Mitch McConnell are sending the same message back to Obama, “We won!”

Obama wants to raise taxes, continue to increase spending and raise the debt ceiling so we can borrow even more money future generations will have to repay.

Our nation is currently on the brink of financial collapse.  We are heading for a cliff and Obama wants to accelerate rather than putting on the brakes.  In just two and a half years, Obama has increased the national debt by 3.8 trillion dollars, or 25 percent.

According to the Bipartisan Policy Center, a Washington think tank, the federal government will receive $172 billion in revenues between Aug. 3 and Aug. 31, but it is obligated to spend $306 billion, leaving a shortfall of $134 billion.

 

No state, no business and certainly no household could survive when the outflow exceeds the income by a whopping 44 percent.  Our problem is not one of income, it is one of spending.

We need to remember how we got to where we are.  It was the sub-prime home loan market collapse that tanked the economy.  Republicans tried in vain to rein in out-of -control Fannie Mae but were blocked by Democrats like Chris Dodd and Barney Frank.

 

In the recent best seller, “Reckless Endangerment,” author Gretchen Morgenson goes into great detail how the financial collapse occurred.  Morgenson is a Pulitzer Prize winning business reporter for the New York Times.  I usually distrust the New York Times, but this reporter tells it like it is.

The American people are already over taxed which accounts in part for the high unemployment rate.  Currently, the official number of unemployed is 14 million, but the actual amount is 24.8 million.  Private industry is not about to even think about expanding in the current hostile Obama economy.  In fact, more and more companies are looking offshore for locations.

One of the most recent is Cessna, which is reportedly in preliminary talks with Chinese conglomerate AVIC to build and distribute business aircraft in mainland China.  It is Barack Obama who wants to remove tax breaks buyers of corporate jets presently now enjoy.

Some may recall some years back Congress eliminated tax breaks on luxury yachts, which resulted on the loss of many jobs in the yacht building industry.

Business people I have talked to say the business climate is worse than is currently being reported.  We feel it at the Lynchburg Ledger.  When the economy sours, one of the first things a business person will do is cut back on their advertising budget.

Obama is insisting on raising taxes and has resorted to despicable scare tactics to pressure Republicans.  He has frightened senior citizens by suggesting that Social Security checks may not go out.  That is a bold face lie and Obama has reached a new low in his presidential term.  Current law requires the Social Security checks to go out and he certainly knows that.

This week, the House Republicans began to debate a bill they call “Cut, Cap and Balance.”

The cut portion would require $111 billion to be cut from the budget.  The cuts would be up front, not in out years.  Ronald Reagan was stung badly by Congress when he agreed to a tax increase with accompanying cuts in spending.  The spending cuts were in later years and never happened.  Republicans remember that and must insist on spending cuts now.

The first place I would cut is ObamaCare.

The cap would cap spending at 20 percent of the Gross Domestic Product (GDP) within 10 years.  It is currently at 24 percent.

 

The balance portion is the passing of a balanced budget amendment to the Constitution which would require the government to live within its means, like states, businesses and American households do.

Democrats are already lining up their forces to oppose it.  It can pass the House but passing the Democrat controlled Senate is another issue.

Even if it did, would Obama sign it?  My guess is likely not.  Barack Obama does not live in the real world.  He has never had a meaningful job in the private sector and has no idea how business works.  He has not run as much as a lemonade stand. He believes businesses exist to hire people and provide health care coverage.  Less than 10 percent of his inner circle has any business experience whatsoever.  They are mostly from left-wing academia.

Rather than listening to the American people and cutting spending, they are digging in their heels on tax increases.  They will continue to employ their scare tactics about default on the debt, which will not happen unless Obama specifically makes it happen.

Our bond rating my go down a bit which will mean we will pay a higher interest on what we borrow.  However, if the Republicans continue to oppose Obama’s reckless spending and taxes, I think the credit market will react positively to that.  Right now, they see us heading for a financial cliff with Obama’s foot firmly placed on the accelerator.  With Obama’s “pedal to the metal” approach, we are doomed.