Do Not Raise The Debt Ceiling…
… Eliminate It.
As the Political Kabuki Theater enters another week with the manufactured Republican crisis of debt, the president and Congressional Republicans continue to blow everything up out of proportion while the rest of the world looks on in nervous anticipation.
On the one side, we have those who suddenly feel that we’ve spent too much money and in order to stop it, they need to take away the credit card. After all, only Republicans can borrow and spend like drunken sailors. Democrats are only allowed to tax and spend — except right now, taxes are off the table. It is a Republican strategy to deny the administration from doing anything, and letting the economy stagnate through the 2012 election.
Basically, these weasels are all about political positioning, instead of looking out for the financial interests of our nation.
On the other side, we have the president and most of the other Congressional Democrats who are trying to avoid another economic crash brought on this time by a group of insane Republicans who are intent on causing a crash.
It is being reported that Moody’s Investors Service is suggesting that the debt ceiling should be eliminated altogether, and that any control on spending be done through the budget process we currently have. They say that having an artificial debt ceiling has done nothing to curb spending, and has only served to cause instability and uncertainty in the markets each time one party or the other makes it a political hot potato.
It makes sense. We are probably the only nation of our stature that imposes such a contrivance as a “debt ceiling”, and since it has been raised virtually every time we’ve reached it, the effectiveness of it is nil.
Spending should be addressed in putting together a budget. If you want to connect debt to the GDP, then connect taxes (revenue) and spending to the GDP as well. Separate out the targeted taxes such as Social Security, Medicare, and unemployment insurance and take them off budget. Pay down the debt that we owe to those funds (which is the lion share of our intragovernmental debt) and lock those down to keep them from being robbed to balance future budgets. (I’m looking at you, Clinton)
For God’s sake, raise taxes on the rich. Why are we even having this argument? How many of us actually know a person who earns over a million bucks a year? Is that person concerned that he or she might have to pay five more percentage points on any income they earn past $250K?
I would raise the top tier marginal tax rate to 50 percent on income over $3 million. I would also close all loopholes and end subsidies on industries that post record profits. (or any profit for that matter)
We need to get it through our heads that we don’t have a “spending problem”, we have a “revenue problem” that was caused by — wait for it…. — tax breaks that lowered the revenue coming in. We took a “surplus” (which was basically a mathematical manipulation that took money from the Social Security Trust Fund and used it to “balance the budget” while still keeping a huge debt in place) and gave it to the rich in the form of the Bush tax cuts. He felt that we didn’t have any business having a budget surplus of any kind, and that the debt was just this mythical thing we kept off in the distance. He then decided to double down by adding another tax break and then start borrowing money to pay for two wars and a prescription drug program called Medicare Part D. (Obama put them back into the budget when he came into office which made it appear that HE was responsible for that added debt)
As the economy went South thanks to deregulation under both Clinton’s and Bush’s watch, more people found themselves out of work. People out of work do not pay taxes — that means less revenue comes in. It also means that more spending is needed to help pull us out of a recession, so the debt increases. This isn’t rocket science.
So, first off, eliminate the debt ceiling. Second, get rid of the Bush tax cuts, raise the top marginal tax rate to 50 percent (once the debt is lowered, that tax rate change can be revisited) eliminate the tax loopholes and subsidies, reinstate tariffs on finished goods back to the levels prior to Reagan.
Reinstate the Glass-Steagall Act. Modernize it if you will, but bring back true market regulation. Break up the “too large to fail” banks.
We need to end this thirty year experiment in “voo-doo economics” and the “Free Market” fiction of Ayn Rand. It has brought us to the financial brink and almost complete destruction. It is time to get back to what has worked for us in the past.