Tag Archives: Debt limit

America: What I Believe In 2011

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Image via Wikimedia Commons

(Please click on “comments” at the left side of the title for an interesting back-and-forth between polar opposite points of view.)

The deadlock over raising the debt limit seems almost like a clash of religious beliefs. The two sides hold different beliefs. The deadlock has helped clarify my thinking about what I believe. Maybe this debt crisis of 2011 will help us all clarify who we are, and what we believe.

Image via Wikimedia CommonsI believe that Social Security, Medicare, and Medicaid are the best part of America. I believe that without Social Security, Medicare, and Medicaid, a large part of the American population — more than half the people over 65 — would fall into hopeless poverty.

Some people believe it would be impossible to balance the American budget without deep cuts in Social Security, Medicare, and Medicaid. I believe that America is still, right now, the most prosperous society the world has ever known. I believe that America can afford Social Security, Medicare, and Medicaid.

I believe it would be fair for the most prosperous among us — those with incomes of $250,000 or more a year — to pay a little more in taxes for the good of America. These people have prospered in America. They live the good life. Aren’t they patriotic enough to want to keep America strong? I believe they ARE patriotic and willing to help. It is inconceivable that they could be otherwise.

Some politicians say they oppose any tax increase because a tax increase would “destroy jobs.”

I don’t believe it. How would a modest tax increase destroy jobs? The president is not talking about making rich people poor. He’s talking about a modest tax increase on incomes over $250,000. How exactly will that destroy jobs? Will people earning $250,000 or more even notice a small tax increase? Will a small tax increase change their way of life? I don’t think so. Some may believe otherwise.

I believe there are other ways to balance the American budget. I believe we are spending far too much on a worldwide military presence. I believe we do not have to be fighting foreign wars in Iraq, Afghanistan and Libya. I believe we could drastically reduce foreign military spending, pull American soldiers out of harm’s way and closer to the North American continent. We could reduce defense spending by perhaps a third, and still have a military that is by far strong enough to defend the North American continent.

I simply cannot understand why anyone would want to destroy Social Security, Medicare and Medicaid. I believe the vast majority of Americans support these programs. I believe that common-sense cuts in general government spending and defense spending, combined with a small increase in taxes on the most fortunate among us, would bring the American budget into balance.

What do you believe?

THIS CHART PUTS THE FINANCIAL CONDITION OF MEDICARE AND SOCIAL SECURITY IN PERSPECTIVE. BEGGING THE QUESTION: IF MODEST CUTS WERE MADE IN U.S. SPENDING ON GENERAL GOVERNMENT AND DEFENSE, AND SOME EFFICIENCIES ARE FOUND IN MEDICARE AND SOCIAL SECURITY, THEN HOW MUCH WOULD STILL NEED TO BE RAISED IN TAXES? Chart via Wikipedia

Keep the faith.

— John Hayden

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Wildcat Debt Strike in Autumn of 2011

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At rock bottom, the interlocking political and financial structures of the U.S. are based on trust. Recently, a string of financial failures has shaken the credibility of the U.S. political-financial-industrial complex, resulting in a rapidly spreading failure of trust.

PRESIDENT BARACK OBAMA, Wikimedia Commons photo

Trust is frayed to the point where, at the end of this week, Speaker John Boehner severed negotiations with President Barack Obama on raising the U.S. debt ceiling and averting financial crisis. At this point, you really couldn’t call the Tea Party a party of “loyal opposition.”

Question:  What do you think will happen when the government is forced, starting August 2, to choose which bills to pay and which bills to default on — which promises to keep and which promises to break?

Answer:  I wouldn’t be surprised if a Wildcat Debt Strike sweeps across the U.S. like a prairie fire in the fall.

Consider the events that brought us to this convergence:

SPEAKER JOHN BOEHNER, Wikimedia Commons photo

  • Strike One — The financial bubble burst, and Wall Street persuaded the pillars of the U.S. government — the Treasury Department, the President, the Congress — that the world economy would collapse without a sudden government bailout. (Presidential candidates of both parties endorsed the bailout in 2008.) Wall Street extorted billions under TARP, but continued to pay bonuses as usual to Wall Street executives.  In 2009, billions more were spent in a giant stimulus package, propping up the profits and cash reserves of corporations and the compensation packages for CEOs.
  • Strike Two — The real estate bubble burst, and banks throughout the U.S. foreclosed on mortgages, further driving down the value of houses. As people found their mortgages underwater (that is, the mortgage is worth more than the house), they considered whether or not to continue making the monthly payment. Some homeowners lost jobs and were unable to pay; some calculated that it made no sense to throw good money after a bad house. It is now widely accepted that people can and will walk away from a mortgage.  Banks are not willing to modify impossible mortgages, and debtors are not willing to pay impossible mortgages.
  • Strike Three — The debt bubble bursts. That comes in August, if the U.S. government decides not to pay its bills, especially its obligations to individual American citizens.

It’s all reciprocal, isn’t it? I’ll play fair with you as long as you play fair with me. As long as my house has value, I’ll continue to pay my mortgage. As long as you pay me, I’ll pay my debts.

Everything depends on our belief in the myths that George Washington will own up to cutting down the cherry tree; and that Abe Lincoln will walk six miles to return a penny.

The entire system could come undone in a cascade of individual decisions to hoard cash and ignore debts. When the government refuses to pay someone — whether it be a Social Security beneficiary, a veteran, a bureaucrat, a soldier, or a Medicare bill to a hospital — that someone will in turn refuse to pay an obligation.

The autumn of 2011 might deteriorate into a general Wildcat Debt  Strike, with individuals following the government into spontaneous default on taxes, mortgages, car payments, and most of all, credit card bills.

— John Hayden

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