Was the whole the shutdown planned and orchestrated to come down the way it did? I think it was. I don't think the Republicans wanted to "win." I believe they planned to make a show of trying to stop Obamacare, but then giving in to the Democrats after waiting just long enough to give us all hope. The Republicans were seemingly negotiating with themselves when they offered up alternative after alternative. This was all done while the Democrats sat back and repeated their mantra of "we won't negotiate about this."
After waiting for a couple of weeks, the Republican leadership just woke up one day and said they had lost the battle. Is that true? No. They just gave up. Do the Republicans really believe that a government shutdown would eventually result in a government default?
I believe that the default is more likely to come from not fixing the spending problem we have in America. If you ran your household like the federal government, how long would it last. Our federal government has been spending about 40% more than it takes in ever since Obama took office. Imagine if your annual household income was $60k, but you were spending $85k. After 5 years, you would have $125k in credit card debt. Think of all the interest you would pay every month on the credit cards. That would be an expense that would grow every month, because if you don't reduce any of your other spending, you would need to borrow more every year as the interest cost rises.
If your home is like the federal government, you would go to your boss and demand a raise. After all, he's a rich guy that makes more money than you; he can afford to pay you more. You can't reduce your spending. Why should you have to drive a Chevrolet? It's not fair that a rich guy can have a Lexus, and you can't. Just go out and get the Lexus and demand a raise.
What happens to your interest payments if the interest rates start to rise? That could happen because no one wants to give you a credit card when you have $125k in credit card debt. You're not a very good credit risk when you owe more than your annual income. This is especially true when your credit history doesn't show that you are responsible with credit.
Of course, there is the economic reality that interest rates today are as low as they will ever be. In fact, the Federal Reserve has taken many steps to try and "jump start" the economy, and the slow economy is the reason interest rates are so low. What happens if the economy ever takes off? There will be excessive inflation unless the Federal Reserve takes steps to limit economic growth. One of the primary levers they have for reining in the economy and inflation is to raise the interest rates. Are you old enough to remember the 1980's? Interest rates for home loans were well into the teens. My first home loan had an adjustable rate of around 14%, and I bought it after the peak had passed. I was on my third home in 1988 before I had a fixed rate mortgage and one with an interest rate below 10%.
Right now, we are in the tenuous position of wanting the economy to take off, but fearing the inflation that will result. Imagine what happens to the interest payments on the national debt if interest rates were to triple. At least the tax revenues would rise if the economy took off. The question is whether revenues would rise more quickly than costs. Historically, the government has grown spending faster than revenues, growing the MessAPolitico.
Additionally, we will pay higher interest rates on government debt instruments if the markets downgrade our bond rating. Is that going to happen because Congress is trying to get the government spending under control? No. It is more likely to happen because Congress keeps kicking the can down the road and does absolutely nothing to control spending.
America, it is time to wake up to the MessAPolitico that is before us. Vote for freedom. Vote for fiscal responsibility. Vote for reducing government regulations that stifle our economic growth. Vote to kick the establishment out of power in the federal government.
No comments:
Post a Comment