Through the 1980's, the National Debt was in the news a lot. It was a big deal to a lot of people, and there was extensive debate about whether the budget deficit should be attacked by cutting spending or raising taxes. In fact, George H. W. Bush lost to Bill Clinton in large part because of his broken promise of "no new taxes." No one seems to remember, but he signed a bill passed by the Democratic Congress that had a tax increase and spending cuts. You see, there was a compromise where Bush got spending cuts he wanted, and the Democratically controlled Congress got the tax increase they wanted. All of that was about balancing the budget.
Bill Clinton was elected President in 1992 after George H. W. Bush's first term. For two years Clinton wasn't able to balance the budget with the Democrats controlling Congress. In 1994, the Republicans ran on a plan called the "contract with America." They took control of the House and the Senate and succeeded in balancing the budget. Bill Clinton fought back against their balanced budget and refused to sign it. There was a big hoopla about shutting down the government, and Clinton blamed the whole debacle on the Republicans. Somehow the budget was passed and put into effect though. Eventually the mainstream media decided that Clinton had balanced the budget as President, and that made him the greatest President of all time. I see this as a dichotomy that has gone largely unchallenged by the American people.
So why do we get so uptight about the National Debt? Who cares about it anyway? It doesn't seem to bother anyone that didn't attend the Republican National Convention in 2012. We should seriously worry about it. Today, interest rates are at historically low levels. Our government must pay out interest to the holders of Treasury bonds. As bonds reach maturity, they must be replaced by new ones at the prevailing interest rates. All new bonds issued to cover the new debt created to cover the over-spending are issued at the prevailing interest rates as well. If the interest rates rise dramatically, the federal government will need to pay a lot more in interest to the debt holders. That means we will either increase the debt exponentially or spending on other pet programs will have to be curtailed.
The interest rates are the main levers used by the Federal Reserve to regulate economic growth and, ultimately, the US economy. Today, the interest rates are so low because the Federal Reserve is trying to get this economy moving. Normally, interest rates this low would encourage folks to buy houses and cars and to use their credit cards to buy everything. However, people just have no confidence in the future of the US economy. Many are unemployed, so they can't buy anything besides the necessities. Others aren't sure their jobs will last.
If the economy ever does take off, inflation is likely to kick in. The treasury has been using money they printed to buy up the bonds they are issuing these days. That devalues the currency and is highly inflationary. The only thing preventing the inflation is the high unemployment and stagnant economy.
So what happens when the economy does get out of the doldrums? Inflation kicks in with a vengeance. Then what happens? The Federal Reserve raises interest rates. Then what's next? The federal spending on interest on the National Debt skyrockets. Has the MessAPolitico thought this far into the future? Maybe. If they did, they're thinking that it will come to pass long after they are retired. It's not a problem if they are still in office though. The disaster can always be blamed on the other party. If you are a Democrat, don't worry. The mainstream media will be so busy blaming everything on the Republicans, you won't have to say anything.
No, we have the Republicans raising the Debt Ceiling at the drop of a hat. They raise taxes on the rich. They reduce the amount the spending goes up and call it a cut. There is no difference between establishment Democrats and Republicans. It's time for a change. Let's do it in the primaries. We need a good batch of Tea Party Republicans running in November. Help me get it done.
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