LEE’S SUMMIT, August 6, 2011 – Last night the dreaded de-rating of the United States Debt took place; Standards and Poor saw it fit to reduce the valuation of the US Debt and to put a fine point on it, they notified the world that further reductions may be required (click here for details).
The US’s AAA rating lasted through World War I, the Great Depression, World War II, Korean War, Vietnam War, 9/11, and everything in between; but it could not last past the Obama Administration, the Pelosi Congress, the Reid Senate and now the Boehner House.
The Chinese stated (click here for details) that the US has a “debt addiction” and to add insult to injury they further dropped the hammer on the US by saying “the world needs a new stable global reserve currency.”
The Wall Street Journal quotes Vladimir Putin saying about the US debt:
“They are living beyond their means and shifting…their problems to the world economy,” he said at a summer youth camp. “They are living like parasites… . They are leeching on the world economy.”
I’m an American by my choice to become a US Citizen in 1992 and I have no love for Russia nor China nor the way they run their countries and what they are doing to the world. Yet, I find nothing – not a single solitary thing – that I can argue with.
The facts as I see them:
- The 2008 crash of the US economy was caused by the collapse of the housing bubble that was started by Bill Clinton and Jim Johnson (at the time head of Fanny Mae).
- It was helped along by Government regulators not doing their job.
- It was further fueled by the Rating Agencies (Fitz, Moody, S&P) who gave Fanny Mae Securitized Mortgages a AA rating based on the relationship of the US Government and Fanny Mae.
- And it Fanny Mae was vigorously defended by Chris Dodd and Barney Frank both of whom had obvious conflict of interests when it came to the sub-prime loans and Freddy and Fanny.
- The 1998 final blow and elimination to the post-Depression Era laws to protect consumers from banks that enjoy gambling with people’s money.
President Obama loves to blame George Bush for the collapse in 2008 as though Bush was the only one to blame. I wonder how President Obama will handle the downgrade of the US debt. I wonder if he’ll graciously take blame for it, as he is trying to pass the blame to Bush for the collapse. I guess you can make the leap (of false logic) that if Bush is responsible for the 2008 housing bubble burst, the collapse of the sub-prime fiasco, and the subsequent freezing of credit, then he is also responsible for the de-rating of the US Debt to AA+ with the possibility of further erosion in confidence (faith and trust) in the US’s ability to pay its debt.
Dave Ramsey has a great saying that the US Government needs to listen to: “debt makes us slaves to the lender.” And, in fact, Dave Ramsey is one hundred percent correct. China now owns a portion of the United States Debt. Yes, China would be short term unwise to force a US default; but China has never impressed me as being concerned with the short term – they are, by culture, a country that things long term and with a 4,000 year history I don’t think that sending the World Economy in a tail spin to teach it a lesson, and to come out on top after all the dust settles, would bother Beijing one bit.
How do you take down the last Super Power in the world – one brick at a time.
Why are S&P, the Tea Party, Russia and China all on the same side of the equation at this point? The answer is very simple: The US is addicted to the purchasing of votes by spending money it does not have.
The Boehner-Reid Debt Reduction plan is a joke! If that was going to be the outcome from the start, then Boehner should have capitulated last April and moved on. Look at the Chart below. Notice that while Boehner, Reid and the President claim that they reduced spending by two trillion dollars ($2,000,000,000,000), the fact is that every year the outlays go up.
In what plain of existence, in what reality, more like in what fantasy world is reducing the increase in spending, a real reduction?
On July 13th Connie Mack (R-FL) introduced the Mack Penny Plan. It is simple. You and I can understand it. It is not 2,000 pages that no one has time to read. The plan proposes the following:
The Mack Penny Plan balances the budget by:
- Cutting total federal spending by one percent each year for six consecutive years,
- Setting an overall spending cap of 18 percent of gross domestic product in 2018, and
- Reducing overall spending by $7.5 trillion over 10 years
Now look at the chart below and look at the difference between the current rate of outlays from 2011 to 2021 (per the CBO), compared to the Boehner-Reid-Obama debt reduction bill, and the Mack Penny Plan. Which one comes closer to actually reducing the budget.
Even Connie Mack fails to see the point that constantly spending more and more money simply promotes a behemoth Government structure that is too close to spending us into oblivion (or Greece, Italy and the other countries who only now are fastening their spending belts a notch or two tighter.
At this point the only option that is actually on the table that makes sense to me is the Connie Mack Penny Plan and I hope we can even do better than that.
America is about Rugged Individuals facing up to the Frontier and its challenges and coming out successful by hard work, by doing what needed to be done. This is one of those times, and the Tea Party is the only group of Citizens ringing the bell saying “We’re headed the wrong way!!!”
Speaker Boehner, I hope you show better leadership once you’ve had a chance to talk to your disappointed constituents in how your leadership lead us right into more spending – that was not the mandate given to the Republicans in the November 2010 election.
The Lee’s Summit Conservative