The United States Congress is going to have to make a decision within the next week: Either to raise the national debt ceiling to its legal limit, which the debt is now $14 trillion, or let the United States go into default.
It has been nothing more than a circus act between the two failed parties over the course the last several months and America’s attention on our major financial problems were diverted this week because of the killing of Osama bin Laden.
The Republican controlled House is refusing to do anything with relation to raising the debt, unless the Obama Administration agrees to additional budget cuts, and Democrats want the status quo. In short, they want everything to remain the same. History has shown that keeping everything the same is what got us into this mess in the first place.
As the decision to raise the debt ceiling draws closer, Treasury Secretary Tim Geithner decided to tap into a $200 billion reserve fund that seemed to have just come out of nowhere, to make some of the nation’s obligations. Well, the $200 billion was quickly depleted within a week’s span. I guess that verifies what we thought about raising taxes on the rich, which if Congress were to tax even 100% all of the people in this country annually making $250,000 or more, would net the Federal Government an estimated $1.4 trillion. So if Tim Geithner can spent $200 billion in a week, then $1.4 trillion would only fund the Federal Government for maybe four to five months.
Furthermore, Geithner has been warning Congress that if the debt ceiling isn’t raised and the United States doesn’t pay its obligations, we would have another economic crisis similar to what we had experienced in 2008 and the unemployment would reach 17%, which by the way, the unemployment in this country is much higher than they really want you to know. The April 15th edition of USA Today had a stunning report from the Bureau of Labor Statistics which found that only 44.4% of Americans actually held jobs in 2010, which means 55% of Americans did not have jobs. How does the Federal Government seriously determine that the current unemployment rate is only at an average of 9%? Surely, they're only counting the percentage of Americans that are actually collecting real unemployment benefits.
To address the debt ceiling from another perspective, on the April 19th blog of Independent Word, I commented on a report from Professor Antony Davis of Duquesne University Donahue School of Business who insists the debt ceiling is really nothing more than a work of fiction. In his analysis, Professor Davis indicated that the debt ceiling has been raised by the U.S. Congress 70 times since 1970. Despite the Federal income tax ranging from 77% in 1969 to averaging between 30% and 40% for the years from 1990 to 2011, the average GDP remained the same at about 18%. Davis’s conclusion is the if tax brackets are fixed to jump up and down through four decades, but the GDP remained the same, then our debt problem is nothing more than a pure spending problem.
But does anyone in Washington really believe this nation has a severe spending problem?
I guess not. If that were the case, then we probably should have cut substantial government cost two years ago following the financial collapse. This way, Geithner wouldn’t be whining right now about raising the nation’s debt limit.
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