Without question the most serious issue facing America, short- and long-term, is debt. The current total national debt is $16.2 trillion, up $5.7 trillion from the same day in 2008 ($10.5 trillion total) and up $10.2 trillion from 2000 ($5.7 trillion total). Projections for 2016, at current rates of spending, are for $22.7 trillion in debt, an increase of $6.5 trillion with debt being 131% of Gross Domestic Product (GDP – the total of everything made and services rendered in 1 year – $17.3 trillion projected). This all assumes interest rates remaining at near 0 levels, which is not realistic. The outlook is unsustainable.
Thus we believe it is important to see, now that the question of who will be President is answered, not only what is pending but also how elected officials have acted to date and what are likely outcomes of actions.
First let’s look at elected officials. We will focus on New York State, but the data for other States can be found with ease. We will start with the 8 Republican members of the House of Representatives, because it’s a very short list. Keeping it simple, how did they voted on H.Amdt.1065 for H.R.5326 – Commerce, Justice, Science, and Related Agencies Appropriations Act, 2013. What is H.Amdt.1065? It simply says that the 2013 budget for Commerce, Justice, Science and related government departments would have a 1% cut – a reduction of $514 million out of $51.49 billion. [In comparison to average American budgets, cutting $514.59 out of $51,459 annual income]
H.Amdt.1065 failed to pass. There were 160 votes for (156 Republicans, 4 Democrats) and 251 votes against (174 Democrats, 77 Republicans). Rep. Ann Marie Buerkle of the NY-25 was the only Republican in New York State to vote for the measure. Representatives Gibson (NY-20), Grimm (NY-13), Hanna (NY-24), Hayworth (NY-19), King (NY-3), Reed (NY-29) and Turner (NY-9) all voted against.
All the Democrat Representatives of New York voted against H.Amdt.1065, except one that did not vote at all. They are Ackerman (NY-5), Bishop (NY-1), Clarke (NY-11), Crowley (NY-7), Engel (NY-17), Higgins (NY-27), Hinchey (NY-22), Hochul (NY-26), Israel (NY-2), Lowey (NY-18), Maloney (NY-14), McCarthy (NY-4), Meeks (NY-6), Nadler (NY-8), Owens (NY-23), Rangel (NY-15), Serrano (NY-16), Tonko (NY-21), Towns (NY-10), Velazquez (NY-12). Slaughter (NY-28) did not vote.
We should note that the $51.4 billion budget passed was below the 2008 funding level. Still that budget was part of the rocketing increase in spending since 2000 noted at the beginning of this article. An extra 1% is nothing except window dressing indicating an even glancing attempt at reducing spending that caused a downgrade of US creditworthiness.
In the Senate, again using New York State as an example, there is the simple example of S.Amdt. 1472 – Prohibits Consideration of Bills Containing Earmarks. It was rejected 59 to 40, with both Senator Charles Schumer (Dem) and Sen. Kirsten Gillibrand (Dem) voting against. The vote for the Bill included 7 Democrats as well as 33 Republicans.
In this case, again a matter of window dressing, the Senate would not vote to prevent earmarks – items unessential to the budget of the nation and highly partisan gifts to special interests for both political parties. This is extra money being spent that again flies in the face of claims, by Democrats and Republicans alike, that there is a serious intention to restrain spending and control the debt.
This is the 112th Congress of the Unites States, a near mirror of the 113th Congress. A group of elected officials unwilling to even consider the most minor and ineffective cuts to spending. A group, that as a whole, have only just begun to consider slowing the rate of spending and debt increase. Considering the amount of gridlock that has existed, and the deep divergence of priorities, few consider the likelihood of real change to occur.
Which brings us to the current dilemma. The “fiscal cliff” and the debt ceiling increase.
The “fiscal cliff” was created in 2011 as a stopgap measure, a means of buying time. There was a deep impasse between Republicans and Democrats on raising the debt ceiling, highlighting the enormous growth of debt in just the past 4 years. Since neither side could come to an agreement on what to cut or by how much, with credit rating agencies and international economies watching for any answer, the solution was a “Super committee of 12” that would hash out a deal or enact needed cuts of a nature that would devastate the economy.
At the time just before the debt deal we stated,
“One of the most daunting is the credit rating of the nation. Currently we are at AAA, and there is almost no scenario in which we will see that rating be maintained…On August 3rd, it is highly likely that America’s credit rating will become AA + or – …IF this is correct, and we are just estimating, then the debt ceiling limit will not last through the 2012 elections as has been planned for. Most likely we will reach the limit, at these higher rates, just AFTER the next Presidential election is tallied.”
Further, just after the debt deal we went on to say,
“The Budget Control Act of 2011 (BCA) will also require that a committee be formed and that they find $1.5 trillion in cuts, which will then be voted on. This part is a joke. Like the continuous Doctor Fix, committees like this find answers and Congress ignores them regularly. Like the way President Obama’s deficit commission filed their report on Dec 2010, and it was summarily tossed in the trash…The national debt will grow larger, now and in the future. More money will be borrowed, now and in the future. America cannot pay off this debt, now or in the future. Spending still exceed revenues, ect.”
Currently, the “fiscal cliff” we predicted is facing the nation. The next increase to the debt ceiling must be resolved by March 2013. The same people who couldn’t get the job done are all back to do it again. Worse, once Congress rejects the ‘mandatory’ budget cuts, proving that nothing serious will change in regard to the debt and annual deficit the rest of the world will react.
If the key reason that the US was not downgraded by all the credit rating agencies was the serious tone of the Budget Control Act of 2011, and all the rhetoric is now being thrown out of a window, what seems most likely to happen. A credit rating upgrade? An embrace by international markets? Stock market predictions of an improved economy? Is that why the stock market sold off 300 points in reaction to the elections?
The reality is that Congress is fiscally irresponsible – Democrats and Republicans alike. There is no serious plan to even retard spending, let alone actually cut spending and reduce the debt. There is zero consideration of the impact of an increase in interest rates – of which our projection from even a modest 1% increase results in $1 trillion extra debt in just 5 years that has yet to be accounted for – which is inevitable.
In conclusion we will state this, Congress must act as the average American does. Spending must be curtailed, as politically unpleasant as that may be. Entitlements, as well as most every aspect of government, must be reformed and reduced. There is no way this can be done in an effective manner that will not impart pain on the nation, nor absolve a backlash of anger from the public as a whole. Given this reality, it is what is required to maintain the stability of the nation. To avoid this is to substitute the ‘fiscal cliff’ with a leap off Mt Everest for our grandchildren in the best case scenario; more likely our children or ourselves just a few years down the road.