It official, the United States has hit its Debt Ceiling today according to Treasury Secretary Timothy Geithner. So what about this august 2 deadline? Geithner has figured out he can stretch the existing Debt Ceiling until then by deferring required payments into various federal retirement funds. While he assures federal retirees that in no way would they feel any effect of the deferred payments, in fact he is incurring additional obligations with the federal government itself. Basically he is doing the same thing as if a home owner delayed paying their property taxes for a few months knowing that such a delay would not result in a default. Yet if a public company did exactly this, they would be required to post it as a liability on their balance sheet consistent with GAP.
Secretary of the Treasury Timothy Geithner Hits Debt Ceiling
Yes, I know this is government and the rules do not apply, and to try and figure out why the rules do not apply would kill far too many brain cells. Yet the question remains, why delay until August and not face the music today? Might it have something to do with the fact traditionally Congress is not in session then and the Administration may be hoping that members may cave in on their demands in order to take their summer vacations? Might it be that the news in August is generally dead and it is the lowest rated month for news outlets? Maybe it’s just the government tendency to never do today what can be delayed until tomorrow. Regardless, the Government is tapped out on its credit cards and needs to deal with the root cause now, not later.
Today we see the spectacle of five CEO’s of the major oil companies being marched in front of the klieg lights to be grilled before the Senate Finance Committee. The democrats are demanding the repeal of tax breaks for the Oil and Gas industry to reduce demands for spending cuts to achieve deficit reductions. Some Republicans will be defending the continued bail out of the oil and gas industries. Unfortunately there is far more at stake here than the hyperbole of Senator Chuck Schumer (D-NY) would let on. Indeed the questions raised by the current energy price escalation and the deficit crisis are complicated and not easily answered. but key to America’s economic and strategic future.
21st Century American Energy Security is Central to Our Future
As a fiscal conservative I am opposed to any industry subsidies as they are just tax payer bail outs disguised as tax reductions. It drives me crazy to see so called conservatives arguing for industry specific tax breaks, regardless if they are for the oil & gas industry, farm price supports or the General Motors bail out. Simply put in a free market companies should manage themselves based on the market based supply and demand forces. When they interfere with those forces by way of collusion (price fixing) then the Justice Department should perp walk them straight to prison. Let the market do its thing, period. It has taken me years to come around to the Flat Tax but the excessive use of industry specific tax and fiscal bail outs based solely on which industry has the best lobbyists is just uncontrollable. It’s time to have a lower flat tax rate with very few deductions (based on GAP accounting, not legislative gibberish) and let companies succeed or fail based on their performance. Not only would this be simpler and less costly (my apologies to all the soon to be unemployed tax accountants and lawyers) but this would allow businesses to plan long term in a stable tax environment.
Don’t be confused by the words spoken at the hearings today, this is simply political theater of the round and an embarrassment to the concept of free enterprise. Yes these CEO’s are coming as an extension of their lobbying efforts to continue to get a bail out for their industry. The Leftist will vilify the corporations over their profits (god forbid anyone makes profits) and talk about the pain of consumers paying gas prices of more than $4 a gallon. Republicans will forget their free market roots and defend the ongoing bail out an industry with combined profits of more than three times the total tax break. All throughout the klieg lights will flash and CNN, Fox News MSDNC and CNBC will provide live coverage of the drama of pre written statements being read. As I said, theater of the round.
All the while maybe the most strategic question to the United States in the next decades will be totally ignored, sustainable energy self sufficiency for America. The politics of this subject have been so blurred than it is dizzying. I am proudly conservative and as such believe in self sufficiency and self reliance, of the individual and the nation. Being conservative does not mean being pro any industry nor does it mean being anti environment. America should be aggressively pursuing clean renewable energy sources. We should be developing domestic oil, gas and coal. We should be developing next generation nuclear energy sources. There is no single solution to our energy problems but there is a common enemy. By allowing our reliance on foreign energy to continue we are continuing our dependence on people who don’t like us. I would rather see solar cells on the roof of every home in my town than continue sending almost a TRILLION DOLLARS a year to Hugo Chaves in Venezuela and to the Saudis’ to pay for Madrasa schools to teach your Arabs to hate us. Really, it’s time to wake up and stop this Washington theater and let loose the ingenuity of the American entrepreneur and private sector and develop the technologies which will allow us to be totally energy self sufficient.
Those of us on the right must step back and think what it really is to be a conservative. I opposed the General Motors bail out since it prevented a poorly run corporation from failing. If the oil and gas industry cannot make money from producing oil and gas inside the largest energy consuming market in the world, welcome to Chapter 11. Pass a flat corporate tax which is based on sound accounting, fair and predictable. Government should limit itself to preventing illegal market abuse, there is nothing Conservative about price fixing and anti competitive practices if they really occur. As for the Senate Finance Committee, I think they have a deficit problem to deal with.
Filed under American Leadership, Budget, Congress, Conservative, Energy, Free Markets, Liberals, National Debt, Politics, Spending, Taxes
In a report today by Erik Wasson in The Hill, he reports that the Republican Study Committee, the caucus representing over 175 Conservative Republicans in the House of Representatives is making a truly radical set of demands in exchange for increasing the Debt Ceiling which will be required in the next couple of months. The RSC is asking each of its members to sign a pledge to support three proposed conditions in exchange for agreeing to increase the nation’s debt ceiling. The RSC conditions include:
1. Cutting the Budget deficit in half by next year. Given this year’s $1.4trillion deficit and a projected FY12 deficit of $1.08 trillion, an additional $381 billion in cuts will be required to reach the required limit of $700 billion
2. Placing a ceiling on federal spending not to exceed 18 percent of Gross Domestic Product. Current federal spending is at 24 percent of GDP.
3. Approval of a Balanced Budget Amendment to the Constitution
This would be the largest reduction in federal spending ever and would dramatically move the nation in the direction of fiscal responsibility and stability. For years we as a nation have lived off what some have seen as a credit card without a limit. However the time of reckoning has come. This past April Standard & Poor’s changed its outlook on US Government Debt to negative while retaining its AAA rating. That is the equivalent of seeing your once stellar personal credit score of over 800 slip into the high 700’s because you have run all your cards up to their limits. Hopefully this is a wake up not only for the inside the beltway crew but for the nation as a whole. One cannot overstate the potential consequences of failing to get the deficit under control. Every day we wait the pain involved with restoring fiscal responsibility simply increases.
We should all send our representatives, even those of us with liberal democrats in our district, a message communicating our strong support for the RSC proposal, as well as the House and senate leadership. The Obama Administration and Congressional Democrats have failed their responsibility to the American people to manage the nation’s finances. Now it’s the GOP’s turn. Game on.
Read more about the Republican Study Committee.
Republican House Speaker John Boehner Adressing the Economic Club of New York
I must admit that for much of the last decade I have had little faith in the Republican leadership in the House of Representatives. It was that group who during the bush years lost touch with the basic principles of restrained government and fiscal responsibility which had defined Republicans for much of the last 50 years since Barry Goldwater redefined what it was to be a Conservative Republican. The American People did not forget and in 2006 and 2008 sent a clear message of disapproval. Fortunately the Democrats misread the message badly and in 2010 the voters gave them a good old fashioned butt kicking. Yet with the new Republican majority in power one question remained; would the new House leadership really have the courage of their convictions t maintain the course, and the political skill and strength to execute. Today it seems the republican leadership under Speaker John Boehner may just be the team t take on the liberal expansionists in the Obama administration and their tax and spend agenda.
Some of the vocal protesters on the extreme right howled in outrage when Speaker Boehner agreed to the budget deal that prevented a government shutdown a month ago. Just as important he prevented a repeat of the 1995 shutdown which the Democrats and their friends in the media used with great effect against Newt Gingrich. However in making that deal Boehner not only extracted billions more in cuts than anyone realistically expected, he changed to debate in Washington to not what new spending programs the Leftists could pass, to a singular focus on where to cut spending. Even President Obama offered an anemic and ill conceived deficit cutting plan. This change in the debate is big stuff! Rep Paul Ryan has offered the first comprehensive plan to realistically take on the looming debt crisis and while this plan is unlikely to be enacted as presented, it is the starting point for the debate. If the House Republican Conference maintains its resolve they can reign in the Obama spending machine.
Yesterday in his speech to the Economic Club of New York, Speaker Boehner laid out a strategy which is likely to result in a sea-change in the direction of Washington’s spending practices. For decades the debt limit has been raised with nothing but the token speeches from members outraged at the level of the debt before they immediately pass the increase in the ceiling. However, by linking the increase in the ceiling to “trillions” of dollars of cuts in spending, Boehner has set up a confrontation with President Obama which is very different. While failure to pass a budget can result is the draconian scene of a government shutdown, failing to raise the debt ceiling would force the President to make choices as to which parts of the government to close. Since the president would continue to have tax revenues to cover approximately 62 percent of government spending, critical services would continue uninterrupted. For the first time we would be focused on what we really can fund within our means. While these kinds of confrontations are no way to run a government, it is an effective means of holding the Obama Administration to debt cutting targets. The lower the incremental increase in the debt ceiling, the more frequent the opportunity to verify the effects. This is a means for the Republicans to define and control the debate, not to be the boogieman for the Leftists and their friends in the media.
The key to this is the ability of House Republicans to hold the line and communicate their message to the American people in an effectively and with resolve. For the first time in a decade I am optimistic that in Speaker John Boehner we have a leader who can effectively manage the Washington power structure yet still remain true to our principles and values. At the same time those of us on the right need to be supportive of this effort and leave the circular firing squads to the Leftists. The debt is the fight of this generation and the economic future of America rests on our ability to rein in spending and restore fiscal discipline to the federal government. With John Boehner’s speech it seems the fight has been joined. Now we must hold the line.
Today we watched President Obama outline his plans for reducing the deficit by $4B over 12 years and we got something different from him for a change, the truth. Gone was the “Change We Can Believe In” and replacing it the hard core leftist Democrat demagoguery and class warfare we have seen since the New Deal. His solution “framework” is to tax the rich otherwise senior citizens will go without healthcare and food. It is all the fault of the Bush tax cuts, which he didn’t mind so much 5 months ago when he signed an extension or his trillion dollar stimulus pork fest. No, the president has seen the way to economic salvation and it is Tax and Spend. Welcome home to leftist land Mister President.
In President Obama’s wonderful world increasing taxes has no negative effect on growth, something he has discovered since he decided in December that extending the Bush tax cuts was essential to maintaining the recovery. He is going to cut an additional $400B from defense, 3 weeks after starting America’s third war in the Middle East. How to make the other cuts? According to The Politico a senior administration official stated “The exact design of that we’d have to work out, obviously.” Working it out is a fine idea, we recommend it strongly.
Ironically the president himself set up a Commission of Deficit Reduction, however when they came back with bipartisan recommendations as to how to reduce the deficit, he chose not to embrace a single recommendation they made. It seems President Obama prefers to live in his imaginary world where economic realities are optional and his Hope is enough. When that fails, he turns to the old democrat standby of class warfare.
The President also set as the official target of leftist attack Republican House Budget Committee Chairman Paul Ryan and his dramatic plan to balance the budget by cutting $6 trillion over 10 years, $2 trillion more than the President two years sooner. I have to admit I have concerns over the Ryan plan, especially over the achievability of the cuts in discretionary non-entitlement spending. Yet Representative Ryan is the first person in almost 2 decades to have the courage to put forward a plan which faces the reality of entitlement spending the need to constrain it. Ryan’s plan surly will evolve over time, but he has taken the first real step forward to realistic restraint in Washington.
So the battle over fiscal responsibility is joined and we can only hope that this will be the foundation of the 2012 campaign. The choice will be clear between fiscal responsibility and democrat fear mongering. The American people will have a choice and the future will be dependent on that choice.