Sunday, July 17, 2011
Getting answer to whether the nation is about to get into default: when a deal is failing at the negotiation stage?
Keywords or Terms: Economic Armageddon; Budget and Debt Ceiling; Retirement Plans; Foreign Governments; McConnell’s Plan; Short-term plan; Mid-term plan; Financial and Fiscal Arrangements; Patients Protection and Affordable Care Act
The United States President has done his job by bringing together the leadership of the two major political parties on the road of averting Economic Armageddon. The onus is now on the leadership to engage in progressive and forthright negotiations to avert the nation from going into default. If Congress fails to bring the components of the budget and debt ceiling debate together this week, then all bets are off on the August 2nd deadline; except miracles take place. The nation will be unable to meet her financial obligations to our creditors, including State, County, Cities retirement plans, federal employees retirement plans, Veterans retirement plans, U.S. seniors, foreign governments; all of whom hold our notes.
U.S. Congress wants us to engage in debates over how much is real value, to muster support among our representatives to avert a disaster. Lawmakers are in tense negotiations which are looking more like race against the clock. But when Republicans are more interested in a bill that will lead us to a balanced budget through constitutional gymnastics, while leaving out genuine negotiations that could help avert Economic Armageddon, you start to wonder, what's next? By this singular action, you doubly wonder, where are the real wise men and women in America Congress? The contemplated and somehow preferred option of, kick the can down the road and constitutional gymnastics offered by some Republican leadership, are not only going to fail because we could not guarantee enough fellowship in both chambers of congress; and, even if we do, the President has indicated a preference for getting the job done, once and for all, rather than the piece meal that the contemplated option(s) entail. He will more likely veto both when they come to his desk and we will be back to square one.
The alternative plans offered to avert gridlock, if all fail with the negotiations on raising the debt ceiling, are giving all of us food for thought. The three known potential plans or options are the: 1) McConnell Plan; 2) Short-term plan; and, 3) Mid-term plan. The well spelt plan offered by Senator McConnell seems very plausible, but rather fearsome. The unfortunate issue regarding the McConnell Plan is that it requires no spending cuts or change to fiscal policies. Further, the plan proposes that the President requests a specific increase on the ability to borrow and a budget cut in an amount greater than the debt ceiling increase. This convoluted budget gymnastics anticipates that it will hardly achieve a two-third support from congress; hence, a default to allow the President to go ahead with his proposal and take the fall for it, come next year’s national elections. The fright from this plan is that it puts everyone on pins and needles and sets a stage for an indeterminable battle for the future.
For many of us, the McConnell’s plan is the height of hypocrisy; and, to imagine that congressional leadership may be contemplating this devious plan smack of genuineness to make the system work. There are reasons for congress debating budget line items and providing workable solutions after negotiations; however, there are no plans, defensible in terms of constitutional separation of powers, as anticipated in McConnell’s Plan, that is worthy of acceptance under the negotiated arrangement or non-negotiation arrangements put forth. This is a plan that says the nation’s lawmakers are unable to take responsibility for very difficult issues facing us. It is a plan with some suspicious possibility of imploding in the face of all involved and one that makes a mockery of United States’ Constitution; with the possibility of setting a terrible precedence for future congresses.
Interestingly, to further imagine that this plan came from Republican lawmakers who once rationalized that we can borrow money to fight two foreign wars; and now, are unable to find answer to the question of deficits from these wars, make many of us uncomfortable or quiver. Lawmakers who were all ‘gong-ho’ to fight wars at one million dollars a second are now unable to fashion out a budget cut to make up for deficits; and, are completely unable to figure out taxation that can recoup over 4 trillion dollars to help us stay abreast of our bills? We are in dire straights, yet we are not attempting to fight the economic problems, we are more interested in fighting political turfs and preparing for future elections. We are refusing to cut more of our defense spending; we are refusing to increase revenue by adjusting the tax code because it may fall on our rich neighbors; We care antagonizing laws and associated bills to the Patients Protection and Affordable Care Act, a law designed to help us cut the costs that have been claimed to be adding to our deficits; yet, we want to take a knife to the meager social security checks to our seniors? What is going on here; or, should it be: what a way to go?
Historically, we have often lifted the debt ceiling to allow government borrow on grounds of our good credit worthiness. We have written-off debts of other nations and guaranteed other nations to borrow from us and many international monetary agencies; yet, we are failing to weigh all constitutionally permissible options to deal with our budget deficits and lift our borrowing ability. We are failing to raise the debt ceiling to avert complete meltdown, but are willing or proposing to scuttle the provisions of our constitution. We are allowing political elections to determine fiscal responsibility and or, what is financially possible for our nation. We are attempting to kick the can down the road, with the mid-term alternative plan to the McConnell’s plan. The principle that we should be governing our affairs and affairs of the state based on good faith effort and transparency of purpose, is now being thrown away.These are rather mystifying at a time when our unemployment is going through the roof!
The whole world is watching, our credit worthiness is now at stake, yet we are playing with fire; one that can burn us real bad. We must appreciate that to a great extent, credit or the ability to obtain credit drives our economy; and, our GDP's growth is not going to improve unless employment improves appreciably. For us to have a substantial difference in growth of our economy and bring more jobs to our people, we must be willing to do the right thing; including lifting the debt ceiling and arranging for alternative solutions to our insatiable diet to expand federal spending. We cannot return the economy to a substantial growth rate, if we are unwilling to improve employment through constructive fiscal management and cautious effort at meeting our immediate, intermediate and long term obligations. We cannot return the economy to growth, if we are refusing to work together at addressing nagging issues that have been around for a long time.
The issue of raising the debt ceiling is neither a Republican nor Democrat’s one. It is a national issue that requires, or probably demands, a constructive working together of lawmakers from both parties. We must confront the real truth that financial or fiscal default is not an option; and, we can do more by identifying those real things that will make us go over the constant threshold of fighting and infighting among ourselves. As somewhat appealing, the notion of a balanced budget amendment, it is hardly going to pass in senate with Democrats. Further, since unimaginable emergencies do happen that make the government spend money to save life and property, it maybe necessary to give the government some slacks, rather than cornering it, where its hands are tied and are unable to help in those times of challenges. To many of us, the balanced budget amendment caviar is more of a mirage in our type of economy and government. Not that we cannot not write and insist on a balanced budget amendment, but for an economy of our size, that proposal will just put us at the mercy of our creditors, thereby setting the possibility of our economic growth and expansion backwards. Yes, both republicans and democrats are guilty of spending beyond budget provisions; however, chasing after a balanced budget amendment does not solve the immediate issue of raising the debt ceiling. Neither will regurgitate ideological position on the part of each political party, position our country to do greater things in the future. With a financial and or fiscal default, we will even be worse-off at addressing issues that have left our whole economy in a recession.