As bad as our looming debt gets each day, even each second, there is worse cases. If you measure external debt on a per capita basis each of our citizens owe $42,000. This is a lot of money for each person to be obligated for, keeping in mind about half of our creditors are foreigners.
Most of the countries of the world do not have such a heavy obligation for their citizens. However, some have a more per capita obligation.
The British owe $150,000. each. The Irish owe $448,000 each. They get the honors or should I say dishonor. By contrast, the Chinese owe $271. each, by the latest figures I could find.
As more and more people come to realize that debt and a growing debt will crush the nation; steps are now being taken for relief of the burden. The Proverbs advises that the borrower is the servant to the lender. Well, we are sitting records in borrowing. Half of what we borrow comes from foreign governments. Bottom line; our debt is not sustainable.
Last week, the President, by executive order, established a debt commission to offer suggestions to Congress on how the debt problem might be alleviated. I say alleviated, because the goal is that our annual deficit will not exceed 3% of GDP. Now, it is at 11% of GDP. It should be noted that this 3% excludes debt service on the existing debt. So, all in all, it has modest goals.
The new commission is constructed to give either party a veto, as 14 members of the 18 member commission must approve any recommendation sent to the Congress.
Some people have offered criticism of the commission as it usurps the responsibility of Congress. Of course, that is true. Yet, the reality is that the current Congress, with its low quality of membership, cannot assume this type responsibility. This Congress, can barely deal with the menial work, much less correct a threatening debt.
If the commission forwards any proposal to Congress that does not include entitlement cuts you will know immediately it is unworkable. Should the commission offer a European-style VAT tax it will be time to batten down the hatches. The adoption of a VAT tax would sentence America to a poorer and more turbulent future. The ingredients that make America, such as; self-reliance, economic creativity, cultural independence, and entrepreneurship would diminish, as in Europe. America’s uniqueness and power would soon follow.
Senator Bayh of Indiana’s announcement that he would not seek re-election produced additional evidence of a dysfunctional and even intractable national government. I know there is a lot of speculation about hidden motives in the decision etc. But, it is hard to argue with his stated reasons for quitting.
Bayh and many others feel the ethics are not right to do the people’s business in Congress. More and more lawmakers are saying the same thing in different ways.
Consider the now shelved health bills and the cynicism of what went on with the senators from Louisiana and Nebraska. It is this type behavior that places distrust in government and the current parties.
Bayh’s decision supplies further evidence of a party break down. There must be new options available for a restless America.
Our history has beckoned new party options in periods of transition. Such times demand distinct voices. Voices that will articulate in shrill tones the yearnings of fearful and now suffering citizens from a significant portion of the population. The so-called major parties can no longer serve the needs and causes of these petitioners. Major parties are too bogged down in petty power wars, corruption, selfishness, indifference, and lack of leadership. Republican and Democrats are non-functional. That is what Bayh and others with a front row seat have said in so many words.
New parties must arrive and arise!
This week the former Alaskan governor, Mrs. Palin advised the Tea Party movement to join up with one of the major parties. Choose sides, she said! The inference being that these parties were the only route to participate in government. Sorry, Mrs Palin, but the future may well belong to the Tea Party’s and their kind. Upstarts of many persuasions will provide the illumination and hope for America.
When Sec. Gates and Admiral Mullen appeared before the Senate Armed Services Committee last week they were prepared to abandon the “don’t ask, don’t tell” law. Of course, these men entertained a lot of questions. I would have liked someone to ask the Admiral if he thought it acceptable for an anatomist male to shower or bunk with an anatomist female. If his answer was no, as you would expect, this should reinforce “don’t ask, don’t tell”. A homosexual anatomist male has the same sexual orientation as a anatomist female.
The military did say they would like about a year to work out the details. The “don’t ask,don’t tell” should gain strength as the military brass moves from “rights” to realities.
Debt and the fear of debt could put a halt to many over ambitious projects and moderate many more, until about 1983. It was along about that time the politicians decided debt did not matter anymore. Reagan, was President and some called him a “riverboat gambler”. Reagan’s plan was to cut taxes, but not to necessitate a commensurate cut in spending. When the books did not balance we would just borrow the money, which we did, in great sums. The sell was that tax cuts would stimulate the economy and produce more revenue. But, the revenue was never enough except for the year 2000.
If you go back and look at our debt ratios, which I have recently, you will see a significant jump in the numbers starting in Reagan’s first term and extending until the end of 1992.
When Reagan went into office the debt to GDP ratio was almost 33%. When he left office it was 52.6%. This is with an expanding GDP. When his successor left office, President Bush, it was 66%. During the Clinton years it was reduced to 57%. Again, with an expanding GDP. When the second Bush left office it was 78%. We are now at a 100% or more.
If you look at the % change in the national debt during the last few Presidential tenures it is equally revealing. President Carter had a 42% increase; Reagan had a 189% increase; the first Bush had a 55.6% increase; Clinton had a 36%; and the second Bush had a 89% increase.
If you happen to listen to right-wing radio, you want have to listen long until some broadcaster will extol that bastion of conservatism Ronald Reagan. Reagan had a lot of virtues to be sure, but he was not a fiscal conservative, or even close to it.
Republicans were once known as fiscal conservatives, but it takes a long memory. The Republicans have not had a fiscal conservative in so long I don’t know if they would still recognize one. That is why a lot of people think Republicans can’t manage money anymore.
When you see national politicians clambering for tax cuts and deficit enlargement, what they are really saying is let the children and grandchildren pay up and we will consume, consume, and consume. This will help the developing world. This is good for us, the developing world, and Wall Street. The children don’t mind!