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J. KARL MILLER: Deciphering the debt ceiling proposals

Wednesday, July 20, 2011 | 12:01 a.m. CDT; updated 8:02 p.m. CDT, Wednesday, July 20, 2011

Please bear with me while I pose a few logical questions to my readers.  

First, how many of us, when we find ourselves strapped financially, have the option of borrowing and spending our way to prosperity?  

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Next, are we somehow empowered to seize or otherwise take the assets of our wealthier neighbors by taxing their wealth?

Third in my line of queries: What lending institution, or individual for that matter, will offer capital without collateral or lend to one who has demonstrated no obvious interest in curbing an insatiable habit for spending?

If your answers are zero/none to each of the questions, you are like me and the rest of the citizens of the U.S. — expected to live within our means. It is not possible to continue spending more than one takes in.

Conversely, if we were to imitate the present – and some past – administrations, we would have long ago liquidated our savings and maxed out our credit cards to spend our way out of debt.  

Somehow, I doubt that Pinkney C. Walker, Mizzou's legendary professor of economics in the 1950s and ’60s, would subscribe to that theory as fiscally sound.

This in a nutshell is the dilemma in which the U.S. finds itself: the necessity to raise the debt ceiling’s currently mandated limit by $2.5 trillion from its present total of more than $14 trillion.

Both political parties agree the limit must be increased; however, until the last couple of weeks, the administration has argued that Congress should vote the increased limit as a “clean debt-limit hike” without a commensurate commitment to reduce the growth of spending.

That this path is unsustainable should be obvious to anyone required to balance a checkbook.   

Since January 2009, the national debt has increased by one-third, from $10.6 trillion to $14.3 trillion. The notion that we can capriciously raise the borrowing limit without a concurrent dramatic cut in spending borders on the absurd.

The threat of the U.S. defaulting on interest or principal Treasury obligations notwithstanding, incurring indebtedness of this magnitude without adding a measure of fiscal responsibility is a disaster looking for a place to happen.

President Barack Obama, albeit somewhat belatedly, has entered the debate, agreeing that reducing government spending is a necessity. However, he wants a tax increase of $1 trillion, levied primarily against the millionaires and billionaires earning more than $250,000 per year.

This flies in the face of the Republican majority in the House and minority in the Senate who are standing firm on their pledge of not raising taxes. When closing out 2010, raising taxes  in a weak economy was deemed counterproductive. What economic improvements have altered that reality?

While both parties share much of the blame for the profligate spending that got us to this point, the inaction and hypocrisy of the Democrats are inexcusable.  

To equate with a straight face an annual income of $250,000 with the status of millionaire/billionaire is pure political class warfare, pitting the middle class against the rich, while the near-half of the public who pay no income tax range from ambivalent to anti-wealthy.  

And, the president’s scare tactics in intimating to Social Security recipients, military retirees and others who receive a government check that they may not be paid come August is fear mongering 101.

Yes, I am placing the bulk of the criticism on the Democrats, but it is richly earned.

From the end of 2008 until 2010, they held the presidency and both houses of Congress, and from January 2011 to the present, they boasted both the presidency and a majority in the Senate.   

This alliance has run unsustainable deficits of $1.5 trillion annually, while Democrats in Congress have failed to submit a budget for two years.  

The president’s February budget increased the deficit to such a degree that it was rejected by the Senate by a vote of 97-0.

Admittedly, almost all of the players would like to see a measure of debt and spending responsibility. The Democrats are adamant that entitlements (Social Security, Medicare, etc.) are not to be touched, while the Republicans are equally against raising taxes.  

The president’s latest position includes significant cuts but is larded with tax hikes for revenue that most economists look upon as job-killing.   

It appears the president and his party prefer to let it ride without making waves through the 2012 elections as politically expedient – by playing a game of chicken, gambling that the opposition blinks first.

As the incumbent, the president holds most of the aces, but the voting public is viewing firsthand that the status quo is not working nor has the spending binge produced jobs.  

Republicans have indicated a willingness to consider serious entitlement reform to include means testing, increasing the age for Social Security and both corporate and individual tax reform to eliminate ambiguities in loopholes and create lower tax rates.

At this writing, the president has rejected any temporary debt ceiling hike of three or six months, demanding the whole enchilada or nothing.  

While the notion that the U.S. will default on its Treasury debt if the ceiling is not lifted by Aug. 2 is considered overstated, the omen of an impending train wreck creates unnecessary unease.  

It took far too long to get serious about the problem — where are the statesmen of the 1970s? Democratic Speaker Tip O’Neill, Senate Majority Leader Mike Mansfield and Republican Minority Leaders John Rhodes in the House and Hugh Scott in the Senate could rise above partisanship when the ship of state was foundering.

We are long past the point where increased revenue through taxation can even make a dent in the debt. People are fed up with the eternal bickering and political one-upmanship.

It is time for the grown-ups to step forward.

J. Karl Miller retired as a colonel in the Marine Corps. He is a Columbia resident and can be reached via e-mail at JKarlUSMC@aol.com.


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Comments

Christopher Foote July 20, 2011 | 1:12 p.m.

Perhaps Mr. Miller could identify the 40% of the federal government that needs to be cut when the "grown-ups" fail to raise the debt ceiling by Aug. 2.

I would also add that contra Mr. Miller's assertion, a large portion of our debt is not due to a recent spending binge. Absent the stimulus, what new spending has been enacted to drive these record deficits?

The 2007-2009 recession has added roughly $400 billion a year to our deficit, and is estimated to continue to do so in the short term. Coupled with the tax cuts from the aughts, these two events are the main reason we have historic deficits.
See here, for policies that have most affected the debt in recent years: http://www.cbpp.org/cms/index.cfm?fa=vie.... Obama's sole contribution is the stimulus. If his profligate spending is the main cause of our deficit, why does the deficit continue to ballon well after the stimulus expires in 2013?

(Report Comment)
Gregg Bush July 20, 2011 | 3:43 p.m.

"Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility – two things that set us apart from much of the world." Ronald Reagan, September 26th, 1987.

"It is time for the grown-ups to step forward." I'm reminded of the 13-year cicadas - years and years of obliviousness...and this time it's a problem.
Pathetic.
It was only three years ago last month that someone wrote: "I hope you will pardon my skepticism [regarding change], but having been taught to believe we are fortunate to live in the greatest country in the world, where is the incentive for change?"

(Report Comment)
Ellis Smith July 21, 2011 | 4:21 a.m.

"A billion here, a billion there, and pretty soon you're talking about real money." - Attributed to Senator Everett Dirksen, R-Illinois.

Dirksen, admired by both Democrats and Republicans in Congress, is a reminder that there was a time when Americans could feel proud and confident of their federal government (and we did) rather than frustrated with it.

How can an organization spend so much (borrowed) money to so little effect?

THAT'S what's pathetic!

(Report Comment)
frank christian July 21, 2011 | 8:14 a.m.

Ellis - "How can an organization spend so much (borrowed) money to so little effect?"

Would you absolutely revolt at the thought of striking the word "spend" in your sentence and replacing it with the word "steal"?

(Report Comment)
Gregg Bush July 21, 2011 | 11:31 a.m.

It's quite a thing to benefit from years and years of government deficit spending just to pull the ladder up when you hit your sunset years - leaving the rest of us to hold the bag of empty promises for the rest of our lives.
All of the pensioners have poisoned the cistern, and won't let the next generation borrow to dig a new one.
You've lived fat and large, and you've left the future generations to wallow in the austerity you forswore yourself. Medicare part D, wars on credit cards, billionaire free-passes, college costs increasing faster than inflation, real wages shrinking for the middle class.
You're entitled to the debt my generation didn't accrue.
It'll be a grand day, when we stop listening to the bellyaching of the fat-cat hucksters in the leisure class who stole the future's wealth and turned us into servants - begging for scraps at their table of plenty. Shame on you.

(Report Comment)
John Schultz July 21, 2011 | 11:59 a.m.

Gregg, I believe President Obama had some things to say about the debt ceiling when he was a Senator:

http://blogs.marketwatch.com/election/20...

(Report Comment)
Jack Hamm July 21, 2011 | 12:14 p.m.

Second Gregg Bush's post.

The baby boomer generation will not be remembered fondly in the history books or by the following generations.

(Report Comment)
Gregg Bush July 21, 2011 | 12:46 p.m.

Right, John. Because 2006 is just like 2011.
Just be sure to yank the supports on your way out of the house. I'll bring you the fiddle so we can have some music during the collapse.

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frank christian July 21, 2011 | 1:12 p.m.

Gregg B - Not able to specify an addressee in this, only your latest "bellyaching of the fat-cat hucksters in the leisure class" (look in the mirror)?

To blame a generation of retirees for poisoning the well for future "pensioners" is absurd. Each of the problems you list have been created by politicians. Specifically those of the party in control at the time (Two of your five listed are figments of your imagination). At any rate, if a group is to be blamed it would be those whom have continually re-elected those of the culprit party to office. Don't know your age, yet I feel safe in "labeling" you into this group. As "Bush, the self-righteous", you cannot envision the selfish self-serving conceit you display in the lament, "you got yours, but I can't have mine!" You refer to control of gov't spending as turning you into "servants" when you know in fact, that to allow the continued rape of our Treasury by the billionaires you purport to hate will have us "begging for scraps at their table of plenty". I say, Shame on You!

(Report Comment)
Ellis Smith July 21, 2011 | 1:24 p.m.

@ Frank Christian:

Sorry for a delay in answering your question, but My focus during the last 24 hours has been on NASA Shuttle Atlantis.

I do not care whether you use the word "borrowed" or "stolen." The word "borrowed" is actuarially correct; "stolen" might be argued. I'm comfortable with either.

Meanwhile, I'm confused. Certain people, above are damning the Baby Boomer Generation. I'm not part of that generation, so am I off the hook or do they propose to lump me in with the Baby Boomers? Actually, we've had little in common with them.

Those born in this country between 1930 and 1941 represent a period of VERY low birth rate. By ourselves we can't possibly break Social Security or Medicare. Your thoughts?

(Report Comment)
frank christian July 21, 2011 | 1:46 p.m.

Ellis - It occurs now that we are in the technical sense, dealing with "white collar" crime. In that case, possibly "misappropriate" would provide the best use.

"By ourselves we can't possibly break Social Security or Medicare." Hell no! The pittance I receive couldn't "hoit it", I know! (That should drive them up and out of their tree.)

(Report Comment)
Ricky Gurley July 21, 2011 | 1:46 p.m.

Ellis,

I have a few questions... And they are honest questions, no ulterior motives here..

You posted this: "Those born in this country between 1930 and 1941 represent a period of VERY low birth rate. By ourselves we can't possibly break Social Security or Medicare. Your thoughts?:

Now, my mother had fourteen (14) brothers and sisters. As I understand it, it was very common for a husband and wife to have 8,9, 10, and even more children back in the time period you are mentioning. Maybe it was geographical? My grandparents were sharecroppers, and although it is said jokingly, I believe there may be a little truth to the statement that I have heard about having children because they needed cheap labor in the form of farmhands.

But, my questions are:

(1) Was it common back in the era that you are mentioning for families to have as many children as what I have been told?
(2) If this was common, how could the birth rates back then be lower than they are today?

Ricky B. Gurley.

RMRI, Inc.
http://www.rmriinc.com
(573) 529-4476

(Report Comment)
Jack Hamm July 21, 2011 | 1:59 p.m.

"Those born in this country between 1930 and 1941 represent a period of VERY low birth rate. By ourselves we can't possibly break Social Security or Medicare. Your thoughts?"

I would imagine that most members of the younger generation would lump those born in that year range with the "Greatest Generation" crowd.

The baby boomer generation “Will be remembered most for the incredible bounty and freedom it received from its parents and the incredible debt burden and constraints it left on its kids,” –Thomas Friedman.

(Report Comment)
Ellis Smith July 21, 2011 | 2:35 p.m.

Rick:

You can check the demographics (government has them). I don't doubt there were instances of many children in some families, but overall the birth rate was very low.

Class sizes in grade and high school were small, and once the folks on WWII GI bill graduated, so were college classes.

Jack Hamm: You are probably correct. We would certainly have more socially and attitudinally in common with those born before 1930. Whether that means anything when arbitrarily throwing groups together, I don't know. The time difference between the end of WW II and the start of the Korean War was less than 5 years, and I know those who served in both wars.

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Jack Hamm July 21, 2011 | 2:44 p.m.

Birth rates in the 1930s were low compared to surrounding decades

1925: 25.1
1930: 21.3
1935: 18.7
1940: 19.4
1645: 20.4
1950: 25.1

The baby boomers peaked with a rate of 25.3 in 1954 and 1957.

However, even the "low" rates of the 1930s are much higher than the birth rates today in the US (13.8 in 2009)

(Report Comment)
John Schultz July 21, 2011 | 3:50 p.m.

Oh I see Gregg, it's OK to quote Reagan from 1987 when it suits your purposes, but I'm a naughty commenter when I mention Obama's contrary stance from 2006? As you progressives like to say, IOKIYAD?

(Report Comment)
frank christian July 21, 2011 | 3:54 p.m.

Not well informed with the Bible, but from the first I always understood, many children hopefully boys were wanted and needed to help provide food. Wrong?

The Great Depression, 1930 on helped hold birth rates down. My father had no job when he married my mother and they waited 2 years before having me, an only child. That they had no more was due less, in my opinion, to the depression and more to the feeling that I was as good as it could ever get, tho they never told me that. (A little humor there. Rick, eat your heart out.)

(Report Comment)
Ellis Smith July 21, 2011 | 4:42 p.m.

Frank:

The desire for sons has skewed adult populations of some societies.

This was true in rural China for centuries.

A more extreme case would be traditional Inuit (Eskimo, for non-Canadians) practices. If there were no male children in a family, baby girls at birth were actually taken outside and left to die! Because of the harsh conditions, it wasn't unusual for a hunter to die on a hunt, and a sufficient number of hunters was needed.

The obvious result was that adult women were a distinct minority. Don't know or care how the Chinese solved that problem, but the Inuit engaged in polyandry, with a woman having two or three husbands. That practice ended with introduction of firearms and priests (who explained to the Inuit that they were living in sin). :)

(Report Comment)
Michael Williams July 21, 2011 | 5:02 p.m.

The seeds for our current pension woes were sowed by the prior generation with their union-driven defined benefit retirement plans. Baby boomers just continued and worsened the situation.

I do agree, tho, that the baby-boomer generation, via their rebellion in the 60s and 70s, achieved a new level of greed and self-indulgence not seen (or even possible) before this era. Those knuckleheads, even now still self-absorbed, lived well off prior generations' efforts and now intend to continue that tradition...at the expense of their descendents.

Most of us, anyway.

Not all.

Pathetic.

(PS: Regarding Gregg's 11:31 post where he lambasts the boomers for having the same things HE wants...well, I just don't know what to say. Seems to me if you want to criticize a prior generation for making mistakes, you shouldn't gripe AND wish to make deja vu all over again.)

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Gregg Bush July 21, 2011 | 6:45 p.m.

Looks like I hit it pretty close to the mark to get all of you riled up.
You're blind to the privilege bequeathed. You've spent our inheritance, and we're supposed to be grateful for the squalor masquerading as austerity.
MW - you don't know me. The only thing the "boomers" had that I want is a opportunity for a living wage and a boss that doesn't make 500 times than I do when 25 times is still plenty wealthy.
JS - you don't know me. I'm no more a Democrat than you are Republican.
I'd love to chat all day, but some of us still produce for this economy. I've got to go to my other job.

(Report Comment)
frank christian July 21, 2011 | 7:43 p.m.

Gregg Bush - "The only thing the "boomers" had that I want is a opportunity for a living wage and a boss that doesn't make 500 times than I do when 25 times is still plenty wealthy." With this comment you have hit a foul ball in the ball park of credibility. Are we supposed to believe these are Your thoughts? Every communist since Karl M. would foist this unbelievable theory upon us. I am saddened that one with the seemingly great command of our language (far, of course, above mine) would waste it with the prattle of the cold war past. Too bad.

(Report Comment)
Michael Williams July 21, 2011 | 8:17 p.m.

...and a boss that doesn't make 500 times than I do when 25 times is still plenty wealthy.
________________________

And the word "plenty" says it all.

Instead of figuring out how to drag someone down the corporate ladder, perhaps your time would be better spent figuring out HOW TO DRAG YOUR REAR END UP......

PS: You are right. I don't know you, except that your boss makes 500 times more than you (your words, not mine). Maybe your boss is 500 times more valuable to your company than you are. I don't know the truth of that statement, but it's not my place to determine that truth...it's the responsibility of the board of directors, the shareholders, and the marketplace. The latter is the most important.

Envy is never pretty.

(Report Comment)
Gregg Bush July 21, 2011 | 8:43 p.m.

"When I feed the poor, they call me a saint, but when I ask why the poor are hungry, they call me a communist." -Dom Helder Camara

The leisure class perceives justice as ugly - it's the glaucoma of greed.

(Report Comment)
frank christian July 21, 2011 | 8:45 p.m.

Gregg B. - You do have us thinking about your posts. Mark Foecking seemingly always has a mathematical resolution to back his answers for the cause and effect of the problems he addresses.

I have been wondering how you arrived at "25 times the "living wage" as proper renumeration for the "boss" you work for. Then, could you describe "our inheritance," and give us more detail about who has spent it?

(Report Comment)
Ellis Smith July 21, 2011 | 9:10 p.m.

Michael & Frank:

You have started me thinking (which is always dangerous).

We have (according to Forbes magazine) two ladies here in Columbia each worth $2 billion (actually, more than that).

Should we picket their homes? Vandalize their property? Write endless posts denouncing them for their disgusting wealth? Aren't those two perfect examples of the awful people being cited here?

Surely no one would be frightened of any repercussions. :)

Why don't I do that? Sorry, I side with the ladies.

(Report Comment)
frank christian July 21, 2011 | 9:18 p.m.

Gregg B. - I thought you were at work. If you like fiction, pick up at the library, a few books by Taylor Caldwell, the deceased British author. She addresses poverty in Our country and the American that knows where he/she is at, can gain better insight from hers than all the Marxist publications you might find.

(Report Comment)
Michael Williams July 21, 2011 | 10:07 p.m.

Ellis says, "Sorry, I side with the ladies."
___________________

Me, too. Perhaps if I keep doing what I've been doing, I...too...can be wealthier. I just want the chance, which is in MY hands, not Gregg's, Ellis's, Frank's, or anyone else's.

Gregg...."justice" is YOU doing the things (all your life, or at least most of it) that are compatible with financial success in the US and the world. Assuming a person is of able body and able mind, "injustice" is taking from others because of that person's rotten past (and present) decisions and financial philosophies.

(Report Comment)
Gregg Bush July 22, 2011 | 6:15 p.m.

It used to be called the divine right of kings.
Now it's called the divine right of capital.

The guilt you must feel leaving for the next generation either (a) a future of crushing debt or (b) a crippled economy due to a less than AAA US bond rating after 93 years. It's lose-lose, and you're calling yourself a winner.

The pensioners line up with one hand outstretched and the other hand batting away those they've sold into servitude by calling them "lazy" and "envious". Their theory of just-world excusing their excesses.
They've been given so much, taken even more, and deluded themselves into thinking they did it all themselves. Absence a concept of privilege and humility, they see any request for acknowledment as an attack. They stand upon the rubble and reject the call for accountability.

A Pharisee feels no shame in hoarding.
They are victims of anosognosia, and for that reason I have compassion.

(Report Comment)
frank christian July 22, 2011 | 9:51 p.m.

If someone knows Gregg, I suggest they stop by and see him. I fear he may be on a trip from which he may not be able to return.

(Report Comment)

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