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    Be Thankful: No Piddling Compromise

    11/25/2011

    Democracy and Power 104: Future Debt Burden

    A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz,

    All democracies institute programs for current voters and shift the debt to future workers...even the unborn.  Social Security, Medicare, prescriptions drug benefits for seniors are all prime examples of future debt burdens in America.

    Be Thankful:  No Piddling Compromise

    Recently, the Super Committee was unable to cut spending or raise tax revenues by $1.5 trillion in 10 years.  Reviewing the alleged proposals by Democrats and Republicans, any compromise would have increased America’s debt and prolonged necessary spending reform.  Be Thankful.

    What would a serious President and Members of Congress do to reduce the dangerous debt?  First, admit there is a problem.  Obviously, President Obama and many Senators and Members of Congress find it difficult to state the obvious – all democracies have serious debt.  European democracies have an acute debt crisis.  In the United States, cities and counties have gone bankrupt.  California, New York, Illinois, and New Jersey have debilitating debt.  Yet, neither the President nor most Senators and Members of Congress admit the danger of America’s ever increasing debt. 

    Be Thankful that ordinary citizens, a.k.a. the Tea Partiers, have acknowledged the debt and its dangers.

    Tax burdens to future workersSecond, government elites must admit what is the root cause of the debt.  Immorally, elected politicians buy votes today at the expense of future workers.  Politicians give benefits to present voters, e.g., Social Security and Medicare, and stick the unpaid bills to future workers.  This and similar schemes, e.g. public employee pensions, are the source of the dangerous debts of Europe and America. 

    Third, elected officials, as honorable and competent stewards of the nation’s economics, must seek guidance from intellectual and academic research.  Particularly, research concerning other country's attempts to reduce their debt.  In a blog last February, an America Enterprise Institute study was presented.

    An American Enterprise Institute (AEI) study, utilizing the groundbreaking work of Alberto Alesina and Silvia Ardagna of Harvard, found that major spending cuts are indispensable:   

    The data also clearly indicates that successful attempts to balance budgets rely almost entirely on reduced government expenditures, while unsuccessful ones rely heavily on tax increases.

    The AEI study found reducing transfers/entitlements and government wages was also essential:

    A 1996 International Monetary Fund study concluded that "fiscal consolidation that concentrates on the expenditure side, and especially on transfers (i.e., Social Security and Medicare) and government wages, is more likely to succeed in reducing the public debt ratio than tax-based consolidation."

    Obviously, the President and most Members of Congress are indifferent to academic research, especially research that does not comport with their ideological agenda.  Again, Be Thankful for the Tea Party movement.  FreedomWorks formed a Tea Party Debt Commission, which acknowledged the problem and followed the academic research by cutting spending.

    The Tea Party Budget cuts $9.7 trillion in 10 years, balances the budget and does not raise taxes. Spending as a percentage of GDP will be 16 percent verses the current 24 percent.  The national debt will be reduced.  Some of the most important changes include: Tea Party Budget

    • Repealing ObamaCare.
    • Eliminating four cabinet agencies – Energy, Education, Commerce, and HUD – and dramatically scaling back or privatizing many others, including the EPA, Fannie Mae and Freddie Mac.
    • Ending farm subsidies, ethanol credits, TARP subsidies and government-provided student loans.
    • Saving Social Security for seniors and improving benefits for future generations by shifting to a defined contribution that is controlled by individuals, not government. This proposal is based on legislation introduced by Rep. Jeff Flake (R-AZ).
    • Giving Medicare recipients the same benefits as members of Congress, giving them the choice to opt into the Federal Employees Health Benefit Program (FEHBP). This is based on Senator Rand Paul’s (R-TN) Congressional Healthcare for Seniors Act.
    • Cutting waste and duplication from Defense spending, and eliminating or moving all programs from the Pentagon that have nothing to do with national defense.

    Be Thankful. Americans still have the freedom to criticize and petition government.  The Tea Party Budget is a sober and sincere attempt to improve America.  Be Hopeful that thousands of Americans will force the President, the Senate and Congress to embrace this Budget.  Only the American people can force the politicians to make the critical and necessary changes.

    3 comments
    Charles Wilson
    11/28/2011

    What Crap!
    Debating whether the USA IS A DEMOCRACY? Somebody has way-too-much spare time to argue that a republic style democracy needs to be replaced. We can't survive if all 250 million citizens have to caucus on spending every cent and banging-out every every law.

    Arguing that President Obama WANTS to destroy the economy is as stupid as arguing FDR was a communist -- FDR and all his friends were rich from prewar captialism and President Obama has certainly benefitted the systems that dimwits claim he chooses to destroy. There are in differences in Almericans' vision like differences between Barry Goldwater and Richard Nixon. Reagan was once a Union President -- thinking evolves and claiming an elected leader intends to destroy America means the bozo making the accusations believes in scaring people with asinine accusations over using brains and logic. Demand proof, you sheep!

    USA emerged from the '29 depression USING GOVERNMENT SPENDING. The WPA wasn't enough stimulus but the Second World War seemed to be sufficient. Do "Christian Values" support another World War economy fix or can we find other methods to resurrect this economy? If cutting taxes were the answer, George W. Bush would be carved into Mount Rushmore -- this didn't do the job and more of the same won't answer our woes, either!

    Consider this. Too many Americans are unemployed and under half the population is capable to raise all the food we need and produce all the steel we need and all the microcircuits and all the furniture . . . I could go on. The point is a few Americans can produce everything we need and we have CHOSEN to further cut employment by buying goods from China and other developing countries. This means a permanent manority of Americans are either sucking resources from those who hold the bank accounts by: a) service industry parasite draw, b) government parasite draw, c) unemployment and retirement and student draws or finially the minority choice d) goods manufacturing. We Americans claim the only honest living is choice "d" (except that our tax code worships and elevates the Wall Street gamblers and speculators above all others. Reality is different and we will need to accept and appreciate a permanent majority of Americans are not going to be squeezing products out of natural resources and skills and effort. Few Americans make far too many goods for our internal consumption (and we choose to buy them from Asians anyway). Discuss the real problems in your next tea party -- too few people with wealt to stimulate our economy.. Whining about the size of government is unproductive. You can't blame the government for sending our jobs offshore, good ole capitalism and lobbiests efforts paved the way with tax gimmicks to chase cheap wages. Blaming the EPA is Ostridge thinking, but the head is blinded by the remains of yesterday's meals and not sand immersion. We need to pull our heads out and look forward. How do we share our wealth when efficiency means only a fraction of us do real manufacturing and wealth-building work!

    Mark Storrs
    11/25/2011

    one small? error in the wording above- the U.S.A. is Not a democracy. our Founding Fathers feared a democracy, that is why they chose a Constitutional Republic based on democratic(as in democracy, not the party) principles, and as for what the Tea Party Budget entails, this is Not a new idea, as many of the Founders spoke voluminously on the same ideas/issues. there is a great book out called "Letters to His Excellency, Thomas Jefferson" read it and see how 'new' these ideas are(n't). we need to return to the founding principles that were set forth "...in order to Create a More Perfect Union."
    thanks for letting me set a course of historical fact for those interested in learning why and where we have gone astray from our Founding Fathers' guidance and reasons for establishing our Constitution, and what we Must avoid (now seems past tense) so we don't end up where we were before we became the U.S. of A.!

    Economics501
    11/26/2011

    Super Committee failed in part because pro socialists in Congress and BO want to destroy our economy, blame capitalism, and start fresh with a Marxist state. Read editorial in Investors Business Daily for the facts and join the on-line blog:

    http://news.investors.com/Article/592861/201111251803/us-govt-conspires-...

    Our socialist leaders are taking over credit. Our Marxist president deliberately destroys the economy. The latest? 1- No Keystone pipline so we increase trade deficit. 2- no relenting on Boeing being able to use $1 Billion plant in right to work state SC. 3- defiance of court order to allow deep ocean drilling in Gulf. What appears obvious: BO goal to destroy economy (capitalism)and blame capitalism (with benighted media) and start fresh with Marxist state.

    also ... Back in May I called it -- BO is likely a Marxist: http://economics501.wordpress.com/2011/04/22/21st-century-karl-marx/ can anyone argue that he is not a Marxist? Read Das Kapital, then Saul Alinsky's Rules for Radicals. Fact: BO is disciple of Alinksy. Then tell me how he is not a Marxist?
    Have you read Robert Wiedemer's Aftershock (2nd version released Spring 2011) - stunning analysis of likely outcomne of our governement debt and Fed QE -- my book review -- http://economics501.wordpress....

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