Knaves And Fools

Tonight on the news there was a story about one of the 400 critically ill patients across the United States that are waiting for experimental treatment. I know the report was supposed to demonstrate how the shutdown is affecting the most vulnerable, but I didn’t think it was fair to target just the Republicans as the report did, but I think the Republicans have brought this on to themselves.

Alan Blinder in today’s article “The GOP’s Flirtation With Disaster” was the one who called all of the politicians Knaves and Fools. He started his article with “While I get more cynical about politics every year, I keep concluding that I’m not cynical enough.” Man, I agree with that statement. While watching every stupid things our leadership does, my political cynicism grows. This involves all politicians Democrat and Republican, and even some of our local Clark County Commissioners.

This Congressional stupidity has harmed our country in several different ways. According to Economists, each week that the government is partially shutdown the GDP growth rate is cut by .15 to .2 of a percentage point. The economists state we will experience the results of this in the fourth quarter of 2013. OF course we can make this up in the first quarter of 2014, at least according to Blinder, but this process has hurt 800,000 government employees, “plus tens of millions of Americans who depend on government services.”

Obviously there is a financial cost associated with the shutdown and a clean CR (continuing resolution), but what about the ongoing cost of a huge deficit and growing Federal debt? The deficit this year will end up being $750 billion. They say that is “roughly 4.5% of GDP.” If Congress does not pass a debt increase then the government budget will need to be cut $750 billion immediately. However, the government will be out of money on Oct 17, so Obama and Michelle, John Boehner, Nancy Pelosi and all the other people in Congress will need to go back to their communities and stand on the freeway off-ramps and raise $750 billion or immediately cut the budget by 20%. If we did cut the budget this much it would result in reducing the “GDP by more than 4.5% – in an economy that is barely managing 2% growth rates,” this will initiate another recession.

I really like what Blinder says about how this CR and default is diminishing our reputation as a country. If we default our interest rates will rise. These rates, just like any person who defaults on a loan, will last for years. And with the amount of money we owe, it could be decades.

Our currency is also the world’s currency. Many countries throughout the world currently hold some of our currency to bring stability to their economic system. If we default then the world will begin to search for a new international currency. This will be even more of a surety if the world begins to see shutdowns and defaults as being used by our Congress as tools of political blackmail.

My favorite comment by Blinder is this, “And did I mention that Washington would look like a bunch of Knaves and Fools? It is hard for a nation that has taken leave of its senses to remain the undisputed leader of the Free World.” All of this spells trouble for the Republicans. Obama has done a pretty good job of using Republican weaknesses against them. However, I think the Republicans have done it to themselves too.

Paul Ryan’s article in Wednesday’s Wall Street Journal was a solid look at a negotiating process that could lead to a budget solution. I don’t think anyone is disputing that Entitlements are the part of the Federal budget that is the problem. You know it just hit me, the Federal government is like Detroit. It has made $60 trillion in unfunded promises, and everyone is losing their job and can’t pay taxes, so the Federal government has a reduced revenue stream. This is the same thing that led to Detroit’s demise; too many promises and not enough money.

I agree with David Malpass when he states that the bigger battles is in the area of our debt and spending. “The Federal Reserve will borrow $1.1 trillion in 2013 alone to buy bonds.” This is the infusion of cash into a market to stimulate consumption. This is why we have a $17 trillion debt situation.

We have a government problem, and the people of the United States have had it. Sunday on the news there was a report displaying law abiding people tearing down barriers and carrying them to the White House and throwing them down by the fence. Police were yelling at these regular folks, and the regular folks were yelling at the police. When I saw this, I thought to myself are we watching the demise of our great country?

I am afraid. Some say that world-leading countries go through a cycle of about 300 years. The country grows and becomes strong, but eventually matures and then goes into decline. Are we at the point of decline? I don’t know but I will say this, our politicians are certainly not helping.

And that is my thought for the day!




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