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Wednesday, July 27, 2011

Debt Ceiling has nothing to do with defaulting

Spending beyond our income has EVERYTHING to do with defaulting!

I want to clarify for people what the debt ceiling is. It is the agreed upon maximum debt our government decided it would allow itself to go into. It is the same as a credit card limit. If you hit your limit, but you still need credit to make your day to day costs, you cannot simply vote yourself a new limit, can you? Surely no one is going to believe that increasing that limit will ensure they can continue to make the minimum payment and all their other bills forever? If your credit cards were all maxed and you needed credit to continue paying your bills, will increasing the amount you owe help you bring that under control? It may provide a temporary shelter but in the end you will owe more and your monthly payments will go up and you will have less money to meet your primary obligations.

But many bloggers and the President of the United States would have you believe that only by raising the debt ceiling (the credit limit of the US Government) can we avoid a default. Not only will this NOT avoid a default (it may delay it) but it will ensure that if we default later we will have many more angry debt collectors at our door.

There is only one way to reduce our debt and that is to cut unnecessary spending. Washington needs to start right with their own salaries and Congress needs to start by halving their salaries and eliminating their retirement program. They have failed our country and no longer deserve the lavish lifestyles they lead on our tax dollars. Most of them are very successful people and can easily afford to pay for expenses above and beyond what a typical private sector employee would be reimbursed for periods of travel. Alcohol with dinner? Pick that up with your own dime. $50-$500 dollar entree? You can pay for any amount over $20 yourself "honorable" person. Hell, they ought to be at home enjoying the same thing most of us are - $13 Lasagna, $8 tacos, or a $10 Pork Lion with trimmings for the whole family.

The President gets a $400,000 salary that is on top of a nearly 100% expense budget. He gets to bank all of that income to save for when he is out of office. A private sector employee earning $50,000 a year would be fortunate to save that up in a 401K in 52 years of employment and somehow this is justified as a payment for one year of services rendered? The office of the President is about service. Yes, he could probably make more in the private sector - it is supposed to be about public service, not about the ability to buy two or three houses a year. But wait, there is more! He's in on the same retirement that the Congress is and boy is it a good one! Not only that, but he gets a life long security detail. The latter I can understand to some degree. These things are not free, however and they are paid for by the taxpayer.

The only way to avoid default is to sit down and remove from the budget all the programs, foreign aid (in all forms - including military), until the government is spending less than it is earning - including the payments on the debt and it's interest. Right now that would require removing $4 billion dollars a day from the budget. Seriously? They can't find a way to quit spending $4 billion a day? Moreover how in the name of all that is holy are we spending even that much a day?! Then they need to sit down with the Constitution and remove all programs that are not directly provisioned for in the Powers Clause and phase them out.

They do have another choice - they could sell some assets. They do hold a ton of land (80% of Nevada for example), sadly most of that land is out in areas people could careless about right now, but there are several locations in premium metropolitan areas that would fetch top dollar. Think IRS and Federal buildings in downtown or mid-town areas. They could sell these and pay down the debt. We don't need the IRS in its current gigantic size - the fairtax could help ween us off of them and as the legislators worked to remove more programs. The government should never have ran many of the current programs that should have only been tried in the private sector. We could eventually eliminate the need for taxes whether they be income or consumption. The federal government was intended to run off import fees and tarrifs and that is where it needs to be returned to. Power of Law, not $$ should be what makes the States respect the powers they gave the Federal Government - but only those powers directly provisioned and nothing more.

Another major thing they could do is eliminate the Federal Reserve. Only with the Reserve out of the way will we have a chance to strengthen the dollar. The Reserve has done nothing but devalue the dollar since 1916 and it's owners have no reason to do anything other than keep the US in perpetual debt. We the slaves to the Federal Reserve, working and paying our debt as income and a myriad of other taxes forever. Is that what we want for our Children and our grand Children?

The next step would be for Congress to ask themselves, "Does this program need the power of force behind it to work?" That is all government is: force. George Washington knew this. Government has been licensed by the people to use force. It is an archaic and deadly institution. People should only use force to protect themselves, not to get their way. What program needs the power of force behind it?

The military? Yes.
NASA? No - privatize it.
(I love our space program, but why does it need to be government ran?) As 4,000+ people found out last week the government can't keep people employed once a program is defunded.

The Postal Service needs force? No!
Privatize it and wish it luck in the world of competition. It did back when the country was rugged. UPS has gone for bailouts a time or two, but Fedex has proven it can be done as long as people are willing to pay the price it costs to get it there.

Retirement funds need force? No!
We are all investing in a lie and we know it. The Congress takes the money and spends it, then they have to borrow to get money to the people who are supposed to be collecting from money that was invested for them. It wasn't, it's gone and it is only costing our children and their children and their children to fund us now.
Medical Insurance needs force? Really? No!
Medi-care/cade are failing seniors and poor people constantly. Doctor's can't afford to provide care to people on the program unless they are willing to gouge other patients or work as if they are in a non-profit. Health Insurance should not be used for 80% of care, because by using it people don't care that an office visit can cost $200 as they only pay $15-$20. By hiding the "true" expense away people are numb to the actual charge and it doesn't irritate them enough to realize that government mandates and regulations are why medical care is so expensive. Those who don't have insurance understand that the teams of administrators, lawyers, and insurance that doctors have to carry is why healthcare is so expensive - not because doctors are greedy. By adding the veil of "insurance" it removed the consumer choice in spending from the equation and made healthcare have no reason to be competitive, but instead maximum price fixed regardless of the efficient processes of the hospital or doctor's office you are visiting. Insurance has ensured price-fixing rather than negate it.

Of course, we can't just flip a switch and turn these programs off - many would need to be spun off into the private sector where they may flourish or die and be bought up by other companies and improved or eventually dismissed as a failed idea. Others, like Social Security would need to be phased out in the long term and replaced with a different idea completely from the private sector and mildly regulated by the States. Sure, we love the idea of a Federal guarantee, but the reality is that it is the taxpayer that guarantee's it. We are guaranteeing our own possible loss, by law. So, just like what happened in the bailouts we point a gun at ourselves and make ourselves bail out the big business that "failed" at our own expense. Some guarantee....

Here is what I wrote my Senator - Senator Bill Nelson.
Senator Nelson,

I am all for any legislation to prevent default, unless it includes raising the debt ceiling. We cannot borrow our way out of debt and raising the ceiling only increases the debt.

Americans who have not been fooled into believing that the only way not to default is to increase the credit limit would likely agree that the only proper method is to immediately terminate spending that creates more debt. Focus on basic needs and paying off the debt. That means we need to cut more than 4 billion dollars of every day's expenditures. That comes out to 1.5 Trillion a YEAR. Don't settle for any cool looking plans that save a couple trillion over 10 years or 20 years. That won't solve anything.

The government is spending like a drunken sailor and it doesn't just do it occasionally, it does it every second of every day. Time for the government to realize it depends on the working American and right now working America can no longer afford drunken government.

If Congress would like to fix its image the first thing it needs to do is include pay cuts to all Congress and immediate termination of their retirement program. There is absolutely no reason to be paying millionaires and successful business people a retirement check for serving as little as one term in Congress. Yes, it's not a huge drop in the bucket, but it is a drop and the little drops add up. But that drop would send a message to the American citizen that Congress is finally waking up and cutting where it "hurts them" first. Remember "public servant" is the key. Sure Congress deserves just compensation for travel and expenses, but no more than the average employee would get for travel and expenses. Most employers would scoff at an employee trying to expense wine and beer with dinner or dinners costing over $25 a plate. Time for Congress members to pay out of pocket if they think they deserve better. Most of them can certainly afford it without the taxpayer's help.

Clean that up as a part of the bill and who knows - Congress might actually click up in ratings.

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