To raise the debt ceiling, moderate Democrats and Republicans
may compel President Obama to significantly cut spending.
Done right that would be a good thing.
Americans do not need higher taxes. They need a government
that spends within the nation's means. That begins with
acknowledging the facts and acting on them.
In 2007, the last year before the financial crisis, the
deficit was a manageable $161 billion. The Bush tax cuts
were in place, and wars in Iraq and Afghanistan were in full
progress. Over the next years, Congress permanently
increased spending by $1.1 trillion and added another
$350 billion in tax breaks and the deficit jumped to $1.6
trillion!!!!
President Obama wants Congress to raise, without conditions,
the debt ceiling. If Congress relents, nothing significant
will happen before the next election, a new Congress is
seated, and bond rating agencies will downgrade US Treasuries
in 2013.
If Congress raises the debt ceiling without credible and
substantial spending cuts, interest rates on the federal
debt will raise the balance of this year and next. Then
President Obama's reelection, especially if accompanied
by a Democratic majority in the Senate, could easily
cause a buyers strike among investors for US Treasuries.
That's what happened when Greece and Portugal failed to
demonstrate the policial will to curb spending and
borrowing.
Social Security, Medicare and Medicaid now consume 70%
of tax receipts!!!
The retirement age may need to be raised to 70 for all Americans
under 55, and the federal government MUST better control health
care costs.
Simply put, the US private health care system is monopolized
and is less efficient than other private systems in Europe
(Germany and Holland, for example). The US spends about
$8,000 per person for health care while our European neighbors
spend half as much and insure nearly all citizens by better
controlling costs.
Neither proposed Budget, the President's nor the budget
proposed by the House of Representatives', will adequately
slow the pace of these increasing costs.
It would be better to decide this and delay discussions about
raising the debt ceiling until a deal is struck. The critical
date for the debt ceiling funding is July 8th. So don't wait
too long. Decisions about the debt ceiling issue must be
accompanied by radical financial reform with parameters and
targets.
Sheila McKinney
