I listened to Geithner’s comments about the current budget crisis and the debt ceiling. After his comments he faced a question and answer session. The national debt and the debt ceiling is the most important issue facing our country today.
Geithner outlines Obama’s plan for tackling the deficit. As the reader well knows, the plan includes government revenue increases as well as budget cuts and discretionary spending cuts.
Geithner claimed that the national debt is due to tax cuts, a prescription drug program and a deep recession.
He stated that we borrow 40 cents on each dollar we spend.
He said that the current interest rate of US Treasury bonds is 2.5% because other nations have worse problems then we do. He also questioned how long the global financial markets will allow us to operate in this debt.
He stated it is important and urgent for us to show the resolve to lower our national debt because confidence is much more difficult to restore than it is to maintain.
He stated that 40% of new born babies are covered by Medicaid, the percentage of kids that graduate from high school is below 50% in some states and tax rates for millionaires is the lowest in 50 years.
We need to cut what we spend to less than 3% of the GDP. We need to cut what we spend to less than what we take in. Government spending must be less than government income. The Federal Reserve cannot do much in this regard. If we succeed, the debt will peak at 70% of GDP and then fall.
Then he outlined the President’s plan to resolve the national debt problem.
The president’s plan calls for reductions in discretionary spending and security spending, preserve critical spending for education, research and innovation, reform corporate taxes, cuts in Medicare and Medicaid, changes in the individual tax code, extend the Bush tax cuts for the middle class only and restore the Clinton tax rates for businesses earning over 250K per year.
Geithner recommended a debt gap fail-safe trigger that will implement cuts in the case where Congress is unable to come to an agreement.
Paul Ryan’s plan for reducing the national debt includes the destruction of Medicare and Medicaid as we know it today and proves beyond any doubt that increasing government revenues must be a part of the debt reduction program. We must increase government revenues in order to reduce the debt without destroying Medicare and Medicaid.
The debt ceiling must be increased whether or not Congress agrees on spending cuts. A default in the national debt interest payment will trigger a global economic and financial crisis. We cannot afford to use this crisis to achieve a political agenda. If we leave any doubt about our determination to lower the current national debt and pay off the debt interest, the global response will be the same as if we defaulted on the debt interest payment: skyrocketing interest rates, tumbling stock market, huge job losses, etc.
The debt ceiling is not a credible tool for fiscal discipline. Corporate tax reform should be addressed after we resolve the current issue on the debt ceiling.
The Republican effort to starve funding and block appointments is nothing more than a political move to stop reform.
Here is my opinion.
In 2008, Obama won the election by giving the public an idealism and a dream. Now he is paying dearly for his bold unprecedented and successful efforts to put our economy back on the path to recovery. That progress is currently hampered by a deficit caused by unpaid for tax cuts, tax incentives and government spending.
Now the Republicans are presenting a dream. The dream is that we can reduce the national debt on the backs of the poor and the needy and tax increases are not needed. That is a falsehood and the Republicans themselves will prove their own dream false.
Destroying programs for our poor and our needy is a desperate effort to avoid the inevitable courageous step of increasing government revenues. Mark my words. Regardless of which party rules the country over the next decade, taxes will increase. That is a fact. The public will pay for abandoning the poor and needy. That bill will come in the form of higher health care costs, higher insurance costs and a revolt against conservatism that will once again leave the Democrats in complete control of Congress and the White House.
The most predictable route back to liberalism is conservatism that abandons the poor and the needy while pushing the middle class into poverty.