Generation Greed and the Debt Ceiling

Imagine this. In mid-2013, President Mitt Romney asks to increase the debt ceiling so he can borrow money to provide benefits for today's seniors while continuing to collect taxes as the lowest level relative to GDP in 60 years. "We owe it to our children to make a deal," he illogically claims. And a large rump of newly elected Democrats in the house threaten to depose Speaker Nancy Pelosi, now back in charge, unless the federal income tax rate is increased to 90 percent on those earning more than $500,000 per year, with no spending cuts. The impass leads a possible financial and economic meltdown. Until Romney knuckles under and agrees to tax increases (with no spending cuts), but only on the politically powerless and younger generations. (Just as Obama is being pressured to agree to just spending cuts, but only for the politically powerless and younger generations).

Enough of this nonsense. As a result of Generation Greed, our taxes are going up, our public services and benefits are going down, and our standard of living is going down, unless our cronies on the corporate board vote for our salaries or we have a public employee pension. But Generation Greed politicians would rather engage in theatrics and finger pointing than face the reality of what they have collectively done. Let the meltdown happen now. Otherwise the rot just continues. They staved off collapse in 2008, and merely preserved the wealth of the wealthy. Bail out the wealthy, or you get another Great Depression. And here we are three years later, blackmailed again. And here we will be in two years. In a collapse everyone gets hit. Perhaps it isn't the worst case scenario after all. Perhaps only a disaster will stop the "I want for me now!" chant we've been hearing for 30 years.

President Obama should make an evening speech on August 2 and say the following.

Congress has ordered me, though the appropriations process, to spend X. And has only allowed me, through the tax law, to collect X minus 40 percent. And has now stopped me from borrowing the difference. As the "something for nothing” politics of the past 30 years reaches its disastrous conclusion, and the rationalizations of the past 30 years reach their end, our legislators have now legislated the impossible in a fight over who is to blame. The truth is a generation or two is to blame.

Therefore, I will pay the interest on our existing debts, as required by the Constitution. I will pay the troops as Commander in Chief. I will provide enough in Food Stamps and other food assistance as is required to prevent any Americans from starving. And I will ensure there is enough basic health care, including vaccines, to avoid having an epidemic of an easily contained disease kill tens of thousands or even millions of us. If the Republicans don’t agree with the latter decision, they can sue me.

For everything else, I will respect the proportions of the remaining money as allocated by Congress, although I can’t pay the bills fully. On everything from Social Security to Medicare to the pay of federal employees, everyone will get perhaps 40 percent of what they would be due. And if tax revenues go down due to a renewed recession, or the need for food aid goes up, the share of what would otherwise be paid for everything else would go down.

No doubt the result will be hardship. They may not starve, but many will lose title to their homes. The young may not be wiped out by an epidemic, but the old and sick may end up dying prematurely due to more serious and costly to treat diseases. The loss of buying power in the economy, as the federal budget is balanced even as the private sector remains deep in debt, will likely lead to an even more severe recession, or even a depression. That is not my choice. Right or wrong, I and my party acted to prevent collapse a few years ago even though it meant bailing out the wealthy. And now, the rest have been blackmailed again.

Needless to say, there will be no repeat of the bailouts. Federal financial guarantees, such as the FDIC and Fannie and Freddie, will the slashed by the same percentage as everything else. Those who wanted the federal government to be too feeble to respond to a financial crisis, or anything else, those who wanted the beast starved through debts and tax cuts – with the spending cuts put off to future generations – have succeeded. We’ll have to find out how it works. They have left us no choice.

Now some folks out there might be inclined to sue the federal government to get the full payment you believe you are due. For example with a 60 percent cut in funding, after allowances for pensions and health insurance, the cash pay of federal employees may fall to near zero. There is a word for an organization that cannot meet its financial obligations. It is bankrupt. Therefore, if you sue, you may be able to get a judge to declare the federal government bankrupt. I’ll save you the time. The federal government is bankrupt.

And the, the President could just watch the consequences unfold. In a few months there would be a lot more equality in this country, I’ll tell you that. But he doesn’t have the balls.

Politics reflects our society. Those who have been grabbing will not stop until the result is disaster. So disaster is inevitable. The longer it is put off, the more gets grabbed. Anyone under 55 would be better off if the disaster took place right now instead of later.

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