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America’s New Economic Policy: “Screw The Kids”

Posted by Larry Doyle on January 16, 2013 8:41 AM |

What about me? What is in it for me? How does this work for me? The “ME” mentality strikes me as central to America’s new official economic policy.

Who is “ME”? Our Washington politicos.

What policy is that? Let’s navigate.

Having recently sidestepped the fiscal cliff, and as we continue to navigate the economic landscape, we are now faced, as the FT describes them, with “three enormous gorges.” Sounds ominous, right? What are the three gorges?

1. The debt ceiling.
The maximum amount of monies the United States can borrow. The debt ceiling was created under the Second Liberty Bond Act of 1917, putting a “ceiling” on the amount of bonds the United States can issue. As of the end of July, 2011 the debt ceiling was set at $14.3 trillion.

A mere 20 months later, the ceiling is now $16.4 trillion and we are faced with the need to raise it once again. Folks, that is $2.1 trillion in the course of 20 months. Can you say, “drunken sailor?” That is your kids’ future being spent right now.

2. The continuing resolution.
The continuing resolution (CR) is a law that provides temporary funding for those parts of the federal government for which annual appropriations laws have not yet been enacted.

Our nation is currently operating on a continuing resolution that expires on March 27th. Why would our government need to have “temporary” funding? Because the clowns in Washington have not enacted a budget nor will there even be a 2013 budget proposal made by the White House by February 4th, even though the law mandates that the President submit one.

Who needs laws? Laws are merely for the little people, right?

3. Sequestration
It’s a package of automatic spending cuts that’s part of the Budget Control Act (BCA), which was passed in August 2011. The cuts, which are projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. The cuts are also evenly split between defense spending — with spending on wars exempt — and discretionary domestic spending, which exempts most spending on entitlements like Social Security and Medicaid, as the Bipartisan Policy Center explains. The total cuts for 2013 will be $109 billion, according to the new White House report.

These automatic spending cuts totaling approximately $1.2 trillion are scheduled to kick in on March 1. Will they? But what about the major spending programs, those being the entitlements? Will we ever muster the discipline to reform these Ponzi-style programs?

When taken in totality, navigating these three gorges present real challenges and will require real work. Perhaps we may use the term, “discipline.” Regrettably, that is a term with which Washington is not familiar. Why so? Discipline does not help win elections in many, if not most, Congressional districts. Continuing to “screw the kids” is far more palatable for most politicians in and around Washington.

The “screw the kids” (aka “kick the can”) approach, initially utilized as a stop gap, strikes me as having now become our official United States economic policy from both a fiscal and monetary standpoint.

As for the American public, do people even care? Why do I ask? Like a bevy of mushrooms, Washington continues to feed us a pile of *&^! and keeps us in the dark.

Unfortunately, I think a significant percentage of people in our nation have no problem with that. Why so? Sprinkle a little salt and mix in a little bacon or pork with that *%^! and it tastes OK.

God help us but more importantly I hope God helps our kids. I would encourage our kids to organize and send a message to Washington. What message should that be?

Social Security? Medicare? Medicaid?

“WE AIN’T PAYING THESE BILLS  . . .  SO NAVIGATE ACCORDINGLY!!”

Larry Doyle

Isn’t it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • DT

    If only I had some answers … better yet, solutions. Is there a way to get every single voter in the country to gang up on the elected officials and force them to work together to keep the can right where it is and solve it now!? DT

    • LD

      DT,

      There are a few necessary steps that need to happen.

      1. We need people to understand the concepts and the magnitude of the figures. I hope as a start this commentary and others running through the blogosphere can do that.

      2. We need to get people talking about these issues from an ownership standpoint. Because we do own these issues and are passing them along to our kids . . . and screwing them in the process.

      3. I think we need to develop a simple report card that lists the names of each elected representative and grade them aggressively on these issues.

      Politicians do not embarrass easily but it seems to me to be one of the very few stimuli (no pun intended) that they respond to.

      Regrettably the individual occupying the Oval Office, President Obama, seems incapable of embarrassment. In fact as I have told others, I truly do not think he cares at all about our deficit. Why? It only serves as a hurdle and roadblock to his goal of transforming America in the manner which he deems “fair” “right”, and “appropriate”.

      Deficits? Laws? Get those things out of my way, would seem to be his style and approach. Can anybody truly disagree?

  • Ed Pefferman

    Larry,
    Just passing through, and I saw your headline and I
    thought a correction was in order. The headline…

    America’s New Economic Policy: “Screw the Kids”

    I thought the use of the term “New” was really a bit
    misleading…nothing new about it. It’s been the policy
    since 2003. Remember it was Dick Chenny that said.
    “deficits don’t matter”. Then he proceeded with his
    elective war in Iran. A little pay back for Bush Sr.,
    kind of costly for us taxpayers.
    Oh, and by the way, you will be stuck with the cost
    overruns in Social Security , Medicare and Mediciad.
    These insurance programs will need to be “suplemented”
    by the next generation, just as we “supplemented”
    the “great generations” Social Security tab.

    The solution is to fully fund them now

    Ed

    • LD

      Ed,

      Your point is a good one. Bush and team did not properly handle spending although I would say that deficits running upwards of 6-7 trillion are dramatically different than those of 16-17 trillion on their way to 20+!!

      Fully fund them now? How? From where would we transfer the funds? Or should we just “print” the dough and devalue the currency immediately as that appears to me what the plan is eventually?

      Thank you for writing.

  • Ed Pefferman

    Larry,
    By raising rates and reducing benifits NOW, these funds
    can be made actuarially sound.
    Do we have the courage to do it?… No, but it is the
    only real managable solution.

    Ed

  • Oleg

    Good morning Larry Doyle,

    Congratulations being voted Best Financial Blog 2012, and I wish you a healthy New Year.

    I live in Kenya, and I’m a great reader of Sense on Cents, and I have not really in the past had as detailed a look-in US financial affairs as I have today.

    Yesterday’s “why should banks be broken up” concludes that the big banks balance sheets are now in a worse state than 2008, plus, plus. Since then we have seen fiddling in these same banks on a scale, which I cannot find words to describe – and nothing seems to have been done by any financial regulatory bodies, be it USA or Europe! Yes, some fines and so what?

    In 2012 your Blog has dealt with a vast number of flagrant financial abuses of which probably the Libor scandal carry the “yellow jersey”!

    Please don’t shake your head or burst out laughing – BUT when is it going to stop? how long can all this continue? and what about future generations on our Planet Earth?

    Best regards






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