Sleeping on the 4th of July
I can not get to sleep. As a citizen I am very proud of my friends serving in Iraq. My family is in great shape and the nieces and nephews are having a great time watching a parade and going to the local carnival. Here are a number of questions that I am afraid of attacking on this 4th of July.
1.) Can consumers keep spending by increasing their debt level?
2.) Can the federal government keep running a large budget deficit without serious problems developing?
3.) Can the U.S. current account deficit keep growing?
4.) Will foreigners keep buying government bonds to cover this growing debt? If the answer is no to such questions, we can expect serious trouble and not just for the United States but for the rest of the world, which has grown used to the United States as the consumer of last resort.
In any other country other than the United States this situation would lead to a severe devaluation of the currency, sharply inflating the price of imports and forcing the monetary authorities (Bernanke) to push interest rates up considerably.
What is Congress doing??
This month as we tackle the hard issues of "flag burning" we must ask ourselves this one question: "When Congress was formed, was it set up to tackle issues that would put it in the best light politically for the party in power or serve the interests of the people?". The legislative branch was used as a check on the executive branch. Currently it gives us the estate tax (AKA Paris Hilton tax) and spends money like crazy giving us a future of federal tax increases. The President has not vetoed one spending bill. However he does manage to use "signing statements".
I was voting for a party that stated the case for a balanced budget amendment. In 1994 that was what people like Newt Gingrich proposed in his Contract for America!! We were told that the tax and spend liberal base was out of control and that the era of big government was over. The Republican party controls the executive branch, legislative branch, and has nominated seven out of the last nine Supreme Court justices. Has anything changed since the Contract with America?
Here is the current situation:
* When President Bush took office five years ago, the national debt was at $5.6 trillion; since then, big budget surpluses have collapsed into huge deficits, and the debt has shot up nearly 50 percent. The debt now stands at more than 8.2 trillion. According to the national debt clock it is close to 8.4 trillion dollars. (http://www.brillig.com/debt_clock/ )
* Many friends of mine are now paying for the following items: college tuition, transportation for gas, health care, groceries, and are now at the point of adjusting their mortgages. All of these areas are increasing while wages stagnate. It is also interesting to report that productivity is on the rise due to some very hard working citizens.
* Mr. Bernanke was signaling that the Fed was likely to raise interest rates for a 17th time in two years . (NY Times June 5th 2006) One of the biggest things to watch over the next six months will be the housing market. How are housing sales? How long will houses be on the market in certain states?
* Finally, the media will talk about the situation in Iraq as a campaign issue. Let's face the facts. Other countries who hold treasury bills (China, Japan, etc) will wield more influence on our foreign policy due to this debt. Acting unilaterally in any other operation would not be a wise choice. This domestic policy will create a weak foreign policy for the next President. I state the Republican party is a bunch of "cut and run" Republicans destined to make the United States weaker due to their inability to deal with our debt. They run away from the problems facing our country. Do not worry... North Korea will improve the President's poll numbers and Iraq will be the main issue in the fall campiagn. Meanwhile our country faces a mounting deficit that is not going to be tackled during this session of Congress. It is still wrestling with the flag burning amendment. We can go back to sleep now.
1.) Can consumers keep spending by increasing their debt level?
2.) Can the federal government keep running a large budget deficit without serious problems developing?
3.) Can the U.S. current account deficit keep growing?
4.) Will foreigners keep buying government bonds to cover this growing debt? If the answer is no to such questions, we can expect serious trouble and not just for the United States but for the rest of the world, which has grown used to the United States as the consumer of last resort.
In any other country other than the United States this situation would lead to a severe devaluation of the currency, sharply inflating the price of imports and forcing the monetary authorities (Bernanke) to push interest rates up considerably.
What is Congress doing??
This month as we tackle the hard issues of "flag burning" we must ask ourselves this one question: "When Congress was formed, was it set up to tackle issues that would put it in the best light politically for the party in power or serve the interests of the people?". The legislative branch was used as a check on the executive branch. Currently it gives us the estate tax (AKA Paris Hilton tax) and spends money like crazy giving us a future of federal tax increases. The President has not vetoed one spending bill. However he does manage to use "signing statements".
I was voting for a party that stated the case for a balanced budget amendment. In 1994 that was what people like Newt Gingrich proposed in his Contract for America!! We were told that the tax and spend liberal base was out of control and that the era of big government was over. The Republican party controls the executive branch, legislative branch, and has nominated seven out of the last nine Supreme Court justices. Has anything changed since the Contract with America?
Here is the current situation:
* When President Bush took office five years ago, the national debt was at $5.6 trillion; since then, big budget surpluses have collapsed into huge deficits, and the debt has shot up nearly 50 percent. The debt now stands at more than 8.2 trillion. According to the national debt clock it is close to 8.4 trillion dollars. (http://www.brillig.com/debt_clock/ )
* Many friends of mine are now paying for the following items: college tuition, transportation for gas, health care, groceries, and are now at the point of adjusting their mortgages. All of these areas are increasing while wages stagnate. It is also interesting to report that productivity is on the rise due to some very hard working citizens.
* Mr. Bernanke was signaling that the Fed was likely to raise interest rates for a 17th time in two years . (NY Times June 5th 2006) One of the biggest things to watch over the next six months will be the housing market. How are housing sales? How long will houses be on the market in certain states?
* Finally, the media will talk about the situation in Iraq as a campaign issue. Let's face the facts. Other countries who hold treasury bills (China, Japan, etc) will wield more influence on our foreign policy due to this debt. Acting unilaterally in any other operation would not be a wise choice. This domestic policy will create a weak foreign policy for the next President. I state the Republican party is a bunch of "cut and run" Republicans destined to make the United States weaker due to their inability to deal with our debt. They run away from the problems facing our country. Do not worry... North Korea will improve the President's poll numbers and Iraq will be the main issue in the fall campiagn. Meanwhile our country faces a mounting deficit that is not going to be tackled during this session of Congress. It is still wrestling with the flag burning amendment. We can go back to sleep now.
posted by Stew On The Go | 4:29 PM
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