All week I have felt nauseous. There has been a knot grinding in my stomach. The same gut feeling I got when I am about to buy a co-op in Park Slope, Brooklyn that I couldn’t afford in 1981. That too was a recession year and my first daughter was just born.
At first, I thought that I was just worried about the United States defaulting on its debt and the whole world blaming us for electing a bunch of morons called the Tea Party Causus. But this morning, I realized that the cause was deeper and darker.
As President Obama signed the Debt-Limit Bill giving him the power to raise the debt ceiling by $2.4 tillion through 2013, I realized that the country was bankrupt. $2.4 trillion is a lot of money for a bankrupt country to borrow. And no one or nothing, not even the Tea Party ideologues, could save us from ruin.
Yes, there was talk about cutting spending. Even some targets and estimates. But a closer look at the details of bill revealed that those cuts were political window dressing designed to protect the Republican leadership. For 2012, the total spending cut will be $21 billion. $21 billion is only 2% of a trillion. In 2013, the cuts will increase to $42 billion according to the Congressional Budget Office.
We could have done better just to get a Discover Card and gotten the 5% cash back option.
So Wall Street’s negative reaction to the signing of the bill and the apparent weakness in the economy is misguided. The pump is being primed — to the tune of $1 trillion a year through the election. If you can’t create any jobs with $1 trillion a year, then there is no way to create any more jobs.
The another thing that Wall Street missed is that the ARRA stimulus money is just beginning to flow. In Dobbs Ferry, the first work has just began on an ARRA grant that was filed in 2009 due to the mettling of State and Federal bureaucrats. In fact, everywhere I turn I see road construction — finally the projects have made it through the government planning and bidding maze.
I would predict an economic boom with this much fiscal stimulus being pumped into the economy, except for the fear factor. Now I understand that the grinding feeling in my gut is for our kids will have to pay back the debt, but won’t be a problem until at least 2014.
Party time.
P.S. With a couple of hours of hindsight, the debt ceiling looks like a Democratic win. They got everything that they wanted except some tax increases which would have hurt their election chances anyway. The Republicans, on the other hand, don’t have much to show for the spectacle and they have acquired the Tea Party taint.
My solutions to the national debt that no politician seems to be paying attention to are: (1) make the dead pay back their portion of the national debt and (2) let the corporation’s repatriate their $1 trillion of overseas cash at the 5.25% so that the money will flow into all the underfunded State and local pension funds.
P.P.S. One week after the debt ceiling bill. The Republican Party has cost the rich who own the country $5 trillion in stock market losses due to their irresponsible behavior. When you are running a Ponzi scheme, like the US government, you can’t tell people that they can’t redeem their investments, it will start a run on the Treasury and cause the scheme to collapse. Vladimir Putin finally realized — with a touch of envy — that America was running a Ponzi scheme to pay for the world’s mightest military. With a national debt of only 9% of GNP and oil and gas reserves, Russia is the position to be the next reserve currency — read Ponzi scheme — if it can get its "rule of law" act together.
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