We are a debtor nation and with the passing of every second, we are going deeper and deeper into debt.
The national debt, the amount of money the government owes its creditors is approaching $15 trillion, over $46,500 for every man, woman and child in the country. Approximately $9.8 trillion has been borrowed in the public debt market, much of it from foreign creditors, including China, Japan, the UK, Saudi Arabia and Iran, who hold the majority of the debt in the form of Treasury Bills, Notes and T-Bonds. Interest on our current debt at fiscal year end 2011 exceeded $454 billion.
Where does the money to pay the interest come from? Who pays the interest? In both cases, it’s the Government. Where does the Government get the money to pay the interest? Taxes it collects, and backed by the full faith and credit of the United States of America, the Government borrows additional money from the public debt market to pay the interest; thereby, adding to the national debt.
The Budget Control Act of 2011 does little to help our long term economic outlook, reduce the deficit or the debt. In COTUS and POTUS terms it means, we planned on increasing spending by $10 trillion and negotiated a reduction to 7.9 trillion, resulting in a cut of $2.1 trillion.
$210 billion per year [$2.1 trillion over 10 years] is a drop in the bucket when the interest on our current debt was over $454 billion at the end of fiscal 2011. They could have cut more by planning to increase spending by $20 trillion than negotiating it down to $7.9 trillion. That would have resulted in a cut in spending of $12.1 trillion over ten years. That's how easy it is to make cuts to future spending proposals and give the impression you're improving the financial outlook. At the start of this cycle they should have mandated an immediate spending reduction of 10%, per agency, for the remainder of the 2010/2011 fiscal year.
At the public debt auction, on the day the Budget Control Act of 2011 passed, investors demanded, and received, higher interest rates on short term US obligations. The higher interest on that day’s transactions alone added over $18 million to the deficit. When the market closed on August 2, 2011, the Dow had dropped over 258 points, the NASDAQ 63 and the S&P 32. By the end of the week, the Dow had dropped over 550 points, Standard and Poors had downgraded the US bond rating to AA+ and Congress began their summer recess.
We are facing an uncertain future if the deficit and debt are not addressed in a rational, balanced and cautious manner.
The career politicians we send to Washington, again and again, have shown they are not part of the solution.
For more than a decade they stood idly by, ignoring the warning signs, while spending and borrowing climbed to unprecedented heights. They are at the root cause of the problems we face as a nation and responsible for our massive debt and deficit..
We must take a stand against special interests, make the hard choices to reduce spending, balance the budget, and end the limitless borrowing that has led to a national debt, soon to exceed $14.9 trillion.
The following political and economic initiatives will place us on a path to fiscal accountability and bring the words prosperity and pride back into the American vocabulary.
- Cut agencies' 2011/2012 fiscal budgets to 85% of their 2010/2011 spending levels and cut discretionary spending, excluding defense, to fiscal 2008 levels.
- Implement zero based budgeting, and eliminate automatic year to year increases.
- Control the money supply; stop the Federal Reserve’s production of fiat money and adopt policies to increase the demand for dollars to reduce risks associated with production of fiat money already in circulation. Congress must reestablish its control over the money supply and audit the Federal Reserve.
- Adopt policies to strengthen the dollar's position as the world reserve currency.
- Embrace free market principles. Reduce tax rates to spur economic growth, adopt a fair, simplified and equitable tax code.
- Promote job growth through the support of small business, the foundation of our economy and local communities.
- Eliminate special interest subsidies. Fully disclosure all current Congressional earmarks and eliminate all future special interest earmarks.
- Implement Social Security reforms that make the program solvent, maintainable, secure and savings oriented.
- Reinstate the budgetary powers of the President to impound funds, a power stripped from the executive branch by the 1974 Budget Act.
- Send to the states a balanced budget amendment with emergency action provisions.
- Repeal Dodd-Frank and reinstate Glass-Steagall.
We must ensure that future generations are not burdened by this generation's unbridled spending and irresponsible fiscal policies.
The Federal Government has mutated into an unrestrained massive bureaucracy that is restricting economic growth. The further we deviate from the principles on which the country was founded the closer we come to government control of every aspect of our lives.
Each generation must insure they pass to the next generation a country that is better than the one they inherited from the prior generation.