An elephant gives birth to a mouse in the signed bi-partisan debt ceiling bill of Tuesday, August 2nd

August 4, 2011

 

President Obama and Congress are feeling smug with themselves after the Debt Ceiling Bi-Partisan Compromise Deal agreed to on Sunday, July 31st was passed, first by the House on August 1st and then by the Senate on August 2nd.

Both parties were quick to point out that they didn’t get what they wanted, but neither did the American people out of this sham piece of legislation, for there are no significant cuts in government, nor does the bi-partisan legislation reduce the growth of this nation’s debt.

Although Democrats did agree to $1 trillion in cuts over a 10 year period, the first year cut would only amount to $7 billion out of a federal budget spending 600 times as much.

What should be of concern is the framework set up by the debt ceiling legislation which calls for a further deficit reduction of $1.4 trillion by the end of this year.  If the appointed congressional committee fails to reach a consensus by the end of December, across-the-board spending cuts would automatically take place.  Here is the catch:  Nearly half or $500 billion would come from national security spending — putting our troops and our national security at risk — and apparently no cuts from the ever-growing budget-busting entitlement programs, the real cause for the pickle this nation is in.

As cuts in spending seldom survive in the long term, it is appropriate to question whether the $2.4 trillion in tax cuts found in the debt ceiling legislation will be fully realized over the set 10-year period.

Most importantly, should the tax cuts be fully realized, what about the automatic 8% increases that are built yearly into the budgets of every government agency.  Presently this nation has $14 trillion in debt. Over 10 years $8 trillion more in debt will be added, which will amount to a debt liability of $22 billion.

President Obama has basically been given a $2.4 trillion slush fund (walk around money to spend), the debt ceiling has been raised past 2013, and most of the tax cuts outlined in the bill aren’t even scheduled to take place until 2013, after the 2012 elections.  2013 is also the year ObamaCare kicks in and the Bush tax cuts are scheduled to sunset.  The implementation of ObamaCare will bring tax increases.

And what about Moody and Standard and Poor?  Will the limited magnitude of the debt ceiling plan keep both from reducing their triple AAA ratings to double AA?  There are signs that a $1 trillion over 10 years is not sufficient to impress the credit agencies.  There is also concern that entitlement spending has not been addressed.

While legislators have engaged in fractious debt limit debate during the past few weeks, it is shameful that they have avoided the real cause for the fix this nation is in.  It involves too much spending; not a shortage of taxes!

The biggest driver of spending if for the entitlements of Social Security, Medicare and Medicaid. Unfortunately any proposed changes to entitlement spending predictably unleashes a fury of anger from liberals.

A study by Heritage Foundation has determined that by 2012 Social Security, Medicare, and Medicaid will consume 58% of this nation’s spending and by 2049 all of its tax revenue.  This nation is already saddled with $62 trillion of entitlement liability.

In comparing entitlement spending with defense spending, defense spending has been on a decline for decades.  It is currently below its historical average of 5.2% of GDP.  If this nation spent nothing on defense, it would still be headed towards an entitlement-driven spending crisis.

Congress has decided to kick the can down the road.  The deplorable financial conditions rocking the European countries of Greece, Spain, and Portugal seem not to have made an impression on our legislators.  Both of my federal legislators, Robert Dold of the 10th Congressional District and Illinois Senator Mark Kirk, voted for the sham debt ceiling bill.

This nation is heading toward the same financial insolvency as nations in Europe are now experiencing unless entitlement reform is addressed before this nation reaches a point of no return.

The National Elections of 2012 will undoubtedly decide the fate of this nation when the size of government and how to pay for it will differentiate the platforms of the presidential candidates.

May God have mercy on this nation if the majority of the American people, having become comfortable with government as a nanny state, op for a candidate advocating for more government and higher taxes. Both will require more borrowing and a rapid spiral downward into an unending fiscal abyss for this once prosperous and proud nation.

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