[The Liberty Insight Newswire is an aggregation of what we consider to be important financial and political news and commentary from across the web.]
This week’s special “Debt Ceiling Debacle” edition of the newswire features some excellent articles and clips to help explain the true nature of the debt ceiling Kabuki theatre debate and resolution. These articles may have a slightly different take than what you read and hear in the mainstream media. The media is shouting, “crisis averted!” and calling the resolution a victory for the Tea Party. (Oddly, I haven’t seen anyone from the Tea Party say it was a good deal.) They are touting the up to $2.4 Trillion in spending “cuts” without raising taxes. What a bunch of BS!
What did this deal actually accomplish? Here are a few points to keep in mind:
1. All of the spending “cuts” are not actually cuts, but reductions in the amount of increase in planned spending. The budget increases every year moving forward and will add $7 Trillion to the debt over ten years. Also, those cuts are budgeted over the next ten years with the bulk of the cuts happening further out into the future. For the first year, the only year that actually counts, the budget “cuts” total a whopping $21 Billion dollars. $21 Billion is less than one freaking percent of the yearly budget. Future congresses are not bound by the promise of this congress to cut anything.
2. The bill actually only specifies $900B in cuts and establishes a bi-partisan “Super Congress” of 12 members to hash out the remaining $1.5T in cuts. The bill they come up with cannot be amended by the “regular” members of Congress. How’s that for representation.
3. The Congressional budget assumes a growth rate of our economy of 4% this year. For the first half of this year, the annualized growth rate was actually less than 1%. In other words, they won’t be getting the revenue they expect and the deficit will actually be larger than expected. If the economy gets worse, the new budget ceiling might not even last through the 2012 election as Congress and the President hope.
So, to sum it up, all the deal accomplished was to push this country $2.4T deeper into debt in the next year and a half; while making zero structural changes to spending, taxation, and the fundamental problems facing our economy; and in the process admitting to our creditors that if we can’t borrow more money we will default on our debts; and creating a new extra-constitutional super Congress that further erodes our Constitution and rights.
Sweet deal! Now Congress can go enjoy their Summer break.
Celente: Dollar not worth the digital paper it’s not printed on; Greatest depression up ahead.
Russia Today, August 2, 2011
Debt Deal is a Blank Check
Peter Schiff, August 1, 2011
The first place I turn when trying to understand the implications of any major economic event is Peter Schiff. As he points out, “…the real crisis is not, nor has it ever been, the debt ceiling. The crisis is the debt itself.” So true.
And more Schiff…
Leading up to the debt deal, our politicians scared Americans into believing that if we did not raise the debt ceiling we would default on our debts. This was a lie. With government tax revenues around $2T per year and the interest payments on the debt at $20B we could easily pay our creditors and have plenty left over for social security and medicare payments. It would simply mean that the President would have to make tough political decisions as to which payments to postpone and what to cut while the Congress worked through tough political structural changes to the tax code and budget.
In this excellent audio commentary, Peter talks about the big picture behind the debt ceiling debate and the implications of our national debt in the long term.
Debt ceiling deal accomplishes little
LA Times, August 2, 2011
Thought I’d throw in some “mainstream media” for good measure. As the author suggests, the debt ceiling deal did little except forestall some political inconveniences for Congress and the President.
China loses trust in US economic stewardship
Gulf News, July 31, 2011
The failure of leadership and responsibility of our government leading up to the debt deal was not lost on other nations. This article highlights the change in sentiment of Chinese leaders in the past few months.
“Coming so shortly on the heels of the subprime crisis, the debate over the debt ceiling and the budget deficit is the last straw. Senior Chinese officials are appalled at how the United States allows politics to trump financial stability. One high-ranking policymaker noted in mid-July, ‘This is truly shocking… We understand politics, but your government’s continued recklessness is astonishing.'”
If that’s not enough, check out this short clip straight from Vladimir Putin about Russia’s feelings towards the dollar.