Unfortunately, these problems are still with us because the acrimonious political divide has not gone anywhere. The parties have staked out their positions. Statesmanship is dead as is any willingness to compromise for the good of the country. We just avoided a Fiscal Cliff, but we are still facing sequestration, renewed debates over the debt limit, and threats of shutting down the government.
Fixing the economy is easier than our politicians make it out to be. They cannot fix it by taking their eyes off the ball. Taking their eyes off the ball happens when the focus is on destroying unions, defunding Planned Parenthood, rejecting stimulus money, debating contraception, attacking entitlements, refusing to extend unemployment benefits, voting against hurricane Sandy relief, and the list goes on and on. Keeping your eye on the ball here means pursuing job growth policies. In fact, strong economic growth would go a long way toward reducing the deficit (and the debt).
No
One Balances Their Budgets
At the risk of committing the fallacy of composition, whereby I equate individual private behavior with government behavior; I do this for illustrative purposes solely, not to claim they are the same. The government and households borrow. They have that in common. The U.S. household debt is about $13 trillion. The national debt is $16.4 trillion (contrast this to the debt limit of $16.394 trillion). Government spending has already exceeded the debt limit and is rising, but Congress threatens to hold increasing the debt limit hostage to concessions on entitlement. Individuals have to cut back on spending when their incomes dry up because of joblessness. They drawdown their savings and scrimp on groceries and entertainment spending. The government can do these things, too. But it can do more. The government can actually create money--i.e., print new money. The U.S. Treasury can mint a trillion dollar platinum coin to pay its bills. President Obama has already said he will not take this step. And he does not propose to throw entitlement recipients under the bus. The fact of the matter is that the government can print money. But this too has problems because the more money the government prints the less each unit of money is worth, and more of it is needed to pay for goods and services. This is just another way of talking about inflation. However, in a recession, overall prices are not a problem, although prices of some things such as gasoline rise.
Reducing
the burden of the debt
The debt should be evaluated not solely in terms of its absolute size but also in terms of its relative size. It is of importance to determine whether a country is generating enough income to service its debt. If a country cannot service its debt, it has to default. But that is not the case with the U.S. This country is a production machine. And as such its output, GDP can cover its debt. The burden of the debt is the ratio of debt to GDP. The idea here is that growing the economy will reduce the debt burden by increasing the denominator in this formula relative to the numerator.
If pro-growth policies in the U.S. were enacted and implemented--rather than the assaults on women, workers, the poor; record filibusters--the economy would have been farther along the way to recovery. And growth would have reduced the deficit because it would have increased government revenues and reduced government expenditures. Unfortunately, economic growth is not the principal topic of conversation--that topic is the deficit and the debt. Even the president has been talking deficit/debt rather than jobs and economic growth. So we are back to tilting at windmills so to speak.
But
none of this matters.
The presidential elections are over and Barack Obama is still president and his detractors are alive and well, and as determined as ever to see him fail. It is ironic because as public servants, his detractors' goal ought to be about the welfare of the United States' economy. Jobs and economic growth should be paramount and everything else just white noise. Truth be told, the protracted snail-pace growth we are experiencing hurts everyone (perhaps with the exception of the rich, business with record profits, and Wall Street or the Dow at 13596.02).
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
1
1
1
