U.S. can’t get its financial house in order
Published 10:35 am Tuesday, July 3, 2012
Column: Al Arends, My Point of View
It is June 20, 2013, and the Central Bank of China Board of Directors is holding a meeting. Chairman Kim Lee begins his presentation by saying that the Congress of the United States and its president has just voted to raise the debt ceiling of the United States to $17 trillion and that they have no plan to pay their debt. The interest on that debt exceeds $300 billion, and they are still borrowing 40 cents on every dollar they spend. The debt they are incurring does not include the unfunded liabilities of their entitlement programs, and I have come to the conclusion that the USA is bankrupt. They are having problems paying pension benefits to retired employees, Social Security and their Medicare obligations. I recommend we dump all the loans that we have made to the USA on the market and take whatever we can get for them.
His board agrees, and they take immediate action.
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China holds 8 percent of our debt. Other foreign countries hold 23.4 percent of our debt and they take similar action. With 31 percent of our debt being held by foreign countries, if they decide to sell off U.S. Treasury bills, it soon becomes evident that the loans they have made to the USA are worthless because we have no plan to pay them back and we cannot even balance our budget.
This is, of course, a fictitious story, and I developed it after reading Tom Cobum’s book, “The Debt Bomb.” Anybody who is concerned about the future of our country and what kind of burden and future our children are going to have should read this book.
Could the preceding story actually take place? Who knows, but it does illustrate the problems we are facing. Unless Congress and the president do not take action, there will not be enough money in the Medicare trust fund to pay seniors for their health care past the year 2016. There is supposedly enough money in the Social Security trust fund to pay benefits until 2036. However, Congress has borrowed all the money from the trust fund, and it is now borrowing money to fulfill the benefits promised to seniors.
If we cannot balance the budget and we cannot borrow any more money from foreign countries, what will we do? I am sure Congress (Democrats and Republicans) and President Barack Obama will want to keep their promise to the American people because they will want to be re-elected. Have you seen any congressman want to make the tough decisions and say “no” to more government spending? Well, maybe there is one. Congressman Ryan from Wisconsin. It sure isn’t Congressman Walz. He has voted for every spending program in Washington including Obamacare, which is going to raise taxes on everyone.
Our government will have to print large amounts of dollars in order to pay for the entitlements that we have. That means that our money won’t be worth as much and prices would go up drastically. Inflation is always painful and it is a hidden tax imposed by government because of their overspending.
Congressmen have become like parents who cannot say “no” to their children. This has spoiled many children and Congressmen have spoiled many citizens giving them benefits the country cannot afford. Sure they could place a tax on wealthier people, but it would not balance the budget. They could take 100 percent of all income over what people make over 1 million dollars, but it would not balance the budget and we would see an increase in unemployment.
It is important that the sooner we address these issues, the easier it will be to solve these problems. There have been solutions proposed to Congress and the president, but they have not had the guts to say “no” to the American people. The president established the Simpson-Bowles Commission and then turned his back on their recommendations. The House of Representatives passed the Ryan budget, and Harry Reid did not have the guts to bring it up for discussion in the Senate. In fact, the Senate has not passed a budget in over 1,000 days and rejected Obama’s budget with even the Democrats voting against it.
So, what is the answer? I am sure there are many, but the most important is to get rid of the career politician. The reason they get re-elected is because they don’t say “no” to us and keep handing out goodies. It is going to be painful to get our house in order, but if we don’t, there won’t be a house for us. It will be owned by a foreign country.
Al Arends is a co-chairman of the Freeborn County Republican Party.