The Great Debt Ceiling Crisis of 2011

August 4, 2011 at 5:54 pm

The saga of the Great Debt Ceiling Crisis of 2011 came to a disappointing end Tuesday when President Obama signed into law the lousy “compromise” that was sent to him by Congress.  Let us look back on the events that brought us to the pathetic end of the over-hyped debt ceiling “crisis”.

The President addressed the nation on Monday July 25, in the hope of frightening the American people into a blind, thoughtless frenzy that would have them pressure their respective members of Congress into a “compromise”.  The days following his speech brought the introduction of several plans by various leaders in Washington DC.  The primary of those being one from House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) – who incidentally filibustered his own bill for more than 20 hours.

In the President’s speech Monday he did his very best to explain the problem to the American people.  He did so by:

  • Demonizing tax cuts as an expense to the government – as if the money belongs to the government, and the government is being inconvenienced in allowing you to have it, as their gift to you.  This money belongs to you!  The government has no legitimate claim to it.
  • Blaming the Federal Reserve created recession for the need to spend on “stimulus” programs and further tax cuts.
  • “Asking” the wealthiest Americans to “pay their fair share” by way of increased taxes.
  • Deceiving Americans about the significance of the debt ceiling and saying that it doesn’t allow more spending, but only allows us as a country to pay the bills we already owe.
  • Claiming that if the debt ceiling was not raised by August 2nd that we could experience “America’s first-ever default”, which is untrue.  The United States has defaulted 5 times in its history.
  • Threatened those dependent on the government with the prospect of not getting Social Security checks after August 2nd unless his “balanced” approach was passed.

Rather than do what is proper and necessary to ensure the future of our country, the President pushed to increase taxes on the rich to pay for his out-of-control spending binge by inciting a class war that would set most Americans against their wealthier counterparts.  This government manipulation of citizens is outrageous.  No one should have to pay increased taxes.  An individual’s wealth should hold no bearing whatsoever on their level of taxation.  Taxation based upon ones income is a despicable policy to begin with, and yet enforcing such a policy with increased vigor on 1% of Americans is what the President called a “fair” and “balanced” approach.  The forced redistribution of wealth is not a Constitutional principle and is not something the Founding Fathers would stand for.  We should be ashamed of our government for partaking in such a practice and of ourselves for allowing and being party to it.

The President grossly misrepresented what the debt ceiling is.  The debt ceiling is a self-enforced limit on how much the United States can borrow.  He trivialized it into an unimportant technicality, which it is anything but.  Yes, it does allow us to “pay the bills we already owe”, but it does so by allowing us to borrow money to pay those bills, which only increases the amount of money we owe to countries such as China.

Contrary to the words of the President, without a debt ceiling hike we as a country would still have been able to pay interest on our debt (thus avoiding a default), Social Security recipients, Active Military, and still have some money left over.  The only way we would have defaulted, or Social Security checks been halted would be by the word of President Obama himself.

In response to the President’s scare tactics Congressional offices were flooded with phone calls the day following his speech.  To the average American, without doing any verification of the President’s message, the situation was simple: Congress is playing politics instead of doing their job by coming to an Obama-approved “compromise”.

It is truly disappointing that a citizen is unable to trust the words of their President.  This is characteristic of a government whose primary purpose is the collection and maintenance of power, rather than the protection and advancement of liberty for its citizens.  Instead of taking for granted what we are told we must verify with the utmost consistency the information given in any speech, news story, or statement (including this very article).  Research and thoughtful consideration using the ideals of liberty as ones looking glass, and the bedrock of the Constitution as the foundation for all arguments is the only way one can hope to cut through the lies, condescension  and wool that seem to exist between the lines of every press release and official statement.

The debt ceiling bill which was passed, dubbed the “Budget Control Act of 2011”, does very little to provide real controls over the budget or spending in the Capitol despite its name.  The “cuts” that are included in the bill are not what we generally think of as cuts.  They are not real cuts.  Example of a real cut: “I’m paying too much for my cable TV, so I cancel it.”  That is a real cut.  It is money that I was spending, that I’m not anymore.  Our government’s definition of a “cut” is not like that.  Their definition goes more like this: “I am going to buy a new car.  I’m planning to buy a car that costs $40,000.  People are upset about me spending that much, so I’m going to spend only $30,000 on a car and I’ll call the difference that I cut a $10,000 savings.”  So basically, the “cuts” are not cuts in actual spending, but cuts in prospective spending.  This is a very important distinction.  The cuts that our government is making are cuts to additional expenditures that have yet to be made.

Congressman Ron Paul (R-TX) argues that the most effective “cut” would be to simply freeze spending:

“Our revenues currently stand at approximately $2.2 trillion a year and are likely to remain stagnant as the recession continues. Our outlays are $3.7 trillion and projected to grow every year. Yet we only have to go back to 2004 for federal outlays of $2.2 trillion, and the government was far from small that year. If we simply referred to that year’s spending levels, which would hardly do us fear, we would have a balanced budget right now. If we held the line on spending and the economy actually did grow as estimated, the budget would balance on its own by 2015 with no cuts whatsoever.” []

In addition to doing literally nothing to bring about real spending cuts, the “Budget Control” bill creates what many are referring to as a “Super Congress”.  This bipartisan committee of 6 Democrats and 6 Republicans is responsible for designing a plan to cut $1-$2 trillion in spending.  They will work behind closed doors, and have until November 23rd to present their plan, which must be agreed upon by 7 of the 12 members.  The plan will then go to both chambers of Congress and must be passed before Christmas; otherwise across-the-board spending cuts will automatically come into play.  A great fault with this plan is that the Congress is only allowed a straight up or down vote on the committee bill.  No debate will take place, no amendments may be offered, and no filibusters will be permitted.  This is dangerous for a number of reasons:

  • First, the vast majority of Congress (and therefore of Americans via their Representatives and Senators) are disenfranchised.  They will not be able to offer any suggestions, opinions or objections to the contents of the bill produced by the Super Congress, and will be forced to vote on it or face the consequences already mentioned.
  • Second, while no tax increases were included in the bill that President Obama signed into law on Tuesday, there are also no provisions that prevent the Super Congress from including them in their legislation.  This makes it possible, and even likely that the President will obtain the tax hikes he desires.
  • Third, it is unlikely that forming such a “Super Congress” is even constitutional.  While the Constitution does authorize that “Each House may determine the Rules of its Proceedings” in Article 1, Section 5, it does not authorized the Congress to give up its responsibilities by vesting them in a small cohort of its membership.  Similarly the Congress did much the same when they handed over their power to regulate the currency to the Federal Reserve.  At least in this situation they did not surrender all of their power; just most of it.  Based on the questionable Constitutionality of the Super Congress, any legislation they produce could possibly be overturned by judicial ruling.

It will be interesting to see what happens with the Super Congress.  The members are to be selected within 2 weeks.  The possibilities are wide open as to what may come from the committee.  A lot of it will depend upon the composition of the membership in regard to experience, consistency, loyalty, and interests in various “sacred cows”.  Given the bill that conceived the committee, it is doubtful that they will produce a piece of legislation worthy of the American people.

This crisis is not over.  Our financial problems at this present age far exceed the ability of a single piece of hastily created law to correct. Our leaders do not understand economics, or as it seems even basic accounting; yet they are responsible for creating law which governs it.  That is a scary thought.  The United States is in need of a major paradigm shift regarding what the role and purpose of government is.  Our Founders knew the basis of good government and valiantly attempted to preserve that truth in the Constitution so that it would endure for the benefit of future generations.  We have lost sight of this and have allowed the Constitution and as a result the nation to fall into dark times.  Now is the time for a renaissance of liberty and limited government; of individual freedom and prosperity; of free markets and a free society.

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