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Tuesday, July 12, 2011

Guest Blog: Flawed Debt Ceiling Discussion Points to Draconian Results

This is a guest blog by Dr. William Stroud of Alamogordo, New Mexico. He was born in Arkansasas and was a United Methodist Clergyman in the USA and in Europe, as well as a college professor. He says he has been a Democrat for so many years that he cannot count them, turning up at the polls when his mother was a poll worker.

He was active in civil rights in Georgia, and was a member of the conference that sent a group of loyal democrats to Chicago to challenge the elected party leaders. He was a delegate to the Arkansas Democratic Convention. He says he wants to help give a voice to the people of New Mexico.

The contemporary political climate includes a strong measure of anti-intellectualism. The unwillingness to listen to the best scientific minds about several issues is dangerous for our future as a nation. We cannot turn our attention to discussing certain things as a part of the “belief” system, discussing only how that system measures up with other beliefs that we hold to be true. We cannot measure the testimony of a scientist in the same way that we measure the testimony of a theologian, because more is directly at stake here.

Freedom of religion allows us to balance one set of premises against another one and say, for example, “this belief fits me better than some other belief does.” While we are free to believe in our nation, the overwhelming evidence from science must be treated differently.

The testimony of economists across the spectrum say that the best and most trustworthy observations in regard to the discussion of the debt ceiling point to draconian results if the right answers are not offered. Default on our obligations might well trigger a depression. That depression will not have the safety net of the recession which began with the two unfunded wars and the unfunded extension of Medicare.

While we do not know what will happen, economists suggest that a default on the obligations of the country will include a termination of, among other things, Social Security payments, military pensions, military pay, Medicare reimbursements, pay for the troops in Afghanistan and in Iraq, among many programs. Even raising doubts about whether we will meet our obligations damages our credibility in the world as our credit scores as a nation are degraded.

The accumulation of evidence on the part of economists of all persuasions, and even among a growing number of CEOs, is that we cannot afford a loss of our ability to borrow. The issue of raising the debt ceiling is not a luxury we can afford, and must be separated now from the discussion of cutting spending.

Spending cuts must come, but they must not come at the expense of veterans, soldiers, families of soldiers, Social Security recipients, Medicare and Tri-Care recipients. After the debt ceiling is secured, we can deal with those issues. Given the anti-intellectual climate of our times, we must be very careful about some things, and understand that the evidence in the case of the environment, and in the case of the economy requires serious and immediate action. 

Ellen Wedum of Alamogordo reminds me that the extension of our debt ceiling has always been more of a formality, and that spending has increased in every administration since the Reagan days. Only at the end of the Clinton administration was there a surplus, which quickly disappeared after he left office, with the advent of two wars and Part D Medicare.

This is a guest blog by Dr. William Stroud. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.

July 12, 2011 at 11:58 AM in Economy, Populism, Finance, Investments, Government, Guest Blogger, Science | Permalink

Comments

I think that it is Obama willing to practice "Shock Doctrine" now as it is he that put our social safety nets on the table.
The Republicans are holding our economy hostage and they are shameless. The Republicans only bring up the issue of debt when a Democrat is in office and when the Republicans are in power they run the nation into the ground. Facts seem to have no influence in this anti-intellectualism environment. The radical right wing wants to de-fund and dis-empower our government at any cost.
The stimulus was about 40% tax cuts and fell far short of it's purpose. Taxes for the rich are at the lowest levels in history and the Republicans still chant the mantra that tax cuts will create jobs. This flies in the face of the FACT that low taxes and more tax cuts have not created jobs thus far. There is not a shred of historical or empirical evidence that low taxes of the rich and large corporations or deregulation will spur job creation.
Do the Democrats have a solution for creating jobs? Not until this nation recognizes that LOCAL economies of small scale must take precedence over large multi-national provision for the people will those people have dignified occupation and compensation. When the Democrats put the welfare of people first instead of Wall Street will we see this nation thrive again.
Also, the birth rate cannot exceed the employment rate in any case. We cheapen human resource with our excessive numbers.

Posted by: qofdisks | Jul 12, 2011 1:52:21 PM

gofdisks is so right about the birth rate. The human population on our one and only planet has increased 7-fold in the last 200 years-- from about 1 billion in 1800 to almost 7 billion today. Resources become scarce and more expensive, human life becomes of less value.

And as I emailed to Dr. Stroud, Ronald Reagan increased the debt ceiling 17 times during his eight years in office (with nary a whimper from ANYONE).

Posted by: Ellen Wedum | Jul 12, 2011 2:07:56 PM

http://www.dailykos.com/story/2011/07/11/993570/-Boehner-and-the-Job-Creators-zombie-myth:-Time-to-stake-it-cold-dead?via=spotlight
" Businesses (and by extension those who own businesses) do not create jobs, and never have.

What businesses create are profits for their owners. That is their function, and there is nothing inherently wrong with that, so long as they are making an honest profit and not doing it by externalizing their costs for others to pay, or by exploiting workers or consumers. But businesses do not create jobs. Demand for what a business sells – that’s what creates jobs."
"A business that has to pay more in taxes is by definition a business that is making more profits. By definition, it’s a good problem to have. Given all the ways that businesses can write off expenses, if after exhausting all of them a business owner still has a substantial tax liability on the profits, it can only mean that there are substantial profits being made in the first place. Continuing to complain about the tax burden in such circumstances, especially using such a disingenuous argument as the “job creator” myth, is evidence simply of greed and a contemptible aversion to giving something back for the upkeep and improvement of the societal structures and institutions that made that business owner’s success possible in the first place. "
"Businesses don’t create jobs. Demand creates jobs. Money in people’s pockets creates demand."
May I add that social safety nets are a huge subsidy for business.

Posted by: qofdisks | Jul 12, 2011 3:12:19 PM

Look for Republicans to become much more aggressive in pushing the jihad to reduce the size of government by any means necessary for any reason that someone might buy into - whether it has truth value or not.

It is just what they are doing. Really, the benefits acrue to Wall Street. While this embroils everyone, it is harder to focus on the causes for the recession or what might prevent a double dip, or what improve the employment situation.

Posted by: Stuart Heady | Jul 12, 2011 6:26:15 PM

Excellent article gofdisks - right on the money, so to speak!

Posted by: Alan | Jul 12, 2011 8:46:40 PM

Your comments are right on target. I hope the right people get to read them. We are back to the depression mindset-5% of the people have the money so they will create jobs for all. double baloney.

Posted by: Florence V. Hamilton | Jul 15, 2011 7:17:27 PM