Jan 8, 2011

What Jerry Thinks: Debt and Denial, Washington Style

Jerry RobinsonBy Jerry Robinson
Follow the Money Daily

[An excerpt from Follow the Money Weekly Radio with Jerry Robinson – 1/8/11. To hear the entire program, click here.]

On Wednesday, newly empowered House Republicans took the reins and opened the 112th Congress to a new era of divided government in the nation’s capitol. Images graced the pages of the print media showing former Speaker Nancy Pelosi handing the gavel, the symbol of power in the Congress, to the apparently humbled Speaker John Boehner. On Wednesday, Mr. Boehner became the 61st Speaker of the U.S. House of Representatives and will now preside over one of the most difficult and trying political times in recent memory. The session was opened with the reading of the U.S. Constitution. Many in the media found it to be a clever tactic. Amazingly, others thought the act was a waste of time and money, refusing to see the relevance of the U.S. Constitution to the Congress. Personally, I didn’t know whether to be happy or to be shocked at how novel the concept appeared to be…

In the three days since Republicans have held the majority, many new rules have been implemented. Some of the rules include: a new requirement that all bills be publicly posted on the internet for a period of at least 72 hours before they’re debated on the House floor. This is a triumph for those who have felt that Congress has shrouded many of its more controversial laws within bills that could not possibly be read in their entirety prior to their passage.

Additionally, the new House Republicans have instituted a new change that improves on the old “pay-as-you-go” budget rule which required bills that sought to increase spending or cut taxes to be offset with spending cuts or tax hikes in other areas. The new rule is called “cut-as-you-go.” Under this new rule, only spending cuts can be used to offset spending increases, virtually taking tax increases off of the table.

As you can imagine, the backlash to the “cut-as-you-go” rule came fast and furious. The loudest of the special interest groups and agencies to oppose this rule include: The U.S. Chamber of Commerce, highway and transit programs, and Education-spending advocates. It is doubtful that this rule can survive very long amid our spendthrift government officials, who actually believe that Washington has a revenue problem.

Friends, Washington’s annual budget is $3.5 trillion. Yet, it only raises a little over $2 trillion in tax revenue every year. Let me say that another way… Our Federal government spends $3.5 trillion per year and it only earns just over $2 trillion per year. And its not like the Federal government just began spending more than it makes… It has consistently gone over its budget time and time again. Recently, it has been going over budget to the tune of over $1 trillion per year!

Let’s break this down to a personal level. If you earn $2,000 per month all year long, and yet you insist on spending $3,500 per month all year long… You don’t have a income problem… Instead, you have a spending problem. Friends, Washington does not have a revenue problem. It does not need more of your hard-earned money. It needs to live within its means like you and I have to do. In fact, it should set the example if it wants its citizens to be financially healthy. But you see friends, the Government doesn’t care about setting an example. It doesn’t care if you are financially healthy. Its only concern is to grow and enlarge itself at your expense. The quicker you understand that, the better off that you will be in the end.

Our national debt now stands at a staggering $14 trillion. After being $14 trillion in the red, you would think that Washington would begin to realize that they have a major spending problem. But remember, Washington thinks that its problem is a revenue problem, not a spending problem. The only time that our leaders in Washington become concerned about anything is when their spending money threatens to dry up… So watch for the big debate over the next few weeks in the Congress to be over raising the debt ceiling. Somewhere around March or April of this year, our spendthrift politicians are going to have to vote themselves more spending money… Instead of slashing spending and cutting redundant government programs, Washington will beg and plead for more money. Have you ever seen a small child in the candy aisle at a grocery store throwing a fit because they want something. That is what our politicians are going to do, just as they do every year. In the end, we have to ask ourselves, are we okay with our nation’s leaders living in total denial over our true economic problems? But don’t answer too fast… Because to answer that question requires that we are not living in financial deception ourselves.

Related Links

Gov't quickly approaching nat'l debt ceiling - OneNewsNow
Bachmann says she's found $450 billion in budget cuts - The Hill
IMF'S Lipsky: U.S. deficit reduction critical - Reuters
US Fiscal Policy and the Global Outlook - International Monetary Fund (John Lipsky)
ObamaCare's Reality Deficit - Wall Street Journal
Bankruptcy of Our Nation: 12 Key Strategies for Protecting Your Finances in These Uncertain Times - Jerry Robinson (Book)