Yesterday, April 5, 2011 will not be long remembered as a momentous day of political reasoning, but perhaps it should. There were two significant political events occurring at the same time; each unique and distinct in its message but each as equally important with economic impact on the United States of America.
The first, and most publicized was the GOP announcement of the “Path to Prosperity” (“PTP”), plan to save the American economy essentially authored by Rep. Paul Ryan of Wisconsin (now there is a bit of irony). Let us not confuse this with the ill fated “Contract With America” of the Gingrich era. This a top to bottom house cleaning of federal finance and most importantly, federal spending. This new GOP led House has kept its promise to deliver a sound, fiscally responsible plan to bring America back to where she was before the dengue of Obamaism found its way to Washington.
PTP is beautiful in its simplicity. But why was it not done prior? Because the American people did not demand it. America was being led down the entitlement path right into the arms of socialism. But fortunately there were enough citizens ( the TEA Party) and politicians (Ryan and Paul to name but two) who could see thru the veil of debt and government control of the American way of life (ala’ Obamacare) and had the temerity to do something about it.
Consequently, the GOP takeover of the House and Ryan’s PTP. This plan is a frontal assault on the welfare state that the democrats and Obama want to impose. Granted, not all of it will be enacted but it lays the foundation for future conservative congress’ and presidents to follow. I will not go into the details of PTP here as there will be volumes written both pro and con, but the die has been struck and the line drawn in the sand.
The second thing that happened was a nine page letter from SECTREAS Geithner to congress. Its subject was a plea to congress to raise the current debt ceiling which is currently at $14.294 trillion. In real numbers that looks like this: $14,294,000,000,000. Some members of congress (Rubio of FL) have flatly refused to even discuss this as well they should The monthly interest alone would bankrupt most economies but Bernake (Fed CHMN) and congress have a printing press so they merely print more money to pay our bills. This practice has already made the dollar lose 14% of its value against the other major currencies of the world and it is headed south, fast. There can only be one result – hyperinflation, which has already started.
But one must look at both sides of the argument here. Geithner insists we must raise the debt limit so we can borrow more money to pay the interest on what we have already borrowed. It is a fact that forty cents of every dollar spent by the Feds is borrowed. If we don’t have the money to pay our bills, we default. The democrats say that this is catastrophic and in a way, they are correct. But they got us in this position in the first place. Obama has doubled our debt in the two years he has been in office and his current plan would double it again! Let’s hope the printing press runs out of ink before then.
Default will hurt everyone, democrat and republican alike. But there is a solution, cut spending. Our government is on the verge of shutdown because Harry Reid is quibbling over $30 billion in spending cuts. When you are talking trillions, this is a pittance. I fully expect the government to shut down and inflict pain on the economy even further. It is within the realm of possibility that we will default. The American economy will go into a tailspin and gold will soar to $5000 and ounce. Oil will be $200 a barrel and gas will be $7 or $8 a gallon. Perhaps then Reid and his minnions will come to their senses.
