Deconstructing the Debt Ceiling Debacle

Email this to someoneShare on FacebookShare on Google+Share on LinkedInShare on StumbleUponPin on PinterestTweet about this on TwitterShare on TumblrShare on Reddit
Image via Wikipedia

This debt ceiling (manufactured) crisis isn’t ‘kinda, sorta’ vaguely a constitutional issue, it’s the exact issue that the writers of the 14th amendment were attempting to forestall by including it. When the Union let the former Confederate states back into the Union, with full rights of citizenship including holding elected office, they were (rightly) worried that those statesmen who had recently waged war against them would try to abrogate the country’s debts and create chaos that way.

So the leaders in Washington forestalled that worry by passing an amendment to the Constitution that says that the Federal debt obligation ‘shall not be questioned’. Pretty unambiguous, eh? They didn’t specify Union war debts, because they were smarter than that (though they did specifically exclude Confederate war debts). They knew that somewhere down the road, some other political block might try the same shenanigans.

Why lookee here! They were right! We have a group of about sixty freshmen congresspersons, nominally allied with the GOP party (though I’m betting Boehner wishes it weren’t so right about now) using the full faith and credit of the US debt as a political tool.

Let’s be clear here. There is no ‘debt crisis’. While the US debt is high as a percentage of the GDP, the primary reason for that right now is that the GDP took a precipitous drop and hasn’t recovered – partly because the democrats have been unable to get sufficient stimulus through (and yes, I am aware that they didn’t try hard enough) to get the economy churning again.

  U.S. debt from 1940 to 2010. Red lines indicate the Debt Held by the Public (net public debt) and black lines indicate the Total Public Debt Outstanding (gross public debt), the difference being that the gross debt includes that held by the federal government itself. The second panel shows the two debt figures as a percentage of U.S. GDP (dollar value of U.S. economic production for that year). The top panel is deflated so every year is in 2010 dollars. (Photo credit: Wikipedia)

Image via Wikipedia

The important chart is the bottom one.

Also, when you look at US debt in comparison to the average household debt of a US citizen (in terms of GDP as stand-in for yearly income) you find that the average American consumer has far more leveraged debt (thanks to Stonekettle Station for writing such a clear article about this).

Finally, when you look at media narratives, you see that there is little relationship between actual problem and media coverage. Until the election of Barack Obama, the problem was jobs and the state of the middle class. Suddenly, upon the election of a Democratic president, the problem was the debt, most of which had been incurred during GOP presidencies, particularly the Bush presidency. The new narrative, however, insisted that President Obama ‘presided’ over the highest debt in US history.

Technically true, of course, because he inherited it and presides over the US currently, but he was not the driver of the current debt level, and his own policies have contributed far less to the national debt than his predecessor’s.

The US needs to get its debt under control, but that is a far easier task than the corporate run media would have us believe. Most of that would be accomplished with three tasks: Raise taxes on the top 1-2% of earners and corporations, end the war in Iraq, and end the war in Afghanistan. The rest would balance pretty quickly if we got Americans back to work.

Image via Wikipedia
Notice that US debt is lower than that of most 1st world countries

Which of course (horror of horrors, do I hear Keynesian economics?) means government spending on stimulus, preferably stimulus that rebuilds infrastructure and re-tunes our economy to get in line with green energy so that we can be at the forefront instead of limping along at the back of the field with the also-rans.

None of the US debt issues requires further impoverishing US citizens who depend on entitlements, nor, especially, does it require defaulting on US debt when we have the means to pay it. They require returning balance to tax obligations such that those who benefit most from government (the wealthy) pay a fair share.
Stating this, of course, means I have to debunk the zombie lie that the poor don’t pay taxes. They do. They pay plenty of taxes. They pay federal, state and local taxes. The only taxes they don’t pay are income taxes – but even without paying income taxes, a substantial portion of their income is taxed through payroll taxes, excise taxes, state and local taxes.

So this is the deal. The debt ceiling crisis, though wholly a manufactured crisis created for political reasons by irresponsible GOP legislators, is a very real crisis that will have very real consequences for US citizens either by forcing the Democrats into accepting further austerity measures that will harm the middle, working, and poverty classes, by causing raised interest rates and reduced confidence in US debt instruments, or both.

At this point, there doesn’t appear to be a way to avoid the negative consequences listed above. However, there is one negative consequence that the GOP are really banking on that must not happen. They want US voters to believe that this crisis is President Obama’s fault, and the fault of democrats in congress. They want to make this an issue at least one more time before the election, and use it to take democratic votes and win elections.

If we keep educating and getting the word out, taking the time to explain to people what is really going on, not losing our temper or ‘giving up on’ ordinary people who are badly misinformed, we can turn this on them and make them bear the responsibility in the polls for their irreponsible actions. Tell your neighbors, tell your friends, give them information and let them explore it, explain the concepts if you need to, and keep putting the word out. Education erases fear. Fear elects Republicans. Education erases (this iteration of) Republicans.

 

Related articles
  • GOP wants to use debt ceiling crisis to make Bush tax cuts permanent (theygaveusarepublic.com)
  • GDP Stats Show Insanity of Opposite-Day Washington Policies (news.firedoglake.com)
  • Very Serious (digbysblog.blogspot.com)
  • Lying right wing says debt crisis all Obama’s fault (theygaveusarepublic.com)
  • News and Blog Roundup: the Debt Limit Ceiling Crisis (themoderatevoice.com)
Print Friendly, PDF & Email

Comments are closed