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August 3, 2011

Avoiding Debtmageddon

Kevin E. Dayhoff

Now that Congress and the president have reached an agreement to avoid Debtmageddon, Americans can now turn their collective attention to the hard cold reality – the current recession continues to grind down the very soul of our society.


And there is no relief in sight – until 2012...


As I scrolled through the Internet the other night, trying to catch-up on my reading, I stumbled across a link to a column by Terry Paulson. The link referred to a headline that read, “Debtmageddon – It’s the Debt Not the Debt Ceiling!” I wholeheartedly agree. Intrigued, I clicked on the link.


It was a dead link, however, at the top of the webpage in huge print was an ad for “Acid Reflux Cure Found In Fridge.”


How appropriate.


Our nation has a horrid case of acid reflux over our current economic malaise. Our current administration has left the American public out in the cold while it warmed itself to the bellowing hot air of partisan politics.


If the definition of compromise is arriving at a disagreeable agreement that nobody likes, then the compromise approved the House of Representatives on Monday, and the U.S. Senate in early afternoon yesterday, is the mother of all compromises. It has something to hate for everyone.


The great compromise to avert financial doom and gloom, and the end of the financial world as we knew it, looked more like the great capitulation.


Supposedly, the agreement will cut over $2 trillion from the out-of-control spending by our federal government over the next 10 years. Many do not believe a word of it. We’ve all heard this before.


However, maybe, just maybe, the idea of postponing the deliberations over the next rise in the debt ceiling until after the 2012 general election will work in our country’s favor.


Hopefully the next election will put into place a solution to the great American experiment in European-style social welfare democracy. After all, that approach has worked so well for the European Union… Hmmm.


I recall saying after the last president election that Hilary Clinton never looked better, a point the Wall Street Journal makes well, alphabetically.


Major Garrett, who now writes for National Journal, opined presciently about who won and who lost, in the great debt debate and capitulation.


“When the debt-ceiling crisis began to capture the public's and Wall Street's bemused imagination in June, President Barack Obama's Gallup approval rating was 50 percent, the highest.


“It's now at 40 percent, the lowest of his presidency, and a disturbing sign that dismay with America's ‘dysfunctional’ government is taking a toll on more than Congress – mired since early spring with approval ratings in the mid-teens.


“Obama won a long-term extension of the nation's $14.3 trillion debt ceiling. The deal extends borrowing authority by at least $2.1 trillion with no threat of congressional obstruction.


“But Obama lost on his push for higher revenue. Tax increases… were left to a special committee. That means Obama traded spending cuts upfront without a dime of guaranteed new revenue – already a flashpoint on the left…”


To be certain, if there were no winners and only losers in the great capitulation, it remains the view of many that forcing the United States to default on its debt was not the better solution.


Many agree with David Malpass, who wrote in a column on that “the deal may be enough to preserve the U.S. AAA credit rating….”


Whether you liked the deal or not, for small businesses and what consumers are left in the community, a rise in interest rates at this point in the great recession would have been just as devastating as a rise in taxes.


However, more important is Mr. Malpass’ point that “the deal avoids a partial shutdown of federal payments [this] week… A shutdown of payments would have created big uncertainties regarding legal authorities, lawsuits and legal precedents… [That] legal chaos …was getting priced into financial markets.”


However, in the end, many feel that the great capitulation solves America’s huge addition to tax, spend and debt by giving us more of the same. Well, perhaps, for right now, the tax part of the Sword of Damocles was averted.


Perhaps the only good thing that has resulted from this mess is that our nation is now firmly aware of our nation’s chronic and debilitating habit of spending well beyond our means.


It was democracy at its worse – and maybe, just maybe – at its best. Candidly, history may very well reflect that as America casually steamed straight for a cliff; it was the Tea Party that helped avert disaster by mapping-out a different course for our great country.


As I listened to National Public Radio, I was amused to hear just how well the Tea Party had performed. Not because NPR gave the Tea Party any credit, mind you, but because the one particular program I was listening to characterized the Tea Party as being obstinate and obstructionist in President Obama’s heroic effort to save the children and the less fortunate in our society from the cruel-hearted conservatives.


Then there was the same tired rhetoric of how the recession will be prolonged by not increasing taxes on the wealthy and not providing for greater government spending.


Yeah, right! Did I mention an ad I just saw on acid reflux?


If you agree that often the habitually and destructively addicted has to hit rock bottom before there is a will be get better, maybe the great debt debate capitulation makes it clear that we are there.


Maybe the solution to our country’s great experiment with acid reflux may be found in the frigid economy. Maybe the solution may be found in the 2012 fridge…


. . . . .I’m just saying.


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