So I guess something was passed yesterday that’s supposed to have brought us back from the brink of the disaster that would have been a credit downgrade.
If you don’t think a credit downgrade would have been bad, look at your creditcard statement, down there by the interest rate, and add 10 points to whatever you’re paying now. Would it have been that bad? Who knows? For my money the threat of a 1 point increase is enough to get me moving. In congress, where everything’s monopoly money and partisanship isn’t just a word, but a warm up for the most boring WWE event ever, not so much.
What’s most interesting is not the tripe that we’re being sold about this event stateside, but rather, what’s being said by our neighbors worldwide about our most recent temper tantrum.
“What America is currently exhibiting is the worst kind of absurd theatrics and the whole world is being held hostage… Most importantly, the Republicans have turned a dispute over a technicality into a religious war, which no longer has any relation to a reasonable dispute between the elected government and the opposition,”…
“One could now ask why is the U.S. debt treated any better than a country like Portugal, which has about the same levels of deficit and debt,”…
“The American politicians supposed to lead the most powerful nation in the world are becoming a laughing stock,” (via The Atlantic Wire)
The stern talking too’s are ineffective. Timeout isn’t working. We need a spanking. Instead, it seems like we’re just giving the kids the candy they want for a quick fix to stop the meltdown of the moment, knowing full well the next meltdown is just right around the corner. In fact, we scheduled it to be right around the corner.
I haven’t read the bill. I don’t know the full details of the deal. I don’t want to know the details right now. I know that my Congressman, Steve Cohen spoke and voted against the deal, because, as he said, it was a Trojan Horse. Based on my general understanding of the deal, I think he’s right on target with that statement.
In fact, the whole debate about raising the debt limit, something that should really be nothing more than a simple procedural vote, and has been nothing more than that the other 74 times it’s happened, is full of distortions, overheated rhetoric, and downright lies, all in service of breaking a series of protections that have been around for decades, and that everyone who has ever had a job has both paid into, and will stand to ultimately benefit from, Social Security.
But I’ll get to that in a minute.
To give you an idea of just how overblown this whole scenario has been I’d like you to watch the following ad that has been airing for about three weeks on cable news. As you watch, I want you to listen to what is being said very carefully. Don’t listen for the content specifically, because it’s got plenty of distortions, listen for the intended impact on the viewer.
Junkie, addict, spending, borrowing, China, $.42 on the dollar, foreign… All of these words are included for a determined psychological and emotional impact. It doesn’t matter if it’s right or wrong, in fact, it hasn’t mattered in our politics the way they’ve been practiced in the country for some time. What matters is if the intended emotional crescendo can be achieved through this messaging. This is the stuff that Frank Luntz lives for.
I couldn’t find any information on who funds these guys, so I don’t know who to direct my ire to, but I know this, it’s all distortion, lies, and an artful use of rhetoric to hide some reality, and that reality is that our nation’s debt isn’t beholden to foreign interest, but rather us.
Look at the chart to the left. This is a visual description of who owns US debt, including all foreign and domestic holders. Take a look at what these colors represent: US individuals and Institutions, Social Security, Civil Service Retirement, Military retirement. These four groups hold the lion’s share of US debt. In fact, they hold some 68.1% of US debt. Had the deal to raise the debt ceiling not been reached, crappy deal though it may be, these are 70% of the people we would have defaulted on. We would have defaulted on ourselves.
It’s bizarre that we live in a world where we’re so disconnected from the things that we should know about that we can have people on the one hand that want their Medicare protected, and yet, want the government to get out of their Medicare. This is something we saw over and over again in the Tea Party protests of 2009 and 10. Folks with so little understanding of what they’re actually asking for that they don’t even know where the money comes from. These are the people who, while still a small minority of Congress, are driving the debate today. It’s madness.
Take out a recent check stub and look for FICA. 15.3% of your income every pay period goes to FICA, which is also known as Social Security. I’ve been working for some 25 years now, paying FICA, 15.3% of which comes out of my pocket, the other 15.3% comes from my employer (if you’re self-employed you pay all of it). This is your money, that you’ve been paying in since you started working. At this point, all of us, not matter how much or how little we make, have invested. If now, or in some near or distant future the US were to default, Americans, as the holders of 68.1% of US debt, would be the ones to feel the most pain. Not China, Japan, the UK, Brazil, “Oil Exporters” or any other nation.
We would feel that pain in the long term through increased borrowing costs. We would feel that pain in the short term through a check not making it to the bank. But make no mistake, we would feel the pain.
Do we need to have a national conversation about taxation and spending? About what we want our government to do and what we want then to stay out of? Sure, but it has to be an honest conversation, not the bull we’re seeing now. We need to ask about our national priorities. We need to question why GE, Exxon, and other multi-national corporations pay less in federal taxes than a median family with the median income. We need to ask why these free riders are allowed to get away with this.
On this one count, we actually SHOULD invoke an idea from Ronald Reagan, that every corporation pay its fair share. The statutory tax rate may be 35%. That’s the number Republicans want to drill in your head. But the effective tax rate is much lower, and is likely next to nothing if you’re a huge multi-national corporation. The US has the fourth lowest effective tax rate for corporations. Lower than countries with far better employment numbers than us, despite the global economic downturn.
Why is this the case? Well, partially because our tax system gives credits to companies that send their jobs overseas, something the Obama administration tried to end about a year ago. Instead, Congress voted to keep these tax credits and extend the Bush tax cuts for the wealthy, which alone led national debt expansion from $5.6t in 2001 to over $10t at the end of the Bush Administration.
The long and the short of it is, our priorities are all screwed up. Any discussion of the debt and deficit that only looks at one side of the balance sheet, in this case spending, is both dishonest and wrongheaded. What’s more, it’s a decision to ignore promises we made to our very own people for the benefit of individuals and groups who have more than they know what to do with.
This assisted stupidity has been the shovel that we’ve dug this hole with. You would think we’d be ready to start putting some of that dirt back in the hole. Instead, we’re divvying up the dirt to those who need it least, and using the shovel as a weapon against those who need the most help.