With a national debt of more than $14.8 trillion that is increasing by a trillion and a half per year, each one of the nation’s official residents of more than 300 million is on the hook for some $49,000. The debt burden for individual taxpayers is actually much larger still as the debt share for those who don’t pay taxes must be shifted onto those who do.
In an attempt to tackle the long-term imbalance in the national budget, U.S. Rep. Paul Ryan (R-WI) has issued a proposed “2012 Budget Resolution.” Under his plan, the Medicare entitlement would became a “voucher” system where each participant could purchase private health insurance. In 2010, the federal government’s spending for Medicare amounted to $519 billion, as compared to $666 billion for all non-defense discretionary spending.
Since Medicare spending has been increasing at a rate of 7 percent a year, it is projected that it will eventually consume nearly all federal tax revenues. Congressman Ryan also suggested that Medicaid become block grants for the states to spend as they choose. In addition, he proposed to lower the top corporation and individual tax rates to 25 percent and end all deductions. He would also cap domestic spending, repeal Obama’s health care plan, and slash farm subsidies. Elsewhere, Ryan also has suggested gradually increasing the Social Security retirement age to 70.
U.S. Rep. Ron Paul (R-TX), while approving of Ryan’s resolution, adopted a slightly different approach. In a recent debate among Republican presidential candidates in New Hampshire, he argued that the U.S. should change its monetary policy of promoting a weak dollar. According to the perennial presidential candidate, nobody wants to invest in a country that has a weak currency. Also, American and multi-national corporations are reluctant to bring their worldwide profits to the United States. As for the budget, he said perhaps the only way to save entitlement programs like Medicare and Social Security will be for the U.S. to bring its troops home from Iraq, Afghanistan and other foreign bases, and to curtail foreign aid. We just can’t afford to continue a policy of policing the world while our own economy sinks toward second class status.
Ron Paul’s son, Sen. Rand Paul (R-KY), has stated that the only way the U.S. government can avoid further debt is by opposing the raising of the debt limit and forcing the government to balance the federal budget (as most states and individual families have to do). To those who fear a financial crisis from defaulting on the debt, he states that can easily be avoided by instructing the Treasury to pay the interest on the debt first before any other expenditures are undertaken.
Nearly everybody knows by now that our continuing economic recession was sparked by the bursting of the “housing bubble” and the failure of a number of Wall Street firms that invested heavily in the “derivatives market.” These derivatives were often tied to real estate “sub-prime” mortgages that became “toxic assets” because the people borrowing the money couldn’t handle the high interest rates and the repayment schedules. Foreclosures in the millions followed and were accompanied by high unemployment.
At a Congressional hearing in October 2008, Alan Greenspan, who set our monetary policy as chairman of the Federal Reserve from 1987 to 2006, said his view during those years that Wall Street and the banking community could “regulate itself” was “flawed,” and he was “wrong” about the way the world’s economy operated.
Thus, our government had for two decades followed wrong-headed policies that led us to the precipice of national bankruptcy. In a recent online article, TIME magazine listed Greenspan as number three in a list of 25 individuals it blamed most for the 2007 financial crisis. Number two on the list was Sen. Phil Gramm (R-TX), chairman of the Senate Banking Committee from 1995 to 2000. Number one was Angelo Mozilo, chairman of Countrywide, the nation’s largest mortgage lender at the time of the financial meltdown.
In a recent Kentucky Educational Television special called “The Warning” (originally aired in 2009), Brooksley Born, former chairperson of the Commodity Futures Trading Commission (who resigned after being opposed by Greenspan and Treasury Secretary Rubin), said Wall Street is back to its old ways of playing fast and loose with investors’ money and with the added advantage of knowing of probable bailouts with taxpayers’ money. She believes the U.S. economy is destined to suffer further serious reverses as long as the Administration and the U.S. Congress are dominated by lobbying groups from the financial industry who block regulation of highly speculative investments like the derivatives market.
Dan Norvell retired to Danville after a career in educational publishing and working and traveling overseas for more than 20 years.
