Government Bonds, Deficits, Debt, Interest and Inflation

Posted by PITHOCRATES - January 16th, 2012

Economics 101

Unlike Corporate Borrowing, Government Borrowing does not Translate into Consumer Goods and Services

When corporations need large sums of money to finance their businesses they issue stocks and bonds.  Investors respond by buying their stocks and bonds.  By loaning the business their money they are investing into these businesses.  Giving them capital to create more things to sell.  Thus stimulating the economy.  Because this investment translates into more consumer goods and services.  That consumers will ultimately buy.

When they offer these goods and services at prices consumers will pay the business does well.  As do the consumers.  Who are able to use their money to buy stuff they want.  So consumers do well.  Corporations do well.  And the investors do well.  For a corporation doing well maintains the value of their investments.  Everyone wins.  Unlike when the government enters the bond market.  For when they do there are some winners and, unfortunately, some losers.

Governments issue bonds when they spend more money than they collect in taxes.  They borrow instead of raising taxes because they know raising taxes reduces economic activity.  Which they want to avoid.  Because less economic activity means less tax revenue.  Which would make the original problem worse.  So like a corporation they have a financing need.  Unlike a corporation, though, the money they borrow will not translate into more consumer goods and services.  They will spend it inefficiently.  Reward political friends.  But mostly they will just pay for past spending.  In mature countries deficits and debt have grown so large that some governments are even borrowing to pay the interest on their debt.

Investors like Government Bonds because Government has the Power to Tax

When the government sells bonds it raises the borrowing costs for businesses.  Because their corporate bonds have to compete with these government bonds.  Corporations, then, pay a higher interest rate on their bonds to attract investors away from the government bonds.  Interest is a cost of business.  Which they add to the sales price of their goods and services.  Meaning the consumer ultimately pays these higher interest costs.  Worse, if a corporation can’t get financing at a reasonable interest rate they may not borrow.  Which means they won’t grow their business.  Or create new jobs.

As government debt grows they sell more and more bonds.  Normally not a problem for investors.  Because investors like government bonds.  (What we call sovereign debt.  Because it is the debt of sovereign states.)  Because government has the power to tax.  So investors feel confident that they will get their interest payments.  And that they will get back their principal.  Because the government can always raise taxes to service this debt.  And raise further funds to redeem their bonds.

But there is a downside for investors.  Too much government debt makes them nervous.  Because there is something governments can do that businesses can’t.  Governments can print money.  And there is the fear that if a government’s debt is so great and they have to pay higher and higher interest rates on their sovereign debt to attract investors that they may just start printing money.  Inflate the money supply.  By printing money to pay investors.  Sounds good if you don’t understand the consequences of printing money.  But ‘inflating the money supply’ is another way of saying inflation.  Where you have more dollars chasing the same amount of goods and services.

When Corporations Fail and go Bankrupt they don’t Increase Consumer Prices or Cause Inflation

Think of it this way.  The existing value of all available goods and services equals the amount of money in circulation.  When you increase the money supply it doesn’t change the amount of goods and services in the economy.  But it still must equal the amount of money in circulation.  So the dollar must now be worth less.  Because more of them still add up to the same value of goods and services.  That is, by printing more money they depreciate the dollar.  Make it worth less.  And if the dollar is worth less it will take more of them to buy the same things.  Causing consumer prices to rise.

Worse, inflation reduces the value of bonds.  When they depreciate the dollar the money locked into these long-term investments shrink in value.  And when people get their money back they can’t buy as much with it as they could before they bought these long-term investments.  Meaning they lost purchasing power while the government had their money.  Which gives investors a negative return on their investment.  And if a person invested their retirement into these bonds they will have less purchasing power in their retirement.  Because a depreciated dollar shrinks their savings.  And increases consumer prices.  So retirees are especially hard hit by inflation.

So excessive government borrowing raises consumer prices.  By making corporations compete for investment capital.  And by causing inflation.  Whereas excessive corporate borrowing does not.  They either provide goods and services at prices consumers willingly pay.  Or they fail and go bankrupt.  Hurting no one but their private investors.  And their employees who lose their jobs.  Sad, but at least their failure does not increase consumer prices.  Or cause inflation.

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Japanese Government Spending so High that they are going to Double the National Sales Tax

Posted by PITHOCRATES - January 1st, 2012

Week in Review

And we thought our government debt was high (see Japan PM’s Sales Tax Plan Hits Another Snag by George Nishiyama, Dow Jones Newswires, posted 12/27/2011 on NASDAQ).

Japanese Prime Minister Yoshihiko Noda’s plan to double the sales tax by the middle of the decade suffered another setback Tuesday as lawmakers bolted from his ruling party in protest over the proposed tax hike to 10%.

In addition to opposition from lawmakers, sliding public support is making it difficult for Noda to push ahead with the politically precarious task, but one that is badly needed to address Japan’s debt load, the largest among the world’s rich nations at more than twice economic output…

Noda’s DPJ, which came to power in the summer of 2009, has so far failed to meet many of its promises to slash unnecessary spending, such as cutting the number of lawmakers and the wages of government officials.

Instead, Noda’s Cabinet last week approved funding for the resumption of a dam project, which had come to symbolize unwanted public works and which the DPJ had initially put on hold…

“But we need to watch the issue going forward as if the administration backs down from hiking the consumption tax further, non-Japanese investors may start selling the bonds.”

With domestic investors holding almost all of its government debt, a Greek- style debt crisis is unlikely in Japan. But Tokyo is under increased scrutiny to lessen its debt, and credit rating agencies have threatened to downgrade its rating if Japan fails to proceed with the sales tax hike.

Japan’s debt as a percentage of GDP is over 200%.  America’s is about 100%.  So some think that American debt is not a problem.  However, domestic investors don’t hold almost all of America’s government debt.  The Chinese hold a big chunk of U.S. debt.  So a Greek- style debt crisis is more likely in the United States.  I mean, Standard and Poor’s has already downgraded U.S. sovereign debt.  So we’ve already started down that road.

Worse, those in government have been talking about a consumption tax for years.  Such as the Value Added Tax (VAT).  Which will become a reality if debt approaches Japan’s levels as a percentage of GDP.  And without entitlement reform, it will.

So this is our future.  A 5-10% national sales tax.  Which will hit rich and poor alike.  On top of all our other taxes.  This is the consequence of too much federal spending.  Which answers the question “are there consequences to too much federal spending?”  And the answer is, of course, yes.  Taxes.  More and more taxes.  That is the consequence of too much federal spending.  Because the federal government can only spend what it takes from us.

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The Debt Limit Debacle goes on, Obama and the Democrats unable to Govern Responsibly like Responsible State Governors

Posted by PITHOCRATES - July 17th, 2011

An Explosion of Government Spending will require an Explosion of New Taxes, Borrowing and/or Printing

Blah, blah, blah.  And the budget debate goes on.  It is interesting that it is the Republicans that are being intransigent.  They’re the reason why there is no deal.  But the Democrats aren’t intransigent when they’re being intransigent.  Funny how that works.  Well now there’s a fallback plan.  In case the Republicans refuse to compromise and agree to all of the Democrat’s terms.  Here it is (see Five questions on the debt-ceiling debate posted 7/15/2011 on The Washington Post).

The third, and increasingly likely, option is a fallback proposed by Senate Republican leader Mitch McConnell (Ky.). Congress would allow Obama to raise the debt limit in three increments totaling $2.5 trillion. It would also vote on resolutions disapproving of the debt increases, letting Republicans formally blame the increases on Obama.

To get House Republicans behind the deal, McConnell and Senate Majority Leader Harry Reid (D-Nev.) are revising it to include $1.5 trillion in cuts to government agencies and a new bipartisan committee to produce a framework for long-term debt reduction. Obama signalled Friday that he could live with the McConnell-Reid fallback.

So they will agree to disagree and let Obama do what is ‘best’ for the country.  And let him have full blame for doing it.  It’s a trap.  So when the nation implodes under unsustainable debt and a destroyed economy, the Republicans can point at Obama and say, “He did it.”  The Republicans may win the battle.  But they will lose the war.

A new bipartisan committee?  Didn’t we already do this?  The president’s own bipartisan committee of Erskine Bowles and former-Sen. Alan Simpson already did this.  And Obama promptly ignored their recommendations.  Then Joe Biden gave it a whirl.  And failed.  Then the president sat in meetings himself.  And failed. 

Another committee?  Why?  It’s just going to fail, too.  They need to cut government spending.  They know it.  All of these bipartisan committees know it.  Even the Chi-Coms know it.  But Obama and the Democrats just aren’t going to do it.  They’ll just keep wasting time with these meetings until they can get the Republicans to cave.  Because that’s their idea of compromise.

A “grand bargain” would mean settling for smaller tax increases on the wealthy than if Obama simply let the George W. Bush-era tax cuts expire at the end of 2012. And it could impede the economic recovery by ratcheting back government spending, thus reducing demand.

A bargain implies two competing viewpoints reconciled to best satisfy both sides.  It doesn’t work well when the Democrats simply reject the Republican’s views in toto.  And hold on to failed, dogmatic Keynesian economic policies.  For if government spending worked there would be no recession.  Or a budget debate to raise the debt limit. 

This pervasive view that these Keynesian policies are accepted as the only viable policies by the Democrats is the reason why we’re in the mess we’re in.  It appears that no amount of empirical evidence discrediting Keynesian economics will ever dissuade the Democrats from their reckless spending ways.  Thickheaded, stubborn and imbued with an air of all-knowing condescension and infallibility, they will let the country crash and burn before ever considering the idea that maybe they aren’t as brilliant as they think they are.

But as Obama sees it, the debt-ceiling crisis has offered an opportunity to fulfill his grand if nebulous campaign promise to get serious about attacking the nation’s fundamental problems. Being able to campaign on a major debt deal could outweigh giving up the chance to attack Republicans over Medicare. Settling now for a smaller tax increase on the wealthy would spare Obama a divisive fight over the Bush tax cuts. And getting the nation’s fiscal house in order could make it easier to win support for spending on education, research and infrastructure in a second term.

As for the economy, Obama seems to have adopted, at least to some degree, the Republican theory that businesses will invest more if they see Washington getting a handle on the debt. And a 10-year debt deal could be arranged so that few of the cuts went into effect immediately — there could even be some upfront stimulus included in the deal.

More spending?!?  You’re going to get your fiscal house in order (i.e., reduce the deficit) by spending more?  Well there’s only one way of doing that then, isn’t there?  With massive new taxes.  And not just on the wealthy.  These are going to have to reach deep into the middle class.  Because Obama has increased the deficit by a trillion dollars.  He’s the king of deficit spending.  He’s taken deficit spending to uncharted heights.  And it will take trillions in new taxes to reduce his deficits.  And this is the problem.  He is spending too much.

The Reagan Revolution was animated by “supply side” theory, but Ronald Reagan himself presided over several tax increases after his initial big cuts of 1981. He escaped GOP opprobrium, but George H.W. Bush caught his party’s ire when he signed a 1990 deficit-reduction deal with higher taxes. George W. Bush passed two big tax cuts, which nonpartisan budget experts now say were a major factor in today’s deficits.

Those ‘budget experts’ are no doubt Big Government Keynesian economists who love stroking their egos by advising governments on macroeconomics.  Talk to an Austrian School economist and you will hear a far different story.  And one that better stacks up against history.

Reagan made a deal with Tip O’Neil and the Democrats to cut $3 dollars of spending for every new $1 in taxes.  Of course, the Democrats lied.  They never honored their spending cuts promise.  Still his tax rate cuts nearly doubled tax receipts.  So tax rate cuts can and have increased tax revenue.  It was the out of control spending of Tip and company that gave Reagan those $200 billion deficits.  Chump change by Obama’s deficit standards. 

Bill Clinton fell ass-backwards into an economic boom thanks to the irrational exuberance of the dot-com bubble.  Money from capital gains tax from all those exercised stock options poured into federal coffers.  Then the bubble popped.  And George W. Bush started his presidency with the dot-com recession.  So, in response to the recession, Bush cut taxes in 2001 and 2003 to stimulate the economy.  In 2003 federal tax receipts were $1.782 trillion.  In 2008 they increased to $2.524 trillion.  That’s an increase of $742 billion.  Or an increase of 41.6%. 

So, no, the Bush tax cuts did not cause the deficit.  It was TARP (caused by the Democrat’s poor oversight of, and profiting from, Fannie Mae and Freddie Mac and their great subprime mortgage scam).  Obama’s stimulus.  And Obamacare.  An explosion of federal spending that will require an explosion of federal taxes, borrowing and/or printing to pay for.  No, this isn’t George W. Bush’s deficit.  This is Obama’s deficit.

A Shortage of Health Care Workers in Canada?

And speaking of national health care, let’s take a look at how well it is working in Canada (see Interactive Billboards: Bringing Billboards To Life by Misty Belardo posted 4/24/2011 on Bit Rebels).

An example of a great interactive campaign is this interactive billboard placed at bus stops. The campaign’s objective was to raise awareness about careers in public service. The challenge for the ad agency was to create enough interest in people so that they might seriously consider pursuing a career in public health. The big idea was to give people the feeling that they are capable of saving a life.

The billboard consisted of a huge interactive screen that illustrated a patient dying (as morbid as that may be). When a passerby pushed the hand marks on the sign, the electrocardiogram beeped, indicating that the man came back to life. Right at that moment a message read “Choose a career in public health, visit SaveLives.com.” It would be interesting to find out how many people interacted with the billboard, and even more importantly, how many of those registered and inquired about that career. Usually for campaigns like this it takes a couple months to find out the results.

The ad is apparently to attract health care workers in the province of Québec, Canada.  Which means they must have a shortage of health care workers.  And must be rationing care.  For that is an expensive way to advertise.  And you don’t do that unless the need is critical.  Whereas in America, it is one of the few growing sectors of employment.  Until the government takes it over under Obamacare, that is.  Then the Americans, too, no doubt, will be advertising to get more people to work in the bloated bureaucracy that American health care will become.

And it’s going to be bad in America.  The debate over raising the debt limit so they can pay their current bills?  Those bills don’t even include the explosive costs of Obamacare.  Those costly benefits are yet to kick in.  When they do there will be a whole lot more people covered by the same amount of health care workers, thus creating a shortage of them.  Which will require the rationing of limited health care resources.  (Unless the government finds an extra trillion dollars in some old coat in the closet.)  And then Obamacare will limp along like Medicare.  Chronically in the red.  And forever threatening to cut providers’ pay.

The State Governors know how to Govern

Part of Obama’s grand plan is to pass a lot of costs along to the states.  Because they can.  And states have to bite the bullet and absorb these costs.  Because they can’t pass them onto anyone else.  Or print money.  We call them unfunded mandates.  State governors call them bull [deleted expletive].

You see, states don’t have the options of the federal government.  They can’t be forever silly and irresponsible.  They can’t bluster in hyperbole, thump their chests with pride for a job not done and then just kick the can down the road.  They have to do what Obama and the Democrats in Washington won’t do.  Govern (see For governors, a personal toll from budget battles by Dan Balz posted 7/16/2011 on The Washington Post).

Talk to state executives gathered here at the summer meeting of the National Governors Association and it quickly becomes clear that the budget fights this year have not just left political scars, but some personal ones as well. As Washington Gov. Christine Gregoire (D) put it, “I’ve just come through a session in which I made rotten decisions.”

In Gregoire’s view, those decisions weren’t bad because they failed to solve the state’s budgetary problems or left her budget hopelessly out of balance. To the contrary, Gregoire oversaw cuts of more than $4 billion that balanced her biennial budget.

Like many governors, Gregoire cut pay for state workers, reformed the state pension system, asked state employees to pay more for health care and retirement, eliminated cost-of-living increases for some retired state employees and revamped the state’s worker compensation system.

She cut education spending and raised college tuition.

Now that’s governing.  Doing the right thing no matter how much it pains you.  This is the way it’s supposed to be.  Politics just isn’t a game, a path to riches and a fat pension.  It’s doing what’s best for the people you govern.  Even when it goes against your own personal philosophy.

We’ve come a long way from the Intent of the Founding Fathers

It’s just more of the same from Washington.  And this is what Thomas Jefferson feared.  And why he hated Alexander Hamilton so.  Permanent government debt is a dangerous thing.  It can give you an out of control federal behemoth.  Intruding ever more on our individual liberties to feed it’s appetite for ever more revenue.  Which is what Washington is today.

Jefferson cut federal spending so much he could hardly defend American shipping.  Today the federal government collects in taxes enough to pay for one Apollo moon program each month and it still isn’t enough. 

We’ve come a long way from the intent of the Founding Fathers.  Lucky for them they didn’t live to see what we’ve done to their beloved republic.

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Learning nothing from Europe’s Financial Crises, Obama pushes hard to increase the Debt

Posted by PITHOCRATES - July 11th, 2011

No Economy is too Big to Fail

Having too much debt is a bad thing.  For one thing, you have to pay it back eventually.  And until you do, you have to service it.  Make interest payments.  Which can become very large if you have a lot of debt.

Greece has a lot of debt.  So much that they can’t sell any more.  And they can no longer service that debt.  Which is a big problem for the European Union (EU), in particular the Eurozone and its common currency the Euro.  Greece is small.  But the EU is big.  And Greece’s problem is now their problem because of that common currency (see Eurozone moves to stop Greek debt crisis by Gabriele Steinhauser, Associated Press, posted 7/11/2011 on USA Today).

Investors are concerned that the debt crisis, which has so far been contained to the small economies of Greece, Ireland, and Portugal, could soon drag down bigger countries like highly indebted Italy and unemployment-ridden Spain. The mere size of their economies could easily overwhelm the rescue capacity of the rest of the eurozone…

“The fact that contagion is spreading marks the failure of politicians to draw a line under the Euro-crisis to date,” Rabobank analyst Jane Foley said. “As yields rise and debt financing costs become even more exaggerated the difficulties of containing the crisis become even bigger.”

The Europeans crated the EU and the Eurozone to counter the economic prowess of the United States.  And it has.  Their economies run shoulder to shoulder.  Which is why the U.S. should be worried about what is happening in Greece.  And how scared the EU is that their contagion may spread.  For no economy is too big to fail from an overload of debt.

Excessive Government Debt making Investors Nervous

If you’re looking for confirmation on the size and reach of the Greek debt crisis, look no further than the world’s financial markets (see Markets Tumble on Debt Crisis by The Associated Press posted 7/11/2011 on The New York Times).

Wall Street and global stocks slid further Monday because of renewed concerns about the euro zone’s debt crisis and after a dismal jobs report in the United States last week rekindled concerns about the recovery in the world’s largest economy…

The downbeat sentiment in markets was worsened by indications that Europe’s debt crisis might be spreading beyond the three countries that have already received rescue packages. There have been mounting concerns that after Greece, Ireland and Portugal, much-larger Italy and Spain could need bailouts to manage its tremendous debt load.

Investors are nervous.  Both about Greece and the EU.  And the United States.  They’re worried about excessive government spending.  And excessive government debt.  Because the higher the debt the higher the interest paid on the debt.  And interest paid on the debt is money spent that results in nothing beneficial.  It’s just a drag on the economy (i.e., higher taxes are required to pay it).  Or worse.  As in borrowing money to service the debt.  Which makes a bad problem (too much debt) worse (more debt).  Which is a further drag on the economy.

The Children refuse to Eat their Peas

And speaking of debt, there was no progress on the budget debate to increase the debt limit.  As if anyone was surprised by this (see WRAPUP 9-Obama, lawmakers fall short on US debt deal by Steve Holland and Thomas Ferraro posted 7/11/2011 on Reuters).

U.S. President Barack Obama and top U.S. lawmakers fell short on Monday of finding enough spending cuts for a deal to avoid an Aug. 2 debt default and Republicans came under fresh pressure to agree to tax hikes.

The two sides achieved no breakthrough in a roughly 90-minute meeting and scheduled a third straight day of talks for Tuesday. This came after Obama, at a news conference, declared it is time for both Republicans and Democrats to “pull off the Band-aid, eat our peas” and make sacrifices.

I’m a grownup.  And I like peas.  I think a lot of grownups like peas.  That’s probably why I see a lot of peas in grocery stores.  But one thing I don’t see is kids begging their mother to buy more peas.  No.  Mothers have to tell them to eat their peas even though kids don’t want to.  Because kids just don’t know what’s good for them.  And mothers, being mothers and not diplomats, don’t discuss this.  They just dictate terms to their children.  Which is what Obama appears to be doing.  Trying to dictate terms to the children on the other side of the aisle.  To get them to accept what’s best for them.  Because he knows best.  Like Mother.

The Treasury Department has warned it will run out of money to cover the country’s bills if Congress does not increase its borrowing authority by Aug. 2. Failure to act could push the United States back into recession, send shock waves through global markets and threaten the dollar’s reserve status.

This ‘running out of money’ line is very strange.  The government is currently collecting some $2 trillion plus in cash a year.  Which comes out to about $180 billion a month.  And as long as your employer is withholding taxes from your paycheck, there’s money flowing into Washington.  So how exactly are they running out of money?

Back into recession?  Didn’t know we ever came out of recession.

Boehner also took issue with Democrats’ suggestion that most of the spending cuts should be concentrated out into future years, rather than beginning right away.

Smart man that Boehner.  He knows Democrats lie.  “Raise taxes now and we’ll make spending cuts later.  Promise.  $3 in cuts tomorrow for every new dollar in taxes today.”  Ronald Reagan fell for it.  George H. W. Bush, too.  But tomorrow never came.  And neither did those spending cuts.  The Democrats had their new taxes.  So they said, “Screw you, Republicans.  Suckers.”

Obama used the latest in a series of White House news conferences to urge lawmakers on both sides to stop putting off the inevitable and agree to tax increases and cuts in popular entitlement programs, trying to persuade Americans he is the grownup in a bitter summer battle over spending and taxes…

Obama is seeking to cast himself as a centrist in the bitter debate. His 2012 re-election hopes hinge not only on reducing America’s 9.2 percent unemployment but on his appeal to independent voters who are increasingly turned off by partisan rancor in Washington and want tougher action to get the country’s fiscal house in order.

And that’s what this debate is all about.  The 2012 election.  If he comes out of this smelling like a centrist he wins.  Even if he loses the debate.  Because he can campaign as a centrist.  Even though he’s the biggest leftist to have ever entered the Whitehouse.  Who tripled the deficit.  And put the U.S. on the road to national health care.

So how much exactly are they looking to raise the debt limit by to save the country?

They said Obama’s view was that without tax increases, the package would at best be little more than $1.5 trillion in deficit reduction, far short of the estimated $2 trillion needed to extend the $14.3 trillion debt ceiling through the end of 2012.

Hmmm, $2 trillion dollars.  Where can we find $2 trillion dollars?

You Repeal Obamacare and we’ll raise the Debt Limit by $2 Trillion

Here’s a thought.  How about repealing Obamacare?  If we need to live within our means and can’t muster the guts to reform entitlements, then Obamacare is a no-brainer.  It’s not an entitlement yet.  No one would miss it if they repeal it.  Because how can you miss something you don’t even have yet?  So how much money would this save?  Let’s take a look at some facts and figures from an interesting article (see Obamacare Tragedy Primed To Further Explode the Deficit by Peter Ferrara posted 7/6/2011 on The American Spectator)?

…close analysis of the CBO score and additional new data indicates that, quite to the contrary, Obamacare will likely add $4 to $6 trillion to the deficit over its first 20 years, and possibly more…

Of course, the deficit is not the biggest problem.  Even bigger is that regardless of the deficit, Obamacare involves trillions of increased government spending and taxes…

In the Wall Street Journal on June 8, Grace-Marie Turner, President of the Galen Institute, estimated based on the numbers in the McKinsey report that as many as 78 million Americans would lose their employer provided coverage.  If those workers ended up receiving the new Obamacare exchange handouts, the estimated costs for those subsidies in the first 6 years alone would soar by 4 times, adding nearly $2 trillion to the costs and deficits of Obamacare during that time…

Such draconian cuts in Medicare payments would create havoc and chaos in health care for seniors.  Doctors, hospitals, surgeons and specialists providing critical care to the elderly such as surgery for hip and knee replacements, sophisticated diagnostics through MRIs and CT scans, and even treatment for cancer and heart disease would shut down and disappear in much of the country, and others would stop serving Medicare patients.  If the government is not going to pay, then seniors are not going to get the health services, treatment and care they expect.

Yet, reversing these unworkable Medicare cuts would add $15 trillion to the future deficits caused by Obamacare.

So Obamacare isn’t going to reduce the deficit after all.  How about that?  You see, Boehner is right not to trust Democrats.  Because they lie.  And while they’re bitching and moaning about trying to raise the debt limit by $2 trillion Obamacare will add another $4 to $6 trillion, or more, to the deficit over its first twenty years.  And there’s a whole bunch of unpleasantness in addition to that.  78 million people losing their private insurance coverage.  And the gutting of Medicare that will destroy that program.  Which will add another $15 trillion to future deficits. 

This should be the Republican position.  This is the deal they should offer.  Raise the debt limit by $2 trillion.  And repeal Obamacare.  Final offer.  Take it or leave it.  Either eat your peas.  Or you, President Obama, can default on America’s debt obligations.  For it is your Obamacare that has put us in this position in the first place.

Too much Debt is a bad Thing

Having too much debt is a bad thing.  We see it in Europe.  The EU is worried about what’s happening in Greece spreading to larger countries in the Eurozone.  Markets are jittery about Europe’s financial crises.  Even on Wall Street.  Because too much debt is a bad thing.  And no economy is too big to fail from an overload of debt.

The whole world understands this.  That too much debt is a bad thing.  And yet what is the Obama administration doing?  Piling on to their debt.  And not in a little way.  They’re collecting some $2 trillion in cash each year but it’s not enough.  They need to borrow an additional $2 trillion this year to pay their bills.  I don’t know what’s going on in Washington but one thing for sure – it ain’t good governing.

Repeal Obamacare.  Solve a bunch of problems with one act of legislation.  And demonstrate some good governing for a change.

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