Wednesday, July 13, 2011

What can be learned from the debt ceiling debate...

Don't trust the government.

We are now into day 24,837 of the national debt crisis. It was sometime in mid 1943 when the American debt doubled, and we have been stressing about it ever since. In that time we have raised the debt ceiling countless times, and at least since the Carter years, rancorous debate and heavily partisan voting on the debt ceiling has been the rule rather than the exception.

We are not experiencing one of those exceptions.

But, there is something very valuable to be gleaned from this current debate that I don't think has been touched on yet, but needs attention. That is, in the political demagogic carnival show of the last months, the Democrats have essentially thrown out the semi-logical arguments that they have made for the need for a Government run retirement and health care program, and deficit spending to boot.

So let's address these arguments in turn:

Argument 1) Market Driven Retirement accounts are inferior to Social Security because market accounts are subject to market volatility while Social Security is backed by the full faith and credit of the United States -

Well, this is so easily proven a pointless distinction that I probably don't even need to point out the trouble with this argument. But I will make the point anyway.

According to the Democrats own demagoguery we as a nation are one debt ceiling vote away from defaulting on the US Debt... so, while the market may fluctuate, by their own argument, Social Security is a debt ceiling vote shy from going away.

This isn't really secure footing given that we are now holding this circus act at least one a year.

Argument 2) Funding the US Budget with Medicare and Social Security funds is fiscally sound since the IOUs deposited in these accounts are backed by the full faith and credit of the United States -

Well, this second point is even easier to dispel than the first. Again we see that when up against the annual debt ceiling vote, by the Democrats own insistence, the rationale for borrowing this money is shown to be comically false. What good are these IOUs without the affirmative debt ceiling vote? If we are going to default on our debt, and ruin the full faith and credit of the nation on this one vote, then how valuable is that IOU really?

Indeed, in an interview with 60 minutes President Obama claimed that he didn't know if the US would be able to pay Social Security and Medicare recipients as soon as August of this year... some three weeks from collapse. This is security, apparently. This is what the President wants us to think.... and in thinking it we must ask the important question: then why should we trust Government with our security?

It should be clear by now how little "full faith and credit" really means in the age of huge deficts and debt. Efforts to cut spending are efforts to reinforce our nations faith and credit at home and abroad. Seeking ways to "increase revenue" and continue spending as usual is simply a continuance of the policy of cashing in on our nations waning faith and credit.

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