Roughly once every four years, our elected "leaders" play a game of financial chicken. The rules are simple. Republican spending addicts stare at Democratic spending addicts and each tells the other that they are not going to let our country go deeper into debt without the other giving in. Who ever blinks first, they both win. Either way, we steal more money from our grandchildren and both groups of spending addicts get another "hit" of their drug.
So what happens if on Aug. 2, financial armageddon happens; Congress and the President don't come to an agreement to go deeper into debt? Will we default? No. Ten percent of monthly tax receipts covers 100 percent of all monthly bond payments. Rather, we wind up in the land of financial insanity were we can only spend the money that we actually have. There would be an instantaneous balanced budget. The government would have to pick and chose its priorities just like you and I do.
Is there a way to get past this impasse? Is there a way where both sides can mutually agree to take us deeper in debt?
The best idea I heard grabs both sides by their tender parts and gives a little squeeze.
Remember the Sainted Clinton era? Our Democratic friends shout from the mountain tops that the tax rates of that time are what led to prosperity and gave us a balanced budget. Our Democratic friends are virtually ready to sit on the Capital steps, pour gasoline over themselves, and strike a match, to raise taxes to the Clinton era rates.
On the other hand, rather than raise taxes, Republicans would rather be dragged to Rouen, France, tied to a stake over a pyre, and martyred like Joan of Arc. They are determined to cut the budget dollar for dollar with any increase in the debt limit.
I propose we reset the clock to the year 2000; Bill Clinton's final year in office.
Who can argue with that? By returning to the Sainted Clinton era the Dems get the same IRS code, tax rates, and all, while at the same time Bill Clinton's 2000 budget would chop about 25 percent off of our current expenditures to the delight of the Repubs. All programs, tax laws, administrative laws, created after the year 2000 go away and every other part of the government would be scaled back to what at the time was considered a bloated bureaucracy.
Those who benefit from us going deeper into debt are really putting on the heat. Moody's, the credit rating service, has announced that they may reduce our credit rating from AAA to AA if we don't reach a deal to borrow more money.
Hang on a second. Greece, which has the lowest credit rating of any nation on earth is rated CCC. While default appears to be inevitable, Greece is still paying its bills. If we were to actually default, wouldn't the U.S. credit rating be reduced to a C-, the lowest rating Moody's can give?
Why is it that when I borrow too much money, my credit rating goes down and the credit rating agencies tell me to stop borrowing, scale back my lifestyle, and pay down my debt? Why would Moody's reduce our national credit rating one level unless we do the exact opposite of what you and I would be required to do? Do they have some stake in the game? Are they another Goldman Sachs?
While Norway, Sweden, Switzerland, Finland, Netherlands, Germany, and the U.S. all have AAA credit ratings, U.S. bonds have the least number of people bidding to buy them compared to the other AAA rated countries.
For reasons that one could only guess about, Moody's announced that the debt ceiling should be eliminated, giving Congress limitless power to borrow and spend, to provide more certainly to bond holders. Yet at the same time, Moody's is demanding that Portugal, Italy, Ireland, Greece, and Spain implement stringent austerity measures.
Incidentally, the sovereign credit rating agency for China has already declared the U.S. is in the process of defaulting on its debt because we have inflated our currency. While the face amount of the bonds remain the same, the value of the dollars used to repay these bonds are worth substantially less then they were three years ago. China would be much happier if we would scale back, stop inflating our money, and pay our debts. They would love to see the clock reset to the Clinton era. The exact opposite of Moody's.