Below are two responses to the original subject message that add to the discussion along with my own letter to the WSJ submitted earlier today.
Dear Editor,
In response to your editorial The Spending Fight (April 1) - Most freshmen Republicans campaigned in 2010 on cutting spending $100 billion their first year in office. Since they never specified differently it was thought they would start in January and go right on through New Year's. Please let me know what fiscally responsible voter in 2010 thought they voted for any candidate who promised to negotiate spending cuts starting at $100 billion per year on a prorata fiscal year basis?
---Response #1---
Doug - Luzzi hit it out of the park. Like you, his writing is clear, concise, & very informative. The 2010 elections will go into the history books as The Big Fleece.
---Response #2---
Message is clear - to make a career in politics you cannot be seen as the one causing pain for the people - you must be able to twist principles so the majority never recognize you are the root cause of the problem . Keep people poorly educated through government schools & you are almost home free.
Only mention deficits when you are trying to scare people especially after you have not cared one whit about them forever - like BO. Many will overlook your talk of deficits because it will cause 'mental pain' to correct it.
It is almost a no win situation. Possible solution - like I know you & Carol believe - when things get really nasty - deficits, loss of jobs, etc, possibly will wake the masses up so they re-consider their views & join in to help our country rather than just be a burden on it.
If you know how to bring us back from the brink without lots of pain for the government dependent public let me know.
Go to www.dickmorris.com. He is spot on regarding Boehner's blunder. Yes - cutting $100 billion was only wishfulk thinking after what happened last night. I am so angered I am blogging away and will write to Rodney and our 2 Socialist Senators.
ReplyDeleteHere was my response to Dick Morris today (note I add a picth for Fair Tax at the end).
Apr 9, 2011:
Dick - I totally agree with you. What a missed opportunity by Boehner! As a result, foreign creditors may be now concluding than any further investments in US Treasuries are extremely poor decisions. If I was an investor from China I would invest internally as their middle class is growing. That sort of investment promises positive returns while prospects in US Treasuries investments promise increasingly negative returns.
The dollar has lost 14% of its value past 10 months. Watch this accelerate. I read a report that the Fed has been averaging $4 billion a day financing our debt since November (our debt increases 4-5 billion per day). No wonder the 10 year T Bill is approx 3.5%. If the Fed backs off QE2 in July, I expect the US Dollar to collapse. Who in their right mind would want to invest? Pimco, the world's largest bond fund sold off all of their T Bills few months ago.
Refer to Damon Vickers book "Day After US Dollar Collapses" for potential severe scenarios. Or read my review of that on Amazon or my blog - Economics501.wordpress.com. Yes - it is very possible that come July the IMF and G20 may be calling the shots for the US finances. This can result in severe cuts in our entitlements. Yes - Boehner blew it big time. He would not hold out for a 2% budget haircut. Expect a 50% haircut come July. Our total deficit has been growing over 12% a year and our GDP only 2%. Again - whi in their right mind is going to invest in US besides the Fed?
One more quick pitch here how to grow our economy: The Fair Tax now in Congress as HR25:
Our cumbersome tax code benefits many special interests with little positive effect on economic growth. How can we address this when our economy desperately needs a boost ? One significant answer is the Fair Tax in Congress (HR 25). It eliminates all special interests, all federal personal and corporate income and payroll taxes and replace that with a revenue-neutral tax of 23 percent (for now) for all "new" products. It is progressive, provides "prebates" to lower-income earners. It eliminates the IRS, which alone will boost our GDP by about $300 billion. That money in the private sector will further generate extra GDP revenue, thus reducing our debt.
The fair tax (fairtax.org) can be set up so Social Security can be funded long-term. Even if the fair tax rate increases (to fund entitlements), the fact that it eliminates federal corporate taxes renders it business-friendly, which likely will significantly increase GDP, thus Treasury revenues.
Dick - keep up your great work. Let us put pressure on our representatives this week to reject the 38.5 billion deal. Let us also call for someone else to replace Boehner. Let's call for someone who can read a balance sheet - Paul Ryan (1st choice); Michele Bachmann (2nd).