Most long-time readers of this blog will remember the negotiations between Congress & BO on the debt ceiling debacle about a year ago. The final deal included the formation of the deficit-cutting Super Committee, & when it failed, to automatic spending cuts over 10 years conveniently starting in January 2013 - right after the 2012 election. With BO firmly entrenched in the position that he will not extend the Bush tax (rate) cuts for millionaires & billionaires (aka individuals who make over $200,000 per year & couples over $250,000) all of this led to the term fiscal cliff - an economic precipice, created by law in summer 2011, that threatens to cast the U.S. back into recession; a fiscal hit of up to $720 billion over time, starting Jan. 1, 2013, caused by the expiration of a host of tax rate cuts and the onset of $1.2 trillion in spending cuts mostly in Defense.
The above graphic shows entitlement spending to be the biggest part of the federal budget & it is hardly touched by the automatic cuts Congress agreed to after the Super Committee failed to reach any agreement last year. This led us to the term sequester - mandatory automatic spending cuts per the above graphic that kick in starting in 2013 if lawmakers can't find comparable cuts by then. BO & the congressional Democrat leadership loved the prospect of large defense cuts & of course the establishment Republican leadership went along with them thinking that these auto-pilot cuts would never happen. Of course every statist politician got what they wanted in that the debt ceiling was once again raised.
The fiscal cliff & sequester political games described above are really a sideshow diversion where statists tinker around the edges to appear to the uninformed that they are doing something.
Now even despite the very poor economic conditions being tolerated in America we still have time to make some real corrections before the terms labor squeeze, concessions, & austerity measures are prevalent throughout America – these terms already are well known in several towns across the country. Time is not a luxury the PIIGS countries of Europe have (had) & we should learn accordingly from them before we fall down the same metaphorical flight of stairs & have labor riots in our streets.
For a refresher that cannot be reviewed too often to understand what remedies are in our best interest please click on Four Points Highlight The Needed Change In Mindset. This posting shows how to solve the entitlement spending problems which are far greater than even indicated on the above graphic as entitlement spending balloons in the future into unsustainability.
In summary, the four points from the above link consist of 1) a change to a premium support plan that will turn the Medicare cost curve down for generations to come while preserving current programs for people 55 & over, 2) Susan Lee's solution for controlling Social Security's growth by reducing the initial benefit for people under 55 so that the initial benefit is calculated based on the CPI rate instead of the wage rate, 3) Ken Blackwell's "cut, cap, & balance" plan that cuts projected borrowing in half next year (not 10 years from now) & caps spending @ 18% of GDP (it's 24% now & going higher under BO), & 4) enactment of the FairTax.
Now if you don't hear politicians running for elective office support the above solutions to our problems I recommend that you ask why. More importantly you should drop these people & support the ones you find through your own research who do.
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