Sunday, July 31, 2011

Debt Deal?

With only 48 hours before the "deadline" (I'll explain why that is in quotations in a minute), the media hype is all focused on the possibility of a debt deal between House GOP, also read 'the Tea Party', and Senate Democrats/the President, also read 'Centrist Democrats'.

If you want to know the importance I place on a balanced budget, under-control debt, and a lack of wasteful spending feel free to read some of my past posts. This post is more about the subtle things that are happening behind the scenes that have gone under the radar with the Mainstream Media.

1. Why the "deadline"?
As Senator Orrin Hatch (R-UT) has asked, how much money (cash) does the Treasury really have? That is a question that has gone unanswered and purposefully so to apply even more pressure on lawmakers to reach a deal.

2. What if the "deadline" passes?
If there is no deal the United States and her government will continue existing the real question comes down to two things: what will our limited funds be spent on? and how does this affect markets, domestic and foreign?

The first question is answered the same way a government shutdown would be handled, by prioritizing our needs and monies until we don't have anymore money. Comments like those made by Adm. Mullen in which he states he is unsure if the military would be paid if the debt ceiling is not raised are perposterous, irresponsible, and false. Pretty much everyone in the federal government would have to be furloughed before anyone even mentioned cutting wages to active military personnel.

The second question's answer is easy, "pretty badly." I don't know about 'disasterous' or 'depression' or any of these other doom and gloom predictions but let's just say if you knew someone had just declared bankrupcy it doesn't exactly inspire confidence in you lending that person any money soon. The problem for our foreign creditors, China and Japan, is that there aren't a whole of other good options right now.

3. Did I read right, Obama is a "Centrist Democrat" now?
Yup, Presidents always move towards the center of the political spectrum with time and I would argue democrats more than republicans. The President is almost the most right-leaning democrat right now! President Obama gave up on tax increases early which could have been used as leverage late in the game (now). Basically in desperation for a deal the President has limited his options and so far it seems he would only use his veto pen on a bill with a balanced budget amendment or cuts that he couldn't spin on certain social programs.

4. Impressions of the majority of each House of Congress?

House of Representatives: Republicans and the Tea Party

At this point there are two majorities, each with its own interests at heart. Republicans are willing to play ball to compromise to a deal as almost all polls say that this crisis is affecting Republican numbers negatively as they are seen as holding up progress.

The Tea Party is playing the "no compromise" card which is hugely popular within their own constituencies but is not in the best interests of the country, which correct me if I'm wrong here but I think that is their JOB. If you think you send a newly-minted member of Congress to DC and s/he doesn't have to compromise once then you must be living in lala land. The Tea Party is hurting their image deeply here, transforming themselves from principled patriots to infantile and stuborn fools who are acting on their own self interests instead of the nation's future. (House GOP 1994, anyone?)

Senate: Harry Reid and Centrist Democrats

For the first month and a half there was a generally open and yielding position for this group, "whatever the President says!" was their call. Now in the 11th hour they are getting a little fiesty, hoping to empower the President with the ability to use the Constitutional option to raise the debt ceiling. While that takes away from their own power and makes them look a little like last-minute objectors, it does bolster their ability to spend while a Democratic President is in office.

Anything I missed? Feel free to comment!