Not the fact that the buffoons in Congress can't come to an agreement - I've long since given up hope of our American political system acting in a responsible and sane manner. It's too caught up in the media hyped blame circle pandering to their narrowly defined bases and corporate sponsors to think that they would be able to reach a reasoned agreement on anything of substance. No, rather how did we get to the point that we have a $14 Trillion debt, earmarked or priority spending levels where they are, and have no maneuvering room. It's worth pondering.
I, like many people out there, have a point of view on this. However my view doesn't fit nicely into minute thirty sound bites on CNN or Fox News, and that it requires you to think about cause and effect over decades. It starts with Nixon and the supposed collapse of the Republican party after his near impeachment. This was followed by the development of Conservative and Neo-Con think tanks in response to the real prospect of Business losing their control of Washington, and the development of long term plans (in the 70s) to reinstitute a facade of democracy in this nation covering the absolute dominance of legal and judicial processes by business interests. What's interesting about this is that while these Think Tanks have always resisted revealing where their funding comes from, they never been shy about communicating their focus and intents. It's been there for you and me to see for 40 years now.
In the '80s Reagan modeled with the Soviets what I believe the Republicans have succeeded in doing to the Americans in the '00s and today. He simply outspent them and forced them into a corner where they had no alternative but to give up and sue for peace. This lead to arguably the greatest single freedom event in history as the Berlin Wall came tumbling down, and the Soviet economy was revealed to be the Potemkin village it really was.
25 years later the Republicans, with Bush as their front man, armed with a military mandate derived from 9/11 and an economy on the skids from the dot bomb, managed to accomplish two major things that have driven us to our current dilemma.
First, playing upon our fears in the clouds of the crumbled towers, they launched both a massive expansion of the military (with its spending) plus they mired us in two wars that continue to this day. Our current military spending is over $1 Trillion a year (Counting appropriations and black ops budgets) - approaching 25% of the Federal Budget, and greater than the military budgets of all other nations on earth combined, and on top of that we've incurred at latest estimates a $4 to $5 Trillion debt to run the wars in Iraq and Afghanistan.
Second, this stroke of budgetary and resource allocation brilliance was coupled with another - a reinstitution of Supply Side economics, that utterly failed policy that, guess who, Reagan brought forth in the '80s. After 25 years everyone seemed to have forgotten that, by cutting the taxes on the wealthy in the 80s, we accomplished nothing, other than to prolong and deepen the recession we were in. As a result, right as we were expanding expenditures, we cut revenues, betting on the come that this would result in an expansion in GDP as the wealthy, in their infinite wisdom, invested in business opportunities that created jobs in the US economy. (We'll come back to that one in a minute)
Fortunately for Bush, the artificial inflation of the economy driven by the soon to be emerging Mortgage crises covered in the short run (2002 - 2008) any issues supply side economics might have created. For those of us who have forgotten (it was after all three years ago - several dogs years in our ADHD media cycle and two Congresses ago), a relaxing of governmental regulation and financial standards allowed mortgage brokers to underwrite mortgages to people that would never be able to repay. After this stroke of regulatory brilliance, the financial institutions were then allowed to commoditize these mortgages into homogenized debt offerings that assumed that, while any individual mortgage might fail, certainly the entire portfolio wouldn't. I could try to explain this, but I don't have 100 pages and a month to do it, and it has been done really well already - look at Matt Taibbi's excellent and entertaining book Griftopia-Machines-Vampire-Breaking-America. Also Dilbert explains it in a much shorter version:
This perfect storm of regulatory ineptitude coupled with greed and avarice led to the greatest financial meltdown since the Great Depression, and, guess what, required investing over a Trillion dollars more in propping up a lethargic and struggling economy. We now have something like 16% un- and under employment (U-6 I believe).
So coming back to supply chain economics - that mantra of the neo-conservatives and savior of the rich. As I said above, the premise is that, by cutting taxes on the rich, they will have more money to invest in the US economy, creating jobs and ultimately lifting everyone out of economic trouble. Unfortunately the global financial economy has significantly shifted in the past 30 years under the US lead World Bank and IMF and their financial policies (See Joseph Stiglitz' Globalization and Its Discontents if this interests you at all - worth a read by the Nobel Prize winning economist). Today, rather than investing in the US, increasingly Global companies have realized they have greater returns and diversify risk by growing brands and operations outside the US. As a result tax breaks and corporate incentives increasingly have little, if any effect on our economy, serving to grow corporate earnings with little if any employment impact in the US. Couple that with lower cost labor alternatives overseas driving an outsourcing trend for the past 20 years and one has to wonder why there are any good jobs left in the US at this point.
Putting all this together all its clear that the neo-Cons and Republicans have lead us to the brink, painting us into a corner from which there really is no exit. They
- deliberately overspent in the 00s, raising the debt to the $14 Trillion mark
- through regulatory "reform" have created an economy that can't make jobs
- created non discretionary buckets of expenditures that leave no room to maneuver, and
- are now citing "philosophical" reasons that they can't even begin to discuss revenue enhancements to address the issues they've created in the first place
Gotta love it eh?
As an aside, while I've been lambasting the Republicans here, the Democrats are every bit as culpable through their ineffectual meanderings and inability to find a platform to promote. While the Republicans have successfully implemented their strategies and tactics to get us to a point where corporate take over of the US legislative process is at hand, the Democrats have been clowns on a stage they weren't even aware of. I honestly don't know which party to despise more, so I'll despise them equally for different reasons.
So now, with the US on the brink of default, which would challenge 60 years of global financial market management where the US debt is considered to be risk free, can we find a compromise to our problems? No. because it's against everyone's principles.
The Republican's approach to negotiation is akin to Bruce Willis' negotiation in the 5th element. Remember the scene? Ugly aliens have taken over the luxury cruiser and demand to negotiate. Bruce asks if he can take over negotiations and proceeds to shoot the ugly aliens.
The Democrat's approach to negotiation, as led by our enormous disappointment of a president Mr Obama, is to roll over at the first request for something and offer more than was asked.
In short, we're up S*&^%s creek without a paddle, and Tuesday the 2nd is just around the Corner.
So I hope you've pulled your money out of the market and invested in gold and firearms. I wish I had at this point.
Good luck!
