Thoughts on the Debt Limit Debate — Updated

What we’ve seeing playing out in Washington during the debt limit debate is in many ways akin to an addict facing an intervention. Washington’s policy makers, both Democrats and Republicans, are hopelessly addicted to spending and they don’t want to admit it or to change their behavior.

As a result they’re lashing out ordinary Americans who have the temerity to demand Washington change its ways and cut spending – drastically. Politicians and pundits alike have dismissed these people as “extremists” or “racists” and referred to them derisively as “Tea baggers” or more recently “Hobbits” and “Terrorists“. These so-called extremists, aren’t really all that extreme most of them have never been politically active, much less protested anything before in their lives. Most of them are well-informed, well-intentioned people who believe in traditional American values… and yes, there are a few cranks and crackpots who give the rest a bad name.

Regardless they’ve all come together for common reason, they’re deeply concerned that this country is headed in the wrong direction and want to see to it put back on the right track. In the words of Ronald Reagan “The federal government has taken too much tax money from the people, too much authority from the states, and too much liberty with the Constitution.”

Let’s be clear about something Washington doesn’t have a revenue problem, it has spending problem… Robin Hood is not going to save from out debt problems. If you look at the numbers, over the last 50 years revenue to the federal government has remained remarkably consistent averaging roughly 18% of GDP. What’s changed is that spending has risen sharply over the last two decades to roughly 21% of GDP under President George W. Bush and now to roughly 25% of GDP under Pres. Obama.

The simple truth is we can’t raise taxes enough to close the current budget deficit much less begin to pay down our $14.2 trillion national debt. We have to cut spending — drastically, that means both sides are going to have to give up some of their sacred cows. Republican are going to have to accept some cuts in defense spending and Democrats are going to have to accept some entitlement reforms. We don’t have a choice in this anymore, our current spending levels are simply unsustainable.

The dirty little secret in this whole debate is that Congress never actually cuts spending, all they ever do is reduce the rate of growth that’s already built into to the government’s baseline budget… and that’s exactly what they’ve done here. There aren’t any real spending cuts in the deal they’ve just agreed to… spending is still going to go up, it’s just going to go up less than would have otherwise. This deal will add roughly $7 trillion to the debt over the next 10 years.

The truth is if a publicly traded company managed its finances the way the federal government does it would a) go bankrupt and b) the management would be indicted for fraud.

Edit: I should also point out that the latest Gallup Poll of political ideology shows roughly twice as many Americans self-identify themselves as conservative than liberal.

Related

• Analysis: Debt mess shows Washington’s awful side – Associated Press
• Sputter to stall: U.S. economy dips into danger zone for recession –  James Pethokoukis, Reuters
• The Obama Recovery – The Wall Street Journal
• The Tea Party, Right About Everything– Randall Hoven, American Thinker
• Obama’s power grows as debt deadline approaches – Byron York, the Washington Examiner
• Open Letter: Why I Oppose the Debt Ceiling Compromise – Senator Rand Paul
• Debt Deal is a Blank Check – Peter Schiff, CNBC
• Debt deal doesn’t dispel downgrade fear – Reuters