Debt ceiling, deficits, taxes and Obama's supposed incompetence

 

Many conservatives claim that the President and the Democrats are incompetent. They often use the more than $800 billion stimulus as an example: it was, supposedly, wasted and didn't improve the economy or create jobs. The other examples they use are the high unemployment, the Administration's desire to increase taxes and its insistence on increasing entitlements (Food Stamp Programs, Medicaid and others) regardless of fraud or affordability.

But is all this really a sign of incompetence?

I don't think so. It seems to me that both Obama and his party are acting with full awareness of the consequences and the benefits to them.

The stimulus didn't do anything for the economy but it did significantly help states (where most of the money went) and kept them from firing and even helped to hire more state employees. Government employee unions are the strongest and richest, much more so than the private market ones. Since in the last presidential election unions poured more than $400 million into the Democrat's coffers it makes a lot of sense to make them stronger and richer, especially if it's done with taxpayers money. The same is true with the billions poured into the new GM. The UAW is happy and will support the Party in the next election at no cost to the Democrats but at a huge expense to the American taxpayer.

The same logic applies to taxation, regulations and other sources of high unemployment: if the President and his Party suddenly changed course, agreed to reduce taxes, cut unnecessary regulations and generally fostered a pro-business environment the economy would improve. But would they be able to claim the credit for it and receive more votes? Maybe, maybe not. On the other hand if you are unemployed or living on welfare and food stamps would you vote for a party that promises to cut spending on these items or would you vote for the people who promise to put bread on your table? It may be stale and bitter bread but it's something.

All the talk about fairness and "taxing the rich" is the same as "putting the means of productions in the hands of the proletariat" - Soviet Union anyone?

So is the President incompetent? Not if the main goal of his policies is to insure a future stable electoral base for his party and bring us as close as he can to a single party system. He will succeed if the Republicans let him. The only means of defeating both Obama and the Democrats is for the Republicans to refuse any compromises and NOT increase the debt limit unless the President and the Democratic leadership agree to $4 trillion in budget cuts.

What will happen if there is no agreement and the debt limit is not extended? The US Government is taking in about $200 billion/month in income. It's paying out about $300 billion/month, including about $20 billion in debt servicing. Not rising the debt limit means that the Government will have to cut it's expenditure to fit it's income of $200 billion/month. The debt must be serviced as is demanded by the 14th Amendment to the Constitution. Which means that our Government will have to cut it's spending by about $80-100 billion/month. This is not a bad thing. Several agencies may be shuttered with lots of benefits for everybody (Education Department, Department of Health and Human Services and maybe a couple of others). Another option would be to cut 45% of the budget across the board. It's going to be more than the apparent 33% ($100 billion out of $300 billion) because of the protected spending on Social Security and Medicare.

So: no Government debt default and no fiscal crash. Here's hoping that the TSA will not have funds for the Thousands Standing Around and groping children and old ladies and other such excesses.