I find it mildly hilarious that democrats are blaming the Tea Party for the credit downgrade… Overspending by Democrats and neoconservative Republicans has caused debt that has spiraled to extraordinary heights resulting in the need to raise the debt ceiling multiple times. Furthermore, I also see the credit rating downgrade by the S&P which may result in economic damage as nothing new. The S&P was one of the key players which led to the economic distress starting in 2007 based on faulty inflated ratings of mortgage-backed securities. Regarding whether the US is currently credit worthy, I believe the answer to that question is yes absolutely. The US has the largest economy and largest military to protect that economy in the world, in the past few years it has wasted trillions in wars thousands of miles away topped with paying off corrupt governments that harbor our number 1 enemy. If we can get our act together and reduce needless spending on destruction while improving domestic infrastructure and reducing restrictions and taxes on businesses I can see a recovery in order. Don’t blame the problem solvers for the result of a problem built by a tainted two party system that has had no respect for fiscal policy.
The democrats who have shifted the blame to the Tea Party include but are not limited to John Kerry and former Obama adviser David Axelrod, who have called the recent credit rating downgrade by the S&P to be the “tea party downgrade”. As an American interested in the long term livelihood of the United States as a sovereign nation, I support the spending cuts achieved primarily upon the stubbornness of the Tea Party to cave into political bullying and threats of major news organizations along with the Treasury Secretary’s unsubstantiated claims of economic ruin should the debt limit be exceeded. Right now, Democrats should focus instead on their party’s 2008 election promises that have never come to fruition. Bringing troops back from Afghanistan, for example, is something that will save the United States billions of dollars. The cost of the Afghanistan war in 2010 alone was 106.6 billion dollars, and it is estimated that this year we will spend 122 billion dollars .
1.”Annual Costs of the War in Afghanistan | COSTOFWAR.COM.” Cost of War to the United States | COSTOFWAR.COM. Web. 07 Aug. 2011. <http://costofwar.com/en/publications/2011/annual-costs-war-afghanistan/>.
The question is looming, and if you haven’t heard by now the US is deeply in debt. While this is called the ‘public debt’ most rational people I know would not have wanted it to come this far, but it did.
Let me summarize a few key points that will often be brought up in these grim yet true commentaries and tidbits. Public debt is another name for government debt, and the debt I refer to is that of the Federal government. It is called public because the government traditionally draws income from the public through taxes. Of late the government has had to draw upon other sources for money including loans to other countries accomplished through treasury bills and other instruments where the government promises to pay interest provided they are loaned the money.
The national deficit, which is the difference between Federal government revenue and spending, was $1.4 trillion dollars for fiscal year 2009 – the largest on record and in terms of purchasing power the largest any country in history has ever overspent. The deficit is possible through the trust of the dollar and the US government – yet history has shown that national debt and high deficits are rarely actually paid off through painful budget adjustments and shrinkage of government.
In fact quite the opposite is true, the government will actually either destroy its own currency or heavily increase taxes – the first of which will be good for manufacturing yet destroy whatever wealth families have accumulated over the years in order, and the second of which stunts growth and would result in less jobs locally.
Let us hope the less trodden path is taken and prudent budget adjustments are made and expensive and useless wars are avoided. In this way the dollar may survive and people wont be forced into bartering for goods and going back to the financial stone age.
Another important point to bring up is the actual production of goods and wealth. If the US was able to increase economic output in areas which haven’t already succumbed to the manufacturing advantages of certain Asian countries it could also reduce its deficit via a shrinking trade deficit (which I should are proportional to national debt). As it stands, each working person in the United States owes over $60,100 if the national debt was evenly distributed amongst them. Over 10% of 2009’s tax income will go towards paying public debt, the amount of debt the U.S. bears is around four times its annual income (compare that to a person who makes $100,000/year whos debt is $400,000). Another interesting blog I read puts the US in the ‘subprime’ category for buying a house.
How can you protect yourself from this? Aside from education, I would suggest either buying silver, owning land, steer clear of keeping large amount of money in low-yield bank accounts or checking accounts, and most importantly invest wisely. Of course spending money, while ironic, is one of the best ways of not accumulating it. Spending it on things that retain value is also a good idea. If you have any more ideas feel free to comment.
The problem with the elections we face this year is that of money. We as Americans have no one to choose from, in terms of reducing the national debt; we can only choose how we wish to increase it and by whom. Both John McCain and Barack Obama have plans, that if put into action, will dramatically increase the federal debt and inflate our currency faster. It is for that reason, regardless of the political spins and personal attacks, that our economy and financial well-being is in peril.