The Next Financial Crisis

This is the coming debt ceiling fiasco.  Secretary Tim Geithner, in a carefully timed announcement, said just after Christmas that the United States would reach its borrowing limit by the end of the year.  He noted, though, that there were games that he could play with borrowing and accounting that could extend the actual default date for a couple of months.

President Barack Obama wants Congress to grant him unlimited authority to borrow—to spend—entirely on his own recognizance; to eliminate any formal debt ceiling, in other words.  As he announced in his victory speech late on New Year’s Day after having eviscerated the Republican Party, leaving it a faction-ridden, impotent, waste-of-space, he’s going to demand yet more tax increases and more spending in order to continue his Big Government “investments.”  The debt ceiling is just a useless distraction.

On the other hand, the Republicans can recover, if they can just stop whining about their defeats long enough to be a serious voice for those hired them to the Congressional job.  (As an aside, the whining may be an indication of the necessary shame for their repeated surrenders.)  Here’s a suggested agenda outline with which the Party can regain its dignity and integrity, and reconnect with its Conservative principles.  And if they can stick to this, and correct their communications failure, they’ll actually have a chance to implement much of this agenda and to recover enough politically to not get swept entirely from Congress in 2014 and to avoid continuing to abandon our country to one-party rule in 2016.

  1. Negotiate in public.  If they negotiate honestly and in accordance with the Conservative principles they claim to espouse, they’ll have nothing of which to be ashamed, and so no reason to hide in the shadows.
  2. Acknowledge whose money it is that the Federal government collects in taxes, whose money it is the Federal government spends, and who it is that must pay the debt the Federal government incurs when it borrows.  Challenge the Democrats to do the same.  Make frequent public notice of any equivocation.
  3. Say, in no uncertain terms, what is the fair share of taxes to be paid by all Americans.  Challenge the Democrats in the Congress and White House to do the same.  In 2009, the top 1% (those singled out by the just passed bill) paid 37% of all Federal income taxes, while the bottom 50% paid 2%.  Make frequent public notice of any equivocation.
  4. Negotiate—in public—to reform our tax code to meet those shares.
  5. Eliminate business taxes, and loopholes (credits, subsidies, etc) altogether.  It’s the individual American, in his role as customer, who pays most of those taxes, anyway, in the form of higher prices used to recoup some of that tax bill.  We don’t need to be taxed more than once.
  6. Say, in no uncertain terms, on what it is appropriate for the Federal government to be spending our money.  Challenge the Democrats to do the same.  Make frequent public notice of any equivocation.
  7. The Democrats will try to distract the public by attempting to pass legislation concerning immigration reform and gun control.  Republicans should ignore these distractions and force the Democrats to begin talking about the debt ceiling now, rather than waiting again until the last minute with their intent of using the then-approaching deadline to pressure another bad deal.
  8. Promptly pass a budget bill in the House that includes significant spending cuts (at a 3:1 ratio in spending cut dollars for debt ceiling raise dollars, which then defines the debt ceiling raise limit), offer separate legislation concerning tax reform (and pass it in the House), offer separate legislation concerning spending and borrowing reform (and pass it in the House), and offer legislation that raises the debt ceiling and that contains the budget’s spending cuts (and pass it in the House).  This legislation all can be completed from the House’s perspective within January, which would leave the decks clear for the debt ceiling fight.  All of this also will set a Republican-controlled baseline for the debt ceiling debate.
  9. Challenge Obama daily to join the debate on the debt ceiling.  Make frequent public notice of his refusal to deal with the problem.

We Americans have the critical role in this agenda, though.  We must hold the Republicans, and the Democrats, to this agenda, and we must loudly and enthusiastically call out any equivocation by individual Congressmen of either party and by the President, with particular emphasis on attempts to conduct the debt ceiling discussion in secret, and further on agenda items 2, 3, 6, and 9 above.  And in 2014 and 2016, fire those Congressmen who do insist on secrecy and equivocation.

I’ll have specific suggestions for continued tax reform and for spending cuts in later posts.

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