Our View: 'The Debt Bomb'

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Date: September 12, 2012
by: Observer Staff

It’s about to explode.

No one knows exactly when, but every day Congress and the president refuse to CUT spending meaningfully — actually reducing spending below the previous year — the the explosion grows nearer.

Pardon us. We know many of our readers prefer we stick to local matters here, but there is a domestic war going on, and none of us should sit idly by — the way they do in Congress. Our freedom, our way of life is at stake and on the verge of calamity.

To see this picture clearly and understand it in layman’s terms, read “The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America,” by U.S. Sen. Tom Coburn of Oklahoma.

Talk about a reality show. Coburn spells out where we are (see charts) and what is going to happen on that day — when foreign governments and investors stop buying our government debt. And they’re going to stop, be assured of that. Writes Coburn:

“In 2022, tax revenues will only cover the cost of Medicare, Social Security and interest payments on the national debt,” Coburn writes. “We’ll simply have nothing left to fund every other function of government. That means we’ll have to do one of three things: 1) Shut down every federal agency and scuttle our aircraft carriers; 2) Borrow a couple trillion dollars every year to fund the other government functions — if we can even borrow the money; or 3) Enact massive tax increases, which will further slow economic growth.”

And that hardly explains the economic catastrophes that will affect every U.S. family when the bomb explodes. Your savings and assets will shrivel to a fraction of their current value; the value of the dollar will shrivel; inflation will be unbearable. You should be watching Greece. That’s just the beginning.

And let’s be honest about something: As the chart above explicitly depicts, the U.S. is in this predicament because of Republicans and Democrats alike. They are equally to blame. Presidents and Congress alike. Congress, after all, controls the purse.

When Barack Obama last week begged for four more years to fix the U.S. economy, we thought: Get real. In business, any CEO worth his pay and facing the crisis that faces America would have taken to cutting expenses with a vengeance on Day One! When the life of the business is teetering, an effective CEO acts decisively. If we are to win this war, we need new leaders with the moral conviction to act NOW.

Currently 1 Response

1.
The Debt Bomb
This is an alarming subject, and finally people are grasping the ugly realities. The curve is alarming, albeit the stated data was not very accurate. The debt did increase 42% under Carter. Reagan’s increases were 79% + 61% for an astounding 288% increase over 8 years. He promised to lower taxes and lower expenditures. He lowered taxes and increased expenditures.
Bush I tried to increase revenue, and lost his job. Clinton and Newt, working together, got a pretty good handle on income & expenditures. Bush II and the neo-coms reduced the income, initiated unbudgeted wars, and reinstated the transformation of wealth and power to the elite rich, whom Bush called his “base”. Bush II raised the debt 89% or $5T, and we never saw the debt clock on Fox News.
Yes, the debt growth is staggering. The Republicans should be leading the polls by 5%, based on a real need to do something different the right way. However, they keep shooting themselves in the foot. The only clear thing that has come from Romney-Ryan is they wish to reduce taxes across the board and broaden the tax base— with no specifics.
It doesn’t help that Romney made an adjusted gross income of $21M and paid 13.9% in federal taxes. That is over 150 times our income, and we paid 15.4%. I don’t look to pay less, but I really think he should pay more. He leaves us guessing about the unreported years. Yes, I have read your tirades about the upper 1% being overtaxed and paying upwards of 40% of the total tax. Yet they are paying at the lowest levels since 1928. It is constantly repeated that increasing taxes on the rich will not make a dent in revenue. For sake of argument, if the upper 1% paid twice their current rate, there would be a 40% increase in revenue. I am not saying that is the solution, but I do recall the upper tax rate of 91% under Eisenhower before Kennedy lowered it to 75%. I was working during all of the Eisenhower years, and the VP’s lived in the best homes in the nicest neighborhoods but not the castles of today.
The latest issue of Fortune reports the % of income of the upper1% went from a high of 23.9% in 1928 to a low of 8.9% in 1976 back to 23.5% in 2007. They further state; “Regrettably, more wealth than ever in recent history comes not from building companies, but from the art of moving money around.” The article made no reference to taxes and/or debt.
Romney, just yesterday, surly criticized the 47% that pay no federal income tax. Thus, they do pay a 15.3% payroll tax, which is higher than his 13.9% federal income tax level.
Then we get Paul Ryan, the idol of the billionaire supported Tea Party. His most precise comment is to reduce the top tax rates. Like Obama, he has not held a real job. He got his wealth the old fashioned way; he inherited it. Yes, he suggests Medicare Coupons to replace traditional Medicare, for only those who are 55 or younger; thereby absolving us old people who created the debt issue for our children and grandchildren.
I agree with your tirades re too much government, unreasonable public unions, too much corruption, voter identification issues and government largesse overall. However, people (not only the lower 47%) are being turned off by the appearance that the Republican Party’s prime aim is to perpetuate the ongoing transformation to the financial elite, without regard to a real solution.
David Asperheim
Tue 18th Sep 2012
at 8:03pm