Beyond the Cusp

October 1, 2013

October Could Result as a Teaching Month for America

This month of October may end up teaching both Americans and anybody who wishes to pay attention some lessons in what has gone wrong with the United States Federal Government. These lessons could potentially be far more fright inducing than even the scariest Halloween costume and may have consequences far worse than even the nastiest prank gone bad. The lesson plan looks something like this; first lesson is the not so smooth rollout of Obama Care today, second lesson will be the shut-down of all nonessential government functions and the final lesson later this month could be what happens when the government runs completely out of borrowed monies as that is basically what the United States runs the government on, borrowed money. So, what are we to take from each of these examples of how not to run a business, organization or even a government?

 

The rollout of Obama Care today was supposed to feature health exchanges where people could go and find affordable, government approved health insurance. Anybody attempting to get in early and avoid the potential long lines as the deadline for having insurance approaches at the beginning of the new year, the very beginning as in right after the ball drops in Times Square or whichever time zone one resides, are going to probably be unhappy as at least thirty-five states have claimed they will not be ready on October 1 to issue health insurance through the exchange system and the majority claim it will be mid to late November before they will be even close to prepared to be up and limping. The Federal Government also is saying they will not quite be ready either and will also require at least six weeks before their system can be put to the test. The more that everybody looks at the difficulties the many separate appendages of the layers of government are having in getting even the basics out and ready in order to facilitate the start of Obama Care, perhaps the idea floated by some Republicans in Congress of simply postponing everything to do with Obama Care for one year, you know, just like all those businesses, unions, and others who were given one year waivers, so that then everybody will be on the same page instead of pushing a half-baked program on the people while allowing the President and Congress to play favorites with waivers and exemptions. I do believe that somewhere in the Amendments to the Constitution there is this cute little idea of equal protection and application of the law; I believe it is in the Fourteenth Amendment. One thing for sure, we can also gain a lesson on how the connected, powerful, wealthy and privileged classes are all dancing their way around being constrained by Obama Care while the ordinary Joe like most of us are being subjected to the whims of an untried system and we are going to be the guinea pigs who get to suffer the bumps, bruises and every trail first run error that this system that has been patched together on the fly just to even get it out over a month late. Does anybody really believe that the government will have even the slightest idea what they are doing by Christmas? I did not think so.

 

The second lesson could follow right on the heels of the rolling fiasco releasing Obama Care before its fully ready and functioning which would be a government shutdown due to the lack of funding set aside to run the Federal Government. The whole idea that we have been running the Federal Government of the United States on continuing spending bills is absolutely ludicrous and embarrassing in that our Federal representatives along with the President have been unable to agree on a budget to fund the Federal Government.  Producing an annual budget is presumably the first item of business the Congress is supposed to accomplish before they tackle anything else. The problem is partisan bickering or at least that has been the excuse for no budget being passed since the 2010 elections. The reason the excuse is not used for the two previous budgets not being agreed to and forcing continuing resolution be the manner for funding the government before then is simply because during the first two years of no budget both houses of Congress were so overwhelmingly Democrat that President Obama had a filibuster proof echo chamber for a Congress made up of members of his own party to an extent most Presidents could only dream about. Even with such a majority in both houses, the President and the Congress still were unable to produce a single budget. Truth is there has not been a budget passed since President Obama was sworn into office. There have been numerous theories and excuses pushed to try and explain why no budget has been passed during the Obama Presidency with the overt partisanship having become the number one excuse despite the inconvenient fact that even with an overwhelmingly Democrat Congress supporting President Obama there was no agreement and thus no budget. I have my own pet reason for there not being a budget and it even works for those first two years when there really was no other excuse not to have submitted and passed a formal budget. As long as there is no annual budget there can be no evaluations as to what the level of spending is related to other years by comparing the budgets. Furthermore, by using continuing resolution the spending for separate items can be passed separately and there can be numerous schedules such that there is no easily discerned way to total government expenditures for each year. One can also hide larger than normal increases in those areas and departments while using the lack of straightforwardness to deny increases or even make actual cuts to those areas where the President and his allies are inclined to do so. An example would be if you wished to increase a particular program’s spending allowance in the budget more than the usual say ten percent, all one need do is schedule it for receiving its funding monthly by continuing resolution and each month increase the spending by what at first appears to be the same ten percent but just as compound interest boosts your savings account and compound interest adds significantly to your mortgage total payment, it also greatly increases the budget well past the ten percent that you are claiming to use. Simply put, continuing resolutions as the method for approving government spending allows for far greater amounts of spending than would otherwise be budgeted if an annual budget were debated and enacted.

 

Should the Federal Government actually shutdown we would be treated to a lesson many of us should have already learned long ago, namely how little such a shutdown affects our daily lives. The Republicans are worried that they will get the blame for any government shutdown and they are therefore very likely to not find their spines and fold to whatever the President and the Democrat leadership demand just to avoid a partial shutdown. Partial, that is the word that everybody needs to put the emphasis on, not shutdown. If the Republicans were at all savvy they could utilize such a shutdown as a public learning experience in much the same way as the sequester turned out. President Obama spent weeks upon weeks warning how the sequester cuts would bring life as we know it to a standstill. He predicted near collisions due to no air traffic controllers, potential disasters from lack of health and other inspectors and the one item he got almost correct, long waits at airports for the TSA inspections. The thing was the lines at the airports were not any longer than normal but by simply having news crews and their cameras at some of the busiest airports during the busiest part of the day and the supervisor being instructed to send a number of his people on break at that time, instant photo-op of the sequester making life impossible. A government shutdown which only places what are deemed unessential personnel on leave, with pay if things are as they have been in past shutdowns as we cannot have these poor unfortunates go without their paychecks just because they are not working as it is not their fault their job is considered unessential, thus all essential services continue unfettered and hopefully smoothly. The Social Security checks, Food Stamps vouchers cards, Welfare payments, Air Traffic Controllers, FBI, CIA, IRS, BATFE and other enforcement personnel and all military personnel will remain at their posts doing their jobs. There is an inconvenience one might face, that would be the Federal Parks being closed, but the State Parks would still be operating as usual for an alternative. While I am aware that some of the Federal Government workers who fall under the classification of nonessential actually provide valuable services or are performing research and other tasks which are quite necessary; still, it does get one to thinking as to whether or not all of the nonessential Federal Government employees are really needed or could we actually do without some percentage and not notice any real difference? When one reads those articles which appear every so often which list some of the inane, insane, and utterly absurd items the Federal Government has either purchased or is researching and you just know that whoever approved these items we would have been better served had that unessential employee been dismissed before that fateful decision on how to waste our tax dollars. In all honesty, could we possibly get by without hiring any more unessential Federal Government employees for say five years and then just cut those positions that went vacant through attrition and start from there?

 

The final lesson coming in October is actually the culmination of our budgetary woes. Once again we have hit the debt ceiling which means that there is simply no money, in theory, to continue government. This problem has grown to the point where it has become a dangerous threat to the future and well-being of the United States. Up until approximately four years ago when the Federal Government reached the debt ceiling the Congress, usually at the behest of the President, had raised the debt ceiling and then the United States borrowed cash by selling bonds to foreign governments, most often this meant China. China reached their tipping point where should they buy additional United States bonds they risked those purchases having a negative effect on their economy. As China was the buyer of last resort for any large issuance of United States bonds, this caused difficulty in marketing additional bond releases. This resulted in a new and riskier arrangement where the Federal Reserve purchased the bonds. This becomes a problem for a myriad of reasons, many are very complicated and difficult to explain. Thomas Sowell has written a number of articles which explain some of these difficulties and is able to explain them such that they are understandable, or at least more so than most textbooks’ explanations. The first problem is the makeup of the Federal Reserve. Despite the inference in their name, the Federal Reserve is not an arm of the government. The Federal Reserve is a board made up of leading international bankers or at least board members and significant people of holdings in the world’s major banks. When they buy the United States Treasury Bonds, they are using the money which they hold which was supplied by the United States Treasury. This results in basically the Treasury printing money that this cabal of the world’s leading bankers and money manipulators then utilize to buy the Treasury Bonds thus returning the money to the Treasury who now place that money into the supply for the banks and markets as well as financing the Federal Government. This is often simply referred to as monetizing one’s debt which has always led eventually to, at best, simple inflation, and at worst, hyper-inflation such as what destroyed the Weimar Republic and has ruined other national economies throughout history including Rome. The other side of the coin is that if the debt ceiling is not raised, then it is possible that the United States would default on our interest payment on the debt. Contrary to what many believe, the only payments that have been made on the United States national debt have been payments to cover only the interest, the principle continues to grow ever larger and has not been paid down since before World War II. Should the United States default on their interest payments on the national debt, the credit rating would instantly drop below anything imaginable and the United States would be facing demands of payment on the principle, the actual debt which we back with our natural resources. The ensuing chaos and destruction would inevitably lead to only one thing, a war where the United States stood alone against the rest of the world, or at least those nations to whom we owe gold, money, or whatever. There would be no full faith and credit of the United States and the dollar would become worthless on the international exchanges. The full ramifications of such an event are unthinkable which is why there is absolutely no possibility that the fight to raise the debt ceiling will go any further than just before the next debt payment comes due. October should be a good month for those journalists who have their degrees in economics. I know I for one will be following Thomas Sowell very closely.

 

Beyond the Cusp

 

Blog at WordPress.com.