Posts tagged budget control act
Posts tagged budget control act
So the debt ceiling was raised and we’ve avoided what Obama warned would be “economic Armageddon.” Phew. That was close. Now we can dig ourselves further into the hole that brought us here to begin with, and not deal with this again until 2013.
If there’s anything that’s more of a sham than the “economic recovery” we are experiencing, it’s the debt ceiling bill that was passed. Let me be clear: The Budget Control Act does not contain ANY spending cuts. Instead, the federal government will only be spending less than they had originally planned. The “cuts” are not from our current spending amounts, but our projected spending increases. Any cuts are illusory. This is their definition of a cut. The Cato Institute confirms this, saying:
“The budget deal doesn’t cut federal spending at all. The ‘cuts’ in the deal are only cuts from the Congressional Budget Office’s ‘baseline,’ which is a Washington construct of ever-rising spending…The federal government will still run a deficit of $1 trillion next year. This deal will ‘cut’ the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.”
Analysts are also speaking out and confirming that the deal will have little economic impact.
“The so-called ‘immediate’ spending cuts of $917 billion do of course not begin this year. And they barely have an impact in 2012 or 2013 either.”
“In a $15 trillion economy, the impact… is negligible.”
“It will save the US government from defaulting on its obligations to pensioners and others. But it does not address the long-term fiscal challenges facing the nation.”
This hasn’t stopped Defense Secretary Leon Panetta from whining about the spending “cuts” for the military, when in reality it has been shown that the Pentagon will really be receiving $50 billion more than what they had been expecting over the next decade.
The deal only serves to preserve the status quo and allow the government to continue accruing massive deficits and debt. Even before the debt ceiling was raised, the Treasury announced it would issue $331 billion in debt this quarter, a 75% increase from the $190 billion of the previous quarter. And that’s exactly what is already happening. In just one day on Tuesday, the Treasury issued $238 billion in debt, 68% of the $400 billion that the debt ceiling was raised by. This took the federal debt to $14.58 trillion. Being that our GDP for 2010 was $14.53 trillion, this means our debt-to-GDP ratio is now 100%. Our debt has exceeded the size of our entire economy. Reaching the 100% mark is not something to be taken lightly by any means, but it seems that’s what the mainstream corporate media is doing. And now the Treasury has announced it will be borrowing an additional $72 billion shortly.
As if all this isn’t bad enough, the debt ceiling bill has authorized the creation of a so-called “super Congress” — essentially a third house of Congress consisting of twelve Congressmen, that will look for areas to make spending or tax reforms. It then will submit their proposals to the real Congress for a vote. But the proposals will be “fast-tracked” and Congress will have no ability to amend or filibuster them. They may only vote yes or no, and if the proposals are rejected, automatic spending cuts kick in. The creation of this third house of Congress is unconstitutional, undemocratic, and dictatorial. Senator Harry Reid has openly admitted its authority could extend beyond just debt proposals, and may act to put other garbage into law:
“The joint committee — there are no constraints. They can look at any program we have in government, any program. It has the ability to look at everything.”
This “super Congress” will ensure that important decisions on spending, taxes, and entitlements are kept out of the hands of Congress, and in the hands of the carefully selected leadership.
The economic collapse is going along smoothly. The real estate bubble is still deflating with no bottom in sight, and property values fell 4.5% from a year ago. Banks are now simply bulldozing foreclosed homes rather than attempt to sell them. Both China and Russia are criticizing U.S. debt, and considering a move away from the dollar as a primary reserve currency. Putin says we are “leeching on the world economy.” The manufacturing and service sectors are both slowing. The Dow Jones Industrial Average just lost 507 points in one day. Gold is hitting all-time highs, meaning the dollar is becoming even more worthless. Major credit rating agencies are warning they might downgrade their rating of U.S. debt, which would mean borrowing would be much more costly. Real unemployment is above 22%. Real inflation is at 27%, with another round of quantitative easing money-printing from the Federal Reserve becoming more possible every day. GDP growth for the first half of the year was less than 1%, and only 0.4% for the first quarter.
Even the New York Times is having to admit that a double-dip recession “may be happening.” Yeah, no shit. The recession never ended, we’re in a depression. And every indicator promises it will only get worse.