I have spent much time trying to understand the financial situation of our nation, but I admit I find it very confusing. I do not know if it is in the best interest of our nation to raise the debt limit or not, but I expect that it is not. I don't know how to bring the governmental spending under control, but I can plainly see that it is necessary. I don't know how to solve the problem of taking care of our elderly, sick, and incapacitated citizens, but I believe that our current entitlement programs must be changed in order that our nation can remain free.
The battle between conservatives in the House of Representatives and liberals/progressives in the Senate and the White House continues day after day. The previous Congress failed to make a budget for FY2011 - one of their main duties. The House of Representatives is working hard to get a budget passed, but the Senate and White House refuse to face the reality that our nation is spending more money than we have.
This morning's newspaper featured a report that Standard & Poor (S&P) sent a warning to national leaders. S&P kept the AAA rating on federal government debt but changed its outlook from stable to negative. This change shows that the ratings agency is doubtful about Washington's ability to take the necessary steps to cut spending and pay debt.
According to the article by Kevin Hall at McClatchy Newspapers, S&P analysts noted the following in their credit report: "The negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years." They also commented: "The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012."
Hall called the action by S&P a "surprise." I find this comment naïve because financial analysts have been warning about such a move. Hall explained that the action "raises the prospect that the United States could be deemed less creditworthy, which would raise the cost of borrowing for government, business and taxpayers alike."
The warning from S&P "sent stocks plunging Monday and crystallized the threat that mounting federal budget deficits and national debt pose to the U.S. financial system and the American way of life."
The same newspaper carried an article by Steven Thomma, also of McClatchy Newspapers, about a national McClatchy-Marist poll. Thomma wrote, "Alarmed by rising national debt and increasingly downbeat about their country's course, Americans are clear about how they want to attack the government's runway budget deficits: raise taxes on the wealthy and keep hands off of Medicare and Medicaid.
"At the same time, they say that the government should not raise the legal debt ceiling, which the government must do soon to borrow more money, despite warnings that failing to do so would force the government into default, credit markets into turmoil and the economy into a tailspin."
The American public seems to be as confused as our leaders. I saw last night a chart showing that 97.30 of federal income taxes are paid by the top 50 percent of taxpayers. In fact, the bottom 50 percent of taxpayers pay only 2.7 percent of the total income taxes. Approximately, 45 percent of workers with income do not pay any income taxes after deductions and some end up receiving more money back from the feds than they actually paid. Many of these same people think that the rich should be paying more taxes plus the social security (FICA) benefits of the poorer workers.
Americans would probably understand the situation much better if Congress, the White House, and the media would give us the truth. This morning I received a letter from The Foundry, published by The Heritage Foundation, signed by Bill Beach, the director of the Center for Data Analysis. The letter is "An Open Letter to Paul Krugman," and it is very direct.
Beach wrote, "Over the past two weeks, you have relentlessly engaged in dishonest, deceptive and factually incorrect critiques of Heritage's recent analysis of the Ryan budget plan, and they need to be addressed. With all of the work good people of every political stripe need to be doing in Washington today, the last thing we all have time for is correcting your typically contrived commentary. But when The New York Times gives you such a platform to spread distortions, they necessitate a response." Beach then proceeded to list each claim and debunk them. I personally was pleased to have someone step forward and force a liberal to face the real truth. You can see the full letter here . I believe that the folks at Heritage Foundation can be trusted to give us the truth. I encourage you to go to AskHeritage.org and become a member. Heritage is a conservative think tank that helps members of Congress work through the problems of government. I believe that they are worthy of our donations.
The financial situation of this nation is critical and needs to be corrected. I believe that this correction will not take place until Americans - all of us - are willing to "bite the bullet" and face the situation directly. Americans need to become educated about the situation and force our representatives in Congress to do the right thing!
Passive Income MD – Podcast #32
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