America's Reality

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By: Wayne Brown


As you may have heard, Standard & Poors’ took the first step in downgrading the U.S.A’s credit rating from triple A to double A this past week. If you return to the recent debate over the debt ceiling you might recall cautions (I am being nice) which were issued by both the President and members of Congress to say that if we did not meet our debt service obligations on time, this is exactly what would happen and it would not be good for America. Of course, the implication in making such a statement is that if we do what they suggest, everything will be fine. We’ll it looks like that was a bad assumption on our part as taxpayers.


In the dramatic last hours before the debt-ceiling deadline, our leaders came together with a plan which provide enough money to meet the approximate 29 billion dollars in debt interest for 2011. In fact, they went far beyond that point by further handing the President an additional 800 billion dollars in ceiling relief along with the promise of another trillion dollars in relief when he tooled a list of spending cuts in the near future. In effect, what our Congress did was give the President permission to add 2 trillion dollars to the bulging national debt in order to find 29 billion to pay our credit obligations.


Let’s put it into an example which is easier to understand. Let’s say your property taxes are due for the year and amount to $5,000 dollars. You don’t have the money in your current income revenue stream as you are maxed out to the hilt with installment payments. So, you go down to the bank and wrangle yourself another credit card with a $100,000 credit line maximum. Immediately, you take a cash advance for the entire $100,000 dollars. You pay your property tax and then look for things to buy with the remaining $95,000 dollars. Since your property taxes were paid on time, you are looked upon in credit circles as a good risk and your financial future is now much stronger as a result of your actions. Do you get my point?


Standard & Poors’action in terms of the downgrading of America’s credit rating is not a function of the debt service obligation being paid on time. It might have come into play had we not made provisions for the payment but the fact of the matter is that we did. That matters very little in the overall picture because, you see, that payment on debt service is just “one” payment and others will come. The actions taken to secure this particular payment signaled to Standard & Poors that America was on a road which is rapidly growing the national debt burden to a figure which will exceed the gross domestic product of the country. In bank loan terms, our debts will exceed our assets as a country. In financial terms, we will be officially bankrupt. At that point, our flexibility to regain control of our finances and meet our debt service obligations will be rather weak. In turn, the economic factors induced by such a financial position will hinder and reduce the revenue streams coming into the government and further undermine its ability to pay. The only avenue at that point will be runaway taxation of the working public…if indeed there are any jobs left at that point to tax.


In this recent debate, our illustrious leadership in the White House and in Congress had an obligation to guard the well-being of America long-term. Instead, the President held out like a child for the money that he wanted to spend. The left side of the aisle did his bidding and held the party line for the most part under the heavy hand of Harry Reid. The right, well, they got duped and traded away our future financial position for some pretty beads which reflect the sunlight so beautifully. Oh, they will tell you that they only gave the President the increase when he caved in on spending cuts but look closely at the cuts that were achieved. There was almost nothing that was of immediate consequence. There was no spending freeze instituted. In fact, there was an immediate approval to increase debt. Long term, there is only the promise to “reduce the rate” at which debt is growing which would insinuate reduced spending but who is the guardian of that treasure chest?


Standard & Poors is not alone in this modification or downgrade of credit standing. Others will follow and America’s financial position will eventually affect the global economic welfare. This single step is the beginning of our inability to borrow effectively. America only has two real revenue streams…taxation and borrowing. If you cannot borrow, then you must tax and that is what the Obama legacy seems to be. He has finally lead America down the blind alley where taxing the workers is the only option and he likes it.


Our dollar will slide downward in value and inflation will rise at a faster and faster rate. Businesses, already strapped for survival, will have no choice but to raise prices in an effort to survive the inflation caused by the shrinking dollar and the intense burden of new government regulations. Investment and growth in the American economy will come to a standstill causing the job market to shrink on a larger scale. The upside for some will be that some of those “mean old corporations” will cease to exist. No longer will they be parasites on the back of the American taxpayer. The scenario paints a worsening of what is already a bad situation in America and we have our leadership in Washington to thank for all of it.


America still has more than a year left before it can take any real action to right the ship of state. The 2012 elections will be the first opportunity for Americans to use their voting power to end the nightmare that we are in and bring some effective leadership to Washington willing to shrink big government and all that goes with it. At that point and time, when the financial markets see that action, we will likely see our credit rating increased to the position it should be. Should we fail to act responsibly as voters and continue the status quo, it is difficult to imagine how deeply troubled America’s future will be and whether or not it can continue as we have known it.


With the recent debt ceiling moves, Obama is in position, with approval for continued spending, to increase the national debt by 9 trillion dollars by the end of his first term in office. In that four year period, he, along with the help of a liberal Congress, will have almost doubled America’s debt load. What we will have seen in this four year term can only get worse if he should win the re-election. His re-election will be looked upon by his administration as a “mandate” from the people and the out-of-control spending will continue on a scale never before seen until we are so buried in debt as a country that our dollar is not worth a plug nickel. At that point in time, the American public will be “humbled” and “accepting of any alternative” offered by the government and that ladies and gentlemen is exactly where this President has been taking you and I and this country since the time he put his hand up and took the oath of office. His agenda has not wavered and the outcome is certain as long as we allow him to hold the office.


There are those among our citizens who look at things with their heart; who cry for the poor and the down-trodden; who believe that most Americans do not care as much as they do. They also believe that there is a magic associated with America and that it is indestructible. They believe America will always be strong and always survive every situation but mostly they believe that too much is never enough and that living beyond your means is fine if your intentions are good. These are the people who will be the most surprised when America does stumble financially. These will be the people who cry out and want someone to take the blame. These will be the people who, up to that disastrous point, will have been blinded by their good intentions and fairy tale thinking regarding America and those who currently lead it.


Certainly one can write letters to Congress and the President and express their disappointments but I caution you that your words are falling on deaf ears. The President and the old guard of Congress populating both sides of the aisle all want the same thing…continue the status quo. Continue on the road to financial ruin. At present, they are thumbing their nose at the American voter. A recent poll suggests that up to 75% of Americans are unhappy with the way recent business has been handled in this country. Do you think the President and Congress aren’t aware of those numbers? Do you think they really care? Do you see the thumbs now?


The elections of November 2012 will be among the most historic or devastating in the history of this country. America will truly decide its fate as nation at that point. Time is running short and the debt is continuing to pile up at an alarming rate. Our leadership has done little of nothing to repair that situation other than to give it lip service in the political arena. 2012 will be the time that the last bastion of American hope takes the reins and acts in a manner to save our country. 2012 will be the election in which Americans will speak the loudest they ever have in history and hopefully the outcome will favor our future as a great country.


 

© Copyright WBrown2011. All Rights Reserved.

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Comments 18 comments

Jed Fisher profile image

Jed Fisher 5 years ago from Oklahoma

Here's a thought. America provides federal government services (Law enforcement, military security, disaster relief, etc.) to the entire world but only collects taxes from Americans. That can't be fair.


Old Poolman profile image

Old Poolman 5 years ago from Rural Arizona

Wayne - The only good thing is that this first and only downgrade came to us during Obama's watch. This may be enough to wake up a few people, certainly after they themselves feel the pain this downgrade will cause every citizen of this country.

My hope and dream is that a real leader will step forward and take the reins to guide this country back to the once powerful nation we once were. I could care less what party this leader is tied to, we need a strong leader, not a professional politician.


FitnezzJim profile image

FitnezzJim 5 years ago from Fredericksburg, Virginia

I'm feeling like a broken record making the same comment on all the Hubs on this Downgrade. How does the 'Two Trillion Dollar' mistake affect S&P's decision to downgrade? Is this market manipulation (or crisis creation) at its worst?


Old Poolman profile image

Old Poolman 5 years ago from Rural Arizona

FitnezzJim, I suspect all is not quite right about this downgrade. There is something going on we are not aware of at this time. Perhaps a plan to let Obama be a hero and restore our AAA rating just about election time?


drbj profile image

drbj 5 years ago from south Florida

Wayne - That photo says it all. More and more every day in every way, I am feeling like that is exactly how our lawmakers feel about this country's citizens.

For 2012, let our motto be: "Ring out the old and bring in the new!" In the time it takes for the new blood to be corrupted, perhaps we can turn things around.


sam3m profile image

sam3m 5 years ago from New York

wayne,

nice work, well written with some great points.

i do have a few comments/questions.

other 1st world countries don't have debt ceilings, they just pay their bills. was all this crisis necessary?

my understanding of the debt ceiling is that it is the amount that we owe right now for goods and services already used/received, not what we will spend in the future, or is that incorrect?

the high taxes you associate with obama-approximately half of the stimulus package was tax relief for the middle class, and we are being taxed less now than any time since the eisenhower administration. which high taxes do you refer to?

it seems that in order to satisfy you, the simplest solution would be to eliminate the poor, sick and disabled since they require huge amounts of money to maintain. if we were a business, we would simply fire or outsource them. cutting off funds to these groups-how do we, in conscience, do that? and from a practical sense, if they had no services, many would be crowding the ER's, an extremely expensive mode of treatment, and paid for by us. many would resort to crime. many would die, etc. you see where this is going.

i'm absolutely amazed that obama, in less than 3 years, has brought us to this point in our history.


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@FitnezzJim...It's all about the ability to pay and pay in the future. Read my comments below to Sam3m and I think that will help you to understand. WB

@drbj..the photo certainly does Doc...we are in some deep waters and our leadership wants to ignore it. WB


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@Jed Fisher...It certainly would not hurt if we sent them a bill for services...I doubt they will be rescuing us anytime in the future but one never knows these days.

@Old Poolman...If we are ever going to turn things in the other direction more in Washington than Obama will have to leave...they old guard on both sides of the aisle is killing us, Mike. WB


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@sam3m...You are correct, Sam. Many countries do not have an established debt ceiling and they continue to survive. My guess is they also do not have the "social debt" loading of America nor are they attempting to be the "police force of the world". Our debt ceiling by law established the maximum amount of debt that we can have or as you say the amount of money already borrowed for things...it is borrowed money that makes up the figures that drive the ceiling. Right now, our national debt is just under 15 trillion dollars. Up until last Tuesday that was also our debt limit or ceiling. Congress handed Obama another 900 billion in immediately borrowing power and the indication that and 1+ trillion would be forthcoming once some spending cuts were identified...nothing of signifcance mind you. America has two ways to borrow for the most part. We make our treasury bills available to private investors who invest pension funds, etc. into these with a guaranteed return. These are considered "safe" investments with only moderate returns at maturity. We can also "auction" debt on the global market to other countries willing to take a chance on us. Here again, with a AAA+ credit rating, the lenders (other countries, investors) conclude that the US is a good and safe investment. As the credit rating is downgraded, it is an indication to other countries and investors that there is greater risk associated with the USA's debt and with not only our ability to pay but possibly our desire to pay. This causes those parties to demand a higher return on their loans thus we have a higher debt service in money paid out on an annual basis. This contributes to our deficit and puts pressure on the system to raise taxes. Keep in mind, our debt service for 2011 was only 29 billion dollars, a figure we could have raised by adjusting our discretionary spending which in 2010 almost matched the 660 billion dollar defense budget dollar for dollar. This money that the government "elects" to spend on earmarks, pork barrels, etc...It is elective in the beginning but out of it comes some contracts and obligations once it is started. Still, 29 billion is less than 5% of the discreationary spending and could have been found had the President and Congress been oriented to really reducing the spending and the debt. Now, here is where the real problem comes in. In years past, though we are required by law to meet our debt obligations, in years past we were much better positioned to not only pay those obligations but to want to pay them. In recent years, especially under Obama, our national debt has grown in leaps and bounds with a projected reach of near 20 billion by the time Obama's first term ends. In four years, he will have doubled the national debt. At that point the national debt either equals or exceeds our annual gross national product...essential our assets which stands around 17 billion at present. When that happens, we may not be able to borrow any longer as the credit ratings will be further downgraded to reflect the fact that not only do we have a limited ability to pay, we may also not have the desire to pay...in other words, for lack of money, we default. You can't get blood out of a turnip and the fact that we have to pay has little meaning if there is no money. We can certainly print a bunch of it but eventually it will be worthless. At the same time, other countries will suffer and the average American who has elected to invest his retirement funds may lose everything. We are on a road that leads to a bad place and spending is taking us there. We have the opportunity to turn around and head in the other direction but it will require austerity on the part of the government and some tough decisions which will have to remain in place until the national debt is reduced by half or more. We can no longer grow our economy at a rate that will keep GDP ahead of debt...those days are over even in the best of times in America. George Soros knows that the only way to bring America to its knees is to do it financially and he has his #1 puppetmaster is office working hard at it every day. We, as Americans, cannot afford to sit and watch things continue in this direction. WB


sam3m profile image

sam3m 5 years ago from New York

wayne,

a couple of points.

1. most other 1st world countries offer their citizens far more than we do, pensions, mandatory vacations, health care and education. of course, some countries, greece, portugal, ireland have over extended themselves.

they can do this, i think because we have taken over the security of the world, a business we should get out of.

2. what is the point of bringing america to its knees? whether it's right or left wing, the moneyed people lose the opportunity to continue to make the huge profits they're making now.


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@sam3m...There are not really very many of them especially when you eliminate the ones you list. Japan is certainly up there but not for reasons for military might but ever so much for their efficiency and productivity as a people. European countries like Great Britian and France are in many ways caught up in a time of post WWII with little progress since then. Both are dominated by European workers unions who dictate 35 hour work weeks and long holidays...productivity is marginal. No doubt, there is not a country in the world with the standard of living for the largest cross-section of their public that exceeds the USA.

I agree that we need to get out of the business of securing the world. Many countries have had the luxury of literally ignoring their military strength simply by assuming the USA will come to the rescue. On his departure from the White House, Dwight Eisenhower warned that the American military-industrial complex could easily become a dangerous liasion for America. The bonds built between industry and the military during the course of WWII, the ties with security agencies such as the NSA and the CIA, and the growing threat offered by the Cold War with the Soviet Union all were factors in growing the presence of this bond. Over the years since Eisenhower that relationship has grown and both sides of the relationship have benefited with tremendous gains military weapondry and devices along with secure growth for the industry. All of that happened at the expense of the American taxpayer. That's not to say it was all bad but possibly out of control and step with the rest of the world. As the Soviet Union fell by the wayside, there had to be other factors to keep the drive going. Those have become the "mad-men" of present day Iraq, Iran, North Korea, and of course the on going feud between India and Pakistan. The fears of terrorism such as 9-11 go a long way to stir that pot and also fire the beliefs of many conspiracy thinkes that 9-11 was self-induced.

No sane American would want to bring America to its knees. In that sense, the "normal" liberals and conservatives want basically the same things, we just differ in our approach to getting them. To the far, far left there are those such as Soros who are about as whacked out as something from a Batman comic and really believe they can control and manipulate the world. At present, Soros has shown his ability to do that in many countries by manipulating the World Bank, the IMF, and arms of the United Nations. The regulatory agencies of the USA in terms of finance, banking, etc. stand in his way although most of his wealth came from operating marginally legal offshore hedge funds in the US market. Soros sold his own people out to the Nazis to save his neck. He funds a number of think tanks and organizations with a primary focus toward eliminating traditional American things. He despises the evils of capitalism and wants to see the number 1 symbol of it, the USA, brought down. Obama holds no real emotion toward democracy and the traditions of American. He has shown that over and over by refusing to place his hand over his heart for Flag ceremonies, by not returning salutes offered to the Commander-in-Chief by members of the militry that he commands, by shunning tradition ceremonies which recognized the sacrifice that so many have made for our freedoms, by trashing the Constitution and referring to it as a antiquated document outdated by our times. His spending is totally wreckless and out of control. His economic beliefs and theory are based on a system espoused by a socialist...a theory proven to fail over and over throughout the world. His desire to move the healthcare industry to government control is just the first industry and the first step in that direction. The people's ability to choose is superceded they government's desire to "provide". If, indeed, he is a Magna Cum Laude graduate of Harvard Law, he is either naive, blind, or both. Just yesterday, the White House was attempting to lay this downgrade of credit rating at the feet of the Tea Party when officials of Standard & Poors were out on the talk circuit making it quite clear that the downgrade came in the light that America had no clear cut plan to reduce spending and to reduce the national debt. To attempt to "spin" this explanation and continue to spend, spend, spend defies the rationale of all logical people on either side of the aisle. WB


LuxmiH profile image

LuxmiH 5 years ago from Fort Pierce, Florida

Keep up the great work. I appreciate your Hubs.


sam3m profile image

sam3m 5 years ago from New York

wayne,

hard to believe all that soros is guilty of. what is your take on the koch brothers?


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@LuxmiH...Thanks much for those good words...I'll sure try! WB

@sam3m...Soros is quite transparent is many ways...possibly he is somewhat stupid in that regard. To be honest with you, I do not know that much about the Koch Brothers. I have read some wranglings of those who feel that their efforts to get the EPA out of their business is to be considered "subversive"...I think it is the nature of most business people who have invested their time and money to want the government off their back or to at least adopt some position of realistic to business. I will do some reading on the subject and maybe offer up a hub on it from my perspective. Certainly, I think we need to say that if the Koch Brothers are dirty with regard to their energy business, we have to look at what Soros is doing with the coal industry in America for his own gain so that he can eventually control the sell of coal to China...who will need it much more than we will. For all Soros is as a socialist who hates capitalism, he does not mind employing the principles of it when it comes to making a buck. I will try to get back with you on the Koch perspective. Thanks much, Sam. WB


Terri Meredith profile image

Terri Meredith 5 years ago from Pennsylvania

Wayne, Kudos to you for pointing the finger at BOTH sides of the aisle! I get sooooo tired of hearing and reading about the Democrats or the Republicans doing this or that... Bottom line is that we have crooks in office and they come from both parties. These self-serving creeps pushing their personal agendas on the American people just make my blood boil. I rarely allow myself to get worked up over political dogma, but things have gotten so out of control, and American liberties have become so threatened, that I sometimes find myself wishing for drastic events to put an end to their reign. Great hub, thoroughly enjoy your perspectives and informative explanations.


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@Terri Meredith...Thank you. We all know that power corrupts and Washington has many examples of it. Collectively, the bad who have served there over the decades have done more damage to us in the long run than good. Now we pay for their sins. This is exactly why I cannot understand people who blindly hold on to a political party only for the reason that their parents were of that orientation and their parents before them. There is no correlation between the Democrats of 1950 and the current bunch today except there were crooks in both crowds. In terms of philosphies...it's just not there. We need to wake up and think for ourselves...that is the only way America gets any better. WB


LuxmiH profile image

LuxmiH 5 years ago from Fort Pierce, Florida

FYI I posted this Hub on my FB Page.


Wayne Brown profile image

Wayne Brown 5 years ago from Texas Author

@LuxmiH...Enjoy! and thanks for the exposure! WB

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