Debt-ceiling talk is nothing but trickery

There has been a lot of talk recently about the nation’s debt ceiling and what to do about it. And most of us have ignored the debate because it seems complicated, confusing and it doesn’t seem to have anything to do with us regular folks.

And as odd as it sounds, it’s actually a good thing that us working folks haven’t drank the Kool-Aid because it’s a simply a trick. It’s a trick designed to encourage us to willingly give away hard-earned entitlements: specifically Medicare, Medicaid and Social Security.

And for those folks who are opposed to entitlements, consider that a civilized state should take care of its aged, its youth and its sick. And despite popular propaganda to the contrary, folks who benefit from these entitlements have already paid in to the system.

Historically, the debt ceiling arose because the U.S. government borrows money to meet its financial obligations. A law was passed by Congress in 1917 to limit the amount of this debt, obviously so that the government wouldn’t get carried away with discretionary spending.

Obviously, the government should seek to reduce some of its debt, but at the same time it needs to continue to borrow and have the ability to borrow. Governments borrow to recover from unforeseen disasters and natural disasters. There has been little call for cutting back on the debt being accrued to fight the wars in Iraq and Afghanistan and the proxy wars in Pakistan, Yemen, Somalia and Libya.

Therefore, a certain amount of debt is necessary. Usually the limit is extended without a lot of hoopla. There has been some controversy in past legislative sessions, but not like this one.

The tall, dark, handsome, eloquent and articulate man who occupies the White House has gone along with the ideas floated by the Republicans that belts need to be tightened. He too has floated proposals in which he contends will result in a “shared sacrifice.” Yeah, right.

But the brown-skinned guy has played along. The Republicans suggested making cuts to the entitlement programs, and the president tossed in a few of his own. Obama has suggested increasing the eligibility age for Medicare from 65 to 67 along with reducing cost-of-living increases to Social Security recipients.

The president did such a good job of proposing cuts on people who work for a living that the Republicans actually accused him of “outflanking” them. And those who think I am exaggerating can simply look up the running debate.

Obama has even gone as far as to say that he “cannot guarantee” that Social Security checks will be mailed out if the August 2 deadline isn’t reached. One can’t help but notice that he didn’t make those kinds of threats to the mega-rich bondholders, nor did he suggest that defense contractors’ checks be held up.

This is all a game of make believe designed to make the public panic and lay down their future government-supported and hard-earned retirement plan without a fight.

The make-believe game is the idea that the Congress is not going to raise the debt ceiling. Of course, they are going to raise the ceiling. The prosecutors, federal employees, contractors, law enforcement, hospitals, educational institutions all depend on monies that have been borrowed. The government won’t shut down. And besides it being disastrous at home, it would be bad for the world market as well.

It would make the current recession look like child’s play.

The folks who hold the bonds know it’s a game. “Don’t mess with the debt ceiling,” said Bill Gross of Pimko, the world’s largest bond fund, because it would instill fear and unnecessary volatility into the economy and global trade.
According to Stanley Druckenmiller, former fund manager for financier George Soros, what the rich and the rich bondholders want most are “steep cuts in social spending now, to ensure their payments are stable and secure over the long haul.”