- Recently, the bond rating agencies that gave junk derivatives
triple-A ratings threatened to downgrade US Treasury bonds if the White
House and Congress did not reach a deficit reduction deal and debt ceiling
increase. The downgrade threat is not credible, and neither is the default
threat. Both are make-believe crises that are being hyped in order to force
cutbacks in Medicare, Medicaid, and Social Security.
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- If the rating agencies downgraded Treasuries, the company
executives would be arrested for the fraudulent ratings that they gave
to the junk that Wall Street peddled to the rest of the world. The companies
would be destroyed and their ratings discredited. The US government will
never default on its bonds, because the bonds, unlike those of Greece,
Spain, and Ireland, are payable in its own currency. Regardless of whether
the debt ceiling is raised, the Federal Reserve will continue to purchase
the Treasury's debt. If Goldman Sachs is too big to fail, then so is the
US government.
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- There is no budget focus on the illegal wars and military
occupations that the US government has underway in at least six countries
or the 66-year old US occupations of Japan and Germany and the ring of
military bases being constructed around Russia.
- The total military/security budget is in the vicinity
of $1.1-$1.2 trillion, or 70% -75% of the federal budget deficit.
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- In contrast, Social Security is solvent. Medicare expenditures
are coming close to exceeding the 2.3% payroll tax that funds Medicare,
but it is dishonest for politicians and pundits to blame the US budget
deficit on "entitlement programs."
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- Entitlements are funded with a payroll tax. Wars are
not funded. The criminal Bush regime lied to Americans and claimed that
the Iraq war would only cost $70 billion at the most and would be paid
for with Iraq oil revenues. When Bush's chief economic advisor, Larry Lindsay,
said the Iraq invasion would cost $200 billion, the White House Moron fired
him. In fact, Lindsay was off by a factor of 20. Economic and budget experts
have calculated that the Iraq and Afghanistan wars have consumed $4,000
billion in out-of-pocket and already incurred future costs. In other words,
the ongoing wars and occupations have already eaten up the $4 trillion
by which Obama hopes to cut federal spending over the next ten years. Bomb
now, pay later.
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- As taxing the rich is not part of the political solution,
the focus is on rewarding the insurance companies by privatizing Medicare
at some future date with government subsidized insurance premiums, by capping
Medicaid, and by loading the diminishing middle class with additional Social
Security tax.
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- Washington's priorities and those of its presstitutes
could not be clearer. President Obama, like George W. Bush before him,
both parties in Congress, the print and TV media, and National Public Radio
have made it clear that war is a far more important priority than health
care and old age pensions for Americans.
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- The American people and their wants and needs are not
represented in Washington. Washington serves powerful interest groups,
such as the military/security complex, Wall Street and the banksters, agribusiness,
the oil companies, the insurance companies, pharmaceuticals, and the mining
and timber industries. Washington endows these interests with excess profits
by committing war crimes and terrorizing foreign populations with bombs,
drones, and invasions, by deregulating the financial sector and bailing
it out of its greed-driven mistakes after it has stolen Americans' pensions,
homes, and jobs, by refusing to protect the land, air, water, oceans and
wildlife from polluters and despoilers, and by constructing a health care
system with the highest costs and highest profits in the world.
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- The way to reduce health care costs is to take out gobs
of costs and profits with a single payer system. A private health care
system can continue to operate alongside for those who can afford it.
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- The way to get the budget under control is to stop the
gratuitous hegemonic wars, wars that will end in a nuclear confrontation.
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- The US economy is in a deepening recession from which
recovery is not possible, because American middle class jobs in manufacturing
and professional services have been offshored and given to foreigners.
US GDP, consumer purchasing power, and tax base have been handed over to
China, India, and Indonesia in order that Wall Street, shareholders, and
corporate CEOs can earn more.
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- When the goods and services produced offshore come back
into America, they arrive as imports. The trade balance worsens, the US
dollar declines further in exchange value, and prices rise for Americans,
whose incomes are stagnant or falling.
-
- This is economic destruction. It always occurs when an
oligarchy seizes control of a government. The short-run profits of the
powerful are maximized at the expense of the viability of the economy.
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- The US economy is driven by consumer demand, but with
22.3% unemployment, stagnant and declining wages and salaries, and consumer
debt burdens so high that consumers cannot borrow to spend, there is nothing
to drive the economy.
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- Washington's response to this dilemma is to increase
the austerity! Cutting back Medicare, Medicaid, and Social Security, forcing
down wages by destroying unions and offshoring jobs (which results in a
labor surplus and lower wages), and driving up the prices of food and energy
by depreciating the dollar further erodes consumer purchasing power. The
Federal Reserve can print money to rescue the crooked financial institutions,
but it cannot rescue the American consumer.
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- As a final point, confront the fact that you are even
lied to about "deficit reduction." Even if Obama gets his $4
trillion "deficit reduction" over the next decade, it does not
mean that the current national debt will be $4 trillion less than it currently
is. The "reduction" merely means that the growth in the national
debt will be $4 trillion less than otherwise. Regardless of any "deficit
reduction," the national debt ten years from now will be much higher
than it presently is.
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- Dr. Roberts was Assistant Secretary of the US Treasury,
Associate Editor of the Wall Street Journal, and professor of economics
in six universities.
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-
- Comment
- Dick Eastman
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- Mr. Roberts, you say, "The US government will
never default on its bonds, because the bonds, unlike those of Greece,
Spain, and Ireland, are payable in its own currency."
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- My question is - have you forgotten that the Fed owns
the currency we use and they don't like competition from the US treasury
as JFK and Lincoln died discovering?
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