It's not today - it's tomorrow!

Monday - August 1, 2011

It’s not today - it’s tomorrow!

The questions facing this country are complex, to say the least. I am not one to say that one party has all the answers, but I am not one to agree that the answers are somewhere in the middle.

The questions today and the deals made today will have an affect on all of our tomorrows. What we are witnessing today is unprecedented. At no other time in our history have we had such a divided government. At no other time have we had a government that has tried to take over every segment of the economy and consequently our lives and do it with such an ideologically based party and president.

I do not blame the current impasse on the Republicans or the Tea Party members of Congress. I blame this impasse on the party that has brought us to where we are today. I blame the president and I blame his party.

The conservatives have the right ideas, but they don’t go far enough. The liberals are lost in their failed premise, because of an ideology that has now been proven to have failed at every level.

The current debt plan coming out of the Senate has minimal cuts the first year and raises the debt ceiling that provides for more future spending. The current plan also calls for large cuts up to 50% in the military. This is a typical liberal thing to do, when the budget needs to be cut. Worse yet, these cuts would be instituted, as a punishment, if a 12 member panel cannot agree on deeper cuts across the board later this year. Our military has been stretched along with all of its resources. The military has been active with a decade of wars. We cannot afford to cut there when we have to add and replace the used up resources now.

Worse yet, the deal that is being agreed to will be voted on in less than 24 hours. This is another no review, no discussion and a big “trust me” bill from your government. The plan calls to raise the debt ceiling by another 2.4 trillion dollars through 2012. The actual cuts only call for 900 billion dollars. This crisis has been brewing for six months only to be agreed to literally at 8:00 pm last night. Are we going to pass the bill only to see what’s in it later on? This is the other $64,000 question that we will have to pay for.

This only demonstrates one thing. The majority of the politicians were not serious about cutting the real costs of government at the beginning of this process. Now that we are at the end of the process, the figures tell the story. It doesn’t do a thing for today or for tomorrow. In this case tomorrow,
August 2, is the deadline for an agreement over this whole debate. At the end of this process, the United States debt might still be down graded even if a default is avoided tomorrow.

I said the liberal premise of big government with big government programs is an ideology that has failed. The liberal premise of big government is now unaffordable. As a result, we have come to a cross road in America. With looming deficits, looming downgrades and the prospect of default with a double dip recession, the prospect of a healthy tomorrow cannot even be talked about in real terms tomorrow when the deadline is reached.

At this point, in the Reagan Presidency, the United States had a 7 % growth rate. The difference between then and today is that Keynesian economics is a model that this administration is following - big deficits, big government spending, and big programs. This approach when tried in a free market has always failed. It failed in the Carter days and it is once again failing today under Obama. Why, because no administration has ever been successful in transforming what America does best. That is practicing free market principals.

It’s easy to be a Monday morning quarterback this morning. So what I am going to say now should set me apart from the other pundits. It should also be a part of the way forward beginning tomorrow even under this current debt deal which does not provide for any sustainable long term solutions.

Our economy lacks certainty. As a result, our debt is now an uncertain investment opportunity. If our economic future is being held hostage by a still looming debt and big spending on failed big government programs the S&P along with Moody’s will downgrade our triple A rating. The triple A rating is enjoyed by only 17 countries in the world today. Tomorrow that may change. This means the prospect of double digit interest rates will become a reality and the interest on student loans will go up. A retracting stock market is most certain and that would cause the nation’s 401K’s, and Keogh plans to retract and it would cause the investments in many of the nation’s IRA plans to go south.

Double digit interest rates would mean that credit would be harder to get and big ticket items such as Car Loans would be on the decrease. This is only what the obvious economic tracking would show. Other underlying economic factors, such as housing starts and manufacturing would be significantly impacted in a negative way. The prospect for long term economic repair might be years away instead of months away.

Tax reform needs to occur with regulatory moratoriums on agencies such as the EPA. In fact all government agencies should have regulatory reforms with moratoriums placed on them now.

Aggressive trade agreements need to be pushed through congress at a lightening fast pace. Import and export duties need to be reformed. Along with lowering taxes for business so that jobs moving offshore come back onto our shore.

The government needs to stop propping up the housing market. Let housing take its natural course and let home values come back to a level that is realistic. Help the home owners who have followed the rules and don’t reward those that haven’t.

Finally, stop the unnecessary assault on business. Entrepreneurship and small business is the productive part of our economy. So why penalize it with more regulation, higher taxes and an environment that doesn’t provide for any expansion policies that are required in a free market economy?

In this whole debate we have lost track of the essential aspects of what makes our economy work. During the Reagan era more jobs were created because more companies were started. This simply provided for more tax payers. If there are more tax payers paying a fair tax then the revenues coming into the Federal coffers grow. If spending is reduced by a few percentage points and capped along with entitlement reform then our economy grows. Confidence comes back and a growth cycle is encouraged by the entrepreneurs that our economy has come to depend on for growth.

The Gross Domestic Product (GDP) which is the value of Goods and services that the United States Produces is not growing. If these reforms were part of the debate today then our GDP would be growing exponentially instead of the 0.4% growth rate in the first quarter and a marginal growth rate of only 1.3% for the second quarter. As I said earlier during the Reagan years our growth rate was 7%. That was due to supply side economics which encouraged investment, entrepreneurship and the lost commodity of confidence not only by the rating agencies but by the investors who invest in ideas and people.

Keynesian Economics and Supply Side Economics cannot work together. The debate today should be over what we want for tomorrow as a nation. The debate today should be over letting the people decide if they want our government to work under the principles of a balanced budget tomorrow. The debate today should include an amendment that the people decide on and not the President, the Senate and the Congress.

Gregory C. Dildilian
Founder and Executive Director
Pinecone Conservatives

A footnote: Today take a step back and consider what you want done tomorrow and then support someone who will act on what you want!