In my opinion as an Accountant, I would say that a certain amount of debt is acceptable. I’m not too concerned honestly with collateralized debt, which is what this is, realistically with the price of gold tied to the world market, that means if our dollar is in higher circulation and worth less, usually expressed in terms of our dollars, gold is going to be worth more. As long as we are able to retain enough gold to collateralize our debt to the Federal Reserve, the debt is essentially paid for. We could buy this currency with gold instead, but what the Fed really is, even though they are a private bank, they are a quasi-governmental organization…they exist for the purpose of printing our money, and much like other areas of the government which are outsourced, this is no different. But it has worked for many, many years. The debt to the Fed is not ever going to come due unless our entire monetary system collapses, in which case the gold will be taken and sold on the world market, the Fed will be fine, but our government will lose its money printing house, which won’t matter because our money will be worthless.
The debt I’m worried about is the foreign debt. Essentially, we sell T-Bills to China, and if China ever stops buying these T-Bills, we’re screwed…something they will do if our level of debt with them and other foreign entities gets too high. Right now, the government is in the same situation as most Americans…as long as it keeps making its minimum payments, it’s fine, BUT if they’re ever called upon to make good on one of their debts in full, or if they run out of credit, they’re screwed, and as such, we’re screwed. The big problem is, if we have a system of continually increasing unemployment rates, and people become so disenfranchised they follow a false prophet, that’s going to tip the whole house of cards in the perspective of foreign governments and it all comes crashing down.
Just like any house of cards, if you want to take it apart piece by piece rather than see it all collapse in a big heap, you have to be VERY careful. And that means that the government needs to begin serving the needs of individuals and no longer the needs of corporations. Consider FISA….the Democrats were in the majority in Congress, yet they gave the telephone companies what they wanted…carte blanche to spy on Americans, because they had $15 million to throw into lobbying efforts. And look at health care reform…private insurance companies and the pharmaceutical industry are spending $14 million a DAY to block reform that would serve the people and not the businesses.
I think one of the first steps needs to be election reforms, something along the lines of Instant Runoff Voting, combined with a publicly financed election system. Yes, it would cost more money in the short term, but if the people could break the back of the two party system, now that not only the Republicans but a growing number of Democrats are in the pockets of special interests, we could actually get back to a Representative Democracy where the people we hire to represent US, actually DO represent us.
Another VERY important step is to stop acting as the world’s police force. We spend over 700 billion a year on military defense (which failed the one time we actually needed it to protect us against a hostile attack), the next largest amount spent by any country on the planet is China which spends less than 60 billion. There is no NEED for this much money pissed away…you bring our military spending in line with other countries and you have our national debt paid off in a couple decades, then the collateralized debt to the Fed is all we have.
Furthermore, so much of our military spending is used to prop up private businesses like Halliburton. We need to stop the waste. We spent for example $100 million to retrofit a fleet of battle ships to make them each 10 feet longer, when they were done, the company essentially destroyed them, they were no longer seaworthy because of structural instability and needed to be retired. So the original cost of the ships plus $100 million we spent on them was just thrown away, we didn’t even request accountability from the company which received the no bid contract. Our government doesn’t look for value for its money, it doesn’t ask for accountability for anything, it needs to negotiate (instead of say refusing to let Medicare negotiate drug costs with big Pharma like Canada does to achieve a 40% savings). The government has all this leverage it is not using, and we need to insist upon getting value for every dollar we spend.
But of course, that’s a vicious cycle because as soon as we do that, the companies that make all this money off our government’s blind eye will spend whatever it takes to stay on the gravy train, which is why we need publicly financed elections and IRV. Essentially we need to end corporate welfare. Our government gives so much in tax breaks, tax incentives and no bid contracts to businesses which don’t do ANYTHING to look out for the common good, but which are only betrothed to the shareholders, bound to make the maximum profit by any means necessary, that we could probably wipe out our national debt in just a couple years if we were to end these practices.
Now I believe in Capitalism, but unfettered Capitalism with no regulations, which is pumped up by government expenditures is NOT a good thing…it is what has gotten us to where we are, and it’s going to destroy us if we don’t do anything about it. But we give this money to the corporations which can survive just fine without it (they just wouldn’t be able to pay 8 figure compensation packages to their CEOs), instead of using it to serve the public good. Instead of taking a trillion dollars and doing something to help the millions of people who lost their homes, their retirement savings, etc., we gave it to the people who caused the problems in the first place so they could pay 8, sometimes 9 figure payouts to their CEOs who were more responsible for the problems than anyone, when they’re on their way out the door and of no more use to the company. If a trillion dollars were instead invested to keep people in their homes and in their jobs, we would recoup this through increased tax revenues.
Now re taxes, you can’t compare the first 137 years of our government to today, nor were those days exactly the halcyon good old days for the common man who worked a lot harder for a lot more hours, had a far lower standard of living and died at a much younger age. Our government is supposed to be of by and for the people, but we only seem to have been able to achieve that between FDR and LBJ, a time when tax collections on the highest earners were MUCH higher than they are now, a time when our social safety net was strong, a time when poverty was a rarity (it’s estimated that 50 million Americans go hungry, and that 16 million of those live in what is considered poverty), and when our wages were the envy of the world. This was a time when we manufactured the things we need. In Minnesota alone, our transportation budgetary needs over the next 20 years will outstrip our budget by 50 billion dollars. We have crumbling roads and mass transit efforts are grossly underfunded. A good contrast, when the NYC subway system took bids to build something like 80 new cars, they did not receive a single bid from a US company. We had to send that money overseas to build something for Americans. Yet, China opens a new subway line every single year with cars built right there in China.
What needs to happen is this. We need to spend money to repair our schools (⅓ of which are in so bad a state of disrepair that it interferes with learning), we need to spend money to give a hand up to people who don’t have enough…by raising the minimum wage to above poverty level, by adjusting the tax rates so they are borne by the people and companies which can afford to pay them, and by giving those who are trying but falling through the cracks a hand up. We could do ALL of this and more if we ended corporate welfare and spent just what we need for national defense (rather than have active military bases in 77 countries).
Basically, we can’t keep giving money away to the corporations. A corporate CEO who tried to run a company while paying its employees a fair wage, obeying all environmental laws, paying its due share of taxes and basically being a responsible corporate citizen, could be JAILED by its Board of Directors for not doing what corporations are bound by LAW to do…return maximum value to the shareholder. Since a corporation is a fictitious person, it is given all the rights of a person, but lacking a body and soul, it is not subject to the same type of criminal liability that a person would be. This means that if there is a choice between doing the right thing and losing money, and doing the wrong thing and making money, even if the wrong thing breaks the law, the CEO would be in more danger of going to jail if he did the right thing than the wrong thing.
So, we need to require a results based pay structure for our CEOs. And we need to collect taxes from the right people. If we’d stop allowing companies (like Haliburton which for all the billions in no bid contracts it gets from the government) to avoid tax liability by setting up companies in countries with no tax, if we’d stop taxing things like capital gains (where most of the money made in this country is made, despite no actual work being done to earn it) at 15%, the same rate you pay if you make 30 grand a year (and work 80 hours a week to do it), if we’d institute a tax system which essentially said that first we’re going to collect what we need, instead of looking at the revenue side FIRST, and setting a tax rate that didn’t kick in until after a person made so much money, then was just progressive enough after that to offset the effect of all the regressive taxes we pay now, ensuring that everyone (including corporations which are after all fictitious people) pays the same percentage of overall tax on their discretionary income, whatever that rate might need to be in order to do all the things our government SHOULD do FOR the people, eventually we would be flush with cash.
As we put people to work, and raised up their standard of living, more people would have more money to buy more goods and services, which they would do. This would spur demand which would spur a need for greater supply, which would spur job creation. Which would put more people to work. They would pay more taxes and buy more things, creating more jobs and so on. IF we invested in our people, instead of in our corporations, we’d have everything we needed to get out of debt forever, no one would have to live in poverty and we’d kick ourselves for not doing it sooner.
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