Tuesday, September 15, 2009

Observations about our Congress

Our legislators in Washington are trying very hard to pull the wool over the eyes of the American public. They are claiming that the healthcare bill is all but a proven accomplishment. This act of fiscal irresponsibility will destroy the economy because of the taxation that will flow from it.

If you believe in tooth fairies and Santa Claus you'll buy into the financial gibberish emanating from Washington, the reality is much different.

The current Social Security plan will go cash flow negative in 2013, for those who don't understand financial terms this means that the taxes coming in are less than the money paid out. At this time the SS administration will have to cash in the Government bonds that Congress so generously substituted for the trust funds they spent. Now US bonds are backed not by cash but by the credit and good offices of the American people, this is not money. Therefore, the only recourse open is to increase taxes to provide the money or cut spending, which do you think will happen?

Now add to this scene another grandstanding spending event called the 'Healthcare Plan" which is going to spend by congress's estimate another $880 Billion over ten years. Now we all know that congress can't count two beans in a row when it comes to money, so this is a low-ball estimate.

When you add just these two spending bills together, a picture arises of deficit spending on a grand scale. The money to pay for this has to come out of the GNP and therefore there will be less capital available to grow our economy and financial stagnation will happen at best.

Add to this the fact that the Chinese, who hold hundreds of Billions of US debt, are getting wary of carrying too much of our promissory paper and will start dumping bonds or calling them in. Ergo, more demand on the GNP of the US and a further depletion of the very capital that we need to sustain growth.

To put national situation as plainly as possible, we are at the same point, nationally, that the folks who bought houses with zero down payments and inadequate income were a year ago. The nation is in over it's collective head with good intentions and an empty wallet. And, we all know what's going on with the foreclosure marketplace.

Hey folks, I forgot the 800lb gorilla waiting in the wings, add to the above the "Cap and Trade" bill which we all know won't cost only a penny, just Billions and drain more money from the GNP. Oh yes, while we're at it add the "Alternative Energy" financial requirements to the budget. Have I forgotten anything? It doesn't matter, there isn't any money available anyway.

The fiscal irresponsibility being demonstrated by our Congress is akin to the irresponsibility that would be demonstrated by a child in a candy shop. For whatever reason they are launched down this path paved with good intentions and sustained by an economy that can't withstand another severe financial blow. We have spent all our assets and our children's assets and are now spending our grandchildren's assets.


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