The headline from philly.com boldly proclaimed, "Christie pegs New Jersey's Sandy damage at $29.4 billion." The article went on to explain:
"Gov. Christie estimates that Sandy cost New Jersey $29.4 billion in damage and economic losses, from washed-out roadways and waterlogged homes to manning storm shelters.
"This preliminary number is based on the best available data, field observations, and geographical mapping," Christie said in a statement released Friday evening. "I will spare no effort and waste no time to rebuild and restore our tourism industry, our transportation and utilities infrastructure, and the lives of our citizens for the long term."
$29.4 billion is a supertanker load of money, especially when we consider the amount of damage Sandy caused in the space of just a couple of days. But fear not, Governor, that much money is just a drop in a fifty-five gallon drum when it comes to Federal spending.
Let's look at the rampaging increases in our national debt since the election, according to the US Treasury. On November 14th, 2012 our national debt was $16.244 trillion. Twenty-four hours later the national debt stood at $16.278 trillion. This increase of over $34 billion dollars in a single day could easily pay for the rebuilding of thousands of houses, plus billions more for transportation, electrical and water infrastructure mitigation for the entire state of New Jersey.
New Jersey, New York, Pennsylvania, Delaware, Virginia, Maryland are hungrily anticipating having all their "Sandy costs" reimbursed for less than weeks' worth of Federal borrowing. No doubt these state's congressional delegations are itching to get paws on all this "free" money. After all the current Administration's unspoken policy assumes our children and grandchildren will inherit this mountain range of debt. Why else would the US Treasury borrow $34 billion dollars a in a single day unless they never actually planned to pay it back?
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The article caught my attention because it helps to put into perspective what we are up against as a nation. It would be naive to assert we got here solely because of Barack Obama. The reason there was such a steady drumbeat about the fact that it was all GWB's fault is because that line tested so well among focus groups. Americans in the majority actually believe the financial condition of this nation is the fault of the previous administration. Even that is simplistic.
We got here over the course of almost a century of slowly boiling in our own juices. As the water temperature has slowly climbed we are now at the point of peril - socialism has fouled the pistons of the engine of free enterprise, and all that remains is determining whether or not we can clear the mechanisms to once again be profitable.
Economists are still divided. "The dark science" of economics instructs some practitioners that the traditional Keynesian response - borrow to create stimulus - is still working and must be employed again and again until the economy jump starts. We are borrowing 40 cents of every dollar the federal government is spending. Does that sound like a taxation problem or a spending problem to you? Others worry that the growth potential of the GDP may never again rise above 1.5 percent annually, where historically it has averaged 4 percent growth per year. All our problems go away if the growth engine gets revved up again and we grow our way out of debt. Every year that goes by now sees just the opposite result. Instead of a proven winner at the throttles, Mitt Romney, we settled for a rank amateur with absolutely no economic track record except his last four years. God help us all with that choice, because we will need all the help we can get.
The idea that politicians may actually be thinking to themselves that there will never be a day of reckoning on the national debt, that we will never have to pay back the national debt now held by our own Treasury, is the only logical conclusion one can draw from their dithering and lack of willingness to address the obvious issues before us as a nation. Instead of curbing spending they are poised once again to do what Congress always does best when they get in a bind - increase taxes, and not just by closing loopholes for deductions. Now they are discussing increasing tax rates on the wealthy, defined as those making more than $250,000 per year.
I have had discussions with those who supported Barack Obama. Stupidly, they will tell me, "A tax increase on the wealthy doesn't really affect me, so what's the big deal?" What they are not being told is a whopping tax increase is coming their way too. The truth is THAT tax increase has already arrived - I call it the "economy tax" in the form of inflation. It's the cruelest tax of all, but it is felt most acutely by those who are struggling the most in this economy. A liberal friend of mine tried to convince me there was no inflation except on things like gasoline and food, where he had noticed an increase in prices but asserted, "Other than those two areas there doesn't seem to be any inflation." Ask yourselves, are there any two areas that affect the average American citizen more than food and gasoline? My biggest concern for folks who talk this way is they don't even recognize the water temperature in the pot has reached boiling. There is no sense of urgency and a willingness to sustain the status quo. I would maintain the status quo is unsustainable.
There are many who argue every day in cyberspace that we have already gone over the fiscal cliff and there is no way back from that reality. Perhaps they are right. Unless another midnight madness deal of some kind is hammered out in Washington to avert it, taxes will increase dramatically across the board on January 1, 2013. Payroll tax withholdings will return to their normal level, meaning an increase in each paycheck of 2 percent, reducing take home pay for all wage earners. The dreaded AMT will be re-introduced to lower-level taxpayers. Tax credits for students will be eliminated. Taxes on Obamacare will begin to take effect on employers who fail to provide health insurance for their employees. Income tax rates on the small business owners whose incomes exceed $250,000 (families) and $200,000 (individuals) will increase. And let's not forget the estate tax, or "death tax," will automatically reset in 2013. Estates valued at $5 million or more which are now taxed at 35 percent, will be taxed beginning at $1 million in value at a rate of 55 percent.
This is just a partial list of horribles that awaits us if Congress fails to act. The last time around in its infinite brilliance, Congress agree on something no one had ever heard of before - "sequestration." The idea was they would put a bicameral super committee from both houses together in a room to work out the details of who, what and how everything in America would be taxed to avoid default on the national debt. Failing to come up with a solution would mean automatic drastic cuts in military spending and other programs would begin to take effect. In it all there has never been one serious proposal, except those put forward by Congressman Paul Ryan, to reduce spending in the automatic payments generated by Medicare, Medicaid, Social Security, and now Obamacare. THAT's where all the big spending is happening, but absolutely no serious proposals to adjust them have been advanced, except by one man - Paul Ryan.
The political wisdom has always been to leave the social spending programs alone. Americans love their entitlements. It would be political suicide to begin even tinkering around the edges, much less threatening to begin gutting them. Spending on entitlements, it is argued by their proponents, has a stimulative effect and they are providing for the social welfare of our citizens. So goes the line of reasoning that put Barack Obama back in the White House for another four years. Unless this administration can somehow "see the light" and begin working to constructively address these critical needs with Congress, we will continue to see our credit worthiness as a nation deteriorate.
Addressing these pressing fiscal issues, of course, presumes that Congress and the White House are in agreement that the national debt needs addressing and that we are running out of time. If they are thinking, as the author cited above, Lee DeCovnick, suspects, we may have entered the twilight zone where no one in Washington actually believes they must be making plans to pay it all back.
The fact that our borrowing rates as a nation are so low and interest on the national debt is so "cheap" (ONLY $34 Billion per day), what we may see in upcoming weeks from the lame duck session of the 112th Congress is nothing more than another joint press conference announcing yet another historic bipartisan agreement for continuation of the status quo.
And that would be yet another signal there are no adults working on the problems we face.