Could it be any more obvious? The Morning Fishwrapper had a couple of articles on the looming debt-limit crisis. Possibly the most stunning was the graph of the national debt curve from the 1980s. The gradual upward slope increases slowly from the beginning until about the year 2000. Then it takes a turn for the heavens doubling from five to ten trillion dollars in that decade. But that isn't the vertical limit by a long shot. The curve becomes near perpendicular with the jump from ten to fourteen plus trillion in the last two and a half years. Now we are at $14.3 T and in need of legislative relief at least temporarily.
There needs to be an easing of the limit. That seems increasingly obvious. The simple knee-jerk positions of yes/no don't stand the scrutiny of where we are and what the immediate pending obligations are. We need a debt limit increase.
But that isn't a mandate for simply continuing down the profligate path. We must reduce our deficit spending. We must modify our entitlement mentality. We can't simply say, no changes and whistle in the darkness about the changing demographics and the not-so-long term viability of our programs. We've got to change spending and we certainly need tax code revisions. We need a breathing space to do that.
The distinction between revenue and tax increases is an important one. We don't want to see additional taxes or taxation rate increases. We very reasonably could use an objective examination of carve outs, deductions and special provisions for narrow segments. Elimination of those special categories would increase revenues. In fact, using rough data from Bowles-Simpson recommendations or the Gang of Six proposal you could lower tax rates, eliminate a group of deductions and get increased revenue while a large percentage of the population would experience tax cuts.
That sort of a shift requires some time to hammer out details. Ditto for adjustments to Social Security such as changes to COLA criteria or increases in retirement age. That necessitates a short-term debt-limit increase.
But that could be handled with a relatively small amount for a six-month period. That solves all the problems but one. That is where the mendacity comes in.
The debt and deficit and taxes are the nibbling rats that are chewing at the President's re-election bid. They simply must be made to disappear for him to gain another four years. His incessant demand that any debt-limit increase be at least $2.5-4 T and extend beyond Jan 2013 is not related to markets or the impending crisis. It is purely related to his political future.
Harry Reid is the loyal henchman in the Senate. This gray, pallid, marginally articulate, charisma-challenged individual mouths the litany provided for him by the White House each day but the American people are beginning to understand what this is all about.