Debt negotiations: The collar is tight, and getting tighter by the minute

Yesterday I went to a business event in one of the New York libraries. While at the event, I met a senior who was interested in what is going on with all these people. A short conversation developed and it turned out he was at the library because he has no air conditioning at home. It was kind of a difficult situation for a moment and I didn’t dare ask the question, why not? I was glad he took that hurdle and explained he can’t afford it. He is on a tight budget, can’t buy one and can’t afford increased costs. He took it with grace, if that can be said in such a situation. “I just have to wait a few days, until it cools down”.

Those that are responsible for their people and their wellbeing, I mean the guys in D.C., of course, have other agendas. In an incredible display of arrogance, self interest and ignorance towards the people, they are playing their game, about political power and playing out leverage. One, as the President, is supposed to be in charge, but can’t do anything because “the other side” doesn’t want him to come up with a solution. A solution HE came up with anyway. It sometimes appears, that a solution is not of interest for the President’s opponents. So, the discussion is going on, day by day, and the people’s and the country’s collar is getting tighter.

The country is in deep debt. The situation is actually so bad, in my opinion, that it is actually next to impossible to solve. One side, let’s call them the yellow side, wants to cut social services in order to cut debt. The popular scare to support the idea are so called freeloaders. People that don’t work and don’t want to work and just living of social services. In many cases “the case” is also supported by the issue of illegal immigrants that are supposed to dry out the system. As a reminder, we have huge deficits in those services and because we have an aging population the expenses will blow out of the roof down the road. Much higher than right now. So, the yellow side’s idea is to cut there to prevent more cost from arriving down the road. Just looking at the numbers and the facts (the aging population and the natural consequences), it makes sense. The question no one wants to answer on the yellow side is, what are we going to do with these people when they need social services?  That is at best answered with they need to come up with it themselves and need to take care of it on their own. On how, the answers are actually much more limited and mostly end up in a classical political performance: Talk for two hours and say nothing.

On the other side we have, in order to stay with colors, the green side. The green side proposes higher taxes, besides savings in other areas, as a tool to solve the problem – higher taxes for the rich and wealthy. That is not going down well with the yellow side. Their opinion is that the wealthy don’t deserve to be taxed higher, because they already pay most of the taxes and their money is needed for investments. If they pay taxes, they can’t invest. Well, that is a point one could understand. However, tax cuts and extended tax cuts haven’t shown that this is really happening. As it goes through the news, unemployment is rising, even in a time of the year when it actually should be better. And, as the “earnings season” shows, corporate America makes handsome profits. Even the banks are starting to look better.

Speaking with seniors and their family members about health care turns up a few interesting facts. First of all, our health care system is a complete mess. On the yellow side it is mostly praised as “good” and “the best” compared to the rest of the world. Taking a closer look at it, it is actually only world class when compared with an African country. However, it is clearly not able to keep up with health care systems in continental Europe, western Europe, that is. As a believer that the U.S. is a great country, that is the standard with which we need to measure ourselves. Looking at these countries, their health care system is expensive and never or only seldom balanced. One of the reasons is the same as here, populations are aging. At first sight, the taxes in those countries are higher than they are in the U.S.. Looking behind the curtain, however, turns up another point. With all the possible tax advantages for investment, there are people that don’t pay tax at all, or very little. Investment in jobs, infrastructure and other parts of the economy are rewarded with tax breaks. Can you believe that? That’s not what you hear in certain circles and not on the internet message boards. “Free loading” health care systems are usually called “communist and socialist” inventions by internet active lobbying groups and certain self proclaimed politicians. Of course, requests for further explanation remain unanswered.

One major foreign politician once stated, “a country’s best asset is a healthy people”. I do agree with that. We are not doing ourselves a favor in not taking care of those that need help because they are sick. If we start leave people hanging with health care expenses we will see two things happening, and we are already one step away from it, a humanitarian crisis and exploding costs in welfare that will bust everything we have ever seen. And, what we already see, increased crime related to health care. To make this a little more apparent, if you are not incredibly wealthy and you get sick as you get older, you, and your family, might end up in poverty. If you have an accident, you might end up in poverty even earlier, during the best part of your life.

So, what to do? Facing the results from living large for the last 40 years and on the other hand facing increasing costs from areas that have been neglected for decades raise some serious concerns. The health care and social security problem has been known for years, the fact that population is aging has been known for decades as well. Living on debt is not that great and that fact is also no secret, not only since recently. These problems were known when a former President spent a surplus of $400 Billion to send everyone a check, stating the government should not sit on the peoples money. While, at the time, this was quite popular, from a business view, this was a complete blunder. Not to talk about the real motivation behind this action, a major cut in taxes for those that are now asked to pay a little more in order to get the country back on track.

Here are the things we need to consider in finding a solution:

  • The debt is out of the roof and every penny spent in the future can only be spent when there is either serious savings following that spending or it has investment character and has a pay-off.
  • We need a plan now on what we are doing with people that cannot pay for health care down the road, if we decide to cut on those services. We need to know now what we are doing with people that can not live on Social Security if we cut it.
  • We need to know now how we finance massive infrastructure problems with price tags close to the trillion (yes, trillion). Further neglecting this will cost us the opportunity to make the money we need to pay our debt. We will lose our competitiveness.
  • We need to know now what the rich and wealthy do if taxes are not raised. If that cannot be accomplished, and there is no sign that it can, then taxes need to be raised and there can only be a tax cut FOLLOWING significant investment in the economy. Jobs and infrastructure are on top of that list.
  • We need to take a look at “holy cows” for spending cuts, such as military spending. It can’t be an ongoing thing that our military spending is the highest in the world, beating second, third, fourth and fifth runners up in the aggregate. There is, at this time, no reason for such lavish spending, especially since two of the four runners up are our allies.
  • We need to stop blaming “freeloaders” as long as we are unable to find jobs for those that can work. Once we have accomplished that, we can address the problem with those that still get a welfare check, not a single day earlier.
  • For finding ways on how to solve certain problems, we need to take a look at some of our allies and see how they got their act together.

Failing to consider and address these questions now will bust every solution within a short time and we face the same misery, or worse.

There is no reason why our seniors should suffer and not be able to address other minimal life style improvements, including health improvements, because their money is spent on health care. They have paid their dues all their life, why should we take it away. This is an embarrassment for this country and those that call themselves leaders. On some message board some comedian was complaining about cuts for NASA and that we might lose our advantage “in space”. Well, for the moment, until we got our act together, there is not a lot of traffic up there anyway. Hopefully that cut helps to keep some social services so that seniors can buy and afford running an air conditioning unit when the thermometer shows 102 degrees.

As of Friday the negotiations about the country’s debt have stalled. Yellow and green are so far unable to find a solution. Even though green made a number of concessions, the country actually can’t afford them. Yellow is not willing to accept revenue increases from the wealthy. One could believe that winning this battle is more important to those leading it than the people on the front lines of it or the country’s future. Should this continue, we will face an incredible setback with unimaginable consequences. It should be interesting to see how actions in this “battle” will turn out in next year’s elections, especially with seniors.

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