“We don’t have an immediate crisis in terms of debt,” President Obama said in an exclusive interview with George Stephanopoulos for “Good Morning America.” “In fact, for the next 10 years, it’s gonna be in a sustainable place.” – http://news.yahoo.com/blogs/abc-blogs/president-obama-no-debt-crisis-135407566–abc-news-topstories.html
“We do not have an immediate debt crisis,” the Ohio Republican said on ABC’s “This Week.” – John Boehner
“We do not have a debt issue right now, but we see it coming. So let’s get ahead of this crisis,” the Wisconsin congressman told CBS’ “Face the Nation.” – Paul Ryan – http://www.foxnews.com/politics/2013/03/17/boehner-ryan-us-has-no-imminent-debt-crisis-but-argue-issue-must-be-fixed-now/
“We are not having a debt crisis.” – Paul Krugman – http://www.nytimes.com/2012/12/14/opinion/krugman-the-gops-existential-crisis.html?ref=opinion&_r=2&
“You know, Paul, Reagan proved deficits don’t matter.” – Dick Cheney – http://www.ontheissues.org/2004/Dick_Cheney_Budget_+_Economy.htm
These quotes serve to illustrate our one-party system of government in America. Conservatives and libertarians had better get used to it as they are not part of the establishment leadership of the GOP. That outlook is expected from the democrats and their leading economist, but when the GOP stands down on the debt as it seems to on all important issues, it’s only natural to conclude that they are one and the same.
That’s a tough pill to swallow for many on the right. They point to Paul Ryan and his budget proposals that spend trillions less than their democrat counterparts. True enough, however, none of the Ryan budget proposals shrink the size of government. They slow the growth rate, but not the size nor do they address actually reducing the debt. We’re only talking about reducing annual deficits that continue to grow the debt.
So why are they all wrong? Why do have a debt crisis today? Simple, because our only opportunity to pro-actively deal with the debt is now. Once the Fed is forced to raise interest rates (when, not if) the debt service costs will eliminate any chance of being in control of managing the debt. The time for action is now, not when it’s too late.
There are other factors as well. The currency war currently underway has unpredictable outcomes. The U.S. dollar has always had an arrogant attitude toward its place as the world’s reserve currency. To think that will never change is naive. As is the assumption that the largest holders of our debt, China and Japan, will always keep rolling their bonds over rather than calling them in one day.
You really don’t have to get into a long diatribe about monetary and fiscal policy to understand a basic premise. If the Federal Reserve continues to artificially manipulate interest rates and buy multiple billions of bond debt each month, it won’t end well. Those policies have consequences and they may be delayed in their effects, but those effects are unavoidable.
There are a number of analogies one could make concerning debt and why it’s a crisis now. For example, if you were diagnosed with pre-diabetes, would you wait until the onset of full-blown diabetes to deal with it? Would you change your diet and lifestyle habits right now to prevent it? Exactly.