On the U.S. Situation

I imagine most Americans are tired of the news about Congress and its antics regarding shutdown and sequester. I also imagine the rest of the world is a bit annoyed as well. Therefore, it’s time to do some basic informing.

The Facts
1) According to the US Constitution, Congress (not the President/Executive Branch) is responsible for fiscal matters, including the budget. Because of the balance of powers in the Constitution, the President can sign or veto the budget bill passed by Congress.

2) According to the US Constitution, the government can operate at a debt, which it has been since the mid 1970s. This is something that many (if not most or even all) state and municipal constitutions do not allow. For the record, the biggest holder of US debt is the US Government itself – not China.

3) Debt and deficit are different, but related. The negative differential in one fiscal year between income and spending is the deficit, while the debt is the cumulative total of annual deficits.

4) Sequester was not a presidential mandate. As part of the Congress-passed, president-signed Budget Control Act of 2011, Congress agreed to form a Super Committee that would produce legislation to reduce the deficit by a fixed amount over ten years. Failure to reach an agreement would initiate pre-determined, automatic cuts known as sequestration.

5) The Super Committee failed in their task, and Congress continues to pass (and president signs) short-term legislation to delay sequestration and raising the debt ceiling – thus choosing to kick the can down the road rather than addressing the issue.

6) The debt ceiling allows government to pay for the bills for goods and services that the government has already authorized to spend. Because the government would still have income, failing to raise the debt ceiling forces the government to prioritize payments (as long as money exists to pay).

Commentary
Although polls have the darkest clouds hanging over Republicans, favorable ratings are not brightly shining on Democrats and President Obama. In the end, US lawmakers are skirting their responsibility of governing for the citizens in favor of the selfishness of their party and themselves. Members will evade, distort, deceive, intentionally misinform, and even lie to get their way. Each party targets certain budgetary items and protects others. Each party has its members firmly in line with a party-first mantra.

The Founding Fathers designed a system with differences from our European forefathers and one involving a separation of powers to prevent one-party domination. Although the majority rules in government, governing involves the majority giving something to the minority as part of the final deal – and that same minority willing to take what they can get.

Currently, this is unquestionably not happening. Partisan lawmakers believe all answers lie within their philosophy while the other party has nothing to offer. Creative problem solving that looks outside of both boxes has no chance.

I fret a future election cycle when one party controls the White House and both sides of Capitol Hill because the stage is set for a strong overreach that forces the party’s values upon all. Given the current climate, the question isn’t if, but when.

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53 thoughts on “On the U.S. Situation

  1. It certainly is a mess. I’ve heard that it’s now mathematically impossible for the US to ever repay its debt and as if that’s not bad enough, the spending continues. I think the one thing Obama will be remembered for is that he alone has spent more money than all other US presidents combined. xx

  2. You’re right–neither party is looking good in this horrible mess. It will be interesting to see what happens at the next election. It’ll probably come down to the lesser of two evils for many people.

  3. I didnt know the US held its own debt. Surprising and interesting.
    Is it in the form of bonds?
    One thing many other countries have that we don’t, is if they don’t pass a budget, spending continues at the same levels as the previous year, averting the kind of mess we’re in.

  4. Thanks for the summary. I do disagree with this: “Congress continues to pass (and president signs) short-term legislation to delay sequestration …” No, not actually true. We are in sequestration right now. The level of spending, by and large, is determined by the sequester legislation. See this Washington Post article for more about who, why, what, how, and how much. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/20/the-sequester-absolutely-everything-you-could-possibly-need-to-know-in-one-faq/

    Oh, uh, also this: “Because the government would still have income, failing to raise the debt ceiling forces the government to prioritize payments (as long as money exists to pay).” This is true. However, just like with many businesses, cash flow is not even for the federal government, nor are expenses. They are lumpy. So you may prioritize payments. For example, you may decide you will pay interest on bonds. Terrific. How about paying wages to federal workers? Can they wait? If you don’t pay them on time, you are in DEFAULT. You’re a deadbeat. It doesn’t matter WHO has to wait to be paid. If you don’t pay your debts on time, you are in default. Working out a priority of payment doesn’t avoid that. Paying on time is what avoids that.

    Heading for bed. Thanks for the piece.

    • Melanie,
      We disagree on the first point because Congress and the president signs short-term measures as full cuts of the sequester are not in place.

      As far as prioritizing payments, you just explained that they would. After all, I didn’t say all payments would be made.

      • With all due respect, Frank, I must side with Melanie in that I am not finding evidence that the budget sequestration has been limited in 2013, except that it was delayed for two months at the start of 2013. There is a good summary of sequestration on Wikipedia. This statement stands out:

        The reductions in spending authority are approximately $85.4 billion (versus $42 billion in actual cash outlays) during fiscal year 2013, with similar cuts for years 2014 through 2021.

        It is true that the scope of funding reductions is dependent on Congressional appropriations for each fiscal year, so 2014 might be less sequestered than this year, but only if Congress passes a budget smaller than this year’s. Don’t anybody hold their breath waiting for that.

        It would be really nice if Congress could negotiate a sensible budget and eliminate the Budget Control Act of 2011, a.k.a., The Sequester law. The president has welcomed a full negotiation on that, with everything on the table, just not under threat of extortion. There he goes again, just a speed-bump on the road to Tea-Party austerity.

        • Jim.
          There’s no doubt that sequestration is in process, but fully enacted, I don’t see it. After all, Congress has also passed exception clauses, such as the FAA. Meanwhile, I do not hold out hope for a sensible budget for one reason … actually one word …. sensible.

  5. Don’t you just love politics? I actually have a BA in political science and just to enjoy learning and watching it. Now that I’m an adult and have real problems I just find the whole process sickening. I fear the day when one party tries to force their rhetoric down the citizens throats. No such thing as dialogue any more.

  6. I can’t thank you enough Frank for explaining so much. I have not had a huge understanding of this one thing:

    * there’s a famous (now dead) US President who once said on a TV interview, “Well, no, if the President does it, it’s not illegal” – & from that I thought Obama could make decisions he saw fit for the country. I just didn’t comprehend why he cannot make a decision, say “This is what I have decided is in the best interests of the people who elected me”.

    I am truly hoping the best for you all. It must be painful. I’m not tired of the news here in Australia – I’m just struggling to understand it as I work & come home to headlines on the evening news, surf the web a bit, then it’s bed time… to start again…

    So truly Frank – thanks for this education.

    • Noeleen,
      Politics has always been tough, but the hyperpartisan nature of recent years has been something I can’t recall before. A group recently demonstrated at the White House, and the quotes from their are headshaking … and to think that public figures also encouraged the crowd. … Sad … very sad.

  7. In Spain the Popular Party has a the majority and they have the country as their play ground. From “big” things like the budget to “smaller” issues like making religion (note that’s catholic religion not whatever religion you are) a mandatory curse in school. Ironically, next elections they will lose, the next party to win will remove all these “laws” passed by the previous government and the cycle will repeat over and over again.
    Just toying with the voters, or rather giving voters what they asked for.

  8. Hard to “like” the situation, although I liked your explanation. Jimmy Fallon asked, “How long do we wait before asking the Canadians to govern us?” If our politicians were smart, and there’s no proof they are, they would tactfully decline. We’d have to XL pipeline a LOT of tar sands oil, to pay off 14 BILLION. :?

  9. Great post, Frank. The only good thing about the current situation in Washington, is that it taught me some new things about how our government works–or SHOULD work. I didn’t know before, for example, that Congress was responsible for fiscal issues. How did I not know that? Kind of embarrassing.

    Hugs from Ecuador,
    Kathy

    • Kathy,
      Sometimes rhetoric is meant to hide the truth! However, because once the Congress-approved bill makes it to the president’s desk, the president either vetoes or approvals … thus how the president becomes a player in the game.

  10. Interesting post Frank. One of the things which I keep being reminded of during this is the how much it will cost us in the long term. Shutting down agencies, and furloughing employees, doesn’t save money, it actually costs. Especially in terms of projects which were in operation before the shut down, and which now sit idle, its window of opportunity being lost along with the initial investment.
    It’s considered bad parenting to indulge a child having a temper tantrum, that we should indulge congress any longer is beyond me.

    • True, Alex. And, the tea party tail is wagging the gop dog. Gov shutdown has been the goal of the gop for 4 years. That is not good governance. The message that government is bad is wrong. They are facing a rising tide putting their popularity and their base on the wane. It can’t survive that way. Tantrums are a likely result.

        • It is a more centrist thing than what is taking place in the GOP in recent years. The emergence of the tea party and extreme right wing voting blocks has caused a lot of turmoil. The large money supporters and the tea party types are not compatible in the long run. The party will need a more centrist stance if it expects to survive and garner votes from the growing diverse population and win elections.

  11. Thank you for that, it certainly explained a few things for me. I haven’t followed it particularly closely, just been aware of it going on of course. I think we all find it quite a strange situation over here in the UK!

  12. Thanks for this Frank. A glimmer of sense, in the deeply depressing sea of long-term government failings. Now I know the difference between debt and deficit. Frankly, I think we’ve had a one party government for years! The greed and corruption party. We need at least one more party, which will hopefully take a generation before they devolve, too.

    I was also convinced that China held our debt. Which just indicates that I’ve watched too much mainstream news. What really heats me up is the use of the word “sequester”. Didn’t it used to be “austerity”?

  13. thank you, Frank – you put this crises in an easy format to digest. i say we get Dave Ramsey, the financial guru, to clean this mess up and quick. but then again, it may be too deep to fix – maybe we need a Divine miracle. cheers!

  14. You explained this mess very well, Frank. And your final concern about the trouble we could get into if one party is in office and controls both sides of Capitol Hill is a very real issue, I think. I’ve thought about this a bit. When there is a natural division of power we are seeing no cooperation or balance, in fact stalemate. But I don’t trust either party to regulate with wisdom, so we could be in even more serious trouble with either party in full position of power. I have no answers. I don’t even know which questions to ask anymore. It’s confusing and frustrating but I really appreciate how you at least give such good overviews. I always walk away with more to think about, Frank. Thank you.

  15. Well explained,factual and digestible. I fear that the country is only going to find one way to sort itself out, and that is hitting rock bottom… which would mean we still have quite a long way to fall. At this rate, however, the country is tearing itself apart… I don’t see any other way out of it other than to make amends, split, or see everything unravel.

  16. I wonder how long they can keep this going? How much longer before people start getting really angry? I give it another week…. as for the debt ceiling, it’s anyone’s guess. No one made such a fuss when Reagan raised it, right? He raised it like 18 times or something…

  17. And you just know we’ll be back at this either in late December or early January. Oh, the poor folk on the foreign news shows (especially the German news), trying to make sense of all this and just being totally bewildered!

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