United States – Debt Ceiling Deal

August 2, 2011

By Padmini Arhant

Leaderships in Washington confirmed consensus on debt ceiling deal passed in the House and Senate in order to avert the manufactured crisis from policies targeting the core consumer base while promoting no revenue in the deficit reduction plan.

The present agreement authorizing government to pay the bills and meet other financial obligations is premised on spending cuts equal to or exceeding the borrowing sum with an immediate increase of $400 billion followed by another $500 billion not barring Congressional blockade,

Alongside more than $900 billion in savings over ten years from downsizing operating expenses within cabinet as well as federal agencies.

Overall debt limit $2.1 trillion considered allowing Treasury to address various payments through 2012 elections and simultaneously minimizing federal spending equivalent to or above the debt amount spanning a decade with no tax increases otherwise income.

Federal budget due in Oct 1, 2011 is set to reduce spending by $7 billion below the existing level to achieve the desirable debt deceleration.

The proposal on bipartisan 12 members House-Senate committee expected to recommend more federal deficit trimmings up to $1.5trillion for legislation by Congress adhering to the requirements.

Upon committee’s failure to generate at least $1.2trillion debt containment, mandatory spending cuts across the federal budget is in place against Pentagon, domestic discretionary appropriations not excluding farm subsidies and Medicare reimbursements to health care providers.

Accordingly the debt limit to be raised anywhere between $1.2trillioin – $1.5trillion based on the funds availability in the budget.

The reassurance in the deal per reports is the exemption on Social Security, Medicare and Medicaid benefits in addition to veteran programs not affected in the process.

Also the legislation seeks Congressional approval for constitutional amendment on balanced budget.

The approach to avert default is mainly focused on spending constraints again ignoring the revenue factor equally important for deficit reduction and economic revival.

Restricting spending in areas without oversight on the out-of-control expenditures are necessary such as Pentagon disproportionate allocations reportedly unaudited up until now due to operations regarded too big to monitor.

Commitments to overhaul tax structure closing loopholes on tax evasions might improve systems efficiency besides contributing to savings for job creation.

As for broadening taxpayer base – the tax burden is already on the middle class and lower income when legislation on Bush tax cuts extended to the wealthy and non-tax paying corporations viz. General Electric…resulting in zero or minimal tax payments combined with job exports and investments overseas.

Lowering tax rates for the top 1% with substantial disposable income not always invested in domestic growth is reflected in poor GDP and national unemployment.

Capitalism thriving under maximum capital infusion would apply if the private sector and individuals benefiting from huge tax breaks and subsidies restored manufacturing by increasing productivity and fair income distribution from upward trend in job market.

Unfortunately the debate on the Senate floor favoring tax policy proved detrimental for the economy is pushed forward even though the decisions have adversarial impact on the average Americans – representing the work force and consumers crucial for any economic model to survive and succeed in the competitive global environment.

The deal is sensible in terms of relevant spending cuts and preserving Social Security, Medicare, Medicaid and veterans benefits provided the provisions are implemented with no possibility for maneuver.

However, neglecting the income aspect via taxes and other avenues is not pragmatic given the latest outcome on Bush tax cuts extension exacerbating economic status by widening the gap between the haves and have-nots,

Notwithstanding the middle class bearing the bulk of economic woes attributed to higher joblessness and housing market decline.

Constitutional amendment for balanced budget imposes fiscal discipline paramount in reversing deficit spending to surplus reserves for investments in infra-structure, education, health, secure retirement, research and development leading to sustainable progress.

In this context, the deal providing $17 billion additional funding towards Pell Grants over the next two years for low income college students is noteworthy.

In general, the deal struck in an effort to prevent default has chartered the course to curb spending and,

Hopefully, the bipartisan House-Senate committee would strongly recommend robust tax reform and meaningful income sources to achieve balanced budget in the immediate future.

Getting the fiscal house in order is the shared aspiration in Congress and the phenomenal costs from perpetual warfare adding to national deficit barely addressed by fiscal conservatives in the slash spending political discourse.

In fact the outgoing Chairman of the Joint Chiefs of Staff Admiral Mike Mullen statement reinforced the mission in Afghanistan in spite of deteriorating monetary conditions.

National priorities deviating from destructive course would strengthen economy and guarantee better living standards for all with prosperity promising more taxpayers to overcome challenges ahead.

Fiscal responsibility is no longer an option but a necessity to regain economic power and consistent rational means recognizing the pros and cons of austerity together with extravagant wasteful spending on wars at several trillion dollars would perhaps expedite anticipated economic recovery.

United States has the ability to rise to the occasion in saving grace.

Political differences aside, displaying solidarity in national interest is a democratic value and the United States Congress could continue to forge bipartisanship with a permanent departure from Washington gridlock on all issues.

That would be the American electorate dream come true.!

Peace to all!

Thank you.

 

Padmini Arhant

 

 

 

 

 

 

 

 

 

 

 

 

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Written by Padmini Arhant · Filed Under Featured, United States 

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