Failing to raise the debt limit in time could cause “irreparable harm to the American economy,” Treasury Secretary Jacob J. Lew, above, warned House Speaker John Boehner recently. (Susan Walsh, AP / July 8, 2013)
On September 4, 2013, Michael Hiltzik writes in the Los Angeles Times that using the debt-limit vote as a political football is more than a stupid game; it can cost real money and destroy the fragile economic growth the U.S. is now having.
The lesson of the post-World War II economy is that the surest way to cut the government’s debt burden is through economic growth. In 1947, gross federal debt swelled by war expenditures reached a record 121.7 percent of gross domestic product. Ten years later, the ratio had been cut in half and by 1974 in half again, to 33.6 percent. In that time frame, the size of the U.S. economy had nearly tripled.
Yet fiscal policy both in Congress and the White House continues to be aimed at measures that will suppress growth.
The federal deficit is shrinking so fast — from 7 percent of GDP last year to a projected 3.7 percent next year — that the risk of a new recession has been heightened, not lowered. Yet despite evidence that relentless austerity budgeting in Europe prolonged the recession there, scolds like the Peter G. Peterson Foundation want more, calling for another $2.2 trillion in U.S. budget cuts over the next 10 years. That’s on top of about $2.2 trillion in cuts made in the budget and sequester provisions in the 2011 debt-limit deal.
The U.S. economy is growing again, but it’s not yet strong enough to stand on its own two feet. That’s where the risk of another debt-limit standoff lies.
Nothing good can come of the posturing we’re about to witness over the next month or six weeks, especially since politicians can easily posture themselves over a cliff. If they do that this time, they might take us all with them.
The surest way to cut the government’s debt burden is absolutely through economic growth. Of course, to reach this goal will require “investment,” that benefits EVERY American. The term “invest” sounds good on paper or in speeches, especially when justified on the basis that investment will create JOBS. But the reality is that no one is addressing the CONCENTRATED OWNERSHIP of the income-producing assets that result from investments under the current financial system. Such assets created by investment are the result of tectonic shifts in the technologies of production, which is the real reason, as well as outsourcing, that jobs are being destroyed and devalued in terms of wage and salary levels. Until our leaders address this BIG ISSUE, unemployment and welfare roles will dramatically expand. It is only through future investment with the stipulation of simultaneously broadening private, individual ownership of income-producing productive capital––the non-human means of production embodied in human-intelligent machines, super-automation, robotics, digital computerized operations, etc.––that we will be able to enrich EVERY American’s life.
As a nation, we continue to ignore the possibility of democratizing future ownership of labor-displacing productive capital technologies and rising ownership incomes as a market-generated means of eliminating wage slavery, welfare slavery, debt slavery and charity slavery for the 99 percent of humanity. Binary economist Louis Kelso argued that the Keynesian model fails to recognize that “when capital workers replace labor workers as the major suppliers of goods and services, labor employment alone becomes inadequate because labor’s share of the income arising from production cannot provide the progressively better standard of living that technology is making possible. Labor produces subsistence at best. Capital can produce affluence. To enjoy affluence, all households must engage to an increasing extent in capital work”
For solutions see “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690 and “Education Is Critical To Our Future Societal Development” at http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479.
Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
