Wednesday, January 9, 2013

US Political Impasse

The latest US budget impasse just before 2013 is just like an action movie, with both sides waiting until the very last moment before finding a compromise. The funny thing? They both want the same thing but are divided in how to achieve it. The problem with politics.

I'm not sure if the US government remembers the reason why they are in such a discussion in the first place. The combined total public debt is more than 100% of their GDP and is definitely unsustainable. Reducing debt definitely needs a combination of cut in spending, entitlements and increase of revenue.

Frankly, I'm surprised by certain remarks by Republicans. I guess that they have very short term memory and forgot that the public debt rose from about $5.8 trillion dollars to almost $12 trillion under a Republican president. In fact, the great recession happened under the watch of a Republican president.

With the type of spending and entitlements that the US are having, I do agree that they need to start cutting back because frankly you should not be spending or giving entitlements to people if you do not have the money in the first place.

Raising revenue by increasing taxes is sadly one of the few ways that you can reduce your debt because when you have increased revenue, you will not need to borrow as much to fund your spending and entitlements, some common facts that some Republicans conveniently forget if you listen to some of the recent remarks by them.

Yes, cutting spending is important but I hope they do not forget the main reason why they are doing it in the first place. With all the cash that the Feds are injecting into the economy and records amount of cash that the US companies are holding, I hope that they can find a solution to this impasse. Political impasses are the worst because it serves no useful purpose.

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