It finally happened.
Republican Eric Cantor calls it a "wake-up call." Congressman Cantor, turn up your hearing aid. The alarm bells for this crisis have been ringing for many years while Congress and the White House have been asleep at America's economic wheel. When Standard and Poor's outlook for the U. S. economy was downgraded from stable to poor today it set off a mountainous sound of gnashing teeth beneath the bubble of Washington, DC - and sent Wall Street tumbling. What else should the legislative and executive branches of our federal government expect when we will overspend 1.5-trillion dollars this budget year alone, which equals ten percent of our gross national product?
What does the downgrade mean for those of us in flyover country? Well, if we are fortunate enough to have cash, the interest rates on CDs may finally be going up. If you are unfortunate enough to need to borrow, expect to pay your friendly neighborhood global banker through the kazoo! It also means that the dollar will tank more and we taxpayers will get to fork out more in interest on our ever increasing 14.2-trillion dollar national debt.
Oh, those lucky Chinese investors who buy our treasury bills. They can expect a hefty hike in their interest returns.
And now it remains up to the bubble heads beneath the Capitol dome to find a solution. These are the same problem solvers who told us they were cutting the newly passed federal budget by 38-billion dollars and we learn Friday that what they really cut from federal spending is closer to 300-million.
Could I be so bold as to offer some suggestions from flyover country:
1. Just say no to raising the debt ceiling when it comes up for a vote in May. There is ample federal revenue to pay the interest on our debt. The only catastrophe will be faced by lawmakers and our big spending President because they won't be able to borrow more money to spend. Gee, how's that for a little hope and change.
2. Immediately cut spending in all government departments by ten percent and reduce government employment by that same amount. Offer buyouts to government workers who are within ten years of retiring. Do not replace those who leave the government workforce for a minimum of five years or until we get our fiscal house in order.
3. Initiate an old fashioned budget method called zero based budgeting, where every year government departments must start from zero and justify all expenditures instead of just lopping a percentage increase onto the previous year's budget. That would require a review of all departments of government and could result in eliminating much of the overlap cited in a recent Congressional Budget Office report. Not revolutionary, but zero based budgeting does work.
4. Eliminate the Departments of Education, Energy, Environment and Agriculture. Savings - about 1.5-trillion. (Where have I read that figure before?) Educating children was, for nearly two centuries, the purview of local communities and the states and that is where it belongs. Managing the environment should be the job of each state and when then are disputes, federal courts can arbitrate a solution. And since this nation is no longer a predominantly agrarian economy, the usefulness of the Department of Agriculture is long over, except for doling out subsidy largess to big landowners, corporate agriculture entities and paying farmers not to plant crops. As for the Energy Department, by eliminating it we would eliminate constraints on states to drill for much needed domestic oil and natural gas and return common sense to the pursuit of alternative sources of energy by not giving huge subsidies to ethanol producers who use more than a gallon of oil to produce every gallon of ethanol. Then corn could again be used for food for humans and fodder for animals, which might bring down the soaring cost of food, which of course, the government, in its ever skewed wisdom - does not consider - along with gasoline prices, in the consumer price index which determines our national inflation rate. Those of us who shop at a supermarket and fill up our gas tanks know inflation. And it ain't that itsy-bitsy figure the federal government would have us believe.
Standard and Poor's downgrade should not be viewed just as wake-up call. It should be a clarion call to action - NOW. And that action should start with REAL spending cuts and no increase in the debt ceiling.