Note: This column was orginally run on April 19th. We're re-running it today because of the Boehner speech calling for significant spending reductions.
Federal finances are a mess. And the negotiations to clean them up are messier still.
Thanks to that three-eyed snake, the 111th Congress, the country has written checks that can’t be cashed by law. In order to remedy the problem, the GOP majority in the House will have to raise the debt ceiling if it wants those checks to clear and America’s credit remain good.
In return for the debt hike, Tea Party conservatives are demanding serious spending cuts.
Treasury Secretary Timothy Geithner says that conservatives will have to bear the responsibility if they refuse to hike the debt ceiling regardless of concessions the administration might make on spending.
Over the weekend Geithner made the rounds of TV talk shows.
Talk is one thing on which the administration hasn’t run a deficit. It’s got plenty of talk.
Geithner ran the new White House negotiating playbook under the TV light, just as the administration did on the 2010 budget. He assured the folks that inside-the-Beltway Republicans have already agreed privately to raise the debt ceiling whether Tea Party types like it or not.
Indeed, GOP leaders may have agreed to that privately, but I doubt it.
Even so, let’s make it clear why we’re in the position where we need to raise the debt ceiling, again.
It was Geithner, Obama and the Democrats who decided to govern without a budget and ran up deficits of an additional $3 trillion as a result.
It was Geithner, Obama and the Democrats who, as late as February of this year, refused to acknowledge what voters told them in the fall election and proposed $7.3 trillion in deficit spending through 2015.
Yes, Republicans may end up with a compromise on raising the debt ceiling. But it’s another liberal mess they are cleaning up.
After two years of progressive demagoguery about how evil corporations have caused the financial mess, the consensus of responsible economists is that it was government intervention in the real estate market that caused the great bubble in the first place.
“The IMF confirmed that government participation in housing finance throughout rich countries exacerbated house-price swings and amplified mortgage credit growth during the run-up to the crisis. The warning advises emerging countries as they seek to develop their own economies,’ reports The Wall Street Journal.
"Countries with more government involvement also experienced deeper house price declines," the IMF said.
“Pointing to the U.S., both the explicit and implicit subsidies offered by authorities fueled a boom in housing debt and helped overinflate prices. The popping of the housing market helped to spark the global credit crisis.”
And it sparked the great big mess that we’re still living with.
Yes, some Republicans were complicit in expanding the federal role in the housing market. But those politicians have either got religion on shrinking government or they have been replaced by GOP voters.
In the meantime, Democrats have promoted their cheerleaders for government interventionism again. And again. And again.
These progressive leaders remain unrepentant acolytes of spending by fiat, a command economy and income redistribution, led by Barack Obama.
The housing bailout, estimated by the IMF at a final tab of $20 trillion, is the largest wealth transfer program in the history of our country- and it isn’t even accounted for on the federal ledgers.
In the end, there are only two sides in this argument:
One side represents the runaway, reckless spending of Washington and Wall Street; the other side represents a smaller, more responsible government.
One side made the mess.
The other side will clean it up.
The only question that remains is which side you’re on.
Ransom's "Must Read Picks for Wednesday:"
Shedlock: Deflation Threat
Malpass: Investment and QE2
Schwab Pomerantz: Retirement without the Matc
Friedman: US-Pak After Bin Laden
Ransom: The New Cradle of Debt-ocracy
You can email John Ransom at thfinance@mail.com
You can follow him on Twitter @bamransom and on Facebook: bamransom.
Get John Ransom's daily market commentary at:
-
-
Join the conversation as a VIP Member