"Liberty means responsibility. That is why most men dread it." -George Bernard Shaw
The focus of the debt ceiling drama continues to be the response to an inability to reach a deal. I think the greater focus should be on responsibility. We must keep in mind we are debating how much money to borrow so we can pay back money that we've already borrowed. That is just a sliver, albeit not too small a slice, of the greater issue. There is also the notion we ultimately must live within our means. This includes not making promises we cannot keep. It is responsible to be honest about those promises. Yes, people put money into the Social Security and Medicare buckets but consume three times more when it's all said and done, and that money has to come from somewhere other than a Ponzi-like scheme.
I still think people should be able to invest their own Social Security money and the government needs to stop lying about guaranteed returns. Our so-called entitlement programs are cut in the mode of Bernie Madoff and just as he ran his scam for decades, so, too, has ours survived so long most people feel it's legitimate. Are we willing to suspend disbelief and just hope for the best or wake up to the truth and try to fix things? Once again, I spent the weekend listening to horror stories about what will happen to the stock market if something isn't done to raise the debt ceiling. If we are honest, it sounds like some politicians want the stock market to crash. Well ... a crash is inevitable, but there are different kinds of crashes.
As I wrote last week, the crash after TARP failed in its first vote in the House might have spooked lawmakers, but those 700 points pale in comparison to the 3,880 points lost in the five months after TARP became law. It's a prime example of the difference between response and responsibility. Even the stock market knew TARP was a mistake, made worse by fear-mongering and slump-shouldered elected leaders. So we are being told we are on the cusp of another Great Depression, and it will begin with a 1,000 point drubbing of the stock market. I suspect it would work in favor of the White House if that crash happens today. Maybe that would be enough to send Republicans diving for cover.
Of course, let's keep in mind Republicans have already blinked, having agreed to give up $800 billion in tax increases. But President Obama wanted more, and used the Gang of Six plan to justify this demand. Then there is the new demand that the debt ceiling be raised so much it's a non-issue until 2013. Yikes! What kind of money or unchecked power could we be talking about? I know the Administration buzzword has been "big", but it seems like we are talking about borrowing more money in the next two years than we have in the last 20 years. This is decidedly not an example of responsibility. But, can we be spooked into allowing it to happen?
I hope not. Even if it means a 1,000 point drubbing for the Dow, I don't want to see this money pass by and all we get is several trillion more in borrowing and blank checks for the White House. I think it's time to take a stand for liberty. Of course, most men dread it these days because it means balancing the account in ways that can only be painful. But it doesn't mean we are going to default on our debt, it simply means money has to be held back or diverted from programs that don't work. If we were being honest that would include giant agencies and government departments like Education, which should be a handled on the local level. We aren't there yet though. We aren't even scratching the surface of responsibility.
The New York Times and others wonder out loud why the market hasn't crashed yet. They spin last week's strong session to the fact everyone feels a deal is a foregone conclusion. I'm just not so convinced that's why the market held up so well. Maybe some investors understand that not going further into debt might be the right medicine. Maybe some investors understand the real danger is to keep spending into oblivion. Maybe some investors are hoping Republicans don't go against the message of November and not put the nation further in hock. Maybe the market knows there is a difference between raising the debt ceiling and default.
Most men dread liberty, but over the weekend it was clear many dread the fact the market hasn't crashed yet. They've been yelling "fire" in a crowded theater for weeks. They need the crowd to give the exits the bum's rush and in the haste, forget their rights and the nation's future.
Everyone is bracing as talks have broken down and word is both parties are working on contingency plans. It may come down to a two-step approach as it's unlikely Washington could get its act together in time to hammer out a comprehensive deal with a lot of moving parts. Speaker Boehner has told Republicans to be prepared for compromise, but I'm not sure if that means more than the $800 billion that was already offered. I'm not sure how serious the President is when he wants a massive hike in borrowing and yet claims he'd like to bring down debt.
I wouldn't force the issue, but I'm looking to buy on a major dip in the market that would be induced by the media and politicians whose best weapon has always been fear rather than solutions or tough choices.