Deceptive Reporting

    The Washington Times said today, "Senate leaders announce agreement to end shutdown, raise debt", giving the impression that it's a done deal to end the government shutdown and increase the debt limit.
    Not true! As one looks further into the article, one sees that this is a unilateral Senate action, which is no surprise. The Senate has had a preponderance of Communist/Democrats all along, and it has been clear from the start that they want to give Pres. Obama a blank check.
    The reason we have had a partial government shutdown of 17% and no action on raising the debt limit for government borrowing is because of the House. The House is responsible for initiating all government funding. Contrary to the Senate, it has a majority of Republicans, who see the handwriting on the wall. That is, the United States is destined to become a third world country, unless it reduces its spending and controls its borrowing limit. House Speaker Boehner has done a good job of keeping the Senate and President at bay until recently. He then started to cave, but fortunately there were enough brave Republicans to stiffen his backbone, and as of this writing it appears that the House will not give Obama the blank check he and the Treasury Department say they need.
    To resolve this conflict to the longer term advantage of the country, the House merely needs to say "no" to almost any Senate proposal that comes to it. Up until now, the reverse has been true in that the House has made many offers to which the Senate has said "no". That puts the Treasury Department and the President on the spot. They can scream and holler, which they will, but they will have to decide to allocate available funds to bond debt payment, for which the House can claim a semblance of victory with government finance. Alternatively, the Treasury Department and the Pres. may decide to default on the interest, which will lower the US credit rating. That credit rating reduction will only then be the fault of the Administration providing the Republicans give up their practice of mostly remaining silent, and instead scream and holler at the Administration for not paying the debt, even though it had the money.

Do Not Raise the Debt Limit

Open Email to Rep. Tim Huelskamp (KS):

Dear Rep. Huelskamp,

    Congratulations for what I'm about to explain!
    According to the Washington Times, House Speaker Boehner proposed an increase in the government debt limit and approval of government spending while attaching a few strings. The general interpretation of this offer was considered very favorable to the Democrats and the President. In spite of that, Pres. Obama said that he would veto the bill.    Simultaneously, it is said that a group of conservative Republicans in the House registered such strong objection, that the bill was not developed. The conservative Republicans were not named in the Washington Times article, but by implication, you are one of them. It is reported that you told CNN news that the bill was going to raise the debt ceiling hundreds of billions of dollars with no change in spending.
    Not raising the debt limit should have no effect on ability to pay current interest on government bond debt, since there is adequate tax revenue to cover this. However, the option to pay lies with the Treasury Department, and it could arbitrarily decide not to pay the interest, which is doubtful.
    However, other government debt obligations might be adversely affected, for which reason one of the three existing credit rating agencies has said that not raising the debt limit could be a precursor for downgrading the credit worthiness of the government, which would increase required interest rates for new government bond issues. It should also be noted that the other two credit rating agencies have so far been noncommittal. The obvious reason is that it is clear to any financial analyst that a continual raising of a credit limit, without some plan of repaying the debt, will eventually end in disaster, at which time the credit worthiness of the borrower will be essentially zero and interest required on any future issues of government bonds will be sky high. For example, the insolvency problem in Greece caused new government bond interest to rise to 18%. It is now down to 8%, because of European Union support., But if the US follows the same pattern who will there be to support the US?
    Net conclusion. Thank you, Rep.Huelskamp and your conservative associates, for trying to bite the bullet now, in order to avoid future real default with sky-high interest rates equivalent to what Germany suffered after World War I.

Lies about Debt Default

Open Email to House Speaker Boehner:

Dear Speaker Boehner,
    The Washington Times says, "Senate leaders explored the outlines of a deal Monday that would end the two-week-old government shutdown and give the Treasury Department enough borrowing room to stave off a potential default this month, but all sides cautioned that the specifics are all still up for negotiation".
    The question is who is doing the lying? Is it the Washington Times, the Senate mouthpieces, the Treasury Department, or all three?
    We have enough data on tax revenues and the amount of the payable bond interest to know that the interest can be easily paid. If it is not paid, it would be because of an option on the part of the Pres. Obama and his Administration. In other words any debt default on government issued securities would be caused by the President.
    Are you going to let these people get away with the basic lie that an extension of the debt limit is necessary to avoid default on interest payment of government issued securities or do you want to scream the truth?

Government Startup versus Reduced Spending

Open Email to Sen. Cornyn (TX):

Dear Sen. Cornyn,
    I refer to your recent form letter on the government shutdown.    In that letter you said excessive government spending dampens job creation and stalls economic growth.  Congress and the President need to implement the spending cuts and structural entitlement reforms necessary to strengthen the long-term fiscal integrity of our country. I agree completely.
    You also said a government shutdown creates further uncertainty and instability in the economy.  I am eager to end the shutdown and move ahead with the fiscal and economic reforms our country so urgently needs.
    It is in this second statement, that we may have a problem. The question is how eager are you to end the shutdown? You must have noticed that Speaker Boehner has made substantial progress against the principles of funding big government advocated by the Senate Democrats and the President. By standing firm in his beliefs and using the strategy of piecemeal funding of government, Speaker Boehner has already achieved some success in government fund reduction and has both Democrats and the President in a state of panic.
    I hope that your eagerness to end the shutdown will not destroy all of the good work that Speaker Boehner has put into his workable program.

Government Spending

    The Washington Times says, "Obama doesn’t back down, keeps pressure on Boehner, GOP".
    It should have more appropriately said, "Boehner and the GOP don't back down, keep pressure on Obama".

Scorekeeping on Government Shutdown

Open Email to House Speaker Boehner:

Dear House Speaker Boehner,
    The Washington Times says that with the 17% government shutdown, key agencies are no longer producing financial reports and this makes it impossible for Congress to determine what action should be taken on government spending.
    That position is WRONG!    Anybody who watches football games can tell who is winning without ever looking at the scoreboard. True, the scoreboard gives additional information, but the fundamental of who wins the game is not changed by concentration on those numbers.
    In the case of the 17% government shutdown, all signs show that piecemeal government funding is an effective strategy. It obviously reduces expenses, which is the major requirement. It is also known to be effective by listening to the howling of Democrats and the President.
    The next issue is extending the public debt limit to allow increased borrowing. This needs to be handled in the same way as all government spending. It is obvious that the only purpose of increasing debt is to obtain more money so that it can be spent, which is exactly contrary to the long-term needs of the government and its people. The Obama Administration has tried to confuse the issue by claiming that unless the debt limit is increased, we will need to default on payment of government bond interest, which would be a worldwide disaster. Baloney! There's plenty of money to pay government bond interest. It is only a matter of how the available money is allocated. Obviously, we advocate paying our debts and avoiding accumulation of new debt. Government finance is not exactly the same as personal finance, but there are many similarities. On a personal basis, one must pay the interest on the credit card, but it is also undesirable to engage in any new spending, which would then require payment of even more interest.

Tough Times Ahead for Research?

Open Email to Representatives and Senators:

Dear Representatives and Senators,
    The American Association for the Advancement of Science (AAAS) is a large nongovernmental organization. However, many of its members obtain financial research support from various government agencies. Last May, it held its annual form on science and technology policy, at which time government funding for private research was discussed.
    The forum bemoaned the fact that projected government research funding in 2013 would be back to the same level as it was in 2002. It also showed that the six major US government funders would be supplying 6.5% less money than it did the previous year. The actual funding reduction would be $9 billion. Total funding would be $133 billion, which I believe most people would agree is a substantial amount of money. I believe this is about $1000 per US resident.
    It is unclear what may have happened since last May, especially in view of the 17% partial government shutdown. However, assuming we're still on the same track, I congratulate Congress for the reduction. I would like to make it as a strong congratulation, but I am limited by my conclusion that $133 billion is much, much, too much for the federal government to be doling out to universities for mostly questionable research projects. I was also sorry to see that, in the recent efforts to use piecemeal funding of various sections of government, the funding of the National Institute of Health was approved. I suppose that because it has the name "health" in its title, it received some sort a special priority. However, I believe the only justification for any significant NIH funding is for the Disease Control Center section in Atlanta. It should be noted that of the various government agencies, the dole for research was largest for the NIH. It amounted to $30 billion last year.
    May I strongly suggest that if Congress is really serious about reducing government spending, with the intention of establishing a long-term fiscally viable government, it could start with these silly research grants which are a significant drain on our resources.