Things to Keep In Mind As The Debt Ceiling Fight Comes to A Conclusion by August 2

By Frank Hill, Telemachus

We have had many humdingers of national debates over our 222 years as the Great American Republic: slavery; the Cross of Gold; the First and Second National Bank; states’ rights; women’s suffrage; civil rights, The New Deal; The Great Society; Vietnam and the Reagan Revolution.

Historians are going to have a hard time fitting ‘The Great Debt Ceiling Debate of 2011’ into that rarified air in the Pantheon of our great national debates just because it sounds so darned ‘boring’ and ‘obtuse’.

But it belongs there simply because it starkly identifies the two ideological camps that have been inherent in virtually all of our national debates since 1787 beginning in the Constitutional Convention in Philadelphia.

In the one corner, wearing the Superman capes, we have the ‘Big Government Statists’, inheritors of the mantle towards concentrated power in our federal government in Washington initiated by Alexander Hamilton and the Federalists. President Obama, Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi are staunch defenders in more government and more taxes to pay for it all, primarily from the rich and the corporations.

And in the other corner, wearing the red, white and blue striped shorts, we have the ‘Smaller Government Free Marketeers’, descendants of the decentralized visions of Thomas Jefferson and James Madison. Speaker of the House John Boehner, Senate Minority Leader Mitch McConnell and the bulk of the freshman GOP House Members representing the Tea Party make up the vocal leadership of this team.

And both sides think they are ’10,000% right’ and ‘on a mission from God’ as Elwood Blues (Dan Ackroyd) would say.

Isn’t it just a bit more than coincidental that the NFL players and owners had been threatening a lockout and end to the NFL season simultaneous to this great national political test of wills along the similar themes of ‘concentrated power’ (owners); ‘distribution of wealth (to the players) and increased costs (to the fans through tickets and ad revenues)

Here are some things to keep in mind as this debate heads towards its 'inexorable conclusion' on August 2:
  1. We would not even need a ‘debt ceiling’ if Congress had done its job for the past 30 years and balanced our national budget every single year. No need for debt; no need to borrow; ergo, ‘NO Debt Ceiling Debate…EVER AGAIN!’
  2. The US will not technically ‘default’ on its bonds as long as it keeps paying interest on the bonds already outstanding which we can and will do as the Priority #1 item in the federal way of doing things.
  3. The US has a ‘massive overspending’ problem, not a ‘massive undertaxation’ problem and has had one for 27 of the past 30 years. Federal spending was 3% of GDP before FDR took office and 10% before WWII. It is now 25% of GDP and growing.
  4. The ‘rich’ are already paying more than their ‘fair share’ since the top 1% of all taxpayers pay 42% of all income taxes as it is today. The top 20% pay close to 75% of all income taxes. The lower 50% of all taxpayers pay 0% of all federal income taxes. Shouldn’t everyone have to pay at least $1 per year in income taxes if we are going to talk about true ‘fairness’ where everyone has a stake in the national budget debate?
  5. The Bush Tax Cuts are due to expire on December 31, 2012 whereby all of the tax cuts, including the dreaded AMT and estate taxes, go back up to what they were in 2001. Whether that is an ‘expiration’ or not, millions of taxpayers will be paying much higher taxes and tax rates in effective January 1, 2013 if President Obama wins a second term in November, 2012 absent any grand compromise emanating from this debt ceiling debate.
  6. On top of that, massive taxes on corporations and small businesses are already beginning to take root as a result of the massively underfunded Obama Health Care legislation passed just last year. The tax hikes are front-loaded and sure to take effect in the near-term; the proposed savings are backloaded (sound familiar by now?) and most likely never to be implemented since no Congress can bind a future Congress to any legislation it passed 10 years earlier.
  7. The ‘only’ pledge that really matters is the oath that each and every elected official makes when he or she takes office and ‘swears’ to uphold the Constitution and ‘protect and defend’ the United States of America ‘so help me God!’
Notice how the oath in the Constitution doesn’t ‘swear’ allegiance to a guy named ‘Grover Norquist’ or the AARP.

God. And God Alone.

We have been making as much of an impassioned plea as we possibly can make for the past 2 years here in Telemachus for: 1) adults to enter the public arena and run for political office to save us from ourselves; and 2) enact trillions of dollars of spending reforms and reductions to save us from this debt trainwreck everyone has seen coming down the track for the past 30 years.

If anyone has proposed or supported more fundamental spending reductions than we have on these pages, all backed up with official CBO scoring and resource citations, we would like to see them.

We respect the foundational principles of the US Constitution that clearly state that the Congress is the sole repository of authority to propose tax hikes or cuts, and spending increases and decreases, not a single person acting like a king or a Caesar or a czar in the Oval Office whether he is named, Reagan, Bush, Clinton or Obama.

We can also count. The Democrats control a clear majority of 53 votes in the US Senate. The GOP controls of a clear majority 242 seats in the US House. Both sides have equal say in crafting a bill that goes to the President to sign or veto.

Neither side is going to get 100% of what they want, no matter how much they huff and puff and want to blooooowwwww down the house of the other side like the Big Bad Wolf.

So far, based on the tiny details that have seeped out from the negotiations into the press by each side’s professional spinmeisters, we think the savings offered by the President and the Democrats are too backend-loaded and non-specific to be taken seriously. This may be the only chance fiscal conservatives will have for the first term of President Obama to plant a stake in the ground to rollback these enormous spending increases and bring some sanity back to the federal budget which is why the House has rejected them so far.

The limitations in the tax deductions and exemptions are not ‘tax hikes’ per se but have the same effect as raising taxes paid by specific groups of people who have already benefitted from special loopholes and carveouts gained for them by clever and talented lobbyists and organizations in Washington, DC.

We have no problem with eliminating many to most special tax breaks…there are literally thousands of them in the byzantine current federal tax code which only further argues for a complete overhaul of the system and replacement by a consumption tax.

Our principle is this: if the tax break is not generally available to each and every taxpayer, it probably should not be allowed. What is so fair about offering a special ethanol tax credit to a producer of corn in Iowa, for example, when a middle-income taxpayer in North Carolina who is renting a home, has no children and pays his own medical insurance gets almost zero tax deductions to use himself?

The tax code should be blind to the individual needs of each and every citizen. The tax code is there to do one thing and one thing only: Raise sufficient funds to pay for the essential government services we need to protect and defend our nation; promote commerce and provide for the general welfare as it says in the Constitution.

Will there be enough time to craft a Grand Compromise by August 2? Probably not. You didn't see the Republicans take the lead on entitlement reform when they held complete control of the government from 2001-2006 simply because everyone knows that a Democrat in the White House has to take the lead on the tricky issue of entitlement reform and raising the retirement age for both Social Security and Medicare (which we think should go to 70 like by tonight at midnight. That would save close to $5.3 trillion in new debt incurred over the next decade, give or take a few hundred billion dollars either way)

It is a shame because these chances only come along about once every decade it seems where both sides have to sheath their swords and park their shibboleths at the door of the Capitol and go in there and act like statesmen for our nation’s sake and not their own particular political future or party’s sake.

(Editor's Note: Frank Hill's resumé includes working as chief of staff for Senator Elizabeth Dole and Congressman Alex McMillan, serving on the House Budget Committee and serving on the Commission on Entitlement and Tax Reform. He takes on politics from a fiercely independent perspective at the blog Telemachus).


  1. So many words in the service of being so completely wrong. First of all, I kind of doubt Hamilton's Federalists ever contemplated regulating the salt content in the citizenry's food. More globally, this silly relativist piece falls into the false narrative that the two sides in today's partisan fight both have in mind the interests of America as it was founded by Hamilton's Federalists as well as Jefferson's Democrat-Republicans. They don't. One side is dedicated to "fundamentally transforming" the country. You know which one that is.

    “Because the Only Good Progressive is a Failed Progressive”

  2. the basic debate of big government versus small government is still intact, just like it was at the Beginning of the Republic.

    and you still have to get to 50%+1 to get anything done in Congress.....that much has not changed in these 222 years no matter how much you might disagree or despise your opposition in politics


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