Tuesday, August 02, 2011

Rant! Who were the winners and losers in the debt limit debate?

The big winners were the rich who will again be able to avoid paying their fair share of the costs of government.

The most immediate losers have been the people who have their retirement savings invested in the stock market, which tanked today after big losses last week. Losers will also be the American public who will have to pay more for the money our government borrows, first because the debate weakened confidence in the full faith and credit of the United States Government, and because it drew attention to the public debt without doing much to slow its growth, and ultimately because the new law will result in increases of the public debt that will be faster and greater than necessary.

The new law, in my opinion, will not provide the flexibility that the government needs to stimulate the economy, practically guaranteeing a second dip recession. Thus the tax income to the government will go down while entitlements will go up. Then the law does not increase Government revenues nor does it go very far to reduce the deficit, so the debt will go up due to this factor also. Since the economy will not be simulated, there will be more people out of work, and they will be big losers. So too will be the businesses that see their profits go down due to the recession, and the owners and stockholders in those businesses.

Of course those who depend on the government safety net will also be losers as the Republicans have succeeded in their demands to cut entitlements.

When the United States sneezes, poor countries come down with pneumonia. The U.S. recession will trigger cuts in demand for imports from poor countries, cuts in foreign direct investment in those countries, and cuts in foreign assistance. Some of the poorest people in the world, people trying to get by on less than a dollar a day, will suffer from this law. The U.S. also uses its soft power to achieve many foreign policy objectives, including the promotion of democracy abroad and the promotion of peace. This law will weaken that soft power, and we will all be losers from that effect.

The talking heads on television have been concerned with the winners and losers among politicians. Those people are all affluent, and even those who lose future elections will be in no financial need. I can't spare any concern for them.

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