The Debt Distraction

The recent fight over raising the debt ceiling is just a charade. The proposal to raise the national debt by $3 trillion is only a borrowing of less than $10,000 per person. Our current debt is $14 trillion, which is only about $45,000 per person.

The $3 trillion could be raised easily by increasing taxes by only 1%, yet while the overall effective tax rate in the US is only 24% of GDP, the fifth lowest among industrialized countries, Americans are so stressed by the economic crisis, they feel as though they should not have to pay any additional taxes and maybe they are right. That's why it should be the bankers who have to pay up.

The bankers and other rich investors were the beneficiaries of the fraudulent ponzi scheme of structured finance and if they are not going to be held to account for their illegal and fraudulent activities they should at a minimum be forced to disgorge their ill-gotten gains. This could be accomplished via raising taxes on the rich or even just the bankers by just 1%. They are not hurting and they can afford to transfer back to the society some of the money they accumulated from the general public via the mortgage backed security ponzi scheme.

Obama's main problem is that he is ever the legislator. He knows how to craft and negotiate legislation but is not an administrator. He approaches each problem from a legislative perspective and not from an administrative perspective. This explains why he never takes the Republicans to task and always starts the negotiation from what appears to be a middle of the road position instead of starting from a position of administrative and public strength. He has been sucked into one manufactured issue to another and is being led around by the nose by the Republicans.

All the wrangling over debt and other "non-matters" is part of a Republican plan to distract the President from making any progress on the economy and jobs. He needs to stop taking the bait and set the agenda instead of constantly responding to the Republican dog whistle, otherwise he will never win in the public's eyes and it's their opinion that matters in the end.