This is a stickup!

The Republican party is holding the country hostage, and one way or another, some serious damage is about to be done.

Here's what's happening, in basic terms...I know this is really long, but hang in there, it's important.

The federal government has about $14.1 trillion in debt and we currently have a $14.3 trillion debt limit (ceiling).  Congress has to vote to raise the debt limit in order for us to borrow enough money to pay the bills.  No one really knows what will happen if we don't raise it because it's never happened before, but economists say that it will likely lead to another recession, increased interest rates, more job loss, etc.  A.k.a., we'd be f*cked.  Mind you the debt ceiling has been raised in the past (five times under Bush), no questions asked.

What's different this time is that there's a Democrat in the White House and Republicans have the majority in the House of Representatives, so we need Republican votes to raise the debt ceiling. The Republicans are using this to their advantage by making ridiculous demands in exchange for their votes.

What politicians are focusing on right now (or so they say) is reducing the budget deficit, which will help bring down the debt over time.  Since early in Bush's presidency, and continuing into Obama's, the government has been spending more money than it brings in in taxes.  This is mostly due to:

• The wars (Bush)
• Tax cuts for corporations and the wealthy (Bush)
• The bank bailout (Bush)
• The stimulus package (Obama, but it was needed to clean up mess from Bush)
• And Social Security and Medicare costs which are rising because the baby boomers are getting old. 

So even though most of the deficit was Bush's fault, the Republicans are suddenly extremely concerned about it and are making it their top priority (although Mitch McConnell, one of the top Republicans, has said very clearly, multiple times, that the "single most important thing we want to achieve is for President Obama to be a one-term president", so that's what this is really all about).

There are only two ways to reduce a budget deficit:

1. You can either cut spending on things that benefit the whole country (defense/national security, social security, medicare, medicaid, roads/bridges/railroads, education, environmental protection, food safety, medical research, etc.)
2. And/or you can raise revenue by raising taxes. 

Almost every economist agrees that we need to do both in order to actually reduce our deficit without seriously screwing people over who desperately need things like medicare, social security, food stamps, roads, NOT GETTING BOTULISM, etc.

Before you freak out about the idea of "higher taxes", Democrats are only suggesting we do this by getting rid of tax breaks for oil companies and closing loopholes for corporations and people making record-breaking profits (before you go feeling sorry for them, keep in mind that you and I each paid more in taxes last year than General Electric, literally).  The corporate tax rate is already at its lowest point in over 60 years. But still, Republicans say raising taxes will keep companies from hiring people and will increase unemployment ("Job-killing taxes!"), but it's simply not true.  They're already making record profits and still not hiring anyone.  Since 2009, 88% of income growth has gone to profits, while only 1% has gone to wages.

The Republicans absolutely refuse to raise taxes in any way, shape or form.  This might sound great on the surface, but the reason behind it is to reduce the size and scope of government.  Not only are they obviously trying to protect the tax breaks for the rich, but they also know that any money that is NOT going to the government will go to businesses which will result in even more profits for the rich. They're willing to sacrifice things like social security, medicare, roads/bridges, education, the environment, food safety, etc. in order to increase profits for the rich (i.e. themselves).  The rich have been getting richer, the poor getting poorer, for a long time, and they have no interest in reversing that trend.

So this is where we stand.  The two sides have been fighting over this for months.  The Democrats have continued to give in and agree to cuts, but the Republicans just throw tantrums and refuse to budge at all on taxes. 

The deadline to raise the debt ceiling is August 2.  If Republicans don't budge on taxes but continue to insist on big deficit reduction, then one of two things will happen.  Either...

1. We don't raise the debt ceiling and we end up with another recession and global economic crisis.

Or

2. To avoid that, Obama caves and is forced to cut spending on things that normal people really depend on in order to get by everyday.

I don't know about you, but "higher taxes" doesn't sound so bad anymore.

Bonus for Republicans...Obama will likely be blamed either way and it could cost him the 2012 election...remember what I said their "single most important" goal was?

What I don't understand is how the Republican establishment can convince roughly half of this country to vote against their own best interests.  If you make less than $250K/year, you have no business voting Republican.  And for those of you who do it anyway, I'm fascinated. Please, tell me why.

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And another thing!  If you're not bored to tears yet...

Many economists say that we shouldn't be focusing on the deficit right now at all since the economy is still so bad and unemployment is so high.  Debt and deficit sound really bad and scary, and they are, but they're not actually doing as much harm to us right now as the bad economy and unemployment.  In order to get people back to work and boost the economy, experts say that the government should actually increase spending. If we invest in things like infrastructure (roads/bridges) or clean energy, we could hire a ton of people. 

You might be thinking, that's great for construction workers, but what about white collar jobs?  Well if construction workers get jobs, they get paychecks. Then their wives go and spend that money at the mall, and Macy's starts doing better and decides to grow their marketing department.  Then they find an ad agency which now has to hire more people to work on that business, etc.  You see where I'm going with this.

Once again, Republicans' #1 goal is to get Obama out of office.  No president since Franklin Roosevelt has been re-elected when unemployment was over 8% and right now it's 9.2%.  The Republicans have no desire to bring down the unemployment rate, regardless of what they say.  They'll tell you that Obama tried this whole "government spending to get the economy going" thing (stimulus package in 2009) and it failed.  It actually didn't fail (things would have been much worse if it hadn't passed), but it didn't work as well as planned.  Part of the reason why is that it got so watered down by Republicans that it wasn't big enough to work.  It mostly consisted of tax breaks and aid for states, but very little for things like infrastructure that would create jobs. 

The 2012 election should be a slam dunk for the Democrats (as should every election if people actually paid attention).  But it won't be.  That's a really scary thought if you look at who's running on the Republican side. This blog post is already waaayyy to freaking long to get into that now, but if you want to know more about who could be the next president if Obama loses, just ask.

If you actually read this whole thing, get yourself a cookie, you deserve it!

There are bad ideas, then there's the Balanced Budget Amendment...

Before you get caught up in the Republicans sounding all responsible by touting a "Balanced Budget Amendment"...you should read Ezra Klein's Wonkbook post on the subject that points out what it really means:  The Worst Idea in Washington.

And this one: The Worst Idea in Washington, Part II
And Part III
And Part IV
And just in case you're still unsure, Part V.