Republicans are being horrible politicians during this contentious and polarized debt debate. Let us be honest, they have not been willing to compromise adequately with the democrats. The Freshman Republicans claim that they were sent to Washington by the Tea Partiers to decrease the debt and put the government on track to become financially self-sufficient, i.e. spending money that we take in from revenue from American citizens. Borrowing from foreign nations, like scary China, is unacceptable to these politicians and for good reason.
But let us put this into perspective and context. China needs us just as much as we need them. There is a reason why they are willing to take in American debt and accumulate a foreign reserve surplus while we run a deficit. China needs America to export a vast amount of their products into our vibrant economy. America's economy is based on 70% consumption and China wants to be a main provider for that 70%. A problem in this dangerously dependent relationship is that if one of us decides to stop playing in this game it could be detrimental to both economies. For instance, if China were to stop buying our debt or demanded faster repayments in the form of higher interest rates it would hurt the American economy. But the point is that even though China owns a substantial amount of debt, I think it is around 8%, they don't have as much leverage as the fiscal situation implicates. An underlying reason why China's economy has been growing at 9% annually is because they began opened themselves up to foreign markets with America being their most significant client.
The China debacle explained to some extent in the previous paragraph is just to get who ever may end up reading this a different way to view our complicated relationship with China. Now, back to the debt debate. All members from both parties acknowledge the fact that increasing an already 14 trillion dollars of debt is dangerous. All congressman are attempting to mitigate our debt problem, it is just the variables that we take to do that that they disagree on.
Republicans have legitimacy behind their statement of "increasing taxes incentivizes the government to spend more." In the past, taxes have been increased as well as spending and decreasing the debt never materialized. But in the Clinton Administration, they balanced the budget while increasing some taxes and put the country on a path of domestic fiscal solvency. And Obama has been willing to decrease the debt by 4 trillion over the next ten years. Some members of Congress call his speech disingenuous. But Obama had a 4 trillion dollar plan that was rejected by Congress. Obama has held meetings daily to find a solution and has himself tied an otherwise unconnected debt ceiling with the fiscal budget. This does not have to be done, but Obama wants to chip away at our debt. He has acted as such. And please, pray that a deal gets done, and if your agnostic or atheist, call someone who is religious and ask them to pray for you.
But let us put this into perspective and context. China needs us just as much as we need them. There is a reason why they are willing to take in American debt and accumulate a foreign reserve surplus while we run a deficit. China needs America to export a vast amount of their products into our vibrant economy. America's economy is based on 70% consumption and China wants to be a main provider for that 70%. A problem in this dangerously dependent relationship is that if one of us decides to stop playing in this game it could be detrimental to both economies. For instance, if China were to stop buying our debt or demanded faster repayments in the form of higher interest rates it would hurt the American economy. But the point is that even though China owns a substantial amount of debt, I think it is around 8%, they don't have as much leverage as the fiscal situation implicates. An underlying reason why China's economy has been growing at 9% annually is because they began opened themselves up to foreign markets with America being their most significant client.
The China debacle explained to some extent in the previous paragraph is just to get who ever may end up reading this a different way to view our complicated relationship with China. Now, back to the debt debate. All members from both parties acknowledge the fact that increasing an already 14 trillion dollars of debt is dangerous. All congressman are attempting to mitigate our debt problem, it is just the variables that we take to do that that they disagree on.
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