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The Political Theater Of US Economics – OpEd

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July 28, 2011

By Porya Mohajer Soltani

Another day and we are all faced with yet another headline covering the US debt crisis and its latest drama between the Robin Hood-like Democrats and the Mr. Burns-like Republicans. And while the default clock keeps ticking, one wonders, whether US leaders actually want to avoid a default?

Seemingly not! But why would anyone in their right mind voluntarily choose to bear the pains of bankruptcy? Maybe, the near 1.5 million US citizens that yearly file for personal bankruptcy could share some of their post-bankrupt experience with their leaders.

United States

United States

The official excuse for them having gone belly up has been the rising jobless rate and level of consumer debt. Not looking too bright for the US with Great Depression 2.0 lurking around the corner. The only three options discussed by US leaders to get the economy out of the black hole have been a cut in budget, a raise in taxes or a mixture of both. All of which somehow leads to pretty much the same results.

Yet, the Democrats and Republicans have failed to find a common ground. Instead, all they keep doing is unveiling new plans only to be rejected by one another.

Nevertheless, while the US government has been quick to bail out blue chip companies these past years, a cut in the governments nearly USD 1.5 trillion budget deficit, will most likely make life harder for the underdogs of the world’s largest economy – in decline. After all, there has not been talks of cuts in much else than entitlement programs, such as Medicare and Social Security.

People on these programs are the unemployed ones. They are the ones with debts. The ones, whose credit cards have been forced into an endless number of traps.

A slash in these programs would only lead to a closure of some offices and thus a further increase in the already high unemployment rate for the already low-income workers. This in turn would decrease the government’s tax revenue and hence increase the budget deficit they were attempting to cut in the first place.

The second option, to eliminate loopholes and tax breaks for the county’s wealthy and big corporations would only lead to a downsizing, as well as an outsourcing of their operations. After all, corporations have to balance their income statements as well.
Consequently, the lines at the unemployment offices in the US would just grow bigger, as not only would no one be willing to hire more workers, but they would also reduce parts of their workforce. Or, they would reduce their workers’ salaries. In any case, the have-nots would again be left with less to have, which would further reduce domestic demand which is crucial for economic growth. The only demand this would increase would be the one for credit, the same evil demand that created this whole mess for the US.

An outsourcing of US businesses, apart from the above mentioned consequences, would only increase the USD 44 billion trade deficit.

As for the wealthy individuals finding loopholes in the tax regulations of the country, would it instead not be better to discuss why these holes where discovered in the first place? After all, the wealthiest in the US have always hired the best tax experts available, to find for them all the undiscovered loopholes, so they can further continue their corruptness.

And now, the people of the US have become prisoners of a potential state of mind, fearing the consequences of a default.

Yet the risk of a default is minimal. The US has nearly one thousand military bases around the world that it could shut down. This would surely balance the budget deficit better than their recently proposed budget cut of USD 2 – 4 trillion over the next decade.

Fear however, seems to be a regular tool used by US leaders to divert people’s attention from where it should be. These budget talks are nothing but bread and circuses designed to distract people for what is yet to come.

So ladies and gentlemen, sit back, relax and watch as Obama welcomes the US to the Age of Austerity.