Trickle-Down Economics, Rich Uncle Pennybags, the Debt Ceiling Debate, and You…in 15 minutes.

Have you ever known of a business owner to lay off employees because they couldn’t pay their income taxes? Alternatively, have you ever known of a business owner to create jobs for people to sit around all day long and read the newspaper, drink free coffee, and loot the office supply room? (And I am not referring to politicians and pundits here). Yeah, neither have I. And I expect that to continue.

Since I could spew ad-nauseam on this subject (and I will in a moment), let’s jump start the conversation with a message from Rich Uncle Pennybags to save some time. My quick review:

The wealthiest among us are in a position to create jobs once that demand exists. But they in no way create that demand. That demand comes from consumers, specifically middle and working class families. Keyword being: working. Right now, only the government can guarantee job creation, specifically in infrastructure projects (mass transit is a huge bang for the buck here) and technology initiatives. And not bank — no pun intended — on a pinky swear, given that the wealthy (in this global economy) will always have other investment opportunities to weigh their supposed job creating options against: real estate, overseas investments, speculative activities, global philanthropic efforts, luxury items, and their mattress. None of which will create jobs here in the US, although high growth/low cost countries — China, Brazil, India, to name a few — very well may be sending thank you notes to our wealthy, patriotic, and job creating heroes.

And don’t get me wrong here. I fully expect people to maximize their return on investment. But until that maximum ROI becomes creating jobs here in the US, expect the wealthy to look elsewhere. And we can change that, but until then, we have to work within the current business and economic environment in which we exist. I don’t expect the rich to take the high road here, since it’s not their job. (I often wonder if the wealthy are even in sync with the GOP marching orders).  It must be the government to continue to stimulate the economy and create jobs. Which leads me to my next subject: the current debt ceiling debate and its August 2nd deadline.

Unbeknownst to many, increasing the debt ceiling is not taking on additional debt. This is money that has already been appropriated and approved BY Congress. The GOP approved increasing the debt ceiling under Dubya 7 separate times (once per year in office with exception of the first, since he was handed a surplus from Clinton). All without issue. It was also raised 18 times under Reagan — who also raised taxes 11 separate times, ultimately undoing half the savings of the massive ’81 tax cuts; the rest was funded by a tripling of the federal deficit, as evidenced by the multitude of debt ceiling increases. And raised only 4 times under Clinton — who, to be fair, benefited favorably from the dot-com bubble. Still, this issue has generally been viewed as a routine political vote and not an economic one — divided along party lines, with bipartisan support when necessary…until now.

So to the Michele Bachmann and tea party supporters who refuse to raise the debt ceiling under anycircumstances, with the exception of those that may exist within Hello Kitty Online? You are irresponsible, and quite frankly, acting like jackholes. All under the guise of “principles”. You are not making a “tough love” decision by voting against a debt ceiling increase. You are purposely tanking the US economy, and highly likely the global economy along with it.

Again, the real challenge here is to change the current system while working within it…and that does not include cutting spending by 44% overnight and “prioritizing” payments to make up for the shortfall. Crashing the global economy is not courageous, especially when it’s to score a political point. Tea Party: 1 Rest of World: 0. You win. Now what? Other than to stake claim to a “titanium spine”:

It pains me to link to a Fox video, and while I don’t agree with the specifics of Bill O’Reilly’s argument (and absolutely nothing Bachmann says), even he agrees: we need to raise the debt ceiling or the American people are going to get hurt. Understand that our entire economy drives off the risk-free rate of US Treasuries — your car loan, your mortgage, your credit card, your student loan, and the price of the shovel you are going need to dig yourself out of the mess you intentionally created.

Markets are fueled by the “confidence and expectation” that the US will always make good on its obligations. All of them. As it has done, without exception, over the last 235 years. It’s called risk-free for a reason and not the pick-and-choose rate. Which I promise will come with a substantial premium. Yet you think that honoring the interest on our debt alone will maintain our current credit rating while defaulting on any of our other commitments, regardless of how “wasteful” you may think they are? Forget all sacred entitlements (Social Security, Medicare/Medicaid, military pay) for the moment, but what about: the US Postal Service, the FAA, the FBI, the TSA (like ’em or not), or the CIA? Unemployment benefits, food stamps…in this economy? All overnight? Anyone? Anyone??

The global credit and financial markets are going to view that otherwise. Big-time. And even if you don’t subscribe to this reality, make your own, and have fun “prioritizing” here. Keep in mind that Americans are going to take serious issue with paying interest payments to foreign governments over the commitment it’s made to its own people. You know, as a “priority” to avoid default. Good luck with that.

Oh, and that austere and financially “responsible” Paul Ryan budget plan you are all so gaga about and unanimously back? Yeah, that one. Just so you know, that plan would require an increase in the debt ceiling as well…to the tune of just slightly under $2 trillion (does that number look at all familiar?) to cover the government’s bills through 2012. But you already know that. The hypocrisy and shortsightedness is so deep, I could swim in it. Make the deal that is currently on the table to raise the debt ceiling, which includes significant spending cuts offset by a much smaller portion being funded by a slight percentage increase in taxes for the filthy rich. Who, by the way, are doing better than ever in an economic environment that requires “shared sacrifice” yet continue to receive the lowest effective income tax rate in the last five decades.

Back in-the-day (like one year ago), this would have been a GOP victory. But in today’s political arena the GOP won’t allow itself to compromise on anything since it’s all about making Barack Obama a“one-term president”. At any expense. And that’s what really worries me. Because we can’t have that. Also, if you are a part of a current presidential campaign (and not just thinking about it)? Fine. Talk about what you will do once elected, and not what you will do to sabotage the current administration.

As for me? I say tax the rich or close existing loopholes, as well as implement the proposed spending cuts…and save a yacht while we’re at it. Because that in and of itself is not what is going to keep this economy afloat. Pun intended. But since the GOP (backed by tea party pressures) can’t seem to exist for more than five business days into the future based on extreme partisan “principles”, I can only hope that your 15 minutes are finally up.