Misguided attempt at fixing the wrong Problem

In the Wall Street Journal, it's being reported that deficit/debt talks between House and Senate Republicans have broken down with the White House over the issue of taxes. The United States is $14 trillion in debt, fighting three wars (Iraq, Afghanistan and Libya) and has a military presence throughout the world. We haven't had a deficit per GDP ratio this high since we fought World War 2. We've also spent $16.5 trillion on social welfare programs, aka War on Poverty, with a negligible change in the actual poverty rate since the 1960's.

Additionally, the Federal Reserve which was created in 1913 to lessen the impact of business cycles (Read end Recessions/Depressions), which failed only 8 years later (1920-1921 Depression which was the worst in US History except that the 1930's Great Depression dwarfed it), and has failed in many subsequent recessions since then, has also managed to Quantitavely Ease the purchasing power of the US dollar by several trillion by purchasing US Treasury Securities. As a result, we're currently watching the Consumer Price Index go from a traditional 3% inflation rate to roughly double. To escape the inflation caused by the Federal Reserve, many investors hedged against it by purchasing commodities (silver, gold, oil, etc.) which recently popped (31% silver from $49 to $34 and 21% oil from $115 to $91).

Bankers and Investors have loved the cheap money created, nearly doubling the Dow Jones from its March 2009 low of 6,627 to its April 2011 high of 12,811. However, unemployment hasn't changed from its 9-something percent. Who benefited? Obviously not the poor and middle class. This isn't a class warfare, coveting thy neighbor's wealth observation. This is an argument against socializing debt and privatizing profit. There is no reason any bank or corporation should have been bailed out with TARP or with cheap money from the Federal Reserve (Read Interest Target rate of 0%). The only Industrialized Nation with a debt to GDP ratio higher than the US is Japan, and they have it solely because they did the same exact thing we've been doing to force recovery on their economy back in the 1990's. It didn't work and as a result they had a decade of lost production and stagnation. Which brings us back to the present.

There's no need to have a deficit. There's no need to have military bases throughout the world at a Defense Department cost of over $800 billion per year. There's no need to spend nearly $2 trillion (55-60% of our Federal Budget) on Social Security, Medicare, Medicaid and other Socialist programs. We shouldn't have Corporate Taxes (a cost which is shifted to the Consumer, not the Producer) let alone the highest Corporate Taxes in the world. We shouldn't have Capital Gains Taxes on those that risk their wealth in order to grow it and in return provide us with every consumer product we purchase. We shouldn't have Estate Taxes which punish those who spent an entire lifetime accumulating wealth that they could pass on to their posterity. We most definitely should not be spending 8% (currently) of our Federal Budget financing our Debt Burden.

What we need is a return to the constructs of the Federal Republic that this country was founded on. Our Constitution stipulated that we have a Senate and a House of Representatives. This allowed State Representation in the Senate and the Peoples Representation in the House. People love using a democracy, which we are not, to use their majority position to force their will on the minority. It's easy to say raise taxes when you're asking the rich to do it because they're a minority. It's easy to keep demanding socialist benefits via Social Security, Medicare and Medicaid because they're in the majority. Our country needs a return to the Federal Republic in which Senators can say and not suffer the wrath of the Voter that we can't afford it, there are consequences to squelching wealth production, there are consequences to ever increasing benefits. So these talks about deficit reduction and debt ceiling are predicated on the belief that our system as it currently stands can continue to function into the future, which is simply unsustainable and false.

Return to the Federal Republic that our country was founded on and these issues will be righted. End the Federal Government's means of directly collecting revenue from the People and force it to collect it from the States. Allow 50 experiments on the best method to raise revenue and foster growth and we'll once again be the Nation of Exceptionalism that Alexis de Tocqueville wrote about in the 1800's.