While we Virgin Islanders observe the drama of our government representatives debating the important task of drafting a fiscally responsible budget. The shenanigans of our elected officials over our territory’s very significant shortfalls pales in comparison to what’s occurring at the federal level. Here’s what’s happening while we lament the local drama.
Government’s deficits at all levels (local, territorial, state & federal) are out of control. The federal government’s annual deficits now routinely surpass $1 trillion. Most people don’t really understand the significance of this sum of money, $1 TRILLION… 12 zeroes after the 1.
The nation’s debt is greater than $14 trillion, but let’s set insane amount aside to concentrate on our country’s annual deficits instead. Let’s try to put this into some sort of perspective. The total federal income taxes and corporate taxes taken in by the feds is roughly $1.1 trillion annually, yet still we still ran a $1.3 trillion federal deficit last year. This means that even if the government DOUBLED taxes on taxpayers, it still can’t cover $200 billion of yearly irresponsible federal spending, fraud, waste & abuse. Currently, the congressional fight is over cutting $61 billion from the budget or risk a government shutdown… my math says they are WAY OFF the mark by many significant figures. Take a close look at your own personal annual budget, can it withstand a 100% increase in taxes? Try going to your bank for a loan with that kind of cash flow problem. Don’t forget, only roughly half of all wage earners actually pay taxes.
The first $1 trillion deficit came in 2008, and the government explained it as a consequence of the financial crisis, TARP. Another $1 trillion deficit in 2009, called Stimulus, rather the American Recovery & Reinvestment Act, and yet another in 2010. We’ll have another in 2011, even if the House Republicans hold the line on out of control federal spending and shut down the government.
The Feds have borrowed more money in the last five years starting in 2005 to the present, than the US government had borrowed in the entire history of our government up to that point, 229 years. This isn’t sustainable and most of us don’t realize the consequences this will have on our collective futures & what it will do to future generations. Here in the US Virgin Islands, as a territory, we are at the end of the fiscal whip when it comes to federal funds; meaning we will be cut off from future funding first.
Our federal government is printing money & calling it Quantitative Easing; it realizes that it can’t finance it’s way out of our debt problem. It must use INFLATION to attempt to reduce our national debt. In order to support the government’s unchecked spending, the Federal Reserve now continuously buys up government debt. How?! The Fed creates, PRINTS, new money to buy government securities, much to the chagrin of the Chinese, Japanese & other nations that own significant portions of our national debt. If the Fed continues this practice, it will eventually cause a global run on the dollar that will destroy the value of our currency. This destruction is already in progress. The World Bank has announced that wants to replace the US Dollar as the world’s reserve currency. The reserve currency topic itself is beyond the scope of this article, but vitally important nonetheless to the overall discussion.
You may read this and ask; Why aren’t these issues in the newspapers or other mainstream media? Well, government spending now makes up more than 40% of our nation’s economy. As a business owner, would you risk offending your best customer? The government is the issuer of licenses, permits, etc needed to conduct business. Better to go along to get along. A single act of Congress, or state, or territorial edict could put any given business out of business very quickly.
Our government, at every level, believes the average citizen won’t understand what’s happening as the dollar continues losing value. The government will shift the blame onto commodity producers, like big oil, large food companies or private businesses in general as prices march ever higher. The fact that commodity prices are set on global markets and that none of the industries to be blamed have anything near monopoly pricing power will be overlooked during the blame game. The government is betting that the average American will neither understand nor care. It’s betting that you will believe anything you hear or read in the mainstream media. It came from a government source, so it must be true… right?
Have you noticed WAPA cutting power for 30 minutes or so periodically each week? Saving some money, incrementally perhaps, while the public considers it only a nuisance. What’s the cost of fuel these days; approaching 2008 levels perhaps? Hmmm… is electric power a commodity?
Nationally, we ignore the fact that the Democrats refused to issue a 2011 federal budget when they had control of the House, Senate & White House to minimize the “shellacking”, according to the President, they received at the hands of the American people on November 2, 2010. Democrats controlled both houses of congress and the country’s purse strings since 2007. Our delegate to congress is, not surprisingly, very quiet.
In the current, ongoing budget battle, House Republicans are trying to bring fiscal responsibility to our government & halt the slide Democrats have put our country on towards socialist banana republic status. The 2012 proposal by Rep. Paul Ryan (R-Wis) proposes cutting over $4 trillion over the next decade, roughly $400 billion/year . If approved, this will put the brakes on our spending problem. A start, not a full reversal. Raising the national debt limit is not a responsible option. Government shutdown is the only remaining option since Democrats refuse to act in a fiscally responsible manner.
Locally we haven’t learned from the national debate, we watch the popularly elected politicians continue to manipulate the system & ignore the public good. Currently, we have local squabbles & outright corruption in our VI Legislature & Executive Branch on the territorial budget, election system reform, et al.
Ah… what do I know… maybe I’m just a republican alarmist. The rum money will save us… if congress doesn’t take it away to help pay off its debt.
Vince Danet, VI Republican and Member of the Territorial Committee