The American Debt: Stupidity

When following the struggle that elected Republicans are pursuing with the Obama administration on the issue of public debt, one wonders if, among the former, stupidity is not aligned with irresponsibility and its opposite: fanaticism. Everyone knows that they only have a few days left to sign an agreement, unless they’ve decided to push their country over the edge of recession.

It’s very simple: if by August 2 the Republicans have not reached an agreement with the White House on how to partially reduce an abysmal debt, then the government will have to declare a default. The next step, if this is the case, is that it will be forced to choose who will not receive their wages or payments. It could be retirees, soldiers, teachers or others.

Worse, if the Republicans insist on rebuffing any tax increase and deviating from any agreement made with Obama, then the American economy — which is known to be in a lackluster state — will become even more fragile. Moreover, according to an analysis by Ben Bernanke, head of the Federal Reserve, which cannot be suspected of leftist leanings, a crisis severe enough to extend this financial nightmare to the entire planet would necessarily follow. To this banker’s warning, we will add two more. They come from two newspapers with no inclination, either, for leftist daydreaming: The Wall Street Journal and The Economist. In short, they demanded that Republicans cease their circus.

Because a circus it is. As proof, when they’re not crossing swords with the Democrats, they’re tearing each other’s hair out. And it’s always on the tax front. Many among them have converted to voodoo economics — any tax cut will pay for itself — and refuse to listen to reason. From this pitiful spectacle, Moody’s and Standard & Poor’s concluded that politicians had lost touch with reality. The result? They intervened this week to underscore that the risk of a below par rating is real.

In this story there is an economic fact, a financial phenomenon that speaks volumes about the stupidity — there is no other word — of this policy that houses the determination to lower taxes among the rich. For the umpteenth time, we will recall that according to a study signed by an economist at the University of Warwick in the United Kingdom and devoted to the tax reductions granted by Ronald Reagan and Bush Sr. — there are about 10 years of this — it turns out that the primary beneficiary of these reductions is in fact the luxury industry, which is exclusively European!

The study insists that any tax cut is an encouragement to export capital or to subsidize luxury goods. The most eloquent example of all comes from Bernard Arnault, the emperor of luxury. At the end of the first year of Bush Jr.’s first term — a year during which he had spoiled the rich — Arnault’s fortune was 26th in the world. This year it has risen to 4th place! For better or for worse, thanks to all these tax gifts, Arnault has quadrupled his fortune ($41 billion). In short, contrary to Republican claims, the allocated reductions do not remain in the United States.

Earlier this year, the Republicans put together a report in which they maintained that the solution to the debt problem was as follows: Debt reduction should be comprised of 85 percent in public cuts and only 15 percent in tax increases. The plan drawn up by Barack Obama is within a few percentage points of that of the Republicans (83 percent and 17 percent, respectively). And what have they done for several days? They reject what they proposed. Their position combines madness and irresponsibility in place of political calculation. The only thing they think about is cutting, and those affected would be the mass of their fellow citizens who occupy the poor and the middle classes. It makes you wonder if there isn’t a hint of Aryan in these Republicans.