The Real Cliff We Face

This so-called “fiscal cliff” we face resulted from an agreement reached last year between Democrats and Republicans in Congress to increase the debt limit high enough to fund the government past the 2012 election. Now that the election is over, the result of that agreement - about $670 billion in budget “adjustments” - is upon us. Those “adjustments” will come, unless Congress acts sooner, in the form of $135 billion in across-the board cuts to discretionary spending, and $535 billion in TAX INCREASES.

What we’re actually debating here is how to pay the tab for things we’ve done since 1980 (before then, the budget was more or less balanced) but for which we lacked sufficient revenue to pay as we went - those things include, a military incursion in Grenada, deployment to Lebanon, the S & L collapse, military intervention in Panama, the First Gulf War, Kosovo, invasion of Afghanistan, invasion of Iraq, two tax rebates (stimulus), homeowner mortgage rescue plan, financial system rescue funding during the 2007-2009 meltdown, automotive bailout, a second round of banking and mortgage bailout, and a general stimulus spending package - all of it facilitated with borrowed money.

Congress is on the verge of dealing with the situation the way Congress always does - at someone else’s expense. They’ll wring their hands and fret over the terrible mess we’re in, but in the end, they’ll pass a bill that does most of what will already occur - raise tax rates and cut domestic spending, which translated means paying for it with middle class money and the poor’s misery. Congress created this problem - both the underlying fiscal issues and the looming automatic changes. All this talk about “fiscal cliff” and “second recession” is nothing more than an advertising campaign to cover the real cliff we face, which is Congress’ pitiful lack of leadership.

Time To Regulate Credit Card Interest Rates

The Obama Administration has used every means available to impose tighter and tighter regulations on companies receiving Stimulus Funding. In the financial industry, they have sought to limit executive pay and eliminate bonuses. In the automobile industry they have used federal assistance as leverage to restructure General Motors, even ousting officials elected by General Motors’ stockholders. Most recently, some in the administration have suggested the government should regulate salaries of all executives in all industries. But one thing they haven’t sought to regulate is credit card and consumer loan interest rates.

Over the past twenty years, the banking industry has lobbied for increasingly favorable rules controlling the interest rates they are allowed to charge for credit card debt. As a result, in some states interest rates are unlimited. In addition, banks and credit card issuers are permitted to tack on fees and late charges and they are permitted to increase interest rates for customers who, though current at the time, fail to meet certain criteria not directly tied to their account.

Not satisfied with that, in 2005 after years of intense lobbying, banking officials convinced Congress to tighten bankruptcy laws to prohibit consumers from liquidating credit card debt. Now that many in the financial industry have run the banking sector into the ground, imperiling the U. S. and the world, these same companies turn to Congress for assistance.

In the past 12 months, the federal government, through one agency or another, has pumped trillions of dollars into the banking industry. Banks have received generous injections of capital, either through the sale of preferred stock or loans from the Federal Reserve, at all but an interest-free rate. Every dime of that money is taxpayer money. If banks get all of this free of charge, why are consumers forced to pay usuriously high interest rates?