Cognitive Dissonance and the Debt-Ceiling Morass
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- Cognitive dissonance -- a refusal to accept objective facts that define rational behavior -- is at the root of impending disaster in Washington.
House Minority Leader Nancy Pelosi and her colleagues simply won't accept that the two wars, Bush tax cuts and prescription drug benefit for seniors didn't cause the deficit. To point: In 2007, the last year before the financial crisis and with all the aforementioned in play, the deficit was a manageable $161 billion -- that's a fact the left simply won't address
In 2011, in the second year of the economic recovery, government spending is up $1.1 trillion, even though only $200 billion was needed to accommodate inflation. Federal spending is up from 19.6% of GDP to nearly 26%.This increase is mostly caused by: additional regulatory costs; newly legislated additions to Medicare and Medicaid benefits and rising health care prices accelerated by "health care reforms" championed by President Obama and congressional Democrats; and a population that lives longer while politicians refuse to further raise the retirement age. Congressional Democrats and the president cannot accept that more taxes are not the answer. Even if every tax and fee the government collected were raised by 50% -- something that is not possible because many activities would leave the country and some folks would choose to work less -- the deficit would still exceed $600 billion. President Obama's taxes on families earning more than $250,000 would raise a paltry $80 billion, and even if all Americans and businesses were taxed more aggressively, the deficit could not be lowered to less than $1 trillion. At that, the nation would be cast into a permanent recession, akin to the 1930s.
Entrenched OpinionsSimply, the national budget cannot afford the additional programs and benefits Leader Pelosi and President Obama have created, and they won't even entertain a discussion of those facts. >> Get your financial news on the go with TheStreet's iPad app. Over on the Republican side, the Tea Party, led by House Majority Leader Eric Cantor, refuses to understand that the 2010 election victory gave Republicans control of one-half of one of the two political branches of government. Control of one-quarter of lawmaking gives Republicans a veto over changes in national policy -- including raising the deficit ceiling -- but it does not put them in a position to impose systemic change.
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