A Short Primer On The Debt Crisis

Last night Hugh Hewitt spent three hours with Representative John Campbell talking about the debt crisis.It was an amazingly educational show.

Representative Campbell’s House of Representatives web page lists some of his committee assignments:

As a member of the House Committee on Financial Services, he has taken an active part in addressing the country’s top economic issues, including mortgage lending, corporate governance, banking reform, and insurance regulation. Through the recent economic crisis, he was influential in the responses to the crisis that averted a collapse in our markets and economy. Currently, he serves on the Capital Markets and International Monetary Policy subcommittees.

John also serves on the House Committee on the Budget, where he has had a hand in crafting portions of The Roadmap for America’s Future.  This plan championed by Congressman Paul Ryan contains a comprehensive proposal to ensure health and retirement security for all Americans, to lift the debt burdens that are mounting due to reckless spending, to reform and simplify the tax code, and to promote jobs and competitiveness in the 21st century global economy.  John is also a leading author of the Taxpayer Choice Act, which would make America’s tax system simpler and fairer by providing the opportunity to take advantage of an optional flat tax, in addition to repealing the Alternative Minimum Tax (AMT).

As a Certified Public Accountant and a former small business owner, Representative Campbell provided a lot of insight into where we are in terms of our current financial crisis.

America crossed over its debt ceiling of $16.4 trillion on December 31st. What that means is that the government cannot issue any new debt. The government is required, at least temporarily, to live within their means.

There were three main points to the discussion:

1. The debt crisis is coming and it could occur at any moment.

2. The debt crisis is caused by a spending problem–not a tax problem.

3. There are immediate spending reforms that would address the problem.

One of the things that I learned from the program is how Washington spends money. There is discretionary spending and mandatory spending. Discretionary spending includes defense, government agencies, etc. Mandatory spending includes all entitlement programs. The three main entitlement programs are Social Security, Medicare, and Medicaid. Other entitlement programs include food stamps, student loans, etc. These two types of spending are funded in different ways–discretionary spending has to be approved by Congress every year and signed into law by the President. Mandatory spending is already law, and unless Congress acts to change it, the spending automatically occurs.  Therefore, when President Obama says that raising the debt ceiling is only paying the bills that Congress has voted for, he is not being entirely accurate.

We are in financial crisis. Unless the spending is slowed, we will continue to see high unemployment and slow economic growth. Until more Americans begin to pay attention and vote for economic growth, rather than against it, America will continue to decline.

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There Is A Plan

I am warning you ahead of time that this article is going in a number of different directions. If you don’t want to bother to read the whole thing, the bottom line is, “Please follow the link to the ‘Fix It’ Series”–Rep. John Campbell’s plan for turning around the economy. Rep. Campbell suggests nine basic steps that would make a great difference.

According to Quoteland.com, Charles Edward Montague, English novelist and essayist (1867-1928), stated: “There is no limit to what a man can do so long as he does not care a straw who gets the credit for it.” That statement has been quoted in various forms by American Presidents, corporate leaders, and various coaches. It still stands as a truthful statement. Washington isn’t broken–it’s just that some of the leadership are not taking full advantage of the talent around them.

John Campbell is a member of the U. S. House of Representatives representing  the 48th Congressional District of district in California. He is a Certified Public Accountant (CPA) and small business owner. He serves on the House Committee on Financial Services and served on several Congressional economic working groups in 2008 and 2009. When you consider his business background, it is not surprising that he has put a plan together to turn around America’s struggling economy. You can find that plan at the “Fix It Series.” Please follow the link to see what is possible if the leadership in Washington was more interested in solutions than politics.

Some of the lessons I think our representatives in Washington need to learn are found in a book I recently read. “How Starbucks Saved My Life,” by Michael Gates Gill. This book tells the story of a high ranking corporate type who had grown up in a privileged environment (Yale University, Skull and Bones, easy entry into the corporate world, etc.). The book details the changes in his life that occurred when he suddenly lost his corporate job. One of the major lessons in the book is the value of respecting yourself and the people who work for you and with you. I understand that Washington politicians need to get re-elected, but a little cooperation and respect would go a long way in the current environment.

Harry Truman once stated, “If you want a friend in Washington, get a dog.” This statement tells me that the environment in Washington is challenging at best and has been for a long time. At this point in our history, we need to grow up and start hearing each others ideas so that we can solve the serious problems facing our country.

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