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The Inconvenient Truth - Your Deficit Ceiling Primer
by John Jazwiec

The inconvenient truth, is that the deficit ceiling crisis, is full of drama and little substance.

The president has no interest in any deal. He is not the one that made the deficit ceiling the issue. He has no skin in the game. It is not his crisis. He does not want a grand bargain. He stands to get no credit for cutting the budget. If Congress can figure out a way to cut spending and end the crisis; Obama bears no responsibility for people affected. He has only one real demand: lock the spending cuts through the 2012 election. Than he will run against any spending cut that is unpopular. The strategy is irresponsible but not without political merit. Unemployment is going to be the main issue in the 2012 election. Obama knows he is going to have run a campaign to INCREASE SPENDING to stimulate the economy. That can't be done with anything more than a dismissive and pained look on his face when he does not veto a congressional compromise.

Republicans don't want a deal. John Boehner dream job was to become Speaker of the House. But he paid a price to get the job. That price, was the Tea Party helping the GOP take control of the lower chamber. Instead of kingmaker, he just serves as a political puppet. The Republicans will get spending cuts without revenue increases. That means they will all be reelected. 

Obama bluffed on entitlement reform and won. Obama has no interest in alienating entitlement voters. He knows that Paul Ryan and the GOP, have forced, whoever he runs against in 2012, to "own" entitlement reform. That poor GOP nominee will lose a massive block of voters. One of which, is senior citizens. A demographic that consistently votes, without being prodded, to the polling booths. These voters always vote. And in 2012, they will turn on a national GOP nominee.

Republicans don't care about the deficit. If they cared, they would have gladly, taken $3 trillion in spending cuts and $1 trillion in ending tax loopholes (like hedge fund managers, whose income is treated as capital gains - 15% - instead of marginal income tax revenue). Repealing the Bush Tax Cuts were not even required. Again this is good for GOP congressman, but not good for a presidential GOP nominee. Independent voters will pummel the later.

Obama want's Wall Street to be happy. Obama has no interest in closing Wall Street tax loopholes. His biggest 2012 campaign contributors are Wall Street. That is not an opinion but a fact. Why do you think Warren Buffet promoted Obama's candidacy in 2008? 

Republicans don't care about budget deficits. The Bush administration from 2002 to 2009 presided on $5 trillion in spending increases that eradicated the surplus. New costs included $1,489 billion for the Iraq and Afghanistan wars, $1,812 billion on Bush Tax cuts, $608 billion on discretionary spending, $224 billion on TARP, $180 billion on Medicare drug benefits and $773 billion on stimulus spending. Obama's net changes (2009 though 2017) include a reduction of $126 billion in defense cuts, and nets adds of $711 billion in stimulus spending, $278 billion in discretionary spending, $425 billion in stimulus tax cuts and $152 billion in health care reform. Think of it like this: Obama inherited Bush's $5 trillion of spending and net overlaid it with $1.4 trillion of spending. This allows the GOP to say he is spending $6.4 trillion irresponsibly. Any short-term cut in spending of $1.5 trillion, which is being bandied about, is just returning back to the Bush spending run rate.

Winston Churchill's Dictum is still true today. He said Americans always do the right thing after they have exhausted every other alternative.

These are the inconvenient truths of the deficit ceiling brinksmanship drama. This is going to be a bumpy road this week. It will all come to a head, using a World War II analogy, with Pearl Harbor. This week's Pearl Harbor will be when the treasury bond market starts to weigh in. That will force congress's hand. For congress, the sooner the better. They need the political air cover.


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From athletic scholar and satirist to computer programmer to CEO success, John Jazwiec brings a unique and often eccentric perspective to business and supply chain challenges. Exploring how they can be solved through the leadership and communication insights found in untraditional sources. This CEO blog demonstrates how business insights from books on history to the music of Linkin Park can help challenge and redefine “successful leadership.” Read Jazwiec’s Profile >>

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