President Clinton was not and is not always wrong. Now that he’s been out of political office for over a decade, he might be starting to see the light. In a recent gathering, he threw out the notion that our corporate tax rate is “uncompetitive”. However, he wanted a reasonable lowering of that rate to be in conjunction with a rise in the debt ceiling. He’s half right, here. The corporate tax rate should be lowered; loop holes plugged and let the corporations flourish.
Many people will remember 90s and his tenure in office. The first few years of the decade were slow recovery from an economic down turn. Then prosperity returned. Jobs were available and those who chose to work could and did. Credit card companies were willing to raise limits for people with some assurance of being repaid.
As individuals spent more and more on things they wanted, but truly didn’t need in many cases, Bank of America, Citi, Sears and others would allow them to spend more and only make a $10, $15 or sometimes as much as $30 payment. As long as the minimum payment was met, the ten thousand dollars owed was forgotten and they could borrow more. Then there was another hiccup in the economy. Interest rates rose causing minimum payments to also increase. People became aware that they could no longer afford their mortgage, car and boat payment and put out $400-$600 a month in minimum payment obligations.
Thanks to the bankruptcy laws, many people were able to get out from under their self-created madness. The courts would simply wipe away the contracts and obligations into which consumers had entered. Great for the consumer, bad for the creditors. Many of the financial institutions that awarded credit to companies and consumers declared bankruptcy, some were taken over by larger or more stable competitors and yet some got bailouts from the government. People no longer make their mortgage payment to Countrywide; they don’t exist. That payment is now made to Bank of America, the new master. That is, if the home hasn’t been foreclosed.
Congress and the current administration are displaying the same greed and idiocy that consumers showed not so long ago. They are continuing to spend and asking for the credit limit to be raised. They won’t part with the political boat or big screen. In fact, they want to replace the boat with a bigger, faster and shinier yacht even though it sits at the dock 90% of the time. What the heck, it’s your money that’s paying for it, raise the ceiling and they’ll continue spending.
We keep borrowing from countries that would like to see the U.S. default. Are you ready to meet your new master?