Party Gridlock In Washington Feeds New Fear Of Debt Crisis

There were comments from Senator Evan Bayh this week about the congress stating that

it was dysfunctional and in other words it made a statement very clear that the two parties are unwilling to come to terms controlling the national debt that is soaring to unimaginable heights.

It has been decades since the warning signs have been sent out regarding the economy, the soaring health care expenses and the population who are not growing any younger. Now, the nation faces a time of emerging from recession that will cost more than trillions of dollars in revenues, lost taxes and the liberal spending for the entitlement programs or safety nets have not been addressed.

Being the centrist democrat of Indiana, Mr. Bayh voted with his feet and explained his decision to not seek re-election. However, Mr. Bayh is not just the single person who is sending out signals regarding the long-term budget; it also includes Medicaid, Medicare and the cost of Social Security that keeps mounting at rates that are hardly sustainable.

Republicans who find this to their advantage are going against the President"s approach of having a bipartisan commission to reduce the debt. In the recent years under President Bush, there were reductions in taxes and deficit spending after the year 2000 when Republicans had control over the Congress and the White House.

The other side of the problem is foreign investors who have more than 50% of the debt that is held publicly and the largest of creditor being China have gone public regarding the fiscal conditions of the United States. Investments in US Treasury securities it is feared may go down day by day if there is no effort to reign in the budget deficit. If this happens, people who invest in US Treasury securities would make greater demands for higher interest payments which would just add to the problem of the growing budget deficit over time.

by: Carolina

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