Obama’s Live Address: Philly Represents

I am always on the lookout for Philadelphia references in national media. Season 5 of The Wire was a bonanza that way, which didn’t escape the notice of my significant other, whose viewing pleasure was tragically interrupted by my little screams of joy.

I have no idea why I care if Philly is mentioned, but I do. Which is why I was gratified while watching the live broadcast of President Obama’s address about the debt to hear a member of the press ask a question about legislation that’s being proposed by Chaka Fattah. Again, that little frisson.

The reporter, whose name I didn’t catch, got very British about things by asking “What say you?” Perhaps the American journalist is angling for a job with Rupert Murdoch, now that no one in England will have anything to do with him. At any rate, I believe the reporter was referring to Fattah’s ongoing work on the debt issue, and in particular, his Debt Free America Act, H. R. 1125, which proposes “to establish a fee on transactions which would eliminate the national debt and replace the income tax on individuals.” Here is what Fattah said about the bill in June:

The U.S. economy depends heavily on foreign capital inflows from countries such as China with high savings rates to help promote growth and to fund the federal budget deficit. China has intervened heavily in currency markets to limit the appreciation of its currency, especially against the dollar. As a result, China is the world’s largest and fastest growing holder of foreign exchange reserves. China’s current U.S. Treasury securities holdings are valued at over $1 trillion, which accounts for 24.3 percent of the total foreign ownership of U.S. Treasury securities.

Alarmingly, there is near unanimity in the consensus of economists, analysts and policymakers that the U.S. debt is accumulating at an unsustainable rate. Similar to the mortgage meltdown that precipitated the worst financial crisis since the Great Depression, the easy money that is financing the exploding federal deficit will soon come to an end.  As the Dallas Federal Reserve President Richard W. Fisher underscored in recent comments to the Federal Reserve, the willingness of China and unstable European economies like Greece to buy American debt will eventually wane as the perceived risk of holding long-term U.S. Treasury debt increases.

In order to avoid a financial crisis of epic proportions, Congress must take decisive action to implement a viable fiscal plan that will ensure long-term fiscal stability. The Debt Free America Act proposes Congress scrutinize the “fiscal imbalance” of the federal government by identifying the factors that affect the long-term stability of the U.S. economy, including analyzing potential courses of action, as well as providing specific policy recommendations. The bill further proposes to implement a 1 percent fee on all financial transactions, except for transactions involving stock, as well as retail transactions, which will immediately reduce the size of the national debt.

There is no question Congress must begin to make some hard choices now.  If Congress fails to act, inflationary pressures triggered by staggering debt will create economic conditions unlike anything ever experienced in the history of this country, including the Great Depression.

Can’t really argue with most of that, particularly the “hard choices” referred to. I don’t think anyone is going to like the deal that we end up with, Republicans or Democrats, Philadelphians or otherwise. For more on Fattah’s Act, go here.