BY RUSSELL TURNER
BREAKING THE PIGGY BANK
Whenever you commit to a contract with someone or some company you need to be confident that the deal will be beneficial to both of you. If for any reason you have doubts about the other participant, it would be very wise to limit the duration of the contract. Once the agreement is signed and it turns out to be a poor deal, you are stuck with it until the time is up. Over the past couple of days the White House and Congressional leaders have reached a tentative budget deal that includes increasing of the federal debt limit. The proposed deal also sets a budget through the remainder of President Obama's tenure in office.
While some may cheer about this deal, I have some serious concerns about the time factor and the details of the agreement. I have noticed one thing about the Republicans in Washington DC, they are absolutely terrified about being blamed for a government shutdown. Maybe that answers the question why they seem to lose all resemblance of a backbone when they have to deal with our illustrious president. Our president has proven himself to be less than truthful on other issues, and he also seems to have little respect for our constitution and the rule of law. It makes me wonder why they would make an agreement that would span two years? In my opinion the maximum length of the agreement should have been at the most 1 year; with this agreement the next president will not have any input on the budget until his second year of his term.
The deal would suspend the debt limit through mid-March 2017 and boost spending by $80 billion through September 2017. This deal will allow the already astronomical national debt to grow even larger. Another issue in the bill that hasn’t got attention is the plan to sell off part of the Strategic Petroleum Reserve from 2018 until 2025. For those of us who remember the oil crisis of 1973-'74, a sale of the SPR seems a bit drastic. When OPEC created the oil crisis back in 1973 it caused rationing of gasoline in the U.S. To prevent a re-occurrence of the problems the government created an emergency supply of oil if it was ever really needed.
The US currently has a reserve of 695 million barrels, held in four sites along the coast of the Gulf of Mexico. In this deal they are planning to sell roughly 8 percent of it. According to the Bloomberg article: The Energy Department, which oversees the reserve, says on average the U.S. paid about $29.70 a barrel for the oil. But after adjusting for inflation and other items, the average cost raises to $74 a barrel, according to ClearView Energy Partners, a Washington-based energy research firm. Currently oil is selling for 44 dollars per barrel, when you do the math the American taxpayer will be losing around 40% per barrel. Some analysts believe the price could go even lower. Selling resources at a loss and/or paying more for goods than they are actually worth is the kind of bad economic choices that we've all come to know and "love" from the federal government.
Even a child knows when you break the piggy bank and spend part some of the coins, when a disaster comes along you run the risk of running short.
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