Balanced Budgets, Interest Rates and Unemployment

Lenders are anticipating mortgage interest rates to remain low this week after a dreadful few days in the stock market. Standard and Poor's recent announcement about downgrading the United State's credit rating outlook to "negative" will keep stock markets sluggish and will cause investors to remain in safe treasuries. The large demand in treasuries will keep the yield down causing interest rates to remain low as well. Fear over the large national debt and a political stalemate over how to fix it will also help to keep rates low in the short term. However, if politicians are unable to come to a relatively quick resolution on how to balance the budget, foreign investors are likely to pull money out of the treasury bills and into other forms of currency. If this happens, demand for treasury bills will fall dramatically causing the yield to rise and mortgage rates to increase as well. It remains unclear whether Standard and Poor's decision will make Republicans and Democrats agree on a debt fix.

Congressman Paul Ryan's budget proposal was a step in the right direction and a real blueprint for balancing the budget. However, Democrats are likely to kill the bill in the Senate and President Obama will definitely not sign the bill into law. Democrats will continue to demagogue the bill accusing Republicans of wanting to hurt senior citizens while keeping tax breaks for the wealthy. The truth is, Congress can increase taxes on everyone making over $250,000 and that still would not even come close to fixing the nation's problems with Medicare, Medicaid, and Social Security. The only real fix will have to contain some kind of benefit reduction or cost sharing, as indicated by Congressman Ryan. Seniors will need to pay more but there is no way around this. If politicians refuse to accept this reality, our nation will continue to spiral into debt causing higher mortgage rates and continued high unemployment. What people need to realize is that the days of buying second homes, luxury vacations, and big screen televisions while our parents get full health benefits are over. Children of the baby boomers will have to cut their expenses dramatically and hold off on unnecessary purchases so that they can help support their parents and pay for their increased medical bills. When he country begins to realize that this is the only way, then they start to embrace Paul Ryan's plan and put our nation back on the path of prosperity.

President Obama and Democrats offered an opposing plan to Congressman Ryan's budget proposal last week. However, the plan was weak on details when it came to Medicare, the main driver of debt and our biggest growing entitlement. Paul Ryan plans to have seniors pay for a portion of a private insurance plan. This will certainly raise the cost to seniors and transfer more of the burden to them. They will end up getting less medical services since they will be sharing in the cost. The Democrats have come down on this but their plan essentially has the same result and also hurts seniors. It just does it in a different way. Instead of senior citizens having to pay more and choose thereby reducing services, under the Democratic plan the federal government will make the decision for the seniors and MAKE them receive less care. How is this any better? Both plans result in senior citizens getting less medical services, which by the way, is necessary and the only way to solve our growing national debt. The question is how do Americans want to go about doing it? Do we want senior citizens to have more control or the federal government? Considering the resume of the latter, I think the answer is quite obvious. Congress should move forward with Paul Ryan's plan immediately which will not only balance the budget but also keep mortgage rates low and help build the economy.