Apr 2
It seems that a large portion of the American electorate just doesn’t understand the problem and magnitude of our government’s deficit spending and accrued debt. They just hear numbers and after a while, they are numbed to the astronomical quantities so it all means little to them. They don’t grasp the gravity of the situation which then makes it more difficult for politicians to seriously address profligate, unfettered federal government spending.
This can be rectified by comparing it to the cost of known disasters – real events. Like the recent earthquake and tsunami in Japan as Lee DeCovnick did as evidenced in his editorial. He noted that for the month of February 2011, the budget deficit of $223 billion was equivalent to the estimated costs of all the reconstruction in Japan inflicted by their recent natural disaster.
Amazing!
How big is the federal budget disaster?
Lee DeCovnick March 29, 2011
The devastating images from Japan are seared into our collective memory. With 10, 901 dead and another 17, 038 still missing, the human toll is almost beyond comprehension. The 9.0 magnitude earthquake and resulting tsunami that ravaged Japan has become the most expensive natural disaster in recorded history.
From Fox News:
Japan's Cabinet Office on Wednesday estimated the catastrophe...could cause losses between 16 trillion yen ($198 billion) and 25 trillion yen ($309 billion). That figure compares with estimates from the World Bank and Goldman Sachs for losses of $235 billion and $200 billion, respectively.
The $309 billion price tag would make Japan's earthquake the costliest on record, surpassing the $125 billion that the Insurance Information Institute estimates Hurricane Katrina cost the Gulf coast in 2005. It would also top the $100 billion in damage caused by the 1995 Kobe quake in Japan.
Uh... hold on a minute. Something seems wrong with these numbers. Do I understand this correctly; all those coastal cities and towns that were leveled, the tens of thousands of cars and homes that were pulverized, all the stores, shops, factories, warehouses, schools, freeways, roads, ships, aircraft, trains, port facilities and infrastructure reduced to rubble and it will only cost as much as US Federal deficit for a couple of months?
First a quick look at the Congressional Budget Office report for February, 2011. Two sentences stand out.
[The] CBO estimates that the deficit in February 2011 was $223 billion, which is very similar to the deficit recorded in February 2010.
[The] CBO estimates that the federal government incurred a budget deficit of $642 billion for the first five months of fiscal year 2011, $10 billion less than the shortfall recorded in the same period last year.
Shocking and inconceivable, how else to describe the monumental scale of the Federal deficit as measured by the devastation from Japan? Hundred of billions of dollars each month, the accumulated treasure of great empire is being hemorrhaged into oblivion, without purpose, thought or rationality. Why would anyone spend a nation into more debt then could ever be repaid? The GOP House is far too complacent, eager only to symbolically nibble at the edges of this crushing burden. Meanwhile our Socialist Administration, content to bleed this nation into second-class status, gleefully ticks off each day that brings our nation $4.1 billion dollars closer to insolvency, instability and the end of our Constitutional Republic.
http://www.americanthinker.com/blog/2011/03/how_big_is_the_federal_budget.html
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Apr 1
Rep. Paul Ryan (R.-WI) is taking his responsibilities as House Budget chief very seriously – just what the electorate wants but will clearly pay a high price for his diligence. He will soon unveil a concrete, effective plan for entitlement reform that unfortunately will be resoundingly attacked by the Democrats and receive little support from many Republicans.
The reasons?
Politics. Plain and simple.
The Democrats see this as an opportunity to sway voters who are addicted to entitlements and don’t want them reduced. Republicans are afraid that being fiscally prudent and responsible will cost them votes – and re-election.
This explains, in essence, why the issues of massive government spending with increasing deficits and debt have not been definitively addressed in the past.
Ryan Drumroll
Investor’s Business Daily 03/25/2011
Fiscal Responsibility: House Budget chief Paul Ryan will soon propose detailed entitlement reform. That he is sure to be savaged — even by fellow Republicans — shows how little Washington appreciates courage.
Ryan, a conservative Wisconsinite, will in early April unveil a budget that promises to be among "the boldest fiscal documents in history."
The Democratic Congressional Campaign Committee — the House Democrats' fundraising arm — already has a website, stopbenefitcuts.com, condemning the plan as "an extreme Republican scheme that will dismantle Social Security and Medicare as we know it."
At the Manhattan Institute's Reagan Centennial conference on supply-side economics last Tuesday, former Reagan and Bush administration economist Lawrence Lindsey said House Democratic leader Nancy Pelosi believes the GOP won the House because senior citizens abandoned the Democrats, and she wants them back.
"She is going to make the issue be, 'We are not going to cut your entitlements,'" Lindsey told the audience.
Ryan is also sure to be attacked by anti-spending purists like Sen. Rand Paul, R-Ky. But House leaders and key GOP senators, such as Senate Budget Committee ranking Republican Jeff Sessions of Alabama and freshman Marco Rubio of Florida, can be expected to give Ryan support.
The inevitable "dime-store Democrat" Republicans who will score political points by criticizing Ryan for his boldness are the most deplorable ones.
Based on past remarks, Ryan would change Medicaid to give governors freedom to tailor their states' plans to meet the needs of their particular low-income populations, in the spirit of the 1990s welfare reform.
Medicare would be reformed to give future beneficiaries a payment they could use to choose from a list of Medicare-approved plans. Social Security reform is not likely to take center stage in Ryan's plan.
Quibbles may be justified, but even hard-core Tea Party supporters should applaud Ryan when he makes history early next month by doing what no politician — not even Ronald Reagan — has ever done: get dead serious about cutting the spending of the most difficult-to-control programs of the federal government.
http://www.investors.com/NewsAndAnalysis/Article/567267/201103251856/Ryan-Drumroll.htm
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Mar 30
The federal government’s continued reckless and profligate spending has resulted in an astounding and soon to be unsustainable debt level that is adversely impacting our economy and threatens even our standard of living and way of life. Irresponsible politicians in Washington including largely but not exclusively Congressional Democrats and Obama, continue to be dismissive of this impending financial apocalypse.
Making matters even that much worse now is the calamity in Japan, a country that is the second largest purchaser of U.S. debt after China. If Japan decides to substantially cut back on their buying of our bonds or even starts selling some of this debt in order to make available the massive capital needed for their country’s reconstruction, this could be financially problematic and costly for us.
This should serve as another important wake-up call to our politicians (and Americans in general) that we must expeditiously and substantially reduce government spending in effective and meaningful ways and get our financial house back in order.
Fears rise that Japan could sell off U.S. debt
Some analysts say that risk to U.S. economy unlikely
Seth McLaughlin The Washington Times March 24, 2011
U.S. Treasury Secretary Timothy F. Geithner said he doesn’t think Japan’s troubles will affect U.S. borrowing costs and interest rates. (Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said he doesn’t think Japan’s troubles will affect U.S. borrowing costs and interest rates. (Bloomberg)
Some lawmakers and market analysts are expressing rising concerns that a demand for capital by earthquake-ravaged Japan could lead it to sell off some of its huge holdings of U.S.-issued debt, leaving the federal government in an even tighter financial pinch.
Others say a major debt sell-off by Tokyo is unlikely, but noted that the mere fact that questions are being raised speaks volumes about the risks involved in relying so heavily on foreign investors to fund U.S. debt.
“This natural disaster in Japan concerns me that it could speed up what’s coming, because they are the second leading buyer of our debt,”Sen. Rand Paul, Kentucky Republican, told The Washington Times. “Small degrees of differences in how much they buy of our debt, I think, can make a big difference in interest rates that we have to pay people to buy our debt.”
With the federal government having piled up $14.2 trillion in debt, budget experts are warning that the country is on an unsustainable fiscal path.Congress, they say, must find cuts in all areas of the budget, while reforming the entitlement programs — Social Security, Medicare and Medicaid — that are the biggest drivers of national spending.
Congress has passed short-term spending bills this year that nibble on the edges of government spending, and President Obama has offered a 2012 spending plan that also saw spending rise.
Concerns about the financial plight facing Japan, which trails only Chinaamong foreign holders of U.S. Treasury debt, aren’t helping the picture.
“They have a lot of bonds,” former Sen. Pete V. Domenici told The Times this month after testifying before Congress about the country’s mounting debt woes. “Are they in such bad trouble that they are not going to buy anymore? If they don’t, who do we look to?”
Asked point-blank last week if he thought Japan’s troubles could affect the U.S. borrowing costs and interest rates, Treasury Secretary Timothy F. Geithner told a congressional hearing, “I do not.”
Japan, which held some $886 billion in U.S. debt in January, is “a very rich country, with a very high savings rate,” Mr. Geithner said.
But some two weeks after the earthquake, uncertainty still reigns over whether Japan will reduce its purchases of Treasury debt and other foreign assets — a decision that could force the U.S. to pay higher rates on its securities to attract buyers and possibly drive up U.S. interest rates.
But judging from Japan’s response to the 1995 Kobe earthquake, Ward McCarthy, chief financial economist at Jefferies & Co., said that it is unlikely.
“It’s not unreasonable to think their appetite will probably diminish somewhat simply because Japan is going to have to fund its reconstruction by issuing more debt,” he said. “So we are going to have more competition from Japan itself going forward.”
Still, lawmakers remain concerned that the amount of foreign-held debt represents a bigger financial gamble than people realize.
“Many people I’ve been talking to in Washington are worrying about Japan because they have nearly 200 percent of their GDP in debt,” Mr. Paul said. “We’re at 100 percent and some people worry that this might not necessarily be a problem for Japan, but more of a problem for us if Japan in this crisis cannot buy our debt any longer.”
Karl Denninger, founder of market-ticker.org, said that could become a real concern in the coming months, as the heavy reconstruction costs inJapan threaten to slow down or even reverse the current flow of goods and services out of the country, and dollars coming into the country.
“The impact of this is widely unappreciated and I think it is a mistake to ignore it,” he said.
Mr. McCarthy said perhaps more importantly, “in the bigger picture, we’ve painted ourselves into a corner.”
“Should an emergency or disaster like the one that happened in Japan, happen in the U.S., we simply have put ourselves in a situation where it will be very difficult for us to come up with the funding to respond in an appropriate way. There are countless reasons why Congress should do the right thing, make some difficult choices and reduce the budget deficit,” he said. “Unfortunately, they apparently don’t see it that way.”
http://www.washingtontimes.com/news/2011/mar/24/fears-rise-that-japan-could-sell-off-us-debt/
http://media.washtimes.com/media/image/2011/03/24/20110324-192949-pic-393009766_s160x240.jpg?474e0a6950947c041101feecbb3ae69ebe630039
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Mar 28
A basic tenet of the Republicans is that reducing government spending and the debt stimulate private businesses and result in a growing economy. This is just the opposite of the failed approaches of Obama and the Democrats (and the news media and liberal intelligentsia) who believe that a bigger and more massively spending government is the correct and only solution.
The last two years of abject failure of these Democratic policies have clearly shown that this approach does not work. Conversely, extensive research involving similar situations including in other countries has revealed that a significant reduction in government spending and in the level of debt will lead to real and substantial growth both short and long term.
This is exactly what several key Republicans are championing and what we need to support.
Spend Less And Owe Less To Make Economy Grow
Rep. Kevin Brady 03/23/2011
For the past two years, Americans have been told that the only way to economic recovery is more federal spending that drives up federal debt. The White House and Washington Democrats continue to cling to this failed economic model, refusing to listen to the voices of respected economists in America.
The job gap between Democratic promises and the results is significant. After nearly $5 trillion in fiscal and monetary stimulus, there are 2.3 million fewer jobs today than when the stimulus began. The White House fell more than 7 million jobs short of its year-end 2010 forecast, and our unemployment rate is far above the promised 6.9%.
The "government spending is the answer" crowd had their chance to jump-start the economy. They failed. It's time for a proven approach.
Congressional Republicans are determined to remove barriers to new jobs by reducing America's dangerous budget deficits and removing the uncertainty that deters businesses from hiring new workers.
Private business investment, not the government, is the engine of job creation in America. Comparing federal spending and private-sector job growth over the past 40 years shows little correlation between the two. Just the opposite: As federal spending grew, jobs on Main Street shrank.
Since 1971, when private business investment grew — that is, companies both large and small bought buildings, equipment, and software — jobs in the private sector grew. For job creation, there is no substitute for private business investment — not federal spending, not rebates, not "shovel ready" projects.
With nearly $2 trillion in capital on the sidelines, it's time to reject Washington-centric policies and instead encourage business investment to again flow naturally into America's economy.
A new report, "Spend Less, Owe Less, Grow the Economy," unveiled this week by the Joint Economic Committee Republicans, surveys economic studies examining countries with developed economies like ours that struggled with rising government debt. It proves that countries which reduce their government deficits through spending cuts can boost economic growth and job creation even in the short term.
Respected economists found 21 instances between 1970 and 2007 where 10 developed countries successfully reduced their debt-to-GDP ratio by 4.5 percentage points or more based predominantly or entirely on spending cuts. Countries that increased taxes were much less successful.
When government debt shrank through spending cuts, jobs grew. For example, neighboring Canada reduced total government spending by 12.8 percentage points of GDP between 1994 and 2006 and boosted its economic growth from under 1% to a robust 3.4% average. Sweden's economy was shrinking in the early 1990s. After reducing Swedish government spending by 11.4 percentage points of GDP from 1994 to 2000, Sweden's economy revived with growth averaging 3.4%. New Zealand experienced the same.
They are not alone. U.S. economists found 26 episodes in nine developed counties where reducing debt through spending cuts provided a large boost to economic growth in the first three years after their fiscal consolidation began.
That's the critical point: While most economists agree that reducing federal spending increases economic growth in the long term, this analysis of economic studies found that reducing federal spending through spending cuts boosts economic growth and job creation in the short term as well.
Two factors drove these pro-growth turnarounds. First, businesses no longer expected the government to levy large tax increases in the future to pay for excessive spending — so businesses stepped up their investment in buildings, equipment and software. Business investment, as we've shown, equals jobs. Second, families no longer facing higher taxes had higher expectations for permanent disposable income and became more confident to make major purchases for homes and autos.
According to the study, to maximize growth and job creation the spending reductions must be "large, credible and difficult to reverse once made." The cuts that produced the greatest economic growth include: right-sizing the government workforce, eliminating duplicative agencies and programs, eliminating transfer payments (subsidies) to businesses, and reforming and reducing transfer payments (entitlements) to individuals.
Moreover, the study found evidence of strong economic growth effects from reforming government pensions and health care to make them "sustainable and solvent," even when the reforms are phased in slowly and exempt current beneficiaries from change.
To preserve the bloated size of our federal government, President Obama and congressional Democrats loudly decry the risk of reducing America's deficits now. But they ignore the risk of delay.
As this study shows, ample real-life data prove that there are significant economic growth and job creation benefits from reducing spending and reforming entitlement programs to restore their sustainability for future generations.
It's time to stop listening to the economists and politicians who were wrong about the stimulus and instead take a different, proven path forward. To grow America's economy, it's time for Washington to spend less and owe less.
• Brady, R-Texas, is the top Republican on the Joint Economic Committee.
http://www.investors.com/NewsAndAnalysis/Article/566960/201103231820/Spend-Less-And-Owe-Less-To-Make-Economy-Grow.htm
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Mar 25
To many Americans, the federal debt seems to be an intangible, diaphanous issue of theoretical importance alone rather than an apocalyptic force that can severely damage our standard of living. They may compare it to a loan or mortgage that will be paid back over a period of time. Unfortunately, they don’t grasp to sheer magnitude of the issue and numbers.
Our debt is accelerating and spiraling out of control and there is little time left before a point of no return. Look at Greece and Japan as just two examples of the direction that we are heading.
We need to make substantive changes now via significant spending reductions or there will be unbearable pain later on.
Six Scary, Inarguable Truths About The New Red Menace
James Carter 03/21/2011
To sway public opinion behind President Truman's policy of Soviet containment, Secretary of State Dean Acheson once admitted he was willing to "scare hell out of the American people" with arguments that were "clearer than the truth."
But sometimes the truth alone is scary enough — particularly when you're talking about the new red menace: the federal budget deficit.
Recent reports from the Congressional Budget Office highlight six indisputable truths, each arguably scarier than the last, that promise to shape the contours of the coming debate over how to handle this menace.
Truth No. 1: The CBO reported last week that the federal budget deficit is, under current law, expected to total $1.4 trillion this year and $6.7 trillion over the coming decade. At $1.4 trillion, this year's deficit is larger than the annual economic output of all but 10 foreign countries.
Truth No. 2: Because of these deficits, the publicly held federal debt is poised to almost double to $18 trillion within 10 years, nearly quadrupling annual net interest costs to $807 billion in the process!
Truth No. 3: While increased spending and depressed revenue both contribute to this year's federal deficit, the source of our long-term fiscal predicament is not a lack of revenues, but an overabundance of spending.
Over the three decades prior to the recent recession, federal revenues averaged 18.3% of gross domestic product while outlays averaged 20.8%. CBO reported last week that with the expiration of the Bush tax rates as scheduled under current law, it expects federal revenues to equal 20.8% of GDP — coincidentally, the historical average for spending — in fiscal 2021.
Federal outlays are expected to fall from 24.1% of GDP this year to 23.9% in 2021. In other words, despite the fact that the tax burden is poised to increase as a share of GDP to a level not seen since 1944, the CBO expects the federal budget will continue to generate massive deficits. And as the CBO reported last summer, "Looking beyond the next decade, the fiscal outlook worsens further."
Truth No. 4: Reducing federal spending in 2021 to its historical average of 20.8% would require a 13% across-the-board reduction in projected spending for that year. Excluding mandatory spending (e.g., Social Security, Medicare) and interest on the debt from the cuts would necessitate an unrealistic 46% reduction in defense and nondefense discretionary spending. Any serious effort to nudge the federal budget toward balance will require a concerted effort to restrain mandatory spending growth.
Truth No. 5: If the CBO's interest-rate assumptions are proved to be overly optimistic, the repercussions could be devastating. Late last year, for example, the CBO estimated that "if interest rates for all newly issued Treasury securities were one percentage point higher in each year than (assumed) ... interest costs (over the 10-year budget projection period) would be higher by more than $1 trillion."
To put this into perspective, a one percentage point increase would translate into a 15% jump in the cumulative budget deficit over the next 10 years.
And if the U.S. should ever lose its AAA credit rating, or if investors should ever lose faith in the federal government's ability or willingness to manage its finances, the Treasury could find itself having to pay far more than one additional percentage point on its newly issued debt. Just ask Greece.
Truth No. 6: Confronted by these dire truths, the Obama administration opted to make the problem even worse. The CBO's preliminary analysis of the president's fiscal 2012 budget found that his policies would, relative to current law, increase both federal spending and the budget deficit.
While the president's budget would keep the federal tax burden from increasing as much as scheduled under current law, its lack of spending cuts to offset the subsequent revenue loss would lead to $519 billion in additional interest payments over the decade and transform the projected $6.7 trillion cumulative deficit into a $9.5 trillion deficit.
Dean Acheson may have thought it necessary to scare the American people into supporting containment, but the new red menace facing the U.S. — the budget deficit — cannot be contained and left to wither on its own.
• Carter, an economist, was a deputy assistant secretary of the Treasury under President George W. Bush and an aide to Sen. Judd Gregg, R-N.H., on the staff of the Senate Budget Committee.
http://www.investors.com/NewsAndAnalysis/Article/566650/201103211745/Six-Scary-Inarguable-Truths-About-The-New-Red-Menace.htm
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Mar 24
There are few serious players who are willing to responsibly address our country’s rapidly approaching fiscal apocalypse. Surely this doesn’t include Obama who submitted his 2012 budget with a $1.7 trillion deficit which he claims will help solve our crisis. Oh, and of course, his plan includes similar gargantuan deficits for as far as the eye can see.
The Democrats are outraged at even a $6 billion cut out of $3.65 trillion. This miniscule amount represents approximately 25 hours of federal spending out of an entire year (of 8760 total hours).
Many Republicans are seeking far more in budget cuts, $60 - $200 billion. Unfortunately, these amounts still fall far short of what is needed.
Who are these (brave) individuals who are willing to put everything on the line in order to save our nation from fiscal calamity? They are all Republicans and Conservatives and include such names as Senators Rand Paul, Mike Lee and Jim DeMint and Rep. Paul Ryan.
We need to give them our support as well.
Sen. Rand Paul introduces Five-Year Balanced Budget Plan with Senators Lee and DeMint
Senator Rand Paul unveiled his five-year path to a balanced budget, which includes cutting four federal government departments: Departments of Education, Energy, Commerce and Housing and Urban Development.
The proposal also calls for the repeal of “Obamacare,” leaves entitlements untouched, and he also said he is willing to make changes to the cuts, but there will have to be cuts elsewhere.
Rand Paul said:
“While official Washington is sitting on their hands and ignoring the ever-expanding deficit, I am offering a real plan to rein in spending and address the looming debt crisis. The only way we can balance the budget is if we have real leadership, and the President has abdicated his leadership on this issue. It’s time to take bold action to bring our country back from the brink, and I am proud to start the conversation on how we go about that.”
Via ABC’s The Note:
“There’s a lot of things in here that everybody could agree to, Republicans and Democrats, but nobody’s leading on the president’s side and on our side we felt we needed to put this forward to get the debate started, at the very least.”
“There’s an argument for every federal program up here… Nobody’s coming up here asking me for money that’s not for a good reason. But the alternative is that we get into a point of financial disaster where nobody gets any money,” he said.
Fellow Tea Party Caucus members, Senators Mike Lee and Jim DeMint were by Paul’s side when he introduced this bill. Both men supported Paul and called for Washington to get serious about the budget and to make cuts. The country is in fiscal jeaopardy.
Senator Mike Lee challenged anyone who criticizes Paul’s plan to present something better rather than verbally criticize it.
“There may be some in this town who will disagree with the manner in which we’re proposing moving toward a balanced budget over a five year period. That’s fine, that’s understandable, that’s what this town is about… but to those who may disagree with it, to those who might want to attack it. I would ask that they come up with their own five year plan.”
Senator DeMint echoed Lee and said that balancing the budget may require “letting things go” back to the state level.
“There are functions and departments at the federal level that need to be devolved to the states. Part of balancing the budget is restructuring and devolving federal functions back the states, local communities and people,” he said.
DeMint said he did not agree with “every particular thing in here,” but stressed the importance of balancing the budget.
http://cubachi.com/2011/03/18/sen-rand-paul-introduces-five-year-balanced-budget-plan-with-senators-lee-and-demint/
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22
The following editorial provides the stark facts regarding America’s impending financial Apocalypse. There has been massive, unrestrained, irresponsible government spending that has spiraled out of control. The debt increase under Obama has been an astounding six times faster than that occurring under previous administrations. We are also borrowing around 45 cents for every dollar that is spent.
Obama and Congressional Democrats don’t want to cut spending despite the fact that the fiscal 2012 budget will chalk up another record deficit of $1.65 trillion. To them, even their compromise $4.7 billion dollar cut which represents 0.1% of the total budget of $3.73 trillion ($3730 billion) is too much. That represents just 25 hours of federal spending out of the entire year (8760 total hours). Clearly, any way you look at this, it is miniscule.
The Republicans who claimed that they would responsibly address the problem appear to have gotten cold feet. Their $61 billion dollar cut, though substantially more, still represents pocket change. They need to resolutely call for and support reductions of far greater magnitude or national bankruptcy will not be averted. Fortunately, there are Tea Party members and younger conservatives who are fervently pursuing this more aggressive tack.
America Slouching Towards Fiscal Armageddon
Chris Banescu March 18, 2011
America is in grave danger. Our government's out-of-control spending and our politicians' refusal to implement meaningful budget reforms are leading us towards a fiscal crisis that can undermine our very way of life. We are spending ourselves into oblivion. With each passing day, we are $5 billion in deficit spending closer to the edge of an abyss that can cripple our economy, destroy America's wealth, and lead to catastrophic social consequences for all current and future generations. Yet our leaders in Washington refuse to face reality and continue to play political games while the country's budget crisis deepens and the threat grows exponentially.
In February of this year the US federal budget deficit grew by a record $224 billion; the biggest one-month increase in history. Worse still, the 2011 US budget deficit is forecast to reach $1.5 Trillion. According to the non-partisan Congressional Budget Office (CBO) this annual deficit represents the largest budget gap in our country's history, equivalent to approximately 10% of America's total economic output. This follows the enormous $1.3 Trillion deficit racked up for 2010 and will be superseded by an equally disturbing $1.65 Trillion deficit forecast for 2012.
In just three short years, Obama and the Democrats have racked up a whopping $4.5 Trillion in debt. That is more than double the $2.1 Trillion in debt added during the entire eight years of the Bush administration. It's an astronomical increase in deficit spending of roughly 571%; that's nearly six (6) times faster than previous administrations.
With Congress unwilling to address the runaway spending, roughly half the money the federal government now spends it has to borrow. Approximately 40 cents out of every dollar in spending is financed by mortgaging our future to foreign investors, primarily China. For 2012, the deficit spending will increase to 45 cents per dollar. Each day America will add another $4.5 billion to the $14.3 Trillion total National Debt. Sometime between now and 2012 the US debt will equal the country's Gross Domestic Product (GDP), the total market value of all the goods and services in our economy for an entire year.
This year the US will spend $200 billion in interest payments on the debt. Thanks to historically low interest rates this figure is lower than normal. Once interest rates start to rise -- and rise they will as inflation is quickly spreading throughout our economy and the world -- we will face an extra $100 billion in interest payments per year for every one (1) percent increase in interest rates. The Wall Street Journal predicts that without any changes, the interest on the nation's debt will reach $900 billion annually in another 10 years. According to their forecast, those yearly interest payments will be 17% greater than our annual Medicare costs and 82% larger than "the cost of all non-security discretionary spending programs combined."
The $1.65 Trillion deficit for 2012 will make the debt grow to 105% of the nation's GDP, a perilous milestone. If the structural budget gaps are not effectively dealt with, the CBO predicts that an additional $7.1 Trillion in debt will be racked up in the next 10 years, increasing our total National Debt to $21.4 Trillion by 2021. But it gets worse. The current unfunded liabilities total (social programs like Medicare, Medicaid, and Social Security which the US government has promised to pay to its citizens) is rapidly approaching $113 Trillion, about $1 million per taxpayer. That will grow to a disastrous $144 Trillionby 2015 if nothing changes.
Last month, members of the National Association for Business Economics provided yet another ominous warning. These economists identified the US budget deficit as the "gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation."
We are on an unsustainable path of uncontrolled and wasteful spending that can devastate the United States. And what is Congress actually doing to effectively deal with this looming catastrophe?
The delusional Democrats have proposed a microscopic $4.7 billion cut for the 2012 budget. That's a ridiculous 0.1% of the total budget for 2012. It represents exactly 25 hours of spending by the government. Multiply that by 100 and it still falls short of the proverbial drop in the bucket. Clearly Democrats are not interested in helping this country avoid fiscal calamity. They're more concerned with demonizing conservatives and maintaining power, instead of governing responsibility and rationally for the welfare and safety of all Americans.
President Obama's phony budget, submitted last month, insanely claims about $1.1 Trillion in "cuts" over the next decade. These fictional cuts happen courtesy of an additional $2 Trillion in new taxes proposed by his administration over that same period. Even taking Obama's fraudulent budget proposal seriously, the US debt will still grow from $7.2 Trillion to as high $9 Trillion over 10 years. This is worse than doing nothing.
The supposedly fiscally conservative Republicans in the House originally proposed a small $100 billion cut in spending. That amount was subsequently reduced during House negotiations to a measly $61 billion, representing just 1.6% of the $3.73 Trillion budget for 2012. Even that minor reduction was mischaracterized as "draconian" and soundly rejected by the Democrats in control of the Senate. Obama has twice threatened to veto the measure if it passed the Senate by some miracle. There is little hope for mature engagement and sane debates with the current majority of leftists in power. They are not interested in cutting spending or negotiating reasonably to implement authentic budget reductions.
A devastating debt crisis is coming; simple mathematics predict it. It is no longer a matter of if, but when. The time for hysterics, hyperbole, and finger-pointing is over. The time for political games, grand-standing, and partisan shenanigans is long past. This is no longer about Democrat, Republican, liberal, conservative, or progressive issues. This affects all of us. The looming danger crosses all party and ideological lines and jeopardizes all Americans, present and future generations. We're staring down a massive debt tsunami that threatens the US with a fiscal Armageddon the likes of which we've never seen.
Since Democrats and the White House are obviously unwilling to face reality and completely AWOL on this crisis, here's a call to action to the conservatives and the Tea Party lawmakers in Washington, our only remaining hope.
Republicans, it's all hands on deck. Convince weak-kneed and waffling colleagues to find their backbone and stand firm. Since you're going to be demonized and vilified anyway, regardless of what you do, make a stand and demand meaningful reductions in government spending. Ask for at least $500 billion in budget cuts, slowly negotiate down to a more comprehensive $400 billion number, and only settle for a final compromise of $370 billion in cuts (still just 10% of the 2012 budget, but better than the original 1.6%). Stop worrying about "bi-partisanship", "reaching across the aisle", and all that other nonsense. It's evident that most Democrats and Obama are not interested in any of it. To them it's all about consolidating and maintaining their own power at all costs, damn the consequences. They would rather shove the country into bankruptcy and fiscal collapse than act responsibly and sensibly. Didn't the ObamaCare battles and the last few decades of disastrous compromises with liberals and progressives teach you anything?
Conservatives, act like leaders and worthy stewards of this great nation. Trust that God will be with you if you remain faithful to Him, speak truthfully, and act honorably. Be true public servants and courageous representatives of the people who elected you. Demand real action and sweeping reforms. Do not back down and compromise just to get along. It doesn't work! Be ready to shut down the government if you have to. Force Congress to do its job to protect the lives, freedoms, and interests of all American citizens, not just the unions, the lobbyists, and other political operatives and supporters. Show the rest of country that you're willing to do the heavy lifting and take the hits. Make the hard choices and stand behind your principles. That is real leadership!
Republicans, in November 2010 we elected you to represent our voices and bring the right kind of hope and change America desperately needs. We're counting on you now to act decisively! Don't disappoint us, the clock is quickly counting down to the fiscal catastrophe awaiting all of us. We're almost out of time.
http://www.americanthinker.com/2011/03/america_slouching_towards_fisc.html
Posted in Congress Conservative Democrat Government spending Obama Republican US Debt with No Comments
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Mar 7
There are two clear facts regarding the federal budget:
1.) Obama and the Democrats in general have no serious desire for a reduction in expenditures
2.) If we don’t drastically reduce out of control federal spending, this country will be insolvent which would drastically affect our standard of living.
The Republicans have declared that they have a mandate to massively reduce the federal government’s profligate spending and waste. They appear to finally be quite serious about this but when it comes to crunch time and dealing with Social Security, Medicare and Medicaid. These are areas that the Obama and the Democrats have intentionally ignored, playing politics with and hoping to portray the Republicans as the bad guys.
Dems Have Zero Desire to Make Budget Cuts
Bruce Bialosky 2/28/2011
I have now read over 100 articles on the Federal budget, and what has become abundantly clear is that President Obama and his Democrat colleagues have no desire to reduce even a single expenditure. That may seem like a mundane statement, but, in fact, it accurately describes a position that borders on insanity.
You must first understand the magnitude of the problem. To do so you need to see the budget numbers for the past five years – something that for some reason don’t seem to show up in the mainstream media. These figures are in trillions of dollars:
YEAR - REVENUE - EXPENDITURES - DEFICIT
2008 - 2.66 - 2.90 - .239
2009 - 2.10 - 3.51 - 1.40
2010 - 2.38 - 3.55 - 1.17
2011 - 2.17 - 3.82 - 1.65
2012 - 2.63 - 3.72 - 1.10
Some basic things to know about these figures. 2008 was the last budget where George W. Bush was in office. Because the budget year starts in October, the transition year is 2009, when Bush proposed but Obama subsequently altered the plan. Bush’s original 2009 projection was for $2.7 trillion of revenue and $3.1 trillion in spending. Because of the bad economy in 2008 and 2009, revenues plummeted by $.6 trillion, but Obama’s reckless stimulus kicked up expenditures by $.4 trillion. This combination caused the deficit to explode, and sent us off to the races – or more properly stated, the poor house. The Feds are spending 30% more in 2011 than in 2008, without more revenue to pay for those outlays.
The 2011 budget is the one now being fought over, principally because Nancy Pelosi irresponsibly refused to hold a vote on the budget because she was afraid it would hurt her party’s election chances. Needless to say, that strategy won’t be taught in political science classes. Republicans now want to reduce spending for the remaining seven months of the budget year by a measly $.061 trillion, cuts that come from budgeted expenditures that are 7.6% higher than the prior year, when spending was already completely out of control. What should be obvious is that the $61 billion in cuts is coming from planned increased outlays, but listening to the Dems you would think that Armageddon is around the corner.
Some classic examples of proposed budget cuts and the Democratic response:
• Speaker Boehner stated that there are 200,000 more federal employees than two years ago and that this number has to be cut back. Nancy Pelosi was on the floor of the House faster than the speed of light saying that those are real people with real jobs. Somehow, she forgot to mention that they are being paid for with Monopoly money.
• Republicans declared that they wanted to eliminate the $600 million annually going to PBS and NPR. They believe that cutting government funding for television stations (when there are hundreds of channels to choose from) makes sense over cutting education or aid to the handicapped. Congressmen Ed Markey was blabbering in front of a microphone so fast, you would have thought that the end of childhood was near. You might also think he was sleeping with Miss Piggy. If you gave the Dems the option between cutting PBS and eliminating home meals for the elderly, their choice would be easy – neither.
• Republicans announced that they want to reduce funding for a charitable organization, Planned Parenthood, which should really be living off private donations because they presently provide abortions with public money – something that over 70% of Americans say should not take place. Liberals in Congress started to howl, but I for one would like to see their tax returns to find out how much they’ve given to Planned Parenthood in the past five years. But then again, we already know that answer.
Democrats don’t want to cut Social Security, Medicare, Medicaid, or (surprisingly) Defense. You would think that the left would be itching to eviscerate the Defense budget, but when Republican Congressman John Campbell offered an amendment to cut Pentagon outlays by 2.5%, he was accused of doing a hatchet job. The amendment lost 68-357. Even the most leftist members of Congress will defend the base in their home district until their dying day.
They don’t want to cut the FEC, FCC (actually an increase), NHTSA, NIH, FTC, the ACC or SEC (yes the last two are college conferences.) They made the post office an “independent” agency – that comes begging for money every year. This year, it’s $11 billion! The postal service, which needs to be totally revamped, has asked to close 2,000 post offices, but Congress consistently ignores these requests. All we ever hear about is the coming calamity for “Madge” if the local post office is closed. We will continue to underwrite this outmoded enterprise, which should really be operating out of kiosks at supermarkets and Wal-Marts.
Some Republicans have suggested returning spending to 2008 levels. If you take inflation into account, that would be $600 billion less than Obama proposes for 2012. Would that be so bad? The government seemed to function quite nicely in 2008. In fact, many of us thought that even those spending levels were too extravagant.
So what is the plan for Obama and the Dems? They haven’t said it out loud, but it’s pretty clear that they want to raise revenues (taxes) until they equal expenditures. You can protest all you want, but the fact is that if you don’t want to cut expenditures, you obviously want to raise taxes or continue borrowing from foreign governments. Either way, they want a permanent expansion of government. If they didn’t, why would they be proposing such a gargantuan budget two years after their own people declared the recession to be over?
This is the only conclusion that a rational person can reach – and that’s why their budget plan borders on insanity.
http://townhall.com/columnists/brucebialosky/2011/02/28/dems_have_zero_desire_to_make_budget_cuts
Posted in Democrat Financial Government spending Obama Republican US Debt with 1 Comment
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