Barack Obama’s big government policies continue to fail. He should put a link to the national debt clock on his BlackBerry. The gears on that clock have nearly exploded during his administration. Yesterday’s terrible job numbers should not be a surprise because it all goes back to our debt. Our dangerously unsustainable debt is wiping out our jobs, crippling our economic growth, and jeopardizing our position in the global economy as the leader of the free world.
As a governor, I had to deal with facts, even unpleasant ones. I dealt with the world as it is, not as I wished it to be. The “elite” political class in this country with their heads in the sand had better face some unpleasant facts about the world as it is. They’ve run out of money and no amount of accounting gimmicks or happy talk will change this reality. Those of us who live in the real world could see this day coming.
Back in January 2009, as governor of Alaska, I announced: “We also have to be mindful about the effect of the stimulus package on the national debt and the future economic health of the country. We won’t achieve long-term stability if we continue borrowing massive sums from foreign countries and remain dependent on foreign sources of oil and gas.” Then I urged President Obama to veto the stimulus bill because it was loaded with absolutely useless pork and unfunded mandates. Everyone knows my early and vocal opposition to that mother of all unfunded mandates known as Obamacare starting back in August 2009, and many recall my objections to the Federal Reserves’ inflationary games with our currency known as QE2 from November 2010. It’s a matter of public record that I did not go to Harvard Law School, but I can add.
The same “experts” who got us into this mess are now telling us that the only way out of our debt crisis is to “increase revenue,” but not by creating more jobs and therefore a larger tax base; no, they want to “increase revenue” by raising taxes on job creators who are taxed enough already! As Margaret Thatcher said, “The trouble with socialism is that eventually you run out of other people’s money.” That’s where we are now. Hard working taxpayers have been big government’s Sugar Daddy for far too long, and now we’re out of sugar. We don’t want big government, we can’t afford it, and we are unwilling to pay for it.
This debt ceiling debate is the perfect time to do what must be done. We must cut. Yes, I’m for a balanced budget amendment and for enforceable spending caps. But first and foremost we must cut spending, not “strike a deal” that allows politicians to raise more debt! See, Washington is addicted to OPM – Other People’s Money. And like any junkie, they will lie, steal, and cheat to fund their addiction. We must cut them off and cut government down to size.
To paraphrase Hemingway, people go broke slowly and then all at once. We’ve been slowly going broke for years, but now it’s happening all at once as the world’s capital markets are demanding action from us, yet Obama assumes we’ll just go borrow another cup of sugar from some increasingly impatient neighbor. We cannot knock on anyone’s door anymore. And we don’t have any time to wait for Washington to start behaving responsibly. We’ll be Greece before these D.C. politicians’ false promises are over. We must force government to live within its means, just as every business and household does.
We can’t close our $1.5 trillion deficit overnight, but we must get as close as we can as soon as we can. Little nibbles here and there over 10 years (spun to sound like they’re huge budget cuts) aren’t anywhere near enough. I know from experience that cutting government spending isn’t easy. As governor, I made the largest veto cuts in my state’s history, and I didn’t make many friends doing it. But we will never recover, we will never get free of devastating debt, unless we make tough choices now. We don’t hear talk like this from leaders in D.C. or from those running for office because they say what they think we want to hear rather than what must be said.
Read more here.
Pain at the pump. If you think gas prices are high now, there is a plan that could push them even higher.
WJZ-TV Political Reporter Pat Warren tells us a hike in the gas tax could be just down the road.
A failed effort to increase the state tax on gasoline during the regular General Assembly session doesn’t mean the idea has gone away. The prospect of another bill may be proposed in a special session.
That’s right. Governor Martin O’Malley held a roundtable discussion on the transportation trust fund on Friday. And wouldn’t you know it, the gas tax came up.
This is where the rubber meets the road, and the wheel, and the axle and sometimes the muffler.
A plan to raise the state gas tax to cover road construction and repair was shot down in the General Assembly this session. As voters watched the price of gasoline go up and up, lawmakers backed off a plan to add their 12 cents to the existing 23.5 cents Marylanders already pay.
But that may not be the end of it. A special session in the fall could give the General Assembly another chance to pass it. But it may still be a long shot.
“There is one tax that the business community universally supports and that doesn’t matter what slice of it where you are and that is the gas tax. And there is one tax that the general public universally and unanimously opposes regardless of black neighborhood, white neighborhood, north, south, east and west and that is the gas tax,” O’Malley said.
But then, thousands of miles of bumpy roads could cause taxpayers to soften.
“I guess it depends on how much we’re talking,” said Katy Johnson. “It might be worth it. The roads definitely need to be improved.”
The money the state collects from the gas tax goes into the transportation trust fund, but that fund has been steadily depleted to cover budget deficits and put us on a bad road.
Read more here.
As U.S. lawmakers seek a compromise on how much federal spending to cut in order to avoid a government shutdown, Tea Party activists who helped propel Republicans back into power are growing impatient with the debate.
When Republicans captured the House in November, vowing to slash $100 billion in federal spending from the budget year ending in September, 76 percent of Tea Party activists supported their deficit-reduction plan, according to a new Pew Research poll released last week.
But after House Republicans approved a plan last month to cut federal spending by $61 billion, that Tea Party support fell to 52 percent.
Now Tea Party Nation founder Judson Phillips, arguably the most vocal critic of GOP leaders, is pushing for a primary opponent against House Speaker John Boehner in 2012 for breaking his campaign pledge to cut $100 billion and for what he sees as hints that he’s willing to cut less than $61 billion in a compromise with Senate Democrats.
“Charlie Sheen is now making more sense than John Boehner,” Phillips wrote in his blog earlier this month.
In an interview with FoxNews.com Thursday, Phillips said he stands by his comments and goal of seeking a primary challenger to Boehner.
“Charlie Sheen still makes more sense than John Boehner because at least Charlie Sheen is winning,” he said.
“This is the one message the Tea Party needs to be out there pushing,” he said. “If you don’t live up to your promise, we’re going to throw you out.”
Read more here.
… it’s spreading. And it’s about durn time. This is a discussion that this country has needed to have for a long while. It’s a shame that it has come at a point when we really don’t have any other options. It’s either allow our states to go broke cowering before the mob mentality and tactics of government worker unions, or start to pull back on the reins and get this sucker under control.
They say that the first step to recovery is realizing that you have a problem. Many of these government employee union workers truly do not understand that there is a problem, that being that their inflated salaries and benefits simply cannot be sustained. It’s just costing the taxpayers too much.
We shouldn’t have allowed the unions to become this strong. Franklin D. Roosevelt warned us against this – told us just what would happen. Deaf ears. This is precisely what you would expect when we have negotiations with managers who have no skin in the game. When government officials negotiate with unions their eye is on reelection. When private sector businessmen negotiate with unions their eye is on their bottom line … maintaining profitability so they can stay in business.
There is no “right” to collective bargaining. The only “right” union members have to their inflated salaries and benefits is through contracts .. contracts that can be abrogated, re-negotiated or rewritten.
Somewhere along the way … whether it was in their government schools or in their homes … these people were raised under the assumption that they worked for a union rather than you – the taxpayers. Do you see the damage this can cause? Do you see how it is nearly impossible to undo this type of thought? But that’s what we are seeing right now in Wisconsin and spreading throughout this nation. As Rick Santorum said, “They are acting like their drug is being taken away from them.” They are addicts that will wither and die without their government administered drugs.
So what’s next for Wisconsin? Well if Governor Scott Walker and the Republicans get their way, other labor groups around the state have hinted that they will endorse a general strike of workers around the state. Won’t that be fun.
How delicious is irony, how fickle fate?
Just a little more than two years ago, liberals were ecstatic about Barack Obama’s election and Democrats’ control of Congress. Liberal pundits were all atwitter about the brand new Democratic Era that voters had ushered in. America would finally become what America should have been years ago: a European-style social democracy.
Boy, did Democrats misread their mandate! With very little hindsight needed, it’s apparent to all but ideologically-blinkered liberals that the Democrats’ gross overreach isn’t what voters wanted or expected. Voters wanted a redo of the Clinton years. Instead, in the person of Barack Obama, voters got an amalgam of FDR and LBJ with a dash of Neville Chamberlin thrown in.
But here’s the real kicker. Two years of Obama-Reid-Pelosi overreach and excesses may have been the table-setter for the real revolution now unfolding. Voters and taxpayers first needed to see the irresponsibility and recklessness of unalloyed liberalism to appreciate that conservative government is far superior. Thank you, Barack Obama, Nancy Pelosi, and Harry Reid.
Of course, the real revolution began last year with the 2010 midterm elections. Yes, the GOP made the largest gains in U.S. House seats since 1948. But the underappreciated story is that the GOP racked up huge gains in state legislative contests, and further down ballot, Republicans swept plenty of local offices. State legislatures control congressional redistricting. Republicans now dominate enough key statehouses to lock-in GOP congressional electoral advantages for a decade.
Had voters limited their ballots to throwing out the rascals in Congress, a fair argument could be made that 2010 was just a protest vote — an attempt by voters to shake up the Democrats. But when voters drill down to change party control of legislatures, city halls, and county commissions, you can bet that they’re thoroughly repudiating the party in power. The 2010 repudiation of Democrats was a clear expression of what voters did and didn’t want from government.
Move now to the present time. Republicans are on the march in Congress. Late last week, House Republicans passed a budget bill containing $61 billion in cuts. It’s not the $100 billion that conservatives aimed for, but it’s substantial and can be considered a down payment. The House Republican proposal now goes to the Senate. The budget process wrangling is just in its first phase. Moving forward, the GOP will have multiple opportunities to push more cuts.
Read more here.
The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.
But any similarity between 1946 and now ends there. The U.S. debt levels tumbled in the years after World War II, but today they are still climbing and even deep cuts in spending won’t completely change that for several years.
As President Obama and Republicans squabble over whose programs to cut and which taxes to raise, slow growth and a rising tide of interest payments – largely beyond their control – are making the job of fixing the budget much harder than in the past. Statehouses and governors face similar challenges.
After World War II, the federal debt – including debt purchased by the Social Security Trust Fund – hit nearly 122 percent of gross domestic product. State and municipal debt back then was minimal. By the time Dwight Eisenhower was elected president six years later, the federal government’s debt had dipped to about three-fourths of GDP.
The key factor in the rapid drop in government debt, said Harvard University economist Kenneth Rogoff, was fast economic growth. Spurred by a young labor force, world-leading manufacturers, high personal savings rates, a pent-up demand for consumer goods after years of war and the Depression, and a bout of inflation, the economy grew 57 percent in six years. Thanks to sharp postwar cuts in defense outlays, federal government spending also tumbled for a couple of years.
But today the U.S. economy is in a polar opposite condition. The labor force is aging, U.S. manufacturing often lags behind Asian and European rivals, households are in hock up to their eyeballs, and consumer appetite for goods is tepid. In addition, inflation is tame and government spending locked into entitlement programs and debt service that will be hard or impossible to alter.
Read more here.
President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly than $21 trillion in five years’ time.
Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.
Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached.
In one often-cited study, two economists have argued that when gross debt passes 90 percent it hinders overall economic growth.
The president’s budget said debt as a percentage of GDP will top out at 106 percent in 2013, but only if the economy booms.
“I still don’t see a sense of urgency from the president about the massive federal debt,” said Sen. Lamar Alexander, Tennessee Republican. “His budget calls for too much government borrowing – even though the debt is already at a level that makes it harder to create private-sector jobs.”
Speaking on MSNBC on Monday, Jacob “Jack” Lew, the White House budget director, said their long-term plan to lower deficits will stabilize the debt.
Read more here.
January is over … and your federal government managed to increase our debt by $105.8 billion in one month alone. This means that in the first four months of the 2011 fiscal year (which began last October), the federal debt increased by $569.4 billion. At this rate, we are on course to make this the second-ranking year in our history for accumulating new federal debt.
This is what we’re getting from an administration that claims to be worried about our debt and our future? Give me a break. The Obama administration has had its chance to tackle our debt crisis, and its solution is more government spending, or “investment.” Outrageous. They want another stimulus plan!
Now, the Republicans in the House have started the ball rolling. Last week they proposed this plan to operate our government at a budget $35 billion lower than last year. Naturally, smaller budgets mean that people and programs will need to be cut. This is exactly what needs to be happening – shrinking the size of our federal government and our bureaucracy and making government be more efficient: do more with less. This is what smart business people have had to do during this recession, why shouldn’t our federal government? Instead, our government has grown. Spending has increased 27% over the last two years. How many of you small business owners think it would be a good idea to increase your spending 27% over two years while taking in less revenue? Oh … and when I say “small business owners,” I’m talking to you. Are you a head of household? If you think about it .. you’re running a small business. You have all the responsibilities … revenue, expenses, personnel, regulations, taxes … all of it. And the money you have left over after all is said and done? That would be your profit … your savings … the money for your vacation … the money you save for retirement. Can you operate your small business the way the government does? Not unless you want to go bankrupt, you cant.
Economic suicide by debt or taxes
By Ernest S. Christian and Gary A. Robbins
”There he goes again, folks,” Ronald Reagan might say, shaking his head ruefully, as Barack Obama goes charging off on that same spavined old big-spending government horse, riding straight into a box canyon where certain disaster awaits America.
The president’s planned fiscal excesses beyond 2010 cannot plausibly be attributed to the recession, blamed on George W. Bush or justified by economic principles, Keynesian or otherwise. They are simply irresponsible to the point of willful endangerment. The public debt will be at least an astronomical 91 percent of gross domestic product (GDP) in 2020 – and the gross debt will be at least 123 percent of GDP (compared with 125 percent in Greece) and greatly in excess of the fatal “tipping point” identified by recent academic research.
Right now, about 42 cents out of every dollar being spent by President Obama is borrowed – mostly from foreigners – and if he continues to stoke the crisis, America’s Triple A bond rating will be downgraded within a few years, the Treasury’s borrowing costs will skyrocket, and Washington will try to inflate its way out of debt by printing lots of cheap new dollars, thereby destroying people’s savings and impairing lives and livelihoods for generations to come. None of this is necessary; it’s Mr. Obama’s choice.
He’s risking America’s future by running up the debt in a hurry-up effort to get in place as quickly as possible – while he still can – his planned expansion of the welfare state and thereby permanently commandeer for its targeted beneficiaries a disproportionately large share of America’s future financial capacity.
At least $4.3 trillion of this kind of additional spending for 2011-20 is buried in his budget. Furthermore, going back to 2009-10, there is another $1.2 trillion, and going forward, Obamacare will add at least another $1 trillion to the accumulated deficits.
There is a method to all this madness. Mr. Obama is using public-sector debt not only to pre-empt for his own ideological purposes the financial capacity of future generations, he also is seeking to pre-empt the prerogatives of voters and their elected representatives in Congress for the indefinite future.
Economist Gene Steuerle at the Urban Institute points out that there may soon be no “fiscal slack,” and therefore no “fiscal democracy,” left in America: All tax revenues will have been pre-committed and all spending predetermined by the current Congress and president. It is already the case that mandated expenditures plus interest on debt are consuming all tax revenues and will soon greatly exceed them.
Mr. Obama’s next step is to commandeer the economy’s capacity to pay taxes, and here again, the cleverness of his debt maneuver is apparent.
Having proposed to run up the debt to irresponsibly high levels and already having built large spending increases into his budget, thereby giving them the appearance of reality, President Obama has scared the pants off everyone in what amounts to a political protection racket.
Now he is calling for “fiscal responsibility.” Taxes must be increased to put the nation’s fiscal house in order, Mr. Obama will say. He also has appointed a National Commission on Fiscal Responsibility and Reform, whose report in December likely will say: “Yes, Mr. President, taxes must be increased by an additional $1 trillion to $2 trillion in order to bring the debt down to fiscally responsible levels.”
Paul Volcker, one of Mr. Obama’s key advisers, recently said that a value-added tax (VAT) may be the solution. Indeed, the VAT is the perfect tax for a big-government politico like Mr. Obama. (It can be disguised so that everyone thinks someone else is paying the tax.)
However, no matter how tricky the tax, a tax increase big enough to make a dent in Mr. Obama’s spending-and-debt spree will, dollar for dollar, do far more damage to the economy than it adds to the Treasury’s revenue receipts. And insofar as Americans’ jobs and prosperity are concerned, another round of multitrillion-dollar tax increases (on top of the $1 trillion he already has in the works) will break the economy’s back.
Mr. Obama is giving Americans a choice of weapons with which to commit economic suicide: debt or taxes.
Germany and other members of the European Union may rescue Greece from its own profligacy and fiscal self-destructiveness, but who, pray tell, is going to rescue America from President Obama?
Ernest S. Christian and Gary A. Robbins are former Treasury tax officials who are, respectively, the executive director and chief economist of the Center for Strategic Tax Reform, cstr.org.