Trillions More in Debt with Nothing Good to Show for It

It is easy to get caught up in all the hype of the media pundits, Ben Bernanke, Joe Biden and Barack Obama that the economy is slowly but surely recovering from the worst recession since the 1930s.  It’s not.  And what is even worse is that we are even deeper in debt with nothing good to show for it.

In September of 2007, just months before the current crisis began, our national debt was a little over $9 trillion give or take a few billion.  As of late last week, our national debt was quickly approaching $12 trillion.  That is an increase in debt of $3 trillion in just two years!  Of course, most of the new debt is a result of stimulus spending, other government handouts to stimulate the economy, and war – things Keynesians have always historically believed would turn any economy around.  That theory has been disproved previously and this current economic crisis is just the most recent repudiation of it.

So, with all this spending what do we have to show for it.  This week the Bureau of Labor Statistics announced that unemployment is at a 26 year high in the United States at 9.8 percent.  Payroll employment has fallen for 21 consecutive months, with total jobs lost equaling 7.2 million.  This is only the phoney government number.  It doesn’t count workers who have been unemployed so long they have given up on finding a job and those working part time that prefer full time.  The total unemployed number, meaning the number the government has always used up until the Clinton years, is actually 17 percent!  This is a Great Depression number.  So it is interesting when Fed chairman Ben Bernanke says his monetary policies have kept us from an economic calamity. 

In addition to higher unemployment, with the new debt we also have lower consumer confidence.  The 2^nd Quarter real gross domestic product number down at an annual rate of .7 percent.  And lastly, Americans continue to lose their homes to foreclosures.  They increased by 17 percent in the 2^nd quarter in spite of a government spending program meant to help borrowers save their homes.  Taking all these facts together, only a fool would believe the economy is recovering, Keynesian economics works, and Ben Bernanke has saved us from an economic abyss.

There is one sector of the economy that is doing pretty well as a result of all this new debt – big banks.  As a group their stock prices are up.  They are receiving a good rate of return on their bailout money being held in their Fed reserve accounts.  Bonuses are being paid.  And they are enjoying the privileges that come with Fed membership – anonymity when given our money and protection against failure.  Perhaps when Bernanke, Biden, and Obama talk of recovery they have the big banks in mind.

One thing is clear.  Most of America is not experiencing an economic recovery.  $3 trillion more in debt and the economy is still in the dumper.  The so-called jobless recovery policymakers speak of is an insult.  It doesn’t give much comfort to the 7.2 million folks who have lost their jobs since December 2007.  The only jobless recovery that is acceptable is the one that will result when the scoundrels that caused this mess lose their jobs.  Americans will have this opportunity starting next year.  Hopefully, they will take full advantage of it.

House Republicans Must Be Joking

Thomas Jefferson said, “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”  Certainly, our current unhappiness as a nation can be partially attributed to the fact that for at least the last 38 years we have allowed government at all levels in the United States to rack up enormous debt in the name of providing for the needs of the American people.  The $400 billion national debt in 1971 has ballooned to well over $11 trillion today.  Our national debt as a nation has gotten so bad that the ratio between debt and GDP will soon be one to one.  Most sane Americans agree that the lunacy must end.

The President, however, doesn’t see things quite the same way.  He has proposed a $3.5 trillion budget for fiscal year 2010.  Besides being the largest budget proposal in the history of the republic, it is filled with items the President claims the American people need.  You know the same kinds of expenditures which have traditionally produced huge deficits and sent our total debt into the stratosphere – more for college loans, worker retraining, nutrition, health and housing programs.

But, this article is not about the President’s insane budget proposal.  It is about the response to it by the opposition party, the so called conservative party of the two major parties in the U.S. – the Republican Party.  This week, responding to a challenge by the President to propose cuts in his budget, the House GOP acquiesced and submitted their recommendations for lowering federal spending.  They proposed spending cuts totaling $23 billion over the next five years.  You heard right, spending cuts averaging $4.6 billion a year for the next five years. That amounts to one-ten thousandth of a percent of the total Obama budget!   House Republicans must be joking. 

Now, the Republicans led by House GOP Whip Eric Cantor of Virginia, are right to propose elimination of federal spending on building sidewalks and bike paths and hiring crossing guards.  But, in a $3.5 trillion budget this is the best they can do?  What about slashing the budgets of various federal departments by half?  Take the Education Department for instance.  It’s unconstitutional and doesn’t educate one kid.  If we cut its budget by half, we could save another $23 billion a year.  Then there are the extortionists over at the Transportation Department.  $73 billion a year is given to this bureaucracy so they can take state funds, attach strings to it, and send it back to the states as a gift to them to improve our highway structure.  Why not let the states keep their own revenue and decide how best to spend it locally?  We would save billions a year just in salaries.  How about the Energy Department?  Aren’t we still dependent on foreign oil?  A slashing of fifty percent here would save $13 billion.  Lastly, there is plenty to be cut at the Commerce Department.  Do we really need a federal agency to promote American products abroad?  Isn’t that what the weak dollar and advertising budgets are for?  In Obama’s budget he has allocated $7.4 billion dollars to Commerce for the 2010 Decennial Census.  If we could reduce the census to its original format, simply counting heads for congressional apportionment and not bathrooms and outhouses on properties for God knows what we could save billions.  The total savings just by cutting these few departments’ budgets in half comes to $80 billion per year.  Now we have a start toward fiscal solvency.

In any event, like the mantra that Obama represents real change the idea that the current Republican Party would have the courage to do the rights things as the opposition party was a pipe dream.  Eric Cantor, one of its leaders in the House is emblematic of this.  Cantor served in the House through the Bush years and voted for almost all big spending schemes.  He consistently voted for Bush budgets which nearly doubled the national debt in eight years.  He voted for Bush’s defense authorization bills, lavish federal department appropriations, the $150 billion “stimulus” bill of February 2008, and the $700 billion TARP (twice).  It’s no wonder the best he could do was come up with an amount of spending cuts that don’t even deserve the title “infinitesimal.” 

Sadly, as our day of financial reckoning approaches there are still no real leaders in charge in Washington to put an end to the lunacy that is federal spending.  Both the Democratic and Republican parties are more interested in helping their own cause than in doing what is right for the country.  Ultimately, doing what is right for the country is what Americans really need.