If Republicans Love America They Must Keep the Government Closed Down

October 5, 2013

The current government shutdown has statists all in a tizzy.  Democratic congressmen and mainstream media pundits have been blabbering all week about how we are doomed because Republicans in the House of Representatives refuse to approve more wasteful federal spending thereby allowing the government to continue to function.  For these folks, it is the end of the world if Washington is not the center of decision making and the purveyor of all of life’s provisions for the American people.  The incessant chatter of how a small group of “extremists” in the House is holding the whole country hostage got old pretty darn quick and I found myself reaching for the remote to quell the noise on more than one occasion.

I mean what is so extreme about attempting to change the disastrous course the country is currently on?  Can the federal government continue to rack up enormous deficits each month with no end in sight?  Are we able to take on another massive entitlement program?  Finally, after five years of managing the economy and producing no economic recovery, is it not time to admit failure and try something new?  If Republicans love America, they must stick to their guns and demand changes before any budget deal is agreed to.

For one thing, it is no secret that Washington wastes billions of dollars each year and a lot of the spending has nothing to do with the welfare of the American people.  It includes everything from $10 million  to create a version of “Sesame Street” for Pakistani television to $2.6 million to train Chinese prostitutes to drink responsibly.  None of it is constitutional and none of it enriches the lives of ordinary Americans.

But, that spending is just the tip of the iceberg.  The national debt is quickly approaching $17 trillion and unfunded future liabilities for Social Security and Medicare equals another $84 trillion.

Then there is Obamacare – the president’s signature legislative accomplishment.  The increased costs that come with that scheme will be enormous.  Much of the costs will be covered by federal subsidies which will further exacerbate the national debt.  Because it is another entitlement program, future lobbying for protection of the system and increased benefits will rival that of Social Security and Medicare thereby causing huge unfunded liabilities of its own.  Yet, Democrats refuse to even consider delaying the law for one year.

In the final analysis, the way to get America back on the path to economic prosperity is not through big government programs supported with huge budget deficits.  That has been proven over the last five years.  The road to a bright economic future is through small government and balanced federal budgets.  The greatest period of economic growth in our nation’s history came when deficits were low and the largest federal program was the U.S. Postal Service.  Between 1869 and 1879 America’s economy grew 6.8 percent (NNP equals GDP minus capital depreciation) per year.  When the 20th Century began, America was the world’s leader in per capita income and industrial production.  Real wages increased greatly and prices of goods and services remained steady.

We have spent over $7 trillion in the last 5 years and what has it gotten us?  Lagging wages, continued high unemployment, and higher prices are the result.

An immense fiscal and monetary crisis is eventually going to engulf America. It is already too late to prevent it.  Over 40 years of profligate federal spending and monetary recklessness is quickly coming to a head.  If Republicans back down to the big spenders and pass a budget which increases the debt ceiling and funds Obamacare the collapse will be that much worse.  If they really love America, they must keep the government closed down.  Maybe we can salvage some of our doomed economy?


Obama Raises More Questions than Answers

July 31, 2011

It seems like every time I listen to a politician talk I always come away with more questions than answers.  Take President Obama’s nationally televised speech this week on the debt ceiling crisis.  The President spoke to the nation for about 15 minutes but I still don’t have a clue as to what he is proposing to do about our debt crisis.  In fact, all I know is that he wants a “balanced” approach to meeting our fiscal woes.  Clearly, his pollsters have indicated to him that independent voters crave “balanced” approaches to problems – but I digress.  What follows are several questions I had after listening to the President.

First and foremost, Obama spent a good amount of time lamenting the deficiencies of the tax code.  He talked about credits, subsidies, and loopholes that allow the very rich to avoid paying their “fair” share in taxes.  Now, there is no doubt that the income tax code is in need of a total revamping, but the question is why did Obama wait for a crisis to take an inflexible stand on raising taxes?  He has been president for two and one-half years and he was a senator for three years before that.  Why didn’t he propose changes to the tax code in all that time that would have closed loopholes and eliminated special breaks for politically connected hot shots?  Could it be this is all just political rhetoric to arouse his base going into an election year?

Speaking of the rich paying their “fair” share of taxes, naturally the President harped on this class warfare theme repeatedly.  Fair is a very subjective word.  Chances are good that what the President considers fair I don’t.  By “fair” does Obama believe the rich should pay the same percent of income in taxes as everybody else?  Or does he believe they should pay an amount equivalent to the amount of government services they use?  In either case they don’t.  I did a little research and found that the rich actually pay most of the federal income taxes in America.  For instance, the richest 10 percent of taxpayers pay 70 percent of all taxes.  Could it be I misunderstood the President?  Perhaps he meant that the rich already pay more than their “fair” share of taxes and deserve a tax cut?

But I suppose the position of Obama’s that I can’t understand the most is his insistence that without raising the debt limit the U.S. Government would be in default.  According to the Bipartisan Policy Center there would be enough revenue per month to pay the interest on the debt, social security, Medicare and Medicaid and unemployment benefits.  If we ended the wars we could use the $31.7 billion earmarked for the military industrial complex (defense venders) for military pay, veteran’s benefits, IRS refunds, and welfare.  Under this scenario, our debt obligations are met thus avoiding default, vital services are provided to the American people, and only the massive bureaucracy which has become Washington will shut down.  I think this sounds like a great deal.

At the end of the day, politicians are puzzling and the current occupant of the White House is no exception.  They talk and talk and talk and produce more questions than answers.  It is amazing that with all the talk in Washington over the debt ceiling no one has mentioned how presidents and Congresses for decades have been ignoring what is already the law of the land.  Section 7 of Public Law 95-435 passed by the 95th Congress and signed into law by President Carter requires a federal balanced budget.  Perhaps if this question were asked of Washington a long time ago we wouldn’t be in the financial mess we find ourselves in today.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

We Can’t Afford to Raise the Debt Ceiling

July 20, 2011

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.”

Senator Barack Obama

Senate Floor Speech on Public Debt

March 16, 2006

Senator Obama ended his speech with a profound yet often neglected fact, “Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”  He went on to vote against raising the debt ceiling in 2006.

What a shame Barack Obama has such a short memory.  If only he would have paid heed to his own words once he became president in 2008 we wouldn’t be about $3 trillion more in debt and in the worst fiscal crisis the world has ever seen.  But, of course, the President and his supporters claim that he had no choice but to spend us even farther into oblivion.  After all, he inherited an awful economy from his predecessor.  The story goes that his spendthrift policies are what saved us from an economic meltdown.  How they know that exactly is not clear?

What is known is that Obama’s policies have not solved our economic woes.  In fact things have become far worse under his leadership.  The two statistics that the ordinary American cares most about are unemployment and price inflation.  Both have headed in the wrong direction since Obama assumed the reins of power.  The government’s unemployment figure stood at 7.8 percent the month Obama became president.  Today, 9.2 percent of our workforce is without work.  In spite of his “stimulus” spending the unemployment rate has increased 18 percent!

Naturally, with all the new spending and monetized debt over the last two and one-half years, it is reasonable to expect that goods priced in dollars would see an increase.  As I have predicted many times on this post, they have.  If we just use the government’s CPI numbers it is easy to see that prices under Obama’s program have taken off. When Obama took office the government’s CPI number stood at 0.0 percent.  The number released for June 2011 stood at 3.6 percent.  Additionally, gas prices have doubled under Obama and food prices are soaring.

If one were to calculate unemployment and price inflation like they were prior to 1980, we are clearly in a depression.  Bread lines have simply been replaced by food stamps.

The point is that Obama’s polices have been a dismal failure.  The current issue before Congress is whether to raise the current debt ceiling.  It is interesting to note that Obama and his ilk will only talk about what alleged calamities will befall us if the debt ceiling is not raised.  Seniors, soldiers, and the disabled will be relegated to the streets begging for change to support their families they tell us.  No mention is ever made of what calamities will befall us if the debt ceiling is raised and the reckless spending is allowed to continue.  Right now, 43 cents of every dollar Washington spends is borrowed.  Over the next decade, interest payments on that debt assuming interest rates rise gradually will total $5.5 trillion.  That is revenue that cannot be used to invest in America – roads, schools, jobs…  If the current debt ceiling is raised for further deficit spending a greater percentage of each future dollar will not be available for American investment or as Senator Obama put it so aptly in 2006, “Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.”

The President and Congress have tried to spend our way out of economic crisis.  Predictably, it has failed and even made things worse.  Raising the debt ceiling further will only exacerbate the crisis.  To avoid a “leadership failure” Obama should do whatever it takes to cut trillions in spending.  It is the only way to get “our Government’s reckless fiscal policies” under control and ensure a viable economic future for all Americans.

Article first published as We Can’t Afford to Raise the Debt Ceiling on Blogcritics.

Drastic Cuts in Spending are Needed Now!

February 19, 2011

The Treasury Department has revealed that sometime in late April or early May the federal government will eclipse the current national debt ceiling of $14.3 trillion.  Of course, this means that Congress must act before then to either raise that figure in order to continue spending to meet its budgetary requirements or cut spending to keep from exceeding the limit.  Needless to say, the battle lines are drawn.  Democrats are on one side appealing to the emotions of Average Americans by claiming that Republicans hate them because they intend to vote against raising the debt ceiling thereby forcing a shutdown of the federal government and consequently denying them of their federal largess which in the last few decades has become their birth right.  For their part, Republicans are proposing, a whopping $60 billion in federal cuts.  This must be a cruel joke – $60 billion out of a $1.6 trillion deficit?  The reaction of both to the current situation is indicative of the fact that we are in real trouble.

There is only one course of action our overlords in Washington can take and that is to cut federal spending by $738 billion over the next six months thereby making raising the debt ceiling a moot point.  We have no choice and here is partially how it could be done.

First of all, whoever said that government jobs should be recession-proof was a fool.  The private sector has laid off millions in the last three and half years, there is no reason why Uncle Sam shouldn’t significantly cut his workforce as well.  The average bureaucrat makes between 30-40 percent more in salary than their private sector counterparts.  They have more generous benefit packages and pay next to nothing for their retirement and health care packages. By cutting 100s of thousands of paper pushers, we can save money and free up resources for the private sector to create real jobs.

We can cut the federal payroll by eliminating several departments and agencies.  Take the Department of Education for instance.   Since its inception in 1980 Uncle Sam has appropriated over $1 trillion to the department.  What has it accomplished?  We are still dissatisfied with our education system.  Eliminate just that one bureaucracy now and we save – $37 billion over the next six months.

Then there is the Defense Department.  As a nation we spend the most on our defense.  As a matter of fact, we spend more than the next six highest countries combined.  In his most recent press conference, President Obama said tough choices have to be made in the budget debate.  But, he questioned whether we really wanted to be a nation that cuts funding for baby formula to poor families.  He should also be questioning whether we want to be a nation that spends hundreds of billions on a war machine that kills millions and ties up capital at the expense of millions of Americans needing jobs.  At around $750 billion a year, we should end the Empire, bring the troops home, and restore sanity to our defense spending.  We can no longer afford it.

There are also many programs of the federal government that should be abolished immediately to save money – for example farm subsidies and NASA.  Farm subsidies should be killed because they go mostly to large agribusinesses anyway and are immoral in these times of increasing food prices and possible worldwide food shortages.  NASA should face the axe because whatever worthwhile benefits it produces can be provided by the private sector for a lot less money.

And speaking of increasing food prices, they are with us and a major reason for getting our fiscal and monetary house in order.  Because the world’s commodities are purchased in dollars, a devaluation of our currency has caused prices to spike worldwide.  In the last year the price of wheat has skyrocketed by 114 percent and corn has soared by 88 percent.  That is what all the fuss is about in Tunisia, Egypt, Algeria, Libya, Yemen, and Bahrain.  If Congress decides to monetize more debt, prices will only rise further.  At some point, unrest could spread to the U.S.

It is a sobering circumstance to say the least.  Now is not the time for class warfare or ridiculous proposals to cut spending.  What is needed is statesmanship.  Nothing less than peace and tranquility worldwide is at stake.

Article first published as Drastic Cuts in Spending are Needed Now on Blogcritics.