We’re we to retire our debt obligations today every working American would have to come up with $800,000; not a realistic solution, but an eminently clear illustration of “where we are” to use the Senate Term Of The Day. We’re you to mortgage that $800,000 over thirty years, $5,000 a month should do it. Please pay up!
We are having an “adult” debate over a tiny percentage of the problem. The debate is educational. The more we learn the more we realize that “cuts” are not necessarily cuts. Typically, part of “the plan” is accounting trickery in combination with a set of questionable “assumptions”. What really happens is that the federal budget grows by an average of 7.5% per year. Cut’s do nothing more than turn 7.5% growth into 6%. Actual dollars being spent grow, deficits grow. When you look at the growth in whole dollars compared to revenue streams; be afraid, be very afraid.
GDP growth over the past two quarters is less than 1%; 1% growth will not contribute to the solution; it will make the situation much, much worse. “Rational” budget assumptions by the administration related to growth sit at 3%, a 66% margin of error as compared to reality. Incremental revenues are two thirds less than expected; no growth no incremental revenue; higher deficits and more spending related to joblessness and social support spending under current law. In other words, as things sit, economic Armageddon is guaranteed, it’s just a matter of time.
We’re not engaging the systemic problems; we’re ignoring demographics and average life spans. We refuse to look to Greece, Spain, Italy, Ireland, Iceland or Portugal as examples of where the path we’re on leads. The Euro is in the tank. We’re being lectured by Communist China on the proper conduct of Capitalism. Tom Freidman of the New York Times refers to the nexus of the demand for fiscal responsibility, the Tea Party, as Hiz’bAllah; really?
The argument can be effectively made that the real economic terrorism is what we’ve experienced over the past two and a half years. There can be little question that the President’s 40% approval is very much tied to his economy; it is the President’s economy at this point, blaming Bush aside. We have not seen a single positive macro-economic trend in a very, very long time. How big of a hammer must we be hit over the head with to demand a dramatic change in course?
The Boehner bill does nothing material, it does, however, send a message. The process to the bill delivers the message that Democrats can engage in as much name calling directed at the Tea Party as satisfies that particular predilection but the Tea Party has a major role in setting the agenda. They are the only caucus demanding a dramatic change in course that will reverse the $1.5 trillion in average deficits beginning in 2009 and projected through 2011 by the CBO.
The President’s budget maintains those deficits for as far as the eye can see. To counteract that trend there has to be a hard push back from the other side. The push back is Tea Party Republicans. Absent the influence of the 2010 elections there would, literally, be nothing in the way to stop the economic demands of Progressives; led by the President. Progressive, Keynesian economics is failing: massive unemployment, deficits approaching 100% of GDP, no aggressive investment by business, a constant stream of ever more intrusive regulation, demonization of business and no plan to address the entrenched trends.
Be afraid, be very afraid.