President Barack Obama, who has increased the national debt by $53,377 per household, has proclaimed April“National Financial Capability Month,” during which his administration will do things such as teach young people “how to budget responsibly.”
“I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices,” Obama said in an official proclamation released Friday.
[…] The proclamation on the White House website links to two other government websites: the site for the Consumer Financial Protection Bureau, and MyMoney.gov, which includes materials from 21 federal agencies.
Listed among the “popular topics” on MyMoney.gov is “Managing Debt and Credit,” which includes a link to a page on the Federal Reserve’s website called “Getting the most from your credit card.” Tip 2 on that page is: “Stay Below Your Credit Limit.”
When Obama was inaugurated on Jan. 20, 2009, the total debt of the federal government was $10,626,877,048,913.08. As of the close of business on March 28, 2013, the total debt of the federal government was $16,766,988,432,792.62—an increase of $6,140,111,383,879.54 since Obama took office.
That means that under Obama the federal debt has increased $53,377 for each one of the 115,031,000 households the Census Bureau says there are now in the United States. The president is required by law to submit a budget proposal for the next fiscal year by the first Monday in February.
Thus far, Obama has not submitted his budget proposal for fiscal 2014.
It’s the liberal way to perceive yourself as diametrically opposed to what and who you actually are. Therefore, Barack Obama being a financially incapable liberal is precisely the reason why the man who has yet to submit a budget proposal for 2014 feels he’s qualified to teach young people “how to budget responsibly.”
What’s next, Bill and Hillary Clinton running a Marital Cohesiveness and Fidelity Seminar? How about first daughters Sasha and Malia, who took not one but two spring break vacations, sharing with the younger set how to spend a week at the Atlantis in the Bahamas and River Run in Sun Valley, Idaho on a limited budget? Sorry, but if Barack Obama is financially capable, then outgoing MSNBC host Ed Schultz is qualified to host a new “Eradicate Bias in the Media” show.
Then again, this is the president who is expert at exempting himself from what he insists others do. That is why a person who clearly has no understanding of sound financial principles can say with a straight face: “I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices.”
Wait! When Obama says “all Americans” does “all” include himself and the $10 million dollar vacationer he’s married to, or does “all” just mean everybody except Mr. and Mrs. Obama?
Either way, the president must truly believe that he’s an authority on stretching a dollar, because in his “National Financial Capability Month” proclamation, he said that his “[a]dministration is dedicated to helping people make sound decisions in the marketplace.” That marketplace, by the way, is the same marketplace that he’s currently in the process of destroying. It could be that President Obama thinks that the soundest way to save money in the marketplace is to exchange the marketplace for something altogether different.
Every year, the federal government spends well over a trillion dollars more than it takes in. As a result, it has racked up seventeen trillion dollars in debt, most of it in the last decade. In seven years at current rates, the U.S. will need almost a fifth of the GDP from the rest of the world just to finance our national debt.
Just two of our federal entitlements, Medicare and Social Security, have “unfunded future liabilities” of $46.2 trillion. Total liabilities are $86.8 trillion or more. Entitlements and other mandatory spending will burden more and more of the federal budget in the coming years. At today’s burn rate, before long no realistic amount of tax revenue will be able to service the debt and fund the government’s basic functions.
We need not worry about the federal government defaulting, since, unlike U.S. states or private citizens, it can print the money it needs to pay the bills. It can and will do so if we don’t make a course correction fast. Massive monetary expansion will ultimately devalue every dollar in circulation and trigger the sort of hyperinflation that flattens entire societies in short order. That’s bad enough, but when government borrows and spends for our supposed benefit, somebody else will have to foot some or all of the bill. If our faith applies to every aspect of life, then it must have something to say about this moral outrage.
[…] In the twentieth century, more than a hundred million people were murdered by their own governments. And that was just in communist countries. History and scripture agree: because of sin, governments with too much power become propagators of evil and destruction.
This speaks directly to government debt, since deficit spending is a symptom of government doing more than it can or should. The federal government now borrows and spends with such reckless abandon that it is careening toward a global economic catastrophe. If Christians can’t muster the courage to speak out against what Rep. Paul Ryan has called “the most predictable debt crisis in history,” we won’t deserve to be taken seriously after the collapse.
Sadly, many Christians don’t know how to disciple our nation to turn the tide because they’ve never studied God’s design for economics or the Biblical role of government. They can’t teach what they don’t know. The key to real reformation, says R.C. Sproul, Jr., is for Christians to understand and work to implement Biblical economic principles:
Christian author and teacher R.C. Sproul, Jr. told CBN News Anchor Lee Webb that he believes it’s time to return to the basics when it comes to economics.
“When we’re left arguing about whether or not we should have a marginal tax rate of 45 percent or 48 percent, and the conservative is stuck arguing for the 45 percent we’ve had an insufficient reformation in our thinking,” Sproul said.
Sproul believes that reformation will happen only when we return to scripture to see what God has to say about economics. That’s why he produced a video series called “Economics for Everybody.” It’s a compelling, even entertaining approach to a topic many find boring.
[…] Sproul provides historical evidence that nations most influenced by biblical Christianity are nations that, by and large, have prospered. They are nations marked by decentralized governments and free markets.
But nations that reject God are marked by centralized power, tyranny, and no free markets. Unfortunately, he said he has observed some of those troubling trends in America now.
“The United States is not a free market. It’s an interventionist economy that’s been moving closer to socialism for over a century now,” he said. “I am not optimistic about our nation’s future economically.”
“We live in a country in which the state forbids me to hire a man unless I promise to pay him X number of dollars,” Sproul explained. “We now live in a country where I can’t hire 50 men unless I promise to buy them all health insurance, including access to abortion.”
“This is not economic liberty. This is not free markets,” he said. “We’re missing the fact that we’re the frog and the water is boiling.”
“It’s my conviction that education is always and everywhere religious,” he said.
“And it’s not a surprise that when 80 percent of evangelical parents have their children in the government’s schools that they’re going to embrace the religion of the government which is the worship of the state,” he said.
Sproul cautioned Christians to avoid despair. One way to do that is by returning to the beginning, to the Creation Mandate and begin to see that our work is part of worship.
After four years of reckless spending, $6 Trillion in new debt, massive tax hikes, devaluing the dollar by printing billions out of thin air, Obamacare, and thousands of smothering, anti-business regulations, this economy is THEIRS. We tried to warn them of the tragic results of Keynesian policies, and they wouldn’t listen, so now it’s time to OWN THE CONSEQUENCES.
For the first time in over three years, the U.S. Gross Domestic Product shrank. Between October and December of 2012, the GDP had a negative growth of 0.1. And let’s remember that this is the same quarter where we saw the media go into hyper-drive to spin Obama’s anemic job and GDP growth into a repeat of the Roaring Twenties.
The problem with the American economy is that Obama and his media can’t fool it. Happy talk and spin and distractions about contraception don’t create jobs or growth. You might be able to fool legions of people into voting a certain way, but you can’t fool them into spending and hiring and investing.
In an attempt to get out in front of startling GDP contraction, Democrats are scrambling to blame the unanticipated growth plunge on spending cuts, not President Barack Obama’s trillions in federal spending that have accelerated the need for tightening the nation’s fiscal belt.
[…] These comments telegraph Democrats broader strategy for the days ahead: use the GDP contraction to stoke fears that Republican calls to cut spending or aggressively negotiate the debt ceiling and sequester will drive growth down further.
Such messaging will be a hard sell. First, the negative growth figures come on the heels of Obama’s second inaugural address that boldly proclaimed the “economic recovery has begun.” Furthermore, if Krueger’s argument that cuts in defense spending triggered GDP to nosedive, how will President Obama defend his decision to slash defense spending by $487 billion over the next decade?
Even Politico has dubbed the negative growth numbers “Obama’s GDP headache,” calling it “bad news for Obama” because it contradicts the president’s “we’re-finally-roaring-back-narrative.”
CNBC analyst Rick Santelli was more blunt. “We are now Europe,” said Santelli. “When you act like Europe, you get growth rates like Europe.”
The Federal Reserve on Wednesday announced that it will launch a fourth round of quantitative easing (“QE4”), this time committing $45 billion a month to the purchase of long-term Treasury securities.
You know what this means, right? It means that along with Washington’s open-ended $40 billion a month program to buy up mortgage backed securities (“QE3”), total monthly bond purchases by the Fed will amount to $85 billion.
Yes, that’s $85 billion a month.
[…] There’s no calendar date set for when the Fed plans on calling it quits. They’re going to keep rates low and keep purchasing bonds until unemployment hits 6.5 percent.
In addition to the bond purchasing, the Fed announced that it would keep the federal funds rate near zero….until unemployment dips below 6.5%! Unless the labor market shrinks to oblivion, the unemployment rate will never dip that low as long as Obama is president. And as long as we suffer from Obama’s taxation, regulation, and subsidization, thereby mitigating economic growth, his unelected acolytes will continue their monetary stimulus. So we will continue devaluing the dollar and depleting saving as far as the eye can see.
Something is fundamentally wrong when a completely unelected branch of government has such unilateral power to affect our savings, purchases, and currency without any recourse. Milton Friedman used to call it taxation without legislation. The sad thing is that they obdurately refuse to learn the lessons from previous failures to tinker with the economy. Nothing will change until we repeal the Fed’s dual mandate of destruction.
In terms that are easily the toughest-sounding it has so far uttered on the subject, the White House today insisted again that taxes “have to go up on millionaires and billionaires” and that the President “will not sign an extension” of present tax rates for the top two per cent of wage-earners (who are not all “millionaires and billionaires”).
Although the Obama Administration has made it clear for sometime now that an increase in tax rates on the highest wage-earners was a non-negotiable part of any deal to avoid the “fiscal cliff,” Press Secretary Jay Carney used his strongest language yet on this point today.
White House sources are telling Democratic reporters that the president is willing to go over the so-called “fiscal cliff” if GOP leaders don’t agree to his demand for higher tax rates on the wealthy without substantive spending cuts.
A political deadlock would mean an automatic tax increase for middle-class and wealthy Americans on January 1, and the opportunity for Obama and the Democrats to push a tax-cutting bill for middle-class voters in 2013, say the White House officials, who leaked the claim to two liberal columnists.
After the Republicans’ counteroffer on the fiscal cliff today, ABC’s Jake Tapper tweeted a response from a senior White House official: “if GOP doesnt agree to higher rates for top 2%, we’ll go over the cliff and the American people will hold them responsible.” This is a hugely irresponsible threat from President Barack Obama’s administration.
[I}f the White House really is willing to risk an austerity crisis unless it gets its way on an unrelated policy matter — then the Obama Administration is as irresponsible as it often accuses Republicans of being.
President Obama would have failed Negotiations 101. If there was such a course, the first rule would be “do not insult the people you’re dealing with.
[…] In a few weeks, our country could be pushed back into another recession if both sides cannot agree on a way to prevent everyone’s taxes from rising sharply on Jan. 1.
Yet there was Mr. Obama, acting as though his political blood sport campaign isn’t over, going on the attack and making a meaningless offer to Mr. Boehner that was nothing more than his original budget proposal, which Congress had rejected out of hand: $60 billion a year in spending reductions, a puny 1.6 percent out of a nearly $4 trillion annual budget.
On top of that, he wanted Congress to give him greater powers than he already has, which the Constitution explicitly gives to Congress: control over raising the debt limit when and how he wishes.
Mr. Boehner responded with great restraint, telling reporters that the president clearly wasn’t taking these negotiations seriously. Mr. Obama, he remarked, had made a “la-la-land offer.”
“We could have responded in kind, but we decided not to do that,” the Ohio congressman said. It was a class act versus a Chicago-style, former community organizer who thinks he is still in the 2012 campaign and that this is no time for leadership.
“Why are Republicans allowing the entire debate to be about taxes and about the war among Republicans over holding the line on the Norquist pledge or not, when what Obama is proposing on raising the rates on the 2% is a triviality? It will reduce the deficit from 1.10 trillion to 1.02 trillion, 8 cents on the dollar. It is nothing. It’s lunch money, it’s a rounding error. And yet that’s all the debate that we are hearing. Obama understands this. He’s not trying to fix our fiscal issues and problems. He’s trying to destroy the Republicans by insisting that there is a split among the Republicans on this issue which has held them together, the same way it destroyed President Bush Senior when he went back on the pledge he made. This is a political attack on the Republicans. There is no evidence right now that he has any interest in the real fiscal issue because he would have to talk about spending and entitlements and he isn’t.”
“What [Obama] proposed this week was a classic bait and switch on the American people—a tax increase double the size of what he campaigned on, billions of dollars in new stimulus spending and an unlimited, unchecked authority to borrow from the Chinese,” Sen. Orrin Hatch (R-Utah) said in Saturday’s weekly GOP address.
“Maybe I missed it but I don’t recall him asking for any of that during the presidential campaign. These ideas are so radical that they have already been rejected on a bipartisan basis by Congress.”
Where are the Democrats standing up to their special interests and proposing compromises contrary to their base? Where is the Democrat saying, you know what, we can’t keep posting trillion+ deficits? Demographics make Social Security and Medicare unsustainable, yet not a single national Democrat will admit that.
Why is the media not seeking out some “adult” Democrat who is willing to admit that we have a serious spending problem and need to reform entitlements? Why do Democrats simply get to deliver pablum that we need a “balanced” approach, but never have to articulate both sides of this balance?
I’ve been around long enough to realize these questions answer themselves. Only the GOP has to compromise its closely held beliefs. The Democrats, who arguably have created this entire mess, never have to question their basic assumptions. They have failed to produce a budget for four years and are currently spending more money than LBJ and FDR ever dreamed of spending, yet no one can question this basic framework.
How is it that the GOP is so feckless and ineffective that it can’t even convince the 48% who voted for Romney that raising taxes on those making over $250,000 is both pointless and bad policy:
Sixty percent of all Americans back higher taxes on higher incomes in the new Post-ABC data. Earlier this month, an identical 60 percent of voters in the presidential election said income taxes should be raised on income over $250,000, according to the national exit poll.
Only 37% oppose the tax hike.
Other than a complete inability to communicate, there’s no rhyme or reason for this. Facts, logic, and history are all with us in this debate, but we still can’t make our case to more than 37% of adults?
We lost here, though, the moment Obama and the media were able to make the deficit reduction debate center on a silly tax increase as opposed to spending decreases.
How is it possible for Democrats to be losing a debate over raising taxes in the middle of the longest, worst recession since the Great Depression? Because they’re too afraid to STAND UP AND MAKE THE ARGUMENT! We need BOLD leaders who don’t have Stockholm syndrome, aren’t intimidated by the predictable liberal playbook, and aren’t ashamed to argue for the conservative principles they claim to represent!
The Democrats are using typical Alinsky scare tactics. But instead of anticipating the predictable Democrat playbook and being prepared to counterattack, the GOP establishment will cower and cave like a scolded puppy. Obama’s playing them like a fiddle.
Today, multiple high-ranking Republicans announced that they were willing to raise taxes as part of a deal to avoid the “fiscal cliff,” breaking the pledges they had made to Grover Norquist’s Americans for Tax Reform.
Norquist has responded by calling them Democrat “pawns,” which they are:
The leader of Americans for Tax Reform told Human Events that Republicans should be ashamed to be part of the Democratic media campaign to raise taxes.
“They should be embarrassed,” said Grover G. Norquist, the founder and president of the Washington-based ATR.
[…] Despite the barrage of attacks against him, and reports of defections, the “Taxpayer Protection Pledge” he asks every candidate to make to the voters is not going away, he said.
“The truth is that 90-plus percent of the pledge signers, they sign the pledge because they have no intention of raising taxes,” said the Massachusetts expatriate.
“They are very comfortable making that commitment because it never occurs to them to raise taxes. They know taxes are bad for the economy. They know raising taxes kills jobs,” he said. “Why would they raise taxes if they know the problem is spending?”
Republicans used to believe in free enterprise, the private sector, and low taxes. They believed in getting government the heck out of the way. They still talk like that, but they don’t seem to actually be operating like that. Senate and House Republicans seem to be in a bidding war to increase revenue in Washington. What’s worse, they are mendacious enough to call it “increasing revenue” instead of “tax increases,” when it amounts to the same thing. The Republican Party of John Boehner and Mitch McConnell have taken a party that once believed in starving the beast and transforming it into a party that believes in feeding the leviathan lest the leviathan consume them. They operate out of fear — fear of losing their remaining power, fear of blame, and fear of the unknown.
[…] The fiscal cliff is actually a bipartisan compromise that congress critters and their friends in the press have now given a spooky name to scare the American people lest Washington have to take the medicine it prescribed itself. The Republicans were complicit in this arrangement.
Republicans and Democrats punted and punted on the Bush tax cuts and they arranged a debt ceiling increase that would, should a committee designed to fail actually fail, force draconian cuts that both sides could scream about and demand be rejected. So Washington would get a debt ceiling increase, but would not actually have to suffer the pain of cuts. Republicans and Democrats collaborated to design a medicine so vile they could ask the public’s forgiveness if they chose not to take it and design a more sugary medicine instead.
But one way or the other, the medicine must now be taken.
[…] So what the heck does the GOP actually stand for? Right now, they seem to want to be the “responsible” party, but know they’re going to get blamed for whatever happens. They are scared of their own shadow. They are caving, but to what?
I couldn’t tell you. I have no idea what John Boehner and Mitch McConnell’s Republican Party stands for other than the acquisition and maintenance of their own power. They’re Bob Michel without the charm willing to take scraps from the Democrats’ table so long as they can sit on the floor next to it. Their own plans are designed around tactics, not strategy, and tactics designed to avoid as much blame as possible for a mess they were complicit in creating.
“The Republicans need to take a big step back, rethink the role of the legislative branch, and understand that they have gone down a trail that has no positive outcome.
A legislative branch does five things: it appropriates, it legislates, it has oversight, it communicates, and it negotiates. They have been overwhelmingly fixated on negotiating, but their real power is appropriate, legislate, oversight, and communicate. I would urge the House and Senate Republicans to take a deep breath, pull all the way back, say ‘when you have a serious proposal, send it up…’
First, I would focus on how they’re going to control appropriations. Obama can’t spend a penny if congress doesn’t give it to him. The House Republicans don’t have to give the Senate Democrats a penny.
Two: what do they need oversight on? Because if every committee and subcommittee was looking at how badly this administration is wasting our money, the president wouldn’t have the gall to ask for more stimulus money.
Three: I don’t think they should move big bills. They should move lots and lots of small bills. Make the Democrats block over and over in the Senate. Set a stage for an obstructionist Democrat reelection effort in 2014.
And then frankly, they need to get their act together on communication. It is pathetic how badly Republicans do, whether it’s the presidential campaign, or when it’s trying to govern, when they are competing with the news media and Obama, which is essentially the same thing. They have got to really rethink their entire communication strategy.”
I don’t think President Obama wants to go down as the worst president in history, do you?
Well, that’s what going over the fiscal cliff will make him. And that’s why the Republicans have a lot a leverage.
The massive spending cuts and tax increases set to kick in January 2 will cause a second recession, from which we may not emerge for many months. The economy may not really get going for years. Obama will have presided over two terms of economic disaster. It will ruin his legacy, and sow the seeds for a major Republican revival.
Republican revival? But the Republicans are going to get blamed, you say.
They will, in the short run. But in the end, it will be the president who failed to somehow make a deal. Presidents are ultimately responsible for their presidencies. The good ones tame their enemies, pick off some of them and make them allies, and get a good result. The bad ones go over fiscal cliffs.
The history books will say that Obama had to deal with a recalcitrant Congress. That will be the second thing school kids learn. But the first thing they will learn is that Obama sucked.
While polls may say Republicans could be blamed for the country falling over the fiscal cliff, make no mistake about it: within months, this will be President Obama’s failed economy for keeps. If we go over the fiscal cliff because the President wants to raise taxes, hike spending, and give himself an unchecked monarchical ability to increase the debt limit, he is the one who will ultimately end up paying the political consequences.
Many Christians vote for politicians who support completely unbiblical economic policies because they have no idea what the Bible has to say about economics. All they know about economics they learned in secular government schools and the talking points put forth by politicians and political activists.
The world is reeling from poverty, drowning in debt, and suffering from other hardships caused by bad economic policies. God’s Word has the answers. Christians are called to disciple the nations to obey everything Christ commanded, INCLUDING in the area of economics, but we can’t teach hurting nations what we haven’t bothered to learn for ourselves.
A week ago, a lot of Americans received a jolt. After the election dust settled, they realized a majority of voters don’t want to lessen the role of government in their lives. If anything, they want to see government expand.
It was (and continues to be) the talk of the airwaves and Internet. As one radio host put it, in light of the election results, what we need is significant economic education. He is right – we do.
It is a pretty grave problem. The truth is that a majority of Americans in both political parties are radically ignorant of basic economics. In numerous ways, most people in the United States have been committed to some form of economic suicide for generations. They just don’t realize the extent of it.
This is one of the main reasons we created Economics for Everybody. The long-term implications of government intervention in the economy are extremely dangerous to all of us, especially to our religious freedoms. More and more people have a sinking feeling about this. But unless they take time to learn the basics of economics, nothing will change.
What is really at stake here?
If a majority of Americans are committed to the expansion of the welfare state, it will lead to increasing poverty for all. A basic economic principle is that whatever you subsidize you get more of.
If a dad offers to give money to his kids to clean up their rooms, he’ll get cleaner rooms. In the same way, if a government offers money to its citizens when they are unemployed, it will get more unemployment. Strange as it may seem, statistics consistently bear this out. And since the government offers money for all sorts of things it shouldn’t be offering money for, it’s no wonder we are where we are. We discuss this at length in ‘Lesson 10 – The Corporate and Welfare States of America.’
Next, if a majority of Americans are committed to government intervention in business through regulation, it will lead to a shrinking business sector. The basic economic principle here is that governments are unable to make accurate economic calculations.
The whole idea behind a planned economy is that central planners know better than producers and consumers what’s good for the economy. But such an idea assumes that a few people not only can comprehend, but actually direct the unique and ever-changing choices of limitless producers and consumers better than they can themselves.
It would be like a few people telling everyone else what they should buy at a grocery store. It’s functionally impossible to know all the discrete needs and desires of that many people, so the only way to attempt it is through general rules that restrict and direct consumption for all. At a business level, such a regulatory approach always ends in more and more businesses not being able to operate profitably and shutting down, ultimately resulting in the slow strangulation of an economy. We explain exactly how it happens in ‘Lesson 8 – The Basics of Government Intervention.’
Finally, if a majority of Americans don’t understand the relationship between economic freedom and religious freedom, they will inevitably lose both. The economic principle is that we are caught in a cosmic battle that has many economic aspects: God wants us to build up a godly civilization with our resources while Satan wants to prevent us from doing so.
In an economy based on Christian principles, there is economic freedom for people to use their land, labor and capital as they see fit. It is a matter of individual stewardship based on God-given ability and property. But in an economy based on atheistic principles, the government is a tool of Satan to control the lives of individuals so that they cannot steward their resources and time for God’s Kingdom. Think of the many socialist and communist economies that persecuted tens of millions of Christians.
The fact that there is a spiritual battle going on that has economic dimensions is lost on most people. But it is the reality of this, as well as the fact of sin in the world, that is so important economically. History reveals this to us over and over again. We explain it in greater detail in ‘Lessons 6 & 7 – A Tale of Two Theologies.’
There is, of course, even more to economics. We try to explore as many basic principles as necessary in the twelve-lesson series. Our belief is that if people go through the entire Economics for Everybody curriculum, they will be in a much better place to understand what happened last Tuesday on Election Day. They will also understand what needs to happen in the future.
The federal government has now piled up more debt since Election Day 2008 than it did under all presidents from George Washington through Bill Clinton, according to official debt numberspublished by the U.S. Treasury.
When the polls opened on the morning of Tuesday, Nov. 4, 2008, the total debt of the U.S. government stood at $10,556,177,748,045.21 (the number it had reached by the close of business on Nov. 3, 2008). As of the close of business on Friday, Nov. 2, 2012, the most recent day reported by the Treasury, the total debt of the U.S. government stood at $16,206,129,028,709.29.
That is a four-year increase of $5,649,951,280,664.08.
Apparently Obama thinks the problem with our economy is too few bureaucrats trying to control the private sector, and not enough centralized control in the hands of a few elite ruling class “intellectuals” like himself:
President Barack Obama signaled if he wins a second term he would appoint a Secretary of Business to oversee newly-consolidated government agencies, including the Small Business Administration, and predicted “a war” will break out within the Republican Party after the Nov. 6 election.
“We should have one Secretary of Business, instead of nine different departments that are dealing with things like giving loans to SBA or helping companies with exports,” Mr. Obama said in an interview that aired Monday on MSNBC. “There should be a one-stop shop.”
Mr. Obama blamed Congress for such consolidation not happening during his first term because lawmakers have been “very protective about not giving up their jurisdiction over various pieces of government.”
“I know the president is trying to figure out some way to suggest he has new ideas,” said Romney, repeating as he often has on the trail that roughly 23 million Americans are out of work or underemployed. “He came up with the idea of creating a Department of Business. I don’t think adding a new chair in his cabinet will add more jobs on Main Street.”
If he truly understood what has been keeping businesses from creating more new jobs, he would task this new Secretary with eliminating red tape, cutting the most burdensome and useless regulations, opening access to the resources we already have, and stopping his own President from pushing for higher taxes.
Instead, the only problem the President came up with was that with nine departments, the process for distributing small business loans and export subsidies was too complex.
Got it? It’s too hard for the government to give money away with all these different departments. Why not just have one for doling out the cash to businesses?
Was it too hard for Solyndra to get the half-billion dollars it took from taxpayers—a half-billion the taxpayers will never get back? Was it too hard for A123 to qualify for a $250 million loan from the government—$130 million of which it used up before declaring bankruptcy? Was it too hard for Goldman Sachs to figure out Wall Street? Should there have been an easier way to get it the $90 million guaranteed loan for its subsidiary Cogentrix of Alamosa?
No — a thousand times, no. As much as Democrats like to aggressively peddle the line that “Mitt Romney wants to take us back to the policies that got us here in the first place,” as if tax cuts and deregulation were somehow the prime movers of the financial crisis, the fact is that too much big government is what really got us here. Operating off of political motives, the feds creating adverse incentives and convoluting free-market signals were the recession’s greatest catalysts, and Obama’s biggest overstep into the business world so far with Dodd-Frank is already inducing mega-uncertainty and depressing private investment. But heck, by all means, let’s just keep right on piling up the bureaucracy and engendering even more mechanisms for the federal government to stick its nose into private business. What could go wrong?
The next Treasury secretary will confront problems so daunting that even Alexander Hamilton would have trouble preserving the full faith and credit of the United States.
Sometimes a few facts tell important stories. The American economy now is full of facts that tell stories that you really don’t want, but need, to hear.
Where are we now?
Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household.
The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt which, when added to the current deficit, means Treasury must raise $4 trillion this year alone. So the debt burden will explode when interest rates go up.
The government has to get the money to finance its spending by taxing or borrowing. While it might be tempting to conclude that we can just tax upper-income people, did you know that the U.S. income tax system is already very progressive? The top 1% pay 37% of all income taxes and 50% pay none.
Did you know that, during the last fiscal year, around three-quarters of the deficit was financed by the Federal Reserve? Foreign governments accounted for most of the rest, as American citizens’ and institutions’ purchases and sales netted to about zero. The Fed now owns one in six dollars of the national debt, the largest percentage of GDP in history, larger than even at the end of World War II.
The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself. It determines the interest rate by declaring what it will pay on reserve balances at the Fed without regard for the supply and demand of money. By replacing large decentralized markets with centralized control by a few government officials, the Fed is distorting incentives and interfering with price discovery with unintended economic consequences.
Did you know that the Federal Reserve is now giving money to banks, effectively circumventing the appropriations process? To pay for quantitative easing—the purchase of government debt, mortgage-backed securities, etc.—the Fed credits banks with electronic deposits that are reserve balances at the Federal Reserve. These reserve balances have exploded to $1.5 trillion from $8 billion in September 2008.
The Fed now pays 0.25% interest on reserves it holds. So the Fed is paying the banks almost $4 billion a year. If interest rates rise to 2%, and the Federal Reserve raises the rate it pays on reserves correspondingly, the payment rises to $30 billion a year. Would Congress appropriate that kind of money to give—not lend—to banks?
The Fed’s policy of keeping interest rates so low for so long means that the real rate (after accounting for inflation) is negative, thereby cutting significantly the real income of those who have saved for retirement over their lifetime.
The Consumer Financial Protection Bureau is also being financed by the Federal Reserve rather than by appropriations, severing the checks and balances needed for good government. And the Fed’s Operation Twist, buying long-term and selling short-term debt, is substituting for the Treasury’s traditional debt management.
This large expansion of reserves creates two-sided risks. If it is not unwound, the reserves could pour into the economy, causing inflation. In that event, the Fed will have effectively turned the government debt and mortgage-backed securities it purchased into money that will have an explosive impact. If reserves are unwound too quickly, banks may find it hard to adjust and pull back on loans. Unwinding would be hard to manage now, but will become ever harder the more the balance sheet rises.
All the first two rounds did was devalue our currency, increase our debt, create stagflation and suppress economic recovery. But just like every other die-hard Keynesian who follows Keynes’ debunked economic theories with cult-like unquestioning loyalty, the conclusion they draw from failed results is “if we just try again and spend MORE money, THIS TIME it will work!”
The Federal Reserve announced a new round of quantitative easing on Thursday, saying that it would continue to pump money into the economy until the unemployment picture improves.
[T]he Federal Reserve will begin buying mortgage-backed securities from private holders at a level of $40 billion per month until the unemployment situation improves, effectively pumping $40 billion per month into the economy for an undetermined period of time.
This third round of easing differs from the previous two in that it is an open-ended commitment by the Fed to inject money into the economy, rather than a promise of a fixed amount of easing as seen in the past.
The bottom line is that the Fed panicked. It is extraordinary that the Fed would announce an open-ended “we’ll print as much as it takes, as long as it takes” policy. Chairman Bernanke is sending a signal to the markets and to government that the economy is bad and getting worse and that the Fed will do its part as everyone expects them to do. This is a clear signal to the markets and the world that the Fed stands for monetary inflation. They don’t know what else to do.
As we have long been telling readers, unemployment is the key to Fed policy and they have formally made it their policy linchpin. As far back as May, 2011, on Fox Business News I said that Mr. Bernanke has no other real alternatives other than QE and that with rising unemployment, he would be pressured to “do something.”
One may ask why none of these policies have led to economic recovery. Why didn’t QE1 work? After all they told us then that it would promote “sustainable economic growth”. By the time QE2 was released we heard much of the same thing: it would “promote a stronger pace of economic recovery”. Had QE1 worked as they said, why did they need QE2? Now the Fed tells us again that another round will “support a stronger economic recovery”.
That begs this question: If QE1 and QE2 and Operation Twist didn’t work, why would QE3 work?
[…] What can we expect the consequences of QE3 will be?
1. Money steroids will give a temporary boost to the financial markets as evidenced by today’s euphoric response to the Fed’s announcement.
2. The impact on organic economic growth will be nil even though it may slightly increase GDP by Q1 2013.
3. Unemployment will remain high.
4. Economic growth will stagnate, if not decline, through the remainder of 2012 as money supply growth declines (TMS2).
5. Post Q1 2013, economic activity will again stagnate, assuming there are no policy changes or political changes (Romney is elected).
6. Europe and the rest of the world’s economies are in decline which will further depress the U.S. economy.
7. Price inflation is a guessing game. My guess is that it will remain within the Fed’s parameters. The key to price inflation will be credit creation through lenders and, while lending has shown some life (mainly the big banks with big companies), it is likely to flatten again as the economy stagnates, thus inflation will remain “Japanese.”
8. Interest rates will remain around their historic lows. While the housing market is showing some signs of life, its recovery largely depends on job growth which will remain subdued.
9. How much QE is a good question. I cannot see that any Fed chairman would print endlessly to a point of high price inflation. That would require much greater amounts of QE-type monetary stimulus plus it would require banks to lend, which means businesses would be willing to borrow, thus expanding credit and money supply to much higher levels. QE is not an efficient way to price inflation, and in a stagnating economy, borrowing will remain flat.
If you are a true believer and feel that the Fed is correct, you have to ask yourself hard questions about your assumptions since the Fed has been consistently wrong in their forecasts and policies. Now they insist on pursuing the same failed policies. Why would they work now?
The Fed continues to follow the same wrong policies as it has since the beginning of this depression. We now have one of the longest depressions in history that has been caused by the Fed and the fiscal policies of the Bush and Obama Administrations. They are devaluing the dollar, destroying capital, thwarting growth, and cheating savers out of their hard earned money. It is a cruel blow to the 23.1 million un/under-employed in the U.S. who need economic growth to create jobs. We need a new direction.
Today, the U.S. debt clock hit $16 trillion. Compare that to the end of 2008, just days before President Obama officially took office, when the total federal debt was short of $10 trillion. That’s a 60 percent increase in the federal debt in less than 4 years! Now more than ever, Congress should get to work to rein in out-of-control spending and debt. The economic health of the American nation is at stake.
At $16 trillion, every American’s share of the federal debt rises to $37,437. That represents nearly three-quarters of the income of the average American household earning $50,964 in 2012. And these levels are projected to grow even further, to the point where each American’s share of the federal debt will surpass the staggering $100,000 mark in less than 20 years. Current and future generations of taxpayers are on the hook for increasing levels of debt as Washington continues on its spending spree.
“We just heard about an hour ago that our government eclipsed the $16 trillion mark in our national debt,” Ryan said at a rally with over 800 people here. “This is a serious threat to our economy. Of all the broken promises from President Obama, this is probably the worst one because this debt is threatening jobs today, it is threatening prosperity today and it is guaranteeing that our children and grandchildren get a diminished future.”
But shhhhh! Remember, you’re not allowed to criticize Dear Leader, or else:
I am a successful small businessman and a patriot who loves America and always sees its greatness. I am also an optimistic, positive thinker who always sees the glass half full.
But not this time.
This time we are in such deep trouble, the only solution is a radical restructuring of the politicians, the economy, and the way we view personal responsibility versus government handouts. If those changes don’t come then we are facing a long decline and the eventual end of America.
This time the results are going to be dramatically worse than 1929. This time we are facing The Greatest Depression ever.
Why? Because The Great Depression had NONE of the structural, economic, and social problems, nor the massive obligations we are now facing. Read the facts:
In 1929, most of our states were not bankrupt, insolvent and dependent on federal government handouts to survive. One county (Cook County which includes Chicago, Illinois) now owes over $108 billion in debt (the biggest part of it in unfunded government employee pensions).
[…] In 1929, Social Security, Medicare, and Medicaid didn’t exist. The federal government had no such obligations threatening to consume the entire federal budget within a few years.
In 1929, there was no such thing as welfare, food stamps, aid to dependent children, or English as a second language programs. American’s didn’t consider it the responsibility of government to pay for breakfast and lunch for school students — let alone for illegal immigrants at school.
[…] In 1929 taxes were much lower. Forget the tax rates — they were meaningless. In those days we had a cash economy, so most businesses paid little or no taxes. Sales and FICA taxes didn’t exist. Today the combined local, state, property, gas, sales, FICA and federal taxes are the highest burden in history.
Prepare for another year of $1 trillion-plus deficits.
The nonpartisan Congressional Budget Office projected Wednesday that the deficit for 2012 will run $1.1 trillion, the fourth year in a row the shortfall will exceed $1 trillion.
The projection is down a bit from an earlier estimate pegging the deficit this year at $1.2 trillion.
The report also warned that a new recession is likely if an ongoing stalemate over tax and spending cuts continues between Democrats and Republicans.
In its annual summertime report, the budget office said Wednesday that letting decade-old tax Bush tax rates expire and sweeping spending cuts occur in January — which will happen without congressional action — “would lead to economic conditions in 2013 that will probably be considered a recession.”
If that happened, the economy would contract by 0.5 percent — a gloomier projection than the budget office made earlier this year when it envisioned slight growth under that scenario. Unemployment would rise to around 9 percent by late next year if the standoff persists, the analysts said.
Bad fiscal policies cause real human suffering, as this unnecessarily prolonged recession – the product of Obama’s imitation of FDR’s failed Keynesian policies – proves with every American worker and family struggling to get by. Their suffering was COMPLETELY UNAVOIDABLE, and can still be relieved, if we STOP these destructive policies and FREE THE MARKET!