Diary

Ending the Myth this Economy is Bush’s Fault

First, an often dismissed and sometimes forgotten fact; Democrats, including Mr. Obama had a majority in Congress two years prior to the last Presidential election. Now, if you believe having a majority in Congress is somehow an overrated and irrelevant actuality, one might think you have not been paying attention lately as Democrats pillage the countryside. But putting this aside for a moment, let’s focus only on the past year as the Peterson-Pew Commission on Budget Reform did;

“Over the past year alone, the public debt of the United States rose sharply from 41 to 53 percent of gross domestic product (GDP). Under reasonable assumptions, the debt is projected to grow steadily, reaching 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038.

However, before the debt reached such high levels, the United States would almost certainly experience a debt-driven crisis-something previously viewed as almost unfathomable in the world’s largest economy. The crisis could unfold gradually or it could happen suddenly, but with great costs either way. The tipping point is impossible to predict, but the United States is already hearing concerns about its fiscal management from some of its largest creditors, and the country is uncomfortably vulnerable to shifts in confidence around the world.”

The co-chairs of this committee are Bill Frenzel, Charlie Stenholm and Tim Penny. The remaining committee members represent a respectable, bipartisan group of experts and virtual “Who’s Who” in their professions. So as Democrats try to double-down and force a financially crippling government takeover of your healthcare, consider this;

“The 2009 budget deficit was $1.4 trillion, almost 10 percent of GDP. The public debt grew 31 percent from $5.8 trillion to $7.6 trillion. And the total debt, which includes what the government has borrowed from itself, grew from almost $10 trillion to $11.9 trillion.”

And this is before even figuring the cost of healthcare hidden by a cornucopia of budget gimmicks. As noted by former CBO Director Douglas Holtz-Eakin;

“The Reid bill is already a fiscal train wreck thinly disguised by every budget gimmick in the Democratic repertoire. The taxes start in 2010, but the entitlement in 2014. Doctors’ Medicare fees are presumed to fall by more than 20 percent beginning in 2011. Hospitals and other providers would get less than inflation increases in their annual payment updates – forever. None of these assumptions stand up to the slightest scrutiny. And when the entire middle class gets on the subsidy gravy train, federal costs will soar.”

Something we worry about constantly in the US Treasury debt markets is that a freefalling dollar will drive people away from that class of securities. This occurrence generally results in paying a higher interest rate to attract buyers and ultimately manifests itself through a host of negative economic impacts which the commission identifies;

“Without a dramatic shift in course, the debt will grow to unprecedented levels, breaking the 200 percent mark in 2038. Well before the debt approaches such startling heights, fears of inflation and a prospective decline in the value of the dollar would cause investors to demand higher interest rates and shift out of U.S. Treasury securities. The excessive debt would also affect citizens in their everyday lives by harming the American standard of living through slower economic growth and dampening wages, and shrinking the government’s ability to reduce taxes, invest, or provide a safety net.”

The Democratic Congress and President have us on an economic train-wreck due to their pursuit of ideological policies over fiscal common sense. Our current, unprecedented level of spending is irresponsible, has nothing to do with a sagacious economic response and spells certain fiscal disaster. Continuing such policies will make today’s “crisis” look like a minor hiccup on the road to financial oblivion. Let’s hope Democrats don’t get the chance and some sanity is restored to our economic policy through deliberate, responsible, conservative fiscal action.