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Obama Stimulus Consigns US to ‘Banana Republic’ Territory

The Washington Times reports:

The United States will “look like a banana republic” unless it gains control over its budget deficit and federal debt, economist Allen Sinai warned Congress on Thursday.

“The deficit and debt prospects under almost any scenario are daunting,” Mr. Sinai, chief global economist for Decision Economics Inc., told the Senate Budget Committee. “This territory is uncharted, with no real historical analogue to this kind of financial situation for a major global economic power.”

Asked by committee Chairman Kent Conrad, North Dakota Democrat, whether the U.S. government’s creditworthiness is at risk, Mr. Sinai replied, “Unequivocally yes.”

Richard Berner, chief U.S. economist at Morgan Stanley, told the committee one measure of America’s creditworthiness — credit default swap spreads — already shows some deterioration. The worse a nation’s credit rating becomes, the more its CDS spread rises. U.S. sovereign CDS spreads have widened to about 0.6 percent from 0.1 percent last summer, Mr. Berner noted.

“So the message is that you ignore global investors at your peril,” he told the committee…

A two-year, $800 billion economic-stimulus package, according to Mr. Sinai’s forecast, would generate a $1.8 trillion budget deficit in fiscal 2009 and $1.3 trillion next year. Measured as a percentage of gross domestic product (GDP), these deficits would be about double what occurred under the Reagan administration in the 1980s, Mr. Sinai said.

Budget deficits for the 2011-19 period would not be much different, averaging $1.2 trillion per year.

There is great pressure in Congress right now to expand the destimulus beyond the $825 billion that Democrats have already proposed. Smart analysts are predicting that it will rise beyond $1 trillion. How much spending is enough?

Congressional Republicans need to make clear that $2 trillion more in spending will not help the economy. We need a stimulus package built on long-term spending cuts and long-term tax cuts.

You can read the testimony from Sinai and Berner — or watch it — here.

COMMENTS

  • izoneguy

    Look like – it already is. With the Bananator in control the
    flies are laying larve that will soon infest your state with
    maggots. How much will you let it eat before you have to
    chop something off?

    Next up: guns, revolution, guns and did I say guns?

  • Praying

    I keep looking for a write up here on the senate vote yesterday that basically released the second half of the TARP money. 8 Dems & 1 independent voted against it, BUT 6 REPUBLICANS [Sens. Lamar Alexander (TN), Jon Kyl (AZ.), Judd Gregg (NH), Richard Lugar (IN), Olympia Snowe (ME) and George Voinovich (OH)] voted FOR the release of the funds. The final vote was 52 – 42. They timed the vote after Burris was seated and could vote, but before Biden had resigned, so he too voted. Cute. How about some outrage? Some calls to action? I googled the story, and wound up finding the report on the huffington post, of all places. Ugh. I’ve already written Sen. Alexander to tell him how disappointed I was by his vote. Action, action, action!

    • izoneguy

      is that we have on record who the idiots are and can flame broil them in 2010 as we enter year two of the Obama depression.

      • ss396

        They aren’t going anywhere else anytime soon. To wit:

        Lamar Alexander – 14 years in elective office (Governor of Tennessee 1979-1986; US Senate 2003-present)

        Jon Kyl – 20 years in Congress (House of Representatives 1987-1994; US Senate 1995-present)

        Judd Gregg – 28 years in elective office (House of Representatives 1981-1988; Governor of New Hampshire 1989-1993; US Senate 1994-present)

        Richard Lugar – 32 years in the Senate (US Senate 1977-present)

        Olympia Snowe – 30 years in Congress (House of Representatives 1978-1994; US Senate 1995-present)

        George Voinovich – 18 years in elective office (Governor of Ohio 1991-1998; US Senate 1999-present)

        And this doesn’t count mayoral offices, or State Legislatures, or such. Mostly they’ve spent their lives in political offices, either as office-holders or as aides. No sir, they aren’t going anywhere.

    • bk

      Tester and some Republican who were going to vote against it sat it out to offset Kennedy and some other Dem who was absent.

  • bk

    Aren’t they aiming to have voting and other rights like Venezuela and health care like Cuba?

  • stang

    Otherwise I agree 100%.

    ?The mystery of government is not how Washington works but how to make it stop.?

    ‘P.J.’ O’Rourke

  • Bourbeau

    We the people, let this happen; this is our fault; and we damn well will suffer for this stupidity that is being demonstrated, on a daily basis, in Washington DC, and in ever state and local government across this nation. Thru all of this mess, the only consistent action that has occurred has been govenment expanding it’s influence over our way of life. They’re nationalizing industries, they’re spending money they don’t have for the sake of stability they can’t provide; they’;re adding employees when everyone else is cutting back; they’re increasing their salaries and pensions at the federal, state and local level to the point many of those govenments are effectively bankrupt. And collectively they act as if nothing is happening. And twe, the populace, sits back and worries if they can get more memorabilia from the Obama coronation. We’re plain nuts!!!! And we deserve to be a third world country.

    • Praying

      Lets not “we” take all the blame – “we” (the Red State audience) were not the ones parodied on u-tube videos saying that the republicans were in charge of congress, or that Sarah Palin was Barrack Obama’s VP running mate. But, I concur that the people of America voted these twits into office. We can – and will – do everything in our power to keep the few good and kick the bad out, but in the meantime, it’s a long time until 2010! A lot of really, really bad legislation can get passed between now and then, and at the rate we’re going we’ll have a 4 trillion $ deficit. So we write/email/call/text-message our senators and representatives – but what else? I’m having a really hard time believing that the majority of American’s really believe in all the crap that’s brewing in Washington – so it must be that they are a) too worried about their own jobs/homes/bills, or b) completely in denial, or c) too caught up watching American Idol or Dancing with the Stars to even know what is going on (I know, hard to tell the difference between the last two). So I’m feeling very frustrated and defeated. Because I don’t know what besides a terrorist organization bombing the congress building is really going to change things from their current path. And that seems a bit drastic, as much as I personally dislike Nancy Pelosi and Harry Reid and Barney Frank, I don’t wish physical harm to anyone. Anyway, I was just wondering, now that you’ve identified the problem, if you or anyone has a concrete suggestion as to what we can DO! Action empowers.

      • Jim

        As my political views have evolved over the last few months, one fact has become more and more clear. The problem is not that the wrong kind of people are running the government (federal, state, local), but rather that we have a government that “runs” so much. When we saw Republicans running both the legislative and executive branches over the last 8 years, we saw the same (though to a slightly lesser degree) reckless spending and living beyond our means as what faces us in the new administration and congress. Before even taking power, the Democrats are pushing all-in and really showing us what “tax and spend” means. At this point, do we honestly, really believe that by simply getting some more (R)s into elected office is going to roll back this impending tsunami of debt come due? Is another piece of legislation or resolution going save us when the rest of the world realizes we cannot pay back the trillions of dollars we are borrowing to blow on “bailouts”, bridges to nowhere, and government leeches? And are more bailouts, stimuli, deposit insurance and the like going to do anything when the rest of the world wants nothing to do with the worthless, overinflated dollar?

        These insanely ignorant and pride-filled jokers in Washington have set us on a course for long-term decline. True, “we the people” have sent them there time and again because they promised the world. So we are all to blame. Therefore, is it possible that 200+ years of U.S. history unfolding has demonstrated that the powers of the state cannot be, as Jefferson put it, chained down by a constitution? I love our Constitution and the framework it setup, but it has clearly not been strong enough to prevent greedy men to pervert it and deliver us the mercantilistic oligarchy we now live under. We used to turn to our families, our churches, and even our local town or city councils for law and protection of rights. we now look to some city hundreds or thousands of miles away to tell us what kind of toilet or lightbulb we can put in our own home, or what we can or cannot do on our own property.

        So what do we do? We realize the painful, but very real, fact that the state we live under has no legitimacy, and the authority that it claims over our lives is false and imposed by force. They tax away our earnings, they mortgage our future through rampant debt, and they destroy our savings through unchecked inflation. They do not operate in our name. They buy our votes on empty promises and they ignore us for the duration of their term. If states can no longer withdrawl from this federal government, then we as individuals and communities need to secede on our own. I am not talking armed revolution, but a peaceful recinding of our consent. For indeed, as Jefferson wrote, “Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.” I would argue the founders threw off their government for far less injustices than we suffer now.

        So…we focus on our families. We raise your children right. We pray to God in heaven. We focus on what really matters. We stop turning to some city built on a swamp, even if it is with the eye of reform. Build up our local communities, work hard in our careers, focus on the real things in life and simply stop giving any sort of legitimacy to this insidious institution that brings us nothing but conflict, dishonesty, and loss.

  • Fairfax

    “It?s not tyranny we desire; it?s a just, limited, federal government.”
    – Alexander Hamilton (1755 – 1804)

    “Power over a man?s subsistence is power over his will.”
    – Alexander Hamilton (1755 – 1804)

    • Jim

      By giving legitimacy to the idea of a central bank. That “lender of last resort” and government debt he loved so much is really proving to be a good idea now, isn’t it?

      • icbm

        ever noticed how much of the constitution has to do with taking care of existing debts? seriously, take a look. multiple clauses deal with it. america had to re-establish its credit among the nations. the central bank was part of the solution.

        • Jim

          “A Central Bank attains its commanding position from its governmentally granted monopoly of the note issue. This is often the unsung key to its power. Invariably, private banks are prohibited from issuing notes, and the privilege is reserved to the Central Bank. The private banks can only grant deposits. If their customers ever wish to shift from deposits to notes, therefore, the banks must go to the Central Bank to get them. Hence the Central Bank?s lofty perch as a ?bankers? bank.? It is a bankers? bank because the bankers are forced to do business with it. As a result, bank deposits became redeemable not only in gold, but also in Central Bank notes. And these new notes were not just plain bank notes. They were liabilities of the Central Bank, an institution invested with all the majestic aura of the government itself. Government, after all, appoints the Bank officials and coordinates its policy with other state policy. It receives the notes in taxes, and declares them to be legal tender.”

          -Murray Rothbard
          What Has Government Done to Our Money?

          • icbm

            Central Bank NOWADAYS.

      • rbdwiggins

        by pursuing that track. The” full faith and credit” of the United States required Hamilton’s solution, and blaming Alexander Hamilton for today’s financial crisis goes way beyond stretching the truth.

        However, these seemingly unrelated events do share a great deal of the blame…

        National Industrial Recovery Act, Public Law 73-67, 48 Stat. 195 (1933)**

        National Labor Relations Act, Public Law 74-198 (1935)

        McCollum v. Board of Education, 333 U.S. 203 (1948)

        Department of Education Organization Act, Public Law 96-88 (1979)

        **The NIRA was overturned in Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), when the Supreme Court unanimously ruled that the Act was unconstitutional, but the damage had already been done.

        • icbm

          http://en.wikipedia.org/wiki/McCollum_v._Board_of_Education

          I don’t see the connection. Excuse me if I’m being slow.

          By the way, it’s interesting that in 1948, as far as Justice Black went (and he did like to go far), the Court still allowed public school release for the purpose of religious instruction elsewhere even though the Court did not permit the use of school facilities for the instruction.

          http://en.wikipedia.org/wiki/Zorach_v._Clauson

          I wonder if the Zorach decision is still the current interpretation. I am guessing that it is not and that government schools cannot even release students for religious instruction elsewhere. Do you know?

          • rbdwiggins

            “We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” — John Adams

            It was the beginning of a series of Supreme Court rulings on separation that extended well into the 1970′s and completely ignored the wisdom of our Founders.

            And much to the detriment of our society.

          • icbm

            n/t