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While Barack Obama flies off to scheduled fundraising events, golf outings with his staff, and phone calls to gay athletes, there are immediate crises like Gaza and the Ukraine. Then there are the smoldering ones- 160,000 dead in Syria, ISIS in Iraq, Iran and the nuclear bomb. The international scene is bad enough, but our “secure borders” have been crossed by over 50,000 illegal aliens this year creating a crisis.
Obama has done the obvious- call for an investigation in Ukraine, said some tough things against Vladimir Putin and is now begging Europe to impose some sanctions. Then he sent Secretary of State John Kerry to the Middle East to broker a cease fire in Gaza. This horse-headed secretary of state sort of makes me want to see Shrillary Clinton back! Meanwhile, 100 Nigerian female adolescents are still MIA at the hands of fundamentalist Muslims. But to John Kerry, the world is at peace, or at least a lot more peaceful than it was under George W. Bush.
However, railing about Obama’s “foreign policy” blunders is not the point of this entry. Amid all the news coverage on the Ukraine incident and on Gaza, the Congressional Budget Office (CBO)- a non-partisan collection of economic wonks- released a disturbing report on July 21st that received no mention in the media.
Without any doubt in this reader’s mind, when and if this report receives any attention, the knee-jerk Leftist Obama administration and its lap dog the media will point a collective finger at Bush for the reasons of the growing public debt. There will be a push for making those evil people in the 1% pay “more of their fair share” in order to bring the deficit and debt down. Expect to see and hear more of Elizabeth Warren.
However, this report makes vividly clear that as of 2008- the year Barack Obama was elected- the public debt stood at 39% of GDP. This is the historical percentage level of debt relative to GDP of the past five decades. In short, despite a terrorist attack, despite an expansion of the federal government under Bush, despite a recession on his watch and two huge natural disasters, the public debt under George W. Bush was the equivalent to that under such Democratic icons as John Kennedy, Lyndon Johnson, and Bill Clinton.
The CBO predicts that as of the end of fiscal year 2014 (September 30th), the public debt will stand at 74% of GDP. This almost doubling of the public debt occurred exclusively under the watch of Barack Obama and company. What cracks me up is that Washington pats itself on the back when the budget deficit decreases. Saying that you “halved the deficit from the previous year” means that you overspent by only $1 trillion instead of $2 trillion. Yet, that is the best they can do.
As the CBO report plainly states, public debt relative to GDP has exceeded 70% once in US history- from 1944 to 1950. And there was a very good reason- we were fighting a war in Europe and in the Pacific. That means that Obama has accomplished what any other president has failed to do in six short years. At the height of the Civil War, the figure was a mere 40%. Even during the Depression, the percentage never exceeded 45%. Barack Obama has no Depression to blame; he has no world war to blame. He has only the phony charges against George Bush to blame. In fact, everyone points to the fiscal policies of Bill Clinton, yet Bush ran lower debt percentages than Clinton!
Now for the scary part. The CBO predicts that absent serious changes to laws involving entitlements- the greatest driver of federal deficits- this country will exceed 74% by 2020 and reach its 1946 historical high of 106% in 2039- only 25 short years away. Thus, time is running out to do something about this.
Obviously, if not fixed, investors would begin to doubt the ability of the government to pay its obligations on time. This would trigger an increase in the interest rates charged the government to borrow money.
Even before we reach that point, the CBO predicts three things, none of them good:
1. Money would be drawn away from private investment in productive capital resulting in a smaller stock of capital and decreased output;
2. Federal spending on interest payments would rise putting additional pressure for draconian spending cuts, tax increases or both, and;
3. The government would be unable to respond to financial crises or international incidents that threaten our national security.
Doing nothing, solves nothing. We have tried the Obama method and it is a failure! There are good Republican, conservative ideas out there such as market-based health care reform, partial and voluntary privatization of Social Security, expansion of the American energy sector, and a sound agricultural policy absent crop subsidies and corporate welfare. These are ideas that worked in countries like Chile and New Zealand…even France…because they had leaders willing to address the issue (not study it) and then actually act.
Barack Obama and John Kerry believe the greatest threat to the United States’ security is climate change. As Ronald Reagan proved by ushering in the demise of the Soviet Union and as Bill Clinton used as a campaign slogan to great effect, “Its the economy, stupid!” Barack Obama is doing to the United States what Ronald Reagan did to the Soviet Union.