We are heading for a cliff, and Barack Obama keeps pushing the accelerator to the floorboard.
It is bad. It is so bad even the liberals on the editorial board of the Washington Post are aware of it.
Sunday, June 28, 2009
THE CONGRESSIONAL Budget Office has a tough job: to provide America’s lawmakers with a reality check on their tax and spending plans. Not surprisingly, the CBO’s projections are not always received cheerfully. Both President Obama and leading congressional Democrats were less than thrilled when the CBO estimated that the costs of universal health coverage would be much higher than advertised. To be sure, projecting the cost of legislation involves making assumptions and constructing models that may or may not prove accurate 10 years down the road. Nonetheless, the CBO, with its tradition of scholarly independence, is the best available arbiter, and Congress must heed its numbers — like them or not.
Now comes the CBO with yet more news of the sort that neither Capitol Hill nor the White House is likely to welcome: its freshly released report on the federal government’s long-term financial situation. To put it bluntly, the fiscal policy of the United States is unsustainable. Debt is growing faster than gross domestic product. Under the CBO’s most realistic scenario, the publicly held debt of the U.S. government will reach 82 percent of GDP by 2019 — roughly double what it was in 2008. By 2026, spiraling interest payments would push the debt above its all-time peak (set just after World War II) of 113 percent of GDP. It would reach 200 percent of GDP in 2038.
This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says.
It’s actually worse than the Washington Post editorial board states. The 113% debt-to-GDP ratio cited by the Post used a different measuring standard than what the Congressional Budget Office uses today. When the debt-to-GDP raises to 82% in 2019, it will be the equivalent of 144% when converted to the same standard that was used to calculate the WWII figure.
Let me illustrate: in 1945 the debt-to-GDP was 115% as found at scribd.com (it actually went to 121% in 1946); the same chart – which runs to 2007 – shows the debt-to-GDP as 65% in 2007. But the Congressional Budget Office figure for the year 2007 shows the debt-to-GDP as 36.9% in 2007 (and 40.8% in 2008). Clearly very different numbers.
So we have to do some converting to make the numbers comparable. And what we find when we take that into account is that our debt-to-GDP ratio in 2019 will be 144.4% rather than 82% [65/39.6 = 1.76; 82 X 1.76 = 144.44].
So, if the Washington Post is going to provide us with debt-to-GDP figures from 1945, they need to state the current and future debt-to-GDP figures in the same terms.
Not only will our debt-to-GDP be considerably higher than it was at the highest point in our nation’s history due to Barack Obama’s frankly insane spending, but other factors need to be considered which reveal the real truth to be even worse yet.
Namely, during the WWII and post-WWII era, American productivity was at its height. U.S. industrial capacity literally stunned the world. We could built more tanks than the Germans believed possible; we could build so many aircraft that by wars’ end the U.S. were able to fly more planes on one single mission than Japanese intelligence said existed in the entire world. And as the war ended, and as American factories geared toward peacetime production to provide a world whose industry had been devastated by war, we were able to produce as had never been seen before.
This is clearly not true anymore. Today, we are watching our industrial capacity go bankrupt, in a trend that started years ago and has accelerated dramatically in recent times.
You cannot spend your way out of debt; you can only produce your way out of debt. When American productivity was at its apex, we could recover from a high debt-to-GDP ratio. But what can we do now and in the future, when we have lost that productive capacity? Exactly how will we produce our way out of anything?
As another problem that is about as serious, during the WWII era America rationed and saved. Even as Americans were rationing every commodity for the war effort, they were also investing in war bonds and Treasury bills. So when the United States government went into high debt in the 1940s, who did they owe that debt to? American citizens. And as the U.S. government repaid that debt, it was being fed right back in to the U.S. economy.
Is that true anymore? Not even close. The U.S. population no longer rations, and it certainly doesn’t save. And thus today, our debt is largely owned by foreign countries (particularly China). So as our debt goes up and ever upward, the U.S. government is most certainly NOT feeding the American economy when it makes its interest payments; it is feeding China’s economy.
So, in real terms, our debt-to-GDP will be higher than it’s ever been (144.4% in 2019, soaring way past the 200s in 2038), and at the same time our means to accommodate that debt will be at an all-time low. Thus, while our debt went down steadily after 1946, it will be going up dramatically as we enter our very bleak future.
In other words, we’re screwed. We are really, truly screwed.
And as shocking as these numbers already are, they do not take into account the trillions of dollars that will be racked up as the Democrats advance their government health care agenda and their cap-and-trade fiasco. The former will add trillions of dollars in costs even as the latter muzzles our economic output to the tune of trillions of dollars.
As the government tries to calculate the cost of health care “reforms,” realize something: in 1965, nobody (but conservatives) ever even began to dream that the Medicare program would soar to an unfunded obligation that is now over Thirty-six TRILLION dollars. The next time someone tells you that the government will be able to create “savings,” remind him of the $36 trillion black hole known as Medicare. And then laugh hysterically in his face.
It won’t get better. Rather, it’s going to get so much worse that it would frankly be less frightening to be having Jason Voorhees chasing you around in a horror movie. The baby boomer generation began qualifying for Social Security in 2008. In two years, they will begin to qualify for Medicare. From that point on, wave after wave of 77 million retiring baby boomers will begin to swamp the system for the next 20 years. Talk about a “tsunami.”
To make matters even worse, our population is aging, and health care costs are going to “necessarily skyrocket” (to borrow a phrase Obama used to describe the costs that would result from his energy plan) no matter what we do. In 1945, we had a worker-to-retiree ratio of 42 workers paying into the system for every retiree consuming benefits. Now we have a 3-1 ratio. And by 2030 it will be only 2-1. It kind of makes me miss those 50 million potential workers that we murdered in the abortion mills.
There is no possible way out system can escape disaster. And on top of that, we have a president and a Congress that is compiling more debt faster than any president and Congress in history, bar none. President Obama racked up more debt in his few months in office – $1.8 trillion – than President Bush did in seven years (dealing with 9/11, two wars, and Hurricane Katrina to boot).
A New York Post article points out:
And these deficits aren’t merely a temporary result of the recession; the president’s budget would run deficits averaging nearly $1 trillion a year for the next decade.
The national debt would double. In other words, Obama would run up as much government debt as every president in US history from George Washington to George W. Bush — combined. Put simply, he’d dump $84,352 per household of new debt into the laps of our children and grandchildren over the next decade.
Given what we face, does more spending and more debt at a faster rate than has ever been compiled in human history seem sane to you?
One day, not very far off now, Americans will realize that they voted for their nation’s national suicide in voting for Barack Obama and a Democrat-controlled Congress. They will realize that they voted for their children or grandchildren to struggle, and quite possibly starve to death as their country collapses under the weight of its own massive debt.
But until that time, we will continue merrily along as we hurtle faster and faster toward food riots and a total societal collapse.
The beast is coming. I pray you will be ready.