Posts Tagged ‘productivity’

Even Liberals Beginning To Warn Of Obama ‘Debt Tsunami’

June 30, 2009

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.

The Debt Tsunami: The CBO’s latest warning on the long-term deficit is scarier than ever

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.

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Democrat’s Ideological Stand Against Domestic Oil Terrible for US Economy & Security

July 4, 2008

According to most sources, oil could soar to as much as $400 a barell (that’s over 2 3/4 TIMES its current price of $144 as of July 2) if Iran shuts down the Strait of Hormuz.

The problem is that Iran promised the world that it would do precisely that if Israel attempts to attack its nuclear facilities.

An impending Israeli attack is itself a result of the failure of liberalism.  The European Union – in refusing to implement ANY truly tough sanctions against Iran – is forcing Israel’s hand.  Liberals will decry “warlike” Israel, but will be those weak, gutless, spineless liberals who refused to stand up against Iran’s nuclear program in a meaningful way that are responsible – NOT Israel.  When (note: not if) Israel strikes Iran, it will be doing so as an act of sheer survival against a country which has for years promised to wipe Israel off the map as soon as it possessed the means to do so.

Genuinely tough UN sanctions, combined with a united international stand against Iran being allowed to even come close to developing nuclear weapons, would have very likely had a good chance of success.  But the liberal/socialist world never learns.  We are repeating the failures that led up to the Iraq invasion, during which time rampant UN corruption (the oil for food program) and corrupt countries (Russia and France) opposed any sanction that would have forced Iraq to truly declare its WMD capabilities.

Teddy Roosevelt said America should speak softly and carry a big stick.  Modern liberals argue that we should throw the stick away altogether and give holier-than-thou lectures.

The primary reason the United States assumed a strong foreign policy stance – and created a powerful military to back up its foreign policy – is because two world wars and millions of American deaths served to demonstrate the fact that enemy tyrants will make us pay dearly for being weak in the face of threats against us.  Yet American liberals look longingly at the demilitarized socialist states of Europe, and at their laissez faire attitude toward despicable and vicious regimes, and they want to pursue a similar  approach in the United States.  The fact remains, however, that it was the strength and resolve of American power that permitted the Europeans to be free to embrace their new attitudes – first from the Nazi conquest and then from Communist expansion.

But let us put this gargantuan failure of liberal foreign policy aside and instead focus on another issue which is more important to most Americans (although certainly not to Israelis facing a new Holocaust at Iranian hands): the shockingly high prices that will most assuredly ensue when Israel attacks Iran’s nuclear sites.

About half the world’s oil supply flows through the Strait of Hormuz.  It is about 25 miles wide, and provides Iran with a easy choke point to stop the oil flow.

A Jun. 11, 2008 Time Magazine story titled, “How Iran Has Bush Over a Barrel” puts the U.S.’s dilemma thusly:

If wasn’t crystal clear before it certainly should be by now: the Bush Administration can’t afford to attack Iran, even if it finds it necessary to do so for the sake of preventing the very real probability of World War III. With gas already at $4 a gallon and rising almost every day, Iran figuratively and literally has the United States over a barrel. As much as the Administration is tempted, it is not about to test Iran’s promise to “explode” the Middle East if it is attacked.

The Iranians haven’t been shy about making clear what’s at stake. If the U.S. or Israel so much as drops a bomb on one of its reactors or its military training camps, Iran will shut down Gulf oil exports by launching a barrage of Chinese Silkworm missiles on tankers in the Strait of Hormuz and Arab oil facilities. In the worst case scenario, seventeen million barrels of oil would come off world markets.

One oil speculator told me that oil would hit $200 a barrel within minutes. But Iran’s official news agency, Fars, puts it at $300 a barrel. I asked him if Iran is right, what does that mean?

“Four-dollar-a-gallon of gasoline only reflects $100 oil because the refiners’ margins are squeezed,” he said. “At $300, you have $12 a gallon of gasoline and riots in Newark, Los Angeles, Harlem, Oakland, Cleveland, Detroit, Dallas.”

But it didn’t have to be this way – even given gutless socialist Europe’s abject refusal to provide any real deterrant that would have made Iran think twice about continuing its nuclear ambitions.

Had Democrats allowed the United States to utilize its own massive oil resources, the United States would have been almost completely immune from this looming crisis.  For information on the Democrat’s culpability in refusing to take advantage of our own energy independence, read my article available here.

The United States is literally sitting on about 170 billion barrels of oil, according to the Geological Survey and Congressional Research Service.

One of our best [short-term] prospects is Alaska’s Arctic National Wildlife Refuge, which geologists say contains billions [the official estimate is 15.6 billion] of barrels of recoverable oil. If President Clinton hadn’t bowed to Wilderness Society demands and vetoed 1995 [Republican-sponsored and supported] legislation, we’d be producing a million barrels a day from ANWR right now. That’s equal to US imports from Saudi Arabia, at $50 billion annually.

Instead, we are currently paying over $4.00 for a gallon of gas, and we are staring into the terrifying prospect of having to pay $12 for that gallon in the near future.

One day, untold years into the future, archaeologists and anthropologists will come to realize that political liberalism invariably resulted in the suicide of nations and of Western civilization in the 20th and 21st centuries.  But tragically, that day of realization has not yet arrived.  And so the United States trudges along on the same path once taken by the Dodo bird.

The dodo bird will be less responsible for its downfall than the United States.  The dodo bird needed something for survival it didn’t have.  The United states, by contrast, refused to use what it actually had in its possession even when it needed it.

Even if the United States and the world manages to dodge the looming confrontation between Israel and Iran, the price of international oil will continue to go up, and it will continue to be subject to one crisis after another as it is produced in and passes through the world’s most chaos-prone nations.  Oil will become more and more scarce as China, India, and the developing world continue to gobble it up.  And the price of gasoline will contine to rise.

And the dramatic rise of the price of gasoline does not just affect our travel plans.  It is directly tied in with our national productivity and our economy.

In a AP story titled, “It’s official: The market is in bear territory: Stocks drop after oil hits new high, concerns that GM could run out of cash,” it was reported that:

NEW YORK – Wall Street resumed its sell-off Wednesday after oil hit a new record and a bearish analyst report renewed concerns that General Motors Corp. could run out of cash.

The stock market’s pullback, which accelerated in the final hours of the week’s last full trading session, left the Dow Jones industrial average officially in bear market territory, with the blue chips having fallen more than 20 percent from their October highs.

Oil surged to new records above $144 a barrel as the government reported a bigger-than-expected drop in U.S. supplies and as investors worried about tensions in the Middle East.

The July 1 DOW figures and analysis about those figures demonstrated how market performance was exactly proportional to the rise of the price of oil.  Oil is the grease that lubes our entire market structure.  More expensive oil makes virtually every product more expensive even as it cuts down on American’s individual purchasing power.

And the Demcorats have for decades now resisted any effort to produce a stable long-term source of domestic oil.  Even in the aftermath of the OPEC embargo that ravaged our economy in the 1970s, Democrats have refused to allow the United States to separate itself from OPEC and other foreign oil.

Hopefully, Americans will recognize the threat that Democrats are to our economy, our security, and our way of life this November.  If not, I can guarantee you that America will continue to suffer the consequences of rising fuel prices until it comes to its senses and elects enough Republicans to overturn the irrational Democrat-implemented drilling bans.

I only hope that we come to that moment of national lucidity before the next crisis strangles our weakening economy.  If we do not act to ensure a stable domestic energy supply in the very near future, we may well find ourselves quickly bleeding to death and desperately needing a transfusion that will not come in time to save us.