Barack Obama is on the record saying, “We don’t need a balanced budget amendment,” he said. “We simply need to make these tough choices and be willing to take on our bases.” Obama says, “I think it’s important for everybody to understand all of us believe we need to get to the point where we can balance the budget,” Mr. Obama said at a White House press conference. “We don’t need a constitutional amendment to do that.”
We desperately need a balanced budget amendment. What we DON’T need is Barack Hussein Obama and his endless rhetorical posturing.
The national debt that is acknowledged is currently more than $14.5 trillion.
Let’s take a brief trip down national debt memory lane. Now, let’s see. When Ronald Reagan left office, the national debt was $2.6 trillion. By the time Bush I left office, the national debt was $ trillion. By the time Bill Clinton left office, the national debt was $5.6 trillion (which is quite strange, given the constant claim that Clinton balanced the budget). By the time Bush II left office, the national debt was $10.6 trillion. It is currently at over $14.5 trillion, and Obama is not even through his first term yet. He wants it increased to more than $16 trillion now. Again, before the end of his first term.
And, of course that’s actually NOTHING. $14.5 trillion, or even $16 trillion, is actually really chump change to how much the United States REALLY owes. Read this figure published in a peer reviewed International Monetary Fund publication article that provides the grim reality:
Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”
Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.
Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”
He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.
One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.
Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.
Prof. Kotlikoff is a noted economist. He is a research associate at the U.S. National Bureau of Economic Research. He is a former senior economist with then-president Ronald Reagan’s Council of Economic Advisers. He has served as a consultant with governments around the world. He is the author (or co-author) of 14 books: Jimmy Stewart Is Dead (2010), his most recent book, explains his recommendations for reform.
He says the U.S. cannot end its fiscal crisis by increasing taxes. He opposes further stimulus spending because it will simply increase the debt. But he does suggest reforms that would help – most of which would require a significant withering away of the state. He proposes that the government give every person an annual voucher for health care, provided that the total cost not exceed 10 per cent of GDP. (U.S. health care now consumes 16 per cent of GDP.) He suggests the replacement of all current federal taxes with a single consumption tax of 18 per cent. He calls for government-sponsored personal retirement accounts, with the government making contributions only for the poor, the unemployed and people with disabilities.
Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.
As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.
Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie. Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.
But Prof. Kotlikoff’s economic genre isn’t the Western. It’s the horror story – “and scarier,” one reviewer of his book suggests, than Stephen King.
And what’s Obama’s response to all of this?
We are so screwed it is absolutely unreal.
And that’s just what the UNITED STATES government owes. Let’s consider the leftist People’s Republic of Californication and see what IT’S actual debt is:
California’s $500-billion pension time bomb
April 06, 2010|By David Crane
The staggering amount of unfunded debt stands to crowd out funding for many popular programs. Reform will take something sadly lacking in the Legislature: political courage.
The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.
That’s the finding from a study released Monday by Stanford University’s public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.
Most other states are facing catastrophic implosion due to government union workers massive unfunded pension liabilities. Take Obama’s own state of Illinois, for instance.
Yeah, you’re right, Mr. Fool-in-Chief. We don’t need a balanced budget amendment. Let’s go with your plan instead. Let’s dig our own graves, slit our own throats, and then fall into a hole never again to crawl out. Let’s sacrifice our children’s children’s children’s children and put the weight of a debt they will never be able to possibly repay as we continue to selfishly and wickedly vote ourselves benefits at their expense. Let’s guarantee that the United States becomes a banana republic in the next fifteen years.
We’re going to collapse soon. When it happens, it will seem to come out of the blue, but we will have been working steadily toward our own doom for generations.
Obama’s Keynesian approach has utterly and completely failed. And only fools refuse to see that by now.