Barack Obama won re-election, and America lost its future. Many would call that statement a sign of sour grapes the words of a poor loser. Yet, it is neither. It is the simple conclusion for anyone who has a calculator and has done the math. The national debt for the United States is 16 trillion dollars. That’s 101% of the Gross National Product. It would be like someone making $50,000 a year owing $5,000,000 dollars. Now that Obama has been reelected, the country is projected to reach 20 trillion in debt by the time he is out of office. The only thing that could change that path is if the President were willing to cut the spending spree, something he has shown he does not want to do.

Our debt is unsustainable at its current level. Now that we are guaranteed to have Obamacare written in stone and the two to three trillion dollars it will cost, by 2016 the country will be on a path that cannot be altered: insolvency. It is simple math. It has nothing to do with being a Republican or Democrat. Issues of racism or classicism makes no difference. It is zero’s and one’s. The income either adds up or it does not.

Greece is learning this lesson now. They spent too much on social programs, guaranteed state and country wide union wages, infrastructure built to provide “jobs” and higher taxes. The net result is a country that went running, hat in hand to the European countries for money to keep their country alive. The loans came with strings attached, as most loans do, and the string was a total restructuring of Greece’s spending. The result has been civil unrest, labor strikes, and riots. If you ask the rioters why they are doing these things, they will tell you because of the cuts to wages, and social programs. The very things that made them have to go begging for loans to stay afloat. It is like a person who buys the exotic sports car, and then gets mad at the person who comes to repossess the car, because they cannot make the car payment.

America is on that path, and has been for quite some time. Like the minor tremors that portent a large earthquake, little signs have been appearing: polls that show most people wanting those that make more than they to pay more in taxes, backlashes against any plan to slow down the spending and cost of medicare, men and women alike defending the idea that others have an obligation to pay for the birth control of women, support for fiscally dubious high speed rail projects across the country. Little by little, inch by inch, the mindset of the government spending the viewpoint of entitled thinking has been creeping into the psyche of the American populace.

Tonight’s election was the seismic event that was building. It signals that America has turned toward a social democracy like Europe. This has occurred not because of Barack Obama, but because people chose him. America’s populace chose tonight. They did not choose Romney because he was a bad candidate or ran a bad campaign. They chose Barack Obama, because they want the freebies, and they want someone else to pay for it. There are more people that embrace class warfare, than shun it. The days when President Kennedy said, “ask not what your country can do for you, but what you can do for your country,” is dead and gone.

We want the healthcare, we want the free birth control; we want the government to take care of us. The only problem is we cannot afford to do it. We cannot do it at 16 trillion in debt, and moving to 20 trillion in debt will not make things better. More debt never does.

American lost tonight, make no mistake about it. America died tonight. What the country that now occupies its space on this planet ends as is pretty clear. We become Greece on steroids, and the collapse will be televised.

Image Courtesy : WCHI News

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Washington, U.S.A. — The Concord Coalition has said that new projections by the Congressional Budget Office (CBO) underscore the need for Washington to commit to long-term fiscal reforms while dealing with this year’s looming budget decisions. Concord said the new numbers should also provide a sobering picture for this year’s candidates for federal office one that should temper election-year impulses to offer voters unrealistic promises.

“Once again, CBO’s projections show that if politicians don’t deviate from current policies, the country will continue down an unsustainable path that threatens to weaken the country, jeopardize our standard of living and leave our children and future generations with unmanageable levels of government debt,” said Robert L. Bixby, Concord’s executive director. “These numbers should frame this year’s political debates, and candidates from both parties would do well to spend some time studying their implications.”

“We need to put the country on a better fiscal path,” he added, “and candidates must clearly explain to voters — with specifics, not empty rhetoric — how they plan to do that. It will require setting priorities and making changes throughout the federal budget, and voters deserve to hear credible plans for doing this.”

CBO’s Update to the Budget and Economic Outlook estimates that the federal deficit for this fiscal year, which ends Sept. 30, will total $1.1 trillion. While that is down slightly from CBO’s March projection, it will be the fourth consecutive deficit of more than $1 trillion. In addition, federal debt held by the public would reach 73 percent of GDP, which CBO notes is the highest level since 1950 and is “about twice the share that it measured at the end of 2007, before the financial crisis and recession.”

The CBO prepared two sets of projections. The first — the CBO’s “baseline projections” — assumes that current laws will generally remain in effect. An alternative scenario, however, looks at what could happen if Congress changes certain laws to continue many current policies. This alternative scenario presents a far more troubling long-term picture. Using the new CBO numbers, The Concord Coalition today updated its own “Plausible Baseline,” which applies what Concord considers to be realistic assumptions about future policy decisions. These projections are close to the CBO’s alternative scenario.

The budget office notes that the outlook for budget deficits, federal debt and the economy are “especially uncertain now because substantial changes to tax and spending policies are scheduled to take effect in January 2013.” These changes have often been called the “fiscal cliff” because if Congress allows all of them to take effect at once, it could cause substantial short-term economic damage, perhaps triggering a recession.

Under Concord’s Plausible Baseline, deficits between 2013 and 2022 would be much higher, averaging over 5 percent of GDP rather than 1 percent. Debt held by the public would grow to 93 percent of GDP by 2022, the highest level since shortly after World War II. As the budget office points out, that is not a sustainable level of federal debt.

“The differences between the CBO baseline and either CBO’s alternative scenario or Concord’s Plausible Baseline are striking, and they highlight the importance of the policy decisions that elected officials must confront before the end of the year,” Bixby said.

“While it is important to support the economic recovery, Washington should also be laying the groundwork for the big fiscal reforms that are necessary to put the federal budget on a more responsible track over the long term. It is possible to do both, but this will require more thoughtful policy-making and greater bipartisanship than we have seen in Washington recently.”

• Choices over tax policy, account for the bulk of the difference between the CBO baseline and the more plausible scenarios within the 10-year budget window. Extending the 2001 and 2003 tax cuts, along with fixes to the Alternative Minimum Tax (AMT) and debt service costs would add $5.2 trillion to deficits over 10 years.
• In CBO’s baseline projections, mandatory spending will increase from 13.3 percent of GDP in 2013 to 14.4 percent in 2022. Nearly all of that increase would be due to the growth of just Social Security and Medicare — representing the effect of the baby boom generation entering retirement. CBO projects that by 2022 over half of the entire federal budget will be spent on just Medicare, Medicaid, and Social Security.
• For Medicare specifically, baseline growth is not attributable to health care inflation but instead to demographics.
• The mandatory spending category of income security, now higher than normal because of the recession, would drop by over 60 percent over the budget window (from 2.1 percent of GDP to 1.3 percent).
• Interest payments under the Concord Plausible Baseline would more than double, growing from 1.4 percent of GDP this year to 3.6 percent in 2022, and would cost over $5 trillion during the 10-year period.
• If the caps included in the Budget Control Act are adhered to, CBO projects that discretionary spending would decrease from 8.3 percent of GDP in 2012 to 5.6 percent by 2022 — the lowest level in the last 50 years.

For more about our plausible baseline visit:

http://www.concordcoalition.org/concord-coalition-plausible-baseline

Image Courtesy of  Third Way

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With the recent near-default of the American government, we are forced to take a closer look at the dark rabbit hole that has become the federal budget. A short plunge into history will surface in a debate of the politics of the current financial crisis: Over the past century, the world has changed dramatically, contributing to and resulting from globalization.

Like the domino effect, once science reached a certain point of innovation, the world population exploded, creating a systematic and uncontrollable increase in both processes over the following years. The U.S. government reflects a clear example of this incredulous expansion. The 20^th century saw America transform from an infant nation into the leading nation of efficiency, compassion, and modernity.

At the helm of the 1900’s, the U.S. government consumed merely 6.9 percent of Gross Domestic Product (GDP, a minority of which was due to federal spending. However, World War I brought a kick to spending, and culminating at about 12 percent of GDP in the 1920s.

President Roosevelt and the New Deal brought spending up to 20 percent during the Great Depression, but it was during World War II that government spending peaked to 53 percent of GDP in 1945. In terms of government spending, the post -World War II era marked itself as the Golden Age, despite President Clinton’s 1995 declaration that big government spending has finally come to an end.

Immediately after WWII, spending dropped to 21 percent, but by the recession of 1980-82, hit a peak of 36 percent. Government spending averaged 32 percent of GDP until the disastrous recession of 2008, in which spending surged to wartime-like spending, 45 percent, thanks to bank and automotive industry bailouts.

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The federal budget for the 2011 fiscal year outlines exactly what the enormous percentage of the GDP amounts to. As seen in the pie chart below, courtesy of usgovernmentspending.com, the $3.8 trillion in expenditures is divided into 5 categories, in descending order of dollars spent: defense, healthcare, pensions, “other”, and welfare.

Defense, 25 percent of the budget, plunders a whopping one trillion dollars. Health follows at a close second with $0.9 trillion, or 23 percent. Pensions, at 21 percent, translate to $0.8 trillion. Welfare constitutes 13 percent of the budget with $0.5 trillion, with the remaining 18 percent pulling $0.6 trillion – including, but not limited to, education.

According to USA Today, the national debt has mounted to such a number that, to repay it entirely, each American household would have to fork over a whopping $668,621. In other words, with absolutely 0% interest, the most manageable payment plan would involve a $13,364 annual payment for the next 50 years per household, or approximately the annual tuition rate for a state-subsidized public American university.

To clarify, this number is only the amount of debt as it stands today, not the additional debt of next year, the year after, etc.

The level of debt has become so outrageous that, last month, the United States government was forced to raise its debt ceiling or face default. The latter decision would have crippled the government, rendering it incapable of basic function and placing the civil population into very real danger.

Welfare and public education would eventually become inaccessible, and troops abroad would be marooned without funding. Additionally, a debt default would have led to an enormous depreciation of the dollar and possible another global recession, due to a reduction in worth of all dollar-back assets worldwide.

Luckily, the Senate cobbled together a last minute compromise that left much to be desired. This heartbreaking piece of work was the result of months of partisan bickering and head-butting. As a result, the DJIA drop 1500 points in little over a week, and the S&P graciously downgraded U.S. debt for the first time in history.

How this will affect the American economy remains to be seen, but the future surely is not bright. Think the government can tighten their belts and spend within their limits? If it means we all must draw back a little bit, then here’s a rally towards a healthy economy in the unfortunately far off future.
Stephen C. / Shutterstock.com

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