Talking Points: Economy's slow boil
It's not just the callous indifference of the political class, but also the majority of Americans that allows our exploding deficits to breed and swallow up the dollar and economic growth.
Once upon a time, credit was frowned upon and people only borrowed as a last resort. Back then, credit wasn't so complicated either. It's a good bet that many Americans today can't explain the debt ceiling, GDP or, for that matter, the infield fly rule. Legal credit once boiled down to two things - layaway or doing without.
Over the course of time, credit received a Kardashian-style makeover, creating a new identity, and the country was hooked. According to Credit.org, the average American carries a debt of $15,325 on a collection of credit cards. Lesser known perhaps is the total U.S. indebtedness that averages out to $750,000 per family. This mammoth figure fails to account for the unfunded liabilities that the political class purposefully keeps off the books that adds another $1 million per taxpayer. These figures do not take into account Obamacare, which will gobble up nearly one-sixth of the total U.S. economy.
No free market economy can survive without sound banking and reasonable credit - but not crushing deficits that are millstones for economic stability and growth. We cannot indefinitely spend more than tax revenues produce, while allowing the welfare state to mushroom.
The U.S. has been borrowing 40 cents on every dollar for years. The Fed prints $80 billion a month; nearly $1 trillion per year. The fruit from this tree is nothing but poison. Nearly half of the country pays no income taxes, while reaping benefits from those who do. Incomes have grown stagnant.
Who besides government operates like this?
Many understand there is a genuine contrast between government growth and freedom and that such growth is directly in proportion to the amount of money available to it. According to the International Monetary Fund (IMF), Canada's Gross Domestic Product (GDP) is falling at 35.9 percent in a growing economy, while GDP in the U.S. continues to rise at 89 percent. Research by Harvard economists Carmen Reinhart and Ken Rogoff shows that for the past 200 years, once a country exceeded 90 percent debt/GDP ratio, economic growth slowed by nearly 2 percent for the duration of a decade.
This is a recipe for disaster.
Most will agree Uncle Sam needs to spend less and stop needless regulation. We are a high entitlement, shrinking tax base country. This cannot last. No matter how much lipstick, piercings and tattoos you give this political pig, either taxes must increase or entitlements must decrease. Each day, the largest generation - the Baby Boomers - are getting more entrenched in Social Security and Medicare, and the taxpayer base supporting those programs is steadily shrinking.
This lethal combination can only end in grief.
Congress continues deficit spending and is more concerned with immediate political needs than any future consequences. The half-trillion dollars a year the feds now pay on long-term debt service is equivalent to one-fifth of all taxes collected yearly. No need to worry about paying back the principal since Obama and Congress continue to borrow as a way to assuage any pain in order to pay the debt service on money already spent. Is it any wonder that the debt has ballooned to $17 trillion and counting?
If the mindset of borrow-and-spend and damn the future persists, American society will collapse. This reckless governance and contempt have saddled future generations with guaranteed economic chaos.
The simmer has commenced. Like the metaphor of the boiling frog placed into lukewarm water and with the temperature continuing to rise, the frog will cook. The U.S. economy is that frog.
Campaigning in 2008, Obama slammed George W. Bush for "driving up our national debt from $5 trillion to over $9 trillion." Obama vowed he would end such "irresponsible" and "unpatriotic" governance. A month after taking office, Obama held a summit on fiscal responsibility, saying, "Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences,"
Obama claimed. "I refuse to leave our children with a debt that they cannot repay."
Obama has added $8 trillion and counting to the debt.
What does that make Obama?