Tag Archives: Debt

Do NOT Cut Defense Spending

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None of the four wars in my lifetime came about because we were too strong. It’s weakness that invites adventurous adversaries to make mistaken judgments. America is the most peaceful, least warlike nation in modern history. We are not the cause of all the ills of the world. We’re a patient and generous people. But for the sake of our freedom and that of others, we cannot permit our reserve to be confused with a lack of resolve.
-Ronald Reagan

With the United States’ debt finally getting the attention it deserves, the discussion has shifted to deciding what parts of the budget to strip down. It seems as though the one area ready to be tackled is military spending.

A brief history lesson:

For whatever reason, the only part of the budget the Left ever wants to reduce is military spending. The Right has also taken part in this fascination. After World War I, a Republican administration gutted the military, in the hopes of preventing another war. The result, a weak West was dragged into World War II.

During the Cold War, Presidents Nixon and Carter also stripped down the military. Weakness emboldened the Soviet Union, and encouraged them to continue their expansionist policies. Thankfully, the Soviet Union was stopped  by Ronald Reagan, who rebuilt the United States military.

After President Reagan won the Cold War, President Clinton proceeded to once again gut the military. True to form, the result was an all-out war declared on the United States, this time by jihadists. The brilliant leadership of Defense Secretary Donald Rumsfeld led to the desperately needed modernization of the United States military.

Where we are today:

President Obama made it clear when he came to office that the only place his budget ‘scalpel’ would even touch was the Pentagon. Upon assuming office, President Obama immediately scrapped missile defense and threatened to veto the F-22 Raptor, a project that was eventually thrown by the wayside in Congress. In fact, a staggering 80% of Obama’s proposed budget cuts have been targeted at the Defense Department. Obama explained: “We can no longer afford to spend as if deficits do not matter and waste is not our problem.” That is true, the United States does have to get spending under control, and fast.

The new Republican Congress got elected largely campaigning against liberal tax-and-spend recklessness. The debt is a serious problem. Even Hillary Clinton has identified the national debt as a true national security threat. The government must be cut down to size and retain only its Constitutionally allotted powers.

The Defense Department, just like any other government department, is definitely guilty of waste, fraud and abuse. However, cutting legitimate defense programs is absolutely the wrong place to be looking for savings.

In a world rife with threats to freedom, destroying the arsenal of democracy is one of the worst ideas imaginable. The United States cannot hide behind the Atlantic and Pacific Oceans. The enemies of freedom will not go away if America retreats. Instead, Evil will march. President Reagan’s ‘peace through strength’ should never be abandoned.

Strictly Right Radio episode 71

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Did Ari and Andrew catch Sarah Palin’s Alaska on TLC? You Betcha! Discussions on airport security, the debt commission, Canadian protectionism, free speech and more, all on this action packed episode of Strictly Right.

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Rush is Right – Debt Commission is a Trick

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The general consensus among conservatives seems to be that the recently leaked pre-report from the Debt Commission is a step in the right direction. The incontrovertible evidence sighted is that Nancy Pelosi said that the report was “simply unacceptable.” In most cases that would be enough evidence. However, the fact of the matter is that the Debt Commission Report is fundamentally flawed.

While the report is strewn with Reagan-esque verbiage, it is far from conservative. The underlying problems with the report are: it makes the recent growth in government permanent, and paves the road for massive tax hikes.

The first problem is on the spending side. The Report claims that spending, currently 25% of GDP, has to be reduced. The plan is to get spending to 22% of GDP, and eventually down to 21%. Sounds good, right? Only if you look at government in a post-Obama vacuum. In the post World War II era, government spending has remained between 18-20% of GDP. The plan to get spending ‘in-check’ actually makes concrete the growth in government seen in the Obama era. The proposed reduction in government does not even return government spending to where it was in 2008.

The second major problem is on the revenue side. The Debt Commission has all the language of simplifying that tax code that makes conservatives hearts swoon. However, upon further review, the Report lays the groundwork for enormous tax hikes. An article by Steve Manacek at ricochet.com points out that federal revenues have never reached 21% of GDP, the proposed ‘cap’ in the Report. Even in the darkest days of FDR’s Raw Deal federal revenues did not exceed 20%. A so-called ‘cap’ of 21% would represent the largest share of American wealth the government has ever seized. Rest assured this ‘cap’ will be used by Obama and his allies in the media to justify massive tax hikes. This report will also be used as a bludgeoned to beat Republicans for being ‘irresponsible’ for opposing tax increases.

The futility of this report begs the question: what is the point of these blue-ribbon, bipartisan commissions? Does anybody remember the Iraq Study Group Report? It was the report President Bush rightly ignored when he implemented the surge, which won the Iraq War. The United States does not need bipartisan solutions, it needs common sense conservative solutions.

Here’s a better Debt Commission Report from Larry Kudlow:

By 2015 the [spending] baseline should be lowered by at least $500 billion, if not more…

And there should be a much more aggressive, true, flat-tax reform, with no more than two brackets of 15 and 28 percent, and preferably one bracket somewhere south of 20 percent. Plus, capital gains and dividends, which would go up under the commission, should be abolished altogether, along with the estate tax. And corporate tax reform should have a lower top rate and should include full cash expensing for new investment in plants and equipment.

And finally, to ensure economic growth over the long run, we need a King Dollar currency reform linked to a gold reference point to stabilize and protect the value of our money.

In three paragraphs Kudlow put together a plan for sustainable prosperity. No need for a months-long bipartisan report; use what has worked in the past.

Just in case, here is the Dr. of Democracy breaking down the Debt Commission Report:

Speaker Boehner Promises to Fight for Fiscal Sanity

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It’s taken 15 years, but the GOP is set to finally muster up the courage to wage another real war to restore fiscal sanity. From the Washington Times:

For the first time in years, House lawmakers will soon have the chance to vote on a standalone measure to increase the federal debt limit next year under the new Republican majority — a vote that’s shaping up as the first early test of the GOP’s commitment to spending restraint.

The House Republican leader, Rep. John A. Boehner of Ohio, will give lawmakers a chance for a direct vote on raising the debt limit, spokesman Michael Steel told the Washington Times.

That would be a break with the recent tactic of burying the debt limit increase in parliamentary maneuvers — a way to shield vulnerable lawmakers from having to take the unpopular vote — and would instantly give leverage to those in Congress hoping to impose immediate spending cuts.

Speaker-elect Boehner is promising that there will be a standalone vote on raising the debt ceiling, which is currently $14.3 Trillion. If the measure fails, the Treasury Department will not be permitted to issue any more debt (borrow any more money). Not raising the debt limit would force Congress to live within its means. Without additional debt, Congress would be forced to adopt serious spending cuts. Essentially, Washington would be forced to acknowledge that they are out of money.

The last time a war over the debt limit was waged was in the wake of the 1994 Republican Revolution. 15 years ago, Republicans tried to force President Clinton to make serious cuts in entitlement spending, by far the most costly, and politically radioactive, segment of the federal budget.

If President Obama, like President Clinton, refuses to pass a GOP budget, we could be looking at another government shutdown. Only, this time the GOP will be in a much better position to defend their position. The 2010 election was abut stopping Obama, and stopping out of control spending. A fight over raising the debt ceiling is a perfect opportunity for the GOP to contrast themselves with reckless Democrats.

A vote to raise the debt limit with no strings attached, as has been the practice in Washington, is a vote to continue spending the nation off a cliff. By making this vote a standalone vote, as opposed to slipping it in with another bill, Speaker Boehner will force members of Congress to go on the record with this issue. The transparency and apparent willingness to fight are both extremely promising sign from the new Congressional majority.

60 Minutes: Obama’s (Miserable) America

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This report brings one word to mind: depressing.

The latest installment of 60 Minutes includes this exposé on the plight of the unemployed in Obama’s America. Currently, people receiving unemployment benefits have 99 weeks, nearly two years, to find employment after being laid off. 60 Minutes take a look at the jobless in Silicone Valley, California, once the home of American ingenuity, in this depressing piece:

In Barack Obama’s America, citizens remain jobless for longer than at any point since the Great Depression. People who once thought they had their lives planned out are being forced to move in with friends and relatives, unable to afford to live on their own anymore. Former executives now stand in file, waiting for food at local soup kitchens.

The policies of President Obama have made life miserable for millions. People do not want to be out of work, underemployed or a burden on their families and friends. However, due to the President’s tax hikes, out of control reckless government spending at the expense of the private sector, anti-business rhetoric and outright economic ignorance, the country, and its people, are suffering.

President Obama has committed the cardinal economic sin of creating an environment of uncertainty. With his vacillating stances on taxes and spending, businesses have no idea what is coming next. The result of an uncertain regulatory climate and the threat of raised and new taxes is that businesses do not expand and therefore do not hire new employees. The obvious result of this indisputable fact has been made painfully clear with the swelling of the ranks of the unemployed. Instead looking for opportunities to grow,  businesses with available funds are sitting on their money, in an attempt to wait out the economic storm.

Elected Democrats are dismantling the country. Their policies are killing jobs, and ruining the lives of countless citizens. They have had their say really since 2006, when they took control of the Congress. Their record is abysmal. In four short years the Democrats have put the very survival of the United States as the world’s lone super power and economic leader at stake.

America working for China?

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Citizens Against Government Waste just released a hard hitting advertisement warning of the dangers of deficit spending.

I can already see the lines of liberals coming out to charge that this video was produced by right wing alarmists. Some Obama liberals might even say that a post-American world would be a good thing. Most liberals will just argue that this is an impossible vision of the future.

Really?

Recent reports have stated that China’s economic growth rate has slowed to 9.6%. - The US is growing at 1.7%.

The US National debt is estimated at over $13.6 trillion today.

China is growing at more than 5.5x the speed of the US and is using its wealth to buy US debt.

In this world, ownership is power. Today, China owns the US. If we continue on this path, the United States will face the terrifying future depicted in that video.

Obama is the Perfect Storm of Freedom Stifling, Economy Killing Policies

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According to US Debt Clock.org the United States’ national debt is $13.48 trillion. The $13.4 trillion represents 92 per cent of GDP. By means of comparison, in 1980 the entire debt was $909 billion, or 33 per cent of GDP. According to the Congressional Budget Office (CBO) the national debt will hit $16.5 trillion. At that point, for the first time in history, the US national debt will exceed 100 per cent of GDP (it will be 100.6 per cent). That means that if every asset produced that year was seized by the government, the United Sates would still not be able to pay off its gargantuan debt. A frightening situation, but is that the worst of it?

Not according to Boston University economist Laurence Kotlikoff. Kotlikoff holds that “the Government is lying about the amount of debt. It is engaging in Enron accounting.”  The official debt does not count some major government entitlement programs because they are classified as ‘off-budget obligations.’ Two examples of ‘off-budget obligations’ are Social Security and Medicare. Factoring in these ‘off-budget obligations,’ and other unfunded liabilities is difficult. The National Debt Clock claims that the United States’ total unfunded liabilities adds up to $110 trillion, or $356,146 for every individual American citizen. The aforementioned Mr. Kotlikoff claims that number to be $200 trillion. Either way, the debt translates to serious problems that are already hurting ordinary Americans.

A Bloomberg poll of 1,408 investors found that the United States is no longer the number one investment market in the world. Brazil, China and India have all shot passed the United States as places of preferred investment. Eric Kraus, the chief strategist for Otkritie Brockerage House in Moscow said that the US economic situation “is obviously unsustainable, and the concerted attempt to suspend disbelief is playing increasingly poorly abroad. One can delay, but no one can forestall the unwind of a multidecade credit bubble.” The debt is warding off potential investors.

Through reckless and irresponsible spending, the Obama administration has allowed the debt problem to metastasize. The United States is scaring off investment in its private sector because investors see the looming debt crisis. At the same time that the debt is spiraling out of control, the United States is being led by decidedly anti-free market ideologues. According to the Wall Street Journal and Heritage Foundation index of free economies, the United States fell from ‘free’ to ‘mostly free’ for the first time since the index began last year. Since Obama was elected the United States has fallen from first to fourth on the World Economic Forum’s (WEF) list of competitive economies. Meanwhile, property rights, the bedrock of US capitalism, are being eroded, with the United States falling 10 places in the WEF’s rankings.  The Obama administration is the perfect storm of freedom stifling, economy killing policies. The Democrats spend like drunken sailors (although, that is unfair to drunken sailors, who at least spend their own money) and hinder any and all economic growth. The results of unchecked Democratic power have, not surprisingly, been disastrous throughout history. From the New Deal, to the Great Society, from Jimmy Carter to Barack Obama, when Democrats have unlimited power the economy, and thus every ordinary citizen, is hurt. The only way out of the economic hole the Democrats have dug is through freedom. Get the government out of the way, cut taxes and regulations and rein in spending. If the government creates a business friendly environment, America’s problems can be solved. If the Obama socialist path is followed it will finally lead the country to the dustbin of history.

The Law of Unintended Consequences

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Fannie Mae and Freddie Mac serve as perfect examples of what happens when the government intervenes in the private sector. The two mortgage giants were once called ‘government sponsored enterprises,’ which meant that profits were collected by Democrat apparatchiks, while taxpayers were on the hook for any and all losses. The purported mission of these enterprises was to add liquidity to the housing market. The great ‘right’ of home ownership was to be extended to everyone. That dream came to a nightmarish end in 2008, when the housing bubble finally burst.

Now Americans are forced to pay for politically motivated decisions. Fannie and Freddie no longer operate under the guise of being private businesses. As part of the never-ending slew of bailouts that have taken place over the last two years, Fannie and Freddie were given an unlimited line of credit from the government. Over that time period, the two firms have requested $150 billion. Freddie Mac has been responsible for $64 billion of those request, with no end in sight. Freddie needs an additional $1.8 billion from the Treasury, just to stay afloat.

What does the government get for this unlimited investment?

The second largest U.S. residential mortgage funds provider reported a loss of $6.0 billion, or $1.85 per diluted share, in the second quarter, including a $1.3 billion dividend payment to the government.

That compares with an $8.0 billion loss in the prior quarter and is the best three-month performance in a year. The firm lost $840 million in the second quarter of last year.

The lesson is obvious: the government should not intervene in the private sector. No matter how innocent or noble a cause the government supports, like home ownership, they do not account, nor can they, for the law of unintended consequences. The economy is far too diverse for the government to make tweaks around the edges, without effecting more than they could ever foresee. The free market will regulate and adjust itself. Government meddling hides problems, creates new ones, and perpetuates existing ones. The seemingly bottomless money pits that are Fannie Mae and Freddie Mac serve as a great evidence of crippling unintended consequences, born of seemingly noble intentions.

Uhh, We Can't Afford This Stuff…

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…in an election year.

ABC News reports:

President Obama has had two major messages for Congress in recent months: Keep the focus on jobs and the economy, and get serious about runaway spending.

His problem now is that they’re starting to listen to him on the second point — at the expense of the first.

In a major shift in congressional politics, Democrats have developed a severe case of sticker shock, just as many of their colleagues press to prime the pump of the economy in time for the mid-term congressional elections.

Now, even popular initiatives with widespread support — notably an extension in unemployment benefits for those who have been out of work for more than a year, plus $50 billion the White House is asking for to help avert state layoffs of teachers and law enforcement officials  are stalled inside Congress.

Democrats are between Barack and a hard place. On the one hand, the only reason they are ever elected is to loot the treasury and put as many people on the government dole as possible. On the other hand, with a national debt of over $13 trillion, there is no more money to give away.

After Obama put his “laser-like focus” on job creation, unemployment soared to 10%, where it has remained since the passage of the porkulus bill. Since then, Obama has also passed the largest entitlement bill in American history – health care. Democrats are in the fast lane, driving the United States off a debt cliff. For Democrats to start opposing spending bills now is laughable. While the new proposed $50 billion giveaway being bandied about in Washington ought to be stopped, there is no way Democrats can claim the mantle of fiscal responsibility in 2010.

In 2006 the Democrats ran against the big spending of George W. Bush and the Republicans. The result of their takeover has been a soaring debt, an unsustainable deficit, and a crippled economy. The Democrats have made it clear that given the power, they will spend the country into ruin. The latest hemming and hawing over spending is cynical political posturing, pure and simple.

Tax Dollars At Work

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Bloomberg.com is reporting that the United States’ debt of $13 trillion will overtake the country’s GDP 2012. Ever wonder where all the money is being spent?

How about a beautiful, state of the art, lavish IRS building. The Boston Herald has a story on a $92 million renovation being done on the government building. The IRS “compound” will have: a reflecting pool, an art gallery, indoor gardens, a 7,000 square-foot cafeteria, and an amphitheater. Of the $92 million, $80 million came from Obama’s Stimulus bill. The architect, Jonathan Levi, is slated to get an $8.3 million payday for the project. The building is designed to provide a “comfortable, collaborative environment,” that will foster “community and belonging.” Levi says “it will be welcoming for the people who use it.” And what better use of taxpayer dollars than to build a palace befitting of a French monarch, that will house bureaucrats whose job is to harass American citizens and coerce them into giving ever larger percentages of their hard-earned paychecks to the government? The new building will have room for 2,000 employees. The current staff consists of 900 people, after 1,400 unnecessary workers were laid off last year. In fact, IRS spokesperson Peggy Riley said “nothing has changed since April (when she said it was premature to say whether permanent jobs would come to Andover once construction is complete in August 2012.)”

$92 million on a reflecting pool, an art gallery, indoor gardens, a 7,000 square-foot cafeteria, an amphitheater, and a 2,000 person capacity office for 900 employees. Not a single permanent job created. Hard to figure out why the country is going bankrupt.