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Obama Wins – Markets Plunge
By Ted Abram on November 08, 2012
Democracy and Power 104: Future Debt Burden
Government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz
Obama Wins – Markets Plunge
Obama persuaded the majority of Americans to re-elect him as President of the United States. Investors throughout the world also voted; upon learning of Obama's victory, the markets plunged. Obama is responsible for an enormous increase in government debt, restrictions on energy production, restrictions on international trade, abuse of the rule of law and enormous tax increases. All of these policies retard job and economic growth in America.
The diving market is a loud and clear wake-up call to America. Investors have lost confidence in our economy and America's political sanity. This acute response should be a great concern to every American and everyone in the world. If investors lose confidence and respect for the dollar as the reserve currency, America and the every person in the world will suffer devastating economic and social disturbances.
Over a year ago, Glenn Hubbard, former chairman of the President's Council of Economic Advisers for George W. Bush, said, "We must change how we conduct our politics and economics...or we will inevitably go the way of all once-great nations and suffer an irreversible decline."
Without a doubt, President Obama and hordes of special-interest predators will seek more tax revenue. Already, Senator Harry Reid claims the President's victory is a mandate for more taxes. How big of a tax increase? Of course, President Obama and Harry Reid won't say. However, Hubbard stated in the Financial Times that across the board increases of 60% would be necessary to maintain Social Security, Medicare and Medicaid. Again Hubbard:
But the bulk of growth occurs in the Social Security, Medicare and Medicaid programmes, which together are set to consume 10 percentage points of GDP more by 2040 than they do today. Accommodating this growth at that time by raising taxes would require a 60 per cent across-the-board increase in taxes.
Contrary to Reid's demand for increased taxes, Hubbard cited the empirical studies of two Harvard economists, which call for substantial spending cuts.
... stabilizing and eventually reducing the debt-to-GDP ratio by limiting the growth of spending is more likely to be successful and to lead to growth. … Careful analysis by Alberto Alesina and Silvia Ardagna reveals that successful debt stabilisations focused on reducing spending rather than raising taxes and that fiscal adjustments associated with higher GDP growth are those dominated by spending cuts.
Alas, many Congresses and many presidents have brought us to this critical point. America's politicians have deceived, obfuscated and procrastinated. Now, they must set a responsible course or terrible disruptions will occur.
The only responsible course is to reduce government spending. Today, only the House of Representatives has the knowledge, courage and honesty to legislate the necessary spending cuts. Representative Paul Ryan is the most important in America. Yes, the President is the most powerful, but Ryan is the most important. Ryan has the knowledge and courage to address America's horrific spending debacle.
Every concerned American must vigorously support Ryan and the House of Representatives. This is the biggest battle of our lives.