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By 2020, public debt in the United States is set to reach 90 percent of GDP, a line that many economists demarcate as when accumulated debt pushes an economy to the precipice of fiscal demise. Entitlement spending remains on autopilot and some federal agencies, with “stimulus” money included, have received 180 percent increases in spending. The Government Accountability Office released a report that chronicles staggering amounts of duplicative and wasteful government programs. Yet, politicians on Capitol Hill are engaged in a rigorous debate over whether to cut a miniscule 6 days of spending or the Democrat proposed ½ day in spending reductions.
We have seen over the last decade how an inflated belief that big government is “winning” has led to ambitious economic policy. President Obama, elected on the mantra of Hope and Change, passed a prodigious $819 billion “stimulus” package with barely any support (sorry Charlie Crist) from the other side of the aisle. The intended results seem to have not manifested themselves, no matter, create an unquantifiable statistic such as “created or saved” jobs to hide its conspicuous failures. Entrenched proponents of Keynesian economics extrapolate that the stimulus wasn’t quite big enough, but shrug at the notion that each individual “created or saved job” of the Recovery act cost $228,055.
The healthcare reform debate was marked with perplexing formulations that the Affordable Care act was the key to creating jobs. This notion rivaled Nancy Pelosi’s declaration that food stamps and welfare payments are the most viable way to stimulate the economy. Guaranteeing 30 million Americans healthcare, who otherwise could not afford it, is certainly a noble proposition. But offering it as a way to create jobs and reduce the deficit is patently cynical and free lunch economics at its worst.
Besides the unconstitutionality of Obamacare, the rule of law gets shoved out of the way again, as over 1,000 waivers have been issued to preclude politically connected businesses and unions from its onerous mandates. An $105,000 billion fund is set up to ensure its implementation, no matter how pernicious the effects are of “what’s in it”.
The Federal Reserve launches a massive quantitative easing initiative, while keeping interest rates at record low levels. The political and economic calculus seems to be that we can print and borrow our way to prosperity. The solution to solving a potential debt crisis is to spend more and inflation will push potential fiscal calamity back below the surface. Food and energy prices are rising; the trajectory seems to be endless as long as reckless policy remains unaltered.
The linkage of low interest rates and government backed easy lending practices to a housing bubble burst is routinely dismissed. Comprehensive financial reform is passed without even the semblance of mentioning the ever menacing Fannie Mae and Freddie Mac. The creation of burgeoning bureaucracy and regulations continue en masse. As Reagan said, “the more the plans fail, the more the planners plan”.
The American people understand that cuts need to be made to what is obviously perceived as a spending problem of immense proportions. The solutions seem fundamentally simple. Drastically reduce spending and cut programs, repeal ObamaCare and other hazardous regulations (EPA), stop printing money we do not have and reduce the tax burden as much as possible. Unleash the economic potential of the United States through pro-growth policy, not reckless and burdensome meddling of wishful thinking politicians and bureaucrats.
The dilemma remains, however, that Washington’s perceived solutions to our epic problems remain detached from reality. Let’s hope the newly elected politicians and conservative stalwarts on Capitol Hill, by remaining true to principle, can wake them up from their perpetual snooze.