American Dream Turning Into A Nightmare
Hard questions are being asked as we confront major issues that will challenge our concepts of traditional American culture and society. The ongoing financial crisis is exposing the myth that America has no fiscal limitations and is able to provide the benefits, wealth and security that many believe they are “entitled to”, simply because they are Americans.
The reality for many is that the “American Dream” never arrived and for many others it is about to disappear. California is the example to the rest of the Nation that every promise made cannot be kept. Governments cannot create wealth by dividing wealth nor can they create wealth through unlimited borrowing and spending. The standard of living for many will decline as promises made cannot be kept.
Our President Isn’t Quite As Advertised - Karl Rove
As a candidate, Mr. Obama promised to end the Iraq war by withdrawing all troops by March 2009. As president, he set a slower pace of drawdown. He has also said he will leave as many as 50,000 Americans troops there.
These reversals are both praiseworthy and evidence that, when it comes to national security, being briefed on terror threats as president is a lot different than placating MoveOn.org and Code Pink activists as a candidate. The realities of governing trump the realities of campaigning.
We are also seeing Mr. Obama reverse himself on the domestic front, but this time in a manner that will do more harm than good.
Mr. Obama campaigned on “responsible fiscal policies,” arguing in a speech on the Senate floor in 2006 that the “rising debt is a hidden domestic enemy.” In his acceptance speech at the Democratic National Convention, he pledged to “go through the federal budget line by line, eliminating programs that no longer work.” Even now, he says he’ll “cut the deficit . . . by half by the end of his first term in office” and is “rooting out waste and abuse” in the budget.
However, Mr. Obama’s fiscally conservative words are betrayed by his liberal actions. He offers an orgy of spending and a bacchanal of debt. His budget plans a 25% increase in the federal government’s share of the GDP, a doubling of the national debt in five years, and a near tripling of it in 10 years.
On health care, Mr. Obama’s election ads decried “government-run health care” as “extreme,” saying it would lead to “higher costs.” Now he is promoting a plan that would result in a de facto government-run health-care system. Even the Washington Post questions it, saying, “It is difficult to imagine . . . benefits from a government-run system.”
Mr. Obama either had very little grasp of what governing would involve or, if he did, he used words meant to mislead the public. Neither option is particularly encouraging.
Terminating Illusions In California - Wesley Pruden
California is the beta state, where everything new is tried and then exported, true or not. Rap, rock, lavender love, student riots, Arianna Huffington, hot rods and the Hula Hoop. Ronald Reagan and the tax revolt. The illusion that you can have it all, and somebody else will pay for it. This week California’s voters offered a view of what happens when big government finally grinds to a noisy halt. Barack Obama could take note.
Geithner Pledges To Cut Deficit
May 21 (Bloomberg) — Treasury Secretary Timothy Geithner said the Obama administration is committed to reducing the federal budget deficit after concerns rose that the U.S. debt rating may eventually be threatened with a downgrade.
The dollar, Treasuries and American stocks slumped today on concern about the U.S. government’s debt rating. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade.
Can debt create prosperity?
A common question asked these days is, if too much debt caused the financial crisis, how can more debt solve the problem? Most American families know that their basic problem is too little income and too much debt. Common sense tells us that unless debt is balanced by inceasing income to service the payments, the end result is bankruptcy, and this rule applies equally to individuals and nations.
WASHINGTON — Just how much government debt does a president have to endorse before he’s labeled “irresponsible”? Well, apparently much more than the massive amounts envisioned by President Obama. The final version of his 2010 budget, released last week, is a case study in political expediency and economic gambling.
Let’s see. From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that’s atop the $1.8 trillion deficit for 2009.
One reason Obama is so popular is that he has promised almost everyone lower taxes and higher spending. Beyond the undeserving who make more than $250,000, 95 percent of “working families” receive a tax cut.
Consider the extra debt as a proxy for political evasion. The president doesn’t want to confront Americans with choices between lower spending and higher taxes — or, given the existing deficits, perhaps less spending and more taxes.
At best, the rising cost of the debt would intensify pressures to increase taxes, cut spending — or create bigger, unsustainable deficits.
At worst, the burgeoning debt could trigger a future financial crisis. The danger is that “we won’t be able to sell it (Treasury debt) at reasonable interest rates,” says economist Rudy Penner, head of the CBO from 1983 to 1987. In today’s anxious climate, this hasn’t happened. American and foreign investors have favored “safe” U.S. Treasuries. But a glut of bonds, fears of inflation — or something else — might one day shatter confidence. Bond prices might fall sharply; interest rates would rise. The consequences could be worldwide because foreigners own half of U.S. Treasury debt.
The Obama budgets flirt with deferred distress, though we can’t know what form it might take or when it might occur. Present gain comes with the risk of future pain. As the present economic crisis shows, imprudent policies ultimately backfire, even if the reversal’s timing and nature are unpredictable.
For some historical perspective on our current problems.
Chicago Tribune - 1934
1934
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