A.J. DiCintio
America's descent into economic hell
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By A.J. DiCintio
June 4, 2011

From the moment he announced his candidacy for the presidency, Barack Obama has continually expended an enormous amount of high sounding but childishly vacuous vocal energy, a tactic conservatives and libertarians have perceived as having the express purpose of obscuring his devotion to the statist ideology called liberalism.

Fortunately, by the fall of '10, the government bloating, reform bereft, true-cost hidden, political friends exempting, trial lawyer industry arse kissing abomination referred to as Obamacare caused millions of independents to join the aforementioned groups not just in comprehending the reality of Obama's shtick but in doing something about it at the polls.

However, as next year's election approaches, it is essential the same coalition arise to oppose the most dangerous aspect of the president's behavior, specifically, his unrelenting dedication to implementing morally and intellectually perverse fiscal programs and policies that are profoundly accelerating what financial expert John Mauldin calls the nation's "descent into economic hell."

Now, to re-form the coalition, we must first persuade our friends who regard the nation's fiscal problems as lying beyond the reach of the ordinary person's intellect and education that their belief is thoroughly unwarranted.

Fortunately, the task is easy; for we need only assure them that grasping the realities surrounding the nation's finances requires neither a degree in economics nor a knowledge of calculus but only a competence in simple arithmetic accompanied by an acceptance of the truth that in all its various forms, the contemptible lie of the free lunch has plagued humankind since it insidiously spewed from the mind and mouth of the first politician.

With that job done, we can move on to educating others, first by stating the following facts and their terrible implications:

. . . The current national debt stands at $14 trillion, which represents 93% of the nation's current $15 trillion annual GDP and thus already lies in the red zone an honest "debt meter" corresponds with "danger."

. . . With annual spending of $3.6 trillion but revenues of only $1.9 trillion, the federal government is currently adding $1.7 trillion to the debt every year.

. . . According to the $2.3 trillion upside "correction" the CBO was obliged to make with respect to the ten year plan Obama included with his FY '12 budget, the president proposes the nation borrow a total of $9.7 trillion through FY '21, thereby bringing the total debt to $23.7 trillion (a lowball amount made possible by the rosiest of growth assumptions).

. . . Regarding the debt to GDP ratio, Obama admits it will rise to over 100% by FY 2021and then rocket to a babblingly insane 150% by mid-century.

Those facts on the table, we can use arithmetic to expose some frightening consequences of Obama's plan.

For FY '12 Obama lists interest costs at $250 billion or 7% of federal spending.

However, by 2021 he projects interest payments to rise to 16% of a $5.7 trillion budget, producing a $900 billion annual bill that rises each year as "Obama Deficits" continue, apparently, ad infinitum.

To look at it from another perspective, over the next ten years the president (in all cases wearing rose-colored glasses) projects increases of 54% in federal spending, 64% in GDP ($15 trillion to $24.6 trillion), and 260% in interest costs, the last, especially, insuring that the change which already has America metamorphosing into something resembling the morbidly sick PIIGS (note today's high unemployment stagflation) will be powerfully accelerated.

Regarding that new look, here's a composite that details the possibilities:

. . . Bailed out, humiliated, profligate ostrich Portugal with its 11% unemployment rate and debt to GDP ratio of 84%.

. . . Devastated Ireland with its debt up 63% since June '09, its 14.6% unemployment rate, and saddest of all, its biggest export being its youth.

. . . Red tape constricted, low to no growth Italy with its raping incubus of a central government and debt to GDP ratio of 118%.

. . . Madly profligate, unproductive, stagnant, socially dysfunctional Greece, the quintessential failed welfare state with its 15% unemployment rate and debt to GDP ratio of 143%.

. . . Deeply troubled Spain, with its public debt and deficit problem, private sector debt problem, bank junk mortgage problem, lack of competitiveness problem, and unemployment rate problem that stood at 11% even during the falsely fabricated boom years but which the bust has exploded to 21% (a hope-crushing 44% for those under 25).

Not a pretty picture, especially for people who take Sandburg's words about Chicago — "proud to be alive. . . Shoveling/Wrecking/Planning/Building, breaking, rebuilding" — as a metaphor for the America that the Spirit of '76 breathed into life.

Yet history teaches that when reality bites, it most often does so with a surprising, astonishing viciousness.

That's why suffering the fate of the countries just described will be the least of our worries if, between now and 2021, inflation causes interest rates to rise to levels of the late '70's and early '80's or higher, thereby turning a frightful mess into a hideous catastrophe.

Fortuitously, the notion of things catastrophic provides us with a transition to our last two topics for analysis, which happen to be the ones responsible for the mid-century disaster mentioned previously, not that, a few years from now, they won't begin causing plenty of fiscal and societal devastation.

Those issues are, of course, Social Security and Medicare, about which highly regarded economist and investment strategist Ed Yardeni recently posted the following crucially important data and arithmetic:

. . . During the past 12 months, payments for Social Security totaled $721 billion, for Medicare $462 billion.

. . . Compared to the same payments in January, 1990, the current numbers represent increases of 203% and 415%, respectively.

. . . Against those stunning percentage increases, the Consumer Price Index, from January, 1990, to the present, has risen 76%.

. . . Total spending per senior citizen on Social Security and Medicare last year amounted to $29,969, an increase of 166% over the corresponding 1990 amount of $11,256.

. . . By 2050, the number of seniors will be double today's.

In place of presenting a lengthy analysis to reveal the destructive unsustainability of such growth, Yardeni simply asks, "How many other Americans have seen their incomes nearly triple over the past two decades?"

But however we choose to explain a madness that can ooze only from the psyche of expediently narcissistic, insatiably power groveling politicians, the fact remains that material as well as moral realities demand the entirety of the federal budget be reformed with the purpose of reversing America's hellish descent.

To death and taxes, we can add the certainty that from now until election day, the president will inundate the country with a tsunami of false rhetoric aimed at keeping the public from focusing on his abject failure to display brave leadership regarding this difficult but essential calling of our age.

However, in every era talk is cheap and cannot keep an enlightened public from perceiving the truth about a politician who, ironically marketed as hip but living life with his face perpetually turned to the corrupt, failed dogmas of the past, evades the calling by declaring it lies "beyond [his] pay grade."

That's why another calling demands we do all we can (with facts, arithmetic, and all) to make the American Dream destroying perversity of retro Barack Obama the central theme of next year's election.

© A.J. DiCintio

 

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A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.

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