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I find myself wondering how long our political leaders think we can continue to live beyond our means. They haven't reached that point yet, and we're on the verge of total fiscal meltdown. What's it going to take to shake them awake ? I wonder if anything can awaken them. For over 70 years, our federal goverment has spent more money than it has taken in, leaving us massively in debt. The last time I checked, the interest alone on the federal debt was over $680 billion. That's a lot of dough we have to skim right off the top, and it's only going to get worse. Much worse. We've been hemorrhaging manufacturing jobs for over 30 years, and I haven't heard many realistic ideas coming from Washington D.C. to turn that around. I'd tell you it's a good idea to 'Buy American', but that's getting increasingly difficult to do. It's far simpler to 'Buy Chinese.' We are transforming from a nation of producers to a nation of consumers. We are sinking in $11-12 trillion in federal debt, and with $55 trillion in unfunded entitlement liabilities looming on the horizon. Both those numbers are rising fast, with no end in sight. We are handing out trillions in taxpayer funded bailouts for industry. Credit markets are freezing. Unemployment is rising. Foreclosures are rising. Government revenue is dropping, as the recession hits home to America.
And our geniuses in D.C. think this is a great time to spend a whole bunch more money. Of course, they ALWAYS think it's a great time to spend a whole bunch more money. That's the essential problem. Our federal government has been running deficits for 95% of the best boom years that America has ever seen, especially from the post-WWII period to present. If they can't balance the budget during the good times, then how on earth are they going to do it now ? Answer - they won't. Even worse, they don't even appear ready to try. One of the scariest things I've heard from President-elect Obama recently was when he said Bush "hasn't done enough" on the economy. Hasn't done enough ? The largest set of bailouts in history isn't enough ? I tremble to think what our new president would consider "enough." As part of a huge economic recovery package (aka, more federal spending), Obama wants to start a new (and mostly unnecessary) countrywide infrastructure project reminiscent of the 1950's. Such a project made sense in the 50's, it doesn't today. Little old Akron, Ohio has chipped in with 228 infrastructure requests, including a redesign of the Rt 76/Rt 77/Rt 8 interchange (unnecessary) and a fence for the Y-Bridge (unnecessary). The governors of the states recently requested $76 billion in earmarks. Apparently, there's no recession on for them. Only for us, the people. I also heard Obama say the other day that redesigning the health care system, which includes insurance for the 45 million who lack it, will be LESS EXPENSIVE than the system we have now. If Obama can provide insurance for 45 million more people and make it cost less than our current health care system, he'll have to change his name to Houdini, because that will be one hell of a magic trick. Maybe he plans to remove the doctors from the health care system. I don't know.
But maybe I'm being too pessimistic. Let's look on the bright side. Let's say that all the bailouts and enormous federal spending work, and the recession magically ends in a few years. Where will we be then ? We'll still be massively in debt, only more like $15 trillion instead of $11 trillion. All the unfunded entitlement liabilities will still be there, and that fiscal tsunami will be a few years closer. Our federal government will be MUCH larger, consuming more of the private sector, making it more difficult for us to compete. Then the baby boomers will start retiring en masse, and kaboom, economic disaster will be right back upon us, only worse. Much worse. The saddest part of all is, this could all have been easily avoided with a little fiscal responsibility.
Yes, that's the bright side, unless our politicians suddenly wake up. And I see no signs of that happening.