Suppose you take in $2,900 a year and spend $3,800. That is a deficit of $900. Suppose you have current debt of $17,000 and long-term debt of $71,000. You agree in August 2011 to immediately increase your current debt limit by $1,200 and cut your spending by $120 a year for 10 years. When the first actual cut is due 19 months later, you say police, firefighters, teachers and children in Head Start will be homeless on the streets.
Obama talks about deficit reduction – never debt reduction. In my example this means spending $3,680 and a deficit of $780 a year. For actual debt reduction to occur, the federal government must run a surplus. A balanced budget only stops the bleeding. The Senate has ignored the budgets passed by the House, and the President has not proposed even a balanced budget. The federal government has run on continuing resolutions for years. This means that programs from four years ago are still funded at the same level. The program may have ended or be unnecessary, or it may be counterproductive to the current economy. Congress and the president keep funding them while increasing the debt.
The Federal Reserve keeps buying Treasury notes and toxic mortgage debt. This artificially stimulates the government to spend and the banks to lend. Unfortunately, stimulating the banks has caused consolidation rather than increased lending. The 10 banks bailed out with $125 billion of taxpayer money in 2009 now control 77 percent of the financial industry. If they were “too big to fail,” now they are too bigger to fail. This money printing by the Fed also causes inflation – an illegal tax, since only the House of Representatives can take your money by law.
The “housing bubble” was partially caused by low interest rates at the Fed, overstimulating the real-estate industry. Fed rates are near 0 percent, and new bubbles are about to burst. The president talked about his college scorecard – although the employment data is not available – but you can see that colleges are graduating small percentages while the students are walking away from the loans. Colleges are taking many students who have little possibility of succeeding.
Ponzi schemes such as Social Security need new blood to pay for promises to the elderly. The liberal Supreme Court said in 1973 that it was “legal” to “terminate a pregnancy.” Since then, more than 55 million babies have been murdered. The United States demographics is now wrong for a Ponzi scheme to continue much longer. This is why progressives desperately need immigrants to fill the gap.
It is illegal to bribe a voter, but it is “legal” for the Federal Communications Commission to charge fees on cell phone bills and use the money to provide free cell phones to those already on federal transfer payment programs. An inarticulate woman in Cleveland explained why the progressives were re-elected: You cell phone bill-payers provided the bribe!
And the debt spiral continues!