January 25, 2013
Responding to the dogmatic commitment to collectivism which permeated Barack Obama's inaugural address, David Brooks (NYT) makes two insightful points that will be appreciated by every American other than the 21% who represent the nation's true-believing liberals.
First, Brooks criticizes Obama's "tour through American history" for omitting the truth that America prospered because it rejected the imperial European nanny state in favor of a decentralized system that produced "innovations and commercial blessings [which] emerged, bottom up, from tinkerers and business outsiders who could never have attracted the attention of a president or some public-private investment commission."
Then, in a second criticism, Brooks asserts that Obama misunderstands the current moment in American history, arguing that the now "mature" United States faces the daunting problems of "an aging population, a bloated political system, a tangled tax code, a byzantine legal code and a crushing debt."
If to those five troubles we add the deterioration of morality; the decline of the middle class; the poison of profligate spending; the failure to conduct a cautious, America first military and foreign policy; and the money-induced corruption that plagues Washington, we will have identified the most crucially important problems that threaten this nation's liberty and prosperity.
To the country's detriment, Obama's devotion to leftist ideology and his eagerness to embrace the dirty expediencies of Democrat Party politics keep him from wisely addressing those problems, especially the fiscal ones, that threaten the nation's liberty and prosperity, including, ironically, the entitlement programs he vows to protect.
Here, then, are some fiscal realities the president might have mentioned, instead of using his speech as an opportunity to turn JFK's line on its head to say, "Ask not what you can do for your country; ask what your country can do for you."
Without requiring a cent of expenditure, Barack Obama could read John Mauldin (mauldineconomics.com) and therefore be exposed to the kind of information offered by Mr. Mauldin and a number of other perceptive, common sense financial experts, for instance those of Hoisington Investment Management who enhanced their latest quarterly review with several very thought provoking charts.
Had the president done so, he would have come across two charts compiled by the federal government's own nonpartisan Congressional Budget Office (CBO).
From one of those charts, Obama would have learned that for the past three years, the federal spending to GDP ratio has risen to its highest levels since World War II.
More importantly and more frighteningly, however, he would have acquired the following information from a second chart:
The recent tax increases notwithstanding, the CBO forecasts that the federal debt to GDP ratio, which now stands well above the 90% danger point, could rise to an unthinkably mad 344% in 2050 and an impossibly insane 947% by 2084 -- with entitlement spending a very important component of the explosion.
In harmony with the CBO, the trustees of the Social Security and Medicare programs are certainly aware of what the future holds for the country's two largest and most beloved entitlements as evidenced by their plea that Congress and the president decide on reforms as soon as possible, thereby availing themselves of more reform options and giving citizens as much time as possible to prepare for their futures.
From Mauldin et al. Obama would also learn plenty about the sick state of the economy and the plight of the middle class, which, ultimately, must pay for the nanny state.
Regarding the first, another CBO chart would, in Hoisington's words, inform him about the following facts with respect to GDP, facts that include his first four years:
"[In all American history, 1790-2012] only the experience in the 1930's was worse. The 1960s was the last decade when the economic growth rate was above the post 1790 average. . . In the thirteen years of this century, the GDP growth rate has averaged just 1.8%, or half of the 3.8% average since 1790. . ."
With respect to the second, data researched by Ben Gersten (moneymorning.com) would teach Obama that during his first term, median household income declined by $3,850, bringing it to a point lower than where it stood in 2000.
Also from Gersten, he would acquire facts showing that during his first term the growth rate of lower wage occupations surged ahead of that of higher wage work while the rate of growth of mid-wage jobs experienced (and continues to exist in) a terrifying free fall.
Yes, things haven't been and aren't good for a middle class that one way or another will pay the price for Barack Obama's silence and inaction regarding this nation's fiscal realities.
And, yes, a truly transformative president would speak honestly about the reality that even a strong middle class in a strong economy couldn't pay the bill for this nation's mad spending and equally mad promises.
But the willfully blind mind of a true-believer in the efficacy and goodness of the decrepit, failed, and doomed to fail centralized, collectivist state permits him to think only of moving "forward" in achieving his goal despite the abject failure of all who have gone before him.
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